J, ..

STATE OF HARYANA & ORS.

v. •

LAL CHAND & ORS:

May 2, 1984 B

. (D.A. DESAI, A.P. SEN AND V. BALAKR!Sf!NA ERADI, JJ.J

Constitution of India 1950, Article 299(1) Condition , to be satisfied before .:z

bfndig Co!Uract between the Union or State cmes into existen1:e-What are. Con 0 tracts execued in exercise of statutary power and contracts which are Statu.f_ory.in nature-Existence of distinction indicated--.Article 299(1) inappli<able wizen Uni.1n

or StGte .enters int(] a contrart.'which is statutory in nature,

Excise_Contract;_A statutory contract-Requirements Of Article 299(1) cannot be invoked.

Punjab Excise Act 1914, Section 60 &.- Punjab .Lf{zuor Licence Rules 1956, .Rules 32(2), 36(22), 36(23), an:/ 36(23A) .

Excise Contract-Reauction-Recovery of difference between bid amount in original auction aiid that fetch€d in reauctidn_;_State whether entitled to recove,. the

dijferetia/ amoqnl from the original licencee.

Indian Contract Act 1872. Co1nmercial Contrat:t-:Perforn1ance of-Definit.e time fixed and mode ofpa; iment specified-Time essence of such contract-Excise

contract-Time whether essence of contract. ·

The I)puty Excise&· Taxation Coni1nissiorier held an auction for gfantiog the right to sell country-Liquor 'for liquor vnd.. The respondents olTered tfie ·

highest bid.which \vas .provisionally acc.epted and they were declared the highest bidder under Rule 36(2)' of the Punjab 'Liquor Licence Rules J956.

Subsequently, the Excise and Taxation Coin missioner accepted the bid as. requi.red Rule 36{22). The resp0ndents however failed to depos'it the security amount as required under Rule 3fi(22A)' and thereby contravened -conditions No- 15(1) of the coditions o.f auction and Rule 36(23)'. the Deputy EXcise & Taxation Commissioner therefore serVed the respond:.::nt<; with a notice to show-cauc why the licence for cuntry liquor vend, shoul-i not be rc-:iuction under Rule 36('!3A) and ihe , eficicncy in price, a n_d all expenses of su-.:h re-auctjon rl?covered from them under S:!ction 60 of the Punjab Excise Act, 1914. The nspondents

reprcse.nted t4at b:'!forc the auction it \Vas announcej that no wine shop would be opened wit-bin a radius of thrCe miles of the liquor vend but acro5s

the bo1der the State Government of J'unjab had sanctioned the establishment of

a liquor Shop Which was hardly 2-1 {1 miles from the border and tbis-would inean that there would be two_ country liquor shops one in the State of IIaryana and the Other in the State of Punjab and this was in breach of condition No. 13(iii) . real! with. Rule 37(88) of the Rules. The Deputy Excise and Taxation Commis

sioner reJected the representation alld directed the re.sale of the licence fot retail vend of the cOuntry•liquor shop under :Rule 36(23). Th•shop_Was reauctioned. ·: At the time. of re-auction f~1ere were 52 bidders and the shop Was resold at the highest bid of Rs. 6.65 lakhs. The respondents were served with a notice of demand of Rs 3.46 lakhs representing the loss on re-.sale.

Ill their writ petitions. to the.High Court the res pendents asailed the notice of demand. Followiilg the decision in Ka~1hi'ya Lal_ Bhatia & Co. v. State of Ha•yaita & Ors. the High Court held that.the State had no authority to demand the amounts for failure of which the.vends were put to re,;.auction on the ground 1hat the licence fee levied was in the nature .of excise duty ..

' Jn the. Appeals to this Court, on the question whether_ the State Governn1ent was-entitled to realise the difference which the respondents had agreed to. pay un(\er the terms of aucton of a liquor vend and the amo1.Jnt realized ori re~

auction of the vend, as also the defaulted instalments of the licence fee payable

n respect of a liquor vend :

Allowing the appeals,

HELD: t. (i) There i~ a distinction between contracts which are executed in exercise of _the executive powers and contracts which are statutory in natureA Under Att.299 (1), thrr!e conditions b'ave to be satisfied before a binding contract. by the Union or th~ Statein exercise.of the executive power comes into t--Xistence :

(1) The contract must be expressed' to be made by the PresiJent or the Governor.

as the case may be . .(2) It must be executed in writing. And - (3) the execution .thereof shollld be by such person and in such manner. as the President or the.· ·

Governor' may direct or. 3.uthoriZe. There call be doubt that acontract which has to be execut.ed iri accordance with Art. 299(1) is nulli6ed a;-id.becomes vOid if the contr; ct is not executed in conforffiity with the provis'ions .of Art. 299(1) -an(i

.• there is no question Of estoppel or ratificati6n in such,.case;. 'Nor can there by

 any irqplied Contrac~ between the Government and another person. [726CE]

Smi. Nanhibai v. The Excise. Commissioner, M.P. & Ors., AIR (1963) MP 352, ieferred to. ·

G Ram Rattan Gllpta v. State. of M-P., AIR (1974) MP 101. Ajodhya Prasad

Shaiv & Anr. v. State of Ori<Sa & Ors.; AIR (1971) Ori., 158, M/S shree Krishna Gyanoday_ Sugar Ltd. & Anr. v, State of Bihar & Anr., AIR (1975) Pat. 123; approved.

(ii) Art. 299(1) applies to a Contract made in exercise of the executive power of the Union or the Sta.te~ but not to a contraCt made in exercise of statutory-power. Art. 299(l) has no application to a case where_a particular statutory authority a-s distinguished from the Union or the States enters into a contract which is statutory in nature. Such 'a contract. even though it is for

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securing the interests of the Union or the States. is not a contract which has been entered into by or on behalf of the Union or the State in exercise. of it'i executive powers. [726F-G]

K.P. Chowdhary v. S!.7te of MP., [1966] 3 SCR 9!9, Mulamchand v. State of M.P., [1968] 3 SCR 214, State of MP. v. Rattan Lal, [196l] MPLJ 104, State of 1!f.P., v. Firm Gobardhan DaS9 Kai/ash Nath, AIR [l97'J SC I 160, referred to.

(iii) Jn ~Ii excise contract, the Collector acting as Depl1ty Excise & Taxa tion Commissioner conducting the auction undr Rule 36(22) ad the Excise Commissioner eXercising the functions of the Finanical Commissioner accepting

the bid under Rule 36(22A) although they act for and op behalf of the State Government.for raising public revenue, have the requisite authority to do so. under the Act a; d th~ 1:ules fraoy:d. thereunder and therefore such a contract which comes -into being a_n acceptance of. the bid, is a s.tatutori contract fal1ing outside the purview of :Article 299(1)- of the Constitu'tion. In such a coritract the requirements of Article 299(1) cannot.be invoked. [727BEl . . ' . . .

A. Damodaran & 4nr. v. Staie /Jf Kera/a & Ors., [1976] 3 SCR 780;

referre~ to,

In the instant case, there was unconditional acceptance of the highest bid of the respondents by the Dputy Excise & Taxation Commissiorie~ at the time of the auction on March 11, 1969, and also by the Excise & Taation Commissioner on.March 21,.1969 as required µndt!r Rule -36(22A). 'fhe respondents could not uniJat_e1rally by their Jetter dated.April 12, 1969 r.escind the contract on the prete'xt that the State Gove_rnment of Punjab had opened a new iiquor shop across the State border. Evln thOugh this may have been in breach of tlie inter-state agreenient beiween the. State Govdrninents o( Punjab and Haryana,_ the oPening of such a liquor vend by the State Government of Punjab

could not justify the re'Spondents in not making the secuity deposit.' This would not.amount to a breach of the .conditions: on the part qf the Sra1e Government of Har.yana or furnish a ground absolving the res_IJ)ndent~ of their liability to pay the shortfall. [7JOE-G; 7l!A-B]

Peisons who offer their bids at an auction to vend country i"iquor witb.

1- full knowledge of the _terms and condi'tions attaching thereto, carinot be permit

ted to wriggle out of the .contractual -obligations arising out of" the acceptance of their bids.by a pet_ition under Article226 of Constitution. [73JGJ

Har Shanker&' Ors.v. The Deputy Excise & Taxation Commislioner & Ors.,

(1975) S SCR 255, State of Haryana & Ors v, !age Ram & Ors., (1980) 3 SCR 746,. State of Pujab v. M/s Dial Chand Gian Chand & Co., [1931] 2 SCC 303: referred to.

3, (i) In a commercial Contrct for the performance of which a• definite time has peen fired and the contract spetifies the mode 9f payment. , i.e. specifies the dates on whiG1'1 the.instnJments of the licence fee are to be paid. time is of t.he essence of the contract. [732H]

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(ii) Rule 36(23)(1) of the Rules specifically makes lime of the essence. It therefore folfows that payment of the instalments On the due dates was a condition pre-requisite to the performance of the contract. [733A]

In the instat case, the failure of the respoJitlents to make. payments relieved thi:: State Govrnn1ent of their obligatioris. The Excise ·& Taxation Commis~ sioner would have been.justified if he had cancelied the, liCence under Ruie 36(23) and put the li.t\uot venc\ to reauction forthe remainig peri0d of the . financial year .. Instead of taking 'this drstic step of cance_llation of the 'contract, the Deputy xcise & Taxatioll Commissioner served the respondents with the impugned notice of den1and for payment of the fi{St fortnightly irista1ment.

The respondents w.re Oound to p'ay the defaulted instalment on the due date. ' f. • . . • . ·

[733B-CJ •

4. The decision of the High Court in Kanhiya/a/ Bhati"a'&.Co. v. Slate of Haryana & Ors. has been reVersed by this Courfin State of HaryanCz v. Jage Ram & Ors.,[1983] 4 SCC556. [720G] '

CIYIL APPELLATE JURISDCJTION : Civil Appeal Nos. 154 & . 155(N} of 1971.

Frem the Judgment and . Order dated the I Ith November, 1969 Civil ofthe'Punjab & Haryana High Court in writ Nos. 1207 and 1607 of1969 respectively. '

. Harbans Singh, 1.S. Gujral, C.V. Subbarao and R.N. Poddar E for the Appellants in both the appeals .

• G.K. Arora for the respondents in C.A. 154/71.

T.S. Munjra/ and Mrs. Urmila KaJ!oor for the Respondent in

. CA 155/1971.

• The Judgment of the Court was delivere~ by

sm~, J.· These appeals on ce"rtificate are directed against the Judgment and orders of the Punjab High Court dated November 19, 1969 allowing the writ petitions filed by the respondents and quashing the impugned notices of .demand for recovery of the difference between the amount which they had agreed to pay under the terms of auction of a liquor vend and the amount realized on re-auction of the vend a.s 8, lso. the defaulted instalments of the licence fee payablein respect of a liquo~ vend issued under s. 60

of the Punjab Excise Act 1914 ('Act' for short).

• Put very shortly; the ssential facts are these. On March 11, 1969, tb~ Deputy. Exdse & Taxation Collllllissioner, Hissar held an

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i!ARYANA v. LAL CHAND (Sen, J.) 719

auction for granting the right to sell country liquor for Mandi Dabwali for the rar 1969-70 at the Colleetorate. At the commenceme!1t of the auction, the Deputy Excise & 'Taxation Commissioner had read out theauction :mnounccments and conditions of auction as required under r. 36(4) of the Punjab Liquor Ucence Rules, 1956 ('R, ules' for short). The respondents Messrs Lal Chand Bal Rai,.ctc. offered the highest bid of Rs. 10, ll, OOO and their bid was provisionally accepted by the Deputy Excise & Taxation Commissioner and they were declared to be the highest bidder as .. required under r. 3,6(2) of the Rules. Subsequently, the bid was

 accepted by the Excise & Taxation Commissioner exorcising the powers of the Financial commissioner on March ~I. 1969 as requi red under r. 36(22) of the Rules. The respondents however failed to deposit Rs. 50,550 \IS security amount as required under r. 36(22A) and thereby contravened condition No. 15(i) of the' condi- tions of auction and r. 36(2~) of the Rules .. They were accordingly . served .with a notice.dated April 9, 1969 by the , Deputy Excise & Tax.ation Commissioner requiring them to show cause why the licence for country liquor vend, Ma!ldi Dabwali should not be put to re-auction under r. 36(23AJ. of the Rules and the deficiency in price and all expwses of such re-auction recovered. from them in the manner' laid dowh ins. l50 of the Punjab Excise Act, 1914. in

response to the same, the respondents by their letter dated .April 12, 1969 tried to wriggle out of their contractual obligations by saying that before the auction.it was announced.that no wine shop shall be opened .within a radius of three miles of liquor vend, Mandi Dabwali, but across the border the. State Government of Punjab had sanctioned the establishment ofa liquor shop at village .. Killlanwali. which was hardly 2-1/2 miles from the State border and this would mean that there would be two country liquor shops-·

one at Mandi Dabwali in .the State of Haryana and the other at village Killianwali in the State of Punjab and this was in breach of condition ~, o, !3(iii) read with r. 37(8B) of the Rules, as applicable to the State of Haryana.. Upon this basis, the respondents represented that before requiring them to deposit the security amount, they should be given an assnrance that no other liquor. shop would be opened.

Although in. the show-canse noiiee, the respondents wete intimated that in case they desired to be heard-· in person, they should appear before the Deputy Excise & Taxation commissioner a\ Chandigrah on April 14, 1969, but none of them tured up on

that date.

On the same day, the Deputy Excise & Taxation _ y-< Commissioner rejected the representation of the respondents and directed resale of the licence for retail vend_ of the country liquor shop at Mandi Dabwali for the year 1969-70 under r. 36(23) of the Rules. The respondents have purposely kept back the reply that they received frnm the Deputy Excise & Taxation commissioner conveying the rejection of their representation which intimated to them that the licence for retail yend of country liquor shop at , Mandi Dabwali would be re-auctioned on April 23, 1.969 at the "' Collectorate, Hissar.

By his letter dated April 15, 1969 addressed f to all the Excise & Taxation Officers in the State, the Deputy Excise & Taxation commissioner forwarded the notice of re-auction asking them to give wide publicity to the notice alo11g with the announcements to be made at the time of re-auction. Copies of the circularletter and the notice of re-auction were sent not only to the commissioner, Ambala and all the Deputy Commissioners in the State but also to tle Chief S_ ecretaries and the Excise Commissioners of diffo- 1, - rent States and they were also requested "to give wide publicity in their States regarding the re-auction of the licence. At the. time of re-auction held on April 23, 1969, there were as many as 52 bidders and ultimately the liquor vend, Mandi Dabwali was re-sold at the highest bid of Rs, 6,65,000 for the remaining part of the financial year. On May 8, 1969, the respondnts were served with a notice of demand of Rs. 3,46,000 representiog the loss on re-sale .. The High Court by the judgment under appeal quashed the notice of demand following the d_ecision in Kanhiya Lal Bl1atia &Co. v. State ""·"f,· of Haryana & Orsl').

The High Court following its decision in Kanhiya Lal's case, fopra, held that the State Government had no authority to demand the amounts for failure of which the vends were pot to re-auction on the ground that the licence fee l_evied was in the uature of excise duty. Recently, this Conrt has in State of fiaryana v.

Jage Ram & Ors.(') reversed the decision of the High Court in Kanhiya Lat's .case, supra, and held that the amo.unts which the State "- ' Government had charged to the respondents were neither in the nature of a tax nor in the nature of an excise duty but were.in the nature of a price. wl; ichthe State 'Government were entitled'to charge as .consideration for parting with its privilegein favour of the .licensees. That being so, the appeals must succeed on this short ground alone.

Normally, this would have entailed remitting the writ petitions to the High Conrt for a decision on merits but looking >-

(1) CW. No. 343of1969 decided on July 23, 1969.

(2) ll98Jj4 s.c.c. 556.

to the fact. that the demands raised were for the financial year 1969-70, we felt that no useful purpose would be served in remitting A the matter to th; High Court and heard the parties on merits.

Apart from the question of. validity of the charge which is co'lnmon to both the appeals, the. questions raised in the two appeals arc distinct and separate and they will have to b<; dealt with separately ..

It is convenient at this stage to set out the relevant statutory provisions. s.27 of the Punjab Excise Act, 1'914 empowers the State Government to"lease' no such conditions and for such period as it may deem fit the right of selling by wholesale or retail any country liquor or intoxicating drug within any specified local area. .On said lease being granted the Collector, under sub-s.(2J thereof, has to grant to the lessee a licence in the from ofa lease. S.34 of the Act provides inter a/ia that"(!) Every licence granted under the Act shall be subject to payment of such fees, if any, as the Financial Commissioner may direct ; and (2) The authority granting such licence may r.equire the ltcensee to give such security for the. obserance of the terms of his licence, or to make such deposits by way of security. as he may think fit. s.5£(1) of the Act confers power on the State . Government, by notification, to make rules for the purpose of carrying out foe provisions of the A<f In particular and without prejudice to the generality of s.~8(1), sub-s. (2) thereof provides that the State Government may makerules with respect to matters enumerated therein. Under .cJ.(f) the State .Government may make rules regulating the manner of holding auctions of liquor shops. S.59 provides that the Financial Commissioner may, by notification, make rules by d. (a) lo regulate the manufacture, supply,·. storage or sale of any in toxic.ant, cl.(d) prescribing the scale of fees or the manner of fixing fees payable in respect of. any. such licence and by cl.(f) prescribing the authority by, the restrictions under, and the conditions on which, any licence may be granted. The licences, in a large measure, owe their existence to the rules framed by the Financial Commissioner under S.59. S.60 of the Act, insofar as

\ material, reads :

"60. (I) Recovery of dues-The following moneys namely:-

(a) all excise revenue ;

(b) .• * •••••. • •

' c

(c) all amounts due to ihe Government by any person on account of any contract relating to the excise

revene;

may be recqvercd. from the person primarily liable to pay the same, or from his surety (if any), by distress.and sale of his moveable property or by any other process for the recovery of arrears of land rcve1\ue due from land holder& or from farmers of land or their mreties."

The Punjab Liquor Licence Rules, 1956 framed by the Finan- . cial Commissioner in exercise of his powers under s.59 of the Act. make detailed provisions regulating(.• the manner -in which a licence tor the retail venJ or country liquor shall .be grarited by public auction, and the conditious to which it shall be subject. R.36(22A) of the Rule provides that a person to whom a country liquor shop has bee!' sold shall deposit by way of security an amount equivalent to one-twenty-fourti1 of the amount of licence fee determined under .r.36(16) within a period of seven days of the date of auction.

,. . ' R.36\23)(2) provides tliat a persun to whom country liquor shop is sold shall pay the amount of licence fee so, calculated in 22 equal instalments, each instalment being paya'ble.on tho 10th and 26th of each month sfarting from the month of April. In the event of failure to pay the instalment by the due date, his Hcence may be cancelled.- R.36(23A) interdicts that any person whose bid has been accepted at the auction Jails tJ make the deposit of the amount of security equivalent to one-twenty; fourth of the total licence fee as required under r.36(22A), the Collector may resell the licence by public auction and deficiency in licence fee .and all expenses for such resale shall be recoverable from (he _defaulting bidder in the "manner laid down in s.60 of the !'unjab.Excise Act, 1914;

In Har Shanker & Ors: v. The Deputy Excise & Taxation Commissioner & Ors.,\') this Court held that the writ jurisdiction of the Hinh Courts under Art.226 was not intended to facilitate avoidance f obligations voluntarily incurrd. It was observed that one of the-important purpose of selling the exclusive right to vend liquor in wholesale or retail is_to raise revenue. The licence fee was a price for acquiring such privilege. One who makes a bidfor the orant of such privilege with a full knowledge of the terms and

onditions attaching to the auction cannot be permitted to wriggle

(I) (1975]3 SCR 255

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HARYANA "LAL CllAND (Sen, J.) 723

out of the contractual .obligations arising out of the acceptance of his bid .. Chandrachud, J. (as he then was) interpreting the provisions of the Punjab Exci.se Act, 1914 and of the Punjab Liquor Licence A Rules, 1956 and speaking for the Court, said:

"The.. announcement of conditions governing the auction were in the nature of an invitation to an offer to .those who were interested in thesaleof country liquor. The bids given in the auction~ were offers m.ade by the prospective vendors to the Government. The Government's acceptance of those bids was the acceptance of willing offers made to it. On such accepta1ice, the contract between the bidders and the Government became concluded and a binding agreement came into existeuce between them . •• •• • • The powers of the financial commiss_ioner to grant liquor licence by auction and to collect licence fees through the medium of auctions cannot by writ petitions.iJe questioned by those who, had thoir vendure SUfceeded, would have relied upon those very powers to found a legal claim.

Reciprocal right and obligations arising out of contract do not depend for their enforceability upon whether a contract- . ing .Party finds it prudent to abide by .the terms of the contract. By such a test no contract could ever .have a binding force."

 To the same effect are the decisions of this Courtin State of Haryana & Ors. v. Jage Ram & Ors.(1) and the State of P1in}ab v. M/s Dial Chand Gian Chand & Co. 12> laying uown that persons who offer their bids at an auction lo vend country liquor with full knowledge of the terms and conditions attaching thereto, cannot be permitted to wriggle out of the contractual obligations arising out of and acceptance of tcir bids by a petition under Art. 226 of the Constitution .

The. observations in Har Shanker's .case, supra, did not touch. upon the questioh . whether such a contract must be. in

compliane with Art, 299 (I) of the Constitution, The question whether the process of licensing by public auction of liquo~ vend involves a contract at al\ or is merely the. grant of a privilege and the bidding at a public auction is with _a .view merely to .fix the pnce for the purchase of the privilege, has been en.gaging the •

(1) [1980] 3 SCR 746.

(2) [19831 2 sec 503.

SU~REME COURT REPORTS

(1984] 3 S.C.R. _..,

attction. of the . High Courts for quite some time. In Smt.

Nanhibai v The Excise Commissioner, M.P. & Ors.(1) the Madhya Pradesh High Court held ihai the. State _Government .has the exclusive privilege of manufacturing, selling and possessing intoxicants which it has power to lease for consideration under s: i 8 of the !\1.P. Excise Act, 1915 and that every • auction of excise contract for sale of intoxicants is a leasing of the Government's right of selling intoxicants. P.V. Dixit; C.J .. speaking for the • •.' Court made following observations on. this point which are _,. pertinent : '

"The principle that the State Government has exclusive right of manufacturing, selling or possessing intoxicants . or • any country liquor intoxicating drug runs through. ss. 13 to )8 of the Act. •• •• •• • •• .

The important condition that must be.satisfied before any licence. can be granted to a person for manufacture or ' . sale of any country liquor intoxicating drug is that the person must first obtain the privilege or the right of manufacturing or selling the intoxicating drug . ** •• •• ••

In every auction sale of a liquor shop at which liquor is sold in wholefale or retail, there is a sale of the lease of the Government's right of selling country liquor intoxicating drug.· On the acceptance of a bid of a person at an auction sale, a contract . for thedemise of the Government's .interest is brought into. exist"'1ce and this is followed by the grant ofa licence to the person whose bid has been accepted."

These observations of t1e learned Chief Jtistice have sine~ been approved of by a Full Bench of the High Court in Ram Rattan Gupt~ v.

State of M.P.(2 ) The other•two cas~ on the point. which we must notice are : Ajodhya Prasad Shaw &. Anr. v. State of Orissa & Ors.(3> and M/s Shree Krishna Gyanoday Sugar Ltd. &' Anr. v. State of Bihar & Anr.('! ' ·

.• (I) A.I.R. [19631 M.P. 352.

(2) A.LR. [1974] M.P. 101.

(3) A.J.R. [1971] Ord. 158.

(4) A.LR. [1975] Pat., 123 •.

" < t ...<.

In A, iodhya Prasad Shaw's case, the Orissa High Court and in. M/s. Shree Krishna Gyanodaj"s case, th'e Patna High Court interpreting like provisions oftheBihar & Orissa Excise Act, 1915 held that where the State Government in exercise of its powers

unde~ s .. 22 of that Ac.t grants exclusive pivilege to any perso~ on certain conditions under s. 22 (I) and a licence .is received. by that person under s. 22 (21, it cannot fo contended that it amounts . to.a contractniade in exercise of the executive power of the State within the meaning of Art. 299 (!)of the Comtitution. R:N. Misra, J. speakin'g for the Court in Ajo1ihya Prasad Shaw's case tried to highlight the problem in these words:

"Law. is well settled and parties before us do not seek to .canvass that this constitutional requirement' is not mandatory. In the field it covers it is a pre-requisite to bring into existence a vaiid contract.

The question for examination in the present case is, however, different.

Is there a contract at all and in case it involves a contract is it one purported to be made in exercise of tne executive power of the .State Government is the question for exami'. . n?-tion."

The learned Judge went on to say :

"In case t\1e result of our invstigation is that it is not a contract in exercise of the executive power of the State in terms of '.he language used in the Article, it would follow that this constitutional requirement has no application. I have already indiciitcd that the settlement of the shop, the collection of the fee and the grant of the licence are all statutory acts by the prescribed authority. The intention of the Constitution is not to extend the principles in Art. 299 (!)to cover all possible contracts. This is why specific teference has been made to contracts "in exercise of tbe executive power". It 1s not necessary for the present purpose to examine whether the licensing process involves a contrnctul agreement. Possibly there is an element of contract in the settlement, but certainly it is noi one entered into in the executive power of the State but is . regulated by the statute or the rules made thereunder.

Jn the circumstances in the case of a statutory licence even based upon 'a contract the requirements of this Article cannot be invoked."

In M/s. Shrce Krishna's case, supra, !'LP. Singh, J. speaking for the Court rightly observed that when the State Government in exercise of its powers under s 22 of the. Act grants . tlie ex.elusive privilege of manufacturing, or supplying or selling any intoxicant like litjuor to any person on certain condition, there . comes into cxis:once a contract mde in exercise of its statutory powers and such a contract does not 9mount to a contract made by the State in exercise of the executive powers.

There is a distinction between. contracts which are execµted in ex'1'.cisc of the qecutive powers and contracts which are statutory in nature.

Under Art. 29,9(1), three conditions have to be satisfied before a binding contract by the Union or the State in excercise of the executive. power comes into existence: (I) The contract must be expressed to be made by the President or the Governer, as the case may be. (2) It. must be executed in. wntmg.

And (3) The execution thereof.should be. by such person and in such manner as the Presid.ent or; the'Govenor may direct or . authorize. There. can be no doubt that a contract which has to be. executed in accordance with Art. 299(1) is nuilified and becomes void if the contract is not executed in conformity with provisions of Art. 299(1) audthere is no question of cstoppel or ratification in swh case, s.

Nor ca.n there be any implied co!1tract between the Governmet and another person : K.P. Clzowdhmy v. Srate of M.P.,('J Mulmnchand v. State uf M.P.,(2! State of M.P. v. Rattan La/(3) and State of M.P. v. Firm Gobardhan Dass .Kai/as/I Nath,\4!

It is well settled thafArt. 289(1} applies to a contract made in exercise of the executive power of the Union or. the State, b.ut not to a contract made in exercise of statutory power, Art. 299(1) l1as no application to a case where a particular statutory -authority as . distinguished from the Union or the States enters into a contract which is statutory in nature. , Such a contract, even though it is. for securing the interests of the Union.or the States, is not a c"ontract which has .been entered into by or on behalf of the Union or the State in xercise of its executive powers. In respect of forest contracts which are deal( wifa. by this Court i11 K.P. Chowdhary's, M ulamchand; s, Rattan-Lal' s and Firm Gobardhan. D/Jss' s cases, supra,

(I) [1966) 3 S.C.R. 919

(2) (19681 3 sc.R. 214

(3) 11967) M.P.L.J. 104

(4) A.J.R. [1973] S.C .. 1160

' ..

' ., .

there are provisions in.the Indian Forest Act, 1927 and the Forest Contract Rules framed thereunder for entering into a formal deed . between the forest contracter and the State Government .to be executed aud expressed in the name of the Governor in conformity with 'the requirements of Art. 299(1), whe.-eas unde1: the Punjab Excise Act, 1914; like some other State Excise Acts, once .the bi.d offered by a person at an auction-sale is accepted by the authority competent, a completed contract comes into existence and all that is required is the grant, of a licence to the person whose bid has been accepted. It.is settled law that.contracts made in exe:cise of statutory powers are not covered by Art. 299(1) and. once this distinction i's kept in view, it will be manifest that tlie principles laid down in K.P. Chowdhary's, Mulamchand's, Rattan Laf's and Firm Gobardhan Dass' cases are not applicable to a statutory contrah. In such' a case, the Collector aeting as the Deputy Excise & Taxation Commissione~ conducting the auction under r. 36(22) and

1 the Excis.e Commissioner exercising the functions of the financial

, Commissioner acceptillg the bid under r. 36(22A) although they undoubtedly act for and on behalf of the 'state Government for raising public revenue, they have the requsite authority to do so under the Act and the rules framed thereunder and therefore such a contract wliich comes into being on acceptance of the bid, is a statut9ry contract failing outside the purview of Art. 299(1) of the Constitution.

We are clearly of the opinion that in the case of a statutory contract like the one under the Excise Act,. the requiremf!nts of Art. 299(1) cannot be. invqked. In A. Damodaran & Aur. v. State of

Kera/a & Ors<•!., the Court interpreting s.28 of the Kerala Abkari }l Act, 1967.which was in pari materia with s.60 of the Punjab Excise Act,. 1914 he.Id th(!t even if no formal deed had been executed as required under Art.299{1), still the liability for payment of the balance of the licence amount" due could ):le enforced by taking recourse.to s.28 of the Act. The Kera\a High Court rejected the contention of the appellants by holding that the li\bility to satisfy G the dues arising out of a bid was enforceable uncler s.28 quite apart from any contractuai' liability and this view was upheld by this C, ourt on the ground that the word 'grantee' in s.28 has a wide'.connota:tion to mean a person who had been.granted the privilege by acceptance of his bid. It was further held that the stat\ltory duties and liabiJic Q

(1)

[1976) 3 S.C.R: 78Q.

ties arising on acceptance of the .bid at a public a\lction of a liq\lor contr<1ct may be enforced in accordance with the stritutory provisions

ad that it was !lot a condition precedent for the ; ccovery of an amount due under s.28 of the Act, that the amount due and recoverable shoufd be under a formally drawn up and executed contract.. This is in recognition of the principle that the provisions of Art.299(1) of the Constitution are not attracted to the grant of . such a privilege to vend liquor under the A'.ct.

In Kishori Lal Minochu's case, supra, there was reauction of a liquor vend on the highest bidder's failure to deposit one-sixth of the bid amount as security deposit and the question was whether the

Sate.waserititled to recover in a suit the deficiency on reauction.

The decision. in Minocha's case Is clearly distinguishable fqr two reasons : first, there was nothing to show that the bid had been accepted by the Excise Commissionerunder r . .359(2) of the U.P.

Excise Manual. Further, r. 357 under which the exCise authorities , put the vend to reauction -had not ben published in the official gazette as requlred by s.77 of the U.P. Excise Act, 1910 and thus had no statutory force.< No such question arises in these cases as. the liability that is sought to. be enforced against the respondents by the impugned notices of .demand is a statutory liability in terms of condition 150).ofthe conditions of auction read with r.36(23) of the Rules and the amount is recoverable from them in .'the manner laid down in s.60 of the Act.

• The short question that falls for determination in these appeals is whether the State Government was entitled to realise the difference which the respondents had agreed to .pay under the terms of auction of a liquor vend and the amount re.alized on reauction of the vend, as also the defaulted instafment o(the licence fee payabie in respect . of a liquor vend. The first of these questions arises fn Civil Appe.al

No.154(N) ofl971 while the second in Civil Appeal No.155(N) of

1971. y/e will deal with them in that order .

• CivU Appeal.No. 154.(N) of 1971

There is no substance in the contention that the respondent were not served with a notice under r.36(3) of the Rules. The date of reauctiori was fixed by the Excise & Taxation Commisaioner under r.36(2) .. On fipril 14, 1969, the Deputy Excise & Taxation Commis sioner rejected the representation made by the respondents and directed resale onhe licence for retail vend of cou11try liquor shop,

...

Mandi Dabwali for the year1969.-70 .. It is accepted before us that the D.eputy Excise & Taxation Commissioner had conveyed to the" • respondents that their representation had been rejected and that the licence for retail vend for Mandi Dabwali shop would be reauctioned . on April 23, 1969, at the Collectorate, Hissar. The respondents have withheld the document and an axlverse inference must necessarily be • drawn against them. It is quite obvious that the respondents were ; du1¥ given notice of re-auction as under r.36(3). It is evident fr9m

the return filed by the State Government that copies of circular letter dated April 15, 1969 by the.Deputy Excise & Taxation Commissioner and the notice of re-auction of even date issued by him were sent. not only to the Commissioner, Ambala but to all the Deputy Commissioners as well as to all the Ex

0 cise & Taxatiop Officers in the State but also to tbe Chief Secretaries and the Excise Commissioner of different State. From this, it is quite apparentthat wide publicity

A ) was given throughout. the State of Haryana as well as in other States

' regarding the date and place of re.auction as. enjoined by r.36(3) of the Rules. As. already stated, there were as many .as 52 bidders present at the time of re.auction. The decision in Jage Ram's case, supra is clearly distinguishable on facts. There, the Court on a consideration of the material on record found that there was no substantial compliance either in the letter or in spirit with the . requirements of r.36(3) ofte R1.1Ies. Since the re-auction in that case did not conform fo the rules,. the Court held that the defanlting ""!""f-- bidders could not be held liable to make. good the difference between the amount which was payable by them and the amount which was fetched at the re-auction. The principle laid down in Jage Ram's case, sµpra is clearly npt ttracted in 'the facts and circumstances of the prhent case. The first contention regarding the invali.dity of reauction held on April 23, 1969 based on r.36(3) of the Rules must therefore faiL

' Equally fntile is the contention that the respondents had with drawn their bid and therefore they could not.be mulcted for the difference between the amount which they were liable to pay and the amount realized 'by re-sale of the vend.

This is not a case. of the type reported in Union of India & Ors. v. M/S. Bhim Sen Wa/ait:

Ram(') which laid down. the well-settled:princip\e tftat an offer can always be withdrawn before it is finally accepted and that a conditional acceptance is not an acceptance in law.

In Bhim-Sen Wa/aiti

(1) [1970) 2 SCR $94,

B.

c •

. Ram's case, supra, the Court held that.the contract of sale was not complete till the bid was confirmed by the Chief Commissioner and till snch confirmation the person who.sc bid had been provisionally accepted was entitled to withdraw his bid and that when the bid was withdrawn before the confirmation of the Chief Commissioner, the bidder was not liable for_ damages on account of any breach of contract.or for the shortfall on the re-sale. It was observed:.

'lt is not disputed that the Chief, Cmnmissioner .has disapproved the bid offered by the respondent. If the Chief Commissioner had granted sanction"under cl.33 of Ex. D-23 the auction rnle in favour of the respondent would have been a completed transaction and he would have been liable foraliy . shortfall .on the resale.

A~ the essential. pre-requisites bf a completed sale are mifsing in this case there is no liability imposed on th~ respondent for payment of the .deficiency in the price."

It is luged on the strength of these observations that the res~ pondents were entitled to withdraw their bid by declining to make the security deposit.

The contention cannot be accepted.

For onething, this was not a case where there was .mere co.nditional acceptance of the highest bid _of the respondents by the Deputy . Excise .& Taxation Commission.er at the time of the auction on: March. 1; 1969, but their bid .was also accepted by the Excise & Taxation Cotnmissioner on March 21, 1969 as required under r.

36(22A).

The responoents could not unilaterally by their letter da\ed 'April 12, 1969 rescind the contract on the pretext that the State

Government of Punjab hud opened a new liqur shop at village Killianwali across the State border whfoh was contrary to condition No. l3(iii) f the conditions of auction read with r. 37(8B) of th~ Rules.

Even though this may have been in breach of the interstate agreement between the State Governments of Punjab and

Heryaria, the opening of such a liquor vend by the State Government of Punjab at village KHiianwalicould not justify the respondents in not maki11g the secu.rity deposit of Rs. 50,550. It appears from the roturn filed by the State Government that although conditio~ No.13(iii) had been read out. before the. auction began as required under r. 36(4), there was no mention that there was an jnter-State areement between the two State Governments nd tha\

HARYANA v. LAL CUAND (Sen, J.) 731

it was a condition of sale that the Slak Government of Punjab would not open a liquor vend within a radius of three miles from the State border. Nor would this amount to a breach f the con- .. ditions on the part of the State Government of Haryana or furnish a ground absolving the respondents of the\r liability to pay the

~ • shortfall. The second contention that the respondents had withdrawn their bid and were therefore not liable for the loss on re- . ' ,\

~ ,•

' ;...

auction or"liquor vend at Mandi Dabwali cannot be sustained.

In Har Shanller's case, supra, this Court held that the writ jurisdiction of the High Courts under Art. 226 was not i_ntended to facilitate avoidance of obligations voluntarily incurred. It was . observed that one of the important purposes of selling the exclusive right to vend liquor in wholesale or retail is to raise revenue. The licence fee was a price for acquiring such privilege.

One who makes a bid for the grant.of such privilege with full knowledge of the terms and eonditions attaching to the auction cannot be permitted tQ wriggle out of the contractual obligations arising out of the . acceptance of his bid. In dealing with the question, Chandrachud, J. said :

"The pow.ers of the Financial Commissioner to grant liquor licences by auction and !o collect licence fees. through the medium of auctions cannot by writ petitions be questioned by those who. had their venture succeeded, would have relied upon those very powers to found a legal claim. Reciprocal° rights and obligations 'arising ut of contract do not depend. for their enforceability upon whether a contracting party finds it prudent to abide by . the terms of the contract. By such a test no contract could

eve11 have a binding force." ·

To the same effect are the decisions of this Conrt in State of Hai yana & Ots. v. Jage Rame & Ors(l). and the State of Punjab

v. M/s. Dial Chand Gian Cha.nd & Co.(2} laying down that persons who offer their bids.at an auction to vend country liquor with full knowledge of the terms' and conditions attaching thereto, . cannot be permitted to wriggle out of the contractual obligations arising ouf of the_ acceptance of their bids by a petition under Art .• 226 of the Constitution.

(I) [ 1980] 3 SCR 746.

(2) [t983l 2 sec so3.

732 SlJPREM, E COlJRT REPORTS

[1984) 3 S.C.R -

Civil Appeal No. 155 (N) of 1971

At an auction for the licence of retail vend for.Butaila in the . Rohtak district for the financial year 1968-69 held by the Deputy Excise & Taxation Commissioner on March 11, 1968 at the Collectorate, Rohtak, the respondents Messrs Ram Kishan Pritiam Singh & Co. offered the highest bid of Rs. 1,40,000. The Deputy Excise & Taxation Commissioner accepted their bid at the conclusion on the auction. On the same day, the respondents deposited Rs. 5,~11 equivalent to one-twentieth of the licenc.e fee repres!'nting the security amount and started operating the said licence w.e.f. April 1 1968.

It appears that they drew their supplies by making applications to the Excise & Taxation Officer, Rohtak for the issuance of challans for deposits of still-head duty in the treasury, and after crediting into the trsury a sum equivalent to the excise duty payable on the. strength of permits issued by him.

Admittedly, the respondents worked the contraet throughour the . period without making any payment of Rs. 1,40,000 towards the'licence fee which was payable in 23 fortnightly instalments. The respondents on being served with a notice of demand for payment of Rs. 13,000 representing the first of such fortnightly instalmants filed a writ petition in the High Court and the High Court following its decision in Kanhiya Lal's ca.se, supra, struck down the notice o( demand. It is accepted at the bar that the respondents have not paid anything towards the licence fee of s. 1,40,000 due and payable by them.

Upmfthese facts, the Excise & Taxation Commissioner would have been justified in!cancelling1(the licence-in terms of r.36(23)(2) of the Rules which is' in these terms :

"A p, erson to whom a country spirit shop is sold shall pay the annual licence fee in 23 equal instalments, e.ach instalment being payable" on the 10th and 26th of each month starting.from the month of April.

In the event of G failure to pay the instalment by the due date, his licence may be cancelled."

There was a fundamental breach of an essential condition by the respondents. In a commercial contract of this nature, for the H performance of which a definite time has been fixed arid the contract specifies the mode of -payment i.e. specifies -the dates on which the instalments of the licence fee are to be paid, time is of the essence

- ·{" ..

. .

...._'

of the contract. R .36(23)(1) of the Rules specifically makes time of the essence: It therefore follows that payment to the instalments on the due dates was a condition pe-requisite to the performance of the contract, and that the failure of the respondents to make such payments relieved the State Government. of their obligations.

The Excise & Taxation Commissioner would therefore have been justified if he had cancelled the licence l!nder r. 36(23) and put the" liquor vend to reauction for the remaining period of the financial year.

Instead of taking this drastic step of fancellation of contract, the Deputy Excise & Taxation Commissioner served the respondents with the impugned notice of demand for payment of . the first fortnigtly instalment of Rs. 13,000. The respondents were bound to pay the defaulted instalment on the due date but without complying .with the notice of demand moved the High Court under Art. 226 of the Constitution challenging the demand on the ground that the licence fee partakes of ihe nature on an excise duty. As already stated, the High Court following its decision in Kanhiya Lal's case struck down the notice of demand. The result has been that the respondents enjoyed the privilege of retail vend of country liquor, Butana for the entire piod without payments of any licence fee. On merits, learned counsel appearing for the respondents had nothing to urge against the impugned notice of demand. 4

The result therefore is .that the appeals succeed and are allowed with costs throughout. The judgment and orders of the High Court dated November 11, 1969 quashing the impugned notice of demand served on the respondents are set aside and the writ petitions filed by the respondents are dismissed.

N.V.K. 4ppeals allowed.

D ..

E ,

STATE OF HARYANA & ORS

LAL CHAND & ORS

May 2, 1984

v. •

LAL CHAND & ORS:

May 2, 1984 B

. (

D.A. DESAI

A.P. SEN

V. BALAKR!Sf!NA ERADI, JJ

Constitution of India

Article 299(1)

Article 299(1)

Article 299(1)

Punjab Excise Act 1914

Section 60

Licence Rules 1956

Indian Contract Act 1872

Liquor Licence Rules

Punjab Excise Act, 1914

State Government of J'unjab

IIaryana

Punjab

Art. 299(1)

Art. 299(1)

Art. 299(1)

Art. 299(l)

[1966] 3 SCR 9

[1968] 3 SCR 214

Article 299(1)

Article 299(1)

[1976] 3 SCR 780

March 21,.1969 as

April 12, 1969

April 12, 1969 r.escind the contract on the prete'xt that the State Government of Punjab had opened a new iiquor shop across the State border.

State Government of Punjab

Har Shanker

(1980) 3 SCR 746

CIYIL APPELLATE JURISDCJTION

Harbans Singh

1.S. Gujral

C.V. Subbarao

R.N. Poddar

G.K. Arora

T.S. Munjra/

Urmila KaJ!oor

s 8

s. 60

Punjab Excise Act 1914

Punjab Liquor Ucence Rules, 1956

Lal Chand Bal Rai,.ctc

March ~I. 1969

Punjab Excise Act, 1914

Mandi Dabwali

Killlanwali

Killianwali

April 23, 1.969

Ambala

Copies of the circularletter and the notice of re-auction were sent not only to the commissioner, Ambala and all the Deputy Commissioners in the State but also to tle Chief S ecretaries and the Excise Commissioners of diffo- 1, - rent States and they were also requested "to give wide publicity in their States regarding the re-auction of the licence.

April 23, 1969

May 8, 1969

Kanhiya Lal

Kanhiya Lat

July 23, 1969

Punjab Liquor Licence Rules, 1956

Excise Act, 1914

Hinh Courts

HARYANA "LAL CllAND

Chandrachud

Punjab Liquor Licence A Rules, 1956

Art. 226

Har Shanker

[1980] 3 SCR 746

sec 503

SU~REME COURT

Madhya Pradesh High Court

Excise Act, 1915

P.V. Dixit

ss. 13

iodhya Prasad Shaw

Orissa High Court

Shree Krishna Gyanodaj"s

Orissa Excise Act, 1915

s. 22

s. 22

Art. 299

R:N. Misra

Ajo1ihya Prasad Shaw

Art. 299

Shrce Krishna

LP. Singh

s 22

Art. 29

Art. 299(1)

Art. 299(1)

Art. 299(1)

K.P. Chowdhary

[1966) 3 S.C.R. 919

Indian Forest Act, 1927

Art. 299(1)

Punjab Excise Act, 1914

State Excise Act

Art. 299(1)

Mulamchand

Rattan Laf

Firm Gobardhan Dass

Art. 299(1)

Art. 299(1)

Kishori Lal Minochu

Minocha

Excise Act, 1910

State of Haryana

Jage Ram

State

Government of Punjab

Slak Government of Punjab

Art. 226

1980] 3 SCR 746

Ram Kishan Pritiam Singh & Co.

April 1 1968

s. 1

Art. 226

Butana

November 11, 1969


, RAM SARUP

-STATE OF BARY ANA & ORS.

May3, 1984 .. [Y.V. CHANDRACHUD c;.J, D.P. MADON, AND RANGA NATH f

MISRA, JJ.J

Panchayat Samitls, and Zilla Paris'1ads Act, 1961 a.r amended by Harayna Ame1Jdment .Act of 1973 de!etiilg Section 33, Effect of-Whether af)y tzppointlizenf made after the deletion of Section 33 valid effective. rf

Section 33 of the Punjab Panchayat Samitis and Zilla Parishads Act, 1961 provided that subject to rules made by the Govetnment, a Panchayat Sariliti may employ such servants as it n1ay consider necessary for the efficienrPerfor- mancc of the dufies imposed upon it by the Act,. i; ules or bye-laws.made there- unde( o~ by any other law for the time beilig in force. The Punjab Panchayat Samitis and Zilla Parishads (Haryana Amendment Act, j973 which came into force from June, 13, 1973', introduced extenSive ar!lendments. Section 33 of the Act was deleted by Section 13 of the Amending Act, Sub section (4) of Section

14 theAmending Act, provided that persos.empJoyed by a Panchayat Samiti before April 4, 1973 and who .were in service .at the commecement of the Amending Act, "shall colninue to serve on the. same terms and conditions on which they "'ere employed by the J>anchayat Samiti" until th.ey are absorbed in the G.overnment Service or retire in sch mannei as m.cy be prescribed. Section . 35(1) of the Act empowers the State-Government to place at the disposa 1 of a

. Panchayat Samiti such of its servants as lrc required for the implementation of the schemes annexed therewith and for such other duties and .fUnCtions as may be assigned to then1 by the Panchayat Samitis from time to timee.

The appellant was appointed as a clerk on Julle I, 1963 by the Panchayat Sarniti, Loharu; He .was confirmed. in that post in course of rime. On January 21,.1974, he was promoted as a Head Clerk lQn an adhoc basis. On March, 14 -1975 a resolution was passed by the Samitl regularising the post of Head Clerk.

On April 1, 1975, the appellant'was appoioted ~:s a Head Cl.erk. Acting in pursuance of the provision of Section 14(4) of the the Amending Act, the Government of Haryana notified the absorption o_f the appellant-as 3. clerk. though hC was worki'ng as a:Head Clerk' since January 21, 1974." B:ing aggriev~ ed the appellant filed a Writ Petition and prayed for il direction to absofb him as a"Head Clerk .. The Writ Petition having been. dismised by the High Court, the appellanths filed this appeal by special leave;

Dismissing. the appeal, the _Court,

HELD: LJ. The Panchayat Samiti had no right to appoint the appellant to the post of Had Clerk on the date on Which it purported tQ dO so. As a result of the <leletion of Section 33 of the Act by the Amending Act of 1973, the

\ .

RAM Si\RUP v. HARYANA (Chandrachud, C.J.) 735

Panchayat Samiti lost its. power to make appointment to the Parichayat. It could not ther.efore have appointed the appellant as a Head Clefk, as it purported to d(}-so, in January,· 1974 on an adhoc basis or in April 1965 On a , regular basis. [737D]

, J .2. Thoughthe right to be considered. for promotion is a term and condi-

- tion of service, in the instant case, the_ appointment .of the appellant to the post

ofa Head CJerk being without the authority of law, the Government was nOt bound to absorb him in. the post of a Head Clerk; He was appointed 1awfu1Jy to the post of a clerk and that fs the pst in which the Government' has absorbed him; [737C ; El

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1433 of . c 1977

Appeal by Special leave from the Judgment and Order. datd the !6th.February, 1977. of the Punj1b and Haryana High Court in

Civil Writ Petition No. 752 of 1977.

J.D. Jain & Mrs. Kawa/jit Kocher for the Appellant.

Harban.; Lai, l.S. Goel & R.N. Poddar for the Respondent.

• The Judgment of the Court was delivered by

CHANDRACl!UD, CJ. Section 33 of the Punjab Panchayat Samitis and Zilla Parishads Act, 1961 ("The Act")" provided in so far as relevant, that subject to rules made by the Government, a Pai:J.chayat Samiti may employ such servants as it may consider ne.cessary for the efficient performance of the duties imposed upon it by the Act, rules or bye-laws made thereunder or by any other law for the time being in force.

In p, ursuance of this power, the appellant was appointed as a clerk on June 1, 1963 by the Panchayat Samiti, Loharu, which is respondent 3 in this appeal.

He was confirmed in that po.st in course of time. On J'anuary 21, 1974 he was promo.ted as a Head Clerk on an ad lzc basis. On March 14, 1975 a resolution was passed by .respondent 3 regularising the post of Head Clerk . . On April 1; 1975, the appellant was appointed as a Head Clerk.

The Punjab Panchayat SamitisJ Zilla Parishads (Haryana Amendment) Act, 1973 introduced extensive.amendments in the Act of 1961. Section 13 of the Amending Act deleted section 33 of the Act. , A plain consequence of this deletion was that the Panchayat Samitis were divested of their power to make allPointments to the Panchayats. The Amending Act re1ieived the assent of the Governor

736 '.'lll'RJMB COURT REPORTS l\9S4J 3 S.C.ll

on April 25, 1973 and was published in the Haryana Gazette on June 13, 1973:

Sections 35(1) of the Act empowers tbe State Govrnment to place at the disposal of a Panchayat Samiti such of its servants as are required for the implementation of the schemes connected therewith and for such other duties and fuµctions as may be assigned to them by the Panchayat Samiti from time to time. Section 35(3) which dealt with the conditions . of. service of the Government servants allotted to the Panchayai Sam.tis, was amended by section · 14 of the Amending AC! of 1973. Sub-section (4) of section 14 of the Amending Act provides that persons employed by a Panchayat

Samiti before April 1, 1973 and who were in s.ervice at the commencement of the Amending Act, "shall continue to service on the same terms and conditions on which they were employed by the Panchayat Saroiti", until they are absorbedin the Government service or retire in such manner as may be pres?ribed.

• 'Acting in pursuance of the provision of section 14(4) of the Amending Act, the Government of Haryana notified the absorption of the apellant as a clerk though, as stated earlier. he . wa.s working as a Head Clerk in the Loharu Panchayat Samiti. Being aggrieved by his absorption on a lower post, he filed a writ petition in the High Cput of Punjab and Haryana, asking that he .should be absorbed as a Head Clerk. The writ ptition having been dismissed by th~ High Court, the appellant has filed. this appeal' by special leave. ...

The appellant was appointed as a clerk by the Loharu Panchayat Samiti in 1963, long before the .. Amending Act came into for<; e on June 13, 1973.

He was, therefore, entitled to be absorbed in Government service as a clerk in any event. But, as a result of the deletion of section 33 of the Act by the Amending Act of 1973, the Panchayat Samiti lost its power to make appointments to the Panchayat. The fact that th, e appellant was promoted as a Head Clerk of\ an ad hoc basis in January 1974, or the further fact.that he was appointed as a Head Clerk on April l; 1975, cannot improve his position for the simple reason that these appointments we.e made after June 13, 1973, being the date on which the Panchayat

Samiti lost its power to make appointments to the Panchayat.

' ' .

• • .,

;.. . . !-

. ,./

RAM SARUP v. HARYANA (Chandrachud, CJ.) 131

It is urged by Shri Jain who appears on behalf of the appellant that by reason of section 14(4) of the Amending Act, the appellant was entitled to continue in the service of the Panchayat on the same terms and conditions on which he was employed by the Panchayat Samiti until he was absorbed in Government service. Since the appellant, according to the terms and conditions of his service with the Panchayat, was entitled to be considered for promotion to the post of a Head Clerk, his appointment s a Head Clerk prior to his

absorption in Government service had to be recognised and protec- ted, despite the fact that such appointment was made after June 13, 1973 when the Amending Act came into force. There is no substance in this contenion. Even assuming for the purposes of argument that the right to be considered for promotion is a term and condition of service, what is relevant for . our purpose is not whether the appellant was entitled to be considered for promotion but, whef(el' the Panchayat. Samiti had the right to appoint him t6 the post of Head Clerk on the date on which it purported to do so. Clearly, it had forfeited that right on June 13, 1973.

It could not, therefore, have appointed the appellant as a Head Clerk, as it pnrported te> do, in January 1974 on an ad hoc basis or in April 1675 on a regular basis. .The. appointment of the appellant to the post of a Head Clerk being without the authority of law, the Government was not bound to absorb. him in the post of a Head Clerk. He was appointed lawfully to the post of a Clerk and that is the post in which the Government has absorbed him.

For these reasons, the appeal fails and is dismissed. There will be "no order as to costs.

S.R Appeal dismisseJ.

RAM SARUP

STATE OF BARY ANA & ORS

Y.V. CHANDRACHUD

D.P. MADON

MISRA, JJ

Section 33

Section 33

Section 33

Haryana Amendment Act

Section 33

Section 13

Section

14

April 4, 1973

January 21,.1974,

April 1, 1975

Section 14(4)

Government of Haryana

Section 33

J.D. Jain

Kawa/jit Kocher

S. Goel

R.N. Poddar

CHANDRACl!UD

Section 33

Loharu

J'anuary 21, 1974

March 14, 1975

April 1; 1975

Section 13

section 33

June 13, 1973

Sections 35(1)

Section 35(3)

section 14

section 14(4)

High Cput of Punjab and Haryana

section 33

Jain

section 14(4)

Samiti


'. >n

; ' .

_.--.

F.',

. ' ...

STATE.OFU:P.·

.v.

sURESH CHANDRA s.RIVASTAVA & ORS.·

. . . . .

May 3, 1984 .

[S. MURTAZA FA.zAL Au, A VARA~AAA1AN AND .

· ·· · RAN~A~Arn MISR~, JJ, J

. ; ' . . -- ' ,, Code of Criminal Procedurec...s, 195(/)(b)(ii°r-Scope of.,. . - . . .

The respondCntS.in the 3pp:al and the petitiones in" th~ special lave . petitions were the same persoris arid ere erDvioyees o( : the.- AJlab-abaci_ High

'CoUrt .. The:Y W(re found to. have femoved some. used court fee stamps from.

ol_d files and [e-usd them in new cases:· e Reiistrar_ with, th_e perinission of, . tbe.Chfof Justice of"the High Court reported~., tlie matter: to ·.the .PoliCe~ . The

.. Pofic.e after investigai.iofi subinitteci before the1rial Co~Ct three chargesheets for

offnCes undei ss. 262. 263,. 467--471 and 120B, I.P.C. - In an application tiledby the resPondent for quashini-th~ PrOceedings, the High Cotirt. held that so far as the offences undcrsS:-467. 471 and 120B,. f.P.C. werC:concerned as they .fell

wtbin the 3mbii o(secti_gn_ 195(J)(b)(ii)- Of the Criminal Procedure rio cogni-

- zance could be en by thejriatcoU:rt without a complaint being filed, b"ut for

Othet offences the_ pro'ceeding~ Would continue. Hence these' cross appeitS and $pecial _Jeavc:: ptititofls. " . '

-:riisisSing the appe.als and the petitionS, ..

. . - .

HELD : The 1:aw .iS: ri0w wen 'settledthat Whe-re. an accused commits som~ Offences _which are: separate and distiflct frOm those contained_ in s.195 of the Code of Criminal Procedure, s.195 .will affect.Only the offece; meritiOned there- . in unJesS: such offences form an intgral part scr aS-to amount to offl!nces committed _'as a part .Of the Sarrie transaction,_ in which case the other offences also. __ would fall within the ambit of s. !95:orthe Code. [741 Di .· ...

Il"the isiaiit case: On .the factsnarrated by the Registrar in his cOmPiaint no _offen-ce unciCr ss. 467, 471 and l20B, I.P.C. is at.all revealed. At the most" the .· offe.nces against the accused would fall withiri. the ambit or sections 262, 263,' 380

-.'-" -

.. I

·~

and 4iO, I.P.C; which do not require a compJ.ifnf under s. 195 of the Code of \i....

Criminal Prcicedurl!. .. As uch it._ is-ncit necessary -'to go iD.tO the qllesdon as 'to what offences are connected with ss~ 467.-471 and_ ·-120B and hkh are Severable-· -· .· from them .. The lligh Court waS fullY justifi.C_d. in quashirig the proCeediu&s • agaui"st theaccµsed as far as. offe_D.ces under Ss-:' 467~-471 and 120B. I.P.C. were

conrnd, not because they Were covered_ bys.~ 195. of .the. Code but because ciUegatiOns contained in. thC complaint_ did not . contstitUte these offences.• The

_ lJ-igh Couti was_ further rutlr jtistified in dirCcting that other oences men\ioned above did flat require a __ c_omplaintunder s.195.and _would veto be.tried. .., . \ ·. . . ' .

[741E-G[ , ..

. •' ":. -~ -

tJ.P, STATE v. s.c. SRIVASTAVA (Fazal Ali, J.) 739

CRIMINAL APPELLATE JURSDICTION : Criminal Appeal Nos. 461-466 of 1980 • From the Judgment & Order dated 9.11.78 High Court in Criminal Misc. Application Nos. 1691 and 1698 of 1979.

. AND

' of the Allahaba<l 1655, 1656, 1657,

Special Leave Petition Nos. 903-908 of 1984

. Da!veer Bhandari & H.M. Singh for the appellant.

P. Govindan Nair and Pramod Swarup for the respondent-.

Pramod Swarup for the petitioner in SLP Nos. 903-908 of 1984.

The Judgment of the Court was deliveed by

FAZAL ALI, J. These appeals by pecial leave 'arise out of a judgment dated January 9, 1979 of the Allahabad High Court refus.ing to quas\l<lhe proceedings in toto which were pending before ·

the Chief J1,1dicial Magistrate, Allahabad, in exercise of ihe powers under s. 482 of the Code of Criminal Procedure, 1973 {hereinafter to be referred to" as the 'Code'). The High Court, howevet, quashed the proceedings only in respect of offences under ss. 467, 471 and 120B of the Indian Peria! Code and directed prosecution .of the respondents in respect of other offences to proceed according to law.

In order to understand the implication of the judgment of the High.

Court, it may be necessary to narrate a few facts.

It appears that some time in the year 1967 S.hankar Lal Bhargava, who was officiating as Stamp Reporter in the Registry of the Allahabad High Court, with the aid of Suresh Chandra Srivastava and Bishan Swarup, who were clerks of Advocates, removed used stamps and out of them reused three court-fee stamps

of the value of Rs. JOO each. in First Civil Appea\Nos. 281/67, 282/67 and L.57/67.

When the niatter was detected; an enquiry was ordered and the Judidal Department of the High Court reported to the Registrar that court-fee stamps of the value of Rs. 23,007.50 p. (9n 15 sheets) were missing from the judicial file of First Appeal No. 186 of 1960. The enquiry further revealed that in several other cases also court-fee stamps had been taken out from the original files and reused in new cases. The Registrar of the High Court suspected that a ell-organised gang of racketeers was opeting in ihe High Court to defral!d the Government by urreptitiously

I •

SUPREME COURT REPORTS [1984] 3 s.c.R.

. ' "'mciving the used stamps from the judicial files and re-using them in new cases.

Th~ Registrar, with the permission o( the Chief Justice of the High Court, reported .. the matter to'the Inspector General of Police, l~, P., who ordered the Criminal Investigation Department of U.P. to investigate into the matter and ultimately three charge-s.heets Were submitted for offences under ss. 262, ;263, 467, 471, 420 and l'fOB of the Indian Penal Code.

The responde*ts filed an application before the High Court contending that as Offences under ss. 467, 471 and t20B, I.P.C. fell within the purview pf s. 194 of the Code, no prosecution could be launched without the procedure, laid down ins. 195, followed.

It is common ground hat no complaint as requ.ired by the mandatory proyisions of s. 195 of the Code having been made, the proceedings . . could not be proceded. The High Court held that so far as the offence under ss. 4p7, 47land 120B, l.P.C. were concerned as they fell within the ambit of s. 165((\)b)(ii) of the Code, no co11nizance could be taken by 1the Magistrate without a complaint being filed.

The relevant portfon of s. 195(1J(b) inay be extracted thus :

"195.(1)

1No Court shall take cognizance- . xx I xx xx

(b)(ii) tjf any offence described in section 463, or punishable uder section 471, section ~475 or section 476, of the said I Code, when such offence is alleged to have been committed in respect of a document produced or given in evidence i~ a proceeding in any court, or

(iii) of Jny criminal conspiracy to commit, or attempt to commit, r the ahtment of, any offence specified.in subclause (i) or sub-clause (ii), . ·

except on th¢ complaint in writing of that Court, or of some other Court Ito Which that Court is subordinate."

On the fac)s mentioned above, it is clear to us that in the complaint sent byl the Registrar to the Inspector General of Police, offences mentiond were offences under ss. 262, 263,_ 467, 380, 420, and 4 71 but frbm a perusal of. the recitals in the original Memorandum which formed the basis of the complaint it seems to ns that the only offences which have made ont would be offences undet ss. 262, 26~, 380 and 420 which are obviously not covered, by ... s, 195 of the Cod'e.

' . ' l.

J, ..

\J.P. STATB v. S.C. SRIVAS1AVA (Faza/ A/i, J.) 141

The High Court held that the offences under ss. 467, 471 and 120B, I.P.C. even if made out could not be taken cognizance of by the trial CO)lrt with.out a complaint under s. 195 of the Code.

A perusal of the facts shows that there is .not even a hint regarding forging any document or using a forged document.

Taking the complaint at its face \alue, at the most the cases against the accused would fall within the ambit of ss. 262, 263, 380 and 420, I.P.C; which.do not require a complaint under s. 195. The fact that some persons aided and abetted the detaching Of the used stamps from the old Jiles and re-using them in the other cases does not involve

any process of forgery or use of a. forged document.

In these circumstances, therefore, it is not necessary for. us to go into the broader question as to whether if offences under ss. 467, 471 and UOB, I.P.C. are committed, 1he complaint could proceed or not. The law is now well settled that where .an accused commits some offences which are separate and distinct from lhose contained in s. 195, and section 195 will affect only the offences mentioned therein unless such offences form an integral part so as to amount to oifellces committed as a part of the same !ransaction, i~ which case the other offences also would fall within the ambit of s. 195 of the Code.

In the instant case", a(already pointed out by us, on the facts narrated by the Registrar in his complaint no offence under ss. 467, 471 and 120B, l.P.C. is at all revealed and as such it is not necessary to -go into the question as to what offences are connected with ss. 467, 471 and l 20B and which are severable from them." The High Court was fully justified In quashing the proceedings against the accused as.far as offences under ss.,467, 471 and 120B, I.P.C. were concerned, not because they were covered by s. ]f)5 of the Code but "because allegations contained in the complaint did not constitute these. offences. The High Court was further fully justified in directing. that other offences mentioned above did not require a . complaint under s. 195 and wou.ld have to be tried.

rn the view , that we . take it is not. necessary for us to decide the broader question of law posed by the High Court, i.e., whether

or not offences under ss. 467, 471 and 120B, I.P.C. along with other H offences, were covered bys. 195 of the Code . •

B ,

 SVPREME COURT REPORTS

I (1984] 3 s. fl R.

We, therefore, affirm the judgment of the. High Court and dismiss theappeals and the special leave petitions and direct that

I . . cases under sections 262, 263, 380/34 and 420/34, Indian Penal Code be tried without aily complaint under section 195 of the Code.

H.S.K.

Appeals & Petitions dismissed;·

' • I

. ' ...

STATE.OFU:P

sURESH CHANDRA s.RIVASTAVA & ORS

ss. 262

I.P.C

Code of Criminal Procedure

ss. 467, 471

I.P.C

sections 262, 263

I.P.C

s. 195

I.P.C

Da!veer Bhandari

H.M. Singh

P. Govindan Nair

Pramod Swarup

FAZAL ALI

s. 482

Code of Criminal Procedure, 1973

ss. 467, 471 and 120B

S.hankar Lal Bhargava

Suresh Chandra Srivastava

Bishan Swarup

ss. 262

OB of the Indian Penal Code

ss. 467, 471

I.P.C

s. 194

s. 195

ss. 4

s. 165((\)

s. 195(1J(b)

section 463

section 471

section 476

ss. 262, 263

ss. 262, 26

ss. 467, 471 and 120B

I.P.C

s. 195

ss. 262, 263, 380 and 420

I.P.C

s. 195

ss. 467, 471

I.P.C

s. 195

section 195

s. 195

ss. 467, 471 and 120B

ss. 467, 471

I.P.C

s. 195

ss. 467, 471 and 120B

I.P.C

sections 262, 263, 380

Indian Penal Code

section 195


74~

DULAREY LODH

THE. IIIRD ADDL. DISTRICT JUDGE, KANPUR & ORS.

May 3, 1984

[S. MURTAZA fAZAL, ALI AND A VARADARAJAN, JJ,]

U.P. Urban Buildings (Regulation of Letting1 Rent a1.d Eviction\ Act 1972, Section 9 & U.P. Urban Build:ngs (Regulation of Letting. Rent and Evict.ion) (Amendinent) Act )9'76- Decree of ev;.: ti on passed' again!d tenant under 1972 Act-Executing court holding decree fne-xecutable-'1976 Amendn1ent Act making ; ection 9 of 19]2 Act applici!blie with retrospective ef!ett--Decree of .. eviction whethef :revived and becorning operative and executable-Doctrine of

eclipse-Appllcability of:

Interpretation of Statutes-Doctrine, of e'cliPse-Appllcability. of-When D arises .

• The respondent 1and1ord filed a suit for ejectment in the year 1971 and obtained a decree for ejectment agatnst the appellant-tenant. By virtue of the provisions Qf the U.P. Urban Buiidings (Regulation of Letting, Rent

and Eviction} Act, 1972; the cuse waS transferred to the court of -the Judge, Small Causes, who tried the case and passed a decree in ravour of the respondent. No appeal or revision was fil_cd agaii1st tbe saidjudgment.

Thereafter, the.decree-holders filed an execiition petition. The apPeJJant, raised a jurisdictional objection, on the basis of tlie judgmeDt of th"e AJJaha~ bad High Court,.(K.K. Saksena v. S.N. Misra 1975ALR 360) to the effect

that the_ transfer of :the suit. before conferment Of the jurisdiction to the Judge, Small Causes Cort was.not coinpeteat and therefore, the decree \vas not executable. The respondent's counsel contended that the suit would have to be tried all over ag<i.in and the Court held that t-he decree was without jurisdiction. The decree remained inexecutable, but bY vjrtue of the U.P.

Urban Buildings (Regulation of Letting, Rent and Eviction) (Amendment) Act, 1976 _s. 9 of the 1.972 Act was made applicable with reirospctive

effect to remove 'he.injustice and remedy the mischief which had been caused to the decree-holders. As a reu't -of the amendment, the aforfsaid judgment of the Allahabad High Court stood .over ruled and effaced .

.Jn view of the aforesaid amendment, the respondents filed an application before the EXecuting Court for revival of the suit and the decree, which was acceptd bYihe Court, and a Civil Revision ij.Jed against t_be siiid Order

was dismissed by the Hish Court, ,

,744

SUPREME COURT. REPORTS [1984] 3 s.c.R.

A Jn the appcii.l lo this Coi.irt, it was contended on behalf of the

appellant, that in icw of the Al!ahabad High Court decision and the r97 2 Act, the decree st9od set aside and could not be revived or made executable .even by the 1976 Aendment Act. ·

Dismissing the appeal,

i ' HELD : I. iThe courts below Juve rightly decided that after the 1976 Amen.drnetit Act tfe decree became legally executable. [747A]

2. By virh~ of the l 97 2 Act the decree could not have been set aside or invaHdafed and the only conequcnce wh.ich would ensue is that the decree wo'11d Pe lying dormant and could not be ext!:utd. OnCe the bar C placed by the 19V Aet is removed, by virtue of the doctrine of eclipse th<>

decree will revive. and become at once operative and executable,

[7SOH; 75 IA]

3. 'Even i1 the 1972 Act were to apply, the utmost" consequence would be that th~ decree would remain inexecutable but could not bo struck off from the reco.Tds of the case. This is a clear case Where the doctrine of eclipse would ap1)ly, and {n view of the 1976 Amendment Act, the decree D will revive and ecome ·-executable. This principl~ has been applied by this Court. in severaf cases and 11.ows from the well-known doctrine of eclipse.

which bas been rnunciated not only ip. India but in other countries also.

. · .

(7470-H)

I . Bhikajl t\{arain Dhakrai & Ors. v. Stats of Madhya Pradesh & Anr; [1955] 2 SCR S89, Deep Chandv' SrQte ofU.P. &Ors; (1959] 2 Supp. SCR E s, Mahendra Lal.laini v. The State of Urtar Pradesh & Ors; [1963] I Supp.

SCR 912, S .A.balag; P v.n. Dcvarajan; [198"4] 2 SCC 91, Kai/ash Sankar v.

Smt. Maya Dev(; (1984] 2 SCC 91, referred to ..

C1v1L ~~PELLATE Ju1so1cnoN : CiviJ Appeal No. 1574 of'l980.

Appeal lby Special leave from the, Judgment and Orcler dated' F tlie27.719791ofthe Allahabad High Conrt i.n C.M.W .. No. Nil of 19.79.

Anil DJv Singh, S.L. Aneja and KL. Taneja for the Appellant.

M.C. 'ftanchanda, Mrs. S, hobha Dikshit and Pramod Swarup G for the Resiiondent. ·. .

The J1ldgment of the Court was deliver< d by

I FAZAJr ALI, .J. This appeal by special leave against a judgment of the Allahabad High Court. unfolds a te!Ha\e plight of an unfortunate litignt who, after obtaining a deeree for ejectment, was driven H .from pi1lar

1to post to get the said decree executed .. Hisattempts to get the sai4 decree executed were stalled sometimes by objections

fl\ed by thi; tenant-appellant and, sometimes by amendments. made

. ,\

' .

DULAREY LODH v. DISTT. JU8GE (Fazal Ali, J.) 745

in the law with the resµlt that even after 13 years .of litigation the A landlord respondent was not able to get possession of the premises.

This was because of a statutory amendment which made the dcree

obtained by him inexec\itable and was, therefore, lying dormant and ineffective. ·

.The .legislature having realised the hardship of such landlords came to their rescue by an amendment in 1976• to the UP. Urban

Buildings (Regulation of Letting, Rent and Evition) Act. 1972 (for short, to be referred to as the •19;2 Act') which was expressly given retrospective operation so as to revive the decrees which had become inexecutable.

•When the appeal was heard .and the arguments were ccincluc)ed the respondents had made a good gesture in agreeing to. allow the tenant two years' time to vacate the premises on giving the usual undertaking and accordingly we adjourned the case to en.able the parties to coine to a settlement. However, we were informed by counsel for the parties that no settlemt could be reached; hence we have now to decide the case on merits.

And now to the facts of the case. The respondent.landlord filed a suit for ejectment in the year 1971 and obtained a de.cree for ejectment against the appellant-tenant. By virtue of the provisions of 1972 Act; the ca§e was transferred to the court of the Judge, Small Causes, who tried the case and passed a decree in favour of the respondent on 4;4.1973. It may be noted that the tenant did not object to the jurisdiction no• did he prefer and appeal or revision against the said judgment dated 4.4. 73 and the same became' final.

Thereafter, the decree"holders filed an execution petition beiqg Execution Case No. 4 of 1973. The appellant, however, raised a jurisdictional obje?tion qn the basis of a judgment of the Allahabad

High Court reported in 1975 (l.L R. 360 that the transfer of a suit before conferment of jurisdiction to the Judge, Small Causes. Court was not competent and, therefore, the decree was not execuiable.

Counsel for the respondents unger some misconception conceded that the suit would have to be fried all over 'again and the Execution Case was, therefore, disposed of by an Order dated 3!.l.1976 passed by the Executing Court. The Court held that the decree was without 'jurisdiction. The respondents, however, took the stand that a concession on a point of law was not. binding on him .nor was his Advocate authorised to make such a concession. However, the decre~

' SUPREM!l COURT RflPORTS [i984) 3 S.C R.

remained inexecutal1Ie but by virtue of the U.p. Urban Buildings (Regulat10n of Lettmg, Rent and Eviction) (Amendment\ Act 1976 (hereinafter referred to as th; '197(, Ame:idment Act'), ; ectio~ 9 of the 1972 Act was made applicable with retrospective effect to remove the injustice and remedy the mischief which had been caused to the dec.ree-holders. The relevant portion of the said amendment may be extracted thus : •

u26. Transftory Provision

xx xx xx

(6) The prov1s10n of section 9 of the Uttar Pradesh Civil Laws Amcndmeni Act, 1972 shall apply ahd shall be deemed always to hwe applied in relation to suits of the nature rferred to therein which before the commencement of tht Act had been transferred to a competent court and were pending immediately before the date of commencement of that Act_in such tnn.cree court as they apply in relation to .suits which were pending in the court in which they were instituted:'

Provided that any such suit decided by the transferee court between the commencement of the said Act and the commencement of this Act on the assumption that the said Section 9 did not apply to such suits shall be deemed to have been validly decided as if the mid section did not apply to such suits."

As a result of the nmendment extracted above, the judgment of the Allahabad High Court reported in 1975 A.L.R. 360 stood overruled and effaced. ·

In view of this amq1dment, the respondents file.d an applica- G tion before the Executing Court for revival of the suit and the decree which was accepted by the court and a civil revision filed against the said Order was dismissed by the Jigh Court; hence this appeal by special leave in this Cour.t.

H In order to understand the implication of the 1976 Amendment Act, it may be necessary to peruse s. 26(5) of the said Amendment, which is extracted thus

.. ' ( ~·

DULAREYLODH v. 01s1r JUDGE (Fnzal Ali, J.)'

 "(5) Notwithstanding any judgment; d'ccree or order of any court or authority, the provisions of Rule 16 of the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Rules, 1972 shall be deemed to have been made under the pcovisions of the principal Act as amend,, d by. this Act as if this Act were in force on all material dates."

A close analysis of the above reveals that the inteniion of the legislature was to remove the injustice done to the landlords whose decrees b.ecame inexecutable. The logical consequence which flows

from an interpretation of clauses (5) and (6) of s. 26 of the 1976 C . Amendment Act would be that all decrees which hitherto had been lying dormant would revive an.cl the landlord could get the decree executed.

The Executing Court as also \he High Court upheld the conten- D tion of the respondents and directed execution of the decree.

The sheet-anchor of the arguments of the counsel for the appellant was that in view of the Allahabad High. Court decision .

(supra) and tho 1972 Act, the decree stood set aide and could not be revived or made executable ven by the 1976 Amendment Act.

It is; however, impossible for us to acc; pt this contention, because the dominant i; iurpose of the 1976 Amendment. Act was to remedy the injustice done to the landfords (Jy the 1972 Act.

Another flaw in the argument of the counsel for the appellant is that it presumes tht the decree became completely without jurisdiction and stood set aside. That, however, could not be the position in Jaw. Even if the 1972 Act were to apply, the utmost

consquence would be that the decree would remain inexecutable but could not be .struck off from the records of the case. This is a clear case where the doctrine of eclipse. would apply and in view of the

1976. Amendment Act, the decree will rvive and become executable.

Tliis principle has been applied by this Court in sever~! cases and

flows from the well known doctrine of eclipse which has been enunciated not only in India but in other countries also. In Sutherland Statutory Construction by Horack (Vol. I, 3rd Edn.), the following pasages may be noted :

"In a majority of the jurisdictions the courts r~.cosnise

• •

SUPRD,!E COURT REPORTS

(1984) 3 S.C.R. '

the mistake of the legislature and try to determine and give effect to its intent. If the legislature .has expressed its purpose intelligibly in the amendatory act and provided fully upon the subject considered, a majority of courts hold that it is a reasonable conclusion that the legislature did not intend to make the enforcement of the statute contingent on the continued existence of the repealed -statute ... (p. 329)

1'he unconstitutional act physically exists in the ofticial statutes of the state and is there available for reference, and as it is only unenforceable, the purported amendment is given effect. If the law as amended is constitutional, it will be enforced." (p. 335)

It is true that the American Constitution as also the American coum have been most reluctant to apply the doctrine of eclipse but this Court has pointed out in more than one case that the American view cannot be applied to our Constitution. The matter first came up. for consideration before this Court in Bhikaji. Narain Dhakras &.

Ors. v. Stqte of Madhya Pradesh & Anr.C') where in a similar situation the doctrine of eclipse was fully applied and the court observed thus:

• "The true position is that the impugned Tu.w became, as it were, eclipsed, for the time being, by the (undamental right. The effect of the Constitution (First Amendment) Act, 1951 )Vas to remove the shadow and to make the impugned Act free froI\l a!l blemish or infirmity ...... Such laws were not dead for all purposes .. They existed for the purposes of pre-Constitution rights and liabilities and they remained operative, even after the Constitution, as against non-citizens ...... Jn our judgment, after the amendment, of

clause (6) of Article 19 on the I8ih June 1951, the impugned Act ceased to be unconstitutional and. became revivified and enforceable against citizens as well as against non-citizens ...

But after the amendment of clause (6) the impugned Act immediatei'y became fully operative even as against the citizens." ·

In Deep Chand"' State of U.P. & Ors.(') simi!ai:, observations

' ' t

• •

PULAREY LODH v. PISTT iUDGE (Fazal Ali, J.) .

were made by this Court which may be extracted! hus :

"As, however, our learned Brother has thought fit to embark upon a discussion of these questions, we desire to guard ourselves against being understood as accepting or acquiescing in the conclusion that the doctrine of eclipse cannot apply to any post-Constitution Jaw. A post-Constitution law may infrlnge either a fundamental right .conferred on citizens onJyor a fundamental right conferred on any person, citizen or non-citizen. In the first case the law will not stand in tlie way of the exercise by the citizens of that fundamental right and, . therefore, will not have any operation on the rights of the citizens, but it will be quite effective as regards non-citiiens. Jn such a case, the fundamental right will, qua the citizens,- throw a shadow on the law which will evertheless be on the Statute Book as a valid law binding on non citizens and if the shadow is removed. by a constitutional amendment, the law will immediately be applicable even to the citizens w'thout being re-enacted ......

In other words, \he doctrine of eclipse as explained by this Court. in Bhikaji Narain Dhakras v .. The State of Madhya Pradesh [1955 (2) SCR 589] also applies to a post-Constitution law o.f this kind .... ;. · ·

A pre-Constitution law, stating in the words of Pas, J., as he theri was, exists notwithstanding that it doe.s not exist v; ith respect to the future exercise of the fundamental rights. 'Jhat principle has been extended in this decision, by invoking the doctrine of eclipse. A" ihe law existed on the statute book to support pre-Constitution acts, the Court held that the said law was eclipsed.for the time being by one or other of the fundiimental rights and when the shadow was _removed by the amendment of the Constitfltion, the impugned Act became free from ll blemish or infitmity." ·• (Emphasis ours)

In Mahendra Lal Jaini v. The State.of Uttai' Pradesh &.Ors.(1l G this Court held as follows :

"The preConstitutionJaws which were perfectly valid when thy were passed and the existence of.which is recognised. in the opening words. of Art. 13(1) revive by the removal of the inconsistency in question. This in effect is

SUPRBMB COURT REPORTS

(1984] 3 S.C.R.

the , doctrine nf eclipse, which, if we may say so with respect, was applied in Bhikdji Narain's case.;.... . .. • .

So far as pre-Constitution laws' are concerned, the amendment of the Constitution which removes the inconsiste:ticy will result in the revival of such laws by virtue of . the doctrinepf eclipse, as laid down in Bhikaji Narain' s case, for .the pre-existing laws Were not still-born nd would still exist though eclipsed on account of the . inconsistency to govern pre-existing matters." (Emphasis supplied)

' , In two recent decisions, this Court has applied the doctrie of eclipse .in similar situations. In S. Anhalagan v. B. Devarajan(1) the following observations were made :

"Unless.the practice of the caste makes it necessary no expiatory rites need be performed and: ordinarily, he regains his cate unless the community does not accept him ...... The practiae of castr however irrational it may appear to our reason and however repugnant it may appear to our moral and social sense, is so deep-rooted in the Indian people that.its mark does not seem to disappear on conversion to a different religion,, If it disappears, it dis-. appears only to reappear on reconversion." (Emphasis ours)

Similarly, in the case of Kai/ash 'Sankar v. Smt. Maya Devi,(1) to which one of us (Fazal Ali, J.)was a party, this Court made the following observation:

"In our opinion, when a person is converted to Chris: tia'nity or some other religion the original caste remains under eclipse and as soon as during his/her life-time the . person is reconverted to the o, riginal religion the eclipse .

. disappears and the caste automatically revives."

Thus, applyipg the rule of law . laid down by this Court, \hero would . be no difficulty in upholding the judgments of the courts below in this particular appeal. By virtue f the 1972 Act, the decree could norhave been set aside or invalidated and the only consequence whfoh would ensue is that the decree would belying dormant and could not be executed. Once the bar placed. by th~ 1972 Act is ·

(t l [1984] 2 sec 91.

\2l] {1984) 2~SCC 91.

j._

\.: .

' '.

.. )

biJiAR.EY LODH v. 01.sn JUDGE (Fazal Ail, J.) . 151

removed, by virtue of the doctrine of eclipse the decree will revive '' and become at one' operative an<l executable. The courts below

have rightly decided th1t after the 1976 Amendment Act the decree became legally executable. .

Some other arguments were also advanced on behalf of the appellant but in view of the expresE language of the 1976 Amendment Act and the doctrine of eclipse, they seem tobe futile.

For the reasons given aboue, we uphold the decree for eject- • men! passed by the courts below aginst.the appf!llant and dismiss the appeal with costs. As the litigation has taken more than a decade; it is hot possible for us to giv~ any time to the tenant for vaqating the premises and the decrre may now be executed forthwitla and the landlord put into possession.

NV •• K.

Appeal dismissed .

. ,

DULAREY LODH

THE IIIRD ADDL. DISTRICT JUDGE, KANPUR & ORS

ALI

A VARADARAJAN, JJ

Section 9

Anil DJv Singh

S.L. Aneja

KL. Taneja

M.C. 'ftanchanda

S,

hobha Dikshit

Pramod Swarup G

I FAZAJr ALI

Allahabad

section 9

Section 9

Allahabad High Court

s. 26(5)

s. 26

Allahabad High. Court

India

Article 19

State of U.P.

Pas

Art. 13(1)

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(1984] 3 S.C.R.

Bhikdji Narain

Bhikaji Narain

Fazal Ali

sec 91