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267 A

HINDUSTAN AERONAUTICS LTD ..

v. '

THE STATE OF ORISSA

December 16, 1983

(V.I). TULZAPURKAR; R.S.

)'ATHAK. AND SABYASACHI MUKHARJI, JJ.]

Central S11les Tax ACt, 1956 rebd with the Central Sales .Tax (OisSo) Rules, -1957-Sales tax levfab/e on transactiOii of sale .and not of works contraci-; Whether a transaction is contract for sale or Contract for works deflends_ upon main object of the partieS in the circrtmstancCs of (he transactiOn and. 110 fixed .rule is.OP_Plic'ale.

After.the Government of.u.S.S.R .. under an agteenient, granti4 a licence to the Government'bf India -for manufaCturing and esserilbling of aircrafts, both the Governments signed a proto001 in the mii.tter of mii'nufacturing of MIG aircrafts . in_ India. The Government, of India in their tum entrusted. the mnufacture of ihci said aircrafts to the appellant, M/s Hindi.istan Aeroriautics Ltd., (H.A.L. for short) .. The GoVernmeilt of India 1infonned H.A.L. that the niaterialS imported by H.A.L. for 'this purpose arid other f:quipri1e:i1t etc .. w.ere the property of Government of India: .. Fof the imPlemen41t.on of. the entnlstment H.~.L .. had. _three diViSions namely, Koraput .(in the State of Otissa), Nasik (in the State of Maharsh tra) and Hyderabad (in the State of Andhra Prad.csh). ·,; The H.A.L. manufactured MIG aircraft engi!tes at Koraput.(Orissa) and se"nt-SOme of thm to its Nasik Division for being. fitted to the MIG aircrafts to be supplied Jo the Govcmnl.ent of India and some to the IndianAi~ For~ direGtly as pf:r instructions from, tht Ministry of Defence. The H.A.L. :ceceived payments from Governmeilt .of India or Indian Air Force for the manufacturing programme:. Jn respect" of payments so received, -th6 Sales Tax Officer, Kora put I Circleof the State of OriSsa levied. ccfitral .sales tax on the ground that the lransactions were inter-State sales. The Assistant Commissioner of Sales. Tax while confirming the order of the Sales Tax Officer obserVed. that"H.A.L. J:i3d charged some prceniageof profit in the invoices sent to. the.

Governmeiit of India for the MtG engines as in a commercial transactio.n ill tase of sale which gave a clear indication tha"t .this was a c8.se _of transaCtio~ of sale and not f agellcy. Ih ppeal the Sales T3x Tribunal negativecf the contention. ofH.A.L. that the .. transaction was a works contract and nof. a sa'l.e.

Herice' this appeal.

Alloing' the appeal,

\ ... ..

HELD : ·· The transaction. is not"a Con'tract for sale but a contract for work and Jabour. (275 DI ·

There is no rigid or inflexible rule applicable aHke to all traaCtioD.s which can indicate distiriction between a contract for sale and contr3ct for.work' and.- labour-. - Whether a particular. contract was on'e of sale or for Work and labour

depended upon the main object of the parties in the ii"cumStance&- of the. trS:ns- actioRs. I11 a contract.for Sale, the main objt _of the parties is, to transfter proPerty. 'in and deliVery of possession of a chattel as a cha-ttel, tO the buYer ... Th~.primary

difference between a contract for work or service and a contract for sale of goods is that :n the formr there is in. the person performing or rendring srvice no pro- A perty in. the 1hirg produced as a whole notwithstanding that a part or even the whole material used by him may have been Qis property. In the case of a cOntract for le, the thing poduced as a whole" haS individul existence as the sole property of the part'y who prod.uced it some time before delivery and the prop"ity 'therein passes only under the contract relating .thcrerto to the other party for pricC. ·

[275 E-F: 276 F-0]

Mis Hindustan Aeronautic~· Ltd v State of Karuatakti, [1984] 2 .S.C.R. -248. referred to.

In the instant case, taking into consideratiop the correspondence and circun1sta11ccs under which this cntfustment had to be understood, there was no transfer of property in the MIG Aero Engines by H.A.L. to the Government of India.

The n1aterials and equipments sCnt by the GOven1mcnt of u.S.s.R. and the MIG Aero Engines asseinbled by H.A.L. fron1 such materials belonged to the Government of India 'at all material ti1nes.

The Appellant had no ownership in the materials whkh were all supulied by the Gcivern1nent-0f USSR. norAi.n the finished products , and no question of sales tax-on the i1npugncd transaction could arise. Even on

the indigenous materialS procured or manufactured by theappe1lnt in the process of fitting in and assernblin.g, the-appellant had no disposing poWer <is the appellant was never the owner of these materials .. The H .A.L. only performed the job cntrus- . ted to the1n for and on behalf of the Government and all incidental steps naturally entering into contract,' procurement, pay1ncnt of price and , billing and invoices had to .be done -in that ligh.t.

The transfer of the Aircrafts to the Nasik DiVision was for the purpose of completion Of the job ahd the niaking of the invoices" "'as a matter.of accounting and carrying out the job of entrustinent"'(275 0-H;- 276 A-B;

275 B; 216 .E] . •

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,.1ii '.

C1v1L .APPELLATE JuRISDICTION: Civil Appeal No. 1658 of 1982. . , ii Appeal by Special. leave fro1i1. the Judgment and Order. dated the 31st December, 1981 of the Member, Sales Tax Tribunal, Orissa,

Cuttack in Second Appal No. 29(C) of i978-79. ·

A S.T. Desai, Y.S. Murty & C.S.S. Rao for the Appellant.

V.S. Desai and R.K. Mehta for the Respondcni. •

The Judgment of the Court was delivered by

 SABYASACHI MUKHARJI, J. This is an appeal by special leave from the order dated 31st December, 1981 passed by the Sales Tax Tritunal, 'i- Orissa. The appellant who ivas the assessee un.der the .Central Sales Tax Act, 1956 went up in appeal against the confirming orders of Assistant Commissioner in respect of the assessment years 1974-75, 1975-76. and 1976-77. The Sales Tax Officer, Koraput l Circle, ·• ..

HINDUSTAN AERONAUTICS v. ORlSSA (S: Mukharji, J.) . 269

Jeypore had made the orders under Rule 12(3) of the Central Sales A Tax (0, issa) Rules, 1957 making demands of Rs. 1,21,38,586.00 for the year 1974-75, Rs. 1,29,64,637.00 for the. year 1975-76 and R, s. l,37,72,652.00 for the year 1976-77. The appellant is a dealer registered under section 7(1) of the Central Sales Tax Act, 1956 under Koraput I Circle in.the State of Orissa. . ,. .

, B M/s Hindustan Aeronautics Limited (hereinafter r<femd to' as 'H.A.L.') of which appellant is a division was established en !st Octo- .. ber, 1964. The objective.of formation of the H.A..L. wa~ to carry on

in India and elsewhere,. the business, inter alia, in aercplanes including manufacture, assembling, buying and selling etc. of the same. ln . its division at Sunabeda, manufacture of MIG engines for MIG aircrafts required for-defence and overhauling of .aero engines of IUdian Air Force were undertaken. Some of the .MIG engines manufactured by it were sent to NaSik Division of H.A.L. and some to • Indian Air Fore' as 'per instructi.ons from the. Ministry of Defence.

The appellant received payments from Gov.ernment of India or Indian Air Force for the manufacturing programme. In respect of payments so received, the Sales Tax Officer, Koraput I Circle levied Central Sales Tax on the 'ground that the transactions were ir •crstate sales.

This was disputed by the appellant according to. whom the latter was only an a, gent of the Government, of India .. In the alternative it was contended that the transaction~ were nothing but works cqntract and as such not exigible to Central Sales Tax . .,

Bing aggrieved by the dcision of the Tax Authorities as mentioned hereinbefore, the appellant had gone. up in appea'l before the Tribunal. The Tax Authorities had negatived both the contentions of !he appellant. As common.question of law on similar facts was raised, the same was disposed of by one order by the Tribunal. Before the Tribunal, only one ground namely, that the transation rpresented works contract was urged ..

It is necessary at this stage to understand the background !n which the manufacture .of MIG engines were undertaken by H.A.L.

In this conne'Ction it is material to refer to the ietter dated 22nd September, 1970 to the Chairman of the appellant company .for and on behalf of the President of India by the Joint Secretary to the Government of India, Ministry of Defence, Department of Defence Prcduc• tion. As the said letter is important, it is necessary to st out the letter :

' • .

210 SUPREME COURT REPORts [J984J 2 s.c.1c

"5iecl'.et " . ·

• '.

The Ch.airnfan,

Annexuri? ·"A"•

EXTRACT OF

No. J 1(2?.8)/69/1/DP/Conlracls Government of India, Minislr 1 of Defence,

Department of Defenc~ Prod, uction, New Delhi. the 22nd September, 1970.

( Hindu, stan Aeronautics Ltd.,

 C . Indian Express Building, Vidhana Veedhi, Bangalore-I.

.. -F

. '

' Sup, ~Manufacture of MlG,21 M A, ircraft and other equipment in India ..

Dear Sir,

On behalf of the President bf India, I have to state that' an Agreement was siged on 30th October, .J969 (copy . already. forwarded to ·. youfbetwecn the Government. of. Irtdia and the Government of Union of Soviet Socialist Rcpublid for tke manufacture under licence. . . . . ti . : . 2. The mai1ufacture of-the said Equipment as defined

i;~ the above said Agreement is hereby ei1trustcd to Hindustan .. . . . . .

Aeronautics Limited, Bangalore in terms of the said Agree:

ment. Under this entrustment the responsibility for the proper implementation of the Agreement shall be exclusively that of Hindusian Aeronautics Limited except that the '.Government inay from time lo time advise the C.ompany . about the program111e of manufacture of. the said Equip- 1nent..

3 .. All payments.falling due under the saisi Agreement io the Government of.the Union of Soviet Socialist epublics shall be made by Hindustan Aeronautics Limited, Bangalore on behalf of the Government . •

4. This entrustment shall remain in force till it is revoked or altered by the President of India. . ...

• >,

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. HIND~STAN AERONAUTICS v .. ORISSA (S. Muk!ic.rji, J.) 271. . . -

5. The Government of the Union of Soviet. Socialist A Republics is being informed. of this entrustment and they are being requested to COO]Jerate and deal diJ'ectly with Hindus- . tan. Aeronautics Lin; iited, , and do .. all thigs necessary for the effective operation of the said 'Agreement according to the terms thereof." . .

There was another letter regarding' tlie dete; mination of premium under Emergency Risks (Goods) Insurance Act,· 1962. The said. letter on behalf or' the Government of India stated, inter afia, as follows : , · •

''That th~ materials imported by H.A.L. for manufacture/ assembly 'of Aircraft/Engines/Helicopter/other equipment and also goods, stocks and stores work-in-progress etc. for which 'on account' payments: have beens ade and are being made by DCDA(AF) are the property of I.A.F. and that the item; manufactured out of the catgories of 'materials stated above arc to be supplied only to the Indian Air Force or.as authorise.d by Government of India .. The materials therefore belong . to the Governll)cnt of Iridia." .

It may be mentioned as appearii1g from the order of the Sales Tax Tribunal that there was an agreement 'between . Government of

 U.S.S, R. and the Government of India .on 29th August, 1962 whereby E Government of U.S.S.R. had. granted a licence to tlie Government . of India for manufacture of special equipment and asseinbling of

aircrafts. Thereafter both the Government~ signed .a proiocol on 29th September, .1964 in the matter of manufacturing of MIG aircrafts . in . India. Government of India 'in their" turn by the secret letter dated i2nd September, 1970 mentioned herein before entrusted the .

F .manufacture of the sajd aircrafts io H.A.L., Bangalore. In:pursuanc, i:

of t]\e said entrustment: H.A.L. undertook the work of assembling and manufacturing 'of MIG engines. For the impleinent<ltio.n of the . . entrustmerit H.A.L. has three divisions namely Koraput (in th~ .

Stat" of Orissa), Nasik (in the State of Maharashtra) and Hyderabad G (in the Sfate of Andhra Pradesh). At Koraput and Hydei; abad, engines which are eiectronic equipments were . respectively manufactured and the MIG aircrafts were finally assembled at Nasik for .delivery tcdhe Government f India, ;

In this backgr; und, the question that aioe before the Tribunal H was whether the contract between the Union of India and the appellant

for manufacture.and supply of MIG engines was a contract of sale as contended by the Revenue or a works contract as submitted by the assessee. There is no consolidated document on record to show the terms of contract between the

0 Union of India and the appellant. Both sides for. this purpose relied upon some correspondence and invoices which are on record.· Mention in this conn'ection may be made to a communication which is in th• form of a corrigendum . to the Ministry's letter regarding 'on account' payments to H.A.L. for MIG Aircrafts, the letter dated 28th July, 1970 from the Under Secretary to the Government" of India, Mjnistr,, of Defence, to the Chief Accounts Officer, High Commission for India i~ U, K. and the Chief Acconts Officer, Embassy of. India in Washington on the subject of "Procurement of bought out items against th~ requirements of I.AR for !st and 2nd line servicing", which dealt with th~ pro cedure sanctioned by the Government of India for the purpose of

"avoiding two customers viz. Hindustan Aeronautics Limit<d and the Indian Air Force going.to. the same supplier abroad for the same items", the letterdated20th December, 1971, from the Under Secretary to the Government of , India, Rakslia Mantralaya, Raksha Utpadan Vibhag, .written to the .General Manager of the Nasik Division of the appellant, the Jetter of 28th April, 1969 on the.subject of "On ..

Accom).t' payments to H.A.L. for I.A.F. m'iinufacturing programmes of H.A.I.:. Nasik~ Koraput and Hyderabad"; letter dated 8th December, 1972 from Under Secretary to the Government of India, Ministry

of' Defence on "pricing . of H.A.L. manufactured aircraft and margin profit etc." and the invoice dated 19th March, 1976.

Reliance was also placed on behalf of the Revenue before us, on :'I the order of the Assistant Commiisioner of Sales Tax for the assessment years 1974-75 and 1975~76, wherein he had referred to a statement F • - 'furnished. with a copy of the claim against price proposal for 6 F2S

details engines as accepted by the Government by their letter dated j ., 4th June, 1976. That claim is against price proposal for 6 F2S details engines ccepted by the Governmeni.Tbeir break up i~ as fellows:-

"Imported materials.

Rs. 48,39,454.08

Indigenous material and. MCH-Freight etc. Rs. 2,64,925. 79

Total material cost

Labour. cost ·

Sundry direct charges

Total •

Rs. 51,04,579.27

Rs. 2;96,480.60

Rs. 12,87,865 :89

Rs. 56,58,724.36

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HINDUSTAN A~RONAUTICS v. ORISSA (S: Mukharji, J.) 273 . . .

Pront@ 1_5 % on HAL's effort Rs. 2,47,809 .00

Rs. 69,06,533.36 or Rs. 69,06,533. 00

The Break up of fIAL's effort also indicated as follows:-

"Freight

Material Overhead •

Ind. materials

Labour cost

rrai ning cost & other expenses

• Tooling expenditure

Last test expenses

Insurance freight ..

Total HAL's effort

15 % profit on HAL's effort

Rs. 66,320.41

Rs.

J ,03,067. 55

Rs. 96,536.03

Rs. ?,64,925. 79

Rs. 2,96,480. 00

Rs. 6,000 .. 00

Rs. 1,50,000.00 ·

Rs. 8,34,342. 65

Rs. 1,00,347. 67

Rs. 16,52,096. 71

Rs. 2,47,8\4.PO"

 The Assitant Commissioner had observed that after the engines were despatched to, Nasik Division to be fitted in the Aircrafts, the bill used to be drawn by H.A.L. and the debit was raised against the Government of India. After sanctio_n of the price, the payment_ was made. The Assistant Commissioner had further observed that it appeared from this letter that six MIG engies' were. deliveml by H.A.L. to I.A.F.,. the cost of which was Rs. 69,06,530.00. He had further observed that it was significant to note th'at the sanction.had been accorded for payment towards the cost of 6 engines delivered to. I.A.F. According to the Assistant .Commissioner, the aument advanced on behalf of the assessee that the delivery was made to Nasik Division which was a branch of H.A.L. appeared to 'be inconsistent with the sanction order. He had further observed that MIG rngines were delivered to Nasik Division whereas the invoice was raised and payment received from the. Govrnment of Inia. TQe purpose of

A giving physical delivery, according to .tfie .Assistant <:; ommisioner, of the MIG engines to Nasik Division was for the purpose of fitting in the Aircrafts. In thatevent, accoding to the Assistant Comrriissiciner, . Nlsik Divisfon became the custodian or the trustees of the. MIG engines. for which the price had already been paiti to H, A.Ic. The Assistant Commissioner concluded that the property in the engines B. passed to the Government ofindia and not'to H.A.L., Nasik Divisicn.

He had further obse.fved that' the break up .of the cost was towards, the material co.st, labo11r cost and sundry direct.charges .. The total cost came to Rs. 08,58,724.36. The .further break up of the total cqst of Rs. 68;58,724.36was imported materials, indigenous material and MCHfreight etc., labour cost an<l sundry direct charges.· Appa- C rently tlie cost of .the material. both imported as. well as procured . locally had been charged in the, bill. According to the Assisfant . Commissioner, further profit -of 15 % had been charged on' H.A.L'.'.s . effort which)neluded freight, material overhead, indigenous material, . labour cost, trajning cost a11d other expnses, tooling expehditure, last.test expenses, insurance and freight. The total cost of'these items.

D · as per the bill stood at Rs. 16,52,096.71. J 5 % of this had been charged

towards the profit. The Assistant Commissioner had further obs.erved that profi.t was charged as in a cori1; nercia\. trai1saction in case of sale: . Commission was allwed in case of agecy transaction between the.

Principal and the Agent; .. But in the supply•ofMIG engines, a profit had .been cl1arged; The Assistant Coi:nmissioner concluded that this • E .gave a clear indication that this was a case of transaction of sale and. not of agenc!f. We are .unable to accept this reasoning of the Assistant Commis.sioner. According to us the procedure indicated in.the break . up has to be understhod in the background of the entire transactiori between the parties. The pricing procedure had to be: judged in the light <;>fthe entire facts and circumstances especiallyinthe background F !hat the. entire transaction was entrusted to ll, . .A,.L. Bangalore in terms of the agreement between the Government of India and the Government. of U$.S.R: for the manufacture on •behalf of the Government ofindia of MIG engines forwhich licences had been granted by the Government of U.s:s.R. t~ the Government c:if India . . 'J:'he .letter dated 22nd .September, 1970 set out herein before indicated

. G clearly that under the entrustment the responsibility for the proper implementation of the aregement would.' be ·.exclusively that of the appellant except that the Government might fioin time to time advise the Company about the P.rogramme of manufacture 'of the equipments.

The various correspondence referred to .hereinbefore, in our opinion~ H !ad co the ifresistible conclusion that the property in the aircrnfts as well as in the e.quipments and spares used in.them were always in .

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Hl'NDUSTAN AERONAUTICS v. ORTSSA (S. Mukharji, J.) 275

• the Governnient. These were procured for and bn behalf of the .

A ' Government of India in pursuance ofthe agreement with the

Government of India and U.S.S.R. The entrustment of jobs on behalf of the Government and the incidental necessary works to. be done in these connections had to. be performed by the appellant.

In this background .. the.pricing, the invoke, lhetratisacJicns have to be understood. ' . . B

' . . . . ' We have referred to the several correspondence. which, according to us, indicate that the property in the aircrafts,· in the equipments and the materials had always been with ti1e. Government. The i:nate- ' rials ifnported under the licence of procured indigenously for the. manufacture were alway~ and )lad alway$ remained the property

. C of the Government, The appellant hail nc property, in ar.v part thereof, and had no right to dispose of or disposal over these materials and spares, These had to be regulated. by the prcdceure envisaged in. the agreement between the parties: The test by '_which these transactions should be judged in deciding whether this was a works cc

0 ntract or a contract "of sa.le of any part of the material hcs""bm1 cmphasisrd.

D in .several decisions of this Ccurt. S®ie of these principles lrnve b<e_n reiterated in the decision of M/s Hindustan Aeronautics Ltd. s. Sta/e of Karnataka iri Civil Appeol Nos. 1386-91 (NT) of J 977 of this Ccurt:" >

As emphasis; d by this Court, ther<\ is no rigid or inflexib!eruie applicable alike to all. transactions which , can indicote distinc1ic.i-. b< t-

. E ween a contract for sale and a contract for wcrk and laMur. But the tests indicated in the several isions f thi; Couri merely fccused on one or the other aspect" of the transaction and affmded some guidance in detefmining the qustiqn, but l:asic'alJy. -and prhl]a.ri!y, whether a., particular contract was one of sale -or for work and labour. ,' depe.nded upciri .the main object of tl1e parties in the cirrnmetan"s

of the transastions, In a contract fer sale, the main object cf the parties is to transfer property in and delivecy of possession. cf.a r.lrn!, tel . as a chattel to the buyer. It has to be. emphasised, taking _into consideration the corresponilence and circuinsiances under .. which this entrustment had to be undesto6d that at no point of tim<' before the delivery of MIG engines, HA:L. was tl1e owner of the. propertyeither . in the equipment or in the sparesor .in ihe aircrafts and as such _there . coald not have 'been transfer of any property frcm H.A.L. to. the Government-of fodia.· The H.A.L. only pcrfcrmcd the jcb entrusted to them for and. on behalf of the Government and all incidental steps

(!) [1984] 2 S.C.R. 248.

276 . SUPREME CoURT REPORTS. [1984] 2 s.c.R.

11aturaily entering into contract, procureme1it, payment nf pri'e 2nd billing and. invokes had to be done in that light. There was no tram fer of property in the MIG Aero Engines by H.A.L. to the Government of India. The materials and equipments sent by the Government of U.S.s:R. and the MIG Aero Engines assembled by H.A.L. frcD1 • such niaterials belonged to the Government of India at all material .times. The appellant had no ownership in the materials which were all supplied by the Government of U.S.S.R. nor in the. finished products and no question of sales tax on the impugned transaction could arise.

Even on the indigenous materials procured or manufactured by the appellant in _the process of fitting in and assembling, the appellant had no disposing power as the appel!ant was never the owner of these . materials. . . .

The payments required in the work of ''manufacture of MIG- 21M Aircrafis and other_equipments in India" were to be made as indicated in the letter dated 22nd September, 1970 by the appellant on behalf of the "Government of Jnda;.

The. entire correspondence and. the nature of the instructions from time-to time issued by the Government indicated that the function of H.A.L. was the implementation o.f the said entrustment.

"There cannot be any question, in our opinion, of any sales tax

i~ respect of Aero-Engines transferred to the Nasik Division -of H.A.L. for installing t11e same in Aircrafts .. It was the transfer of the Aircrafts to the Nasik Division for the purpose of completion of the job and the making of tl].e invoices was a matter of accounting and carrying . ounhe job of entrustment. As had been emphasised by this .Court, that the primary difference between a contract for work or service and a contract for sale of goods is that in. the former there is in the person performing or rendering srvice no _property in' the thing produced as a whole notwithstanding that a part !Jr "even the whole of material . used by him may have been his property .. Jn the case of a contract for sale, the tiring produced as a whole has individual existence as th> . sole property of the party who produced fr so""me time before delivery and the property there.in passe~ only under the contract relating thereto to the other partyfor price.

This cannot be said to be in respect of any of the items involved in these transactions, These transactions were carried out in implementation of the entrustment job for the manufacture by H.A.L. and all payments and actions taken m this behalf were on behalf of the Government of India.

We arc therefore of th.e opinion that the Tribunal was _in error_

• . .

HINDUSTAN AERONAUTICS y. ORISSA (S. Mukhai}i, J.) 277 .. . in concluding that there was sale involv.ed in these transactions. It is not necessary for us in this connection to refer to the principles in detail which the Court should cept in deciding in each particular .case the nature or' the transactions. 'Fhese principles have : been reiterated in the dedsion of this Cour( in the case. of M/s Hindustan

Aponautics Limited v. State o/Karnataka.lll

In the above view of the matter, the appeal is allowed,. The assessments are set aside. Necessary adjustments and refund, if necessary, . of the tax paid should be done accordingly, In the facts and cirumstances, parties will bear 'their respective costs throughout.

H.S.K. appeal allowed .

(1) [i984J 2 S.C.R.. 248.

B •

A

HINDUSTAN AERONAUTICS LTD

THE STATE OF ORISSA

V.I). TULZAPURKAR

Koraput

Nasik

Hyderabad

MIG Aero Engines

Government of India

Nasik DiVision

A S.T. Desai

Y.S. Murty

C.S.S. Rao

V.S. Desai

R.K. Mehta

Central Sales Tax Act, 1956

Mukharji

Jeypore

section 7(1)

Central Sales Tax Act, 1956

Hindustan Aeronautics Limited

Sunabeda

IUdian Air Force

Ministry of Defence

Gov.ernment of India

Indian Air Force

Government, of India

H.A.L.

Hindustan

Insurance Act

Government of

 U.S.S, R.

Government of U.S.S.R.

Government . of India

Union of India

Union of India

28th July, 1970

Washington

I.AR

Hindustan Aeronautics Limit

Raksha Utpadan Vibhag

I.A.F.

Nasik Division

Nlsik Divisfon

Government ofindia

Nasik Divisicn

Government. of U$.S.R

Hindustan Aeronautics Ltd.

[1984] 2 S.C.R. 248

Government of U.S.s

India

22nd September, 1970

HINDUSTAN AERONAUTICS

S. Mukhai}i


. c

.. 278 •

MITHILESH KUMAR PANDEY

BAIDYANATH YADAV AND ORS .

. January 2, ~984

[S. MURTAzA FAz~L Ai, r; o. CmNNApPA REDDY AND . .

RS. VENKATARAMIAH, JJ.]

Repreientation of the People Act, 1951, Sec.tion•81(3~Co11structio11 of ihe •.provisions of the sectiOn-Copy of ihe election Petition containing several mistakes Of Vital -ch'arater, not fo'und i'n the orig'inal-Election petition is not nwintainable and

nJustbe disn1issed. ·

' . . ' . ' . . . . .

In the genefal.electioiis held irrJune 1980, the appellant fought .is i. Congress(!) candidate from Harlahi Asscmb.ly constituency inBihar•and was.eclared elected. The respondent who was defeated filed an election petition in the. Patna High Court !is.ting a. large nwttber of persons through when corrupt practices werealleged to have been practised by the appellant. Siflce the copy of the petition, th6ugh attested. by the election petitioner under his own_ signature to he a true copy, contitined sCveral mistakes which ,\vere of a vCry vitaJ 'c.haracter, the apj)ellant contested the petition atleging that the mandatory provisions of section 83(3) of. the Representatfon of People Act not having been cOil).plied vvith at an, thC petition should be dismissed in linine withoµt going into the merits of the Case. Though {he High Court found , as a faCt. that a Tafge number of mistakes were there in the copy of the electib-n.

petition su.{, plied to the .appellant. Yef, as they were of a superficial and inSignifiw cant nature bordering_ on clerical or tY'pii1g mistakes, on the whole; there "'.as a substantial compliance of ihe pro'vsions of Section 81(3) of the ACt. Hence the <ippeal ag; i.inst the interlcutory order.

Allowing the appeal .and disrnis_sing the el.tioh petition, ihe c01:u{

. . HELD : r: 1 A Perstia.1 'of Sections 81(3). and 86 Of the R6presentat_ion of _the People Act reveals ·-that the statUtc intended that before an election petition can be entertained~ th~ Copy sent tO the elected candidate n1ust be a 1-rue copy, railing which thcrC Would. be a serious diSobedience of the mandate Contained in . s.81(3) whichwould be fa tar to lhc maintainability of the saidpeition. (281 FJ ' . . . .· . ' . . ..

1 :2 It is now well settled by a large catena Of atithorities of this Court that thc'clectoral process by Which the verdict of the people has'been given is a sacrosanct bne and ca-nnot be lightly set at naught unle;; s the groun_ds rrlendoned in the Act for seiting side an election a.re held to -be proved.

Jn these circumstances, it is manifest that the _provisions of .s.81(3) Of the act should be. G._onstred to te letter and spirit of the law because if the election petitioner docs not give full and Complete n9tice of the allegations inade against. the returned candidate, he runs the. risk of his petition being d.is1nissed in limine. (281 G-H]

. '

M.K. PANDEY v. BAID~\NATH 279

2 on a careful consideration and i; crutiny of the la\\ on the subject, the following principl.es-are Well established.;~

(l). that where the copy of the eleCtion petition served on the returned candidate contains .only clefical or typographical mistakes Which arc of no consequence, the petition cannot be disn1issed straightway under s .. 86 of the Act, (283 F]

(2) A true copy means a. copy which is wholly and substantially the same as the original and wher~ there arc insignificant or minimal° 1nistakes, the c.ourt n; i.ay _not tak~ notice thCreof, [283 G]

(3) wh.ere the Cop~ cOn{ains important on1issions or discrepanics of a vital nature, which are likel:Y to cause prejudice t~ the defence of the returned candidate, it cannot be aid that there has been a substantial compliance o.f t.he provisions of s.81(3) of !he Act, (284 A]

(4) Prime fade, the statute uses the words "true copy'' and the concept of substantial con1pliance cannot be exten(\Cd too far to include serious or.vital mistakes \vhich shed the char<icter of a trtie copy so that the copy furnished.to the returned candidate cannot be said to be. a true copy within the meaning of s.81(3) of; thc Act, nd [284 Bl~

(5) As s.81(3) is incant to protect and safeguard the sacrasanct electoral

p1'ocess so as not the disturb the verdici of the .voters, there is no room for giVing a .Jiberal -or bt-o<i.d irterpretation to the provisions of the said section. [284 CJ .. . .

Murarka Radhey Shya111 Rani Kunwr v. Roop Singh Rat/u)J"e & Ors. l1964] 3 SCR ~73; Jagat kishore Prasad Narain Singh v. Rajendra Ku111ar Poddar & Ors. [1971] t SCR 821; Satya Narain V. Dhuja Rain&. Ors., [1974] 23 SCR 20; Shari/-ud-

Din v'. Ahd_ul Gpni Loni!, [1980].1 SCR 1177; M. Karunaidhi tc~ etc. v. H. y. Ha1ide & O•s: etc. etc. [1983] 1 SCALE 344 referred to. (284 D-E; 285 G; 286 A; 285 q

.., 3. lfl the instant case, the mistakes iri the copy supplied. to the returned candidate related to corrupt practice-s, have to be proved to the hilt just like a criminal charge and any mistake 'vhich contains an ele1nent of vagueness \Vould immcdia: tely vitiate the election petition and n1erit its disn1issal under' s.86 of the.Act. Among

- 'tbe 1nany 1nore mistakes given in Shedule I, the '.few selected items then1selves are vital and may seriously prejudice the ct.fence of the appellant because it. will be very difficult for him to find out the pe_rsons, named. in the copy supplie.d to hin1At who are said to have indulged in corrupt practiceS a( his instance. The present case is a nluch""worse case than Murarka Radhey Sh:va111 Ra111 Kunw;'s case (supra) \Vherc onlY a slight difference in the title led this Court to hold that the mistake was a vital one was a valid one.

Further, the omission of names cannot be said

t_o be a_ typing 1nistake but a very vital and serious on Which is sufficient to entail the dis1nissal of the election petition. [284 D~E; 285 G; 286 ~; 285 C]

CLVIL APPELLATE JURISDICTION Civil Appeal No. 5307 of 1983

G.'

Appeal by Special leave from the Judgmen.t and Order dated :H the 7th January, 1983 of the Patna High Court in Election Petition

A No. 48 of 1980).

.• S.N. Kacker, L.R. Singh aQd Gopa/ Singh for (he Appellant:

 R.K. -Garg and D:K. Garg for the Respondent.

The Judgmentof the Court was delivered hy

. . ·- ' .

h .. • FAZAl L AWL!; J, By Orderddated}'fov 1 ember 29, Ijl83hwe hdd a 0 l!cd.wed ... ·~ t e a, rrea . . e. now procee to give t 1e reasons JOT t e sai r er.

This election appeal is directed agains't an interlocutory. Order dated Jnuary 7, 1983 passed by the Patna High Court overruling a . preliminary objection taken by the appellant (ele'ctd candidate) that the election petition of.the respondent (e!ectio1i petitioner) should be dismissed str.aightaway uiicter the: provisions of s:86 of the Representation or' the People. Act. l 951-a< .amended uptodate-(here'nafter referred to as the 'Act'.).,

' .

Theappellant's case is'that in the general election held in June. 1980 he fought s; a Congress (I) andidte 'from Harlakhi Assembly c.onsthu_ency in .Bihar in ·\vhich 'he._ was deCJared elected, 'dfe; itini. the respondent who filed the. election petition in the. High Courl.

He further subm.itted that the copy of the <; lection 'peti'tion served on . him contained tt Jarge ~)Uinbet f)nistakesin respecf of Persohs through whom corrupt practices were alleged w h.ave been practised by the appellant c!uring -'the. election.. He . contended that in view of the very large number of mistakes, which were of a very vital character; !he mandatory provisions. of s.81 (3) c; r the Act were not complied ·.with at' all,' which. infirmly by itself woulil be sufficient to dismis the election petition in /imine without going into . the merits of the .· . . -~ case. . /

. ' The stand taken by the respondent ~s tbat the I].listakes were. undoubiedly there but they were of a minor and significant nature ' . \ . . and did not affect his case on merit.

The 1earned Judge .of the Hi, gh Court found as a fact that a large . n\Jmber of mistakes were there in the copy of the election petition 'supplied to i\1e appellantbut as they were ofa superficial and i;1significant nature bordering on clerical or .typing.mistakes, on the whole there was a substantial compliance of .the .provisions of s.81(3)' of. the Act. The learned Jucig:' has entered into a detailed discussion. of

'-i

. \

• -..

i ..

M-~· PANDEY"· DAIDYANATH (Faza/ Ali, J.j 281

the various dcisions of this Court and also of High courts and has , correctly held that the provisions .of s.81(3) are mandatory and if the court finds that. they have not been cornpl\ed with ii has no alte111ative bu\ to dismiss the. election petition .straightaway, Unfortunately, however, in the process of applying the principles laid d°'vn by this Court he bas completely glossed over the nature of ilie 1:nistakes by describing them as merely clerial or typing ones. On a perusal. of the aforcsid mistakes (listd at pp. 64-65 of tne"rarerbook) they .do not appear)o b<; so. , Section 81(3) of-the Act run' <\rns:

"l. Presentafio"n of petitions ,.

(3) Every election petition shall be accopanied by. as many .copies thereof as there are respondents mentioned in th~ petition, and every such copy shall be attested 'by tb.e pe1; itioner under his O\v1r signature to be.a truecopy of the

Petition.~.' .

The cunsequen.ce of nOn-compliance of thi.s. section l12s. been D mentio11ed in s.86(1) which may be extacfrd thus '

"86 .. Tfia/ of' c!e"cti"pn petitions ..

(!). Tl1e High Court shall dismiss a1{ election petition which does not compJy.with"the prov'isions of sccticn 81 er • section 82 o'r sectiCn 117.' . .

A pe1"usal of.the above reveals that the statute intended that" before an election peiition can be entertai1icd; the copy sent 'to if.e elected candidate niµst be a true copy, failing which there would be a serious disobedience of the mndate contained in s.81(3) whkh would be fatal_ to the maintainability of the said petition.

\ It is now .\vc!I settled bv. a large catepa of aut.bcit.ics -cf 1l1.is Co.uri that the elec!oral procss by. vhcih th<"vcrdici of lhc .people has been given is a sacrosanct en~ and cai1not .1--:c:li_ghtly Ht at n<1ught unless he gi-Ounds 1nentioned in the Act for setting aside an election a1"e held to be'provcd.

Jn these circumstaHcs. it is ffanifrct :11oat th provisions of s.81'(3) of the Act should be construed to the letter and spirit of the law because if the election petitioner des not give full.. and coo1plcte 'notice of the aflegation.s made against the return(d . candidate. he runs the . risk of hi~. pctit(cn, _being disrnis~(d in lfmine. ,

.. H

A hi the instant case, it is the.a.dmitted case of the parties that the

mistakes in the copy supplied to the. appellant rel.ted to corrupt• practices indulged in by him through various persons who liave been named at pages 64-65 of the Paperbook. In Murarkd Radhey Shylim Ram Kumar v. Roop Singh Rathore & Ors.<ll this Court made the . followitg obsrvations :--

• "Having'rcgard to the prov1s<0ns of Part VI.of the Act we are of the.viewthat the word "copy" does not mean an absolutely exaot copy.

Tt means a .copy so true that nobody ca.n by any possibility.misunderstand it..

The test whether. the copy is a true one is whether any varition frora the original_ is calculated to mislead an ordinary

person.'' . .

In other, words, this Court merely mrant to indicaie that where the variation isso minin1al and insgnificant that it is incapable of misleading any person as to the true purport of the allegation, it would be a substantial complia1ice of. the provisions of s.81 (3) cf the Act.. The High Court has largely relied on the ratio of this particular case.

There can be no dispute. regarding the principle laid down by this Court but the main difficulty.arises when we approach the facts of a particular case in. order to find .out whether the copy .supplied to the returned candidte is really a true copy or not •

Tn Jagat Kio}wre Prasad Narain Singh v. Rajendra Kumar Poddar & Ors.121 the same principle was laid down.

In this case, the mistake was that in the election petition it was stated that rnrney was offered to one Jctba Kisku by Munshi Hansda but in the 'opv served on the returned candidate instead of M).Jnshi Hansda the name of Paul Hansda was mentioned. Apparently, the mistake was a verbal one but this court held that it was sufficient to prejudice the defence and accordingly came to the conclusion that the petition was liable to

 .. -f '

G be dismissed under s.86 of the Act.

We shall presently show that in the instant case the mistak.es were of a greater nature than those with which this Coµrt was dealing 1--

(I) (1964] 3 S.C.R. 573.

(2) [1971] I S.C.R. 821. .

• -f.

. .

• M.K. PANDEY l'. BAJDYANATH (Faza/ ,4/i, J.) . . , 283

with in the aforeid ase. Jn Satya'Narin v, Dhuja Ram & Ol's.<1 1

this Court clearly pointed out that where the first.part of s.81(3) was n.ot complied with .. the provision being a peremptory one, total nqnc, compliance with the same would. entail dismissal of the election petitio'n under s.86 .of the Act.

In a later case in' Shari[-ud-Din v. Abdul Gani Lonei2> this Court observed thus ·

"It .is true that section 89(3) of the Act is purei'y procedural in character and that ordinarily prccedimil Jaw should not be given that primacy by cuurts a~ would defeat

the ends of justice, But if a Jaw even though it may be procedural in character insists that an act must be done in a particular mam, er .and further provides that certain consequences should follow'ifthe act is not done.in that manner, courts have no.option but to enforce the law as it is." . . . .

In a la(<:st decision of the Court in M. Karunanidhi etc. etc. v.- H.

V. Hrmde & Ors. etc. etc.,<3> the following observations were mad!': .. "It .is obvious that the photograph was a part of the \

verment contained in paragraph l S(b). Jn the absence of the photograph the averment contained in paragraph 18(b) ·, vould be incomplete. The photograph referred to in paragraph 18(b) was therefore ai1 integral part of the election petition. It follows that there was total non-ccimplia'nce \vith the requirements of sub-s.(3) of s.81 f the Act by failure to. serve the appellant with a copy of the elcctidn petition."· · ' On a careful consideration and scrutiuy of the Jaw on the subject, the following principles are wen established :· - ' . . .

I) that where the copy of the election petition. served on the returned candidate conta\ns only clerical or typographical mistakes whiCh are of no. comcquence, the petition cannot be dismissed straightaway under s.86 of the Act,·

2) A true copy _means a copy which is wholly and substantially the same as the original and where there are insignificant or minimal' mistakes, the court may not take notice thereof, ...

(1)' [1974] 3 S.C.R. 20.

(3) [1983) I SCALE 344.

' .

. .

D ..

3) where the, copf contains importai1t omissions or discrepancies of a vital nature,· which are likeiy to. cause prejudice 'to the defence of the returned candidate;· it cannot be said that there has been a. sbstantial com- . pliance of the provisions ofs.81(3) of.the ct. .

~ 4)

Pri~1a facje, the tatute .uses the. words. "true copy"

.. and the concept of'substai1tial compliance cannot be extended tdo .far to. include se1ious or vital itiisiakcs which :shed the character of a _true copy so that the copy furnished to the returned candidate cannot be said to be a true copy wiibin the meaning of s. 81(3) of ihe Aci,. ; nd

. '

. . . ·... . \

- . . . . . ' ..

As s.81(3) is meant to pr<ltect and safeguard the Bacrosanct. electoral process so as not to disturb the verdict of the .voters, there is no. room , for giving a liberal or broad interpretation to the provisions of the

.sid secti.on. ,

We might mention here• that in the instant case the mistakes in the copy supplied .to the returned candidate related to corrupt practices' which, as has beert held by this Court in. a large number of cases, have to be proved to the hili just like a crii11inal charge and any mistake which co.ntains an eleme1it of vagueness would immediately vitiate the election petition and merit its dismissal. under. s.86 of the Ac( . .

A . . .

In the view that. we lake, it.is not necessary for us t<i wade through a detailed dis<; ussion of the mistakes because a few mistakes pointed out by the Judge himself clearly reveal that they were .of a very vital and material nature so as to mislead the returned .. candidat~ . and prejudice him. in his defence. Schedule I to the election petition contained the.· list of persons through whon1 the corrupt practices were alleged to have been committed, An analysis of these mistakes may be plad in three cafego:fie~(l) where there is complete omission of some names which have .been mentioned in the election petition but riot in. the copy'\upplie>[ to the returned candidate, (2) giving . absolutely .wrong names whic11 are bound to mislead the appellant . in his 'defence as the persons bearing the wrong names could not be t.raced out, and (3) some names given in the petition appear to be . . males but i(l the copy given to the appellant they ppear to be feales_.

Coming to the first category, a few exmples will suffice .to

.·~

M.K. PANDEY v. BAI~YANATH (Fazal Ali, i.)

 Q85 • illustrate our point ·

SI. No. in .Name in the Name in the Schedule I orig; nal petitfon copy

17 · Y ogendra Jha '.

Omitted 37 Bufa.ri Devi Omitted .· ft.

Omitted 188 Bal Bhogia 445 Ra1n<leo Pa'swan Omitted 486 ..

Jugeshwari Devi Omitted

The omission of names cannot be said to be a typing misiake but a very vital and serious one which is sufficient to entail the dismissal of the election petition. Under the secod categoy (.giving wrong names), the following names may: be mentioned . . . . .

 . There are many more mistakes given in schedule I but we have se!Ccted only those which are vitaL and may seriously prejudice the .'defence of the appellant because it will be very difficult for hini to find

out the persons,' named in the copy supplied to him, who are said to have indulged in corrupt pradices at his .instance ..

1~ . . . - . ·- Thus, on ,[n oyerall consiiierntion of the facts and circumstances ..

~ -. ' A

' .. A

.286

SUPREME COURT REPORTS [1984] 2 s.c.R. .. of this case, we. are unable to agree with. the High Court that the 'mistakes in the copy were either verbal, typographical 6r clerical..

The present case appears to be a much worse case than Murarka ·

Radhey Shyam Ram Kumar,'s case (supra) where only a slight.difference jn the title led this Co.urt to hold that' the mistake was a vital one .

. . I

We are, therefore, of the opinioq.that the High Court. committed a serious error of law in holding that there had been a substantial compliance of the provisions of' s.81(3) of the Act so a~ to exC!ude the. applica'tion of s.86 of the Act.

• For. the reasons given above, we allow the appeal and dismiss the election r.etitio1\ filed in the High Curt but in the .circumstances without any order as to costs. As a result of our judgment, nothin.g now survive"s iii the High Court. ..

S.R.

Appeal a/!'Oived.

• . . . .. .,

MITHILESH KUMAR PANDEY

BAIDYANATH YADAV AND ORS

o. CmNNApPA REDDY

RS. VENKATARAMIAH, JJ.

Repreientation of the People Act, 1951

Patna High Court

section 83(3)

Section 81(3)

Sections 81(3)

[1974] 23 SCR 20

Murarka Radhey

S.N. Kacker

L.R. Singh

R.K. -Garg

D:K. Garg

Section 81(3)

section 82

Jctba Kisku

Munshi Hansda

M).Jnshi Hansda

Paul Hansda

(1964] 3 S.C.R. 573

M.K. PANDEY

section 89(3)

[1974] 3 S.C.R. 20

s. 81(3)

Schedule I

Schedule I

Murarka ·

Radhey Shyam Ram Kumar


287 A

GAYA PARSHAD OIKSHIT

' v.

DR. NIRMAL CHANDER & ANR.

January:;,, 1984 ·

[P.N: BHAGWATl, ACTING CHIEF JUSTICE AND D. P. MADON, JJ.]

Litnitatio11 A.ct 1963, Article 65, 'title by adverse possession':Clabn of- Licence tenninated by itotice-Suit for possdssion-Licence to show by overt act that he is cla1ning adverse title . .

The respondents filed a suit for r.ecovery .of possession of the preniises (rorn the appellant after terfuination of his licence. The appellant cf aimed title _b.Y adverse possession.

. The High Court held' that mere termination of the licence of a liccncee does not enable th, e .licence to clalin adverse JJOSsession, unless and uritil he -sets up a title hostile to that of the liccncer after tennination of hisMicencc, and decreed the suit for possession.

Dismissing the appeal,

HELD : I. There nust be so1ne overt act on the pa-~1 of th~ licencee indiating assertion bf hostile title. Mere continuance o( unauthorised possession even for . a period of1nore tha'n 12.years is not enouh. [288 bJ

2. It is -not n1erely unauthorised possession on -tenni11atio11 of his licence t_hat enables the licencee toclaim title by adverse possession but there must be some overt act on the part of the licencee to show that he is clain1ing adYerse title.

It is pos.sible that the licencor n1ay not file an action fur the purpose of recovering

possessic:>n of the prcimises from the licencee after Jern1inatlng his licence but that by itself canot enable the licencee to claim thk:_ by adverse possession. (288 Cf

. In th. instant case, the High Cout was riht •ill takingthe view that the appellant had not establisPed any title by adverse possession, and that the suit of

the first respondent for recovery of possession of the premises from the appellant G. was not barrd under Article 65 of the Lin1itatioil At, 1963. (288 E-FJ

CIVIL APPELLATE J.URISDJCTION: Civil Appeal 'No ... J8)] of 1978.

From the judgment and ordel' dated 24th August; fl78 of the H Allahabad High Court in sec?nd Appeal No, 1287 of _1974.) ·

SUPREME COURT REPORTS [1984] 2 s.c; R.

A S, . Markendeya for the Appellant,

BC Afarwala .for the Respondents .

. The Judgment of the court was delivered bv

~ .. •

B. .

BHAGWATl: ACTING CJ. We. Jiave'hard the learned counsel on behalf of the appellant and after hearing hi~ and persuing the judgment of the .High Court, we find ourselves wholly in agreement

with the' view t.aken by the. High Court that mere termintion of the licence' of a licencce does not enable the licencee to claim aderse . possession, .unless and until he sets up a title hostile io that of the

 C · licencor after termination of his licence,' It is not. merely unauthorised .

~ possession 011 termination of his licence that enables ihe licencee to claitn title ):iy adver; e 'possession but there musi be some overt at ori the pat't of ihc licencee to sho~ that he is claiming adverse title: Jt is possible that the licencor may not file an action for the purpose of . recovering possession of the premises from the licencee after terminan ting his licence but that by itself cannot enable the licencee to claim title by dverse jlossession. °There must be some overt act on the part of the licence<1; indicating assertion of.hostiie title. Mere con- . tin1iance. of uriauthorised possession even for a period of more than . .12 years is n.ot enough: .Here in the present case there is nothing to

show that at any time after termination of his licence by Dr: Rama E Shanker or by tl; e first repodent' the appellant asserted hostile title in himslf. The High \ourt was, therefore, rigl1t in t, aking.the view that t!J..e ·., ppellanf had not established any title by adverse. possession and iii that view of the matter," the suit of the first respondent for recovery of possession of the premises ffom the appellant was not barred under article 65 which is the only article of the LimitationAet, f 1963 applicable in the present .case. We accordingly confirm the

judg111ent ofthe ]i:igh Co!Jrl and dismiss !lie appeal. ·

Mr. Markandeya,. learned. counsel appearing on behalf 6f the . appellant, has urged that the appellant has ben in possession of the premises which consist ofr9oms Nos. I, 4 and 5 shown in fhe Amin's map marked l6/5C since his birth and it would cause considerable hardship 10 him if he wereto be ev.icted from these room.s immediately and he.has, therefore; requested'that sufficient time may be granted fo the appellant to vacate these rooms. He has also stated that in the meanwhile the appellant is prepared to give up. possession of room No. i but he may .be allowed to continue in possession of room Nos. 4. & 5 for some reasonable period. This is a reasonable request on

I. j.

G.P .. DIKSHIT v. N!RMA~ CHANDER (Bhagwati, A cling, CJ.) 289 . . behalf of the appella1it. Jn view of the fact that the appellant ha& A been in possession of rooms Nos. I, 4 ad. 5 for a very loi1g perird and he has:, .son who is studying in school, we a.re' incilned fo grant . time to the appellant to hand. over possession of. room Nos. 4 and 5, provided he gives up possession of room No. 1 on or before 28th February, 1984. If the appellaiif hands over vacant and peacefu)

possession of room No.· f and any other portio!ii of the house which B may be it1 his" own occupation apart from room Nos: 4 and 5 on or. before 28th.February, 1984 and he.and his. son file an' affidavit in this Court on or before t.hesame datestating-that they are in possession and occupation of rooms Nos, 4 and 5 and undertaking that they . will not induct anyone else in possession or cccupatio'n of these two rooms and will hand over vac.ant and peqaceful possession of these

C ' two rooms to the !st respondent on or before 30th June, 1987, 'the decree for possession against the appellant in respect of rooms Nos.A '"and 5 will not be executed untii 30th 5-une,. 1987.· If vacant and

. peacefu(possession of room No, i is not handed over by the appellant to the 1st respondent on or before 28th February, 19 84 or if the appellant and his son fail to file an affidavit in the aforeswd terms on or D before that date, the .qecree for possessi.on will beome executable forthwith. . • •

 . There will be no order as to costs throughout. ' . ' . '

N.V.K.

Appeal <lismissed .

.. . . .

. I

• . ,

. '

' .

A

GAYA PARSHAD OIKSHIT

NIRMAL CHANDER & ANR

D. P. MADON, JJ.

Article 65

Article 65

CIVIL APPELLATE J.URISDJCTION

BC Afarwala

Rama E Shanker

article 65

Markandeya

Amin

28th.February, 1984

30th 5-une,. 1987

28th February, 19 84

N.V.K.


A 290

V. S. RABI AND ANR.

SMT. RAM CHAMBELI

JanuaJy 3, 1984

[E.S. VEN, KATARAMlAH AND R.B, MISRA, JJ.J

Delhi Rent Cotro/ Act, 1958, (Act 59 '°f 1958) Sectio; 2J~W.hile invoking ·

te re1nedial provisions of 'Section 21~ he lau; lllord Shot{!d conie with clean hads a . and not supprdss or falsify facis-Doctriue of suppressioverf will disentit/e hbn to get back possession later iiz such case; of stippression of facts- Duty of the Court- Meaning of collusion-Right to resile, when aval1able.....-Rule of oppression and illegal contract explained. ·

The respondent Smt. Ran1 Chambeli leased out the suit premises to the arpcllantS for a P.eriod o.f three yCars under an orQer dated December 22, 1977 passed bY the Additional Rent Controller in Suit No. M/?98/77 µnder section 21 of the Delhi Rent Contr9I ACt. . bii the expiry of the .said period, when the espondefil filed an application eforc the Rent Controller for possess'ion of the preinises, the appellants filed objections, highlighting how by suppression and falSifying facts the resporident resorted to the proYisions of section 21 of the :Rent.Act, arl'd challenged the need for personal Occupation. : The Additional Rent Cpiltroller, therefore, after hearing both sides revoked the perlnission granted in 1977.

HOwever, the Rent Control Tribunal set aside the o_rdr of the Addi. Rent Controller. and ordered eviction. The High Court in Second Appeal confinned Tribunal's order. Hence "the tenan(s'appeat" by Special' Leave of the Court,

Allo\ving the appeal, the c;:ourt,

Hi5:LD .:

1. On .the factsand ciicumstances of the" case, the landlady is not entitled to invoke th'C ren; edy under section.21 _of the Delhi Rent Control Ac~.

The permission under section 21 of the Act had been obtained by her .on the basis of wrong statement, but for which the permission wollld not have been accorded._ .. These statements which were in the nature of half truths were apparently ma.de

in Order to ffiake good the plea that_ there was only a .temBorary necessity to lease out t\le building for a short period and that thCre wiS a bonafide anticipation that there would be a pressing neCeSsity to reoccupy the pren}ises at '1e end of the period, which wer(;! the two crucial factors governing an order under section 2_1 of the At.

[296 F; E]

S.B. Noronah v •. Prem Kun1ari Khaizna, [19.80] 1 S.C.R. 281; applied.

. . . . . . 2: 1 It is true that the appellants who were the weaker.'of th6two parties did not. question ihe .truth of.the staten1ents made by the rspondentwhen.the . permiSsiOn was granted. But such \collusion, if anY, between the two unequal parties dO'es hot confer any sanctity on the transaction in question; In cases of this 'Ilature it is always oPen to the weaker of the two parties to establish that the.transaction was only a camouflage used to cover-its true nature. [296 H; 297 A]

)-.

~ -

~ ..

• '

v .. s .. RAHi v. RAM CHAMBELJ (Venkataramiah, J.) 291 .

2:2.

Collusion in1plies the existenCe of two or n1ore parties \vho r;:an deal with each other independently with the object of entering into an arrangement which may seive as a cloak to cover up the real state of affairs. When one party can dominate over the will of the other, it would nOt be a case of Collusion but one of compulsioU; The ilbove view is fully in. cc; insonancc with the spirit behind the

rule of oppression which , is recognised as an exception to the doctrine" that a party cannot recover what he has given to the other P.arty under an illegal contract. The gro.und that the appellants cannot challenge! the permission , i_nitially grar.ted under section 21 of the ct is not, therefore) availa?le in this cse. (297 B-CJ

S1nith v. Ci<ff[1817] 6 & S 160@ 165, quoted with approval.

CIVIL APPELLATE JUR1So1CT10N: Civil Appeal No. 28<lJ of 1982.

From the Judgment and Order dated. the 23rd August, l 982 of the Delhi High Court at New Delhi in S.A.O. No. 277 of 1982'.

B.X. Joseph and N.S. Das Behl for the Appellant.

J.M. Khanna for the Respondent.

The Judgment of the Court was delivered by :

~ V~NKATARAMIAH; J.· This is an appeal by spcial leave against the judgment of the High Cou•t of Delhi atcd Augm.t 23. 1982 in S.A.O. No. 277 of J982tJismissing the appeal filed by the appellants.

The respondent Smt. Ra1~ Chambeli leased out the premises in question to the appellan'ts under an order dated December 22 •

1977 passed by the Additional R.enf Contr.oller in s.uit No. M/798/77 under section< 21 of tl1e Delhi Rent Control Act, I 958 (Act 59 of 1958) (hereinafter referred to as 'the Act'), the rckvant part~ wJ1ich reads thus :

"Statement of Smt. Ram Chambcli w/o SJ1.' G.L. Gandhi.

I' am the owner-landlord of premises No. 637, Double Storey, New. Rajinder Nagar, New Delhi. The entire premises comprising of two rooms, kitchen, bath, ]aterine shown in the plan Exhibit-Al is surplus with me for a limited period of 3. years which I want to let out to the respondent for res'dential purposes fer the said rericd at rupees 425/- p.m. which is mentioned in Mark Il with effect from tl1e date of perm1ss1on.

I have never let out the. portion to anybody earlier to it. My son and my mother were Jiving in the

292 •

SUPRHME COURT REPORTS [J 984] 2 s.c.R •

. said premises. My mother has not been reeling well.· My

son is studying in 9th class. After about three years my. mother will be alright and my son.will grow up and for them

'J. spall require t-be pre111ies after three_ years. _

RO & AC

ARC • Statement of Shri V.S. Rahi, son of Sh: Thakur Gopal Singh, 45 years, teachcr •ind Smt. Santosh Rahi w/o Shri V.S. Rahi, aged 45 years, teacher .resident of 33/52, Prabhat Rold, Karol Bagh, New. Delhi.

We want. tlw premises for three' yqrs for the residential purposes from .the date of pe.rni:iSSion.

We are not in possession of the premises nor were we.tenants In it. ·

'RO & AC

ARC

ORDER . ' This order will dispose of application under Section 21 DRC Act filed by Smt. :Ram Chambel.i pplicant seeking pennissio1i to let out first floor of her premises No.. .637 Double Stof'ey, New Rajinder Nagar, New Delhi; It is stated • that the first floor4tif the said premises comprising of two living rooms, kitchen, bath and late.tine detailed in plan exhibit. A-I is.surplus with her for a lim.ited period. of three years cind she will req\lire it after the said period of three. years. The'- petitioner and respondent have made statement on oath in. this connection. In view of the statement of the 'parties, permission u/s. 21 .of DRC Ac.t is 'granted to Smt. R'.lm Chamlieli, wife of Shri G:L Gandhi applicant

to let out first floor of her p; emises No. 637, Double Storey, New Rajinder Nagar, New'Delhi to Shri V.S. Rahi and Smt. Santosh Rabi respondents fot resi<lei1tial pufposes for the said peri.od of three years with effect from the date. of the order. .. .

J. D: Kapoor, Add. Rent Controller''

On th_e cxpi1y of the period of three years mentioned in the above order the respondent filed an application before the Additional Rent Controller for possession or the premises.' The appell.ants filed objec; tions to the said application stating that. te respondent was coinfor-

' ' . v.s. RAHi v. R.AM CHAMBELI (Venkataramiah, J.) . 293

tably living with her husband and son in .the ground floor . of the

b11ilding; that she was not .in need of the first floor of the bu; lding . . which had been leasedout intheir favour; that the statement that her mother was Jiving with her was not true; tliat her son was studying in the 7th class in 1977 and not in the 9th class as stated by her before ·

the Rent Controller in 1977 and that the Rent c'ontrollet had permitted the lasing out of the building under section 21 of the Act without applying his mind.

H was further pleaded that the application had been .filed with a v"iew to extracting higher r"ent. The appellant.s also stated. that the statement of the respondent that she had not leased .out the building earlier to any body elsewas not.true. After. going through the affidavits filed by the parties in support of their cases the Additional Rent" Controller' held that the respondent .. had obtained the permission under section 21 of .the Act by making . wrong statements and accordingly revoked the said perrnission .. Consequently the appellants coul.d not be evicted unde, r that section.'

Aggrieved by the or.der of the Additional Rent Controller, the respondeii't filed an ap1}eal before the Rent. Contr'o'I. Tripunal. The Tribunal allowed the appeal and directed the eviction of the appellants. The Tribunal observed that when the Conirollcr had been informed by tl1e respond.en ·, right atthe time when the permission was gran'ted under section 21 of the Act that the property was not required by her for a period of three years but wculd"te. needed after that period foi the use of her son and her mother who was unwell at that time, there was no ground to hold that the transaction was not genuine.· Tl; e secnd appeal filed by the. appellants against . the order of the Tribunal was dismissed by the High Court. This

appeal by special .)eave is filed gains! the judgment of the' High

~~ ' '

 Section. 21 of tl)e Act reads . ·

"21.

Where. a lndlord. does not require the whole or any part of any premises for" a particular period, and the landlord, after obtaining the permission of the Controller in the prescribed -. manner, lets the whk of the preinises or part thereof as a residence, for such period as may be .agreed. to in writing between the landlord and the tenant' and the tenant does not; on the expiry of the said period, vacate such :Premises, the~1, not\vithstanding ;:iyq1ing contained in section 14 or in any .other law, the .Controller may,_ on an application made to him in this. behalf by the landlord within. such time as may be prescribed, place the

' 294'

SUPREME COURT REPORTS

[1984) 2 S.C.R. .

A landlord in vacant possession of the premises :or part thereof by evicting the tenant and every other person who may be in

ocupation of such premises."

When section 21 of the Act was enacted it was believed that it would encourage landlords .. who would not ordinarily be willing B to lease out a building as a residence for a short time even though - 'they might not. be in need of it durig that pericd, to lease ii..out for such short period because qf the si1mmary remedy provided by that section to recover possession>of the building quickly from. the tenant instead of the usual eviction proceedings which would take c

a Jong tirnc to terminate. . .

lt was not perhaps fully realised at the t'me of the enactment of section 2f .of the Act that many unscrupulous landlords would 'enter into arrangements purportjng tb be 'those .under that .seCt.fon

but in reality were ordinary leases and would utilise the threat of the summary remedy availabie under that section to realise higher rents or for any. other purpose considered to be contrary to the benign purposes sought to be:achievd by the Ace When one such case in • which the genui~1eness of a transaction entered irito under section 21 of the Act came before this Court in S.B. Norimah v. Prem Kumari Khanna, '1' Krishrni Iyer, J. observC'd :

"ft is easy to envisage the terrible blow to .the rent control Jaw if Section 21 were freely permitted to subvert the scheme . of Section 14. Every landlord will insist on a tenant going

•through the formal exercise Qf Section 21, making ideal avermcnts in terms of that Section .. The consequence will be that . both the Civil Procedure Code which prescribes suits for recovery of possession and the Delhi Rent Control Act which prescribe.s grounds for evictiort \vill be eclipsed. by the pervasiye operation of Section 21. , Neither grounds for evictioil nor suits for.cviction WiJJ thereafter be needed, and if the landlord moves the court for a mere warrant t~ place the Jandtdnl, through the court precess. in vacant possession of the premises, he gets it. No court-fee, no decree, no execution petition, no terminalion of tenanc);_ \Vish for possession_ and the co"urt is at. your Command . . Such a horrendous situation will be the negation of the rule of law in this area.

So it is that we deem it necessary to

(I) [1'980] I S.C.R. 281.

.. Alli •

• I

v.s. RAH! v. RAM CHAi.imi, LJ (Venk.alaramiah, J.) 295

. lay down the law as implied inSecti.on 2!'.

When anapplication under Section 21 .is filed by the landlord and/or tennt; the Contro!!er must satisfy himself by .such inquiry as .lie may make abqut the. compulsive 're-.· q11iremei1ts of that provision.' If he makes a mindless order,. the Court, \Vhen challenged. at.· the time of execution, will go into the question aS to whether the twin cOnditiuns for sanction have .really been fulftlkd."

The appeal before us bas to be con'sidered agai1ist the above bac1"ground. . . ' . . . ' .

It is urged by the appellants that the order passed under sedion

21. '0fh_e Ai;; i in this Case-havir, g.hCt:n obt:::ined _en t:he basis.of statements which were wrong, the app!icaticn for eviction should be dis1nissed.

While it is true that the Court should . proced with the initial presumption that the order under section 21 of the. Act was a regular one, the Court should. still examine the maierial plae<d befcre it by the. tena11t i'rrducted und9r that provision in order' to satisfy itself th.at there has riot b~~!) any mi-sus~ of the said proVision by th, e Jarid!Ord taking advantage of the helpless ·$itua1ion in \Vhic~ the tenf}nt 'vas placed. a-t. the ti111c when such order \.v"as obtained.

• _ fn the instdnt case .. it.is See;1 tha~ there weie three wrpng state- . ments .ma.<; teby the esponde:nt \\; hen. She apprcaChed !he AdditioTI31

Rent COnroller scekirig , pern1issinn 11nder secticn 21 cf the Act" to lease out' the property. First, it is. not true thai the 'building had not bceri Jeas<; d out earlier.

Now it is admitted before us that there was. on~ Katria occµJ)ying tl~-e 'buiiditlg a~ a ·.teriant an a. mothly rent, ofRs. 100/- oniy and .he had vacated the same abaut. four 'or live months before the, date on which.the orde~ was ma.de under section . 21 while it is. true that he had been there as• tenant even before the respondent purchased ihe building "in the year l 972 .. After he vacated the building, .it was leased out to the appellants on a . rent ofRS. 425/- per mensem. Secondly, it is admitted that the respondent's mother was not living with her. It is now admitted before us that the wom'an who is more tliitn 75 years old described as the mother of the re.spondenl'in the statement of the respondent recorded by the Additional .

Rent Controlier vvhen pern1issiOn was given u~1d.er secti'cn. 21-- is the si'ster .of the 'respondeni's father although in the course .of the .pro-

G -·

ff.

• G

SUPREME COURT REPORTS .

(1984) 2 S.C:R

ceedings before the Additional Rent Controller out of which this appeal arises, she was described as the adoptive mother of the respondent. Itis now stated that she is the foster mother of the respon~ dent ad that she came with. the respondent to the residence of her husband after her marriage. It is stated that she was suffering from cataract in her eyes;. that it was not ripe for being treated in 1977 when the order was passed under section ·21 of the Act and that it was expcted that after the cataract was removed she would need the · - building in the occupaiio11 ofthe appellants which is equal in size . to the ground floor in the occupation of the respondent. Thirdly; the son of the respondent was an . young boy studying in the seventh class in !977 and not in the ninth class. From the foregoing it is obvious that-the respondent had suppressed that thj!re was a tenant iri the building who had vacated only a few months before the date of the .application under section 2fofthe Act; had made false statement about the relationship with her so-called foster mother; had not disolosed the nature of her sickness which was expected to be cured in three years; had stated that her son was studying in the ninth class to make it appear that he ould be sufficiently old at the end of the period of thre~ years and that he would be in need of extra accommodation. These statements which were in the nature of half-trµths were apparently made in order to make good the plea that t.here was only a temporary necessity to lease out the building for a short pericd and that the respondent bona fide anticipated that there. would be a pressing, necessity to reocc.upy the premises at the end of the pcricd which are the two crucial factors governing an order under secticn 21 of the Aci: The reasons given in this case are .quite unconvincing~ 'we arc not satisfied that the respondent honestly believed when she . applied .for permission under. section 21. of t]Je.Act that' she would. be in need of the premises in question at the end of the stipulated period. On a consideration of the material before him, the Additional Rent Controller' was right in holding thaLthe permission under section 21 of the Act had been obtained by the respondent ori the basis of wrong statements but for which the permission would not have been accorded. •

It is, however, urged that the appellants who had colluded with the respondent when po; rmission was granted under section 2i' of the Act should not be now allowed to resile from the stand they had taken then., It is true that the appellants who were the weaker of the two parties did not question the truth of the statements made by the respondent when the permission was granted. But sucl1 collussion, if any; beiween the to unequal parties does not confer any sanctity

• I

v.s. RAHi v. RAM CHAMBELl (Venkataramiah, J.)' ?,97 • • on the transaction in question. In cases of this nature it is always A open to the weaker of the two parties to establish that the transaction was only a camouflage used to cover its true nature. Collusion implies the existence ofo or more parties who can deal with each other independently with the object of entering into an arrangement which . . may serve as a cloak t-0 cover up the" real state of affairs. When

one party can dominate over the will of the other, it would not be

 B a case of collusion but one of compulsion~ The above Vitw' is fully in consonance with the spirit behind the rule of ci]lpression which is . recognised.as.an exception to the doctrine that a party cannot recover . what he has given to 'the. other party under an illegal contract. 'It can never be pred.icated as pari de/icto where one holds the rod and the other bows to it'. (Per Lord Ellenborough in Smith v. Cuff C

(1817) 6 M & S 160 at 165). Cases which call for appropriate relief . to be given to an innocent party where 'one has the power to dictate, the other has no alternative but to submit are not uncommon. Cheshire and Fifoot's Law of Contract (10th Edn.) referes to another type of case belonging to this category. At page 338 of that !realise is the '.' following .passage : D

. "Another type of case where the parties are not regarded as equally delictual is where the contr"act. is n•ndcrcd illegal bya statute, the object of which is to proteci one class of persons from the machinations of another class, as for example where it forbids a 1and1;, rd to take a premium from.a prospec- E live tenant. Here, the duty of observing the law is placed squarely upon the shoulders of t.he landlord, a11d the protected person, the tenant, may recover an illegal premiu111 in an action jor money had and. received, even if the statutf' omits to afford him this remedy either expressly or by implication. In the words of Lord Mansfield :

 F

. Where contracts or transactions are prohib.ited by positive statutes, for the sake of protecting one set of men from another set of men;· the one from their situation and condition being liable to be oppressed and imposed upon by the other; there the parties are not in G pari delicto; and in furtherance of these statutes, person injured after the transaction is finish<d and com, the pleted, may bring his action and defeat the contract." H The ground that the appellants cannot ch, allenge th~ permission

SUPREME COURT REPORTS [1984) 2 s.c.R. • A initially granted under section 21 of the Act is not therefore, available•. in this case:

. .

. . . .. .

The Tribunal and the High Court have approached the present case in a mechanical way ani, I have failed to apply correctly the ratio of the d.ecision in Noronah's ca.1e to the facts before thei11. We are of the view that on the facts and in the .circumstances_ of the case , the respondent is not.entitle<) to invoke the remedy under section 21 of the.

Act to. recover possession of the premies.'.

In the result, the judgments of the High Court .. and of the T-ribunal - are set aside and the application filed b'y th& respondent unde~ section 21 of the Act for recovery f the premises is dismissed.

. The appeal is accordingly allowed with costs .

.. S.R.· , Appml allowed. fl

I .

.. :411 '

290

V. S. RABI AND ANR

RAM CHAMBELI

MISRA, JJ

Section 21

section 21

section 21

section 21

section 2

Venkataramiah

section 21

S 160

B.X. Joseph

N.S. Das Behl

J.M. Khanna

NKATARAMIAH

Delhi Rent Control Act

New Delhi

Section 21

Ram Chambel.i

s. 21

R'.lm Chamlieli

V.S. Rahi

Santosh Rabi

section 21

section 21

section 21

section 14

section 21

section 2

section 21

Krishrni Iyer

Section 21

Section 14

Section 21

Section 21

Venk.alaramiah

Section 21

section 21

section 2

section 21

section 21

section 2

Ellenborough

S 160

Cheshire

Fifoot

Mansfield

SUPREME COURT REPORTS [1984) 2 s.c.

section 21

Noronah

section 21

section 21


.. AMAR KANT CHOUDHARY

STATE OF BIUAR & ORS.

January 3, 1984

(E.S, VENKATARAMIA!l , AND R, B. MISRA, H.]

Naturaltt1usticr-ruie o.f-a.dver~e report in confiifential .roil 'nl?f to be acted upon to deny proniotional ojJpOrtunitieS un!Css. con11nt1nicated and explanation con~

_s, idered, a.ciing _otherwise vitiates: .decision. .

The appellant, a directly recruited Deputy, Superintendent of Police' in the Police Departmen, t .of the Respondent State was conSidered in 1976 for appointment as a ml;'.n1bcr of the Inl.ijan Police SerVice under the pr1Jvisions of the Indian Police ·

Service (Recruitn1ent) Rule~, 1954 read with.the Indian Police Service (Appointment by pro1notion) Regulations, 1955. The sclectioll' Committfe did not include the. appellant in the select list because of ·n adverse entrY. i~ his confideiit.ial ro1i. of

1973-74. T.he appellant was cOrrmunicated the said adverse entry only in' J977. which was later on expunged by the .state Governn1ent in DCCenlber 1980. There were also adverse entries iri the Confidntial foll of the appellant.for the year 1974-75

Which were communicated tb him in 1976 and which we; e aJso later on expunged by the.State Government in February, 1978.and Octobet 1980. 'ThC Selection Con1n1ittee nlet again in March 198J, bi.It this tin1e illso did not include the appellant in the slect. list while son1e of his. junio.i:s were included .. The appellant. qu_estioned

the validity of the decision of the Sclecti-On- Colnmittce in a writ petition before the !Jigh Court: The High Court disnlisscd the 'writ pe.iition 'at the stage of adn1ission. ,. Heo, cethis appe:i.L ln this appeal the apj:icllant urged that the Selection

ComcTiittee was wrong in relying upon the adverse entries , vhich had been n1ade in his collfidential rOI.ls \vhich had noi beep either. con1munica.ted to hin1 or against which he.had n1ade representation \vhich hadr-emained undisposed Of and.which had been subseqlleJ?.tlY expunged. ' '

Apowing ihe apµ, eal,

~Ef,, D: The principle is. \veil settled tha~ in acord<ince With the rules of natural justice; an adverse rejJort n a. c011.fidenial roll cannot be acted upon to deny promoti.o"nal oifportunities Unless it is comri; tUaicated to the person concerned

, A

' c

so that h6 has an opportunity to improve hiS \vork and conduct or to explain the

G.> circumstances leading to •the report. Suen all opporturiitY:iS not <l; Il empty formality,

its object, partiillly, being to enable the superior authorities to deeide on, a consideration of the explanation o.fferedby the Person concerned,. whether the adverse . . . report is justified. [302 F]

Gurdial Singh FUji v. State_ of unjab & Ors., [1979] 3 S.C .. R:.518; referred to.

Jn the instant c.'.l.se, the case of the appeilant for pro1notion to the Ttldian

I c

Police "Service Cadre .had not been considCrcd by the committee in a just and fair way and his case has been disposed Of contrary to the principles laid dow9 in the Gurdial Singh Ffjji's case.

The decisions of the Selection Committee recorded at its meetings in which thci case of the appellant was Considered are vitiated by reason of reliance being placed on the adverse rearks which were later on expunged~ ThC High-Court committed an error in. dismisSing the petition of the appellant. _The appellant hp.s made out a case for reconsideration of the question of his prornotion. to the Indian Police Service adre of thC State of Bihar as on Dece'mber 22, i976.

The Selec.tion _Co1nn1iUee has .now to /econsider 'the case of"'the -appellatit accordingly. [104 B-G]. '

R.L. i3utail v. Union of India & Ors., (1971] 2 S.C.R. 55. distinguished.

In order tO, avoid a contingency; as arose.i~ this case, the Gofcrnment 1nay consider the introduction of a system in which the officer who has to make entries in thci confidential roll-1nay be required to record his remarks. in the presence of the.,.Officer against Whom remarks are proposed to be made after giving him an opportunity to explain ahy circumstance that may apPear to be against him with the right .to -niake rePrcsentation to higher authorities agairlst any °adverse remarks. Another system which may be introduced. is to ask the officer who records the confidential remarks to serve a cop"y of such remarks on the officer concerned before the confidential rOU is sllb1nittcd to the higher authorities so that hiS iespresentation against the remarks may also reachthe higher auth9rity shortly after th_e confiden- . tial roll is received. This would curtail the delay in taking action on the representa- iton. [105 B-0] .

CIVIL APPELLATE JURISDICTION ; Civil Appeal No. 8491 of .1983.

From the Judgment and Order dated 5th October, 1982 of the .. ~Patna High Court at Patna in C.W.J.C. No. 1420 of 1982 .

. P.R. Mridul, and M.P. Jha,. for the.Appellant.

i. B.B: Singh, for the Respondents

The Judgment of the Court was delivered by,

. VENKATARAMIAH, 1: This is an appeal by special leave against the order dated: October 5, 1982 inc.W.J.C. No'. 1420 of 1982 on the file of the High Court of Patna dismissing the petition filed by the .G appellant under Article 226 of the Constitution.-

The facts of the case are these ; The appellant was directly . . recruited and appointed as a Deputy Superintendent of Police in the Police Department of the State of Bihar in the year 1964. Jn 1973 H he was eligible to be considered for appointment as a member of the Indian Police Service under the provisions of the Indian.Police Service

l a.. • l

A.K. CHOUDEARY v. BIHAR (Venkataramfah, J.) . 301

(Recruitment) Rules, 1954 (hereinafter referred to as 'the Rules') read with the Indian Police. Service (Appointment by Promotion) Regulations, !955 (hereinafter referred to as 'the Regulations_') framed under sub-rule (1) of Rule 9 of the Rules. His case was placed before . the Committee constituted under Regulation 4 of the Regulations for the purpose of preparation of the list of suitable officers for promotion to the Indian Police Service Cadre of the State of Bihar in 1973, 1974, 1975 and 1976. In the years 1973, 1974 and.1975, he could not be included in the select list as he was junior 50 thos_e who were included intheselect list. In the_ year 1976 his name was not. included in :the select list as there was an adverse entry "in his confidential roll of 1973-74. The reasons given b, v the _Committee for superseding the appellant based on. the confidential roll were these : ·

"Delayed disposal of pending papers and supcrv; sicn notes. 'Inadequate control over office, judgment," initiative, sense of responsioility and anagement reported to be just fair. Censured by State Govt. order Cit. 20th Oct., 1975."

. '

The Selection Co_mmiitee took_ the decision to supersede the appellant at its meeting held on Decembe.r 22, 1976 in. view of !le above entry in te confidential roll of the appellant. It. is not disputed

tht the_ said adverse entry was communica.ted to the appellant in the year 1977 after the above meeting was over. It appears thaf there were also adverse entries in the annual confidetial roll of the appellant . . for the year 1974-7-5. They were communicated to tlfe appellant in the year 1976. The appellant made representations in respect of.both the adverse entries in time, His main 'grievance was that tly . had been made by his official superior who was biased against him.

The adverse entry made in the confidential roll for the year 1973-74 was expunged by the State Governent on December 3, 1980 and the adverse entries in the confidential roll for the, year 1974-75 were expunged by two orders dated February21, 1978 and October 7, J980. There was.no meeting of the Selection Committee from 1977 to 1980.

It, however, met on March ll/12, !.981. on thi; occasion the appellant represented to the Committee \jlat the adverse entries in his confidential rolls had been removed by the State Governmrnt by various orders and requested them to consider his case for promotion to the Indian Police Service. Cadre. . On this occasion ti1e Committee did not look into the confidential rolls of the appellant for the years 1979-80 _and 1980:81 which eontaind entries' very favourable to the appellant for no fault of the appellant .. The' Co.mmittee,' however,

. . , F

' .

classified bi!n as.'good' .but did not inciude. him in the sekct list while

some of his juniors, were included. The appellant 'represented to the 'committee and the State Government ag,'.inst tl; e decision taken by the Committee. -the Committee again 'met on October 14, 1981.

When nothing came outof therepresentations made by him,' tl'.c appellant filed.a writ petition questioning th validity. of the dccisioi:s of the Selection Committee before the,. High Court of Patna. The petition wasdismissed at.the stage of admissicn. This appeal is filed by special leave against the. ordef of the High Court;

~. ' .

The main point urged before us is that the Selection Committee 411 had committed, ah illegali.ty in rejccting th.c daim .of the appl!ant fer being included in the select list in th~ Y.ear 1976 by relying upcn tle adverse entries whiCh had been made. in his confidential rolls which had' not been either' .commu;1icated to him or against which. he had .made representation which had remained undisposcd of and which _.had been subsequently expunged. .·

' The true legal position governing such cases is laid down by this Court in Gurdial Singh Fijji Y. State~[ Punjab & Ors.'''. which was a case arising under. the Indian Adminis.trative Service (Appointment ·

by Promoti:in) Regulations, 195~ which more or Ics.s correspond to the Regulations applicable to the Indian Po life Service.

Jn tbe 'aboyc case Chandrachud,.C.J. has observed thus : ' . . .

"The principle is weJl'.settled that in accordanc~. with the rules of natural jlistice, all adverse. rcpcrt ln a cOnfidtntial roll cannot be. acted upon to deny promotional opportu.nities unless itfs communicated to the .person con.cerned so. that. • he has .an opportunity 'to improve his work arid conduct or . fo explain: the circumst.ances leadjng to the )'eport. Such an oppoitunity is not _an empty fotmality, its object, .par- . tial!y, being to enable the superior authorities .to decide on a consideration of the explanation offered by the person concerned, whether the adverse report is justified. Un- , . fortunatel'y, for one reason or another.,. not arising out of any fauli on the: part of the. appellant, tliongh the adverse report was communicatd to hiin, the Government has not been able to consider his explanation and decide whether the report was justified. In these circumstances It i's didilcult to suppoti the non-issuance of. the integrity certificate to

(I) [1979] 3 S.C.R. SIS.

. '""'

...

.....

A.K. CHO.UDIIARY v. BIHAR cvenkataramieh, f)' 303

the appeJlimt. The chain or reaction .began with the adverse A report and. the infirmity in the link -of causation is that no one .has vet deciccd whether that rcpcrt was justified. We cann.ot speculate, in the absence cif a prper p!ea<, ling, whether the appellant was not four.ct suital;'e _otherwise, that. is to say, for reasons other than. those connected with the n<Ynisuarice of an .integrity .certifiC'ate to hin1." B . . ·. . .

It is ot disi:.uted that the c'.&csilirnticn d" cfiicers whose ca><s are taken up forconsiderati()n into 'outstanding', 'very .l'ccd', 'geed' or 'bad' etc. for .pmposes o( promotion to tl\e Indian 'folice ervice Cadre is mainly based upon the remarks in the confi<; lential rolls.

On December 22; J 976, when the Selection Committq' met, the adverse remarks, in the onfidential roll for 1973-74 had. not peen communkated.and the appellant's representatio11 1egarding a_dvetse remarks in the confidential roil for the year J<;74-7) and censure against him had not. been disposed .cif clthough it is alkged that one

Shri Yamuna Ram agai1lst whon1 dso r.dvcrse ren1rrks had been . . made was included provisicnally in, the '°!eel list When the Selection Committee met on March 11 and 12, 1981 despit~ State. Governm!'nl's suo nrofli decision not to retain actverse rem.arks for 01e year 1976-'77 on records, the same had not been removed froll) the confidential roll, This must have infim.nced ihe decision of the Selection Com- 1™ttee. lt is also seen that the confidential rolls of the appella; it for the year l 979-80. and' 1980-81 which contained eniries favour.able to the 'lppellant were n; t placed before the Selection Committee.

On October 14, 1981 when the Selection Committee met, it does not appear to haw considered _the representation made by_ the appellant against his non-selection.. hi addit.ion to all these, the State Government has expunged t\1e adverse remarks by its orde!S made from time. to time. These facts are not controverted by .the respondents.

' . . .

The fac'ts of this case are distinguishable fron1 the facts irivolved

in the decision of this Court in R.L. Butail v. Union of India & -Ors,'"

which is relied on by the respondents. In that case the confidential report _of the appel\ant !hrein for the year "1964 containd an adverse entry and he had made a representation regarding it. When the Departmental Promotion Committee met in March, '1966, the appellant's . represetation regarding the adverse entry of ]964 was not placed before it and a decisio'n adverse to the ppellant was taken by the Commiitee witl1ont reference to the said 1; epresentation.. The

(1) [!971] 2 S.C.R. SS . . .

appellant contended before this Court tl\at th~ omission to consider his 'representation before th~ date of meeting of the Commiitee vitiated "" its decision. The Court held that the .omission either to place the said representation before the Committee or its '.•non-corisideratin

before the date of the meeting had no effect on the decision of the Committee as the represetation had actuaily been rejected subsequently with the result that the confidential report for the year 1964 remained unchanged. The position in the case before us is different. _Herc the adverse entries in question have in fact been expunged by · the State Government subsequently. It may be pertinent to state here that the" practice of the Departmental Promotion Committee referred to in Butail's case (supra) was that if in such a case a rep- . . . . resenta.tion were to be accepted .and. in consequenc' the. confidential report .was altered or the adverse.entries were expun.ged the Committee would have to review its recommendations in the light of such a result. ' The appellant in the present case has pressed before us for a similar relief as the adverse entries made against him have been since expunged. . . .

After giving our anxious consideration t.o the uncontroverled material placed before us we have reached the conclusion that the case of the appellant for promotion to the Indian . Police Service Cadre has not been consideied by 'the Committee in a just and fair .way 'and his case , has been disposed of contrary to the principles laid

down in Gurdial _Singh Fijji's case (supra). The decisions of the Seleo- -1' . tion Committee Tecorded .at its meetin-gs in which the case of the appellant was consideretl are vitiated by reason of reliance being ( placed on the adverse remarks which were later. on expunged. The 1 High Court :committed . an error in dismissing the petition of the appellant and its order is, therdorc, liable to be set aside. We accorditigly set aside the order of the High Court. . We hold that the appellaJ¥ has made oµt a case for reconsideration of the question )- • 0f his promotion tci .the Indian Police Service Cadre of the State of 'Bihar as oil" December 22, 1976 and if he is not elected as on that date for being considered again as on March 12, 1981. If he is not sejected as on March.12, 1981 his.case has to be considered as on October 14, 1981. The Selection Committe has now to reconsider the case of the appellant accordingly after taking into consideration the orders pased by the State "Government subsequently on any adverse entry that may have heen mde earlier and any other order ·-/. of similar nature pertaining to the service of the appellant If on such reconsideration the: appellant is selected he shall be entitled to the seniority and all other consequential benefits flowing therefrom. We issue a .dirction to the respondents to reconsider the case of the ..

~-

. '

A.K. CHOUDHARY v, BIHAR (Venkataramiah, J.) . 305

appellant as stated above. We hope that the above direction will be complied with expeditiously but not later than four months from today. ·

Before concluding we wish to state that the Central Government and the State Governments should now .examine whether .the present system of maintenance of confidential rolls should be continued.

Under the present system, entries are first made in the confidential roll of an officer b.ehind. his back and then he is given an opportunity to make a representation against any entry that may have been made against him by communicating the adverse. entry after considerable delay. Any representation made by him would be considered b~ a higher authority or the State Government or the Central Government, as the qse may be, some years later, as it has happened in th_is' case, by which time any evidence that may be ihere to show that the entries made were baseless. may have vanished. The preqicament in which .. the officer against whom .advese remarks are made. is then placed can easily be visualised .. Even the authority which has got to pass

orqers on the representation.of the officer will find .it difficult to deal with the matter satisfactorily after a long interval of time .. Jn the meanwhile the officer concerned would have missed many opportuties which would have advanced 'his prospects in the serviCe.. Jn order to avoid such a centingency, the Government inay consider the introduction of a systein in which the officer who has to make entries in the confidential roll may be required to record his. remarks in the presence of the officer against whom remarks are proposed to be made after giving him an opportunity to' explain any circumstance that may appear to be agafost him with the righ!'to make represe, ptation to higher authori.ties against any adverse remarks. This cou.rse may obviate many time~ totally baseless remarks being made in tJie confidential roll an"d would minimise the unnecessary snffering to which the officer concerned will be exposed. Another system which. may be introduced is. to ask the officer who rec.ords the cc; mfidential remarks to serve a copy of such remarks on the officer concerned before the confidential roll is submitted to the higher authorities so . that his representation against th~ remarks may also reach the higher authority shortly after the confidential roll is received. This would curtail the delay in taking action on the representation. Suspensions,· adverse remarks in confidential rolls and frequent transfers from one place to another are ordered or made many a time without justification and without giving a reasonable opportunity to the officer concerned and such actions surely result in the demoralisation of the services. Courts can. give very little relief in such . cases.

The

SUPREME COuRT REPORTS

[1984]2 S.C.R.

A Executive itself should, therefore, devise effective mearis to mitigate the.hardship caused to the officers who are subjected. to such treatmen\. "* These questions require to be examined afresh in the light of the experience gained in. recent years and solutions should be found to ell1,; inate as fr as p.ossible 6omplaints against mi; use of these powers by official superiors who may not be well disposed towards the officer

B . against whom such action. is taken. It is needle<is to state that a non-disgruniled bureaucracy adds to the efficiency of administration .

. The appeal is accordingly allowcc! with 'costs.

H.S.K.

Appeal allowed.

. /':-·

~ .... -

AMAR KANT CHOUDHARY

STATE OF BIUAR & ORS

B. MISRA

Singh Ffjji

(1971] 2 S.C.R. 55

P.R. Mridul

M.P. Jha

B.B: Singh

VENKATARAMIAH

Article 226

State of Bihar

December 3, 1980

October 7, J980

March ll/12, !.981

October 14, 1981

High Court of Patna

Chandrachud,

December 22; J 976

Yamuna Ram

State. Governm!'nl's

Butail

Gurdial _Singh Fijji

December 22, 1976

March 12, 1981

March.12, 1981

A.K. CHOUDHARY

Venkataramiah

Central Government

SUPREME COuRT REPORTS

[1984]2 S.C.R.