' .

 .. '.

. RAMENDRA SINGH

v ..

JAGDISH PRASAD. AND ORS.

 Febf'uary 17, 1984

. [ E.S. VENKATARAMIAH .AND R.B. MISRA, JJ. :J •

Cit-ii Se; dcc: ersons.1161 qua!ijiefi'appoilit¢d to higher p; stS to n1eet e1nei'gC111 siturition--1! could be given senioity over person~.' apjJoli1ted under . ru!s subsequently. . . . . . .. .. .

. In ontcc; tion ·.\Yith tle cxccu"tion of _a \Volli Banl(,· 1rocct. on _an ~!11.e; gcil.cy . basis, which was required .to be completed within a short tin1e, the Public Works .

Department of the State needed a nu1nber of mechanical ov'erseerS. Since at that time there as accute shortag~-.or qu<ilified overses the Dcpartn1ent had al?pointcd; as.oversee.rs on provisional basis against th© sanctioned posts, certain persons who \Vere worki1; g in the depart1nent as sub-overs~s even though. theY had orily appeared. in the dipfrn110· ~Xamination in engineering but hc.d not yet passed it. ln the 1n1::a1time, the respontjets ·(petitioner~ befoe; the High Court) W'.ere selte"d . by a S;:tection Con1nlittce constituted inaccordancc withdie procedure laid down in. Bih<i.r Public. Works Depa!'h11ent Co.de. After they passed .the d-iplotna CxaminJ.tio:~, h..: Cili_..:r E_:-._g:ine;._r had in ·~964 apoi_nted the ·appel.lants (contst.ing respondats ofor~· tr1~ 1-llgh .-...outl) as ten1porry overseers against the sanctioned posts frOm the date of publica ticin of results of.the diplo1na examintion. In 1973; a grad~ .tion list \Va's. prepared and so1ne Of the appellants wre subsequently pronlotcd to

high.er' posts. . ·

Th~ respondc;.:ntS in a writ petition fitCct in the High Court had inlpugned the order of th.e C_!, k:f Engincci appointing the _appellants retrospectively as oversee.rs on the. ground that while they were apr)oirite<l after folloWinti the procodure pres" .cribed under the rules, ti-le a"ppllants t the time of their appointment as overs$eCrs--.

were nejthr qualified .to be appointed s overseersnor were they selected by a Selec

tio~ 'Con1mit~ consfitutCd under the rules .and that in any event the apP.cllarii-s .could not Qc aPvoiuted with etrospective efre'ct. secondly. thoµgh .the ·.appellants

shown aS seniors to the respondents by th~ chief Engineer.'soi:dersof 1964, _the

aP1J~1lants were in rac'c junior to them anct that their tater" pron1otion was imp.roper.··

' . . ·-.

-j: .. \

The Higll Court held that tbc Publi~ W-0rks :Ocpartent Code n accoljj61_1ce with \Vhich-thy respondents wete recruited. directly contained. merly devartmental irlstri.tctions and .. hvd. not ac(tuired -statutory force .and that, theiefon::, tbe appciint~ inent o.f thC appellants. Could nOt be held to be invii.lid on the ground thnt the department had no poWer to illake retrospective appointments.· It ho, vever held that the~ .fevised , gra4l.tio(l isi, showing .the appelri.nts above . the resp, endents, on. the _bas.is . Qf -the 1964orders was bad.in law .. Consequently, the. Iiigh Court qua.shed that part of the two ofders which.had fixed the date of pi, iblic; atiori Of the resU1t of diploma

cx:afuiation as, the cp1nmenCe1ei-it of length of se1vi~ of tenip6rary oversees.

k:c

/':

RAMENDRA SINGH v. JAGDISH PRASAD ...

In appeal..fo this Cort is was cOnteded on behalf Or" the appCllJ.nts that since the Cxccutivc power .. of the State is co-extensive with its lbgiSlativC pow¢f, n the :absericc of a statutorY .rule.framed :under. Article 309 of the. CoiistitUtion, it was opetf ·to the executive." in eXercise of its excuiive power :Uni; Ie"r-Art. . .162 of.the Collstitu•: tion, !O njake "appoiritment~$to meet' the" exigC1cics of a sitlltioll. . .. ..

DiSn1issing the appeal,

HELD The impugned order oi 1964 which prported to appoitthc s~ ov'crseers as temporary overseers from the date Of publication of their. rc~1:1lt of diplonl'a examination are clear_l.Y vlolatlve Or Articles 14 _and 16 of. the c;:'onstitution ·-inasmuch as the respondents hi:tdalready b"een appointe_d as ovei:eers by. a Seie.:- tion committee. conStitutC<l under the rules contained in.the public Works :i;:>ep_art- .. merit COde.· The 1964-order making. the tempoa:rY. appointments conferred . natiOnal seniority on the appellarits for the period heY aie. actua1ly working as subOverseers fri the lower scales. Ciutside the cadre of Overseers: ·The impugned orderS.inay.llot bave'esultedjri.reduction of rank but yet theydid.· affect the seniority of the .respondents which eventUaUy inight result. ill' reducing thCir cha_nOes for promotion. [613 D-F] ·

ft"~.

There'"iS no gain-sayin& _the fact that the .executive i:iower of the .&ate .is co-· ex!ensiVe with the legislative Power and that. it is.not necessary that. there' should be~ -

law ill existence before the executive is enabled to flinction and the power of the executive is limited.me_rely to the carrying oiit of the laws. Th_e;.e.is nothing in terms. of Article 309 which abridges .the powers or the executie to .act. under Article 162 o'f the Contitution without a la~.· hilt.yet if there i~ a statutorY nile or anAct'On a n'atter the . exercise of its. executive pciwer uder. Art. -162, ignore -Or a.ct Contrary: td .-m~~~ . . .

-1. -· B.N; Nagarajan & Ors.' v. State of My; ore '& Ors, [1966]3 SCR.682; Ram ""'-·-· JafVayll Kapur v. State oj Punjah.[1955] 2 SCR 225; Rajendr.a Narin Sitlih &Ors. . v. State of Bihar & Ors .. [1980] 3 SCR 450; S.B. Patwardhan's case [1977] 3 SCR ns . . ..

-.·

and R.N. Nanjundappa v. T. Tiiinimiah & Anr. [i972] 2 SCR 799, referred to. . . . . .. .

C1v1L APPELLATE'JUR1smcnoN : Civil Appeals NM.

1977.'

308,313 Of

, Appeals by Special leave frol)l the Judgment and Orderdated ' .the 8th September, 1915 of the l'atna IDgh Court in C, W.J.€. Nos.

1419/73; 467/74 and522 ofl974, . . .

. i,, N, Sinha, R.P. Singh., R.K. .Jaiii, Suman Kqpur: for the Appellant in CA. No. 308 of 1977. , . _. .... ' . '

R.K. Garg, R, D., . Singh,

~ Appellat in CA. 309 o( 1977. . '• .• _, . ' .

R.K. Jin & Suman. 'Kapoor, for il1e . ..

.. ·,

G ,,

600 . '. ·SUPREME. COlJRi' REPORTS. .. . . . . R.K:. Jai!l for the Appellaht in CA. 310/77: ' . s . .. . .

(1984) 2 S.C.R ...

.L.N. Sii1gh and D. Gpbiirdhan for•thc AP,, olfa:; t in. Cs. 311-13 .. . •. . .. ,. " .... L.N, Sinha, D. Goburdha;, for Respondents 3-7 in CA.,30S/77 and '.or Respondents Nos. 7-6 in CA. 309/77 &for Responiknts 2 to. 4 tn CA No: 310/77. .

.•;_- •

I ? ··· M. K. Ramamurthi D.P. Mukherjee for .·.CA: No. 308/77 & RR 9'10 in CA. 310/77~

' '

Respondents 12, 13 in.

. . U.S. Prasad for Rspondent No .. 4 in CA. 309/77. ·· .

D .. • G.L. Sanghi, Radlia Mohqn & M.L. 'Verma for RR. !, 2 & 16. in CA. 509/77 & for R-11 in CA: 3iO ofl977.

, . . .... ,. '.. .

. " '._ . . Jaynarai11, R.P;. Singh; R.K. Jain & Suman Kapor. for. Respondents in CA. 311-313 of 1977. ·-* . 't'. -- ' .. ..

. ; A.K. Sen, Radha Mohan.Prasad& M.L. 'Ve/,;,; for R.R. I &.2 iq CA. 313 of 1977:. . • . " .· .. . Th~ judgment of the Court ;,, as delivered by · . . , . , .

. MISRA; 1. This ]mnch of appeals is directed agaist a 'commdn .. judgment and order of the Patna High Court dated 8th September, . 1975 all.; wingthree petitions under Art. 2:26 of the Constitution ln part.· . ' ' . ' .

. . ·. ·. ·. . ·,,. . : .. "- . . The materfal facts to bring .0ut the points for consideration in . these appeals lie in a narrow compass. The Public Works Department · in Ilihar had a very smaU mechanical organisation. In_ 1962, however;. it undertook the execution.of a.WorldBank project. In that conneO:. tion a numt)er or mechanical" overseers were needed. As the project had to be, executedon an ernergency basis within a short time and ' . . . .

' .. ·,.../'

. RAMETDRA: sn:iGH v. J~GDISH PRASR~ (Misra}.). 601

.'there being dearthor'qu; lified overseers, persos ho were .. working . '

ortly as sub-ove.tseers or persons who haCt appe.arcd at the diploma .exaillination in engineering, but had npt passed the sanie.; were appoiil_.,.

A.

ted against the sanctiQl!d posts on a provisional basis. There were.··. . some.others who .were also .. appointed as niechankal overseers on •· '

'.·. teip.porai:y basi~ iilthe World Bartk project; a .wing of the Public Works . • '

~.

...

'- ·-·

Department, after appearing before a seiection committee dly con, stituled according to r. 1, Appendix II cif the.Bihar, Publ.ic Works Department. Code, !st Edi1., 1958, VoL IL Thi.s rule. readi: · .

' "All j, ermanent appoiritmc'nts to the .. Bihar Subordinate , Engineering Service either by absorptiqn ofJempornry or. work; - ,, charged Overseers a1id Estimators; or by direct recruitment,

wiH. be made by the CJ;1iefEngineer, provic; led that in the pase .oC' direct recruitment :(permanent o.r teniporaty)'; appointment will . be mde o.n th; e advice of the fOmmitte of senior officers con:

stitutedfor the purpose. The committee will consist of.·.three members including the Chief. Engineer, who:will be the Chair~· : man .of the committee; Tb.e. other two members will be nomi- . nated by him with the approval of the Government in the Public

Works Department from' time to time". · ' -· - . - .

The: Chief Eilgiileei by oders ~-dated 18th A; gust and 26th'

..i,,..~ Septeiribe~, 1964 , appointed among . others the following. persons,. al- ·

 teady working. as sub-overseers in the department as temporary qver- · seers aginstthe sanctioned posts m their pssing the.diploma eX:ami- . , nation from the .date of j:mblicatipn of their results of the diploma -in .

mechanical/elcctricai engh1eedng examination: ·

. .,·,

~· .

-. __.. ...

1. Ramendra Singh 2.. Keshav'Singh . . .. 3 .. Bho\a Nath Chaudhary • A Awadesh 'Kumar Singh. ·

5. Raje; hwar Sirtlla .6. Ra;,_ Chandra Prasad

7. Udai Narain Singh, ·

_ .. 8~_. Siillil I<llmar ' 9; . Rajnandan Pd. Singh 10, Gopa!Ram ..

IL Sidh Na!Ji Singh_ .

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. i

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. 602

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

...

12. '. Prem Chand Prasad, nnd many other? who_ are. not parties ,. here,

It; ppears ihat a provisio11al gr_adation list of overieers was wepared. Certain overseers who fdt aggrieved by the provisional ·]ist inade: various respre_sentations and eventually a revis.ed gradation list dated 17th November, 1973 was prepared.

Some. of the aforesaid twelve persons were promoted as Mechanical Sub-Divisional Officers lby an _order dated !3th __ March,~ 1974.

The revised gradation list dated 17th November, 1973 and the two orders dated J8th' August and 26th September, 1'!64 appointing the aoresaid twelve'Persons as temporary. overseers with retrospecfive . effect and the order dated 13th March, 1974 promoting some of them .. ,

as .Mechanical Sub-Divisional Officers were challe.nged -by three sepa rate writ petitions: (I) writ. Nv. 1419 of 1973 filed. by Shyam Dayal

Pandey, (2) writ No. 467 of 1974 filed by Fu! Chand, and (3) .writ No. 522 of 1974 filed by Jagdish Prasad and Mohammad Shamsuddin.

The respondents in the three petitions includirtg,.the aforesaid twelve persons were. common, though differently numbered.· .... ·.

It wouldbe convenient to identify_ the parties with , reference.

to the writ.petitions .. The writpetitioners therein will be rcferre.d to ~~>(' "'hereinafter as the petitioners and th~:above mentioned twelve persons,: 1 ;.. l whose retrospective appointment has been challenged, as the c.0ntes- . ,_ting respondents. . . .. -.. 81 The _case. of. the petitioµers in the three petitions b.s .been th.at they were ppointed as mechanicaloverseers on temporary basis in. t_he World Bani< prqject, a unitofthe'Public Works Department after appearing before a selection committee duly constituted according to r. 1 referred to above. The appointment of the . contesting respon dents by orders dated 18th August and 26th September, 1964 with retros' pee.live. effect. has been challenged on the ground that they were tern-., porarymechanical sub-overseers and had not got the requisite qualift- · ' cation for being appointed asoverseers' n6r did they appear pefote~ co=ittee as required by r. 1 of the PW.D Code and in any case they could n, ot be appointed with retrospective effect. It was further pleaded that the contestii.1g respondents were-junior tci the petitioners but in •

~··.·

RAMENDR.A SINGH v. JAGDIS.B .PRASAD (Misra 1.) . .603.

the <revised gradation .list-the contesting respondents wete. shown . above .the P'titioners on the basis of the aforsaid two o.rders dated ·.18th August aiid.26th September, 1964. T, he promotion of some.of nhe contesting respondents as mechanical. sub-divisional officers was

'also bad on that account. ' ·

The contesting_respondents as well as the State of Bihar flied a return justifying .. the appointment of !lie contesting respondents as ': wen as the promotion given to some of tM contesting respondents as m?chanical SuiJ.-diVisjO:nal offiers. On thccoi1tntions 9fthe Parties, .., the !Iigh Curt formulated the'following points for consideration:, ... c

. '

 i .. Whthcr .the impugned gradation listhad been prepared in .. acco.rdane with law ? . ·

2. Whether the promotion or various respondets on the basis . of the said grac!otio;1 list is ji.1stified? •

3. Whether th.¢ app0intmentofthe respon~.ents w.1S bad as they. , haf.n?t apPeared.'.bef~e .he sele.qjion. con:-in.itte?· ·. 'I

. 4. Whethe.t the orders dated 18th August and 26th Scptemb7r;

.1964 appointing t.he respondents, and some of the petitioners . as tcmp9rary overseers from. the date of publication or'' their

results of diploma in rii.echanical/electria( engineering ex; mi" ·.

nation, are justiflect.and in c\ccordance with .law .and whether' . the same cm; kl . have beeff made the basis for preparing.

the graciatio1i~.l.!Sr?· •

While supporting. the' app::>!htnient of contestitig respondents on, merits two prelimitiary objctions \V.ere raised on behalf of the ~G contesting res.ron(!ents' about the 'maintainability of the ,,; it petitins: ,

1. None _of the requi; i(es of r: l of the PWD Cod.e was coin plied ,

... with.whiie const.ituting the selection coffimitiee and this.being the position the petiti61\ers: themselves were not selected . by

6,04'

. 'SUPREME COURT REPORTS [1984] 2 s.c.R,:

. '

a dilly constitted committee; and. therefore. they had no right to asail the gradation list and to challenge theappoil1t . '.. .. ment of the contstin.g respondents under Art.. 226 of .the

Constitution.. ·

2. rhe petitioners could not challenge the gradaliordist without assailing the. orders dated. 18th Augusfand 26th September, 1964 on whfoh the.gradation list was based, nd the petitionrs · col)Jd not be allowed to asail those o.rders after a lapse of .. abou't!O years and if they were allowed to challenge the grada

tion Jlst that would' virtually amount to permitting the petitioners to challenge those orders. · J

'' ..

The High Co11rt overruled both the preliminary objections . . Thditst. preliminary objection was overmfod qh the ground, ihatthe

. requirements of. r. l of the PWD Code are not mandatorv, they are .

merely dopartmetal instructions which had .not. acquired the statutory force:[u1d. the petitioners .could not be non-suited merely because there was no compliance ofr. l 'of th~ Code. The cond preliminaty objec-. tion was also overruled on the:grounds: (a) that the petitioners had not'prard for the quashing of the entireorder.s but they were ggrleved ·

...; i,. o.nly with that' portb'n of the orders by which the contesting' res, pon- E donts were appointeq. retrospectively from the date of the publication . of the results of diploma iri 1nechanic; al/cleotrical engineering exatni-. . • . nation, which affected the seniority of the petitioners in the revised ---X' gra'dation list; (b) thatthe petitioners'came to kno,;, ofthe two orders . after.the preparation of tl; ie revised 'gradatiOn list on.· 17th November, :. · 1973 wherein the coatesting responde)ltS were placed above the peti- . F . tioners; (e) that .the. Court was mainly. concerned. with the revisd

. ; gradation list, but. 'vi-th a view.to find out the •btsis for preparation of

 ..• ...

~· the rvised gradation.list the.Court had'to examine as to whether the,.·. retro, spective appointment of the contesting respondents by the afore, said two .. orders .in the .circnn\.stan2es was vaiid .. If, the Court holds that they could not.have been appoint,, d. retros, pectively that w<)ulc'.

G . simpiy cha11ge their positi<in in the revised gradation list and 'that ' would ncit affect !lie. appointment' of'thc contesting respondents; and

(d) that ignoring the claim. of the petitioners on th.c ground of !aches 'or delay is not a rule' of law btii'a rule of practice; .<

-·· .' .. ' - ' . . ' .. ..

H r .. Coming to the ; neri.ts; the appointment of the contesting respon- . •

 R~ MRNDRA SINGH v, 1A.onrsH .PRASAD ( Misra.J:) . . . ' . - ' . 605

dents was challengd by the.potitioncrs on ti1e grond .that thev had.

A , not appoard before the selectioll committee as requ.ired.by r. i and '

ther('f9re their appointment was i'llegai and .'al a11y.ratethey.coulci noi . . hve been'pla2erl'higher than di.e petitioners. in th.e r~ised gradatibn list. - .~

:· ' . .

. B .. The High Court negatived the 6onteniion on ihe selfsame ground op which thOJ preliminary objection No.l was ovef,; uled: Rule 1 of the PWD Code was inerely a departmental instruction. and· if had not .

·~·.· acquired the staiutory force. therefore,. the app<jintmc1i(of the 6on-

I · tesiig respondents culd not be 'held to \Jc invalid merely because

. -.. '

~, .~~. they had.not appeared before the selection committee. Besides, there· C ·

 was o 'such stipulation in their initial ordet ofappointment 11orwere -

~. . ' .

~·.

• ...

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.. '. - - . . . ' ' ·.

- . ,, . . . . .they calle, d for. appearing before the selection committee: Keshav. .. Singh and Sunil Kumar, t\Vo of thecotitesting resporidentsan<lqne Shyam Dayal.Pahey, cme of the petitioners hi.: one of the .writ petitions, who were placed in similar sitation'as the c01itesting respondents . , Wh() were phced in siinihr situation as the coniesiing respondents D

appeaed befoe ihe sekdion committee 'but , it was due to .. soine

•• misunderstanding onthe part of the Executive Engineer (Workshop , Divisi9n) under whom they happened :t0 be' posted although thei.r ; . Originl Jr:t't, er-c_:.f apPo'intrp:e1:1-t c.onti.ne.d-n0 such s_ti_pt.Ilatior1-that tJ1y

. would 'have .. 'to appear l)efore the selection committee, .

 On the cruCial point. whether th.e.twciorders. dated .18th Augttst and .26th Septmber .1964 'making reifospectivc. appoiµlmetits were the various authorities. Cited liefor.e. it. ·

~ •.

The c;; rt fudner hl.d that the petitioners were initially appin- . ted provisionally but after they appeared before the (election committee ·. . !liey were appointed temporarily nd, therefore, the services of the . petitioners: from the date cf their appointment could be cm.; nted while

. fixing their seµi6iity, whereas those.cif the contesting respondents, who

wre. pr6visionally'. appointed' c.o'uld not have Meli ounted for fixing . their setiioritf. Tl alsu heki'that" thc revised gradation liot showing the.·

contesting respondenis above the petitjoners. on the basis. of the .two orders .dated !8th .i\ugust and 26th September 1964 was badjn law. . - . . . -~...... . - . - ' ,,\' . ., .

.· a:msequentJy; .tlie High cciurt quashed only that parfcifeth

..... ·"' _' "

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.G ....

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606 SUPREME QOliRT REPORTS [1984] 2 S.l_:.R •.

. two. xirders whicl{ had fixed the date of publication of the result of. diploma i_n n\echanical/electrical enginecring.ex'amination as the date of commencement of length of services of' temporary .overseers. The seniority list prepared in pursuance of the order dated 17th November ·

1973, insofar as it relates to the contesting rc.spondents vis-a-vis the . petitioners inthe three peiitions was also qushed. The order of pro1;, o-~ tiqn of some .of the contesting respondents, namely,· Ramendra Singh,"· Bhola Nath Choudhary, Rajeshwar Sinha, Ramchandra Praad an.d

Udi Narain 'Singh was also quashed .

.The contesting respondents .have n<;>w come to challenge the . orcjer of the High Court by special leave under Art: 136 of the Con• . stitut.ion. The State of 13ihar has also flied three separate appeals against. the same order and for the same relief. ' .. •

• The cru¢ial question fot consideration in this case is whether . . . . the appointment of the contesting respondents, arrayed as . ppellatits fo th" first b.ttch ofthrceappoals, bythe two orders dated 18th August

ad 26th Septeinber, 1964,. with retrospective effect is bad in law.·

Shri A.K. Sen . along with Shri G.L. Sanghi apparing for the petitioners, now arrayed as tespondents in these appeals supported the judgment of the High Cou"rt. Their .mai)l contention was that the contesting respondents had not acquired .the requisite qualification on the date of their appointment and, therefore, their appointment by orders dated 16th August and 26th- Sept.ember, 1964, witji.·, retrospective effect was in the teeth of r. I .of the PWD Gode, and •in an1{ase there can be no retrospective appointment o.f the CQntesting respondents f; om the date of p1ss.ing their ·, Jiplma exc'mination inasmuch as it affected the senioritY of the petitioners in the revised gradation list:·.

Shri Lal Narain. Sinha ssisted by She R.K. Garg appe, iring . for. the (petitioner~) contesting respondent appeJlants, raised the follo

wing three contentions:

• . . j

- . . . . ·.

I.. TM impugned orders are about ten years ol.d and the., petitioners could not be permitted to cha1knge those orders after the lapse of such. a l9i::. time .

,,.. .

.....

.,,.,

, .

f! /' - .. •

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RAMENDRA SINGH v. JAGDISI! PRASAD (Misra J.) 607

•' .

I ---' .. "" , • 2. The High Curt itself.; fi;; ld inade a discriinaiion inasfnuch as tl1c writptitions agaist Kesli"av Singh and A\vadesh Kumar'r • " Singh have already been dismisse.d. . ·

' J

3. In the absence of. any statutory. rule 'or. rules framed under Art. 309 of the Con'titutidiL it cWaS open to the .Govern- • ment to'make apoointments to suit the exigencies of the situa~;' ·., • . .

I, . . • at1on.· .- \, \

• '"'." .The High Court. has given detailed reasons. for not accepting .

the. c, ontetion of unde dealy in filing the . writ petitions .. It is ot . necessary to' repeat those grounds over again. We fl!IIY agree with the view t.aken by the High Court that the writ petitions filed by. the petitio)'ers cold nt be dismisssd on the groun(! of ]aches.. : .

. I .

As -regards the second contention of Shri Lal Narain Singh; we are of the .view that. the mere fact that the writ petitic)ns have been. dismissed' against Keshav Singh ·."·::i.nd: A"vl{es11~ Kum.ar Singh, will not be a ground.for setting aside the inpugned order of the High '

. . . #" ' . ' ' : Court. The contesting respondents have to ; how that the llvo orde1s

dated 18th .August and' 26th .September,1,1964 making retrospective

'apointments, were valid one. , . '

As regards the third contention, Shri Lal Narain Sinha.submits

., that the executive power of the State is co-extensive with its !egisla.tive

po1ver ancf"therefore, ifthe Statecan nass an enactment so also it can,,· pass .orders :in .exereise .. of i.ts executive power, as contemplaied by Art. 162 ofthe Constitutlon to.suit the eicigencies.ofa particular situa- {ion. In the instant case, as stated eaiJier, the World' Bank project.was undertaken by tbe.PWD inJ962. A large number of mechanical over-' seers WeFe needed as thC project had t~ be executed on emergency , basis within~ short time and thee being dearth of qualified hands

'I, , -·" -': ' , .. - ., ;4;' 'persons .who were. working only as sub_-overseers or who had appeared ,· atthe diplbma exmination.but had not passed wre appoillted"against " sanctioned posts and werepern\itted to draw the pay scale of oversees • fromJhe date "of tli.e .passing of the diploma examinatiQn: . ' . . ' .

' ., .

~' . l ..

J * There is no denying_ the fact that\ the executive power oLthe

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SUPREME COURT REPORTS [1984],2 S, c.R.

. . . .

State is irrno way narrower than the legislative power. But the question ·.is whether in exercise of that power tl1e State in violation of Art 16 of the' Constitution could make retiospective appQintment of the con, testing respondents in the instant case so as to affect seniOrity of tile.

ptitio•1ers. . . ' For the respondents reliance was placed on Staid of Punjab v. kishan 'Dass<il. Jn that case pursuant to c?rtain charges against a .police constable hlS entire se'rvice with permanent effect was forfeited, 'whic; h . meant reducing .his salary to the starting point in the time scrtle for constables. The co'nstable challenged the order by filing a regular suit.~ The two courts below decreed the.suit holding that there was flgrant violation of Art. 311 (2) of the Constitution as the impugncd"prder amoucl'ted to reduction in rank. This Court interpreted the expression 'reduction' in rank' arid held': · '

."The expressi; n 'reduction in rank' in the article, .therefore rrteans reduction from a higher to ~"lower rank or post when imposed as,~· pe!1altY: T, herefore, an order forfeiting' the past

servie whi'ch has .. earned a .govern.mcnt servant incren1e111s in.the post or faille he hqlds, however adverse it is to him, affcctirig

his seniority within the rank to which 110 belongs, od1is..future chances of promotion 'does not attract the article. His. remedy, therefore, is confi(\ed to the rules of. service governing his post." . ' The impuged orders in the instant case may not have reulted ii\ reduction of rank but all the same they affected the s1miority of the petiotioners whiCh eventually might result in reducing their chances for promotion.

/ ' . .. . · Reliance was next placed on B.l'f Nagarajan & Ors. _v. ' State.

of Mysore & Ors"l. () 1e of the arguments advanced in that case was that till the rules are made in that behalf no recruitment could be ma& to any service.- This argument was, however, repelled. by this Court;· firstly becat\se, it was not obligatory under proviso to Art. 3o9 to mqke nilts of recruitment, etc. before a service could be consiitute<t'o'r i. - . ' .

-·--<1)rr97])'3 sci. is9 ..

(1) [1955] Z S.C.R. 225. ..

'.\

I j

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\ , • .j

j -

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~·· ..

RAMBND(lASINGH v. JAGDISH PRAS.AD (Misra J.) 60~ . . . . . . . .

.~~·

post'created .or filled; seciindly the State Government had executive power in relation to all matters wlth

0 respect to whtchthe.Iegisiature of the State has power to make rules; and it follows' froni this that the tate.Goyernnient will have executive power fn respect of List II, Entry 4L State public Services .. Relying .on Ram.Jawaya Kapa.or .

v. State of l!unjab11l. Rani was held that it was.n9t necessary ihat there should be a law already in existence before the executiv1\.is. enabled to function and that the pdwers of the execi1tive were liniited' merely to the carrying out of these laws. There was nothing in the terms 'of Ari. 309. of the Constitution which abridges .the power: of the exe' cutive to .act under Art. 162 of the Costitution without a la iv. the Court, h6wevet, piit a word ~[caution in mentioni;1g that f there . 'is stautoty rule or an Act on the J11lltter, the Executive iioust abide

by.that Act or ruie'and it' coilld not in exercise f executive power. under .Art. 162 of the .. Constituti011 ignore or .act contrary to. that.

rule or. Act ..

·.I

The secod contention in the above case wa; that the Executive could 1ut frame rules retrospctively unless the Act; peciflcally'em- ,' . powers it to do so. This Court, however, r, frafnect. from deciding this point because in. their .opini)in the :i;:iioal could be disposed of on ·, another ground .. This Court observ.ecf that assuming for the sake of aglifi1ent that . the r.;{ysore State , Goyerninent could not make mks retrospectivtily.and.tlia1 tl\erules were thus void.so.far.as they operated '\',.:_ retrospectively, proceeded to )gnore th6se rules, and td. examine

.;.hether the appointmenttmad\; on Ootober'31, J961 _could be upheif!. . The Court came to the conclusion that those appointments. could'

be considered to have been validly made in exercise of the' ex('cutive

, I

.. '(

power.of the Staie under Art. 162 'of.the GonstltulimL · ·- F ., "

~·.

,. . ' . , ,. ' . : ' ( . - - '' pot the appellants.siro\1g reliance was also placed upoh Rajentira' Narain Singh & Ors:v. State of Bihar & Ors. 12 ) It was laid down in that case that in the absence of anylegislation oh th~ subject on a rule framed :.under !he proviso to' Art. 309 of the 'Constitution, the State Government could rezulate' itspublic seryices in the exercise 'of its executive power. In the above case. there wa~ no st.atut!' or any rule frarried under the provision to Art. 309to determine the seniority as between the direct . recruits a1id the. prol\1otec~.

1The detennihat~_oi1 of the sniritv 1op. the

(1) [1906] 3 S.C.R. 68i.

,.:(2) [1980] 3 S.C.R 450. ,

I ..

. I

\. , .

SUPREME 1::0URT .REPORTS

. '

A basis of contin'uous officiat'on was held to be valid on the bais .of the decision in S.B. Patwardhmi.'s case.(1) There is no gainsaiing the fact that the executive power of the State is co-extensive 'with the legislative power.- but whctl:ier the exercisz of the -power can be in st1ch a \vav as 't6, offond (\rt. 16 of the Constitution. Th~ retrospective appointment -of the n; sponqents in the aforeasaid writ petiti'ons affected the senioi'ity

. ...i-.

B of the respondents. ' .

. '"".

This question, however, need not detain us as the point in question is covered by R.N. Nanjundappa v. T. Thimmiah & Anr: "' rn "'. that case. the respondent 1 Thimmiah was appointed ti\rough the Public Service Conunission as an Assistant Geologi'St in the Depart

ment of Geology in the Mysore Government in 195! in the grade of Rs. 125-10-175. When the Kolar GolJ. Fields School of Mines -

was set up in foly 1'957 the respodent was se1it on deputation;.for two years as. Vice-'Ptlncipal of, the School of Mines. , When the, then

Pri.ncipal of the School of Mines, who was employed on. a part

'I' '

time basis o;, an a!1owarice 0f Rs. 200/- left\ on 22nd July 1958, the respondent who was Vice-Principal and wqs also doing the duties .of Principal since 15th Ft>bruary 1958, was appointed as officiating .Principal with effect from 22ncl July, 1958 in the .grade of Rs. 500-30-800 by. an order dated 25th .September, 19 58. On 3rd April, 1959' the Sfate Government in mdification or' the notification dated 25th September, 1958 appointed the respondent as tem- ., porary of!Liating Principal with effect from 15th February, 1958. _ .. ){ The Mysore Education- Department Service Rules' 1967 regularised the appointment of the responde.nt. The revelant portion of the the Rules reads

,; Notwithstnnding a; y rule made under the proviso to artfole 309: of the Constitution of India, or any other' rules or Order in force, t any time, Dr. T. Thimmiah, B.Sc. (Hons.) Ph:D. (Lond.) F.G.S. shall be deemedt~ have been regularly appointed os Principal, School of Mines, Ooragau1w, ., Kolar Gold Fields, with effect from 15-2-1958. ''

This rule was challe!'ged by the appellants on various grounds :

(I) [197.7] 3 S.C.R. 775 .

(2) [1972) 2 S.C.R. ,799 •.

. ,, .... "

-~

' .--· 'I' . . ' . . .. •

. RAMENDRA SINGH v. JAGDIS~•PRAS~D(Wisra, J.)

' . ' ) , ' l!f, . ~

(a) That the respodent as 'governed.by the Myoe Servife.

Rc•ulati6ns, 1943, the Mysore State Civil•Serviees General

Riruilmen\) Rules, 1957, as well as the Mysore _Education Departinent. Servies (Technical Education Deyartment)

~ ..

(Rccruitmnt) Rules,. 1964'

(b) That the respondent was in Class JU servic'e and his appointment by the imougned regulation amounted tO his. promo~ lion' from Class III service to Class I. If so, it is hedged

 by two limittions as contcpla:ed by sub'cluses (a) and -

(b) of rule 4 (3) of the Mysore s.tate Civil Services Rules;

1957, i :e. (!) it has to be hn the basis of merii and suitability . with due regard to se'nio'rity frm among persons eligible fol",

promotion, and (2) it ; has to be on the basis. of senioritycum-merit from among persons. eligible for promotion .

• . -

""··

, The stand of the rspondent, however, was .that (l) l\eqyas a

. D:

!cal cndidate in service and, therefore, the aforesaid rules , did not ' apply to him andJhe egularisation of his appointment was valid; (2) . under "Art.-162 of the Constitution regufarlsation would in itseff be: a mode of exercise of power of appointment .of•thc Execuiive Goverri- -, men!. Such n appointment even If made in.the slrnpe of rules.under : Art. 309 cold not be attacked on the ground of being made forwne

E .. person just as a piece of leglslatjon could not be r.ttacked on the ground of being ma<\flor a particular. person oi entity. .

. 'The High Cpurtcame fo the .conclusion that:the appointment of the .respondent co"illd .be regulrised with .effect fron1 any date as

 F he was a local candidate within the meariing of the Mysore Govern-. , merit Seniority Rules, 1957. This Cnurt in .appeal, however, reversed-. the"judgment of the fligh Court and observed:

. ~"No one can deny th~ power of the Government to appint. · .. G If it were a case ofclirect appointment or if itwere a case of appoint' :.inent. of. a candidate by competitive examination or if itjwere

a case of appointment.by selection. recourse to rule under Article 309 for regularisation would not be necessary. Assume that

• ' • , 1'f - ' ' r_ules under Attic!~ 309 conld be made in respect of appoi_ntment . , H of one man but thereare two limitations.· Article 309 speaks 'of •

• '.

g '

' ' ' - ,

612 ..

SUPRBME COURT REPORTS [1984] 2 s.c.R.

" : J . ·, ,,. •. rules for appointment and general conditions of service. Regularisation of appointment by stating that notwithstanding any rules the appointment is regularised strikes at the root of the rules ahd if .the effect of the regularisation is . to nullify the . operation and effectiveness of the rules, the rule' itself is open to

. criticism on the ground that it is, in violation of current rules.

Therefore the relevant rules 'at the materitd time as to promotion ,1nd appointment are infringed and the i111pea.ched rule cannot . be permitted to stand to operate as a regularisation of appoiritment of one perso'n in utter defiance, of rules requiring condsideration of seniority and merit in the case of promotion and co11- . sideratiml' bf appointment by selection or by competitive exami-

.. nation:' .. . . •

The 'court gave further rasons for holding the. regularisation to be bad in law. It obseved · ·

"This regularisation is bad for the following reasons, 'Ffrst, regulai:isati; n is not itself a mode of appointment. Second' . .ly, the modes of appointment are direct reoruitmen\ or selection or promotion or appointing for .reasons to be recorded in }Vfiting . an officer holding a post of an equivlent grade, by transfer,

 ·from any other service of .the , State. The Government did' not contend it to be a case of promotion. If it were a case of promotion it would not be valid because it would be a promotion not on the basis of senioritycum-merit but a promotion of some pne who was in Class III to Class I. Even with regard to appoint- . ment under rule:I6 by transfer of a person holding an.equivalent " grade the appointment would be . offending the rules because it

would nht be . transfer from an t!quivalent grade. Again/ merit . and seniority could nt be disregarded because tJ_ie respondent

was not in the same class as the Principal of the School ofMines . . Tlie pay of the Principal was s. 500'800 where as the respondenlr

was getting a salary of Rs. 165 in the grade of Rs. 125-165 plus an allowance of Rs. '75".

 . The Court also prought out the distinction. between the scope of Art. 309 and Art:J/62 of the Constitution. It observed i

-~· ,

' .\

. '

RAMENDRA 'SINGii ..

.. . . \

v. JAGDISH lsAD (Misra[) 613

''There were 1957 rules which s'pokO o.f appointment by

ompetitive efamfnation or by selection or by promotion.Even

'i(spcific rules of recruitment [or, such srviceuvere not made the rule as to a1pointment by competitive examihatiiii1 or

Seiection or by promotion \vas there. Article 162 does not.confer po'wer of regularisation. Article> 162 does not confer power :•on the Goefnmer; t to make rules! for the recr.uitment or . conditions of service. Rules are.not for the'purpose ofvalida- . 'tfog al)illegal appointment or for making appointments orpromotions or transfer. Rules n11der Article" 30'9 ire for the ' • ) ' . ' . l_ ; ''• ·'#' . purpose of laying down the con.ditions of serice ahd recuritment..

 ' Therefore, regularisation by tl'e way of .rules under Article 309 in the present case by stating that. notwitl)standing'any!]:ling .in the rul1:s the apppihtment of the. respondent' was being regula- . rised was in itself iolation of therules as to appointment and as'

to cadi; e and also. as .to the proper selection".

,· ' -

' In view.of this cfoarauthorlty,. it cannot )le argued Jo;· ilie 'appellants that they conld be appointed with retrospectiveeffect so as to affect

th~ seniority of the respondents. The orders dated .18th August and 26th Septeinbe.r, 1964.which purported .to appoint the sub-overseers.

named tb, ern as temporary '.wer, seers from.the date of Publicati?n of their result.of diploma .examination. are clearly violative of Arts. 14 ·.,. and 16, of the Constitution i.nasmuch as theipetitioners had a.leady. "'-, f , eenappointed as overseers by sel)'ction comniiltee consitituted, uhder the rules contained inP.W.D. Code. The orde'r of temporary appoint- .·· men! by ihe impugned orders dated 18th Angus! and 25th September, -- 1964° onferted national seniority o'u the contesting resp011dents for

 the period while they were actually"w0rking as sub-overseers in the ' ' - . . ·- . 1 . . lower scale outside .the cadre .of overseers.· The ~:ligh Court in. our

opinion ivas fully justified .Jn a110wing the writ petitions in' part. .

'...,.

~ •, - ! ' For the reasons given above the appeals must.fail. They are' accordingly dismissed; In the circumst)liices of the c.'\se,, b, owever, •we allow the parties to-bear their own costs. . - * . . '

P.B.R.

A.ppe§l!S dismissd.

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RAMENDRA SINGH

JAGDISH PRASAD. AND ORS

E.S. VENKATARAMIAH

R.B. MISRA, JJ.

Article 309

Articles 14

Article 309

Article 162

[1955] 2 SCR 225

[1980] 3 SCR 450

S.B. Patwardhan

Sinha

R.P. Singh

R.K. .Jaiii

Suman Kqpur

R.K. Garg

R.K. Jin

Suman. 'Kapoor

R.K:. Jai!l

.L.N. Sii1gh

D. Gpbiirdhan

L.N, Sinha

D. Goburdha

M. K. Ramamurthi D.P. Mukherjee

U.S. Prasad

G.L. Sanghi

M.L. 'Verma

R.P;. Singh

R.K. Jain

Suman Kapor

A.K. Sen

Radha Mohan.Prasad

Art. 2

Ilihar

Ramendra Singh

Keshav'Singh

Bho\a Nath Chaudhary

Raje

Ra;,_ Chandra Prasad

Udai Narain Singh

Udai Narain Singh, ·

 .. 8~. Siillil I<llmar ' 9; .

Siillil

Rajnandan Pd. Singh

Gopa!Ram

IL Sidh Na!Ji Singh

Prem Chand Prasad

Shyam Dayal

Pandey

Fu! Chand

Jagdish Prasad

Mohammad Shamsuddin

State of Bihar

Keshav. .. Singh

Sunil Kumar

Shyam Dayal

Ramendra Singh

Bhola Nath Choudhary

Rajeshwar Sinha

Ramchandra Praad

Udi Narain 'Singh

State of 13ihar

Lal Narain. Sinha

She R.K. Garg

A\vadesh Kumar'r • " Singh

Art. 309

Lal Narain Singh

Keshav Singh

dismissed' against Keshav Singh ·."·::i.nd: A"vl{es11~ Kum.ar Singh, will not be a ground.for setting aside the inpugned order of the High '

. . . " ' . ' ' :

Lal Narain Sinha.submits

Art. 162

State

Art 16

Art. 311

Art. 3

Ram.Jawaya Kapa.or

State of l!unjab11l. Rani

Art. 162

Art. 162

Art. 162

Art. 309

Art. 309

[1906] 3 S.C.R. 68

[1980] 3 S.C.R 450

S.B. Patwardhmi

Thimmiah

Constitution of India

T. Thimmiah

Civil Services Rules

Art. 309

Seniority Rules, 1957

Article 309

Article 309

s. 500

Art. 309

RAMENDRA

JAGDISH

Article 162

Article 309

Arts. 14


A 614

c •

RAVI DUTT SHARMA

' '

RATAN LAL BHAR.GAVA •

February 20, 1984 '..

'• S, MuRTAZA FAzAL Au: A. VARADARAJAN & R, N. MISRA, Jl l •

Constitution of India 1950, Article 14: Sections 14A, 25A and 25B of Delhi Rent Control Act 1958 whether ultra vires Article 14:

, Slull) Areas([nif, rovement and Clearance~·.At-1956, s, 19 Delhi.. Rent Contrl Act 1958, Ss.14 (!) (e), 14A, 25A, 25B & 25C: suit by landlord for eviction of tenant under s.14.(1) (e) or s.l4A of the Rent Act-prior permiss(on ofCompetant Authority urider Slun1 Clearance Act-Whether necessarr.

~ .. '-.

The appt::hant-tenant was induct~ into the suit prenrises as for bck as 194~.

.:..-

The respondent landlord a, pplied _under section 19 _(!)(a) of the Slum Areas Irilprovc-. \ ~:.., ment and Clearance) Act 1956 before the Competent Authority for pennitting .him_ J to institute a suit for eviction or the appellant but that application was dismissed. I aod thC order was confirn1ed ill appeal by the Financial Conunissioner: Thereafter the respondelit field a1 suit for eviction in April 197!? under section 14 (1) (e) read with seCtiori 25B of the Delhi Rent Control Act 1958. The tenant applied for leave ... "'to defend the suit but the same was rejected and an order of eviction was passed A revision filed by the tenn~ Jin the High' Court was dismissed.

- " . ' 'n the appel to this Court .fs el1 as in the connected Special LeaV"e Petition lt, \Vas.contended that: (1) under seetion 19 (1) (a) or the Slum Act it is incumbent on the landlord to obtain iJenni36ion frQm the Competent Authority before insti~ . tution of a suit for evicting a tenant and without such permission the suit . was no "' 1naintainable, and (2) sections 25A and 2~'.B were ultra vires of Article 14 of the Constitution aud \Vere inconsisterit wit~ the Slun1 Act which was an existing Statute and, , therefote, the prqcedure substituted under: Chapter, IIlA, particularly sections 25A and 25B should be invaljdated. \

DiSmissi~ the Appeal and Spcciill Leave Petition;

• IF

I '

RAX' ouTr v. )lATAN LAL 615

. , HELD: A.(i) The High Court was cotret in rejecting the applications of 'A the tennts-for setting as_idc the ofder;-ef eviction. ['624

1.§] - . ~.. '

, B.(l). sctions 14A; 25A;25B firld 25C Of the Rent Act arc sPecial ·revisions so far as the landlord and tenant arc concerned an, f in view Of. the nonobstante clause

thse proviSions verridc the existingla\V So far as. the neW procedure is oncemed; .[624Al B

, J..._. (2) Thef; is lio._differenCe ei_ther on principle or in Ia_w between sections 14 (l)(e) and 14A of the Rent At even though these two: proviSios rdate to Cviction. of tenants under different situationS; [624B] ' .

(3) ;-, The prOccdtire inca'fporated in Chpter IIIA ar _th~ Aending Act into the Rent Act is in public .. interest and is not vlotatiyeof Artir.fe 14 of the Constitu:. ti on; [624C] ' •

::t: .--

. ·"{ . ....,.

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- . \ . . (4) ~1n vieW of the prOcedure in Ch3pter IIIA of the Rent Act, thC Slum Act

i~ reqdered inapplicabJe to the extent of inconsiStency and it is not; therefore, neces~ - sary for the landlord to obtain permission of the Compcent Authority_ undCr s. 19 (i)(a): of ihe Slum Act. before 'ihstitufing a sUit for evicti-00 arid corning _within .s.14 _(.l)(e) or 14A of the Rent Act.. [624D-E] ·

C.(1) The_dominant object of' the Amending~Act f 1976 was to provide a speCdy, expeditio-us -and effect ieffiedy for a.' claS:s of landlords contemplated 9Y seCsections 14(1)(e) and J4A and foi avOidinf'unusual dilatorY process pfOvided other.,

wise by the Rcq.tAct. Suiis'for evicti6n.under the Act take a Jong_time commc'ncing with the Rent eOntroller arid ehctlng up with" thO ~.upn .. Jnc- COurt.· ln many caes by 'the 'time. thC eviction decree becanie final several :years elapsed and either 1:the . - •) ' ' landlord died or the necessity which provided the cause of action disappeared. It waS this n1ischief Which the.legisl_ature intended _to ayoid by incorporatingthe.new procedure in Chapier IDA: It cannot therefore be said that the tlilssification of

sue~ landlords- wouid be an ureasonaPle one because such a classification has. got a clear nexus withlith_e objects of the Alnending Act or 1976 and tP, e purposes which-~

it seeks to subServe. [619D-F; G] ·. -. ·, , . :

-.' :'1l : I . :, ',) ,

(2) The ne'v sections 14A, 25A, 25B and 25C had been introduced for the purpose Or meeting ~~. pa_Fticular ntingencY as spelt out in 'the object and reasons behind the" new proViSionS. once it is recognised that the nCwly a'dded sections are in the nature uf a spedal law inte"nded to apply to speci(\1 classes of landlords, the . inevitable Conclusion would be that the ; pplication of the Sl'um Act st2.nds with-.

''drawn to iha:t exterit and any SUit falling.within the scOpi_ of sections 14(1)(e) 'and

14Awould not be governed.or controlled by section 19(1) (a) of'the Slum Act, r

. ' '

[621CD-J

E.

. F

, -

•' i

A '

• I 616

SUPREME COURT . REP, ORTS (1984] 2' S.C.ll. \.

J • (3)

1 It is open to the egislaturc to pick ut 'one class of the '1anillords out of sever.al covered by sectioq 14(J)(e) of thc.Re1lt Act so long as they fonned a class

bythemslves and the lcg1slaturc \Vas fr9c to prOvidc the be.ncfit of the special prncedure to them in the matter of eviction of their' tenants as long as the legislation had an object tci achieve and the special procedure had a rc.asOnable nexus with such . object , to be secured. [621F-G] ·

, (4). The new povision in the Ariiending Act wre.intended to haveoverri ..

di~ ffect an(.f all prcedural. laws wer.e to give waY to .he ew procedure. [623pj ' .

. ' ' ew.al .Sing/I v. Lajwaftti [1980] 1 S.C.R. 854; Sar.wan Sing11 & Anr. 'v.,, Kasturi Lal [.l9Tlj 2 S.C.R. 421; Vinod Kun1ar , Chowdhry v. Narain DeVi Taneja [1,80) i S.C.R. 746 referred to.

Smt:'Krislma Devi Nigpm ~Ors. v. Slryan1 Babu Gupta & Ors. AIR 1780 Delhi

.165 pproved. ; ·~

C1v1L APPELLATE JuRIS4lICTION : Civil Appeal No. 212 of 1981

. Appeal by specie! .leave

the 26th.August, 1980 of the

of 1979:

from the judgment and order dated Delhi .High Court in C.R. No. 790 .

' ..

. WITH

\ \ . . - , .

SPBCIAL LFIAVB PETITION (CIVIL) NO. 2948 OF 1982

From the judgment and order d, ated the 17th December, ofthe Delhi High Court in C.R. No. 873 of 1981. . . . .

V.M.' Terkunde, P:M. Parekh, Ms, .Jndu Ma/hotta, Ms. Kaila!h Mehta & Vima/ Dave for the Appelant/Pctitioners.

Bikarmjit Nayer aicd D.D. Sharma for the Respcident in CA.

212/81. .. • ( ''

RAVI DUI? v. RATAN LAL (Faz'al Ali, J.) 617 . . . . ' ' ' \ ' .

T.s,,.Kawatra & NJ{, Agarwaia•fo'r the Respondent in S.L.P.. A No .. 2948 bf 1982, . ' . , ' , , . ·~-'

The Judgment .of the Couft was delivered by ·

·•'' • B

4FAZAL Au, J. This Appeal'b;.spedal' leave is directed against

':Jo an order passed by the" Delhi High Court ori August 26, 1980 .· affirmillg an order of eviction of the appelarit , madeby .the 'Rent ,-Tontroller.The.f(lcts of the ase '.ie \thin.a yery, narrow compass / ·

. ,; r.

. and the appeal mvolves a pure .Polilt ofraw w)11ch 1s already convered C' by decisions of this coµrt to which we shall presently refer: : . ' , . , . I , . : . ' '

" . . ,...

The tenant, Ravi Dutt Sharma, ;;, as inducted into the suit premises as for back as 1945, Tl(e .landlord Ratn Lal Bhargava applied undj:r' section 19 (I) (a} of the Slum Clearance Act ('Sluin Act' fot'. . short) before the . Competent Authority for .permitting .him to institute. a suit for eviction of the ,' appellant but that. application was . dismissea on'July 28, 1973. An appeal against this order was dismissed by t]je Financial Commissioner 'on October 4,, 1974. Thereafter ,...

Respondent filed a suit (or eviction of theienant. under s: 14 (I) (e) read with s. 25 (B) of the Delhi Rent Control Aci ("Rent Act' for •

- - \ - •' ' #" , , ' • I

1 short) on April 13, 1979. Qrn:Ler the provisions of. !he Rent Act, as , . "-.wended 'in 1976 it is'incun1bent upon the. defendant tenant to apply

 for leave to defend 'a sit for eviction before. entering contest; The tenant applied for sucb leave but the same was rejected and an order. •.

of his' eviction was passed, on September J 4, 1979: A revision by ihe.

tenant to the High Court was dismissed and that has '1ed to the appeal •, to this Court.' · '

In the special. leave' petition Smt. Puspa Rani filed' a stiit for eviction against her tenant, Swara~ .Kumar and .others, which also

.· G • ws allwed by the Rent Controller and a revision therefrmit has' been . dismissed l)y the High Court, Ij:ence the petition for special leave "". a, gainst judiiment, of the High Court h_as been filed and that was directed ,

to be heard along with the Civil Appeal. It is unnecessary to giv' the ractsfovolved in the case in which special !eave . has been asked H for because the poin( of law. for cosideratfon is one and the same. . . . . ,.

. I

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. "

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

Admittedly the houses for which eviction )1as been asked for.in

' these two cases are located within the slum areas as defined under the _.__. .

Slum Act. It was contended on behalf of the t"nants that .the .suits . for eviction by the landlords were not competent in view of want of

 permissio~ from the competent Authority under the Slum Act. Under section 19 (1) (a) of t]].e Slum Act •it' is incumbent'on the landlord to B obtain permission from the Competent Authority before instituting a suit for evicting a tenant all(! without such permission the suit is . iot maintainable. · .•

t This argument was co11ntercd by the respondent on the ground """ C .. that by virtue of the. Amending' Act of 1976 (referred to as the 'A'.mending Act' for short) a 'new procedure has been substituted for two types of eviction of tenant-one of . which was covc, red by. s . .14 (I) (e) and the other by . section 14 (A).

In the instant case we ate mainly concerned with eviction. applications covered by s'. 14(1) le) ' and' the special procdure provided in D Chapter III-A. introduced by the Admending Act. It was contended by the respqudent that by virtue of the Rent Act a specialprotection was gtven to a particular class of landlords who fell within the provisioi:is of s. 14 (l).(e) of the Rent Act (personal necessity) and in such

. ,

 cases a procedure different rrom the procedure fo)lowed in other

ases had been prescribed. Section 25 (A) and 25 (B) soght to simplify the procedure by insisting on the tenant to obta;,; permission

to enter defence. In other word.s, so far as "suits for eviction on the ' . ground of personal necessity weae conered, the case for eviction_....>-' " was put at par witlis.uits m1der Order 37, Code of Civil' Procedure . where the Court was satisfied that the tenant had-an arguable case,· 1eave to defend would be. granted;. otherwise the order of eviction would be passed straightway. ,

Learned counsel for the tenants then argue<! that. sections 25(A) 'and 25 (B) were 1:1ltra vires of Article 14 of the Constitution and were inconsistent with the Slum Act which was an existing statute and, therefore, the procedure substituted under Chapter III-A, particulary in ss. 25(A)°and 2'5 (B) sho11ld be invalidete<l. On the other hand, counsel for the landlords contended that by virtue of the Amending Act a new procedure has been added in respect of evictions . under s. 14(1) (e) as also the newly added 14(A), and sections 25(A) and 25(B} have been brought into the 'Statute to give efiect to the intention of the legislature by providing a Special .procedure and

' \ . .

.. , .

- v

' -

/ . ' •"-. " . . ·.RAVID, UTT V. RATt, NLAL (Faza/A/i, J,) 619

also making provision at the. existing lawto the contl'ary.

riew • procedure would override the

. In 'order to appreciate 'this contention it niay be necessary to give: an extract of Statement of objects and resons of'the Amending

""'

. , B Act : , , ·

 ..

' .

~ ' . . ' ·.· . ' ' ' "There I.as been a persistent demand for amendments to the iDelhi Rent Control Ad, 1958 with a view. to ccfnferring1 a right of tenancy on' certain heirs/successors of a dceased .. statutory, tenant to that they may be protected froril eviction , by landlords and also for simplifying the procedure,, for

eviction of tenants in case. the landlord requiresthe pre!llises . bona. fide for his personal occupation. Further Government

decided on tlle 9th Scotenber J9i5. that, a prso11 who owns his own ho us~ in his place of ;.ork should vacate, the Government accommodation allotted'. to him before the 31st DEX<em- - ber 1975. do\)rnm-nt cmisiiered that in the circumstances, the Act requi..rcs to be a111cnded_ urgntly.", .

The dominant objct of the Amending Act was, therefore, to provide a spoody, expoditious .and effective remedy for a class of landlords . . ;·{_ contempbt1'd by ss. _14 (l)(C) .and 14 (A) and ror avoidin'g unusual 1

dilatory process provided .otherwise by the Rent Act. Jt is commo'n experience that su_its fo~ eyiction under the Act take a long time. cmninencirig with the Rent Controller and endi1ig up with the Supreme Court. In many cases experience-has indicated thatby the time the eviction .tiecrec became final' several years elapsed and eitlie[ .. the. hndlord died _or the necessity which provided the cause of action dissappered and' if. the're wasfurther delay in securing eviction and tfor family of t_he landlord' ha\:l by .then expanded, in the absen.ce of acc6mmodation _the 1ncnibers of the family ,_were virt-11ally. thrown on the road. It.was this mischief wihch the legislature intended to avoid by incorporating _the new procedute in Cliapter'III:A. The legislature in its wisdom thought that -in cases where the landlorils required their own premises for bona fide and personal necessity they shriuid< be treated as a .. ieparat~ class along with the landlords .

• covered-by s .. 14 A and should be allowed to reap the fruits of decrees for eviction wiihin the. quickest possible time. It cannot, . therefore, be said that the Clssification. of such 'landlords would be

, .

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620 SUPREME COURT REfORTS [1984] 2 s.c.R.

. I

A. an unreasonabl~ one because such a classification has got a clear nexus with the objects of the Amending.Act and the purposes which : it seeks 'to subserve. Tenants cannot complain of any discrilnination

because .the' Rent Aci merely gave . certain protection to them in public i;1terest and if ihe protection 'or part of'. it afforded by the Rent Act was .withdrawi1 and the common law right of the tenant: : nden the l'ransfer of property Act was stilL preserved; no genuine grievance could be made. This wa~ clearly held in the case of

E . .

[(ewaf Singh v. Lajwan!i.(1) . '

~ ' ' The matter )s no longer res, integra and is coverecf by' two' : .- decisions of this Court which.ate directly in •point. The first cine is

the' case of Sarwan Singh & Anr. v. Kasturi Lal, 1" hi which, ari . identical point came up for.consideration, It.was held by this Court that sections 2'5 (A), 25 (BJ and. 25 (C) of the Rent Act (introduced .- by the Amend, ing Act) were special provisions with reference to s. 1 14 (A) thereof 'which superseded all existing Ac!s to the contrary. ..

It .was also pointed out 'that thefo ilewly added sections in :the)lent Act were to app)y only to. a ciass Of landlords and, therefore, the question of violation of At. 14 of the constitution did not arise.· While considering verious ,; spects of the aforesaid provisions, Chand- . rachud, J. (as.lie then was): spoko for t1ie Court th.us . ._,, •

~'When"two or more !all's operate. in \he same field and _ _.}-'.

eacl;, contains a non7obstante clause stating that its provisions will override those of any other law, stimulating and inoisive problems' of interpretation 'arise. Since statutory inter, pretat.ion has no conventional protocol, cases of such 'conflict . have to be decided in refe'rence Jo the object and purpose JI of the laws under con'sid.eration ...... For resolving such inter

s~. conflicts, one other t.est may also be applied though the • persuasive force of such a test is but one of the factors which : combine to give a fair, meaning to the language of the' faw.

That test is that the later. en'ilnctment mwst prevail ayer -the earlier one. Section 14 A and Chapter I.II A .having been ena- . . , cted with effect from December I 1975, are lat•; enatinents . in reference tO. s. 19 of' !, he Slum 'clearance Act which in its present form,. was placed 'on the statute book with effect

' .

Ji ..; (I) [1980fl S.C.R. 854.

(2)[1977]'2 S.C.R. 421.

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...

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I ~

' '

' ' .' ' ' 1 !\AV! DUTT •. v. RATAN LAL' (Faal Ali, J.) 621,

•' '~ '

>!O I • ,'' f .. from February28, 1965 and in reforene to s. 39 of the same Act, which came into force in 1956 wh.en the Act itself was passed. The .legislature gave over-riding effect to s. 14 A and ' Chapter III A with the knowledge that SS.' ]9 and ,39 'of the

Sluin Clearance Act contined non-bstante clauses.of equaI efficacy. Therefore, .the later eactment must prevail:overthe former .. , . Bearing iii' mind the langu:lge of the two fuws, their object and putp9se, and the fact that one.ofthem is later in point of.time and was ei; cted with the knowledge of the 'non-obstante 'ciau, ses in, the earlie, law, e hcwe' ome to the . .conclusion .that tl).c p'rovisions of s. 14 A.and ChapteflJI. A of t!).e Re11t Control Act must preva'il over those c0ntained u1 ss, 19 and 39'of the. Slum Clearance Ac't."

" An analysis of. the aforesaid dediion ~]early revels. thaf the.new sections 14A 25(A)i 25(B) and 25(C) had been intr0dced tor the purpose of meeting a particular contingency aespelt out\ in the objects and

' .

reasons behind the , new provisions. Once it is. recoginsed that the D newly aaded sections are .in the nature of a special law. intended to ' . ' ' - - ' ' . .· . ' . ' - ' . apply to special classes of landlords, the inevitable conclusion would 'be that the applica:tiol) of· the Sulm Act •stands withdraw~ to that extent and any suit falling within the scope of the aforesaid seetions-

14 (!) (e) and 14A ,":ould not be govcnied or controlled bys. '19 (!) (a} of the Slum: AcL · ·

E ,\ __ . '

Jt was; however, ; ul:imitted that s. 14A of the Rent act dealt with a specil contingehcyfor which .a. different procCdure had been provided ii1 the mder of evicting tenants by the 'landlords iii bccupation of preni.i; es allotted by the Central. Governinet or any local authority.

This was• to .enable them to get their dwn residntia!' accommodation so , that thby would be. in a position to vacate , the premises alloted to them by the Centrai.Government., It was coriten- ·,

F •,

-. ..

'. ded that as. the. Central GJvernment a11d persons. in occupation as

tenants pf premises providd. by Central Govern.men! were a dhss by themselves, section 14 A could be taken as a. special provision but 1.4 (I) (e) of the Act could nrit.be levated to .that pedestal. We are no"t able to accept this 'ilrgument. .. It was open to the legislature to pick out 'one class of landlords out of the 'seeral covered by .s. 14' · . (1) (e) of the Rent act so long is they formed a class by themselues and legislature was freeto provide the benefit of a special procedure to , them in .the matter of e.vi6tion o'(their , tenants is long }he legisl; i-

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, 622 SUPREME COURff REPORTS,

[1984] 2 $.C.R.

' \ - ' ' .. 6on had art object to achieve and the , specaiJ procedure had a reas- ·

onaple naxm with such object to be secured.·

r ' ' '. . \ . • ' ' ,,. .

I .

Despite.the ingenius and attractive arguments of Mr, Tarkunde, it seems to us tha~ the distinction made by the learned counsel between ss, 14 (l) (e) nd 14 A is really a distinction without any difference. Moreover, the newly added sections, viz., ss, J4A, 25(AJ, 25 (B) and 25 (C) do constitute parts of a special scheme and have the effect of makin, g the Sulm Act inapplicable. fo view 'of the pronouncement of this Court as referred t<;> above, it is impossible to accede to the contention advanced on behalf of the tenants. In Kewal Singh's case (supra), a decision to which one of us was a party (Fazal Ali, J.), this Court observed as follows~ ' '

' "The Act actually re_plac\d the Ordinance which was promulgated on Jst December, 1979, The objects and reasol)s clearly reveal that the amendme, nt has been made or simplifying the procedure for evictio'n of tenants in case the landlord requires the premises bona fide for his per.son'al occuration, It -is a ' matter of common knowledge that even though the landlord may have an in1n1ediate and imperative necessity for. vacating the house given to a tenant he , is compelled• to resort to the time consuming and dilatory procedure of a suit,:wb:ich takes years before the landlord is able to obtain the 'tiecree and in most cases by the tfm, e the d'cree is psscd either the landlord dies or the need disappears and the landlord is completely , deprived of getting any relief. It appears to ns that it was for

thes~ reasons that the legislature in.its wisdom thought that a short ancl. simple procedure should be provided for those land- ' ' lords who generally want the premises , for their bona fide necessity so that they may be.able to get' quick and expec.itious relief. ... , . The landlords having personal necessity have been

- '

- ' ~ brought together as a separate class because of thei1' special needs and .such a classification cannot be said to be unreasonable, particularly when the legislature in its wisdom feels that . tl:ie landlords should get this reli_ef as quickly as possible

Thus taking an overall picture of the situation, the circu~ stanccs under.which the landlord's needs have been calssified and the safeguards given by the statute it cannot be said by

...

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RAVI DUTT, i:: RATAN LAL (Faza/ Ali, J.) .. " .. -~·· 623

any stretch of imagination that section 29B and its sub-scti~ . ons are violative of Article 14 of the Constitution of India,

or that section 29 B suffers from,.t}le vice of excessive delega-

• ' 1 -· I tion of powers.

In fact section 29 B contain• valuable and sufficient guldclines'which completely exclude the exercise of uncanalised or arbitrary power~ by the Rent Cotroller: .

 .. ti' . - ..

-The .ratio ofcthis case reinforces ih~ ruie laid down in Sawaii Singh'/case'sµpra and in Vlnod Kumar Chowdhry v. "Naraill Devi

Taneja,11 1 it .was clearly pointed out that wheneyer there . was any conflict b.etween. section 29A and 'any .other provision of law. s.' 29 A was to override and prevaiL Here again one of . us (Fazal Ali, J.)

observed; ' ' · · '

~.The non-obstant.e cluse occurring in sect.ion 29 A . makes it quite c, Lear that whenever there is a conflict between the provi- \ sions of Chapter III A on the one hand and those of the re&t of' the Act or qf any other law foi the ti;,, e bein, g irl force o.n the other, the former shall prevail:" · " ·, I

D ' '

It is; therefore, clear frDm_ the' new provisipn in the Amending . . Act thatrthe procedure indicated tj1er., in was intended to have ovej,- / . riding effect and au procedural laws weri: to give way 'to the new .E proceclure. 'Applioations under. s.; 14 (I) (e), theref9re, clearly fell within the protective umberlla of the new procedure in Chapter IIIA.

.An iden\ical view has been tak'en by , the oelhi High. Court tn the cdse of Smt. Krishna Devi Nigam & .Ors. v. Shyam }Jabu, Gupta & Os., '•' In this decision it has been clearly held that.the pro- . . . . .. - visions of s. 29A carniot be controlled by the provmons of the Slum Act. We fully app-rov" and endors~ the ratio laid down in that decision as it is in conformity with 'the consistent opinion of this .Court.' .,, • , .

On a consideration, therefor~. of the 'ract~ and irc1imsta~Ces 'of tho case and .the , law referred to' above, we' reach the fo)lowing

_/

conclusions :

. ' (I) [19801 2 S.C.R. 747 .. (2)

AIR.1980 Dellii 1~5!

' ' .·~

. )

H -.

(1)

I . • \

 SUPREME COURT REPORTS

That sections 14A, 25A, 1513 and 2SC of the Rent Act are special pmvisions so far: as the landlord and tena1\t are concerned and in view of the non-obstante clause

thes,6 .provisions woul.d override. the existing law so far . as the new procedure i's concerned;.

(2) That there is no difference either on principle or in law .

, between sections. 14(1) (e)and !4A of the Rent Act even

though these two provisions rebte to tenants under different situations;

- 'f'

(3) That ihe procedure incorporated. in .Chapter lllA of the

(4)

Amending Aci into the. Rent Act is in , public interest and 1s not violativ, e.of Article 14 of the Constitution;

I . -

That in'view of the procedure in Chapter ITTA of the Rent Act, the Slum Act is rendered inapplicable to the extent of inconsistency a'nd it is !lot, therefore, necessary . for the landlord to obtain permission of th.e Competent

Authority udet s. 19 (I) (ii)of the Slum Act before instituting a suit for 'eviction and coming withins. 19(1) (e)

flt •· ' or 19A of the-Rent Act. - . ' ~

We are: therefore; of the opinion 'that the High Cour.t i\-as correct in rejecting applications of the tenants for setting rs'de. the. order of•_eviction. The appeal is acordingly dismssed but without

any. order as to coSts ..

' As. a result of o:ir decision, the special leave petition has to be dismissed. In both these.cases time to hcate the premises i~1 exten ded till June 30, i 984, subject to filing f the usual undertaking within four weeks from today failing which the landlords shall be free to a1k for possession forthwith through the 'executing court.·

'N.V.K.

Appeal & /'etition dismissed. ..

' '

.. ' .... ·.

"4·

RAVI DUTT SHARMA

RATAN LAL BHAR.GAVA

MuRTAZA FAzAL Au: A. VARADARAJAN

N. MISRA

Constitution of India

Article 14

Sections 14A, 25A and 25B

Delhi Rent Control Act 1958

Article 14

Rent Contrl Act 1958

section 19

section 14

Delhi Rent Control Act 1958

sections 25A and 2

Article 14

sections 25A and 25B

sections 14

Aending Act into the Rent Act

IIIA of the Rent Act

s. 19

sections 14(1)(e)

IDA

sections 14A, 25A, 25B and 25C

sections 14(1)(e)

section 19(1)

[1980] 1 S.C.R. 854

V.M.' Terkunde

:M. Parekh

.Jndu Ma

Kaila!h Mehta

Vima/ Dave

Bikarmjit Nayer

RAVI DUI? v. RATAN LAL

Faz'al Ali

Kawatra

4FAZAL Au

Ravi Dutt Sharma

Ratn Lal Bhargava

section 19

s. 25

Puspa Rani

Authority under the Slum Act

section 19

section 14

s. 14

Section 25

sections 25(A)

Article 14

ss. 25(A)

s. 14(1)

.RAVID

Supreme Court

sections 2

s. 1

Section 14

s. 19

Faal Ali

DUTT •. v. RATAN LAL' (Faal Ali, J.) 621,

•' '~ '
!

s. 39

s. 14

s. 14

sections 14A

s. 14A

section 14

s. 14

Tarkunde

Kewal Singh

Fazal Ali

RAVI DUTT

RATAN LAL

section 29B

Article 14

Constitution of India

section 29

section 29

Sawaii Singh'/case'sµpra

section 29A

s. 29A

sections 14A, 25A, 1513 and 2S

Article 14

Chapter ITTA of the Rent Act

s. 19

30, i 984


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COMMISSIONER OF WEALTH TAX, PATNA

' v.

RAGHUBIR NARAIN SINGH

i \

Pebruary 20, 1984

_.,.....~. - [ V.D .• TULZAPURKAR AND SABYASACHI MUKHARi1, JJ. J

"'Net wealth"-~·-"V, aluation of''n~; wealth.": unde~ section 7 _re'ad with ser_tiqn 2(m) Of the Wealth Tax A.ct,...J.951-Treatnu!llf of (a) co1npensation an10u11t'receiv'ah!e under. the Bihar Lands. Refor1~~-Act'; (b) the eh~ i~ ihe nati1re of Agriculture Inconie Tax due to Government, and,.ded_uctible ffo1n the receivable con1pensatio11; (c) the a1nou1lt of money -decree'sfully attached 'by Garnishee orders of competent court and (d) claims ttder aecrees not yet e.xeruted, expldned.

"y The ssesee is an individual and hi~ estate stood csted in the State of-Bikar U_nder the Bihar Land Reforms Act, 1950'as and lrom 1st or' July.1952, ad he -is

.~--._, I entitled to receiVC cOmPens'atio~ under the Acf rron1 , the Govern

1 ment .. 'The; assessr, e . ""-., during the relevant asessment year5 had obtained twdiim<?netary . decrees' from his debtors, but the amolinfa receivable by the-'"assessee were attached by two~7 gatnish"e.e ... orders iss'uCd bythe Cak!u"tta High Court on \3th January-1960 and 21st Jn:e ," 1961.

The asseisee also

0had some claim. decrees but as th_eY were -not yet exeCuted: they were sho\Vll in -:'his book of accounts as Still Outstanding. The assesseci had to pay.

Agricultural Incofile Tax to the Government and thi$ deb? has.to-be deducted _from

,•

"'' . the conipenSation receivable by th~ assessc~: Jn these five appeais oY certificrite of fitneSs, question arose as to whether thC answers of the Hjgh <;:::ourt of. atna Given .. in the Tax reference!': on the questi9n of correctness of valuation of the "net wealth"

under soction 7 Or the weilth Tax Act, :1957 are correct. ·• . '

The Revenue Urged be followirl& five propositions:1 -

' (I) For t?c urposes_ Qf compUtation of neiwealth of an_ a".!ssoc: each assCt

, belonging to ; irn-and (lach de'bt owed by.him haS to -be valutd separatcIY.

(2)· The differencetbetwCell the ggre.!iat~ value of the assets and the awe~

gate value of the.-debts represCts his ctwealth.

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•,,.; . ,,

G . ~.

(3) I? ~!ermining th~ mar~t vlue,.of an. asst (or_ the resi9ue of the aSset

.?1n1shd by a~ over-nd1ng title on the asset itself),' any liability or debt 1ncurre_d in relation to it has _to e ignored as the debt or liability hits to be separately evaluated: ·

(4) What i~· the ~rke.t value of a ce1iain asset or the reside asset s referred to above, iSa quetion of fact, to be detcrnlined finally by the Inco1ne-tax Appellate Tri_bunal t.; iking into acCollnt he relevant evidence a1-icl consld~

ratios put. forward by both the sides and the High Court Cannot interfere with such a finding of fact unlt:ss it is found to be based on irrelevant consideration or is arrived at by ignorir:g"relevr.nt eVidcnce. ~·

• • (5) ./

When the debt is represented as an asset, its ma1:ket value has to be determiii.Cd )n the san1e Iha.oner as ttie market value of any other ass"et irres- Pec:tive of the fac.t whether such an asset-det is encubercd J;:iy another debt-0wed fro111 the asses~, .becallse __ the later-tmlntioned debt can qualify

fo~ deduction at its rriarket V<i.lue indcI?ndcntly. ·

Dismissing_ the appeals.the Coµrt, . -\· , •

HP, LD:· 1.l. Sect_ion 7 and 2(M) of the Wealth Tax Act, 1957, though ust be rea4 harmoniously, apply at two different stiges.' Section 7 deals with theestimation of the market value of the asset, while section 2(M) enjoins that froii1 the same, the .debt owned by the assessee to be dedi1cted. The debts may. be deducted ., from the value of assets bUt the valution ~Of all asse~ hfls to be done in lerms of~ Section 7(1) taking into considerationS all the hazards incluctmg tbe possibility of . an an1ount orl account of debt being deduct.ed fron1 t~1e .value of the asset is a factor.

 \Vhicb:_, vill _influence a ;>respective buYer in the ope1t market, depending upon-the facts and drucumstances of each q:ise.

[633-EF] • 'f

J 1.2. ,.:Agricultural income tax dties from the assessee which are deductible fro1n the compensation under Section 4(c) of the 'Bihar Land Refonns Act, .1950, if the "s3.me bas not been dectuCted before the issue of the cornpensation bond,' then the possibility and the hazard of its being duducted fron1 the, compcnsniion involv<."d~ is a faCtor which has to b~ taken into acCount in estimating the value of the right. of comp6ns:i.tion for the purpose of eS:timating the net \Vealth of the as~; essee on the valuation date" under the Wealth Tax Act. TI1e arrears of agricult"ural incon1c-tax is .not to. be' deducted from the nt wealth as such but is a factor which willing Pui--

0 _...., chaser will take into consideration in estimating the value of thCse assCls and that is afactO'r which should be taken into consideration .. The Tribunal will estimate' the alue -taking iilto consideration the ptis.sibility of dcduc; ti"on on account of the liability of the assessecon ::i.ccount of 3.gricultural iii.Come-tiix if it had not been already dedUcted in accordilnce With the prov1sioris of the At and determine the net valueof the assets of the aSsossee, 3.ccOrdingly. [629A-D] ' .

c. v. T. w. RAGHUBIR NARAIN. 627

. Commi'ssion'er Of Wen/th Tax,'B(har, Patna'Vs. M'1haraja Kuffiar Kamal~Singh '-A (Civil Appeal Nos. 1238 to 1240 (NT)/J,973 decided On 20-2-84 relied on'. ·

I . '

2.'1. Ir .here is. an asscf which is. ~bject. to certain hazards ihcludng the liability or"certain debt to be deducted from the said asset, then th:it factor would -be a relevant factor dimini~}liug the -marhe~ va!Ue o.f the asset in Open market and has to. be estimated> taking into consideration tat factor. [633D]_, '

'B , .

. ' ' ...,.. 2.2.

Merely becalise the asscssee had shown the fu11 dccretal amo_unts in his hooks as stillduc,_ would. nt rpso /aero lead to the conclusiOn tha(ihey -should , be. . _ Valued at thOse suhls whhoUt taking into consideratioll the hazards of realisation . -·.of te ctecre.es.

These ctccrei:-.s had o-t ri executed and in the process of execlition- . there may be hazards ai1d the \Vea.Ith Tax , Officer n1ust .estlate the priceof the decree by anticipat'ing what a willing prirchaser wouidhavC paid for those decrees taking the haz<1rds'-into consideration in open inarket on the valuation ct'a.tc-arid

hould .estimate the price of the asset ill.questirt accordingly: .: .[631C-D]

::'..3.

When assessee .had c: .daim , decfce ::i.gainst hs debtor, thC Wcalih. Tax Officer should ascertain the - price that a rcasOriablc. person would have paid fo11 it on the relnt _date, and ".alc , jn oPen m3.rket cnsidering .that this~ claim decree Can only bO satified, wholly opartly fr6m the compensation which the .debtor would receive under. the Bihar J--aqd Reforms At, 1950.'\The clailn decree iS hn asset, but-it shf?uld bevaI_ucd by estimating What it would fetch in tho open market on the'valuatiOn date taking int~ .coasideration all the hzards_. [631H, 632A] ·

. I , 3.1. For the pUfp6ses Or con-iputR_tion of net-wealth o~ n aSi; e1See each. agset ·--4.._;'-belonging to him and each dfbt owed 1?Y , him haS tO br valued scpaiatd)r. [632E] ..

3,2. The difference between the aggregate value of the assets alld the atgri

:'F gate value of. the debts represet~ his net-wealth. [632F] -,. . ·

. '

. C;'Y!L APPBLLATH JUKIIDICTION•: Civil Appeal Nos. 1233-1237of1'973.

Appeals from t!; e Judgment and Order dated the .5th May, 1972 efthe Patna High'\ourt in Tax Cases Nos. 64 to 68 of'l967. . ! '.

G.C Sharma~ JJ. B, . A.hufa & Miss A. Subhashini fo; the

Appellant.,~

·.,...

. SUPR!ME COURT REPORTS

(1984} 2 S.C.R • , .

A P.X. Chatterjee and Rathin Dass for the Respondent. .

. E

The Judgment of the Court was delivered by

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SABYASACHI .MmrnARJJ, J., These appe.als from the judgment of the High Court of Patna have come to this Court by certificates l!lranted under Section 29 of the Wealth Tax Act, .1957. The questions upon which the. certificates. of fitness of appeal to this Court have licen granted are question Nos. (2), (3) and (4) in Tax Cases Nos. 64 to 68 of 1967. The questions are as follows: <, •

" "Qu.stion No. 2. Whether, in the fact• and circumstances of the case, the decrees obtained by the assessee against Shri A.H.

I, al arid Shri D'.D. Tulsi for Rs:. 1,11.747 and Rs. 51,525 respectively, have been valued under the Wealth Tax Act, 1957, by. correctly applying the provisions of section 9 of the Act for the ' purpose of including their values fa th~ net walth of. the ustssee?

' Question J'{o. 3~Whether, , the sum of Rs. 32,266, the amount of Agricultural income-tax due from. thb asessee, falls • for deduction in hands of the assessee in arriving at his total

. .

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' I

. wealth for the years 1957-58, 1958-59, 1959-60 and 1960:61? .. ,.).,·

011.stion No .. 4-Whether, the sum• of Rs. 597909 due from Tikait Girja .Prasad Singh,+.Rs. 40001 due (rom Sri

Gangeshwar Prasad Singh, Rs. 64000 due from Mahanth Mahabir Das, Rs .. 37773 due from Sri Lakshmi Narain Singh, Rs. 2600 due from Sri Jamuna Prasad Missir, Rs. 1250 due from Sri. Sarjg Kumar, Rs. 15344 due from Sri .NandJoshore Singh, and Rs. 388760 due from Raja Prithivichand Lal Chaughiiry under claim decrees obtained against them by. •ne .assessee under the Bihar Land Reforms Act are. assets of tno as.essee within . the meaning of Wealth Tax Act, 1957, and have been valued under the. 'said Act by correctly applyin~ , he orovisions of section 7 of the Act for the purpose of incl.ud.ing their values in 'the net wealth of the assessee"? j.

' \ c.w.T: v. RAGHUllIR N.ARAIN (Mukharji, 1.). 629 •

Regarding Question Na.· 3 which is the question whether!the f

. • amount of agricultural income-tax dues from the assessee is a factor which has to be taken into account for 'valuing the compensatfol} pay-· able to the assessee, wehave held that agricultural.income-tax ~.ues from the asscssee which are deductible from the. compensation under . Section 4 (c) of the -Bihat Land RefotmsAct, .1950, if the sal]le has not • been deducted .before the issue <if the compensation bond, then the · .. 'possibility a11d the hazafd of its being ~.eduded fro, m th~ compensation involved is a factor which has.to be taken into account in esti- "· mating the value of the right of compensation for the purpose of esti- 'ffiating -'tI1e net wealth cif the assessee on the valuation dte under the :• ·. Wealth Tax Act. The ·dears, of a_gricultural incofTle-tax is not io be deducted frcim the net wealth as such but is a factor which a willing purcha.ser will take into consideration in estimating the .value of these assests and .that isa factor which should be taken into consideration.

The point h&s been discussed by this Court in the case f Comissioner '.\ of Wealth. Tax,'Bihar, J!atna v. Maharaja Kumar Kamal Singh (Civil

Appeal Nos. 1238 to 1240 (NT) of 1973)~ , The qµestion, is, therefore aµswered as•the ans>yere~ given in the said appeals and the Tribunal will estinwte the Value by taking into C'<nsideration the possibility for deduction on account. of the liability of the assessee on account. of agricultural income-tax if it had not be2n already deducted in' accor-. dance wi_th the" provisions of the Act a:nel determine the net value of . the assets of the assessee, accordingly. , . ,

I - ,. ~· \ . ·: .; . . .

• \, ' . • I .

These. questions are for the wealth ta-x assessments of. the asses- ., ' ' ' ..... sec for the assessment years 1957-58, 1958-59, 1959-60, 1960-61 and

1961-62. J'he assessments involved were for those years in which the relevant valuation dates we're 20th September, 1956,.2lst March, 1958;

21st March, 1959, 21st.March 1%0 and 20th March 1'96hespectively.

In the firs\)'ear the'assessee had filed return of wealth for Rs. 447065.

The Wealth Tax Officer, however, determined the total wealth of the .assessee at 'Rs: 1608863.

The Wealth Tax Officer included in the net wealth of the assessec, vrious amounts of money due under. the

I ' decrees which the assessee hal, l obtained against certain debtQrs, as•,

well as t.he compensation payable to him under the Bihar 'Land Reforms A.Gt after valuing the bonds.· It may be mentioned that the asses see had appealed to the Appellate Asistant Commissioner arid thereafter he . had carried appeals , to the Tribunal also and had obtained. snme srelief in _the processc For the subsequent assessment years of 1958-59. 1959-.60, 1960-61 and 1961-6.2, 'similar considerations had come \IP before the Wealth Tax Officer, o~ the assessee filing separate returns and similar results were followed. In each year

\ '

A.'

.c ' .. "'

'H '

.. .,,_

L ,, ..

the asessee had claimed ertain deductions: including an amount of . n . .

R•. 32266 due as agricultural income tax. The later sum hns . been consi5tently disallowed. This point we have 'd, isposed of in terms of tlo.o deeisioa of this Court in Civil Appeal Nos. 1238 to 1240 (NT) of 1973. . . . .

So far as Question No. 2; is concerned, while' computing the net wealth, the Wealth Tax Ofi\oer had incluc:e<l the sums of Rs. 8000 and

s.'130.11 for the ; iear 1957-58, due from S; i A.K.Hazr~ and Sri N.

 Sabay respectively, on the bsis o( l)sufructuary mortgatge in favour of the assesee as his assests. On th~ last point the assessee has obtained ~- . relief from the Appellate Tribunai for the year 1957-58 and for .that reafon thes~ two sums were excluded from .the net wealth of the asses- see for the subsequent assessment years and that point had given rise -' to the reference in Tax Cases Nos. 23 to 27 of 1966. On the other

questions raised by the assessee, reference in Tax. Cases No~: 64. to ' 68 of 1967 had arisen.

. •

. .

No,,; the facts thaterial for Questin No. 2 are.as follows: . . ' ' The assessee had obtained civ]J court decrees for Rs. 11 i747. and Rs. 51525 against Sri A.H. Lai and Shri D.D. Tulsi. The decrees are sti.li pending eecution. In the books of the assessee'lfthese two decretal aniounts were showff as tstill outstanding. So far as the decree

obtained against Shri D.D. Tulsi, th~ position seems to be that .Tulsi

owed a decree to the assessee and the assessee owed money to the bank.

In .c; onnection with the decre obtained against D.D. Tulsi, it liad

l>een contended before ihe Tribunal that at the instance ofo the Official Liqwdator, the Calcutta High Court had issuef.1 a Garnishj order on 13th January, 1960 for setting off the assessee's liability to the Pacific Bank and, therefore, the decree-.did not represent wealth wh.ich could . be valued under the Act. It was recorded by the Tribunal that the order .of the Caltuita High ¢ourt had been passed after the relevant dates

of the first three assessment years and it held that even for the assess~ m.ent years 1960,61 and 1961-62, tlie 'order of attachment could not indicate that the value of the decree was 'nil', as was the assessee's

se. Hence, the decree against. Sri tulsi was valued by the Wealth Tax Officer at Rs. 51525.

As regards the decree against Sri A.H.

Lal, tlie attachment order passed by the Calcutta High- Court was on :m1t 1'!11e, 1961, hat, is to say,. even aftet the valuation date for the ..

c.w.T. v .. RAGHUll!R NA~AiN' (Mukharji, J.) 631

assessment year 1961-62. Tl; ede'cree.was therefore valued by the Wealth Tax Officer at the figure of Rs.· JI 1747. It wasdie contention. of the assessee. that the hvo decrees had been erroneously valued and 'the . . . principles for valuation unde'r Setion 7 (I~ had hot been followed:

On the other hand it was cbntended 'on. behalf of the revenue !bat . decrees had been correctly valued unde~ Section 7 (2) (a) of the .AC't.

'The High Court held and in our opinion rightlythat .two d.ecrees had :not been.valued under. Section .7 (2) of the Act at all and. had been valued under Section 7 (I) of the Act., We are in agreement with the . High Cour~ that merely becausetJ; e assessee had shown the_ full dec; etal amounts in his books as still due, would notdpsofacto lead to the conclusion that they would be valued at those sums without taking.into .. cosideration tlie haz_ards of realisa6on pf the decrees. These decrees

had not been executed and in the process of execution, there may be hazards and the Welath'Tax Officer n!ust, sJimate the price of the decree by anticipating what a willing purchaser won.Id have paid for those ..

deerees taking the hazards Into consideration ·-in open market on• the . val_uation date and should estimate the price of thi; asset in question accordingly. The High Court. answered this question in the negative ..

We are of the opinion that in view of the well-settled principles which we have discussed In the case of Cimimisioner of Wealth Tax, Bihar, Patna v. Maharaja Kumar Kaina/ Singh '(Civil A, ppeal Nos~ 1238 to:· 1240 (NT) of 1973, the.High Court was right in its decision' ·

{ .

sf r ar as the~ Question. No. 3 is concerned,. the same question

~-.; would. have to be answered in the manner indicated above and the . High Court has done the same and we affirm the said decision in view of the decision of this Court in Civil Appeal Nos.· 1238 tci J240 (NT) . of 1973. The facts regarding question. No .. 4 after taking into coside~

.. \:

ration statement of this. case as also the suppiementary statement 6f . . the .case sent to the High Court pursuant to its. dirc.tions are as . follows : . /

' •.'

., .

D ..

- In respect of sums due from. Tikait Girja Prasad Singh; . the . High Court-hs liserved that assessee was entitled in respect; of the

G ·. , zamindari compesation of Tikait Girja Prasad Singh which had. vested in the G, overnn1ent and the. valne of.the compensation 11ad Men". estimated 'at 75 per cent . of' certain, figure.

The High Court directed that . when assessee had a claim. decree against . its debtor, the Wealth Tax.Officer should_ ascertain the price that areason- H al:lle. person would have paid for. ii on the relevant -date, . valuation ...

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\ A

• G

' . . in opn market Considering that this claim decree Cal) only be Satisfied

wholly or partly from the compensation which the. 'debtor would receive under the Bihar Land Reforms Act. 1950.~ The claim decree was an aset, the High Court held, but -it was wrongly valued by the authorities and directM to be valued by estimating what it would fetch in the open market on the valuation date taking into considc- ration all the hazarils.

.,__ _ '

on the same principle, the other decrees mentfoned in the. qestidns . .-

hae been disposed of by the High Court. We are of' the opinion th'at ·

i~ view of the principles :discussed by this Court in the case of Commis- ~·" . s10ner of JV, a/th Tax, B1har, Patna 'v. Maharaja Kuma.r Kaflutl Singh ,,,_

the High Co, urt was right in its conclusion. Indeed this question was hot seriously pressed before us sewrately ...

• We. may. reiterat<; that learned. counsel before U& certain propositions, namely: ,,

for the revenue urged ·

(1) For the purposes of computation of. net-wealth of an assessee ech asset belongini: to him and each debt owed by hill} has to be valued s.cparately, · • '

(2) , The difference between the ai:i:reagate value 0f .:r the 'assets and the agrcgate value of the debts , represents his - . net-wealth. ·

' ,

(3) In determining the market value of an asset( or the_ residue "I of the asset diminishCd by an over-tiding title. on the asset itself), any liability or debt incu\red in relation to it hs. to be ii:nored as the debt or liability has tci be separately evaluated. '

(4) What is the market value of a certain asset P• he residue asset as referred to 'above: i; a question of fact, to be deter~ i~ mined finally by the Income-tax Appellate ·.Tribunal taking .' ir1Jo account 111e relevant evidence and: consid" utions put

fore ward by both the sides and the High Cow cannot in"·, ..

'' ,,,

J' .

: .. :o . ;; ;

• ---..:i.

j ..

C.W.T.)'. RAGIIUBIR NARAIN (Mukhar}i.-J.)

' . ~' . \' 633

,# terfere with such a finding of fact nless it isJoud t~. be

basect n irrelevant consideration or is arrived at by' ignoring 'relevant' evidence.

'---.

' ' - . '

(5) When the debt is representedasm) asset, its market. value has. to be determined in the same manner as the. market" . value of any other asset irrespective of the fact whether such an asset-debt"is encumbered by another debt owed from the assessee, because the later-mentioned debt can qualify for deduction at its markt value independently: ·

I About proposition No. (l) and (2) above, there cannot be' any dispute.' But as regards Proposition No. (3), as this Court has discussed in Commissioner of Wealth Tax, Pihar Patnq v. Mahdraja Kumar . Kamal Singh, if there is an' asset, whicli_.is -subject 'to certain hazards including the liability. of certain debts to be deducted from the .said ttsset, then that factor ould be relevant factor diminishing the market .

value of the asset in open market and has to be estimated taking into consideration that fct9r. Regarding Proposition No. ( 4), it may be stated that while it is a question of fact but if the Tribunal has arrived at the conclusion by takit1g wrong principles into consideration, then

-·-·.

 such a findi'ng )VOU!d not bind the High Court. Regarding Propositon No. (5), it 'may be stated that (de bis may be deducted from' the value

...

. ..;;. i of a$, sets but the valuation of an asset has to be \!one in terms of Section / 7 (I) taking into considerations a!I the hazard$ including the po.sibility "---. of au amount on account, of. debt being deducted fron\ the value of the

asset is a factor which will. influence a prospective buyer in the open market, depending upon the facts and circumstances of each case .. . ' . . . ' ·~

In the aforesaid view of the matter, we affirm the decision of the

.· High Couri in all these points and dism.iss thee appeals with costs:

S.R.

.&pplifals dismissed. ·

.A ..

/ ''

COMMISSIONER OF WEALTH TAX, PATNA

RAGHUBIR NARAIN SINGH

V.D .• TULZAPURKAR

section 7

Bihar Land Reforms Act, 1950

Or the weilth Tax Act

Wealth Tax Act, 1957

Section 7

section 2(M)

Section 7(1)

Section 4(c)

Bihar Land Refonns Act

RAGHUBIR NARAIN. 627

M'1haraja Kuffiar Kamal~Singh

G.C Sharma~

A.hufa

A. Subhashini

A P.X. Chatterjee

Rathin Dass

SABYASACHI .MmrnARJJ

Section 29

A.H.

I

Wealth Tax Act, 1957

section 9

Gangeshwar Prasad Singh

Mahanth Mahabir Das

Lakshmi Narain Singh

Jamuna Prasad Missir

Sarjg Kumar

.NandJoshore Singh

Raja Prithivichand Lal Chaughiiry

Wealth Tax Act, 1957

section 7

Section 4

Wealth Tax Act

A.K.Hazr~

N.

 Sabay

A.H. Lai

D.D. Tulsi

Calcutta High Court

Pacific Bank

tulsi

A.H.

Lal

Calcutta High- Court

Mukharji

Section 7

Section 7

Tikait Girja Prasad Singh

RAGIIUBIR NARAIN