S.C.R.

SUPREME COURT REPORTS 817

allow the licensing authority to make any reduction he likes. On the whole we are of the opinion that clauses (7) and (8) of the Control Order do not impose unreasonable restrictions upon the freedom of trade enjoyed by the petitioners and consequently the declaration of the 16th of Juiy, 1953, cannot be held to be invalid. The result is that, in our opinion, clause 4(3) of the Control Order as well as tbe cancellation of the petitioners' licence should be held to be invalid and a writ in the nature of mandamus would issue against the respondents opposite parties preventing them from enforcing the cancellation order. The rest of the prayers of the petitioners arc disallowed. \Ve make no order as to costs.

Petition partly allot11ed.

Agent for the petitioners : Ga11pat Rai.

Agent for the respondents : C. P. Lal.

CHA TTURBHUJ VITHALDAS JASANI v.

MORESHW AR P ARASHRAM AND OTHERS.

[MuKHERJEA, V1v1"" BosE and

BHAGWATI

JJ. /

Represellfation of t!1c People Act (XLlll of 1951), s. 7(d)-A firm entering into co11trac1s with Central Govern1ne11t for supply of goods-A candidate seeking election for Parlianient, a partner of the said firm on the crucial dates-Disqualificatio11-Co11stitution of India, art. 299(1)-Indian Contract Act (IX of 1872) s. 230(3)- Contract ivith Gover111nent not in proper forn1-TVhether void- Ratification-Contract for supply of goods-Subsists till fully discharged by both sides-And payn1ent. 1nade-Person of Scheduled

Caste Mahar convertt'd to 1\fahanubhava Pa11th-FVhether convert..,· caste statu.i altered.

A contract for the supply of goods does not tenninate \Vhcn the goods arc supplied, it continues into being till pay1ncnt is made and the contract is fully discharged by performance on both sides.

O'Carroll v. Hastingt ([1905] 2 LR. 590) and Satyendrakumal' })as v. Chairn1an of the Municipal Com1nissioners of Dacca (I.L.R . 58 Cal. 180) relieJ upon.

The firm Moolji Sicka and Company of was a partner had _ entered into contracts which the candidate \Vith the Central

.. i\.ftssrs. Dwarka

Prasad Laxmi Narain v.

The State of Uttw Pradesh and

Two Others.

Mukhtrjea J.

February 15.

Chatturbhuj

Vithaldas Jasani v.

Moreshwar

Par ashram and Others.

(; overnn1ent for the supply of goods.

The contracts subsisted on the crucial dates, Nove1nber 15, 1951, and February 14, 1952.

Novernber 15, 1951, \Vas the last date for putting in nominations. an<l February 14, 1952, \Vas the date on which results were declared : Held, that the candidate had both a share and an interest in the contracts for the supply of goods to th~ appropriate Governn1ent on the crucial dates and was thus disqualified for being chosen as a member of Parliament by virtue of the disqualification set out ins. 7(d) of the Representation of the People Act (XLIII of 1951).

Held further, that the contention that the contracts in question \Vere void because the l}nion Government could not be .sued by reason of art. 299(1) of the Constitution as the contracts were not expressed to be nlade by the President was without force because this was the type of case to which s. 230(3) of the Indian Contract Act would apply.

\\.'hen a Government officer acts in excess of authority Government is bound if it ratified the excess.

T/1e Collector of J.\1asulipatam v. Cavaly Venkata Narrainapah (8 M.l.A. 519) relied upon.

A member of Castes continues conversion to the version imports certain ideological status.

the Mahar caste \vhich is one of the Scheduled to be a member of the Mahar caste despite his tenet.s of the ~IahanubhaYa Panth as such conlittle beyond an intellectual acceptance of tenets and does not alter the convert's caste

Abraham v. A />raham (9 M.I.A. 199) relied upon.

C1v1L

APPELLATE JURISDICTION : Civil Appeal No. 155 of 1953.

Appeal by special leave from the Judgment and Order dated the 15th July, 1953, of the Election Tribunal, Nagpur, in Election Petition No. 3 of 1952.

B. Sen and T P. Naik for the appellant.

Veda Vyas (S. K. Kapur with him) for respondent No. 1. 1954.

February

15. The Judgment of th<' Court was defo ere.cl by BosE J.-This is an appeal against a decision of the Nagpur Election Tribunal.

The contest before • the tribunal was about two seats rn the Bhandara Parliamentary Constimency.

The elections were held on five days in December, 1951, and January, 1952.

Thirteen candidates filed nomination papers among them the petitioner.

Of these, six contested the seat reserved for the Scheduled Castes.

One of these was Gangaram Thaware who has since died.

The Scheduled Caste in question is the Mahar caste.

Objection was taken to Thaware's nomination for the reserved seat on the ground that he was not a Mahar.

It is admitted that he was born a Mahar, but later in life he joined the Mahanubhava Pantli.

This, according to the appellant, is a sect which does not believe in caste, and alternativdv that it forms a separate caste in itself.

The contention was that when Gangaram Thaware joined the Panth he ceased to be a member of the Mahar caste.

The objection succeeded and his nomination was rejected.

The nomination of another Scheduled Caste camli- .datc was also rejected and five others were withdrawn before the election, among them was the present petitioner.

That left six candidates of whom three were eligible for the reserved seat.

The two who were elected were Tularam Sakhare, for the Scheduled Caste seat, and Chaturbhuj J asani, for the general seat.

Jasani's election was challenged -0n the ground that he was subject to the disqualifications set out in section 7(d) of the Representation of the People Act (Act XLIII of 1951) as he \Yas interested in a contract for the supply of goods to the Central Government.

The Election Tribunal held that the rejection of Gangaram Thaware's nomination was improper as he

continued to be a member of the Mahar caste despite his conversion to the tenets of the Mahanubhava Panth.

It also held that Chaturbhuj J asani had a <:ontract with the Central Government, so he was disqualified.

Accordingly it set aside the whole election.

We will deal with Chaturbhuj Jasani's election first.

Section 7 ( d) is in these terms: "A person shall be dissqualified for being chosen as, and for being, .a member etc.

* * * *

Chatturhhuj Vithaldas Jasani v.

Moreshwar Parashram and Others.

Bose].

Chattwbhuj Vithaldas

Jasani

Moreshwar Parashram and Ot/urs.

BoseJ.

( d) if. .. .. . hy himself ...... he has any share or interest in a contract for the supply of goods to ..... . the appropriate Government."

Chaturbhuj Jasani was, and still is, a partner in the firm of Moolji Sicka & Company, and it is said that at all material times the firm had a contract for the supply of bidis to the Government for the troops.

Moolji Sicka & Company is a firm of bidi manufacturers.

The Central Government was interested in stocking and purchasing bidis for sale to its troops throngh its canteens.

Accordingly, it placed two of the brands of bidis manufactured by this firm on its approved list and entered into an arrangement with the firm under which the firm was to sell, and the Government was to buy from the firm, from time to time, these two brands of bidis.

It was argued that this amounted to a contract for the supply of goods within the meaning of the section.

It was said that the contract was embodied in four letters.

We do not intend to analyse thee letters in detail here.

It is enough to say that in our opinion no binding engagement can be spelt out of them except to this extent: Moolji Sicka & Company undertook to sell to the canteen contractors only through the Canteen Stores and not direct and undertook to pay a commission on all sales.

This, in our opinion, constituted a continuing arrangement under which the Canteen Stores, i.e., the Government, would be entitled to the commission on all orders placed and accepted in accordance with the arrangement; and in fact the Canteen Stores did obtain a sum of Rs. 7,500 in satisfaction of a claim of this kind.

This money was paid long before the dates which are crucial here but the settlcmcnr illustrates that there was an arrangement of that nature and that it was a contmumg one.

In our opinion, it continued in being even after that and the mere fact that there was no occasion for any claim subsequent to the settlement • does not indicate that it was no longer alive. But except for this, the letters merely set out the terms on which the parties were ready to do business with

each other if and when orders were placed and executed.

As soon as an order was placed and accepted a contract arose.

It is true this contract would be governed bv the terms set out in the letters but until an order as placed and accepted there was no contract.

Also, each separate order and acceptance constituted a different and distinct contract: see Rose and Fran!( Co. v. J. R. Crompton & Bros. Ltd.( 1).

The crucial dates with which we are concerned are 15th November, 1951, the last date for putting in the nominations, and 14th February, 1952, the date on which the results were declared. The section runs-

"A person shall be disqualified for being chosen as ...... n

The words which follow, "and for being'', need not he considered as it is enough for our purposes to use only the former.

Now the words of the section are "shall be disqualified for being chosen." The choice is made by a series of steps starting with the nomination and ending with the announcement of the election. lt follows that if a disqualification attaches to a candidate at any one of these stages he cannot be chosen.

 The disqmlificatwn alleged in this case is that Chaturbhuj Jasani had an interest in a contract, ur a series 0£ contracts, for the supply of goods to the Central Government.

He hail this interest because the contracts were made with Moolji Sicka & Company, a firm of which Jasani is one of the partners.

The fact of partnership is admitted but the other facts are denied. \Ve have therefore to see whether any contract for the supply of goods to Government by Moolji Sicka & Company existed at any time on or between the relevant dates.

Exhibit C is a tabular statement which sets out the dealings between the parties during certain months.

It is accepted as correct by both sides.

The following extracts from this statement show that Moolji Sicka & Company had an interest in a series of contracts for the sale of bidis to the Canteen Stores at and between the relevant dates .

. (1) [1925] A.C. 445.

C/iatturbh11i

VithaldaS

Jasani v.

Mareshwar LParashram artd Others.

~'.-.. :- Bose].

Chatturbhuj

Vilhaldas

Jasani v.

Moreshwar Parashram and Others.

Bose].

Date of ord<:>r Date of invoice Price of Date of by and goods pay- Canteen Stores Despatch supplied me-nt ---..

8-10-1951 18-10-1951 Rs. 1 ,684-13-9 19-12-1951 8-10-1951 19-10-1951 3,373-9-3 d.:; 17-8-1951 26-10-1951

I 2,662- 8-0 do 12-9-1951 26-10-1951 I l,426-14-6 do

I 1-10-1951 26-10-1951 8,411-14-0 do 21-10-1951 30-11-1951

IO, 125-2-9 do 9-8-1951 29-8-1951 25,812-12-0 24-12-1951 8-10-1951

18-10-195 I 4,793-4-9 do 14-n-1951 22-11-1951 l ,887-9-9 5-1-1952 17-10-1951 8-J I-I 95 l 16,554-2-0 22-1-1952 12-11-1951 20-l 1-1951 4,205-15-0 do 13-12-1951 l0-1-1952 13,97,079-7-9 12-2-1952 14-1-1952 22-1-1952 1,691-11-9 do 21-12-1951 l0-1-1952 16,983-8-0 18-2-1952

12-II-1951 22-n-1951 8,411-14-0 13-3-1952 9-1-1952 16-1-1952 5,888-4-9 do 23-1-1952 28-1-1952 8,411-14-0 20-3-1 <)52

This statew.ent reveals that various contracts aggregating Rs. 15,39,345-6-0 less some small sums for railway freight, were outstanding at one time or another between the two crucial dates and that payments in discharge of these liabilities were made at various dates between 15th November, 1951, and 20th March, 1952.

It also shows that orders were placed and accepted for goods priced at Rs. 84,659-14-3 before 15th November, 1951, and that payment was not made till after that date.

Therefore, on 15th November, 1951, goods worth Rs. 84,659-14-3 had still to be paid for.

Then between 15th November, 1951, and 14th February, 1952, further orders for goods v:ilued at Rs. 39,695-8-9 were placed and accepted and they were not paid for till after 14th February, 1952.

It was argued that there is nothing to show that the goods were not supplied before 15th November, 1951, and before 14th February, 1952.

It was said on behalf of the appellant that these are the only dates which are crucial, so if Moolji Sicka & Company had fully

executed their part of the contracts before the two crucial dates the disqualification would not apply.

That raises these questions: (1) Does a person who has fully executed his part of a contract continue to have an interest in it till the goods are paid for?; and

(2) were these contracts fully executed so far as Moolji Sicka & Company's part was concerned?

The parties are not agreed about this, so it will now be necessary to examine their letters in detail to determine the terms of the various contracts.

The correspondence discloses that the Canteen Stores and Moolij Sicka & Company dealt with each .,. -Other from time to time under various arrangements which ,!hey called "systems".

The earliest letter we have about the transactions between these parties is one dated 30th March, 1951.

It shows that the "system" which they called the "Direct Supply System" was in use at that time The .details of the "system" are set out in an order dated 17th April, 1951.

Under it Moolji Sicka & Company had to send supplies of bidis direct to the Canteen Stores contractors as and when ordered.

The value of the goods so supplied was to be recovered from the .contractors direct and the Canteen Stores were to he informed of the sales and were to be paid a certain .comm1ss1on.

This led to some friction and in their letter of 30th March. 1951,. the Canteen Stores complain that information about some of the sales to the contractors had been suppressed with the result that the Canteen Stores lost their c.ommission.

Moolji Sicka & Company replied to this on 24th April, 1951, and suggested a slight change in the system, namely that all orders for the goods should in future be placed through the Canteen Stores and that there should be no dealings with the contractors direct except to supply them with the goods ordered by the Canteen stores; then, they said, there would be no complaint about their having been kept in the dark.

This appears to have been agreed to because such of the subsequent orders as arc on record were placed by the Canteen Stores.

Chatturhhuj

Vithaldas Jasani. v.

Moreshwar Parashram and Others.

Bose J.

Chatturhhuj

Vithaldas

:Ja.1an1

More.Jltwcu Parashram and Other.J".

Bose].

The or<ler date<l 17th April, 1951, to which we have

referred above is a sample.

This was considered unsatisfactory and it was felt that a change was called for.

Moolji Sicka & Company's letter of 24th Ap1il, 1951, shows that their complaint was that the Canteen Stores did not keep a sufficient stock of bidis on hand. They said-

"W e feel that you can stock more of our bidis.

And that will mean an added profit to you; since the rebate you get on supplies made under the Direct Supply System 1s Rs. 4 only, whereas on supplies made to you we have now offered a much higher rebate .............. We have therefore to request you to kindly stock more of our bidis."

In view of this, two representatives of Moolji Sicka & Company, met the Chairman of the Board of Administration, who was in charge of the Canteen Stores Department, on 10th July, 1951. They reached certain tentative conclusions which were reduced to writing by the Canteen Stores on 11th July, 1951.

Their letter of that date shows that the Canteen Stores proposed to abolish the Direct Supply System in the near future but so far as Moolji Sicka & Company were concerned they said that the system could be abolished at once ("forthwith" is the word used) provided Moolji Sicka & Company would agree to supply bidis for the Bombay, Calcutta and Delhi Depots of the Canteen Stores under a new system which they called the "Consignment System''.

Under this the Canteen Stores were to pay as they sold. But the new system was intended only for the Bombay Calcutta and Delhi Depots of the Canteen Stores. The letter goes on to say that for the Pathankot and Srinagar Depots the supplies would have to be made on the "Outright Purchase Basis".

These proposals were embodied under the heading "Future Business Relations".

Then there was a provision for what was called the "Transition Period".

That said that "Until stoch could be placed in our depots, it was agreed that you would supply your bidis direct against. our orders and on such supplies you would allow us rebate as at present."

These proposals were sent to Moolji Sicka & Compau y for confirmation.

It will be seen that the letter makes four proposals :

(1) That so far as Moolji Sicka & Company were concerned, "the Direct Supply System" should be terminated at once though, so far as other manufacturers were concerned, it should continue in force for some time longer;

(2) That in its place the Calcutta, Bombay and Delhi Depots were to be supplied under a new system called the "Consignment System";

(3) That the Pathankot and Srinagar Depots were to be supplied under another new system called the "Outright Purchase System";

( 4) That during the "transition period" the "Direct Supply System" was to continue in operation "as at present" even with Moolji Sicka and Company.

Moolji Sicka & Company replied on 16th July, 1951, saying that they were prepared to accept these terms prqvided the Canteen Stores confirmed certain modifications which Moolji Sicka & Company proposed.

They were as follows:

(1) Regarding the "Transition Period" they said- "W e arc pleased to note that vou will soon be abolishing the Direct Supply System.

But it should be applied to all suppliers at the same time. Till then we should b('. allowed to supply any orders received from the Canteen Contractors. You should inform us of the date on which Direct Supply System will be discontinued."

(2) Regarding the new proposals under the heading "Future Business Relations" Moolji Sicka & Company said-

"Goods sent to your depots on consignment basis must be either returned to us or paid for fully within three months of the date of supply. We understand that the system of supplying goods on consignment basis will be discontintd in about six months' time."

Chatturbhuj

Vithaldas

Jasa'!li

Moreshwar Parashram and LOtJiers.

Bose J.

Chatturblud

Vithaldas Jasani v.

Mareshwar

Parashram and Others.

Bose .7

(3) They said-

" And for this purpose we have agreed to offer you Rs. 7,500 in full and final settlement of all your claims to date and upon the understanding of your acceptance of the terms for future business."

They concluded- "Upon rece1vmg your confirmation we shall instruct our Bombay office to send you the cheque for the amount stated above."

The Rs. 7,500 was what the Canteen Stores claimed from Moolji Sicka & Company as compensation for breach of the agreement under which Moolji Sicka & Company had agreed not to sell to the Canteen Contractors without paying the Canteen Stores a comm1ss10n.

Neither side was able to produce exact figures but this was the estimate made by the Canteen Stores of the loss suffered by them by reason of that breach.

It will be seen that the proposal about the "Consignment Svstem" which the Canteen Stores made was that they would pay Moolji Sicka & Company only when they sold the stocks with which Moolji Sicka & Company were to supply them for stocking their depots at Calcutta, Bombay and Delhi.

Moo! ji Sicka & Company were not satisfied with this and said that the Canteen Stores must either return or pay for all stocks supplied, within three months from the date of supply.

The Canteen Stores replied on 19th July, 1951, as follows: ( l) They accepted suggestion that when abolished the abolition of bidis.

Moolji Sicka & the Direct Supply

would apply to

Company's System was all suppliers

(2) As regards the "Consignment Account System" they did not turn down the proposals but observed that they were thinking of doing away witl1 that too in favour of the "Outright Purchase System" and warned Moolji Sicka & Company that in view of that it might not be necessary to place any of Moolji Sicka & Company's stocks in their depots.

(3) They wanted a six months' guarantee period in place of three months.

The letter concludes-

"Although under the system of provisioning adopted by us, and as explained to you during our discussions, it may not be that we shall at any time have any stocks surplus to our requirements or stocks which have not been disposed of within the guarantee period, but should there be any solitary occasions will you please confirm that you will replace such stock with fresh stock without any cost to us?

We await yoar agreement by return."

They also said, "We now await your cheque for Rs. 7,500."

Moolji Sicka & Company replied on 26th July, 1951, and commenced by saying-

"W e agree to all you have said in page one of your letter under reply."

Regarding. the guarantee they said they could not agree to six months but would agree to three provided the guarantee was limited to goods found to be defective because of faults in manufacture.

They concluded-

"We have also to pay letter, dated 16th July, Canteen Stores would made.

you Rs. 7,500 as per our 1951," and asked how the like the payment to be

The Canteen Stores replied on 31st July, 1951, and explained what they meant by the "guarantee period".

Bidis deteriorate by keeping, so the idea was to have a system under which they could be returned within six months to prevent their deterioration. They explain that this is in the interests of the manufacturer because ( 1) it will not bring their brands into disrepute, for that would be the inevitable result if stale bidis which had deteriorated were sold in the canteens and

(2) if the period is made too short, then

"the goods will not stay in our depots and in the stalls of our canteens and contractors long enough to sell and hence our depots will always be anxious to

C!iatturbhuj

Vithaldas Jasani v.

Moreshwa"

Parashram ond Others.

Bose].

i95+

Chatturbhuj

Vithaldas

JrLfani

Moteshwar Parashram and Others.

Bose J.

return these stocks.

The result will be obvious. Your sales will be lower."

They continue-

"W e therefore consider that the period of six months should be the least before the expiry of which goods may be taken back by you and replaced ......... .

The period of three months within which you expect us to return your stocks, should we find them not moving. will be too short."

Tky conclude by saying that they hope Moolji Sicka & Company will agree to the six months.

Now it will be seen that all this correspondence related to the proposals about the "Consignment System" which were first mooted on 11th July, 1951.

Moolji Sicka & Company complained on 24th April 1951, that the Canteen Stores were not keeping large enough stocks of their bidis and they asked the Canteen Stores to stop the Direct Supply System and purchase stocks direct.

The Canteen Stores were naturally reluctant to keep large stocks on hand because bidis deteriorate and become unsaleable in course of time.

Therefore they proposed the "pay as we sell" system, that is, they would keep stocks of bidis and pay for whatever they sold.

But the problem of unsold stocks deteriorating still remained. \Vho was to be responsible?

The obvious answer was that the manufacturers should take back the unsold stocks before they were too far gone and in their place send fresh consignments for sale on the "pay as we sell" basis.

We say "obvious" because the manufacturers could use the stale tobacco by re-curing and blending it, or could use it for other purposes provided it was not toQ far gone.

The proposal therefore was that the Canteen Stores were to keep stocks of Moolji Sicka & Company's bidis in their depots and canteens, pay for what they sold and return all unsold stocks within six months. Moolji Sicka & Company were then to replace them with fresh stocks which would he paid for when sold.

This was agree< I to in the main but the point at which they were at issue was the six months. Moolji Sicka & Company proposed three months w hilc the

Canteen Stores wanted six months.

We think the argument used in the letter of 31st July, 1951, that "the result will be obvious.

Your sales will be lower'" .can only have reference to an arrangement of this kind, otherwise no question of the sales being lower could arise.

In the case of an outright sale, the sale would be complete when the order was executed, and except for bidis found to be defective due to manufacture.

Moolji Sicka & Company would have no further con- <:ern with them.

The sentences "the goods may be taken back by you and replaced" and "should w~ find them not moving" can only refer to these p: uposals about the "Consignment System".

In any <ease, it certainly includes this system.

Moolji Sicka & Company's reply is dated 9th August, 1951.

They say- "We are in receipt of your letter No. 7B/29/-17/ 1299, dated 31st July, 1951, and are pleased to extend the guarantee period from three. to six months. \Ve are sure this will now enable you to keep adequate stocks of our bidis.

Awaiting your esteemed orders." This is an acceptance of the interpretation of the "guarantee period" as given by the Canteen Stores in their letter of 31st July, 1951.

The words "now" and "adequate" relate to the dispme which started on 24th April, 1951, when Moolji Sicka & Company <:mnplained that the Canteen Stores were not keeping adequate stocks of their bidis in their depots. The subsequent correspondence was aimed at finding out ways and means to meet this objection and at the same time satisfy both sides.

It all ended by Moolii Sicka & Company accepting the terms set out in the ktter of 31st July, 1951.

We are accordingly of opinion that Moolji Sicka & Company accepted the "Consigmnent System" on 9th August,

1951. That imported a "pay as we sell" arrangement with an obligation to take back stocks unsold within six months and replace them with fresh stock which would he paid for when sold.

In the "transition period" the Direct Supply System was also to continue.

That meant that there would be two systems in force for a time in certain depots: the "Consignment

Chatturbhuj Vithaldas

Jamni

Moreshwar

Parashram and Others.

Bose].

Chatturbhuj

Vithaldas Jasani v.

Moreshwar Parashram and Others.

Bose J.

System" regarding stocks ordered for the stocking upof the Calcutta, Bombay and Delhi depots of the Canteen Stores and the "Direct Supply System" till such time as the depots were stocked.

The third system of "Outright Purchase" was limited for the time being to the Pathankot and Srinagar depots.

Both the "Direct Supply" and the "Consignment" systems were abolished together on 1st November, 1951 (see the Canteen Stores' letter dated 24th November, 1951).

But the obligation to take back unsold stocks within the six months' period continued to attach to all contracts for consignment to the Calcutta, Bombay and Delhi depots made between 9th August, 1951, and 31st October, 1951.

The tabular statement shows that the following contracts for consignment to one or other of these three depots were made during that period.

The date of the invoice is the date of the execution of the order and thus of the acceptance of the proposal contained in the order.

Date of Invoice Depot.

Price of goods Date of & DLspatch. supplid. payment

1l 0-195 l Bombay.

Rs. 5,056-2-0 15-11-1951 13-10-1951 do 13,536-4-6 do 18-10-1951 Delhi

I ,684-13-9 19-12-1951 19-10-1951 Calcutta 3,373-9-3 do 18-10-1951 Bombay 4,793-4-9 24-12-1951

The value of these orders comes to Rs. 28,444-2-3.

The obligations under these sc veral contracts continl!ed from !st April, 1952 to 18th April, 1952.

It was argued that assuming that to be the case, then there were no longer any contracts for the "supply of goods" in existence but only an obligation arising under the guarantee clause. We are unable to accept such a narrow construction.

This term of the contract, whatever the parties may have chosen to call it, was a term in a contract for the supply of goods.

When a contract consists of a number of terms and conditions, each condition does not form a separate contract but is an item in the one c"P.tract of which it is a part.

The consideration for ~ch

condition in a case like this is the consideration for the contract taken as a whole.

It is not split up into several consider:, tions apportioned between each term separately.

But quite apart from that, the obligation, even under this term, was to supply fresh stocks for these three depots in exchange for the stocks which were returned and so even when regarded from that narrow angle it would be a contract for the supply of goods.

It is true they are replacements but a contract to replace goods is still one for the supply of the goods which are sent as replacements.

But even if all that be disregarded and it be assumed that Moolii Sicka & Company had fully performed their part of the contract by placing the goods on rails before 15th November, 1951, we are of opinion that the contracts were not at an end until the vendors were paid and the contracts were fully discharged.

The words of the sections are "if .... he has any share or int.-rest in a contract for the supply of goods to ...... the appropriate Government." There can be no doubt that these various transactions were contracts and there can equally be no doubt that they were contracts for the supply of the goods.

Whether they were contracts for the supply of goods to the Government is a matter which we shall deal with presently. But we have no doubt that they were contracts for the supply of goods. The question then is, does a contract for the supply of goods terminate when the goods are supplied or does it continue in being till pyment is made and the ontract is fully discharged by performance on both sides? We are of opinion that it continues in being till it is fully discharged by performance on both sides.

It was contended, on the strength of certain observations in some English cases, that the moment a contract is fully executed on one side and all that remains is to receive payment from the other, then the contract terminates and a new relationship of debtor and creditor takes its place.

With the utmost respect . we are unable to agree. There is always a possibility of the liability being disputed before actual payment is made and the vendor may

2-96 S. C. India/59

19M

C!.allurb'iuj

Vlt a/dos J .. sani , ..

Mf)rtS'.1.Q(ll

Paras!JfanJ ind' Ot.i.trS

Bo" J'

Chatturb '1lfi

Vit .aldas

Jw.ani

Mares'.war

Ptiias , ram and Ot,, ns.

f!ose J~

have to bring an action to establish his claim to payment.

The existence of the debt depends on the contract and cannot be established without showing that payment was a term of the contract.

It is true the contractor might abandon the contract and sue on quantum mem1t but if the other side contested and relied on the terms of the contract, the decision would have to rest on that basis.

In any case, as we are not bound by the dicta and authority of those cases, even assuming they go that far, we prefer to hold that a contract continues in being till it is fully discharged by both sides: see the observations of Gibson J. in O'Carroll v.

Hastings(').

To use the language of O'Brien L.C.J. in that case at page 599, these contracts have not been "merged, abandoned, rescinded, extinguished or satisfied; and if any demur was made as to payment before payment was actually made, he could have sued upon the contract specially; or if he sued for work done at the request of the defendants the contract would have been a part of his necessary proofs." We agree with the learned Lord Chief Justice in thinking that "it is far-fetched to contend that a man is not concerned in the contract or security by which he can enforce payment." The same view was taken by Costello J. in an Indian case in Satyendral(umar Das v.

Chairman of the Municipal Commissioners of Dacca(').

Counsel for the appellant relied strongly on certain English cases.

They were all examined and distinguished in the above decisions. They either turned on special facts or on the words of a statute which are not the same as ours. The leading case appears to be Royse v. Birley(').

But the decision turned on the language of the English statute which the learned Judges construed to mean that the contract must be executory on the contractor's part before the English Act can apply.

Tranton v. Astor(') follows the earlier ruling.

The statute with which Darling J. was dealing

(t) (1905) 2 I. R. 590 at 608.

(2) I.L.R. 58, Cal. from P 193 on,\•ar<ls.

(3) L. R. 4 C. P. 296.

(4) 33 T.L.R. 383.

in Co>.: v. Truscott( 1 ) is nearer the language of our Act.

He hesitatingly proceeded on the debtor and . creditor basis.

We need not go further than this because, as we have said, if these decisions cannot be distinguished, then we must with respect differ. We hold therefore that these contracts which Moolji Sicka & Company had entered into with the Government subsisted on 15th November, 1951, and on 14th February, 1952, and that as Chatturbhuj Jasani, the appellant, was a partner in the firm he also had both a share and an interest in them on the crucial dates.

That brings us to article 299(1) of me Constitution.

It states:- "All contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President. ..... and all such contracts ... made in the exercise of that power shall be executed on behalf of the President ... by such persons and in 'uch manner as he may direct or authorise."

The contention was that as these contracts were not expressed to be made by the President they are void.

Cases were cited to us under the Government of India Acts of 1919 and 1935.

Certain sections in these Acts were said to be similar to article 299. We do not think that they are, but in any case the rulings under section 30(2) of the Government of India Act, 1915, as amended bv the Government of India Act of 1919 disclose a diffrence of opinion. Thus, Krishnaji Nilkant v. Secretary of State(') ruled that comracrs with the Secretary of State must be by a deed executed 011 behalf of the Secretary of State for India and in his

name.

They cannot be made by correspondence or orally.

Secretary ot State v. Bhagwandas(') and Devi Prasad Sri Krishna Prasad Ltd. v. Secretary of State(') held they could be made by correspondence. Secretary of State v.

O.T. Sarin & Company(') took an intermediate view and held that though contracts in the prescribed form could not be enforced by either side,

(1) 21 T.L.R. 319. (>) A.LR. 1937 Born. 449, 451.

(3) A.LR. 1938 Born. 168.

I08

(4) A.LR. i941 A\\. 377.

(5) I.L.R. 11Lah. 375.

195+

C/, alturbhtd

Vithaldas

Jasani .,, Mores11war

Paras/, ram and Other:..

Bose].

Chatturb,'1uj

Vit'ialdas

]asani -,, J.\{oreshwar

Par ashram nr.d Others.

a claim for compensation under section 70 of the Indian Contract Act would lie. Province of Bengal v. S. L.

Puri(') took a strict view and held that even letter~ headed "Government of India" did not comply with the rule in section 175 (3) of the Government of India Act, 1935.

The Federal Court was called upon to construe section 40 (1) of the Ninth Schedule of the Government of India Act, 1935.

It held that the directions m n were only directory and not mandatory, and the same view was taken of article 166 (1) of the present Constitution by this court in Dattatreya Moreshtuar Pangarkar v. State of Bombay(').

None of these provisions is quite the same as article 299.

For example, in article 166, as also in section 40(1) of the Government of India Act of 1935, there is a clause which says that "orders" and "instruments" and "other proceedings" "made" and "expressed" in the name of the Governor or Governor-General in Cou'ilcil and "authenticated" in the manner prescribed shall not be called in question on the ground that it is not an "order" or "instrument" etc. "made" or "executed" by the Governor or Governor-General in Council.

It was held that the provisions had to be read as a whole and when that was done it became evident that the intention of the legislature and the Constitution was to dispense with proof of the due "making" and "execution" when the form prescribed was followed but not to invalidate orders and instruments otherwise valid.

Article 299( 1) does not contain a similar clause, so we are unable to apply the same reasoning here.

In our opinion, this is a type of contract to which section 230(3) of the Indian Contract Act would apply.

This view obviates the inconvenience and injustice to innocent persons which the Federal Court felt in f. K. Gas Plant Manufacturing Co., Ltd. v. The King- Emperor(3) and at the same time protects Government.

We feel that some reasonable meaning must

(1) ;;1 C.W.N. 753

(2) [1952] S.C.R. 612 at 63,, 633.

(3) [1947] F.C.R. 141 at 156, 157

be attached to article 299 ( 1).

We do not think the provisions were inserted for the sake of mere form.

We feel they are there to safeguard Government against unauthorised contracts.

If in fact a contract is unauthorised or in excess of authority it is right that Government should be safeguarded.

On the other hand, an officer entering into a contract on behalf of Government can always safeguard himself by having recourse to the proper form.

In between is a large class of contracts, probably by far the greatest in numbers, which, though authorised, are for one reason or other not in proper form.

It is only right that an innocent contracting party should not suffer because of this and if there is no other defect or objection we have no doubt Government will always accept the responsibility.

If not, its interests are safeguarded as we think the Constitution intended that they should be.

In the present case, there can be no doubt that the Chairman of the Board of Administration acted on behalf of the Union Government and his authority to contract in that capacity was not questioned. There can equally be no doubt that both sides acted in the belief and on the assumption, which was also the fact, that the goods were intended for Government purposes, namely, amenities for the troops.

The only flaw is that the contracts were not in proper form and so, because of this purely technical defect, the principal could not have been sued.

But that is just the kind of case that section 230(3) of the Indian Contract Act is designed to meet. It would, in our opinion, be disastrous to hold that the hundreds of Government officers who have daily to enter into a variety of contracts, often of a petty nature, and sometimes in an

emergncy, cannot contract orally or through correspondence and that every petty contract must be effected by a ponderous legal document couched in a parti- <:ular form.

It may be that Government will not be bound by the contract in that case, but that is a very different thing from saying that the contracts as such are void and of no effect.

It only means that the principal cannot be sued; hut we take it there would

Chat.urb.izy'

Vi.haldas

Jasani v.

A1 ores/, wa1

Parashram and Ot.'iers.

Bou J.

195t

C , atturhhu}

Vitlial; fas

Jasani v.

J foreshwar Para1-hram and Ot '1ers,

Bose]

be nothing to prevent ratification, especially if that was for the benefit of Government.

There is authority for the view that when a Government officer acts in excess of au, hority Government is bound if it ratifies the excess: see The Collector of Masulipatam v.

Cavaly Venkata Narrainapah(' ).

We accordingly hold that the contracts in question here are not voici simply because the Union Government could not have been sued on them by reason of article 299 ( 1).

Now section 7 ( d) of the Representation of the People Act does not require that the contracts at which it strikes should be enforceable against the Government; all it requires is that the contracts should be foe the supply of goods to the Government. The contracts in question are just that and so are hit by the section.

The purpose of the Act is to maintain the purity of the legislatures and to avoid a conflict between duty and interest.

It is obvious that the temptation to place interect before duty is just as great when there is likely to be some difficulty in recovering the money from Government (for example, if Government were to choose not to ratify the contracts) as when there is none.

In our opinion, the Election Tribunal was right in disqualifying Cbatturbhuj Jasani.

We now turn to Gangaram Thaware. He stood as a Scheduled Caste candidate and his nomination was rejected on the ground that he did not belong to the Scheduled Caste in question, namely the Mahars.

The only question here is whether he ceased to be a Mahar when he joined the Mahanubhava Panth. This gave rise to much controversy and we have been presented with many conflicting opinions.

Thus, the Imperial Gazetteer of India, Volume XXI, page 301, states that the founder of the sect repudiated the caste system as also a multiplicity of Gods and insisted on the monotheistic principle.

At the same time it says that he taught his disciples to eat with none but

(1) 8 M.I.A. 529 at 554

the initiated and to break off all former ties of caste and religion.

Russell in Volume IV of his Tribes and Castes of the Central Provinces says that the Manbhaos (Mahanubhau) is a religious sect or order which has "now" (1911) become a caste.

The Central Provinces Ethnographic Survey, Volume IX, says the same thing at page 107 and at page 110 and adds that members of the sect often act as priests or gurus to the Mahars.

As against this, the Election Tribunal has quoted a number of opinions which tend the other way.

Thus, V. B. Kolte says at page 247 of his Shri Chandradhar Charitra that no serious attempt has been made by them to abolish caste, and Ketkar says at page 76, Volume XVIII of the 1926 edition of his Maha. rashtriya Dhnyankosh that there are two divisions among the Mahanubhavas, one of Sanyasis who renounce the world and the other a secular one. The latter observe the caste system and follow the ritmls of their own caste and cirry on social contacts with their caste people and marry among them. Similar views are expressed by Bal Krishna Mahanubhav Shastri.

But we are not really concerned with their theology.

What we have to determine are the social and political consequences of such conversions and that, we feel, must be decided in a common sense practical way rather than on theoretical and theocratic grounds.

Conversion brings many complexities in its train, for it imports a complex composite composed of many ingredients.

Religious beliefs, spiritual experience and emotion and intellectual conviction mingle with more material considerations such as severance of family and social ties and the casting off or retention of old customs and observances. The exact proportions of the mixture vary from person to person. At one extreme there is bigoted fanaticism bitterly hostile towards the old order and at the other an easy going laxness and tolerance which makes the convenion only nominal.

There is no clear cut dividing line and it is not a matter which can be viewed from only one angle.

Cf.attUrb'iu)

Vitkaldas

Jaasni

v~ .

MOreshwa'r

Pafashrr.im and Otaers.

Bose J.

Chauurb ;.j

Vit aldas

]1JJani

v Moru1War

Paras .ram and Ot.'ps.

Looked at from tbe secular point of view, there are three factors which have to be considered:

(1) the reactions of the old body, (2) the intentions of the individual himself and (3) the rules of the new order.

If the old order is tolerant of the new faith and sees no reason to outcaste or ex-communicate the convert and the individual himself desires and intends to retain his old social and political ties, the conversion is only nominal for all practical purposes and when we have to consider the legal and political rights of the old bodv the views of the new faith hardlv matter.

The new body is free to ostracise and outcaste the convert from its fold if he does not adhere to its tenets, but it can hardly claim tbe right to interfere in matters which concern the political rights of the old body when neither the old body nor the convert is seeking either legal or political favours from the new as opposed to purely spiritual advantage.

On the otber hand, if the convert has shown by his conduct and dealings that his break from the old order is so complete and final that he no longer regards himself as " member of the old body and there is no reconversion and readmittance to the old fold, it would be wrong to hold that he can nevertheless claim temporal privileges and political advantages which are special to the old order.

In our opinion, broadly speaking, the principles laid down by the privv Council in the case of a Hindu convert to Christianity apply here: not, of course, the details of the decision but the broad underlying principle. In Abraham

v. Abraham (1 ), their Lordships say:-

"He" (the convert) "may renounce the old law by which he was bound, as he has renounced his old religion, or, if he thinks fit, he may abide by the old law, notwithstanding he has renounced the old religion."

The only modification here is that it is not only his choice which must be taken into account but also the views of the body whose religious tenets he has

(1) g M.I.A. 199 at 242, 243 and 214

renounced because here the right we are considering is the right of the old body, the right conferred on it as a special privilege to send a member of its own fold to Parliament.

But with that modification the observations which follow apply in their broad outline

"The profession of Christianity releases the con- . vert from the trammels of the Hindu law, but it <loes not of necessity involve any change of the rights or relations of the convert in matters with which Christianity has no concern, such as his rights and interests in, and his powers over, property.

The convert, though not bound as to such matters, either by the Hindu hiw or hy any other positive law, may bv his course of conduct after his conversion have shown by what law he intended to be governed as to these matters.

He may have done so either by attaching himself to a class which as to these matters has adopted an<l acted upon some particular law, or by having himself observed some family usage or custom; and nothing can surely be more just than that the rights and interests in his property, and his powers over it, should be governed by the law which he has adopted, or the rules which he has observed."

Now what are the facts here? 'Whatever the views of the founder of this sect may have been about caste, it is evident that there has been no rigid adherence to them among his followers in later years. They have either changed their views or have not been able to keep a tight enough control over converts who join them and yet choose to retain their old caste customs and ties. We need not determine whether the Mahanu- -bhava tenets encourage a repudiation of caste only as a desirable ideal or make it a fundamental of the faith -because it is evident that present-day Mahanubhavas admit to their fold persons who elect to retain their old caste customs.

That makes it easy for the old caste to regard the converts as one of themselves : despite the conversion which for all practical purposes is only ideological and involves no change of o:status.

Chatturhhuj

Vithaldas

Jasani v.

Moreshwar Paras/, ram and Others.

Bose J .

1954 c ... atturb!inj

Vithaldas

]asani

'. .Woreshwar

Parashram llnd Ot.'1ers.

Bose].

Now no witness has spoken of any outcasting, neither outcasting in general nor in this special case. No single instance has been produced in which any person who has joined this sect from the Mahar community has ever been outcasted from the Mahars for that reason; and as the sect is said to be over 1000 years old, there has been time enough for such instances to accumulate.

Further. no instance has been produced of a Mahanubhava marrying outside his or her old caste whereas there are instances of Mahanubhavas who have married non-Mahanubhavas belonging to their own caste.

Nene (P. W. 1), Sadasheo (P. W. 3), Sitaram (P. W. t) and Haridas (P. W. 5) say that a Mahar convert does not lose his caste on conversion.

He is admitted to all caste functions and can marry in the community.

Of these, Sadasheo (P. W. 3) and Haridas (P. W. 5) are Mahars.

There is no evidence to rebut this.

The witnesses on the other side take refuge in theory and, when confronted with actual facts, evade the issue by saying that Mahanubhavas who do these things are not real Mahanubhavas.

Harendra (R. W. 1) is a Mahanubhava Guru and so ought to know, but he affects an otherworldly indifference to mundane affairs and says that as he does not lead a worldly life he does not know whether converts retain their caste distinctions and whether there are inter-dinings and inter-marriages in .the Mahanubhava fold itself among those who belonged to different castes before conversion.

Shankar (R. W. 2) says that a convert loses his caste on conversion but gives no instance of ostracism from the old fold.

In any case, his evidence is confined to the sanyasi order among the Mahanubhavas because he says that every person who becomes a convert to this sect must renounce the world and cannot marry.

W'hen pinned down in cross-examination he had to admit that he did know two or three Mahanubhavas who were leading a worldly life but he meets that by saying that they are not real Mahanubhavas.

Chudaman (R. W. 3) evades the issue in the same way.

He is a Mahanubhava Pujari and so isc

another person who ought to have special knowledge.

Despite that he says he cannot give a single instance of a person belonging to one caste, initiated into the Mahanubluva sect, marrying a person of another caste initiated into the same Panth.

When further pressed he said the question <lid not arise as a man lost his caste 011 con version.

On this evidence, and after considering the historical material placed before us, we conclude that conversion to this sect imports little beyond an intellectual acceptance of certain ideological tenets and does not alter the convert's caste status, at any rate, so far as the householder section of the Panth is concerned.

So much for the caste consciousness on both sides.

Now considering Gangaram Thaware the individml we find that he was twice married and on both occasions to Mahar girls who were not Mahanubhavas at the time of their respective marriages. His first wife was never converted.

His second wife was converted after her marriage.

The witnesses say he was still regarded as a Mahar after his conversion and aiways looked upon himself as a Mahar and identified himself with the caste.

No one on the other side denies this.

As we have shown, they took shelter behind generalities and evaded the issue by saying that in that case he cannot be a real Mahanubhava.

If he was not, then he must have continued a Mahar even on their view The evidence also discloses. that Gangaram Thaware led Mahar agitations and processions as a member and leader of the Mahar caste.

In 1936 he contested the election for the Provincial Assembly as a Mahar ondidate. No one appears to have questioned his competency.

And lastly, he declared himself to he a Mahar in the verifica.tion to his nomination form in the present election as also in an affidavit filed before the Returning Officer who rejected his nomination.

The Returning Officer described that as a "cleverly worded document." We have read it and find nothing tricky or crooked in it.

Therefore, applying the test in Abraham v. Abraham ( 1 ), we hold that despite his

(1) 9 M.I.A. 199.

Chatturhiwj

Vithulda1

Jasa'li

Mcreshwar Paras 1, ram and Others ..

Bost].

Chatturb', uj

Vithaldat

,7asani

v. .i\toreshwar Paras11ram and Others.

Bose J.

Det:emhcr 18.

conversion he continued to be a Mahar nomination form was wrongly rejected. the whole election.

(1954J

and so his That affects

The other points argued before the Election Tribunal were not pressed before us.

We therefore uphold the decision of the Tribunal and dismiss the appeal with costs.

Appeal dismissed.

Agent for the appellant: I. N. Shroff.

Agent for the respondent: Gan pat Rai.

BISW AMBHAR SINGH

ti.

THE STATE OF ORISSA AND ANOTHER

JANARDHAN SINGH v.

THE STATE OF ORISSA AND ANOTHER

SIBANARA YAN SINGH MAHAPATRA

ti.

THE STATE OF ORISSA AND ANOTHER.

rPATANJALI sAsTRI c.J., MEHR CHAND

MAHAJAN, S. R. DAs, VIVIAN BosE and GHuLAM HASAN. JJ.J Orissa Estates Abolition Act, (Orissa Act I of ]952), ss. 2(g) 2(h) and 3-0tuners of certain zamindaries-Whether intern1ediaries holding an estate iuithin the nieaning of ss. 2(g'; and 2(/i ).

The State Government is en1po\vered under s. 3( 1) to issue a notification declaring that the estate specified therein has passed to the State, but the notification must be in respect of the property which is defined as an estate in s. 2(g) and that estate must be held by an intermediary as defined in s. 2(h).

In order to be an intennediary accordirig to the definition in s. 2(h) the person n1us.t be, among other things, "a Zamindar, Jlaquedar, Kherposhdar or Jagirdar within the nieaning of Wajibul-arz or any Sanad, deed or other instrument."

16th of Juiy, 1953

clause 4(3)

Ga11pat Rai

C. P. Lal

CHA TTURBHUJ VITHALDAS JASANI

MORESHW AR P ARASHRAM AND OTHERS

MuKHERJEA

V1v1"" BosE

BHAGWATI

JJ.

s. 7(d)

art. 299(1)

Indian Contract Act

s. 230(3)

Moolji Sicka and Company

Mukhtrjea

Chatturbhuj

Parliament

Representation of the People Act

art. 299(1)

s. 230(3)

Indian Contract Act

B. Sen

T P. Naik

Veda Vyas

Veda Vyas (S. K. Kapur with him) for respondent No.

S. K. Kapur

Nagpur Election Tribunal

Gangaram Thaware

Thaware

Tularam Sakhare

Chaturbhuj J asani

Jasani

section 7(d)

Representation of the People Act

Central Government

Chaturbhuj Jasani

Section 7

Chattwbhuj Vithaldas

Moreshwar Parashram

Moolji Sicka & Company

15th November, 1951

14th February, 1952

Jasani

VithaldaS

Mareshwar LParashram

20th March, 1952

Moolij Sicka & Company

30th March, 1951

17th April, 1951

30th March. 1951

24th April, 1951

Bose

Bose J.

Chatturhhuj

Vithaldas

:Ja.1an1

More.

Jltwcu Parashram

Moolji Sicka & Company

10th July, 1951

11th July, 1951

Bombay

Calcutta

Delhi

Bombay Calcutta

Pathankot

Srinagar

Moolji Sicka & Compau

Moolji Sicka and Company

16th July, 1951

Moreshwar Parashram

Moo! ji Sicka & Company

19th July, 1951

Moolji Sicka

26th July, 1951

31st July, 1951

Moteshwar Parashram

24th April 1951

9th August, 1951

Moolii Sicka & Company

9th August,

1951

1st November, 1951

24th November, 1951

31st October, 1951

18th April, 1952

Gibson

O'Brien

Costello

Darling

Chatturbhuj Jasani

article 299(1)

article 299

section 30(2)

Government of India Act, 1915

O.T. Sarin & Company

section 70

Indian Contract Act

section 175

Government of India Act, 1935

section 40

Ninth Schedule of the Government of India Act, 1935

article 166

article 299

article 166

section 40(1)

Article 299( 1)

section 230(3)

Indian Contract Act

[1947] F.C.R. 141

article 299

section 230(3)

Indian Contract Act

article 299

section 7

Representation of the People Act

Cbatturbhuj Jasani

Russell

V. B. Kolte

Chandradhar Charitra

Ketkar

rashtriya Dhnyankosh

Bal Krishna Mahanubhav Shastri

Vitkaldas

Vithaldas

1954 c ... atturb!inj

Vithaldas

]asani

'.

Nene

Sadasheo

Sitaram

Haridas

Harendra

Shankar

Chudaman

Chudaman (R. W. 3) evades the issue in the same way.

.i\toreshwar Paras11ram

I. N. Shroff

Gan pat Rai

BISW AMBHAR SINGH

STATE OF ORISSA

SIBANARA YAN SINGH MAHAPATRA

MEHR CHAND

MAHAJAN

S. R. DAs

VIVIAN BosE

GHuLAM HASAN

Orissa Estates Abolition Act

ss. 2(g)

ss. 2(g'; and 2(/i )

s. 3( 1)

s. 2(g)

s. 2(h)

s. 2(h)

Jlaquedar

Kherposhdar

Jagirdar


S.C.R.

SUPREME COURT REPORTS 873

effect to the provisions of the Orissa Estates Abolition Act of 1951 and not to take possession of the several estates of the three petitioners under that Act.

The costs of the petitions here and in the High Court should, in our opinion, be paid by the State of Orissa.

Appeals Nos. 167 and 168 allowed

Appeal No. 169 dismissed.

Agent for the appellants: B P. Maheshwari.

Agent for the respondents: G. H. Rajadhyaksha.

COOVERJEE B. BHARUCHA

THE EXCISE COMMISSIONER AND

THE CHIEF COMMISSIOKER, AJMER,

AND OTHERS.

[MEHR

CHAND

MAHAJAN. C.J., MuKHERJEA, VIVIAN BosE, GHuLAM HAsAN and JAGANNADHADAS JJ.]

Constitution of India, art. 19 (1) (g)-Excise Regulation I of 1915-Whether ultra vires art. 19 (J) (g)-Reasonable restrictions under art. 19 (6)-Charge of fee-Whether in the nature of tax.

Held, (i) that with reference to Excise Regulation I of 1915 for the purpose of determining reasonable restrictions within the meaning of art. 19 ( 6) of the Constitution, on the right given un<lrr cl. 19 ( 1) (g) regard must be had to the nature of the business and the conditions prevailing in a particular trade and no hard and fast rules concerning all trades can be laid down.

The State has the power to prohibit trades which are illegal or in1moral or injurious to the health and welfare of the public. There "is no inherent right in a citizen to sell intoxicating liquors by retail and therefore the provisions of the Excise Regulation I of 1915 purporting to regulate trade in liquor in all its different spheres are not invalid;

(ii) charge of licence fee by public auction is more in the nature of a tax than a licence fee though it is described as a licence fee.

One of the purposes of the Regulation is to raise revenue.

Revenue is collected by the grant of contracts to carry on trade in liquors and these contracts are sold by auction.

The grantee

Biswambhar

Singh

The State of

Orissa and Others.

Bose J.

January 13

Cooverju B. Bharucha

The Excise Commissioner and the

Chief Commissioner, Ajmer,

and OJhers.

is given a licence on payment of the auction price.

The Regulation specially authorises this.

It is not a fee levied without authority of law.

(i) Crowley v. Christensen (34 Law, Ed. 620, 623)

(ii) Commonwealth of Australia v. Bank of New South Wales

([1950] A.C. 235)

(iii) Rashid Ahmed v. Municipal Board of Kairnna ([1950] S.C.J.

324) ( <listinguished) referred to. ·

ORIGINAL f URISDICTION : Petition (No. 232 of 19)3) under art. 32 of the Constitution of India.

B. D. Sharma for the petitioner.

M. C. Setalvad, Attorney-General for India (Portts A Mehta, with him) for the respondent.

1954. Jannary 13. The Judgement of the Court was delivered by

MAHAJ:AN C. r.-This petition under article 32 of the Consritution of India arises in the following circu1nstances.

The Collector of Excise, Ajmer, respondent No. 3, on the 16th March, 1953, held an auction sale of "Chang Gate conntry liquor shop, Beawar," for the year 1953-54 pursuant to the rules framed under Excise Regulation I of 1915.

The petitioner and respondent No. 5, Chhoga Lal, offered bids at the auction sale.

Chhoga Lal, whose bid was in the sum of Rs. 57,000, was declared the highest bidder and the pet!tIOner who was the former licensee was thus unsuccessful in obtaining the contract to run this liquor shop as hereinbefore.

Half of the auction price was payable immediately on the provisional acceptance of the bid.

Chhoga Lal, however, deposited Rs. 16,500 on the 16th March, 1953, and the balance of Rs. 12,000 on the 18th March, 1953, i.e., two days after the due date, contrary to the provisions of sub-rule 8(a) of rule 6 of the auction rules..

In spite of this the sale was eventually confirmed in his favour by the Minister of EJtcise.

The petitioner, when apprised of this irregularity, sent a telegram to the Collector of Excise stating that

S.C.R.

SUPREME COUR1' REPORTS 875

the sale should not be confirmed in favour of Chhoga Lal as he had failed in paying the price according to the mks and expressing his willingness to take the licence on the price fetched at that auction sale.

He also preferred an appeal to the Chief Commissioner against the order of the Collector allowing the deposit of Rs. 12,000 after the due date and in not ordering a resale.

His appeal and representation both were unsuccessful.

He claims redress for both these grievances by means of this petition.

The petition is founded on the following allegations:

(1) That the petitioner's fundamental right to carry on trade or business in liquor under article 19(1)

(g) had been infringed by the act of the Collector of Excise, in condoning the failure of the respondent in depositing the whole of the security deposit required under sub-rule S(a) of rule 6 of the auction rules within the prescribed time and in not reauctioning the licence under sub-rule 9 of rule 6.

(2) That in allowing Chhoga Lal to make the deposit after the expiry of the prescribed time the Collector had discriminated between him and Chhoga Lal and had thus abridged the petitioner's fundamental right under article 14.

It is alleged that if the petitioner had known that the Collector would enlarge the time for the security deposit be would have offered a higher bid.

(3) That the Hon. Minister for Excise, respondent No. 2, had no authority under the regulation to confirm the auction sale held by the Collector. ( 4) That the ummary rejection of his appeal without hearing was not justified and has resulted in the abridgement of his right to carry on his trade. ( 5) That the provisions of the Excise Regulation and the auction rules made thereunder were ultra vires as the same purport to grant monopoly of trade to a few persons . and are thus inconsistent with article 19

(1) (g) of the Constitution and that the provisions of the regulation regarding levy of licence fee with the avowed object of raising a big source of revenue also

Cooverjee B. Bharutha

Tiu Excise Com ..

misioner and lhe

ChiefCommiJ .. sioner, Ajmer, and Others.

Mahajan c. J.

Coove'ljee B. Bharucha v.

The Excise Commissioner and the Chief Commissianer, Ajmeri

and Others.

Mahajan C. ].

serious! y affected the fundamental rights of the petitioner under article 19(1) (g) of the Constitution. On these allegations the petitioner prayed for a writ of mandamus or a writ in the nature thereof or a direction or order on respondents Nos. 1 to 4 directing them,

(a) not to levy any duty or fee for the purpose of raising revenues for the benefit of the State by holding auction sales,

(b) not to grant monopoly in the trade to a selected few individuals, but to grant licences freely on application, and . ( c) to grant a licence to the petitioner to deal in country liquor with his place of business at or near Chang Gate, Beawar.

In the alternative a mandamus was asked directing the officer concerned either to confirm tne next lower bid of the petitioner and to grant the licence for Chang Gate liquor shop, Beawar, in his favour or to hold a reauction in accordance with the auction rules and to cancel the licence of respondent No. 5.

Some of the points raised are clearly outside the ambit of the constitutional remedy provided under article 32 of the Constitution and will be considered hereinafter.

The main contention which needs consideration in the case is regarding the constitutional validity of the Excise Regulation I of 1915.

It was contended that the petitioner, a citizen of free India, had an unfettered right to carry on trade and business in liquor and this right had been guaranteed to him under article 19 (1)

(g) of the Constitution, and that being so, the provision; of the regulation which confer discretion on the Excise Commissioner to restrict the number of liquor shops, and to license them by auction to the highest bidder amount to creation of a monopoly in liquor trade and are void. The excessive licence fee recovered by public auction was attacked on the ground that it was not in the nature of a licence fee but was in the nature of a tax and this could not be

recovered by having resort to the powers of legislation saved by article 19 ( 6) of the Constitution.

In order to determine the validitv of these contentions, it is necessary to refer to th~ relevant provisions of the regulation which consolidates and amends the law relating to import, export, transport, manufacture, sale and possession of intoxicating liquors and of intoxicating drugs, in the Provinces of Ajmer-Merwara.

It has been enacted in exercise of the legislative power conferred by the Government of India Act 1935 Seventh Schedule, List II, "For making laws regarding intoxicating liquors, i.e., the production, manufacture, possession, transport, purchase and sale of intoxicating liquors", and under power conferred for raising "duties of excise on alcoholic liquors for human consumption." The pith and substance of the regulation is that it raises excise revenue by imposing duties on liquor and intoxicating drugs by different methods and it also regulates the import, export, transport, manufacture, sale and possession of intoxicating liquors.

Section 13 enacts that no excisable article shall be manufactured or c0~!~'.'ted except under the authority and subject to the terms and conditions of a licence granted in that behalf.

Section 14 provides that the excise commissioner may (a) establish a distillery in which spirit may be manufactured under a licence granted under section 13 on such conditions as the Chief Commissioner may impose;

(b) discontinue any such distillery; ( c) license, on such conditions as the Chief Commissioner may impose, the construction and working of a distillery or brewery;

(d) establish or license a warehouse wherein any excisable article may be deposited and kept without payment of duty; and ( e) discontinue any such warehouse.

Section 15 provides that without the sanction of the Chief Commissioner no excisable article shall be removed from any distillery, brewery, warehouse or other place of storage.

Section 18 says that the Chief Commissioner may lease to any person, on such conditions and for such period as he may think fit, the right of manufacturing or of supplying by wholesale, or of both, or

Coovetjee B .. Bharucha v.

The Excise Com

missioner and the

ChiefCommis

sioner, Ajmer, and Others.

Mahajan C. J.

Cooverjee B. Bharucha v.

The Excise Commissioner, and the

Chief Commis~ sioner, Ajmer,

and Others.

Mahajan C. J.

of selling by wholesale or by retail, or of manufacturing or of supplying by whole, or of both and of selling by retail any country liquor or intoxicating drug within any specified area. Restrictions regarding the manufacture and sale of liquors in cantonments and other places are found in some other provisions of the regulation.

The employment of children and women is prohibited in this business and provision is made authorising the District Magistrate for closing shops for the sake of maintenance of public peace. Section 24 authorises the Chief Commissioner to impose a duty at such rate or rates as he thinks fit on any excisable article imported, exported, transported or manufactured, cultivated or collected under any licence granted under section 13 Section 27 deals with grant of licences, permits and passes.

It provides that a licence shall be granted on payment of such fees, if any, for such period and subject to such restrictions and on such conditions and shall be in such form and contain such particulars as the Chief Commissioner may direct either generally or in any particular instance.

Power is then given by section 30 for cancellation or suspension of the licence.

Sections 31 and 32 provide for the withdrawal and surrender of licence.

Chapter VII of the regulation deals with offences and penalties.

Chapter VIII deals with detection, investigation and trial of offences under the regulation.

Section 62 provides, inter alia, that the Chief Commissioner has power to make rules prescribing the scale of fees and the manner of fixing the fees payable in respect of any privilege, licence, permit or pass or the storing of any excisable article.

Section 64 says that the following moneys, namely, all excise revenue, any loss that may accrue when in consequence of default a grant has been taken under management by the Collector or has been resold by him, and all amounts due to the Government by any person on account of any contract relating to the excise revenue, may be recovered from the person primarily liable to pay the same, or from his surety (if any), by distress and sale of his movable property or by any other process for the recovery of land

revenue due from landholders or from farmers of land or their sureties. _

Article 19 ( 1)

(g) of the Constitution guarantees th;.it all citizens have the right to practise any profession or to carry on any occupation or trade or business, and clause ( 6) of the article authorises legislation which imposes reasonable restrictions on this right in the interests 0£ the general public.

It was not disputed that in order to determine the reasonableness of the restriction regard must be had to the nature of the business and the conditions prevailing in that trade.

It is obvious that these factors must differ from trade to trade and no hard and fast rules concerning all trades can be laid down.

It can also not be denied that the State has the power to prohibit trades which are illegal or immoral or injurious to the health and welfare of the public.

Laws prohibiting trades in noxious or dangerous goods or traffickir.g in women cannot be held to be illegal as enacting a prohibition and not a mere regulation.

The nature of the business is, therefore, an important element in deciding the reasonableness of the restrictions.

The right of every citizen to pursue any lawful trade or business is obviously subject to such reasonable conditions as may be deemed by the governing authority of the country essential to the safety, health, peace, order and morals of the community.

Some occupations by the noise made in their pursuit, some by the odours they engender, and some by the dangers accompanying them, require regulations as to the locality in which they may be conducted.

Some, by the dangerous character of the articles used, manufactured or sold, require also special qualifications in the parties permitted to use, manufacture or sell them.

These propositions were not disputed, but it was urged that there was something wrong in principle and objectionable in similar restrictions being applied to the business of selling by retail, in small quantities, spirituous and intoxicating liquors.

It was urged that their sale should be without restriction, that every person has a right which inheres in him, i.e., a natural 5-96 S. C. India/59

!9~'

a-.ju· B .. B,,-/io.·.

Thi E>iis..C.- ·

missio11n MIJ-IM"

C1tiif~-·:.

SClitia, ·.Aj1Uf>·.

and Ollwrl. ,. -, Mahf!fon•C. :l•''

Coo<lrrjff B. B""""'1a

TM &iseCom mis.Wtutd 11.e

GitN/OJmmi,. siMfr; Aj1tttr -' Ol1Mt.

MahtljBn C. J.

right to carry on trade in intoxicating liquors and that the State had no right to create a monopoly in them.

This contention stands answered by what Field J. said in Crowley v. Christensen('):

"There is iti this position an assumption of a fact which does not exist, that when the liquors are taken in excess the injuries are confined to the party offending.

The injury, it is true, first falls upon him in his health, which the habit undermines; in his morals, which it weakens; and in the self-abasement which it creates.

But as it leads to neglect of business and waste of property and general demoralisation, it affects those who are immediate! y connected with and dependent upon him.

By the general concurrence of opinion of every civilized and Christian community, there are few sources of crime and misery to society equal to the dram shop, where intoxicating liquors, in small quantities. to be drunk at the time, are sold indiscriminately to all parties applying.

The statistics .of every State show a greater amount of crime and misery attributable to the use of ardent spirits obtained at these retail liquor saloons than to any otber

ource. The sale of such liquors in this way has therefore, been, at all times, by the courts of every State, considered as the proper subject of legislative regulation.

Not only may a licence be exacted from the keeper of the saloon before a glass of his liquors can be thus disposed of, but restrictions may be imposed as to the class of persons to whom they may be sold, and the hours of the day, and the days of the week on which the saloons may be opened.

Their sale in that form may be absolutely prohibited.

It is a question of public expediency and public morality, and not of federal law.

The police power of the State is fully competent to regulate the business-to mitigate its evils or to suppress it entirely.

There is no inherent right in a citizen to thus sell intoxicating liquors by retail; it is not a privilege of a citizen of the State or of a citizen of the United States. As it is a business attended with danger to the community, it may, as already said, be entirely prohibited, or be

(1) 34 Law. Ed. 620, 6'3

permitted under such conditions as will limit to the utmost its evils.

The manner and extent of regulation rest in the discretion of the governing authoritv.

That authority may vest in such officers as it may deem proper the power of passing upon applications for permissioa t0 carry it on, and to issue licences for that purpose.

It is a matter of legislative will only."

These observations have our entire concurrence and they completely negative the contention raised on behalf of the petitioner.

The provisions of the regulation purport to regulate trade in liquor in all its different spheres and are valid.

The contention that the effect of some of these provisions is to enable Government to confer monopoly rights on one or more persons to the exclusion of others and that creation of such monopoly rights could not be sustained under article 19 ( 6) i~ again without force.

Reliance was placed on the decision in Raslzid Ahmad v. Municipal Board of Kairana('). That decision is no authority for the proposition contended for.

Elimination and exclusion from business is inherent in the nature of liquor business and it will hardly be proper to apply to such a business principles applicable to trades which all could carry. The provisions of the regulation cannot be attacked merely on the ground that they create a monopoly.

Properly speaking, there can be a monopoly only when a trade which could be carried on by all persons is entrusted by law to one or more persons to the exclusion of the general public.

Such, however, is not the case with the business of liquor. Reference in this connection may be made to the observations of Lord Porter in Commonwealth of Australia v. Bank of New South Wales( ).

This is what his Lordship

aid:

"Yet about this as about every other proposition in this field a reservation must be made. For their Lordships do not intend to lay it down that in no cirnunstances would exclusion of competition so as to

(•) (1950) S.C . .J. 324.

(2) (1950] A.C. 233.

Cooverjee B. Bharucha v.

The Excis~ Commissionfr and the

Chief Commissioner, Ajmer and Others.

Ma/wJan C. ].

Cooverjee B. Bharuc.'1a

The Excise Commissionef' and the

Chief Commissio11er, Ajmef'

and Others.

Mahajan C. J.

create a monopoly either in a State or Commonwealth agency or in some other body be justified. Every case must be judged on its own facts and in its own setting of time."

Further it seems to us that this argument suffen from a fallacy.

Under the rules every member of the public who wishes to carry on trade in liquor is invited to make bids.

This is the only method by which carrymg on of liquC>r trade can be regulated.

When the contract is thrown open to public auction, it cannot be said that there is exclusion of competition and thereby a monopoly is created.

For all these reasons we are of opinion that the contention that the provisions of the regulation are unconstitutional as they abridge the rights of the petitioner to carry on liquor trade freely cannot be sustained.

The next contention that the charge of fee by public auction is excessive and is not in the nature of a fee but a tax ignores the fact that that licence fee described as a licence fee is more in the nature of a tax than a licence fee.

One of the purposes of the regulation is to raise revenue. By the provisions of section 24, duties can be imposed on the manufacture, import, export and transport of liquor and other excisable articles.

Revenue is also collected by the grant of contracts to carry on trade in liquors and these contracts are sold by auction.

The grantee is given a licence on payment of the auction price. The regulation specifically authorises this.

It is not a fee levied without authority of law as was the situation in Rashid Ahmad's case( 1).

As regards the other contentions of the learned counsel, it is sufficient to say that if there has been any breach of the rules framed under the regulation by the officers concerned, the remedy for such breaches is provided for in the regulation itself. Mere irregularities committed in conducting an auction sale connot be said to have abridged the petitioners's fundamental rights and so article 32 is not attracted. It is open to the petitioner under article 226 to approach the High Court for a mandamus if the officers concerned have i•) [1950] S.C.J. 324.

conducted themselves not in accordap.ce with law or if they have acted in excess of their jurisdiction. The same is the answer to the petitioner's next contention that the sale could not be confirmed by the Minister and that under the rules it was only the Chief Comm1ss10ner who was authorised to confirm it. The point of discrimination was not seriously argued before us.

For the reasons given above we see no validity in this application and we accordingly dismiss it with costs.

Petition dismissed.

Agent for the peut10ner: S. D. Sekhri.

Agent for the respondent: G. H. Rajadhyaksha.

THE VICE-CHANCELLOR, UTKAL

UNIVERSITY AND OTHERS

fl.

S. K. GHOSH AND OTHERS.

[MEHR

CHAND

MAHAJAN. C.J., MuKHERJEA, S. R. DAs, VrVIAN BosE and GHULAM

HASAN JJ.]

Constitution of India, art. 226-Mandamus petition-High Court-Whether can constitute itself as court of appeal-Resolu~ ti<>ns passed by University Syndicate-Validity of-Notice of meeting issued to all-T¥ant of due notice waived-Substantial compliance with spirit of law.

In the present case there were two meetings of the University Syndicate, consisting of twelve members.

Proper notices of both meetings were issued to all the members but one member did not attend one meeting and another n1e111ber did not attend the other meeting. 1'he defect \Vas that the subject matter of the present case was not included in the agenda of either meeting but one of the items in the agenda of both the notices was "other matters_, if any." The subject matter consisted of leakage of examination papers and the cancellation of results. fhose present passed the resolution on both occasions unanimously.

The High Court held that want of notice in the two cases invalidated the resolutions

!954

Coovetjee B. Bharucha v.

The Excise Commissioner and the

Chief Commis~

sioner, Ajmer and Others.

Mahajan C . .].

Jariuary 15.

State of Orissa

B P. Maheshwari

G. H. Rajadhyaksha

COOVERJEE B. BHARUCHA

THE EXCISE COMMISSIONER AND THE CHIEF COMMISSIONER, AJMER, AND OTHERS

MAHAJAN

MuKHERJEA

VIVIAN BosE

GHuLAM HAsAN

JAGANNADHADAS JJ.

Constitution of India

art. 19

art. 19

art. 19

art. 19

cl. 19

Biswambhar

Singh

State of

Orissa

Bose

Cooverju B. Bharucha

art. 32

Constitution of India

B. D. Sharma

M. C. Setalvad

Portts A Mehta

article 32

Collector of Excise, Ajmer

Chhoga Lal

Chhoga Lal

18th March, 1953

Chhoga Lal

article 19(1)

article 14

Minister for Excise

article 19

Cooverjee B. Bharutha

Mahajan

Mahajan C.

article 19(1)

Beawar

article 32

India

article 19

article 19

Ajmer-Merwara

Seventh Schedule

Section 13

Section 14

section 13

Section 15

Section 18

Section 24

section 13

Section 27

section 30

Sections 31 and 32

Section 62

Section 64

Article 19

Field

United States

article 19

Porter

section 24

Rashid Ahmad

article 32

article 226

S. D. Sekhri

VICE-CHANCELLOR, UTKAL

UNIVERSITY

S. K. GHOSH

S. R. DAs

VrVIAN BosE

GHULAM

HASAN

Constitution of India

art. 226