S.C.R.

SUPREME COURT REPORTS 125

KULDIP SINGH

THE STATE OF PUNJAB AND ANOTHER.

[VIVIAN BosE, JAGANNADHADAS, B. P. SINHA, JAFER IMAM and CHANDRASEKHARA AIYAR, JJ.]

Complaint by Oourt-Oomplaint by Senior Subordinate Judge of offences committed in a proceeding before the Subordinate Judge of the first class-Validity-Competency of the Additional Judge to entertain appeal-Power of High Court in revision-Gode of Criminal Procedure (Act V of 1898), ss. 195 (8), 476, 476-A, 476-B, 489-The Punjab Courts Act (VI of 1918), ss. 18, 21-0ode of Civil Procedure

(Act V of 1908), s. 115.

The question as to which Court is competent to make a com plaint under s. 476-A read withs. 195(3) of the Oode of Criminal Procedure where none was made by the Court in which the offence was committed or its successor Court, will depend on the nature of the proceeding in which the offence was committed, whether civil, criminal or revenue, and on the hierarchy of superior Courts to which an appeal from such proceeding will ordinarily lie as con templated by s. 195(3) of the Code, apart from such exception!' as may be made in respect of any particular matters by any spe~ 'al notifications or laws. Where, however, appeals ordinarily Iii\ .., different courts, the one of the lowest grade will be the Court c~ patent to make the complaint.

Wadero Abdul Rahman v. Sadhuram, ([1930) 32 Cr. L.J.1012J and M. S. Sheriff'v. Govindan (A.I.R. 1951 Mad. 1060, 1061), not approved.

Under the Punjab Courts Act of 1918 and the hierarchy of civil Courts established thereby, appeals from the Courts of the various subordinate Judges who constitute distinct Courts do not ordinarily lie to the Senior Subordinate Judge but to the District Judge and the Court of the Additional Judge is not a Court of coordinate jurisdiction with that of the District Judge. The Act neither mentions nor recognises an Additional District Judge as a Court of that hierarchy.

Consequently, in a case where offences under ss. 193 and 471 of the Indian Penal Code were alleged to have been committed in a civil proceeding in the Court of a Subordinate Judge of the first class, exercising jurisdiction under the Punjab Courts Act of 1918,

and neither he nor his successor made a complaint or rejected the application for the making of it, the Senior Subordinate Judge had no jurisdiction to entertain the matter and make the complaint either as a Court of appeal under s. 476-B or of its own authority under s .. 4 76-A of the Code of Criminal ProceduTe and the Additional 17

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Judge, liy wrongly describing himself as an Additional District Judge, could not assume a jurisdiction which he did. not possess under those sections.

The High Conrt has power to revise orders of subordinate Courts made without jurisdiction both under s. 439 of the Code of Criminal Procedure and under s. 115 of the Code of Civil Procednre, therefore, it was not necessary to decide under Art. 136 of the Con stitution which of these two sections applied in the present ca.se, but the High Court erred in upholding the complaint made by the Senior Subordinate Judge because that court had no jurisdiction to make the complaint.

The High Court is not a Court to which the Subordinate Judge of the first class is subordinate within the meaning of s. 195(3) of the Code of Criminal Procedure and could not, therefore, make the complaint of its own authority and should have remitted the appli cation to the District Judge.for disposal according to law.

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 34 of 1955.

Appeal by special leave from the judgment and order dated the 7th June 1954 of the Punjab High Court at Simla in Criminal Revision No. 985 of 1953 arising out of the judgment and order dated the 9th May 1953 of the Court of the Additional District Judge, Ambala.

Ramalal Anand and I. S. Sawhney, for the appellant.

Gopal Singh and P. G. Gokhale, for respondent No. I.

Jindra Lal and Gopal Singh, for respondent No. 2.

1956. February 15. The Judgment of the Court was delivered by BosE J.-This appeal was argued at great length because of the wide divergence of judicial opinion that centres round sections 195 and 476 of the Crimi-. na.l Procedure Code. The question is a.bout the validity of a complaint made against the appellant for perjury and for using a forged document as genuine in the following circumstances.

The second respondent Amar Singh filed a civil

suit against the appellant for recovery of a large sum of money on the basis of a mortgage in the Court of Mr. E. F. Barlow, a Subordinate Judge of the First class. The appellant filed a receipt which purported to show that Rs. 35 000 had been paid towards satisfaction of the mortgage (whether in full satisfaction or part is not clear), and in the witness box he swore that he had paid the money and was given the receipt. Mr. Barlow held that the receipt did not appear to be a genuine document and that the appellant's evidence was not true. Accordingly he passed

a preliminary decree against the appellant for the full amount of the claim on 15-3-1950 and a final decree followed on 15-7-1950.

There was an appeal to the High Court but that was dismissed on 9-5-1951.

The High Court also held that the receipt was a very suspicious document and that the appellant's evidence was not reliable.

The plaintiff then made an application in the Court of Mr. W. Augustine, who is said to have succeeded Mr. Barlow as a Subordinate Judge of the first class, asking that a complaint be filed against the appellant under sections 193 and 471 of the Indian Penal Code. But beforeit could be heard Mr. Augustine was transferred and it seems that no Subordinate Judge of the first class was appointed in bis plaee; instead, Mr. K. K. Gujral, a SubordinateJudgeofthe fourth class, was sent to this area and he seems to have been asked to decide the matter.

But as he was only a Subordinate Judge ofthe fourth class he made a report to the District Judge that he had no jurisdiction because the offences had been committed in the Court of a Subordinate Judge of the first class.

The District Judge thereupon transferred the matter to the Senior Subordinate Judge, Mr. Pitam Singh, and that officer made the complaint that is now under consideration.

The appellant filed an appeal against Mr. Pitam Singh's order to the Additional District Judge, Mr.

J. N. Kapur. This learned Judge held that the Senior Subordinate Judge (Mr. Pitam Singh) had no jurisdiction to make the complaint because he was

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not Mr. Barlow's successor.

He also held, on the merits, that there was no prima facie case,

The matter went to the High Court in revision and the learned High Court Judge who heard the matter held that the Senior Subordinate Judge had jurisdiction and that the material disclosed a prima facie case. Accordingly, he set aside the Additional District Judge's order and restored the order of the Senior Subordinate Judge making the complaint.

This raises three questions. The first concerns the jurisdiction of the Senior Subordinate Judge Mr.

Pitam Singh to entertain the application and make the complaint. The second is whether the Additional District Judge had jurisdiction to entertain an appeal against Mr. Pitam Singh's, order; and the third is whether the High Court had power to reverse the Additional District Judge's order i~ revision.

We will first deal with Mr. Pitam Singh's jurisdiction to make the complaint. This question is governed by the Criminal Procedure Code and by the Punjab Courts Aot, 1918. We will examine the Criminal Procedure Code first.

The offences said to have been committed are ones under sections 471 and 193 of the Indian Penal Code, namely, using as genuine a forged document knowing it to be forged and perjury. Section 195(1) (b) and (c) of the Criminal Procedure Code prohibit any Court from taking cognizance of either of these two offences except on the complaint in writing of the Court concerned

"or of some other Court to which such Court is subordinate".

The offences were committed in the Court of Mr.

E.F. BarlQw, a Subordinate Judge of the first class.

It seems to have been accepted that Mr. Gujral was not Mr. Barlow's successor because he was only a Subordinate Judge of the fourth class, but whether he was the successor or not, he neither made the complaint nor rejected the application. He declined to do either because he said he had no jurisdiction; so also neither Mr. Barlow nor Mr. Augustine made a complaint or rejected the application.

Tht carries

us on to section 476-A of the Criminal Procedure

Code.

Section 476-A states that when the Court in which the offence is said to have been committed neither makes a complaint nor rejects an application for the making of a complaint, "the Court to which such former Court is subordinate within the meaning of section 195, sub-section (3)" may take action under section 476.

Section 476 authorises the appropriate Court, after recording a finding that it is expedient in the interests of justice, etc., to, among other things, make a complaint in writing and forward it to a Magistrate of the first class having jurisdiction. That was done by Mr. Pi tam Singh. So the only question we have to decide on this part of the case is whethe'r the Court of the Senior Subordinate Judge over which Mr. Pitam Singh presided was the Court to which the Court of Mr. Barlow was subordinate within the meaning of section 195(3).

Now it is to be noticed that subordination has been given a special meaning in this section. It is not any superior Court that has jurisdiction, nor yet the Court to which the "former Court" is subordinate for, what might be termed, most general purposes, but only the Court to which it is subordinate within the meaning of section 195(3). Section 195(3) states that-

"For the purposes of this section, a Court shall be deemed to be subordinate to the Court to which appeals ordinarily lie from the appealable decrees or sentences of such former Court, or in the case of a Civil Court from whose decrees no appeal ordinarily lies to the principal court having ordinary original civil jurisdiction within the local limits of whose jurisdiction such Civil Court is situate" and then follows this proviso-

"Provided that-

(a) where appeals lie to more than one Court, the Appellate Court of inferior jurisdiction shall be the Court to which such Court shiill be deewed to be subordinatei and

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(b) where appeals lie to a Civil and alsO' to a Revenue Court, such Court shall be deemed to be subordinate to the Civil or Revenue Court according to the nature of the case or proceeding in connection with which the offence is alleged to have been committed".

These provisions have given rise to much conflict in the High Courts. The controversy has centred round the word "ordinarily". One class of case, of which Wadero Abdul Rahman v. Sadhuram(') is a sample, holds that "ordinarily" means "in the majority of cases" and that it has no reference to the particular case in hand. We d-0 not think that is right because that gives no meaning to the proviso to sub-clause (3). If appeals lie to a particular Court, e.g., the District Court, in the majority of cases and to another Court, say the High Court, only in a few cases, then the inferior tribunal is a fixed quantity and so the need to choose between the inferior and the superior Court cannot arise. That makes sub-clause (a) to the proviso otiose; also, it does not necessarily follow that the appeal in the majority of cases will always lie to theinferior Court. Cases may occur in which the majority of appeals would go to the higher of two given tribunals; and in any case this interpretation has.the disadvantage that a Court may be compelled to call for and go into a mass of statistics to ascertain which of two Courts entertains the majority of appeals over a given period of time, as well as to determine what is the appropriate period of time.

Another view considers that the word means that the higher Court is the one to which there is an unrestricted right of appeal and so cannot apply when any restriction intervenes such as when the right of appeal is limited to a particular class of cases or is hedged in by conditions. This was the view taken in M. S. Sheriff v. Govindan(").

Other views are also possible but we do not intend to explore them. In our opinion, the matter is to be viewed thus. The first question to be asked is whether any decrees, orders or sentences of the original Court

(1) (1930] 32 Cr. L.J. 1012.

(2) A.I.I\. 1961Mod.1060, 1061.

are appealable at ail. If they are not, and the Court is a Civil Court, then, under section 195(3), the appeal against the order making or refusing to make a complaint will be to the principal Court of ordinary original civil jurisdiction. If, however, appeals from its various decrees and orders lie to different Courts, then we hive to see to which of them they "ordinarily" lie and select the one of .lowest grade from among them.

In determining the Court or Courts to which an appeal will ordinarily lie, we have to see which Court

or Courts entertain appeals from that class of tribunal in the ordinary way apart from special notifications or laws that lift the matter out of the general class. Our meaning will be clearer when we turn to the case in hand and examine the Punjab Courts Act of 1918.

Apart from the Courts of Small Causes and Courts established under other enactments, the Punjab Courts Act, 1918 makes provision for three classes of Civil Courts, namely-

(1) the Court of the District Judge,

(2) the Court of the Additional Judge, and

(3) the Court of the Subordinate Judge.

At the moment we are concerned with the Subordinate Judge. Section 22 enables the State Government to fix the number of Subordinate Judges after consultation with the High Court. The local limit of jurisdiction of each of these Judges is the district in which he is appointed unless the High Court defines a different limit (section 27). The pecuniary limits are set out in section 26:

"The jurisdiction to be exercised in civil suits as regards the value by any person appointed to be a Subordinate Judge shall be determined by the High Court either by including him in a class or otherwise as it thinks fit".

These are what might he termed the ordinary powers and jurisdiction of these Courts. But sections 29 and 30 authorise the High Court to confer certain additional powers and jurisdiction on them. We will deal with that later.

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Next, we turn to the provisions for appeal. They are governed by section 39. In the absence of any other enactment for the time being in force, when the value of the suit does not exceed five thousand rupees the appeal lies to the District Judge, and in every other suit, to the High Court. But by sub-section (3) the High Court is empowered to direct by notification

"that appeals lying to the District Court from all or any of the decrees or orders passed in an original suit By any Subordinate Judge shall be preferred to such other Subordinate Judge as may be mentioned in the notification" and when that is done

"such other Subordinate Judge shall be deemed to be a District Court for the purposes of all appeals so preferred".

The High Court availed itself of this provision and provided that appeals lying to the District Courts from decrees or orders passed by any Subordinate Judge in two classes of case which are specified

"shall be preferred to the Senior Subordinate Judge of the first class exercising jurisdiction within such Civil District".

There are thus three forums of appeal from the Court of the Subordinate Judge depending on the _ nature of the suit and its value.

The question is whether in each of these three classes of case the appeal can be said to lie "ordinarily" to one or other of these appellate tribunals.

Applying the rule we have set out above, the appeal to the Senior Subordinate Judge cannot be termed "ordinary" because the special appellate jurisdiction conferred by the Notification is not the ordinary jurisdiction of the Senior Subordinate Judge but an additional power which can only be exercised in a certain limited class of case.

It is not a power common to all Subordinate Judges nor even to all Senior Subordinate Judges. Therefore, it cannot be said that appeals from the Courts of the various Subordinate Judges "ordinarily" lie to the Senior Subordinate Judge. Consequently, that Court is not one of the appellate tribunals contemplated

by section 195(3) of the Criminal Procedure Code and its proviso.

But appeals do "ordinarily" lie either to the District Court or the High Court; and as the. District Court is the lower of these two tribunals that must be regarded as the appellate authority for the purposes of section 476-B of the Criminal Procedure Code.

Now it is to be observed that vhis is a purely objective analysis and is not subjective to any particular suit.

In the present suit, the value of the suit was over Rs. 5,000, so the appeal would have lain to the High Court, but we are not concerned with that because section 195(3) does not say that the appellate authority within the meaning of that section shall be the Court to which the appeal in the particular case under consideration would ordinarily lie but generally

"the Court to which appeals ordinarily lie from the appealable decrees or sentences of such former Court".

It would, however, be wrong to say that the nature of the proceedings in the case must be wholly ignored because sub-clause (h) to the proviso to sub-section

(3) states that

"where appeals lie to a Civil and also to a Revenue Court, such Court shall be deemed to be subordinate to the Civil or Revenue Court according to the nature of the case or proceeding".

Therefore, to that limited extent the nature of the proceedings must be taken into account, but once the genus of the proceedings is determined, namely whether civil, criminal or revenue, the heirarchy of the superior Courts for these purposes will be determined, first by the rules that apply in their special cases and next by the rule in section 195(~) which we have just expounded and explained.

M. S. Sheriff v. The State of Madras and Others(1) was quoted but the present point was neither considered nor decided there.

The next question is whether the Court of the Senior Subordinate Judge is the same Court as Mr.

Barlow's Court, namely the Court of the Subordinate

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Judge of the first class.

That depends on whether there is only one Court of the Subordinate Judge in each district; presided over by a number of Judges, or whether each Court is a separate Court in its elf.

That turns on the provisions of the Punjab Courts Act.

We make it clear that our decision on this point is confined to the Punjab Act.

We understand that similar Acts in otl:ier States are differently worded so that what we decide for the Punjab may not hold good elsewhere.

We say this because rulings were cited before us from other parts of India which take differing views.

We do not intend to refer to them because it would not be right to examine the language of Acts that are not directly before us. Accordingly, we confine ourselves to the Punjab Act (Act VI of 1918).

Section 18 of the Punjab Courts Act states that there shall be the following classes of Courts, namely

" (3) the Court of the Subordinate Judge".

Section 22 provides that

"the State Government may ........ fix the number of Subordinate Judges to be appointed".

Section 26, which has already been quoted, fixes the pecuniary limits of their jurisdiction. Then comes section 27 defining the local limits of their jurisdiction:

"(l) The local limits of the jurisdiction of a Subordinate Judge shall be such as the High Court may define.

(2) When the High Court posts a Subordinate Judge to a district, the local limits of the district shall, in the absence of any direction to the contrary, be deemed to be the local limits of his jurisdiction".

From there we go to the Notification. It is High Court Notification No. 4 dated 3-1-1923. It makes four classes of Subordinate Judges with effect from 5-1-1923

"in respect of the jurisdiction to be exercised by them in original snits, namely:- Class I-Subordinate Judges exercising jurisdiction without limit as to the value of the cases;

Class II-Subordinate Judges exercising jurisdiction in cases of which the value does not exceed Rs. 5,000;

Class III-Subordinate Judges exermsmg jurisdiction in cases of which the value does not exceed Rs. 2,000;

Class IV-Subordinate Judges exercising jurisdiction in cases of which the value does not exceed

Rs. 1,000.

When a Subordinate Judge is appointed to any of the classes constituted by this Notification, he shall exercise the jurisdiction hereinbefore defined for the class to which he is appointed within the local limits of the ci vii district to which he may be posted from time to time".

This gives rise to three points of view.

According to one, there is only one Court of the Subordinate Judge for each district and every other Subordinate Judge is an additional Judge to that Court. This is based on the language of section 18, and the High Court Notification is, under that view, interpreted as dividing the Judges of that one Court into four categories but not as creating independent Courts. Section 26 is there read as empowering the High Court to include each Subordinate Judge individually on appointment into a given class within the one Court and not to turn him into a separate Court.

According to the second view, there are four classes of Subordinate Judge's Courts in t.he Punjab because of the High Court Notification. The argument here runs that section 18 must be read with section 26, and as the High Court is empowered to divide Subordinate Judges in a di11trict into classes it must mean that each class forms an independent Court, for, according to this point of view, it would be anomalous to have Judges of the one Court invested with differing pecuniary jurisdic tions because that is always regarded as inherent to the Court. The position created by the Act, it is said, is not the same as the one that arises when work is administratively distributed among Additional Judges of the same

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Court because the jurisdiction and powers of the Judges are unaffected by such distribution and there remains the one Court with one inherent and territorial jurisdiction despite the distribution.

The third view is that each Subordinate Judge is a separate and independent Court in himself and it is pointed out that section 27 'invests each Judge personally with a territorial jurisdiction and not the Oourt, and so also section 26.

Under section 33 the power of control (apart from the High Court) over all civil Courts within the local limits of a District Judge's jurisdiction is with him, and section 34 empowers the District Judge to distribute any civil business

"cognizable by .... the Courts under his control. ... among such Courts in such manner as he thinks fit".

The Senior Subordinate Judge does not therefore appear to be vested with either administrative or judicial control over any other Subordinate Judge except in so far as he is a Court of appeal in certain specified classes of case.

In our opinion, the Senior Subordinate Judge who made the complaint had no jurisdiction to make it, either as the original Court which tried the suit, or as the appellate authority under section 476-B of the Criminal Procedure Code. It is not enough that he also had first class powers because he was not the same Court. That is not to say that a successor could not have been appointed to Mr. Barlow so as to establish continuity in the Court over which he presided. It is possible that one could have been appointed and indeed it seems to have been assumed that Mr. Augustine was his successor. But as Mr.

Augustine did not take up this matter we need not decide that point. What we think is clear is that Mr. Pitam Singh was not a successor, especially as appeals lay to him from certain decisions of the Subordinate Judges in his district. It would be unusual to provide an appeal from one Judge of a Court to another single Judge of the same Court. It would be even more anomalous to have an appeal from the decision of a judge lie to his successor in office. Even

in the High Courts, where there are Letters Patent appeals, the appeal is always heard by a Division Bench of at least two Judges; nor can this be treated as a case where a Court with inherent jurisdiction decides the matter as an origina.1 tribunal though, owing to territorial or other similar classificittion not affecting inherent jurisdiction, the case should hav:e gone to some other tribunal of co-ordinate or lesser authority. Section 193(1) of the Criminal Procedure Code imposes a definite bar which cannot be ignored or waived any more than the prohibitions under sections 132 and 197 and, just as the sanctions provided for in those sections cannot be given by any authority save the ones specified, so here, only the Courts mentioned in section 195(1)(b) and (c) can remove the bar and make the complaint.

This also appears to accord with the Punjab practice. The Rules and Orders of the Punjab High Court reproduce a Notification of the High Court dated 16-5-1935 as amended on 23-2-1940, at page 3 of Chapter 20-B of Volume t, where it is said in paragraph 2---

"lt is further directed the Court of such Senior Subordinate Judge of the first class shall be deemed to be a District Court, etc." This appears to regard each Senior Subordinate Judge as a Court in himself and not merely as the presiding officer of the Court of the Subordinate Judge.

Section 39(3) of the Punjab Courts Act is also relevant. It states that-

"the High Court may by notification direct that appeals lying to the District Court from all or any of the decrees or orders passed in an original suit by any Subordinate Judge shall be preferred to such other Subordinate Judge as may be mentioned in the notification, and the appeals shall thereupon be preferred accordingly, and the Court of such other Subordinate Judge shall be deemed to be a Distrfot Court, etc." -Now this permits an appeal from one Subordinate

Judge to another and the words the "Court of such other Subordinate Judge" indicate that the Subordi-

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nate Judge to whom the appeal is preferred is a separate and distinct Court.

The position thus reduces itself to this. The original Court made no complaint; section 476-A of the Criminal Procedure Code was therefore attracted and the jurisdiction to make the complaint was transferred to the Court to which Mr. Barlow's Court was subordinate within the meaning of section 195.

That Court, as we have seen, was the Court of the District Judge.

Now, when the matter was reported to the District Judge by Mr. K. K. Gujral, the District Judge dealt with it. He had authority under section 476-A either to make the complaint himself or to reject the application. He did neither. Instead, he sent it to Mr.

Pitam Singh who had no jurisdiction. Of course, the District Judge could have sent it to the original Court or to the successor Judge of that Court if there was one, but he sent it to a Court without jurisdiction, so his order was ineffective and the subsequent order of Mr. Pitam Singh was without jurisdiction.

That still left the District Court free to act under section 476-A when the matter came back to it again.

This time it came by way of appeal from Mr. Pitam Singh's order but that made no difference because the substance of the matter was this: the original Court had not taken any action, therefore it was incumbent on the District Judge to make an appropriate order either under section 476-A or by sending it for disposal to the only other Court that had jurisdiction, namely the original Court. But the District Judge did not deal with it. The application went instead to the Additional District Judge and what we now have to see is whether the Additional District Judge had the requisite power and authority. That depends on whether the Additional District Judge was a Judge of the District Court or whether he formed a separate Court of his own like the various Subordinate Judges; and that in turn depends on the language of the Punjab Courts Act.

As we have already pointed out, section 18 of that Act states that, in addition to Courts of Small Causes

and Courts established under other enactments,

"there shall be the following classes of Civil Courts, wunely:·- ·

(1) The Court of the District Judge;

(2) The Court of the Additional Judge; and

(3) The Court of the Subordinate Judge".

The Court of the Additional Judge is therefore constituted a distinct class of Court, and it is to be observed that the Act speaks of the Court of the Additional Judge and not of the Additional District Judge as is the case with certain other Acts in other parts of India. This language is also to be compared with articles 214 and 216 of the Constitution which constitute and define the constitution of the High Courts in India.

"214(1). There shall be a High Court for each State".

"216. Every High Court shall consist of a Chief Justice and such other Judges as the President may from time to time deem it necessary to appoint".

The Punjab Courts Act nowhere speaks of an Additional District Judge or of an Additional Judge to the District Court; also, the Additional Judge is not a Judge of co-ordinate judicial authority with the District Judge. Section 21(1) states that-

"When the business pending before any District Judge requires the aid of an Additional Judge or Judges for its speedy disposal, the State Government may appoint such Additional Judges as may be necessary''.

But these Judges cannot discharge all the judicial functions of the District Judge.

Their jurisdiction is a limited one and is limited to the discharge of such functions as may be entrusted to them by the District Judge. Section 21(2) states that

"An Additional Judge so appointed shall discharge any of the functions of a District Judge which the DistrictJud, ge may assign to him".

It is true that sub-section (2) goes on to say that

"in the discharge of those functions he shall exercise the same powers as the District Judge" but these powers are limited to the cases with which

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he is entitled to deal. Thus, if his functions are confined to the hearing of appeals he cannot exercise original jurisdiction and vice versa.

But_jf he is invested with the functions of an appellate tribunal at the District Court level, then he can exercise all the powers of the District Judge in dealing with appeals which the District Judge is competent to entertain.

This is a very different thing from the administrative distribution of work among the Judges of a single Court entitled to divide itself into sections and sit as division Courts.

When the Chief Justice of a High Court or the District Judge of a District Court makes an administrative allotment of work among the Judges of his Court, their jurisdiction and powers are not affected, and if work allotted to one Judge goes to another by mistake his jurisdiction to entertain the"matter and deal with it is not affected. But that is not the scheme of the Punjab Courts Act and the mere fact that Mr. J. N. Kapur called himself the Additional District Judge and purported to act as such cannot affect the matter of his jurisdiction. As the Punjab Courts Act does not contemplate the appointment of Additional Judges to the District Court, none can be appointed.

The Court contemplated is the Court of the Additional Judge which is in the nature of a special tribunal set up for a special purpose and invested with the powers of a District Judge when dealing with the matters specially entrusted to its jurisdiction.

We hold therefore that the Court of the Additional Judge is not a division Court of the Court of the District Judge but a separate and distinct Court of its own.

Now, as we have seen, when the original Court does not make a complaint under section 476 of the Criminal Procedure Code or reject the application, then the only other Court competent to exercise these powers is the Court to which appeals from the original Court "ordinarily lie".

That Court, in the present case, was the Court of the District Judge and not the Court of the Additional Judge Mr. J. N.

Kapur. Therefore, Mr. J. N, Kapur's order was also without jurisdiction.

Mr. Kapur's order went up to the High Court in revision, and the next question we have to deter-· mine is whether the High Court had jurisdiction to entertain the revision and the extent of its powers.

Keshardeo Chamria v. Radha Kissen Chamria and Others(1). and many cases from the High Courts were cited which show that there is much difference of opinion about this but we are fortunately not called upon to decide that question because this is not a case where a Court with jurisdiction has acted under section 476 of the Criminal Procedure Code of its own motion or has acted as a Court of appeal under section 476-B. As we have shown, the Court of the Senior Subordinate Judge Mr. Pitam Singh had no jurisdiction to entertain this matter either as a Court of appeal under section 476-B or of its own authority under section 476-A. The Additional Judge Mr. J. N.

Kapur, who has called himself an Additional District Judge, also had no jurisdiction under either section.

But he seised himself of the case and has rejected the application for the making of a complaint. He therefore assumed a jurisdiction which he did not possess and that at once attracted the revisional jurisdiction of the High Court.

Now it does not matter in this case whether that jurisdiction lies under section 439 of the Criminal Procedure Code or under section 115 of the Civil Procedure Code because under either of these two sections the High Court is entitled to set aside an order of a Court subordinate to it which has assumed a jurisdiction that it does not possess. Therefore, in so far as the High Court set aside the order of Mr.

J. N. Kapur it was right. But where it went wrong was in upholding the complaint made by the Senior Subordinate Judge. As we have shown, that Court had no jurisdiction to make the complaint.

The next question is whether the High Court could itself have made the complaint in this particular case because if it could have done so then we would not have used our extraordinary powers of appeal under article 136 to set right what would in those circum-

(1) (1953] S.C.R. 136, 150 to 152.

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BoseJ.

stances have been a mere procedural irregularity.

But as our opinion is that the High Court, had no jurisdiction to act under section 476 in this case, we are bound to interfere. As we have shown, section 195 contains an express prohibition against taking cognizance of the kind of complaint we have here unless the bar is lifted either by the original Court or the Court to which it is subordinate within the meaning of section 195(3). Those are the only Courts invested with jurisdiction to lift the ban and make the compfaint. Had this been a case in which the High Court was the superior Court within the meaning of section 195(3) the matter would have been different, but as the High Court was neither the original Court nor the Court to which the original Court was subordinate, according to the special definition in section 195(3), it had no jurisdiction to make the complaint of its own authority. Therefore, all that the High Court could, and should, have done was to send the case to the District Judge for disposal according to law.

We will, therefore, now do what the High Court should have done.

We were asked not to a.llow the proceedings to pend. any longer but we are not prepared to do that in this case. If the view taken by Mr. Pitam Singh

and the High Court is right, then a serious offence of a kind that is unfortunately becoming increasingly common, and which is difficult to bring home to an offender, has been committed against the administration of justice, and if the District Court is satisfied, as were Mr. Pitam Singh and the High Court, that a primafacie case has been made out and that it is expedient in the interests of justice that a complaint should be filed, then it is but right that the matter should be tried in the criminal Courts. We will not say anything more lest it prejudice the appellant. The District Judge will of course be free to exercise his own discretion. The application for the making of a complaint will accordingly be remitted to the District Judge who will now deal with it.

125

KULDIP SINGH

THE STATE OF PUNJAB AND ANOTHER

VIVIAN BosE

JAGANNADHADAS

B. P. SINHA

JAFER IMAM

CHANDRASEKHARA AIYAR, JJ.

ss. 195

ss. 18, 21

s. 115

s. 476

s. 195(3)

ss. 193 and 471

Indian Penal Code

s. 476

State of Punjab

s. 439

Code of Criminal Procedure

s. 115

Art. 136

s. 195(3)

Code of Criminal Procedure

Ramalal Anand

I. S. Sawhney

Gopal Singh

P. G. Gokhale

Jindra Lal

sections 195 and 476

Amar Singh

E. F. Barlow

Barlow

W. Augustine

sections 193 and 471

Indian Penal Code

Augustine

K. K. Gujral

Pitam Singh

Pitam Singh

J. N. Kapur

State of

Punjab

State of Punjab

Punjab Courts Aot, 1918

sections 471 and 193

Indian Penal Code

Section 195(1)

E.F. BarlQw

Gujral

section 476

Section 476

section 195

section 476

Section 476

Pi tam Singh

section 195(3)

section 195(3)

Section 195(3)

section 195(3)

Punjab Courts Act, 1918

Section 22

section 27

section 26

sections 29 and 30

State of

Ptfnfab

section 39

section 195(3)

section 476

section 195(3)

section 195(~)

Kuldip Singh

India

Section 18

Section 22

Section 26

section 27

section 18

Section 26

Punjab

section 18

section 26

Kuldip Singh

section 27

section 26

section 33

section 34

section 476

Section 193(1)

sections 132 and 197

section 195(1)(b)

Punjab High Court

Section 39(3)

Ktllaip Singh

section 476

section 195

section 476

section 476

section 476

section 18

articles 214 and 216

Section 21(1)

Section 21(2)

J. N. Kapur

section 476

J. N.

Kapur

J. N, Kapur

Kapur

section 476

section 476

section 476

section 476

section 439

section 115

article 136

section 476

section 195

section 195(3)

section 195(3)

section 195(3)


S.C.R.

SUPREME COURT REPORTS

FIRM OF BHAGAT RAM MOHANLAL v.

THE COMMISSIONER OF EXCESS PROFITS

TAX, MADHYA PRADESH, NAGPUR

AND ANOTHER.

(S. R. DAs, ACTING C.J., BHAGWATI and

VENKATARAMA AYYAR JJ.]

Indian Income-Tax Act, 1922 (XI of 1922), s. 26-A-Excess Profits Tax Act, 1940 (Act XV of 1940), ss. 7, 8(1) and 20-Registration of appellant firm-Partners-Hindu undivided family consisting of karta and his two brothers and two others-Made profits in two accounting years and assessed to excess profits-Loss during 'the succeeding year-Profits set off against loss under s. 7 of the Excess Profits Tax Act-Partition of joint family-Appellant firm reconstituted under fresh agreement-Consisting of five partners-Erstwhile karta and his two brothers and two previous partners-Whether a change in the persons carrying on business within the meaning of a. 8(1) of the ExcessProfits Tax Act-Whether previous order paying back excess profits to assessee a mistake apparent on the record within the meaning of s. 20 of the Excess Profits Tax Act.

The firm of Bhagat Ram Mohan Lal-Appella.nt-constituted on 23-8-1940 wa.s registered under s. 26-A of the Indian Incometax Act, the partners of the firm according to the registration certificate being (1) Bhagat Ram Mohan Lal (Hindu undivided family),

(2) Richpal and (3) Gajadhar, their shares being respectively 8 annas, 4 annas and 4 annas. Mohan Lal was the karta of the aforesaid family, which consisted of himself and his two brothers, Chhotelal and Bansilal. The firm made profits during the accounting yea1'S ending 1943 and 1944 on which it was assessed to excess profits tax respectively of Rs.10,023/5/-andRs.13,005/5/-.Duringthe year 1944- 1945 it susta\ned a loss of Rs. 15,771 and adding thereto Rs. 37,800 the standard profits for the business, the Excess Profits Tax Officer

determined the deficiency of profits for the year at Rs. 53,571. Acting under s. 7 of the Excess Profits Tax Act the Excess Profits Tax Officer passed an order on 23-12-1946 whereby after setting off the profits of the firm for the years ending 1943 and 1944 against the deficiency of profits during the year ending 1945, he directed a refund of Rs. 23,028/10/- which had been paid by the appellan~ as excess profits tax for those years.

At the commencement of the assessment year 1944-1945 there was a partition in the joint family of which Mohan Lal was erstwhile karta, he and his two brothers becoming divided in status. As a result thereof the appellant firm was reconstituted under an agreement dated 17-10-1944, the partners of the firm being five in number. There was a reconstitution of the firm with respect to persons

February 15

Firm of Bhagat Ram MoT1anlat

The Commissioner

of Exctss Profits

Tax, Madhya Pradesh, NagPur

and, another

and their shares.

According to s. 8(1) of the Excess Profits Tax Act the change in the persons is deemed to bring about a disconti nuation of the old business and the commencement of a. new one and if that section applied no relief could have been granted to the appellant under s. 7 of the Act.

The facts as to the reconstitution of the firm having come to the knowledge of the Com'\lissioner of Excess Profits Tax be issued a notice under s. 20 of the Excess Profits Tax Act calling upon the appellant why the order of Excess Profits Tax Officer dated 23-12-1946 should not be set aside on the ground of mistake as he had failed to take into consideration the change in the -constitution of the firm which took place on 17-10-1944. After hearing the appellant the Commissioner held by his order dated 15-3-1950 that on the facts disclosed there was a change in the persons and that the a.ward of relief under s. 7 of the Act by the Excess Profits Tax Officer was a mistake. He set aside order only so far as Bhagat Barn Mohan Lal was concerned maintaining it with regard to two others.

On an application for a writ of certiorari and for a writ of pro hibition under Art. 226 of the Constitution the High Court upheld the order of the Commissioner. On an appea!'by Special Leave to the Supreme Court:

Held (1) that by reason of the partition of the joint family and the reconstitution of the firm under the deed dated 17-10-1944 there was a change in the persons carrying on business within s. 8(1) of the Act.

If all the five persons who were mentioned as partners in the deed of 1944 were partners of the old firm, there would be no change in the persons carrying on the business within s. 8(1) of the Act by the mere fact of reshuffling of the shares among them but the real question for determination was whether Cbhotelal and Bansilal were partners in the firm constituted on 23-8-1940. It is not in dispute that Mohanlal was the karta of the joint family, and that be entered into the partnership on 23-8-1940 as such karta. rt is well settled that when the kart& of a joint Hindu family enters1nto a. partnership with strangers, the members of the family do not ipso facto become partners in that firm.

They have no right to take part in its management or to sue for its dissolution.

The creditors of the firm would no doubt be entitled to proceed against the joint family assets including the shares of the nonppartner coparceners for reali .. sation of their debts. But that is because under the Hindu Law, the karta bas the right when properly carrying on business to pledge the credit of the joint family to the extent of its assets, and not because the junior members become partners in the business.

The liability of the junior members arises by reason of their status as coparceners and not by reason of any contract of partnership and it would follow therefore that when Mobanlal became a partner of the firm on

23-8 1940 Obhotelal and Bansilal could not be held by reason of that fa.ct alone to have become partners therein.

Accordingly whether the querion was to be considered on the 1956 principles of Hindu law or on the principles of the Excess Profits Tax Act there was a change in the personnel of the firm on 17 10 1944 Firm of Bhagat and the matter fell within s. 8(1) of the Act.

Ram Mohan/al

(2) That there was a mistake apparent on the record as required by s. 20 of the Act and the Commissioner had jurisdiction to pass the order dated 15-3-1950 which he did. There was no force in the contention that the record in Excess Profits Tax proceedings con sisted in the present case of the only order dated 23-12-1946 and that the facts on which the proceedings were taken under s. 20, namely, the constitution of the firm on 23-8-1940 and the changes effected therein on 17 10 1944 were not recited therein and that in consequence there were no materials on which an order could have been passed under that section because though the order of the Ex cess Profits Tax Officer dated 23-12 1946 does not mention these facts these facts appear from the record of the income-tax proceed ings which included the registration certificate of the firm under s. 26-A of the Income-Tax Act and the returns made by the firm dis closing the names of the partners and their respective shares.

Fur ther the fact is that the proceedings under the two Acts, namely, the Excess Profits Tax Act and the Income Tax Act, are interdependent.

Lackman Das v. Commissioner of Income-Tax ([1948] 16 I.T.R. 35), Sundar Singh Majithia v. Commissioner of Income-tax ([1942] 10 I.T.R. 457), Shanmuuavel Nadai and Sons v. Commissioner of Income-tax ((1948] 16 I.T.R. 355) and Shapurii Pellonji v. Commis sioner of Income-tax ((1945] 13 I.T.R. 113), referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 139of1953.

Appeal by special leave from the judgment and order dated the 22nd day of August 1950 of the Nagpur High Court in Miscellaneous Petition No. 67 of

1950.

Radhey Lal Agarwala and B. P. Maheshwari, for the appellant.

0. K. Daphtary, Solicitor-General of I rulia ( G. N.

Joshi and R.H. Dhebar, with him) for the respondents.

1956. February 15. The Judgment of the Court was delivered by. .

VENKATARAMA AYYAR J.-The firm of Bhagat Ram Mohanlal, which is the appellant before us, was constituted on 23-8-1940, and registered under section 26-A of the Indian Income-tax Act. The partners of

The Commissioner of Excess Profits

Tax, Madhya Pradesh, Nai<faur

and another

Firm of Bhagat

Ratn Mohanlal v.

The Commissioner

of Excess Profits

Tax, Madhya Pradesh, Nagpur

and another

Venkatarama

AyyarJ.

the firm, according to the registration certificate, were

(1) Bhagat Ram Mohanlal, Hindu undivided family,

(2) Richpal and (3) Gajadhar, their shares being respectively 8 annas, 4 aunas and 4 annas. Mohanlal was the karta of the aforesaid joint family, which consisted of himself and his two brothers, Chhotelal and Bansilal, and he entered into the partnership as such karta. The firm carried on business at Drug in Madhya Pradesh as the agent of the Government for the purchase of foodgrains, and during the accounting years ending 1943 and 194.4, it made profits on which it was assessed to excess profits tax respectively of Rs. 10,023-5-0 and Rs. 13,005-5-0. During the year 1944-1945 it sustained a loss of Rs.15,771, and adding it to the sum of Rs. 37,800 which was the standard profits for the business, the Excess Profits Tax Officer determined the deficiency of profits for the year at Rs. 53,571. Section 7 of the Excess Profits Tax Act, hereinafter referred to as the Act, provides that when there is a deficiency of profits in any chargeable accounting period in any business, the profits of that business during the previous years shall be deemed to be reduced eo extanti, and that the relief necessarv to give effect to the reduction shall he given by repayment of the tax paid or otherwise. Acting under this section, the Excess Profits Tax Officer passed an order on 23-12-1946 whereby after setting off the profits of the firm for the years ending 1943 and 1944 against the deficiency of profits during the year ending 1945, he directed a refund of Rs. 23,028-10-0 which had been paid by the appellant as excess profits tax for those years.

It should be mentioned that at the commencement of the assessment year 1944-1945 there was a partition in the joint family of which Mohanlal was the erstwhile karta, as a result of which he and his brothers, Chhotelal and Bansilal, became divided in status. Consequent on this disruption of the joint family, the appellant firm was reconstituted under an agreement dated 17-10-1944.

Under this agreement, the partners of the firm were five in number, Richpal, Gajadhar, Mohanlal, Chhotelal and Bansilal, the two

former being entitled to 5 annas share each and the latter three to 2 annas each. There was thus a reconstitution of the firm both with reference to the persons who were its partners and the shares which were allotted to them. Now, section 8(1) provides, omitting what is not material, that ''as from the date of any change in the persons carrying on a business, the business shall he deemed to have been discontinued a.nd a new business commenced". If this section applied, then no relief could have been granted to the appellant under section 7 of the Act.

The facts relating to the reconstitution of the firm having come to the knowledge of the Commissioner of Excess Profits Tax on examination of the record, he issued a notice on 19-2-1948 calling upon the appellant to show cause why the order of the Excess Profits Tax Officer dated 23-12-1946 should not be set aside on the ground of mistake. This notice was issued under section 20 of the Act, which confers on the Commissioner authority to rectify "any mistake apparent. from the record". Tpe mistake, according to the Commissioner, consisted in the Excess Profits Tax Officer failing "to take into consideration the change in the constitution of the firm which took place on 17-10-1944, consequent on the disruption of the joint Hindu family of one of the partners". The appellant appeared in response to the notice, and contended that on the facts the. proceedings under section 20 were misconceived.

The facts on which the proceedings were taken were not themselves disputed. By his order dated 15-3-1950 the Commissioner held that on the facts disclosed on the record, there was a change in the persons carrying on the business, and that the award of relief under section 7 by the Excess Profits Tax Officer was a mistake. He, however, maintained the order dated 23-12-1946 with reference to Richpal and Gajadhar, and set it aside only so far as "Bhagat Ram , Mohanlal, Hindu undivided family" which was registered as partner on 23-8-1940, was concerned. He further directed that Rs. 11,514-5-0 which had been refunded to it should be collected.

Firm of Bhcrgat

Ram Mohanlal v.

The Commissioner

of Excess Profits

Tax, Madhya Pradesh, Nagpur

and another

Venkatarama

AyyarJ.

1956 The appellant thereupon moved the High Court of Nagpur under article 226 fbr a writ of certiorari FirmofBhagal quashing the order of the Commissioner dated Ram Mohanlal v. 15-3-1950 and for a writ of prohibition restraining Th• Com•nissioner the authorities from collecting Rs. 11,514-5-0 under

ofBxcessProfils that order. By their judgment dated 22nd August

Ta•, Muahya 1950, the learned Judges agreed with the Commis- Pra":.;'":::,.gpur sioner that by reason .of the partition there was a

" change in the persons who carried on the business, Vcnkalarama and that the order dated 23-12-1946 was contrary to AyyarJ. section 8(1) of the Act.

They also held that as the mistake appeared on the face of the record, the Commissioner had jurisdiction under section 20 of the Act to pass the order which he did. In the result, the writs were refused. Against this judgment, the appellant prefers this appeal by special leave.

Two questions have been raised for our determination in this appeal: (1) whether by reason of the partition of the joint family and the reconstitution of the firm under the deed dated 17-10-1944 there was a change in the persons carrying on business within section 8(1) of the Act; and 12) whether the order of i the Commissioner dated 15-3-1950 is bad on the ground that there was no mistake apparent from the record, as required by section 20 of the Act. On the first question, the contention of the appellant is that when Mohanlal entered into partnership with Richpal and Gajadhar on 23-8-1940 as karta of the joint family, the other members of that family, Chhotelal and Bansilal, also became in substance partners of the firm, and that when they were mentioned eo nominee as partners in the deed dated 17-10-1944 the change was more formal than substantial, and that further the fact that there was a re-allotment of shares among the partners would not amount to a change in the persons who carried on the business.

We agree that if all the five persons who were mentioned as partners in the deed of 1944 were partners of the old firm, there would be no change in the persons carrying on the business within section 8(1) of the Act by the mere fact ofreshuffiing of shares among them. But the real question that has to be decided

is whether Chhotelal and Bansilal were partners in the firm, which was constituted on 23-8-1940. The appellant contends that they were, both according to the Hindu law and even apart from it, under the general law relating to partnerships.

It is not in dispute that Mohanlal was the karta of the joint family, and that he entered into the partnership on 23-8-1940 as such karta. It is well settled that when the karta of a joint Hindu family enters into a partnership with strangers, the members of the family db not ipso facto become partners in that firm.

They have no right to take part in its management or to sue for its dissolution. The creditors of the firm would no doubt be entitled to proceed against the joint family assets including the shares of the nonpartner co-parceners for realisation of their debts.

But that is because under the Hindu law, the karta has the right when properly carrying on business to pledge the credit of the joint family to the extent of its assets, and not because the junior members become partners in the business. In.short, the liability of the latter arises by reason of their status as coparceners and not by reason of any contract of partnership by them. It would therefore follow that when Mohanlal became a partner of the firm on 23-8-1940, Chhotelal and Bansilal could not be held by reason of that fact alone, to have become partners therein.

It is argued that when that firm was constituted on 23-8-1940 the persons who entered into the contract of partnership were not merely Mohanlal as karta of the joint family but also Chhotelal and Bansilal in their individual capacity, and that therefore they became partners under the ordinary partnership law.

But the registration certificate of the firm while showing "Bhagat Ram Mohanlal, Hindu undivided family" as a partner, makes no mention of either Chotelal or Bansilal as partners.

The contention that they also became in their individual capacity partners appears therefore to be an afterthought, and is opposed to the findings of the learned J uges of the High Court. This is sufficient, without more, to dispose of this contention.

But even apart from this1 20

Firm of Blia gat

Ram Molian/al

The Co11111tijsfouer

of Excess Profits

Tax, Madhya Pradesh, Nagp11r

and a11ot!tcr

Venkatarn111a

Ayyar, J.

19,5 it is difficult to visualise the situation which the appellant contends for, of a Hindu joint family enter- Ffrm of Bhagat ing into a partnership with strangers through its Ram Mohanlal v. karta and the junior members of the family also be- Th• Commissioner coming at the same time its partners in their personal of Excess Profits capacity. In Lachhman Das v. Commissioner of Income-

Tax, Madhya tax('), it was held by the Judicial Committee that the Prad•t Ntgpur karta of a joint Hindu family could enter into partan ano " nership with an individual member of the coparcenary

Venkatarama quoad his separate property. It was also held by the ; lyyarJ.

Privy Council in Sundar Singh Majithia v. Commissioner of Income-tax(') that there was nothing in the Income-tax Act to prohibit the members of a joint Hindu family from dividing some properties, while electing to retain their joint status, and carrying on business as partners in respect of those properties treating them as its capital. But in the present case, the basis of the partnership agreement of 1940 is that the family was joint and that Mohanlal was its karta and that he entered into the partnership as karta on behalf of the joint family. It is difficult to reconcile this position with that of Chhotelal and Bansilal being also partners in the firm in their individual capacity, which can only be in respect of their separate or divided property.

If members of a coparcenary are to be regarded as having become partners in a firm with strangers, they would also become under the partnership law partners inter se, and it would cut at the very root of the notion of a joint undivided family to hold that with reference to coparcenary properties the members can at the same time be both coparceners and partners.

To get over this difficulty, it was suggested that all the three coparceners might be regarded as having entered into the contract of partnership as kartas of the joint family.

But even if that could be done consistently with the principles of Hindu law, the very pleadings of the appellant are against such a supposition being made, affirming as they do that it was only Mohanlal that was the karta, not the others.

(1) [1948] 16 I.T.R 35.

(2) [1942] 10 I.T.R. 457.

...

The contention, therefore, that Chhotelal and Bansi- 1956 lal should be held to have become partners in the old Firm of Bhagat firm under the agreement dated 23-8-1940 cannot be Ram Mohanlal maintained. v.

The question whether there was a change in the The C-Ommissioner persons carrying on the business may now be consi- 0f Excess Profits dered independently of the principles of Hindu Law P Ta;, aihy';.. or the general law of Partnership and with special '"; n:saoti7!. ,. reference to the provisions of the Indian Excess Profits Tax Act.

Section 2(17) of the Act defines a Venkatarama 'person' as including a joint family.

Applying this AyyarJ. definition, who were the members of the firm when it was constituted on 23-8-1940? Rich pal, Gajadhar and "Bhagat Ram Mohanlal, Hindu undivided family" consisting of three coparceners, Mohanlal, Chhotelal and Bansilal, it being immaterial for the present purpose whether the karta of the family was only Mohanlal, or all the three of them. Then, the family became divided in 1944, and the result of it was that one of the three persons who were partners in the old firm, "Bhagat Ram Mohanlal" ceased to exist.

On 17-10-1944, the two surviving partners of the old firm, Richpal and Gajadhar, entered into a contract of partnership with Mohanlal, Chhotelal and Bansilal.

The erstwhile joint family of which they were members not being a partner in the new firm, it h!J, ving ceased to exist by reason of the partition, there was, having regard to the definition in section 2(17) of the Act, a change in the persons who carried on the business.

That was the view taken in Shanmugavel Nadar and Sons v. Commissioner of Income-tax(1), and we agree with it. Whether the question is considered on the principles of Hindu law or on the provisions of the Excess Profits Tax Act, there was a change in the personnel of the firm on 17-10-1944, and the matter falls within section 8(1) of the Act.

(2) The next question for determination is whether the order of the Commissioner dated 15-3-1950 is not justified by the provisions of section 20 of the Act for the reason that there was no mistake apparent from the record. The argument in support of this conten- !ll [1948J 16 I.T.R. 355.

Firm of Bhagat Ram Mahan/al v.

The Conunissioner

of Excess Profits Tax, Madhya Pradesh, Nagpur

and another

Venkatarama Ayyar J.

tion is that the record in the Excess Profits Tax proceedings consisted in the present case of only the order dated 23-12-1946, that the facts on which the proceedings were taken under section 20, namely, the constitution of the firm on 23-8-1940 and the changes effected therein on 17-10-1944 were not recited therein, and that, in consequence, there were no materials on which an order could have been passed under that section. It is true that the order of the Excess Profits Ta.x Officer dated 23-12-1946 does not mention these facts, but they appear from the record of the income-tax proceedings which included the registration certificates of the firm under section 26-A of the Income-tax Act and the returns made by the firm discl.osing the names of the partners and their respective shares. It is argued for the appellant that these records were inadmissible for the purpose of proceedings under section 20 of the Act, because the record referred to and contemplated by that section must be the record of the excess profits tax proceed ings, and that the records of the income-tax proceedings could not be used under that section.

We are unable to agree with this contention. Section 22(1) of the Act provides that:

"Notwithstanding anything contained in the Indian Income-tax Act, 1922, all information contained in any statement or return made or furnished under the provisions of that Act or obtained or collected for the purposes of that Act may be used for the purposes of this Act".

Section 22(2) similarly makes the record of the excess profits tax proceedings admissible in proceedings under the Indian Income-tax Act. The fact is that the proceedings under the two Acts are interdependent. Assessments under the Excess Profits Tax Act are, subject to the special provisions of that Act, made on the basis of the assessments made under the provisions of the Indian Income-tax Act. The same officers are in charge of the proceedings under both the enactments. The order of the Excess Profits Tax Officer dated 23-12-1946 refers in terms to the order dated 28-9-1946 passed in the proceedings for assessment of income-tax on the appellant, and the deficiency of profits is worked out on the basis of the loss of Rs. 15,771 as ascertained therein. We see no substance in this contention, which must accordingly be rejected.

It was finally contended that the particulars recited in the registration certificate as to who were all partners of the firm were not conclusive, and that the appellant was not estopped from proving that even on 23-8-1940 the real partners were all the five per- 13ons mentioned in the deed dated 17-10-1944, and the dec; iision in Shapurji R&llonji v. Commissioner of lncome-taxe) was relied on in support of the position.

It is undoubted law that the income-tax authorities are not estopped by the fact of registration from going behind the certificate, and deciding who the real partners of the firm are. But can the assessee whose statement is the basis on which the registration is made and who has possibly been benefited thereby deny its correctness, when the facts mentioned therein turn out to his disadvantage? It is unnecessary to consider this point, in view of our decision that on the facts as pleaded by the appellant, Chhotelal and Bansilal could not be regarded as partners in the old firm. We may add t.hat this contention does not appear to have been put forward before the Commissioner when notice was issued to the appellant under section 20 of the Act. If any such contention had been raised, it would have been open to the Commissioner to have taken action under section 19 of the Act.

In the result, the appeal fails, and is dismissed with costs.

(1) (1945] 13 I.T.R. 113.

Firm of Bhagat

Ram Mohanlal v.

The Commissioner

of Exec ss Profits Tax, Madhya Pr"desh, Nagpur

and another

Venkatarama

AyyarJ.

FIRM OF BHAGAT RAM MOHANLAL

S. R. DAs

BHAGWATI

Indian Income-Tax Act, 1922

s. 26

Excess Profits Tax Act, 1940

ss. 7, 8(1) and 20

s. 7

s. 20

Bhagat Ram Mohan Lal

s. 26

Richpal

Gajadhar

Mohan Lal

Chhotelal

Bansilal

s. 7

s. 8(1)

s. 7

s. 20

s. 7

Bhagat Barn Mohan Lal

Art. 226

Supreme Court

s. 8(1)

s. 8(1)

Cbhotelal

Mohanlal

Mobanlal

23-8 1940

Obhotelal

17 10 1944

Bhagat

s. 8(1)

Ram Mohan

s. 20

s. 20

23-12 1946

s. 26

Income-Tax Act

Radhey Lal Agarwala

B. P. Maheshwari

K. Daphtary

G. N.

Joshi

R.H. Dhebar

Bhagat Ram Mohanlal

section 26

Income-tax Act

Ratn Mohanlal

Venkatarama

AyyarJ.

Madhya Pradesh

Section 7

section 8(1)

section 7

section 20

section 20

section 7

Bhagat Ram

High Court of Nagpur

article 226

Vcnkalarama

section 8(1)

section 20

section 8(1)

section 20

section 8(1)

Bhagat Ram Mohanlal

Chotelal

Ram Molian

Ayyar

Income-tax Act

Chhotelal

Bansi-

Section 2(17)

section 2(17)

section 8(1)

section 20

Firm of Bhagat Ram Mahan

Venkatarama Ayyar

section 20

section 26

Income-tax Act

section 20

Section 22(1)

Section 22(2)

Income-tax Act

Income-tax Act

section 20

section 19

Ram Mohanlal


February 17

SUPREME COURT REPORTS

DULICHAND LAKSHMIN ARA YAN v.

[1956]

THE COMMISSIONER OF INCOME-TAX,

NAGPUR.

[S. R. DAS, C.J., BHAGWATI and VENKATARAMA

AYYAR, JJ.]

Indian Income Tax Act, 1922 (Act XI of 1922), s. 26A and 2( 6B)-Indian Partnership Act, 1982 (Act IX of 1982), s. 4-Regis tration of an unregistered firm constituted under a deed of partnership-Five con&tituent parties-Three separate firms consti .. tuted under three separate deeds of partnership-Sianaturcs on deed by three different persons on behalf of three firms.respectively-Fourth party a Hindu undivided family of which karta put the signature on deed-Fifth party an individual-Whether registration of 8'tch afirm competent under s. 26-Aof Indian In come Tax Act, 1922-Firm and partnership-Definitions of-Indian Partnership Act, 1982, s. 4-Firm-Firm name-Partnership- Partner-Meanings of-Partnership, general concept of-Word "per

sons" ins. 4-Meaning of-Firm-Whether a person and whether entitled to enter into partnership with another firm or Hindu un dividedfamily or individuals.

In connection with the assessment for the assessment year 1949·1950 of Dulichand Lakshminarayan an unregistered firm, an application was made under s. 26 A of the Indian Income-Tax Act, 1922 before Income-Tax Officer, Raigarh, for its registration as a firm constituted under a Deed of Partnership dated 17th February, 1947.

In the opening paragraph of the deed the names and descriptions of the five parties thereto were set out. The signatures of five per sons were appended on behalf of five parties respectively at the foot of the deed.

It was common ground that out of the five constituent parties, D.L., J.H., and L.C., were separate firms constituted under three separate deeds of partnership. The three different 'persons who signed the deed on behalf of those three firms respectively were partners in their respective firms.

The fourth party M.B. was the na.me of a. business carried on by a Hindu undivided family of which the person who signed it was the karta.

The fifth party M.G. was e.n individual.

The Income-Tax Officer rejected the application on the ground that Dulichand Lakshminarayan, constituted under the deed dated 17th February 1947, consisted of three firms, one Hindu undivided family business and one individual and that a firm or a Hindu undivided family could not as such enter into a partnership with other firms or individual.

1956 .

The assessee's appeal to the Appellate Assistant Commissioner was dismissed but it succeeded before the Income Tax Appellate Tribunal who directed registration of the firm.

On the application Dulichand of the Commissioner of Income Tax under s. 66(1) of the Income Lakshminarayan Tax Act the High Court held that on the facts of the case the assesv.. . see was not entitled to registration under s. 26-A of the Income Tax The Commissioner Act.

On appeal to the Supreme Court: 0/ Income Tax, Held that a perusal of the deed would indicate beyond any Nagpr1r doubt that the intention of the parties quite clearly was that each of the three constituent firms and not the particular member of each of the said three firms who had signed the deed for his respective firm was to be the partner in the bigger firm constituted under this deed.

The contention that only the five individual executant of the deed were the partners of the newly created firm was against the tenor of the deed and was therefore without force.

Section 26-A of the Indian Income Tax Act postulates the existence of a firm.

The Act, however, does not indicate what a firm signifies or how it is to be constituted.

Section 2(6-B) of the Act clearly provides, inter alia, that "firm" and "partnership" have the same meaning respectively as they have in the Indian Partnership Act, 1932.

Section 4 of the Indian Partnership Act (which gives the definitions of "partnership", "partner", "firm" and "firm name") clearly requires the presence of three elements namely (1) that there must be an agreement entered into by two or more persons: (2) that the agreement must be to share the profits of a business; and (3) that the business must be carried on by all or any of those persons acting for all.

The general concept of partnership according to both systems of law, English as well as Indian, is that a firm is not an entity or "person" in law but is merely an association of indiv.iduals and a firm name is only a collective name of those individuals who constitute the firm. In other words a firm name is merely an expression, only a compendious mode of designating the persons who have agreed to carry on business in partnership.

The word "persons" in s. 4 of the Indian Partnership Act, which has replaced s. 239 of the Indian Contract Act, contemplates only natural or artificial, i.e., legal persons and therefore a firm is not a person and as such is not entitled to enter into a partnership with another firm or Hindu undivided family or individual and there is no question of registration of a partnership purporting to be one between three firms, a Hindu undivided family business and an individual as a firm under s. 26-A of the Act, as in the present case.

Jabalpur Ice jJfmmfacturing Association v. Commissioner of In come Tax, Madhya Pradesh and Bhopal ([1955] 27 I.T.R. 88), Exparte Corbett, In re Shad, ([1880] L.R. 14 Ch. 122, 126), Bhag-

1956 wanji Morarji Goculdas v. Alembic 07"mical Works Oo. Ltd. a7'd ot7"rs (A.I.R. 1948 P.O. 100), Commissioner of Income Tax, West Dulichand Bengal v. A. W. Piggies tf Oo. and ot7"rs ([1954] S.C.R. 171), and Lakshminarayan In reJai Dayal Madan Gopal, ([1933] I.T.R. 186), referred to. v.

The Commissioner

CIVIL APPELLATE JURISDICTION: Civil Appeal of Income Tax, No. 195 of 1955.

Nagpur Appeal from the judgment and order dated the 30th day of December 1953 of the Nagpur High Court in Miscellaneous Civil Case No. 35 of 1952.

Kirpa Ram Bajaj, (Hardyal Hardy, with him) for the appellant.

0. K. Daphtary, Solicitor-General of India (G. N.

Joshi and R. H. Dhebar, with him) for the respondent.

1956. February 17. The Judgment of the Court was delivered by

DAS C.J.-This is an appeal from the judgment and order passed by a Bench of the Nagpur High Court on the 30th December, 1953 in Miscellaneous Civil Case No. 35 ofl952, whereby the Bench answered in the negative the question that had been referred to them by the Income Tax Appellate Tribunal, Bombay under section 66(1) of the Indian Income Tax Act, 1922 (hereinafter referred to as the Act).

In connection with the assessment for the assessment year 1949/1950 of Dulichand Laxminarayan, an unregistered firm, an application was made under section 26-A of the Act before the Income Tax Officer, Raigarh for its registration as a firm constituted under a Deed of Partnership dated the 17th February

1947. In the opening paragraph of that deed the names and descriptions of the parties thereto were set out in the following words:-

"We, Dulichand Laxminarayan Firm, through Malik (partner) Laxmi Narayan son of Laljimal, Laxmi Narayan Chandulal Firm through Malik

(partner) Chandulal son of Nanakchand, Mukhram Bholaram Firm through Malik (partner) Tekchand son of Bhola.ram, Jeramdas Hiralal Firm through

Malik (partner) Beharilal son of Asharam and 7956 Mangatrai Ganpatram through Malik (partner) Dulichand Ganpatram son of Mangatrai, Agarwar Bani, aged Lakshminarayan 50, 40, 28, 25, 45 residing at Raigarh are partners in v. equal shares with effect from 5-1-1946 in the firm The Commissioner Dulichand Laxminarayan in whose name Importers' of Inconie Tax, Nagp .. r Licence of cloth is issued for Raigarh .State group- Raigarh, JaipurSaraigarh, Udeypur and SaktiState, on the following terms and conditions ....................... "

Then follow 15 clauses containing the terms on which the partnership business was agreed to be done. At the foot of the deed signatures were appended in the following order one below the other:- Laxminarayan for Dulichand Laxmi Narayan.

Beharilal for J airam Das Hiralal.

Ganpatram for Mangatrai Ganpatram.

Tekchand for Mukhram Bholaram.

Chandulal for Laxminarayan Chandulal.

It is common ground that out of the five constituent parties Dulichand Laxminarayan, Jairamdas Hiralal and Laxminarayan Chandulal are separate firms constituted under three separate deeds of partnership and that Laxminarayan, Beharilal and Chandulal, who signed the deed on behalf of those firms are partners in their respective firms.

There is also no dispute that Mukbram Bholaram is the name of a business carried on by a Hindu undivided family of which Tekchand, who has signed for it, is the Karta.

It is also conceded that Mangatrai Ganpatrai is an individual. The application for registration was signed by the same five individuals who bad signed the deed of partnership.

Finding that Dulichand Laxminarayan constituted under the aforesaid Deed of Partnership dated the 17th February 1947 consisted of three firms, one Hindu undivided family business and one individual and taking the view that a firm or a Hindu undivided family could not as such enter into a partnership with other firms or individuals, the Income-Tax Officer held that the said D1dichand Laxminarayan could not be registered as a firm under section 26-A and

!ll

DasC.J,

Dulichand Lakshtninarayan v.

Tile Co1nmissioner of lnconie Tax, Nagpur

Das C.J,

accordingly on the 26th February 1950 he rejected the application.

Ou appeal the Appellate Assistant Commissioner held that when a firm entered into a partnership with another firm the result in law was that all the partners of each of the smaller firms became partners of the bigger firm and, therefore, there was no legal flaw in the constitution of the bigger firm of Dulichand Laxminarayan. He, however, took the view that, as the application for registration had not also been signed personally by all the partners of those three smaller firms as required by section 26-A of the Act and rule 2 of the Rules framed under section 59 of the Act, there was no valid application for registration and consequently the firm could not be registered.

The result was that on the 5th August 1950 the Appellate Assistant Commissioner dismissed the appeal.

The assessee appealed to the Income Tax Appellate Tribunal. The Tribunal agreed with the Appellate Assistant Commissioner that a valid partnership had been brought into existence but reversed the decision of the Appellate Assistant Commissioner on the ground that as all the five executants of the deed had signed the application for registration, the requirements of law had been satisfied. Accordingly on the 12th June 1951 the Tribunal directed registration of the firm.

On the application of the Commissioner of Income Tax, Madhya Pradesh the Tribunal under section 66(1) of the Act drew up a Statement of Case and submitted to the High Court of Nagpur the following question of law, namely:- Whether on the facts of the Case the assessee is entitled to registration under section 26-A of the Income Tax Act?

The reference came up for hearing before a Bench of the Nagpur High Court on the 30th December

1953. Following their own judgment delivered earlier in the day in Miscellaneou~ Civil Case No. 189 of 1951, Jabalpur Ice Manufacturing Association v. Commissioner of Income Tax, Madhya Pradesh and Bhopal('),

(1) [1055] 27 I.T.R. 88.

1956 the High Court answered the referred question in the negative. In view, however, of the importance of the Dulichand question involved in the reference the High Court, Lakshminarayan under section 66-A(2) of the Act, gave a certificate of v. fitness for appeal to this Court. Hence the present The Commissioner appeal. . of Income Tax, Section 26-A of the Act under which the applica- Nagpur tion for registration was made provides as follows:- J Dase • • (I) Application may be made to the Income-tax Officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners, for registration for the purposes of this Act and of any other enactment for the time being in force relating to income-tax or supertax.

(2) The application shall be made by such person or persons, and at such times and shall contain such particulars and shall be in such form, and be varied in such manner, as may be prescribed; and it shall be dealt with by the Income-t, ax Officer in such manner as may be prescribed.

The relevant portion of rule 2 of the Rules made under section 59 of the Act runs thus:-

" Any firm constituted under an Instrument of Partnership specifying the individual shares of the partners may, under the provisions of section 26-A of the Indian Income-tax Act, 1922 (hereinafter in these rules referred to as the Act), register with the Income-tax Officer, the particulars contained in the said Instrument on application made in this behalf.

Such application shall be signed by all the partners (not being minors) personally, or .... ·----···" At the hearing before us it was at one time suggested that the partners of the firm consisted of the five individuals who hd signed the deed and each of them had an equal share as specified therein and that as all the said five partners had signed the application for registration the requirements of section 26-A of the

Act a.nd rule 2 had been fully complied with and the assessee should have been registered as a firm for the purposes of the Act. A perusal of the deed and par-

Duliclland Lakshminarayan

The Commiasione,.

of Incotne Tax,

Nagpur

Das C, J,

ticularly the portions hereinbefore set out indicate be:yond any doubt that the intention of the parties quite clearly was that each of the three constituent firms and not the particular member of each of the said three firms who had signed the deed for his respective firm was to be the partner in the bigger firm constituted under this deed. The contention that only the five individual executants of the. deed were the partners of the newly created firm runs counter to the apparent tenor of the deed and cannot be entertained. Indeed learned counsel appearing in support of this appeal did not press this point. The main argument before us has centred round the larger question as to whether a firm as such can be a partner in another firm.

Section 26-A of the Act quoted above postulates the existence of a firm, for otherwise µo question of its registration can possibly arise. The Act, however, does not indicate what a firm signifies or how it is to be constituted.

Indeed section 2(6B) of the Act clearly provides, inter alia, that "firm" and "partnership" have the S'lme meanings respectively as they have in the Indian Partnership Act, 1932. We have, therefore, to go to the last mentioned Act to ascertin what a firm is and how it can be created.

Turning, then, to the Indian Partnership Act, 1932 we come to section 4 which defines "partnership", "pal,'tner", "firm" and "firm name" in the words following:-

4. Definition of "partnership", "partner'', "firm" and "firm name":-"Partnership" is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.

Persons who have entered into partnership with one another are called individually "partners" and collectively "a firm", and the name under which their business is carried on is called the "firm name", This section clearly requires the presence of three elements, namely (1) that there must be an agreement entered into by two or more persons; (2) that the agreement must be to share the profits of a business;

and (3) that the business must be carried on by all or any of those persons acting for all. According to this definition "persons" who have entered into partner-

Dulichand Lakshminarayan ship with one another are collectively called a "firm" v. and the name under which their business is , carried The Commissioner on is called the "firm name". The first question that arises is as to whether a firm as such can enter into an agreement with another firm or individual. The answer to the question would depend on whether a firm can be called a "person".

There is no definition of the word "person" in the Partnership Act.

The General Clauses Act, 1897, however, by section 3(42) provides that "person shall include any company or association or body of individuals whether incorporated or not".

The firm is not a company but is certainly an association or body of individuals. The argument is that applying th&t definition to the word "persons" occurring in section 4, one can at once say that an unincorporated association or body of persons, like a firm, can enter into a partnership just as by the application of that definition to section 4 of the Indian Partnership Act a company can become a partner in a firm. The definitions given in section 3 of the General Clauses Act, 1897, however, apply when there is nothing repugnant in the subject or context.

It is difficult to say-that there is anything repugnant in the context of section 4 itself which will exclude the application of that definition to the word "persons" occurring in section

4. Is there, however, anything repugnant in the subject of partnership law, which will exclude the application of that definition to section 4? • As pointed out in Lindley on Partnership, 11th Edition, at page 153, merchants and lawyers have different notions respecting the nature of a firm.

Commercial men and accountants are apt to look upon a firm in the light in which lawyers look upon a corporation, i.e., asa body distinct from the members composing it. In other words merchants are used to regard a firm, for purposea of business, as having a separate and independent existence apart from its partners. In some systems of Jaw this separate perof Income T<n,

Nagpur

Das C.J.

1956 sonality of a firm apart from its members has received full and formal recognition, as, for instance, Dulichand 1, aks/,,,.inarayan in Scotland. That is, however, not the English Com-

•· mon Law conception of a firm.

English Lawyers do 1'hc Commissioner not recognize a firm as an entity distinct from the

0/ Income Tax, members composing it. Our partnership law is based Nagp,.r on English Law and we have also adopted the notions of English lawyers as regards a partnership firm.

J>, rs C.j.

Some of the mercantile nsages relating to a firm have, however, found their way into the law of partnership. Thus in keeping accounts, merchants habitually show a firm as a debtor to each partner for what he brings Into the common stock and each partner is shown as a debtor to the firm for all that he takes out of that stock. But under the English Common Law, a firm, not being a legal entity, could not sue or be sued in the firm name or sue or be sued by its own pa, rtner, for one cannot sue oneself.

Later on this rigid law of procedure, however, gnve way to considerations of commercial convenience and permitted a firm to sue or be sued in the firm name, as if it were a corporate body (see Code of Civil Procedure, Order XXX corresponding to rules of the English Supreme Court Order XL VIII-A). The law of procedure has gone to the length of allowing a firm to sue or be sued by another firm having some common partners or even to sue or be sued by one or more of its own partners (see Order XXX, rule 9 of the Code of Civil Procedure), as if the firm is an entity distinct from its partners. Again in taking partnership accounts and in administering partnership assets, the law has, to some extent, adopted the mercantile view and the liabilities of the firm are regarded as the liabilities of the partners only in case they cannot be met and discharged by the firm out of its assets. The creditors of the firm are, in the first place, paid out of the partnership assets and if there is any surplus then the share of each partner in such surplus is applied in payment of his separate debts, if any, or paid to him. Conversely, separate property of a partner is applied first in the payment of his separate debts and the surplus, if any is utilised in meeting the

debts of the firm (see section 49 of the Indian Partnership Act, 1932). In the Indian Income Tax Act itself a firm is, by section 3, which is the charging section, made a unit of assessment.

It is clear from the foregoing discussion that the law, English as well as Indian, has, for some specific purposes, some of which are referred to above, relaxed its rigid notions and extended a limited personality to a firm. Nevertheless, the general concept of partnership, firmly established in both systems of Law, still is that a firm is not an entity or "person" in law but is merely an association of individuals and a firm name is only a collective name of those individuals who constitute the firm. In other words, a firm name is merely an expression, only a compendious mode of designating the persons who have agreed to carry on business in partnership. According to the principles of English jurisprudence, which we have adopted, for the purposes of determining legal rights "there is no such thing as a firm known to the law" as was said by James, L. J. in Ex parte Corbett, In re Shand(1). In these circumstances to import the definition of the word "person" occurring in section 3(42) of the General Clauses Act, 1897into section 4 of the Indian Partnership Act will, according to lawyers, English or Indian, be totally repugnant to the subject of partnership law as they know and understand it to be. It is in this view of the matter that it has been consistently held in this country that a firm as such is not entitled to enter into partnership with another firm or individuals. It is not necessary to refer in detail tb those decisions many of which will be found cited in Jabalpur Ice ; Manufacturing AssoC'iation v. Oommissi6ner of Income-tax, Madhya

Pradesh(~) to which a reference has already be'en made.

We need only refer to the case of Bhagwanji Morarji Goculdas v. Alembic Chemical Works Co. Ltd and others(3), where it has been laid down by the Privy Council that Indian Law has not given legal personality to a firm apart from the partners. This

(1) (1880] L.R. 14 Ch. 122, 126.

(2) (1955] 27 I.T.R. 88.

(3) A.LR. 1948 P.C. 100.

Dulichand Lakshminarayan v.

The Commissioner

of Income Tax,

Nagpur

Das C.J.

Dullchand Lakshminara yan v.

view finds support from and is implicit in the observations made by this Court in the Commissioner of Income-Tax, West Bengal v. A. W. Figgies & Co. and others(').

The Co,,.missioner In Jai Dayal Madan Gopal("), Sulaiman C. J. of Income Tax, followed the Calcutta decisions and was not prepared Nagpur to dissent from the view that the word "person" in

Das C.J. section 239 of the Indian Contract Act, 1872 should not be interpreted so as to include a firm. The learned Chief Justice, however, expressed the view that it was difficult to say that there was anything in section 239 itself which .made the application to that section of the definition of "person" as given in General Clauses Act in any way repugnant. The learned Chief Justice, however, does not appear to have con- , sidered whether there was anything repugnant in the subject of partnership law, as it prevails in this country, which operates to exclude the application of that definition to the word "person" occurring in section 239 of t.he Indian Contract Act. In our opinion, the word "persons" in section 4 of the Indian Partnership Act, which has replaced section 239 of the Indian Contract Act, contemplates only natural or artificial, i.e., legal persons and for the reasons stated a.hove, a firm is not a "person" and as such is not entitled to enter into a partnership with another firm or Hindu undivided family or individual. In this view of the matter there can arise no question of registration of a partnership purporting to be one between three firms, a. Hindu undivided family business and a.n individual a.s a. firm under section 26-A of the Act.

The learned Advocate for the appellant then urges that at any rate the partnership was not illegal, for there was no legal impediment in the way of all the members of all the three constituent firms and the karta of the Hindu undivided family and the individual entering into an agreement and that, therefore, a valid partnership was constituted by the deed of partnership under consideration. Assuming that this contention is possible in view of the language which

(1) (1954] S, O.B. 171; 1953 I.T.B. '05. {ii) (1933] I.T.B. 186.

has been used in this deed for describing the parties, the position of the appellant will not improve, for in order to be entitled o the benefit of registration under the Act, it will have to be shown that the shares of all individual partners are specified in the deed and that all the partners have personally signed the application for registration as required by section 26-A of the Act read with Rtule 2..

The deed specifies that each of the five constituent parties is entitled to an equal, i.e., I /5 share but it does not specify the individual shares of each of the partners of each of the three smaller constituent firms. :Further all the members of those three firms have not signed the application for registration personally. It is said that each of the three persons who executed the deed for the three smaller firms must be regarded as having the authority of their co-partners in their respective firms to sign the application for registration just as they had their authority to execute the deed itself for them. Even if they had such authority-as to which there is no evidence at all on the record-the section and rule 2 require that each partner (not being minors) must sign personally. That admittedly has not been done, and, therefore, the application wa11 not in proper form. In our judgment the answer given by the High Court to the question is correct.

This appeal must, therefore, be dismissed with costs.

Dulichand Lakshminara yan v.

The Commissiouer

of Income Tax,

Nagp11r

Das C.J.

THE COMMISSIONER OF INCOME-TAX,

NAGPUR

S. R. DAS, C.J.

BHAGWATI

Indian Income Tax Act, 1922

s. 26A and 2( 6B)

Indian Partnership Act

s. 4

s. 26

Aof Indian In come Tax Act, 1922

Indian Partnership Act

s. 4

of Dulichand Lakshminarayan

s. 26

Indian Income-Tax Act, 1922

17th February, 1947

Dulichand Lakshminarayan

17th February 1947

Income Tax Appellate Tribunal

s. 66(1)

s. 26

Supreme Court

Section 26

Section 2(6-B)

Indian Partnership Act, 1932

Section 4

Indian Partnership Act

s. 4

Indian Partnership Act

s. 239

Indian Contract Act

s. 26

Lakshminarayan

Kirpa Ram Bajaj

Hardyal Hardy

K. Daphtary

G. N.

Joshi

R. H. Dhebar

DAS C.J.-This

30th December, 1953

Income Tax Appellate Tribunal, Bombay

section 66(1)

Indian Income Tax Act, 1922

Dulichand Laxminarayan

section 26

Raigarh

17th February

1947

Mangatrai Ganpatram

Laxminarayan

Dulichand Laxmi Narayan

Beharilal

Laxminarayan Chandulal

Laxminarayan

Jairamdas Hiralal

Laxminarayan Chandulal

Beharilal

Mukbram Bholaram

Tekchand

Mangatrai Ganpatrai

Dulichand Laxminarayan

D1dichand Laxminarayan

section 26

section 26

section 59

5th August 1950

12th June 1951

Madhya Pradesh

section 66(1)

High Court of Nagpur

section 26

Nagpur High Court

High Court, Lakshminarayan

section 66

Section 26

section 59

section 26

Indian Income-tax Act, 1922

section 26

Duliclland Lakshminarayan

Das C

Section 26

section 2(6B)

Indian Partnership Act, 1932

Indian Partnership Act, 1932

section 4

General Clauses Act, 1897

section 3(42)

section 4

section 4

Indian Partnership Act

section 3

General Clauses Act, 1897

section 4

section

4

section 4

Lindley

Nagpur

Scotland

Code of Civil Procedure

the Code of Civil Procedure

section 49

Indian Partnership Act, 1932

section 3

James

section 3(42)

General Clauses Act, 1897

section 4

Indian Partnership Act

Jabalpur

Commissioner

of Income Tax,

Nagpur

Sulaiman

Calcutta

section 239

Indian Contract Act, 1872

section 239

General Clauses Act

section 239

Indian Contract Act

section 4

Indian Partnership Act

section 239

Indian Contract Act

section 26

section 26