(2) S.C.R.

SUPREME COURT REPORTS 107

in the circumstances of the present cases, be held to

I959 have caused prejudice to him. We must accordingly hold that the continuation of the trial of the three Gopi Chand v. cases against the appellant according to the summons The Delhi procedure subsequent to October I, 1950, has vitiated Administration the trial and has rendered the final orders of convic- , tion and sentence invalid. We must accordingly setGajendragadkar J. aside the orders of conviction and sentence passed against the appllant in all the three cases.

That takes us to the question as to the final order which should be passed in the present appeals. The offences with which the appellant stands charged are of a very serious nature; and though it is true that he has had to undergo the ordeal of a trial and has suffered rigorous imprisonment for some time that would not justify his prayer: that we should not order his retrial. In our opinion, having regard to the gravity of the offences charged against the appellant, the ends of justice require that we should direct that he should be tried for the said offences de novo according to law.

We also direct that the proceedings to be taken against the appellant hereafter should be commenced without delay and should be disposed of as expeditiously as possible.

Appeal allowed.

Retrial ordered.

TIRUVENIBAI & ANOTHER

1).

SMT. LILABAI (P. B. GAJENDRAGADKAR and M. HIDAYA'.1.'ULLAH, JJ.) Registration-Contract to lease-Agreement not creating a present and immediate demise-Whether requires registration-" Agreement to lease ", Meaning of-Indian Registration Act, I90/i (I6 of

I908), S. 2(7).

A document purporting to be a receipt and bearing a four anna revenue stamp was executed by Min favour of the respondent and recited, inter alia, as follows: " I have this day given

I959

January :JI.

r959 to you the land described below which is owned by me.

Now you have become occupancy tenant of the same.

You may Tirttvenibai enjoy the same in any way you like from generation to genera- & Anoth" tion.

My estate and heirs or myself shall have absolutely no v. right thereto. You shall become the owner of the said land Smt. Lilabai from date r-6-4+ I will have absolutely no right thereto after the said date ......... The estate ...... has been given to you in lieu of your Rs. 8,700 due to you, subject to the condition that iii case your amount has not been paid to you on date 1-6-44, you may fully enjoy the estate .... in any way you like from generation to generation." The respondent instituted a. suit against M for the specific performance of a contract to lease alleging that under the document he had contracted to lease to her in perpetuity in occupancy right his lands in consideration of the debt of Rs. 8,700 and as the amount was not paid within the due date, he was liable to perform and give effect to the said contract.

M contended, inter alia, that the document was an agreement to lease under s. 2(7) of the Indian Registration Act, r908, and that as it was not registered it was inadmissible in evidence. Held, that an agreement to lease under s. 2(7) of the Registration Act, 1908, must be a document which effects an actual demise and operates as a lease.

An agreement between t\vo parties which entitles one of them merely to claim the execution of a lease from the other without creating a present and in1mediate demise in his favour is not an agreement to lease within the meaning of s. 2(7) of the Act.

Held, further, that on a construction of the document in question, it \Vas not intended to, and did not, effect an actual or present demise in favour of the respondent and consequently it was not an agreement to lease under s. 2(7) of the Act.

Accordingly, the document did not require registration and was admissible in evidence.

Hemanta Kumari Devi v. Midnapitr Zamindari Co., Ltd.,

(1919) L.R, 46 I.A. 240, relied on.

Panchanan Bose v. Chandra Charan Misra, (r9IO) I.L.R. 37 Cal. 808, approved.

Narayanan Chetty v. Muthia Servai, (1912) I.LR. 35 Mad. 63, Purmananddas ]iwandas v. Dharsey Kirji, (r886) I.L.R. IO Born.

IOI, Balram v. Mahadeo, I.L.R. 1949 Nag. 849 and Poole v. Bently, (r8IO) 12 East. r68; I04 E.R. 66, distinguished.

CIVIL APPELLATE Jumsm.cTION: Civil Appeal No. 239 of 1955.

Appeal from the Judgment and Decree dated the 30th November, 1953, of the former Nagpur High Court in First Appeal No. 118 of 1947, arising out of the Judgment and Decree dated the 12th August,

194 7, of the Court of the Additional District Judge, 1 959 Wardha, in Civil Suit No. 9-A of 1946.

T iruvenibai M. 0. Setalvad, Attorney-General for India, J. B. & Another Dadachanji, S. N. Andley and Rameshwar Nath, for v. the appellants.

Smt. Lilabai M. Adhikari, Advocate-General for the State of Madhya Pradesh and I. N. Shroff, for the respondent.

1959. January 21.

The Judgment of the Court was delivered by

GAJENDRAGADKAR, J.-This is an appeal by the Gajendragadkar J. widow, and the minor son of Mangilal, defendant 1, and it has been filed with a certificate by the High Court of Judicature at Nagpur. It arises out of a suit filed by the respondent Shrimati Lilabai w/o Vrijpalji, for the specific performance of a contract to lease or in the alternative for damages and for a declaration against defendant 2, the daughter of defendant 1 that she has no right, title or interest in the property in suit. The respondent's case was that defendant 1 had executed an instrument (Ex. P-1) in favour of the respondent by which he had contracted to lease to her in perpetuity in occupany right his four khudkasht lands admeasuring 95·19 acres situated in Mouza Mohammadpur in consideration of the debt of Rs.

8,700.

According to the respondent the instrument had provided that, if defendant 1 did not repay to her the said debt on June 1, 1944, the said contract of lease would be operative on and from that date. Defendant 1 did not repay the loan by the stipulated date and so he became liable to perform and give effect to the said contract of lease on June l, 1944. The respondent repeatedly called upon defendant 1 to perform the said contract, but defendant 1 paid no heed to her demands and so she had to file the present suit for specific performance. The respondent had been and was still ready and willing to specifically perform the agreement and to accept a deed of lease for the lands in question in lieu of the said debt of Rs. 8, 700. Defendant 1, however, had been guilty of gross and unreasonable delay in performing his part of the contract and that had caused the respondent the loss of

'959 the benefit of the lease and consequent damage. On

Tfruvenibai these allegations the respondent claimed specific per-

& Another formance of the contract and an amount of Rs. 2,340 v. as compensation or in the alternative damages Smt. Lilabai amounting to Rs. 11,080.

G . d dk 1 To this suit Mst. Durgabai, the daughter of defena; en raga ar . d d b . ant I ha een 1mpleaded as defendant 2 on the ground that she was setting up her own title in respect of the lands in suit and a declaration was claimed against her that she had no right, title or interest in the said lands. Defendant 2 filed a written statement contesting the respondent's claim for a declaration against her but she did not appear at the trial which proceeded ex parte against her. In the result defendant 1 was the only contesting defendant in the proceedings. Several pleas were raised by defendant 1 against the respondent's claim. He denied the receipt of the consideration alleged by her and he pleaded that the document (Ex. P-1) was a bogus, sham and collusive document which had been brought into existence for the purpose of shielding his property from his creditors and it was not intended to be acted upon. It was also urged by him that the said document, if held to be genuine, was an agreement to lease under s. 2(7) of the Indian Registration Act, and since it was not registered it was inadmissible in evidence.

The learned trial judge framed appropriate issues on these pleadings and found against defendant I on all of them. Accordingly a decree was passed ordering defendant 1 to execute a lease-deed in respect of the fields mentioned in the plaint on a proper stamp paper in occupancy right in favour of the respondent and to put her in possession of them.

A decree for the payment of Rs. 2,316 by way of compensation was also passed against him. The declaration claimed by respondent against defendant 2 was likewise granted.

This decree was challenged by defendant I by his appeal before the High Court of Judicature at Nagpur. Pending the appeal defendant 1 died and his widow and his minor son came on the record as his

legal representatives and prosecuted the said appeal. r959 The High Court held that the document was support- Tiruvenibai ed by consideration, that it was not an agreement to & Another lease under s. 2(7) of the Indian Registration Act and v. therefore it did not require registration and was snit. Lilabai admissible in evidence. In the result the decree pass- - ed by the trial court was confirmed and defendant l's Gajendragadkar J. appeal was dismissed.

The present appellants then applied to the High Court for leave to appeal to this Court and the High Court granted leave because it held that the basic question involved in the decision of the appeal was the legal effect of Ex. P-1 and that the construction of a document of title is generally regarded as a substantial question of law. It 1s with this certificate that the present appeal has come before this Court, and it raises two questions for our decision : Is the document (Ex. P-1) an agreement to lease under s. 2(7): If not, does it require registration under s. 17 of the said Act? All other issues which arose between the parties in the courts below are concluded by concurrent findings and they have not been raised before us.

Before dealing with these points, we must first consider what the expression "an agreement to lease" means under s. 2(7) of the Indian Registration Act, hereinafter referred to as the Act. Section 2(7) provides that a. lease includes a counterpart, kabuliyat, an undertaking to cultivate and occupy and an agreement to lease. In H emanta K umari Debi v. M idnapur Zamindari Go. Ltd. (1) the Privy Council has held that "an agreement to lease, which a lease is by the statute declared to include, must be a document which effects an actual demise and operates as a lease". In other words, an agreement between two parties which entitles one of them merely to claim the execution of a lease from the other without creating a present and immediate demise in his favour is not included under s. 2, sub-s. (7). In Hemanta Kumari Debi's case (1) a petition setting out the terms of an agreement in compromise of a suit stated as one of the

(1) (1919) L. R. 46 I. A. 240.

'959 terms that the plaintiff agreed that if she succeeded in another suit which she had brought to recover ffruvenibai certain land, other than that to whicl:t the com: & Another

v. promised suit related, she would grant to the defensmi. Lilabai dants a lease of that land upon specified terms. The petition was recited in full in the decree made in Gajendragadkar hthe compromised suit under s. 375 of the Code of.

Civil Procedure, 1882.

A subsequent suit was brought for specific performance of the said agreement and it was resisted on the ground that the agreement in question was an agreement to lease under s. 2(7) and since it was not registered it was inadmissible in evidence. This plea was rejected by the Privy Council on the ground that the document did not effect an actual demise and was outside the provisions of s. 2(7).

In coming to the conclusion that the agreement to lease under the said section must be a document which effects an actual demise the Privy Council has expressly approved the observations made by Jenkins, C. J., in the case of Panchanan Bose v. Chandra Charan Misra (1) in regard to the construction of s. 17 of the Act. The document with which the Privy Council was concerned was construed by it as" an agreement tha.t, upon the happening of a contingent event at a date which was indeterminate and, having regard to the slow progress of Indian litigation, might be far distant, a lease would be granted "; and it was held that" until the happening of that event, it was impossible to determine whether there would be any lease or not ". This decision makes it clear that the meaning of the expression " an agreement to lease" "which, in the context where it occurs and in the statute in which it is found, must relate to some document that creates a present and immediate interest in the land". Ever since this decision was pronounced by the Privy Council the expression " agreement to lease " has been consistently construed by all the Indian High Courts as an agreement which creates an immediate and a present demise in the property covered by it.

It would be relevant now to refer to the observations

(1) (1910) I.L.R. 37 Cal. 808.

of Jenkins, C. J., in the case of Panchanan Bose (1). r959 In that case, a solehnama by which no immediate Tiruvenibai interest in immoveable property was created was & Another held not to amount to a lease within the meaning v. of cl. (d) of s. 17 of the Act but merely an agreement Smt. Litabai to create a lease on a future day. "Such a docu- . - ment ", it was observed, " fell within cl. (h) of s. 17 and Ga; endragadkar I as such was admissible in evidence without registration".

Jenkins, C. J., held that "on a fair reading of the document, no immediate interest was created, there was no present demise, and the document was merely an agreement to create a lease on a future day, the terms of which were to be defined by documents to be thereafter executed ". " This being so ", said the learned C. J., " I think the appellants have rightly contended before us that the document was admissible in evidence as it falls within cl. (h) of s. 17 of the Indian Registration Act". This decision would show that an agreement which creates no immediate or present demise was not deemed to be a lease under s. 2(7) and so it was held to fall within s. l 7(h) of the Act and this view has been specifically affirmed by the Privy Council in Hemanta K umari Debi's case (2).

It is true that in Narayanan Ohetty v. Muthiah Servai (3) a Full Bench of the Madras High Court had held that an agreement to execute a sub-lease and to get it registered at a future date was a lease within s. 3 of the Indian Registration Act of 1877 (III of 1877) and was compulsorily registrable under cl. (d) of s. 17.

Such an agreement to grant a lease which requires registration, it was held, affects immoveable property and cannot be received in evidence in a suit for specific performance of an agreement. The question which was referred to the Full Bench apparently assumed that the agreement in question required registration and the point on which the decision of the Full Bench was sought for was whether such an agreement can be received in evidence in a suit for specific performance

(1) where possession is given in pursuance of an agreement, and (2) where it is not; and the Full Bench

(r) fr9ro] I.L.R. 37 Cal .808.

(2) [1919] L.R. 46 I.A. 240.

(3) (1912) I.L.R. 35 Mad. 63. 15

'959 answered this question in the negative. "An agreement to lease", it was observed in the J

0 udgment of the Tiruvenibai

.., Another Full Bench, " is expressly included in the definition of v. the lease in the Registration Act while it cannot be Smt. Lilabai suggested that an agreement to sell falls within any - definition of sale". It is clear that the question about Gajendrngadkar J. the construction of thn words " agreement to lease "

was not specifically argued before the Full Bench, and the main point considered was the effect of the provisions of s. 49 of the Act. In that connection the argument had centred round the effect of the provisions of cl. (h) of s. 17 of the Registration Act and s. 54 of the Transfer of Property Act. The Full Bench took the view that in enacting s. 49 of the Act the Legislature meant to indicate that the instrument should not be received in evidence even where the transaction sought to be proved did not amount to a transfer of interest in immoveable property but only created an obligation to transfer the property. A contract to sell immovable property in writing, though it may affect the property without passing an interest in it, is exempted from registration by clause (h) (now cl. 2 (v)) of section 17 but an agreement in writing to let, falling within cl. (d) of s. 17, is not. That is why,. according to the Full Bench, such an agreement cannot be received in evidence of the transaction which affects the immovable property comprised therein. Thus this decision does not directly or materially assist us in construing the expression "agreement to lease".

Besides, the said decision has not been followed by the Madras High Court in Swaminatha Mudaliar v.

Ramaswami Mudaliar(') on the ground that it can no longer be regarded as good law in view of the decision of the Privy Council in Hemanta Kumari Debi's case('), and, as we have already pointed out, all the other High Courts in India have consistently followed the said Privy Council decision.

The learned Attorney-General has, however, contended before us that the correctness of the decision of the Privy Council in Hemanta Kumari Debi's case(') is open to doubt and he has suggested that we

(r) (I92I) l.L.R. 44 Mad. 399

(2) (I9I9) L.R 46 I A. 240.

should re-examine the point on the merits afresh. We 1959 do not think there is any substance in this contention Tiruvenibai because, if we may say so with respect, the view taken & Another by the Privy Council in the said case is perfectly right. v.

Section 17(1) of the Act deals with documents of which Smt. Lilabai registration is . compulsory. It is obvious that the Ga 'endra adkar J. documents fallmg under els. (a), (b), (c) and (e) of 1 g sub-s. (1) are all documents which create an immediate

and present demise in immovable properties mentioned therein. The learned Attorney-General's argument is that cl. (d) which deals with leases does not import any such limitation because it refers to leases of immoveable properties from year to year or any term exceeding one year or reserving a yearly rent; and the Act deliberately gives an in"tllusive definition of the term 'lease ' in s. 2(7).

This argument, however, fails to take into account the relevant provisions of the Transfer of Property Act.

Section 4 of the said Act provides that s. 54, paragraphs 2 and 3, 59, 107 and 123 shall be read as supplemental to the Indian Registration Act, 1908. Section 107 is material for our purpose. Under this section a lease of immoveable property from year to year or for any term exceeding one year or reserving a yearly rent can be made only under a registered instrument. This section also lays down that where a lease of immoveable property is made by a registered instrument, such instrument, or, where there are more instruments than one, each instrument, shall be executed by both the lessor and the lessee. It would be noticed that if s. 107 has to be read as supplemental to the Act, the definition of the word 'lease ' prescribed by s. 105 would inevitably become relevant and material; and there is no doubt that under s. 105 a lease of immoveable property is a transfer of right to enjoy such property made in the manner specified in the said section. Therefore, it would not be right to assume that leases mentioned in

cl. (d) of s. 17, sub-s. (1), would cover cases of documents which do not involve a present and immediate transfer ofleasehold rights. It would thus be reasonable to hold that, like the instruments mentioned in els. (a), (b) and (c) of s. 17(1), leases also are instruments

116 SUPREME COUR'.l' REPORTS [1959] Supp.

'959 which transfer leasehold rights in the property immediately and inpresenti. VVe have already referred Tiruvenibai

& Anoth" to the requirement of s. 107 of the Transfer of Prov. perty Act that a lease must be executed both by the Smt. Lilabai lessor and the lessee. It may be pertinent to point out - that an instrument signed by the lessor alone which Gajendrngadka. J. may not be a lease under s. 107 may operate as an agreement to lease under s. 2(7) of the Act.

The legislative history of the provisions of s. l 7(2)(v} may perhaps be of some assistance in this connection.

Section l 7(h) of Act III of 1877 which :corresponds to

the present s. 17(2) (v) did not appear in the earlier Registration Acts of 1864, 1866 and 1871. Its introduction in Act III of 1877 became necessary as a result of the decision of the Privy Council in Fati Chand

Sahu v. Lilarnbar Singh Das (1) in which it was held that an agreement to sell immoveable property for Rs. 22,500 coupled with an acknowledgment of the receipt of Rs. 7,500 and a promise to execute a saledeed on the payment of the balance was compulsorily registrable under s. 17 of the Act (2).

Section l 7(h) was therefore enacted in 1877 to make it clear that a document which does not itself create an interest in the immoveable property does not require registration even if .it expressly contemplates and promises the creation of that interest by a subsequent document; in other words, contracts of sale and purchase of which specific performance would be granted under certain circumstances fall within this provision and would no longer be governed by the said decision of the Privy Council in the case of Fati Chand Sahu v.

Lilarnbar Singh Das (1 ).

Thus the policy of the Legislature clearly is to exclude from the application of els. (b) and (c) of s. 17(1) agreements of the said character. On principle, there is-no difference between such agreements of sale or purchase and agreements to lease.

Under both classes of documents no present or immediate demise is made though both of them may lead to a successful claim for a specific performance. That is why the Privy Council observed in the

(1) (1871) 9 Bcng. LR. 433; 14 M.I.A. 129.

(2) Act XX of 1866.

case of Hemanta Kumari Debi (1) that the context and

I959 the scheme of the statute justified the view taken by Tiruvenibai Jenkins, C. J., in the case of Panchanan Bose (2). & Another It may also be relevant to bear in mind that the v: other documents which are included within the word Smt. Lilabai ' lease ' by s. 2(7) of the Act support the same conclu- . - sion.

A counterpart, as it is usually understood, is a Ga; endragadkar J. writing by which a tenant agrees to pay a specified rent for the property let to him and signed by him alone. It is thus in the nature of a counterpart of a lease and as such it is included within the meaning of the word ' lease' under s. 2(7). Same is the position of a kabuliyat and an undertaking to cultivate or occupy.

In other words, it is clear that all the four instruments which, under the inclusive definition of s. 2(7), are treated as leases satisfy the test of immediate and present demise in respect of the immoveable property covered by them. We must, therefore, hold that the expression " an agreement; to lease " covers only such agreements as create a present demise.

Let us now proceed to deal with the question as to whether the document (Ex. P-1) constitutes" an agreement to lease ". It purports to be a receipt executed in favour of the respondent by defendant 1 and bears a four anna revenue stamp. "I have this day given to you", says the document, "the land described below which is owned by me.

Now you have become occupancy tenant of the same. You may enjoy the same in any way you like from generation to generation.

My estate and heirs or myself shall have absolutely no right thereto. You shall become the owner of the said land from date 1-6-1944.

I will ha.ve absolutely no right thereto after the said date". Then the document proceeds to mention tbe properties and describes them in detail, and it adds " all the above fields are situate at Mouza Mohammadpur, mouza No. 312, tahsil Arvi, district Wardha. The estate described above has been given to you in lieu of your Rs. 8,700 due to you, subject to the condition that in case your amount has not been paid to you on date 1-6-1944, you may fully enjoy the estate described

(1) (1919) L.R. 46 I.A. 240.

(2) (1910) I.L.R. 37 Cal. 808.

I959

Tiruvenibai

& Another v.

Smt. Lilabai

GaJendragadkar

llS SUPREME COURT REPORTS [1959] Supp. , above in any way you like from generation to generation". The question for our decision is: Does this document amount to an agreement to lease uuder s. 2(7) of the. Act ?

In construing this document it is necessary to remember that it has been executed by laymen without 1 legal assistance, and so it must be liberally construed without recourse to technical considerations. The heading of the document,. though relevant, would not determine its character. It is true that an agreement would operate as a present demise although its terms may commence at a future date. Similarly it may amount to a present demise even though parties may contemplate to execute a more formal document iu future. In considering the effect of the document we must enquire whether it contains unqualified and unconditional words of present demise and includes the essential terms of a lease.

Generally if rent is made payable under an agreement from the date of its execution or other specified date, it may be said to create a present demise.

Another relevant test is the intention to deliver possession. If possession is given under an agreement and other terms of tenancy have been set out, then the agreement can be taken to .be an agreement to lease. As in the construction of other documents, so in the construction of an agreement to lease, regard must be had to all the relevant and material terms; and an attempt must qe made to reconcile the relevant terms if possible and not to treat any of them as idle surplusage.

The learned Attorney-General contends that this document is not a contingent grant of lease at all.

According to him it evidences a grant of lease subject to a condition and that shows that a present demise fo intended by the parties. He naturally relies upon tho opening recitals of the document.

According to him, when the document says tht defendant I has given to the respondent the land described below and that the respondent has become occupancy tenant of the same, it amounts to a clear term of present demise. A similar recital is repeated in the latter part of the document where it is stated that the estate described

I959 above has been given to the respondent in lieu of Rs. 8,700 due to her. In our opinion, it would be un- Tiruvenibai reasonable to construe these recitals by themselves, & Another a.part from the other recitals in the document.

We v. cannot lose sight of the fact that the document ex- Smt. Lilabai pressly states that the respondent shall become the - owner of the laud from 1-6-1944 and that defendant 1 Gajendragadkar f. would have no title over it after that date. This recital also is repeated in the latter part of the document ; and it makes the intention of the parties clear that it is only if the amount of debt is not repaid by defendant 1 on the date specified that the agreement was to come into force.

In other words, reading the document as a whole it would be difficult to spell out a present or immediate demise of the occupancy rights in favour of the respondent. In this connection the fact that the document is described as a receipt may to some extent be relevant. It is clear that by executing this document the defendant wanted to comply with the respondent's request for acknowledging the receipt of the amount coupled with .the promise that the amount would be repaid on 1-6-1944. The defendant also wanted to comply with the respondent's demand that, if the amount was not repaid on the said date, he would convey the occupancy rights in his lands to her. Besides, it is significant that the document does not refer to the payment of rent and does not contemplate the delivery of possession until 1-6-1944. If the document had intended to convey immediately the occupancy rights to the respondent it would undoubtedly have referred to the delivery of possession and specified the rate at which, and the date from which, the rent had to be paid to her.

The stamp purchased for the execution of the document also incidentally shows that the document was intended to be a receipt and nothing more.

Under s. 2 of the Central Provinces Land Revenue Act, 1917 (C. P.

II of 1917) an agricultural year commences on the first day of June and it is from this date that the agreement would have taken effect if defendant 1 had not repaid the debt by then. It is clear that the respondent was not intended to be treated as an

occupancy tenant between the date of the document and June I, 1944.

During that period the agreement Tfruvenibai did not come into operation at all. In other words, it is & Another v. on the contingency of defendant's failure to repay the

r959

snit. Litabai amount on June I, 1944, that the agreement was to take effect. We have carefully considered the material Gajendrngadkar J. terms of the document and we are satisfied that it was not intended to, and did not, effect an actual or present demise in favour of the respondent. In our opinion, therefore, the High Court was right in holding that the document was not an agreement to lease under s. 2(7) of the Act and so did not require registration.

We would now briefly refer to some of the decisions on which the learned Attorney-General relied in support of his construction of the document. In Purmananddas Jiwandas v. Dharsey Virji (1), the agreement between the parties had expressly provided that the lease in question was to commence from October l, 1882, though the agreement was executed seven days later, that the rent was to commence from that day and the rent then due was to be paid by the next day. It is in the light of these specific terms that the Bombay High Court held that the relevant words in the document operated as an actual demise.

None of these conditions is present in the document with which we are concerned.

Similarly in Poole v. Bentley ('), by the instrument in question, Poole had agreed to let unto Bentley, and Bentley had agreed to take, all that piece of land described for the term of 61 years at the yearly rent of£ 120 free and clear of all taxes, the said rent to be paid quarterly, the first quarter's rent within 15 days after Michaelmas 1807, and that in consideration of the lease, Bentley had agreed within the space of four years to expend and lay out in 5 or more houses of a third-rate or class of building £ 2000 and Poole had agreed to grant a lease or leases of the said land and premises as soon as the said 5 houses were covered in.

In dealing with the construction of this document Lord (I) (1886) I.L.R. 10 Born. 101.

(2) (1810) 12 East. 168; 104 E.R. 66.

Ellenborough, C. J., observed that the rule to be collectx959 ed from the. relevant decisions cited before him was Tiruvenibai that the intention of the parties as described by the &; Another. words of the instrument must govern the construction v. and that the intention of the parties to the document smt. Lilabai before him appeared to be that the tenant, who was to - have spent so much capital upon the premises within Gajendragadkar J. the first four years of the term, should have a present legal interest in the term which was to be binding upon both parties; though, when certidn progress was made in the building, a more formal lease or leases might be executed. This decision only shows that if the intention is to effect a present demise the fact that a further formal document is contemplated by the parties would not detract from the said intention. It would, however, be noticed that the document in that case contained a stipulation for the payment of the rent and the tenant was to be let into possession immediately. This case also does not assist the appellant.

In Satyadhyantirtha Swami v. Raghunath Daji (1) the contract of lease was contained in two documents which showed that the lands were being cultivated by Appaji and Ravji who had signed the first document and that they were authorised to. continue in occupation of the lands on terms mentioned in the first document. The argument that a part of the agreement would not come into operation till some years later, it was held, did not operate to make the document other than a present demise. It is difficult to appreciate how this decision can assist us in construing the present document.

In Balram v. Mahadeo (2) the Nagpur High Court was dealing with an instrument which purported to be a receipt and the terms of which seemed to contemplate the execution of a sale-deed in respect of the properties covered by it. Even so, the material clause was that "it is agreed to give to you both the above fields in occupancy rights". It was held that, on a fair and reasonable construction, the document was

(r) A.I.R. 1926 Born. 384. 16

(2) l.L.R. 1949 Nag. 849.

'959 intended to affect a transfer of the occupancy right in presenti and was as such an agreement to lease. No TiYuvenibai

& Anoth!r doubt, as observed by Bose, J., " on a superficial view v. of the document it would not appear to be an agree' Smt. Lilabai ment to lease.

But in construing a transaction one . - has to look beneath the verbiage and ascertain what Ga1endragadkar J. are the real rights which are being transferred. When that is done, we consider that this document is an agreement to lease despite the fact that it calls itself a receipt and speaks throughout of a sale ". It is unnecessary to consider the .merits of the conclusion reached by the Nagpur High Court in this case. It would be enough to say that the said decision would not afford any assistance in construing the document before us. Besides it is obvious that in construing documents, the usefulness of the precedents is usually of a limited character; after all courts have to consider the material and relevant terms of the document with which they are concerned ; and it is on a fair and reasonable construction of the said terms that the nature and character of the transaction evidenced by it has to be determined. In our opinion, the High Court was right in holding that the instrument (Ex. P-1) was not an agreement to lease under s. 2(7) of the Act.

The result is the appeal fails and must be dismissed with costs.

Appeal dismissed.

TIRUVENIBAI & ANOTHER

SMT. LILABAI (P. B. GAJENDRAGADKAR

Meaning of-Indian Registration Act

S. 2(7)

s. 2(7)

Registration Act

s. 2(7)

Registration Act, 1908

s. 2(7)

s. 2(7)

s. 2(7)

Registration Act

s. 2(7)

Registration Act

s. 2(7)

s. 17

s. 2(7)

Registration Act

Section 2(7)

s. 2

(1919) L. R. 46 I. A. 240

s. 375

s. 2(7)

s. 2(7)

s. 17

s. 17

s. 17

s. 17

Registration Act

s. 2(7)

s. 3

Registration Act

s. 17

L.R. 46 I.A. 240

Registration Act

s. 49

s. 17

Registration Act

s. 54

Transfer of Property Act

s. 49

cl. 2

section 17

s. 17

L.R 46 I A. 240

Section 17(1)

s. 2(7)

Transfer of Property Act

Section 4

s. 54

Indian Registration Act, 1908

Section 107

s. 107

s. 105

s. 105

s. 17

s. 17(1)

s. 107

s. 107

s. 2(7)

s. 17(2)

s. 17

s. 17(1)

s. 2(7)

s. 2(7)

s. 2(7)

(1919) L.R. 46 I.A. 240

s. 2(7)

s. 2

s. 2(7)

s. 2(7)


(2) S.C.R. SUPREME COURT REPORTS 123

M/S. DIWAN SUGAR & GENERAL MILLS

(PRIVATE) LTD. AND OTHERS

THE UNION OF INDIA

(S. R. DAS, c. J., JAFER IMAM, s. K. DAS, K. N. W ANclioo and M. HrnAYATULLAH, JJ.)

Sugar Control-Notification fixing price ex-factory-Legality -Restrictions on right to trade-Discrimination-Sugar (Control) Order, r955, cl. 5-Essential Commodities Act, I955 (IO of r955), s. 5-Constitution of India, Arts. r4, r9(r)(g).

In exercise of the powers under s. 3 of the Essential Commodities Act, 1955, and under cl. 5 of the Sugar (Control) Order, 1955, the Government of India issued a notification dated July 30, 1958, fixing the ex-factory price per maund of sugar produced in Punjab, Uttar Pradesh and North Bihar. The petitioners challenged the legality o:t the notification on the grounds (1) that it was beyond the ambit of authority conferred on the Central

Government under s. 3 of the Essential Commodities Act, 1955, and clause 5 of the Sugar (Control) Order, 1955, and that, in any case, it was bad as it could not subserve the purposes of the Act ensuring equitable distribution of the commodity to the consumer at a fair price, (2) that the Act and the Order did not authorise the Central Government to fix ex-factory prices, and, in aµy case, the notification failed to fix prices for the ultimate consumer, (3) that it imposed an unreasonable restriction on the right to trade under Art. l9(1)(g), inasmuch as it fixed the price arbitrarily, and there was no reasonable safeguard against the abuse of power, and (4) that it was discriminatory because it fixed ex-factory prices only for factories in Punjab, Uttar Pradesh and North Bihar and not for factories in other parts of liidia and there was no reasonable classification discernible on any intelligible differentia on the basis of which prices had been controlled in certain regions only.

Held, (1) The notification dated July 30, 1958, is within the authority conferred on the Central Government by s. 3 of the Essential Commodities Act, 1955, and cl. 5 of the Sugar (Control) Order, 1955

(2) Section 3 of the Act which provides for control of price is very general in terms and authorises the Central Government to fix the ex-factory price of sugar without fixing the wholesale or retail prices ; and, since fair prices for the consumer are ensured by fixing the ex-factory price, the notification in question subserves the purposes of the Act, and is valid.

(3) Clause 5 of the Sugar (Control) Order, 1955, lays don the factors which have to be taken into consideration in fixing prices, and as the prices were fixed in accordance therewith, the

r959

January 23.

Diwan Sugar &-

General Mills (Private) Ltd. v.

Union of India

action taken by the Government in the interests of the general public could not be challenged on the ground that it was an unreasonable restriction on the right to carry on trade under Art. rg(r)(g) of the Constitution.

(4) Though under the notification prices are fixed for factories only in Punjab, Uttar Pradesh and North Bihar, in effect, they are fixed for the whole of India, as the other States are deficit; consequently, the notification brougM about no discrimination between different regions.

ORIGINAL JURISDICTION: Writ Petition No. 134 of 1958.

Writ Petition under Article 32 of the Constitution of India for the Enforcement of Fundamental Rights.

N. C. Chatterjee, K. P. Mukherjee, P. D. Himatsinghka and B. P. Maheshwari, for the petitioners.

M. C. SetalvarZ, Attorney-General for India, B. Sen and R. H. Dhebar, for the respondent.

J{. P. Khaitan, K. P. Mukherjee and B. P. Maheshwari, for Interveners l to 10.

G. S. Pathak, K. P. Mukherjee and B. P. Maheshwari, for lnterveners 11 to 13.

1959. January 23.

The Judgment of the Court was delivered by -..

Wanchoo J.

WANCHOO, J.-This petition under Art. 32 of the Constitution challenges the legality of the notification" dated July 30, 1958, (hereinafter called the impugned notification), issued by the Government of India fixing the ex-factory price per maund of sugar produced in Punjab, Uttar Pradesh and North Bihar. It has been supported by two sets of interveners consisting of sugar factories in these areas who did not join the petition.

The case of the petitioners is that the Essential Commodities Act, 1955 (X of 1955), (hereinafter called the Act), was passed by Parliament in 1955, for the control of the production, supply and distribution of, and trade and commerce in, certain commodities, which included sugar. By s. 3 of the Act, the Central Government was given the power, if it was of opinion that it was necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and

availability at fair prices; to provide by order for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therefn.

Section 3(2) further provided inter alia for controlling the price at which any essential commodity might be bought or sold. In exercise of these powers, the Central Government promulgated the Sugar (Control) Order, 1955, (hereinafter called the Order), on August 27, 1955.

Clause 5 of the Order gave power to the Central Government, by notification in the Official Gazette, to fix the price or the maximum price at which any sugar might be sold or delivered, and different prices might be fixed for different areas/factories or different types or grades of sugar. Such price or maximum price had to be fixed with due regard to various factors, with which we shall deal later. On June 27, 1958, the Central Government promulgated the Sugar Export Promotion Ordinance, No! V of 1958, empowering it to appoint an export agency for carrying out the work of buying sugar in the Indian market and exporting the same to foreign markets and fixing the quantity of sugar for export. The Central Government was also authorised by that Ordinance to fix quotas apportioning the quantity of sugar to be supplied by each factory for export and levy an additional excise duty at the rate of Rs. 17 per maund on any factory failing to deliver its quota of sugar for ex port. On the same day, . three notifications were issued : (i) fixing 50,000 tons of sugar as the quantity to be exported out of India during the period ending October 31, 1958, (2) appointing the Indian Sugar Mills Associatiou, Calcutta, as the export agency, and

(3) delegating the powers conferred on the Central

Government to the Chief Director of Sugar and Vanaspati, Ministry of Food and Agriculture also.

Then followed the impugned notification fixing ex-factory prices of sugar produced by the factories in Punjab, Uttar Pradesh and North Bihar. It is being challenged on the ground that the price fixed is considerably below the cost of production and ignores various factors affecting the cost of production and distribution of sugar including charges incidental to sale and

I959

Diwan Sugar &·

General Mills

(Private) Ltd. v.

Union of India -·- Wanchoo ].

I959

Diwan Sugar 6'

General Mills (Private) Ltd. v.

Union of India

Wanchoo ].

distribution. The impugned notification is also attacked on the ground that it did not fix any price at which the persons purchasing sugar from the mills would sell it, so that it was open to the middleman who bought sugar from the factories to sell it at any price, thus creating discrimination between factories and factories and between the producers selling sugar and the middlemen who buy sugar selling the same in their turn. It is also alleged that fixing of the price was arbitrary and did not take into account the cost of production of a large number of units in the country and did not provide for a fair and equitable distribution of sugar in the country at a price in any way related to the price at which the factories were compelled to sell their products. Consequently, the petitioners prayed for an appropriate order, direction or writ in the nature of mandamus or any other writ quashing the Sugar (Control) Order, 1955, arrd all orders made in pursuance of it including the impugned notification.

The petition has been opposed by the Central Government. It is contended on their behalf that the entire object of fixing the price of sugar was (a) to make it available at a reasonable price to the consumer, and (b) to ensure adequate and smooth flow and supply of sugar which is an essential commodity for the life of the people to all parts of the country according to their need~ and requirements, checking the speculative tendency of the market and destroying the creation of an artificial shortage by unscrupulous persons.

Prices of sugar were first put under control as far back as 1942 and this control continued up to 1947, when it was withdrawn on December 8, 1947.

It was, however, found that internal prices were raised during the de-control period on the pretext of subsidizing export, which never materialised. In consequence, control was again imposed on September 2, 1949 ; but it was lifted in 1952, when it was found that there was sufficient stock available at the end of the 1951-52 season. In 1953-54, however, production fell and control had again to be imposed for that season. It was, however, lifted a year later.

In November 1956

there was a considerable surplus of sugar and the Central Government permitted export of 1·53 lakh of metric tons in 1957. The Central Government was again approached in 1958 to make the export of sugar a permanent feature and it agreed to allow export during 1958 in view of the carry over from the previous season and also for earning foreign exchange in the interest of the country. Therefore, the Central Government promulgated the Sugar Export Promotion Ordinance, No. V of 1958, on June 27, 1958.

But as this Ordinance was expected, a tendencyideveloped in the sugar industry to push up prices after the month of April 1958. As a result of this tendency, prices went up by about a rupee per maund in May and June 1958,. and it was feared that they might go up further in view of the quota for export announced on June 27, 1958. In view of this apprehension, the industry assured Government that the sugar factories would offer to sell their released stocks freely at prices prevalent before the export policy was announced, i.e., in the week before June 27, 1958. In spite, however, of this assurance, there was a general rise in prices during the four weeks preceding the impugned notification.

This rise was particularly marked in Northern India. It was in these 'circumstances that the Government decided to control ex-factory prices of sugar in Punjab, Uttar Pradesh and North Bihar.

The Government took all relevant factors into account in fixing the price.

This was done in the interest of the general public in order that sugar might be available at fair prices.

As Uttar Pradesh and North Bihar are the main surplus areas and feed the deficit areas of the country, it was not necessary to control prices elsewhere; nor was it necessary to control prices beyond the ex-factory stage as the prices in the wholesale or the retail markets are governed by ex-factory prices. There was in the circumstances no question of discrimination or any unreasonable restriction on carrying on trade in sugar. The Government did not admit that the price fixed was below the cost of production generally. Consequently, it was prayed that the petition should be dismissed.

I959

Diwan Sugar &

General Mills

(Private) Ltd. v.

Union of India

Wanchoo ].

I959

Diwan Sugar &

General ft1ills

(Private) Ltd. v.

Union of India

Wanchoo j.

Learned counsel appearing for the petitioners and the interveners raise the following points in support of their contention that the impugned notification is illegal and invalid :-

(1) (a) The impugned notification is beyond the ambit of authority conferred on the Central Government under s. 3 of the Act and clause 5 of the Order, and in any case it is bad as it cannot possibly subserve the purposes of the Act ensuring equitable distribution of the commodity to the consumer at a fair price ;

(b) The impugned notification merely fixes exfactory prices and is bad, firstly, on the ground that the Act and the Order do not authorise the Central Government to fix ex-factory prices, and, secondly, on the ground that even if ex-factory prices can be fixed under the Act and the Order, the impugned notification is still bad as it fails to fix prices for the ultimate consumer which must be done under the Act;

(2) The impugned notification imposes an unreasonable restriction on the right to trade under Article 19 (1) (g), inasmuch as (i) it compels factories to sell sugar at a loss, (ii) it fixes the price arbitrarily, and (iii) there is no reasonable safeguard against the abuse of power and no provision for a check by way of appeal or otherwise ;

(3) The impugned notification is bad inasmuch as it is discriminatory because it fixes ex-factory prices only for factories in Punjab, Uttar Pradesh and North Bihar and not for factories in other parts of India and there is no reasonable classification discernible on any intelligible differentia on the basis of which prices have been controlled in certain regions only.

Re. (J) (a).

The Act deals with essential commodities which have been defined therein. The preamble shows that it has been passed in the interest of th~ general public for the control of the production, supply and distribution of, and trade and commerce in, certain commodities.

Section 3 of the Act gives power to the Central Government to pass orders under the Act if it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing

their equitable distribution and availability at fair prices. No attack has been made on the vires of the Act; but the vires of the Order relating to sugar passed under the Act and particularly of the impugned notification fixing ex-factory prices in Punjab, Uttar Pradesh and North Bihar have been attacked.

The Order in our opinion merely carries out the purposes of the Act and cl. 5 thereof gives the ambit of the powers of the Central Government in fixing prices, and lays down the manner in which it should be done and the factors which should be taken into consideration in doing so.

Though in the petition, the Order was attacked on the ground that it gave ' uncontrolled, unguided and unfettered' power to the executive and imposed unreasonable restrictions on the right to carry on trade, no arguments were addressed to us on the constitutionality of the Order itself. We are in this case concerned only with that part of the Order

which deals with the fixation of price.

Clause 5 provides for factors that the Government will take into ace omit in fixing prices and these are: (i) price or minimum price fixed for sugarcane, (ii) manufacturing cost, (iii) taxes, (iv) reasonable margin. of profit for producer and/or trade, and (v) any incidental charges. It is amply clear from this that price is to be fixed after taking into account all reasonable factors which go into the consideration of price fixation. In view of this it cannot be said that the Order gives ' uncontrolled, unguided and unfettered ' power to the executive to fix prices arbitrarily.

We shall proceed therefore on the basis that the Act and the Order so far as they are concerned with the fixation of price are valid.

This brings us to the' question whether the impugned notification is beyond the authority conferred on the Central Government by s. 3 of the Act and clause 5 of the Order. Reading s. 3 of the Act with the preamble, it would be obvious that the object of the Act is to provide for control of the production, supply and distribution of, trade and commerce in, essential commodi- . ties in the interests of the general puQlic, so that the

I9$9

Diwan Sugar&·

General Mills (Private) Ltd. v.

Union of India

Wanchoo J.

'959

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General idills (Private) Ltd. v.

Union of India

Wanchoo ].

supplies of such commodities may be maintained or increased, their equitable distribution secured and they may be available to the general public at fair prices.

Considering the history of sugar control and the trends which appeared in the market from April, 1958, it cannot possibly be said that the impugned notification does not subserve the purposes of the Act and the Order. There can be little doubt that fixation of ex-factory prices of sugar mills in the main surplus areas would have the effect of stabilising sugar prices for the general public, which is the consumer, at a fair level and make sugar available at fair prices. In the affidavit filed on behalf of the Government it is stated that as a result of this action prices have come down to normal levels. This is demonstrable proof, if such was needed, that the impugned notification subserves the purposes of the Act.

This contention, therefore, fails.

Re. (1) (b).

The argument under this head is two-fold. It is said that in the first instance, s. 3 of the Act requires that prices for the consumer only should be fixed.

The object of s. 3 is undoubtedly to secure essential commodities at fair prices for the general public, i.e., the consumer. It is well-known that there are three kinds of prices prevalent in the market for a commodity like sugar, namely, ex-factory price, wholesale price and retail price. It is the last that the consumer has to pay. It is urged that when s. 3 provides for availability of essential commodities at fair prices to the general public it means that price can only be fixed at the stage where the consumer is the purchaser. In particular, our attention was invited to clause (c) of s. 3 (2), which provides for control of price at which any essential commodity may be bought or sold. Now there is no doubt that the object of the Act is to secure essential commodities for the consumer, i.e., tlie general public;'at fair prices; but it does not follow from this that t, his object can only be achieved if retail prices are fixed and that there is no other way of achieving it. In any case, clause (c) of s. 3 (2)' which speaks specifically of control of price is very general

in terms. It provides for fixation of price at which any essential commodity may be bought or sold ; it does not specify the stage at which the price should be fixed.

Therefore, we are of opinion that the control provided under clause (c) of s. 3 (2) is control at any of the three stages mentioned above. There is no reason to cut down the generality of the words used in clause (c) so as to make them applicable only to the last stage, namely, the retail price. This contention, therefore, thats. 3 only authorises the Central Government to fix the retail price, i.e., the price for the consumer, fails.

It is then urged that even if the power is there to fix prices at all stages, the Act requires that the price must be fixed for the consumer, whether it is fixed at an earlier stage or not.

There are no words in s. 3 (1) ors. 3 (2) (c) of the Act, which compel such an interpretation. It is true that the object of the Act is to ensure fair prices for the consumer; but if fair prices for the consumer can be ensured by fixing the exfactory price, there is no reason why the Government should go on also to fix the wholesale or retail price.

It is well-known that the wholesale and retail prices depend upon ex-factory price, in the case of a commodity like sugar. Therefore if fixation of price at the ex-factory level is enough to ensure a fair price for the consumer, there is no reason why the Government should not stop at that and should go on also to fix wholesale and retail prices. It is urged that the middleman who buys from the factory is not controlled and he can sell at any price; and, therefore, the object of the Act may not be achieved.

Theoreti cally this may be so and a middleman may abuse his position. If he does so, we have no doubt that the Government will intervene as it has ample power to fix wholesale and retail prices also.

But if the purpose is served by merely fixing the ex-factory price, we see no reason why the Government must fix wholesale and retail prices also. The petitioners have not even alleged that as a matter of fact the wholesalers and retailers are profiteering and making it impossible for sugar to be available for the general public at a fair

I959

Diwan Sugav &

General Mills {Private) Ltd, v.

Union of India

Wanchoo ].

'?59 price. In the circumstances, it was not necessary in fact for the Government to fix wholesale or retail Diwan Sulfa' & •

I 1 c h ]d' h G'"''"l Mills pnces. n aw, we see no warrant 1or o mg t at (P, ivafo) Ltd. under s. 3 (1) ands. 3 (2) (c) of the Act, the Governv. ment must not only fix ex-factory prices but also Union of India wholesale and retail prices. What prices the Government will fix depend upon their estimate of the situawan'"00 f. tion, which would serve the object of the Act. We are, therefore, of opinion that there is no force in this contention either. Re. (2).

The contention under this head is that the impugned notification is invalid as it is an unreasonable restriction on the petitioners' right to carry on trade under Art. 19 (1) (g).

The argument is urged in three ways; namely, (i) factories are being compelled to sell at below the cost of production, (ii) the price fixed is arbitrary, and (iii) there is no safeguard against abuse of power.

The argument that the factories are being compelled to sell at below the cost of production is put in two ways. It is said that the press note issued by the Government on July 30, 1958, shows that the Government was of the view that prices should be pegged at the level at which they were in the week preceding June 27, 1958, and inasmuch as they fixed prices below that level or even below the level at which they were at the end of May, 1958, the prices were below the cost of production.

We must say that this is a complete misunderstanding of the press note of J nly 30, 1958.

All tha.t that press note said was that prices had risen even before June 27, 1958, in expectation of a large export quota.

Thereafter, the Government were assured by the industry that prices would not rise further after J nne 27 ; but this assurance was not kept and prices went up further by one rupee per ma.nnd by the end of July. It was in these circumstances that the Government intervened.

There was, however, no commitment in this press note by the Government that if they intervened they would fix prices at what they were either in the week before June 27, 1958, or in the last week of May; nor is there anything in the press note to suggest that the

prices prevalent on either of these two days were proper prices and that any price below them would not even meet the cost of production. The press note had nothing to do with the cost of production; nor were the Government bound to fix the prices at the level of the end of June or the end of May. When they eventually decided to intervene at the end of , July, they were free to take action under the Act and the Order and so long as the prices fixed were in accordance therewith, the action could not be challenged on the ground that it was an _unreasonable restriction on the right to carry on trade under Art. 19 (1) (g).

Clause 5 of the Order lays down the factors which have to be taken into consideration in fixing prices. These factors include among other things a reasonable margip of profit for the producer and/or trade and any incidental charges.

This was. kept in mind when prices were fixed by the impugned notification. The petitioners have certainly filed with their affidavit a schedule giving the cost of production. According to them, their cost of production is above the price fixed by the impugned notification. This schedule has not been admitted by the Government.

We see no reason to accept the ipse dixit of the petitioners as to their cost of production. The sugar crushing season begins about the end of October and finishes about the end of May, so that fixation of price in July, 1958, would be on the basis of the 1957-58 season.

Market prices were available to the Government when they fixed the prices by the impugned notification. In the case of the three States, namely, Punjab, Uttar Pradesh and North Bihar, the prices fixed by the impugned notification were above the prices prevalent in the beginning of April and also above the average prices for the month of April, though in the: case of Punjab and_ West Uttar Pradesh they were slightly below the prices of the 30th of April. These prices were prevalent in the free market and must certainly have taken account of a fair margin of profit for the producer, though in the case of an individual factory due to factors for which the producer might himself be responsible, the cost of production might have been a little more.

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Diwan Sugar &

General .Wills

(Private) Ltd. v.

Union of India

Wanchoo J.

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Diwan Sugar &>

General Mills

(Private) Ltd. v.

Union of India

Wanchoo ].

Therefore, the prices fixed by the Government by the impugned notification can in no circumstances be said to have been proved to be below the cost of production.

The petitioners were also not unaware of this state of affairs, and therefore, in the rejoinder came out with the story of distress sales by the mills in the early part of the crushing season.

We are not impressed by this story, and in any case there could hardly be any question of distress sales in April when the crushing season was almost coming to an end.

We see therefore no reason to hold that the prices fixed were below the cost of production aJ?d were therefore an unreasonable restriction on the petitioners' right to carry on trade under Art. 19(l)(g). This also disposes of the second ground of argument under this Head, namely, that the prices were arbitrary. All relevant factors prescribed under cl. 5 of the Order were apparently taken into consideration and the prices fixed themselves show that they were not arbitrary. The last argument in this connection is that there is no reasonable safeguard against the abuse of power and no check by way of appeal or otherwise is provided against the order of the Central Government. It is enough to say that we are here dealing with the power of the Central Government to fix prices in the interests of the general public. It is in these circumstances absurd to expect that there would" be some provision by way'of appeal or otherwise against this power of the Central Government. So long as the Central Government exercises its power in the manner provided by the Act and the Order-and this is what it appears to have done-, it cannot be said that any further safeguard is necessary in the form of an appeal or otherwise. The safeguards are to be found in cl. 5 itself, namely, that the Central Government must give consideration to the relevant factors mentioned therein before fixing the price, and thus these factors are a check on the power of the Central Government if it is ever.minded tO abuse the power.

We are therefore of opinion that the impugned notification is not an unreasonable restriction on the petitioners' right to carry on trade under Art. 19(1)(g).

Re. (3).

This raises the question of discrimination. It is said that price control is imposed on factories in Punjab, Uttar Pradesh and North Bihar and that there is no reasonable basis for such classification ; factories in other parts of India are left uncontrolled with the result that there is discrimination. From the material supplied it appears that there are 97 sugar factories in Punjab, Uttar Pradesh and North Bihar while there are 50 sugar factories in the rest of India, of which as many as 18 are in the State of Bombay. In the other States there are very few factories, the lowest being in West Bengal, Orissa and Ker ala with one factory each and the highest being in Madhya Pradesh with seven factories. We also understand that the major part of production of sugar in this country is from the factories in Punjab, Uttar Pradesh and North Bihar. Of the 97 factories which have been controlled, as many as 90 are in Uttar Pradesh and North Bihar and it is these two areas which are what are called mainly surplus areas.

The price of sugar in India depends upon the price of the factories in Uttar Pradesh and Bihar. The contention of the Government is that as soon as the price is controlled in Punjab, Uttar Pradesh and Bihar the price for the whole of India is fixed, for other States are deficit and import sugar from these States, particularly Uttar Pradesh and North Bihar.

In these circumstances if price is fixed in this area, price all over India is practically fixed, and it is not necessary to fix prices separately so far as factories in other States which are said to be mainly deficit, are concerned. In the circumstances we are of opinion, that though in form prices are fixed for factories only in Punjab, Uttar Pradesh and North Bihar, in effect they are fixed for the whole of India, once the production of these three regions is controlled. There is, therefore, in our opinion no discrimination in effect by the fixation of prices in these three regions.

The argument that there is discrimination is purely theoretical, in view of the economic factors which control the price of sugar in this country. Thus in fact there is no discrimination after the control of sugar

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Generul Mills (Private) Ltd. v.

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Wanchoo j.

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January 28.

prices in these three regions and the contention that the factories in the other areas are left free to sell at any price is specious and does not merit a moment's consideration. We are therefore of opinion that in effect the impugned notification brought about no discrimination between different regions or between producers and middlemen in view of what we have said already in Re. l (b ), and consequently, it is not necessary to consider the last part of the submission under this head. There is in fact no discrimination by the impugned notification and this contention fails on that ground.

There is no force therefore in this petition and it is hereby dismissed with costs.

Petition dismissed.

BENGAL CHEMICAL & PHARMACEUTICAL

WORKS LTD., CALCUTTA

THEIR WORKMEN (P. B. GAJENDRAGADKAR, A. K. SARKAR and K. SuBBA RAo, JJ.)

Industrial Dispute-Reference-Government, if empowered to transfer from one Tribunal to another-Award-If can be superseded by fresh agreement-Disputes referred on fresh agreement-Reference if bad-Industrial Disputes Act, r947 (r4 of r947), ss. 2(r) and

7A.

Industrial Disputes (Amendment and Miscellaneous Provisions) Act: r956 (36 of r956), s. 30-litdustrial Disputes (Amendment) Act, r957 (r8 of r957), s. 2.

Supreme Court-Scope of furisdiction vis-a-vis the Award of Tribunal-Right of appeal-Constitution of India, Art. r36.

Aggrieved by an Award of r95r, the employees placed before the Company a fresh charter of demands which was mutually settled by a written agreement which provided, inter alia, that the existing rate of dearness allowance should prevail which was adjustable to any future substantial change in the cost of living index of the working class.

As the cost of living increased disputes arose, and in spite ol the said Award of r95r,

THE UNION OF INDIA

S. R. DAS

JAFER IMAM

cl. 5

Essential Commodities Act

s. 5

Constitution of India

s. 3

Essential Commodities Act, 1955

cl. 5

s. 3

Essential Commodities Act, 1955

clause 5

s. 3

Essential Commodities Act, 1955

cl. 5

Section 3

Clause 5

Article 32

Constitution of India

Art. 32

s. 3

Section 3(2)

Clause 5

s. 3

clause 5

Article 19

Section 3

cl. 5

Clause 5

s. 3

clause 5

s. 3

s. 3

s. 3

s. 3

s. 3

s. 3

s. 3

s. 3

s. 3

Art. 19

Art. 19

Clause 5

Art. 19(l)(g)

cl. 5

cl. 5

Art. 19(1)(g)

Industrial Disputes Act

ss. 2(r) and

7A

s. 30

s. 2

Constitution of India


I959

Diwan Sugar(&..

General Mills (Private) Ltd. v.

Union of India

Wanchoo j.

'959

January 28.

136 SUPREME COURT REPORTS [1959] Supp.

prices in these three regions and the contention that the factories in the other areas are left free to sell at any price is specious and does not merit a moment's consideration. We are therefore of opinion that in effect the impugned notification brought about no discrimination between different regions or between producers and middlemen in view of what we have said already in Re. l (b ), and consequently, it is not necessary to consider the last part of the submission under this head. There is in fact no discrimination by the impugned notification and this contention fails on that ground.

There is no force therefore in this petition and it is hereby dismissed with costs.

Petition dismissed.

BENGAL CHEMICAL & PHARMACEUTICAL

WORKS LTD., CALCUTTA

THEIR WORKMEN (P. B. GAJENDRAGADKAR, A. K. SARKAR and K. SuBBA RAo, JJ.)

Industrial Dispute-Reference-Government, if empowered to transfer from one Tribunal to another-Award-If can be superseded by fresh agreement-Disputes referred on fresh agreement-Reference if bad-Industrial Disputes Act, r947 (r4 of r947), ss. 2(r) and

7A.

Industrial Disputes (Amendment and Miscellaneous Provisions) Act: r956 (36 of r956), s. 30-litdustrial Disputes (Amendment) Act, r957 (r8 of r957), s. 2.

Supreme Court-Scope of furisdiction vis-a-vis the Award of Tribunal-Right of appeal-Constitution of India, Art. r36.

Aggrieved by an Award of r95r, the employees placed before the Company a fresh charter of demands which was mutually settled by a written agreement which provided, inter alia, that the existing rate of dearness allowance should prevail which was adjustable to any future substantial change in the cost of living index of the working class.

As the cost of living increased disputes arose, and in spite ol the said Award of r95r,

which was not terminated according to law, the dispute ansmg 1959 out of the said written agreement was referred for adjudication by the Government to the Second Industrial Tribunal, Calcutta, Bengal Chemical & in September, 1956. In April 1957, the Government transferred Pliar'maceutical the dispute from the Second Industrial Tribunal to the Fifth Works Ltd., Industrial Tribunal. The Company, inter alia, contended that Calcutta the Government had no power to transfer the dispute from one v.

Tribunal to another and that the reference was bad as the 1951 Their Workmen Award had not been duly terminated.

The Industrial Disputes (Amendment and Miscellaneou• Provisions) Act (36 of 1956) amending the Industrial Disputes Act (14 of 1947) came into force on August 28, 1956, giving authority to the Government to transfer a reference from one Tribunal to another, which was followed by a further amending Act, being Industrial Disputes (Amendment) Act (18 of 1957) whereunder among other things a new definition of 'Tribunal' was given, whereby the Industrial Tribunal constituted prior to March Io, 1957, under s. 7A of Act 14 of 1947 was included.

Held, that as a result of the amendments to the Industrial Disputes Act, 1947, the Government had authority to transfer a case from one Tribunal to another. 'Tribunal' as defined by s. 2(r) of the Industrial Disputes Act, 1947, aamended by Act 36 of 1956, read with amending Act 18 of 1957, empowers the Government to transfer a reference from one Tribunal to another.

Where, in spite of a previous award, the employees after raising fresh demands enter.ed into a new agreement with the employer which started a fresh chapter regulating the relationship of the parties, the previous award, though not terminated in accordance with the provisions of law, must be deemed to have been superseded.

Held, further, that though Art. 136 of the Constitution is couched in the widest terms and confers a discretionary power (which cannot exhaustively be defined) on the Supreme Court to grant special leave to appeal from the order of a tribunal, but it is necessary for the Supreme Court to exercise its said discretionary jurisdiction only in cases (a) where there is a violation of the principle of natural justice, (b) raises an important principle of industrial law requiring elucidation and final decision by the Supreme Court, or (c) discloses such other exceptional or special circumstances which merit the final decision by the Supreme Court. Such discretionary reserve power cannot obviously be so construed as to confer a right of appeal to any party from the decision of a Tribunal. where he has none under the law.

Industrial Disputes Act is intended to be a self-contained one and it seeks to achieve social justice on the basis of collective bargaining, conciliation and arbitration. Awards are given on circumstances peculiar to each dispute and the Tribunals are to a

1959 large extent free from restrictions of technical considerations imposed on courts.

Bengal Chemial &- A free and liberal exercise of the discretionary powers by Pharmaceutical the Supreme Court may materially affect the fundamental basis

Woi-ks Ltd., of the decision, namely, quick solution to such disputes to achieve Calcutta industrial peace. v.

Where an Industrial Tribunal on the consideration of the Their Workmen f entire material placed be ore it and having regard to the overall picture, came to a conclusion of facts, the Supreme Court will not interfere with such finding of fact nor will it be justified to allow to make a new case for the first time before it.

Pritam Singh v. State of Madras, [1950) S.C.R. 453; Hem Raj v. State of Ajmer, (1954) S.C.R. rr33 and Sadhu Singh v.

State of PEPSU, A.LR. 1954 S.C. 272, referred to.

CIVIL APPELATE JURISDICTION: Civil Appeals Nos. 125 and 164 of 1958.

Appeals by special leave from the Award dated August 26, 1957, of the Fifth Industrial Tribunal at West Bengal in Case No. VIII-264/56.

S. G. Issacs and S. N. Mukherjee, for the Appellants in C. A. No. 125/58 and Respondents in C. A.

No. 164/58.

N. G. Chatterjee and Dipak Datta Ghoudhri, for the Respondents in C. A. No. 125/58 and Appellants in C. A. No. 164/58. ·

1959. January 28.

The Judgment of the Court was delivered by

S!lbba Rao J.

SuBBA RAO, J.-These appeals are by Special Leave from the Award by Shri G. Palit, Judge, Fifth Industrial Tribunal, West Bengal, in the matter of a dispute

- between Messrs.

Bengal Chemical & Pharmaceutical Works Limited, Calcutta, and their employees, represented by Bengal Chemical Mazdoor Union, Calcutta.

The Government of West Bengal by its order dated September 13, 1956, referred the following dispute between the parties referred to above to the Second Industrial Tribunal, under s, 10 of the Industrial Disputes Act, 194 7 (Act 14 of 194 7), hereinafter referred to as the Act. " Is the demand of the employees for increase in Dearness Allowance justified ? If so, at what rate?". The said Act was amended by the

Industrial Disputes (Amendment & Miscellaneous 1 959 Provisions) Act, 1956 (36 of 1956), which came into - f A 6 0

A .1 9 1956 h Bengal Chemical & Orce on ugust 28, 195 . n pri , , t e Pharmaceutical Government made an order transferring the said disworks Ltd., pute from the file of the Second Industrial Tribunal to Calcutta that of the Fifth Industrial Tribunal. The Fifth v.

Industrial Tribll.llal, after making the necessary in- Their Workmen quiry, made the award on August 26, 1957, and it was Subba Rao J. duly notified in the Calcutta Gazette on September

26, HJ57.

As a mistake had crept in, the award was modified by the Tribunal by its order dated the 29th November, 1957; and the modified award was published in the Calcutta Gazette on the 29th November, 1957.

Under the award t.he Tribunal held that there was a rise in the cost of living index and that to neutralise the said rise the employees should get an increase of Rs. i in dearness allowance on the pay scale up to Rs. 50 and Rs. 5 on the pay scale above Rs. 50. On that basis the dearness allowance payable to the employees was worked out and awarded. The correctness of the award is questioned ih these appeals. The Company preferred Civil Appeal No. 125 of 1958 against the award in so far it was against it and the Union preferred Civil Appeal No. 164 of 1958 in so far it went against the employees. For convenience of reference, the parties will be referred to in the course of the judgment as the Company and the Union.

Learned Counsel for the Company raised before us the following points: (1) The order dated April 9, 1957, made by the Government transferring the dispute from the file of the Second Industrial Tribunal to that of the Fifth Industrial Tribunal was illegal ; (2) the previous award made by the Tribunal between the same parties on April 26, 1951, and confirmed by the Labour Appellate Tribunal by its order dated August 30, 1951, had not been terminated in accordance with the provisions of s. 19(6) of the Act and therefore the present reference was bad in law and without jurisdiction ; (3) there was no change in the circumstances obtaining at the time the previous award was made and those prevailing at the time of the present reference as to justify making out a new award; (4) the Tribunal

r959 went wrong in taking the rise in the cost of living

Cl . 1 , index between the yearr 1954 and 1957 instead of tak- Bengaz iemica . h fl t · h b h Pha, ma"utical mg t e uc uatmg rate m t e mdex etween t e date wo, ks Ltd., of the earlier award, i.e., August 30, 1951, and the date Calcutta of the present reference in the year 1957; (5) the v.

Tribunal went wrong in so far as it based its decision Thefr Workmen on the Second Engineering Award of 1950 which was already considered by the Tribunal in "its earlier award Subba Rao ]. of the year 1951; and (6) in any event, in computing the amount, the Tribunal applied wron_g criteria.

- \.Ye shall consider the above contentions seriatim.

But before doing so, it will be convenient to refer briefly to the scope of jurisdiction of this Court under Art. 136 of the Constitution vis-a-vis the awards of Tribunals.

Article 136 of the Constitution does not confer a right of appeal to any party from the decision of any tribunal, but it confers a discretionary power on the Supreme Court to grant special leave to appeal from the order of any tribunal in t.he territory of India. It is implicit in the discretionary reserve power that it cannoff be exhaustively defined. It cannot obviously be so construed as to confer a right to a party where he has none under the law. The Industrial Disputes Act is intended to be a self-contained one and it seeks to achieve social justice on the basis of collective bargaining, conciliation and arbitration.

Awards are given on circumstances peculiar to each dispute and the tribunals are, to a large extent, free from the restrictions of technical considerations imposed on courts.

A free and liberal exercise of the power under Art. 136 may materially affect the fundamental basis of such decisions, namely, quick solution to such disputes to achieve industrial peace.

Though Art. 136 is couched in widest terms, it is necessary for this Court to exercise its discretionary jurisdiction only in cases where awards are made in violation of the prh:iciples of natural justice, causing substantial and grave injustice to parties or raises an important principle of industrial law requiring elucidation and final decision by this Court or discloses such other exceptional or special circumstances which merit the consideration of this Court. The points raised by the

learned Counsel, except perhaps the first point, do not r959 stand the test of any one of those principles.

C' . 1 L d C 1 h Benga.l .irmica & earne ounse for the Company, owever, says Pharmaceutical that, though the said principles might be applied at works Ltd, the time of granting leave, once leave is given no such Calcutta restrictions could be imposed or applied at the time of v. the final disposal of the appeal. The limits to the Their Workmen exercise of the power under Art. 136 cannot be made Subba Rao J. to depend upon the appellant obtaining the special leave of this Court, for two reasons, viz., (i) at that stage the Court may not be in full possession of all material circumstances to make up its mind and (ii) the order is only an ex parte one made in the absence of the respondent. The same principle should, therefore, be applied in exercising the power of interference with the awards of tribunals irrespective of the fact that the question arises at the time of granting special leave or at the time the appeal is disposed of. It would be illogical to apply two different standards at two different stages of the same case. The same view was expressed by this Court in Pritam Singh v. The State of Madras (1), Hem Raj v. State of Ajmer(2) and Sadhu Singh v. State of Pepsu (3).

The first question turns upon the construction of the relevant provisions.of the Act as amended by the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956. The relevant provisions inserted by the Amending Act read as follows :

"Section 2(r) : 'Tribunal ' means an Industrial Tribunal constituted under section 7 A."

"7 A. Tribunals.-(!) The appropriate Government may, by notification in the official Gazette, constitute one or more Industrial Tribunals for the adjudication of industrial disputes relating to any matter, whether specified in the Second Schedule or the Third Schedule.

(2) A Tribm1al shall consist of one person only to be appointed by the appropriate Government.

(3) A person shall not be qualified for appointment as the presiding officer of a Tribunal unless-

(r) [1950] S.C.R. 453.

(2) [1954] S.C.R. II53.

(3) A.LR. 1954 S.C. 271.

r959

(a) he is, or has been, a Judge of a High Court;

Bengal Chemical &- or

Pha•maceutical

(b) he has held the office of the Chairman or any wa"" Ltd.,· other member of the Labour Appellate Tribunal con.

Calcutta stituted under the Industial Disputes (Appellate Triv. bunal) Act, 1950 (48 of 1950), or of any Tribunal, for Their Workmen d f 1 h a per10 o not ess t an two years.

Subba Rao;.

(4) The appropriate Government may, if it so thinks fit, appoint two persons as assessors to ad vise the Tribunal in the proceeding before it."

"33B. (1) The appropriate Government may, by order in writing and for reasons to be stated therein, withdraw any proceeding under this Act pending before a Labour Court, Tribunal, or National Tribunal, as the case may be, for the disposal of the proceeding and the Labour Court, Tribunal or National Tribunal to which the proceeding is so transferred may, subject to special directions in the order of transfer, proceed either de novo or from the stage at which it was so transferred : Provided that where a proceeding under section 33 or section 33A is pending before a Tribunal or National Tribunal, the proceeding may also be transferred to a Labour Court." Section 30 of the Amend, ing Act reads :

"If immediately before the commencement of this Act, there is pending any proceeding in relation to an industrial dispute before a Tribunal constituted under the Industrial Disputes Act, 1947 (14 of 1947), as in' force before such commencement, the dispute may be adjudicated and the proceeding disposed of by the Tribunal after such commencement, as if this Act has not been passed." Section 7, before ihe Amendment ran thus :

 " The appropriate Government may constitute one or more Industrial Tribunals for the adjudication of industrial disputes in accordance with the provisions of this Act.

(2) A Tribunal shall consist of such number of members as the appropriate Government thinks fit.

Where the Tribunal consists of two or more members, one of them shall be appointed as chairman.

(3) Every member of the Tribunal shall be an x959 independent person, .

Bengal -;;;:; mical &

(a) who IS or has been a Judge of a High Court Pharmaceutical or a District Judge, or Works Ltd.,

(b) is qualified for appointment as a Judge of a Calcutta High Court : v. 1 f Their Workmen Provided that the appointment to a Tribuna o any person not qualified under part (a) shall be made subba Rao J. in consultation with the High Court of the Province in which the Tribunal has or is intended to have, its usual place of sitting." It will be seen from the aforesaid provisions that the Amending Act, which came into force on August 28, 1956, changed the constitution of a tribunal to some extent and conferred a power for the first time on the Government to transfer a proceeding pending before a tribunal to another tribunal; or in the case of a proceeding under s. 33 or 33A pending before a tribunal to another tribunal or to a Labour Court.

Section 30 of the Amending Act expressly saves a pending proceeding before a tribunal constituted under the Act before the Amending Act came into force and directs that such dispute shall be adjudicated and the proceeding disposed of by that tribunal after the commencement of the Amending Act as if that Act had not been passed.

A combined and fair reading of the aforesaid provisions, it is argued, was that s. 33B, inserted in the Act by the Amending Act, was prospective in operation, i.e., it would apply only to proceedings initiated in the tribunal constituted under the amended Act and that proceedings pending before the tribunals constituted under the Act before the commencement of the Amending Act would be disposed of as if the Amending Act had not been passed.

The Parliament, presumably to clarify the position, brought out another.Amending Act styled the Industrial Disputes (Amendment) Act, 1957 (18 of 1957), whereunder among other things, a new definition of " Tribunal" was given in substitution of that ins. 2(r) of the Act.

The substituted definition reads : "'TribuIJ.al' means an Industrial Tribunal constituted under section 7 A and includes an Industrial

'959 Tribunal constituted before the 10th day of March,

B 1-c,- . 1957, under this Act." enga 1cm1cal (5..

I'ha, ma"utical Sub-section (2) of s. 1 of the Amending Act 18 of 1957

w,, k, Ltd., says that s. 2 shall be deemed to have come into force

Calcutta on the 10th day.of March, 1957.

The result is that

v. section 33B should be read along with the definition Their Workmen of a "Tribunal" inserted by the Amendment Act 18

Subba Rao;. of 1957, as if that definition was in the Act from March 10, 1957. If that definition of a "Tribunal" be read in place of the word " Tribunal" in s. 33B, the relevant part of that sectiou reads:

"(1) The appropriate Government may, by order in writ.ing and for reasons to be stated therein, withdraw any proceeding under this Act pending before a Tribunal constituted before the 10th day of March, 1957, and transfer the same to another Tribunal constituted under section 7 A of the Act." So construed it follows that in respect of proceedings pending in a tribunal constituted before the 10th day of March, 1957, the Government has the power to transfer them from that date to any other tribunal.

It is said that this construction would make s. 30 of the Amending Act 36 of 1956 otiose or nugatory.

That section contained only a saving clause and it was not inserted in the Act ; it served its purpose, and oven if it ceased to have any operative force after the Amendment of 1957, that circumstance cannot have any bearing on the impact of the amendmentof the definition of " Tribunal " on the provisions of s. 33B of the Act.

In the present case, the Government made the order of transfer on April 9, 1957, i.e., after s. 2 of Amendment Act 18 of 1957 was deemed to have come into force. It must, therefore, be held that the Government acted well within its powers in transferring the dispute pending before the Second Industrial Tribunal, to the Fifth Industrial Tribunal.

The second contention, namely, that the Award of 1951 was not terminated in accordance with law, does not appear to have been pressed before the Tribunal.

The governing section is s. 19(6) which says :

"Notwithstanding the expiry of the period of operation under sub-section (3), the award shall

continue to be binding on the parties until a period of

I959 two months has elapsed from the date on which noticeB 1-Ch . · b b d b l d h enga emical & IS given y any party oun y t 1e a war to t e Pharmaceutical other party or parties intimating its intention to works Ltd., terminate the award." Calcutta In the first written-statement filed by the Company v. d Their Workmen before the Tribunal, no plea was taken base upon s. 19(6) of the Act. In the second written-statement Subba Rao J. filed by the Company on December 20, 1956, a contention was raised to the effect that the award dated June 21, 1951, was not terminated under s. 19(6) of the Act, that the said award was binding between the partfos and therefore the reference was bad in law.

Notwithstanding the said allegation, the award discloses that no issue was raised on that count and no argument was advanced in support thereof.

This attitude might have been adopted by the Company either because it did not think fit to rely upon a technical point but had chosen to get a decision of the Tribunal on merits, or it might be that there was no basis for the contention, as the company might have received notice under the said section. Though it may not be quite relevant, it may be mentioned that even in 1951 when the dispute between the parties was referred to the Industrial Tribunal, though a similar contention was open to the Company and indeed was suggested by the Tribunal, it moved the Tribunal to give an award on the merits of the matter.

If this plea had been seriously pressed, the Tribunal would have raised a sepa; rate issue and the Union

would have been in a position to establish that notice had been served on the Company as required by s. 19(6) of the Act.

As the question raised depends upon elucidation of further facts, we do not think that we would be justified in allowing the Company to raise the plea before us, and we, therefore, do not permit them to do so.

The fourth. point turns on the construction of the terms of the agreement entered into between the parties on September 15, 1954. The dispute between the parties had an earlier origin and apart from the

•959 present reference, there were as many as four refer. ences and four awards, and the last of them was dated Bengal Chemfoal & April 3 1951. The Companv preferred an appeal

Phatmaceuticol ' h d h L b• A J] T "b w , k Ltd. agamst t at awar to t e a our ppe ate n unal,

a1:utta ' Calcutta, which, with some modification, confirmed v. the award of the Tribunal on Augu&t 30, 1957. That Thei• Wo•kmen award as modified by the Appellate Tribunal fixed the basic wages and the rate of dearness allowance pay- Subba Rao f. able to the employees.

The employees were not satisfied with the a ward and they placed before the Company a new charter of demands claiming higher rates of dearness allowance and wages, but the dispute was compromised and the parties entered into an agreement dated September 15, 1954, by virtue of which, the Company introduced the incremental scale in the wage structure. As regards the dearness allowance, it was stated in cl. 11 of the agreement as follows :

" The existing rate of D. A. will prevail unless there is a substantial change in the working class cost of living index, in which case the rate will be suitably adjusted." On the construction of this clause depends the question of the Union's right to claim enhanced dearness allowance. It is common case that if the cost of living index in the year 1951 was taken as the basis, there was a fall in the rate of working class cost of living index in 1957. On the other hand, if the cost of living index in 1954 was the criterion, there was a substantial increase in the cost of living index in 1957.

The question, therefore, is.what did the parties intend to agree by the aforesaid clause in the agreement. To ascertain the intention of the parties, we should consider the circumstances under which the said agreement was entered into between the parties. Exhibit 6 is the said agreement. The preamble to the agreement reads:

"The Company and the Union came to a settlement in respect of the Pay Scales and Grades in the Charter of Demands dated 25th June, 1953, at the intervention of Shri A. R. Ghosh, Asstt. Labour Commissioner during the Conciliation proceedings ending on the 30th August, 1954."

The preamble indicates that the entire situation r959 obtaining on the date of the agreement was reviewed - d . d h f h l Bengal Chemical & an the parties agree to t e terms o t e sett ement Pharmaceutical mentioned therein. Under clause (1) of the agreement, works Ltd., pay scale and grade as given in annexure B was Calcutta agreed upon for the time being for a period of three v. years as an experimental measure, to be reviewed, Their Workmen modified or suspended or withdrawn after three years, Subba Rao J. depending upon the Company's business and financial condition.

By cl. (2), the employees agreed not to raise any dispute involving any further financial burden on the Company during the next three years in respect of pay scale and grade. Clauses (3) to (5) deal with increments and the age of retirement.

Clause (6) provides for the piece-rated (contract) workers in respect of their increments. Clause (7) is in respect of increment for the daily-rated workers.

Clause (8), is in respect of the grade and scale of pay and increments of Chemists, Engineers and Doctors, etc. Clause (9) is to the effect that the employees who would be made permanent thenceforward would be grouped under two divisions for the purposes of giving effect to the scale of pay. Clause (11) which we have already extracted above relates to the dearness allowance. Clause (12) says "barring the question of bonus for 1358 and 1359 B. S. the Union withdraws its claim in respect of other items in the Charter of Demands dated 25th June, 1953."

We have given the agreement in extenso only for the purpose of showing that all the disputes between the parties arising out of the charter of demands dated June 25, 1953, were settled between them and reduced to writing. The agreement was self-contained and started a new chapter regulating the relationship of the parties to the dispute in respect of matters covered by it. The award must be dee"med to have been superseded by the new agreement. In this context the crucial words " existing rate of D. A. ", on which both the learned Counsel relied, could have only one meaning. Do the words " existing rate " refer to the date of the agreement or to the date of the award ? It is true that the existing rate of D. A. had its origin in the award and was made to prevail

'959 under the agreement, that is to say that the rate was

l - . accepted by the parties as reasonable on the date of Benga Chemical & h '11 h b

 I J • Pharmaceutical t e agreement, t1 t ere was a su stant1a c iange m

works Ltd.. the working class cost of living index. If the conten- Calcutta tion of the learned Counsel for the Company should v. prevail, the agreement would not be self-contained, but Their Workmen only to be construed as modifying the earlier award to

Sttbba Rao J. some extent. We are satisfied that in regard to matters covered by it, the agreement replaced the earlier a ward and therefore the date of the agreement is the crucial one for ascertaining whether there was substantial change in the working class cost of living index in the year 1957.

We, therefore, reject this contention.

Contentions 3, 5 and 6 raise pure questions of fact.

The Tribunal, on the consideration of the entire material placed before jt, came to the conclusion that there was change of circumstan.ces which entitled the employees to claim an increase in their dearn, ess allowance. It has also fixed the rate of increase in the dearness allowance on the basis of the rise in the cost of living index. In doing so, it also took into consideration the difficulties facing the industry and the repercussion of the rise in the dearness allowance on the consumers in general. Having regard to the overall picture, it came to the conclusion that full neutralisation of the deficiency as a result of rise in the cost of living iudex by dearness allowance could not be permitted and therefore allowed them only 75 per cent. of the increase in the dearness allowance to -which they would have otherwise been entitled on the basis of the rise in the cost of living index. The finding given by the Tribunal is one on fact and we do not see any permissible ground for interference with it in this appeal by special leave.

Before closing, one point strenuously pressed upon us by the learned Counsel for the Company which is really another attempt to attack the finding of fact given by the Tribunal from different angle must be mentioned ; it was that the Tribunal wrongly relied upon Exhibit 3, corrected on the basis of the information given by the State Statistical Bureau, west Bengal, for ascertaining. the working class cost of living index since August 1954 up to March 1957.

On the

basis of Exhibit 3, the Tribunal held tha.t the working x959 class cost of living index stood at 344·1 in August Bengal -;;:; mical & 1954 and it rose to 400•6 in May 1957, with the result Pharmaceutical that there was a rise of 56 points, a substantial rise in Works Ltd., the cost of living index. Exhibit 3 certainly supports Calcutta the finding of the Tribunal. The learned Counsel for Their ;; orkmen the Company points out with reference to the relevant entries in the Monthly Statistical Digest, West Ben- Subba Rao J. gal, that the said figures relate only to working class menials and the corresponding entries in regard to the working class cost of living index do not indicate so much increase as in the case of the menial class.

Learned Counsel has also taken us through the relevant figures.

The relevant entries in the Monthly Statistical Digest were not filed before the Tribunal.

Indeed when the Union's witness, Shri Satyaranjan Sen, was examined before the Tribunal, he was not cross-examined with a view to elicit information that Exhibit 3 did not relate to the working class cost of living index.

When Shri Chatterjee, the Assistant Manager of the Company, who was examined after Shri Sen, gave evidence, he not only did not object to the entries in Exhibit 3 but stated that he was not aware of any substantial increase in the working class cost of living index and complained that similar entries for all the relevant_years had not been produced. Even before the Tribunal it does not appear that any argument was advanced contesting the relevancy of Exhibit 3 on the ground that it did not refer to the working class cost of living index. In the circumstances, we do not think that we are justified to allow the learned Counsel for the Company to make out a new case for the first time before us, upsetting the Tribunal's basis for calculation and involving further and different calculations.

In the result, we confirm the award of the Tribunal and dismiss the appeal with costs.

The learned Counsel, appearing for the Union, did not press the appeal No. 164 of 1958, filed by the Union, and therefore it is also dismissed with costs.

Appeals dismissed.

THEIR WORKMEN (P. B. GAJENDRAGADKAR

A. K. SARKAR

K. SuBBA RAo, JJ.

Industrial Disputes Act

ss. 2(r) and

7A

s. 30

s. 2

Constitution of India

Industrial Disputes Act

s. 7A

Industrial Disputes Act, 1947

s. 2(r)

Industrial Disputes Act, 1947

Art. 136

Industrial Disputes Act

Industrial Disputes Act

s. 19(6)

Art. 136

Article 136

Industrial Disputes Act

Art. 136

Art. 136

Art. 136

Section 2(r)

section 7

Second Schedule

Third Schedule

section 33

section 33A

Section 30

Section 7

s. 33

Section 30

s. 33B

section 7

s. 1

s. 2

section 33B

s. 33B

section 7

s. 30

s. 33B

s. 2

s. 19(6)

s. 19(6)

s. 19(6)

s. 19(6)

cl. 11