(2) S.C.R.

SUPREME COURT REPORTS "54:7

Panchayat just in the same way as he had executed the z959 school contract as the Secretary of the Vidyalaya in b Bhagwan Singh question. That eing so, s. 7(d) cannot be invoked v. against him. In view of this conclusion it is unneces- Rameshwar sary to decide whether the works in question had Prasad Sastri been undertaken by the Government of Bihar or by - the Central Government. .

Gajendragadkar ].

The result is that the appeal must be allowed, the order passed by the High Court set aside arid that of the tribunal restored ; respondent 1 shall pay the.

costs of the appellant throughout; and the Election Commission shall bear their own.

We would like to add that, after this appeal was argued before us on April 2, 1959, we had announced our decis!on that the appeal would be allowed and that the judgment would be delivered later on in due eourse. It is in pursuance of that order that the present judgment has been delivered.

Appeal allowed.

M/S. MAHARANA MILLS (PRIVATE) LTD. v.

THE INCOME-TAX OFFICER, PORBANDAR

(B. P. SINHA, J. L. KAPUR and M. HrnAYATULLAH, JJ.)

Income Tax-Depreciation-Written Down V alue-C amputation for prior years-Whether binding for succeeding years-Fresh calculation for written down value by Income-tax Officer-Notice to assessee-When essential-Indian Income-tax Act, r922 (XI of r922), ss. ro(z)(vi), 35(r), 63,

Sub-section (r) of s. 35 of the Indian Income-tax Act, 1922, provided: " .................. the Income-tax officer may ...... on his own motion rectify any mistake apparent from the record ...... and shall ...... rectify any such mistake which has been brought to his notice by an assessee: Provided that no such rectificatioa shall be made, having the effect of enhancing or reducing a

I959

April I4.

I959 refund unless ...... the Income-tax Officer. ..... has the assessee of his intention so to do and has M /s. _Maharana reasonable opportunity of being heard.".

given notice to allowed him a

Mills (Private) Ltd.

The appellant, a private limited company, was assessed to

1 v. income-tax for the assessment year 1953-54 under the provisions The nconi:tax of the Indian Income-tax Act, 1922, and as per the assessment Officer, Porvandar d d t d J h f d · d or er a e une 30, 1955. t e amount o eprec1at10n allowe under s. 10(2)(vi) of the Act was Rs. 3-48,105~ On August 8, 1955, the appellant made an application before the Income-tax Officer for rectification of the order under s. 35 of the Act, pointing out certain mistakes in calculation in regard to the depreciation amount. By his order of February 27, 1956, the Incometax Officer corrected the written down value of the different properties of the appellant and determined the total allowable depreciation to be Rs. l,94,07+ The appellant challenged the order dated February 27, 1956, on the grounds, inter alia, (1) that he was not given a written notice of the intended rectification of the written down value, (2) that the provisious under which the Income-tax Officer acted, i.e., s. 35 of the Act, was not meant for the purpose of making corrections in written down values, the correct provision being s. 34 which specifically refers to excessive depreciation, and (3) that, in any case, he had exceeded his jurisdiction under s. 35 of the Act in calculating the depreciation on the written down value of the buildings and machinery of the appellant acting suo motu, and that he could correct only those mistakes which had been pointed out by it.

It was found that notice was given to the appellant of the intended determination of the written down value, though it was • not a written notice, and that the matter was discussed with its representative. ' Held: (1) that the object of the provision as to notice under s. 35 of the Indian Income-tax Act, 1922, is that no order should be passed to the detriment of an assessee without affording him an opportunity for being heard and that if, as a matter of fact, the assessee knew of the proceedings and the matter had been discussed with him, an adverse order would not be invalid merely because no written no\ice was given.

(2) that the word "record " used in the phrase " mistake apparent from the record" ins. 35(1) of the Act refers not only to the order of assessment but comprises all proceedings on \Vhich the assessment order is based and the Income-tax Officer is entitled for the purpose of exercising his jurisdiction under s. 35 to look into the whole evidence and the law applicable to ascertain whether there was an error.

If he doubts the written down value of the previous year it is open to him to check up the previous calculations and, if he finds any mistake, to make fresh calculations in accordance with the law applicable including the rules made thereunder.

A mistake contemplated by this section is not one which is

to be discovered as a result of an argument but it is open to the

I959 Income-tax Officer to examine the record including the evidence and if he discovers any mistake he is entitled to rectify the M/s. Maharana error provided that if the result is enhancement of assessment Mills (Private) Ltd. or reducing the refund, then notice has to be given to the v. assessee and he should be allowed a reasonable opportunity of The Income-tax being heard.

Officer, Porbandar

Venkatachcdam v. Bombay Dyeing & Mfg. Co., Ltd., [r959] S.C.R. 703, Commissioner of Income-tax v. Khemchand Ramdas, [r938] L.R. 65 I.A. 236 and Sidhramappa Andannappa Manvi

v. Commissioner of Income-tax, [r95r] zr l.T.R. 333, relied on.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 39 of 1959.

Appeal by special leave from the judgment and order dated November 26, 1957, of the Bombay High Court at Rajkot in Special Civil Application No. 119 of 1956.

A. V. Viswanatha Sastri, S. P. Mehta, J. B. Dadachanji, S. N. Andley and Rameshwar Nath, for the appellants.

M. 0. Setalvad, Attorney-General for India, R. Ganapathy Iyer and-D. Gupta, for the respondent.

1959.

April 14.

The Judgment of the Court was delivered by

KAPUR, J.-This is an appeal by special leave J{apur J. against the judgment and order of the High Court of Judicature at Bombay dismissing the appellant's petition under Art. 226.

The appellant before us is a private limited company carrying on the business of manufacturing and selling textiles and the respondent is the Income-tax Officer of Porbander.

Previous to the year 1949, in Porbander which became a part of the State of Saurashtra, there was no income-tax. In 1949 the Saurashtra Income-tax Ordinance (hereinafter termed the Ordinance) was promulgated which was applicable to the State of Saurashtra.

By that Ordinance income-tax became leviable and from 1950 onwards when Saurashtra became part of the Union of India the Indian Income-tax Act (hereinafter referred to as the Act) became applicable by reason of the Finance Act of 1950 (Act XXV of 1950).

r959 The appellant was taxed for the accounting year 1949, M/

M 1 i.e., the assessment year 1950-51. In that year the

Mill;· 1 p,;·,:~;~~d amount of depreciation allowed under s. 10(2)(vi) of v. the Act was Rs. 3,43,869 .. The appellant continued Th, Incon1'-ta• to be assessed to income. tax in the assessment years Offi"' Po•banda.1951-52, 1952-53 and 1953-54 and the present appeal relates to the assessment of year 1953-54. According Kapi" 1 to the assessment order dated June 30, 1955, the amount.of depreciation allowed for the asessment year 1953-54 was Rs. 3,48,105._ On August 8, 1955, the appellant made an application for rectification under s. 35 of the Act. In this application he pointed out several mistakes in calculations in regard to the depreciation amount. By his order of February 27, 1956, the Income-tax Officer corrected the Written Down Value of the different properties of the appellant and determined the total allowable depreciation to be Rs. 1,94,074. The order of the Income-tax Officer was as follows :

"To arrive at the Written Down Value of the assets it was necessary tu maintain depreciation record.

This being not done so far, is -Oone now and working attached. _ Depreciation allowance as per rules is worked out at Rs. 1,94,074 as per working sheet attached.

The correct computation of income is as under:- Income before allowing depreciation as per original assessment order: Rs. 1,00,674 Less charity disallowed wrongly written Rs. 21,889 instead of Rs. 20,124: Rs. 1,765

Income Less depreciation :

( - ) Less Dividend income as per original assessment order :

------ Rs. 98,909 Rs. 1,94,074

Rs. 95,165

Rs. 11,870 ------ Loss.

Rs. 83,295 Loss on account of depreciation to be carried forward.

Declared N. A."

And thus the unabsorbed, depreciation amount which

I959 under the assessment order of June 30, 1955, was d d R 3 h.

M /s. Maharana Rs. 2,31,944 was re uce to s. 8 ,295 and t IS was Mills (Private) Ltd. set off against the appellant's income 0£ the assessv. ment year 1954-55. On February 29, 1956, the In- The Income-tax come-tax Officer passed two provisional assessment Officer, Porbandar orders for the years 1954-55 and 1955.56. In both these orders he calculated the depreciation amounts Kap"' f. on the basis of the same Written Down Value as he had determined for the year 1953-54. The reasons for calculating them on the new basis were set out by the Income-tax Officer in his order dated May 18, 1956, and they were :-

"Less Depreciation. The depreciation of the Company has not been properly calculated by arriving at Written Down Value as per the Saurashtra Income Tax Ordinance and also as per Indian Income-tax Act. The assessee Company was being assessed regularly even as per Indian Income-tax Act. So Written Down Value of all assets are arrived at by working out the depreciation as per above Ordinance as well as Income Tax Act. The depreciation is worked out as per separate statement keeping in view the following:-

(i) Definition of "assessee" as per Indian Income-tax Act.

(ii) The exact meaning of W. D. V. as per Income~ tax Act.

(iii) The meaning of W. D. V. as per the Saurashtra Income-tax Ordinance, 1949 and Rules (Page 20, para. 13-5-A).

(iv) I. T. R. Volume 25, 558.

Decision of Calcutta High Court as regards C.I. T., West Bengal,- M/s. Karnani Industrial Bank Ltd.

(v) Views expressed by Taxation Enquiry Commissioner, 1953-54, Volume II, page 84, para. 34.

(vi) Taxation Laws (Part' B' State) (Removal of Difficulties Order, 1950.

The depreciation thus worked out as per separate statement".

On August 8, 1955, the appellant made an application under s. 35 for certain corrections in the calculations and the order thereon was passed on :February

s959 27, 1956, but no written notice of the intended rectifi-

M h cation of the Written Down Vaiue and the deprecia- /s. Ma arnna . . b h I Mills (P•ivate) Ltd. t10n amount was given y t e ncome-tax Officer to v. the appella11t under s. 35 read with s. 63 of the Act.

The Income-tax On March 9, 1956, the appellant wrote to the Income- Offi"' Porbandar tax Officer protesting against the order:-

"You have exercised powers not vested in you Kapur j. d h d S . d un er t e sai 'ect10n, an you have gone beyond the purview of the Act by preparing statements and records which are prejudicial to the rights of the Company".

The appellant requested the Income-tax Officer to cancel his previous order and to pass a fresh order correcting only those mistakes which had been pointed out by it. On the same day the appellant sent another letter as.king for the cancellation of the provisional assessment order for 1954-55 and requested for a revised assessment order on the basis of the return filed by it.

The reply of the Income-tax Officer of the same date was that the order was correct and a similar order was made on the second application in regard to the assessment of 1954-55.

On April 16, 1956, the appellant filed a petition in the High Court of Bombay under Arts. 226 and 227 in which it alleged that the Income-tax Officer had: . "exceeded the limits of .jurisdiction vested in him and exercised illegally jurisdiction not vested in him by law under Section 35 and passed orders, inter alia, and suo motu and without giving any prior notice and altered the entire procedure and basis of calculating depreciation on the written down value of buildings and machinery of the petitioners". , The appellant prayed that the order made under s. 35 of the Act be quashed and an injunction issued restraining the Income-tax Officer from recovering the assessed tax. The High Court dismissed this petition on the ground that it contained mis-statements of fact; that

"The advantage of this jurisdiction is not available to the subject when adequate and efficacious remedy is available to him under the ordinary law"; that the appellant could, under s. 33A of the Act,

(2) S.C.R.

SUPHEME COURT HEPORTS 553

have gone in revision to the Commissioner. The High r959 Court also held against the appellant on merits. The appellant as come to .this Court by speci.al leave ad Mi;·(;:,:::i:~~d. three quest10ns were raised (1) that no notice as reqmrv. ed under s. 35 was given to the appellant; (2) that The Income-tax there was no record on the basis of which the rectifica- Officer, Porbandar tion in the Written Down Value of the property could be made. and (3) that there was no mistake apparent Kapur J. from the record.

The learned Attorney-General contended in the first instance that the remedy available under Art. 226 is a discretionary one and if the High Court had exercised its discretion no appeal was competent and in support of his contention he relied upon the judgment of this Court in K. S. Rashid & Son v. Income-tax Investigation Commission, etc. (1), where Mukherjee, J., (as he then was) said:- _ ... " For purpose of this case it is enough to state that the remedy provided for in Art. 226 of the Constitution is a discretionary remedy and the High Court has always the discretion to refuse to grant any writ if it is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere ". - It is not necessary to decide in this case whether the order passed under Art. 226 is of a discretionary nature and therefore in appeal this Court' would not interfere with the exercise of discretion, because in our opinion, the case can be decided on other grounds of substance.

'fhe first question is that of notice under s. 35 of . the Act. The affidavit of the Income-tax Officer shows that the correctness of the figures for determining the depreciation was discussed with the appellant's Secretary.

The Income-tax Officer stated that: "The depreciation which was calculated in the assessment order of 1953-54 was as per the statement given by the petitioner. On submission of the said application the petitioner (Shri Ganatra, the Secretary of the Mills) was told that the depreciation will be given after rectifying mistakes. The petitioner had

(t) (r954) S.C.R. 738, 747. 70

r959 agreed to the same. There being no record of the

h working out from the first available record in the M fs. Ma arana Mills (Private) Ltd. Assessment order for the Assessment year 1943-44, the v. petitioner was also supplied with the copy of the The Income-tax working of the depreciation along with the necessary Officer, PMbandar rules and regulation for calculating the same ".

J<apur j.

He also sta'ted that the order of rectification was passed "almost at the end of the financial year, after explaining and discussing all the above calculation along with the relevant rules and regulation of the calculated depreciation" ; that the order was not passed without giving a reasonable opportunity to the appellant; that the matter was discussed with its representative more than once; that the assessment for the year 1954-55 was made final after calculating the depreciation; that the point of depreciation wn, s not 1 raised by the applicant at any hearing and that even though no written notice was given, the representative of the appellant was given notice of the intended determination of the written Down Values. He also stated :

"Thus though no written notice is given, applicant is given notice of the intention of calculating depreciation on record basis and is also allowed a reasonable opportunity of being heard inasmuch as he was given the calculation of depreciation on .21-2-1956 ".

The orders placed on the record show that the Incometax Officer made calculation for the purpose of determining the depreciation amount and after giving deductions allowed by the Act and the Rules made thereunder arrived at the corrected figure of Rs. 1,94,074 for the assessment year 1953-64.

Apart from the fact that the petition of the appellant does not set out clearly all the facts which should have been set out, there is the affidavit of the respondent that the matter wasdiscussed with the representative of the appellant although no written notice was given. In this connection the learned Attorney-General has further submitted (1) that the order determining the depreciation amount allowable was not final ;

(2) that the effect of the order making the rectification

(2) S.C.R. SUPBEME COURT REPORTS 555

was not of enhancing the assessment or reducing the r959 refund; and (3) that the question of depreciation , h ld b d t h t• f t b df /s. Ma arana cou e raise a t e ime o assessmen in any su - Mills (Private) Lid. sequent year. v.

The object of the provision as to notice in s. 35 is The Income-tax that no order should be passed to the detriment of an Officer, Porbandar assessee without affording him an opportunity but it cannot be said that the Rule is so rigid that if, as a Kapur f. matter of fact, the assessee knows of the proceedings and the mattef has been discussed with him then an adverse order would be invalid merely because no notice under s. 63 was given.

Of course this postulates that a reasonable opportunity has been given to show cause. Secondly this provision is applicable only where the assessment is enhanced or refund is reduced.

Neither of those contingencies has arisen in the present case.

The depreciation allowed to the appellant in the year of assessment 1943-44 when the appellant was assessed as a non-resident, was Rs. 1,91,224. In the year 1944-45 t.here was no asssessable income in British India and so also in 1945-46. In the year 1946-4 7 there was a loss. In the year 194 7 -48 as in the preceding years the sales were effected at Porbander and there was no collection made in British India.

The total tax due was calculated at Rs. 43-llAs. In 1948-49 the sales were Rs. 38,656 and they were assessed to income-tax on a total income of Rs. 9,326. ]'or the accounting year 1948, i.e., the assessment year 1949-50 when the Ordinance came into force the total depreciation amount allowed was Rs. 3,66,925 which was much more than what was allowable on the Written Down Values determined in accordance with the provisions of the Ordinance which defined Written Down Value:

"\Vritten Down Value means- ( a) In the case of assets acquired in the previous year, the actual cost to the assessee;

(b) In the case of assets acquired before the previous year the actual cost to the assessee less all depreciation actually allowed to him under this Ordinance or allowed under any Act repealed hereby or

556 SUPREME COUH, T REPORTS [1959) Supp.

r959 which would have been allowed to him if the Indian

MJs. Maha•ana Income-tax Act, 1922, was in force in past".

Mills(Ptivate) Ltd. On the basis of this Ordinance and the other Statutes v. and Iiules mentioned in his affidavit, which have been The Income-tax set out above, the Income-tax Officer made the vari- Oific.,, Po•bonda• 1 1 t" d d d th d · _ ous ca cu a 10ns an etermme e epremat10n Kapu• 1. amounts which have given rise to the controversy before us. These calculations were based on the Written Down Values for the successive assessment years up to the year of assessment 1953-54. •

But it was argued by counsel for the appellant tlia.t according to s. 10(5)(b) of the Act the Written Down Value in the case of assets acquired before the previous year mean the actual cost to the assessee Jess all depreciation actually allowed to him under the Act or under any Act repealed thereby and therefore the provisions of the Saurashtra Ordinance which came to an end when the Act became applicable cannot form the basis of determining the Written Down Value for the purposes of assessment of the years 1950-51 onwards. In reply it was submitted that the W rittcn Down Values were calculated and depreciation determined for the year 1943-44 and should in subsequent years ha:ve been calculated in accordance with the provisions of the Ordinance and they could not become - higher for purposes of s. 10(5)(b) of the Act merely because the Ordinance was replaced by the Act. In this connection reference was made to s. 12 of the Finance Act, 1950, s. 12 of which empowered the Central Government to make provision for the removal of difficulties in giving effect to the provisions of any of the Acts, Rules or Orders extended by s. 3 or s. 11 of that Act, i. e., Finance Act, 1950.

Under that section (s. 12) the Taxation Laws (Part B States) Removal of Difficulties Order, 1950, was promulgated on December 2, 1950, and by cl. 2 of this Order provision was made for computation of aggregate depreciation allowance and Written .Down Values.

To this Order the following explanation was added on March 9, 1953: (Notification No. S. R. 0. 477) :-

" For the purposes of this paragraph, the expression " all depre'ciation actually allowed under any

(2) S.C.R.

SUPREME COUH.T REPORTS 557

laws or rules of a Part B State " means and shall be r959 deemed to .ha.ve always. meant the agregate aII:-iwance Mfs. Maharana for depremat10n taken mto account m computmg the .Mills (P•ivate) Ltd. vVritten Down Value under any laws or rules of a v.

Part B State or carried forward under the said laws The Income-tax or rules".

Officer, I'orbandar But the appellant's counsel contended that this explanation is ultra vires because it was promulgated under s. 60-A of the Act and that section was inapplicable to the Order made under s. 12 of the Finance Act, 1950.

He relied on two cases decided by the Hyderabad High Court in S. V. Naik v. Commissioner of Incometax (1) and Commissioner of Income-tax v. D. B. R.

JJ1 ills Ltd. (2) but we are informed that one of those judgments is under appeal to this Court and we therefore do not wish to express any opinion upon the correctness or otherwise of this contention raised by the appellant,

It was next argued by the learned Attorney-General that the 'Vritten Down Values determined under s. 35 are not final and can be re-determined in the following assessment years and in support he referred to

K.arnani Industrial Bank v. Commissioner of Incomctax (3) where the original cost of the machinery purchased Rs. 3,40,000-was accepted in the successive asRessment years till it was doubted in the assessment order 1946-47 and was determined at H, s. 2,80,000 and it was contended that the Income-tax Officer had to take the Written Down Value of the previous year as correct.

Thus the question there raised was whether the Income-tax Officer was entitled in law to go behind the original cost accepted by his predecessor ever since the assessment year 1939-40. It was held that neither the principle of res judicata nor estoppel nor the terms of s. 10 (2) (vi) of the Act prevented the Income-tax Officer from determining for himself what the actual cost of the machinery had been and that depreciation had to be calculated for every year and it was open to the Income-tax Officer not merely to perform "a mathematical operation on

(r) [1955] 29 I.T.R. 206.

(2) [1954] 29 I.T.R. 2m

(3) [1951] 25 I.T.R. 558.

Kapur ].

r959 the basis of the \Vritten Down Value of the previous

/ h year, but one of determining the \Vritten Down Value ,.J s. !Ila aranu l .

If,, Mills (l'rivate) Ltd. lllllSe v.

The limit to which the Income-tax Officer can go n, J,, come-tax back does not stop at the Written Down Value of the Offim. P°'bandar previous year but extends up to the figure of the origi-

Kapur ]. nal cost, and the method enjoined bys. 10(5)(b) is not that the Income-tax Officer should merely scale down the Written Down Value of the previous year, but that be should take into consideration the actual cost, determining it for himself, if necessary, take also into consideration the allowances granted in the past and then make his own computation as to the Written Down Value for the assessment year with which he is concerned. Thus it cannot be said that merely because under s. 35 some Written Down Value and the depreciation amount have been determined they are a final determination binding for all times to come nor does the determination operate as estoppel or rM judicata for the following years. Therefore it cannot be said that there is no other efficacious and adequate remedy open to the appellant to challenge the depre.ciation amount determined under s. 35.

Counsel for the appellant contended that the provision under which the Income-tax Officer acted, i. c., 35 was not meant for the purpose of making corrections in 'Written Down Values; and that for the purpose the appropriate and correct provision was s. 34 which specifically refers to excessive depreciation.

There are two sections under which an Income-tax Officer can act, i. e., ss. 34 and 35 and the question for decision that arises is whether s. 35 was open to him.

Section 35 provides :

"The Commissioner or Appellate Assistant Com- 'missioner may, at any time within four years from the date of any order passed by him in appeal or, in the case of the Commissioner, in revision under section 33A and the Income-tax Officer may, at any time within four years from the date of any assessment order or refund order passed by him on his own motion rectify any mistake apparent from the record of the appeal, revision, assessment or refund as the cac may be, and

shall within the like period rectify any such mistake r959 which has been brought to his notice by an assessee ". l\f

M 1 /s. aiarana The question therefore is was it a mistak.e apparent Mills (Private) Ltd. from the record which the Income.tax Officer has v. rectified. It was submitted that recalculation is not The Income-t•x rectifying a mistake which is apparent from the Officer, f'orbandar record.

The words used in the section are "apparent Ka;:; J. from the record " and the record does not mean only the order of assessment but it comprises all proceedings on which the assessment order is based and the Income-tax Officer is entitled for the purpose of exercising his jurisdiction under s 35 to look into the whole evidence and the law applicable to ascertain whether there was an error. If he doubts the Written Down Value of the previous year it is open to him to check up the previous calculations and if he finds any mistake it is open to him to make fresh calculations in accordance with the law applicable including the rules made thereunder.

The Privy Council in Commissioner of Income-tax v.

Khem Chand Ramdas (1) held s. 35 to be applicable where the facts were that the assessee did not produce books of account and an assessment was made by the Income-tax Officer to the best of his judgment.

An application for the registration of the firm was however allowed and it was registered on January 17, 1927.

On the same day assessment was made under s. 23(4).

As it was a registered firm no super-tax was assessed.

The Commissioner called for the record under s. 33 and cancelled the registration on January 28, and ordered the Income-tax Officer to take necessary consequential action. The result of that was that the assessee became liable to super-tax. Consequently an order for s.uper-tax was made on May 4, 1929, and three days later notice of demand was issued. The Privy Council held that as the fresh action taken by the Income-tax Officer was hopelessly out of time the demand for super-tax was illegal because after the final assessment the Income-tax Officer could not go on making fresh computations and issuing fresh notices of demand to the end of all time but it was held that

(r) (1938) L.R. 65 I.A. 236.

z959 the provisions of ss. 34 and 35 prescribed the only

M/s. Maharana circumstances in which fresh assessment could be made Mills (Private) Ltd. and fresh n_otice of demand could be issued.

At p. 426

Lord Romer observed : The Income-tax "In the present case it is a i:lebatable question Office" Porbandar whether the circumstances were such as to bring it

Kapur 1. within the provisions of Section 34. It is not necessary to determine that question inasmuch, as, in their lordship's opinion, the case clearly would have fallen within the provisions of section 35 had the Income-tax Officer exercised his powers under the section within one year from the date on which the earlier demand was served upon the respondents.

For, looking at the record of the assessments made upon them as it stoorl after the cancellation of the respondent's registrationand the order affecting the cancellation would have formed part of that record-it would be apparent that a mistake had been made in stating that no super-tax was leviable ".

Thus the order effecting the cancellation of the rogi~. tration of the assessee's firm was considered to have formed part of the record of the case.

In Sidhramappa Andannappa Manvi v. Commissioner of Income-tax (1) the facts were that a debt belonging to a joint family fell on partition to the share of the assessee.

This debt was held not to be recoverable by a judgment of the Bombay High Court dated September 29, 1941.

Holding it to be within the accounting year the Appellate Tribunal allowecl this sum to be taken into consideration for the purpose of the accounting year. It subsequently corrected the error. It was held that under s. 33 the Tribunal was entitled to rectify the mistake and was competent to pass a consequential order dismissing the , appeal instead of allowing it.

The power under s. 35 is no doubt limited to rectification of mistakes which are apparent from the record. o A mistake contemplated by this section is not one which is to be discovered as a result of an argument but it is open to the Income-tax Officer to examine the record including the evidence and if he discovers any

(1) (1951] 21 I.T.R. 333.

mistake he is entitled to rectify the error provided r959 that if the result is enhancement of assessment or M , d . th f d h . h t b . t h /s. Ma,1arana re ucmg e re un t en notice as o e given o t e Mills (Private) Ltd. assessee and he should be allowed a reasonable opporv. tunity of being heard.

The Income-tax The scope and effect of -the expression " mistake Officer, Porbandar apparent from the record " and the extent of the powers of the Income-tax Officer under s. 35 of the Kapur 1 Act were discussed by this Court in 1ll. K. Venkatachalam v. Bombay Dyeing and Manufacturing Go.

Ltd. (1) where the facts were these: A sum of Rs. 50,063 being interest on tax paid in advance was given credit for under s. 18A(5) of the Act..

Subsequently there was an amendment of the Act by which the interest became allowable only on the difference between the amount of tax paid and what was actually determined.

As a consequence of this the Income-tax Ocer purporting to act under s. 35 of the Act rectified the mistake and reduced the amount of interest credited to Rs. 21,157 and issued a demand for the difference. The assessee obtained a writ of prohibition against the Incometax Officer on the ground that the mistake contemplated under that provision had to be apparent on the face of the Order and it was not contemplated to cover a mistake resulting from an amendment of the law even though it was retrospective in its effect. The l{evenue appealed to this Court.

Thus the question for decision in that case was whether an order proper and valid when made could be said to disclose a mistake apparent from the record merely because it became erroneous as a result of a subsequent amendment of the law which was retrospective in its operation.

In delivering the judgment of the Court Gajendragadkar, J., said:-

"At the time when the Income-tax Officer applied his mind to the question of rectifying the alleged mistake, there can be no doubt that he had to read the principal Act as containing the inserted proviso as from April 1, 1952. If that be the true position then the order which he made giving credit to the

(r) [1959] S.C.R. 7oi. 71

'959 respondent for Rs. 50,603-15-0 is plainly and obviously inconsistent with a specific and clear provision of the M/s. Makarana t d th t . 't bl b t d .

Mills (Private) Ltd. statu e an at mus mev1 a y e trea e as a imsv. take of law apparent from the record. If a mistake n., Income-tax of fact apparent from the record of the assessment Officer, Po1bandar order can be rectified under s. 35 we see no reason why

- a mistake of law which is glaring and obvious cannot Kapur J. be similarly rectified".

The decision of the Privy Council in Commissioner of Income-tax v. Khem Chand Ram Chand (1) was referred to.

Counsel for the appellant sought to distinguish both these cases; Venlcatachalam' s case (') and Khem Chand's case (1) on the ground that the record there considered was the assessment record of that year and the Income-tax Officer did not have to go to the records of the previous year. That is a distinction without a difference. If, for instance, the Incometax Officer had found that in the assessment year 1952-53 there was an apparent arithmetical mistake in the account of the Written Down Value of the properties which resulted in a corresponding mistake in the assessment of the year in controversy could he not take the corrected figure for the purposes of the assessment and could it be said that the mistake was not apparent from the record.

A fortiori if he dis- 1covered that the very basis of the different assessments was erroneous because of an initial mistake in determining the Written Down Value could it be said that this would not be a mistake apparent from the record.

And if in order to determine the correct Written Down Value the Income-tax Officer makes correct calculations, can it be said that that is not rectifying a mistake apparent from the record but is dehors it.

In our opinion this appeal is without force and we would therefore dismiss it with costs.

Appeal dismissed.

(1) (1938) L.R. 65 I.A. 236.

(2) [1959] s.c.R. 703,

s. 7(d)

M/S. MAHARANA MILLS (PRIVATE) LTD

THE INCOME-TAX OFFICER, PORBANDAR

B. P. SINHA, J.

L. KAPUR

Income-tax Act

s. 35

Indian Income-tax Act, 1922

Indian Income-tax Act, 1922

s. 10(2)(vi)

s. 35

s. 35

s. 34

s. 35

s. 35

Indian Income-tax Act, 1922

s. 35

L.R. 65 I.A. 236

Art. 226

s. 10(2)(vi)

s. 35

s. 8

Income-tax Act

Income-tax Act

Indian Income-tax Act

Saurashtra Income-tax Ordinance, 1949

s. 35

s. 35

s. 63

Arts. 226 and 227

Section 35

s. 35

s. 33A

s. 35

Art. 226

Art. 226

Art. 226

s. 35

s. 35

s. 63

Income-tax Act, 1922

s. 10(5)(b)

s. 10(5)(b)

s. 12

Finance Act, 1950

s. 12

s. 3

s. 11

Finance Act, 1950

s. 12

cl. 2

s. 60

s. 12

Finance Act, 1950

s. 35

s. 2

s. 10

s. 35

s. 35

s. 34

ss. 34 and 35

s. 35

Section 35

section 33A

s 35

s. 35

s. 23(4)

s. 33

(1938) L.R. 65 I.A. 236

ss. 34 and 35

Section 34

section 35

s. 33

s. 35

s. 35

s. 18A(5)

s. 35

s. 35

(1938) L.R. 65 I.A. 236


(2) S.C.R.

SUPREME COURT REPORTS 563

MAHANT MOTI DAS

S. P. SAHI, THE SPECIAL OFFICER IN CHARGE

OF HINDU H, ELIGIOUS TRUSTS & OTHEH, S

(and connected appeals)

(S. R. DAS, c. J., s. K. DAS, P. B. GAJENDRAGADKAR, K. N. WANCHOO and M. HIDAYATULLAH, JJ.)

Hindu Religious Trusts-Constitutional validity of Bihar Hindu Religious Trusts Act-Difference between Hindus, Jain and Sikh religious trusts-Legislative classification-Restrictions imposed on trustees-Validity-Whether Act interferes with practice of religion-Levy of a fe§ for the expenses of administration of Act- Legality-Bihar Hindu Religious Trusts Act, r950 (Bihar I of r95r), ss. 2, 5, 6, 7, 8, 28, 29, 32, 55(2), 60, 70-Constitution of India, Arts. r4, r9(r)(j), r9(5), 25, 26, 27.

The appellants as the Mahants of the respective maths or asthals were served with notices under s. 59 of the Bihar Hindu Religious Trusts Act, 1950, by the President, Bihar State Board of Religious Trusts, asking them to furnish statements and accounts of the properties in their possession. They challenged the constitutional validity of the Act by proceedings taken in the High Court on the grounds (r) that ss. 2, 5, 6, 7 and 8 of the Act infringe Art. 14 of the Constitution, inasmuch as there was ine:!qu:; Llity of treatment as between Hindu religious trusts on one hand and Sikh religious trusts on the other, the latter having been excluded from the purview of the Act, and that there was inequality of treatment even as between Hindu religious trusts and Jain religious trusts, though both came under the Act; (2) that the provisions of ch. V of the Act and in particular ss. 28 and 32 violate Art. i9(r)(f) of the Constitution, as under those provisions the mahant or Shebait practically loses his right of management and is reduced to the position of a mere servant of the Board; (3) that the provisions of the Act contravene Arts. 25 and 26 of the Constitution, as the power to alter or modify the budget relating to a religious trust or the power to give directions to a trustee may be exercised by the Board in such a way as to affect the clue observance of religious practices in the math or temple ; (4) that s. 70 imposes an unauthorised tax, and (5) that s. 55(2) contravenes Art. 133 of the Constitution.

Held, (r) that in view of the fact that in the matter of religious trusts in the State of Bihar, there are differences between Sikhs, Hindus and Jains and that the needs of Jains and Hindus are not the same in the matter of the administration of

I959

April Ij.

• I959

Mah ant i'v! ofi v.

S. P. S11hi

their respective religious trusts, it is open to the Bihar Legislature to exclude Sikhs who might have been in no need of pro- Das tection and to distinguish between Hindus and Jains.

Accordingly, ss. 2, 5, 6, 7, and 8 of the Act do not infringe Art. r4 of the Constitution.

It is well settled that while Art. r4 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation, and in order to pass the test of permissible classification, two conditions must be fulfilled, namely, (1) that the classification must be founded on an intelligible differentia which distingvished persons or things that are grouped together from others left out of the group and (2) that that differentia must have a rational relation to the object sought to be achieved by the statute in question.

Shri Ram Krishna Dalmia v. Shri Justice S. R. Tendolkar, (1959] S.C.R. 279, relied on.

(2) that having regard to the position of a trustee in respect of the trust property which he holds and the object or purpose of the Act, the restrictions imposed in Ch. V of the Act are really for the purpose of carrying out the objects of the trust and for the better administration, protection and preservation of the trust properties, and are reasonable restrictions in the interests of the general public within the meaning of cl. (5) of Art. 19 of the Constitution.

(3) that the Act does not contravene Arts. 25 and 26 of the Constitution, as the provisions of the Act relating to the power of the Board to alter the budget and to give directions to the trustee are subject to restrictions, namely, that they must be for the proper administration of the religious trust; and, further, none of the provisions interfere with "matters of religion" including practices which a religious denomination regards as part of its religion.

(4) that s. 70 of the Act is a valid provision as it only provides for the levy of a fee for the purpose of defraying the expenses incurred or to be incurred tn the administration of the Act and is not a tax.

Mahant Sri Jagannath Ramanuj Das v. The State of Orissa, (1954] S.C.R. 1046, followed.

(5) thats. 55(2) of the Act does not contravene Art. 133 of the Constitution as it does not override or is not intended to override Art. 133 or any other Article of the Constitution relating to appeals to the Supreme Court.

CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 225, 226, 228, 229 and 248 of 1955.

Appeals from the judgments and orders dated October 5, 1953, in Misc. Judicial Cases Nos. 418/52 and 124/53 and October 8, 1953, in T. S. No. 106/53,

Mi,; c. Judicial Cases Nos. 188/53 and 235/53 of the r959 Patna High Court.

Mahant Moti Das R. Patnaik, for the appellant (in C. A. No. 225/55). v.

R. 0. Prasad, 'for the appellants (in C. As. Nos. 226, 5 P. Sahi 228, 229 & 248/55).

Mahahir Prasad, Advocate-General for the State of Bihar, Tribeni Prasad Sinha and S. P. Varma, for the respondents (in C. As. Nos. 225, 226, 228 & 229/55).

Mahabir Prasad, Advocate-General for the State of Bihar and S. P. Varma, for the respondent (in C. A.

No. 248z55).

1959.

April 15.

The Judgment of the Court was delivered by

S. K. DAS, J.-This is a batch of five appeals which s. K. Das]. have been heard together and the principal question for decision in these appeals is the constitutional validity of the Bihar Hindu Religious Trusts Act, 1950 ( Bihar I of 1951 ), hereinafter referred to as the Act. l!'our of these appeals arise out of writ proceedings taken in the High Court of Patna on petitions made under Arts. 226 and 227 of the Constitution. One of them, namely, Civil Appeal No. 228of1955, arises out of a suit which was originally instituted in the Court of the Subordinate Judge of Patna but was later transferred to the High Court by an order made by it under Art. 228 of the Constitution. The petitioners in the writ petitions and the plaintiffs in the suit challenged the constitutional validity of the Act on certain grounds to which we shall presently refer. The petitions and the suit were contested by the State of Bihar and/or the President, Bihar State Board of Religious Trusts, who are now respondents before us.

The High Court in three separate judgments, two dated October 5, 1953, and the third dated October 8, 1953, held that the Act was a valid piece of legislation and on that main finding dismissed the writ petitions and the suit. The petitioners and the plaintiffs, appellants before us, applied for and obtained certificates from the High Court under Art. 132 of the Constitution to the effect that the cases involved substantial ques-

1959 tions of law as to the interpretation of the Constitution

- . D and the appeals have been brought to this Court in JHahant /\Jolt as f h 'fi v. pursuance o t ose 9ert1 cates. s. r. sahi The facts lie within a very narrow compass. In Civil Appeal No. 225 of 1955 the appellant is Mahant s. K. Das J.

Moti Das, and he alleged that he was the Mahant of a math or asthal situate in village Parbatta, district Monghyr, in Bihar, that he was a follower of the religion founded by Sri Kabir Sahib, that the properties of the as th al were treated as private properties of the mahants and that the President of the Bihar State Board of Religious Trusts constituted under the Act had no authority to serve him with a notice under s. 59 of the Act, inasmuch as the Act was ultra vires and unconstitutional and, in any event, did not apply to his math or asthal. In Civil Appeal No. 226 of 1955 the appellant l\fahant Ram Das similarly alleged that ho was the mahant of a math or asthal situate in villae\e Bhuthari in the same district of Monghyr, that he was a " bairagi sadh u " and follower of Ramanandi Laskari Sri Vaishnava Sampradaya, that he was the absolute owner of the properties belonging to tbe math and that the 'President, Bibar State Board of Religious Trusts, had no authority to issue a notice to him asking him to furnish statements and accounts of the propert.ies in his possession. In Civil Appeal No. 228 of 1955 the appellants made similar allegations in their plaint and challenged the" vires" of the Act, mentioning as their cause of action the date on which the assent of the President of India to the Act was first puhlished in the Bihar Gazette.

In Civil Appeal No. 229 of Hl55 the appellant Mahant Mahabir Das stated that he was the Mahant of an asthal known as Bisanpur Asthal situate in the self.same district.

He also received a notice from the President, Bihar State Board of Religious Trusts, to furnish statements and accounts, and he challenged the vires of the Act on similar grounds. In Civil Appeal No. 248 of 1955 Mahrmt Ram Krishna Das alleged that the temple in question, known as Bhikam Das Thakurbari in the town of Patna, was constructed by one Benidasji with his own money and he installed certain deities therein.

The allegation was that the temple and the properties x959 thereof did not constitute a ' religious trust ' within h -

. D th . f h t . . h A t d f th Ma ant Motz as e meanmg o t a express10n m t e c an ur er v. that the Act was ultra vires the Constitution inasmuch s. P. sahi as it infringed some of his fundamental rights. The

defence in all these cases was that the Act was valid, s. !(, Das J. and applied to the asthals or temple in question and the properties thereof.

The principal argument presented before us on behalf of the appellants is that the Act is bad on the ground that its several provisions infringe the appellants' fundamental rights guaranteed under (a) Art. 14; (b) Art. 19 (l)(f); and (c) Arts. 25, 26 and 27 of the Constitution. The Act has also been impugned on the ground that it imposes an unauthorised tax and also contravenes Art. 133 of the Constitution.

At this stage, it is necessary to advert to tho object or purpose of the Act and set out the relevant provisions thereof. The Act was passed by the Bihar Legislature and received the assent of the President, which assent was published in the Bihar Gazette on February 21, 1951. The long title of the Act and the preamble give the object of the Act. The long title says that it is an "Act to provide for the better administration of Hindu Religious Trusts and for the protection and preservation of properties appertaining to such trusts." The preamble repeats the same object or purpose, and makes it further clear that the Act is meant to provide for the better administration of Hindu Religious Trusts in the State of Bihar. Section 1 gives the short title, and provides for extent and commencement, the Act having come into force on August 15, 1951. Section 2 is the definition section, and the word ' Hindu ' in the Act means a person professing any religion of Hindu origin and includes a Jain and a Buddhist, but does not include a Sikh.

The expressions " religious trust " and " trust property " are defined in the following way :-

" Section 2 (1). ' religious trust ' means any express or constructive trust created or existing for any purpose recognised by Hindu Law to be religious, pious or charitable, but shall not include a trust created

1959 according' to the Sikh religion or purely for the benefit

Mahant Moti Dasof the Sikh community and a private endowment

v. created for the worship of a family idol in which the s. P. sa1,; public are not interested ; ·

S. K. Das}.

(p) 'trust property' means the property appertaining to a religious trust".

Section 3 states :

"This Act shall apply to all religious trustR, whether created before or after the commencement of this Act, any part of the property of which is situated in the State of Bihar. " Section 4 was amended by Bihar Act 16 of 1954, and it provides for necessary amendment or repeal, as the case may be, of certain earlier Acts dealing with public religious trusts and charitable endowments, such as, the Religious Endowments Act, 1863 (20 of 1863), the Charitable Endowments Act, 18~0 (6 of 1890) and the Charitable and Religious Trusts Act, 1920 (14 of 1920).

Sub-section (5) of s. 4 has an important bearing on one of the questions before us and must be quoted in full:

"Section 4 (5).

The Religious Endowments Act, 1863, and section 92 of the Code of Civil Procedure, 1908, shall not apply to any religious trust in this State, as defined in this Act." Chapter II of the Act deals with the constitution of the Board. Section 5 provides for the constitution of the Bibar State Board of Religious Trusts. Section 5(3) states that the Board shall be a body corporate and shall have perpetual succession and a common sea.I with power to acquire and hold property, both moveable and immovable. Section 7 makes provision for the appointment of the President and the members of the first Board and their terms of office. Section 8 contains the terms of tbe constitution of the second and every subsequent Board. Chapter IV refers to the appointment and qualification of the Superintendent of the religious trusts. The chapter further provides for the appointment of officers and servants for the Board.

Chapter V relates to the power and duties of the Board.

Section 28 (1) provides that the general superintendence of all religious tru•ts in the State shall be vested in the

Board and the Board shall do all things reasonab~ r959 and necessary to ensure that such trusts are properly - . supervised and administered and that the income Mahant Moh Das thereof is duly appropriated and applied to the objects s. p~Sahi of such trusts and in accordance with the purposes for which such trusts were founded and for which they s. K. n,, s J. exist. Section 28 (2) enumerates in great detail the powers and duties of the Board in regard to certain matters. Section 28(2)(e),, for example, states that the duty of the Board shall be to cause inspection to be made of the property and the office of any religious trust including accounts and to authorise the Superintendent or any of its members, officers or servants for that purpose. Section 28(2)(g) empowers the Board to give directions for the proper administratio_n of a religious trust in accordance with the law governing such trust and the wishes of the founder in so far as such wishes can be ascertained. Section 32 empowers the Board to settle a scheme for the proper administration of religious trusts. Chapter VI refers to the establishment of regional trusts committees and the powers and duties imposed on such committees. Chapter VIII refers to transfer of immovable properties and borrowing of money by trustees. Section 44 of this chapter states that no transfer made . by a trustee, of any immovable property of a religious trust by way of sale, mortgage, or lease for a term exceeding three years shall be valid unless made with the previous sanction of the Board. Section 45 prohibits a trustee from borrowing money for the purpose of any religious

trust without the previous sanction of the Board.

Chapter X relates to trustees and their duties. Section 59 of this chapter imposes a duty on the trustee to furnish particulars of the religious trust. Section 60 relates to the budget of religious trusts and submission of such budgets to the Board and the Board may alter or modify the budget in such manner and to such extent as it thinks fit.

Chapter XI relates to audit of accounts and recovery of irregular expenses from the trustees in default. Chapter XIII provides for the creation of a trust fund which is to be vested in the 72

'959 93oard.

Section 70 states that for the purpose of

Mahant Moti Da> defraying the expenses incurred in the administration

v of the Act the trustee of every religious trust shall pay s. P. Sahi to the Board such fee, not exceeding five per centum of its net income as the Board may from time to time 5 K. Da> J. with the previous sanction of the State Government determine. Chapter XVI provides for the dissolution or supcrsession of the Board. Section 80 states that if in the opinion of the Stat\) Government the Board makes default in the performance of the duties imposed on it or exceeds or abuses its powers, the State Government may declare the Board to be in default and direct that the Board shall be superneded. Section 81 provides that where an order of supersession has been passed, all the members of the Board shall vacate their offices as such members and all the power~ and duties to be performed by the Board shall be performed by such person as the State' Government may direct. Section 81 empowers the State Government to make rules and s. 83 empowers the Board to make bye-laws not inconsistent with the Act and the rules made thereunder.

We proceed now to consider the contentions urged on behalf of the appellants. The first contention is that the provisions in ss. 2, 5, 6, 7 and 8 infringe Art .. 14 of the Constitution. It is pointed out that the definition of the word ' Hindu' in s. 2 does not include Sikhs; and s. 5 constitutes a Board for religious trusts other than Jain religious trusts, and also two separate Boards-one for Swetambar Jain religious trusts and the other for Digambar Jain religious trusts. It is further pointed out that under ss. 6, 7 and 8 the con- • stitution of the Board for religious trusts other than Jain religious trusts differs in material particulars from the constitution of the two Boards for Jain religious trusts. The submission is that there is ineg uality of treA.tment as between Hindu religious trusts on one hand and Sikh religions trusts on the other, the latter having been excluded from the purview of the Act; secondly, there is inequality of treatment even as between Hindu religious trusts , i, nd Jain religious trusts, though both come under the Act.

We do not

(2) S.C.It~ SUPREME COURT H, EPORTS 571

think that there is any substance in this contention. r959 The provisions of Art. 14 of the Constitution had comeM h -M . D f d, . b £ h' C . b f a ant oti as up or 1scuss10n eiore t is ourt m a num er o v. earlier cases (see the cases referred to in Shri. Ram s. P. sahi Krishna Dalmia v. Shri Justice S. R. Tendolkar (1)). It is, therefore, unnecessary to enter upon any lengthy s. K. Das J. discussion as to the meaning, scope and effect of the Article. It is enough to say that it is now well settled by a series of decisions of this Court that while Art. 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation, and in order to pass the test of permissible classification, two conditions must be fulfilled, namely, (1) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (2) that that differentia must have a rational relation to the object sought to be achieved by the statute in question.

The classification may be founded on different bases such as, geographical, or according to objects or occupations and the like. The decisions of this Court further establish -that there is a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the cons.titutional guarantee ; that it must be presumed that the legislature understands and correctly appreciates the needs of its own people and that its faws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds; and further that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest. It is not disputed before us, and this has been pointed out by the High Court, that there are some differences between Hindus, Sikhs and J ains in some of the essential details of the faith which they rofess and the religious practices they observe; the Sikhs ha.ve no caste _or priests, though they have grantis who officiate at marriages and other ceremonies ; they do not believe in the Vedas, Puranas or Shastras, at least not in the same

(1) [I959] S.C.R. 279.

z959 way as the Hindus believe in them. The J ains also

Mahant Moti Das do not recognise the divine authority of the Vedas and v. do not practise sradhs or ceremonies of the dead, nor s. P. Sahi do they recognise the spiritual authority of the Brahmins (Maine's Hindu Law, 11th Edition, p. 82). It 5 I<. Das f. has been further pointed out that there are also organisational differences in the matter .of religious trusts between Hindus, Sikhs and Jains. There are not many Sikh religious trusts in Bihar, and their organi- , sation is essentially different. J ains consist of two main branches-Swetambar Jains and Digambar J ains-and each branch has a separate central organisation. Section 8 of the Act recognises these differences; for example, there is an assembly of Swetambar Jains known as Shree Sangh and under s. 8(2)(c) of the Act the Shree Sangh is entitled to elect five persons to the Board of Swetambar Jain Religious Trust.

Similarly, Digambar Jains also have an assembly known as the Digambar Samaj and under s. 8(3)(c) of the Act this assembly is entitled to elect five persons to the Board for Digambar Jain Religious Trust. In view of these differences it cannot be said that in the matter of religious trusts in the State of Bihar, Sikhs, Hindus and J ains are situated alike or that the needs of the J ains and Hin!i us are the same in the matter of the administration of their respective religious trusts; therefore, according to the well established principles laid down by this Court with regard to legislative classification, it was open to the Bihar Legislature to exclude Sikhs who might have been in no need of protection and to distinguish between Hindus and J ains.

Therefore, the contention urged on behalf of the appellants that the several provisions of the Act contravene Art. 14 is devoid of any merit.

The next contention urged on behalf' of the appellants is that the provisions in Chapter V, and in particular ss. 28 and 32, violate the fundamental right guaranteed to the appellants under Art. 19(l)(f) of the Constitution, namely, their right to acquire, hold and dispose of the trust properties. This argument before us has proceeded on the footing th.at the properties which the appellants hold are trust properties within

(2) S.O.R..

SUPREME COURT l~EPORTS 573

the meaning of the Act; but we must state here that 1959 the appellants have also alleged that the properties M h -;; . D are their private properties, to which aspect of the a ant v. oti as case we shall advert later. Chapter V of the Act, and s. P. sahi in particular s. 28 thereof, lays down the powers and duties of the Board. To some of these powers and. s. K. Das J. duties we have already made a reference earlier. Section 32 gives power to the Board, of its own motion or on application made to it in that behalf by two or more persons interested in any trust, to settle schemes for proper administration of the religious trust. There

are other sections in the chapter which give the Board power to enter into contracts and to borrow money, etc., for carrying out any of the purposes of the Act or to give effect to the provisions thereof. Under s. 58 every trustee must carry out all directions which may from time to time be issued to him by the Board under any of the provisions of the Act. The powers given under s. 28 include the power to prepare and settle the budget, to cause inspection to be made of the property and the office of any religious trust, to call for information, reports, returns, etc., to give directions for the proper administration of a religious . trust in accordance with the law governing such trusts and the wishes of the founder, to remove a trustee from his office in certain circumstances, and to control and administer the trust fund, etc.

The argument before us is that the position of a mahant or shebait of a Hindu religious trust is a combination of office and proprietary right and under the provisions of the Act the mahant or shebait practically loses his right of management and is reduced to the position of a mere servant of the Board; this, it is contended; is violative of the appellants' fundamental right under Art. 19(l)(f).

In A ngurbala Mullick v. Debabrata Mullick (1) Mukherjea, J., delivering the majority .judgment of this Court, has said that the exact legal position of a shebait may not be capable of precise definition, but its implications are fairly well established. It is now settled that the relation of a shebait in regard to

(1) (195r] S.C.R, 1125, 1133.

574 SUPREME COURT REPOiiTS [1959] Supp.

I959 debutter property is not that of a trustee to trust property under the English law.

Mahant Moti Da> M I h J 'd u { erJea, ., sa1 : v.

S. I). Sahi "In English law the legal estate in the trust property vests in the trustee who holds it for the benefit of s. K Da, J. cestui que trust. In a Hindu religious endowment on the other hand the entire ownership of the dedicated property is transferred to the deity or the institution itself as a juristic person and the shebait or mahant is a mere manager.

But though a shebait is a manager and not a trustee in the technical sense, it would not be correct to describe the shebaitship as a mere office.

The shebait has not only duties to discharge in connection with the endowment, but he has a beneficial interest in the de butter property ............ In almost all such endowments the shebait has a share in the usufruct of the debutter property which depends upon the terms of the grant or upon custom or usage. Even where no emoluments are attached to the office of the shebait, he enjoys some sort of right or interest in the endowed property which partially at least has the character of a proprietary right.

Thus, in the conception of shebaiti both the elements of office and property, of duties and personal interest, are mixed up and blended tog_ether ; and one of the elements cannot be detached from the other. It is the presence of this personal or beneficial interest in the endowed property which invests shebaitship with the character of proprietary rights and attaches to it the legal incidents of property,"

lt is to be remembered that even before the passing of the Act here impugned, there was statutory machinery for enforcing the obligations and duties imposed upon a mahant or shebait.

SectioR 92 of the Code of Civil Procedure provided that in the case of an alleged breach of any express or constructive trust created for public purposes of a charitable or religious nature or where the direction of the court was deemed necessary for the administration of any such trust, the Advocate-General, or two or more persons having an interest in the trust and having obtained the consent in writing of the Advocate-General, might institute

a. suit to obtain a decree-(a) to remove any trustee, 1959

(b) appointing a new trustee, (c) vesting any property h - . Das . (d} d" t' t d . .

Ma ant Moti m a trustee, rrec mg accoun s an enquiries, v.

(e) declaring what proportion of the trust property s. P. sahi or of the interest therein shall be allocated to any particular object of the trust, (f) authorising s. K. Das J. the whole or any part of the trust property to be let, sold, mortgaged or exchanged, (g) settling scheme and/or (h) granting such further or other relief as the nature of the case might require. The section therefore provided an important machinery for enforcing the obligations and duties imposed on trusees and

the jurisdiction given to the court was of a very wide extent.

Now, the right guaranteed under Art. 19(l)(f) is subject to cl. (5), thereof, which says inter alia that nothing in sub-clause (f) shall prevent the State from making any law imposing reasonable restrictions on the exercise of the right conferred by the said sub-clause in the interests of the general public.

We are of the view, in agreement withthat of the High Court, that the restrictions imposed by the Act on the power of the trustees are really intended, as the preamble of the Act states, for the better administration of Hindu religious trusts in the State of Bihar and for the protection and preservation of properties appertaining to such trusts. It is indeed true that the Act provides a better and more speedy remedy for the enforcement of the obligations and duties imposed on the trustees than the lengthy and cumbrous procedure of a suit under s. 92 of the Civil Procedure Code.

The Board is vested with summary powers in various matters, but the control is to be exercised for the better and more efficient' administration of the trust and for the protection and preservation of the trust properties. It is germane to refer in this connection to sub-s. (1) of s. 28 which states that the Board shall do all things reasonable and necessary to ensure that the religious trusts are properly supervised and administered and that the income thereof is duly appropriated and applied to the objects of such trusts and in accordance with the purposes for which such trusts were founded.

Section

1959 60 (2) no doubt empowers the Board to alter or modify

M h -;; . D the budget of any religious trust in such manner and

• ant v. 01 ' as to such extent as it thinks fit; but sub-s. (6) of s. 60 s. P. saM makes it clear that nothing contained in the section shall be deemed to authorise the Board to alter or s. IC Das J. modify any budget in a manner or to an extent inconsistent with the wishes of the founder, so far as such wishes can be ascertained, or with the provisions of the Act. Section 28 (2) (h) gives the Board power to remove a trustee from his office in certain contingencies ; but sub-s. (3) of s. 28 says that an order of removaJ passed by the B9ard under cl. (h) of sub-s. (2) shall be communicated to the trustee concerned ard such trustee may within 90 days of the communication of such order apply to the District Judge for varying, modifying or setting aside the order. Section 28 (2) (j) empowers the Board to sanction the conver- , sion of any property of a religious trust into another property if the Board is satisfied that such conversion is beneficial for the trust; there is, however, an important proviso that no such conversion shall be sanctioned unless the Board so resolves by a majority which includes at least three-fourths of its members and the resolutiol) is approved by the District Judge.

Even with regard to the settling of a scheme under s. 32 there is a safeguard under . sub-s. (3) thereof, which says that the trustee or any person interested in the trust may within three months of the publication of the scheme make an application to the District Judge for varying, modifying or setting aside the scheme.

These and similar other safeguards clearly indicate the true nature of the restrictions imposed under the Act, and we are of the view that having regard to the position of a trustee as respects the trust property which he holds and the object or purpose of the Act, the restrictions imposed .are really for the purpose of carrying out the objects of the trust and for better administration, protection and preservation of the trust properties; they_are, therefore, reasonable restrictions in the interests of the general public within the meaning of cl. (5) of Art. 19 of the Constitution. In

(2) S.C.R. SUPREME COURT ~EPORTS 577

this respect, the impugned provisions of the Act differ

L959 from those provisions of the Madras Hindu ReligiousM ,

-M . . . a1ta nt oti Das and Charitable Endowments Act, 1951, and the Or1ssa v.

Hindu Religious Endowments Act, 1939, as amended s. P. sahi by the Amending Act II of 1952, which came under consideration of this Court in The Commissioner, s. J<. Das J.

Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Shri Shirur Mutt (1) and Mahant Shri Jagannath Ramanuj Das v. The State of Orissa (2), and were held to be invalid on the ground that they were not reasonable :restrictions within the meaning of cl. (5) of Art. 19 of the Constitution.

The third contention of the appellants rests upon Arts. 25 and 26 of the Constitution. The appellants have invoked in aid Art. 25 (I) which says inter alia that subject to public order, morality and health, all persons have the right freely to profess, practice and propagate religion.

Article 26 is also relied on for the contention that every religious denomination or any section thereof has a right (a) to establish and maintain institutions for religious and charitable purposes and -(b) to manage its own affairs in matters of religion. It is difficult to see how any of the provisions of the Act can be said to interfere with the right guaranteed by Art. 25, viz., freedom of conscience and the right freely to profess, practice and propagate religion.

Learned counsel for the appellants has not been able to point out to us any particular provision of the Act which interferes with such a right. On behalf of the appellants it has been submitted that the power to alter or modify the budget relating to a religious trust or the power to give directions to a trustee may be exercised by the Board in such a

way as to affect the due observance of religious practices in a math or tern ple so as to constitute an encroachment on the right guaranteed under Art. 25, and learned counsel for the appellants had placed reliance on The Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swa- . miar of Sri Shirur Mutt (1 ), for his submission tj1at

(r) [1954] S.C.R. 1005.

(2) [1954] S.C.R, ro.16.

578 SUPREME , COUR1'. REPOR'.t'S [1959) Supp.

I959 freedom of religion in our Constitution is not confined - . to religious beliefs only, but extends to religious practi- Mahant Moti Das II b' h t · h' h h C ' ces as we su Ject to t e res notions w IC t e onst1s. p~· Sahi tution itself bas laid down. The answer to this submission is two-fold: we have pointed out , earlier that s. K. Da., J. the power to alter the budget is subject to cl. (6) of s. 60 of the Act and the Board is not authorised to alter or modify the budget in a manner or to an extent inconsistent with the wishes of the founder or with the provisions of the Act. The power to give direct.ions to the trustee is also subject to a siniilar restric- tion, namely, the . directions must be for the proper administration of the religious trust in accordance with the law governing such trust and the wishes of the founder in so far as such wishes can be ascertained and are not repugnant to such law.

The keynote of all the relevant provisions of the Act is the due observance of the objects of the religious trust and not its breach or violation. Secondly, as was observed in The Commissioner, Hindu Religious Endowments, Madras

v. Shri Lakshmindra Thirtha Swamiar of Shri Shirur Mutt('), at p. 1030, "an apprehension that the powers conferred ...... may be abused in individual cases does not make the provision itself bad or invalid in law".

With regard to Art. 26, els. (a) and (b), the position is the same. There is no provision of the Act which interferes with the right of any religious denomination or any section thereof to establish and maintain institutions for religious and charitable purposes; nor do the provisions of the Act interfere with the right of any religious denomination or any section thereof to manage its own affairs in matters of religion. Learned counsel for the appellants has drawn onr attention to Sri Venkataramana Devaru v. The State of Mysore (2), where following the earlier decision in The 001nmissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt('), it was observed that matters of religion included even practices which are regarded by the community as part of its religion. Our attention has also been drawn

(1) [1954] S.C R. 1005.

(2) [1958] S.C.R. 895.

to Ratilal Panachand Gandhi v. The State of Bombay (1) r959 in. whch it has been eld that a religio.us sect or en?- Maha,.1-;;01; Das mmatwn has the right to manage its own affairs rn v. matters of religion and this includes the right to spend s. P. sahi the trust property or its income for religion and for religious purposes and objects indicated by the founder s. I<. Das J. of the trust or established by usage obtaining in a particular institution. It was further held therein that to divert the trust property or funds for purposes which the charity commissioner or the court considered expedient or proper, although the original objects of the founder could still be carried out, was an unwarranted encroachment on the freedom of religious institutions in regard to the management of their religious affairs. We do not think that the aforesaid decisions afford any assistance to the appellants. Granting that ' matters of religion' include practices which a religious denomination regards as part of its religion, none of the provisions of the Act interfere with such practices; nor do the provisions of the Act seek to divert the trust property or funds for purposes other than those indicated by the founder of the trust or those established by usage obtaining in a pai.ticular institution. On the contrar.Y, the provisions of the Act seek to implement the purposes for which the trust was created and prevent mismanagement and waste by the trustee. In other words, the Act by its sveral provisions seeks to fulfil rather than defeat the trust.

In our opinion, there is no substance in the argument that the provisions of the Act contravene Arts. 25 and 26 of the Constitution.

Lastly, the appellants have challenged the validity of s. 70 of the Act, the relevant portion of which states:

"Section 70(1).

For the purpose of defraying the expenses incurred or to be incurred in the administration of this Act, the trustee of every religious trust shall, in each financial year, pay to the Board such fee, not exceeding five per centum of its net income in the last preceding financial year, as the Board may, from time to time, with the previous sanction of the State.

Government, determine."

(I) [1954] S.C.R. 1055.

'959 The argument is that s. 70 imposes an unauthorised

M I

-;-1 . D tax. The point. is, we think, concluded by our decision a 1ant Jr oti as . , . v. m M ahant Sri J agannath RamanUJ Das v .. The State s. P. sahi of Orissa (1) where the distinction between a tax and a fee for legislative purposes under our Constitution was s. J{. Das J. pointed out and with regard to an identical imposition under s. 49 of the Orissa Hindu Religious Endow-· mcnts Act, 1939, it was held that the contribution levied was a fee and not a tax. It was observed there at p. 1054:

" The collections made are not merged in the general public revenue and are not appropriated in the manner laid down for appropriation of expenses for other public purposes. They go to constitute the fund which is contemplated by section 50ofthe Act ...... '\Ve are further of opinion that an imposition like this cannot be said to be hit by article 27 of the Constitution.

What is forbidden by article 27 is the specific appropriation of the proceeds of any tax in payment of expenses for the promotion or maintenance of any particular religion or religious denomination. The object of the contribution under section 49 is not the fostering or paeservation of the Hindu religion or of any denomination within it; the. purpose is to see that religious trusts and institutions wherever they exist are properly administered. It is the secular administration of the religibus institutions that the legislature seeks to control and the object, as enunciated in the Act, is to ensure t.hat the endowments attached to the religious institutions are properly administered and their income is duly appropriated for purposes for which they were founded or exist. As there is no question of favouring any particular religion or religious denomination, article 27 could not possibly apply." These observations apply with equal force to the present case.

It has also been argued that s. 55 (2) of the Act contravenes Art. 133 of the Constitution and is accordingly invalid. Section 55 is in thee terms: 55 (I). "Unless otherwise provided in this Act, an appeal shall lie to the High Court against every order passed by the District Judge under this Act.

(1) [1954] S.C.R. 1046.

(2) No appeal shall lie from any order passed in z959 appeal under this section." M h M

 D . f

 A 'd a ant oti as We do not thmk that s. 55 (2) o the ct overn es v. or is intended to override Art. 133 or any other Artis. P. sahi cle of the Constitution relating to appeals to the Supreme Court. Such appeals must undoubtedly lie to s. I{. Das J. the Supreme Court, provided the necessary requirements for such appeals are fulfilled. It is, we think, obvious that the Act cannot affect the jurisdiction of the Supreme Court.

We now come to that part of the case of the appellants in which they claim the properties to be their private properties or, in the alternative, the trusts to be private trusts. The High Court has pointed out that in M. J.C. 418of1952 out of which has arisen Civil Appeal No. 225 of 1955, though there was an assertion that the properties were not trust properties, there was a counter-affidavit on behalf of the State of Bihar that the asthal in question was a public asthal and the properties appertaining thereto trust properties within the meaning of the Act.

In 'M. J. C. 124 of 1953 out of which has arisen Civil Appeal No. 226 of 1955 there was a similar claim that the mahant of the asthal was the absolute owner of the properties belonging to the . 34 of 1952 . math. In Smt No. 106 of 1953 out of whrnh has arisen Civil Appeal No. 22$ of 1955 there was a prayer for adjournment in order to enable the plaintiffs (now appellants before us) to file a petition to amend the plaint, and the purpose of the amendment sought~ to be made was to claim that the institutions in question were of a private charater and the Act had no application to them. This prayer was disallowed by the High Court on the ground that the amendment sought to be made would alter the whole character of the suit. In M. J.C. 188 of 1953 out of which has arisen Civil Appeal No. 229 of 1955 the claim was that there was no trust, express or implied. In M. J.C. 235 of 1953 out of which has arisen Civil Appeal No. 248 of 1955 there was a counter-affidavit on behalf of the State of Bihar that •the temple in question was a public temple and the Act applied to it. In all these cases the High Court has

'Y59 taken the view, rightly in our opinion, that the ques-

Mahant-;:; oti Das tions wheth_er the tru.sts are public or priv'.1te trusts or v. the properties are private or trust properties are quess. P. Sahi tions which involve investigation of complicated facts and recording of evidence and such investigation could 5 1' Das J. not be done on writ proceedings. In the one suit which was tried in the High Court the question did not arise as no amendment was allowed.

Therefore, in these cases there are no materials on which the question as to the nature of the trust can be determined, though in Ci vii Appeal No. 343 of 1955 (1 ) in which also judg - • ment is being delivered today, we have held that having regard to the preamble to the Act, the provisions in s. 3 and the provisions of sub-s. (5) of s. 4 the definition clause of •religious trust ' in the Act must mean public trusts express or constructive, recognised by Hindu law to be religious, pious or charitable. That finding, however, is of no assistance to the appellants in the present cases. The fate of these cases must depend on the sole question whether the Act is constitutionally valid or not.

We have held that the Act is constitutionally valid.

In the result we hold that the appeals are without any merit. They are accordingly dismissed with costs.

Appeals dismissed.

(1) Jlahant Ram Saroop Das;'i v. S. P. Sahi, seep. 583 post.

S. P. SAHI, THE SPECIAL OFFICER IN CHARGE OF HINDU RELIGIOUS TRUSTS & OTHERS

P. B. GAJENDRAGADKAR

K. N. WANCHOO

M. HIDAYATULLAH, JJ.

Constitution of India

s. 59

Bihar Hindu Religious Trusts Act, 1950

ss. 2, 5, 6, 7 and 8

Art. 14

ss. 28 and 32

Arts. 25 and 26

s. 70

s. 55(2)

Art. 133

ss. 2, 5, 6, 7

Art. 19

Arts. 25 and 26

s. 70

Art. 133

Art. 133

Bihar Hindu Religious Trusts Act, 1950

Arts. 226 and 227

Art. 228

Art. 132

s. 59

Art. 14

Art. 19

Arts. 25, 26 and 27

Art. 133

Section 1

Section 2

Section 2

Section 3

Section 4

Religious Endowments Act, 1863

Charitable Endowments Act

s. 4

Section 4

Religious Endowments Act, 1863

section 92

Code of Civil Procedure, 1908

Chapter II of the Act

Section 5

Section 5(3)

Section 7

Section 8

Section 28

Section 28

Section 28(2)(e)

Section 28(2)(g)

Section 32

Section 44

Section 45

Section 59

Section 60

Section 70

Section 80

Section 81

Section 81

s. 83

ss. 2, 5, 6, 7 and 8

s. 2

s. 5

ss. 6, 7 and 8

Art. 14

Art. 14

Section 8

s. 8(2)(c)

s. 8(3)(c)

Art. 14

ss. 28 and 32

Art. 19(l)(f)

Chapter V of the Act

s. 28

Section 32

s. 58

s. 28

Art. 19(l)(f)

the Code of Civil Procedure

Art. 19(l)(f)

s. 92

s. 28

Section

1959

s. 60

Section 28

s. 28

Section 28

s. 32

Art. 19

Das and Charitable Endowments Act, 1951

Hindu Religious Endowments Act, 1939

Amending Act II of 1952

Art. 19

Arts. 25 and 26

Art. 25

Article 26

Art. 25

Art. 25

s. 60

Art. 26

Arts. 25 and 26

s. 70

Section 70(1)

s. 70

s. 49

section 50

article 27

article 27

section 49

article 27

s. 55

Art. 133

Section 55

s. 55

Art. 133

s. 3

s. 4