April 7•

SUPREME COURT REPORTS [1960]

MUIR MILLS CO. LTD., KANPUR

ITS WORKMEN. ( P. B. GAJENDRAGADKAR, K. N. WANOHOO and K. c. DAS GUPTA, JJ.)

Industrial Dispute-Wage structure-Production bont<s and incentive bonus, if could be taken into consideration when fixing new basic wage-Intention of Government if can be interpreted to prejztdicc interest of Labour, Industry and Country-U.P. Industrial Disputes Act, r947 (U. P. 28 of r947).

The appellant paid wages to its workmen in the Carding Department on piece rate basis and in addition, the workmen were entitled to receive further emoluments if their production exceeded a certain norm. The right to receive these additional emoluments had become a part of the terms of service of these. workmen. In 1948 the Government of Uttar Pradesh with a view to make it obligatory on the employers in the different industries to keep the wages of workmen at a certain level, by its order under the provisions of s. 3 of the U.P. Industrial Disputes Act, 1947, laid down the standard of basic wages and dearness allowance for different industries in the provinGe.

The appellant in giving effect to the said order of the Government for introducing the new piece rate raised the fixed piece rate but stopped the system of paying additional emoluments, as it thought itself to be justified, in taking into consideration for this purpose the amounts actually earned by the workers including what had been earned as additional emoluments which were being paid to the workmen by \Vay of productive and incentive bonuses. ]'he \Vork1nen's

case was that by stopping the additional emoluments which they used to get on the basis of better production by extra efforts the employer had in fact reduced the wages to which they were entitled and the fact that higher piece rates were introduced did not affect the question. The question was whether the Government order required or authorised the company to_include the incentive bonus and the production bonus which they had been so long paying in fixing the new piece rate for the purpose of compliance \vith the directions given in the Government order as regards the basic wages : • Held, that the Government order did not require or justify the employer including the production and incentive bonuses in the calculation of the rates of the basic wage of the workers and consequently the Government order did not have the effect of absolving the company from the duty of continuing to pay the production and incentive bonuses to workmen as before : Held, further, that the concept of "basic" is not peculiar to wages alone; it is what is normally allowable to all, irrespective of special claims and is also ordinarily understood to mean that part of the price of labour, which the employer must pay to all

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workmen belonging to all categories. The phrase is used ordiz960 narily in marked contra.distinction to " dearness allowance " the quantum of which varies from.time to time, in accordance with Muir Mills Co. Ltd. the rise or fall in the cost of living. Thus understood " basic v. wage" never includes the additional emoluments which some Its Workmen .., workmen may earn, on the basis of a system of bonuses related to the production.

Titaghur Paper Mills Co. Ltd. v. Their Workmen, [1959] Supp. (2) S.C.R. 1012, referred tp .

CIVIL APPELLATE JURISDICTION:. Civil Appeal No. 305 of 1959.

Appeal by special leave from the Decision dated January 10, 1957, of the Labour Appellate Tribunal of India, Bombay, in Appeal No. III-346 of 1955.

G. S. Pathak, S. P. Sinha and K. K. Sinha for G. N.

Dikshit, for the appellants.

Maqbool Ahmad Khan (General Secretary of the Union), fqr respondent No. 1.

J.P. Goyal, for respondent No. 2. ,

1960. April 7. The Judgment of the Court was delivered by DAS GUPTA, J.-This appeal by the employer, the Das Gupta J.

Muir Mills Co., Ltd., Kanpur, is against the decision of the Labour Appella'te Tribunal of India, Bombay, modifying an award of the Adjudicator, Kanpur, in a reference made by the Government of. U. P. under the provisions of ss. 3, 4 and 8 of the Industrial Disputes Act, 1947. The matter in dispute referred was originally set out in these terms :-

"Whether the employers have wrongfully and/or unjustifi11>bly reduced the wages of their workmen of Carding Department, given in the annexure? If so, to what relief are the workmen entitled and from what date ? " By an order dated April 25, 1955, the Government amended this issue by substituting therefor the following :-

"Whether the employers have wrongfully and/or unjustifiably reduced the wages of their workmen of Carding Department, given in the annexure, by discontinuing the payment of production and/or special bonus, if so, to what relief are the workmen entitled and from what date? "

z96o It will be noticed that the issue as re-framed by the

M . M-; l-C Ltd amendment indicated the manner in which the reducuir '/

0 • • tion in the wages of these workmen had been alleged to Its workmen be made, viz., by "discontinuing the payment of production and/qr special bonus". To understand how Dos Gupta J the question of such a reduction arose and also the considerations which arise in deciding the question whether the reduction, if any, was wrongful and/or unjustifiable a few facts need to be mentioned: The appellant company is a textile mill employing in its Carding Department workmen known as Inter Tenters, Roving Tenters, Draw Frame Tenters and Slubbers.

All these workmen are paid wages on piece rate basis.

Before 1948 the rates in force per hank weri;> -/2/3/- for the Inter Tenters, -/2/3/- for the Slubbers and Draw Frame Tenters and -/2/5/- for the Roving Tenters. In addition to this these workmen were entitled to receive further emoluments if their production exceeded a certain norm. The rates for these further emoluments then in force were two annas per rupee of basic earnings of Rs. 15 to Rs. 25 per month and three annas per rupee for basic earnings above Rs. 25 per month. Apart . from these emoluments payment was also made at 9 pies per hank if the production on any day was 7 hanks .or more.

Though both these additional emoluments were related to production the Tribunals below have described the first kind as production bonus and the second kind as incentive bonus and it will be convenient to adhere to that description here.

These two kinds of additional payments which the workmen would receive only iftheir production would reach and surpass certain standards had the result of increasing the total emoluments received' by some of the workmen much above what they would be getting under the fixed rate per hank. The right to receive these additional emoluments had become a part of the terms of service of these workmen. With effect from December 1, 1948, however the appellant-company stopped the system of paying such additional emoluments but instead raised the fixed rate per hank to -/3/9/- for Inter Tenters, -/3/6/- for Slubbers and Draw Frame Tenters and -/4/9/- for Roving Tenters. This was done immediately after an order had been made

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by the Government under the provisions of s. 3 of the x960 U. P. Industrial Disputes Act, 1947, laying down the M . M-:-- 1 c r.. a d d f b . d d ll c uir i ls o. t ., stan ar s o asrn wages an _earness a owance .lOr v. . different industries in the Province. Clause 2 of this Its Workmen order fixed the minimum basic wage for cotton and woollen textile industries in Kanpur and certain other Das Gupta J. areas at Rs. 30 per month. Clause 3 provided for payment of dear food allowance.

Clause 5 provided that persons who are already employed on November 30, 1948, in any industrial textile concern shall receive wages at the increased rates mentioned therein.

Clause 7 provided that "every employee of an industrial concern or undertaking to which this order applies, shall be paid wages including dear food allowance in accordance with the provisions of els. (2), (3), (5) and (6). " There is a proviso to the clause which says that where the consolidated wage payable to an employee who was on the pay roll of the conaern or undertaking on November 30, 1948, is more than the consolidated wage payable in accordance wi_th the proviHions of the said clauses, the difference shall be paid to him as personal wage. Clause 8 defines "basic wages " as "consolidated wages payable. to an employee on November 30, 1948, minus Dear Food Allowance calculated according to the rates prevalent in the concern on the said date. "

The workmen's case is that by stopping the additional emoluments which they used to get on the basis of better production by extra efforts the employer had in fact reduced the wages to which they were entitled and the fact that higher piece-rate were introduced with effect from December 1, 1948, does not affect the question. The employer's contention is that by the Government order it was required to introduce new piece-rates after taking into consideration the amounts actually earned by workers including what had been earned by additional emoluments and so the stOppage of these additional emoluments did not amount to any reduction. The Adjudicator held that these additional emoluments payable as production bonus and incentive bonus had not been taken into consideration by the company while arriving at the revised piece-rates. He

r960 held further that these could not be taken into consideration in law as the Government order did not Muir Mills Co. Ltd. contemplate these bonuses to be taken into considera-

Its w:hmen tion in arriving at the appropriate figure fo: basic wages for the purpose of the order. In that view the Das Gupta J.

Adjudicator held that there had been an unjustifiable reduction in the wages of the workmen and directed the management to restore with effect from December 1, 1948, "the system of granting production and . incentive bonuses to such of the workmen who are entitled to it''. He also gave directions as to how the calculations should be made for the purpose of incentive bonus and production bonus.

The Appellate Tribunal thought it unnecessary to consider the question whether these bonuses had been actually taken into consideration while fixing new piece rates, being of opinion that if the Government order did not require or justify the employer's including these bonuses in the calculation of the new rates the company would be hound in law to restore these bonuses even if they had actually taken them into consideration. It held that the Government order did not require or justify the employer including these bonuses in the calculation of the rates of wages for the purposes of the Government order. In the result the appellate tribunal agreed with the first tribunal's decision that this system of granting production and incentive bonuses must be restored. In view of the fact however that for a long time after December 1, 1948, the workmen did not raise this question the appellate tribunal was of opinion that the restoration should be only with effect from February 1, 1954. As regards the rates at which these bonuses had to be calculated they also modified the directions given by the Tribunal.

The main contention raised before us on behalf of the appellant-company is that the appellate tribunal was wrong in thinking that the Government order did not require or justify the company in including the additional emoluments being paid by way of production bonus and the incentive bonus in the calculation of the rates of basic wages for the purpose of the order, ·

Before we proceed to consider this question it is z96o proper to mention a preliminary contention which M . M7c Ltd was sought to be raised by Mr. Pathak, on behalf of uir i s o. the appellant. Referring to a n,.ote made by the v.

Adjudicator on August 27, 1955, he wanted to argue Its Workmen that it was not open to the tribunals below to consider Das Gupta 1. at all the question whether under the Government order the appellant could have included the incentive bonus in the calculation of the basic rayte.

The note is in these words :-

- " The parties are represented. The calculations have been filed by them which were made in the presence of the Adjudicator. There is no difference between the parties that while calculating the rates with effect from l-l!~-48 if production and incentive bonus have been considered the question of any relief does not arise,, and vice versa. The workers say that in the said. wages, these bonuses have nbt been included while the employers contend that they have been included.

The latter have not filed the required information. Proceedings closed." At first sight, this does seem to give a basis for an argument that the parties agreed before' the Tribunal to treat the matter as a question of fact only and that .the workmen did not want to raise any question that under the Government order these bonuses could not be included in the calculation of the rates. It is unnecessary however for us to examine the effect of such concession in view of'what transpired before the appellate tribunal. From the judgment of that Tribunal we find that on behalf of the workmen it was stated that they had not conceded any such position in the lower tribunal and that their contention was that such bohuses had not and could not be taken into consideration. It is also clear from the judgment that in view of this the parties argued their appeal before the appellate tribunal on both these contentions, viz., whether the Government order in question aillowed the employers to include the bonuses in questjon in the calculation of the new rates of basic wages in the case of the piece-rate workers like those concerned in this and if so, whether the employers have in

(i3

z960 fact taken these bonuses into account. It is clear

M . M"ll c Ltd that the contention that in view of the concession

"" '/ o. made on August 27, 1955, it was not open to the Its wo, kmen appellate tribunal to go into the question whether the Government order required or authorised the em- Das Gupta f. ployer's including the bonuses in the calculation of the new rates was abandoned before the tribunal below.

When it was pointed out to Mr. Pathak that in view of this, he should not be allowed to raise this contention Mr. Pathak fairly abandoned this contention here also.

The real question therefore is whether the Government order required or authorised the company to include the incentive bonus and the production bonus which they had been so long paying in fixing the new piece rate for the purpose of compliance with the directions given in the Government order as regards the basic wages. In finding the correct answer to this question it is necessary to examine the entire scheme of the Government order. The relevant clauses of the Government order have already been set out. The purpose of the scheme, on the face of it, is to make it obligatory on the employers in different industries to keep wages of workmen at a certain level. This purpose is sought to be achieved by laying down on the one hand the basic wages which must be paid and on the other hand the dearness allowance-called in the Government order dear food allowance-which must be paid. The concept of basic wage is familiar to employers and workmen and all who have to deal with the problems of labour's remuneration. It may be profitably remembered in this connection that the concept of a "basic" is not peculiar to wages alone. ]for instance, when any rationing system is introduced for any commodity, whether it is food, or coal, or petrol or some other commodity, it is usual to fix a quantum as the basic ration. The underlying idea is to fix some amount as what every individual coming under the system will get; while additional amounts _to be fixed in accordance with further directions will be allowed to some individuals, in view of their special claims as supplementary rations. " Basic" in all such cases is what is normally allowi.ble to all-irrespective

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of special claims. The phrase " basic wages " is also i96o ordinarily understood to mean that part of the price M . c L 4 of labour, which the employer mmit pay to all work-· "" '/

0 • 1

• men belonging to all categories. The phrase is used Its Workmen ordinarily in marked contra-distinction to " dearness allowance", the quantum of which varies from time Das Gupta J. to time, in accordance with the rise or fall in the cost of living.

Thus understood " basic wage" never includes the additional emoluments which some workmen may earn, on the basis of a system of bonuses related to the production. The quantum of earnings in such bonuses varies from individual to individual according to their efficiency and diligence ; it will vary sometimes from season to season with the variations of working conditions in the factory or other place where the work is done ; it will vary also with variations in the rate of supplies of raw material or in the assistance obtainable from machinery. This very element of variation, excludes this part of workmen's emoluments from the connotation of" basic wages". But, says the appellant, whatever may be ordinarily understood by the word " basic wages" hardly matters when the Government order itself contains a definition of "basic wage". Clause 8, which has already been referred to is in these words :-"Basic Wages " for the purposes of this order will mean consolidated wages payable to an employee on November 30, 1948, minus Dear Food Allowance calculated according to the rates prevalent in the concern on the said date." On behalf of the appellant Mr. Pathak concentrates on the words "consolidated wage", and argues that everything which answers to the description of wage must be included in this process of consolidation.

Contending next that the emoluments payable by way of production bonus and incentive bonus are"' wages " even if not ordinarily understood to be basic wages _ he argues that the result of the definition in cl. 8 is that basic wages for this order is the sum total of all emoluments answering to the description of wages thus including production and ineentive bonuses, but excluding by reason of the express words used " dearness allowance ", .

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1960 In support of his argument that production or - incentive bonuses which used to be paid by the com- Muir Mills Co. Ltd. pany is also a kind of wage the learned advocate has

Its ;/; rkmen placed strong reliance on some observations made by this Court in Titaghur Paper Mills Co., Ltd. v. Their Das Gupta f, Workmen (1 ) that a production bonus is in the nature of an incentive wage.

We will presently consider how far the fact that these bonuses are in the nature of an incentive wa.ge assists the appellant's contention that it has to be included in the "consolidated wage" within the meaning of cl. 8 of the order. But before we do that, it will be proper to see exactly what this Court said in the above case. A question had been raised as regards the jurisdiction of the Industrial Tribunals to go into the question of any production bonus claim at all, that being a matter of agreement between the employer and the employees. In considering thiS question this Court thought fit to consider first what a production bonus essentially is. In the course of that discussion the Court said :-

" Before we go into the question of jurisdiction of a tribunal under the Industrial Disputes Act, 1947 (hereinafter called the Act), we should like to consider what production bonus essentially is, The payment of production bonus depends upon production and is in addition to wages. In effect it is an incentive to higher production and is in the nature of a, n incentive wage." ............................................................... "There is a base or standard above which extra. payment is made for extra production in addition to the basic wage. Such a plan typically guarantees time wage up to the time represented by standard performance and gives worker! a share in the savings represented by superior performance."

............................................................... " Therefore generally speaking, payment of production bonus is nothing more or less than a payment of further emoluments depending upon production as an incentive to the workmen to put in more than the standard performance. Production

(I) [19;9) Supp. 2 s.c.R. IOl2.

...

3 S.C.R. SUPREME COURT REPORT~ 497.

bonus in this case also is of this nature and is r960 nothing more than additional emolument paid as - an incentive for higher production. We shall later Muir Mills Co. Ltd. consider the argument whether in this case the pro- Its w:kmen duction bonus is anything other than profit bonus.

It is enough to say at this stage that the bonus Das Gupta ]. under the scheme in this case also depends essentially on production and therefore is in the nature of incentive bonus;" It is important to notice that while the learned counsel is undoubtedly right in saying that a bonus related to production was described in this case as in the nature of an incentive wage, the Court was equally emphatic in laying down tliat such bonuses form no part of wages as ordinarily understood and again that these are in addition to basic wages.

Can it be reasonably said that even such "incentive wage " though not forming part of basic . wage as . ordinarily understood was intended to be included in the consolidation of wages which cl. 8 speaks of? The answer must be in the negative. While it is true that the 'Yord "consolidated wage" taken away from the context would import the inclusion of every ki:id of wage, we have to remember that here it is basic wage which is being defined. It will be unreasonable to think that in defining basic wage the Government would include something which is always understood to be outside the ordinary concept of basic wage.

Remembering as we must that it is basic wage which is being defined here it is reasonable to think that .only such emoluments which are receivable by the workmen generally, as a normal feature of their earnings and therefore satisfy the .characteristics of "basic wage", are intended to be covered by the consolidation.. It is because dear food allowance does not satisfy this charitcteristic that this has .been expressly excluded.

Mr. Pathak's argument that when in the case of dearness allowance an express exclusion has been made, everything else in the nature of wages has to be included would have been of great force but for the fact that when "basic wage " is being defined the presumption must be that anything which ii; i eseutially

1960 different and distinct from basic wage was not intended to be included.

Muir Mills Co. Ltd.

It . th t" . 1 th t th t"fi . v. 1s wor men 10mng a so a e no 1 cat10n Its workmen does not in terms refer to piece rate system of payment.· That itself is a , reason for thinking that Das Gupta J. production bonuses which are an essential feature of piece rate system but not of time rate system, were not in the contemplation of those who drafted the order.

Equally pertinent is the consideration that when the Government is evolving a scheme to improve the wage structure of workmen it would not knowingly do anything which would have the effect of removing incentives to production. Such removal would harm labour by preventing workmen from earning more by extra efforts, harm capital by diminishing the return therefrom and harm the country as a whole at a time when higher production is the crying need of every branch of industry. An interpretation which would impute to Government such an unthinkable intention to harm all concerned, cannot be lightly accepted; but that would be the necessary result if "consolidated wages" in the definition of basic wages is interpreted to include even an incentive wage like bonus related to production. On every consideration it is therefore abundantly_clear that production bonus and incentive bonus were not within basic wages as defined in the Government order.

It was faintly arguedby Mr. Patlrak that the fact that the workmen did not for a number of years raise any objection to the stoppage of the old system of production bonus and incentive bonus shows that they themselves understood the Government order to mean that these bonuses would be included in fixing the basic wages for the purpose of the order. Whether that was so or not it is unnecessary for us to consider, for when the only reasonable interpretation of the words used in the order is that these are not to be included, it matters little how the employer or the workmen 1mderstood these words to mean.

We have therefore come to the conclusion that the Labour Appellate Tribunal was right in holding that the Goverl!ment order did not require or justify the

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employer including the production and incentive 1960 bonuses in the calculation of the rates of the basic . f h . d l h h kfutr lvlilis Co. Ltd. wage o t e worKer:s an consequent y t at t e v.

Government order did not have the effect of .absolving lts Workmei: the comp.any from the duty of continuing to pay the. production and incentive bonuses to workmen as Das 0up1a J. before.

No objection has been raised before us as regards the directions given by the appellate tribunal for the calculation of these bonuses. • The appeal is accordingly cfomissed with costs.'

Appeal dismised.

IN RE: SANT RAM

(B. P. SINHA, C. ]., ]AFER lMAM, ]. L. KAPUR,

K. N. WANCHOO , and K. C. DAS GuPTA, JJ.)

Supreme Court Rules-Publication of list of touts by "Registrar -Rules, if ultra vires the powers of this Court-Supreme Court Rules, 1950 (as amended), 0. IVA, rr. 23, 24-Constitution of India, Ats. 14S(l)(a), 14, 19, 21.

On a complaint made by the Honorary Secretary of the Supreme Court Bar Association, . the Registrar of, the Supreme Court issued notices to the appellant and another under r. ;!4,

0. IVA of the Supreme Court Rules to show cause why their names should not be included in the list of touts to be published by him thereunder.

A preliminary objection was raised that rr. 23 and 24 were ultra vires the powers of this Court conferred by Art. 145(1)(a) of the Constitution and that e Registrar had, therefore, no jurisdiction to initiate the proceedings. The Registrar overruled the objection and on the: evidence adduced by the complainant found both the persons to be touts within the meaning of r. 23 of the said order and directed their names to be included in the list of touts to be hung up on the Court notice board.

The appellant appealed to the Chamber Judge and on his direction the matter was placed before the Constitution Bench: Held, that rr. 23 and 24 of 0. IVA of the Supreme Court Rules, 1950, as amended, are infra vires the rule-making powers of this Court. and the order of the Registrar must be upheld.

There can be no doubt that this Court has the inherent juris-' diction to regulate its proceedings relating to the conduct of persons appearing . before it, in and out of O; mrt, in so tar as it relates to the profession and its P.(.1ics.

Apart from such jurisdictim., Art. 145(l)(a) of the Constitution by using the expression "the practice and procedure of the

IA-6 SCI/ND/82

.jJril 7.

MUIR MILLS CO. LTD., KANPUR

ITS WORKMEN. ( P. B. GAJENDRAGADKAR

K. c. DAS GUPTA, JJ.

Industrial Disputes Act

Government of Uttar Pradesh

s. 3

Industrial Disputes Act, 1947

Muir Mills Co. Ltd.

G. S. Pathak

S. P. Sinha

K. K. Sinha

G. N.

Dikshit

Maqbool Ahmad Khan

J.P. Goyal

DAS GUPTA

Das Gupta

Government of. U. P.

ss. 3, 4 and 8

Industrial Disputes Act, 1947

April 25, 1955

Dos Gupta

December 1, 1948

s. 3

Industrial Disputes Act, 1947

Clause 2

Kanpur

Clause 3

Clause 5

November 30, 1948

Clause 7

Clause 8

February 1, 1954

Pathak

August 27, 1955

Das Gupta

Clause 8

cl. 8

cl. 8

cl. 8

Patlrak

SANT RAM

B. P. SINHA

AFER lMAM

L. KAPUR

K. N. WANCHOO

K. C. DAS GuPTA

Supreme Court Rules

Court-Supreme Court Rules, 1950

Constitution of India

Supreme Court Bar Association

IVA of the Supreme Court Rules

Art. 145(1)(a)

Constitution Bench

IVA of the Supreme Court Rules, 1950

Art. 145(l)(a)


3 S.C.R. SUPREME COURT REPORTS 499

employer including the production and incentive 1960 bonuses in the calculation of the rates of the basic . f h . d l h h kfutr lvlilis Co. Ltd. wage o t e worKer:s an consequent y t at t e v.

Government order did not have the effect of .absolving lts Workmei: the comp.any from the duty of continuing to pay the. production and incentive bonuses to workmen as Das 0up1a J. before.

No objection has been raised before us as regards the directions given by the appellate tribunal for the calculation of these bonuses. • The appeal is accordingly cfomissed with costs.'

Appeal dismised.

IN RE: SANT RAM

(B. P. SINHA, C. ]., ]AFER lMAM, ]. L. KAPUR,

K. N. WANCHOO , and K. C. DAS GuPTA, JJ.)

Supreme Court Rules-Publication of list of touts by "Registrar -Rules, if ultra vires the powers of this Court-Supreme Court Rules, 1950 (as amended), 0. IVA, rr. 23, 24-Constitution of India, Ats. 14S(l)(a), 14, 19, 21.

On a complaint made by the Honorary Secretary of the Supreme Court Bar Association, . the Registrar of, the Supreme Court issued notices to the appellant and another under r. ;!4,

0. IVA of the Supreme Court Rules to show cause why their names should not be included in the list of touts to be published by him thereunder.

A preliminary objection was raised that rr. 23 and 24 were ultra vires the powers of this Court conferred by Art. 145(1)(a) of the Constitution and that e Registrar had, therefore, no jurisdiction to initiate the proceedings. The Registrar overruled the objection and on the: evidence adduced by the complainant found both the persons to be touts within the meaning of r. 23 of the said order and directed their names to be included in the list of touts to be hung up on the Court notice board.

The appellant appealed to the Chamber Judge and on his direction the matter was placed before the Constitution Bench: Held, that rr. 23 and 24 of 0. IVA of the Supreme Court Rules, 1950, as amended, are infra vires the rule-making powers of this Court. and the order of the Registrar must be upheld.

There can be no doubt that this Court has the inherent juris-' diction to regulate its proceedings relating to the conduct of persons appearing . before it, in and out of O; mrt, in so tar as it relates to the profession and its P.(.1ics.

Apart from such jurisdictim., Art. 145(l)(a) of the Constitution by using the expression "the practice and procedure of the

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.jJril 7.

500 SUPREl\IE COURT REPORTS [1960]

Court," which has to be construed in its widest sense, confers, on this Court the power to regulate not merely the. conduct of In r•: Sant Ra_m advocates appearing in Court buf' also of their assistants in

. - - - relation to the business of this Court. Consequently, r. 23 which makes an advocate who ; tccepts engagement in legal business . through .a tout guilty of misconduct and r. 24 which lays down the procedure for including a person in the list of touts are clearly within the rule-making powers of this Court. No question as to r. 24 infringing Art. 14 of the Constitution . could arise since it does not discriminate within the class to which it applies, nor does it contravene Art. 19 or 21 of the Constitution and; it was futile to contend that the word •life' in Art. 21 included• livelihood'. No tout can claim any rights in relation to the business of the Court. This rule which seeks to maintain the purity of the legal profession'is no less in the interest of the -

- general public and it is the duty of every -Court to see that toutism is completely eliminated; - - CivIL APPELLATE JURISDICTION: Civil l\Iisc. Petition No. 928 of 1959.

Appeal against the order dated l\Iay 16, 1959, of the Registrar.

M. G. Bhimasena Rao, for Sant Ram. -· . H. N. Sanyal, Additional Solicitor-General of India, N. S. Bindra .and, R.H. Dhebar, for the Attorney- General of India. · "1960. April 7. The Judgment of the Court was delivered by Sinha C. J.

SINHA, C. J.-This matter was placed before the Constitution Bench by an order of the Chamber Judge --dated August 14, 1959, as it involved the vires of the rules framed under Art. 145 of the Constitutionwith

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--- - - particular reference to Rule 24 of Order IV-A of the Supreme Court Rules (as Amended}.

 It appears that on receipt of a letter dated April 28, - 1959, from the Supreme Court Bar Association forward~ -mg a.copy ofa resolution which had been passed by -

the Executive Committee of that Association, the Registrar initiated proceedings and held an enquiry under R; 24(2} of Chap, IV-A. The enquiry was made against two persons named Sa, nt Ram and Budh Dev Sharma on a complaint made by the Honorary Secretary of the Supreme Court _Bar Association. 'The complaint against those persons-was to the effect that they were " continuing their undesirable activities" - and were seen _eyery day in the Court premises and

3 S.C.R. SUPREME COURT REPORTS 501

in the verandah in front of the Bar Association r960 "accosting clients". On receipt of the Secretary's I t R letter the Registrar caused notices to be issued to the n re:__.:: am two persons aforesaid to show ca11se why their names Sinha c. J. should not be included in t.he "list of touts" to be kept hung up on the Court notice board according to R. 24 aforesaid. The R.egi; trnr fixed a date for holding the enquiry and called upon those persons to appear before him and to adduce such evidence as they may be ad vised, in showing cause against the inclusion of their names in s11ch a lisL.

The notice further called upon them to file their replies, if any, to the complaint on or before May 6, 1959, and to be ready with all their evidence and witnesses, if any, at the hearing on May 9, l!J59.

C!opies of the complaint and other relevant papers were also sent to the Secretary of the Supreme Court Bar Association inviting him to take such part in the proceedings as the Association may be ad vised and requesting him to furnish particulars of the evidence in support of the complaint and to be ready with the evidence. In pursuance of the notice aforesaid Budh Dev Sharma alias B. D.

Pathak filed his reply on May 6, 1959, annexing thereto certain documents and praying that he may be allowed to continue eaming his livelihood. He also prayed that his employer Shri Dharam Bhushan, Advocate, may be accorded permission to have his name registered as a clerk in the Registry and also in the Bar Association. Ou May 8, 1959, Sant Ram filed his reply to the said notice annexing thereto a certificate of Mr. M. U. Bhimasena Rao, Advocate, and praying that the notice against him may be discharged and that he be " allowed to make both ends meet in the service of hia present employer", meaning thereby Mr. Bhimasena Rao, Advocate. The proceedings before the H, egistrar commenced on May 9, 1959, and were concluded on May 11, when evidence was recorded.

A preliminary objection was raised on behalf of the persons proceeded against that the rules framed by the Supreme Court under which the proceedings had been initiated against them were ultra vires the powers of the Court conferred by Art. 145 of the Constitution.

In re : Sant Ram

Sinha C. ].

SUPREME COURT RJ<JPORTS (1960]

It was contended on their behalf that the Registrar had no jurisdiction to initiate the proceedings against them. The learned Registrar overruled the preliminary objection and held that it was not competent for him to go behind the rule8 and that he must follow them, though he indicated that if he had the competence to decide the preliminary objection on its merits, he would have no difficulty in holding that the objection was wholly unfounded.

After considering the evidence adduced before him the learned Registrar by his order dated May 16, 1959, recorded the finding that it had been proved to his satisfaction that both those persons had been habitually frequenting the precincts of the Court for the purpose of procuring business for certain advocates in their profession, for remuneration, over a period of years right up to the time the show cause notice had been served upon them. He directed accordingly that a list of touts be published forthwith in accordance with R. 24(1), 0. IV-A, of the Supreme Court Rules, showing the names of the two persons aforesaid in that list which shall be kept hung up on the Court notice board.

Against this order of the Registrar only Sant Ram appealed to the Chamber Judge. As already indicated, the learned Chamber Judge directed the matter to be placed before the Constitution Bench in view of the constitutional question raised by the appellant challenging the vires of the rules aforesaid.

Though other points were also raised in support of the appeal before us, the most important question that falls to be determined is whether this Court had the jurisdiction under Art. 145 of the Constitution to frame the rules impugned in this case. Before the rules which were amended in the present form and which came into force with effect from April 15, 1959, there was no provision in the rules of this Court containing the definition of the word " tout " or laying down the procedure for dealing with persons who were alleged to have been acting as such. Order IV-A was therefore added. It was headed : " Professional or Other Misconduct". It contains rules relating to the suspension or removal of advocates from the roll of

-- L

advocates of this Court including the procedure to be followed in proceedings started against an advocate of the Court.

Rules 23 and 24. which are the relevant rules are in these terms:-

"23. Any Advocate, who accepts an engagement in any legal business through a person included in the list of touts published as provided in the next . following Rnle, shall be deemed guilty of professional misconduct.

Explanation:-

"Tout" means a person who procures, 111 consideration. of any remuneration moving from any Advocate or from any person on his behalf, the employment of such Advocate in any legal business, or who proposes to any Advocate to procure, in consideration of any remuneration moving from such Advocate or from any person on his behalf, the employment of the Advocate in such business, or who for purposes of such procui-ement frequents the precincts of the Court."

2'!. ' (I) "The Registrar shall publish lists of persons proved to his satisfaction, by evidence of general repute or otherwise, habitually to act as touts, to be known as 'lists of touts' and may, from time to time, alter and amend such lists.

A com of every list of touts shall be kept hung upon the Court Notice Board.

Explanation:- The passing of a resolution by the Supreme Court Bar Association declaring any person to be a tout shall be evidence of general repute of such person for purpose of this Rule. .

(2) No person shall be included in the list of touts unless he has been given an opportunity to show cause against his inclusion in such list.

Any person may appeal to the Chamber Judge against the order of the Registrar including his name in such list.

(3) The Registrar may, by general or special order, exclude from the precincts of the Court all such persons whose names arc included in the list o_f touts." The question the rule-making is whether these rules are within power of this Court conferred by

In re: Sant Ram

Sinha C. J.

In re: Sa1d Ram

Sinha C. ].

Art. 145( l )(a) of the terms:-

Cumtilttlion 1d1ich is in these

"1'15(1) Subject to the provisions of any law made by Parliament, the Supreme Court may from time to time, with the approval of the President, make rules for regulating generally the practice and procedure of the Court including- ( a) rules as to the pernons practisingbefore the Court:

It has been contended that the power of this Court to frame rules is confined to making rules for regulating the "practice and procedure" du not include rules to declare a person a tout aml the procedure leading up to such a declaration.

In our opinion there is no force in this contention.

It has not been, and it cannot be, contended that: this Court is incompetent to frame rules regulating conduct in and out of Court bearing on the professional activities of an advocate of this Court.

This Court has the inherent jurisdiction to regulate its !Jroceedings relating to conduct of persons appearing before it, in and out of Court, in so far as such conduct has a bearing on their professional relations anrl ethics, apart from the constitutional provisions of Art. MS set out above.

This Court must in the very nature of things have the fullest power to lay down rules with a view to ensuring honest and efficient rlischarge of their duties by officers of the Court, including legal practitioners admitted to the roll of advocates of the Court.

This Court has, subject to such legislation as may be made by Parliament, the responsibility vested in it of maintaining proper discipline in Court and of insisting upon proper standards being observed by legal practitioners who have the privilege of appearing, acting and pleading in this Court.

This Court must, therefore, in the proper discharge of its duties as the highest Court in the land make such rules as would ensure sound administration of justice and proper conduct on the part of those whose duty it. is to help the Court in the discharge of its resp01isibili1ies.

Apart from the inherent jurisdiction of this Conn, the Constit:ntiou itself has

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' lo(

3 S.C.R.

SUPREl\iE COURT REPORTS 505

authorised the Court to make rules for regulating 1960 generally the practice and procedure of the Court. 111 re : Sant Ram The expression, "the practice and procedure. of the Court" must be construed in its fullest amplitude and Sinha C. J. must include regulating the conduct of all persons, appearing before the Court, in relation to the business of the Court. Thus the conduct of advocates and their assistants in relation to the business of the Court must form the subject matter of regulation by the rules of the Court.

Once it is held that this Court has the 'authority to frame rules relating Lo the conduct of persons practising in this Court, it follows that this Court has the power to prescribe a code of conduct for advocates, regulating their relations with their clients and their conduct in Court as officers of the Court. \Vhen this Court, as in R. 23, proYides that an advocate shall be guilty of professional misconduct if he accepts an engagement in any legal business through a person included in the list of touts, such a rule cannot be said to be beyond the rule-making powers of this Court.

It follows that >vi th a view to enforcing that rule, a "tout" has to be defined, which is done by the explanation to

R. 23.

It is equally clear that R. 24. which lays down the procedure for publishing lists of touts and for holding an enquiry to determine whether or not a particular person should be included in such a list must be equally within the purview of the rule-making power of this Court.

In our opm10n, therefore, it is futile to contend that R. 24 in question is ultra vires the rule-making power of this Court.

It is next contended that Art. 14 of the Constitution has been infririgecl by the prov1s1ons contained in

R. 24.

It was cl iflicult for the appellant to indicate in 11:hat way the alleged discrimination occurs.

It was faintly suggested that there was some difference' between the provisions now impugned and those of s. 36 of the Legal Practitioners' Act (Act XVIII of 1879).

Assuming that there is some difference between the two provisions. it cannot be said that ipso facto there is discrimina1 ion.

All persons who frequent the pre-- cincts of this Court shall be <lealt with under the same

IY6U

ht re: Sa11l Ram

Sinha C. J.

rules, if and when lhe occasion arises.

All persons who are included in the list of touts under R. 24 wm be liable to be dealt with in the same way irrespective of any other considerations.

Hence there is no room for any discrimination so far as the precincts of this Court are concerned.

It is also contended that the impugned rule infringes Arts. I 'J and 2 I of the Constitution, because it has the effect of excluding him from the precincts of the Court, and of carrying on his occupation and that it has a tendency to deprive him of his liwlihoocl.

The rule, as already indicated, has been made with a view to ensuring the purity and soundness of the profession of la11 so far as the advocates of this Court are concerned.

It cannot, therefore, be said that it is not in the interest of the general public lo exclude touts from the precincts of this Court.

If the appellant has been rightly declared to be a tout, he cannot justly complain that he is being deprived of the right to carry on his occupation, an occupation which is regarded as having a corrupting infiuencc.

A lout as ouch cannot claim any rights in relation lo the business of the Court and it is incumbent on every Coun where legal practitioners arc allowed to appear and plead to see that toutism is completely eliminated.

\\'ith reference to the terms of Art. 2 l, it 11as also argued by the appellant himself, after he harl been permitted by the Court lo dispense with the services of his advocate, that life must include livelihood.

The argument that the "ord '"life" in Art. '.!I of the Constitution includes '"livelihood'" has only to be stated to be rejected.

The question of livelihood has not in terms been dealt with by Art. '.!I of the Constitution.

That question is included in the freedoms enumerated in Art. I 'J, particularly cl. (g), or even in Art. ](i in a lirnitedsense, but the language of Art. 21 cannot be pressed into aid of the argument that the "ord '"life" in Art. 2 I includes '"livelihood" also.

Even if this extreme proposition were to be accepted as "ell founded, the appellant will have to be kept out of the precincts of the Court only after the procedme established by the rules of this Courr has been observed. "'c hav'C already held that the rule in

' -

.• ./

. '

1o1

question is not ultra vires.

That being so, the only question that remains to be considered is whether the procedure laid clown by the rule has not been followed as contended by the appellant.

It has already been stated that the appellant had been properly served with the notice to show cause why his name should not be included in the list of touts.

He put in his show cause petition and he was given time to adduce such evidence as he may have been advised in support of his case.

The appellant has not contended that the procedure laid down in the rule has not been followed. but his contention was that as the Registrar did not grant further time and did not issue summons to his \1;{tnesses he had been rleprived of his right to adduce evidence.

In our opinion, there is no substance in this contention.

The enquiry was a summary one.

The matter was dealt with by the Registrar on two dates. If the lawyers whom the appellant wished to ex<imine on his belnlf did not turn up on the date fixed, it m<iy be clue to the fact th<it they were not willing to support his case.

It is <i little difficult to <ippreci<ite what those <idvoc<ites, even if they had <ippeared before the Registrar, could prove.

They could not prove the neg<itive.

It was for the com.- phinant to adduce evidence in support of the allegation that: the appellant is a tout. The whole question, therefore, which the Registrar had to determine was whether or not the evidence adduced in support of the complainant's case was sufficient to make out that complaint. The Registrar has come to a distinct finding that it had been established to his satisfaction by evidence of repute that the appellant is a tout. It appears that the appellant started coming to this Court as a litigant after his conviction under s. 409 of the J ndian Penal Code.

He said he worked as clerk with a lawyer who had taken up his cause, but he appears to have changed his masters rather too frequently and pretended to have worked as an advocate's clerk without his name being shown in the register of clerks maintained by the Bar Association.

His case that a number of advocates of this Court had started a false propaganda against him and some others, because they felt that their clients were being misled into

In re: Sanl Ram

Sinha C. ].

111. r~ : Sant Rnm

Sit1ha C. J

April Tl.

cngaging other a<hocates, h:1s not been accepted b)' the Registrar.

It appears to have been the case that not being a registered clerk, he could not do any job perr111.ss1hle for such a clerk.

N:1t11rally, therefore, he \\'as found .wandering about in the corridors in circ11m.stanccs which led to the gem1ine belief th:1t he had no other business in Court than that of touting for such legal practitioners as would engage him for that nefarious activitv. \\le cannot, therefore, accede to the argument that the appellant has been a l'ictim o[ mere .suspicion.

The nidence of general repute aga1nst hin1, in our opinion, 'vas suA.icient: to brand him as a "!Out". It follows that there is no merit in this appeal, which is hereby dismissed.

AfJfJeal dismissed.

M/S. MULLER Re PHIPPS (INDJA) LTD. v.

K. C. SUD

(P. B. GAJENDRAGADKAR and K. C. DAs

GUPTA, J.J.) Industrial Dispute-Scheme for gratuity-Claim for gratuity by workmen under the scheme in addition to retrenchment compensation-If must depend on the construction of the scheme- Industrial Disputes Act, 1947 (14 of 1947), s. 25F.

The Labour Court, Delhi, made an award framing gratuity scheme, one of the provisions being that on the termination of service by the company, the workmen shall be entitled to half a month's basic salary or wage for each year of completed service as gratuity.

The respondent who was retrenched had received compensation under s. 25F of the Industrial Disputes Act made an application under s. 33C of the Act claiming the gratuity in accordance with the sche1ne in addition to the retrenchment compensation already received.

The contention of the appellant was that the gratuity which the respondent claims was in essence the same thing as compensation for the retrenchment and to allow gratuity in addition to the retrenchment compensation under s. 25F would be to give double benefit for the same eYent, i.e., .retrenchment: _ Held, that whether retrenched workmen can claim the benefit of a gratuity scheme in addition to the retrenchment compensation would depend on the construction of the material terms of

' -

IN RE: SANT RAM

B. P. SINHA

L. KAPUR

K. N. WANCHOO

K. C. DAS GuPTA, JJ.

Supreme Court Rules

Court-Supreme Court Rules, 1950

Constitution of India

Supreme Court Bar Association

IVA of the Supreme Court Rules

Art. 145(1)(a)

Constitution Bench

IVA of the Supreme Court Rules, 1950

Art. 145(l)(a)

Art. 14

Art. 19

Art. 21

M. G. Bhimasena Rao

Sant Ram

H. N. Sanyal

N. S. Bindra

R.H. Dhebar

Sinha

SINHA

Art. 145

Order IV-A of the Supreme Court Rules

Sa

It appears that on receipt of a letter dated April 28, - 1959, from the Supreme Court Bar Association forward~ -mg a.copy ofa resolution which had been passed by -

the Executive Committee of that Association, the Registrar initiated proceedings and held an enquiry under R; 24(2} of Chap, IV-A. The enquiry was made against two persons named Sa, nt Ram and Budh Dev Sharma on a complaint made by the Honorary Secretary of the Supreme Court Bar Association. '

Budh Dev Sharma

S.C.R. SUPREME COURT REPORTS 501

The complaint against those persons-was to the effect that they were " continuing their undesirable activities" - and were seen eyery day in the Court premises and

3 S.C.R. SUPREME COURT REPORTS 501

in the verandah in front of the Bar Association r960 "accosting clients".

May 6, 1959

May 9, l!J59

Pathak

Dharam Bhushan

May 8, 1959

M. U. Bhimasena Rao

May 9, 1959

Art. 145

May 16, 1959

Art. 145

April 15, 1959

Sant Ram

Sinha

Sa1d Ram

Art. 145( l )(a)

Parliament

Art. 14

s. 36

Art. 2

Art. 21

Art. 2

s. 409

Penal Code

Sanl Ram

Sant Rnm

ha

P. B. GAJENDRAGADKAR

K. C. DAs

Industrial Disputes Act, 1947

s. 25F

Labour Court, Delhi

s. 25F

Industrial Disputes Act

s. 33C

s. 25F


111. r~ : Sant Rnm

Sit1ha C. J

April Tl.

SUPREME COURT REPORTS ll960J

cngaging other a<hocates, h:1s not been accepted b)' the Registrar.

It appears to have been the case that not being a registered clerk, he could not do any job perr111.ss1hle for such a clerk.

N:1t11rally, therefore, he \\'as found .wandering about in the corridors in circ11m.stanccs which led to the gem1ine belief th:1t he had no other business in Court than that of touting for such legal practitioners as would engage him for that nefarious activitv. \\le cannot, therefore, accede to the argument that the appellant has been a l'ictim o[ mere .suspicion.

The nidence of general repute aga1nst hin1, in our opinion, 'vas suA.icient: to brand him as a "!Out". It follows that there is no merit in this appeal, which is hereby dismissed.

AfJfJeal dismissed.

M/S. MULLER Re PHIPPS (INDJA) LTD. v.

K. C. SUD

(P. B. GAJENDRAGADKAR and K. C. DAs

GUPTA, J.J.) Industrial Dispute-Scheme for gratuity-Claim for gratuity by workmen under the scheme in addition to retrenchment compensation-If must depend on the construction of the scheme- Industrial Disputes Act, 1947 (14 of 1947), s. 25F.

The Labour Court, Delhi, made an award framing gratuity scheme, one of the provisions being that on the termination of service by the company, the workmen shall be entitled to half a month's basic salary or wage for each year of completed service as gratuity.

The respondent who was retrenched had received compensation under s. 25F of the Industrial Disputes Act made an application under s. 33C of the Act claiming the gratuity in accordance with the sche1ne in addition to the retrenchment compensation already received.

The contention of the appellant was that the gratuity which the respondent claims was in essence the same thing as compensation for the retrenchment and to allow gratuity in addition to the retrenchment compensation under s. 25F would be to give double benefit for the same eYent, i.e., .retrenchment: _ Held, that whether retrenched workmen can claim the benefit of a gratuity scheme in addition to the retrenchment compensation would depend on the construction of the material terms of

' -

the scheme considered in the light of s. 25F of the Industrial Disputes Act, 1947. The reasonable conclusion .from the present scheme is that the gratuity that could be daimed . under the award was intended to be in addition to the retrcnchmenf compensation and not in lieu thereof.

The respondent was entitled to such gratuity even thoug!i he had already received payment of compensation for retrenchment in accordance with the provisions of s .. 25F of the Act.

Indian Hume Pipe Co. v. Its Workman, [19601 2 S.C.R. 32, followed.

Bramachari Research Institute v. Its Workme~, [1~6o] 2 S.C.R. 45, referred to.· ·· • ' : · CrvrL APPELLATE JuRISDICTION: Civil •Appeal No . . 147 of 1960. · Appeal by special leave from the dcision dated May 18; 1959, of the Labotir Court, Delhi, in L.C.A.

No. 53/1959. '. .

Pnrshottam Tricwiidas, S. N. Andley, ]. . B. Dadachanji and Rameshwar Nath, for the appellrtnts. Sulwmar Chose, for the respondent. ;·

1960. April 11.

The Judgment of the Court was delivered by ' DAs GuPTA, J.-This appeal is against an order of the Judge, Labour Court, Delhi, in an application under s. 33C of. the Industrial Disputes Act by the respondent, K. C. Sud, by which the' ~Otlft computed the amount fh1e to the petitioner by way of ' g-ratuity under an award to be Rs. 80.42 np. only.

Sud; who was a workman of the appellant company, M /s. Muller & Phipps (India) Ltd. was retrenched by the company on January 31, 1958.

At that time a lefere11ce on the question of introduction of a gratu_ity' scheme for the workmen of the company was pending before the Industrial Tribunal.

An application by Sud against this order of retrenchment under s. 33A failed. In the reference above-mentioned the Court. made an award framing a gratuity scheme in th~_following terms:- .. "On the death of an employee while in te service of the company, or on his becoming. physically m mentally incapable of further service, half a !nonth's basic salary or wages for each year of continuous service shall be paid to the disabled employees, or if he h:1~ died, to his he'irs or legal representative~ or

• llf ' • . assigns. ·

3-6 SCI/ND/82 \

Muller & Phipps

(India) Lttf.

K. C. Sud

Dns Gupta].

' "

ll!ul!tr & Phif;/is

(India) Ltd. v. /(.C.S, ud Das G11/1fa }.

On volnntarv retirement or resignation of an emplovec, after. five \ears' continnons service, ha![ a montJ{'s basic salar)· or wages for each year of continuous service.

On terminati.on of serl'ice by the company, half a month's basic salary or wages for each year of completecl service." The scheme was also made applicable with effect from the d; ite on "hich the reference had been made, viz., June '-2s, 19;,7, It was on the basic of this .award that Sud has made his application under s. l3C, his case being that as his retrenchment amounted to termination of se1'vice within the meaning of the award he was entitled to half a month's basic salary for each year of completed serl'ice.

Admittedly he had completed two years of service.

It is also not disputed that his basic wage at the time of retrenchment was Rs. 80.42 np.

If, therefore, he is entitled to have a gratuity in accordance with the scheme of the award

the amount due to him "ill be Rs. 80.42 np.

Of the manv contentions raised on behalf of the company in re; lsting the petition, all of which were rejected by the Court below, the only one which is pressed before us is on the question whether the respondent is entitled to recover gratuity under this scheme in addit:ion to the compensation, he had admittedly received already in accordance with the provisions of s. 2iiF of the Industrial Disputes Act.

In suppon of this contention it is urged tht the gratuity which the respondent claim's is in essence the same thing as compensation for his retrenchment and to allow him gratuity in addition to retrenchment compensation ui1der s. 2.'iF woulrl be to gi, e double benefit for the same event i.e., retrenchment.

This it is ursed is unfair to the employer am! is against the Industrial Disputes Act. , The <]Ue, stion whether a double benefit of a gratuity scheme as well as retrenchment compensation can be given to workmen, came up for consideration before this Court in Indian Hume Pifu: Co. v. !Is Worhl'rs (').

This Court there considered in some detail the real nature and object of the retrenchment compensation

(I) [1960]2 S.C.R.3 2.

. "

provided by s. 25F of the Industrial Disputes Act and the nature and object of a gratuity scheme as a retirement benefit. It pointed out that while gratuity is intended to help workmen after retirement . to whatever' cause the retirement may be due to, the retrenchment compensation is intended to give relief for the suaden and unexpected termination of employment by giving partial protection to the retrenched person and his family to enable them to tide over the hard period of uncm polyment.

The Court also traced the history of development of the industrial law as regards gratuity schemes and retrenchment compensations, and. after a full . consideration of the question,. came to the conclusion that there was notliing in law to prevent a workman from•getting double benefit, one under a gratuity scheme and the other as retrenchment cqmpensation. The Court however took care to point out that gratuity schemes may be so framed, whether by consent or by award, that retrenchment confpensation is thereunder payable only in lieu of gratuity and again they may be .so framed as to provide for payment of gratuity in adition to retrenchment compensation.

Accordingly, the Court laid it down that the. question as to whether retrenched workmen can claim the benefit of a gratuity scl; ieme in addition to the retrenchment compensation m!der s. 25F or not would depend on the construction of the material terms of the .scheme <::onsidered in the ljght of the provisions of', s. 25F of the Act.

On the very day this pronouncement was made the Court also delivered judgment in Brahmachari Research Institute v. Its W orkmer~ (1) in which the question as indicated above fell to be considered. In Brahmachari's case the Court after mentioning . that the general question as to double benefits of retrenchment. compensation and gratuity being available to. workmen had already been considered in the Indian Hume

Pipe Company's case proceeded to examine the award , that had been made in a dispute between thet Institute and its workmen to ascertain. whether gratuity. in addition to retrenchment compensation was provided thereby. 1"he Court pointed out that in that award

(I) [1960) S.C.HA5.

Muller & Phipps (India) Ltd. v K. C. Sud

Das Gupta J.

.A1ulkr & PhijijJs

(India) Ltd. v.

K. C. Sud

Das Gupta J ..

512 SUPRE'NlE COURT REPORTS [1960]

the word 'gratuity' had been used to coyer all three cases, \'iz., (i) retrenchment, (ii) termination of service by any reason. at.her than misconduct and (iii) resignation with the consent of the . management; what deserved special notice was that cases of retienchment as such were specifically covered by t.he award. It was of opinion that such payment to workmen for retrenchment as such did not lose its character of retrenchment compensation by reason of t.he mere fact that it was described as gratuity. Jt was mainly on the basis of this fact that the award had provided gratuity for retrenchment as such in addition t.o gratuit\' for other modes of termination of service that the 'courtdecided in Brahmachari's case that the gTatuity there on ret.rcnchn1c11t lras nothing 111orc or less than compensation on account of retrenchment as provided under s. 25F of the Act and decided that the workmen were entitled to only one or the other, whichever i~ more adv•intageous to them. lf we examine the award in the case before us in the light: of the two decisions of the Court mentioned above the first thing that strikes us is tl1at this a'\rard did not. make any provision for gratuity for retrenchment as such.

It is important: to notice that the worknlt!n themselves in their statement of claim had urged for a distinct provision for , retrenchment in addition to other modes of termination of service.

The Tribunal holl'ever made n6 special provision for retrenchment but: provided in its scheme of gratuity for three classes of cases, namely, (i) on the death of an employee or on his becoming physically or mentally incapable of further sb-vice, (ii) on voluntary retirement or resignation and (iii) on termination of service by the company.

Retrenchment, it is true, will fall within the termination of service.

Tlpt, however, as is clear from the above cases, cannot by itself justify a conclusion that the gratuity that could be claimed under such a schen)e in case of ret renchrnent was in lieu of retrenchment: compensation.

If the intention was that in cases of retrenchment the gratuity will be in lieu of retrenchment compensation provided under s. '25F the ohviom thing woulcl be' to make scpar:itc

provisions for gratuity for retrenchment as such and

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...

• I

3 S.C.R.

SUlJREME COURT REPORTS 513

gratuity for other modes' oi termination of service.

That was the method followed in the award that fell for comideration fr1 Brahmachari's case.

That method has however not been followed in the award that we have to. consider here. ln this case there is no specific reference 'in the award to retrenchment as such: The reasonable conclusion from the scheme as drawn up is that the gratuity that could be claimed under this

award by retrenched workmen because of the fact that retrenchment is also one kind of termination !l'of service vl'ithin the meaning of the award was intended to be in addition to the retrenchment compensation and not in lieu thereof.

The decision in Brahmachari.'s case on the special facts of the award therein is therefoi; e of no assistance to the appeUai1t. \Ve are bound to hold on an examination of the award in the present case that the gratuity which the respoi1dent claims on the basis of the award is distinct from and in addition to the retrenchment compensatioh he has received. v\Te are of opinion therefore that the Tribunal was right in holding that the respondent is e1ititlecl to such gratuity e11en though he has already received payment of compensa'tion for retrenchment in accordance with the provisions of s. 25F of the Industrial Disputes Act.

The appeal 1s accordingly' dismissed with costs.

A jJ/JCal disntissed.

COMivIISSIONER OF INCOME-TAX, BOMBAY

v . (S. K. DAs, J. L. KAPUR and/M. 1-TmAYATULLAtt, JJ.)

Income-tax-Association of persons-Meaning o(-Indian Incume-tax Act, 1922 (XI of .1922), s. 3.

A Hindu governed by the Mitakshara School of Hindu Law died leaving three widows as his legal heirs.

The widows took the estate as joint tenants and did not exercise their right to separate possession and enjoyment.

The main income was from - dividends and from immovable property.

The latter was held under s. 9(3) of the Income-tax Act not to be assessable as income

Muller & Phij1ps .(India) Ltd. v. K. C. Sud

Das Gupla ].

Af, ril 14.

S. MULLER Re PHIPPS (INDJA) LTD

K. C. SUD

P. B. GAJENDRAGADKAR

GUPTA, J.J.

Industrial Disputes Act, 1947

s. 25F

Labour Court, Delhi

s. 25F

Industrial Disputes Act

s. 33C

s. 25F

s. 25F

Industrial Disputes Act, 1947

Pnrshottam Tricwiidas

S. N. Andley

B. Dadachanji

Rameshwar Nath

Sulwmar Chose

DAs GuPTA

s. 33C

Industrial Disputes Act

Muller & Phipps (India) Ltd.

Sud

s. 33A

K. C. Sud

s. 2

Industrial Disputes Act

s. 2

Industrial Disputes Act

s. 25F

Industrial Disputes Act

s. 25F

s. 25F

Brahmachari

s. 25F

s. 25F

Industrial Disputes Act

COMivIISSIONER OF INCOME-TAX, BOMBAY

S. K. DAs

L. KAPUR

TmAYATULLAtt

Indian Incume-tax Act, 1922

s. 3

s. 9(3)

Income-tax Act


I960

Commissionsr of

Income-Tax,

Bombay v.

Chandulal Keshavlal & Co.

Kapuy ].

F 6bruary. il9

SUPREME COURT REPORTS [1960)

not in terms, negativing the Crown's contention. I think that there was ample material to support the findings of the Commissioners, and accordingly that this prohibition does not apply." Thus in cases like the present one in order to justify deduction the sum must be given up 'for reasons of commercial expediency ; it may be voluntary, but so long as it is incurred for the assessee's benefit the deduction would be claimable.

The Income-tax Appel.late Tribunal has found in favour of the Managing Agent that the amount was expended for reasons of commercial expediency, it was not given as a bounty but to strengthen the Managed Company and if the financial position of the Managed Company became strong the Managing Agent would benefit thereby. Th>l.t. finding is one of fact.

On that finding the Income-tax Appellate Tribunal rightly came to the conclusion that it was a deductible expense under s. 10(2)(xv).

In our OJ>inion the judgment of the High Court was right and we would dismiss this appeal with costs . • Appeal dismissed. 1-

THE COMMISSIONER OF INCOME-TAX,

BOMBAY NORTH & OTHERS.

M/S. HARIV ALLABHDAS KALIDAS AND CO.,

(S. K. DAs, J. L. KAPUR AND M. HrnAYATULLAH. JJ.)

Income-tax-Managing Agent's Commission payable at the end of the year-Rate of Cm1<missio1~ reduced before then by agreement-If voluntary reliiiquishment of a portion of accrued commission.

The respondent-firm Harivallabhdas Kalidas was appointed

the Managing Agent of Shri Ambika Mills Ltd., the appellant in -" the connected appeal by means of a Managing Agency Agreement the relevant portion of which ran thus:-

" (2)(a) The Company shall pay each year to the said Firm either the commission of 5 (five) per cent on the total sale proceeds of yarn, and of all cloth, manufactnred tram cotton,

.....

silk, jute, wool, waste and other fibres and sold by the i96o company, or 'a commission of three pies per pound avoirdupois Commissioner of on the sale, whichever the said Firm choose to take, and also Income-Tax, a commission of IO (ten) per cent on the proceeds of sale of all B b N th other materials sold by the Company and IO (ten) per cent on om ay or the bills of any ginning and pressing factories and on any M/ H ".· 11 'hd th k d ti C " s. ariva au as o er wor one oy ie ompany.

Kalidas And by clause (5) it was provided:

"(5) The remuneration payable to the said Firm under clause z(a) shall be paid to the saii!l Firm forthwith after the 31st day of December or such otker date as the Directors may fix for the closing of the accounts of the Company in each year and after such accounts are passed by the company in General Meeting." Subsequently, at the request of the Managed Company the

Managing Agents agreed to charge commission at 3 per cent on sales instead of 5 per cent for the year ending December 31", 1950 and a resolution to that effect was passed by the Managed Company and a formal agreement to that effect was executed. The Income-tax Authorities, however, taxed the Managing Agents for two assessment years on the basis that by entering into an agreement with the mills they had voluntarily relinquished

certain sums of money as their commission which had accrued to them as income for the purpose of income-tax. An appeal was taken to the Income-tax Tribunal which held that the agreement between the Managing Agent and the Managed Company to receive remuneration at 3 per cent on the total sale was valid and took effect from January, r, :i:950, and the questions whether the eommission accrued on the proceeds of every single sale or only wken the assessee firm exercised its option to charge it on the total sale proceeds or on the weight of the yarn sold and whether the Managing Agents would get their commission after the whole profit was determined at the end of the year, were decided in favour of the Managing Agents. The High Court also on a reference made to it at the instance of the Commissioner of Income-fax, answered the abovementioned question in favour of the Managing Agents. On appeal by the Income-tax Commissioner by special leave, Held, that on a proper construction of the agreement, it was clear that there was no accrual of commission till the end of the year and that it did not accrue as and when the sales took place.

The Managing Agents were to be.paid at the end of the year and by agreeing to the modification of the agreement before then they had not voluntarily relinquished any portion of the commission. Commissioner of Income-tax, Madras, v. K.R.M.T.T. Thia garaja Chetty and Co., [1954] S.C.R. 258, E.D. Sasoon and Co. Ltd.

v. The Commissioner of Income-tax Bombay City, [1955] r S.C.R. 313 and Commissioner of Inland Revenue v. Gardner Mountain and D' Ambrumenil Ltd., 29 T.C. 69, not applicable.

I960

CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 145/58 and 323/57.

Commission" of Appeals by special leave from , the i'udgment and Income-ta1:, Bombay North order dated 8eptember 14, 1955, of the Bombay High v.

Court in I.T. Iteferences, Nos. 8 and 21 of 1955 M /s.Harivallabhdas respectively, Kalidas R. Ganapathi Iyer and D. Gupta, for the appellant in C.A. No. 145 of 1958, and respondent in C. A.

No. 323 of 1957.

N. A. Palkhivala, S. N. Andley, J.B. Dadachanji and Rameshwar Nath, for the respondent in C. A.

No. 145 of 1958 and appellant in 0. A. No. 323 of 1957.

1960. February, 19. The Judgment of the Court was delivered by J(apur ].

KAPUR, J.-This judgment will dispose of two appeals, C. A. No. 145/58 and C. A. 323/57.

They arise out of the same transaction i.e. Managing Agency Agreement and the result of C. A. No. 323/57 is dependent upon the judgment in C. A. 145/58 and we propose to deal with the latter appeal which was argued before us and £he former for reasons to be stated later was not pressed. The appellant in C. A. 145/58 is the Commissioner of Income-tax, Bombay and the respondent is the assessce, a registered firm, which on March 8, 1941, was appointed the Managing Agents of Shri Ambica Mills Limited (hereinafter termed the Managed Company) the appellant in C. A. 323/57. The duration of the Managing Agency period was 20 years. By clause (2) of the Managing Agency Agreement it was provided:-

" (2)(a) The Company shall pay each year to the said Firm either the commission of 5 (five) per cent. on the total sale proceetls of yarn, and of all cloth, manufactured from cotton, silk, jute, wool waste and other fibres and sold by the company, or a commission of three pies per pound avoirdupois on the sale, whichever the said Firm choose to take, and also a commission of 10 (ten) per cent. on the proceeds of sale of all oUrnr materials sold by the Company and 10 (ten) per cent. on the bills of any

ginning and pressing factories and on any other work done by the Company.

' -

(b) If in any year the net profits of the Company r96o shall not be sufficient to enable the Directors, if they Commissioner of think fit, to recommend a dividend of eight per cent.

Income.tax, per annum on the capital paid up on the ordinary Bombay Nrtk

shares for the time being, the same Firm shall be v. bound to give up from the total amount of commis- M/s.Harivallabhdas sion payable under clause 2(a) hereof such portion Kalidas thereof as may be necessary to make up the deficit.

Kapur 1.

PROVIDED THAT in !'no event the amount so given up by the said Firm shall exceed one-third of such total amount of commission".

Arid by Clause (5) it was provided:

"(5) The remuneration payable to the said Firm under Clause 2(a) shall be paid to the said Firm forthwith after the 31st day of December or such other date as the Directors may fix for the closing of the accounts of the Company in each year and after such accounti; i are passed by the Company in General Meeting ".

On December 9, 1950, the Board of Directors of the Managed Company pa.ssed a resolution to the effect that the Directors had for some time past been discussing with the Managing Agents the advisability of modifying the terms of the Managing Agency Agreement as to the commission payable under it and that the Managing Agents had agreed to charge 3 per cent. on sales instead of 5 per cent. for the year ending December 31, 1950.

A resolution was passed at the Annual General Meeting of the Managed Company on April 22, 1951, which was to the same effect. The resolution of the Board of Directors was ratified at an Extraordinary General Meeting of the shareholders of the Managed Company on October 7, 1951, and the same day a formal agreement embodying the terms of the resolution was executed between the Managing Agents and the Managed Company. For the accounting years 1950 and 1951 i.e. assessment years 1951-52 and 1952-53 the Managing Agents were taxed by the Income-tax Authorities on the basis that in those two years they had voluntarily relinquished a sum of Rs. 1,69,981 and Rs. 2,10, 530 for the respective assessment years. These sums were added to the income of the Managing Agents for the purpose of income-tax.

'960 An appeal was then taken to the Income-tax Appel-

Commissioner of late Tribunal and it was held by the Tribunal that the Income-tax, agreement between tho Managing Agents and the Bombay North Managed Company to receive remuneration at 3% on v. the total sales was a valid one and took effect as from

M/s.H;•i;_~ 1ablidas January 1, 1950. The second question, whether the s commission accrued on the_ proceeds of every single Kapur J. sale or it accrued only when the a8sessee firm P.Xercised its option to charge its commission on the total sale proceeds or on the weight of tho yarn sold and • whether the Managing Agents were to get the amount of commission after the whole profit was determined at theend of the year, was decided in favour of the Managing Agents.

A Reference was made to the High Court at the instance of the Commissioner of Income-tax and the questions abovementioned were answerecl. in favour of the Managing Agents. This appeal by the appellant has been hr.ought against the judgment of the High Court by special leave.

In the oonneoted appeal i.e. C. A. 323/57 by the Managed Company the facts are the same except t.\; tat the Appellate Tribunal allowed the Managed Company the sum on which the Managing. Agents were to be taxed as allowable deduction. When the Commissioner got the case stabed to the High Court tho Managing Company also had a case stated,. But as the High Court upheld the contention of the Managing Agents the Managed Company did not press its application which was therefore dismissed. The appeal of the Managed Company is brought against that order.

In the appeal by the Commissioner of Income-tax, i.e. C. A. 145/58, it was argued that according to tho terms of the Agency Agreement the Managing Agents were to get the commission on the sales and as the accounts were kept on a mercantile basis, the amount of commission accrued as and when the sales took place and paragraph 5 of agreement was only a machinery for quantifying the amount. It was also argued that the Managing Agents by entering into an agreement with the Mills had voluntarily relinquished a portion of the amount of commission which had accrued to them and therefore the whole of the inoome from commission which had already accrued was liable to

3 S.C.R. SUPREME COURT REPORTS 55

income-tax; and reference was made to the cases

I960 reported as Commissioner ol' Income-tax, Mailras v. c . . .i 1 • • 'J 1 ommissumer o J(. R. M. 1. T. ThwgaraJa Chetty and Co. ( ), E. D. . Income-tax,

Sassoon & Company Ltd. v. The Commissioner of Bo•bay North Income-tax, Bombay City (2) and to an English case v. , .

Commissioners of Inland Revenue v. Gardner Mountain M /s.H arivallabhdas & D' Ambrumr.nil Ltd. (3).

But these ca.ses have no Kalidus application to the facts of the present case. In the Commissioner of Income-tax, Mailras v. K. R. M. T. T.

Thiagaraja Chetty & Co. (1 ), the assesse@ firm was, under the terms of the Managing Agency Agreement, entitled to a certain percentage of profits and in the books of the Company a certain sum was shown as commission due to the assessee firm and that sum was also adopted as an item of business expenditure and credited to the Managing Agents' commission account but subsequently it was carried to suspense account by a resolution of the Company passed at the request of the assessee firm in order that the debt due by the Firm might be written off.

The accounts were kept on mercantile basis and it was held that 13n that basis the commission accrued to the assessee when the commission was creditsd to the assessee's account and

subiequent dealing with it would mot affect the liability of the assessee to income-tax. It was also held that the quantification of the commission could not affect the question as it was not a condition precedent to the accrual of the commission. At page .267 Ghulam Hassan J., observed:-

"Lastly it was urged that the commission could not be said to have accrued, as the profit of the business could be computed only after the 31st March, and therefore the commission could not be subject to tax when it is no more' than a mere right to receive. This argument involves the fallacy that profits do not accrue unless and. until they are actually computed. The computation of'the profits whenever it may take place cannot possibly be a.llowed to suspend their. accrual. In the case of income where there is a condition that the commission will not be payable until the expiry of a definite period or the making up of the account, it might be (I) [19.Hl s.c.R. 258 at 267.

(2) [1955] I S.C.R. 313, 344.

(3) 29 T; C. 6g, 96.

Kapur].

'960 said with some justification, though we do not decide it, that the income has not accrued but there is no Comntissioner of

In"me-tax. such condition in the present case ".

Bombay North This passage does not help the appellant's case. The

~· q ue8t.ion there decided was that the accrual of the

Mfs.Harw~Uabhd•scommission was not dependent upon the computation

Kahdas of the profits although the question whether it would

Kapur J. make any difference where the commission was so payable or was payable after the expiry of a definite period for the making of the account was left undecided. In the case before us the agreement is of a different nature and the above observations are not applicable to the facts of the present case.

The next case is E. D. Sassoon & Co., Lkl. v. The Commissioner of Income-tax, Bombay City('). But it is difficult to see how it helps the case of the appellant.

If anything it goes against his contention. In that case the assessee Company was the Managing Agent of several Companies and was entitled to receive remuneration calculated on each year's profits. Before the end of the year it assigned its rights to another person and received from him a proportionate share of the commission for the portion of the year during which it worked as Managing Agent. On the construction of the Managing Agency Contract it was held that unless and until the Managing Agent had carried out one year's completed service, which was a condition precedent to its being entitled to receive any remuneration or commission it was not entitled to receive any comm1ss10n.

The facts in that case were different and the question for decision was whether the contract of service was such that the commission was only payable if the service was for a completed year or the assessee Company was entitled to receive even for a portion of the year for which it had acted as a Managing Agent.

It was held that it was the former.

As was observed by Lord \Vright in Commissioners of Inland Revenue v. Gardner, Mountain & D'Ambrumenil Ltd. ('), "It is on the provisions of the contract that it must be decided, a~ a question of construction and .therefore of law, when the commission was

earned". The contract in the present case in para-

(I) [1955] I S.C.R. 313, 344

(2) 29 T.C. 69, 96.

graph 2 shows that (1) the company was to pay each z960 year ; (2) that the Managing Agents were to be paid f h

Commissionr of 5 per cent. commission on the proceeds o t e total Income-tax sales of yarn and of all cloth sold by the Company or Bombay Nortl• three pies per pound avoirdupois on the sale, which- M

H Y

11 k th M .

A t h th th /s. arwa ab das ever e . anagmg gen s c ose ; us ere was an Kalidas option to be exercised at the end of the year; (3) they were also to be paid at 10 per cent. on the proceeds of Kapur J. sales of all other materials; and (4) the Mills were to pay to the Managing Agents each year after December 31, or such other date which the Directors of the Company may choose for the closing of the accounts.

There was a further clause that if the net profits of the Managed Company, that is, the Mills were not sufficient to enable the Directors to recommend a dividend of 8 per cent. per annum on the paid up capital, then the Managing Agents were bound to forego a portion of their commission upto one-third.

All these provisions as to payment have to be read together as an indivisible and an integral whole. On ·· a proper construction of this contract, therefore, it is obviot1s that the Managing Agents were to be paid at the end of the year. They had the option of receiving a percentage on total sales or three pies per pound and this was exercisable at the end of the year. There was also a liability to pay back a portion of the commission in certain contingencies which also could be determined only when the accounts were made up for the year. It is thus clear that there was no accrual of any commission till the end of the year. On this construction of the contract it cannot be held that the commission had accrued as and when the sales took place and that as a result of their agreeing to the modification of the agreement the Managing Agents had voluntarily relinquished a portion of their commission. On the other hand under the original agreement the Managing Agents were entitled to receive commission only at the end of the year and before then the agreement was varied modifying its terms as from the beginning of the accounting year.·

w e are of the opinion, therefore, that the High Court correctly found against the appellant and we therefore dismiss C. A. No.145 of 1958 with costs. In 8

z960 view of this Mr. Palkiwala for the Managed Company did not press C. A. No. 323 of 1957, which is therefore Commissioner af b "11 b h · Income-tax. dismissed ut the parties w1 ear t. eir own costs m Bombay North that case because the result of that appeal is rea.lly v. dependent upon the result in C. A. No. 145 of 1958.

i1 /s H arivallabhdas

Kaliaas Appeals dismissed

Kapur J.

Ig6o

February 32

THE BIHAR STATE CO-OPERATIVE

BANK LTD. v.

THE COMMISSIONER OF INCOME-TAX

(J. L. KAPUR, A. K. SARKAR AND

M. HIDAYATULLAH, JJ.)

Income Tax-Co-operative Bank-Interest received on deposits with other banks-Exemption from taxation under Notification-

Indian Income-tax Act, r922 (XI of r922) ss. IO, I2.

The Appellant Bank which was registered under the Cooperative Societies 'Act, 1922, received, in the relevant account years, by way of interest on deposits with the Imperial Bank of India certain sums of money. The Income-tax Officer assessed the aforesaid sums under s. 12 of the Indian Income-tax Act 1922, as income from other sources, but the appellant claimed that the deposits were made not with the idea of making investments but for the purpose of carrying on its business as a bank and that as the interest received on the deposits was profit attributable to its business activities it was not subject to incometax because of the Notification issued by the Central Government under s. 60 of the Act.

Under the Notification profits of any Co-operative Society are exempt from the tax payable under the Act but not income derived from "other sources" referred to in s. 12 ofthe Act.

IIeld, that the interest from <leposits received by the Appellant Bank in the present case arose out of a transaction entered into for the purpose of carrying on its banking business and fell within the income exempted under the Notification.

The Punjab Co-operative Bank Ltd. v. The Commissioner of Income-tax, Punjab, [1940] 8 I.T.R. 635, relied on.

CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 228 to 230 of 1958.

Appeals from the judgment and decree dated July 2, 1957, of the Patna High Court in Misc. Judicial Case No. 640 of 1955.

Income-tax Appellate Tribunal

s. 10(2)(xv)

S. HARIV ALLABHDAS KALIDAS AND CO

S. K. DAs, J.

L. KAPUR

Harivallabhdas Kalidas

Ambika Mills Ltd.

December 31", 1950

CIVIL APPELLATE JURISDICTION

Harivallabhdas

Kalidas R. Ganapathi Iyer

D. Gupta

N. A. Palkhivala

S. N. Andley

J.B. Dadachanji

Rameshwar Nath

KAPUR

March 8, 1941

Ambica Mills Limited

clause 2(a)

Clause 2(a)

December 9, 1950

December 31, 1950

April 22, 1951

October 7, 1951

January 1, 1950

'960 An appeal was then taken to the Income-tax Appel-

Commissioner of late Tribunal and it was held by the Tribunal that the Income-tax, agreement between tho Managing Agents and the Bombay North Managed Company to receive remuneration at 3% on v. the total sales was a valid one and took effect as from

M/s.H;•i;~ 1ablidas January 1, 1950.

Ghulam Hassan

Kapur

\Vright

Palkiwala

BIHAR STATE CO-OPERATIVE

BANK LTD

COMMISSIONER OF INCOME-TAX

A. K. SARKAR

M. HIDAYATULLAH

Indian Income-tax Act

Imperial Bank of India

s. 12

Indian Income-tax Act 1922

Central Government

s. 60

s. 12

July 2, 1957

Patna High Court