--· .

3 S.C.R.

SUPREME COURT REPORTS 727

arbitration they did not anticipate the complications which have subsequently arisen.

That is why an arbitration agreement may have been introduced in the contract in question.

All these facts have been considered by both the courts, and though it is true that in their approach and final decisions in respect of these facts the two courts have differed in material particula1:s, they have in the result agreed with the conclusion that the discretion vested in them should be exercised in not granting stay as claimed by the appellant.

Under these circumstances we do not think we would be justified in substituting our discretion for that of the courts below.

It may be that if we were trying the appellant's application under s. 34 we might have come to a different conclusion; and also that we may have hesitated to confirm the order of the tnal court if we had been dealing with the matter as a court of first appeal; but the matter has now' come to us under Art. 136, and so we can justly interfere with the concurrent exercise of the discretion by the .courts below only if we feel that the said exercise of discretion is patently and manifestly unreasonable, capricious or perverse and that it may defeat the ends of justice. Having regard to all the circumstances and facts of this case we are not disposed to hold that a case for our interference has been made out by the appellant.

That is why we dismiss this appeal but make no order as to costs throughout.

Appeal dismissed.

COMMISSIONER OF INCOME-TAX,

AHMEDABAD v.

K:ARAMCHAND PREMCHAND LTD.,

AHMEDABAD. (S. K. DAS, J. L. KAPUR and

M. HIDAYADULLAH, JJ.) Income-tax-Set-off-Business loss in Indian State-Profits in British India-Applicability of the Act to business in Indian State- Business Profits Tax Act, 1947 (21 of 1947), ss. 2(3), 4, 5.

The assessee held the managing agency of a limited company in what was then called "British India" and had also a pharma-

Printers (Mysore)

Privale Ltd.

v ..

Pothan Joseph

Gajendragailkar J.

April 28.

Commissior.tr of

Incomttax

Karamchand Prtmchand Ltd.

SX. Das J,

SUPREME COURT REP<; JRTS [ lYuQJ

ceutical business in the Baroda State which was at the relevant time an Indian State.

The business in British India showed profits asessable under the provisions of the Business Profits Tax Act, 1947, but the business carried on in Baroda resulted in .2 loss, in the relevant chargeable accounting 'periods between 1946 and 1949.

Before the Income-tax authorities the assessee claimed that the loss suffered by it in its business in Baroda should be deducted in computing its , bus, iness inome liable .o business profits tax, but this claim was rejected on the ground that though under s. 'S of the Act, if it stood by itself without any of the provisoes, the Act wound be applicable to the Baroda business, tile third proviso had the effect of extluding that 'business from tl\e purvie\\,. of the Act, except in so far as the income, profits or _gains of the business were received or deemed to 1 be received in or brought into British India: ' . ' Held, th.at the citecr of the third proviso to s. 5 of , the. Business Profits Tax Act, 1947, was merely to exempt the income, profits and gains of the Baroda business except whet\ they were reteived or brought into British India, but the. business itself v{as one to which the Act was applicable under \he substantive part of s. 5.

Consequently, the losses of the business could. be set off against the profits of the business in. British India. , The relevant provisions of .the Act _are set o.\lt , in the judgent. ·

C1v1L {\PPELLATE JURISDICTTQN: Civil Appe_al No. 304. of 1958'. · ' Appeal from the j1ulgment and order dated September 7, 19.56, qf, the. Bombay: High Court. in Incometax Reference No. 19 qf 1956. ·

C. K.

Daph.tary, Solicitor-General of 1l11di11, K. N. Ri1jagofial Sasti; i and D. (Guf1ta, for. the appel- . Jant.

 N. A. Palkhivala and S. N. Andley, for the respondent.

1960, , April 28.

The Judgment.of the Court was delivered by S. K. DAs, J.-This is an appeal on a certificate of fitness granted by the High Court of Bombay, and the short question for decision is the true scope and effect of the third proviso to s. 5 of the Business Profits Tax Act, 194-7 (Act No. XXI of 1947), hereinafter referred to as the Act.

The appellant is the Commissioner of Income-tax, Ahmedabad, and the respondent .is a private limited company .under . the name and style of . Karamchand Premchand Lt, d., Ahmedahad,. to be called hereafter , as the assessee. , \ • ' ' . . - ' ' , " I "

. -

- .

....

3 S.C.R.

SUPREME OOURT REP~)R'T:S

... The relevant .facts are tbe,5.e.: the assessee l1dd .the . managing agency -of the Abmedabad Manufa1=turing

.aii:d Calico Printing Co.

Ld. 'It also haid , a: pharma

(; e, uticl business , in the. Baroda State, wh, ich was t: the relevant. ime an indian State run: in tl1e name and sty le of Sarabhai Chem.icals.

The assessee' s business in India (we , shaU qse. the -expression i India in thisr:judgment to .mean:British . .India as it was then caHed: in contra-distinction. , to .an Indian .State) showed b:nsiness profits • as~sale l1nder the provisions of the A.ct; but the .business , carried on in the name and style of Sarabhai Chemicals in. Baroda ~.howed a lqs

in the relevant chargeable accounting , periods which were four in number, namely: (1) April 1, 1946, 1 tp

December 31, 1946; (2) January 1, 1 947, to December .31, 1947;. (3) January l, 19,48, -to December 31, 1-948; ancl (4) J anrtary l., 1949,

1 o fy[arch 31, l 949, The assessee claimed t.hat ,-its assessable income : in

, hiia should be reduced by•thelos '.sµffered RYiit ; in

its business -in Baroda. The Income-tax Officer rejected the claim of the assessee and held that. the Act did 'pot apply to the business carried o~. ip 'an :Indian Stae

µnless profits and gains of th.at business were rcceivd Ol'• deemed to hqve beer reeved .in , pr brought into -lndia.

On appeal the Appellate Assistant Commissioner upheld the 'cqptenti9n of the .· asesee arfl allowed the appeal.

The -Departrp.ep.t wet up , in appeal to the Appelhte Tribunal, _which help. . th<j.t qnder the . relevant proviso. to _s. ,5 of the At, profits and losses of , a businss in <j-P Iµdian St<J.te were ppt

to be .ta}\.en illto consideration unless thy wee received. or deem~F1 to have been rcived in or brot1ght into India. .In that view of the matter the Tribunal set aside the order of. the Appellate Assistan't Co'mis sioner and restored that , of the Income-tax , Officer.

The assessee then moved four applications iri' resp7ct of the four relevant chargeable accounting periqds, and by these applications the assessee required , t_he .Tr.ibunal to state. a case to the .High Court. 0£ Bombay on the question of la:w which arose. out .of its. order.

These four applications were consolidated.' The Tribunal on being satisfied that a .. question of law,, arqse out , 9£ ; its o; r, d.er i:n. the four cases. numqered as >:8,5, 1.:8, fi, c-;87

1960

11 Commi,1sioner P, f Income'.tax

'v.

K aramc.!umd Premchand Ltd.

S._K. Das J.

1960.

C0111missioner of lncmne-tax

Karnmchond Premchand Ltd.

S. K. Das] ..

and 88 of 1 %3-!i4, referred that question to the Bombay High Court in the following terms:

"W'hether on the facts and in the circumstances of the case the loss suffered by the assessee in the busine'S of Sarabhai Chemicals should be deducted in computing the business income of the assessee company liable to business profits tax?" The High Court answered the question in the affirmative and came to the conclusion that the assessee was entitled t:o deduct the losses incurred by it in its Baroda business and set them off against the profits made iu the taxable territories.

The appellant then moved the High Court and obtained a certificate of fitness.

On that certificate the present appeal has come to us.

The main contention on behalf of the appellant is that the High Court came to an erroneous conclusion with reg<ml to the true scope and effect of the third proviso. to s. 5 of the Act.

It is necessary here to refer to some of the provisions of the Act to understnd its general scI:eme.

In 1940 the Central Legislature passed the Excess Profits Tax Act, 1940 (Act No. XV of 1940), to impose a tax on excess profits arising out. uf certain businesses. vVe shall have occasion to refer to some of the provisions of that Act, in due comsc.

For the pmposes of that Act, the expression "chargeable accounting period" meant (a) any accounting period falling wholly within the term beginning on September 1, 1939, and ending on March 31, 1946, and (b) where any accounting period fell partly within and partly without the said term, such part of that accounting period as fell within the said term. It may be here stated that originally the term was from September I, 1939, to March 31, 1941, but by several annual Finance Acts the term was extended up to March 31, 1946.

ln 1947 came the Act in which "chargeable accounting period" means: . (a) any accounting period falling wholly within the term beginning on April I, J 946, and ending on 'March 31, 1949, and

(b) where any accounting period falls partly within and partly without the said term, such part

.. ·- .....

< -

of that accounting period as falls within the said term.

The Act extended to the whole of India.

The world "business" is defined in s. 2(3) of the Act as including any trade, commerce or manufacture, etc., the profits of which are chargeable according to. the provisions of s. 10 of the Indian Income-tax Act, ! 922.

There are two provisoes to this definition clause, and the second proviso states that all businesses to which the Act applies carried on by the same person shall be treated as one business for the purposes of the Act.

The expression "taxable profits" is clefinecl under s. 2( l 7) of the Act and it means the ain6unt by which the profits during a chargeable accounting period. exceed the abatement in. respect of that period. what is meant by "abatement" is defined in s. 2(1) of the Act.

The charging section is s. 4 and we may read that section here, so far as it is relevant for out purpose, in order to understand the general scheme of the tax imposed under the Act.

"S. 4. Charge of tax-Subject to the provisions of this Act, there shall in respect of any business to whid1 this Act applies, be charged, levied and paid on the amount of taxable profits during any chargeable accounting period, a tax (in this Act referred to as "business profits tax'') which shall, in respect of any chargeable accounting period ending on or before the 31st clay of March, 1947, be equal to sixteen and two-third per cent. of the taxable profits, and in respect of any chargeable . accounting period begini1ing after . that date be equal to such percentage of the taxable profits as may be fixed by the annual Finance Act." Shortly stated, the scheme is that in respect of any business to which the Act applies, there shall be charg ed, levied arid paid a tax called "business profits tax" on the amount: of the taxable profits, which means the amount exceeding the abatement, during any chargeable accounting period; the tax shall be equal to sixteen and two-third per cent. of the taxable profits in respect of the chargeable accounting period ending on or before March 31, 1947, and in respect of any chargeable accounting period after that date, the tax shall

Commissioner of Income-tax v.

Karamchand Premcliand Ltd.

S. K. Das :J.

Commtssioner of

Incometax

Karamchand Premckand Ltd.

S. [(. Das ].

~UPREME COURT REPORTS [1960]

be equal to such percentage of the taxable profits as may be fixed by the annual Finance Act. Then comes s. 5 which is the section dealing with the application of the Act and it is in these terms :

"S. 5.

Application of Act-This Act shall apply to every business of which any part of the profits made during the chargeable accounting period is chargeable to income.tax by virtue of the provisions of sub-clause (i) or sub-clause (ii) of clause (b) of sub-section (1) of section 4 of the Indian Incornet ax Act, 1922, or of clause (c) of that sub-section: Provided that this Act shall not apply to any business the whole of the profits of which accrue or arise without the taxable territories where such business is carried on by or on behalf of a person who is resident but not ordinarily resident in the taxable territories unless the business is controlled in India: Provided further that where the profits of a part only of a business carried on by a person who is not resident in the taxable territories or not ordinarily so resident accrue or arise in the taxable territories or are deemed under the Indian Income-tax Act, 1922, so to accrue or arise, then except where the business being the business of a person who is resident but not ordinarily resident, in the taxable territories is controlled in India, this Act shall apply only to such part of the business and such part shall for all the purposes of this Act be deemed to be a separate business: Provided further that this Act shall not apply to any income, profits or gains of business accruing or arising within any part of India to which this Act does not extend unless such income, profits or gains >tre received in or are brought into the taxable territories in any chargeable accounting period, or are assessable under section 42 of that Act.'' \Ve have read the section as it stands to-day. The expression " taxable territories" in the provisoes was substituted for "British India" by the Adaptation of Laws Order, 1950, and the third proviso originally referred to any income, profits or gains of business a.ceruing or arising within "any Indian State" ; then

- .

,,._

 the expression "a Part B State" was substituted, but this was again changed_ by the Adaptation of Law~ (No. 3) Order, 1956, and the present expression "any part of India to which this Act does not extend" was introduced.

For the purposes of this appeal nothing turns upon these changes, and :we may read the third proviso as referring to any income, profits or gains of a business accruing or arising in an Indi<m State. Section 6 deals wjth relief on occurrence of "deficiency of profits" an expression which is defined in s. 2(7) of the Act.

The rest of the Act deals with matters, such as issue of notice for assessment, assessments, profits escaping assessment, penalties, appeal, .etc., with which we are not directly concerned in this appeal.

Now, ss. 4 and 5 of the Act make it quite clear that the unit of taxation is the business, that is, any busi~ ness to which the Act applies; and if a person cfrries on more than one business to all of which the Act applies, all the businesses carried on by the same person shall be treated as one business for the purposes of the Act.

Section .5, in its substantive part, states to which business the Act applies and says that the Act applies to every business of which any part of the profits made during the chargeable accounting period is chargeable to income-tax by virtue , of. the provisions of sub-cl. (i) or sub-cl. (ii) of cl. (b) of subs. (l). of sc 4 of the Indian Income-tax Act, 1922, or

cl. (c) of that sub-section.

A reference to 'the aforesaid provis<ions of the Indian Income-tax Act, 1922, shows at once that in so far as they concern the present assessee s. 5 in its substantive part makes the Act applicable to his business whether the profits , of the business accrued or arose in India or Baroda; and this i~ so in spite of the fact that the Act extended only to India.

Indeed, learned counsel-for the appellant has conceded that had s. 5 stood by itself without any of the provisoes, the Baroda business of the assessee would have come within the' wide ambit of s .. and the Act woiild be applicable to that business.

His contention, however, is that the third proviso has the effect of excluding the Baroda business from the purview of the Act, except in so far _as the income, profits or gains of that business are received or deemed to

31-6 SCI/ND/82-

ComMissioner of Income-tax v.

K"rnmchand Premchand Ltd.

SX Das J-

SUPREME COURT HEPORTS [1960]

1960 he received ill or brought into India. On behalf ol the assessce the argument is that in its true scope anrl Commissioner of ff buow-tax e ect the third proviso has merely the effect of exemptv.

Karmnchrmd Prr111rltr111d ],/r/ .

SJ<. Das J.

ing the income, profits or gains of the Baroda business except when they arc received or brought into India, . hut the business itself is not: excluded from the purview of the Act; the business is still one to 'rhich the Act applies under the sul>stantive part of s. :"i and as the third proviso .exempts income, profits or gains only, the losses of the Baroda business can be set off against the profits of the business in India.

These are the two main rival contentions which we have to consider in this appeal.

Now, let us examine a little more closely ss. 4 and 5 of the Act. v\'c have stated earlier that s. 4 is the charging secti•)n, which levies a tax on the amount of taxable profits during any chargeable accounting period, in respect of_ any

brnincss i-o which the Act applies. The corresponding section in the Excess Profits Tax Act, 1940, was also s. 4 thereof, which levied a tax on the amount by which the profits during any chargeable accounting period exceeded the standard profits in respect of any business to which that Act applied. lJ nclcr the Excess Profits Tax Act, l 'l4·0, as also nnder the Act under onr consicleratio11, the unit is the husiness-bnsiness to which the Act applies.

For the application of the Act WC have to go to s. !J. vVc have i)ointed 0111. that

>. '' in its substantive part makes the Act applicable to cvcrv hminess of which any part of th'e profits is chargeable to income-tax by virtue of the provisions of sub-cl. (i) or sub-cl. (ii) of cl. (b) of sub-s. (1) of s. 4 of the Indian Income-tax Act, 1922, and, thns makes

the Act applicable to the Baroda. bnsincss of the assessce.

The question then is-does the third proviso to s. :; exclude that business except in so far as the income, profits or gains of that. business are received or deemed to he received in or are brought. into the taxable territories in any chargeable accotinting period?

If that is the true scope and effect of the third proviso, then the appellant is entitled to succeed.

If, on the countrary, the third proviso merely makes the Act inapplicable to income, profits or gains of the Baroda bm1ness unies> such income, profits or gains arc

--- .

received or deemed to be received in or are brought into the taxable territories, but does not exclude the business from the purview of ss. 4 and 5, then the answer given

by the High Court is correct.

The High Court has stated that whichever view is taken the third proviso leads to certain difficulties, and in a case where much can be said on both sides. the benefit of any ambiguity of language must be given to the assessee. \Ne agree with the High Court that the question is not quite free from difficulty; but on the language of the proviso as it stands, the answer given by the High Court appears to us to be the correct answer.·.

It is not the case of the appellant that the first and the second provisoes to s. 5 apply to the facts of this case.

But it: is significant to note the phraseology of these two ptovisoes and contrast them with the third proviso.

The first proviso says:-· "Provided that the Act shall not apply to any business the whole of the profits of which accrue or arise without the taxable territories, etc.., The language is clear enough to exclude the business referred to therein from the purview of the Act.

Similarly, the second proviso excludes under certain circumstances part of a b11siness aiicl uses appropriate language to give effect to that exclusion.

By a •legal fiction as it were, it divides a business into two parts, one separate from the other, and makes the Act applicable to one of them only.

Unlike the other two provisoes, the third proviso does not use the language of exclusion in respect of' any business. vVhat it takes out of the ambit of the Act is merely the "income, profits and gains" of a particular business.

The language is thus more apt to effectuate an exemption from tax of "income, profits or gains" rather than an exclusion of the bl.1siness from the purview of the Act.

On behalf of the appellant it is contended that such a constructi?n results in this anomaly that if the income, profits or gains are not brought into India, they escape tax and yet tl1e losses of a business which is ontsicle India are taken into consideration in computing the profits, etc., in lndia.

This, it is argued, could not have been the object of the legislature in

Co.mmissioner qf

Income tax

v •.

Karamchand Premchand Ltd.

S. K. Das].

Curn1nissioner

lncomelax

enacting I he third proviso to s. 5 uf the Act.

It is contended that the object was to exclude the business of in an Indian State as also the income; profits or gains thereof, ttnles uci1 }Jroiits, etc., \Vere recc1vcc.l in or brought into J ndia.

This argument. is not devoid of plausibility and requires careful consideration.

Karamchand Premchand Ltd,

S.K. Das J. \Ve may here refer tu the relev;111t provisions of the Excess Profits Tax Act, l 9·10.

Section 5 of that Act in its substantive part and the first and second provisoes thereto were worded in identical languag-e, but the third proviso to s. 5 of the Excess Prolit:s Tax Act,

HMO, was worded quite dilferemly from the third proviso to s. 5 of the Act.

The third proviso to s. 5 of the Excess Prolits Tax Act, lV-IU, stated:

"Provided further that this Act shall not apply to any busiue" the 11holc oI the profits of which accrue or arise Jn a Part B State, and where the profits o[. a pan of a business accrue or arise in a

Part ll State, sucli part shall, for the purposes of this provision, be clcemcd to be a separate business the whole of the profits of which accrue or arise in a Part B State, and the other part: of the business shall, for all the purposes oI this Act, be deemed to be a separate business." The languagc used was clearly one of exclusion, and it said that the Excess Profits Tax Act was not applicable to a business the profits of which <kerned 01 arose in a Part ll State. \\'hy then clid the legislature use different language in the third proviso to s. !i of the Act?

On behalf of the appellant. it has been submitted that the change in language is deliberate and

the reason for the change is to make the income, profits or gains of a business accruing in an Indian or Part B State liable to tax 11hen such income, profits or gain; are brought in India while under the third proviso tu s . .5 of the Excess Profits Tax Act, they were not liable to tax even when they were brought int, o India.

On behalf of the assessee, however, it has been submitted that the change in lang1iage is due to a different reason altcwether.

The third J>rol'iso to s. ii of the Excess 0 .

Profits Tax Act, l !J40, and s. 1+(2)(c) (now deleted) of the Indian I ncome-t:ix Act, I !l~2, wc1e cmcted :11 about the same time, and the broad object of both rhc

. -

.. -- .

provlSlons was to exclude profits of a business in an Indian or Part B State from charge of tax; but under the Excess Profits Tax Act, 1940, such profits were not chargeable even if received in or brought into India whereas under s. 14(2)( c) of the Indian lncometax Act such profits became chargeable to tax if received in or brought into India.

This difference, learned counsel for the assessee states, was no doubt done away with by the change in language of the third proviso to s. 5 of the Act; but the change in language did smnething more, because it assimilated' the position under the proviso t:o that under s. 14(2)( c) of the Indian Income-tax Act, namely, that though . profits of a business. in an Indian State cannot be taxed unless they: are brought into the taxable territories, yet the losses incurred can be adjusted' in computing the profits of the business as a whole.

Learned counsel for the assessee has relied on the decision of this Court: in Commissioner of lncornc-tax, Mysore, Trauancore- Cochin and Coorg v. lndo-Afercontile Bank Ltd. (')and the decisions of the Bombay High Court in Commissioner of Income-tax., Bombay City v., Murlidar iVl.athu.- rawalla Mahajan Association (2) and Commissioner of Excess Profits Tax, Bo111bay City v. Bhogilal H. Patel.

Bombay (').

The first two decisions cited above considered the effect of s. 21( I), Indian Income-tax Act, 1922, with special reference to the first proviso thereto (as it stood at the time relevant therein) and its inipact on ~. 10 of tl1e said Act.

It was held that sub-s. (I) of ~. 2-1 dealt onlv with set-off of loss under one head

ag'.aimt profits rn; der any other head, and therefore the old first proviso to sub-s; (l j of s. 21 applied and barred the right of set-off only where a loss in the Indian State was sought to be set off against Indian profits under any other head; where, however, the assessee sought to set off his loss in the I hdian State against his Indian profits under the same head, e.g., set-off of loss incurred in a pusiness carried on in an l ndian State against the profits of the same or another business carried on in India, the prmiso did not apply am! the assessce was en ti tied to such set-off under s. I 0

(!) [19"9] Supp_ 2 S.C.R. 2S6. (2) [19!P.J JG I.T.R. J.t:;,

(3) [1952) 21 l.T.R. Z2.

Commissiouer of 11lcorne-tax v.

I( aramchand Premclumd Ltd.

S.K. Das J.

'960 of the Indian Income-tax Act. Learned counsel for -. -. the assessee has submitted that the same principle Commissioner of l' "th d t th h' d . t 5 f th Imome-ta> app !BB WI regar o e t 1r proviso o s. o e v.

Act. Learned counsel has submitted that as under

Karamchand s. 10 of the Indian Income-tax Act, different businesses Premchand Ud. constitute one head and in order to determine what s. K. Das J. are the profits and gains of a business under s. 10 an assessee is entitled to show all his profits and set off against those profits losses incurred by him, in the same head ; so also under s. 5 of the Act, the Baroda business of the assessee is within the am bit of the Act, though the income, profits or gains thereof are excluded by the third proviso unless they are received or brought into India. He has pointed out that the position under the Excess Profits Tax Act was different, as was explained in Bhogilal Patel's case (1) where the learned Chief Justice said :

" This contention of Mr. Kolah is based on the language used in the proviso, namely, that 'this Act shall not apply to any business thew hole of the profits of which accrue or arise in an Indian State'.

Now, this contention is obviously fallacious, because the proviso does not say that the Act shall not apply to the profits of a business which accrue or arise in an Indian State. What the proviso says is that the Act shall not apply to any business the whole of the profits of which accrue or arise in an Indian State.

The expression 'the whole of the profits of which accrue or arise in an Indian State ' is an expression which indicates the nature of the business which is excluded from the purview or ambit of the Act".

Now, the third proviso to s. 5 of the Act uses not the phraseology of the Excess Profits Tax Act, but the very phraseology which according to the learned Chief Justice would have made all the difference. Learned counsel for the assessee has argued, and we think it has considerable force, that the legislature had before it the language used in s. 14 (2) (c) of the Indian Income-tax Act and it knew the effect of those provisions and it used the same language in the third proviso to s. 5 of the Act. If the object of the legislature was to exclude the business itself from the ambit

(t) (1952] 21 I.T.R. 72.

of the Act wl1ile taxing the profits which were brought into the taxable territories, then it used language which failed to achieve that object.

On behalf of the appellant it bas been pointed out - that the expression used in the third proviso to s. 5 is - "Provided further that the Act shall not apply to any income, profits or gains of a business, etc." It is argued that this language, (namely, that the Act shall not apply) is apt to exclude from the purview of the Act business the profits of which accrue or arise in an Jnclian State, - except in so far as _ such profits are brought into the taxable territories.

In support of this argument a reference has been made to s. 4(3) of the Indian Income-tax Act as it stood prior to 1939 and reliance is placed on the decisions in C.ommissioner of Income-tax, Madras v. M. T. T. K. M. M.

S. M. A. R. Somasundaram Chettiar (1) and Commissioner of Income-tax, Bombay v., The Provident Investment Co. Ltd. (2).

It is true that s. 4(3) of the Indian I ncome-t:ax Act, as it stood prior to 1039, said that this Act (meaning the Indian Income-tax Act, 1 l22) shall not apply to certain classes of income", and in the two decisions cited it was held. that the word '"business" mca nt a business whose profits were being assessed in the year under consideration and there was no justification for deduction of the expe1ises of a foreign btisiness. 'Ne do not, however, think that the use of the expression, "the Act shall not apply", is. decisive in this case. \;\Te have to read the third proviso as a whole :ind in the context in which it occurs, in order to find o_ut what it means.

So read it is difficult to hold that it has the effect of excluding the Baroda business except in so far as the prof-its thereof are brought into the taxable territories. what it says in express terms is that the Act shall not apply to any income, profits or gains of business accruing or arising in an f nd ia n State, etc.

It does not say that the lnisiness itself is excluded from the purview of the Act.

We have to read and construe the third proviso in the context 'of the substantive part of s . .5 which takes in the Baroda business :ind the phraseology of , the first and second provisos thereto, which clearly uses the (l' A.I.R. 1928 Mad. 487. ,

(2) (1931) I.L.R. 56 Born. 92.

Commissioner of Income-tax

Karamchand Premchand I:.td.

S.K. Das J-

Commissioner of

Incomtlax

\'.

ll~, irt•mrhmuf Prnnclwud Ltd.

S.K. Das J.

HO SUPREiVm COl'RT REPORTS [1960]

l:111g11agc of exclrnling the business referred to therein.

The third pnl\'iso cloes not use th:il language and 1d1at learned counsel for the appellant is seeking to do is to atcr the l:i.ngu1gc of the proviso so as to n1:i.ke it rc:1cl as 1ho11gh it excl11clccl business the income, profits or p; ai'ns of \\'liich accrue or arise in :m Indian Staie.

The diflicnhy is that 1he third proviso docs not say so: ou the contriry, it uses language which rncrch exempts from tax the income, profits or gains unless such incnn1c, profits or g:i.ins arc received in or hro11ght into India.

Next. we have to consider what the expression "income, profits or gains"' means.

In the context of 1he third proviso, it cannot include losses because the latter pan of the pro\'iso .says "unless such income, profits nr g; iins arc received, etc., into the taxable territories".

Obvio11sly, losses cannot be hro11ght into 1he t:1x:ihle territories except in an accounting sense, :rnd the expression "income, profits or gains" in the context cannot include losses.

The expression mnst have the same rncanii1g thro11ghout the proviso, anrl cannot have one meaning in the first part an<i a di1Te1'ent mc:rning in the Lnter part o[ the proviso.

The ; ippcllant crnnot therefore say that the third prm-iso exclpclcs the business altogether, because it takes away from the ambit of the Act not only income, profits or gains hut also losses of the business referred to therein.

On behalf of the appellant it has been arguer! that thongh the language of the third proviso to s. !J of the

Act is similar to that of s. l4(2)(c) of the Indian 1 ncome-tax Act. the language of the t11·0 provisions is not identical and it is not correct t:o say that their effect is snbstantiall\' the same.

It is pointed out 1'11at the language of s. i'-1(2)(c) was one of exemption only in respect of , any income, profits or gains accruing or arising in an Indian State, though for purposes of "total income"' the Income-tax Act applier! thereto, and therefore the normal process of aggregating profits and losses where\'cr they occnrred could be adopted.

But says learned counsel for the appellant, the position is otherwise under the third proviso to s. 5 of the Act.. because, firstly, it uses the expression, "the Act

4 --

shall not apply" and secondly, there is no question of exempting the profits from tax while including them for the purposes of "total income". vVe agreed that the complication of excluding the profits from tax while including them for determining "total income" does not . arise under the third proviso to s. 5 of the Act; but the argument presented is the same as we have dealt with earlier. The argument merely takes us back to the question--does the third proviso to s. 5 of the Act merely exempt the income, profits or gains or does it exclude the business? If it excludes the business, the appellant is right in saying that the position under the proviso is not the same as under s. 14(2)(c) of the Indian Incometax Act. If, on the contrary, the proviso merely exempts the income, profits or gains of the business to which the Act otherwise applies, then, the position is the same as under s. 14(2)(c).

It is perhaps repetition, but we may emphasize again that exclusion, if any, must be done with reference to business, which is the unit of taxation.

The first and second provisos to s. 5 do that, but the third proviso does not. '

Lastly, it has been contended that the construction adopted by the High Court is likely to lead to consequences which the legislature manifestly could not have intended. This contention has been pi; ssed in respect of two matters: (a) computation of capital under the rules in Schedule II of the Act in a case where the assessee company sustains a loss in an Indian State; and , (b) relief for deficiency of profits where th'e assessee makes profits in an Indian State but sustains a lossin

India.

As to the first matter, it has been fully dealt with by the High C<; mrt with reference to r. 2A. of the Rules in Schedule II and it has been rightly pointed out that no difficulty really arises by reasons of r. 2A.

Nor are we satisfied that any real difficulty arises with regard to relief for deficiency of profits when the assessec makes profits in an Indian State but sustains a loss in

India.

The Ad will not apply to such profits unles:. thev are brought into India, and if thev are brought inw India, s .. 6 will apply with regrd to relief on the ground of deficiency of profits.

It is -unnecessary to consider

32--6 SCI/ND/82

Commissi0111Jr of Income-tax v.

Karamchand Premchand Ltd .

S.K. Das J.

1960 here any hypothetical difficulty which may arise in the

Commissioner of

lnco.ne-ta,,;

application of s. 6. .

The appellant relies, on the third proviso to s. 5 of the Act in support of the contention that it excludes the Baroda business of the assessee and the losses of that business cannot be set off against the profits of the business in India, and the appellant can succeed only on establishing that the proviso clearly and without any ambiguity excludes the Baroda business.

We agree with the High Court that if there is any ambiguity of language, the benefit of that ambiguity must be given to the assessee. However, the conclusion at which we have arrived is that on the language of the proviso as it stands, it does not exclude the Baroda business of the assessee but exempts only the income, profits or gains thereof unless they are received or deemed to be received in or brought into India. Accordingly, the High Court correctly answered the question of law referred to it. The appeal fails. and is dismissed with costs.

Knramch,, nd Pre, nchand Ltd.

S.K. Das J.

April 28

Appeal dismissed.

H. C. NARAYANAPPA AND OTHERS

THE STA.TE OF MYSORE AND OTHERS

(B. P. Sinha, C.J.,' Jafer Imam, A. K. Sarkar,

K. Subba Rao and J.C. Shah, JJ.) . Transport Business-Stage carriages-Exclusion of private operators-Competence of Parliament to create monopolies-Grant of monopoly to State for transport business-Scheme framed by State for State Transport Undertaking-Legality-Motor Vehicles Act, 1939 (IV of 1939), Ch. IV A, ss. 68C, 68D (2)--Constitution of India, Arts. 12, 13(3)(a), 19(l)(g), 19(6), 298, Seventh Schedule, List II, entry 26, List III, entries 21, 35.

In exercise of the powers conferred by s. 68C of the Motor Vehicles Act 1939, the General Manager of the Mysore Government Road Transport Departmem published a scheme for the exclusion of pivate operators on certain routes in a specified area and reservation of those routes for the State Transport Undertaking.

The scheme was approved by the Government under s. 68D(2) of the Act ater the Chief Minister of the State bad given an opµortunity to the operators affected by the scheme to make ri:resentations objecting to it.

The petitioners who were

tf-, ....

s. 34

Art. 136

S. K. DAS

J. L. KAPUR

M. HIDAYADULLAH

ss. 2(3), 4, 5

Pothan Joseph

Gajendragailkar

SX. Das

Baroda

s. 5

Business Profits Tax Act, 1947

s. 5

K. N. Ri1jagofial Sasti

N. A. Palkhivala

S. N. Andley

S. K. DAs

s. 5

Sarabhai Chemicals

India

K aramc.!umd Premchand Ltd.

S._K. Das

S. K. Das

s. 5

September 1, 1939

March 31, 1946

March 31, 1941

s. 2(3)

s. 10

Income-tax Act

s. 2( l 7)

s. 2(1)

s. 4

S. 4

31st clay of March, 1947

March 31, 1947

Karamchand Premcliand Ltd.

s. 5

S. 5

Application of Act-This Act

section 4

Indian Incornet ax Act, 1922

Income-tax Act

section 42

Section 6

s. 2(7)

ss. 4 and 5

Indian Income-tax Act, 1922

Indian Income-tax Act, 1922

s. 5

s. 5

Das

Baroda business

ss. 4 and 5

s. 4

s. 4

s. 4

Indian Income-tax Act, 1922

ss. 4 and 5

s. 5

Karamchand Premchand Ltd.

s. 5

Karamchand Premchand Ltd

S.K. Das

Section 5

s. 5

s. 5

s. 5

Profits Tax Act

s. 1

Excess Profits Tax Act, 1940

s. 14(2)( c)

s. 5

s. 14(2)( c)

Income-tax Act

Bombay High Court

s. 21( I)

Indian Income-tax Act, 1922

s. 21

aramchand Premclumd Ltd.

Income-tax Act

s. 10

Income-tax Act

s. K. Das J.

s. 10

s. 5

Bhogilal Patel

Kolah

s. 5

s. 14

Income-tax Act

s. 5

s. 5

s. 4(3)

Income-tax Act

s. 4(3)

Income-tax Act

Income-tax Act

s. 5

s. 5

s. 5

s. 14(2)(c)

s. 14(2)(c)

s. 5

Schedule II of the Act

Schedule II

s. 6

s. 5

H. C. NARAYANAPPA

STA.TE OF MYSORE

B. P. Sinha

Jafer Imam

A. K. Sarkar

K. Subba Rao

J.C. Shah

Motor Vehicles Act

ss. 68C, 68D

Constitution of India

Seventh Schedule

s. 68C

Motor Vehicles Act 1939

s. 68D(2)


SUPREME COURT REPORTS [1960]

1960 here any hypothetical difficulty which may arise in the

Commissioner of

lnco.ne-ta,,;

application of s. 6. .

The appellant relies, on the third proviso to s. 5 of the Act in support of the contention that it excludes the Baroda business of the assessee and the losses of that business cannot be set off against the profits of the business in India, and the appellant can succeed only on establishing that the proviso clearly and without any ambiguity excludes the Baroda business.

We agree with the High Court that if there is any ambiguity of language, the benefit of that ambiguity must be given to the assessee. However, the conclusion at which we have arrived is that on the language of the proviso as it stands, it does not exclude the Baroda business of the assessee but exempts only the income, profits or gains thereof unless they are received or deemed to be received in or brought into India. Accordingly, the High Court correctly answered the question of law referred to it. The appeal fails. and is dismissed with costs.

Knramch,, nd Pre, nchand Ltd.

S.K. Das J.

April 28

Appeal dismissed.

H. C. NARAYANAPPA AND OTHERS

THE STA.TE OF MYSORE AND OTHERS

(B. P. Sinha, C.J.,' Jafer Imam, A. K. Sarkar,

K. Subba Rao and J.C. Shah, JJ.) . Transport Business-Stage carriages-Exclusion of private operators-Competence of Parliament to create monopolies-Grant of monopoly to State for transport business-Scheme framed by State for State Transport Undertaking-Legality-Motor Vehicles Act, 1939 (IV of 1939), Ch. IV A, ss. 68C, 68D (2)--Constitution of India, Arts. 12, 13(3)(a), 19(l)(g), 19(6), 298, Seventh Schedule, List II, entry 26, List III, entries 21, 35.

In exercise of the powers conferred by s. 68C of the Motor Vehicles Act 1939, the General Manager of the Mysore Government Road Transport Departmem published a scheme for the exclusion of pivate operators on certain routes in a specified area and reservation of those routes for the State Transport Undertaking.

The scheme was approved by the Government under s. 68D(2) of the Act ater the Chief Minister of the State bad given an opµortunity to the operators affected by the scheme to make ri:resentations objecting to it.

The petitioners who were

tf-, ....

. .,

• ...

""·

printe operators challenged the validity of the scheme and the Jl}(j(J action taken by the Government pursuant to it on the grounds, Utter alil. ( 1) that the petitioners have a fundamental right to N•l!Jlaru¥Pa airry on the business of plying stage carriages and that the prov. visions of Ch. IVA of the Motor Vehicles Act, 1939, which pro- State of MJsore vide for the right of the State to exclusive right to carry on motor transport business are invalid, (2) that by Ch. IV A Parliament had merely attempted to regulate the procedure for entry by the State into the business of motor transport in the State, and that in the absence of legislation expressly undertaken by the State in

that behalf, that State was incompetent to enter into the arena of motor transport business to the exclusion of private operators, and (3) that the scheme violated the equal protection clause of the Constitution because only fourteen out of a total of thirty one routes on which stage carriages were plied for public transport in the area specified were covered by the scheme : Held, (l) that the expression "commercial and industrial monopolies" in entry 21 of List III of the Seventh Schedule of the Constitution of India is wide enough to include grant or cretttion of commercial or industrial monopolies to the State and citizens as well as control of monopolies.

(2) th!!! it is' competent for the Parliament to enact Ch. IVA o.f the Act under entry 21 read with entry 35 of List III.

(3) that the scheme framed under s. 68C of the Motor Vehicles Act may be regarded as "law" within the meaning of Art. 19(6) of the Constitution, made by the State excluding private operators from notified routes or notified areas, and immune from the attack that it infringes the fundamental right guaranteed by Art. 19(l)(g). ( 4) that on a true reading, the scheme in question was approved in. relation to the fourteen notified routes and not in relation to a notified area and that as a scheme under s. 68C of the Act may be one in relation to an area or any route or portion thereof, the scheme could not be challenged as discriminatory.

ORIGINAL ] URISDICTION: PETITION No. 2 OF 1960.

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

A. V. Viswanatha Sastry and B. R. L. Iyengar, for the petitioner.

G. S. Pathak, R. Gopalakrishnan and T. M. Sen, for the respondents.

C. K. Daphtary, Solicitor-General of India and B.R.L. 1,1engar, for the Intervener (D. R. Karigowda).

1960. April 28.

The Judgement of the Court was delivered by

SH.AH, J.-The petitioners pray for a writ quashing ShtJ• .J. a. schenie approved under s. 68D(2) of the Motor Vehicles Act. I 939, by the Government of the State nf

33-6 SCI/ND/82

Narayonappa

taie o_f Mysore

S.\ah J.

Mysore an<l for a writ restraining the respondents, i.~ .. the State of Mysore, the General Manager, the Mysore Government Road Transport Deparment and the R,3ional Transport Authority, Bangalore, from takin~ act:on pursuant to the scheme.

The petitioners are operators of Stage cari-iages on onain routes ; n the sector popularly known as "Anekal '.lrea" in the Bangalore District.

On J anuan 13, 1959, the General Mana:>; er, Mysore Government Road Transport Depmtment, who \'i ill hereinafter be referred to as the 2nd respondent, published a scheme in exer6se of the powers conferred by s. 68C of the Motor Vehicles Act, 1939, for the exclusion of pr:vt< opc:rators on certain routes and reservation of these routes for the State trauspor~ undertakini~ in the Anekal area.

The Chief Minister of the Mysore State gave the op.-:rators affecte<l , Jy the sc'lemc "n opportunity of making oral reprccntati.ons nd on pursuim-; t'.-ie writtt-n objections and considering t21e oral representations, a," proved the 1chLme as framed by the 2nd respondem.

On April 23, l 959, the scheme was published in the Mysore State Government gazette.

On June 23, 1959, renewal applications submitted by petitioners 1 to 3 fot permits to ply Stage carriages on certain routes covered by the scheme were rejected by the Transport Authorit1 and the 2nd respondent was given permanent permih operative as from June 24, 1959, for plying buses on those routes.

In 'Vrit Petition No. 463 of 1959 challenging the validity of the permanent permits granted to the 2nd respondent, the High Court of Mysore held that the issue of permits to the 2nd respondent befor~ the expiry of six weeks from the date of the application was illegal. To petitioners 1 to 3 and certain other operators renewal permits operative till March 11 l, 1961, were thereafter issued by the third respondent.

The 2nd respondent applied for fresh permits in pursuance of the scheme approved on April 15, 1959, for plying Stage carriages on routes specified in the scheme and notices thereof returnable on January 5, 1960, were served upon the operators likely to be affected thereby.

On January 4, l 960, the five petitioners

t ..

' ... -

3 S.C.R. suPREME COURT REPORTS 745

applied to this com t under Art. 32 of the Constitution for quashing the scheme and for incidental reliefs.

The petitioners claim that they have a fundamental right to carry on the business of plying stage carriages and the scheme framed by the 2nd respondent and approved by the State of Mysore unlawfully deprives them of their fundamental right to carry on the business of plying stage carriages in the Anekal area.

The divcr; e grounds on which the writ is claimed by the

petitioners need not be set out, because, at the hearing of th c petition, counsel for the petitioner~ has restricted his argument to the following four heads :

( 1) tin' the scJ.eme ·:iotates the equal protection clause of the Constitution, because onlv fourteen out of a ro11l of thirty one routes on which, stage carriages were plied for public transport in the Anekal uea were covered by the scheme and that even from among the opera'ors on the fourteen routes notified, two operato"s we--e left out, thereby making a flagrant discrimination between the Gperators ccven on those fourteen routes:

(2) that by Ch1pter IVA of the Motor Vehicles Act,

J 9'19, 1';11 liamcnt had mcrel) attempted to regulate the procedure for entry by the States into the busine~~ of motor transport in the State, and in the absence of legislation expressly undertaken by the State of Mysore in th; it behalf, that State was incompetent to enter into the arena of motor transport busines' to the exclusion of private operators

(3) that the Chief Minister who heard the objections to the scheme was biased against the petitioners and that in any event, the objections raised by the operators were not considered judicially; and

(4) that the Chief Minister did not give "genuine consideration" to the objections raised by the operators to the scheme in the light of the conditions prescribed by the Legislature.

Re. 1: In column I of the scheme "part of Bangalore Dis- '"\. trict, viz., Bangalore North, Bangalore South, Anekal and Hosakote Taluks" is set out as the area in relation to which the scheme is approved; and in

J9(j()

Narayaaa{J/m

Stfft. of Myme

S4tJI J.

196(}

SW. :1

column 3, "the routes (with their starting points, termini, intermediate stations and route length) in which the State transport undertaking will introduce its services to the exclusion of private operators" are those set out in statement 1 appended to the scheme.

Statement 1 sets out the description of fourteen routes with their intermediate points, route length, number of buses w be operated .and the maximum number of trips to be performed on each route.

By column 4 "the number of existing stage carriages on each route with the number of trips and the names of their operators" are described "as in statement 2 appended".

Statement 2 sets out the names and places of business of fifty-six operators together with the routes operated and the numbers of the stage carriages and trips made by those operators.

In the Anekal area, there are thrityone routes, which are served by stage carriages operated by private operators, and by the approval of the scheme, only fourteen of those routes arc covered by the scheme.

Section 68C, in so far as it is material, provides that a State transport undertaking, if it is of opinion that it is necessary in the public interest that road transport services in relation to any area or route or portion thereof

' ...

' -

should be run and operated by itself, whether to the ex- 1clusion, complete or partial, of other persons or otherwise, it may prepare a scheme giving particulars of the nature of the services proposed to be rendered, the area or route proposed to be covered and other particulars respecting thereto as may be prescribed.

Section 68D(I) provides for inviting objections by persons affected by the scheme.

Sub-section 2 of s. 68D authorises the State Government after considering the objections and giving an opportunity to the objectors to approve or modify the scheme; and by sub-s. 3, the scheme as ap proved or modified and published by the State Government in the official gazette shall "become final and shall be called the approved scheme and the area or route to which it relates shall be called the notified area or notified route." Counsel for the petitioners contended that ex ercising powers under s. 68C, the State transport undertaking may prepare a scheme in respect of an area or a

number of routes in that area, but not a scheme for an area 'd1ich is to apply to some only and not to all routes on which pnbl ic transport vehicles in the area oper; ite.

In this case, it is unnecessary to decide whether it is open to a State transport undertaking under a scheme fran1ed for a notified area to limit its application to some only of the routes, because on a true reading of the scheme, it is amply clear that the scheme was ap pioved in relation to fourteen notified routes and not in relation to a notified area.

The approved scheme is in the form prescribed by the rules, and in the form prescribed, by column 1, the area in relation to which the scheme is approved is required to be set' out.

But a scheme under s. 68C must be one in relation to an area or any route or portion thereof wherein the transport service is to be undertaken by the State transport undertaking to the exclusion, either complete or partial, of other operators.

Column 1 of the approved scheme undoubtedly describes the area in relation to which the scheme is approved, but by the designation of the area, in the scheme, an intention to exclude either whollv or partially, the operators of stage carriages from that area is not evinced either expi; essly or by implication.

By column 3, the scheme expressly directs that the State transport undertaking will introduce its service to the exclusion of private operators on the specified routes.

The scheme must therefore be regarded as one for the fourteen notified routes and not in relation to the area described in column l.

Counsel for the pet1t10ners submitted that an order passed on October 22, 1959, by the 3rd respondent -the Regional Transport Authority-rejecting a pplications for permits for one of the fourteen routes to an applicant, indicated that in the opinion of the third respondent, the scheme related to a notified area and not to notified routes.

The order states that "an approved sch.eme' for the exclusive operation in the notifi.ed area of Bangalore District" by the second respondent "has come into existence after the

n0t1fication of the route Bangalore to N 1llnr, and the major portion of the route applied for lie in the notified area and as such it was not desirable to grant any permit

34-6 SCI/ND/82

Narayanappa. v.

State of Nf.)'sore

Shah J.

J{nrt1J'll11t1/i/ia

Stnfe o.f Avsnrr

Shah],

to operators to pass through notified area in the intr:i-

.t:atc rnntc." The third rcsn<"ndenc ma' ha, c in u:miflffing the applicati011 01s;::i11c<l th:it the scheme rchted to a notifier] a•ea, b11r the true int:n1•rctatinn d the 'rhcmc cannot he :1djudgcd in the light of tint

a>sL1mption.

The other documem relie<l npon is "

1°t~.iernent of objections filed lw the second resp0ndcnt "" Ou.oher 21, l!l.'>9, resi1tinti the applicatiJn for st.1gc

carriage permits to a private operator on the ronte Siddalaghatta-Bangalore via Nallm.

In para 4 of the statcn1c11t, ir \~.:as sub1niuci.1 th:1: "tl1l_' exi.; t!nr: noii(it~ tion dated October l 5, 1959 came under tl; e notified area of the department" of the second respondent "and that would overlap certain services of the department".

But because in making his rlcfence, the seconrl respondent has referred to the scheme as dealing "ith "the notified area". the scheme "ill not necessarilv he helrl

to be one in relation to the notified area. ·

The argument that among the operators on the fourteen routes, two haYe been selected for special trcatn1t:nt: ; inrl on that account. the sche1ne is <lis crimi natory, has, in our judgment, no substance.

It is averrer] in para. 13 of the petition that two persons, Chikkaveerappa operating on ronte Chikkathirnp:ithi to Bangalore via Surjapur, Dornsanclra and Agara and

Krishn:i Rao operating on route Banglore to Chik- Kathirupathi via Agara and Surjapur are not amongst those who are excluded from operating their vehicles on the notified routes.

In the affidavit filed by the State and the second respondent, it is submitted that the plc:i of the petitioners that the two persons operatmg stage carriages on specified routes "ere not amongst those to be excluded is incorrcn arnl th:\t those two persons had been notified by the Secret:iry of the third respondent th:it they "-ere "likely to be affected on oivinoeffect to the a}J}Jl'O\'erl scheme." t"I ei Uncloubtedlv, route-item No. 2 in statement. I lo the scheme is "Bangalore to S11rjap11r or any portion thereof" and the' route operates \'ia Agara and Domsandra, but. the record does not disclose that the two named persons are, in plying their stage carriage, entitled to operate on the route specified with right to stop at the named pbces for picking up passengers.

lt is not clear ou the averments made in the petition that the route on which the stage carriags of the two named persons ply are identical; even if the routes on which the stage carriages of these two operators ply overlap the notified route, in the absence of any evidence to show that they had the right to pick up pessengers en route, the discrimination alleged cannot be deemed to have been made out.

Re. 2: Article 298 of the Constittition as amended by the Constitution (Seventh Aniendment) Act, 1956, recognises the executive power of the Union and of each State as extending to the carrying on of any trade or business.

That power of the U uion is subject in so far as the trade or business is not one in respect of which Parliament may make laws, to legislation by the State; and the power of each State, in so far as the trade or business is not one with respect to which the State Legislature may make laws, is subject to legislation by Parliament.

Like ordinary citizens, the Union and the State Governments may carry on any trade or business subject to restrictions which may be imposed by the Legislatures competent to legislate in respect of the particular trade or business. Under Article 19(6) of the Constitution as amended by the First Amendment Act, 1951, nothing in sub-cl. (g) of cl. (1) of Art. 19 is to affect the operation of any existing law in so far as it related to, or prevent the State from making any law relating to the carrying on by the State or by a Corporation owned or controlled by the State of any industry or business, whether to the exclusion, complete or partial, of citizens or otherwise.

The State: may therefore carry on any trade or business, and legislation relating to the carrying on of trade or business by the State, is not liable to be called in question on the ground that it infringes the fundamental freedom of citizens under Art. 19(1 )(g).

The Motor Vehicles Act, 1939, was enacted by the Central Legislative Assembly in exercise of its power under the Government of India Act, 1935, to legislate in respect of mechanically propelled vehicles.

Chapter IV A containing ss. 68A to 68J was incorporated into that Act by the Parliament by Act 100 of 1956 whereby special provisions

J\rarayatwppa

Stale of klysure

Shah J.

State of A1_ysore

Shah J.

relating to the conduct of transport undertakings by the States or Corporations owned or controlled by the State were made.

Section 68A defines the expression "State transport undertaking"' as meaning among others an undertaking for providing transport service carried on by the Central Government or a State Government or any Road Transport Corporation established under Act 44 of 1 %0.

By s. 68B, the provisions of that chapter and the rules and orders made thereunder are to override Chapter IV and other laws in force.

Section 68C authorises the State transport undertaking to prepare and publish a scheme of road transport services of a State transport undertaking.

Section 68D deals with the lodging of objections to the scheme fram.cd under the preceding section, the consideration of those objections and the publication of the final scheme approved or modified by the State

Government.

Section 68F deals with the issue of permits to State transport undertakings in respect of a notified area or notified route and provides that the Regional Transport Authority shall issue such permits to the State transport undertaking notwithstanding anything contained in Chapter IV.

It also enables the Regional Transport Authority, for giving effect to the approved scheme, to refuse to entertain any application for the renewal of any other permit, to cancel any existing permit, to modify the terms of any existing permit so as to render the permit ineffective beyond a specified elate, to reduce the number of vehicles authori.sed to be used under the permit and to curtail the area or route covered by the permit.

Section 68G sets out the principles and method of determining compensation -to persons whose existing permits are cancelled.

By Chapter IVA, the State transport undertaking which is either a department of the State or a corporation owned or controlled by the St.ate on the approval of a scheme, is entitled, consistently with the scheme, to exclusive right to carry on motor transport business.

The Regional Transport Authority is bound to grant permit for the routes covered by the scheme to the State transport undertaking if that authority applies for the same and the Regional Transport Authority is

,~ f -·

also. bound in giving eHect to the approved scheme, "to modify the terms of existing permits and to refuse to entertain applications for renewal of permits of private operators.

Chapter IV A is not merely regulatory of the procedure for carrying on business of road transport by the State; it enables the State transport undertaking, subject to the provisions of the scheme, to exclude private operators and to acquire a monopoly, partial or complete, in carrying on transport business, in a notified area or on notified routes.

The authority of the Parliament to enact laws granting monopolies to the State Government to conduct the business of. road transport is not open to serious challenge.

Entry No. 21 of List III of the Seventh Schedule authorises the Union Parliament and the State Legislatures concurrently to enact laws in respect of commercial and industrial monopolies, combines and trusts. The argument of the petitioners that the authority conferred by entry No. 21 in List III is restricted to legislation to control of monopolies and not to grant or creation of commercial or industrial monopolies has little substance.

The express10n "Commercial and industrial monopolies" is wide enough to include grant or monopolies to the State and Citizens as well as control of monopolies.

The expression used in a constitutional enactment conferring legislative powers must be construed not in any nan:ow or restricted sense but in a sense beneficial to the widest possible amplitude of its powers: Navinchandra Ml•fatlal v. The Commissioner of income-tax, Bombay City('). The United Provinces v. Atiqua Begum.(2). Entry No. 26 of List II of the Seventh Schedule which invests the States with exclusive authority to legislate in. :respect of trade and commerce within the State, subject to the provisions of entry No. 33 of List III, does not derogate from the authority conferred by entry 21 of List III concurrently to the Parliament and the State Legislatures to grant or create by law commercial or industrial n1Dnopolies.

The amplitude of the poweri; imder the entry in the co.ncurrent list expressly dealing with commerical :ind industrial monopolies cannot be presumed to be restricted by the (I) [1955] l.S.C.R. 829, 836. (2)

[19'W] F.C.R. 110.

Stale of Mysore

.51wh J.

,1Varr.ya11ajJ/1a

State of 1l1;•sore

Shah J.

752 SUPRE:tl1E COURT REPORTS [ 1960]

generality of the expression "trade and commerce" in the State List. If the argument of the petitioners and the intervener that legislation relating to monopoly in respect of trade and industry is within the exclusive competence of the State be accepted, the Union Parliament cannot legislate to create monopolies in the Union Government in respect of any commercial or trading venture even though power to carry on any trade or business under a monopoly is reserved to the Union by the combined operation of Art. 298, and the law which is protected from the attack that it infringes the fundamental freedom to carry on business by Art. l '1(6). 'We are therefore of the view that Chapter IVA could competently be enacted by the Parliament under entry No. 21 read with entry No. 35 of the Concurrent List.

The plea sought to be founded on the phraseology used in Art. 19(6) that the State intending to carry on trade or business must itself enact the law authorising it to carry on tnde or business is equally devoid of force.

The expression "the State" as defmcd in Art. 12 is inclusive of the Government and Parliament of India and the Government and the Legislature of each of the Stat.cs.

Under entry No. 21 of the Concurrent List, the Parliament being competent to legislate for creating commercial or trading monopolies, there is nothing in the Constitution which deprives it of the power to create a commercial or trading monopoly in the constituent States.

Article 19(6) is a mere saving provision: its function is not to create a power but to immunise from altack the exercise of legislative power falling with in its ambit.

The right of the State to carry on trade or business to the exclusion of others does not arise by virtue of Art. 19(6).

The right of the State to carry on trade or business is recognised by Art. 298; authority to exclude competitors in tbe field of such trade or business is conferred on the State by entrusting power to enact laws under entry 21 of List III of the Seventh Schedule, and the exercise of that pml"er in the context of fundamental rights is secured from attack by Art. 19(6).

In any event, t.he expression "law" as defined in Art. l3(3)(a) includes any ordinance, order, bye-bw,

" -

' •

• j

,__.\

rule, regulation, notification, custom, etc., and the scheme framed under s. 68C may properly be regarded as "law" within the meaning of Art. l 9(6) made by the State excluding private operators from notified routes or notified areas, and immune from the attack that it infringes the fundamental right guaranteed. by Art. 19(1 )(g).

Re. 3: The plea that the Chief Minister who approved the scheme under s. 68D was biased has no substance.

Section 68D of the fotor Vehicles Act undoubtedly imposes a duty on L.te State Government to act judicially in considering the objections and in approving or. modifying the scheme proposed by the transport Jmdertaking.

GullafJalli Nageswara Rao v. Andhra Pradesh State Road TransjJort Corporation and another('). It is also true that the Government on whom the duty to decide the dispute rests, is substantially a party to the dispute but if the Government or the authority to whom the pmver is delegated acts judici; any in approving or modifying the scheme, the approval or modification is not open to challenge on a presumption of bias. The Minister or the officer of the Government who is invested with the. power to hear objections to the scheme is acting in his official capacity and unless there is reliable evidence to show that he is biased, his decision will not be liable to be called in question, merely because he is a limb of the Government. The Chief Minister of the State has filed an affidavit in this case stating that the contention of the petitioners .that he was "biased in favour of the scheme was baseless"; he has also stated that he heard such objections and representations as were made before him and he had given the fullest opportunity to the objectors to submit their objections individually. The Chief Minister has given detailed reasons for approving the scheme and has dealt with such of the objections as he says were urged before him. In the last para.· of the reasons given, it is stated that the Government have , heard all the arguments advanced on behalf of the operators and "after giving full consideration to them, the Government have come to

I (I) (1959] Supp. I S.C.R, 319.

NaraJ•a11appa

State of kfi•.<ore

Shah ,7.

Nara yanappa

State of Mys0¥6

Shah ].

the conclusion that the scheme is necessary in the interest of the public and is accordingly approved subject to the modifications that it shall come into force on May 1, 1959 ". In the absence of any evidence controverting these averments, the plea of bias must fail.

Re. 4: The argument that the Chief Minister did not give " genuine consideration " to the objections raised by opera.tors to the scheme in the light of the conditions prescribed has no force. The order of the Chief Minister discusses the questions of law as well as questions of fact. There is no specific reference in the order to certain objections which were raised in the reply filed by the objectors, but we are, on that account, unable to hold that the Chief Minister did not consider those objections. The guarantee conferred by s. 68D of the Motor Vehicles Act upon persons likely to be affected by the intended scheme is a guarantee of an opportunity to put forth their objections and to make representations to the State Government against the acceptance of the scheme. This opportunity of making representations and of being heard in support thereof may be regarded as real only if in the consideration of the objections, there is a judicial approach. But the Legislature does not contemplate an appeal to this Court against the order passed by the State Government approving or modify. ing the scheme. Provided the authority invested with the power to consider the objections gives an opportunity to the objectors to be heard in the matter and deals with the objections in the light of the object intended to be secured by the scheme, the ultimate order passed by that authority is'not open to challenge either on the ground that another view may possibly have been taken on the objections or that detailed reasons have not been given for upholding or rejecting the contentions raised by the objectors.

In the view taken by us, the contentions raised by the petitioners fail and thr petition is therefore dismissed with costs.

Petition dismissed.

s. 6

s. 5

India

H. C. NARAYANAPPA AND OTHERS

THE STA.TE OF MYSORE AND OTHERS

B. P. Sinha, C.J.

Jafer Imam

A. K. Sarkar

K. Subba Rao

C. Shah, JJ.

Motor Vehicles Act

ss. 68C, 68D

Constitution of India

Seventh Schedule

s. 68C

Motor Vehicles Act 1939

s. 68D(2)

IVA of the Motor Vehicles Act, 1939

Parliament

Seventh Schedule

Constitution of India

s. 68C

Motor Vehicles Act

Art. 19(6)

Art. 19(l)(g)

s. 68C

Article 32

Constitution of India

A. V. Viswanatha Sastry

B. R. L. Iyengar

G. S. Pathak

R. Gopalakrishnan

T. M. Sen

C. K. Daphtary

D. R. Karigowda

s. 68D(2)

Motor Vehicles Act

Narayonappa

State of Mysore

Bangalore District

J anuan 13, 1959

s. 68C

Motor Vehicles Act, 1939

Anekal

Mysore

April 23, l 959

June 23, 1959

June 24, 1959

High Court of Mysore

March 11 l, 1961

April 15, 1959

January 5, 1960

January 4, l 960

Art. 32

IVA of the Motor Vehicles Act

Section 68C

Section 68D(I)

section 2

s. 68D

s. 3

s. 68C

s. 68C

October 22, 1959

Narayanappa

State of Nf.)'sore

Shah J.

Bangalore

Surjapur

Dornsanclra

Agara

Banglore

Chik- Kathirupathi

Domsandra

Article 298

Article 19(6)

Art. 19

Art. 19(1 )(g)

Motor Vehicles Act, 1939

ss. 68A to 68J

Act by the Parliament by Act

Shah

State of A1_ysore

Shah J.

Section 68A

Central Government

s. 68B

Section 68C

Section 68D

Section 68F

Section 68G

Seventh Schedule

Seventh Schedule

State

Art. 298

Art. 19(6)

Art. 12

Parliament of India

Article 19(6)

Art. 19(6)

Art. 298

Seventh Schedule

Art. 19(6)

s. 68C

Art. 19(1 )(g)

s. 68D

Section 68D

State of kfi•.<ore

Shah

Nara yanappa

State of Mys0¥6

Shah

May 1, 1959

s. 68D

Motor Vehicles Act


,. .• - r

3 S.C.R. SUPREM'E'COURT REPORTS· 755

JADAB SINGH AND OTHERS

THE HIMACHAL PRADESH ADMINISTRATION

AND ANOTHER ...,., . (B. P. SINHA, c. J., P. B. GAJENDRAGADKAR, K. SUBBA

RAO, K. C. DAS GUPTA and J.C. SHAH, JJ.)

Estates, Abolition of--Enactment declared invalid as having been passed by State Legislature .not duly constituted-Validating Act passed by Parliament-Competence-Constitutional validity of the Abolition Act-Himachal Pradesh Abolition of Big Landed Estates and Land Reforms Act, I953 (Himachal IS oj.I954), ss. II, .I5-Himachal Pradesh . Legislative Assembly (Constitution and

Proceedings) Validation Act (No; 56 of Igj8), ss. 3, 4-Constitution of India, Arts. Ig, JI, 3IA, 240, 248, Item No. 97, List!, Seventh Schedule.

• On October IO, 1958, the Hi!Jlachal Pradesh Abolition of Big Landed Estates and Land Reforms Act, 1953, was declared invalid by the Supreme Court on the grourid that the .Legislative Assembly of the New Himachal Pradesh State which passed it was not duly constituted and was as such incompetent to pass the Act (Vide :Skree Vinod Kumarv. State of Himachal Pradesh, [1959] Supp. l S.C.R. l6b). The President by Ordina, nce .No. 7 of 1958 validated the constitution and proceedings of tlie said Assembly. That Ordinance was replaced by the Validating Act No. 56 of 1958 passed by the Parliament. Section 3 of the Act validated the constitution and proceedings of the Legislative .Assembly of the Himachal Pradesh State ands: 4 prohibited the

.courts from questioning the validity of any Act or, prpceeding of the Assembly on the ground of defect in its constitution. The Himachal Pradesh Abolition of Big Landed Estates and Land Reforms Act was accordingly validated. The petitioners who were land-holders challenged the constitutionality of the Ordinance and the validating Act, by petitions under Art. 32 of the Constitution : .

Held, that (i) in view of Art. 240 as it stood befor!( its amendment by the Constitution (Seventh Amendment) Act, 1956, the Parliament was competent to enact the validating Act; \ii) the provisions of the Abolition Act did not infringe Arts. 19 and 31 of the Constitution, and ,

(iii) the Abolition Act foll within the protec; tion_o_f Art .. 31A of the Constitution and it was not open to challenge on. the ground that it infringed Arts. 19 and 3Iof the Constitutfon.

Shri Ram Narain v. State of Bombay, [1959] Supp. r S.C.R. 489, referred to. · . .

The reason which precluded the members of the. Old Himachal Pradesh Assembly from functioning as the Legislature, of the New Himachal Pradesh State was that a Notification under s. 74 of the Representation of the People Act, t9:S1, wa~ ilqt

~ .

. "4pr, il .2~,'

c960 issued. The Parliament, bi virtue of its residual powers of l_egislation under Art. 248 of the Constitution and item No. 97 of Jadab Singh List I to the Seventh Schedule, was competent to remove the v. defect that arose because of the failure to issue the notification, Himaehal Pradesh and to validate the actual proceedings of the body which func- A dministration tioned as the Legislature. . Under Art. 240 of the Constitution, as it stood before it was amended by the Constitution (Seventh Amendment) Act, 1956, the Parliament was not debarred from enacting the validating Act nor did the power of the Parliament to validate the acts an<! proceedings of the State Legislature come to an end when the State itself ceased to exist.

ORIGINAL JURISDICTION: Petitions Nos. 161 of 1958 and 109 of 1959.

Petitions under Art. 32 of the Constitution of India for the enforcement of fundamental rights.

Achhru Ram, D. R. Prem and Ganpat Rai, for the petitioners (In Petn. No. 161 of 58 and 16, 17, 35, 58, 69, 102, 109/1959).

D. R. Prem, R. Thiagarajan and T. Satyanarayana, for the petitioners (In Petn. No. 36 of 1959).

0. K. Daphtary, Solicitor-General of India, R. Ganapathy Iyer, R. H. Dhebar and T. M. Sen, for the respondents (in all the petitions).

1960. April 28.

The Judgment of the Court was delivered by Shah J.

SHAH, J.-In the First Schedule to the Constitution, as originally enacted under the heading " Part C States" were set out the names of ten " C " States.

The Parliament of India enacted The Government of Part C States Act, 49 of 1951, providing for the constitution of Legislative Assemblies, Councils of Ministers and Councils of Advisers for Part C States. Under s. 4 of the Act, the President was authorised to delimit by order the constituencies into which each Part C State was to be divided and the areas of the constituencies, t.he number of seats allocated to' each such constituency and the number of seats reserved for scheduled castes and tribes. In exercise of the powers conferred by s. 4 of the Act, the President made an order determining the constituencies into which the State of Himachal Pradesh was to be divided. In 1952, elections were held to the Himachal Pradesh Assembly and 36 members were elected in the different constituencies. In the Legislative Assembly of the State,

...

hall be deemed to have been duly chosen as the Speaker and the Deputy Speaker respectively; Jadab Singh and accordinglyv.

(1) any Bill passed by the new Legislative Assem- Himachal Pradesh bly. (whether the Bill was introduced in the new Administration Legislative Assembly or was introduced in the Legislative Assembly of Himachal Pradesh functioning immediately before the 1st day of July, 1954) and assented to by the President shall be deemed to have been validly enacted and to have the force of law;

(2) any grant made, resolution passed or adopted, proceeding taken or any other thing done by or before the new Legislative Assembly shall be deemed to have been made, passed, adopted, taken or done in accordance with law."

Section 4:

"No court shall question any Act passed, or any grant, resolution, proceeding or thing made, passed, adopted, taken or done by or before the new Legislative Assembly merely on the ground that the new Legislative Assembly had not been duly constituted or on the ground that a, person who was not entitled so to do presided over, sat or voted or otherwise took part in the proceedings of the new Legislative

Assembly."

By these nine petitions, the constitutional validity of Ordinance No. 7 of 1958 and Act No. 56 of 1958 is challenged and the petitioners pray for writs of mandamus or other writs or directions restraining the Himachal Pradesh Administration and the Union of India from giving effect to Ordinance No. 7 of 1958 and Act No. 56of1958 and to the Abolition Act or " acting in any manner under or on the basis of that

Act".

Counsel for the petitioners contends, (1) that the persons summoned by the Lieutenant-Governor by his notification dated July 7, 1954, could not constitute a Legislature of the new State as those persons were not elected or nominated in the manner prescribed by Art. 240 of the Constitution; and the Parliament could not by law validate acts and proceedings of that body which had no authority to legislate, (2) the Parliament in enacting the Validating ·

Shah j.

r960 Act had no authority retrospectively to form a Legislative Assembly in violation of the terms of Art. 240 Jadab Singh v. of the Constitution especially when the new State of Himo, hal P•adesh Himachal Pradesh which was formed under Act 32 of

Admin; si.ation 1954 had ceased to exist at the date when the Aboli-

Shah ]. tion Act was enacted, and (3) even if the Validating Act is not open to challenge, the Abolition Act contravened Art. 31 of the Constitution and is therefore void as infringing the fundamental rights of the petitioners under Art. 19 and Art. 31 of the Constitution.

In our view, there is no substance in any of the contentions raised.

By Art. 240(1) of the Constitution, before it was amended by the Constitution (Seventh Amendment) Act, 1956, it was provided:

"240. (1) Parliament may by law create or continue for any State specified in Part C of the First Schedule and administered through a Chief Commissioner or Lieutenant-Governor- ( a) a body, whether nominated, elected or partly nominated or elected, to function as a Legislature for the State; or

(b) a Council of Advisers or Ministers, or both with such constitution, powers and functions in each case, as may be specified in the law."

By the Article as it stood before its amendment, the Parliament was competent by law to create or continue for any State specified in Part C of the First Schedule a body to function as a Legislature. Under that Article, the Legislature was to consist of persons nominated or elected, or partly elected and partly nominated, and there is no dispute that the Legislature consisting of members validly elected from the various constituencies functioned for the old State of Himachal Pradesh. Those 36 members of the old Himachal Pradesh Assembly having been under Act 49 of 1951 duly elected to the Assembly of that State, by virtue of s. 15(1) of Act 32 of 1954 each member was to be deemed to have been duly elected by the corresponding constituency of the Legislature of the new State, and the only reason why those members could not function as a Legislature of the new State was that the notification under s. 74 of the Representation of

.\ ---

-' \ -

the People Act was not published. The legislative 1960 acts of tha.t Assembly were undoubtedly unauthorised, . . but it was competent to the Parliament by legislation fadab Singh to remove the bar which arose because of the failure Himacha~P, adesh to issue the notification and to validate the acts done Administration by the Legislature.

Article 240 did not provide that the Legislative Assembly could not function unless the members thereof were expressly elected or were nominated to the . Legislature of a Part C State. By Art. 248, the Parliament has the residuary power to make laws with respect to any matter not enumerated in the Concurrent List or the State List, and legislation seeking to remove the disability of members of a Legislative Assembly of a Part 0 State arising because of the failure to issue a notification under s. 74 of the Representation of the People Act, is not covered by any item falling in the Concurrent List or in the State List. By item No. !:17 in List I to the Seventh Schedule, the Union Parliament is competent to make any other law not enumerated in Lists II and III. The legislative competence of the Parliament to enact the Act is therefore not open to challenge.

The legislative competence of the Legislative Assembly of the New Himachal State Assembly to enact the Abolition Act in 1954 cannot be and is not denied. There is no absolute bar against the authority of the Parliament to enact legislation which takes away vested rights provided the legislation falls within any of the legislative lists within the competence of the Parliament and it does not infringe any of the fundamental rights of the citizens. Again, no constitutional provision is violated by the enactment of Act 56 of 1958. "\Ve are also unable to hold that the authority of Parliament to validate the acts and proceedings of the Assembly summoned by the Lieutenant-Governor in 1954 was exhausted when Art. 240 as it originally stood was amended by the Constitution (Seventh Amendment) Act, 1956, and Part 0 State of Hiinachal Pradesh ceased to exist; When the Validating Act was enacted, the Himachal Pradesh Part 0 'State had ceased to exist but on that account, the authority of the' Parliament tO validate

Shah j.

rg6o the proceedings of the body of persons which purport-

Jadab Singh ed to function as the Legislative Assembly under Act v. 32 of 1954 was not extinguished.

Himachal Pradesh Did the Abolition Act infringe the fundamental Administration rights of the petitioners under Art. 19 or Art. 31 of

Shah ./. the Constitution ? Bys. 11, the tenants were invested with the right to acquire the interests of the landowners in the lands held by them. It was provided that notwithstanding any law, custom or contract to the contrary, any tenant other than a sub-tenant shall, on application made to the compensation officer at any time after the commencement of the Act, be entitled to acquire, on paymnet of compensation, the right, title and interest of the land-owner in the land held by him subject to certain terms and conditions set out therein. Section 14 permitted acquisition by the tenants of the rights of the land-owners in a portion of the lands of the tenancy in certain specified circumstances. Section 15 sanctioned the acquisition by the State Government of the rights of the landowners by notification in the gazette declaring that as from such date and in respect of such area as may be specified in the notification, the right, title and interest of the land-owner in the lands of any tenancy held under him by a tenant shall stand transferred to and vest in the State Government free from all encumbrances created in such lands by the land-owner. By s. 16, the method of computation of the compensation payable for acquisition of the right, title and interest of the land-owners under s. 15 is prescribed. Bys. 27, it was provided that notwithstanding anything contained in the provisions of the foregoing sections of that chapter, the land-owner who held land, the annual land revenue of which exceeded Rs. 125 per year, the right, title and interest of such owner in such land shall be deemed to have been transferred and vested in the State Government free of all encumbrances.

Sub-s. (3) of s. 27 laid down that the land-owner whose right was acquired under sub-s. 1 by the State Government shall be entitled to receive compensation to be determined by the compensation officer having regard to ss. 17 and 18 of the Act, in accordance with the provisions of Schedule II; but in

\ r

.__

--"'

the case of such occupancy tenant who was liable to pay rent in terms of land revenue or the multiple of land revenue, the compensation payable to his landfadab Singh owner shall be computed in accordance with Sche- Himacha~Pradesh dule I. Provision was also made by the Act for State Adminis11ation management of lands in certain eventualities. Article 31 of the Constitution a.s amended by the Constitution (Fourth Amendment) Act, 1955, provides, inter alia, that a law for compulsory acquisition of property for public purposes shall not be called in question in any court on the ground that the compensation provided by that law is not adequate, and by Art. 31-A which was substituted by the Constitution (Fourth Amendment) Act, 1955, for the original Article with retrospective effect, it is provided that notwithstanding anything contained in Art. 13, no law providing for

(a) the acquisition by the State of any estate or of any rights therein or the extinguishment or modification of any such rights ...... shall be deemed to have become void on the ground that it is inconsistent with or takes away or abridges any of the fundamental rights conferred by Art. 14, 19 or 31; provided that where such law is made by the Legislature of a Sate, the provisions of the Article shall not apply thereto unless the law, having been reserved for the consideration of the President, has received his assent. The Abolition Act passed by the State Assembly was reserved for consideration of the President and it received bis assent.

The impugned Act contains provisions transferring the interest of the land-owners to the tenants in lands and for acquisition by the State of the property of the land-owners on payment of compensation under the Schedule provided in that behalf. This court has held in Sri Ram Narain v. State of Bombay (1) that a statute the object of which is to bring about _agrarian reform by transferring the interes~ of the land-owners to tenants falls within the class of statutes contemplated by Art. 31-A(a) and is protected from the attack that it violates the fundamental rights enshrined in Arts. 14, 19 and 31 of the Constitution. Counsel appearing on behalf of the petitioners conceded, and in our judgment rightly, that the principle of that case -governed this

, (I) [1959) Supp. I S.C.R. 489.

Shah ].

1960 case and the validity of s. 11 could not in view of Art. 31-A be challenged. The validity of the provi- Jadab Singh sions for acquisition by the State of the lands of the

Himach; i Prnd"h land-owners for compensation determinable in accord-

Adm; nJStration ance with the provisions of Sch. II is also not liable

Shah ].

April 29.

to be challenged under Art. 31 read with Art. 31-A.

In that view of the case, all these petitions must fail and they are ordered to be dismissed with costs.

Petitions dismissed.

A. S. T. ARUNACHALAM PILLAI

M/S. SOUTHERN ROADWAYS (PRIVATE) LTD. (B. P. SINHA, c. J., JAFER IMAM, A. K. SARKAR,

K. SuBBA RAO and J.C. SHAH, JJ.) Motor Vehicles-Stage carriage permits, variation of-] urisdiction of Regional Transport Officer-State Government's power of revision-Motor Vehicles Act, I939 (4 of I939l. as amended by the Madras Act, 2oof I948, ss. 44A, 64A.

The question for decision in this appeal was whether the Regional Transport Officer under the Motor Vehicles Act, 1939, as amended by the Madras State Legislature, had the power to vary the terms of a stage carriage permit granted under that Act.

The appellant, holder of a stage carriage permit, applied on July

t9, 1954, to the Regional Transport Officer for a variation of the route specified in his permit. The Regional Officer after hearing objections rejected the application. The appellant applied to the State Government for revision of the order under s. 64A of the Act and the Government after hearing objections set aside the order of the Regional Transport Officer and granted variation of the permit as sought for.

Against this order the respondent moved the Madras High Court under Art. 226 of the Constitution. The Single Judge who heard the matter, following a decision of a Division Bench of that Court, held that the Regional Transport Officer had no jurisdiction to deal with the appellant's application and the State Government for that very reason could have no power in revision to grant the same, and set aside the order of the Madras Government : Held (per Sinha, C. J., Imam, Sarkar and Shah, JJ.). Section 64A of the Motor Vehicles Act, introduced into the Act by the Madras Legislature, although couched in wide language, does not confer on the State Government any original jurisdiction or authorise it to pass in revision an order which the authority, .whose order it seeks to revise, has no jurisdiction to pass. While undoubtedly it can set aside an order of ap auwority or officer

755

JADAB SINGH AND OTHERS

THE HIMACHAL PRADESH ADMINISTRATION . AND ANOTHER

B. P. SINHA

P. B. GAJENDRAGADKAR

RAO

K. C. DAS GUPTA

C. SHAH, JJ.

ss. 3, 4

Constitution of India

Seventh Schedule

October IO, 1958

Supreme Court

Parliament

Section 3

Art. 32

Art. 240

Arts. 19 and 31

Arts. 19 and 3I

s. 74

Representation of the People Act

Art. 248

Seventh Schedule

Art. 240

Art. 32

Constitution of India

Achhru Ram

D. R. Prem

Ganpat Rai

R. Thiagarajan

T. Satyanarayana

K. Daphtary

R. Ganapathy Iyer

R. H. Dhebar

T. M. Sen

Shah

SHAH

First Schedule

Parliament of India

s. 4

s. 4

Himachal Pradesh

Himachal Pradesh Assembly

Legislative Assembly of the State

Jadab Singh

Section 4

Himachal Pradesh Administration

July 7, 1954

Art. 240

Art. 240

Art. 31

Art. 19

Art. 31

Art. 240(1)

First Schedule

First Schedule

s. 15(1)

s. 74

Article 240

Art. 248

s. 74

Representation of the People Act

Seventh Schedule

Art. 240

State of Hiinachal Pradesh

Himachal Pradesh Did the Abolition Act

Art. 19

Art. 31

Section 14

Section 15

s. 16

s. 15

s. 27

s. 1

ss. 17 and 18

Schedule II

landfadab Singh

Article 31

Art. 31

Art. 13

Art. 14, 19

Art. 31

Arts. 14, 19 and 31

s. 11

Art. 31

Art. 31

Art. 31

A. S. T. ARUNACHALAM PILLAI

SOUTHERN ROADWAYS (PRIVATE) LTD

JAFER IMAM

A. K. SARKAR

K. SuBBA RAO

Motor Vehicles Act

ss. 44A, 64A

Motor Vehicles Act

July

t9, 1954

s. 64A

Madras High Court

Art. 226

Madras Government

Sinha

Imam

Sarkar

Section 64A

Motor Vehicles Act

Madras Legislature