SUPREME COURT REPORTS • [1960]

z96o proceedings in such a. suit a.re not binding on him so Rajkumarl. as to affect his rights und.er the second mortgage. He Kaushalya v.V; can thus follow the property by suing his mortgagor, . v. even though it may have been sold under the decree . ilawaPritmaSingliofa.U: earlier mortgagee in a. suit to which he was not a.. pa.rty .• __ Therefore, .the interest of the prior mort- Wa,,.hoo' J • . gagee or the subsequent mortgagee, if any, would not . be affected by a decree passed on an application under s. 13 and there is no reason therefore to cut down the plain meaning of the words used in B. 2 (6}(c) on the ground that the procedings: under the .Act would prejudicially-. affect' the -rights• of: prior or puisne

r96o

April zo.

mortgagees>•·• ' · . ., ·-· _ • • r "' • There is therefore no.· force in this appeal and it is hereby dismissed with costs." .... ·: ·

" ·:·r:, _; ~-. ,' -'. ;:T .... Appl dis1nissed. ,··

'.,,

' - .. , :r , li ·.: .~.:,:~IAHAi>EOL.AilKANODIA,.· .. rr: li'. -, 11 - - '. •• -i ~-1 - . ;_i ::· . .i ;_ •l .. ~:f-, ·:.~·:_ -· ' '";_,.::-,~ ,, v•, '•' ,-,; U'i ~. ' ('. ":.<:· ' / >, : .-THE -.AD~IINISTRATOR-GENERµ. OF-.

.; ... , ,, ; .:"' <:, ... WESTBENGA.L.• ;'-:\'-·" ·

- , ' :• j • ' ' . (P .. B. GA.JENDRAGADKAR,- K. N; . w ANCHOO . : .•·· "' :.':and K. C. DAs Gm.A.; JJ:)- - ..

'!\~-,~-- : .• _-:-.-~_!;:; i ,,_.',:.,_~.·- ~-' •.. '.:;; -· .. , • .Thika Tenancy..,-Decree for possession against tenant-Applicaiicln'f<W rdiefby lenant-,-Amendment. of Act withretrospective

'operation~Effect-:.fnterpretation of Statute-Principles of construction~Thika Tenancy• Act (W:B. z of r949f; s. 28-Thika. Tenancy Amendment Act (W .B. 6 of r953). s.'I(z). ·. -:: ·with a" view to i; ive protection to Thika' tenants against eviction and in certain.other matters, the West Bengal -Legislature enacted -the Calcutta Thika Tenancy Acti 1949 .. That Act . was amended by the Calcutta Thika Tenancy Amendment Act,

:i:g5j, which omitted s: 28 of the Act. The question for decision in

- the appeal was whether . the cappellant against whom proceedings

for' execution of a decree for ejectment was pending, who had appli~ __ . ed -for, relief under s; 28 when that section was in force, was - -

 entitled:to have his ; application , disposed of in accordance with the provisions of s. 28, which had ceased to exist retrospectively though. it remained undisposed of 'on the date the Amendment Act came into force:· • · · ' - . '. . .. ·: · ·· ", r; Held, thats, 1, 'sub-5: (2) Of the Calcutb. Thlka 'Tenanc{A.ct t953,• clearly intended that no reilef under s.' 28 of the brigfnal

Act should be given in cases pending for disposal on the date the amendment became effective and s. 28 ceased to exist retrospectively.

The principles applicable to interpretation of statutes are four-fold in nature,-

(r) such statntory provisions as create or take away substantive rights are ordinarily prospective ; they can be retrospective if made so expressly or by necessary implication and the retrospective operation must be limited only to the extent to which it has been so made either expressly or by necessary implication,

(2) the intention of the legislature has to be gathered from the words used by it, giving them their plain, normal, grammatical meaning,

(3) if any provision of a legislation the purpose of which is to benefit a particular class of persons is ambiguous so that it is capable of two meanings the meaning which preserves the benefit should be adopted,

C4) If the strict grammatical interpretation gives rise to an absurdity or inconsistency, such interpretation should be discarded and an interpretation which will give effect to the purpose will be put on the words, if necessary, even by modification of the language used : Held, also, that judicial decorum ought never to be ignored.

Where one Division Bench or a Judge of a High Court is unable to distinguish a previous decision of another Division Bench or another Single Judge and holds the view that the ear lier decision was wrong, the matter shonld be referred to a larger Bench to avoid utter confusion.

Deorajan Devi v. Satyadhan Ghosal, [1953] 58 C.W.N. 64, overruled.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 303 of 1956.

Appeal from the judgment and decree dated February 7, 1955, of the Calcutta High Court in Appeal from Appellate Order No. 102 of 1953, arising out of the judgment and decree dated August 6, 1953, of the Subordinate Judge, Second Court of Zillah, Howrah, in Misc. Appeal No. 231 of 1953.

G. S. Pathak, P. K. Chakravarty and B. C. Misra, for the appellant.

B. Sen, S. N. Mukherjee and P. K. Bose, for the respondent.

1960. April 20. The Judgment of the Court was delivered by

DAS GUPTA, J.-In Calcutta and its suburb Howrah there have existed for many years precarious tenancies popularly known as Thika tenancies, the characteristic feature of which is that the tenant

Mahadeolal Kanodia v.

Administrator- Genetal of West Bengal

Das Gupta],

r960

Mahadeolol Kanodia v.

Administralor-

General of West Bengal

Das Gupta].

takes lease of the land only and erects structures thereon at his own expense; where there is already a structure on the land the tenant acquires these struc

tures by purchase or gift but takes the land on which the structure stood in tenancy. With the influx of population into these areas that followed the partition of India the position of these Thika tenants became even more insecure than before. With the sharply rising demand for accommodation the landlords found it possible and profitable to put pressure on these Thika tenants to increase their rents or to evict them so that other tenants who would give more rents and high premiums might be brought in. With a view to give some protection to these Thika tenants against eviction and in certain other matters, the West Bengal Legislature enacted in 1949 an Act called the Calcutta Thika Tenancy Act (hereinafter referred to as " the Act "). Some features of the protection afforded by this legislation which deserve mention are that ejectment could be had only on one or more of the six grounds specified in s. 3 of the Act; special provisions as regards notice for ejectment were made in s. 4; in the same section provision was also made about payment of compensation as a necessary pre-requisite for ejectment in certain cases. Section 6 provides that no orders for ejectment on the grounds of arrears of rent shall be executed if the amount of arrears together with costs of proceedings and damages that may be allowed were deposited within 30 days from the date of the order. Not content with giving such protection only in suits and proceedings for eviction that might be instituted by the landlord in future the Legislature in the 29th section of this Act provided that even in suits and proceedings which had already been instituted and were pending for disposal on the date when the new law came into force, this new law will be applicable, except the provisions as regards notice in s. 4. In the 28th section of the Act the Legislature went further and provided that even where the decree or order for recovery of possession had been obtained by the landlord against a Thika tenant but possession had not been actually recovered, courts will have the power to re-open the ma.tter a.nd

'>-.

3 S.C.R.

SUPREME COl)RT REPOl\'{S 581

if the decree or order 'is not in conforn1ity yith: tl~~ beneficent provisions of the Act either to rescind the decree or order altogether or to vary it to bring it into such conformity.

Section 28 with which we are specially concern.ed in this appeal is in these words:--

''vVhere anv decree or order for the recovery of possession of any. holding from a Thika tenant has been made before the date of commencement of this Act but the possession f s1ich holding has not been recovered from

1 the Thika tenant by the execution of such decree or order, the court bv which the decree or order was made may, if it is of opinion that the decree or order is not in conformity with any provision of th is Act other than sub-section (i) of section 5 or section 27, rescind or vary the decree or order in such manner as the Court niay think fit for the purpose of giving effect to such provision , anl a decree or order so varied by any Court shall be transferred to such Court to the Controller for execution under this Act as if it were an order made under and in accordance with the provisions of this Act." The new lqw however failed to achiev~ its object for some years as rhe Cot!rts interpreted the definition of Thika tenant in the Act in such a manner that speaking geerally no tnant. was able to establish its reqt!irement. To remedy this the Governor of West 'Bengal enacted on October 21, 1952, an Ordinance by which the definition of Thika tenant was revised and a few other amendments of the Act were made.

The . spcial protection given under ss. 28 and 29 of the Act to tenants against whom decrees or orders had been obtained or against whom cases were pending was however kept intact. The Ordinance by its s. 5 extended such special protection also to tenants whose cases were pending before .a court on the date of the commencement of the Ordinance and those against whom decrees or orders had been made after th~ date of the Act and before the date 13f the Ordinance but possession had not been o])tµ.ined.

In 1953 the West Bengal Legislature enacted the Clctta Thika Tenancy Amendment Act, 195q, revising r.ermanently the definition of Thika tenant ancl II1aking sqme other

12-6 SCI/ND/82

Mahadeo(al

'Kaiiodia

"V.· Administrator-

' General of West Bngal

Das Gupta].

Afahndeolnl

llanodia

V, Adminislralor-

Ge11eral of JV'est Bengal

D11s (,'11/ila ].

amendments.

One of the amendments was that ss. 28 aml 29 of the Original Act were omitted.

The principal question before us in this appeal is whether the provisions of s. '28 could be applied by a Court in a case where an application hacl been made b;· a tenant for relief under that section anrl such application was pending for disposal on the date the 01nission becan1e effective. l)y reason of the f\n1cndmcnt Act coming into force.

The clecree for possession with which we are concerned in this case was made as far back as August 8,

I 94 l, by a Munsif in Howrah. The tenant's appeal was dismissed on April 9, 194~. On February 28, 1949, on which rlate the Calcutta Thika Tenancy Act of 1949 came into force, proceedings for the execution of the decree of ejectment 11ere pending in the 1\hmsif's Comt.

On March J<l, 19:'\2, when these proceedings were still pending the tenant made an application to the Court which had passed the decree praving that the decree may be rescinded or varied in accordance with the provisions of s. 28 of the Act.

This application came up for hearing before the Munsif on July 7, l!l'i'!.

In the meantime the Amenclment Act of l 'li\.~ had come into force anrl the omission of s. 28 of the Act harl become effective.

The learner! Munsif held that s. 28 of the Act being no longer in force he harl no power to give the tenant a1iy relief in accordance with the provisions thereof.

Jn that view he dismisser! the application.

The tenant's appeal to the District Judge, Howrah, having been rejected, he preferred a secoml appeal to the High Comt.

The Jeanice! judges of the J-lir; h Court who heard the appeal agreed with the courts below on a construction of s. 1 (2) of the Amendment Act tlut s. 28 was not applicable to the proceedings commenced by the tcna!ll by his application for relief and dismissed the appeal.

Against that decision the tenant has filed the present appeal befor_c us on a certificate of fitness granted by the High Comt_.

The decision -of. the question raised in this appeal, viz .. whether this tena'nt who had applier! for relief

3 S.C.R. SUPREME COURT RE.PORTS 583

under s. 28 when that section was in force is entitled to have his application disposed of in accordance with the provisions of that section though it remained undisposed of on the date the Amendment Act came into force, depends on the interpretation of s. 1, sub-s. (2) of the Amendment Act.

This section is in these words:

" It shall come into force immediately on the Calcutta Thika Tenancy (Amendment) Ordinance, 1952, ceasing to operate: Provided that the pruvijons of the Calcutta Thika Tenancy Act, 1949; as amended by this Act, shall, subject to the provisions of s. 9, also apply and be deemed to have always applied to all suits, appeals and proceedings pending-

(a) before any Court, or

(b) before the Controller or ( c) before a person deciding an appeal under section 27 of the said Act, on the date of the commencement of the Calcutta Thika Tenancy (Amendment) Ordinance, 1952." It is obvious and indeed undisputed that but for any difficulty that may be placed in the tenant's way by these provisions the tenant would in view of the provisions of s. 8 of the Bengal General Clauses Act be entitled to have his applicatian for relief under s. 28 of the original Act disposed of as if s. 28 still continued. If however a contrary intention has been expressed by the Legislature in its amending Act the contrary intention would prevail. What we have to decide is whether in s. 1, sub-s. (2), the Legislature has clearly expressed an intention that no relief under. s. 28 of the original Act shall be given in cases like these.

The principles that have to be applied for interpretation of statutory provisions of this nature are well.established. The first of these is that statutory provisions creating substantive rights or taking away substantive rights are ordinarily prospective; they are retrospective only if by express words or by necessary implication the Legislature has made them rPtrnspective; and the retrospective operation will be limited

M ahadeolal Kanodia v.

Admitiistrator~

General of Wist Bengal

Das Gupta].

Ma.h'.l:leolal

'KawJdia

V, Adniillistratbr-

Ge11eial .of West Bengal

Das Gupta J.

c'n1lv to the extent to which it has been so made by express words, or by necessary implication.

The second rule is that the intention of the Legislature has ah1ays

to b'e gathered from the words used by it, giving to the \Vords their plain, normal, grammatical meaning.

The third .rule is that if in any legislation, the general object of which is to benefit a particular class of persons, any provision is ambiguous so t.h::it it is capable of tw0 1ileanings, one which would preserve the benefit and another which would take it away, the meaning which preserves it should be adopted.

The fourth rule is that if the strict grammatical interpretation gives rise to an absurdity or inconsistency such interpretation should he discarded and an interpretation which will give effect to 'the purpose the Legislature may reasonably be considered to have had will be put on the words, if ncc:essar\', even bv modification o[ the language used. ' ' In applying these principles to the interpretation of s. l (2), it is necessary first to consider a contention that has been raised by l\fr. Pathak on behalf of the appellant that the phrase "as amended by this Act" qualifies the word "provisions". lf this be correct, the meaning of the proviw will be that only those provisions of the Act which have been amended by the Act shall apply and be deemed to have applied always to pending proceedings.

This will become meaning-Jess, the argument continues, if the word "amended" is interpreted to include omissions.

For it makes no sense to say that a provision which has been omitted shall apply.

So, it is argued, the word "amended" should be interpreted to mean only amendment by additions or alterations and not an amendment by omissim1s.

The result of the proviso, the appellant's counsel contends, is to make applicable to pending proceedings the altered provisions in place of olcl provisions but to Say nothing as regards such provisions which have' been omitted.

vVe are 1111; ible to see how it is possible, unless rules of grammar arc i:otally disregarded to read the words

.. .;

...

"as amended by 1.his Act" as to qualify the word "~- "provisions:' If ordinary grammatical rules arc applied there is no escape from the conclusion tht

3 S.C.R. SUPREME COURT REPORTS 585

the djectival phrase "as amended by this Act " qualifies \!-_he proximate substantive,)iz., the Calcutta Thika Tenancy Act, 1949. There is no escape from the conclusion therefore that what the Legislature was saying by this was nothing more or less than that the provisions of the amended Thika Tenancy Act shall apply.

Mr. Pathak argued that if that was what the Legislature wanted to say, it was reasonable to expect it to use the words "The Thika Tenancy Act, 1949, as amended by this Act," in the proviso ; and there was no reason for the use of the words " the provisions of the Thika Tenancy Act". We are not impressed by this argument. The Legislature might certainly have used the language as suggested by the learned counsel, and as he says, that would have meant an economy of words. But where there are two ways of saying the same thing it is useless to speculate why one way was adopted in preference to the other. It is not unusual to find draftsmen using the words " provisions of the Act" in many statutes where the words "the Act" would have been adequate; and it would be unreasonable to try to read too much in the use of the words "the provisions of the Thika Tenancy Act" instead of " The Thika Tenancy Act" in the proviso.

Even so the learned counsel contends, there is no reason to read "amendments " so as to include omissions. The word" amendment '', he has submitted is sometimes used in the restricted sense of "addition" or "alteration" as distinct from omission; and he asks us to read the word "amended " in the proviso, to mean only alterations or additions in the statute, and as not including omissions. It is unnecessary for us in the present case to express any opinion on the general question whether in certain context the word" amended" should be interpreted so as to exclude omissions.

What is clear however is that the present is not one of such case8. The amendment Act itself was being called the Calcutta Thika Tenancy (Amendment) Act,

1953. The preamble says "whereas it is expedient to amend the Calcutta Thika Tenancy Act, 1949 ".

Section 2 of this amendment Act substitutes a new clause for the old cl. (5) of s. 2; s. 3 adds some words to cl. (1) ands. 3(b) omit8 some words in cl. (4) and

Mahadeolal Kanodia v.

Administrator-

General of West Hengal

Das Gupta .J.

Mahadeolal Kanodia v.

Administrator ..

General of West Bengal

Das Gupta].

SUPREME COURT REPORTS [1960]

again adds some words to cl. (5) of s. 3 of the Act.

Section 4 omits certain words of sub-s. (1) of s. 5.

Section 5 substitutes some new words in place of cer. tain words in the original sub-ss. (1) and (2) of s. 10 of the Act. Section 6 omits one section of the original Act, viz., s. 11 ; s. 7 inserts some words in the original s. 27; section 8 omits two sections, viz., ss. 28 and 29; the last section, s. 9 provides for the continuance of proceedings under s. 5, sub-s. (2) of the Amendment Ordinance if sub-ss. (2), (3) and (4) thereof were in force.

Reading the Amendment Act as a whole there can be no doubt that the Legislature in using the word " amended" in the proviso to sub.s. (2) of s. 1 sought to make no distinction between amendment by additions, alterations or omissions. It is clear when certain words or sections have been added, altered or omitted by the Amendment Act, the Calcutta Thika Tenancy Act, 1949, took on a new shape with some added features, some altered features and minus those features which have been omitted.

What the proviso says is that the Calcutta Thika Tenancy Act in its new shape shall apply and shall be always deemed to have applied to proceedings pending before a Court, a Controller or an appellate authority under s. 27 on the date of the commencement of the Thika Tenancy Amendment Ordinance, 1952. As the application which the appellant had made for relief under s. 28 of the Tenancy Act was pending for disposal before the Munsif's court on October 21, 1952, the date of the commencement of the Calcutta Thika Tenancy (Amendment) Ordinance, 1952, the position which cannot be escaped is that the Thika Tenancy Act of 1949 without the provisions as regards relief to tenants against whom decrees had been obtained on the date of the commencement of the original Act but possession had not been actually recovered would be applied to pending appli cations.

In other words, though the application originally was for relief under s. 28 no such relief could be granted, the section having ceased to exist retrospectively.

It is helpful to remember in this connection the fact that while s. 28 of the original Act was giving certain tenants a right to relief which they would have had if

-- .

3 S.C.R.

StJPREME COURT1REPORTS 587

the beneficent provisions of the new Act were available to them during the disposal of the suits the man- . ner in which the right is given is by conferring on courts a power to rescind or vary decrees or orders to bring them into conformity with the provisions of the Act.

As soon as s. 28 was omitted the courts ceased to have any such power.

The effect of the proviso in its strict grammatical meaning is that the courts shall be deemed never to have had this power in respect of applications which were still pending.

The inevitable result is that the Court having been deprived of the power to give; relief even, in .. respect of applications made at a time when the power could have been exercised, was bound to dismiss the applications.

There can be no doubt that this is an unfortunate result. . It may \•ery well be true that if as a result of the Amendment Act, many tenants are deprived of the benefit of s .. 28, this will be mainly because of the Court's inability to dispose of the applications before the Amendrne1t Act came into force and not for any default on their' 11art.

Mr. Pathak has repeatedly stressed this and has ask.eel us to construe s. 1(2) ii1 a way that would retain the benefits of s. 28 to tenants whose applications remained .to be disposed of 0~1 • the crucial elate.

He has in this connection emphasized the fact that the Amendment Act itself is a piece of , beneficent legislation and that the amendments made by ss. 2, 3, S and 9 all extend to tenants benefits to which they would not have been entitled under the original Act.

Ti1is extension of further benefits to tenants, he says, is a guiding principle of the amending legislation.

He points out also that. excl~~ as regards such pending applications under s. 28,, the. effect of s. 1(2) of the amending Act will be 'to give. the.· extended benefits to tenants in pending procee0ings .. It will be incongruous, he argued, that while all tenants stand to benefit by the amending. legih 1 tioh . only those whose applications under s. 28 have,· for no fault of theirs, remained pending "''otild' be deprived 'of the benefit they would have had' but for the omission in the amending Act, of s:. 28: It is difficult not to feel sympathy for these tenants. As we have already mentioned it is a sound

Mahadeolal Kanodia v.

At!ministrator-

General qf West Bengal

Das Gujila J.

1'falwdeola{

J[mndi;1

"- /I ilmitJ>lrator-

(; e11cral qf TVest Bcn.!Ial

J)ns G11/1!a J.

SUPREME GOUR T REPORTS [1960]

rule of interpretation of beneficent legislation that in 'Cases of ambiguity the construction which advances the beneficent purpose should be accepted in preference to the one which <lefeats that purpose.

In their anxiety to advance the beneficent: purpose of legislation courts mnst not however yield to the temptation of seeking ambignity when there is none.

On a careful consideration of. the language used by the Legislature in s. I('.!) we are unable Lo see that there is any such ambiguity.

The bnguage used here has one meaning only and that is that the Act in its new shape with the added benevolent provisions, and minus the former benevolent prO\isions in s. 28 ha~ to be applier! to all pending proceedings, including execution proceedings and the proceedings pending under s. 28 of the original Act on October 21, I !Ei2.

There is therefore no scope for applying in this case the principles of interpretation which are applicable in cases of ambiguity.

Nor is it possible to agree with Mr. Pathak's last contention that the strict grammatical interpretation \rould result in an absurdity or inconsistency.

It is urgecl that it is unthinkable that the Legislature when undenaking a legislation to help tenants would do anything to deprive them of the existing benefits under s. ~8. It is in our opinion useless to speculate as to why the Legislature thought it right to take away the benefit.

One reason that suggests itself is that the Legislature might have thought that where landlords hacl , dready been deprived of the fruits of the decrees they had obtained for a long periorl from the date when the original Act came into force up to the time when 'llw Amendment Act came into force, it \rnuld not be right to continue that deprivation.

But whatever the reasons may be the fact remains that the Legislature has used won ls which in their normal grammatical meaning show that they intentionally deprived this class of. tenants, Yiz., those whose applications under s. 28 of the Act were undisposed of on the elate the Ordinance came into force, and remained unclisposed of, even when the Amendment Act came into force.

vVe have therefore come to the eonclusion that the view taken bv the Hic:h Court in this case that the ' "

' '

'·

effect: of s. 1(2) of the Calcutta Thika Tenancy (Amendment) Act, 1903, is that all pending applications under s. 28 of the original Act must be dismissed is correct.

The contrary view taken by the same High Court in Deorajan De/Ji v. Satyadhan Ghosal (') and other cases is not correct.

Before we part with this appeal, however, it is our duty to refer to one incidental matter. vVe have noticed with some regret that when the earlier decision of two judges of the same High Court in Deorajan's Case was cited before the. learned judges who heard the present appeal they took on themselves to say that the previous decision was wrong, instead of following the usual pro, cedure in case of difference of opinion with an earlier cleciion, of referring the question to a larger Bench.

Judicial decorum no less than legal propriety forms the basis of judicial procedure. If one thing is more necessary in law than any other thing, it is the quality of certainty. That quality would totally disappear if judges of co-ordinate juris- , d iction in a High court start overruling one another's decisiqns. If one Division Benh of a High Court is unable to distinguish a. previous .decision of another Division Bench, and holding the view that the earlier decision is wrong, itself gives _,_effect to that view the result would be utter confusion.

The position would be equally bad where a Judge sitting singly in the High Court is of opinion that the previous decision of another single Judge on a question of law is wrong and gives effect to that view instead of referring the matter to a larger Bench.

In such a case lawyers would not know how to advise their clients and all courts subordinate to the High Court would find themselves in an embarrassing position of having to choose between dissentient judgments of their own High Court. .

As far as we are aware it. is the i1piform practice in all the High Courts in India tha't if one Division Bench differs from an earlier view on a question of law of another Division Bench, a reference is made to a larger Bench. In the Calcutta High Court a rule to this effect has been in -existence since' 1867.

It is unfortunate

(!) [1953] 58 C.W.N: 64.

13-6 SCI/ND/82

Maliadeolal

Kanodia

V, Admlnistralor- General of West Bl!ngal

Das Gupta].

lvfa/wdeo!nl

J(anodia

Adminislra lor •

Geut'ral of Wes! Rrngal

Dns G11/1!a J.

A/1ril 20.

------ ... ~

that the attention of the learned judges was not dra"n in the presenr case to that rule.

But quite apart from any rule, considerations of . judicial proprietv and decorum ought never 10 be ignored by courts in such matters.

On the merits, as \\'C have Found that the view of l:nr taken by the High Conrt in this case 1s correct,

the appeal is dismissed.

In view however of the uncertainty that was in the law as regards the applicability of s. ~8 to proceedings pending on the commencement of the Thika Tenancy Ordinance, I 'l:i~. we order that the parties "ill hear their own costs.

A jijJeal dismissed.

SATYADHYAN GHOSAL AND OTHERS

Sl\I. DEORAJIN DEBI AND ANOTHER. (P. H. GA.JEN!lRAGADKAR, K N. ,\T,1xcHoo and

K. C. DAS Gl'l'TA, JJ.)

Remand order-Interlocutory-Whether can be challenged in Tenancy Act (W.B. Act 11 of 1949), s. 28, The Calcutta Thika appeal from final or order-Res judicata-The Calcutta Thika Tenancy (Amendment) Act, 1953 (W.B. Act VI of 1953), s. 1(2) The Calcutta Thika Tenancy (Amendment) Ordinance, 1952 (West Beniial Ordinance No. XV of 1952).

The Calcutta Thika Tenancy Act, 1949, came into force before the appellant-landlords could obtain possession in execution of their decree for ejectment against the respondent-tenants.

Failing to get the decree set aside under 0. 9, r. 13 of the Code of Civil Procedure the tenants made an application under s. 28 of the said Act praying that the decree against them be set aside on the ground that they were Thika tenants, but the Munsif holding that they were not Thika tenants dismissed their application.

While an application by the tenants under s. llS of the Code o[ Civil Procedure against the Munsif's order was pending in the High Court the Calcutta Thika Tenancy Ordinance, 1952, and the Calcutta Thika Tenancy (Amendment) Act, 1953, came into force.

The 1953 Amendment Act omitted s. 28 of the Original Act.

The High Court after considering the effect of s. 1(2) of the Amendment Act held that it did not affect the operation of s. 28 of the Original Act which was applicable to these proceedings.

The High Court also found that the tenants were Thika Tenants

Rajkumarl

s. 13

s. 28

Tenancy Amendment Act

s. 28

s. 28

G. S. Pathak

P. K. Chakravarty

B. C. Misra

B. Sen

S. N. Mukherjee

P. K. Bose

DAS GUPTA

Calcutta

Mahadeolal Kanodia

West Bengal Legislature

s. 3

s. 4

Section 6

s. 4

S 581

Section 28

section 5

section 27

October 21, 1952

ss. 28 and 29

s. 5

ss. 28

August 8,

I 94

April 9, 194~.

February 28, 1949

s. 28

s. 28

s. 28

District Judge, Howrah

s. 1

s. 28

S.C.R. SUPREME COURT RE.PORTS 583

s. 28

s. 1

s. 9

section 27

s. 8

General Clauses Act

s. 28

s. 28

s. 1

s. 28

Das Gupta

Pathak

Calcutta Thika Tenancy Act, 1949

Thika Tenancy Act, 1949

Calcutta Thika Tenancy Act, 1949

Section 2

s. 2

s. 3

s. 3

Section 4

s. 5

Section 5

s. 10

Section 6

s. 11

s. 7

s. 27

section 8

ss. 28 and 29

s. 9

s. 5

Reading the Amendment Act

s. 1

Calcutta Thika Tenancy Act, 1949

s. 27

Thika Tenancy Amendment Ordinance, 1952

s. 28

s. 28

s. 28

s. 28

s. 1(2)

s. 28

ss. 2, 3

s. 28

s. 1(2)

s. 28

Das Gujila

s. 28

s. 28

October 21, I !

s. 28

s. 1(2)

s. 28

Deorajan

India

Calcutta High Court

Maliadeolal

Kanodia

SATYADHYAN GHOSAL

DEORAJIN DEBI

P. H. GA.JEN!lRAGADKAR

K N.

K. C. DAS Gl'l'TA

s. 28

s. 1(2)

West Beniial Ordinance

Calcutta Thika Tenancy Act, 1949

the Code of Civil Procedure

s. 28

s. 28

s. 1(2)

s. 28


SUPREME COURT REPORTS [1960]

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.

N. A. Palkhivala, Thakur Prasad and R. 0. Prasad

Z960

for the appellant.

Bihar State

0. K. Daphtary, Solicitor :General of India, R. Gana- Co-operative Bank pathy Iyer and D. Gupta, for the respondent.

Ltd.

1960. February 22.

The Judgment of the Court v. d 1. d b Commissioner of WaS e lVere y Income Tax KAPUR, J.-The appellant is a Bank registered under the Co-operative Societies Act, 1912 (Act II of Kapur J.

1912) 11>nd is deemed to be registered under the Bihar & Orissa Co-operative Societies Act, 1935 (Bihar Acb VI of 1935) which in Bihar has replaced the Cooperative Societies Act of 1912. It was carrying on banking business in the State of Bihar. One of the objects of the Bank is to carry on general business of banking not repugnant to the provisions of the Bihar Act and rules framed thereunder for the time being in force (Bye-Law 3(a)vi). In the calendar years 1945, 1946 and 1947, the appellant Bank received by way of interest on deposits with the Imperial Bank of India the sums of Rs. 7,192, R(l. 20,250 and Rs. 22,600 respectively. It is these sums which are the subject matter of dispute in these three appeals which relate to the respective assessment years 1946-47, 1947-48 and 1948-49. These sums were not assessed when assessment was made under s. 23(3) of the Income-tax Act, but subsequently under s. 34 they were assessed as being ' income ' under the head 'other sources'. This order was upheld by the Appellate Assistant Commissioner and by the Income-tax Appellate Tribunal. A case was then stated to the High Court under s. 66(1) of the Act, but was decided against the appellant. The appella.nt brought three appeals in this Court in regard to the three assessment years.

In each one of them the respondent is the Commissioner of Income-tax, Bihar & Orissa. As the appeals involve a common question of law they were consolidated and can conveniently be disposed of by one judgment:

In its return the appellant showe\l these various sums as ' other sources ', but nothing turns on the manner in which the appellant chose to show this income in itlil return.

The Income-tax Officer, however, assessed the interest for these three years

r960' under s. 12 of the Income-tax Act, as income from . 'other sources'. The appellant took an appeal to the

C Bihar1 51"8 1' k Appellate Assistant Commissioner where it was conoopera ive an ddh hb" fh 11 Bk Ltd. ten e t at as t e usmess o t e appe ant an v. consisted oflending money and the deposits had been Commissioner of made not for the purpose of investment but for that Income Tax business and thereby fulfilling the purpose for which

Kapur]. the Co-operative Bank was constituted, these various sums of interest were not subject to income-tax because of the Notification issued by the Central Government under s. 60 of the Income-tax Act. The relevant portion of that Notification, C.B.R. N otification No. 35 dated October 20, 1934, and No. 33 dated August 18, 1945, was:-

"The following classes of income shall be exempt from the tax pa.yable under the said Act, but shall be taken into account in determining the total income of an assessee for the purpose of the said Act:-

(2) The profits of any Co-operative Society other than the Sanikatta Salt Owners' Society in the Bombay Presidency for the time being registered under the Co-operative Societies Act, 1912 (Act II of 1912), the Bombay Co-operative Societies Act, 1925 (Bombay Act VII of 1925), or the Madras Cooperative Societies Act, 1932 (Madras Act VI of 1932), or the dividends or other payments received by the members of any such Society out of such profits.

Explanation: For this purpose the profits of a Co-operative Society shall not be deemed to include any income, profits or gains from :-

(1) Investments in (a) securities of the nature referred to ins. 8 of the Indian Income-tax Act; or

(b) property of the nature referred to in s. 9 of that Act;

(2) dividends, or

(3) the 'other sources' referred to in s. 12 of the Indian Income-tax Act".

The Appellate Assistant Commissioner, however, repelled the contention of the appellant. He held that the business of the appellant consisted of 'lending money, and selling agricultural and other products '

I960 to its constituents' which could be planned ahead and nia state required no provision for extraordinary claims. He c0•0;.~:iive Bank remarked that it appeared from the balance-sheets Ltd. that in the accounting year 1945 the Bank invested v.

Rs. 13,50,000 as fixed deposits, which_, in the following Commissioner 01

d 1 Income Tax year was raised to Rs. 15,00,000 an it was on y in -< the, accounting year 1947 that the fixed deposits Kapur J. 'were realised on maturity with interest'. He was also of the opinion that the length of the period during which this money 'was kept locked in this way ' showed clearly that ' not the exigencies of pressing necessities, but the motives of investment of surplus fund had actuated the deposits'. He there-

>\' fore held that the fixed deposits with the Imperial Bank were held as an investment quite apart from the business of the appellant and the interest from these deposits was not exempt from income-tax. He further held that the exemption as to the profit of a Co-operative Society extended to its sphere of cooperative activities and therefore interest from investments was no part of the appellan.t's business i. profits exempt from taxation. Against this order an appeal was taken to the Income-tax Appellate Tribunal and it was there contended that the Bank did not make the deposits as investments, but in order that cash might be available to the appellant ' continuously ' for the carrying on of the purposes of its business, and that the deposits were intimately connected with the business of the appellant and " therefore the interest should have been held to be profits arising from the business activities of the Bank, and that the finding tb'at the short-term deposits in the Imperial Bank were separate from the appellant's banking business was erroneous. The Income-tax Appellate Tribunal, by its order dated April 11, 1955, held :-

" (1) That the interest was an income rightly to ...;_ be included under the head of 'other sources' . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) The profits of a Co-operative Society indicates the profit derived from the business which can be truly called the business of the Co-operative

zg6o

Bihar State Co-operative Bank Ltd. v.

Commissioner of Income Tax

Kapu• J.

Society. Investments by the society either in securities or in shares or in bank fixed deposits are made out of surplus funds.

The interest or dividend derived from such investment cannot be regarded as part of the profits of the business (sic) qua such bank and therefore, it is not exempt from income.tax (Vide Hoshiarpur Central Co-operative

Bank v. Commissioner of Income-tax (1),)" Against this order a case was stated at the instance of the appellant under s. 66(1) of the Act, and the following two questions of law were referred for the opinion of the High Court ;

(1) Whether, in the facts and circumstances of this case, the receipt of interest on fixed deposits was an income under the head of 'other sources' : and

(2) Whether in the facts and circumstances of this case, the receipt of interest from the fixed deposits was an income not exempt from taxation under the C. B. R. Notification No. 35 dated 20th October, 1934 and No. 33 dated the 18th August, 1945.

In the High Court the appellant's contention was that the fixed deposits were made with the Imperial Bank of India not with the idea of making investments, but for the reason that cash should be available to the appellant as and when it was needed for the purposes of its business. It was also contended that the deposits were short-term deposits and that the Bank could not ca.rry on its business without such short-term deposits. In other words, the contention was that making deposits with the Imperi:i.l Bank was intimately connected with the business activities of the appellant Bank and that the interest received on the deposits was profit attributable to its bus"iness activities. But the High Court did not accept this contention. It held that if the income derived by a Co-operative Society was from the business of the Co-operative Society as such, it fell within the exemption, but if it arose out of the business with third parties as in the case of investment of surplus assets, the exemption was inapplicable because the

(1) (1953] 24 l.T.R. 346, 350.

investment of fluid assets was not a part of the busix960 ness of the Co-operative Bank and the reason for the Bihar state Notification was to exempt profits accruing to a Co- Co-operative Bank operative Society from 'carrying-on business of a Ltd. mutual co-operative society and upon the ground . ~· that a man cannot make profit or loss out of Commissioner 01 h.

If' Income Ta;>; 1mse .

The ground of mutuality was not relied upon Kapur J. before us by the learned Solicitor-General who appeared for the respondent. So the sole question for determination is whether the investment by a Cooperative Bank of its assets in fixed deposits in the manner that the appellant Bank had deposited its moneys falls within the term ' business' and s therefore assessable under s. IO of the Income-tax Act, or it is an investment the interest from which would fall under the term 'other sources ' and therefore within s. 12 of the Income-tax Act. It was contended by the learned Solicitor-General that the finding of the Appellate Tribunal as to the nature of these deposits was one of fact. This contention is not sustainable.

It has not been treated as a. finding of fact either by the Appellate Tribunal or by the High. Court. They have both treated it as a question of law and it is on that basis that the reference was made. The decision of the question depends on what'is comprised within the ordinary business of a bank and whether the business of the appellant bank is in any way different.

Relying upon the decision of the Privy Council in The Punjab Go-operative Bank Ltd v. The Commissioner of Income-tax, Punjab (1), counsel for the appellant submitted that the business of a bank is one of dealing in money and credit and that laying. out moneys in deposit with other banks is just as much a mode of conducting business as lending moneys to

borrnwers whether members of the society or to other co-operative societies, and is therefore a part of the appellant's business. Therefore, where out of moneys in deposit with a bank a portion is put away or laid out in securities or in deposits with another banker, two objects are served: (I) the moneys which are not immediately required do not remain idle but

(x) (x940) ll I.T.R, 635

earn interest; and (2) if and when money is required to meet any demand, the investment i. e. the deposits Bihar State 11 th •t• d f h. h C t .

B k as we as e secun ies prov1 e a source rom w 1c a-apem we an • • 1 b Th h Ltd. tnese reqmrements can eas1 y e met. us t e v. credit of the bank remains unimpaired and its moneys Commissioner af continue to earn interest.

Income Tox Counsel for the respondent argued that where

Kapur]. moneys are so laid out they cannot be termed ' carrying on business of the bank ' and therefore any sums coming in from such investments cannot be termed profits arising from business, but they are income from ' others sources'. In support of this argument reliance was placed by counsel on The Madras Central. Urban Bank Ltd. v. Commissioner of Income Tax (1); The Madras Provincial Co-operative Bank Ltd., Madras v. Commissioner of Income Tax, Madras (2); Commissioner of Income Tax, Burma v.

Bengalee Urban Co-operative Credit Society Ltd. ('); Commissioner of Income Tax, Madras v. Madras Provincial Co-operative Bank Ltd. ('); Hoshiarpur Central Co-operative Bank Ltd. v. Commissioner of Income Tax, Simla (5); Cochin Cottage Industries Cooperative Marketing Society Ltd. v. Commissioner of Income Tax, Mysore &c. (6).

But none of these cases supports the argum.(lnt raised on behalf of the respondent. In the Madras Central Urban Bank case (1 ) the society was required to invest 40 per cent. of its total liability under call deposits in a liquid or fluid form and the society invested it in Government securities which produced intere3t. It was held that interest from securities was not part of the profits of the business of the society as it was not obliged to invest in such securities. Similarly in the Madras Provincial Co-operative Bank Case (2 ) also the income which was the subject matter of dispute was interest received by the bank from its investments in Government securities and it was held that it was not part of the income derived from its business. The Rangoon case, Commissioner of Income-tax, Burma v. Bengalee Urban Go-operative Credit Society (') was also a case relating

(1) I.L.R. 52 Mad. 640 F.B.

(2) I.L.R. 56 Mad. 837 F.B.

(3) [l9J4] 2 I.T.R. 121.

(4) l.L.R. 1943 Mad. 390.

(5) [1953] 24 I.T.R. 346.

(6) [1956] 30 l.T.R, 356.

to income derived from interest on capital invested in r960 Government securities. At p. 128, Page, C. J., said:- . " d £ th f 'th Bihar State . t .... t ... f ........ , an . prima ~Cle erde o.re dne1f er Co-operative Bank m eres rom securities nor mcome erive rom Ltd. property are ' profits ' within the meaning of that v. term as used in the notification ..... , .................. It Commissioner of may be that investment of ca pita! in properties or Income Tax sec11rities is part of the business of an assessee, and in such a case, in my opinion, the net income accruing from such investm'ents would be, and be chargeable as, profits of the business".

(As the matter had not been considered from this point of view the. case was sent back for doing so).

These cases before the amendment of the Notification show that the income which was exempted was profit from business and not income from sources which fell under ss. 8 and 9 of the Income-tax Act. The.

Commissioner of Income-tax, Madras v. The Madras Provincial Go-operative Bank Ltd. (1) was a case where moneys ha~ been invested in debentures and for reasons similar to the ones given in the cases abovementioned, it was held that interest derived therefrom was not profits of the business.

Counsel for the respondent relied on a judgment of the Punjab High Court in Hoshiarpur Central Cooperative Bank v. Commissioner of Income-tax, Simla (2).

In that case the Government authorised the Bank to deal in sugar, oil and standard cloth and it made profit thereform. Those activities were neither its business under the bye-laws nor within its objects.

The question was whether this profit was exempt from income-tax on account of its being profits of a

co-operative society and it was held that the decided cases showed that where income was derived by a co-operative society, the profits were within the exemption, but not if the business was of the nature not covered by the objects of the society. This line of reasoning has not formed part of the. respondent's argument in this Court and the case therefore has no application to the facts of the present case. The decision in Cochin Cottage Industries Go-operative

(1) I.L.R. [1943] Mad. 390 9

(2) [1953) 24 I.T.R. 346

Kapur].

z96o Marketing Society Ltd. v. Commissioner of Income-tax, Mysore &c. (1) proceeded on the same ground. In Bihar State that case the profit which was held not to be exempt

Co-operatve Bank under .the Notification was the apportioned profit of

L~. the society from its dealings with non-members.

Commiooioner of In the Surat Peoples' Co-operative Banlc Ltd. v. The Income Tax Commissioner of Income-tax, Ahmedabad (2 ) the profit arose duting the course of banking business out of Kapur 1 the sale of Government securities which formed part of the stock-in-trade and as it was a co-operative bank the profits made from such sales were held to be exempt from taxation under the Notification.

In the instant case the co-operative society (the appellant) is a Bank. One of its objects is to carry on the general business of banking. Like other banks money is its stock-in-trade or circulating capital and its normal business is to deal in money and credit . . It cannot be said that the business of such a Bank consists only in receiving deposits and lending money to its members or such other societies as are mentioned in the objects and that when it lays ou~ its moneys so that they may be readily available to meet the demand of its depositors if and when they arise, it is not a legitimate mode of carrying on of its banking business. The Privy Council in The Punjab Cooperative Bank Ltd. v. The Commissioner of Incometax, Lahore (3) where the profits arose from the sale of Government securities pointed out at p. 645 that in the ordinary cases the business of a Bank essentially consists of dealing with money and credit. Depositors put their money in the Bank at a small rate of interest and in order to meet their demands if and "when they arise the Bank has always to keep sufficient cash or easily realisable securities. That is a normal step in the carrying on of the banking business. In other words 'that is an act done in what is truly the carrying on or carrying out of a business '.

It may be added that another mode of conducting business of a Bank is to place its funds in deposit with other banks and that also is to meet demands which may be made on it. It was however argued

(1) [1956] 30 I.T.R. 356

(2) [1958] 33 I.T.R. 396.

(3) [1940] 8 l.T.R. 635

-+ '

that in the instant case the moneys had been x96o deposited with the Imperial Bank on long term d 't h th d •t d £ Bihar State epos1 s masmuc as ey .were epos1 e or one year Co-operative Bank . and were renewed from time to time also for a year ; Ltd. but as is shown by the accounts these deposits fell due v. at short intervals and would have been available to Commissioner of the appellant had any need arisen.

Stress was laid on the use of the word ' surplus ' both by the tribunal as well as by the High Uourt and it was alflo con, tended before us that in the byelaws under the heading 'business of the bank' it was provided that the bank could 'invest surplus funds when not required for the business of the bank in one or more ways specified in s. 19 of the Bihar Act (Cl. 4 III(i) of the Bye-Laws). Whether funds invested as provided in s. 19 of the Bihar Act would be surplus or not does not arise for decision in this case, but it has not been shown that the moneys which were in deposit with other banks were 'surplus ' within that bye-law so as to take it out of banking business. As we have pointed out above, it is a normal mode of carrying on banking business to invest moneys in a manner that they are readily available and that is just as much a part of the mode of conducting a Bank's business as receiving deposits or lending moneys or discounting hundies or issuing demand drafts. That is how the circulating capital is employed and that is the normal course of business of a bank. The moneys laid out in the formof deposits as in the instant case would n, ot cease to be a part of the circulating capital of the appellant nor would they cease to form part of its banking business. The returns flowing from them would form part of its profits from its business. In a commercial sense the directors of the company owe it to the bank to make investments which earn them interest instead of letting moneys lie idle. It cannot be said that the funds of the Bank which were not lent to borrowers but were laid out in the form of deposits in another bank to add to the profit instead of lying .idle necessarily ceased to be a part of the stock-in-trade of the bank, or that the interest arising therefrom did not form part of its business profits. Under the bye-laws

Income Tax

Kapur].

' f

one of the objects of the appellant bank is to carry on the general business of banking and therefore subject Bihar State h C S t' A t 't h t C P t .

B k to t e o-operat1ve ome ies c , I as o carry on o-o era ive an • • b k Lrd. its business in the manner that ordmary an s do. v.

It may be added that the various heads under s. 6 of Commissioner of the Income Tax Act and the provisions of that Act Income Tax applicable to these various heads are mutually exclu-

Kapur].

z960

February 22

sive. Section 12 is a residuary section and does not come into operation until the preceding heads are excluded. Commissioner of Income-tax v. Basant Rai Tak hat Singh (1 ).

In our opinion, the High Court was in error in treating interest derived from deposits as not arising from the business of the Bank and therefore not falling within the income exempted under the Notification. The appeal must therefore be allowed and the judgment and order of the High Court set aside. The appellant will have its costs in this Court and in the Court below.

Appeal allowed.

THE TINNEVELLY-TUTICORIN ELECTltIC

SUPPLY CO. LTD., v.

ITS WORKMEN

(P. B. GAJENDRAGADKAR, K. SUBBA RAO AND K. c. DAS GUPTA, JJ.) Industrial Dispute-Bonus~Full Bench formula-If applicable to workmen in electricity undcrtaking--Elcctric Supply Act. r948 (54 of r948). s. 57. Sixth Schedule, para, r7(2)(b)(xi).

Can the Full Bench •formula for calculation of bonus apply to a claim of bonus made by \.vorkmen engaged in electricity concerns and undertakings? That ¥.'as the question raised for decision in this appeal. A Special Bench of the Labour Appellate Tribunal held in the affirmative and the correctness of its decision was challenged in this appeal. It was contended on behalf of the appellant company that the Electricity Supply Act, 1948 (54 of

1948) was a self-contained code intended to regulate the business and affairs of electricity concerns and that Act and not the formula applied to a claim of bonus by the workmen in an electricity concern.

(r) (1933] I J.T.R, 197, 20I,

. ' ...

Palkiwala

Kapur J.

THE COMMISSIONER OF INCOME-TAX

A. K. SARKAR

M. HIDAYATULLAH, JJ.

Indian Income-tax Act

Imperial Bank of India

s. 12

Indian Income-tax Act 1922

Central Government

s. 60

s. 12

N. A. Palkhivala

K. Daphtary

D. Gupta

Bihar

Orissa Co-operative Societies Act, 1935

s. 23(3)

Income-tax Act

s. 34

s. 66(1)

s. 12

Income-tax Act

s. 60

Income-tax Act

October 20, 1934

August 18, 1945

Bombay Co-operative Societies Act, 1925

Bombay Act VII of 1925

Madras Cooperative Societies Act, 1932

Madras Act VI of 1932

Income-tax Act

s. 9

s. 12

Income-tax Act

Assistant Commissioner

Kapur

Imperial Bank

He there-
\' fore held that the fixed deposits with the Imperial Bank were held as an investment quite apart from the business of the appellant and the interest from these deposits was not exempt from income-tax.

April 11, 1955

Commissioner of Income Tax

Kapu• J.

s. 66(1)

20th October, 1934

18th August, 1945

IO of the Income-tax Act

s. 12

Income-tax Act

Bihar State

Madras Central Urban Bank

Madras Provincial Co-operative Bank

Rangoon

ss. 8 and 9

Income-tax Act

Punjab High Court

s. 19

Cl. 4

s. 19

s. 6

Section 12

P. B. GAJENDRAGADKAR

K. SUBBA RAO

K. c. DAS GUPTA

s. 57

Sixth Schedule


lvfa/wdeo!nl

J(anodia

Adminislra lor •

Geut'ral of Wes! Rrngal

Dns G11/1!a J.

A/1ril 20.

------ ... ~

SUPREME COURT REPORTS [1960]

that the attention of the learned judges was not dra"n in the presenr case to that rule.

But quite apart from any rule, considerations of . judicial proprietv and decorum ought never 10 be ignored by courts in such matters.

On the merits, as \\'C have Found that the view of l:nr taken by the High Conrt in this case 1s correct,

the appeal is dismissed.

In view however of the uncertainty that was in the law as regards the applicability of s. ~8 to proceedings pending on the commencement of the Thika Tenancy Ordinance, I 'l:i~. we order that the parties "ill hear their own costs.

A jijJeal dismissed.

SATYADHYAN GHOSAL AND OTHERS

Sl\I. DEORAJIN DEBI AND ANOTHER. (P. H. GA.JEN!lRAGADKAR, K N. ,\T,1xcHoo and

K. C. DAS Gl'l'TA, JJ.)

Remand order-Interlocutory-Whether can be challenged in Tenancy Act (W.B. Act 11 of 1949), s. 28, The Calcutta Thika appeal from final or order-Res judicata-The Calcutta Thika Tenancy (Amendment) Act, 1953 (W.B. Act VI of 1953), s. 1(2) The Calcutta Thika Tenancy (Amendment) Ordinance, 1952 (West Beniial Ordinance No. XV of 1952).

The Calcutta Thika Tenancy Act, 1949, came into force before the appellant-landlords could obtain possession in execution of their decree for ejectment against the respondent-tenants.

Failing to get the decree set aside under 0. 9, r. 13 of the Code of Civil Procedure the tenants made an application under s. 28 of the said Act praying that the decree against them be set aside on the ground that they were Thika tenants, but the Munsif holding that they were not Thika tenants dismissed their application.

While an application by the tenants under s. llS of the Code o[ Civil Procedure against the Munsif's order was pending in the High Court the Calcutta Thika Tenancy Ordinance, 1952, and the Calcutta Thika Tenancy (Amendment) Act, 1953, came into force.

The 1953 Amendment Act omitted s. 28 of the Original Act.

The High Court after considering the effect of s. 1(2) of the Amendment Act held that it did not affect the operation of s. 28 of the Original Act which was applicable to these proceedings.

The High Court also found that the tenants were Thika Tenants

~ I

and remanded the case to the Munsif for disposal according to 1960 law whereupon the Munsif rescinded the decree.

On an appli- Sal) adl!J'"" Ghosal cation by the landlord under s. ll5 of the Code of Civil Procedure v. against the order of the Munsif rescinding the decree the High Sm. Deoraji11 Debi Court held that the question of applicability of s. 28 was res judicata. between the parties and could not be raised again before the High Court and dismissed the landlord's application.

On appeal by the landlord by special leave the respondent contended that the appellant was barred by the principle of res judicata from raising before this Court the question whether on the enactment of the Thika Tenancy Amendment Act, 1953, s. 28 of the Original Act survives or not in respect of proceedings pending on the date. of the commencement of the Thika Tenancy Ordinance, 1952: Held, that the appellants were not precluded from raising before this Court t_he question that s. 28 of the Original Thika Tenancy Act was not available to the tenants after the Thika Tenancy Arnendinent Act came into force merely because they had no.t: appealed from the High Court's order of remand.

An interlocutory order which did not terminate the proceedings and which had not been appealed from either because no appeal lay or even though an appeal lay an appeal was not taken, could be challenged in an appeal from the final decree or order.

Maharaja Mohesur Singh v. The Bengal Government, (1859) 7 M.I.A. 283; Forbes v. Ameeroonissa Begum, (1865) 10 M.1.A 340

an(\ Sheonath v. Ramnath, (1865) 10 M.I.A. 413, followed.

Rcimkripal Shukul v. Mst. RupKuari, (1883) L.R. 11 I.A. 37, Bani Ram and Anr. v. Nandu Mal,

(1884) L.R. 11 I.A. 181 and Hook v. Administrator General of Bengal and Ors. (1921) L.R. 48 I.A. 187, distinguished . . ''"' .

Section 28 of the Calcutta Thika Tenancy Act, 1949, after its omission by the amending Act was not available in respect of proceedings pending on the date of the commencement of the Thika Tenancy Ordinance of 1952. , Mahadeolal Kanodia v. The Administrator General of West Bengal, [1960] 3 S.C.R. 578 followed.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 257 /59.

Appeal by special leave from the judgment and order dated April 18, 19.58, of the Calcutta High Court

in Civil Rule No. 1487 of 1955, arising out of the judgment and order dated February 12, 1955, of the ,'\fonsif Second Court, Ali pore, in Misc. Case No. 342 / 1949. .

Nalini Ranjan Bhaltar:harjec and R. R. Biswas, for the appellants.

D. N. A1nhhcrjec, for the respondenls.

Safyadhyan Ghosal v.

Sm. Deorajin Debi

Das Gupta].

SUPREME GOUR 1' REPOH.TS [ 1960]

1%0. April 20.

The Judgment of u1e Court was delivered by

DAs GUPTA, J.--This appeal is by the landlords who haYing obtained a decree for cjectmcnt against the tenants, Deorajin Debi and her minor son, on February JO, 1949, have not yet been able to get possession in execution thereof.

Soon after the decree was made the Calculta Thika Tenancy Act, l!!-rn, came on the statute book.

On March 3, 1949, the tenants made an application under Or. 9, r. 13 of the Code of Civil Procedure for having the decree set aside.

That application was dismissed on .July 16, 191'.I.

On September 9, 1949, ; rn application was made by the tenants under s. 28 of the Calcutta Thika Tenancy Act alleging that they were Thika tenants and praving that the decree made against them on February 2, J !H9, may be rescinded.

Th is Application was resisted by the landlords, the decree-holders. and on N01ember 12, 195 l, the Munsif holding that the applicants were not Thika Tenants within the meaning of the Thika Tenancy Act and accordingly the decree ''""snot liable to be rescinded dismissed the application.

Against this order the tenants moved the High Coirt of Calcutta under s. I l :i of the Code of Civil Procedure. By the time the Revision Application was taken up for hearing the Calcutta Thika Tenancy Ordinance had come into force on October 21, I Y:i2, and the Calcutta Thika Tenancy (Amendment) Act, 1953, had come into force on l\larch 14, J<JG:J.

The 1953 Amendment Act inter alia omiLted s. 28 of the original Act. [n order to decide therefore whether the application under s. 28 was st ill aliYe the High Court had to consider the effect of s. I (2) of the Calcutta Thika Tenancy Amendment Act which provided that the provisions of the Calcutta Thika Tenancy Act, I !H9, as amended by I he I 9:i.~ Act shall apply a;1d be deem.ed to have ah;•ays applied to proceedings pending on the date of the commencement of the Calcutta Thika Tenancy Ordinance of 1952.

The learned judges of the High Court held that s. 1(2) of the Thika Tenancv Amendment Act did not affect the operation of s. '28 of the original Act to these proceedings and disposed of these applications on the

< (

basis that s. 28 was applicable. The High Court also 1!_6!!. held that in view of the amended definition of the Satyad!9 an chosal

term "Thika . tenant" and the evidence which had 0 D . ".. Db. b d d b I I . f I . . . . b ., m. eor<'Jt1l e 1 een recot e y t Ie l\' unsr tie •petitioners must e --· found to be Thika tenants. Accordingly they allowed Das Gupta J. the a:pplication for revi'sion, set aside the order of the Munsif by which he had dismissed the application under s. 28 and remanded the case to the Ivf unsif's Court for disposal in accordance with law.

After remand .the .l\Junsif rescinded the decree.

The landlords' application under s .. 11 :) of the Code of Civil

Procedure against the Mmisif's order was rejected by the High Court. The attempt of the landlords to raise before the High Court again the question of the applicability of s. 28 was unsuccessful, the learned judge who heard the matter in the High Court being of opinion that this quest.ion as between these parties was res. ji1dicata.

Against this order of the High . Court the present appeal has been preferred by the landlords on the strength of special . leave granted by this Court on November I G, I 956.

On behalf of the appellant it is urged that on a proper interpretation of s. 1(2) of the Calcutta Thika Tenancy Amendment Act, 1953, it should be held that s. 28 of the original Act cannot, after the amending Act came into force, be applied to any proceedings pending on the elate of the commencement of the Calcutta Thika Tenancy Ordinance, 1952.

This question has been considered by us in Mahadeolal Kanodia v. The Adrninistrator-Generol of West Bengal (1) in which judgment has been delivered to-day. wherein we have decided that s. 28 of the odginal Act is not applicable to such proceedings. If therefore this argument is available to the appellant the appeal will succeed as in that view of the law no relief under s. 28 of the original Act is available to the tenants and the order made by the Munsif on December 12, 1955, rescinding the decree for ejectment must be set aside. ·

The respondent contends :however that the appellant is bared by the principle of res judicata from raising before I his Conn the question whether on the

Sa{1•adf!.ran Ghosal

Sm. Deorajin J)ebi

Das Gupta J.

enactment of the Thika Tenancy Amendment Act, 1953, s. 28 of the original Act: survives or not in respect of proceedings pending on the date of the commencement of the Thika Tenancy Ordinance, I !):)2.

He bas relied in support of this contention on the decision of the Privy Council in Ram Krijial Shulwl v. Muss Urnat Rup Kuari (1).

The principle of res judicata is based on the need of g1vmg a finality Lo judicial decisions. \\'hat it says is that: once a res is jmlicala, it shall not be _adjudge<! again.

Primarily it applies as between past litigation and future litigatioi1. \\'hen a matter-whether on a quest.ion of fact or on a question of law-has been decided between two parties in one suit or proceeding and the decision is final. either became no appeal was taken to a higher court: or because the appeal "as dismissed, or no appeal lies, neither party will be allowed in a future suit or proceeding between the same parties to canvass the matter again. This principle of res judicata is emboclied in relation lo suits in s. l l of the Code of Civil Procedure: but even where s. 11 docs not apply, the principle of res judicata has been applied by courts for the purpose of achieving linality in litigation. The result of this is that the original court as well as any higher court must in any future litigation proceed on the basis that the previous decision "as correct.

The principle of res judicata applies also as between t\lo stages in the same litigation to this extent that a court:. whether the trial court or a higher court having at an earlier stage decided a matter in one way will not allow the parties to re-agitate the matter again at a subsequent stage of the same proceedings. Does this however mean that because at an earlier stage of the litigation a court has decided an interlocutory matter in one "ay and no appeal has been taken therefrom or no appeal did lie, a higher court cannot at a later stage of the same litigation consider the matter again)

Dealing with this question almost a century ago the Privy Council in M11h11raja. Mohcshur Singh v.

The Be11g11l Govcrn1nenl (')held that it is open to the appeal- \ate court which had not earlier considered the matter to investigate in an appeal from the final decision

(l) [1883] l-.R. n J.1\. 37. (2f[l8o9] 7 M.JA 2H3.

3 S.C.R.

SUPREME COURT!REPORTS 595

grievances of. a party in -respect of ; in interlocutory 1960 order.

That c; ise referred . to the question of ; issess- Sa£iadhyan Ghosal ment of revenue on lands.

On December 6, 1841, Sm. Deorin Debi judgtnent was pronounced by the Special Commis- Das Gupta J. sioner to the effect that :l,.~ l !l becghas of land alone were assessable, and that the collections made by the Government on the other lands should be restored to the possessors. This judgment was ; iffirmed by another Special Commissioner on March 8, 1842.

On Septem- " ' ber 21, 1847, a petition for review on behalf of the ' Government of Bengal was presented to another Special. Commissioer.

1That pe'tition for revew was granted. 1 After due hearing the judgment of Maich 8,

18·12, 'was re, iersed.

TJ1e. gues.tiori. arose befre the Privy Council whether the review .had. been granted in cc; mformity with the Regu)ations existing at th;1t time with repect to the granting a , review.

It was urged however on behalf of the Government of Bengal that it was then too late to impugn the regularity of the proceeding to gran, t, the review and that if the appellant deemed himself aggrived by , i, t, he ought to

have~ .~1ppealt; d at the time, and that it was too late to do so after a clecis.ion, had been pronounced against him.

Dealing with observed:- ·

"I " this objection the Privy Council

"\Ve are of opinion that this objection cannot be sustained, \Ve are not aware of any lavv or regulation prevailing in India .which renders it imperative ' upon the suitor to appeal from every interlocutory order by which he may conceive himself aggrieved, under the penalty, if he does not so do, of forfeiting for ever the benefit of the consideration of the ;:tppellate court..

No authority or precedent has been cited in support of such a proposition, and we cannot conceive that anything would be more detrimental to the expeditious; administration . of justice than the establishme1it of a rule which would impose upon the suitor. the necessity of so appealing; whereby on the one hand he might be harassed with endless expense and delay, and on'-the other inflict upon his opponent similar calamities. vVe believe there have

S11.{f'tidk1a11 Cliosal

Sm Deorajiu Debi.

Das r:u/Jfa ].

been 1ery many cases before this Tribunal i11 ll"hich rheir Lordships ha1c deemed it to be their duty to correct: erroneous intcrlocutorv orders though not brought: under their consider,; t:ion un, til the whole cau.se had been decided, and brought hither by appeal for adjudicatiou." This view was rcaOirmed by the Privy Council in For/Jes v. Amccroonissa Begum (1).

A decree for possession with mesne profits havi1w been made .

I o against t 1c defendant: by the Civil Judge, Purnecha, on December 18, 18J4, the defendant appealed to the Sadar Diwani Adalat.

That Court by its order dared .January 22, 18:'>7, held that the Civil° Judge had been wrong in decreeing the mesne profits and further that the plaintiff was bound before he was entitled to have his conditional sale made absolute to render certain accounts.

Accordingly the Sadar Diwani Adalat: remanded the case in order that the judge might call upon the plaintiff for his accounts and then decide the case in t:he light of the remarks made by

the Adalat.

After t.he case went: back the plaint.iff produced accounts but the judge held that they were insu!Ticient :md dismissed the suit:.

An appeal w.as taken agaimt that decree of dismiss:1l to the Sa, br Diwani Adalat bur the appeal was unsuccessful; a later prayer for review w; is also rejected.

On behalf of the appellam it: was contended before the Privy Council that: the Sadar Diwani Adalat. "as wrong in rcquiri.ngthe appellant: to produce his accounts.

In order however that this question could be raised, it was necessary to decide, whether if the Sadar Diwani Acblat was wrong in remanding the case for retrial, the appellant was bound by that decree he not havi.ng appe; ilcd therefrom.

Their Lordships of the Privy Council pointed out that the order of remand was an

intcrloc11tory order and that it did not: purport lO dispose of the case and consequently upon the principle bid clown by the Privy Council in Afoharaja Moheshur

Singh v.

The Government of Bengal (supra), the appellant was not precluded from insisting that the remand for the production of the accounts was crro ncous or that the cause should ha1e been decided in

LI) [1865] IO M.[A. 340.

. '

his favour, notwithstanding the non-production of the 1!!_6.!!_ accounts.

Their Lordships also mentioned the fact Satyadh;•an Ghosal that the learned 1"t1dges of the Sadar Court also treats D v ... D b" . . . h m. eora1in e t ed the latter point as still open to the appellant, w en considering his appeal against the decree of dismissal Das Gupta J. passed after remand.

The principle laid down in Moheshur Singh's Case

(supra) was also acted upon by the Privy Council in Sheonath v. Ramnath ('). That litigation was commenced Ramnath by a suit in the Court of the Civil Judge, Lucknow, seeking a general account and partition.

The plaint mentioned the execution of some releases described as (Farighkuttees) but alleged that there had been no partition as between the parties as stated in them, that the partition was intended to take effect after the settlement of accounts when the Farighkuttees were to have been registered and that in the meantime they had remained with the appellant as incomplete instruments.

The Trial .Judge held however that the Farighkuttees had been executed on the footing of actual partition and diversion of the joint property, that these had been executed without taint of fraud and dismissed the suit. An appeal was taken to the Judicial Commissioner; he affirmed the Civil .Judge's decision on all points adding however that "there was one account between the parties still unadjusted, viz., the division of the outstandings which was left open at the time of the division of the assets." ' In this view he remanded the case to the Judge to decide what sum should be awarded to the plaintiff in satisfaction of all claims on this account and directed that if possible a decision should be obtained from the arbitrators previously appointed by the parties.

After remand the Civil Judge referred the question involved to certain arbitrators but the defendant did pot acquiesce in this Order and petitioned the .Judicial Commissioner against it, stating that he objected to the arbitrators to whom the Civil Judge had referred the case, and requesting that other arbitrators might be appointed.

This objection was overruled by the .Judicial Commissioner, _and the request was rejected.

Ultimately two separate decrees

(I) [1865J 10 M.I.A. 413.

14-6 SCI/ND/82

Satyadhyan Ghosal

Sm. Deorajin Debi

Das Gupta J.

were made by the Civil Judge, one on the 4th September as regards part of the claim and the other on 22nd December as regards another part.

On appeal both these decrees were affirmed by the Judicial Commissioner.

It was against this decision of the Judicial Commissioner that the defendant appealed to the Privy Council.

Two points were raised before the Privy Council.

The first was that it was not compettent to the Judicial Commissioner except with the consent of both parties to vary, as he did vary, bv his order of May 1.5, 1862, the rights of the parties under the Farighkuttees and to impose on the defendant an obligation of purchasing the plaintiff's interests in the outstandings on a rough estimate of its value; the other point raised was that the nomination of the particular arbitrator by the Judge without the consent and against the repeated protests of the appellant was altogether irregular, and that the award was therefore not binding upon him.

It has to be noticed that the defendant had not appealed against the .Judicial Commissioner's order of May 1.5,

1862, nor had he appealed against the Judicial Commissioner's later order rejecting the defendant's petition that he objected to the arbitrators to whom the Civil Judge bad referred the case and that other arbitrators might be selected by the parties.

In spite of these facts the Privy Council held that both these points were open to the appellant observing: -

"That both points are open to the appellant, although he has in terms appealed only against the final decision of the Civil Judge and the confirmation of it by the Judicial Commissioner, is, we think, established by the case of Moheshur Singh v. The Government of Bengal. The appeal. is, in effect, to set aside an Award which the appellant contends is not binding upon him.

And in order to do this he was not bound to appeal against every interlocutory order which was a step in t_he procedure that led up to the Award." There can be little doublt about the salutary effect of the rule as laid down in the above cases on the ' ' administration of justice.

The very fact that in future litigation it will not be open to either of the

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parties to challenge the correctness of the decision on 196~ a matter finally decided in a past litigation makes it Satyadhyan Ghasal important that in the earlier litigation the decision s D v ... D b' · m. eora1in e i must be final m the stnct sense of the term.

When a court has decided the matter it is certainly final as Das Gupta J. regards that court. Should it always be treated as final in later stages of the proceeding in a higher court which had not considered it at all' merely on the ground that no appeal lay or no appeal was preferred?

As was pointed out by the Privy Council in Moheshur Singh's Case (supra) the effect of the rule that at every stage of the litigation a decision not appealed from must be held to be finally decided even in respect of the superior courts, will put on every litigant against whom an interlocutory order is decided, the burden of running .to the higher courts for redress of the

.. grievances, even though it may very well be that though the interlocutory order is against him, the final order will be in his favour and so it may not be necessary for him to go to the appeal court at all.

Apart from the inevitable delay in the progress of the litigation that such a rule would cause, the interests of the other party to the litigation would also generally suffer by such repeated recourse to the higher courts in respect of every interlocutory order alleged to have been wrongly made.

It is in recognition of the importance of preventing this mischief that the Legislature included in the Code of Civil Procedure from the very beginning a provision that in an appeal from a .decree it will be open to a party to challenge the. correctness of any interlocutory order which had not been appealed from but which has affected the decision of the case.

In the Code of 1859 s. 363 after laying down that no appeal shall lie from any order passed in the course of a suit and relating thereto prior to a decree provided "but if the decree be appealed against, any error, defect or irregularity in any such order affecting the merits of the case or the jurisdiction of the court may be set forth as a ground of objection in the memorandum of appeal."

When the Code of 1877 made provisions in Chapter 43 for appeal against certain orders, s. 591 thereof

Satyadhyan Ghosal v.

Sm. Deorajin Debi

Das Gupta J.

provided "Except as provided in this chapter, no appeal shall lie from any order passed by any court on the exercise of its original or appellate jurisdiction" and went on to say "but if any decree be appealed against any error, defect or irregularity in any such order a!Iesting the decision of the case, may be set forth as a ground of objection in the memorandum of appeal." The position remained the same in the Code of 1882.

The present Code in its .105th section uses practically the same phraseology except that the word "any such order" has been substituted by "any order" and an additional provision has been made in the second sub-section in respect of orders of remand.

The expression "such order" in s. 591 gave rise to a contention in some cases before the Privy Council that s. 59 I applied to non-appealable orders only.

This contention was overruled by the Privy Council and that view was adopted by the Legislatureby changing the words "any such order" to "any order".

As regards the orders of remand it had been held that under s. 591 of the Code a party aggrieved by an order of remand could object to its validity in an appeal against the final decree, though he might have appealed against the order under s. .588 and had not clone so.

The 5econd sub-section of s. 105 precludes an appellant from taking, on an appeal from the final decree, any objection that might have been urged by way of appeal from an order of remand.

It is clear therefore that an interlocutory order which had not been appealed from either because no appeal lay or even though an appeal lay an appeal was not taken could be challenged in an appeal from the final decree or order.

A special provision was made as regards orders of remand and that was to the effect that if an appeal lay and still the appeal was not taken the correctness of the order of remand could not later be challenged in an appeal from the final decision. If however an appeal did not lie from the order of remand the correctness thereof could be challenged by an appeal from the final decision as in the cases of other interlocutory orders.

The second sub-section did not apply to the Privy Council and can have no application to appeals to the Supreme Court, one reason

·~

being that no appeal lay to the Privy Council or lies to . 1960 the Supreme Court against an order of remand.

Satyadhyan Ghtisal There appears to be no reason therefore why the v. appellant should be precluded from raising before this Sm. Dearajin.Dei>i Court the question about the applicability of s. 28 Das GuptaJ. merely because he had not appealed from the High Court's order of remand, taking the view against him that the section was applicable; We are unable to agree with the learned Advocate that the decision of the Privy Council in Ram Kirpal Shukul' s Case (') affects this matter at all. .

That was a case as regards execution proceedings.

The decree in question had been made in 1862.

In execution proceedings the question arose whether or not. the decree awarded mesne profits.

The District Judge, Mr. Probyn, decided this question in the affirmative.

In 1879 the decree had not yet been executed and execution proceedings were pending. The question was raised again before the Executing Court whether the decree allowed mesne profits.

That court held that he was bound by the decision of Mr. Probyn that the decree did allow mesne profits and ordered the execution to proceed on that basis. His order was affirmed on appeal.

The judgment-debtor then appealed to the High Court. Before that could it was urged on behalf of the judgment-debtor that the law of res judicata did not apply to proceeding. in execution of a decree.

The Full Bench of the High Court to which the Division Bench referred this question answered the question in the negative and then the . Division Bench ordered, being of opinion that Mr. Probyn's view was wrong, that the appeal be decreed and execution of decree in respect of mesne profits be disallowed.

The Privy Council after stating that Mr. Probyri.'s order was an interlocutory judgment stressed the fact it had never been reversed or set aside, and said that the fact that second appeal did not lie to the High Court was of no consequence, for if no such appeal did lie the judgment was final and if an appeal did lie and none was preferred the judgment was equally binding upon

the parties.

In the opinion of the Judicial Committee the' learned Subordinate Judge and the Judge were bound by the order of Mr. Proby1i in proceedings

(I) [1884] L.R.'il I.A. 37,

Satyadhyan Ghosal v.

Sm, Deorajin Debi

Das Gupta J.

between the same parties on the same judgment, the High Court was bound by it and so were their Lordships in adjudicating between the same parties.

Ram Kirpal Shukul's Case (supra) was followed by the Council in Bani Ram v. Nanhu Mal (1) which also related Privy to an order made in execution proceedings.

It was followed again by the Privy Council itself in Hook v. Administrator-General of Bengal (').

The facts in Hook's Case were that in an administration suit the High Court had held that certain conditions of a will had not been fulfilled and there was not an intestacy as to the surplus income, rejecting a contention on behalf of the next of kin that the gift over was invalid, as creating a perpetuity; the decree provided that the determination of the destination of the income or corpus of the fund upon the death of the annuitant should be deferred until after that event.

In further proceedings in the suit after the annuitant's death the next of kin contended that under the reservation in the decree they were entitled again to raise the contention that the gift over was invalid. The Privy Council held that the validity of the gift over was res judicata.

It will be noticed that in all these three cases, viz., Ram Kirpal Shukul's Case, Bani Ram's Case and Hook's Case, the previous decision which was found to be res judicata was part of a decree.

Therefore though in form the later proceeding in which the question was sought to be raised again was a continuation of the previous proceeding, it was in substance, an independent subsequent proceeding.

The decision of a dispute as regards execution it is hardly necessary to mention was a decree under the Code of Civil Procedure and so in Ram Kirpal's Case and Bani Ram's Case, such a decision being a decree really terminated the previous proceedings.

The fact therefore that the Privy Council in Ram Kirpal Shukul's Case described Mr. Probyn's order as an "interlocutory judgment" does not justify the learned counsel's contention that all kinds of interlocutory judgments not appealed Jrom become res judicata.

Interlocutory judgments which have the force of a decree must be distingui:shed from other interlocutory judgments which are a step

(1) (1884) L.R. 11 I.A. 181.

(2) (1921) L.R. 48 I.A. 187.

• ..

r '

-.J

towards the decision of the dispute between parties by 196~ way of a decree or a final order.

Moheshur Singh's Sal)adhyan Ghosal Case, Forbes' Case and Sheonath's Case dealt with s D v ... Db' . . h m. eoraJtn e i interlocutory judgments which did not termmate t e proceedings and led up to a decree or final order.

Das Gupta].

Ram Kirpal Shukul's Case, Bani Ram's Case and Hook's Case deal with judgments which though called interlocutory, had, in effect, terminated the previous proceedings.

These cases are therefore of no assistance to the learned counsel for the respondent in his argument that the order of remand made by the High Court not having been appealed from to this Court the correctness of that order cannot be challenged now.

In our opinion the order of remand was an interlocutory judgment which did not terminate the proceedings and so the correctness thereof can be challenged in an appeal from the final order. We hold therefore that the appellant is not precluded from raising before us the question that s. 28 of the original Thika Tenancy Act was not available to the tenants after the Thika Tenancy Amendment Act came into force.

On this question we have already decided, as already indicated above, in Mahadeolal Kanodia':S Case (1) that section 28 after its omission by the Amending Act is not available in respect of proceedings pending on the date of the commencement of the Thika Tenancy Ordinance of 1952.

We hold therefore that the view taken by the High Court in this matter was wrong and that the Munsif acted without jurisdiction in rescinding the ejectment decree.

We accordingly allow the appeal, set aside the order of the High Court appealed from and also the order of the Munsif dated February 12, 1955, by which he rescinded the ejectment decree.

In consideration of the fact that the state of the law as regards the applicability of s. 28 .was uncertain, we order that the parties will bear their own costs in this Court.

Appeal allowed

(I) [1960) 3 S.C.R. 573.

SATYADHYAN GHOSAL AND OTHERS

I. DEORAJIN DEBI AND ANOTHER. (P

s. 28

s. 1(2)

West Beniial Ordinance

Calcutta Thika Tenancy Act, 1949

the Code of Civil Procedure

s. 28

s. 28

s. 1(2)

s. 28

the Code of Civil Procedure

Deoraji11 Debi Court

s. 28

s. 28

Thika Tenancy Ordinance, 1952

s. 28

(1883) L.R. 11 I.A. 37

(1884) L.R. 11 I.A. 181

(1921) L.R. 48 I.A. 187

Section 28

Calcutta Thika Tenancy Act, 1949

[1960] 3 S.C.R. 578

CIVIL APPELLATE JURISDICTION

Calcutta High Court

Nalini Ranjan

R. R. Biswas

D. N. A1nhhcrjec

Safyadhyan Ghosal

Deorajin Debi

DAs GUPTA

Deorajin Debi

March 3, 1949

the Code of Civil Procedure

.July 16, 191'

September 9, 1949

s. 28

February 2, J !H9

N01ember 12, 195

Calcutta

the Code of Civil Procedure

s. 28

s. 28

s. 1(2)

s. 28

Das Gupta

s. 28

s. 28

s. 1(2)

s. 28

Calcutta Thika Tenancy Ordinance, 1952

s. 28

s. 28

December 12, 1955

Deorajin J)ebi

Thika Tenancy Amendment Act, 1953

s. 28

the Code of Civil Procedure

s. 11

S.C.R.

SUPREME COURT!REPORTS 595

December 6, 1841

Deorin Debi

March 8, 1842

Septem- " ' ber 21, 1847

Maich

Government of Bengal

India

December 18, 18J4

Sadar Diwani Adalat

Sadar Diwani Adalat

Sadar Diwani Acblat

Moheshur Singh

Court of the Civil Judge, Lucknow

Satyadhyan Ghosal

May 1.5, 1862

May 1.5,

1862

Satyadhyan Ghasal

the Code of Civil Procedure

s. 363

s. 591

s. 591

s. 59

s. 591

s. 105

Supreme Court

Satyadhyan Ghtisal

Dearajin.Dei>i Court

s. 28

Das GuptaJ.

Ram Kirpal Shukul

Probyn

Probyn

Probyri

Hook

Bani Ram

the Code of Civil Procedure

Ram Kirpal

(1884) L.R. 11 I.A. 181

(1921) L.R. 48 I.A. 187

Forbes

Sheonath

Das Gupta

s. 28

Mahadeolal Kanodia':S

section 28

February 12, 1955

s. 28

[1960) 3 S.C.R. 573