3 S.C.R. SUPREME COURT REPORTS 167

ously be decided on a fair and reasonable construction r960 of s. 19(6) itself, and the rule in question, even if Associated applicable would not be material in that behalf. We Cement companies accordingly hold that, on a fair and reasonable Ltd. construction of s. 19(6), the true position is that, v. though the expression "any party bound by the Their Workmen award" refers to all workmen bound by the award, G . d-dk 1 , . h 'd d b . a; en raga ar . notice to termmate t e sa1 awar can e given not by an individual workman but by a group of workmen acting collectively either through their union or otherwise, and it is not necessary that such a group or the union through which it acts should represent the majority of workmen bound by the award.

In the result the appeal fails and is dismissed with costs.

Appeal dismissed.

JAMES ANDERSON, ADMINISTRATOR OF

THE ESTATE OF THE

LATE HENRY GANNON, BOMBAY . . v .

THE COMMISSIONER OF INCOME-TAX,

BOMBAY

(S. K. DAS, J. L. KAPUR AND

M. HIDAYATULLAH, JJ.)

Income-tax-Distribution of capital assets-Whether distribution mu.st be in specie-Sale of capital assets by administrator for distribution amongst legatees-Profit on such sales, if amounts to capital gains liable to tax-Income-tax Act, r922 (XI of r922), s. I2B(I), third proviso.

The appellant was the administrator of the estate of one Henry Gannon, a resident of British India, who left for the

~ United Kingdom in 1944 and died there in 1945 In the course of administration the appellant sold certain shares and securities belonging to the deceased for the purpose of distributing the assets amongst the legatees and thereby realised more than their cost price. The excess of sale price over the cost price was treated by the Income-tax Officer as capital gain under s. 12B

March 4

•960 of the Income-tax Act and the appellant was assessed to tax on such capital gain for the assessment years r947-48 and r948-49 . .fames Anderson The appellant contended that there had been a distribution of v. capital assets by him under the will of Henry Gannon and there- Commissioner of fore he came under the protection of the third proviso to s. r2B(r) Inc:ime-tax, Bombay and was not liable to tax.

Heid, that the appellant was not protected by the third proviso to s. 12B(1) as the expression "distribution of capital assets" in that proviso meant distribution in specie and not distribution of sale proceeds of the capital assets. So long as there was distribution of the capital assets in specie and there was no sale, there was no transfer for the purposes of s. r2B, but as soon as there was a sale of the capital assets and profits or gains arose therefrom, the liability to tax also arose, whether the sale was by the administrator or by the legatee.

Sri Kannan Rice Mills Ltd. v. Commissioner of Income-tax, Madras, (r954) 26 I.T.R. 35r; Commissioner of Income-tax, Bombay North v. Walji Damji, (r955) 28 I.T.R. 9r4 and Gowri Tile Works v. Commissioner of Income-tax, Madras, (r957) 3r I.T.R. 250, referred to.

CrvIL APPELLATE JURISDICTION: Civil Appeal No. 335 ofl956.

Appeal by special leave from the judgment and order dated August 25, 1954, of the Bombay High Court in Income-tax Reference No. l of 1954.

N. A. Palkhivala, S. N. Andley, and J. B. Dadachanji, for the appellant.

K. N. Rajagopal Sastri and D. Gupta, for the respondent.

1960. March, 4. The Judgment of the Court was delivered by s. K. Das J.

S. K. DAS, J.-This appeal by special leave is from the decision of the Bombay High Court dated August 25,

1954', in Income-tax Reference No. 1 of 1954. The only question which falls for decision in the appeal is the true scope and effect of the third proviso to old S. 12B(l) of the Indian Income Tax Act, hereinafter referred to as the Act.

The facts relevant to the appeal are these : one Henry Gannon was a resident of British India, who used to be assessed to income-tax under the Incometax law of this country. He left India in 1944 for the United Kingdom where he died on May 13, 1945. He left a will dated November 18, 1942 by which the National Bank of India Ltd., in London was appointed Executor of his estate. Ou October 1, 1945, probate

~- ....

...

·-..

. ,,

of the will was granted to the said Bank by 'a Court z96o of competent jurisdiction in the United Kingdom. 1 A d On October 25, 1945, a power of attorney was given am•s v n erson by the Bank to James Anderson, who is now the commis; ioner of appellant before us. He made an application to the Ino.-ta,,, Bombay High Court of Bombay under s. 241 of the Indian Succession Act and on that application obtained s. K. Das J.

Letters of Administration with a copy of the will annexed. In the course of administration of the estate of Henry Gannon, the appellant sold certain shares and securities belonging' to the deceased for the purpose of distributing the assets amongst the legatees.

The sale of these shares and securities realised more than their cost Pl'.ioe. The excess of the sale price over the cost price was treated by the Income Tax Officer as capital gain under s. 12B of the Income Tax Act. For the assessment year 1947-48 the capital gain was computed by the Income Tax Officer at Rs. 20,13,738 and for the assessment year 1948-49 at Rs. 1,51,963. These amounts of capital gain were brought to tax for the assessment year 194 7-48 and 1948-49 along with certain dividend and interest inc@me which had accrued or had been received in the relevant years of account. Not satisfied with these assessments, the appellant preferred two appeals to the Appellate Tribunal, Bombay. These two appeals were consolidated. -The appellant urged three points in support of his contention that the assessments were invalid: firstly, that s. 12B imposing a tax on capital gains was ultra vires the Government of India Act, 1935; secondly, that under s. 24B of the Act, the appellant was only liable to pay tax which the testator would have been liable to pay and as these capital assets were not sold by the testator, there was no liability upon the appellant: and thirdly, that the sale of the shares and securities by the appellant under the will of Henry Gannon came within the purview of the third proviso to s. 12B(l) and, therefore, was not to be treated as a sale of capital assets under s. 12B(l).

The Appellate Tribunal repelled the first two contentions, but accepted the third as correct and in that view allowed the two appeals in part. It directed the Income Tax Officer to delete from the assessed income

z96o the capital gains made by the sale of shares and

A , securities. The Commissioner of Income-tax, Bombay ames nr.i.erson C" . v. 1ty, then moved the Appellate Tribunal to refer to Commissioner of the High Court of Bombay the question which arose Inc.-tax, Bombay out of the third contention, naely, tbe true scope and effect of the third proviso t, o old s. 12B(l) of the 5 K. Das J, Act.

The Appellate Tribunal thereupon referred the following question of law to the Bombay High Court:

"Whether the sale of the shares and securities by the administrator of the estate of late Mr. Gannon is not a sale for the• purpose of Section 12B(l) in view of the third proviso to section 12B(l) of the Indian Income Tax Act." At the instance of the assessee the other two questions which were decided against him were also referred to the High Court. The High Court of Bombay considered all the three questions in Income-tax Reference No. 1 of 1954 and by its decision appealed from answered all the three questions against the assessee. The appellant then moved this Court for special leave which "was granted on October 7, 1955.

The question whether the levy of capital gains under section 12B is ultra vires no longer survives by reason of the decision of this Court in N avinchandra M afatlal v. Commissioner of Income-tax(').

This question was not therefore pressed before. us. The question under s. 24B was also not seriously pressed. The view of the Bombay High Court that s. 24B does not limit the liability of the Administrator or Executor to the cases referred to under that section is correct; because the appellant is as much an assessee under the Act as any other individual and ifhe makes capital gains, he is as much liable to pay tax as any other individual. This position has not been seriously contested before us. We are, therefore, left only with the question which turns on the true scope and effect of the third proviso to old s. 12B(l) of the Act. Capital gains were charged for the first time by the Income-tax and Excess Profits Tax (Amendment) Act, 1947, which inserted s. 12B in the Act. It taxed capital gains arising after March 31,

1946. The levy was virtually abolished by the Indian

(I) [1954) 26 I.T.R. 758; [1955) 1. S.C.R. 829.

...

.... -,-Jo

Finance Act, 1949, which confined the operation of

I960 the ection to ?pital ains arising before pril l, 1948; James Anderson but it was revived with effect from April 1, 1957, by v.. the Finance {No. 3) Act, 1956, which substituted the Co111missione1 of present 3ection. We are concerned in this appeal Ino.-tax, Bo111baJ. with the old section. That section, leaving out those parts which are not relevant for our purposes, ran as S.K Das f .. follows:

"S. 12B Capital gains-(1) The tax shall be payable by an assessee under the head "capital gains" in respect of any profits or gains arising from the sale, exchange or transfer of a capital asset effected after the 31st day of March, 1946, and. before the 1st day of April, 1948; and such profits and gains shall be deemed to be income of the previous year in which the sale, exchange or transfer took place: ' ..................................................................................

. Provided further that any transfer of capital assets by reason of the compulsory acquisition thereof under any law for the time being in force relating to the compulsory acquisition of property for public purposes or any distribution of capital assets, on the total or partial partition of a Hindu undivided family, or on the dissolution of a firm or other association of persons, or on the liquidation of a company, or under a deed of gift, bequest, will OT transfer on irrevocable trust shall not, for the purposes of this section, be treated as sale, ex9hange or transfer of the capital assets:

(2) The amount of a capital gain shall be computed after making the following deductions from the full values of the consideration for which the sale, exchange or transfer of the capital asset is made, namely:-

(i) expenditure incurred solely in connection with such sale, exchange or transfer;

(ii) the actual cost to the assessee of the capita 1 asset, including any expenditure of a capital nature incurred and borne by him in making any additions or altera.tiop.s thereto but excluding any expenditure

James Anderson v.

Commissioner of ln&.-tax, Bombay

S. K. Das].

172 SUPRElVIE COURT REPORTS [1960]

in respect of which any allowance is admissible under any provisions of sections 8, 9, 10 and 12.

(3) Where any capital asset became the property of the assessee by succession, inheritance or devolution or under any of the circumstances referred to in the third proviso to sub-section (1), its actual cost allowable to him for the purposes of this section shall be its actual cost to the previous owner thereof and the provisions of sub-section (2) shall apply accordingly ; and where the actual cost to the previous owner cannot be ascertained, the fair market value at the date on which the capital asset became the property of the previous owner shall be deemed to be the actual cost thereof. " "Capital asset" is defined in s. 2(4A) of the Act, and it was not disputed before us that the shares and securities which the appellant sold constituted capital asset within the meaning of that definition. We may shortly state here the scheme of sub-ss. (1), (2) and (3) of s. 12B of the Act. Sub-section (1) is the substantive provision which levies a tax in respect of profits or gains arising from the sale, exchange or transfer of a capital asset effected during a specified period. The admitted position in this case is that the appellant sold the shares and securities, which constituted capital asset, within that period and thus clearly came within sub-s. (1) of s.12B. Sub-s. (2) states how the amount of capital gain shall be computed, and it allows certain deductions from the full value of the consideration for which the sale, exchange or transfer of capital assets is made. As nothing turns upon the deductions allowed under sub-s. (2), we need not refer to them. Sub-section (3) refers to a capital asset which became the property of the assessee by succession, inheritance or devolution or under any of the circumstances referred to in the third proviso to sub-s. (1), and states what deductions the assessee is then entitled to. In one case, the assessee may be the administrator or executor who has himself sold the capital

\ J

. .,

...

assets ; in another case the assessee may be the person r960 who has got the capital assets by succession etc. or - under any of the circumstances referred to in the Jams Anderson third proviso to sub-s. (1), and if in the latter case the Commi;; ioner of assessee sells the capital assets, he brings himselfwith- Inc.-tax, Bombay in sub-s. (1) but is entitled to a deduction of the actual cost to the previous owner in accordance with the s. K. Das J. provisions of sub-s. (2); where, however, the actual cost to the previous owner cannot be determined, he is entitled to a deduction of the fair market value at

the date on which the capital assets became the property of the previous owner. This in effect is the scheme of the three sub-sections. Manifestly, the intention of the legislature is to tax the profits made by the sale, exchange or transfer of capital assets and . the incidence of the taxation falls at the time of the transfer. If the sale is made by the administrator or executor, the liability under sub-s. (1) falls on him; if, however, the sale is made by a person who got the capitalassets inter alia in any of the ways mentioned in sub-s. (3), he becomes liable to tax as and when he sells the capital assets and makes profits therefrom. Now, the question is what bearing the third proviso to sub-s. (1) has on the aforesaid scheme.

This proviso states in effect that under certain circumstances mentioned therein a transfer of capital assets shall not be treated as a. transfer for the purposes of the section. The circumstances enumerated are: (a) compulsory acquisition of property for public purposes, (b) distribution of oapital assets on the total or partial partition of a Hindu undivided family, (o) distribution of capital assets on the dissolution of a firm or other association of persons, or on the liqaidation of a company, and (d) distribution of capital assets under a deed of gift,. bequest, will or transfer on irrevocable trust. In the present case we are concerned with the question whether there has been a distribution of capital assets by the appellant under a will so as to bring him within the ambit of the third proviso. If the appellant comes within that ambit, then th_e sales which he made of the shares and securities will not be treated as transfer within the meaning of sub-s. (1).

The contention of the appellant

r96o is that there has been a distribution of capital assets by him under the "Viii of Henry Gannon and therefore James Anderson h d h v. e comes un er t e protection of the third proviso.

Commissioner of The High Court took the view that the expression Ino..tax, Bombay "distribution of capital assets" in the third proviso can only mean such distribution in specie; it cannot s. K. Das J. and does not mean distribution of the sale proceeds of the capital assets. The High Court, therefore, held that the appellant did not come within the protection of the third proviso, as he did not distribute the ca pita! assets in specie.

On behalf of the appellant it has been contended before us that the High Court came to an erroneous conclusion with regard to the scope and effect of the third proviso. Mr. N. A. Palkhivala who has argued the case on behalf of the appellant has put his argument in the following way. He has submitted that normally the purpose of a proviso is to carve out an exception from the substantive provision. Sub-section

(1) of s. 12B, which is the substantive provision, imposes the liability to tax on an assessee in respect of profits or gains arising from the sale, exchange or transfer of a capital asset. Leaving out the case of compulsory acquisition of property for public purposes which may result in capital gains, Mr. Palkhivala has submitted that the other cases earlier .enumerated as (b), (c) and (d) in the proviso caµnot result in any capital gains by a mere distribution in specie ; because on a distribution in specie upon a partition or upon a testamentary gift or gift inter vivos, no capital gain can possibly be made by the person who owned the assets before the distribution and who alone can be liable to tax under the section. If, therefore, the correct interpretation of the third proviso is distribution of ca pita! assets in specie, the proviso.'. does not serve any -purpose.

Therefore, Mr. Palkhivala has argued that the expression " distribution of ca pita! assets " must be given a meaning which will fulfil a purpose and correlate the proviso to the substantive provision in sub-s. (1).

That meaning, according to him, is distribution of sale proceeds of capital assets.

We are unable to accept the argument as correct.

Firstly, having regard to the definition of the expres-

• y

..... .

sion "capital assets" it would be wrong to read

I960 "distribution of eapital asset~" as meaning "ditribu~ James Anderson tion of sale proceeds of capital assets". Obv10usly, v. there is a clear and vjtal distinction between "capi- Commissioner of tal assets" and their "sale proceeds". If capital Inc.-tax, Bombay assets are sold first and a distr:ibution of the sale proceeds is made afterwards, then the sale precedes diss. K. Das .I tribution and what is distl'ibuted is not capital assets but the sale proceeds thereof. Secondly, we do not agree that the third proviso serves no purpose if the expression "distribution of capital assets" is given its o natural and plain meaning, viz. distribution in specie.

The High Court expressed the view that by the proviso the legislature might have intended to protect an assessee from a possible argument by the Revenue that when (to take an example appropriate to the case) an executor or administrator transferred the -estate or part of the estate to the person entitled to it, there was a transfer within the meaning of sub-s. (1) of s. 12B. To us it seems that the purpose of the proviso is abundantly clear ifthe scheme of sub-ss. (1),

(2) and (3) is kept in mind. Assume that there is a distribution of capital assets in specie amongst the legatees, and one of the legatees sells the capital assets which he got in one of the ways mentioned in the third proviso ; he at once becomes liable to tax on the profits made on the sale. Sub-section (3) makes that position clear and if the proviso is read in the context of the substantive provisions o~ s. 12B its purpose is quite clear. The purpose is this: aB long as there is distributfon of the capital assets in specie and no sale, there is no transfer for the purposes of the section ; but as soon as there is a sale of the capital assets and profits or gains arise therefrom, the liability to tax arises, whether the sale be by the administrator or the legatee. It is significant that the proviso uses the words " for the purposes of this section " . and not merely sub-s. (1). Indeed, Mr. Palkhivala was forced to concede that in view of the provisions of sub-s. (3) of s. 12B, the expression "distribution of capital assets" must also mean distribution in specie because under sub-s. (3) it is the capital asset which becomes the property of the assessee under any of the circumz960 stances mentio11ed in the third proviso. He then contended that the expression meant both distribution James Anderson in specie and distribution of sale proceeds.

We do

C .v". ' not see why an unnatural or forced meauing should ommissioner o1 b . h . h b . . h lno.-tax. Bombay e gtven to t e expression, w en y g1vmg t e expres- - sion its plain and natural meaning the third proviso s. K. Das J. fits in with the scheme of sub-ss. (1), (2) and (3) of s. 12B of the Act. It is necessary to point out here that on the interpretation sought to be placed on the third proviso on behalf of the appellant, the adminiso trator will escape paying tax if he sells the capital assets; but the legatee will not escape if he sells the capital assets after having received them in specie from the administrator. This is an anomaly which is against the scheme of s. 12B of the Act.

We are accordingly of the view that the High Court rightly held that the expression "distribution of capital assets" in the third 11roviso to sub-s. (1) of s. 12B of the Act means distribution in specie and not distribution of sale proceeds.

In the High Court an alternative argument was also presented on behalf of the assessee to the effect that the third proviso contemplated involuntary transfers.

This argument was based on the use of the expression ' by reason of' in the proviso, and the proviso was soughtto be read as follows (omitting words not relevant to the case) :

"Provided further that any transfer of capital assets by reason of any distribution of capital assets under a ........................................ will .............. . . . . . . . . . . . .. . . . . . . . . . . . . shall not for the purposes of this . section be treated as sale, exchange or transfer of the capital assets." The argument was that inasmuch as the administrator sold the shares and securities for the purpose of distributing the sale proceeds to the legatees, the sale was involuntary and was necessitated ' by reason of' the terms of the will; therefore, he was protected under the third proviso. The High Court repelled this argument and for good reasons. Firstly, the question whether the sale was voluntary or involuntary is not germane to the scheme of section 12B.

Secondly, on a proper reading of the proviso, the

.... 4 - expression 'by reason of' goes with the clause relatz96o ing to compulsory acquisition of property and not James Anderson with the distribution of capital assets.

The position seems to us to be so clear that it is un- Commi';; ioner of necessary to labour it or to refer to decided cases. Inc.-tax, Bombay Such decisions of the High Courts as have been -- brought to our notice are all one way and they take s. K. Das J. the same view as was taken by the High Gourt in the decision.under appeal (see Sri Kannan Rir, e Mills Ltd.

v. Commissioner of Income-tax, Madras (1); Commissioner of Income-tax, Bombay North v. Walji Damji (2); and Gowri Tile Works v. Commissioner of income-tax, Madras (3).

For the reasons given above, we see no merit in the appeal and we dismiss it with costs.

Appea:l dismissed.

THE PARBHANI TRANSPORT CO-OPERATIVE

SOCIETY LTD.

THE REGIONAL TRANSPORT AUTHORITY,

AURANGABAD AND OTHERS

(B. P. SINHA, c. J., JAFER IMAM, A. K. SARKAR,

K. N. W ANCHOO AND J. 0. SHAH, JJ.)

Motor Vehicles-Grant of stage carriage permit to Government under Ch. IV-Constitutional validity--Motor Vehicles Act, I939 (4 of I9J9), as amended by Act IOO of I956, ch. IV. ss. 42, 47, ch, IV A, s. 68F(I)-Constitution of India, Arts. I9(L)(g), I4.

The petitioner, a registered co-operative societ; r, carrying on the business of plying motor buses as stage carriages, had permits for four routes which were due to expire. The State applied for permits for all these routes under Ch. IV of the Motor Vehicles Act, 1939, as amended by Act roo of 1956, and the petitioner applied for renewal of its own permits. The Regional Transport Authority rejected the petitioner's applications and granted those of the State. The petitioner's appeal to the State Transport Authority was rejected. But the High Court quashed the said orders under Art. 226 and directed a

(I) [1954] 26 I.T.R. 3.~I.

(.?) (1955] 28 I.T.R. 914.

(3) [I9,57] 3I I. T.R. 250. 2J

z960

Match 7

s. 19(6)

s. 19(6)

THE COMMISSIONER OF INCOME-TAX,

BOMBAY

S. K. DAS, J.

L. KAPUR

M. HIDAYATULLAH, JJ.

Income-tax Act

Henry Gannon

s. 12B

Income-tax Act

s. 12B(1)

CrvIL APPELLATE JURISDICTION

N. A. Palkhivala

S. N. Andley

J. B. Dadachanji

K. N. Rajagopal Sastri

D. Gupta

s. K. Das

Bombay High Court

S. 12B(l)

British India

India

United Kingdom

May 13, 1945

National Bank of India Ltd.

London

October 25, 1945

James Anderson

s. 241

Indian Succession Act

s. 12B

Appellate Tribunal, Bombay

s. 12B

Government of India Act, 1935

s. 24B

s. 12B(l)

s. 12B(l)

Commissioner of Income-tax, Bombay

s. 12B(l)

Gannon

Section 12B(l)

section 12B(l)

High Court of Bombay

October 7, 1955

section 12B

s. 24B

s. 24B

s. 12B(l)

s. 12B

March 31,

1946

Finance Act, 1949

S.K Das

S. 12B

31st day of March, 1946

1st day of April, 1948

sections 8, 9, 10 and 12

s. 2(4A)

s. 12B

Jams Anderson

Bombay

K. Das

s. 12B

Palkhivala

s. 12B

s. 12B

s. 12B

s. 12B

s. 12B

s. 12B

section 12B

Kannan Rir

B. P. SINHA

JAFER IMAM

A. K. SARKAR

K. N. W ANCHOO

0. SHAH

ss. 42, 47

s. 68F(I)

Constitution of India

IV of the Motor Vehicles Act, 1939

Art. 226


3 S.O.R.- SUPREME COURT REPORTS 177

.... 4 - expression 'by reason of' goes with the clause relatz96o ing to compulsory acquisition of property and not James Anderson with the distribution of capital assets.

The position seems to us to be so clear that it is un- Commi';; ioner of necessary to labour it or to refer to decided cases. Inc.-tax, Bombay Such decisions of the High Courts as have been -- brought to our notice are all one way and they take s. K. Das J. the same view as was taken by the High Gourt in the decision.under appeal (see Sri Kannan Rir, e Mills Ltd.

v. Commissioner of Income-tax, Madras (1); Commissioner of Income-tax, Bombay North v. Walji Damji (2); and Gowri Tile Works v. Commissioner of income-tax, Madras (3).

For the reasons given above, we see no merit in the appeal and we dismiss it with costs.

Appea:l dismissed.

THE PARBHANI TRANSPORT CO-OPERATIVE

SOCIETY LTD.

THE REGIONAL TRANSPORT AUTHORITY,

AURANGABAD AND OTHERS

(B. P. SINHA, c. J., JAFER IMAM, A. K. SARKAR,

K. N. W ANCHOO AND J. 0. SHAH, JJ.)

Motor Vehicles-Grant of stage carriage permit to Government under Ch. IV-Constitutional validity--Motor Vehicles Act, I939 (4 of I9J9), as amended by Act IOO of I956, ch. IV. ss. 42, 47, ch, IV A, s. 68F(I)-Constitution of India, Arts. I9(L)(g), I4.

The petitioner, a registered co-operative societ; r, carrying on the business of plying motor buses as stage carriages, had permits for four routes which were due to expire. The State applied for permits for all these routes under Ch. IV of the Motor Vehicles Act, 1939, as amended by Act roo of 1956, and the petitioner applied for renewal of its own permits. The Regional Transport Authority rejected the petitioner's applications and granted those of the State. The petitioner's appeal to the State Transport Authority was rejected. But the High Court quashed the said orders under Art. 226 and directed a

(I) [1954] 26 I.T.R. 3.~I.

(.?) (1955] 28 I.T.R. 914.

(3) [I9,57] 3I I. T.R. 250. 2J

z960

Match 7

z960 reconsideration of the matter. The State published a scheme under s. 68C, Ch. IV A, of the Act. The scheme was not however Pat; bhani Transpo1t finalised. Thereafter the Regional Transport Authority, purpor- Co-op. ting to reconsider the matter as directed by the High Court, Society Ltd. rejected the petitioner's applications for rene\val and granted v. those of the State for permits. It was contended on behalf of

R. T. A. the petitioner that in view of Ch. IV A of the Act, the State had Aurangabad no right to apply for pern1its except thereunder and the grant of permits on applieations made under Ch. IV was, therefore, illegal and infringed the petitioner's fundamental rihts under Ans. rg(r)(g) of the Constitution. It was further contended that the order violated Art. r4 as well.

Held, that both the contentions were without substance and must fail. ' The Motor Vehicles Act, r939, as amended by Act roo of r956, Jays down two independent sets of provisions relating to running of buses by the Government, one under Ch. IV and the other Ch. IV A of the Act. The latter chapter by s. 68F(r) confers a special advantage on the Government when it proceeds under that chapter and entitles it to the necessary permits as a matter of right.

Under Ch. IV of the Act, however, the Government cannot claim any such advantage. It has to compete with other applicants. The powers conferred by the two chapters being thus not one but two different powers, the principle enunciated in Nazir Ahmad's case has no application.

Since, therefore, the Government had a distinct right to apply for permits under Ch. IV of the Act, no question of applying for permits without the right to do so and thereby infringing the petitioner's fundamental right under Art. r9(r)(g) could arise.

Nazir Ahmad v. King Emperor, (r936) L.R. 63 I.A. 372, held inapplicable.

Taylor v, Taylor, (r876) r Ch. D. 426, distinguished.

Nor could the maxim expressio unius est exclusio alter£us be ()f any help to the petitioner. That maxim has its utility in ascertaining the intention of the legislature. Since s. 42(3)(a) of the Motor Vehicles Act leaves no manner of doubt as to that intention by its clear indication that the Government cannot run buses as a commercial enterprise without first obtaining permits under s. 42(r) of the Act, that maxim cannot operate so as to imply a prohibition against applying under Ch. IV of the Act.

There was therefore, no reason for holding that Ch. IV A of the Act contained the only provision under which the Government could be allowed to ply stage carriages.

Viscountess Rhondda's claim, (r922) 2 A.C. 339 and Motilal v.

Government of Uttar Pradesh, (r955) r I.L.R. AIL 269, considered.

It was not correct to say that the State was not intended to compete with private citizens in obtaining permits under Ch. IV of the Act.

Section 47 of the Act lends no support to such a proposition and Art. r9(6) of the Constitution indicates that the Government can enter -into such competition without infringing any of the fundamental rights.

. "

., __ .....

The Regional Transport Authority in granting permits acts r960 in a quasi-judicial capacity. If its decision was in any way erroneous having regard to the proviso to s. 47(1) of the Act, Parbhani Transport that could not amount to a violation of Art. 14 of the Constitu- Co-op. ·. tion.

The petitioner had other remedies open to him. Nor Society Ltd. could Ch. IV of the Act be said, in view of Art. 19(6) of the v.

Constitution, to offend that Article by permitting open corftpeti-

R. T. A. tion between the State and a private' citizen. _Aurangabad

ORIGINAL JURISDICTION: Petition No. 110 of 1959.

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

B. R. L. Iyengar and Shankar Anand, for the petitioners.

M. 0. Setalvad, Attorney General for India, B. Sen, R. Gopalakrishnan R. H. Dhebar and T. M. Sen, for the respondents. ·

1960. March, 7. The Judgment of the Court was delivered by

SARKAR, J.-The petitioner is a co-operative society Sarkar J. duly registered and it carries on the business of plying motor buses as stage carriages on the public highways in the State of Bombay. Its case in this petition is that it has been deprived of its right to crry on this business and has also been subjected to discriminatory treatment in the matter of the grant of permits to run its buses. It complains of the infringement of its fundamental rights under arts. 19(l)(g) and 14 of the Constitution. The questions raised in this matter turn on some of the provisions of the Motor Vehicles Act, 1939, as amended by Act 100of1956. These provisions have to be examined before proceeding to discuss the questions that arise. We are concerned only with Chapters IV and IV A of the Act. Chapter IV comprises ss. 42 to 68 and Chapter IVA, which was in its entirety introduced by the amending Act, consists of ss. 68A to 68I.

Taking Chapter IV first, we find that s. 42(1) provides that no owner of a transport vehicle shall use or permit t:\le use of the vehicle in any public place save in accordance with the conditions of a permit granted under the Act. A " transport vehicle " is defined in 's. 2(33) as a public service vehicle or a goods vehicle.

Clause (a) of sub-sec. (3) of s. 42 as it originally stood

r960 provided that sub-sec. (1) of that section would not --:- apply to any transport vehicle owned by or on behalf Parbham Transport of the Central Government or a State Government

50,7,~otd. other than a vehicle used in connection with the busiv. ness.of a railway. So under it the Government could

R. T. A. ply stage carriages on the public highways without Aurangabad having to obtain permits in respect of them. The

Sarkar]. amending Act of 1956 substituted a new clause (a) in s. 42(3) for the old clause. The new cl. (a) provides that sub-sec. (1) shall not apply to any transport vehicle owned by the Central Government or a State Government and used for Government purposes unconnected with any commercial enterprise. Since the amendment, therefore, the Government cannot run stage carriages on the public highways without a permit, just as a private owner of stage carriages cannot do, because such use of the vehicles will not be for a purpose unconnected with a commercial enterprise.

Section 44 authorises a State Government to constitute a State Transport Authority aI)d Regional Transport Authorities for different areas in that State to carry out the duties specified. Section 45 provides that every application for a permit shall be made to the Regional Transport Authority of the region in which it is proposed to use the vehicle. Section 47 specifies the matters to which a Regional Transport Authority shall have regard in considering an application for the grant of a permit.

We now come to Chapter IVA. Section 68A(b) defines a " State transport undertaking " for the purpose of the Chapter to mean an undertaking providing road transport service, carried on, among others, by a State Government. Section 68B provides that the provisions of Chapter IV A shall have effect notwithstanding anything to the contrary contained in Chapter IV. Section 68C is in these terms:

680.

Where any State transport undertaking is of opinion that for the purpose of providing an efficient, adequate, economical and properly co-ordinated road transport service, it is necessary in the public interest that road transport services in genPral or any particu Jar class of such service in relation to any area or route or portion thereof

•.

should be run and operated by the State transport r960 undertaking, whether to the exclusion, complete or - 1 f h h • h S Parbhani Transport partia , o ot er persons or ot erw1se, t e tate c _ P transport undertaking may prepare a scheme giving soci~; Ltd. particulars of the nature of the services proposed to v. be rendered, the area or route proposed to be

R. T. A. covered and such other particulars respecting there- Aurangabad to as may be prescribed, and shall cause every such scheme to be published in the Official Gazette and also in such other manner as the State Government may direct. ' Section 68D provides for°the preferring of objections to the scheme published under s. 68C, consideration of such objections and final approval of the so.heme by the State Government. The terms of s. 68F(l) are as follows :-

8. 68F. (1) Where, in pursuance of an approved scheme, any State transport undertaking applies in the manner specified in Chapter IV for a stage carriage permit or a public carrier's permit or a contract carriage permit in respect of a notified area or notified route, the Regional Transport Authority shall issue such permit to the State transport under. taking, notwithstanding anything to the contrary contained in Chapter IV.

The respondents to this petition are (1) The Regional Transport Authority, Aurangabad, (2) The State Transport Authority; Bombay, (3) The. Divisional Controller of State Transport, Marathwada and (4) The State of Bombay. Aurangabad and Marathwada are both in the State of Bombay. The first and second respondents are the authorities set up under s. 44 of the Act by the Government of Bombay.

It is the duty of the first respondent to consider applications for and to grant, permits for stage carriages to be plied in Aurangabad region and the, second respondent hears apJleals from the decisions of the first respondent. The third respondent is the head of a department of the Government of the State of Bombay and is in charge of public transport work in Marathwada.

It appears that the petitioner had permits to run buses on four routes in Aurangabad and that these

Sarkar].

r96o permits were due to expire on October 1, 1958. The

P bh -:--T third respondent who really represents the Governar ani ransport f h S f h co-op. ment o t e tate o Bombay \lld w. o may be con- Society Ltd. veniently referred to as the State of Bombay, had v. permits for two of these routes.

On J\fay 19, 1958,

R. T. A. the State of Bombn, y applied for permits for all these Aurangabad four routes under Chapter IV of the Act.. On May 27, Sarkar]. 1958, the petitioner applied for renewal of its existing permits. The first respondent rejected the application of the petitioner and granted those of the State of Bombay. The petitioner appealed to the second respondent but its !\ppeal was rejected. In the meantime on some date which does not n, ppear on the record, the petitioner had been granted temporary permits up to December 31, 1958.

On the expiry of its temporary permits on December 31, 1958, the petitioner would have been unable to run any of its buses and it therefore moved the High Court at Bombay under art. 226 of the Constitution and the High Court quashed the oders of respondents Nos. 1 and 2 and directed the applications of the petitioner and the State of Bombay for the permits to be reconsidered. With the reasons of this order of the High Court we are not concerned. Respondent No. l, however, without re-considering the applications as directed by the High Court, granted temporary permits to the Stn, te of Bombay. The petitioner again moved the High Court which thereupon quashed the order of respondent No. 1 granting temporary permits to the State of Bombay. Thereafter, on March 20, 1959, the respondent No. 1 granted temporary permits to the petitioner which were later extended to July 20,

1959.

On June l, 1959, the State of Bombay published a scheme under s. 680 in Chapter IV A of the Act.

Various objections were filed against the scheme and nothing further appears to have been done to make "the scheme final.

On July 18, 1959, respondent No. 1 purporting to carry out the directions of the High Court, recfmsidered the petitioner's applications for renewal and the applications of the State of Bombay for permits and rejected the petitioner's applications while allowing those of the State of Bombay. On

July, 20, 1959, t.he petitioner's temporary permits

...

.. -

having expired, it ceased to operate its buses. On 1960 August 27, 1959, the petitioner filed the present peti- P lh -:--T 1 • . h' C d 32 f h C . t' i." ar' ani ranspor t10n m t is ourt un er art, o t e onst1tu 10n .LOr Co-op. appropriate writs quashing the order of respondent Society Ltd.

No. 1 dated July 18, 1959, restraining the Sate of v.

Bombay from applying for permits save under the

R. TA. provisions of Chapter IVA 'and respondent No. 1 from A1t.angabad entertaining any application by the State of Bombay Sarkar J. under Chapter IV and directing respondent N:o. 1 to hear the petitioner's applications for permits according to law. Various grounds have been advanced in support of the petition and these will now be discussed.

The petitioner first contends that in view of Chapter.IV-A the State of Bombay had no right to apply for permits under Chapter IV of the Act as it had done. It says that the order of the first respondent granting permits to the State of Bombay under Chapter IV was therefore illegal and affected its fundamental rights under art. 19(1) (g).

The first question then is whether the State of Bombay was entitled to apply for permits under Chapter IV. The petitioner says that special provisions having been made in Chapter 1 VA to enable the Government to run its buses the Government's right to run buses was restdcted to those provisions and the Government was not entitled to resort to the other provisions of the Act .. In support of this contention reference was made to the case of Nazir Ahmad v. King Emperor(1) where it was observed that "where a power is given to do a certain thing in a certain way the thing must be done i~ that way or not at all." But this principle can apply only where one power is given and has no application where more powers than one are conferred. If a statute contains . provisions giving more than one power, then the rule cannot be applied so as to take away the powers conferred by anyone of these provisions. As pointed out in Taylor v. Taylor( 2 ) referred to by the Judicial Committee in Nazir Ahmad's case (1) "When a statutory power is conferred for the first time upon a Court, and the mode of exercising it is pointed out, it means that no other mode is to be adopted."

z. ( 1936) L, R, 63 I.A. 372. 381,

(2) ((1876) 1'Ch. D. 426, 431.

'960 Now the position here is different.

The Govern- Parbha;;; y; ansport ment has of course the power to do any business it Co-op. likes and therefore the business of running stage

socfrty Ltd. carriages. We have earlier dmwn attention to the v. change made in cl. (a) of s. 42(3) by the amendment

R. T. A. of 1956. Previously, it was not necessary for the Au1angabad Government to obtain permits under s. 42(1) for buses Sarkar J. that it intended to run as stage carriages. Since the amendment the Government can no longer run transport vehicles for commercial purposes without obtaining permits under s. 42(1).

Now the plying of buses as stage carriages is a commercial enterprise and for such buses, therefore, under the sections as they stand, the Government would require permits as any one else. That being so, the sections clearly contemplate that the Government may apply for and obtain permits for its buses run as stage carriages.

The rule applied in Nazir Ahrnad' s case (') does not permit the ordinary meaning of s. 42, sub-s. (1) and sub-s. (3), cl. (a) to be cut down because of the provisions of Chapter IV A.

The Act lays down tw" independent sets of provisions in regard to the running of buses by the Government, one nnder Chapter IV and the other under Chapter IVA. Chapter IVA was intended to give the Government, a special advantage.

When the Government chooses to proceed under that chapter, it becomes entitled as a matter of right under s. 681<' (1) to the necessary permits. Under Chapter IV the Government does not have any_ such advantage; it has to compete with other applicants, to secure permits to be able to run its buses. The powers under the two Chapters are therefore _different.

To such a case the principle of Nazir Ahrnad's case(') cannot be applied.

The learned counsel for the petitioner also referred to the maxim expressio unius est exclusio alterius and contended that since the Act by Chapter IVA provided that the Government would be entitled to run buses under a scheme it impliedly prohibited the running of buses by the Government otherwise. It does not seem to us that this maxim carries the mat t<>r further. It is a maxim for ascert(l, ining the

(1) [1936J L.R. 63 I.A. 37z, ~81

•' .

intention of .the legislature. Where the statutory z960 language is plain and the meaning clear, there is no .-. - scope for applying the rule. Section 42(3) (a) appears Parbh~'- ansport to us to be perfectly plain in its terms. It contem- Soci:,; Ltd. plates that the Government has to apply for permits v. under s. 42(1) to run buses as a commercial enterprise.

R. T. A.

That being so, the maxim cannot, be resorted to for / Aurangabad ascertaining the intention of the legislature and .Sarkar .f, implying a prohibition against the Government apply- ing for permits under Chapter IV.

The learned counsel then referred to the case of Viscountess Rhondda's claim (1), where it was observed at p. 365 that "The words of the statute are to be construed so as to ascertain the mind of the Legislature from the natural and grammatical meaning of the words which it has used,· and in so construing them the existing state of the law, the mischiefs to be remedied, and the defects to be amended, may legitimately be looked at together with the general scheme of the Act." His point is that Chapter IV A was introduced by the amendment of 1956 to meet the observations made in Moti Lal v. Government of Uttar Pradesh (2) and some other cases that s. 42(3)(a) was discriminatory in that it exempted the Government from the requirement of a permit and was hence void as offending art. 14 of the Constitution. It is said that Chapter IV A must, therefore, be construed as containing the only provisions enabling the Government to run a stage carriage. It is difficult to appreciate this contention. The observations in the cases referred to, had been made in regard to cl. (a) of s. 42(3) as it stood before its amendment in 1956.

That section has been amended and as it now stands it is not discriminatory. The evil pointed out no more exists and no question of reading the Act keeping in view that evil of discrimination, arises. We find nothing in Moti Lal's rose (2) or any other case which points to an evil nor ha~ the learned counsel drawn our attention to any, which the Act can be said to have intended to remedy. We, therefore, find no justification for reading Chapter IVA as containing

(I) (1922) 2 A.C. 339,

~ .. •

1960 the only provisions under which the Government can

bh --:-T ply stage carriages. , Par am ransport

I "d 42 1 t h ,. c _ P t is next sa1 s. contemp a es t e owner Oi a Soci:t; i.td. transport vehicle obtaining a permit and a "State v. transport undertaking" cannot apply for a permit

R. T. A. under Chapter IV as it cannot be such owner. But Aurangabad here we are not concerned with a State transport undertaking for that comes into existence for the Sarka• J. purposes of Chapter IV A and that Chapter has not been resorted to by the Government yet. Here the Government applied for the permits under Chapter IV.

The Government can of course be the owner of tra.nsport vehicles. We have earlier said that in view of

cl. (a) of s. 42(3) the Government has to apply for permits under s. 42(1) as any other owner.

Therefore the Act contemplates the Government as owner of transport vehicles. Further, under s. 68A a "State

transport undertaking" has. been defined as an undertaking providing road transport service carried on by a state Government. Such an undertaking is really a department of a Government and in order to be able to provide transport service, it must be able to own transport vehicles. In fact s. 68F(l) requires the State transport undertaking to apply for permit.s under Chapter IV and therefore contemplates it as an owner of a transport vehicle for the purposes of s. 42 which is contained in that Chapter.

The learned counsel then referred to the concluding portion of s. 47(1) which makes it incumbent on the authority considering applications for permits to take into consideration the representations made by the persons therein mentioned. He said that the persons there mentioned did not include the Government and therefore the intention is clear that applications for permits by the Government were not intended to be considered under s. 47 and if Government could not come under s 47, it could not come under Chapter IV a't all. But assume that representations by the Goverment are not contemplated bys. 47. That does not show that applications for permits by the Government are also not contemplated by that section.

It is also said that the matters to which the authority granting the permits is required to have regard in

•' .

" .

- ·-r

considering applications for permits under s. 47 are r960 such that if the State enters into competition with -- • · c h f h S Parbkani Transport 01t1ens ior t e grant o permts .t e ate mut neces- Co-op. sarily get them. Therefore, it is said that it could society Ud. not have been intended that the State would compete v. with the citizens in the matter of obtaining permits .

R. T. A. under Chapter IV. We are unable to assent to this A1trangabad contention. There is nothing.in s. 47 which leads to the conclusion that whenever the Government applies along with private citizens for permits, the Government must get. them. Indeed, if that were so, then it would not hav<:i been necessary to provide by s. 68F (1) that when the Government, that is, its State transport undertaking, applied in . pursuance of an approved scheme for a permit, the authority concerned would be bound to grant such permit. Section 68F (1) clearly contemplates that . without the provision made therein it may so happen that the authority acting under s. 47 may think it fit to grant the permit to a private operator in preference to the Go.vernment. It also seems to us that there is nothing in our law to prevent the Government from (;!ntering a business in competition with private citizens.

Indeed, Art. 19(6) by providing that nothing in art. 19(l}(g) shall affect the application of any existing law in so far as it relates to, or prevent the State from making any law relating to the carrying on by the State of any trade, business, industry or service whether to the exclusion, complete or partial, of citizens or , otherwise, would seem to indicate that the State may

carry on any business either as a monopoly, complete or partial, or in competition with any citizen and that would not have the effect of infringing any fundamental rights of such citizen. Our attention was then drawn to the proviso to s. 47(1) under which other things being equal a cooperative society is entitled to preference over individual owners in the matter of grants of permits. It is said that the Government is not an individual owner and therefore it is not contemplated as an applicant for a permit under s. 47. It seems to us that if the Government is not an individual owner-as to which we are not called upon to say anything--, it does not

Sarkar].

188 SUPI'tEME COURT REPORTS [1960]

r960 follow that that section does not contemplate the - .

Government as an applicant for permit. If Govern- Porbh"; iT; onsport ment is not an individual owner, then all that will

50,;:,; Ltd. happen in view of the proviso to s. 47(1) will be that a v. co-operative society will not be able to claim any pre-

R. T. A. ference over the Government.

All that the proviso Au.angobad does is to give a co-operative society a preference over individual owners. It is not concerned with stating Sarllar ]. who can apply for permits.

It seems to us therefore that the petitioner's contention that the Government cannot apply for a permit under Chapter IV of the Act is unsustainable. The petitioner cannot complain of the GovernIL1nt having applied under that Chapter. We are not Cb!led upon, therefore, to discuss the further question, whether any fundamental right of the petitioner under art.19(l)(g) would have been affected by the Government having appliedfor and obtained permits under Chapter IV without having the right to do so. This disposes of the contentions concerning the infringement of the petitioner's fundamental rights under art. 19(l)(g) of the Constitution.

We will now consider the question of the violation of art. 14 of the Constitution. The first contention in this regard was based on the proviso to s. 47(1). It is said that in the circumstances of this case, as a cooperative society the petitioner was entitled to preference over the Government, considered as an individual owner, and had not been given that preference. It is contended that respondent No. I relying on various promises made by the State of Bombay to repair roads and to give other facilities to the travelling iJUblic had held that the other conditions were not equal while under the proviso, it was entitled to rely only on the existing conditions. It is contended that thereby the provisions of Art. 14 had been infringed. This contention is in our view clearly untenable. The decision of respondent No. 1 may have been right or wrong and as to that we say nothing, but we are unable to see that that decision offends Art. 14 or any other fundamental right of the petitioner. The respondent No. 1 was acting as a quasi judicial body and ifit has made any mistake in its decision there are appropriate

remedies available to the petitioner for obtaining i96o relief.· It cannot complain of a breach of Art 14.

P b'- r Th h . f th . . . th if ar 'ni rampo•l e ot er contention o e peht10ner IS at.

C<HJp.

Chapter IY permits the State to compete with a private Society Ltd. citizen, it offends Art. 14 because in view of the vast v. resources of th. e State a private citizen is bound to lose

R. T. A. 1 £ d Aurangabad in such competition. --This point is clear y un ounde • Article 19(6) as it now stands, contemplates such a Sarkar J. competition as we have earlier pointed out. The petitioner can base no grievance on such competition. , For these reasons we think that this petition must fail' and hence it is dismissed with costs. · Petition dismi; ed. ···

M/s. U. P. ELECTRIC SUPPLY CO., LTD. v.

THE WORKMEN OF M/s. S. N. CHOUDHARY,

CONTRACTORS AND ANOTHER

(P. B. GAJENDBAGADKAR AND K. N. \VANCHOO, JJ).

· · IndustrilDispute-Tribunal deciding issue not rejerred to it~ Jurisdiction-U.P. Industrial Dispute Act, r947 (XXV III of r947), &~~~0~& ..

The appellant company used to employ J\Iessrs. S. 11: Choudhary as its contractors for doing certain work for it and the contractors in their turn used to employ some workmen to carry out the work _w)lich they took on contract. A dispute having arisen between the contractors and their workmen an application was made before the conciliation board by the workmen in which both the company and the contractors were parties and four matters were referred, namely, non-grant of bonus for two years, non-grant of festival holidays, non-fixation of minimum wages of those workmen at par with the workmen of the company and non-abolition of the contract system. As conciliation failed the Government referred the dispute to the Industrial Tribunal under the U.P. Industrial Disputes Act in which only three points out of the four mentioned above were referred and the question of non-abolition of the contract system was not referred. The parties to this reference were the contractors and their workmen . and not the appellant company. By a subsequent notification, ho; vever, the Government impleaded the Company asa party to . the dispute but did not amend the previous referring order by

Ma1eh8

James Anderson

Kannan Rir

B. P. SINHA

JAFER IMAM

A. K. SARKAR

0. SHAH, JJ.

ss. 42, 47

s. 68F(I)

Constitution of India

IV of the Motor Vehicles Act, 1939

Art. 226

s. 68C

IV A of the Act

Aurangabad

Motor Vehicles Act

IV A of the Act

s. 68F(r)

Nazir Ahmad

L.R. 63 I.A. 372

s. 42(3)(a)

Motor Vehicles Act

s. 42(r)

IV A of the Act

Rhondda

Section 47

s. 47(1)

Art. 14

Nor Society Ltd.

Art. 19(6)

Article 32

Constitution of India

B. R. L. Iyengar

Shankar Anand

Setalvad

B. Sen

R. Gopalakrishnan R. H. Dhebar

T. M. Sen

SARKAR

Sarkar

Bombay

arts. 19(l)(g) and 14

ss. 42 to 68

ss. 68A to 68I

s. 42(1)

s. 2(33)

s. 42

Parbham Transport

s. 42(3)

Central Government

Section 44

Section 45

Section 47

Section 68A(b)

Section 68B

Section 68C

Section 68D

s. 68C

s. 68F(l)

State Transport Authority; Bombay

State of Bombay

Marathwada

s. 44

Government of Bombay

Government of the State of Bombay

October 1, 1958

State of Bombay

State of Bombn

May 27, Sarkar]

High Court at Bombay

art. 226

State of Bombay

March 20, 1959

July 20,

1959

June l, 1959

s. 680

Chapter IV A of the Act

Bombay Sarkar

art. 19(1)

s. 42(3)

Au1angabad Government

s. 42(1)

s. 42(1)

Nazir Ahrnad

s. 42

s. 681

L.R. 63 I.A. 37

Section 42(3)

s. 42(1)

Viscountess Rhondda

s. 42(3)(a)

art. 14

s. 42(3)

Moti Lal

s. 42(3)

s. 42(1)

s. 68A

s. 68F(l)

s. 42

s. 47(1)

s. 47

s 47

s. 47

s. 47

s. 68F

Section 68F

s. 47

Art. 19(6)

art. 19(l}(g)

s. 47(1)

s. 47

s. 47(1)

art. 19(l)(g)

art. 14

s. 47(1)

Art. 14

Art. 14

Art 14

Art. 14

Article 19(6)

U. P. ELECTRIC SUPPLY CO., LTD

P. B. GAJENDBAGADKAR

K. N. \VANCHOO

Industrial Dispute Act

S. 11

Industrial Disputes Act


3 S.C.R. SUPREME COURT REPORTS 189

remedies available to the petitioner for obtaining i96o relief.· It cannot complain of a breach of Art 14.

P b'- r Th h . f th . . . th if ar 'ni rampo•l e ot er contention o e peht10ner IS at.

C<HJp.

Chapter IY permits the State to compete with a private Society Ltd. citizen, it offends Art. 14 because in view of the vast v. resources of th. e State a private citizen is bound to lose

R. T. A. 1 £ d Aurangabad in such competition. --This point is clear y un ounde • Article 19(6) as it now stands, contemplates such a Sarkar J. competition as we have earlier pointed out. The petitioner can base no grievance on such competition. , For these reasons we think that this petition must fail' and hence it is dismissed with costs. · Petition dismi; ed. ···

M/s. U. P. ELECTRIC SUPPLY CO., LTD. v.

THE WORKMEN OF M/s. S. N. CHOUDHARY,

CONTRACTORS AND ANOTHER

(P. B. GAJENDBAGADKAR AND K. N. \VANCHOO, JJ).

· · IndustrilDispute-Tribunal deciding issue not rejerred to it~ Jurisdiction-U.P. Industrial Dispute Act, r947 (XXV III of r947), &~~~0~& ..

The appellant company used to employ J\Iessrs. S. 11: Choudhary as its contractors for doing certain work for it and the contractors in their turn used to employ some workmen to carry out the work _w)lich they took on contract. A dispute having arisen between the contractors and their workmen an application was made before the conciliation board by the workmen in which both the company and the contractors were parties and four matters were referred, namely, non-grant of bonus for two years, non-grant of festival holidays, non-fixation of minimum wages of those workmen at par with the workmen of the company and non-abolition of the contract system. As conciliation failed the Government referred the dispute to the Industrial Tribunal under the U.P. Industrial Disputes Act in which only three points out of the four mentioned above were referred and the question of non-abolition of the contract system was not referred. The parties to this reference were the contractors and their workmen . and not the appellant company. By a subsequent notification, ho; vever, the Government impleaded the Company asa party to . the dispute but did not amend the previous referring order by

Ma1eh8

M/,, U P.

Electric Supply Co. Ltd. v.

Workmen of

Mf' S. N.

Choudhary

adding the fourth point of dispute which was hefore the conciliation board, namely, the non-abolition of the contract system.

The Industrial Tribunal framed a number of issues the most important of which was whether the workmen concerned were the employees of the appellant company or of the contractors and came to the conclusion that those workmen were in fact and 'in reality the employees of the company. On appeal by the company by special leave, .

Held, that on such a reference there could be no jurisdiction in the tribunal to decide the question whether these workmen were the \vorkmen of the company or of the contractors, for such a question was riot referred to the tribunal.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 481of1958.

Appeal by special leave from the Award dated June 29, 1957, of the State Industrial, Tribunal U.P.

Allahabad, in Ref. No. 98 of 1956.

M. G. Setalvad, Attorney-General for India, S. N: Andley, J.B. Dadachanji, Rameshwar Na.th and P. L.

V ohra, for the appellants. • A. D. Mathur, for respondent No. 1.

G. G. Mathur and G. P. Lal, for respondent No. 2.

G. N. Dikshit and G. P. Lal, for the intervener.

1960. March, 8. The Judgment of the Court was delivered by

Wanchoo J.

WANOHOO, J.-This is an appeal by special leave against the order of the Industrial Tribunal, Allahabad. The appellant is the U. P. Electric Supply Co.

Ltd., Lucknow, (hereinafter called the company). It appears that the company used to employ Messrs.

S. M. Choudhary (hereinafter referred to as the contractors) as its contractors for doing certain work for it. The contractors in their turn used to employ a number of persons to carry out the work.which they had taken on contract. A dispute.arose between the qontractors and their workmen in 1956 and an application was made on June 6, 1956, by the workmen before the conciliation board. To this application both the company as well as the contractors were parties and four matters were referred by the workmen to the concil, iation board, tlamely, (i) non-grant of bonus for the years 1953-54 and 1954-55; (ii) nongrant of festival holidays; (iii) non-fixation of minimum wages of these workmen at par with the

., .

r960 workmen employed by the company; and (i~) nonabolition of the contract system. Efforts at conciliation failed and thereupon the Government of Uttar Mie~t Pradesh made a reference to the Industrial Tribunal supply co. 1.td, under the U. P. Industrial Disputes Act, No. XXVIII v. of 194:7, (hereinafter called the Act). In this reference Workmen °1 only thr6le points were referred out of the fpur which M/s. s. N. b Choudhary were before the conciliation oard, namely, those relating to bonus, festival holidays and payment of wages to these workmen at par with the workmen of the company. The fourth point which was raised before the conciliation board (namely, non-abolition of the contract system) was not referred. The parties to this reference were two, namely-(i) the contractors and (ii) their workmen. The appellant was not a party to this reference. On August 13, 1956, another notification was issued by the U. P. Government under ss. 3, 5 and 8 of the Act by which the company was impleaded as a party to the dispute referred by the notification of July 31, 1956. It is remarkable, however, that the matters of dispute which were specified in the reference dated July 31, 1956, were not amended as they could have been under the proviso to s. 4: of the Act, by adding the fourth point of dispute before the conciliation board, namely, the non-abolition of the contract system. When the matter came up before the industrial court it framed a number of issues; and the first and most important issue ran thus : " Are the workmen concerned employees of the U. P. Electric Supply Co. Ltd., Lucknow or of Messrs. S. M. Chaudhary, contractors? "

The main objection of the company was that the dispute, if any, was between the contractors and their employees and that there was no dispute between the company and its workmen. It was further objected that there was no valid or legal order of the Government referring any dispute between the company and its workmen to the tribunal and therefore the tribunal had no jurisdiction. On the merits it was urged that the workmen concerned were not the workmen of the company and there was no relationship of employer and employee between the company and these workmen and therefore the company could not be regarded

Wanchoo. ].

M/s.U.P.

Electric Supply Co. Ltd. v. 1Vorkmen of

M,'s. S.N.

Choudhary

Wanchoo ].

as a party to the dispute between the contractors and their workmen.

It is therefore clear that the ma.in question which was considered by the tribunal was whether the workmen concerned were the workmen of the company or of the contractors.

As the tribunal itself says, "the crux of the whole case was whether the workmen concerned were the employees of the company".

The tribunal went into the evidence in this connection and came to the conclusion that these workmen were in fact and in reality the employees of the company.

The main contention on behalf of the company before us is that even assuming that the Government had power under s. 5 read with cl. 12 of G. 0.

No. U-464 (LL)XXXVI-B-257(LL)/1954, dated July 14, 1954, to implead the company as a party, the main issue decided by the tribunal was not referred to it and the tribunal could only decide the three matters of dispute included in the order of reference of July 31, 1956. Therefore, in so far as the tribunal went beyond the three matters of dispute 8pecified in the reference and decided the question whether the workmen concerned were in the employ of the company or of the contractors it was acting without jurisdiction as this matter was never referred to it.

We are of opinion that this contention must prevail.

As we have already pointed out, there were four matters before the conciliation board including the que8tion of non-abolition of the contract system.

Further before the conciliation board not only the contractors but the company was also a party, for obviously the question of non-abolition of the contract system would necessitate the presence of the company as a party to the proceedings. When however the Government referred the dispute to the tribunal on July 31, it did not include the fourth item which was before the conciliation board relating to the non-abolition of the contract system among the matters in dispute. It also did not include the company as one of the parties to the dispute, for the reference-order refers only to two parties to the dispute, namely, the contractors and their workmen. , On such a reference there could be no jurisdiction in

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the tribunal to decide the question whether these workmen w, ere the workmen of the company or of the uontractors, for such a question was not referred to the tribunal. It is true that on August 13, 1956, the company was impleaded as a party to the dispute referred by the notification of July 31; but the matters in dispute remained unamended, and the question of non-abolition of the contract system or the question whether these workmen were the employees of the company in fact and , in reality was not included in the matters of dispute by amendment . under the proviso to s. 4 of the Act. In these circumstances it is immaterial to consider whether the impleading of the company as a party on August 13, 1956, was legal and valid or not. Assuming that it

ws legal and valid, the fact remains that issue No. 1 set out above by us which is undoubtedly the crux of the question in this case was not referred to the tribunal at all and did not arise out of the three matters of dispute specified in , the reference order of July 31, 1956. In these circumstances the order of the tribunal by which it held that these workmen were the workmen of the company was beyond its jurisdiction. The entire order of the tribunal is directed against the company and must therefore be set aside in whole as without jurisdiction and we need not express any opinion on the merits. We therefore allow the appeal and set aside the order of the tribunal against the appellant. In the circumstances we pass no order as to costs .

Appeal allowed.

r960

M/s. U. P.

Electric Supply Co. Ltd. v.

Workmen of Mjs. S. N.

Choudhary

Wanchoo ].

Art 14

Art. 14

Article 19(6)

s. U. P. ELECTRIC SUPPLY CO., LTD

Industrial Dispute Act

S. 11

Industrial Disputes Act

M. G. Setalvad

S. N: Andley

J.B. Dadachanji

Rameshwar Na.th

P. L.

V ohra

A. D. Mathur

G. G. Mathur

G. P. Lal

G. N. Dikshit

Wanchoo

U. P. Electric Supply Co.

Ltd., Lucknow

S. M. Choudhary

June 6, 1956

Government of Uttar Mie~t Pradesh

Industrial Tribunal supply co. 1.td,

Industrial Disputes Act

August 13, 1956

U. P. Government

ss. 3, 5 and 8

July 31, 1956

s. 4

U. P. Electric Supply Co. Ltd.

Lucknow

S. M. Chaudhary

s. 5

cl. 12

July 14, 1954

s. 4