April 17

790-

SUPREME COURT REPORTS [1964]

KULTAR SINGH

MUKHTIAR SINGH

(P. B. GAJENDRAGADKAR, C. J., K. N. WANCHOO, M. HIDAYAT

ULLAH, K. C. DAS GUPTA AND N. RAJAGOPALA AYYAN

GAR, JJ.) .

Representation of the People Act, 1951 \43 of 1951) s. 123(3)- Election Petition-Allegation of publication and d1strtbutwn of posters contain~:tg an appeal to voters to vote on the ground of religion-If amounts to corrupt practice-Word "panth". w; ed in the Pamphlet-Meaning of- The respondent challenged the appellant's election before the Tribunal alleging that it was void inasmuch as for the pur 'pose of securing votes the appellant had appealed to his religion and had thereby committed a corrupt practice. He had addressed seven election meetings and in those meetings he and his supporters had asked the voters to vote for him as he was the proper representative of the Sikh Panth, and so, he would be able to protect the Sikh religion and the Sikh language. It was further alleged that at five of the seven election meetings organised by him, the printed posters (Exts. p. 1 to p. 10) had been distributed by him and they contained an appeal to the voters to vote for him on the ground of his religion. The appellant denied both these allegations. He disputed the respondent's case that at these meetings any appeal to religion was made. In regard to the posters, he denied that he had anything to do with the said posters, except one Ext. p. 9 and piaded that the said poster was innocent and its publication .and distribution would not attract the provisions of s. 123(3) of the Act. Both these questions were answered by the Tribunal in favour of the respondent. On appeal, the High Court reversed the conclusion of the Tribunal on the first question. In regard to the pcs\"ers, it held that all the ten posters had been distributed by him, but, in its opinion, except Ext. p. 10, none of the others ofTenried the provisions of s. 123(3f of the Act. In regard to poster Ext. p, 10. however, it agreed with the conclusion of the Tribunal and held that the said poster contained an appeal to the votes to vote for the appellant on the ground of his religion. and so, by publishing and distributing it at his election meetings. he had committed a corrupt practice under s. 123(3) of the Act.

In this Court the appellant contended that the view taken by the Election Tribunal and the High Court was based on a misconstruction of the impugned pamphlet.

Held: In considering the question as to whether a parti- . cular appeal made by a candidate falls within the mischief of - s. 12~(3f of the Act, courts should not be astute to read into the words used in the appeal anything more than can be attributed to them on its fair and reasonable construction.

The view taken by the High Court and the Tribunal was inconsistent with a fair and reasonable construction of the impugned poster. In fact, the High Court did not consider the di!Terent places in the poster where the word "Panth" had been used ; md no attempt was made to co-relate these sentences and to enquire whether the meaning attributed by the High Court

to the \\'md "Panth" was justified in regard to all the sentences In which that word occurred.

. 'l'he significance of the reference to the Punjabi Suba in the impugned poster arises from the fact that it giv'Cs clue to the meaning which the poster intended to assign to the word

"Panth". Therefore, the word "Panth" in this poster did not mean. Sikh religion and so, it would not be possible to accept the view that by distributing this poster, the appellant had appealed to voters to vote for him because of his religion.

In construin~ the impugned poster, the High Court did not take into account the oral evidence. !t is true that oral evidentc wo~1ld not be of any mate11ial assistance in construing the. words in the pamphlet; but. the wcrd "Panth" used in six places in the pamphlet could be properly interpreted only to mean the Akali Dal party and it was in that context that the statements made by the witnesses as to the name bv which the Akali Dal Party was known in popular minds, might have some relevance.

Sardul. Singh Caveesliar v. Hukam Sing/1, (1953) VT. E.

L. R. 316 and Baba Gurdit Singh v. Sardar Partap Singh Kairon, Indian Election Cases by Doabia. Vol. I. p, 92, referred to.

Political issues which form the subject-ma.tlr'r of controversies at election medtings 1nay indirectly and incidentally introduce consideration of language or religion, but in deciding the question as to \Vhether corrupt practice had been ron1mittcd under s. 123(3), care must be taken to consider th" impugnrd speech or appeal carefully and always in the light of th<' r1lc'

vant political controversy. Therefore, the I-Iigh Court ,, as in error in coming to the conclusion that the in1pugned poster Ext. p. 10 attracted the provision of s. 123(3) of the Aet.

Jag:lev Shgh Sidhanti v. Partap Singh Danlte. A.LR. rnG5 s.c. 183.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 29& of 1964. Appeal from the judgment and order dated May 31, 1963, of the Punjab High Court in F.A.O. No. 5-E of 1962.

M. C. Setalvad, and B. P. Maheslnvari, for the appdlant.

Bawa Sl1iv Charan Singh, Hardel' Singh and Y. Kumar, for the respondent.

April 17, 1964. The judgment of the Court was delivered by

Ktdtar Singh

v • Mukllliar Slrr, gb ,

GAJENDRAGADKAR. C. J.-The short question of law which aa arises in this appeal by special leave is whether by publish- ndragaalcm.C.J. ing and distributing a poster (Ext. p. }O) in furtherance of his election, the appcliant. Kultar Singh has committed a corrupt practice under section 123(3) of the Representation of the People Act, 195! (Na. 43 of 195)) (hereinafter called 'the Act'). The Election Tribunal which tried the election petition

SUPRE:\IE COURT REPORTS (1964]

1964 tiled by the respondent Mukhtiar Singh challenging the vali- Kullar Singh dity of the appellant's election, as well as the High Court of . v. .

Punjab which heard the appellant's appeal against the deci- }lluklu.ar Smgh sion of the Election Tribunal have answered this question

Gajendragadkar, c.J. against the appellant. Accordingly, the election of the appellant has been declared to be void. Mr. Setalvad for the appellant contends that the view taken by the Election Tribunal and the High Court is based on a misconstruction of the impugned pamphlet. The appellant was elected to the Punjab Legislative Assembly from the Dharamkot Constituency and he defeated his nearest rival. the respondent, by a margin of nearly 8,000

votes. The appellant had stood for election on the Akali Dal ticket, while the respondent had been officially adopted by the Congress Party. After the election of the appellant was declared, the respondent filed an election petition alleging that the appellant's election was void inasmuch as for the purpose of securing votes, he had appealed to his religion and had thereby committed a corrupt practice. It appears that the election petition had also alleged that the appellant had appealed to J1is language and community, but with that part of the case we are no longer concerned in the present appeal, because the petition has not succeeded in that behalf. According lo the respondent, the appellant had addressed seven election

metings held in different places and on different dates and at those meetings, he and his supporters had made speeches asking the voters to vote for the appellant as he was the proper representative of the Sikh Panth. whereas the respondent represented the Hindu-ridden Party. and so. the appellant would be able to protect the Sikh religion and the Sikh language. The petition further alleged that at five of the seven election meetings organised by the appellant, the printed posters (Ext. p. I to p. 10) had been distributed by the appellant and these posters contained an appeal to the voters to vote for tl1e appellant on the ground of his religion.

The appellant denied both these allegations. He admitted that election meetings were held on his behalf and were addressed by him and his supporters, but he disputed the respondent's case that at these meetings any appeal to religion was made. In regard to the posters, the appellant denied that he had anything to do with the said posters, except one Ext. p. 9 and he pleaded that the said poster was innocent and its publication and distribution would nat attract the provisions of s. J 23(3) of the Act.

On these pleadings, two broad questions arose for decision. The first question was whether the speeches alleged to have been made by the appellant and his supporters at the election meetings included appeals to the voters to vote for the arpellaht on the grQUnd of his religion; and the second

....

was whether the impugned posters Exts. p. 1 to p. 10 were 1961 published or distributed by the appellant at the election meet- K11llar Singh ings, and if yes, whether any one or more of them contained M Mr T. 8 . h an. appeal to the voters on the ground of the appellant's reliu ~

•"!I gion. Both these questions were answered by the Tribunal Gaj<nd"'i/adka,, 0.1. in favour of the respondent. The High Court, however, has reversed the conclusion of the Tribunal on the first question; it has held that the evidence led by the respondent in support of his case that at the election meetings an appeal was made to the voters to support the candidature of the appellant on the ground of his religion, did not establish the respondent; s case. Jn regard to the posters, the High Court has held that all the ten posters had been distributed by the appellant, but, in its opinion, except Ext. p. IO, none of the others offended the provisions of s. I 23(3). An argument was urged before the High Court by reference to the two posters in particular Exts. p. 9 and p. 1 O. The High Court rejected the respondent's case with regard to poster Ext. 9, beca.use it held that it was not clear that the poster contained an appeal to the voters on the ground of the appe!lant's religion .. In regard to poster Ext. p. 10, however, the High Court agreed with the conclusion of the Tribunal and held that the said poster contained an appeal to the voters to vote for the appellant on the ground of his religion, and so, by publishing and distributing it a.t his election meetings, the appelhint had committed a corrupt practice under s. 123(3) of the Act. That is how on this narrow ground, the decision of the Tribunal was confirmed by the High Court and that raises the question about the construction of the impugned poster Ext. p. 10.

Before dealing with this question, it is necessary to refer to the provisions of s. 123(3). Section 123 provides for different acts which constitute corrupt practices under the Act. Section 123(3) lays down, inter alia, that the appeal by a candidate or his agent or by any other person with the consent of a candidate or his election agent to vote or refrain from voting for any person on the ground of his religion, would amount to a corrupt practice. It is thus, plain that if it is shown that the impugned poster which the appellant is proved to have published and distributed at his election meetings contained an appeal to the voters of his constituency to vote for him on the j!round of his religion. that would amount to a comipt practice under s. 123(3) of the Act and in !ha.t case, the election of the appellant would be void under s. IOO(l)(d)(ii) ..

It is true that a corrupt practice under s. 123(3) can be committed by a candidate by appealing to the voters to vote for him on the ground of his religion even though his rivaf candidate may belong to the same religion. If, for instance, a Sikh candidate were to appeal to the voters to vote for him. because he was a Sikh and add that his rival candidate.

1964 though a Sikh in name, was not true to the religious tenets of Sikhism or was a heretic and as such, outside the pale of K ullar SingA v. the Sikh religion, that would amount to a corrupt practice Mv.ltAliar s; ng11 under s. 123(3), and so, we cannot uphold the contention that Gofi-11Ylilatlka C.J. s. 123(3) is in applicable because both the appellant and the

'• respondent are Sikhs. In fairness, we ought, however, to add that Mr Setalvad did not press this contention before us.

tfhe corrupt practice as prescribed by s. 123(3) undoubtedly constitutes a. very healthy and salutary provision which is intended to serve the cause of secular democracy in this country. In order that the democratic process should thrive and succeed, it is of utmost importance that our elections to Parliament and the different legislative bodies must be free from the unhealthy influence of appeals to religion, race, ::aste. community, or language. If these considerations are allowed any sway in election campaigns, they would vitiate the secular atmosphere of democratic life, and so, s. 123(3) wisely prcvides a check on this undesirable development by providing that an appeal to any of these factors made in furtherance of the candidature of any candidate as therein prescribed would constitute a corrupt practice and would render the election of the said candidate void.

In considering the question as to whether the distribution of the impugned poster by the appellant constitutes corrupt practice under s. 123(3), there is one point which has to be borne in mind. The appellant had been adopted as its candidate by the Akali Dal Party. This Party is recognised as a p.:ilitical party by the Election Commission notwithstanding the fa.ct that all of its members are only Sikhs. It is well-known that there are several parties irt this country which subscribe to different political and economic ideologies, but the membership of them is either confined to, or predominantly held by, members of particular communities or religions. So long as law does not prohibit the formation of such parties and in fact recognises them for the purpose of election and parliamentary li(e, it would be necessary to remember that an appeal made by candidates of such parties for votes may, if successful, lead to their election and in an indirect way, may coneeivably be influenced by considerations of religion, race, caste, community or language.

This infirmity cannot perhaps be avoided so long as parties are allowed to function and are recpgnised, though their composition may be predominantly based on membership of particular communities or religion. That is why we think, in considering the question as to whether a particular appeal made by a candidate falls within the mischief of s. 123(3), courts should not be astute to read into the words used in the appeal anything more than can be attributed to them on its fair and reasonable -construction.

(}hat takes us to the question of construing the impugn 1964 ed poster. The principles which have to be applied in constru- Kvltar Singl> ing such a document are well-settled. The document must be M Mr"· 8 . ,. read as a whole and its purport and effect determined in a u '.'.'.'.'___ •"9 fair, objective and reasonable manner. In reading such docu-Gajendrogadl:ar, O.>. ments, it would be unrealistic to ignore the fact that when election meetings are held and appeals are made by candidates of opposing political parties, the atmosphere is usually surcharged with partisan feelings and emotions and the use of hyperboles or exaggerated language, or the adoption of metaphors, and the extravagance of expression in attacking one another, are all a part of the game, and so, when the question about the effect of speeches delivered or pamphlets distributed at election meetings is argued in the cold atmosphere of a judicial chamber. some allowance must be made and the impugned speeches or pamphlets must be construed in that light. In doing so, however, it would be unreasonable to ignore the question as to what the effect of the said speech or pamphlet would be on the mind of the ordinary voter who attends such meetings and reads the pamphlets or hears the speeches. It is in the light of these well-established nciples that we must now turn to the impugned pamphlel.:.J

Ext. p. 10 has been translated by the High Court. The correctness of this translation is not challenged by either party before us. It reads thus:-

"Dear resident Sikhs,

We, who are living itlt Singapore, Malaya, and South East Asia, place this before you, most respectfully, that at this critical juncture it is your duty to keep high the honour of the Panth. This is not the time to criticise the weaknesses of the leaders of the Panth; the need is that irl the coming General Elections you should defeat the opponents of the Panth the same way as you did in the last Gurdwara Elections. Every Sikh vote should go to the representatives of the Akali Dal. and we hope that this prayer of ours from far off wilf be accepted by you and you will once again preserve the honour' of the Panth. Victory of the Pa nth will. maintain the honour of the Pan th. Ry maintaining such honour we will reach our final goal, that is Punjabi Suba''.

The poster then ends thus : -

we remain anxious to keep the honour and prestige of'the Panth ever high..

Yours, Non-resident brother ..

1964 The respondent's contention before the Tribunal and the Kullar Si"'Jh High Court was that this appeal plainly and unambiguously !· . invites the voters to vote for the appellant in order to pre- .Mukk'.'.'.:_ 8•"1Jh serve the honour and prestige of the Panth and it was urged 4aj•ndra1adkar, o, J, that in the context. the Pan th meant the Sikh religion. Since

the pamphlet clearly appeals to the voters to vote for the appellant and proceeds on the assumption that the election of the appellant would uphold the honour and prestige of the Sikh religion, that amounts to a corrupt practice, because the appeal is based on the !,'found of the appellant's religion. The courts below have accepted this contention.

The word 'Panth' is one of Sanskrit origin and etymologically ft means the path or the way. It must be conceded that by itself it has come to indicate the Sikh religion, because it has been used by Sikhs to denote their religion and their denomination as the followers of that Panth.

In that context, Panth may mean the Sikh religion and the followers of the Panth would be the persons who follow the path prescribed by the Sikh-gurus and as such, would signify the Sikh community. Panthic is an adjective which means, of the Panth or belonging to the Panth, and so, prima facie, the glory or prestige of the Panth may mean the glory or prestige of the Sikh religin.

The question which calls for our decision, however, is not what the word 'Panth' in the abstract may mean in the Punjab. The question which we ha.ve to answer is, what d0es the word "Panth" mean in the context of the pamphlet the distribution of which is alleged to constitute corrupt practice?

It would be noticed that the word "Panth" occurs in six places in this pamphlet. First, reference is made to the honour of the Panth; then .it is said that it is not the time to criticise the leaders of the Panth. In both these places, the word "Panth" may conceivably mean the Sikh religion. But when we go to the use of the word "Panth" in the next sentence, it becomes clear that the said word cannot possibly mean the Sikh religion. The relevant portion of the pamphlet says to the electors: you should defeat the opponents of the Panth the same way as you did in the last Gurdwara Elections. It is common ground that the Gurdwara Elections were fought between different parties of the Sikhs and the Akali Dal party triumphed at the said Elections. Therefore, there is no doubt whatever that in this sentence, the Panth cannot possibly mean the Sikh religion. The expression "the opponents of the Panth" obvious! y means the opponents of the Akali Dal party and: what the pamphlet purports to tell the electors is, just as at 'the last Gurdwara Elections the Akali Dal Party succeeded over its opponents, so should the Akali Dal Party triumph 1n the election in question. The next sentence makes it still clearer that the Panth and the Akali Dal Party are treated as

7 S.C.R.

SuPREME COURT REPORTS 797

1964 synonymous in this portion because it says "every Sikh vote should go to the representatives of the Ai Dal", and tht Kti/lar Singh can be reconciled with the previous sentence only on the basis v.

M u!Aliar Sillflh that in the minds of those who drafted the impugned poster, the Akali Dal Party and the Panth are the same. Then theQq/tllclragadiliar, O.J. poster says that the prayer made in the poster, if accepted, will once again preserve the honour of the Panth; the words "once again" take us back to the triumph which the Akali Dal Party achieved at the last Gurdwara Elections, and so, the Panth in this context must mean the Akali Dal Party; and in the end when the pamphlet refers to the victory of the Panth and the honour of the Panth. it must be taken to refer to the victory and honour of the Akali Dal Party. The last sentence is very significant. It says tha.t by maintaining such honour, meaning the honour of the Panth which is the Akali Dal, we will reach our final goal, that is, the Punjabi Suba. It is not disputed that at these elections, the Akali Dal Party propagated for the crea.tion of the Punjabi Suba and the crux of the appeal made by the impugned poster is that if the voters returned the Akali Dal candidate, the honour and prestige of the Akali Dal would be maintained and the ideal of the Punjabi Suba attained. In the end, the poster also says that those who issued it were anxious to keep the honour and prestige of the Panth ever high.

We have carefully considered the view taken by the Punjab High Court and the Tribunal. but we are satisfied that the said view is inconsistent with a fair and reasonable construction of the impugned poster. In fa.ct, the High Court does not appear to have considered the different places in the poster where the word "Panth" has been used and no attempt has been made to co-relate these sentences and to enquire whether the meaning attributed by the High Court to theword "Panth" is justified in regard to all the sentences in which that word occurs.

It is an elementary rule of construction that the same word cannot have two different meanings in the same document, unless the context compels the adoption of such a course. Afterall, the impugned poster was issued in furtherance of the appellant's candidature at an election, and the plain object which 1t has placed before the voters is .that the Punjabi Suba can be achieved if the appellant is elected; and that necessarily means that the appellant belongs to the Akali Dal Party and the Akali Dal Party is the strong supporter of the Punjabi Suba. In these proceedings, we are not concerned to consider the. propriety, the reasonableness or the desirability of the claim for Punjabi Suba. That is a political issue and it is per f.ectly competent to political parties to hold bona fide divergnt and conflicting views on such a . political issue. The sigmficance of the reference to the Punjabi Suba in the impugned

1964 poster arises from the fact that it gives a clue to the mean- Kul1ar Singh ing which the poster intended to assign to the word "Panth'".

_v. .

Therefore, we are satisfied that the word "Panth" in this poster Muklu•ar B•ngh does not mean Sikh religion, and so" it would not be possible

Gaj, o.dragadkar, C.J. to accept the view that by distributing this poster, the appellant appealed to his voters to vote for him because of his reli gion.

In this connection, it may be relevant to refer to the oral evidence led in this case. Kartar Singh has stated that since the last 30 years the other name of the Akali Party is Panthic Party. This witness had been actively helping the appellant in his election, and he added that at the said election, there was a common front of all the opposition parties against the Congress. These parties were Jan Sangh, Swatantra Party, Akali Party and others. Another witness Ajmer Singh admitted that Shiromani Akali Dal was a political party of the Sikhs.

He also stated that excepting 1957 elections, for which there was settlement with the Congress, the Akali Dal had been fighting in all the elections. In 1957, the Akali candidates contested the election on the Congress ticket. In 1958, the Akali Dal started an agitation for getting Punjabi Suba because it thought that the Regional Formula had not been properly implemented by the GQ1yernment. This evidence would show that the Akali Dal Party is also known as the Panthic Party and that one of. the major issues on which it fought the Congress party at the election in question was

the creation of a separate province which it calls the Punjabi Suba. In construing the impugned poster, the High Court does not appear to have taken into account this oral evidence.

It is true that oral evidence would not be of any material assistance in construing the words in pamphlet; but as we have just indicated, the word "Panth" used in six places in the pamphlet can be properly interpreted only to mean the Akali Dal Party and it is in that context that the statements made by the witnesses as to the name by which the Akali Dal Party is known in popular minds, may have some relevance.

It .appears that a similar question has been considered bv the Election Tribunals on two occasions in the past. In Sardul Singh Caveeshar v. Hukam Singh and Ors.(') the Election Tribunal had to consider the denotation of the words "Panth" and "Panthic" candidate and it has observed that though the words "Panthic candidate" would literally signify a candidate of the Sikh Community, after the Akali Dal Party came to be known as the Panthic Party in the popular minds, the word "Panthic" candidate came to signify a candidate of the Akali Dal Party. It appears from this judgment" that the Aka Ii Da I Party called itself the Panthic Party even at the time when there were separate Sikh electorates, and that has

(') (1953) VI E.L.R., 316 at 326.

a significance of its own. When there were separate Sikh elec- I~ torates, the candidates who fought against each other would Kultar Siogh all be Sikh and yet. the Akali Dal Party which set up its own '!· . candidates, described itself as a Panthic Party and its candi- Muk~Siogll -Oates as Panthic candidates, (vide Baba Gurdit v. Sardaraa,; endragad/car, O.J.

Partap Singh Kairon)('). These decisions tend to show that the Akali Dal Party is known as Panthic Party and its candidates as Panthic candidates, and that incidentally may be of some help to determine the true denotation of the word "Panth" used in the impugned poster in the present case. Unfortunately, these decisicns also do not appear to have been placed before the High Court.

Before we part with this appeal, we may refer to a recent decision of this Court in Jagdev Singh Sidhanti v. Pratap Singh

Dau/ta and Ors.('). In that case, the election of the successful candidate was challenged on the ground that he had committed a corrupt practice under s.123(3) of the Act in that he had appealed to the voters to vote for him on the ground of his language, and the High Court had upheld that contention. In reversing the conclusion of the High Court, this Court pointed out that the reference to the language on which the challenge to the successful candidate's election was based, had to be considered in the context of the main controversy between the parties and that controversy was that the Hariana Lok Samiti which had sponsored the candidature of the successful candidate wanted to resist the imposition of Punjabi in the Hariana region and that was clearly a political issue. If in propagating its views on such a political issue, a candidate introduces an argument based on langu' age. the context of the speech in which the consideration of language has been introduced must not be ignored, and that is how this Court held that the corrupt practice alleged against the successful candidate had not been established.

Political issues which form the subject-matter of controversies at election meetings may indirectly and incidentally introduce considerations of language or religion, but in deciding the question as to whether corrupt practice has been committed under s.123(3), care must be taken to consider the impugned speech or appeal carefully and always in the Jfoht of _th~ relevant political controversy. We are, therefore, satisfied that the High Court was in error in coming to the conclusion that the impugned poster Ext. P-10 attracted the provisions of s.123(3) of the Act. . The reslt is, te appeal is allowed, the decision of the High Court 1s set aside and the election petition filed by the respondent is dismissed with costs throughout.

Appeal allowed. (')Indian Election Cases by Doabia Vol I p 92

(')A.LR. 1963 S.C. 183. . ' . .

KULTAR SINGH

MUKHTIAR SINGH

P. B. GAJENDRAGADKAR

K. N. WANCHOO

K. C. DAS GUPTA

Representation of the People Act, 1951

s. 123(3)

s. 123(3)

s. 12

Punjabi Suba

Akali Dal party

Akali Dal Party

s. 123(3)

s. 123(3)

M. C. Setalvad

B. P. Maheslnvari

Bawa Sl1iv Charan Singh

Hardel' Singh

Y. Kumar

Ktdtar Singh

GAJENDRAGADKAR

Kultar Singh

section 123(3)

Representation of the People Act

High Court of . v. .

Punjab

Gajendragadkar

Setalvad

K11llar Singh

s. 123(3)

s. 123(3)

Section 123

Section 123(3)

s. 123(3)

s. 123(3)

s. 123(3)

s. 123(3)

s. 123(3)

Parliament

s. 123(3)

s. 123(3)

Election Commission

s. 123(3)

Singapore

Malaya

South East Asia

Akali Dal

Punjab

Panth

Ai Dal

lar Singh

Punjab High Court

Gaj

Kartar Singh

Akali Party

Congress

Jan Sangh

Swatantra Party

Ajmer Singh

Shiromani Akali Dal

Aka Ii Da I Party

Hariana Lok Samiti


Api/ 17

SUPREME COURT REPORTS [196~]

AMBAPRASAD v.

ABDUL NOOR KHAN AND ORS.

(M. HIDAYATULLAH AND N. RAJAGOPALA AYYANGAR, JJ.)

U. P. Zamindari Abolition and Land Reforms Act, 1950, s. 20-Explanation II to s. 20-Suit for possession by occupant on the basis of entry in Khasra for 1356F-Entry not corrected before date of vesting-Its effect-Whether correctness of entry be questioned subsequently-Whether plaintiff required to prove actual possession.

On October 10, 1953, the respondents filed suits under s. 232 read with s. 20 of the U. P. Zamindari Abolition, and Land Reforms Act, 1950 against the appellant before the Sub-Divisional Officer. Before the coming into operation of the Abolition Act the appellant (Amba Prasad) was Zamindar of the disputed land. The names of the respondents were recorded in column 23 (miscellaneous) in the Khasra for the year 1356 Fasli as persons in possession of the disputed land. The respondents claimed ad!hivasi rights under s. 20 of the Abolition Act because they were recorded as occupants of the fields in dispute in the Khasra for 1356 Fasli. The common case of the respondents was: (i) that they were in possession of the suit land (ii) that they were dispossessed after June 30, 1948 by the appellant,

(iii) that as they were recorded occupants in 1356F they were not required to prove actual possession. The case of the appellant was that the entry was fraudulently made after July 1,

1949. Th1'5e suits were dismissed by the Sub-Divisional Officer.

On appeal, the Additional Commissioner held ·.that the respondents had acquired the adhivasi rights.

Against this order Amba Prasad (the appellant) appealed to the Board of Revenue.

The Board of Revenue dismissed the appeals. The appellant then filed appeals in this Court.

Held: (i) Under s. 20 of the Abolition Act (U. P. Zamindari Abolition and Land Reforms Act) a person continues as an adhivasi after July 1, 1952. provided he is in possession or was evicted after June 30, HMS. If he was evicted after June 30, 1948 he is entitled to regain possession in spite of any order or decree to the contrary. '

(ii) The words "recorded as occupants" in s. 20 of the Abolition Act mean persons recorded as occupants in the Khasra or Khatauni for 1356 Fasli (1-7-48 to 30-6-49). Such persons do not include an intermediary. The word "occupant" must mean a person holding the land in possession or actual enjoyment.

Mediate possession (except where che immediate possessor holds on behalf of the mediate possessor) is of no consequence.

(iii) The appellant was not entitled to raise the plea of the correctness of the entry in Khasra because the entry was not corrected before the date of vesting (1-7-52) as required by Explanation (ii) to s. 20 of the Abolition Act.

(iv) The title to possession as adhivasi depends on the entries in the Khasra or Khatauni for the year 1356 Fasli. Section 20 of the Abolition Act does not require the proof of actual possession. Therefore, s. 20 eliminates inquiries into disputed possession by accepting the record in the Khasra or Khatauni of 1356F. or its correction before July 1, 1952.

i.l

1961 The Upper Ganges Sugar Mills Ltd. v. Khalil-u!-Rehman, {1961] 1 S.C.R. 564, referred to.

Amba Pmaad T.

Lala Nanak Chand v. Board of Revenue, U. P., 1955 A.L.J. Abdul Noor Klia11 408, Ram Dular Singh v. Babu Sukh Ram, 1963 A.L.J. 667, and Otli<r• Bhal Singh v. Bhop and Anr., 1963 A.L.J. 288 and Sugriva v.

Muhi etc., 1963 A.L.J. 17 (Rev.), approved.

CIVIL APPELLATE Jua1sDICTION: Civil Appeals Nos. 680 to 682 of 1963. Appeals by special leave from the judgment and decree dated February ~. 1960 of the Board of Revenue, U. P. in petitions Nos. 203 to 205 of 1958-59.

J. P. Goyal, for the appellant (in all the appeals).

Brijbans Kishore and Ramesh B. Saxena, for respondents Nos. 1 to 3 (in all the appeals).

April 17, 1964. The judgment of the Court was delivered by

HmAYATULLAH, J.-This judgment shall also govern the HidayaJul/.ak, J disposal of C. A. 681 of 1963. These are appeals by special leave of this Court against a common order of the Board of Revenue, U.P. dated February 3, 1960 disposing of three .appeals. Civil Appeal No. 682 of 1963 (since compromised) was also against the same decision. The appellant in each of these appeals is one Amba Prasad who was the Zamiridar of village Rhonda, Pargana and Tehsil Khurja, District Buland- 11hahr, before the coming into operation of the U. P. Zamindari Abolition and Land Reforms Act, 1950. The opposite parties (who will be referred to as the answering respondents in this judgment) are persons whose names were recorded in column 23 (miscellaneous) in the Khasra for the year 1356 F asli, as persons in possession and who claim, by reason of the entry, to be the recorded occupants of the fields in dispute, and to have bbtained adhivasi rights in the fields under s. 20 of the Abolition Act. Though the point in dispute appears to lie within a very narrow compass the history of litigation in respect of these plots is as tedious as it is long.

It must unfortunately be told to get a true measure of the arguments in the appeals.

Amba Prasad brought two suits under s. 180 of the U.P.

Tenancy Act, 1939 for ejectment from the fields now in dispute and for damages, against Mohammad Ali and Mst.

Sharifan respectively because their names were recorded in the Khasra as tenants 'bi/a tasfia laan'. These suits were dismissed by the trial Judge and Amba Prasad's appeal to ; the Commissioner failed on November 30, 1943. Amba Prasad then appealed to the Board of Revenue, U.P. and suc- -ceeded .. The order of the Board of Revenue, U. P. is dated March 19, 1949 (item No. 25). Mohammad Ali had died by l,/P(D)!SCJ-26 ..

.Amba p....,,,; v • .Abd..Z Noor Klwn

a"'1 Others

Bidayalullah, J.

then and was represented by one Faiyazali and six ot •• rs.

Mst. Sarifan had also died and was represen:ed by one Abdul Sattar alias Chunna Khan and two others. As a result of the decision of the Board of Revenue possession of the fields was delivered to Amba Prasad on July I. 1949--the day of the commencement of the year 1357 Fasli. The dakha/namas are items Nos. 44 and 45 in this record and they mention fields Nos. 427 / 2, 428 /2, 429, 430 and 380 (item No. 441 and fields Nos. 416, 418/1 and 418/2 <item No. 45) of village Rhonda, Pargana and Tehsil Khurja, District Bulandshahr.

Immediately after obtaining possession of the fields Amba Prasad was required to commence proceedings under s. 145, Criminal Procedure Code before the Sub-Divisional Magistrate, Anupshahr against Faiyazali and Abdul Sattar and others and on January 13. 1951 these proceedings terminated in favour of Amba Prasad (item No. 28). The Sessions Judge Bulandshahr made a reference to the High Court of Allahabad recommending that the order be vacated but the High Court declined to interfere. The order of the High Court is dated October 20, 1951 (item No. 29). Meanwhile, Amba

Prasad started a prosecution under s. 218. Indian Penal Code against the Lekhpa/ alleging that he had made false entries in the Revenue papers but the Magistrate, 1st Class. Bulandshahr discharged _him by his order dated Jnly 24, 1950 (item No. 26). An application for revision of the order filed by Amba Prasad was dismissed by the Sessions Judge, Bulandshahr on October 10, 1950 (item No. 27).

During the pendency of the proceedings under s. 145, Criminal Procedure Code these fields remained under attachment from August 23, 1949 (1358 F.J to November 6, 1951 (1359 F.). Two suits were then commenced in the court of the Munsif, Khurja for declaration that crops of the fields under attachment belonged to the plaintiffs. One suit (97 of

1951) was filed by Abdul Noor Khan and others (answering respondents) and the other (67 of 1952) was filed by Sarfraz Ali Beg and 8 others (respondents in C. A. 682 of 1963since compromised). These suits were directed against Amba Prasad and the plaintiffs claimed to be in possession of the fields by virtue of entries to this effect. in the remarks column of the Khasras of the relevant years. These sµits failed on August 9, 1952 and Aulll!st 8, 1953 respectively (vide items.

Nos. 30 and 32). It appears that proceedings under s. 107,.

Criminal Procedure Code were also started against A. Noorkhan and others before Magistrate, I st Class, Bulandshahr and they were bound over to keep the peace. There is on the file of this case an order of the Sessions Judge, Bulandshahr dismissing their application in revision on February 24, 1953 (item No. 31),

Meanwhile, the answering respondents and Sarfraz Ali l964 and others commenced on November 6, 1951 thr.ee suits Amba Praaad under s. 61 read with s. 183 of the U. l'. Tenancv Act, 1939 v. ha for declaration of Sirdar rights and to claim hereditary rights Abd:!z Ng:r.,1f, " under s. 180/2 ibid. These suits were decreed against Amba - Prasad by the Judicial Officer, Anupshahr on July 14, 1953. Hidayatullah, J.

He held that the Dak/ialdehi of July 1, 1949 did not affect .the plaintiffs and since they were shown to be in possession they were entitled to succeed (item No. 33). Amba Prasad filed an appeal and the Commissioner, Meerut Division reversed the decision by his order dated April 1, 1954 (item No. 35).

The Board of Revenue, U. P. also dismissed the appeal of the plaintiffs on September 17, 1955 (item No. 38).

On October JO, 1953 two suit> were filed by the answering respondents in these two appeals and a third by the respondents in C. A. No. 682 of 1963 which has been compromised. These suits were under s. 232,120 of the U. P. Zamindari Abolition and Land Reforms Act. It is with these suits that we are concerned in the appeal~. Two suits also under s. 232/20 of the Abolition Act were filed by Ayub Ali Khan and Abdul Sattar Khan and others against Amba Prasad.

The answering respondents and Sarfraz Ali and others were joined as defendants in those suits. The plaints in these two suits are dated December 28, i954 and December 20, 1954 (items Nos. 36 and 38). They were dismissed by the Sub- Divisional Magistrate, Khurja on l'lfay I 6, 1955. The Additional Commissioner, Meerut, dismissed the appeals on January 30, 1950 in default of appearance (item No. 39).

On September 4, 1958 the Sub-Divisional Officer, Khurja dismissed the three suits filed. by the answering respondents and the respondents in the companion appeal. In these suits the answering respondents relied on extracts from the Klwsras of 1355F, !356F, 1357F, 1358F and 1359F as showing their possession. These lands, however, were under attachment from August 23, 1949 (l 358Fl to November 6, 1959 (1359F) and could not be in the possession of the answering respondents in the years 1358F and 1359F. This fact was noticed by the Commissioner, Meerut Division, in his order dated April I, 1954 and he cast doubts on the entries in 1355F and 1356F. The Sub-Divisional Ollicer took up the same line of reasoning and pointed out that in years subsequent to 1355F the entry would have found place in column 6 of the Klwsra and .not the remarks column. He accordingly held that the entncs of 1355 F and 1356 F were unreliable and the answering respondents had not acquired adhivasi rights.

On Appeal, the Additional Commissioner, Meerut, reversed the decision m April 19, 1959 and decreed the suits. Before the Comnrns1011cr the answering respondents claimed that a~ L/P( I)} ISCl--:!l'{n)

.dmba Pr<U<Ul v . .dbdtil Noor Khan

and Others

Hidayalilllah, J.

804 SUPREl\IE COURT REPORTS

(1964 J

they were recorded occupants in !356F they were not required to prove actual possession. This proposition, it appears • was conceded by the counsel for Amba Prasad.

He only argued that the entries were not in accordance with paragraph 87 of the Land Records Manual and they were considered spurious in earlier litigation. He aho claimed that the answering respondents were barred by the principle of res judicata because though they were parties to the suits of Ayub Ali Khan and Abdul Sattar they did not claim adhivasi rights in those suits.

The learned Commissioner pointed out that the entries were no doubt suspected to be spurious by the Commissioner on April I, 1954, but this was after July I. : 952 which was the date of vesting and the case therefore was outside Explanations II and III of s. 20(b) of the Abolition Act. The learned Commissioner, therefore, was of the opinion that the entries could not be discarded as thev must have been completed under the rules before April 3o, 1949, that is to say, even before the Dakhaldehi. He held that the answering respondents (appellants before him) had acquired adhivasi rights.

Amba Prasad appealed to the Board of Revenue. The Board dismissed his appeal on February 8, 1960 by the order now impugned. This time the learned counsel for Amba Prasad conceded that the entry was made but contended that it was fraudulently made after July 1, 1949 and referred to the prosecution of the Lekhpal. The Board of Revenue pointed out that there was no order for the correction of the entry before the date of vesting and the Lekhpal was acquitted of the charge under s. 218, Indian Penal Code. Since the entries were not corrected as required by Explanation II to s. 20 the conditions of s. 20(b) of the Abolition Act were held to be satisfied and the appeal was dismissed.

Mr. Goyal on behalf of Amba Prasad contends that these suits were barred by res judicata. He submits that in the previous suits filed by Ayub Ali Khan and Abdul Sattar and others, the answering respondents were made defendants . and could have raised the plea that they had acquired adhivasi rights and as they did not raise such a plea they cannot now raise it. We do not accept this contention. The answering respondents had filed these suits even before Ayub Ali Khan and Abdul Sattar had filed their suits. Further, the

suit~ filed by Ayub Ali Khan and Abdul Sattar did not decide anything because they were dismissed owing to a technical flaw in the plaint. Even the appeal was dismissed in default of appearance. Lastly, the answering respondents and Amba Prasad were co-defendants and no issue between them was tried or decided even if one was neces.ary to be tried.

Mr. Goyal next contends that the answering respondents 1964 must show that they were in possession and that under Ex- Amba Prasad planation I to s. 20 they were evicted after June 30, 1948. Abd 1 Nv.

Kha He submits that these conditions are not fulfilled by them. ::..i 3~{.,, " Mr. Goyal also wishes to withdraw the concession made on behalf of Amba Prasad before the Tribunals below that the Hidayatullah, J. answering respondents need not prove their possession. He says that the concession was made because there were rulings of the Allahabad High Court which bound the Revenue Tribunals. He submits that these rulings should be considered and urge that possession in 1356 F asli must be proved. He further submits that even entries in the Khasra and Khatauni to be tJf value must be made in accordance with ss. 28 and 33 of the U. P. Land Revenue Act and he relies on paragraph 87 of the Land Record Manual to contend that the entries in favour of the answering respondents were irregular. These contentions though they appear to be many are really two.

The first questions the entry and the other the right of the answering respondents even if the rectJrd be correct to claim adhivasi rights under s. 20 of the Abolition Act. We shall consider them separately.

The first question is whether these entries were regularly made. It is pointed out that they were doubted by the Revenue Tribunals in some other proceedings and that the Lekhpa/ was also prosecuted under s. 218, Indian Penal Code.

That, however, does not prove in these proceedings that the entries are spurious. The Lekhpal was discharged and the Additional Commissioner has held here:

"By making the entry in the remarks column it is also not possible to attribute any dishonest . or collusive entry. It appears that Shri Amba P'rasad had filed a criminal case against the patwari but this was after the entries in the remarks ctilumn in favour of appellants had been made. The entry in 1356 fasli cannot be discarded on the remarks in the judgments referred by the learned counsel for the respondent. It appears that Sri Mohammad Ali and Srimati Sharifan were the proprietors and they mortgaged their share with present respondents and Sri Amba Prasad purchased the equity of redemption and got the share partitioned. There was litigation between Sri Amba Prasad and Sri Mohammad Ali and Srimati Sharifan upto High Court. Sri Amba Prasad and others filed suits against Srimati Sharifan and Sri Mohammad Ali under section 180 and it was decreed in the 2nd appeal on 19-3-49. The possession was delivered on 1-7-1949, in execution of the decree. The Khasra for 1356 Iasli under

..d mba Pnuad v . .Abdul Noor Kha1'

and Ofhers.

Bidayatullah, J.

the rules may have been deposited some time before 31st July 1950 but the entries in the Khasras had to be completed upto 30th April

1949".

Mr. Goyal relies upon paragraph 87 of the Land Records Manual and argues that the names of persons occupying land without the consent of persons whose names are recorded in column 5 of the khasra should have been entered in cqlumn 6 but column 6 is crossed out. It is, however, to be seen that when a tenant leaves the neighbourhood without leaving in charge of his holding, a person responsible for the payment of his rent as it falls due and without giving a written notice to the land holder of such arrangement, the Lekhpal is required to show the name of the actual cultivator in the column of remarks preceded by the word 'qabiz' (see Para. 85(c)). That is how the entry stands and there is nothing on the record of this case on the strength of which it can be said that the entry in 1356F was not regularly made. If it was wrong' Amba Prasad ought to have got it corrected but the doubts cast on the entry cannot be said to have corrected it as required by Explanation III to s. :.:.0 of the Abolition Act.

There is thus no doubt that the answering respondents were recorded as 'qabiz' in 1356F. There is also no doubt that if they were • qabiz' they were dispossessed after June 30, 1948. The possession of Amba Prasad did not begin earlier than July l, 1949. There is nothing to show that t}le possession of the answering respondents was disturbed between these two dates, because the attachment came much later. Mr. Goyal, however, contends that the burden is on the answering respondents to prove their possession and eviction after June 30, 1948 before they can regain possession as adhivasis under s. 20. Mr. Brij Bans Kishore, ht>wever, joins issue and claims that the answering respondents have done enough when they show that they are recorded as 'occupants' in the year 1356F. He contends that it is not necessary to show possession though he does not admit that the lands were not in his clients' possession. ·

We have pointed out above that the eviction could not have taken place before. July I, 1949. The Dakhalnamas show that possession was given to Amba Prasad on July I, 1949.

In so far as the appellant is concerned he was not in possession before that date and the khasra for 1356F shows that the answering respondents were 'qabiz' (in possession). It is contended that the suit is for possession and the date of dispossession has not been given as required by rule 183. No such objection appears to have been made at any time. In any event. that date is useful only to calculate limitation and it is not Amba Prasad's cases that there is any such bar.

The real dispute thus is whether a person who is record- 191i4 ed as 'qabiz' but not as a tenant or a sub-tenant can get the Amb" Prasad

advange ?f s._ 20 of te Aboliti?n Act and claim rights as Abdul N';,,, Khan an adhrvast. It 1s convement at this stage to set out the mateand 011"" rial portions of s. 20:

"20. Every person who-

(a) * • • • •

(b) was recored as occupant-

(i) of any land (other than grove land or land to which section 16 applies) in the khasra or khatauni of 1356F prepared under sections 28 and 33 respectively of the U.P. Land Revenue Act, 1901, or who was on the date immediately preceding the date of vesting entitled to regain p0ssession thereof under clause (c) of subsection (!) of section 27 of the United Provinces.

Tenancy (Amendment) Act, 1947, or (ii) * • • " be called adhivasi of the land and shall, subject to the provisions of this Act, be entitled to take or retain possession thereof.

Explanation I-Where a person referred to in clause

(b) was evicted from the land after, June 30, 1948, he shall notwithstanding anything in any order or decree, be deemed to be a person entitled to regain possession of the land.

Explanation II-Where any. entry in the records re-·

ferred to in clause (b) has been corrected before the date of vesting under or in accordance with the provisions bf the U. P. Land Revenue Act,

1901, the entry so corrected shall for the purposes of the said clause, prevail.

Explanation III-For the purposes of explanation II an entry shall be deemed to have been corrected before the date of vesting if an order or decree of a competent court requiring any correction in records has been made before the said date and had become final even though the correction may not have been incorporated in the records.

Explanation IV-For the purposes of this section

"occupant" as respects any land does not include a person who was entitled as an intermediary to the land or any share therein in the year 1356 Fasli." The scheme of the section may now be noticed. The section, speaking generally, says that certain persons "recorded" as "cccupants" of lands (other than grove lands or lands to which section 16 applies) shall be known as adhivais and

H idayatullaA, J

1964 shall be entitled to retain or to regain possession of them, Ambu Pmsad after the date of vesting which was July 1, 1952. Such persons •· do not include an intermediary (Explanation IV). Such per- Abd;1.; l07k,,.!han sons must be recorded as occupants in the khasra or khatauni

 for 1356F 0-7-48 to 30-6-49). If such a person is in posses- Hidayoi.izoi., J. sion be continues in possession. If he is evicted after June

30, 1948 he is to be put back in possession notwithstanding anything in any order or decree. By fiction such persons are deemed to be entitled to regain possession (Explanation l).

The emphasis has been laid on the record of khasra or khatauni of 1356F and June 30, 1948 is the datum line. The importance of 'an entry in these two documents is further apparent from explanations II and III. Under the former, if the entry is corrected before the date of vesting 0-7-52), the corrected entry is to prevail and under the latter the entry is deemed to be corrected (even though not actually corrected) if an order or decree of a competent court ordering the correction had been made before the date of vesting and the order or decree had become final. There are thus two date lines. They are June 30, 1948 and July l, 1952, and the title to possession as adhivasi depends on the entries in the khasra or khatauni for the year 1356F.

Before we proceed to decide whether the answering respondents satisfy the above tests we must consider what is meant by the terms 'occupant' and 'recorded'. The word 'occupant' is not defined in the Act. Since khasra records possession and enjoyment the word 'occupant' must mean a person holding the land in possession or actual enjoyment.

The khasra, however, may mention the proprietor, the tenant, the sub-tenant and other person in actual possession, as the case may be. If by occupant is meant the person in actual possession it is clear that between a proprietor and a tenant the tenant, and between a tenant and the sub-tenant the latter and between him and a person recorded in the remarks column as "Dawedar qabiz" the dawedar qabiz are the occupants. This is the only logical way to interpret the section which does away with all intermediaries. If rights are not to be determined except in the manner laid down by the section, the entries must be construed as explained by the four explanations. Once we find out the right person in the light of the explanations, that person continues as an adhivasi after July 1, 19 52, provided he is in possession or was evicted after June 30, 1948. If he was evicted after June 30;• 1948 "he is entitled to regain possession in spite of any order or decree tb the contrary. The word 'occupant' thus signifies occupancy and enjoyment. Mediate possession, (except .where the immediate possessor holds on behalf of the mediate possessor) is of no consequence. In this way even persons who got into occupation when lands were abandoned get recognition. The

196' section eliminates inquiries into disputed possession by accepting the records in the khasra or khatauni of 1356F, or Amba Prasa4 its correction before July 1, 1952. It was perhaps thought Abdu! N:~, Kha,. that all such disputes would have solved themselves in the and Others four years between June 30, 1948 and June 30, 1952.

There was, however, for some time a difference of opinion, on the point whether possession in 1356F should be proved, between the High Court of Allahabad and the Board of Revenue. Section 20 came before this Court in The Upper Ganges Sugar Mills Ltd. v. Khalil-ul-Rehman and others(') where the correctness of Lala Nanak Chand v. The Board of Revenue, U.P.(') was challenged on the ground that it had held that a mere entry in 1356F without possession in that year was sufficient. This Court did not decide the question and left it open. Subsequently, the Allahabad High Court in several decisions including the Full Bench decision in Ram Dular Singh and another v. Babu Sukh Ram and others(') has endorsed the earlier view in Nanakchand v.

Board of Revenue, U.P.(') In L. Bha/ Singh v. Bhop and another(') the following passage from Nanak Chand's case was expressly approved: -

"It seems to us that clauses (b)(i) and (b)(ii) of Sec.

20 do not require the. proof of actual possession in the year 1356F. What they require merely is the entry of a person's name as an occupant in the Khasra or Khatauni of 1356F. The words of the section are clear. (Every rson who was recorded as occupant in the Khasra or Khatauni in 1356F. etc.).

The words are not "every person who was an occupant in l 356F": nor are the words "every person who was recorded as an occupant in the year 1356F and who was also in possession in that year''. There is no warrant for introducing words in the section which are not there. This conclusion is reinforced by what is stated in Explanation II".

The Board of Revenue in Sugriva v. Mukhi etc.(') has also adopted the same view. In view of the long established line of cases we see no justification for reopening of this question.

The decision of the Board of Revenue was therefore right.

The appeal fails and is dismissed with osts. One set of hearing fees.

A ppea/ dismissed.

(') [1961] 1, S.C.R. 564.

(') 1955 A.L.J. 408.

(') 1963 A.L.J. 667. (') 1963 A.L.J. 288 at p. 291. (') 1963 A.L.J. 17 (Rev.).

Hidayntu7fal1, J~

ABDUL NOOR KHAN AND ORS

M. HIDAYATULLAH

N. RAJAGOPALA AYYANGAR, JJ.

Zamindari Abolition and Land Reforms Act, 1950

s. 20

Zamindari Abolition and Land Reforms Act, 1950

Zamindari Abolition and Land Reforms Act, 1950

s. 20

s. 232

s. 20

Land Reforms Act, 1950

Amba Prasad

s. 20

Before the coming into operation of the Abolition Act

Before the coming into operation of the Abolition Act

June 30, 1948

July 1,

s. 20

Zamindari Abolition and Land Reforms Act

July 1, 1952

June 30, HMS

s. 20

Zamindari Abolition and Land Reforms Act

Zamindari Abolition and Land Reforms Act

s. 20

Section 20

s. 20

1961] 1 S.C.R. 564

CIVIL APPELLATE Jua1sDICTION

CIVIL APPELLATE Jua1sDICTION: Civil Appeals Nos.

J. P. Goyal

J. P. Goyal, for the appellant (in all the appeals).

Brijbans Kishore

Ramesh B. Saxena

HmAYATULLAH

Board of Revenue, U.P.

Amba Prasad

Rhonda

Pargana

Khurja

Buland-

s. 20

s. 180

Tenancy Act, 1939

Mohammad Ali

Sharifan

November 30, 1943

Board of Revenue, U. P.

Mohammad Ali

.Amba

.Abd..Z Noor Klwn

Bidayalullah

Faiyazali

Sarifan

Abdul Sattar alias Chunna Khan

July I. 1949

Bulandshahr

s. 145

Criminal Procedure Code

Sub-Divisional Magistrate, Anupshahr

Faiyazali

Abdul Sattar

January 13.

Sessions Judge Bulandshahr

High Court of Allahabad

October 20, 1951

Amba

Prasad

s. 218

Indian Penal Code

Lekhpa/

Sessions Judge, Bulandshahr

October 10, 1950

s. 145

Criminal Procedure Code

August 23, 1949 (1358 F.J to

November 6, 1951 (1359 F.

Abdul Noor Khan

Sarfraz Ali Beg

s. 107

Criminal Procedure Code

A. Noorkhan

February 24, 1953

Sarfraz Ali

November 6, 1951

s. 61

s. 183

Tenancv Act, 1939

s. 180

Amba - Prasad

Anupshahr

July 14, 1953

Hidayatullah

July 1, 1949

April 1, 1954

September 17, 1955

October JO, 1953

s. 232

s. 232

Ayub Ali Khan

Abdul Sattar Khan

Amba Prasad

December 28, i954

Sub- Divisional Magistrate, Khurja

Meerut

January 30, 1950

September 4, 1958

August 23, 1949

November 6, 1959

April 19, 1959

.dbdtil Noor Khan

Hidayalilllah

Abdul Sattar

April I, 1954

s. 20(b)

April 3o, 1949

February 8, 1960

s. 218

Indian Penal Code

s. 20

s. 20(b)

Goyal

s. 20

Allahabad High Court

ss. 28 and 33

Land Revenue Act

s. 20

s. 218

Indian Penal Code

Amba P'rasad

Srimati Sharifan

section 180

Bidayatullah

July l, 1949

s. 20

Brij Bans Kishore

July I, 1949

s. 20

section 16

sections 28 and 33

Land Revenue Act, 1901

section 27

Land Revenue Act

section 16

H idayatullaA

Ambu Pmsad

July l, 1952

July 1, 19 52

June 30;• 1948

Abdu! N:~, Kha

June 30, 1952

Section 20

Nanak Chand

Sec.

20


.April 17

SUPREME COURT REPORTS (1964)

THE COMMISSIONER OF INCOME-TAX, MADHYA

PRADESH, NAGPUR

SWADESHI COTTON AND FLOUR MILLS

[K. SUBBA RAO, J.C. SHAH AND S. M. SIKR!, JJ.]

lncome Tax-Deduciion of bonus-Bonus relating to 1947 paid in 1949-Claim for deduction for account year 1949-System of accounting by assessee-Principle of reopening of acc-ounts-lf applicable-Indian Income-tax Act, 1922 (11 of 1922), ss. 10(2)(x), 10(5).

The respondent company paid to its employees Rs. 1,08,325/- as bonus for tbe year 1947 in the calendar year 1949, as a result of tbe award of the Industrial Tribunal dated January 13, 1949. This amount was debited by the company in its profit and loss account for the year 1948 and the corresponding credit was given to the bonus p'l)'able account. The books for 1948 were not closed till the date of the award of the Industrial Tribunal. For the relevant assessment year, 1950-51, the company claimed that under s. 10(2)(x) of the Indian Income-tax Act, 1922, it was entitled to an allowance in respect of the amount paid as bonus, but the claim was reiecte9 by the Income-tax authorities on the ground that according to the mercantile system of accounting which was followed by the assessee the year to which the liability was properly attributable was the calendar year 1947 and not 1949. It was the case of the Income-tax authorities that it was a legal liability of the assessee which arose in 1947 and should have been estimated and put into the accounts for 1947, and that, if necessary, the amounts for the year 1947 should be reopened. It was admitted that the bonus in the instant case was a: profit bonus.

Held: (i) It was only when the claim to profit bonus, if made, was settled amicably or by industrial adjudication that a liability was incurred by the employer, who followed the mercantile system, within s. 10(2)(x), read with s. 10(5), of the Indian Income-tax Act, 1922; and as it was only in 1949 that the claim to profit bonus was settled by an award of the

Industrial 'Tribunal, the only year the liability could be properly attributed to was 1949.

(ii) The system of reopening accvunts was not applicable under the scheme of the Indian Tncome-tax Act.

(iii) The words "year in question' in proviso (b) to s. 10 :2)(x) of the Act incant "year in respect of which bonus was paid''. -

C!V!L APPELLATE JURISDICTION: Civil Appeal No. 587 of 1963.

Appeal by special leave from the judgment and nrder dated November 30, 1960 of the Madhya Pradesh High Court, in Miscellaneous Civil Case No. 73 of 1960.

K. N. Rajagopal Sastri and R. N.

Sachthev, for the appellant.

S. K. Kapoor, S. Murty and K. K. Jain, for the respondent

April 17, 1964. The judgment of the Court was elivered by Tl1e Commis3ioner

l11come-tax, SJKRI, J.-The respondent, Swadeshi Cotton & Flour Madl•11~• Pradeah, Mills, hereinafter referred to as the assessce, is a limited 1\apur company which owns and runs a textile mill at Indore. For Swadrsl1iv(o11on a11d the assessment year 1950-51 (accounting year calendar year Flour Jlill• 1949), which was its first year of assessment under the Indian Sikri, J.

Income-tax Act, 1922 (hereinafter referred to as the Act) it claimed that under s. I0(2)(x) of the Act it was entitled to an allowance in respect of the sum of Rs. 1,08,325 /- which it had paid as bonus for the year 1947 in the calendar year 1949, as a result of the award of the Industrial Tribunal, dated January 13, 1949. The claim of the assessee was not accepted by the Income Tax authorities. The Appellate Tri bunal held that it was a liability relating ttJ an earlier year and not the year 1949. However, on an application by the assessee it stated a case and referred two questions. We are concerned only with one which reads thus:

"Whether on the facts and in the circumstances of the case the assessee is entitled to claim a deduction of bonus of Rs. 1,08,325 /- relating to the calendar year 1947 in the assessment year 1950-51?

The High Court of Madhya Pradesh answered the question in the affirmative. The appellant, having failed to get a certificate under ~. 66A(2) of the Act, obtained special leave from this Court, and that is how the appeal is before us.

The facts and circumstances referred to in the question have been set out in the statement of the case. Unfortunately, the facts are meagre, but since the apel!ant is content to base his case on a few facts, which will be referred to shortly, it is not necessary to call for a further statement of the case.

The facts, in brief, are as follows. The assessce paid as bonus to its employees the sum of Rs. 1,08,325/9/3 for the calendar year 1947 in terms of an award made on January 13, 1949 under the Industrial Disputes Act. This amount was debited by the assessee in its profit and loss account for the year 1948 and the corresponding credit was given to the bonus payable account. The books for 1948 had not been closed till the date of order of the Industrial Tribunal, January 13,

1949. This bonus was in fact paid to the employees in the calendar year 1949. the relevant assessment year being 1950- 51.

The Appellate Assistant Commissioner had further found that upto 1946 when the order for payment of bonus used to be received before the company's accounts for the year were finalised, the amount of bonus used to be in fact

1901 debited to the profit and loss account of the respective year.

Th, rommissionerojThis finding is repeated by the Appellate Tribunal in its aplncome-ta•, pellate order.

Madhya Pradesh, Xapgur On these facts the learned counsel for the appellant, Su deshtcottonarul Mr. Sastri, contends that according to the mercantile system a Fleur .Mills of accounting. which is followed by the assessee, and on which its profits have been computed for the accounting Sikri,

J calendar year 1949, the year to which the liability is properly attributable is the calendar year 1947 and not 1949. He says that it was a legal liability of the ;1ssess?.e which arose in 1947 and should have been estimated and put into the accounts for 1947. In the alternative he has invited us to reopen the accounts for the year 1947, following the practice which, according to him, obtains in England.

In our opinion,. the answer to the question must depend on the proper interpretation of s. 10(2)(x), read with s. 10(5), of the Act. These provisions read as follows : -

"s. I 0(2)(x)-Any sum paid to an employee as bonus or commission for services rendered, where such sum would not have been payable to him as profits or dividend if it had not been paid as bonus or commission; Provided that the amount of the bonus or commission is of a reasonable amount with reference to-

(a) the pay of the employee and the conditions of his service;

(b) the profits of the business, profession or vocation for the year in question; and

(c) the general practice in similar businesses, professions or vocations." "s. 10(5}-ln sub-section (2), "paid" means actually paid or incurred according to the method of ac counting upon the basis of which the profits or gains are computed under this section; ... " If we insert the definition of the word 'paid' in sub-cl. (x), it would read as follows:

"any sum actually paid or incurred according to the method of accounting upon the basis of which the profits or gains are computed under this section, to an employee as bonus ... " As the assessee's profits and gains have been computed according to the mercantile system, the question, using for the time being the terms 6f the clauses, comes to this: -

"Has this sum of Rs. 1,08,325/- been incurred by the assessee according to the mercantile system in the calendar year 1947 or 1949?"

7 S.C.R.

SuPREME COURT REPORTS 813

At first sight the sentence does not read well, but the 1964 meaning of the word 'incur' includes 'to become liable to'. The Commi.s8ioner of Therefore, the question boils down to: Madhlncom<Ptaxad, . ya r ear., "In what year did the liability of this sum of Rs.

Nagpur 1,08,325 /- arise, according to the mercantile swa.ie..1/oo11ona..i system?" Fkntr Mill<

The mercantile system of accounting was explained in .a judgment of this Court in Keshav Mills Ltd. vs. Commissioner of Income Tax, Bombay(') thus:-

"That system brings into credit what is due, immediately it becomes legally due and before it is actually received, and it brings into debit expenditure the amount for which a legal liability has been incurred before it is actually disbursed."

These observations were quoted with approval in Calcutta Co. Ltd. vs. Commissioner of Income Tax, West Bengal(').

On the facts of this case, when did the legal liability arise in respect of the bonus? This depends on the facts of the case and the nature of the bonus awarded in this case.

This Court has examined the nature of profit bonus-it is common ground that the bonus with which we are concerned with was a profit bonus-in various cases. It is explained in Muir Mills v. Suti Mills Mazdoor Union(') that "there are two conditions which have to be satisfied before a demand for bonus, can be justified and they arc (I) when wages fall short of the living standard, and (2) the industry makes huge profits part of which are due to the contribution which the workmen make in increasing production. The demaud for bonus becomes an industrial claim when either or both these conditions are satisfied."

This matter was again considered in the case of Associated Cement Co. v. Their ' Workmen('). This Court observed:-

"It is relevant to add that in dealing with the concept of bonus this Court ruled that bonus is neither a gratuitous payment made by the employer to his workmen nor can it be regarded as a deferred wage. According to this decision, where wages fall short of the living standard and the industry makes profit part of which is due to the contribution of labour, a claim for bonus can be legitimately made."

(') (1953] S.C.R. 950.

(') [1955] 1 S.C.R. 991.

(') [1959] S.C.R. 925.

Bibi, J.

1984 In 1961, this Court was able to say that "the right to fie Commissioner of claim bonus which has been universally recognised by indus • .ii""0j,';::;\ trial adjudication in cases of employment falling under the M 1!; agpr es ' said Act has now attained the status of a legal right. Bonus v. can be claimed as a matter of right provided of course by Swade&hi Oouo/'and the application of the Full Bench formula it is shown that

Flour Mills for the relevant year the employer has sufficient available sur- Sikri, J, plus in hand." (Vide Gajendragadkar, J., as he then was, in Workmen v. Hercules Insurance Co.(').

The Indian Tea Association v. Workmen(') this Court held that "the profit bonus can be awarded only by reference to a relevant year and a claim for such bonus has therefore to be made from year to year and has to be settled either amicably between the parties or if a reference is made, it has to be. determined by Industrial adjudication. A general claim for the introduction of profit bonus cannot be made or entertained in the form in which it has been done in the present proceedings.'' It follows from the above decisions of this Court that: -

(a) workmen are entitled to make a claim to profit bonus if certain conditions are satisfied;

(b) the workmen have to make a claim from year to year;

(c) this claim has either to be settled amicably or by industrial adjudication; and

(d) if there is a loss or if no claim is made, no bonus will be permissible.

In our opinion it is only when the claim to profit bonus, if made, is settled amicably or by industrial adjudication that a liability is incurred by the employer, who follows the mercantile system of accounting, within s. !0(2)(x), read with s. 10(5) of the Act.

On the facts of this case, it is clear that it was only in 1940 that the claim to profit bonus was settled by an award of the Industrial Tribunal. Therefore, the only year the liabi ltty can be properly attributed to .is 1949, and hence we are of the opinion that the High Court was right in answering the question in favour of the assessee.

The second contention of the learned counsel does not appeal to us. We are of the opinion that this system of reopening accounts does not fit in with the scheme of the Indian Income Tax Act. We have already held in Commissioner of Income Tax, Madras v. A. Gajapathy Naidu, Madras(') that as far as receipts are concerned, there can be no reopening

(')A.LR 1964 S.C. 1653.

of accour.t3. The same would be the position in respect of 1961 expense;. But even in England accounts are not opened in The Commis•i°"" of every case. Habbury gives various instances in footnote (m) MaA"'""''"h at p. 148. Vol. 20. Mr. Sastri has relied on various English 'aupur ' cases but it is unnecessary to refer to them as Lord Radcliffe .... explains the position in England. in So1, thern Railway of Swadept;""M:U."" Peru Ltd. v. Owen(') thus:

"The courts have not found it impossible hitherto to make considerable adjustments in the actual fall of receipts or payments in order to arrive at a truer statement of the profits of successive years.

After all, that is why income and expenditure accounting is preferred to cash accoun, ting for this purpose. As I understand, the matter, the principle that justified the attribution of something that was in fact, received in one year to the profits of an earlier year, as in such cases as Isaac Holden and Sons v. Inland Revenue Comrs. 0924)

12 Tax Cas. 758 and Newcastle Breweries Ltd.

Y. Inland Revenue Comrs. 0927) 12 Tax Cas. 927 was just .this, that the payment had been earned by services given in earlier year and, therefore, a true statement of profit required that the year which had borne the burden of the cost should have appropriated to it the benefit of the receipt."

The principle mentioned by Lord Radcliffe would not apply to a profit bonus. As stated above, a profit bonus is strictly not wages, at least not for the purpose of computing liability to income tax; it is not an expense, in the ordinary sense of the term, incurred for the p.urpose of earning profits.

A fortiori profits have already been made. It is mtlre like sharing of profits on the basis of a certain f01mula.

One other point raised by Mr. Sastri remains. He urged that the word "for the year in question" in the proviso to sub-s. 10(2)(x) mean "for the year in which allowance is claimed." We are unable to agree with him. The words 'for the year in question' mean the year in respect which bonus is paid.

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

Appeal dismissed.

('} [1957) A.C. 334.

Sil:ri, J.

SWADESHI COTTON AND FLOUR MILLS

K. SUBBA RAO, J

C. SHAH

Income-tax Act

ss. 10(2)(x), 10(5)

January 13, 1949

s. 10(2)(x)

Indian Income-tax Act, 1922

s. 10(2)(x)

s. 10(5)

Indian Income-tax Act, 1922

s. 10

K. N. Rajagopal Sastri

R. N.

Sachthev

S. K. Kapoor

S. Murty

K. K. Jain

Indore

Income-tax Act, 1922

High Court of Madhya Pradesh

Industrial Disputes Act

January 13,

1949

Su deshtcottonarul

Sastri

England

s. 10(2)(x)

s. 10(5)

s. 10(5}-ln sub-section (2)

[1955] 1 S.C.R. 991

Bibi

Vide Gajendragadkar

s. 10(5)

Habbury

Radcliffe

Newcastle Breweries Ltd.

s. 10(2)(x)

ri


.April 21

SUPREME COURT REPORTS

STATE OF ORISSA

v .

M.A. TULWCH AND CO.

[1964}

[K. SUBB~ RAO, J. C. SHAH AND S. M. SIKR•, JJ.] Sales Tax-Sale to Registered deale.r-Claim for deduction- Production of declaratio71. under r. 27(2) if obligatory-Orissa Sales Tax Act, 1947 (Orissa 14 of 1947), s. 5(2)(a) (ii), Orissa Sales;

Tax Rules, 1947 r. 27(2)-0rissa Sales Tax (Amendment} Act (Orissa 10 of 1957).

Assessment orders were passed by the Sales Tax Officer allowing the deductions of two amounts claimed by the respondent-dealer under s. !>(2)(a)(ii) of the Orissa Sales Tax Act in: respect of goods sold to a registered dealer. The respondentdealer filed appeals to the Assistant Collector Sales Tax, challenging the assessment on grounds which were not relevant and against those decisions revisions were filed by the dealer. While the revisions were pending the Orissa Sales Tax Act was amended by Orissa Sales Tax (Amendment) Act (Orissa Act, 10' of 1957) with the result that revisions were treated as appeals to the Sales Tax Tribunal, and it enabled the Government to file cross-objections. In pursuance, the State filed cross-objections challenging the deductions on the ground that the dealer had not produced any declaration as required under r. 27(2) of the Orissa Sales Tax Rules, 1947. The Tribunal upheld this objection and directed that fresh assessments be made.

On statement of the case, the High Court answered that the assessing officer was not wrong in allowing the deductions.

On appeal by special leave).

Held: (i) There is nothing in s. 5(2)(a) (ii) itself that disentitles a selling dealer to a deduction, but if the contingency provided in the proviso occurs, then the price of goods is included in the taxatle turnover of the buying dealer.

(ii) The production of a declaration under r. 7(2) is not always obligatory on the part of a selling dealer when claiming the exemption. It is open to him to claim exemption by adducing other evidence so as to tring the transaction w1thin the scope of s. 5(2)(a)(ii). Rule 27(2) must be reconciled with the section and the rule can be reconciled by treating it as directory. But the rule must be substantially complied with in every case. It is for the Sales-tax Officer to be satisfied that, in fact. the certificate of registration of the buying dealer contains the requisite statement, and if he has any doubts about it, the selling dealer must satisfy his doubts. But if he is satisfied from other facts on the record, it is not necessary that the selling dealer should produce a declaration in the form required in r: 27(2)~

before being entitled to a deduction.

Member, Sales-tax Tribunal, Orissa v. M/s. S. Lal & Co.

(1961) 12 S.T.C. 25, referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 507-508 of 1963.

Appeal by special leave from the judgment and order dated November 4, 1950, of the Orissa High Court in Special Jurisdiction Cases Nos. 38 and 39 of 1958.

R. Ganapathy Iyer and R. N. Sachthey, for the appellant (in both the appeals). ·

B. Sen and S. N. Mukherjee, for the respondents (in both 1961 the appeals).

Staie of on ...

April 21, 1964. The Judgment of the Court was delivered JI.A.Tu~'oclrnndCo. by

SJKRI. J.-The respondent, hereinafter referred to as the the dealer, filed a return for the quarter ending June 30, 1951. under the OriGsa Sales Tax Act (Orissa Act XIV of 1947) (hereinafter referred to as the Act). He claimed a deduction of Rs. 2,40,000/- under s. 5(2)(a)(ii) in respect of the goods sold to a registered dealer, named Mis. Lal & Co. Ltd., BA

1335. Similarly, for the quarter ending September 30. 1951, he claimed a deduction of Rs. 15,677 JI/ 3.

By two assessment orders passed under s. 12(2) of the Act, the Sale;> Tax Officer, Cuttack III circle, Jaipur, Orissa, determined the tax payable allowing the deduction of Rs. 2,40.000 /- and Rs. 15,677/1/3, under s. 5(2)(a)(ii). The dealer filed appeals to the Assistant Collector, Sales Tax, challenging the asses;;.

ment on grounds which are not relevant. The dealer later filed revisions against the decision of the Assistant Collector.

While the revisions were pending, the legislature amended the Orissa Sales Tax Act, in 1957, by Orissa Sales Tax <Amendment) Act (Orissa Act XX of 1957). The effect of this amendment was that revisions were treated as appeals to Sales Tax Tribunal, and it enabled the Government to file croos-objections. The State of Orissa, in pursuance of this amendment, filed memorandum of cross-objections challenging the deduction of Rs. 2,40,000/- and Rs. 15,677 JI /3, on the ground that the dealer had not produced any declaration, as required under r. 27(2) of the Orissa Sales Tax Rules, 1947, as evid.nc ed from the Check Sheet kept on record. The Tribunal upheld this objection and directed that freiih assessments be made.

Certain other questions were raised before the Tribunal by the dealer, but as nothing turns on them as far as these appeals are concerned, they are not being mentioned. The Tribunal stated a case to the High Court and one of the questions

eferred. to was "hether the asseiising officer was not wrong m allowing deducl!on of Rs. 2,40,000/- for the quarter ending on•30-6-51 and Rs. 15,6771113 for the quarter ending on 30-9-51. from the respective gross turnover of the applicant." The High Court, following its earlier decision in Member, Sales-tax Tribunal, Orissa v. Messrs S. Lal & Co. Limited(')

anrswered the question in the affirmative. The State of Orissa having obtained special leave from this Court, these appeals are now before us for disposal.

Mr.Ganapathy Iyer, on behalf of the State of Orissa, has contended before us that it is clear that r. 27(2) was not complied with, and, therefore, the Sales Tax Officer was wrong

( 1) (1961) 12 S.T.C. 25.

Silri, J.

~ in. allowing the said deduction. The answer to the question

.fJIJIU of °""" referred depends on the correct interpretation of s. 5(2)(a)(ii),

m ... ~~-' _, 0 . and r. 27(2). They read thus:- Jr.A. , na- O.

.8ilw1, J. "s. 5(2)(a)(ii)-sales to a registered dealer of goods specified in the purchasing dealer's certificate of registration,. as being intended for resale by him in Orissa and on sales to a registered dealer of con tainers or other materials for the packing of such goods.

Provided that when such goods are used by the registered dealer for purposes other than those speeified in his certificate of registration, the price of goods so utilised shall be included in his taxable turnover." "Rule 27(2). Claims for deduction of turnover under sub-clause (ii) of clause (a) of sub-section (2) of section 5- A dealer who wishes to deduct from his gross turnover on sales which have taken place in Ori8sa the amount of a sale on the ground that he is entitled to make such deduction under sub-clause (ii) of clause (a) of sub-section (2) of section 5 of the Act, shall produce a copy of the relevant cash receipt or bill according as the sale is a cash sale or a sale on credit in respect of such sale and a true declaration in writing by the purchasing dealer or by such responsible person as may be authorised in writing in this behalf by such dealer that the goods in question are specified in the purchasing dealer's certificate of registration as being required for resale by him or in the execution of any contract: Provided that no dealer whose certificate of registration has not been renewed for the year during which the purchase is made shall make such a declaration and that the selling dealer shall not be entitled to claim any deduction of sales to such a dealer." It ill plain from the terms of s. 5(2)(a)(ii) that a selling dealer is entitled to a deduction in respect of sales to a registered dealer of goods, if the goods are specified in the purchasing dealer's certificate of registration as being intended for re-sale by him in Orissa. No other condition is imposed by the above r, ection. The proviso deals with consequences that follow if the purchasing dealer uses them for purposes other than those specified in his certificate of registration, and directs that, in that event, the price of goods so utilised shall

.. '

be included in his turnQIVer. Therefore, there is nothing in 1964

the section i16eli that disentitles a selling dealer to a deduction, Stale of Orri•sa but if the contingency provided in the proviso occurs, then H..A Tu~ ndO the price of goods is includc; d in the taxable turnover of the _ 0 0 • buying dealer. But Mr. Ganapathy Iyer says, be it so, but Sikri, J. the rule making authority is entitled to make rules for carrying out the purposes of the Act, and r. 27(2) is designed to ensure that a buying dealer's certificate of registration does, in fact, mention that the goods are intended for resale by him, and for that purpose it has chosen one exclusive method of proving the fact before a Sales Tax Officer. He further urges that no other method of proving that fact is permissible. Rule 27(2) is mandatory and if there is breach of it the selling dealer is not entitled to deduction. The learned counsel for the respondent, on the other hand, contends that r. 27(2) is directory.

He points out that the word 'shall' should be read as 'may', in the context. He further says that supposing the selling dealer brought the original certificate of registration of a buying dealer and produced it before the Sales Tax Officer, according to the appellant, this would not be enough, but this could never have been intended. In our opinion, r. 27(2) must be reconciled with the section and the rule can be reconciled by treating it as directory. But the rule must be substantially complied with in every case. It is for the Sales Tax Officer to be satisfied that, in fact, the certificate of registration of the buying dealer contains the requisite statement, and if he has any doubts about it, the selling dealer must satisfy his doubts. But if he is satisfied from other facts on the record, it is not necessary that the selling dealer should produce a declaration in the form required in r. 27(2), before being enti tied to a deduction.

We are, therefore, of the opinion that the High Court came to a correct conclusion. The High Court is correct in holding that the production of a declaration under r. 27(2) is not always obligatory on the part of a selling dealer when claiming the exemption. It is open to him to claim exemption by adducing other evidence so as to bring the transaction within the scope of s. 5(2)(a)(ii) of the Act In this case, the Sales Tax Officer was satisfied by a mere statement of the dealer and it has not been shown that in fact the registration certificate of the buying dealer, Mis S. Lal & Co., did not contain the statement that the goods were intended for resale by him in Orissa.

The appeais accordingly fail and are dismissed with costs. One set of hearing fee.

Appeat~ dismissed .

STATE OF ORISSA

M.A. TULWCH AND CO

K. SUBB~ RAO, J.

C. SHAH

Orissa Sales Tax Act, 1947

s. 5(2)(a)

Tax Rules, 1947

Orissa Sales Tax Rules, 1947

s. 5(2)(a)

s. 5(2)(a)(ii)

R. Ganapathy Iyer

R. N. Sachthey

B. Sen

S. N. Mukherjee

Orissa Act XIV of 1947

s. 5(2)(a)(ii)

Mis. Lal & Co. Ltd.

s. 12(2)

Orissa

s. 5(2)(a)(ii)

Orissa Act XX of 1957

State of Orissa

Orissa Sales Tax Rules, 1947

Ganapathy Iyer

Silri

s. 5(2)(a)(ii)

s. 5(2)(a)(ii)

section 5

section 5

s. 5(2)(a)(ii)

Ganapathy Iyer

Sikri

s. 5(2)(a)(ii)

Mis S. Lal & Co.