Ftbruary 17.

SUPREME COURT REPORTS

RAMCHANDRA RAMBUX

CHAMPABAI AND OTIIERS

(K. SusBA RAo AND J. R. MuDHOLKAR JJ.)

Will-G-enuineness-Credibility of wit11esses-..f)urrounding circumsta~ ces and probabilities, if court can look into--Re11zoval of tu.vpiciom circumstances, if propounder has to satisfy the court.

The appellant filed a suit claiming the property of one R which was in possession of R's widow on the allegation that R had executed a will bequeathing almost his entire property to the appellant and practically excluding his widow and daughters.

The ground on which the widow and the daughters were excluded is said to be the strained relations which had developed between R and his wife. The widow denied the execution of the alleged will ana challenged the genuineness.

The Trial Court holding that the will was genuine decreed the suiL On appeal, the High Court dismissed the suit. holding that the will was not genuine. The finding of the High Court was based on the evidence and the attending circumstances appearing in the case.

On appeal to this Court by a certificate granted:

Held: (i) In order to judge the credibility of the witness, the Court is not confined only to the way in which the witnesses have tdeposed or to the demeanour of the witnesses, but it is open to it to look into the surrounding circumstances as well as the probabilities, so that it may be able to form a correct idea of the trustworthiness of the witnesses. This issue cannot be determined by considering the evidence adduced in the Court separately from the surrounding circumstances brought out in the evidence, or V.'hich appear from the nature and the contents of the do.:ument itself.

(ii) It is necessary for the propounder to satisfy the court about the genuineness of the will by removing all suspjcions which naturally flow from the various circumstances.

Surat Kumar Bibi v. Sakti Chand, (1928). L.R. 56 f.A. 62, Kri.rhto Gopal v. Baidyanath, A.I.R. 1939 Cal. 87, Chotey Narain Singh \'.

Mt. Ratan Kaer, (1894) L.R. 22 I.A. 12, Ii. Venkachala Iyengar v.

B. N. Thaimmajam1na, [1959) Supp. 1 S.C.R. 426, Shashi Kumar Banerjee v. Subodh Kumar Banerjee, C.A. No. 295 of 1960. dt. Sept. 13, 1963 (Nonreportable and Tyrell v. Painton, (1894) P. 151, referred to.

CIVIL APPELLATE JuR1smcnoN: Civil Appeal No. 758 of 1963.

Appeal from the judgment and decree dated February 14, 15, of the former Bombay High Court in Appeal No. 516 of 1957 from original Decree.

J. B. Dadachanji, Ravinder Narain and 0. C. Mathur, for the appellant.

Girish Chandra and Sardar Bahadur, for respondents Nos. 1, 2(i) to 2(iv), 3 and 4.

February 17, 1964.

The Judgment of the Court was delivered by:-

MUDHOLKAR, J.-The question which arises for consideration in this appeal by a certificate granted by the High Court of Bombay is whether a will alleged to have been executed by one Ramdhan on May 23, 1947 is genuine or is a fabrication.

By this will. Ramdhan is alleged to have bequeathed almost his entire property consisting of 16 fields assessed to land revenue at Rs. 425 /- per annum. five hou•es, a shop and movables consisting of 800 tolas of gold, I.COO tolas of silver, Rs. 50,000/- cash and Rs. 15,000/- due trom debtors as well as cattle, agricultural implements, utensils. etc., to the appellant, and practically excluded his widow.

Sitabai and his three married daughters. The appellant is the grandson of one of the three predeceased uncles of Ramdhan, and the ground on which the widow and the daughters were practically excluded by Ramdhan is said to be the strained relations which developed between Ramdhan and his wife during his last days.

Ramdhan died on October 31. 1948. and Sitabai, who was all along living with him, came into possession of Ramdhan 's property.

Admittedly, the appellant did not trv to disturb her possession. According to him, he allowed Sitabai to remain in possession on his behalf, and that for some time she was managing the estate in a satisfactory way.

Later on, however, she, in utter disregard of the appellant's interests, began to give away some portions of the property to her daughters and strangers, even though she knew that the property had been bequeathed to him by Ramdhan. and that she was entitled to receive only a maintenance of Rs. 40 /- per month under the will of Ramdhan. It may be mentioned that Ramdhan was a resident of Peepalgaon in the district of Parbhani, and the entire property, movable as well as immovable, is at Peepalgaon itself.

Upon these allegations, the plaintiff instituted the suit Out of which this appeal arises, in the District Court at

Ramcluurtlnr

Rambta

Champaboi

M11dlwlkar J.

llamchandra

R.ambUJ<

Champabal

'Mudlrolkar I.

Parbbani. Sitabai denied the execution of the alleged will by Ramdban, and also denied the relationship claimed by the appellant with Ramdhan. According to her, after Ramdhan's death she was in exclusive possession of the property, that she is a helpless widow without a male issue, 1nd that the appellant taking advantage of this fact has set up a false will and laid claim to Ramdhan's property. While admitting that the immovable property had been correctly set out in the plaint, she challenged the correctness of some of the items of the movable property.

During the pendency of the suit, one Madanlal was joined as a party to it on !he basis of his claim to be the adopted son of Ramdhan. He also challenged the genuineness of the will.

According to him, he was adopted by Ramdhan in the month of Chait, Samvat, 1999 according to the prevailing custom in the State of Udaipur.

Sitabai died during the pendency of the suit, and her daughters, Champabai, Rambhabai, and Rajubai as also Ram Pershad, one of Sitabai's sons-in-law, who was alleged to have obtained possession of the property after the death of Sitabai. were brought on record as the legal representatives of Sitabat.

The trial Court held in favour of the appellant that he was related to Ramdhan, as alleged by him, and that the will executed by Ramdhan was genuine. It also negatived Madanlal's claim of having been adopted by Ramdhan. On

these findings, that Court decreed the appellant's suit. The legal representatives of Sitabai thereupon preferred an appeal before the High Court. which held that the will set up by the appellant is not genuine, and on that ground, dismissed his suit.

In support of the will, the appellant examined himself, the scribe, Venkat Rajaram and three of the attesting witnesses, Raja Kaniahprasad, Rashecduddin Ahmed and Wamanlal.

The appellant also examined some witnesses in support of his contention that the property bequeathed to him under the will was entrusted by him to Sitabai after the

death of Ramdhan.

On the other hand, the respondents have led evidence to show that Ramdhan could not have been at Hyderabad where the will is alleged to have been executed, on May 23, 1947, because till the afternoon of the

previous day he was at a village nearly 300 miles distant from Hyderabad.

The High Court. on a consideration of the entire evidence adduced by the parties, came to the conclusion that th<.: will was prepared under highly suspicious circumstances, and that the evidence adduced by the appellant was not such as to satisfy it that the alleged will was a genuine one. Accord ing to the High Court, the circumstances appeaiing in the case indicate that the alleged will was "in all probability" a false document brought into existence without the knowledge of Ramdhan. The High Court rightly pointed "Out that the nature of proof which was required in a case of this kind was that laid down by the Privy Council in Sarai Kumari Bibi v. Sakhi Chand('), where it has been stated that in all

.:ases in which a will is prepared under circumstances which arouse the suspicion of the Court that it does not express the mind of the testator, it is for the propounder of the will to remove that suspicion. According to the High Court, the evidence led by the appellant was so unsatisfactory tlfat it 'Vas impossible to give any effect to the alleged will.

Mr. Dadachanji's grievance, however, is that the entire approach of the High Court to the evidence in this case was wrong, because it first took into consideration the various circumstances, and then judged the credibility of the wit nesses in the light of those circumstances. In support of his contention, he has relied upon the following observation ot Biswas, J. in Kristo Gopal v. Baidya Nath( 2):

"It is difficult to avoid the conclusion that the learned Judges for some reason or other must have formed the idea that the will was not a genuine document. and that having formed such an idea, he looked at the evidence of each of the wit

nesses with a suspicious eye.

On no other hypothesis is it possible to explain the criticism which he has led himself to make."

The learned Judge has supported his observation by quoting the following observations of Lord Watson in Chotey Narain Singh v. Mt. Ratan Koer(1 ):

(I) (1928) L.R. S6 I.A. 62.

(3) 22 I.A. l2, 21.

\34-159 S.C.-52

(2) A.I.R. 1939 Cal. 87.

Ramchaatltrl

Ramba

Champal>al

M11dhu/kar I.

19M

Blllnclrandro

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"The theory of improbability remains to be considered; and the first observation which their Lordships' have to make is that, in order to prevail against such evidence as has been adduced by the respondent in this case, an improbability must be clear and cogent.

It must approach very nearly to, if it does not altogether constitute, an impossibility."

The learned Judge has then observed as follows:

"In a case where .. attesting witnesses are produced and they give clear and cogent testimony regarding execution, one should require very strong circumstances to repel the effect of such testimony. It will not do to talk airily about circumstances of suspicion. It is no doubt true that a person who takes it upon himself to dispute the genuineness of a will cannot be expected to prove a negative in many cases.

At the same time, the difficulty in which, on his own seeking, he places himself, will not relieve him of the burden-it may be a heavy burden-of displacing the positive testimony on the other side. If he rests his case on suspicion, the suspicion must be a suspicion inherent in the transaction itself which is challenged and cannot be a suspicion arising out of a mere conflict of testimony."

Then the learned Judge went on to observe that if there was evidence to show that the will was actually made, it would not be relevant to enquire whether there was any occasion or motive for the execution of the will, and that if such a test were to be applied in every case, no will could probably be .proved at all.

The questions which we have to consider are whether there was, in fact, a will, that is to say, whether Ramdhan did execute a will during his lifetime, and if so, whether the docu. ment •upon which the appellant relies is a will executed by Ramdhan and duly attested by witnesses. The appellant can prove these facts only by adducing evidence of the due cxecu. tion of the will by Ramdhan and of its attestation.

The challenge before us is as to the credibility of the witnesses

who have come forward to say that the document upon which the appellant relies not merely bears the signature of Ramdhan but represents the disposition made by Ramdhan, that is it was executed by Ramdhan, and that the attesting witnesses attested the execution of the will by Ramdhan. In order to judge the credibility of the witnesses, the Court is not confined only to the way in which the witnesses have deposed or to the demeanour of witnesses, but it is open to it to look into the !urrounding circumstances as well as the probabilities, so that it may be able to form a correct idea of the trustworthiness of I.he witnesses. This issue cannot be determined by consider. ing the evidence adduced in the Court separately from the imrrounding circumstances which have also been brought out :in the evidence, or which appear from the nature and ror.tenls of the document itself. We do not understand the observa tions of Lord Waston to mean that the testimony as to the execution of the document has to be considered independently of the attendant circumstances. All that he says is that where there is a large and consistent body of testimony tending to show the execution of a will by the testator, that evidence should not be lightly set aside on the theory of improbability.

Dealing with the mode of proof of a will, this Court has observed in H. Venkatachala Iyengar v. B. N. Thimmaiamma and Others('):

"As in the case of proof of other documents so in the case of proof of wills it would be idle to expect proof with mathematical certainty. The test to be applied would be the usual test of the satisfaction of the prudent mind in such matters.

However, there is one important feature which distinguishes wills from other documents.

Unlike other documents the will speaks from the death of the testator, and so, when it is propounded or produced before a court, the testator, who has already departed the world cannot say whether it is his will or not; and this aspect naturally intro

duces an element of solemnity in the decision of the question as to whether the document pro. pounded is proved to be the last will and testa•

(I) [t9S9] S.C.R. Supp. I. 426. 443.

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Champabal

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ment of the departed testator. Even so. in dealing with the proof of the wills the court will start on the same enquiry as in the case of lhe proof of documents. The propounder would be called upon to show by satisfactory eyidence that the will was signed by the testator, that lhe testator at the relevant time was in a sound and disposing state of mind, that he understood the nature

and effect of the dispositions and put his signature to the document of his own free will.

Ordinarily when the evidence adduced in support of the will is disinterested, satisfactory and sufficient to prove the sound and disposing state of the testator's mind and his signature as required by law, courts would be justified in making a finding in favour of the propounder.

In other words, the onus on the propounder can be taken to be discharged on proof of the essential facts just indicated.

There may, however, be cases in which the execution

of the will may be surrounded by .uspicious circumstances.

The alleged signature of the testator may be shaky and doubtful and evidence in support of the propounder's case that the signature in question is the signature of the testator may not remove the doubt created by the appearance of the signature; . . . . the dispositions made in the will may appear to be unnatural, improbable or unfair in the light .of relevant circumstances; or, the will may otherwise indicate that the said dispositions may not be the result of the testator's free will and mind.

In such cases the court would naturally expect

that all legitimate suspicions should be completely removed before the document is accepted as the last will of the testator. The presence of such suspicious circumstances naturally tends to make the initial onus very heavy; and unless it is satisfactorily discharged, courts would be reluctant to treat the document as the last will of the testator."

This Court also pointed out that apart from suspicious circum. stances of this kind, where it appears that the propounder has

taken a prominent part in the execution of the will which confers substantial benefits on him, that itself is generally treated as a suspicious circumstance attending the execution of the will, and the propounder is required to remove the suspicion by clear and satisfactory evidence. In other words, the propounder must satisfy the conscience ot the Court that the document upon which he relies is the last will and testament of the testator.

This decision has been recently referred to in a Judgment of this Court in Shashi Kumar Banerjee and others v.

Subodh Kumar Banerjee(') (Civil Appeal No. 295 of 1960 decided on September 13, 1963). There, Wanchoo J. who spoke for the Court, has observed as follows :

"The mode of proving a will does not ordinarily differ from that of proving any other document except as to the special requirement of attestation prescribed in the case of a will by s. 63 of the Indian Succession Act. The onus of proving the will is on the propounder and in the absence of suspicious circumstances surrounding the execution of the will, proof of testamentary capacity and the signature of the testator as required by law is sufficient to discharge the onus. Where however there are suspicious circumstances, the onus is on the propounder to explain them to the satisfaction of the court before the court accepts the will as genuine. Where the caveator alleges undue influence, fraud and coercion, the onus is on him to prove the same. Even where there are no such pleas but the circumstances give rise to doubt it is for the propounder to satisfy the conscience of the Court. The suspicious circumstances may be as to the genuineness of the signature of the testator, the condition of the testator's

mind, the dispositions made in the will being unnatural, improbable or unfair in the light of relevant circumstances or there might be other indications in the will to 'show that the testator's

(I) C.A. No. 295 of 1960, D. Sept. 13, 1963 (Non-reportable).

196#

Rmnchandro

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Champabal

M1uthulkar I.

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M11dhnlkar J.

mind was not free.

In such a case the court would naturally expect that all legitimate suspicion should be completely removed betore the document is accepted as the last will of the testator. If the propounder himself takes part in the execution of the will which confers a substantial benefit on him, that is also a circumstance to be taken into account, and the propounder is required to remove the doubts by clear and satisfactory evidence. If the propounder succeeds in removing the suspicious circumstances the court would grant probate, even if the will might be unnatural and might cut off wholly or in part near relations. It is in the light of these settled principles that we have to consider whether the appellants have succeeded in establishing that the will was duly executed and attested."

In Sarat Kumari Bibi's case(') on which the. High Court has relied and which is also relied upon in Venkatachala lyengar's case(') just cited, it.was found that one Jamaluddin who took benefit under the will, had taken an active part in the preparation of the will, and, therefore, the rule made by Lindley and Davey L.JJ. in Tyrrell v. Painton( 3 ) that where

circumstances exist which would excite the suspicion of the Court. the burden is upon the propounder of the will to remove such suspicion and prove affirmatively that the testator 1'11ew and approved of the contents of the document, was applied.

The High Court has analysed the entire evidence adduced by the propounder of the will to prove its due execution by Ramdhan, and along with that evidence, it has also consider. ed certain attendant circumstances. One is the fact that the will is said to have been executed at Hyderabad, which is a place where the appellant resides and carries on his profes sion as a medical pmctitioner and not at Peepalgaon, where Ramdhan resided. The evidence adduced in the case shows that on the day prior to the one on which the will purports

to have been executed, Ramdhan was at Ghanegaon till the

~moon. This place is 8 miles distant from Peepa lgaon, and

(!) [1928] L.R. 56 I.A. 62.

(2) [1959] Supp. l, S.C.R. 426, 443.

(3) [18941 P. 151, 157, 159.

the nearest railway station is 20 miles distant from Peepal gaon. The will is said to have been executed at about noon, and though it is not impossible, it is highly improbable that Ramdban could have been present at the place of execution by that time. The third thing is that the will was executed in the house of the appellant. One of the circumstances is that there was no particular reason why the will should have been executed at that time, because there is no suggestion that Ramdban was not keeping good health.

Then again, the property is very considerable, and instead of employing the services of a trained lawyer to draw up the will, a layman like Venkat Rajaram, who has given his profession as "Jagirdari" had been enlisted.

The scribe as well as the attesting witnesses are not the personal friends of Ramdhan, though they say they knew him, but appear to be either the friends or neighbours of the appellant.

Yet, the appellant wants the Court to believe that all these persons were collected by Ramdhan after his arrival at Hyderabad on the morning of May 23. This, in itself, would be an improbable thing indeed, because Ramdban would not have had enough time at his disposal for doing it.

Again, th.ere is no explanation why he should collect only the friends and acquaintances of the appellant rather than persons, who were his own friends.

The High Court has further pointed out that the document is inscribed on a flimsy paper. It is in high-flown Urdu, and is alleged to have been dictated by him in that language. No doubt, the evidence indicates that Ramdhan could speak in

Urdu, but it also indicates that he cannot read or write in Urdu. It would, therefore, be legitimate to infer that the language which he could speak was the unlettered man's Urdu and not high-flown Urdu. which contains an admixture of Persian words.

Indeed. such words have actually been used in this document. The signature of Ramdhan is itself in Modi script, which would not have been the case if he were well-versed in Urdu. When we turn to the reverse of the sheet on which the document is inscribed, we find that as we go lower down, more and more words seem to be crammed in each line and the spacing between two lines tends to decrease, even though there appears to have been plenty of room for the signature of Ramdhan to be scribed lower down

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Ranu:handnl

Ralllbuz

Champabal

M rtdlwlP<r J,

196'

Bamchandro

RJJlnbuz

Champabal

Jl.udho/kar J.

on the paper. It would be legitimate to infer from this that the signature was already there before the will was scribed.

This feature of the document as well as the quality of the paper used would suggest that a piece of paper bearing Ramdhan's signature has been utilised by the sclibe for engrossing what purports to be a will.

Finally, there is the circumstance that the will is unnatural in the sense that though Ramdhan left property worth several lakhs, he made no provision for a residence for his wife but gave her only Rs. 40 /-per month as her maintenance,

und lnade only paltry bequests to his daughters. It is true that the daughters are married in affiuent families, but in the absence of a male issue, a father is normally expected to give at least substantial bequests to his daughters. Instead, the wiil gives almost the entire property to a distant relative, who, it may be noticed, was neither brought up by the testator, nor was a person who looked after the testator during his declining years. All this is said to have been due to the fact that Ramdhan's relations with his wife had become strained.

Indeed, the relationship between Ramdhan and his wife had become so bad that Ramdhan, according to the appellant, suspected that she was trying to poison him. Curiously enough, in spite of this, Ramdhan continued to live with Sitabai right till his death, and had made no arrangement for a person other than her to take charge of the cash and the gold and silver ornaments of the value of a couple of lakhs of rupees or so, in the event of his dying suddenly. There is nothing to suggest that Ramdhan's food was cooked by any one other than Sitabai.

To prove the appellant's allegations that Ramdhan and Sitabai were not getting on well, the main evidence is that of the appellant himself, who is the person who has obviously taken an active part in procuring the execution of the document which he has set up as the will of Ramdhan. He must be held to have taken an active part, even though, according to him, he did not do so, because the will was written not only al Hyderabad where he lives and carries on his profession but also in his own house, and the persons who played one part or the other in this connection are either his friends or his neighbours. It is these circumstances which have to be borne i.n mind while evaluating the testimony of the witnesses bearing on the execution of the will. Further, it is necssary for the appellant to satisfy the conscience of the Court about the genuineness of this will by removing all suspicions which naturally flow from the various circumstances, which we have set out above. There is not an iota of evidePce in this regard, and we are not satisfied that the suspicion created by the circumstances referred to by us has been removed.

Learned counsel has taken us through the evidence of the appellant, the scribe and three attesting witnesses examined . by him. All this evidence has been critically examined by the High Court but for reasons given by it in its judgment, not accepted by it. We find no reasons for viewing the evidence differently.

We have already adverted to the fact that no particular reason has been even indicated by the appellant as to why Ramdhan thought of executing a will long before his death.

If his idea in doing so was to make certain that his property does not fall in Sitabai's hands after his death one would have expected him to make some arrangement for keeping the movables out of her reach.

He, however, made no such arra11i; ement. Further, he would have also taken the precaution of regiMering the will, so that any challenge to its genumeness could not have been successfully made.

Funner, there is no unimpeachable evidence to show that the will was brought to light immediately after Ramdhan's death, which would have been the case if it were a genuine will.

On the other hand, there is one circumstance which suggests that the claim on the basis of Ramdhan's will was not even thought of by the appellant till long after Ramdhan 's death.

The circumstance is the continuance of Sitabai in . possession of the cash, gold and silver articles and other movables, even subsequent to Ramdhan's death. Of course, the appellant has given the explanation that he allowed her to remain in possession on his behalf, but his evidence is wholly incredible.

Indeed, the appellant has said that he instituted the suit because he found Sitabai parting with portions of Ramdhan's movables in favour of her daughters and strangers after the death of Ramdhan. At least, one thing will follow from this that according to him Sitabai was more interested in her daughters than in him.

If, therefore, he had a _genuine claim to Ramdhan's property, he would not have

Ramchandrt1

Rambw:

Champabal

M11dholkar I.

Rlllnclumdra Rambu

Clunnpabal

Mudholkar J.

, Fcbr1111TY 19.

allowed Sitabai to remain in possession of Ramdhan's movables.

At least, he would have obtained from her a document containing the list and description of the movables and also an admission to the effect that she was entrusted with them by the appellant and that she had no right in them.

Had she refused to execute such a document, one would have naturally expected the appellant to institute a suit for their possession immediately. There is no explanation for the absence of such a document, and thus this is also a circumstance which militates against the genuineness of the will.

In the circumstances, we hold that the High Court was right in rejecting the evidence of the attesting witnesses and the scribe as well as of the appellant with regard to the execution of the will by Ram4han. ·

We accordingly uphold the judgment of the High Court, and dismiss the appeal with costs.

Appeal dismissed.

K. S. RASHID & SONS AND ANOTHER

COMMISSIONER OF INCOME-TAX, U.P. AND

OTHERS

(P. B. GAJENDRAGADKAR, C.J., K. N. WANCHOO, K. C. DAS

GUPTA, J.C. SHAH AND N. RAJAGOPALA AYYANGAR JJ.)

Income-tax-Proceedings under s. 34(1A}-Applicability of other relevant provisions of the Act-Slction 34( 1.A.) whether contravenu Art. 14 of the Constitution-Indian Income-tax Act, 1922 (11 of 1922), rs. 34(1), 34(1A)-Constitution of India, Art. 14.

The validity of s. 34(1A) of the Income-tax Act was challenged by the assessees as contravening Art. 14 of the Constitution. It was contended, that th'e remedy by way of appeals and revisions availablo in cases under s. 34( 1) was denied to the assessees against whom proceedings were taken under s. 34(1A), and that while under s. 34(1)(a), as it then stood, the assessing authority could not act beyond 8 years, this protection was not available to assessees against whom action was taken under s. 34(1A).

RAMCHANDRA RAMBUX

CHAMPABAI AND OTIIERS

K. SusBA RAo

R. MuDHOLKAR JJ.

Chotey Narain Singh

Ratan Kaer

(1894) L.R. 22 I.A. 12

J. B. Dadachanji

Ravinder Narain

0. C. Mathur

Girish Chandra

Sardar Bahadur

February 17, 1964

MUDHOLKAR

High Court of Bombay

Ramdhan

May 23, 1947

Sitabai

October 31. 1948

Peepalgaon

Parbhani

Ramdban

Madanlal

Udaipur

Champabai

Rambhabai

Rajubai

Ram Pershad

Sitabat

Venkat Rajaram

Raja Kaniahprasad

Rashecduddin Ahmed

Wamanlal

Hyderabad

Dadachanji

Biswas

Watson

Waston

Ramchandl'll

September 13, 1963

Wanchoo

s. 63

Indian Succession Act

Champabal

196Rmnchandro

Rambw:

Champabal

M1uthulkar I.

~1"indra

Rambwc

Champabai

M11dhnlkar J.

mind was not free.

Champabai

Sarat Kumari Bibi

Venkatachala lyengar

Jamaluddin

Lindley

Davey

Ghanegaon

L.R. 56 I.A. 62

Peepal gaon

Venkat Rajaram

Bamchandro

Champabal

Mudholkar

K. S. RASHID

P. B. GAJENDRAGADKAR

K. N. WANCHOO

K. C. DAS

J.C. SHAH

N. RAJAGOPALA AYYANGAR

Art. 14

Constitution of India

Art. 14

s. 34(1A)

Income-tax Act

Art. 14

s. 34( 1)

s. 34(1A)

s. 34(1)(a)

s. 34(1A)


Rlllnclumdra Rambu

Clunnpabal

Mudholkar J.

, Fcbr1111TY 19.

SUPREME COURT REPORTS [1964]

allowed Sitabai to remain in possession of Ramdhan's movables.

At least, he would have obtained from her a document containing the list and description of the movables and also an admission to the effect that she was entrusted with them by the appellant and that she had no right in them.

Had she refused to execute such a document, one would have naturally expected the appellant to institute a suit for their possession immediately. There is no explanation for the absence of such a document, and thus this is also a circumstance which militates against the genuineness of the will.

In the circumstances, we hold that the High Court was right in rejecting the evidence of the attesting witnesses and the scribe as well as of the appellant with regard to the execution of the will by Ram4han. ·

We accordingly uphold the judgment of the High Court, and dismiss the appeal with costs.

Appeal dismissed.

K. S. RASHID & SONS AND ANOTHER

COMMISSIONER OF INCOME-TAX, U.P. AND

OTHERS

(P. B. GAJENDRAGADKAR, C.J., K. N. WANCHOO, K. C. DAS

GUPTA, J.C. SHAH AND N. RAJAGOPALA AYYANGAR JJ.)

Income-tax-Proceedings under s. 34(1A}-Applicability of other relevant provisions of the Act-Slction 34( 1.A.) whether contravenu Art. 14 of the Constitution-Indian Income-tax Act, 1922 (11 of 1922), rs. 34(1), 34(1A)-Constitution of India, Art. 14.

The validity of s. 34(1A) of the Income-tax Act was challenged by the assessees as contravening Art. 14 of the Constitution. It was contended, that th'e remedy by way of appeals and revisions availablo in cases under s. 34( 1) was denied to the assessees against whom proceedings were taken under s. 34(1A), and that while under s. 34(1)(a), as it then stood, the assessing authority could not act beyond 8 years, this protection was not available to assessees against whom action was taken under s. 34(1A).

Held: Section 34(1A) was valid and did not contravene Art. 14 of the Constitution.

It could not have been the intention of the legislature when it enacted s. 34( IA) that the procedure prescribed by the relevant provisions of the Act beginning with s. 22 sho11ld not be applicable to proceedings taken under s. 34(1A), and that the procedure to be followed in the said proceedings and the powers to be exercised by the Incometax Officers dealing with them should be, what is vaguely described as "the inherent or incidental powers" of such officers. The words "thereupon" and "accordingly" in s. 34(1A) seems to emphasise the applicability of the relevant provisions of the Act to the proceedings taken under s. 34(1A). ·

The object of the legislature being to catch income which had escaped assessment, it would be legitimate for the legislature to deal with the class of assessees in whose cases the income which had escaped assessment was much larger, because that would be a basis for rational classification which has an intelligible connection with the object intended to be achieved by the statute.

Jai Kishan Srivastava v. lncOmel(u Officer, Kanpur, l.L.R. [1959] II All. 451, approved.

Sura; Mull Mohta v. A. V. Viswanatha Sastri, [1955] 1 S.C.R. 448 and Shree Meenakshi Mills Ltd.. Madurai v. Sri A. V. Yiswanatha Sastri, [1955]1 S.C.R. 787 referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 37-40 of 1963.

Appeals from the judgment and decree dated August 13, 11, 1259 .. of. the Allahabad High Court in Civil Misc. Writ Petitions Nos. 870 to 873 and 349 of 1956 respectively.

WITH

Petitions Nos. 335 to 345 of 1960.

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

G. S. Pathak, S. N. Andley, Rameshwar Nath and P. L.

Vohra, for the appellants (in C.As. Nos. 37-40 of 1963).

-- M. C. Setalvad, Rameshwar Nath, S. N. Andley and P. L. Vchra, for the aq:>pellant (in C.A. No. 589/63).

('. K. Daphtary, Attorney-General, K. N. Rajagopa/ Sastri and R. N. Sachthey, for the respondents (in all the apPeals and petitions).

K. S. Rasl!U

CJ.T.

K. S. Rashid

C.J.T.

Gaiendragadkar

c. J.

F"ebruary 19, 1964.

The Judgment of the Court was delivered by

GAJENDRAGADKAR, C.J.-These civil appeals and wn; petitions !wvc been placed before us for hearing in a group, because all of them raise a common question of law about the validity of section 34(TA) of the Income-tax Act (No. XI of 1922) (hereinafter called 'the Act'). M/s. K. S.

Rashid & Son, and its partner, Rashid Ahmad, arc the appellants in Civil Appeals Nos. 37 to 40/1963, and petitioners in W.Ps. Nos. 335-345 /1960. The appeals arise out of the four writ petitions (Nos. 870-873 of 1956) filed by the firm and its partner in the High Court of Allahabad challenging the validity of the notices served upon them under s. 34 (IA) of the Act in respect of their income for the years 1941-42 to 1946-47. These writ petitions have been dismissed by the said High Court and it is with the certificate issued by it that the firm and its partner have come to this Court in appeal. The writ petitions Nos. 335-345/1960 have been filed by the same parties in this Court under Art. 32 of ti ' Constitution in respect of the notices served on them on tile 19th March. 1956 and the order of excess profit tax kicd on them. In these petitions, the same point is urged b} the parties; and that is that the notices are invalid, becau.; e s. 34(IA) is itself ultra vires. The respondents to the appeals are : the Commissioner of Income-tax, U.P.. Lucknow, and the Income-tax Officer, Central Circle IV, Delhi. The respondents to the writ petitions are : the Income-tax Officer, Central Circle IV, New Delhi, the Income-tax Officer, 'A' Ward, Meerut, the Commissioner of Income-tax, U.P., Lucknow, and the Central Board of Revenue, New Delhi.

Civil Appeal No. 589 of 1963 has bee.n brought to this Court in similar circumstances by the appellant, M/s.

Bhawani Prasad Girdharlal. The appellant had challenged the validity of the notices issued to it on the 16th August, 1955 under s. 34(1A) of the Act. The writ petition filed by the appellant has been dismissed bv th~ Allahabad High Court and it is with the certificate issued by the said High Court that the present appeal has been brought to

this Court. That is how the only question which arises for our decision in this group of matters relates to the validity of s. 34(IA) of the Act.

The argument urged in support of the challenge to the validity of the impugned section is that it suffers from the vice of contravening Art. 14 of the Constitution. It is urged that whereas under s. 34 (1) which deals with similar cases of assessees, the remedy by way of appeals and revisions under the relevant provisions of the Act is available to the assessees, that remedy is denied to the assessees against whom proceedings are taken under the impugned section.

Section 34 ( 1) thus gives a preferential treatment to the assessees who are similarly placed with the assessees dealt with under s. 34(1A); and that amounts to unconstitutional discrimination. It is also urged that in regard to cases falling under s. 34(1) (a) as it stood at the relevant time, a period of limitation of 8 years had been prescribed beyond which the assessing authority could not act, and this protection of the prescribed period of limitation is not available to the assessees against whom action is taken under the impugned section.

It is on these two grounds that the validity of s. 34 (IA) is challenged before us.

Section 34 deals with income which has escaped assess- 01ent. Section 34(1) (a) deals with cases where income has,

inter alia, escaped assessment, owing to the omission or failure on the part of the assessee to make a return of his income under s. 22 for any year, or to disclose fully and truly all material facts necessary for his assessment for that year, whereas s. 34( 1 )(b) refers to cases where income has escaped assessment notwithstanding that there bas been no omission of failure as mentioned in clause (a) on the part of the assessee. In respect of the first category of cases,

s. 34 ( 1) had provided at the relevant time that the Incometax Officer may, in cases falling under cl. (a) at any time within eight years, and in cases falling under clause (b) at any time within four years of the end of that year, serve on the assessee "a notice containing all or any of the requirements which may be included in the notice under subsection (2) of s. 22, and may proceed to assess or re-assess such income, profits or gains, or recompute the loss or

K. S. Riuh/4

C.1.T.

Gaj•ndragadkar

c. J.

J[. s. Rmhid

. v.

CJ.T.

Gaiendragadk111

c. J.

depreciation allowance; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section" .

Let us now read the relevant portion of s. 34 (1 A). This provision lays down, inter alia, that if, in any case of an assc, see. the Income-tax Officer has reason to believe:

(i) that income has escaped assessment for any year in respect of which the relevant previous yea1 falls wholly or partly within the period beginning on the 1st day of September, 1939, and ending on the 31st day of March, 1946; and

(ii) that the said income amounts, or is likely to amount, to Rs. 1 lakh or more, he may, notwithstanding that the period of eight years or. as the case may be, four years specified in subsection ( 1) has expired, in respect thereof, serve on the assessee, or, if the assessee is a company, on the ; principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 22, and may proceed to assess or reassess the income, profits or gains of the assessee for all or any of the years referred to in clause (i), and thereupon the provisions of this Act [excepting those contained in clauses ( i) and (iii) of the proviso to sub-section (1) and in sub-sections (2) and (3)' of this section J shall, so far as may be,

apply accordingly :

Provided that the Income-tax Officer shall not issue a notice under this sub-section unless he bas recorded bis reasons for doing so, and the Central Board of Revenue is satisfied on such reasons recorded that it is a fit case for the issue of such notice :

Provided further that no such notice shall be issued after the 31st day of March, 1956.

It is urged that whereas in cases falling under s. 34(1), the Income-tax Officer has to deal with the matter on the footing that the notice issued against the assessee is a notice under s. 22 ( 2), that obligation is not imposed on the Income-tax Officer while he deals with cases falling under s. 34(IA), because the words "as if the notice were a notice issued under that sub-section" which are found in s. 34(1) are omitted in s. 34(IA). It is not seriously disputed that if the notice issued under s. 34 (IA) is not deemed to be a notice under s. 22(2), the remedies by way of appeals and revisions which are prescribed by sections 30, 31, 32, 33, 33A and 33B of the Act would not be available to the assessee, and so, the main basis for the attack against the validity of s. 34{IA) rests on the hypothesis that the omission of the relevant words in s. 34 (IA) in substance deprives the assessee of the said remedies prescribed by the relevant provisions of the Act. If the assumption on which this challenge proceeds is well-founded, s. 34 (IA) may suffer from the infirmity that it contravenes Art. 14. Though, as we will later point out, there is a rational classification between the assessees fallin11: under s. 34 ( 1), and those falling under s. 34(IA), thit rational classification would not justify the denial of the right of appeal to the persons included in s. 34(IA). The question thus presented is one of construction.

Before dealing with the construction of s. 34 (IA), it would be necessary to refer very briefly to the background of the enaotment of the said section. This section was introduced by an amendment in the Act on the 17th July, 1954, and that was because s. 5 ( 4) of the Taxation on Income (Investigation Commission) Act (No. 30 of 1947) was struck down by this Court as unconstitutional on May 28, 1954, in Suraj Mall Mohta and Another v. A. V.

Viswanatha Sastri and Another(1 ). In that case, while examining the validity of s. 5 ( 4) of the Investigation Commission Act. this Court held that the persons brought within the mischief of the said section belong to the same class of persons who fall within the ambit of s. 34 of the Act and are dealt with by s. 34 ( 1 ) , and in view of the

(I) [19SS) I S. C. R. 448.

K. S. Radl4

.v.

CJ.T.

Gaf•ndragadl:ar

c. 1.

JC,. s. Rashid

v. c.i.r.

Ga/endragadkar

c. J.

fact that tlle procedure prescribed by S; 5 ( 4) of the Jnvesiigation Commission Act was very much less favourable to the assessees than the one available to them if action was taken against them under s. 34 (1), the conclusion reached was that the impugned s. 5 ( 4) was unconstitutional. It is unnecessary to refer to the several grounds mentioned by Mahajan C.J. who spoke for the Court in striking down the impugned section.

After this judgment was pronounced, the legislature intervened and enacted s. 34 (IA). That, however, was not the end of the matter.

When s. 34(1A) was introduced in the Act, there remained two statutory provisions dealing with substantially the same subject-matter, section 5 (1) of the Investigation Commission Act and s. 34 (1) of the Act.

In Shree Meenakshi Mills Ltd., Madurai v. Sri A. V.

Viswanatha Sastri and Another('), a point was raised before this Court as to whether it was open to the Income-tax Department to invoke s. 5 ( 1) of the Investigation Commission Act after s. 34 (IA) of the Act was enacted, and this Court held that it was not, because on comparing the two relevant provisions, s. 5 ( 1), according to the decision of this Court, contravened Art. 14 of the Constitution. That is bow, s. 5 ( 1) became a dead letter and the Investigation Commission, in consequence, ceased to function. The cases which bad been referred to that Commission and which had not been completed had, therefore, to be taken up under s. 34(1A) of the Act.

Thus. it would be noticed that the present controversy bas bad a somewhat chequered career.

The first challenge was to s. 5 ( 4) of the Investigation Commission Act; when the challenge succeeded and the said section was struck down in the case of Suraj Mall l\1ohta(2) the legislature intervened and s. 34(IA) was added in the Act.

Nevertheless, the cases pending before the Investigation Commission were sought to be continued before the said Commission under s. 5 ( 1) and this section was struck down in the case of Shree Meenakshi Mills Ltd.('); and, now, that proceedings against the same class of assessees are sought to be continued under s. 34(1A), it is urged thats. 34(1A) of the Act itself is invalid. It is in

(I) [1955] I S.C.R. 787.

(2) [1955) I. S.C.R. 441.

the light of this background that the controversy between the parties in the present proceedings has to be judged.

Reverting then to the question of construction, the narrow point which needs to be examined is, what is the effect of the omission to include in s. 34(IA) the clause "as if the notice were a notice issued under that sub-section" which is to be found in s. 34 (1)?

In dealing with this question, we think it would not be unreasonable to bear in mind that when the legislature enacted s. 34(IA), it must have desired to remove the infirmities which had rendered s. 5 ( 4) of the Investigation Commission Act invalid.

In other words, the legislature must have presumably wanted to afford to the assessees in respect of whom s. 34(IA) was intended to be invoked, the same remedies that were available to .the assessees covered by s. 34 (1). Though the importance or significance of this consideration cannot be unduly emphasised, it cannot be said that •this consideration is altogether irrelevant.

We have already read the relevant portion of s. 34(IA) and. we have seen that it requires that a notice containing all or any of the requirements which may be included in the notice under s. 22, sub-section (2) has to be issued. In other word~. the notice which is required to be issueA. is, in terms, in a sense referable to s. 22(2), because the legislature has provided that it must contain all or any of the requirements which would be included in such a notice.

Then, s. 34(JA) provides that after issuing the notice on the r.ssessee in the manlier prescribed by it, the Income-tax Officer may proceed to assess or reassess the income, profits or gains of the assessee for the relevant years. In the context, it would, we think, be reasonable to hold that the assessment or reassessment which has to follow the issue of the notice, must be assessment or reassessment in accordance with the relevant provisions of the Act, and this is made very clear by the clause that follows, because the said clause begins with the word "thereupon" which indicates that when the process of assessment or reassessment commences, the clause beginning with the word "thereupon" comes into operation and this clause requires that the nrovisions of the

134-159 S.C.-53

K. s. Ra11dtl ..

CJ.T.

Gaiendra1adw

c. I.

/C. 8. l!Juhld

CJ.T.

Gof*ndragadkar

c. /.

Act shall, so far as may be, apply accordingly.

The word "accordingly" like the word "thereupon" seems to emphasise the applicability of the relevant provisions of the Act to the proceedings taken under s. 34(IA); otherwise there is no particular reason which would have justified the further provision in the section excepting certain provisions of the Act which are held to be inapplicable to the proceedings under s. 34(IA).

It is true that s. 34( I) uses the clause "as if the notice were a notice issued under that sub-section" and s. 34(IA) does not; but the two provisions were not inserted in the Act at the same time; s. 34( I) in the present form was enacted in 1948, whereas s. 34(IA) was enacted in 1954.

It is quite likely that the draftsman who drafted s. 34(IA) took the view that the last clause in question which occurred in s. 34 (1) was really superfluous and that may account for its omission in s. 34(IA).

In our opinion, therefore. construing the relevant words in s. 34(IA), it would be difficult to accede to the argument that the said omission was deliberate and significant, and its consequence is that the provisions of s. 22 and all other provisions consequent upon the application of s. 22 become irrelevant in dealing with cases under s. 34(IA).

If s. 22 is held to be inapplicable to proceedings under s. 34(IA), fue consequence would be entirely irrational and fantastic. The powers conferred on th~ Income-tax Officer under s. 23 (2) to take evidence would then not be available to him, and, indeed, all the powers prescribed and the procedure laid down by s. 23 would become irrelevant.

Likewise, the provisions in regard to appeals and revisions contained in sections 30, 31, 33, 33A and 33B would also be inapplicable. As we have already seen, the inapplicability of these provisions is , the main foundation of the attack against the validity of s. 34(IA).

It is, however, urged that though the specific powers conferred by s. 23 may not be available to the Income-tax Officer, be may, nevertheless, exercise similar powers, because the authority to assess must itself include such powers as incidental to assessment. The best judgment assessment which is authorised by s. 23 ( 4) may, it is suggested, be made even in cases falling under

1. 34(IA) under the inherent authority of the Income-tax Officer.

In our opinion, this approach is wholly misconceived.

We are satisfied that it could not have been the intention of the legislature when it enacted s. 34(IA) that the procedure prescribed by the relevant provisions of the Act beginning with s. 22 should not be applicable to proceedings taken under s. 34(1A), and that the procedure to be followed in the said proceedings and the powers to be exercised by the Income-tax Officers dealing with th'.llil

should be what is vaguely described as 'the inherent or incidental powers' of such officers. Therefore, we have no hesitation in holding that the challenge made to the validity of s. 34 (IA) on the ground that the remedy by way of appeals or revisions which is ayailable to the assessees against whom proceedings are taken under s. 34(1) is not available to the assessees who are covered by s. 34(IA), cannot be sustained.

The other contention raised against the validity of s. 34(1A) is based on the fact that at the relevant time, s. 34(1 )(a) dealt with cases similar to those falling under

1. 34(1A), and yet. whereas in the former category of cases a period of limitation was prescribed as eight years there is no such limitation in regard to the latter, and that, it is urged, means unconstitutional discrimination. We are not impressed by this argument. It is true that in a broad sense both s. 34(1 )(a) and s. 34(IA) deal with cases of income which has escaped assessment. and in that sense, the assessees against whom steps are taken in respect of their income which has escaped assessment can be said to form a similar class; but the similarity between the two categories disappears when we remember that s. 34(1A) is intended to deal with assessees whose income has escaped assessment during a specified period between 1st of September, 1939 and the 31st of March. 1946.

It is well-known that that is the period in which as a result of the War, huge profits were made in business and industry.

The second point which is very important is that in regard to the cases falling under s. 34(IA), action can be taken only where the income which has escaped assessment is likely to amount to Rs. 1 lakh or more. In other worcb.

1:. s. &u~

CJ.T.

Gajendragadklu

c. J.

lfllf .t. If. Ro.JtiJ

CJ.T.

Oa/tndratadkar

C. I.

it is only in regard to cases where the escaped income is of a high. magnitude that the restriction of the period of limitation has been removed.

It is difficult to accept the argument that the legislature was not justified in treating this smaller class of assessees differently on the ground that the profits made by this class were higher and the income which had escaped assessment was correspondingly of a much larger magnitude. The object of the legislature being to catch income which had escaped assessment, it would be legitimate for the legislature to deal with the class of assessees in whose cases the income which had escaped assessment was much larger, because that would be a basis for rational classification which has an intelligible connection with the object intended to be achieved by the statute.

It was suggested that as a result of the provisions contained in s. 34(l)(a) and s. 34(1A) one year would overlap; and that may be true. But the argument of overlapping has no significance because it makes no difference whether action is taken under s. 34( 1), or s. 34(1A) in respect of that year. Once the notice is served under s. 34(1) or s. 34(1A), the rest of khe procedure is just the same and all the remedies available to the assessees are also just the same. Therefore, we see no substance in the argument that the absence of the restriction as to period of limitation under s. 34(1A) introduces any infirmity in the said provision. In the result, we must hold that s. 34(1A) is valid and has not contravened Art. 14 of the Constitution.

That is the effect of the majority view taken by the Allahabad High Court in Jai Kishan Srivastava v. lncome-tax Officer,

Kanpur and Another(').

There is one minor additional point which has been argued before us by 'Mr. Setalvad in Civil Appeal No. 589 of 1963, and that point is based upon tbe requirement prescribed by the proviso , to s. 34(1A) that the Income-tax Officer shall not issue a notice unless he has recorded his reasons for doing so, and the Central Board of Revenue is satisfied on such reasons recorded that it is a fit case for the issue of such notice. The argument is that the require-

( I) I. L. R. (19591 Il All. 451.

ment prescribed by the proviso constitutes a condition precedent for the exercise of the authority conferred on the Income-tax Officer by s. 34(1A) and since that requirement is not shown to have been satisfied in his case, the appellant in C.A. No. 589 of 1963 must succeed even if s. 34(1A) is held 'to be valid.

We are not impressed by this argument.

What was urged before the High Court by the appellant was not that no reasons had been recorded by the Income-ta1 Officer as required by the proviso; the argument was that the appellant had not been given a copy of the said reasons and it appears to have been urged that the appellant wa' entitled to have such a copy.

This latter part of the case has not been pressed before us by Mr. Setalvad, and rightly.

Now, when we look at the pleadings of the parties, it is clear that it was assumed by the appellant that reasons had been recorded and in fact, it was positively affirmed by the respondent that they had been so recorded; the controversy being, if the reasons are recorded, is the assessee entitled to have a copy of those reasons? Therefore, we do not sec how Mr. Setalvad can suggest that no reasons had in fact been recorded, and so, the condition rprecedent prescribed by the proviso had not been complied with.

The result is, all the Civil Appeals and Writ Petitions in this group fail and are dismissed.

There would be no order as to costs.

Appeals and Writ Petitioru diJmisud.

MEMON ABDUL KARIM HAJI TAYAB

DEPUTY CUSTODIAN GENERAL, NEW DELHI AND

OTHERS

(P. B. GAJENDRAGADKAR,'C.J., K. N. WANCHOO, K. C. DAS

GUPTA, J. C. SHAH AND N. RAJAGOPALA AYYANGAJl JJ.)

vacuee Property-Money deposited wlth an Indian by u ptron wi'lo

migrated to Pakistan-Liability to pay that amount to tM Cllltl>' dia-Admlniltration of E•ocw• Pro~1f1 Act, 1950 (31 al

J:., I. Railil ...

C./.T.

Gai•ndragodklir

c. J.

ltlH

Sitabai

Ramdhan

S. RASHID & SONS AND ANOTHER

P. B. GAJENDRAGADKAR, C.J.

K. N. WANCHOO

GUPTA, J

C. SHAH

N. RAJAGOPALA AYYANGAR JJ.

Art. 14

Constitution of India

Art. 14

s. 34(1A)

Income-tax Act

Art. 14

s. 34( 1)

s. 34(1A)

s. 34(1)(a)

s. 34(1A)

Section 34(1A)

Art. 14

s. 34( IA)

s. 22

s. 34(1A)

s. 34(1A)

s. 34(1A)

Jai Kishan Srivastava

[1955] 1 S.C.R. 448

CIVIL APPELLATE JURISDICTION

Allahabad High Court

Art. 32

Constitution of India

G. S. Pathak

S. N. Andley

Rameshwar Nath

P. L.

Vohra

M. C. Setalvad

P. L. Vchra

K. Daphtary

K. N. Rajagopa/

R. N. Sachthey

K. S. Rasl!U

K. S. Rashid

C.J.T.

Gaiendragadkar

GAJENDRAGADKAR

section 34(TA)

Income-tax Act

K. S.

Rashid & Son

Rashid Ahmad

High Court of Allahabad

s. 34

Art. 32

tile 19th March. 1956

s. 34(IA)

Income-tax Officer, 'A' Ward, Meerut

Central Board of Revenue, New Delhi

Bhawani Prasad Girdharlal

16th August, 1955

s. 34(1A)

s. 34(IA)

Art. 14

s. 34

Section 34

s. 34(1A)

s. 34(1)

s. 34

Section 34

Section 34(1)

s. 22

s. 34( 1 )(b)

s. 34

s. 22

K. S. Riuh/4

s. 34

31st day of March, 1946

section 22

31st day of March, 1956

s. 34(1)

s. 22

s. 34(IA)

s. 34(1)

s. 34(IA)

s. 34

s. 22(2)

sections 30, 31, 32, 33, 33A and 33B

s. 34

s. 34

s. 34

Art. 14

s. 34

s. 34(IA)

s. 34(IA)

s. 34

17th July, 1954

s. 5

May 28, 1954

s. 5

s. 34

s. 34

K. S. Radl4

s. 34

s. 5

Mahajan

s. 34

s. 34(1A)

section 5

s. 34

s. 5

s. 34

s. 5

Art. 14

s. 5

s. 34(1A)

s. 5

Suraj Mall

s. 34(IA)

s. 5

Shree Meenakshi Mills Ltd.

s. 34(1A)

s. 34(IA)

s. 34

s. 34(IA)

s. 5

s. 34(IA)

s. 34

s. 34(IA)

s. 22

s. 22(2)

s. 34(JA)

l!Juhld

Gof*ndragadkar

s. 34(IA)

s. 34(IA)

s. 34( I)

s. 34(IA)

s. 34( I)

s. 34(IA)

s. 34(IA)

s. 34

s. 34(IA)

s. 34(IA)

s. 22

s. 22

s. 34(IA)

s. 22

s. 34(IA)

s. 23

s. 23

sections 30, 31, 33, 33A and 33B

s. 34(IA)

s. 23

s. 23

s. 34(IA)

s. 22

s. 34(1A)

s. 34

s. 34(1)

s. 34(IA)

s. 34(1A)

s. 34(1 )(a)

s. 34(1 )(a)

s. 34(IA)

s. 34(1A)

1st of September, 1939

31st of March.

s. 34(IA)

s. 34(l)(a)

s. 34(1A)

s. 34( 1)

s. 34(1A)

s. 34(1)

s. 34(1A)

s. 34(1A)

s. 34(1A)

Art. 14

Setalvad

s. 34(1A)

s. 34(1A)

s. 34(1A)

P. B. GAJENDRAGADKAR,'C.J.

J. C. SHAH

N. RAJAGOPALA AYYANGAJl


6 S.C.R.

SUPREME COURT REPORTS

ment prescribed by the proviso constitutes a condition precedent for the exercise of the authority conferred on the Income-tax Officer by s. 34(1A) and since that requirement is not shown to have been satisfied in his case, the appellant in C.A. No. 589 of 1963 must succeed even if s. 34(1A) is held 'to be valid.

We are not impressed by this argument.

What was urged before the High Court by the appellant was not that no reasons had been recorded by the Income-ta1 Officer as required by the proviso; the argument was that the appellant had not been given a copy of the said reasons and it appears to have been urged that the appellant wa' entitled to have such a copy.

This latter part of the case has not been pressed before us by Mr. Setalvad, and rightly.

Now, when we look at the pleadings of the parties, it is clear that it was assumed by the appellant that reasons had been recorded and in fact, it was positively affirmed by the respondent that they had been so recorded; the controversy being, if the reasons are recorded, is the assessee entitled to have a copy of those reasons? Therefore, we do not sec how Mr. Setalvad can suggest that no reasons had in fact been recorded, and so, the condition rprecedent prescribed by the proviso had not been complied with.

The result is, all the Civil Appeals and Writ Petitions in this group fail and are dismissed.

There would be no order as to costs.

Appeals and Writ Petitioru diJmisud.

MEMON ABDUL KARIM HAJI TAYAB

DEPUTY CUSTODIAN GENERAL, NEW DELHI AND

OTHERS

(P. B. GAJENDRAGADKAR,'C.J., K. N. WANCHOO, K. C. DAS

GUPTA, J. C. SHAH AND N. RAJAGOPALA AYYANGAJl JJ.)

vacuee Property-Money deposited wlth an Indian by u ptron wi'lo

migrated to Pakistan-Liability to pay that amount to tM Cllltl>' dia-Admlniltration of E•ocw• Pro~1f1 Act, 1950 (31 al

J:., I. Railil ...

C./.T.

Gai•ndragodklir

c. J.

ltlH

Jlnnon Abdul

Llrim

D7 C111todl1111 General

' 19SO) Amended 1. 48 (Act No. 91 of 19S6)-Limitation Act, 1908 (9 o/ 1908), Art. 60.

Rupees 8S, OOO/· was deposited with the appellant by his sister in January 1946. The appellant's sister migrated to Pakistan sometimes between June to August 1949. The Assistant Custodian called upon the appellant to pay this sum lying in deposit under s. 48 of the Administration of Evacuee Property Act, 1950. The appellant pleaded that the amount could not be recovered from him because the money bad 1Jecn given to him as a loan and its recovery was barred in January

194S. The Assistant Custodian rejected the contention of the appellant and directed him to pay the amount under s. 48 of the Act, as it then stood. This decision was affirmed . in appeal as well as in revision.

Then the appellant moved a writ petition before the High ourt which was dismissed by the single Judge. On Latten Patev.t Appeal the High Court held that the amount was not recoverable under s. 48 of the

Act as it stood at the relevant time. This decision was given oo December 9, ,1957, In the meantime, s. 48 had been amended on October', 22, 195'6. On January' 22, 1958 another notice of demand was sl:rved on the appellant by the Assistant Custodi•n, The Assistant Custpdian again directed the amount to be rccoyered. 1hc appc!Jaot preferrpd an appeal before 'the Custodian-General. 'The Custodian General allowed the appeal and remanded the proeedings for further enquiry a.s directed by him. After the remand further evidence wa.t taken and it was held that the amount in question was payable by the appellant as it was a deposit and was still recoverable when th&

property vested in the Custodian. Thereupon the appellant preferred an appeal to the Custodian-General and that appeal was di5missed.

Then the appellant applied to this Court for special leave which wu sranted. Hence the appeal.

H<ld: (i) Sub-ss. I and 2 of the amended ' 48 of the Administn>- tion of Evacuee Property Act are clearly procedural and would apply to all cases which have to be investigated in accordance therewith after October 22, 1956, even though the claim may have arisen before the amended section was inserted in the Act. It is well-settled that procedural amendments to a Jaw apply, in the absence of anything to the contrary, retrospectively in the sense that they apply to all actions after the date they come into force even though the actions may have begun earlier or the claim on which the action may be based may be of an anterior date. In the present case when the Assistant Custodian issued notice to the appellant on January 22, 1958, claiming the amount from him, the recovery could be dealt with under sub-ss, (I) and (2) et the amended 1. 48, as they are merely procedural provisions.

(ii) ID the present case the property which vested in the Custodian was not the actual money in specie lying with the appellant who must be treated as a banker with respect to the property with him; on the other band the property which vested in the Custodian would be tbt riaht of the appellant's sister to recover the amount from the appel18111

and that would be incorporeal property in the form of an actionable claim. It is in respect of that actionable claim that the Custodian can proceed under s. 48 sub-ss. (I) and (2), to recover the sum payable lo him in respec: o< illat property, namely, the actionable claim.

The Custodian. could not take action under s. 9 by physically seizing the amount because the amount cannot be treated as specific property which is liable to be seized under that section.

(iii) As this amount was a deposit, limitation would run at the earliest from the date of demand and there is no evidence that any demand was made by the appellant's sister for the return of the money before she migrated to Pakistan. Therefore, the period of limitation had not even begun to run on the date the appellant's sister migrated to Pakistan, assuming Art. 60 of the Limitation Act No. 9 of 1901 •rrlied. Consequently the right o! the appellant's sister to recover the amount vested in the Custodian and was not barred by limitation al tbe time "'hen she became an evacuee.

CrvIL APPELLATE JURiso1cnoN: Civil Appeal No. 119 of 1963.

Appeal by special leave from the judgment and order dated January 16, 1961 of the Deputy Custodian-General, New Delhi in Appeal No. 172-AI SUR/ 1960.

M. C. Setalvad, A(iqur Rehman and K. L. Hathi, for the appellant.

C. K. Daphtary, Attorney-General, K. S. Chawla and B. R. G. K. Achar, for the respondents.

February 19, 1964.

The Judgment of the Court was delm:red by

1'64 M•mo';;'"Aw

KJJrlM

D7. !:1111""'-

G•Mrol -

W ANCHOO, J .-This is an appeal by special leave against w~ J, the order of the Deputy Custodian General, and the question involved is whether the appellant is liable to pay Rs. 85.000/- to the Custodian. The matter has a long history behind it which it is necessary to set out in order to understand the point now in dispute in the present appeal. The money in question was deposited with the appellant by his sister as far back as January 1946.

The total amount deposited was Rs. 90,000/-, but the appellant's sister took back Rs. 5,000/-, with the result that the balance of Rs. 85,000/ • remained deposited with the appellant The appellant's sister theroafter migrated to Pakistan sometimes between June to Augull

196'

Mmon Abdul

K"'im

Ib Ciutodian General

Wanchoo J.

1949. Sometime later, the Assistant Custodian General called upon the appellant to pay this sum lying in deposit under s. AS of the Administration of Evacuee Property Act, No. XXXI of 1950, (hereinafter referred to as the Act). The _appellant contested the matter on the ground that the money had been given to him as a loan and its recovery was barred in January 1949 long before his sister had migrated to Pakistan, and therefore the amount could not be recovered from him. The Assistant Custodian however directed the recovery of the amount as arrears of land revenue under s. 48 of the Act. as it then stood. The matter was taken in appeal before the Custodian, Saurashtra, but the appeal failed. The appellant then went in revision to the Custodian General, and the revision also failed.

Then followed a writ petition by the appellant before the Saurashtra High Court in 1955.

The writ petition was dismissed by a learned Single Judge; but on Letters Patent Appeal the appellant succeeded, the High Court holding that the amount was not recoverable under s. 48 of the Act as it stood at the relevant time. This decision was given on December 9, 1957. In the meantime, s. 48 had been amended on October 22, 1956 and we shall refer to this amendment in due course.

After the appellant had succeeded in the High Court, another .notice of demand was served on him by the Assistant Custodian on January 22, 1958, and after hearing the objections of the appellant, the Assistant Custodian again directed the amount to be recovered.

The appellant then took the matter in appeal to the Custodian General. The Custodian General allowed the appeal in August I 958 and remanded the proceedings for further enquiry as directed by him. The Custodian General then held that s. 48 as amended applied to the fresh proceedings which began on the notice issued by the Assistant Custodian in January 1958.

He further held that the amount was recoverable under the amended s. 48 provided it was due to the evacuee on the date the property of the evacuee vested in the Custodian. He was therefore of opinion that it would have to be determined when the sister o.{ the appellant migrated and whether the amount was due to her on the date of her migration and had not become barred by the law of limitation on that date. He was further

of opinion that the question whether the transaction amounted to a Joan or a deposit had to be determined as there were different periods of limitation for these two types of transactions. He therefore remanded the matter for disposal after finding the facts in accordance with the directions given by hi.t<1.

After the remand further evidence was taken and it was held that the amount in question was payable by the appeilant as it was a deposit and was still recoverable when the property vested in the Custodian. Thereupon the appellant again went in appeal to the Custodian General and \hat appeal was dismissed on February 6, 1961. Then the appellant applied to this Court for special leave which was granted; and that is how the matter has come up before us.

Two questions have been urged befo; e us oa behalf of the appellant. The first is whether the amended s. 48 can be applied to the present case. The second is whether the claim of the Custodian is barred •wen on the basis of the, trans.action between the appellant and his sister being a deposit and not a loan.

The amended s. 48 came into the Act by Act No. 91 of 1956 from October 22, 1956 and runs as follows: -

" 48. Recovery of certain sums as arrears of land

revenue: -m Any sum payable to the Government or to the Custodian in respect of any evacuee property, under any agreement, express or implied, lease or other document or otherwise howsoever, may be recovered in the same manner as an arrear of land revenue.

(2) If any question arises whether the ; um is payable to the Government or to the Custodian within the meaning of sub-section (I), the Custodian shall, after making such inquiry as he may deem fit, and giving to the person by whom the sum is alleged to be payable an opportunity of being heard, decide the question; and the decision of the Custodian shall, subject to any appeal or revision under this Act, be final and shall not be called in question bv any court or other authority.

Memon Abdul Karim

Dy.

Cun0<liall General

Wanchoo /,

19/H

Memon Abdul Karim

(3) For the purpose of this section, a sum shall be deemed to be payable to the Custodian notwith-

0,.

Custodlll11 General

standing that its recovery is barred by the Indian Limitation Act, 1908 (9 of 1908), or any other law for the time being in force relating to limi- Wanchoo J. tation of action." It will be seen that this is mainly a procedural section replacing the earlier s. 48 and lays down that sums payable to the Government or to the Custodian can be recovered thereunder as arrears of land revenue. The section also provides that where there is any dispute as to whether any &um is pay- .able or not to the Custodian or to the Government, the

Custodian has to make an inquiry into the matter and give the person raising the dispute an opportunity of being heard and thereafter decide the question.

Further, the section makes the decision of the Custodian final subject to any appeal or revision under the Act and not open to question by any court or any other authority. Lastly the section provides t1:Jat the sum shall be deemed to be payable to the Custodian notwithstanding that its recovery is barred by the Indian Limitation Act or any other law for the time being in force relating to limitation of action. Sub-sections (!) and

(2) are clearly procedural and would apply to, all cases which have to be investigated in accordance therewith after October 22, 1956, even though the claim may have arisen before the amended section was inserted in the Act. It is well settled that procedural amendments to a law apply, in the absence of anything to the oontrary, retrospectively in the sense that they apply to all actions after the date they come into force even though the actions may have begun earlier or the claim on which the action may be based may be of an . anterior date. Therefore, when the Assistant Custodian issued notice to the appellant on January 22, 1958 claiming the amount from him, the recovery could be dealt with under sub-ss. (I) and (2) of the amended s. 48, as they are merely procedural provisions.

But it is urged on behalf of the appellant that sub-s. (!) in terms does not apply to the present case, and if so, sub-s. (2) would also not apply. The argument is that under sul>-s. (!) it is only any sum payable to the Government or to the Custodian in respect of any evacuee :property which can be recovered as arrears of land revenue.

Therefore, the argument runs, , wacuee property itself cannot be recovered under sub-s. (!), for that sub-section only provides for recovery of any sum payable in respect of any evacuee property. In this connection reference has been made to s. 9 of the Act, which lays down that if any person in possession of any evacuee property refuses or fails on demand to surrender possession thereof to the Custodian, the Custodian may use or cause to be used such force as may be necessary for taldng possession of such property and may, for this purpose, after giving reasonable warning and facility to any woman not appearing in public to withdraw, remove or break open any lock, bolt or any door or do any other act necessary for the said purpose. The argument is that the Custodian can only take action for recovery of evacuee property under this section. We are of opinion that the argument is misconceived. Section 9 deals with the recovery of immovable property or specific movable property, wliich can be physii; ally seized; It does not deal with incorpc;>real evacuee property which, 'may vest in the Custodian and which, for xample, may be of the nature of an actionable claim. " So far as actionable clllims are concerned, they are dealt with by s. 48 as amended read with

1. 10 (2) (i). It is also a misconception to think that the amount of Rs. 85.000/- which is involved in this case is actually evacuee property. It is true that under s. 48 as amended, the Custodian can take action for recovery of such sums as may be due in respect of any evacuee property and

if the sum of Rs. 85,000/· which was deposited with the appellant is actually evacuee property, the Custodian may not be able to take action under s. 48 (I) and (2) in respect of the same. But the property which vested in the Custodian was not the actual money in specie lying with the appellant who must be treated as a banker with respect to the property with him; on the other hand the property which vested in the Custodian would be the right of the appellant's sister to recover the amount from the appellant and that would be incorporeal iproperty in the form of an actionable claim. It -is in respect of that actionable claim that the Custodian can proceed under s. 48, sub-ss. (I) and (2), to recover the sum payable to him in respect of that property, namely, the action. able claim. The contention of the appellant that s. 48 (!) will not apply to the recovery of this sum of money must

Jlemon Abdul Karim

Dy.

CUJtodia General

ff' IUICitOO /.

Me"'o" Abdul ~

Dy.

Cu81oditJ11 General

Wonchoo J.

therefore fail and the Custodian would have the right to recover this sum of money as it is payable in respect of the evacuee property of the appellant's sister, namely, the right which she had to recover the sum from the appellant, and it is this right which vested in the Custodian. The Custodian could not take action under s. 9 by physically seizing the amo!lnt because the amount cannot be treated as specific property which is liable to be seized under that section. If the <!ppellant's sister had the right to recover this amount from the appellant that right would be incorporeal property which would vest in the Custodian and in respect of which action could be taken under s. 48 as amended and not under s. 9 of the Act. The contention of the appellant that s. 48,

(t) and (2) do not apply to this case must therefore fail.

The next contention is that in any case treating the amount as a deposit the right to recover it had become barred and therefore the Custodian could not recover it under this section and that sub..s. (3) of s. 48 would not apply as it affects vested rights and is not procedural in nature and therefore could not be applied retrospectively.

Some dates would be relevant in this connection. On the findings of the authorities concerned, it appears that the deposit was made sometime in January 1946. The appellant's sister migrated sometimes between June to August 1949.

According to the law in force in that area at the relevant time, on the date of migration of the appellant'!

sister, she became an evacuee and her property would vest in the Custodian on such date. So her right to recover this amount from the appellant would vest in the Custodian sometime between June to Augut 1949, if it was still alive under the law of limitation, even apart from the que"tion that in such cases only the remedy is barred though the right remains.

Further as this was a deposit, limitation would run at the earliest from the date of demand and there is no evidence that any demand was made by the appellant's sister for the return of the money before she migrated to Pakistan. Therefore, the period of limitation had not even begun to run on the date the appellant's sister migrated to Pakistan, assuming art. 60 of the Limitation Act, No. 9 of 1908 applied. C011Sequently the right of the appel-

!ant's sister to recover the amount vested in the Custodian and was not barred by limitation at the time when she became an evacuee. The demand was made for the first time on January 10, 1952 by the Assistant Custodian and time would run from that date, at the earliest.

Then it is urged that even if the actionable claim vested in the Custodian, the demand in this case was made for the first time on January 10, 1952, and therefore under art. 60 of the Limitation Act, the right to recover the amount would be barred in January 1955, and consequently no proceeding could be taken under s. 48 to recover the same after January 1955. It is further urged that the amended Act came into force. on October 22, 1956 and su!J..s. (3) would only apply to such cases where the limitation had not expired before that date. We do not think it necessary for purposes of the present appeal to decide the effect of su!J..s. (3) of s. 48, for the appellant never contested before the authorities concerned that recovery could not be made under s. 48 even if the omount was treated as a deposit. What the appellant had contended before the authorities concerned was that the recovery would b~ barred as the amount was given to him as a loan. The appellant therefore cannot now for the first time in this Court take the plea that recovery could not be made under s. 48 and sub-s. (3) thereof would not apply even if the amount is treated as a deposit. This contention thus raised in this Court for the first time raises a question as to the effect of sub.s. (3) of s. 48. Besides the effect of s. 48 (3), it is contended for the respondent that if this question had been raised before the proper authorities evidence might have been led to show that the recovery was not barred, for the case proceeded on the assumption that Art. 60 of the Limitation Act applied and proper defences could have been raised as for example the conditions on which the eposit was made i.e. whether on demand or otherwise and acknowledgements of liability made by the appellant. Such defence would have raised questions of fact which have never been investigated. Therefore it is urged that the appellant should not be allowed to raise the point that the recovery would be barred even if the amount was treated as a deposit and should be confined to his case

IHI

MtntQn Abdul Karim

Vy.

Cwtodian General

W llllC/wo I.

M•mpn Abdul Karim

v. "1 Ciutodla11 G•noral

'WIUIChoo /.

that this was a loan and not a deposit, for he never pleaded at any time before the authorities concerned that even if it was a deposit the recovery would be barred by time. We are of opinion that there is force in this contention on behalf of the respondents and we are not prepared to allow the appellant to raise the questfon whether the recovery would be barred eve.n if the amount is treated as a deposit.

In this view of the matter, it would not be necessary to consider the exact effect of s. 48 ( 3) and to decide whether it will apply even to cases where the recovery had become barred under the Limitation Act before October 22, 1956.

We therefore do not allow the appellant to raise the point that the recovery would be barred even if the amount was

a deposit.

The appeal therefore fails and is hereby clismWed witll cos ta.

Appeal. dismissed.

STATE OF MADHYA PRADESH

BHOPAL SUGAR INDUSTRIES LTD.

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

SHAH, N. RAJAGOPALA AYYANGAll AND s. M. S!KRI JJ.)

.Iqua/ Protection of Lllw......Oeographical clas•ification du• to hiSlorical

ttOIOn.t whethef valid-II upheld-Time-limit for adjustments, .ii pos1il!le-Difierential trlatment-Mere plea not su/ficient-Coriitlfution oi India, A.rt. 14--Bhopal State Agricultural Income-tax A.ct,

!9S3 (Bhopal A.ct 11 of 1953) .

The respondent, a company incorporated in the former State .of.

Bhopal, presented a petition in August 1960 under Art. 226 of Iha Constitution "in the High Court of Madhya Pradesh for a writ restraini111 the Stale of Madhya Pradesh from enforcing the Bhopal State Agri cliltural Income-tax Act, 1953, claiming that the Act contravened Iha respondent's right under Art. 14 of. the Constitution. lly the Stater lleorganisation Act, 1956 the territory of tho State of BhOPal ..,.

s. 34(1A)

s. 34(1A)

Setalvad

MEMON ABDUL KARIM HAJI TAYAB

K. N. WANCHOO

K. C. DAS

GUPTA

J. C. SHAH

N. RAJAGOPALA AYYANGAJl

Limitation Act, 1908

Art. 60

s. 48

s. 48

s. 48

December 9, ,

s. 48

October', 22, 195'6

January' 22, 1958

Evacuee Property Act

October 22, 1956

January 22, 1958

s. 48

s. 9

Pakistan

Art. 60

Limitation Act

M. C. Setalvad

A(iqur Rehman

K. L. Hathi

C. K. Daphtary

K. S. Chawla

B. R. G. K. Achar

W ANCHOO

Wanchoo

s. 48

Saurashtra

Saurashtra High Court

s. 48

9, 1957

s. 48

s. 48

s. 48

February 6, 1961

s. 48

s. 48

Memon Abdul Karim

s. 48

Limitation Act

s. 48

s. 9

Section 9

s. 48

s. 48

s. 48

s. 48

s. 48

Jlemon Abdul Karim

Wonchoo

s. 9

s. 48

s. 9

s. 48

s. 48

art. 60

Limitation Act

January 10, 1952

art. 60

Limitation Act

s. 48

s. 48

s. 48

s. 48

s. 48

s. 48

Art. 60

Limitation Act

s. 48

Limitation Act

P. B. GAJENDRAGADKAR

N. RAJAGOPALA AYYANGAll

s. M. S!KRI

Art. 226

High Court of Madhya Pradesh

Art. 14

Stater lleorganisation Act, 1956

BhOPal