8 S.C.R.

SUPREME COURT REPORTS 347

in the statute to include in that expression what in reality 1964. is not 'income, but is deemed income, the liability to CJ.'l. assessment would justifiably be limited to profits of. tlie Chu:•, J;,, a1Ul business which is computable under s. 10. \ Co.

The appeals therefore fail and are dismissed with costs.

One hearing fee.

Appeals di.rmissd.

C. PERIASWAMI GOUNDAN AND ORS.

. --v.

SUNDARESA IYER AND ORS.

(K. SUBBA RAO AND S. M. Sllll, JJ.)

/Mm rrant--Suit for_ ejectment-Defendant raised plea of LoJt Grant-

When presumption of Lo1t Grant arise.1-Whether trant i.r melvaram.

or both ,,_ .. urm.J--Right of Archaka.t-Whether ArchaktJ.f can cl&im remuneration. in a 1uit for ejectment.

The :appellants filed suits for the recovery of certain properties from tl!.e pos!e!sion of the respondents. The plaintiffs were the trwtees of the temples and the defendants were the archak!s and the alienees of tho suit properties. The!e suits were based on title and the relief a,, ked fee was the eviction of the arcbakas from the suit property z.s they. · accordi.n: to the plaintiff:!!, (appellants) bad no title to rerriain in pcssession. Tho plaintiffs claimed that the suit properties were the iJLOperties of the deity !.nd that the defendants bad no, right therein.

The archal!.S raised the plea that the title of the deity was confined enly to rr.elvaram in the plaint-!chedule landa and that they had title to the Kudivaram. Both the Trial Court and the High Court confirmed the title of the deity to both the intere!ts (VaramJ) and negatived the

title of the defendant-Archakas.

The High Court also held. that the art:h.akas were entitled to have a portion of the said properties allotted to lliem toward.J their remuneration for the services to the temples and. &a.Te a decree directing the division of the said properties into two halYes

and puttin.; the archakas in possession of one half. Against this decree of the High Court both the arch al: as and the trustees (appellants) preferred cross appeals to this Court.

Sluzh /.

July, :n .

I964 ' -\ C.. Periaswami

Slllldaresa Iyer

The main point for consideration was whether the High' Court. havitiJ held that the title to the suit property vested in the deity, had ; urisdiction to compel the trustees of the tenlple to put the arcbakas m posseSjlOA of specified extent of prop.eny towards t.cir ren.11., crtlon.

lleld: (i) The principle of a Lost Grant l'an rJ;1l}' ~-e invoked whe1cthere is. no accepta'ble evidence of the terms of the grant. In tU present case there is no scope for invoking the doctrine of Lost Gra..-it -as the terms of the grant are clear from the recitals in the loam :register

and the inam statement, which conclusively establish that both the.

Varam~ were &ranted to the deity.

Sankaranarayana Pillayan T. 11.R.E. Board, Madrtu~ I.LR. 1941- Mad. 585, Buddu Satyanarayana v. Konduru Venkatapayya, [1953] S.C.R. 1001, !rfaginiram Sitaram v. Kasturbai Manibhai, (1921) LR. 49 I.A. $4 and Mohamed Muzafar Ali Musavi v. labeda Khatun, (1930) LR. '7 I.A. 125. relied on.

(ii) The High Court erred in making an allocation of the Janda between the trustees and the archakas in a suit Coiejectment because there was absolutely no material either in the pleadings or in the evidence to make anY SU.ch apportionment. The High Court bad no option but to deliver possession. to the plaioliffs who had t;-Stab!ished

their title to the suit properties. Io aiUit for framing a s;::heme lot temple a court may in an appropriate case put the arcbaka in Pl..,_o;-e.ssion of a portion of the temple lands towards his remuneration for :icrvices of the temple; but such considerations are out of place in a suit for rjectmenL -Uk:J

. Brahmayya v. Rajaswaraswami Temple, A.l.R. 1953 ;, I:ld. . .SSO as . Yenkatadri v. Seshacharlu. LLR. 1948 lad. 46. referred to.

, (iii) On the facts of thiJ case it was held that the conducl of tho archakas, was consistent with the recitals in the inam -register, namely, that what was granted to the deity was the land i.e. both the Varam1 and that they had been put in enjoyment tbe said land in their capacity as archakas and de facto trustees.

They could not by mortgaging or otherwise alienating the property claim any right in derogation of the title of the deity. They also cannot claim any right because their namca are mentioned in addition to deity in the loam register. Their names in addition to the deity are mentioned as they were in possession (}f

the land in their capacity as de facto trustees.·

Arunachalam Chetti v. Venkata Chalapathl Guruswami2al •. {1920) I.LR., 43 Mad. 253 and Secretary of State for India T. Vldhya Thill"

Swamiga, I.L.R. 1942 Mad. 893, referred to.

 "larayanamurthi v. Achaya Sastrulu, A.LR. 1925 Mad. -411 rdft

Oil.

Civu. APPELLATE JURISDICTION: Civil Appeal No. 646 -652 of 1960.

Appeals from the judgment and decree dated November !3, 1962 of the Madras High Court in 385, 259, 260, 385 <Ji 194 7 respectively.

A. V. Viswanatha Sastri and R. Gopa/akrishnan, for 1he appellant (in C.A. Nos. 648, 649 and 650 of 1960) and

for the respondents (in C.A. Nos. 651 and 652 of 1960),

T. V. R. Tatachari, for respondents Nos. 1. 2, 5 and 6 (in C.A. No. 648 of 1960) and appellants (in C.A. No. 652 el 1960).

S. T. Desai, K. Jayaram and R. Ganapathy Iyer, for respondents No. I, 3, 4, 5, 8 to 11, 15, .16, 18, 19 and 21 (in C.A. No. 649 of 1960) responden~ Nos. 1, 2 and 8

tin C.A. No. 650 of 1960) and the appellants (in C.A.

No. 651 of 1960).

July 31, 1964.

The Judgment of the Couft1 was delivered by '

1'64

SUB BA RAo, J .-Thei; e five appeals by certificate arise Subbo Rao 1. out of Original Suits Nos. 183, 184 and 185 of 1945 filed in the Court of the Subordinate Judge; Coimbator, Madras "late.

O.S. No. 183 of 1945 relates to properties claimed on hehalf of Sri Chowleswaraswami temple.

Periaswami Goundar and Samana Goundar, the plaintiffs in the said ilUit, are the trustees of the said temple.

They filed the ilUit for the recovery of the plaint-scheduled properties from the defendants who are the archakas and the alienees from

!hem on the ground that the said properties were the properties of the ieity and that the defendants had no right

d:ierein. They also claimed mesne profits for a period of J years prior to the suit.

The defendants filed a writtenlitatement admitting the claim of the deity to the melvaram interest in the properties but claimed that the archakas O'll'ned the kudivaram therein and that some of the said properties were validly transferred to the alienees.

O.S. No. 184 of 1945 was filed in the said Court by lite trustees of Sri Pongali Amman temple situated in the vllage of V engambur for the recovery of the properties

C. Periaswami

Sundaresa Iyer

Subba Rao J.

mentioned in the schedule attached to the plaint. ThJ defendants, who are the archakas and alienees from them, inter a/ia, pleaded that only melvaram in the said properties was granted to the deity and that the archakas owned the kudivaram therein and that they had validly alienated their interest in the said properties in favour of the alienees.

O.S. No. 185 of 1945 was filed in the same Court by the trustees of Sri Varadaraja Perumal temple situated in Vengambur village.

The plaintiffs sought to recover th• properties mentioned in the schedule annexed to the plaint from the archakas and the alienees from them on, the same grounds and the defendants raised similar pleas. It is not necessary to mention other defences raised in the written 'tatements filed in the three suits as nothing turns upon them in these appeals.

The main issue in O.S. No. 183 of 1945, 0.S. No. 184 of 1945 and O.S. No. 185 of 1945 was whether the inam grants made to the three temples consisted of both th8

varams or melvaram alone.

The learned Subordinate Judge tried the said suits along with two other suits and delivered a common judgment therein.

On the said issue he held in all the three suit! that the grants to the three deities comprised both the varams.

He further held that the alienations made by tha archakas prior to May 16, 1931, were binding on the trustees of the respective temples and that the alienatiom made subsequent to that date were liable to be set aside.

In the result the learned Subordinate Judge gave a decreo in each of the suits for possession of the plaint-schedule properties except those covered by the alienations effected before May 16, 1931. He also decreed rnesne profits to the plaintiffs for a period of 3 years prior to the suits and also subsequent profits from the date of the suits to the. data of delivery of possession at the rate fixed by him.

Tho defendants in the said suits preferred appeals to the High Court of Madras, being Appeals No_s. 259, 260 and 38' of 194 7. The said appeals were heard by a Division Benell of the said High Court, consisting of Satyanarayana Rao and Rajagopalan, JJ. The High Court agreed with the

BS.C.R.

SUPREME COURT REPORTS 351

.trial court on the finding relating to the nature of the grants to the temples, that is to say it held that the grants to the temples comprised both the varams, namely, me/varam and kudivaram. The learned Judges, for the first t; me, though there was no pleading, no issue and no contention in the trial Court, held that the archakas were entitled to have a portion of the said properties allotted to them towards their remuneration for the services to the te10ples and gave a decree directing the division of the said properties into two halves and putting the archakas in possession of one half.

They did not disturb the finding of the learned Subordinate Judge in regard to the aliena tions, that is they maintained the alienations made before May 16, 1931.

Against the decree of the High Court in A.S. No. 259 of 1947 and A.S. No. 385 of 1947 both the archakas and the trustees preferred appeals to this Court questioning the correctness of the decree of the High Court in so far as it went against them. Against the decree in A.S. No. 260 of 1947 no appeal was filed by the archakas, but the trustees preferred an appeal questioning that part of the decree directing a part of the properties to be put in possession of the archakas.

Mr. Desai and Mr.

Tatachari, appearing for the archakas in the different appeals, contended that the Courts below, having regard 10the consistent and continuous conduct of enjoyment as absolute owners of the properties by the archakas spread over a long period of time, should have invoked the doctrine of lost grant particularly when there was no clear and convincing evidence of the terms of the grant. Alternatively, they argued that the Courts

hould have held, on a fair construction of the recitals found in the inam statements and the inam register, that only melvaram was granted to the deity.

Mr. Viswanatha Sastri, learned counsel for the trustees, contested this position. He would say that there is no scope for invoking the doctrine of lost grant as the recitals in the

inam register and the inam statement, which are of great evidentiary value, conclusively establish that both the

c. p.,;41W111n1

'I'.

Sundaresa Iyer

Subba Rao 1.

IH4

C. P•ri48w•11<i

"· S"""1111tJ Iyer

Subb• lta• !.

varams were granted to the deity and that all the documents, or most of them, disclosing the conduct of the

archakas would support the conclusion that both the varams were so granted to the deity.

At the outset it would be convenient to notice briefly the scope of the doctrine of lost grant, as the learned counsel for the appellants have strongly relied upon it.

The doctrine of lost grant with its limitations has been succinctly explained by the Jlldicial Committee in Sankaranarayana Pillayan v.

H.R.E. Board, Madras(').

The temple in that case had 4 kattalais. Though the temple had a general trustee, each of the kattalais was in the charge of a special trustee or trustees. In regard to one of the kattalais after meeting all the expenses there remained a surplus which the trustees claimed for their own benefit and in fact they were utilizing the surplus for the benefit of their families.

It was contended by the appellants that they were the owners of the suit properties, which were subject only to a charge in favour of the katta/ai for the performance of the worship according to the prescribed scale. The Judicial Committee, after noticing the earlier decisions, observed:-

"The presumption, it was stated, of an origin in some lawful title which the Courts have so often readily made in order to support possessory rights long and quietly enjoyed, arises where no actual proof of title is forthcoming, and the rule has to be resorted to because of the failure of actual. evidence. In the present case, where there is ample and convincing proof of the nature of the grant, the object of the endowment and the capacity of the persona Claiming the user and enjoyment, the rule can hardly have any application." ·

It!. the result the Judicial Committee held that the properties were granted only t'o the deity and that the trustees had no claim to any surplus income. The said principle hu been accepted by this Court in Buddu Satyanarayana Y.

Konduru Venkatapayya(').

There a question similar to

(1) I.L.R. 1948 Mad. 585, 6o5~.

(2) [1953) S.C.R. 1001, 1003.

that now raised was considered. The archakas claimed, relying upon the doctrine of lost grant, that under the original inam grant only the melvaram interest was given to the deity. Rejecting that contention, Das, J., speaking for the Court, observed:

"There is no doubt, on the authorities, that a presumption of an origin in some lawful title may in certain circumstances be made to support possessory rights long and quietly enjoyed where no actual proof of title is forthcoming but it is equally well established that that presumption cannot lie made where there is sufficient evidence and convincing proof of the nature of the grant and the persons to whom it was made."

The basis of this doctrine is clearly brought out by two judgments of the Judicial Committee.

Lord Buck-master, delivering the judgment in Maginiram Sitaram v. Kasturbhai Manibhai('), observed:

''At the lapse of 100 years, when every party to the original transaction has passed away, and it becomes completely impossible to ascertain what were the circumstances which caused the original grant to be made, it is only following the policy which the Courts alays adopt, of securing as far as possible quiet possession to people who are in apparent lawful holding of an estate, to assume that the grant was lawfully and not unlawfully made."

Viscount Sumner in Mohamed Muzafar Ali Musavi v.

Jabeda Khatun (2) said much to the same effect thus :

"The presumption of an origin in some lawful title, which the Courts have so often readily made in order to support possessory rights, long and quietly enjoyed, where no actual proof of title is forthcoming, is one which is not a mere

(I) [19zr] LR .. ;9 I.A. 54, Jll Sup. Court.-23

(2) [1930] L.R. 57 I.A. 125.

196'1

C. Periaswami

v. • Sundaresal Iyer

Sub/Jo Rao I.

C. , Perkuwami

"· Slllldmem Iyer

Subbll Rao J.

branch of the Jaw of evidence. It is resorted to because of the failure of actual evidence."

It is, therefore, clear that the said principle can only be invoked where there is no acceptable evidence of the terms. of the grant.

In these appeals the trustees filed copies of the relevant extracts of the inarn register and the statements filed by the ancestors of the archakas during the inam enquiry in support of the contention that both the varams were granted to the deity.

The evidentiary value of the recitals in the inam register has been emphasized by the Judicial Committee in more than one decision.

In Arunachalam Chetti v. Venkata Chalapathi Guruswamigal('), the Judicial Committee expressed its view on the evidentiary value of the recitals in inam register thus:

"It is true that the making of this register was for the ultimate purpose of determining whether or not the lands were tax free.

But. it must not be forgotten that the preparation of this register was a great act of state and its preparation and contents were the subject of much consideration under elaborately detailed reports and minutes.

It is to be remembered that the Inam Commissioners, through their officials, made enquiry on the spot, heard evidence and examined documents, and, with regard to each individual property, the Government was put in possession not only of the conclusion come to as to whether the land was tax free, but of a statement of the history and tenure of the property itself. While their Lordships do not doubt that such a report would not displace actual and authentic evidence in individual cases, yet the Board when such is not available, cannot fail to attach the utmost importance, as part of the history of the property, to the information set forth in the inarn register."

(1) (1920] I.L.R. 43 Mad. 253.

' I

In the latest decision of the Judicial Committee reported in Sankaranayurza Pillayan's case('), it reiterated the same position when it said:

"The question arose in a recent case before this Board with reference to a Madras inam [see Secretary of State for India v. Vidhya Thirta Swamigal( 2 }], where it was held that the title deeds and the entries in the inam register are evidence of the true intent and effect of the transaction and of the ch2.racter of the. right

which was being recognized and continued.

The entries in the inam register and the description of the inamdar therein were accepted as indications of the nature and quantum of the right and the interest created in the land."

This view of the Judicial Committee has been accepted and applied by the Madras High Court in many decisions when it was called upon to decide on the conflicting claims of a trustee and a archaka to the properties de1 lt with in he inam registers.

The documents relating to Sri Pongali Amman temple are Exs. P-2 and P-3. Ex. P-2 is the statement filed by an ancestor of the present archakas before the Inam Commissioner. It is of the year 1862. Ex. P-3 is an extract of the inam register. As observed by the Judicial Committee, the entries made in the said register are the result of an elaborate enquiry based upon oral evidence, on the spot enquiry and scrutiny of available accounts and records.

The inam statement is only one of the pieces of evidence which the Inam Commissioner might have taken into consideration in compiling the inam register. The recit~.ls in the statement must, therefore, give place to the recitals in the inam register, though an attempt shall be made to harmonize them, if possible. Before considering the recitals in Ex. P-3 it fa necessary to bear in mind the common case i.e., that it is the case of both the archakas and the trustees that Ex. P-3 deals only with the property that was given to the deity. But the dispute is as regards the extent of the

(I) I.L.R. [1948] Mad. 585.

(2) I.L.R[r942] Mad. 893, 908 (P.C.).

C. Peria.swan

•• Sundaresa lyt

Subba Rao'

1964 I

C. Perkuwami

"· Sundare• 11er

Subba Rao I.

interest in t.he property that was given to the deity. wa~ it only the melvaram in the said property that was granted to the deity or was it that both the varams therein were granted to the deity. Now let us. give a close look to the recitals under the variou~ columns in Ex. P-3.

The first major head is "class, extent and value of inam". The said major head is divided into 7 sub-heads. Jn col. 2 under the sub-head "General class to which the inam belongs", the entry is "religious". In col. 3 under the head "the survey number and the name of the field or fields comprised in the grant-dry, wet or garden", the particulars of the lands are gjven.

This entry shows that except a small extent which is a garden the rest is dry land. These details are more consistent with the grant being of both the varams than being of mere melvaram. If it is of melvaram alone, the quality of the field is quite irrelevant. Sub-heads 4, 5 and 6 show that the extent is about 18 acres and 99 cents and the assessment is Rs. 24-14-5. These recitals leave the impression that the land was a dry land bearing a small assessment of Rs. 24-14-5 and the income therefrom could not have been appreciable in those days. The second main head is "description, tenure and documents in support of the inam". The entries under the various columns under this head establish that the dry lands bearing an assessment of

R~. 24-14-5 described in cols. 3. 4, 5 and 6 were granted as Devadayam to the deity Pongali Amman penrnmntly bv Maduraiyar Paligar of Madura. The date of the grant is not known; but even in the accounts of 1209 F. the name of the deity was ctere:l as the grantee.

The third major head is "name and relationship of the original grantee and of sub, equent and present heirs-length of possession". Jo Cols. 13 and 15 the name of the deity alone is given. In Col. 16 under the heading "name and age" and in Col. 17 under the heading "place of residence" only the name of the deity is given. Below the name of the deity the name of the pujari "Pujari Muttandi. age 45" is given. In Cols. 18 and 19 under the heading "relation to orginal grantee or subsequent registered holders" and "surviving heirs of the present incumbent" no entry is made.

Obviously no entries are made under these sub-heads, as the deity cannot have relations.

The mention of Pujari Muttandi in the

context of other entries indicates that he was in charge of the temple. If his name was mentioned because he had some interest in the land, the other suitable entries in regard to his relations ould have been made under the relevant sub-heads.

Indeed it is not the case of the archakas that they have some interest in the me/varam. If the document was concerned only with the me/varam interest, strictly there was no place for the archaka in the document, for he had no interest therein. His name was mentioned only as he was the person who was in de facto management of the properties of the deity. In Col. 21 under the heading "Deputy Collector's opinion . and recommendation'', the entry is "To be confirmed permanently to the Pagoda so long as it is well kept up, subject to the existing jodi of Rs. 3-1-7". Under Col. 22 the inam is confirmed to the pagoda. A reasonable interpretation of the recitals in this document leads to the only conclusion that the Inam Commissioner was dealing with the entire interest in the land, the particulars whereof were given therein. There is no evidence that at the time the grant was made the archakas or any others were kudivaramdars.

But it is said that Ex. P-2, the inam statement, filed by the then archabs would establish that what was granted was only the melvaram.

There, in Col. 2 under th:! head "Name of the inamdar entered in dowle and names of the present enjoyer" the following entry is found:

"Pongaliamman poosari Kuppaiyandi Mu!huveeran as per paimash entry. For fields Nos. 595 and 597 no poosari's name is mentioned. Present

(enjoyer) Pongaliamman poosari Muthandi."

It is said that pujari is shown as the enjoyer and, therefore, the deity has no interest in the enjoyment of the land. The deity was obviously represented by the pujari who was the de facto trustee.

He was in possession of the property in his capacity as the de facto trustee. In those circumstances if the pujari of the temple is described as an enjoyer, it can only mean that he was in possession of the land on

---,1 behalf of the temple. Whatever ambiguity there m1gnt be in the said recital it is dispelled by the entry in Col. 12 under t11e head "Particulars of present enjoyment'', namely

C. Peria.swa;

Sundaresa ly

Subba Rao

~. Peria.swami

undareaa Tyer

Subba Rao J.

"By directly cultivating this land selling the produce derived therefrom and applying the sale proceed to the service of the deity.

I and my agnates have been performing pooja and enjoying the said land according to the conditions of the grant". This entry is couched in clear and unambiguous terms.

It describes the nature of the enjoyment of the land by the archaka; it clearly says that he was cultivating the land, selling the produce and from the sale proceeds he was doing the services to the deity in accordance with the terms of the grant. If the deity was entitled only to the melvaram, this recital is inconsistent with it.

The recital indicates that the entire land was the subject-matter of the grant in favour of the deity and that the produce from t!:Iat land was utilized for the services to the deity.

Strong reliance is placed upon the entry in col. 13 under the head "Income derived from the manibam; whether sarvadambla or jodigai, if jodigai, how much". The entry is, "Income Rs. 24-14-5; Jodigai Rs. 3-1-7." Basing upon the said entries the argument is that Ex. P-3 shows that the assessment on the land was Rs. 24-14-5 and Ex. P-2 indicates that the same amount was the income derived from the inam and, therefore, what was granted in inam could have been only the assessment i.e., Rs. 24-14-5. This ar'.!nment is farfetched and based on a slender foundation.

One of the main objects of the inam enquiry was to ascertain whether the alienated lands were free of tax or not.

The archaka who was in possession of the land on behalf of the deity had to give information as regards the tax payable in respect of the land in his possession.

In that context the expression "income derived from the manibam" can only mean the assessment fixed on the land. After stating that full assessment was only Rs. 24-14-5 the archaka stated that he was not paying the entire amount, but was paying only the jodigai of Rs. 3-1-7.

So understood the said recitals fit into the scheme of other recitils in the said statement and those found in Ex. P-3. A similar argument was advanced before this Court in Buddu Satyanarayana's case(') and was rejected.

Das, J ., observed at p. 1006 thus:

(1) [1953) S.C.R. 1001

"A part from these points of distinction the decision relied on by the learned Attorney-General appears to us to be of doubtful aut!iority. As will appear from the passages quoted above, the decision rested mainly, if not entirely, on the fact that _the amount of assessment and the amount of income were the same and the conclusion was drawn that the Inam grant comprised only of the revenue assessment, i.e., of melvaram rights.

We are unable to follow the reasoning."

We, therefore, hold that, from the recitals in the said two documents, what was granted to the deity was of both the varams.

Learned counsel for the archakas relied upon the long possession and enjoyment of the. suit lands by the archakas t and their ancestors in support of their contention that the melvaram alone could have been granted to the deity.

Long enjoyment is also consistent with an arrangement that might have been entered into between the grantor and the then functioning archaka or archakas having regard to the conditions prevailing then.

The lands granted were comparatively of small extent and they were dry lands. In those days the income from the said lands must have been very insignificant.

There was no trustee for the temple.

In those circumstances it is more likely that the grantor would have put the land in the possession of the archaka.so that he might, from and out of the produce from the land, maintain the temple, perform the puja and meet the expenditure connected with the puja and also pay himself the remunera- ' lion for his services to the temple. That was a convenient arrangement which was adopted in many of the small temples in that part of the country. This practice was recorded with clarity by the Madras High Court in Narayanamurthi v. Achaya Sastrulu('). In dealing with a

imilar argument the learned Judge observed:

"The evidence of user and enjoyment, however Jong ' uninterrupted and unquestioned, would be evidence of the grant only ht the absence of

(1) A.T.R 1925 Mad. 4tr, 412-4r3

19M

C. Peria.sw• ...

Sundaresa I:

Subba Rao

. Ptriaswami

•• .undaresa Iyer

'ubba Rao J.

any reliable or cogent evidence with regard to the terms of the grant itself or in the case of any ambiguity in the grant. It seems to be clear that almost very recently the suit lands yielded only just what was sufficient for nitya naivedyam or the daily worship. No doubt in such a state of things not only the persons who established the temples and made the endowments but succeeding generations of worshippers would have allowed the archakas to cultivate the lands and take the income performing the puja as it was obviously the most convenient mode of arranging for the worship of the deities and the payment of remuneration of the archaka service."

"But when the income accruing from the lands came to be considerable and the atchakas, by reason of old habits and follo" i:1g their forefathers, claimed the lands and surplus profits therefrom to b~ their own, it was only natural that the worshippers should take steps to secure the surplus income for the institutions."

These observations are very apposite and they clearly describe the cicumstances under which the archakas of the temples were allowed to be in possession of the temple lands. If that was the situation under which the archakas came into possession of the lands, they were certainly in the position -o1 de facto trustees and they could not by mortgaging or otherwise alienating the properties claim any rights in derogation of the title of the deity.

Indeed the documents on which the learned counsel relied contain clear and unambiguous admission on the part of the archakas that the land itself was the property of the deity.

Exs.

P-12, P-13, P-14 and P-15 are copiek of mortgages execut.ed by the archakas. Under these documents the land in teir possession was mortgaged and it was described as padi(haram Manyam.

They also disclosed that the paditharam paddy directed to ,, be paid to the temple was more than the kist payable thereon to .the Government.

In the prior proceedings i.e., applications preferred by tl1e

archakas for declaring the temples as excepted ones, there was no claim that the melvaram alone was granted to the deity. In other proceedings the archakas claimed that the lands were service inams, but they did not come forward with the present plea that melvaram only was granted to the .deity. Further, pattas for the suit lands were transforred without any objeqtion of the archakas in the name of the deifies in 1939 anl:i the archakas also paid contribution to the Madras Hindu Religious Endowments Board on the basis that both the varams belonged to the deity.

The conduct of the archakas, therefore, is consistent with the recitals in the inam register, namely, that what was granted to the deity was the land i.e., both the varams, and that they had been put in possession and enjoyment of the said land in their capacity as archakas and de facto trustees.

1964'

C.Pul"6Wo ...

Sunda,.., l:

Learned counsel for the appellants relied upon an order made by A.RC. Westlake, Collector of Coimbatore, on April 14, 1941, wherein he held that only melvaram was granted to the deity. That order came to be made under the following circumstances.

The trustees appointed by the Coimbatore District Temple Committee filed an application before the Revenue Division Officer under s. 44-B- 11 (a) of the Madras Hindu Religious Endowments (Amendment) Act, 1934, for a declaration that the alienations of portions of inam land attached to the temple were null and void and for resumption and regrant of the same

Subba RJJo

to the deity. One of the issues in the application was whether the inam comprised melvaram or both melvaram and Kudivaram. The Revenue Division Officer held that the inam comprised both the varams. On appeal, the Collector _ came to the contrary conclusion. But a perusal of the order lhows that his conclusion was based upon pure surmises.

The Collector did not refer to any document or evidence for his conclusion. The trustees filed a suit in the Court of the Subordinate Judge, Coimbatore, for a declaration that the inam grant in favour of the plaint , temple comprised both the varams.

The learned Subordinate Judge -1 held that s. 44-B of the Act had no application as the grant was to the deity and was not a service inam. The result' of this litigation was that there was no final decision on the

Perialwami

•• rndarem lyr

•bba Rao J.

question whether the grant was of both the varams or only of the melvaram. These proceedings cannot, therefore, be of any evidentiary value in this case.

On a consideration of the entire evidence we agree with the conclusion arrived at by the High Court that the grant to the deity comprised both the varams in the suit lands.

Now coming to the appeals relating to . Chowleswara swami temple, the factual and legal position is exactly the same as in the case of Pongaliamman temple.

Ex. P-2 is the statement made before the Inam Commissioner by the then archaka and Ex. P-3 is the extract from the Inam register.

Under the relevant entries in the inam register, survey numbers, extent, quality and the assessment of the subject-matter of the grant are given. The land is described as Devadayam and is stated to have been granted for the support of the pagoda of Chowleswaraswami. The nature of the grant is described as permanent.

The date of the grant is not known.

The grantor's name is given as Maduraiy'ar Paligar of Madura. The name of the original grantee is given as Chowleswaraswami.

The grant of the land described earlier is confirmed permanently to the pagoda as long as it is well kept subject to the existing jodi of Rs. 24-8-2. The only mention of archaka is in col. 17 under the head "Particulars regarding present owner" and the entry thereunder is "Chowleswaraswami, stanika Muttaiyan".

The other columns where the relationship of the presel'lt owner with the previous owners is expected to be recorded are left blank for the obvious reason that the said columns are irrelevant in the case of a deity. The archaka's name in addition to the deity is mentioned as he was in possession of the land in his capacity as de facto trustee.

The deity must necessarily have to be represented by somebody and that he can only be the stanika who was managing the temple and its properties.

The relevant entries in the inam register do not countenance any contention that the melvaram interest only in the land was granted and that was confirmed to the deity. If the melvaram was granted or confirmed, the recitals would have been different. The corresponding inam statement is Ex. P-2. The entries are practically similar to those found in Ex. P-2 relating to

Pongaliarnman temple with some slight variations.

Col. 2 makes a dear distinction between ownership of the land and enjoyment. The owner is shown as Chowleswaraswami and the "present" enjoyer is shown as Chowleswaraswami'8 stanika. The nature of the enjoyment is described in col. 2 thus:

"The said lands are leased out for varam cultivation and I cultivate the same myself some times and the income (masul) therefrom is enjoyed by me and co-sharers (Pangali) and used for Swami Viniyogam." It is manifost from this recital that the land was the subjectmatter of the grant and the income therefrom was derived either by direct cultivation or by leasing out the same, and the said income was enjoyed by the archaka and used for viniyogam. The point to be noted is that the predecessorin-interest to the present archaka admitted that the produce from the land was utilized for the services of the deity.

The said admission is inconsistent with the allegation that the grant was only of me/varam. The entries in col. 13 arc sin1ilar to those contained in the corresponding Ex. P-2 relating to Pongaliamman temple, and, for reasons already given, they do not support the contention that the assessment of Rs. 74-1-5 was only granted to the deity.

A combined reading of these two documents leads to the only conclusion that both the varams were granted to the deity.

Just as in the case of Pongaliamman temple so in the case of Chowleswaraswami temple, the subsequent conduct of the archakas belie their assertion that only melvaram int<:'rest in the land was granted to the deity.

Exs. D-1 of 1867, D-2 of 1868, D-3 of 1870 and D-4 of 1883 are some of tlie mortgages executed by the archakas of Chowleswara$wami temple. Exs. D-5, D-6 and D-7 are sales. In all these documents the property is described as Chowleswaraswami manyam.

If really the fodil'aram belonged to the archakas, they would not have described the land they were alienating as Chowleswaraswami manyam.

The description of the property as that of the deity is consistent with the title of kudivaram also heing in the deity.

Further, as in the other case, the pattas .Zere

C. l'eriaswa111i

Sundaresa 1)'11

Subba Rao J.

i. Ptriuwami

v. 7undaresa Iyer

Subba Rao J.

transferred in the name of the deity in 1939, the contributions were paid to the Hindu Religious Endowments Board on the basis that the entire interest in the lands belonged to the deity and that in other proceedings the archakas's case was not that the grant to the deity was only of the melvaram but the lands were service inam lands.

Though the archakas dealt with the properties by mortgaging or otherwise alienating them they never denied the title of the deity.

For the foregoing reasons we hold that even in the case of Chowleswaraswami temple the original grant made to the deity comprised both the varams.

In regard to Sri Varadaraja Perumal temple, no appeal was filed hy the archakas and they allowed the judgment of the High Court in regard to the title to become final.

Nothing, therefore, need be said on the question of title of the land in respect of this temple.

Coming to the cross-appeals filed by the trustees against L'iat part of the decree of the High Court apportioning the property of the deity between the deity and the archakas, the question raised is whether the High Court, having held that the title to the suit property vested in the deity, had jurisdiction to compel the trustees of the temples to put the archakas in possession of specijied extent of property towards their remuneration.

The High Court observed thus:

"On these findings, it is no doubt true that the decree in favour of the plaintiffs for possession of the properties on behalf of the deity has to be upheld subject to the consideration set forth below." Then it proceeded to consider whether any allocation of land should be made between the archakas and the trustees.

After noticing the relevant decisions on the subject, it observed thus:

"These decisions are practically uniform except for the decisions .......... (in) A.S. No. 237 of

1950(') and ............ (in) Venkatadri v.

eshacharlu (2 ) and have upheld the allocation ----\- (I) Brahmyya v. Rojesu<>rcswami temple A.I.R. 19;; Mad. 580.

(2) I.L.R. r948 Mad. 46.

of lands between the archakas and the trustees, the proportion however varyi.ng with the extent of the lands and the amount of the income.

None of the Judges were of the opinion that the arrangement should be a permanent and an unalterable one and it must naturally be subject o revision or alteration according to the circumstances of the case at the Instance not only of the trustees but also at the instance of the archakas, if it was found that the allocation was working to the detriment of either the archakas or of the temple."

It concluded:

"We think, therefore, in these cases, the best arrangement would be to allocate half the lands in each of the suits for the remuneration of the archakas, to be divided equally, having regard to the wet and dry extents, and leave the remaining half to the trustees, who have to meet the cost of the daily worship and accumulate the surplus in their hands as it belong; to the deity."

On principle, in our view, the conclusion arrived at by the learn1:d Judges of the High Court is unsupportable.

The suits were based on title and the relief asked for was the eviction of the archakas from the suit property as they, accord:ng to the plaintiffs, had no title to remain in possession.

The archakas raised the plea that the title of the deity was confined only to melvaram in the plaint-schedule lands and that they had title to the kudivaram. Both the courts confirmed the title of the deity to both the interests and negatived the title of the defendant-archakas. In the

circumtances the Court has no option but to deliver possession to the plaintiffs . who had established their title to the suit properties. In a suit for framing a scheme for a temple a court may in an appropriate case put the archaka in possession of a por.tion of the temple lands towards his remuneration for services to the temple; but these are not 11uits for framing a scheme. That apart, there is absolutely no material either in the pleadings or in the vidence to

1'64

C. l'triaswaml

•• SMndar-r• ly<t

Suhbo Rao I.

C. Periaswami

Sundarya Iyer

Subba Rao J.

make any such apportionment, for the allotment of a particular share to the archaka would depend upon the total income from the lands, the value of the articles required for the worship, the amount of reasonable remuneration intended to be provided and other similar circumstances.

An allotment cannot possibly be made on the basis of allocations made in the circumstances and facts peculiar to other cases.

Indeed, this Court has already expressed a clear opinion on this aspect of the case in Buddu Suryanarayana's case('). Therein, Das, J., said at p. 1008 thus:

In a proceeding for the framing of a scheme relating to a temple it may be permissible to take into account the claims, moral if not legal, of the Archakas and to make some pro vision for protecting their rights, but those considerations appear to us to be entirely out of place in a suit for ejectment on proof of title."

With respect we e'1ti•ely agree with the said observations.

It follows that the High Court went wrong in making an allocation of the lands between the trustees and the archakas in a suit for ejectment.

Learned counsel for the archakas made an impassioned appeal that we should give a direction to the authorities concerned to make an apportionment of the properties on the lines suggested by the High Court, having regard. to the long enjoyment of the temple lands by the archakas. Long enjoyment of the temple lands by the archakas is not a peculiar feature of this case.

The authorities concelilled

have made suitable arrangements for remuneration in the J case of other temples and we have no doubt that they would make a reasonable provision for the archakas in the present case also for their remuneration in accordance with law.

In the result, Civil Appeals Nos. 648 and 650 of 1960 filed by the trustees are allowed but, in the circumstances, without costs. Civil Appeal No. 649 of 1960 filed by the ,...., trustees is also allowed without costs except as against tlle I

(1) [1953) S.C.R. lCOl

14th respondent.

The said appeal against the 14th respondent is withdrawn on the ground that his interest as a mortgagee is not now subsisting and the said appeal against the 14th respondent is dismissed as withdrawn but, in the circumstances, without costs.

Civil Appeals Nos. 651 nd 652 of 1960 file:l by the archakas are dismissed with costs.

One hearing tee.

Ordered accordingly.

GMGIPND-L-.sJ s c (4, · , o - 1>-n-6s-•, soo.

C. Peri<uw0rn

v, Su1tdare3tl lye1

Subba Rao I.

s. 10

C. PERIASWAMI GOUNDAN AND ORS

SUNDARESA IYER AND ORS

K. SUBBA RAO

Periaswami

Sankaranarayana Pillayan

A. V. Viswanatha Sastri

R. Gopa

T. V. R. Tatachari

S. T. Desai

K. Jayaram

R. Ganapathy Iyer

SUB BA RAo

Subbo Rao

Periaswami Goundar

Samana Goundar

C. Periaswami

Sundaresa Iyer

Subba Rao

Vengambur village

May 16, 1931

High Court of Madras

Satyanarayana Rao

Rajagopalan

Desai

Tatachari

Viswanatha Sastri

Subba Rao

Das

Buck-master

Viscount Sumner

L.R. 57 I.A. 125

C. Periaswami

Sundaresal Iyer

Subbll Rao

Sankaranayurza Pillayan

Madras

Madras High Court

Pongali Amman

C. Peria.swan

Madura

Pujari Muttandi

Pongaliamman

undareaa Tyer

Buddu Satyanarayana

Ptriaswami

.undaresa Iyer

'ubba Rao

Madras Hindu Religious Endowments Board

A.RC. Westlake

Coimbatore

April 14, 1941

Coimbatore District Temple Committee

s. 44

Subordinate Judge, Coimbatore

s. 44

Perialwami

•bba Rao

Chowleswaraswami

Ptriuwami

7undaresa Iyer

Varadaraja Perumal temple

L'iat

Suhbo Rao

Sundarya Iyer

Buddu Suryanarayana


CJ.T., Modrt11 •• Slvaklui Match

Export Co.

SWJ.

SUPREME COURT REPORTS [rg64J

so complied with, the taxing authorities would be bound to refuse to give the taxpayer the benefit claimed. When application for registration of the firm is made, the Incometax Officer is entitled to ascertain whether the names of the partners in the instrument are of persons who have agreed to be partners, whether ihe shares are properly specified and whether the statement about the shares is real or is merely a cloak for dis, ributing the profits in a different manner.

If all persons who have in truth agreed to be partners have not signed the deed or their shares are not truly set out in the deed of partnership, it would be open to the Incometax Officer to decline to register the deed, even if under the general Jaw of partnership the rights and obligations of tke partners eo nomine thereto may otherwise be adjusted. As a corollary to this, if the requirements relating to the form in which the petition is to be presented are not complied with, and the relevant information is withheld, the Incometax Officer may be justified in refusing registration.

In my view the High Court was in error in holding on the question submitted that the registration of the assessee under s. 26-A of the Income-tax Act was wrongly refused.

The answer to the ques:ion referred to the High Court lhould be in the affirmative.

ORDER In accordance with the opinion of the majority, the appeal is dismissed with costs.

Appeal dismissed

COMMISSIONER OF INCOME-TAX KERALA AND

COIMBATORE

KRISHNA WARRIAR

(K. SUBBA RAo, J. C. SHAH, ANDS. M. SJKRI JJ.) ltteome Tax-Exemption from taxation-Businen held in trUll- Pllrl of profit• to be utiliud for religiOIU or charitable purp"'•,_

Business, if property-Indian Income-tax Act, 1922 (11 of 1922), s. 4(3)(1).

CJ.'I.

A testator was carrying on business in Ayurvedic drugs under the ~

,., W: name and style of Arya Vaidya Sala.

Under his will his properties, _ "" .including the business, were held under trust and the object of the trw.t y; as to utilise 60 per cent of the profits of the business for 20 yean and 85 per cent thereafter for religious and charitable purpo!!ieS.

The assessment years in qu'tstion fell within 20 years from the death of the testator and the question was whether the 60 per cent of t.:ie income from the trust 1 properties was exempt from assessment to income-tax under s. 4(3)(i) of the Indian Income-tax Act, 1922. The lncometax authorities rejected the claim for exemption and asseod the entire income from the said properties, on the ground that the .ubstantive cl. (i) of s. 4(3) was not applicable to the case but only el. (b) of tlie prmliso and that the conditions laid down thereunder were not complied with.

HELD: (i) The business run under the name and style of Arya Vaidya Sala was property within the meaning of s. 4(3 )(i) of the Indian Income-tax Act, 1922, and as the entire business was held ia trust for uti[sing a part of its profits for religious or charitable purposes, the said income Was exempt from assessment to • income-tai under that section.

(ii) Cl. (b) of the proviso to s. 4(3)(i) was applicable only to a business not held in trust but carried on on behalf of a religious or charitable institution.

(iii) A business held in trust wholly or in part for religion• or charitable purposes was not a business carried on on behalf of a religious or charitable institution.

(iv) The dichotomy between the two expressions "wholly" and "'in part" in s. 4(3 )(i) was not based upon the dedication of the whole or a fractional part of the property, but between the dedication of lite said property the income from which was to be utilized wholly for religious or charitable purposes or in part for such purposes.

(v) The expression ''such income" in the opening words of the proviso to s. 4(3) (i)' meant "income accruing or arising in favour of the trust".

CML APPELLATE JURISDICTION: Civil Appeal Nos. 606-610 of 1963.

Appeals by special leave from the judgment dated January 20, 1961 of the Kerala High Court in Income-tax Referred Case No. 16 of 1959.

K. N. Rajagopal Sastri and R. N. Sachthey, for the appellant (in all the appeals) .

CJ.T. v. ;,11na W arriat

-:ubba Rao I.

S. T. Desai and Sardar Bahadur, for the respondent (in all the appeals) .

April 29, 1964. The Judgment of the Court was delivered by ·

SuBBA RAo J.-These appeals by special leave raise the question of the construction of the provisions of s. 4(3 )(i) of the Indian Income-taic Act, 1922, hereinafter called the Act, as amended by the Indian Income-tax (Amendment) Act, 195 3, hereinafter called the Amending Act.

The facts are as follows.

One P. S. Warriar, an eminent Ayurvedic physician, carried on business in Ayurvedic drugs under the name and style of "Arya Vaidya Sala" and was also running a hospital named "Arya Sikitsa Sala" and a school called "Arya Vaidya Pata Sala". The said Warri.ar died on January 30, 1944, after executing a will wherein he created a. trust in respect of his properties, including the Arya Vaidya Sah.

He gave directions to the trustees appointed under th~ said will to conduct the said business and to disburse the income therefrom in certain proportions to the Arya Vaidya Sala, Arya Sikitsa Sala and Arya Vaidya Pata Sala and to his descendants.

Broadly stated 60 per cent of the income was directed to be spent on the said three institutions and 40 per cent to be given to his descendants.

Till the Amending Act came into force the Incometax Department gave exemption from assessment for the 60 per cent of the income under s. 4(3) (i) of th; Act; but, after the Amending Act came into force, which was given retrospective operation from .April 1, 1952, the said Department refused to give exemption from assessment even in regard to the 60 per cent of the income.

For the assessment years 1954-55 and 1955-56 the Income-tax Officer assessed the entire income from the said properties; and in respect of the income pertaining to the assessment years 1952-53 and 1953-54, which had already been assessed in the usual course giving exemption for the said 60 per cent of the income, the Income-tax Officer issued notices under s. 34 of the Act and by two separate orders dated September 28, 1956, assessed the said 60 per cent of the income on the basis of escaped assessment.

On December 20, 1956,

for Ile assessment year 1956-57 the Income-tax Officer, in 1964 the li.:e manner, assessed the entire income from the said

CJ.T. properties.

The appeals filed by the assessee against the . v. . f .

Kruhna Warr.a, said urders o assessment to the Appellate Assistant Com- _ misskner were dismissed.

The appeals filed against the Subba Rao J. orderH of the Appellate Assistant Commissioner to the Income-tax Appellate Tribunal, Madras, were consolidated and by its order dated February 28, 1958, the said Tribunal allowed the appals ex em piing 60 per cent of the said income from assessment to income-tax under s. 4 ( 3) ( i) of the Act. The references made to the High Court of Kerala were dismissed.

Hence the present appeals.

Mr. Rajagopala Sastri, learned counselfor the Revenue, contends that under s. 4 ( 3 )( i) of the Act whereunder the said income is given exemption from taxation, the property wherefrom the income is derived shall have been held under trust wholly or in part for religious or charitable purposes, that the business run under the name and style of Arya Vaidya Sala was not capable of being held in trust, that even if it was capable of beirig held under trust, it was not wholly or in part so held in trust for religious or charitable purposes, as only a part of the income was rlirected to be spent for religious or charitable pu.rposes and that in the circumstances cl. (b) of the proviso was attractd but the conditions laid down thereunder were not complied with.

Learned counsel for the respondent, Mr. S. T. Dsai, contends that business is property within the meaning of s. 4 ( 3 )( i) of the Act and that it is held in tmst in part for religious and charitable purposes and, therefore, the substantive part of the provision is attracted to .the facts of the case and hence the proviso is excluded.

Before we construe the relevant provisions of the Act and consider the arguments advanced on either sid~, it would be convenient at the outset to read the mateiial part of tbe will and to ascertain the scope of the bequest created thereunder.

The will is marked as Annexure A2 in the case. 1be relevant parts of the Will read:

"l. Will executed by Pannbmnalli Warrialh deceased Parvathi alias Kunkikutty Warassiar's

IHI

CJ.T.

Y. '.ruluw ",,,,;,,,.

son Sri Sankunny Warriar known as Vaidyaratnam Sri P. S. Warriar, residing at Puthan Warian in Kottak:kal Amsom and Desom of Ernad Taluk.;'

"7. Apart from the properties mentioned in Schedule B, C and D all other properties, movable as well as immovable, belonging to me I hereby constitute into a trust to be managed by the trustees as per the directions in the will. They are described in Schedule E, and on my demise those properties will vest in the trustees. It is my intention that except the properties mentioned in paras 4 and 5 (B, C & D Schedule), all my properties are to be• included in the Trust and therefore, even if some item of property is left out by 'inadvertence, it is also to be deemed included in the Trust and vested in the Trustees."

"8. Provisions regarding the Trust.

I hereby nominate the following persons as the first Board of Trustees:- ........ (Names of 7 persons given).

4 9. The above Trust is to be managed and conducted according to the terms and conditions detailed below:- (A to F) .......................... .

G. The primary and chief objectsof the Trust are to carry on for ever the two institutions viz., the Arya Vaidya Sala and the Arya Vaidya Hospital on the lines followed now with the object of enlarging and increasing their scope and utility.

The work of Arya Vaidya Sala now consists of,

1. preparation of Ayurvedic medicines,

2. sale of the same,

3. treatment of patients, receiving from them compensation according to their capacity and means,

fff4

CJ.T. ...

4. to conduct research into Arya Vaidyam with a view to make it more and more useful to the public. ... ,,,..

II' .nar H. The following are the matters conducted in the '•bb• Ru 1. institution called the Arya Vaidya Hospita!..

1. To examine poor patients free of charge, to prescribe treatment for them and give medicines gratis (out-patient Department).

2. To take in at least 12 poor patients at any

time, give them lodging and board and also free medicines and treatment free (the in-patient Department).

3. To carry out the said services with the help of an Arya V aidyan and necessary operations with the help of an Allopathi doctor.

4. Give treatment and medicines to all persons seeking them, receiving from such of them as are able such remuneration as they can afford including cost of medicines.

The Arya Vaidya Hospital is now carried on with the medicines supplied by and takeri from th\: Arya Vaidya Sala and the incidental expenses are now me~, from out of the funds of the Arya Vaidya Sala.

]. The trustees are to run the above institutions according to the intentions expressed abovo:: with such modifications as the circumstances may .warrant.

K. In the Arya Vaidya Patasala run under the auspices of the Arya Samajam, Aryavaidyam is taught in accordance with the service of Ayurveda.

I have been meeting the expenses of the said institutions, not covered by its income.

From out of the profits of Arya Vaidya Sala.

L. Out of the net profits of the Arya Vaidya Sala 25 per cent is to be devoted to the ftevelop-

CJ.T . ...

Krishna Warriar

ment of the Arya Vaidya Sala, 25 per cent for meeting the expenses of the Arya Vaidya Hospital and 25 per cent for division equally between the two tavazhies (this only for 25 years) out of the remaining 25 per cent a sum not exceeding 10 per cent may be according to requirements, utilised for the purposes of the Arya Vaidya Patasala. The balance, if any, that m1y remain out of the

10 per cent after disbursement to the Arya Vaidya Patasala, may he used for the Arya Vaidya Sala itself. The balancr 15 per cent are to be deposited by the Trustees each year in approved banks as a Reserve fund for the two tavazhies for a period of 20 years and the fund thus accumulated inclusive of interest is to be divided equally among the two tavazhies equally i.e., in moiety and it will be the duty of the Trmtees to invest the same on the authority of immovable properties.

Subba Rao 1.

M. The Trustees me not bound to pay any amount to the said two tavazhies after the expiry of 20 years.

The 40 per cent of the profit so earmarked for 20 years and so released after the expiry 9f 20 years are therefore to be utilised for the development of the Arya Vaidya Sala and Arya V.1idya Hospital according to the discretion of the Trustees.

E Schedule: All remaining properties constituted into the Trust.

It will be seen from the said recitals of the Will µiat the testator created a trust in respect of his entire properties, including those mentioned in Schedules B, C and D and specifically vested them in the trustees appointed thereunder.

The properties so vested included the business carried on in the name .1nd style of Arya Vaidya Sala. The main objects of the trust were to carry on the said two institutions, namely, Arya Vaidya Sala and Arya Vaidya Hospital

and also the other objects mentioned thereunder. Out of 1964 the income from the business so vested in the trustees, he cJ.T. directed the trustees to spend 25 per cent for the develop- . v. ment of Arya Vaidya Sala, 25 per cent to meet the expenses Krtslm• War of the Arya Vaidya Hospital, not exceeding 10 per cent for Subba Rao . the Arya Vaidya Patasala, 25 per cent to be shared equally by the two branches of the family of the testor for a period of 20 years .and thereafter to be utilized for the purpose of the Arya Vaidya Sala and Arya Vaidya Hospital and 15 per cent to be given to the said branches; that is to say, 60

per cent of the total properties for a period of 20 years from the. demise of the testator should be utilized for religious and charitable purposes and thereafter 85 per cent to be utilized for the said purposes and the rest to be spent on non-religious and non-charitable purposes.

Therefore, under the Will the E Schedule properties, including the business, were held under trust and the object of the trust was to utilize uO per cent of the profits of the business for 20 years and 85 per cent thereafter for religious and charitable purposes.

The assessment years in question fell within 20 ye.1rs from the death of the testator and, therefore, we are concerned only with 60 per cent of the income from the trust properties.

The question is whe.ther the 60 per cent of the income from the trust properties is eXe!fipt from assessment to income-tax under s. 4(3) (i) of the Act.

The relevant provisions of the Act read:

Section 4. ( 3) Any income, profits or gains falling within the following classes shall not be inc!uded in the total income of the person receiving them:

(i) any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, and in the case of property so held in part only for such purposes, the income applied, or finally set apart for application, thereto:

Provided that such income shall be included in the total income ..................... .

(b) in the case of income derived from business carried on behalf of a religious or charitll)IU

CJ.T .

... , j(rishna Warnar

able institutions, unless the income is applied wholly for the purpose of the institution and either-

Subba Rao J.

(i) the business is carried on in tbe cours~

of the actual carrying out of a primary purpose of the institution, or

(ii) the work in connection witb the busineS5

is mainly carried on by beneficiaries of the institution.

A brief history of the proviso may not be out of place here.

Before the amendment of this clause by the Amending Act of 1953 the proviso was in the form of a separate substantive clause and was numbered as cl. ( i-a). The said cl. (i-a) came under judicial scrutiny.

It was argued on behalf of the Revenue that though a business was held under trust for religious or charitable purposes, it would fall under cl. (i-a) and the income therefrom could not be exempted from income-tax unless th~ conditions laid down in the said clause were complied with.

In Charitable Gadodia Swadeshi Stores v. Commissioner of Income-tax, Puniah (1 ) .• the Lahore High Court rejected that contention, and one of the reasons given for the rejection was that if the s.aid clause was intended to narrow down the scope of cl. (i), the said clause should have been added as a proviso to the old clause. Presumably on the basis of this suggestion the Amending Act of 1953 substituted cl. (i-a) by cl. (b) of the proviso. But it is not an inflexible rule of construction that a proviso in a statute should always be read as a limitation upon the effect of the main enactment. Generally the natural presumption is that but for the proviso the enacting part of the section would have included the subject-matter of the proviso; but the clear language of the substantive provision as well as the proviso may establish that the proviso is not a qualifying clause of the main provisions, but is in itself a substantive provision.

In the words of Maxwell, "the true principle is that the sound view of the enacting clause, the saving clause and the proviso take.n and construed tog; ether is to prevail".

So construed we find no difficulty, as we wiU indicate later

(I) (1944) Ii I.T.R. 385.

_J •

ia our judgment, in holding that the said cl. ( b) of the 1964 proviso de.als with a case of business which is not vc, ted in CJ. r. trust for religius or charitable purposes within the moaning Kmlm; i •. """'6 " of the substantlve clause of s. 4 ( 3) ( 1). -··

With this introductory remarks we shall proceed to con strue the provisions of s. 4(3)(i) of the Act, along with

cl. (b) of the Proviso.

Under cl. (i), so far as it is relevant to the question raised before us, to earn the exemption the income shall have been derived from property under trust wholly or in part held for religious or charitable purposes.

Under cl. (b) of the proviso to that clause, in the case of income derived from business carried on on behalf of a religious or charitable institution, unless the condition laid down thereunder are complied with, the said income cannot be exempted. If business is property and is held under trust wholly or partly for religious or charitable purposes, it falls squarely under the. substantive part of cl. ( i) and i" that event cl. (b) of the proviso cannot be attracted, as under that clause of the proviso the business mentioned therein is not held under trust but one carried on on behalf of a religious or charitable institution.

To take a business out of the substantive cl. ( i) of s. 4 ( 3) and place it in cl. (b) of the proviso, it is suggested that business is not property and that even if it is property the said property is not wholly or partly held in trust for re!lgious or charitable purposes. That business is property is now well settled.

The Privy Council in In re Trustees of the Tribune(') did not question the view expressed by the Bombay High Court that business of running the newspaper Tribune was property held under ocsst for charitable purposes.

This Court in J. K. Trust, •ombay 'Y. Commissioner of Income-tax .. Excess profits Tax :lombay(") endorsed the said view and held that "property" ii .11 term of the widest import and that business would undoubtedly be property unless there was something to the contrary in the enactment. If business was property, it could be held under trust for religious and charitable purposes. As

the business of running the Arya Vaidya Sala vested under trust for religious and charitable purposes, it would iall under

(1 ) (1939) l.T.R. 415 (P.C.)

(2) (19 58) S.C.R. 65

Subba Rtro 1.

cl. (i), if the other conditions laid down therein were satis

C.L.T. fied.

The necessary condition for the application of cl. (i) Kri.rhna Y. Warrior of ~· 4(3) of the Act is that the said property, namely,. the - busmess, shall have been wholly or iD part held for rehg10us S11bba RJIO 1. or charitable purposes.

As 40 per cent of the profits in the business would be given to purposes other than religious or charitable purposes it cannot be said that the business was held wholly for religious or charitable purposes.

But as 60 per cent of the profits thereof would be spent for religious or charitable purposes, the question is whether it can be held that the business was held in trust in part for religious or charitable purposes.

The argument advanced on behalf of the Revenue is that the expression "in part" in cl. (i) applies only to a case where an aliquot part of property is vested in trust and that is not legally possible in the case of business. It is said that a business is one and indivisible and, therefore, the subject-matter of trust can only be the share of the profits payable to a partner during the continuance of the partnership or after its dissolution. Reliance is placed in support of the said proposition on the decisions in K. A. Ramachar v.

Commissioner of Income-tax, Madras('), David Burnet v.

Charles P.

Leininger(2 ), Mohammad Ibrahim Riza v. Commissioner of Income-tax, Nagpur( 8 ). The first two decisions dealt with a different problem, viz., whether an assessee is liable to tax on his share of profits in a finn after setting or assigning the same in favour of a third party and the courts have held that the profits accrued to the assessee before the assignments could operate on them and he was Ii.able to be assessed to tax OD. the said profits.

In the third decision, the Judicial Committee held that there was no valid trust for charitable purposes, as the utilization of the income to charitable or secular purposes was left to the absolute discretion of the head of the community. None of the three decisions has .any bearing on the question whether a business could be held in trust wholly or in part for religious or charitable purposes. That question falls to be considered on different considerations.

In our view, the expression "in part" does not refer . to an aliquot part; if half a house is held in trust wholly Jor

(I) [I96I] 3 s.c.R. 380

(2) (I 932) 76 L.Jld. 665.

(3) (1930) S7 I.A. 260

religious or charitable purposes, it would be covered by the first part of the substantive clause of cl. ( i), for in that event the subject-matter r.f the trust is only the said half of the ·, ouse and that half is ':leld w:1011y for religious or charitable purposes.

The expression "in part'', therefore, must apply to a case other than a property a part of which is wholly held for religious or charitable purposes.

In India there are a variety of trusts wherein there is no complete dedication of the property but only a partial dedication.

A property may be dedicated entirely to a religious or charitable institution or to a deity. This is an instance of complete dedication. A property may be dedicated to. a deity, subject to a charge that a part of the income shall be given to the grantor's h€irs.

A property may be given to an individttal subject to, or burdened with, a charge in favour of an. idol or a religious institution or for charitable purposes.

An owner of property may retain the property for himself but carve out a beneficial interest therefrom in favour of the public by way of easement or otherwise.

There may be many other instance, where though there is a trust, it involves only a partial dedication of the property held under trust in the sense that only a part of the income of that property is utilized for religious or charitable purposes. The dichotomy between the two expressions "wholly" and "in part" is not based upon the dedication of the whole or a fractional part of the property, but between the dedication of the said property wholly for religious or charitable purposes or in part for such purposes. If so understood, the two limbs of the substantive clause fall into a piece. The first limb deals with a property or a part of it held in trust wholly for religious or charitable purposes, and the second limb provides for such a property held in trust partly for religious or charitable purposes.

On the said reading of the provision it follows that the entire business of Arya Vaidya Sala is held in trust for utilizing 60 per cent of its profits i.e., a part of the income, for religious or charitable purposes. The present case, therefore, falls squarely within the scope of the substantive part of cl. (i) of s. 4(3) of the Act.

Even so it is contended that cl. ( b) of the proviso imposes further limitations before the exemption can be

'1964

C.I.T., ...

Krishna W arriar

Subba Rao J.

1964 granted. But the :said clause of the proviso only applies to

CJ.T. the case of income derived from business carried on on •. h "· .., . behalf of a religious or charitable institution.

A business .. rzs na "a1riar . . . . . - held m. trust wholly or m part for reltg10us or chantable

Sbbo Rao 1. purposes is not a business carried on on hehalf of a religious I or charitable institution, for the business itself is held in trust.

A few decisions cited at the Bar bringing out the distinction between the substantive part of cl. (i) of s. 4 ( 3) and cl. (b) of the proviso may usefully be referred to at this stage.

Where a business was held in trust for charitable ourposes, a Division Bench of the Bombay High Court in Dharma Vijiya Agency v. Commissioner of . Income-tax, Bombay City(') held that it was not business which was

carried on on behalf of religious or charitable institutions within the meaning of cl. (b) of the proviso.

Shah J., after considering the relevant authorities and the provisions of the Act, observed:

"In our view, the business referred to in cl. (b) of the proviso need not be business which is held for religious or charitable purposes, provided it is business carried on on behalf of a religious or charitable institution." Desai I., stated thus:

" ........ it is impossible to equate the scope of proviso (b) with the scope of property consisting of business held under trust wholly for religious or charitable purposes.

It must of necessity mean that we have in clause ( i) a very wide category of business which is trust property, and we have in proviso (b) a restricted and a lesser category of business which is carried on by or on behalf of a religious or charitable institution." A Division Bench of the Kerala High Court in Dharmodayam Co. v. Commissioner of Income-tax, Kerala( 2 ) expressed much to the same effect.

A Division Bench of the Madras High Court, in Thiagesar Dharma Vanikam v. Commissioner

( 1) (1960) 38 l.T.R. 392, 405-466, 410.

(2) (1962) 45 I.T.R. 478.

l9H

C.I.T.

<Jf Income-tax, Madras('), after considering the decisions of the various High Courts and the relevant provisions of the Act, observed: Krishna

W"""" "When the trustee acts, it is only the trust that acts, Subb<r llJlo 1• as the trustee fully represents the trust.

A business carried on on behalf of a trust .rather indicates a business which is not held in trust, than a business of the trust run by the trustees."

It concluded thus:

"fn our opinion proviso (b) to section 4(3) (i) does not restrict the operation of the main provision in section 4 ( 3) ( i). If a trust carried on business and the business itself is held in trust and the income from such business is applied or accumulated for application for the purpose of the trust. which must of cou ; e be of a religious or a chariL1hle character, the conditions prescribed in sec; ion 4(3)(i) . e fulfilled and the income is exrnpt fr'.!111 ta~tibn. Thb exemption cannot lle defeated e-. en if the business were to be conducted by somebody else acting on behalf of the trust. Pr JViso (b) to section 4(3) (i) has application only to businesses which are not held in trust, and the field of its operation is, therefore, distinct and separate from that covered by section 4 ( 3 )( i)."

Emphsis is laid upon the expression "such income" in the openir:g words of the proviso and a crntention is raised that the inrnme dealt with in the proviso is income derived from prope; :y held under trust.

To state :. differently, the adjective 'such" in the expression "such income" refers back to the in ome in the substantive clause.

There is some plausibility in the contention, but if the intP-pretation be accepted, we w' l be attributing an intention to the legislature to make a dis'. inction between bm.iness ano other property though bfl:h >f them are held under trmt.

There is no acceptable

rl'.f~• t for this distinction.

T:rnt apart, the expression

(( (I963) 50 f.T.R. 798, 807, 809.

jl S. C.-4

IfJfU "such" may . as weU refer to the "income" in the opening

CJ.T. sentence of sub-s. (3). The said rnb-section says that the

~I h "· WanllJ incomes mentioned thereunder shall not be included in the • "°- ' total income, but the proviso lifts the ban and says that such Sublla Rao 1. incomes shall be included in the to:al income if the conditions laid down are satisfied.

We think that the expression usuch income" only means the income accruing or arising in favour of the trust.

April, 29.

The legal position may briefly be stated thus.

Clause

(i) of s. 4,(3) of the Act takes in every property or a fractional part of it held in trust wholly for religious or charitable purposes.

It also takes in :mch property held only in part for such purposes.

Business is also property within the meaning of the said clause. Clause (b) of the proviso to s. 4(3)(i) applies only to a business not held in trust but carried on on behalf of religious or charitable institutions.

For the foregoing reasons we hold that the High Court has coectly answered the question referred to it.

In the result, the appeals fail and are dismissed with costs.

One set of hearing fees.

Appeal dismissed.

JAGDISH CHANDER GUPTA v.

KAJARIA TRADERS (INDIA) LTD.

(K. N.

WANCHOO, M.

HIDAYATULLAH, K.

DAS

GUPTA AND N. RAJAGOPALA AYYANGAR JJ.)

hrbitration Act-Partnership agreement-Provision for referring to arbitration-Partnership not registered-Application in the High Court for appointment of arbitrator-If maintainable-Interpretation of statute-Ejusdem Generis--No1citur a sociis-Indiarc Partnership Act, 1932 (9 of 1932), •· 69-Arbitration Act, 1940 (Act 10 of 1940), " 8(2). lbo respondent entered into a partnership agreement with tho appellant. But this was not registered. There was an arbitration clauoe sti-

s. 26

Income-tax Act

KRISHNA WARRIAR

K. SUBBA RAo

C. SHAH

M. SJKRI

Indian Income-tax Act, 1922

s. 4(3)(1)

Arya Vaidya Sala

s. 4(3)(i)

Indian Income-tax Act, 1922

s. 4(3)

s. 4(3 )(i)

Indian Income-tax Act, 1922

s. 4(3)(i)

s. 4(3 )(i)

s. 4(3)

Kerala High Court

K. N. Rajagopal Sastri

R. N. Sachthey

ubba Rao

CJ.T. v. ;,11na W arriat
:ubba Rao I.

S. T. Desai and Sardar Bahadur, for the respondent (in all the appeals) .

S. T. Desai

Sardar Bahadur

SuBBA RAo

s. 4(3 )(i)

Indian Income-taic Act, 1922

P. S. Warriar

January 30, 1944

Arya Vaidya Sah

Arya Sikitsa Sala

Arya Vaidya Pata Sala

Till the Amending Act

s. 4(3)

s. 34

September 28, 1956

December 20, 1956

Kruhna Warr.a

Subba Rao

s. 4

High Court of Kerala

Rajagopala Sastri

s. 4

S. T. Dsai

s. 4

Arya Vaidya Sala

Arya Vaidya Hospital

Arya Vaidyam

Arya V

Arya Vaidya Patasala

Aryavaidyam

Ayurveda

Krishna Warriar

Subba Rao

Arya V.1idya Hospital

s. 4(3)

Section 4

Lahore High Court

Maxwell

s. 4

s. 4(3)(i)

s. 4

Bombay High Court

J. K. Trust

India

s. 4(3)

Krishna W

Sbbo Rao

s. 4

Shah

Desai I.

Madras High Court

Krishna

section 4(3)

section 4

section 4(3)

section 4

s. 4

s. 4(3)(i)

K. N.

WANCHOO

M.

HIDAYATULLAH

DAS

GUPTA

N. RAJAGOPALA AYYANGAR

Indiarc Partnership Act, 1932

Arbitration Act, 1940