H. K. CHOUDHURY, REGIONAL SETTLEMENT

COMMISSIONER

SHRI ISSARDAS KUNDANMAL MOTIANI AND OTHERS

February 15, 1965

[P.B. GAJENDRAGADKAR, C.J., M. HIDAYATULLAH, J.C. SHAH AND

S.M. S!KRI, JJ.]

Displaced Persons (Compensation and RehabiMation) Rules, 1955, r.l!f-If applies to agricultural woperty.

The respondent who had a "verified claim" applied for compensation under the Displaced Persons (Compensation and Rehabilitation) Act, 1954. He alleged that he was a co-sharer along with his brothers in agricultural property in West Pakistan and claimed his share of the compensation. The Assistant Settlement Officer held that the alleged co-sharers were members of a joint Hindu, family and that the agricultural property was joint property. He then calculated the compensation on the joint property as per rr. 51 and 56 of the Displaced Persons (Compensation and Rehabilitation) Rules

1955. The respondent thereupon filed a petition in the High Court under Arts. 226 and 227 of the Constitution contending that on the finding that the respondent and his brothers constituted a joint family, the unit for assessment of compensation should first be determined according to f. :!.~, which makes special provision for payment of coi;; npensation to joint families, before compensaton was calculated. The High Court allowed the petition.

E In the appeal to this Court it was contended that r. 19 was inapplicable as that rule does not apply to agricultural land.

HELD: The High Court was iight in holding that the rule applied to the claim of the respondent in respect of the agricultural land.

Chapter IV of the Rules in which r.19 occurs contains some F rules which apply to applications for compensation in respect of agricultural lands also. Therefore it cannot be said that the Chapter does not deal with agricultural lands at all. Each rule must be considered to see whether it has application to a claim for compensation in respect of agricultural land. So considered, there is no principle of construction by which the scope af'the general words in r. 19 could be limited, so as not to apply to agricultural land. Chapter G VIII of the Rules provides for compensation in respect of verified claims for agricultural lands in rural areas and only deals with how a unit that has been determined is to be compensated. There is nothing in that Chapter which modifies or overrides r.19 which enables the authorities to determine the unit for assessment of compensation in the case of joint families. [83 D-E; 85 A-Fl

C1v1L APPELLATE JuRJSDICTJON; Civil Appeals Nos. 89-93 H of 1964.

Appeals by special leave from the judgment and orders dated August 30, 1961 and June 13, 1961 in Special Civil Application Nos. 440, 441, 509, 510 and 7 of 1961.

K. S. Chawla and R. S. Saclzthey, for the appellant (in C. As.

No,. 89/91-'19641

CliuUDHGRY v. ISSARDAS (Sikri, J.) 79

A C. K. Daphtary, Attorney-General, K. S. Chawla and R. N.

Sachthey, for the appellant (in C.A. No. 93 I 64).

N. N. Keshwani, for the respondents in all the appeals.

The Judgment of the Court was delivered by

B Sikri, J. These five appeals by special leave raise a common

qpestion of interpretation of r. 19 of the Displaced Persons (Com pensation & Rehabilitation) Rules, 1955 (hereinafter referred to as the Rules). It is common ground that nothing turns on any dissimi larity in the facts of each appeal. It will accordingly suffice if facts in Civil Appeal No. 93 of 1964 3re set out.

The respondent, Lachman Hotchand Kriplani, is a displaced person from West Pakistan. He has three brothers. They owned 731 acres of agricultural land in District Nawabshah, Taluka Nawab Shah, Sind-now in Pakistan. The respondent submitted a claim under the Displaced Persons (Claims) Act, 1950 (XLIV of D 1950)-hereinafter referred to as the Claims Act. The word 'claim' was defined to mean "assertion of a right to the ownership of, or to any interest in (i) any immovable property in West Pakistan which is situated within an urban area, or (ii) such class of property in any part of West Pakistan, other than an urban area as may be notified by the Central Government in this behalf in the official E gazette". It is common ground that agricultural land in Sind was so notified. The . respondent's claim was that he owned 114 share of 731 acres and 14 ghuntas standing in the name of Fatehchand.

The Claim Officer, by order dated October 7, 1952, accepted the claim and assessed his claim as 94-3 standard acres.

F On July 2, 1955, the respondent applied for compensation under the Displaced Persons (Compensa.tion and Rehabilitation) Act (XLIV of 1954)-hereinafter referred to as the Compensation Act. In. the application he stated that he was not a member of a Joint Hindu Family in Pakjstan, but his claim was as a co-sharer G alongwith three others, who had filed separate claims. The Assis

tant Settlement Commissioner was, however, not satisfied with this assertion and after holding an enquiry, by order dated March 3, 1960, he held that the four alleged co-sharers were members of a Joint Hindu Family, and the whole agricultural land claim was to be treated as joint property. On August 29, 1960, a statement of account was issued to the tesrvmdent. This statement showed H that his claim was assessed as Rs. !D,701/- gross compensation This figure was arrived at, as stated in the affidavit of the Assis tant Settlement Commissioner, thus:

"The claim was assessed for 376 standard acres and 12 units out of which the petitioner had I/ 4th share.

The compensation on 376 Standard Acres and 12 Unit< work<.: n11t tn 1 ()Q Cl+~ .... "' - ·

scale indicated in Rule 51. This converted in terms of A money as per Rule 56 comes to Rs.. 42,806 /- The petitioner's I I 4th share would be Rs. 10,701 /-".

The respondent then on October 28, 1960, ser.ved a notice on the Regional Settlement Commissioner calling upon him to rectify the statement of account, failing which he will be con- B strained to move the High Court under arts. 226 and 227 of the Constitution. In this notice he claimed that r. 20 applied to his case; in the alternative he asserted that at least r. 19 should be applied to him. In reply, the Assistant Settlement Commissioner informed him that the calculation had been done correctly. Thereupon, he filed a petition under arts. 226 and 227, in the Bombay 0 High Court. The High Court allowed the petition and set aslde the statement of account furnished to the petitioner on August 29, 1960, and directed that the respondent shall give the benefit of r. 19 and determine the amount of compensation payable to him in accordance with the provisions of rr. 19, 51 and 56 and other rules of the Displaced Persons (Compensation and Rehabi- D litation) Rules, 1955.

The appellant having obtained special leave, the appeals are now before us. We may mention at the outset that in the High Court the respondent's counsel did not challenge the finding of the Assistant Settlement Commissioner that the respondent and his brothers were members of a joint family. The High Court came to E the conclusion tha~ t. 19 applied to agricultural land. It found nothing in the scheme of the Rules, or in the language of r. 19, to support the claim of the Department that r. 19 applied only to nonagricultural land.

The learned Attorney-General, on behalf of the appellant, P challenges the conclusion of the High Court. He has taken us through various sections of the Compensation Act of 1954 and various rules to substantiate his contention. Let us then look at the Compensation Act and the Rules. The Compensation Act was enacted to provide for payment of compensation and rehabilitation grant to displaced persons and for matters connected therewith. 'Verified claim" is defined to mean, inter alia, a claim registered G under the Displaced Persons (Claims) Act (XLIV of 1950). It is not disputed that the claim of the respondent verified by order dated October 7, 1952, is a verified ciaim.

Section 4 provides for an application for the payment of compensation in the prescribed form to be made by a displaced person R having a verified claim within a certain period. Section 5 provides that bn receipt of an application under s. 4, the Settlement Officer shall determine the amount of public dues, if any, recoverabJe' from the applicant 11nd shall forward the applieation arid the record to the Settlement Commissioner. It will be noticed that a verified claim registered under the Claim Act, 1950, includes claims to urban as well as certain agricultural land. Therefore, both ss. 4 l\lld

~HOUDHURY V. ISSARDAS (8'ikri, J.) 81

A 5 apply to such agricultUfal land as has been made the subjectmatter of claim and verification under the Claims Act of 1950.

Section 6 was referred to by the learned Attorney-General but we have not been able to appreciate how it advances his case. Section 6 gives relief to certain banking companies in this way. If a banking company held a mortgage of an immovable property belonging B to a displaced person in West Pakistan, and that mortgage was subsisting at the date when the claim of the banking company was registered under the Claim Act, 1950, and the displaced person is entitled to receive compensation in respect of any such property, the banking company was entitled to various reliefs, the appropriate relief depending on whether the compensation to the disc placed person is payable (1) in cash or (2) in the form of transfer of any property, or (3) in any other form. In this section immovable property would include agricultural land and it cannot be denied that the respondent is entitled to compensation at least in one of the three forms mentioned in sub. s. (2).

n Section 7(1) directs the Settlement Commissioner on receipt of the application under s. 5 to ascertain the amount of compensation having due regard to the nature of the verified claim and other circumstances of the case. Section 7 (2) provides for the deduction of certain dues and the Settlement Commissioner then makes an order under s. 7(3) ascertaining the net amount of compensation.

E Section 8 provides the form and manner of payment of compensation of the net compensation determined under s. 7(3) as being payable to a displaced person. Subject to any rules that may be made, the net compensation is payable in cash, in government bonds, or by Ele to the displaced person of any property from the compensation pool and setting off the purchase money against the F compensation payable to him, etc. Section 8(2) enables rules to be made by the Central Government on various matters, inter alia, the SC!lles according to which. the form and the manner in which and the instalments by which compensation may be paid to different classes of displaced persons. Section 40 enables rules to be made to carry out by the purposes of the Compensation Act. It G is not necessary to refer to other sections of the Compensation Act.

Before ; We deal with the 1955 Rules, it is apparent that ss. 4, 5, 6, 7 and/8 do not in any manner distinguish between urban land and agricuJtural land as long as the agricultural land is the sub- H ject-matter of a verified claim. If a person holding a verified claim in respect of agricultural land owes .Pubfic dues-and "public dues" is defined very widely in s. 2(d) to include all kind of loans not only from the Central Government but from a State Government alsothis has to be deducted under s. 7(3). It is suggested that the expression "net amount of compensation" ii! s. 7(3) means only cash compensation but We are unable to limit the expression thus in view of the scheme of ss. 4 to 8.

The Central Government in exercise of the power conferred A by s. 40 of the Compensation Act made the Displaced Persons (Compensation and Rehabilitation) Rules, .1955. Chapter I contains various definitions; Chapter II deals with procedure for submission of compensation application and determination of pqblic dues. Rule 3 enables a displaced person having a verified claim to make an application for compensation. Rule 4 deals with the form B of application and Appendix I is the form prescribed, and Appendix II is the questionnaire which has to be answered. One question is important for our purpose. Under the heading "II. Particulars of claims under Displaced Persons Claims Act, 1950" is mentibned: "(a) agricultural land, index no; Village/Tehsil/District; value assessed in standard acres; cosharers in each property with respective C shares;. if any property is mortgaged state mortgage money and name of the mortgagees". The rest of the rules, upto r. 9, in this Chapter deal with the scrutiny of the application and the determination of public dues. It is only necessary to notice r. 6(2) which requires a Settlement Officer to send a duplicate copy of the application to the Office of the Chief Settlement Commissioner for D verification of the assessed value of the claim in respect of which the application has been made. Under r. 10, the Settlement Officer is required to pass an order and send a copy of the order and the original application along with the records of the case to the Regional Settlement Commissioner. It will be seen that Chapter II does not distinguish between verified claims relating to urban E property and rural property.

Then we come to Chapter III which contains r. 11. Under this rule the Settlement Commissioner deals with the duplicate copy sent to him under r. 6(2). He verifies the assessed value of the claim, as stated in the application, with the final order in respect F thereof, in the claims record and returns the duplicate copy to the Regional Settlement Commissioner with such remarks as may be relevant for the determination of the amount bf compensation.

Chapter IV deals with determination of compensation. It will be remembered that s. 5 of the Compensation Act requires the Settlement Officer to determine the amount of public dues and forward G the application and the record of the case tb the Settlement Commissioner, and r. 1], which we have just noticed, requires the Settlement Commissioner (Headquarters) to send the duplicate copy to the Regional Settlement Commissioner. Rule 12 directs the Regional Settlement Commissioner to consolidate all these papers.

Rule 12 obviously applies to application in respect of verified H claims to agricultural land. As we have already said, s. 5 and r. 11 applied to such verified claims. Rule 13 deals with determination of certain dues to banking companies under s. 6 and any unsecured debt payable by an applicant in respect of which a communicatibn has been received from any Tribunal under s. 52 of the Displaced Persons (Debt Adjustment) Act, 1951 (LXX of 1951). Rule 14 directs that the public dues and the amounts referred to in Rule 13

CHOUDHURY V, ISSARDAS (Sikri, J.) 83

A shall be deducted from the amount of compensation in a certain

order of priority. Rule 15 reads as follows:

"Determination of net compensation; After deducting the amount referred to in rule 14, the Regional Settlement Commissioner or an Assistant Settlement Commissioner or a Settlement Officer, or an Assistant Settlement Officer, having jurisdiction and duly authorised by the Regional Settlement Commissioner, shall pass an order determining the net amount of compensation payable to the applicant in respect of his verified claim and shall prepare a summary in the form specified in Appendix VII (Abstract of particulars).

It is significant that Appendix VII has a column for agricultural land and a column for remarks regarding application of r. 19.

Pausing here, it is difficult to hold that rr. 12, 13 and 14 do not apply to applications for compensation in respect of agricul- D tural lands which are the subject-matter of a verified claim. Therefore, we must reject the contention that Chapter IV, in which r. 19 occurs, does not deal with agricultural lands at all. It may be conceded that r. 16 does not apply to agricultural lands. The scale of compensation in respect of agricultural lands which are E the subject-matter of a verified claim is expressly dealt with elsewhere. Rule 51 which provides that the scale of allotment of land as compensation in respect of a verified claim for agricultural land shall be the same as in quasi-permanent land allotment scheme in the State of Punjab and Patiala, and the East Punjab States Union, as set out in Appendix XIV. The explanation fur- F ther provides that if any public dues are recoverable the allotable area shall be reduced correspondingly. Rule 49 read with r. 56 enables the compensation due on the verified claim for agricultural land to be converted into cash if a person wishes to have his claim satisfied against property other than agricultural land. Rule

18 expressly excludes agricultural land from its purview.

What G emerges from a consideration of these rules in Chapter IV is that we must consider each rule and see whether it has application to a claim for compensation in respect of agricultural land.

Rule 19 reads thus:

"Special Provision for payment of compensation to Joint families-Where a claim relates to .properties left by the members of an undivided Hindu family in West Pakistan (hereinafter referred to as the joint family) compensation shall be computed in the manner hereinafter provided in this rule.

(2) where on the 26th Sept. 1955 (hereinafter referred to as the relevant date) the joint family consisted of:-

(a) two or three members entitled to claim partition,

the compensation payable to such family shall be computed by dividing the verified _claim into two equal shares and cafoulating the compensation separately on each such share,

(b) four or more members entitled to claim partition, the compensation payable to such family shall be computed by dividing the verified claim into three equal shares and calculating the compensation separately on each such share.

(3) For the purpose of calculating the number of the member of a joint family under sub-rule (2), a person who on the relevant date: -

(a) was less than 18 years of age,

(b) was a lenial descendant in the main line of another living member of joint Hindu family entitled to claim partition shall be excluded: Provided that where a member of a joint family has died during the period commencing on the 14th August .1947 and ending on the relevant date leaving behind on the relevant date all or any of the following heirs namely:-

(a) a widow or widows,

(b) a son or sons (whatever the age of such son or sons) but no lenial ascendant in the main line, then all such heirs shall, notwithstanding anything contained in this rule, be reckon&! as one member of 'the joint Hindu family. ' Explanation-For the purpose of this rule, the question whether a family is joint or separate shall be determined with reference to the status of the family on the 14th day of August, 1947 and every member of a joint family shall be deemed to be joint notwithstanding the fact that he had separated from the family after the date".

The heading "Special Provision for payment of compensation to joint families" is general. So is sub-rule (1). The word 'pro. perties' is general and would include agricultural land. That this is the meaning is also borne out if we consider the word "claim". The word "claim" must have reference to the claim in the application

to be made under s. 4 read with rr. 3 and 4, and as we have al- B ready noticed, the application would include a claim in respect of agricultural land if it is the subject-matter of a verified claim.

The learned Attorney-General has not been able to. point to any principle of construction which would enable us to limit the scope of the general words in r. 19(1). His main argument that no 'rule in Chapter IV applies to claims in respect of agricultural land we have already rejected.

• C!!Ol"f>HURY t'. ISSARDAS (8ikri, J.) 85

A The learned Atlorney-General then urges that the scheme of the Rules is to provide in separate chapters for compensation in respect of various classes of properties, and h~ says that Chapter VIII provides for compensation in respect of verified claim for agricultural land situated in rural area and the rules contained in the chapter are the only rules _that govern the grant of com- B pensation. But none of the rules in this chapter deals with what is to happen if the agricultural land was held by a joint family in West Pakistan or if the agricultural land was held by co-owners in West Pakistan. Even if a Joint Hindu Family is treated as a unit for s:Jme purposes in some laws, co-owners are very rarely treated as a unit and it would require express language to treat C co-owners as a unit and award compensation to them as a unit.

However,· r. 20 recognises ihe general rule and provides that where a claim relates to property left in West Pakistan, which is owned by more than one claimant as co-owners, the unit for the assessment of compensation shall be the share of each co-owner and the compensation shall be payable in respect of each such share as if D a claim in respect thereof has been filed and verified separately.

The learned Attorney-General, when asked, said that even r. 20 would not apply to a claim in respect of agricultural land, but we are unable to accede to this contention. It would be the height of inequity to hold this. In other words, rr. 19 and 20 enable the authprities to determine the unit for assessment of compensation. This E subject is not dealt with in Chapter VIII, which deals with how the unit, be it an individual, a member of Joint Hindu Family or a co-owner, is to be compensated. There is nothing in Chapter VIII which modifies or overrides rr. 19 and 20.

Accordingly, in agreement with the High Court. we hold r that r. 19 will apply to the claim of the respondent in respect of

agricultural land left by him as a member of the Joint Hindu Family.

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

As stated in the beginning, it is common ground that if this: G appeal fails the other appeals must also fail. They are according-. ly dismissed with costs. There will be one hearing fee in them.

Appeals dismissed.

ISSARDAS KUNDANMAL MOTIANI AND OTHERS

February 15, 1965

P.B. GAJENDRAGADKAR, C.J.

M. HIDAYATULLAH, J

C. SHAH

Arts. 226 and 227

Chapter IV of the Rules

Chapter G VIII of the Rules

K. S. Chawla

R. S. Saclzthey

A C. K. Daphtary

R. N.

Sachthey

N. N. Keshwani

B Sikri

Lachman Hotchand Kriplani

West Pakistan

Nawabshah

Sind

Pakistan

Central Government

Fatehchand

October 7, 1952

July 2, 1955

Pakjstan

March 3, 1960

August 29, 1960

October 28, 1960

arts. 226 and 227

arts. 226 and 227

Bombay 0 High Court

Section 4

Section 5

s. 4

ss. 4

~HOUDHURY V. ISSARDAS

Section 6

Section 6

Claim Act, 1950

Section 7(1)

s. 5

Section 7

s. 7(3)

Section 8

s. 7(3)

Section 8(2)

Section 40

ss. 4, 5, 6, 7

s. 2(d)

s. 7(3)

s. 7(3)

ss. 4 to 8

s. 40

s. 5

s. 5

s. 6

s. 52

Punjab

Patiala

26th Sept. 1955

14th August .1947

14th day of August, 1947

s. 4


KEDAR PANDEY

NARAIN BIKRAM SAH

April 15, 1965

[P. B. GAJENDRAGADKAR, K N. WANCHOO, M. HIDAYATULLAH AND

V. R.AMASWAMI, JJ.]

Constitution of India, 1950, Art. 5(c)-Acquisition of Indian domicile-Proof.

The appellant and respondent were contesting candidates for election to the State Legislative Assembly. The respondent was

declared elected, and the appellant filed an election petition challenging the election on the ground that the respondent was not duly qualified under Art. 173 of the Constitution as he was a citizen of Nepal and not a citizen of Inclia. The Tribunal held that the respondent was not a citizen of India, but the High Court in appeal set aside that order and upheld the election of the respondent.

On the question whether the respondent was a citizen of India under Art. 5 of the Constitution, on the material date,

HELD: Assuming that the respondent was not born in the territory of India, on a consideration of all the events and circumstances of his life, he had acquired a domicile of choice in India long before the end of 1949 which is the material time under Art. 5 of the Constitution. He had formed the deliberate intention of making Inclia his home with the intention of permanently establishing him

self and his family in India and therefore had t':i.e requisite anirn .. us manendi. He was ordinarily resident in India for 5 years immediately preceding the time when Art. 5 came into force. Since the requirements of Art. 5(c) were satisfied, the High Court rightly reached the conclusion that he was a citizen of India at the relevant time. [805 C-D]

The only intention required for a proof of a change of domicile is an intention of permanent residence. What is required to be established is ti/at the person who is alleged to have changed his domicile of origin has voluntarily fixed the habitation of himself and his family in the new country, not for a mere special or temporary purpose, but with a present intention of making it his permanent homei

On the question of domicile at a particular time the course of his conduct and the facts and circumstances before and after that time are relevant. [8()1 F-G; 803 F]

Udny v. Udny, L.R. 1 H.L. Sc. 441 and Doucet v. Geoghegan, 9 Ch.

Div. 441, applied.

CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 976 A and. 977 of 1964.

Appeals from the judgment and decree dated March 26, 1964 of the Patna High Court in Eleetion Appeals Nos. 8 and I 0 of 1963.

C. B. Agarwala, Jagdish Pan<lay, Chinta Subbarao, M. Raja- B gopalan and B. P. lha, for the appellant, Un both the appeals).

K. P. Varma and D. Goburdhun, for the respondent (In both the appeals).

The Judgment of the Court was delivered by

Ramaswami, J. Both these appeals are brought by certificate against the judgment and decree of the High Court of Judicature at Patna dated March 26, 1964, pronounced in Election Appeals Nos. 8 and IO of !963.

The appellant-Kedar Pandey and the respondent-Narain Bikram Sah (hereinafter called Narain Raja) were the contesting D candidates in the year 1962 on behalf of the Congress and Swatantra Party respectively for the election to Bihar Legislative Assembly from Ramnagar Constituency in the district of Champaran.

The nomination papers of the appellant and the respondent and two others-Patmeshwar Prasad Roy and Suleman Khanwere accepted by the Returning Officer without any objection on E January 22, 1962. Later on the two candidates-Parmeshwar Prasad Roy and . Suleman Khan-withdrew their candidature~.

After the poll the respondent, Narain Raja was declared elected as member of the Bihar Legislative Assembly by majority of valid votes. On April 11, 1962 Kedar Pandey filed an election petition challenging the election of the respondent. It was alleged F by Kedar Pandey that the respondent was not duly qualified under Art. 173 of the Constitution of India to be a candidate for election as he was not a citizen of India: According to Kedar Pandey the respondent, bis parents and grand-parents werei all born in Nepal and, therefore, on the date of the election, the respondent- G Narain Raja-was not qualified to be chosen to fill the Assembly seat for which be _had been declared to have been elected. According to Kedar Pandey the respondent was related to the royal family of Nepal and the father of the respondent-Rama Raja-owned about 43 bighas of land and a house at Barewa in Nepal in which the respondent bad a share along with his three other brothers. The . H election petition was contested by the respondent who said that .he was an Indian citizen and there was no disqualification incurred under Art. 173 of the Constitution. The further case of the respondent was that he had lived in India since his birth and that he was a resident of Ramnagar in the district of Champaran and not of Barewa in Nepal. The respondent claimed that he was born in Banaras and not at Barewa .

Kl':PAR l'ANDEY .,,, NA.RAJX (Ranuis1ran11'., .J.) i915

A Upon these rival contentions it was held by. the Tribu-. nal that the respondent-Narain Raja-was not a citizen of India and. therefore, was not qualified under Art. 173 of the Constitution for being chosen to fill a seat in the Bihar Legislative Assembly. The Tribunal, therefore. declared that the election of the respondent was void. But the Tribunal refused to make a B declaration that Kedar Pandey was entitled to be elected to Bihar Legislative Assembly for that Constituency. Both the appellant and the respondent preferred separate appeals against the judgment of the Election Tribunal to the High Court. of Judicature at Patna.

The High Court in appeal set aside the judgment of the Tribunal and upheld the election of the respondent-Narain Raja. The High C Court found, on examination of the evidence, that Narain Raja, the respondent before us, was born in Banaras on October 10, 1918 and that the respondent was living in India from 1939 right upt0

1949 and even thereafter. The High Court further found that long before the year 1949 Narain Raja had acquired a domicile of choice in Indian territory and, therefore, acquired the status of a citizen of D India both under Art. 5(a) and (c) of the Constitution. On these findings the High Court took the view that Narain Raja was duly qualified for being elected to the Bihar Legislative Assembly and the election petition filed by the appellant-Kedar Pandey-should be dismissed.

The main que, tion arising for decision in this case is whether the High Court was right in its conclusion that the respondent- Narain Raja-was a citizen of India under Art. 5 of the Constitution of India on the material date.

The history of the family of Narain Raja is closely connected with the history of Ranmagar estate. It appears that Ramnagar estate in the district of Champaran in Bihar originally belonged to Shri Prahlad Sen after whose death the estate came into th~ possession of Shri Mohan Vikram Sah, popularly known as Mohan Raja. After the death of Mohan Raja the estate came into the possession of Rani Chhatra Kumari Devi, the vidow of Mohan Rajd, and after the death of Rani Chhatra Kumari Devi, the estate came into the possession of Rama Raja alias Mohan Bikram Sah, the fther of the respondent-Narain Raja. It is in evidence that the daughter of .Prahlad Sen was married to Shri Birendra Vikram Sah, the father of Mohan Raja. Mohan Raja died without any male issue but during his lifetime he had adopted Rama Raja, the father of the respondent and by virtue of a will executed by Mohan Raja in the year 1904 in fa, mir of his wife Rani Chhatra Kumari Devi the Rani became entitled to the Ramnagar estate on the death of Mohan Raja (which took place in 1912), in preference to the adopted son Rama Raja since the properties belonged to Mohan Raja in his absolute right and not as ancestral properties. After the death of Rani L/P(ll)5'ur-1;

796 Sl'l'IU•iMF: 1.ouRT REPOR'fS I 1965] :l S.C.R.

Chhatra Kumari Devi i11 1937 Rama Raja caine into the posses- A sion of the Ramnagar estate. In the year 1923. Rani Chhatra Kumari Devi had tiled R.S. No. 4 of 1923 against Rama Raja in the Court of Sub-Judge, Motihari with regard to a village which Rama Raja held in Ramnagar estate on the basis of a Sadhwa Patwa lease. Rama Raja in turn filed T.S. No. 34 of 192, l in Ille Court of Subordinate Judge of Motihari against Rani Chh3tra B Kumari Devi and others claiming title to Ramnagar estate anti for possession of the same on the basis of his adoption by Mohan Raja. The Title Suit and the Rnt Suit were heard together by the Additional Sub-Judge, Motihari who, by his judgment dated August 18, 1927 decreed the Title Suit filed by Rama Raja and .dismissed the Rent Suit filed by Rani Chhatra Kumari Devi. There C

was an appeal to the High Court of Patna which dismissed the appeal. Against the judgment of the High Court appeals were taken to the Judicial Committee of the. Privy Council. The appeal was decided in favour of Rant Chhatra Kumari Devi and the result

.vas that the Title Suit filed by Rama Raja was dismissed and Rent D Suit ti led by Rani Chhatra Kumari Devi was decreed. In the course of judgment the Judicial Committee did not disturb the findiug of the trial Court that Rama Raja was an adopted son of Shri Mohan Vikram Sah alias Mohan Raja and accepted that finding as correct; but the Judicial Committee held that Ramnagar estate was not the ancestral property of Mohan Raja, but he got that E property by inheritance, he being the daughter's son of Prahlad Sen, the original proprietor of that estate. In view of this circumstance, the Judicial Committee held that though Rama Raja was .the adopted son of Mohan Raja, Rama Raja was not entitled to. the estate in view of the will executed by Mohan Raja in favour of Rani Chhatra Kumari Devi in .the year 1904. It appears that p in the year 1927 Rama Raja had taken possession of Ramnagar estate and got his name registered in Register D and remained in possession till the year 1931 when he lost the suit in Privy Council.

After the decision of Privy Council, Rani Chhatra Knmari Devi again came into possession of Ramnagar estate and continued to remain in possession till she died in 1937. It is in evidence that G after the death of Rani Chhatra Kumari Devi, Rama Raja obtained possession of Ramnagar estate and continued to remain in possession thereof from 1937 till 1947, the year of his death. There is evidence that Rama Raja died in Bombay and his dead-body was cremated in Banaras.

It is also in evidence that during the lifetime Qf Rama Raj~ there was a partition suit in the year 1942-No. 40 of 1942-for the partition of the properties of the Ramnagilr estate among Rama Raja and his sons including the respondent. This suit was filed on September 29, 1942 in the Court of the Subordinate Judge at Motihari. A preliminary decree-Ex. 'l (2)-was passed on April 16, 1943 on compromise and the final decree-Ex l'(l) in the suit

w.15 ~3ssed on:May'.!2. 1944._From the two decrees-it appears that

!{a:n'nagar. estate w;1s comprised of extensive properties include iac'. <ainindari interest in a large number of villages and the estate h:i:J an :::, tensive area of Bakasht lands. By the said partition the

cstat~ was divided among the co-sharers but certain properties indudi11~ fooests in the estate were left joint. -

On behalf of the appellant Mr. Aggarwala put forward the argument that the High Court was not justified in holding that Narain Raja was born in Bnnaras in the_ year 1918. According to the case of the appellant Narain Raja was born at a place called _ • Barewa in Nepal. In order . to prove his case the appellant - C examined two witnesses-Sheonath Tewari (P.W. 18) and N: D.

Pathak (P.W. 15). The High Court held that their evidence was acceptable. There was also a plaint <Ex. 8) produced on behalf of the appellant to show that Narain Raja was born at Barewa. T1ilil

plaint was apparently filed in a suit brought by the respondent for the realisation of money advanced by the respondent's mother to D one Babula) Sah. The place of birth of the respondent is men-.

tJOIed in this plaint as Barewa Durbar. The High Court did not atta.:h imilortance to Ex. 8 because it took the view that the description of the place of birth given in the document was only for the purpose of litigation. It further appears from Ex. 8 that it was not _ <igned by the respondent but by one Subhan Mian Jolaha d_es E cribed as 'Agent". On behalf of the respondent R.W.19-G. S.

Prasad was examined to prove that Narain Raja was born at.

Banaras. The High Court accepted the evidence of this witness and also of the respondent himself on this point. It was submitted by Mr. Aggarwala that there were two circumstances which indicate that the respondent could not have been born at Banaras: In the -- F _first place, it was pointed out, the municipal registers of Banaras . for the year 1918-Ex, 2 series-did not mention the birth of the respondent. It was explained on behalf of the:resl'ondent thar tho house at Mamurganj in whichthe respondent was born was not . included within the limits of the municipality in the year 1918, and -

0 that the omission of the birth of the respondent in the municipal -registers was therefore, of no significance. It was contended on

bh31f of the appellant that there was litigation with regard to properties of Ramnagar estate between the respondent's father and Rani Chhatra Kumari Devi and therefore the evidence of P.W. Y.

G. S. Prasad that Rama Raja was living with Rani Chhatra Kumari n Devi at Ramnagar even during her lifetime cannot <be accepted_

s true. It was, therefore, suggested that it was highly improbable that Narain Raja should have been born at Banaras iii the year 1918, as alleged; in the house belonging_ to Ramnagar estate. We do not, however, think it necessary to express any concluded opinion on this question of fact but proceed to decide the case 011 .

the assumption that Narain Raja was not born in the territory of India, in the year 1918. The reason is that the place of birth

of Narain Raja has lost its importance in this case in view of the A. concurrent findings of both the High Court and the Tribunal that for a period of 5 years preceding the commencement of the Constitution. Narain Raja was ordinarily resident in the territory of India. Therefore the requirement of Art. S(c) of the Constitutio1? is fulfilled. Mr. Aggarwala on behalf of the appellant did not cha1lenge this finding of the High Court. It is. therefore, manifest that B the reqmreroent of Art. 5 (cl of the Constitution has been established anc: the only question remaining for oonsideration is th~ question whether Narain Raja had his dornicil in the territory of India at the material time.

Upon this question it was argued before the High Court on C behalf , Qf the respondent that the domicil of origin of Mohan Raja may have been in Nepal but he had acquired a domicile of choice in India after inheriting Ramnagar Raj from his maternal grandfather Prahlad Sen. It was said that Mohan Raja had settled down in India and had married all his 4 Ranis in Ramnagar. It was argued, therefore, that at the time when Mohan Raja had adopted D Rama Raja in 1903 Mohan Raja's domicil of choice was India.

It was said that by adoption in 1903 Rama Raja became Mohan Raia's son and by fiction it must be taken foal Rama Raja's do:nicii was India as if he was Mohan Raja 's son. It was contended in the alternative that whatever may have been Rama R<1ja's domicil E hefore 1937 when Rani Chhatra Kumari Devi died, Rama Raja acauired a domicil of choice in India when he came to India ou the death of Rani Chhatra Kumari Devi. It was also stated on behalf of the respondent that Rama Raja remained in possession of the Ramnagar estate until his death in 1947. The High Court, however. held. upon examination of the evidence, that there was F no material on the record to decide 1he question of Mohan Raja's domicil. It was also held by the High Court that it was not possible to ascertain from the evidence whether there was any intention of Rama Raja to settle down in India and make it his permanent home. In any event. Narain Raja was born in the year 1918 and unless the domicil of Rama Raja in 1918 was ascertained the G domicil of origin of Narain Raja will remain unknown. The High Court therefore, proceeded upon the assumption that Narain Raja had his domicil of origin in Nepal and examined the evidence to find out whether Narain Raja had deliberately hosen the domicil of choice in India in substitution for the domicil of origin.

The crucial question for determination in this. case. therefore. is whether Narain Raja had acquired the domicil of choice in India.

The law on the topic is well-established but the difficulty is found in its application to varying combination of circumstances In each case. The law attributes to every person at birth a domicil

' ·,

..,.

.-~~~~~~~--~~. -~-------------------------,

' I

.... ' .•• '>.. :.

KEDAR PANDE_Y v. NARAIN (Rar, uiswami, J.) 799

-, ' .'\ which is called a domicil of origin. This domicil may be changed.

~"'' a new domicil, which is called a domicil of choice, acquired; • hut the two kinds of domicil differ in one respect. The domicil of - - origin is received by operation of Jaw at birth; the domicile of choice is acquired later by the actual removal of an individual to another country accompanied by his animus manendi. The B domicil of origin is determined by the domicil, at the time of the child's birth. of that person upon whom he is legally depende'nt.

A legitimate child born in a wedlock to a living father receives - - the domicil of the father at the time of the-birth; a posthumous

legitimate child receives that of the mother at that time. A>

0 regards change of domicil, any person not under disability may at any time change his existing domicil and acquire for .himHlf a domicil of choice by the fact of residing in a country other than that. of his domicil of origin with the intemion of con- _ tinuing to_ reside there indefinitely. Forthis purpose residence 'is a mere physical fact,- and means no more than personal D presence in a locality, regarded apart from any of the circumstances attending it. If this physical .fact is accompanied by the required state of mind, neither its character nor its duration is in ' any way material. The state of mind, or animus manendi, which is .

required demands that the person whose domicil is the object of the inquiry should have formed' a fixed and settled purpose of E making his principal or sole permanent home in the country of residence, or, in effect, h~ should have formed a deliberate intmtion to settle there. It is also well-established that the onus of proving that a domicilhas been _chosen .in substitution for the domicil of origin lies upon those who assert that the domicil of origin has been lost. The domicil of origin -. continues unless a F lixed and settled intention of abandoning the first domicil and acquiring another as the sole domicil is clearly shown (see Winans

v. Attorney-Genera/.(') In Munro v.

Munro(') Lord Cottenham

st•tes the rule as follows: - ''The domicil of -origin must prevail until the party

has not only acquired another, but has manifested and carried into execution an intention of abandoning his for _ _ mer -domicil. and acquiring another as his sole domicil. To effect this abandonment of the domicil of origin, and substitute another in its place, it required animo et facto. that is. the choice of a place. actual residence in the place _then chosen and that it shotild be the principal and permanent residence, the spot where he had placed larem rerumque ac fortunarum suarum summam. In fact. there must be both residence and intention. Residence alone has no effect, per se, though it may be most important as a g10und from which to infer intention." - -'.

_') [IW!] A.C. 287.

~) 7 er. & Fin. 876 •. •

800 BUl'RE!.IR

COURT HEl't.JR.'l':i (196/i} 3 .;.<

0.R.

In Aikman v. Aikman('), Lord Campbell has discussed the ques A tion of the effect on domicil of an intntion to return to the native country, where such intention is attributable to an undefined aml remote contingency. He said:

"If a man is settled in a foreign country. engaged in some permanent pursuit requiring his residence there, a B mere intention to return to his native country on a doubt ful contingency, will .not prevent such a residence in a foreign country from putting an end to his domicil of origin. But a res~Jence in a foreign country for pleasure, lawful or illicit, which .residence may be changed at any moment, without the violation of any contract or any 0 duty. and is accompanied by an intention of going back to reside in the place of bittll, or the happening of an event which in the course of nature must speedily happen, cannot be considered as indicating the purpose to live and die abroad."

On behalf of the appellant Mr. Aggarwala relied on the de.:ision of the House of Lords in Moorhouse v. Lord(') in which it was held<hat in order to lose a domicil of origin, and to acquire a new domicil, a man must intend q1Jatenus in illo .exuere patriam and there must be a change of nationality, that is natural allegiance

It is not enough for him to take a house in tile new country. E even with the probability and the belief that he may remain there all the da:ys of his life. But the principle laid down in this case was discussed in Udny v. Udny(") which decision is the leading authority on what c9nstitute a; domicil, of choice taking the place of a domicil of origin. It is there pointed out by Lord Westbury that the expressions used in Moorhouse v. Lord('), as to the intent F e:x1tere patriam, are calculated to mislead, and go beyond the questi""· of domicil. At page 458 Lord Westbuy states:

"Domicil of choice is a conclusion or inference which the law derives from the fact of a man fixing voluntarily his sole or chief residence in a particular place, with the G intention of continuing to reside there for an unlimited time. This is description of the circumstances which create or constitute it domicil and not a definition of the term.

There must be residence freely chosen and not prescribe" or dictated by any external necessity, such as the ctuties of office; the demands of creditors, or the relief H from illness, and it must be a residence fixed, not for a limited period or particlllar purpose, but general and indefinite in its future cmttemplation. It is true that resi dence, originally temporary or intended for a limited

(') 3 Mac Q., H.L.C. 854. (') 10 H L. Cas. 272. (') L.R 1 HL. Sc. 441.

period, may, afterwards become general and unlimite•j; and in such a case, so soon as the change of purpose. or animus monendi, can be inferred, the fact .of domicil is

established."

[n tbe ne:.t case-Doucet v. Gl?og/; egan(') the Court of Appeal deCl(•ed th2t the testator bad. acquired an English domicil; and one of the main facts relied on was that he had twice married in E'nQlanJ in a manner not conforming to the formalities which ne required by the French Law for the legalisation of marriages of Frenchmen in a foreign country. James L. J. stated as fol lows:

"Both his marriages were acts c:>f. unmitigaU!d scoundrel'. ism if he was not a domiciled Enghshman. He hroght up his children in this country; he made his will in this country, professing to exercise testamentary rights which he would not have if he hnd not been an Englishman. Then with respect to his declarations. what do they amount to? He is reported to have said that when he had made his fortune he would go back to France. A man who says that, is like a man who expects to reach the horizon and finds it at last no nearer than it was at the beginning of his journey. Nothing can be imagined more indefinite than such declarations. They cannot outweiJh the focts of the testator's life."

In our opinion, the decisions of the English Courts in Udny v. l!ndv(') and Doucet v. Geoghegan(') represent the correct law with regard to change of domicil of origin. We are of the view that the only intention required for a proof of a change of domicil is an intention of permanent residence. In other words, what is required to be established is that the person who is alleged to have changed his domicil of origin has voluntarily fixed the habitation of himself and bis family in the new country. not for a mere special of temporary purpose, but with a present intention of making it hi' permanent home.

Against this background of law we have to consider the facts in the present case for deciding whether Narain Raja had adopted India as his permanent residence with the intention of making a clomicil of choice there. In other words, the test is whether Narain Raia had formed the fixed and settled purpose of making his home in India with the intention of establishing himself and his famil) tn India.

(' J 9 Ch. Div. 441.

(') L.R 1 H.L. Sc. 441.

The following facts i, ave been either admitted by the parties or A found to be established in this case. Narain Raja was educated in Calcutta from 1934 to 1938. From the year 1938 onwards Narain Raja lived in Ramnagar. After Rama Raja's death in 1947 Narain Raja continued to live in Ramnagar, being in possession of properties obtained by him under compromise in 1944. In the course B of his statement Narain Raja deposed that his father had built a palace in Ramnagar between 1934 and 1941 and thereafter Narain Raja himself built a house at Ramnagar. Before he had built his house, Narain Raja lived in his father's palace. There is the partition suit between Narain Raja and his brothers in the year 1942. Exhibits 1(2) and 1(1) are the preliminary and C final decrees granted in that suit. After the partition Narain Raja was looking after the properties which were left joint and was the manager thereof. The extensive forests of Ramnagar estate were not partitioned and they had been left joint.

Narain Raja used to make settlement of the forests on behalf of the Raj and pattas used to be executed by him. After partition, D he and his wife acquired properties in the district of Champaran, in Patna and in other places. Narain Raja and his wife and children possessed 500 or 600 acres of land in the district of Champaran.

Narain Raja managed these properties from Ramnagar. He had also his houses in Bettiah, Chapra, Patna and Benaras. The forest settlements are supported by Exhibits X series, commencing from E 1943, and by Ex. W of the year 1947. Then, there ate registered pattas excluded by Narain Raja of the year 1945, which, are Bxs. WI 3, WI 4, and WI 5. There are documents which prove acquisition of properties in the name of Narain Raja's wife-F(I), F(2). F(3) and F(5). Exhibit F(4) shows the purchase of 11 bighas and odd land at Patna by Ji.larain Raja. It is also important to F notice that Narain Raja had obtained Indian Passport dated March 23, 1949 from Lucknow issued by the Gqvernor-General of India and he is described in that Passport as Indian by birth and nationality and his address is given as Ramnagar of Champaran district. In the course of his evidence Narain Raja said that he had been to Barewa for the first time with his father when he was 10 or G 12 years old. He also said that he had not gone to Barewa for ten years before 1963.

The High Court considered that for the determination of the B question of domicil of a person at a particular time, the 'course of his conduct and the facts and circumstances before and after that time are relevant. We consider that the view taken by the High Court on this point is correct and for considering the doinicil of Narain Raja on the date of coming into force of the Constitution of India his conduct and facts and circumstances subsequent to the time should also be taken into account. This view is borne

H ..

KEDAR PANDEY v. NARAIN (&ma.swami, J.) 803

out by the decision of the Chancey Co?rt in In re. G_rove Vaucher

v. The Solicitor to the Treasury(') m which the dom1cil .of one Marc Thomegay in 1744 was at issue and various facts and clfcumstances after 17 44 were considered to be relevant. At page 242 of the report Lopes, L. J. has stated :

"The domicil of an independent person is constituted by the factum of resid.ence !n a coun!fY nd the animus manendi, that is, the mtent10n to reside m that country for an indefinite period. During the argument it was contended that the conduct and acts of Marc Thomegay subsequently to February, 1744, at the time of the birth of Sarah were inadmissible as evidence of Marc Thomegay's intention to permanently reside in this country at that time. It was said that we must not regard such conduct and acts in determining what the state of Marc Thomegay's mind was in February, 1744. For myself I do not hesitate to say I was surprised at such a contention; it. is opposed to all the rules of evidence, and all the authorities with which I am acquainted. I have always understood the law to be, that in order to determine a person's intention at a given time, you may regard not only conpuct and acts before and at the time, but also conduct and aets after the time, assigning to such conduct and acts their relative and proper weight of cogency.

The law, I thought, was so well-established on that subject that I should not have thought it necessary to allude to this contention, unless I had understood that the prcpriety of admitting this evidence was somewhat questioneci by Lord Justice Fry, a view which I rather now gather from his judgment he has relinquished."

We are, therefore, of opinion that the conduct and activities of Narain Raja subsequent to the year 1949 are relevant but we shall decide the q ue, Lion of his domicil in this case mainly in the light of his conduct and activities prior to the year 1949.

Reverting to the history of Narain Raja's life from 1950 onwards, it appears that he had married his wife in 1950. His wife belonged to Darkoti in Himachal Pradesh near Patiala. The marriage had taken place at Banaras. Narain Raja had a son and a daughter by that marriage and according to his evidence the daughter was born in Banaras and the son was born in Bettiah. The daughter prosecutes her studies in Dehradun. In 1950 or 1951 Naraiil Raja had established a Sanskrit Vidalya in Ramnagar in the name of his mother, called Prem Janani Sanskrit Vidyalaya. The story or Narain Raja's political activities is as follows: There was a

Union Board in Ramnagar before Gram Panchayats had come into existence, of which Narain Raja was the Chairman or President.

(') (1889) 40 Ch. D. 216.

. 80-i SUPREllE

COURT

REPOBTS

[1965] 3 S.C.R.

After Gram Panchayats were establishd, the Union Board A

was abolished. Narain Raja was a voter m the Gram Panchay:n and he was elected as the Vice-President of the Union called C.D.C.M. Union of Ramnagar. For the General Elections held in 1952 Narain Raja was a voter from Ramnagar Constituency. Tn the- General Election of 1957 he stood as a candidate .opposini: Kedar Pandey. Thereafter, he became the President of the Bettiah B Sub-divisional Swatantra Party and then Vice-President of Champaran District Swataµtra Party.

Taking all the events and circumstances of Narain Raja's lifo into account we are satisfied that Jpng before the ena of 1949 which is the material time under Art. 5 of the Constitution, Narain C Raja had acquired a domiciil of choice in India. In other words, Narain Raja had formed the deliberate intention of making his borne with the intention of permanently establishing himself and his family in India. In our opinion, the requisite animus manendi

ha~ been proved and the finding of the High Court is correct.

On behalf of the appellant Mr. Aggarwala sugested that there were two reasons to show that Narain Raja had no intention ol making his domicil of choice in India Reference was made, in this context, to Ex. lO(c) which is a khatian prepared in 1960.

showing certain properties standing in the name of Narain Raja

and his brothers in Nepal. It was argued that Narain Raja bnd E property in Nepal and so he could not have any intention of living in India permanently. It is said by the respondent that the total area of land mentioned. in the khatian was about 43 bighas. The case of Narain Raja is that the property had belonged to his natural grandmother named Kanchhi Maiya who had gifted the land to Rama Raja. The land was the exclusive property of Rama F Raja, and after his death, the property devolved upon his sons.

The case of Narain Raja on this point is proved by a Sanad

<Ex. AA). In any event, we are not satisfied that the circumstance of Narain Raia owning the property covered by Ex. 1 O(c) can outweigh the fact that Narain Raja alone had extensive properties Qin India after the partition decree of the year 1944.

' It was also pointed out on behalf of the appellant that Narain Raja, and before him Rama Raja, had insisted upon designatinu themselves "Sri 5" indicating that they belonged to the royal family of Nepal. It was argued on behalf of the appellant that Narain H Raja had clung tenaciously to the title of "Sri 5", thereby indicating the intention of not relinquishing the claim to the throne of Nepal if at any future date succession to the throne falls to a junicr member of the family of the King of Nepal. We do. not think there is any substance in this argument. It is likely that Narain

Raja and his father Rama Raja had prefixed the title of "Sri 5" to their names owing to the pride of their ancestry and sentimental

an::chrncnt to the traditional title and this circumstance has no bearing on the question of domicil. Succession to throne of Nepal

is gcverned by the rule of primogeniture and it cannot be believed :hat as the second son of his father, Narain Raja could ever hope to ascend to the throne of Nepal, and we think it is unreasonable to suggest that he descr:bcd himself as "Sri .5" with the intention of keeping alive his ties with Nepal. There was evidence in this case that Narain Raja's elder brother Shiv Bikram Sah has left mak issues.

For the reasons expressed, we held that Narain Raja had acquired domicil of choice in India when Art. 5 of the Constitution came into force. We have already referred to the finding of the High Court that Narain Raja was ordinarily resident in India ror 5 years immediately preceding the time when Art. 5 .of the Ccnstitution came into force. It is manifest that the requirements of Arl. 5(c) of the Constitulion are satisfied in this case and the High Court rightly reached the conclusion that Narain Raja was a citizen of India at the relevant time.

We accordinp, ly dismiss both these appeals with ccsts. One set

Appeals dismissed.

KEDAR PANDEY

NARAIN BIKRAM SAH

April 15, 1965

P. B. GAJENDRAGADKAR

K N. WANCHOO

M. HIDAYATULLAH

Constitution of India

Art. 5(c)

Art. 173

Art. 5

India

Art. 5

Art. 5

Art. 5(c)

C. B. Agarwala

Jagdish Pan

Chinta Subbarao

M. Raja- B gopalan

B. P. lha

K. P. Varma

D. Goburdhun

Ramaswami

High Court of Judicature at Patna

Kedar Pandey

Narain Bikram Sah

Swatantra Party

Champaran

Patmeshwar Prasad Roy

Suleman Khanwere

January 22, 1962

Parmeshwar Prasad Roy

Later on the two candidates-Parmeshwar Prasad Roy and .

Suleman Khan

Narain Raja

April 11, 1962

Kedar Pandey

Art. 173

Constitution of India

Nepal

G Narain Raja

Rama Raja

Barewa

Art. 173

Ramnagar

Banaras

Narain Raja

Art. 173

High Court. of Judicature at Patna

Indian

Art. 5(a)

Narain Raja

Bihar Legislative Assembly

Art. 5

Constitution of India

Bihar

Prahlad Sen

Mohan Vikram Sah

Mohan Raja

Rani Chhatra Kumari Devi

Mohan Rajd

Rama Raja alias Mohan Bikram Sah

.Prahlad Sen

Birendra Vikram Sah

Rama Raja

Rani

Chhatra Kumari Devi

Rani Chh3tra B Kumari Devi

August 18, 1927

High Court of Patna

Rant Chhatra Kumari Devi

Mohan Vikram Sah alias Mohan Raja

Rani Chhatra Knmari Devi

Bombay

Rama Raj~

Subordinate Judge at Motihari

April 16, 1943

Aggarwala

On behalf of the appellant Mr. Aggarwala put forward the argument that the High Court was not justified in holding that Narain Raja was born in Bnnaras in the year 1918.

Bnnaras

Sheonath Tewari

D.

Pathak

Prasad

Mamurganj

G. S. Prasad

Rani Chhatra Kumari n Devi

Art. 5

Ramnagar Raj

Prahlad Sen.

Ranis

D Rama Raja

Mohan Raia

Rama R<1ja

Campbell

Westbury

Westbuy

James

James L. J. stated as fol lows:

"Both his marriages were acts c:>f.

France

Narain Raia

Calcutta

Narain Raja was educated in Calcutta from 1934 to 1938.

Patna

Bettiah

He had also his houses in Bettiah, Chapra, Patna and Benaras.

Chapra

Benaras

Ji.larain Raja

March 23, 1949

Lucknow

Champaran district

Constitution of India

Marc Thomegay

Lopes

Sarah

Fry

Himachal Pradesh

His wife belonged to Darkoti in Himachal Pradesh near Patiala.

Patiala

Dehradun

The daughter prosecutes her studies in Dehradun.

Naraiil Raja

Prem Janani Sanskrit Vidyalaya

Champaran District Swataµtra Party

Art. 5

Narain C Raja

Aggarwala

Kanchhi Maiya

Rama F Raja

Narain H Raja

Narain

Raja

Shiv Bikram Sah

Art. 5

Art. 5


JAGDISH PRASAD

STATE OF U.P.

April 15, 1965

[A. -K. SARKAR, RAGHUBAR DAYAL AND R. S. BACHAWAT, JJ.J

Prevention of Food Adulteration Act, 1954-Higher punwhment for "second o:[J'ence"·-Meaning of "second offence"-Whether offence of the same type or offence subsequent in tim~, C

The appellant having been once convicted under the Prevention of Food Adulteration Act, 1954 for keeping foodstuff for sale in d

container without coverini< it, was for a second time convicted for .selling foodstuff which had been coloured with a prohibited dye.

Treating the latter conviction as a "second offence" under s. 16(1) of the Act the Trial Court sentenced the appellant to two years D imprisonment. Having failed to get r.edress in the High Court he appealed to this Court by special leave.

It was contended on behalf of the appellant that the "second o'i'ence" contemplated by s. 16(1) was an offence of the same kind as the first and not any offence under the Act.

HELD: (i) The word second in the expression "second offence" in s. 16(1) means second in time, and not second of the same type.

The section does not say "second offence" of the same type; the latter words are not there. On the other hand from the phrase 'subsequen't offences' used in the section in respect of offences subsequent

to the third one, it is clear that the words 'first', 'second' and 'third' were intended to indicate things happening one after another in F point of time.

[808 BJ

The object of the sub-section is cjearly to prevent repetition of offences. That is why for the offence subsequently committed a heavier sentence is providd. No object could have been served by seeking to stop the repetition of the same type of conduct only.

(808 E-FJ

(ii) There is no foundation in the Act for distinguishing between trivial and serious offences and then arguing that the Act could not have intended to impose a heavier punishment for a second offence which might be of a less serious nature than the first. The Act provides the same punishment for each offence under it. If the punishment is the same, it would follow that the statute considered them to be of the same seriousness. [808 HJ

(iii) The "second: offence~ mus~ be an offence under he A~

althoug~ it is not specifically so stated. Section 16(1) says that .1f any person does any of the acts mentioned in els. (a) to (g) in it, he shall be punishable for the first offence with a certain pealty, for the second offence with a higher penalty, and for the third a still. higher penalty. It is clear that the acts or omissions mentioned

JAGDISH PRASAD v. STATE (Sa; rkar, J.) 807

in the different clauses constitute the offences for which the penalties are provided. From this structure of the sub-section the implication necessarily arises that the penalties were imposed for offences under the Act only. [809 E-F] City Board, Saharanpur v. Abdul Wahid, A.LR. (1959) All. 695, Chuttan v. State, A.LR. (1950) All. 629 and In re Authers, (1889), L.R. 22 Q.B.D. 345, referred to.

CRIMINAL APPELLATE JurusmcTION: Criminal Appeal No. 43 of 1965.

Appeal by special leave from the judgment and order dated November 10, 1964 of the Allahabad High Court in Criminal Revision No. 2097 of 1963.

B. C. Misra, for the appellant.

0. P. Rana, for the respondent.

The Judgment of the Court was delivered by.

Sarkar, J. This appeal raises a question of construction of sub-s. (I) of s. 16 of the Prevention of Food Adulteration Act, 1954. The sub-section in providing for punishment for

breaches of the Act slates, "for a second offence, with imprisonment for a term which may extend to two years and with fine".

In respect of the first offence it provides for a smaller sentence.

The question is whether the appellant was liable to punishment £or a second offence. The order of this Court granting leave to appeal confind it only to that question.

It appears that on an earlier occasion the appellant kept foodstuff for sale in a container without covering it as required by sub-r. (3) of r. 49 of the rules made under the Act and was thereupon convicted under s. 16 and sentenced to a fine of Rs. 40/- as tor a first offence. This time he has been convicted for selling foodstuff which had been coloured with a dye the use of which was

prohibited by r. 28 of the same rules.

G Learned counsel for the appellant stated that the present was not a second offence. if we have understood his arguments correctly, and we confess to some difficulty in understanding them, he said that the second offence contemplated is an offence constituted by the same kind or type of act for which he had been convicted under the Act on an earlier occasion. According to him, if H the present conviction was for keeping foodstuff'intended for sale in a container not covered as required by sub-r. (3) of r. 49, then only it would have been for a second offence, but as the conviction in the present case was for selling foodstuff coloured with prohibited dye, it was not for a second offence.

This contention does not seem to us to be acceptable. The real question is, What do the words 'second offence' mean? Learned

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(:OUR1' REl'ORTS

[ 1965) 3 S.C.R.

counsel for the appellant referred us to Webster's New World Dk A tionary where one of the meanings of the word 'second' has been stated to be 'of the same kind as another'. That meaning cannot be attributed to that word in the sub-section. It increases the penalties as the offences are 'first', 'second' or 'third'. Thus it states, "for a third and subsequent offences, with imprisonment for a term B which may extend to four years and with fine". The word 'subsequent' makes it clear that the words 'first', 'second' and 'third' were intended to indicate things happening one after another in point of time. Sub-section (2) of s. 16 also leads to the same conclusion. It says, "If any person convicted of an offence under this Act commits a like offence afterwards", the subsequent conviction c

nd the penalty imposed with his name and address may be published in a newspaper at his expense. The word "afterwards" clearly indicates that the statute was contemplating offences committed subsequently and was indicating a sequence of time. In the dictionary to which learned counsel referred, the meaning on which he relies is illustrated by the following sentence, "There has been no D second Shakespeare". It seems plain to us that the meaning conveyed by the word 'second' in this sentence cannot be attributed to the word 'second' as used in the .sub-section.

Then as regards the word "offence" in the expression "second offence", we find no justification for confining it to an offence con- E stituted by the same type or kind of conduct as the previous offence. The sub-section does not say "second offence" of the same type; the latter words are not there. The object of the sub-section clearly is to prevent repetition of offence~. That is why for the offence subsequently committed a heavier sentence is provided.

We cannot imagine what object would have been served by seek- F ing to stop the repetition of the same type of conduct only. The Act no doubt intends to prevent the doing of various acts by punishing them. That object is better served by imposing a heavier penalty when a person repeats any of such offensive acts .. The gravamen of the charge of a second offence is the repetition of any offence under the Act and not the repetition of one of the various types G of offences mentioned in it. Any interpretation which would not carry out the object of the Act would be unnatural. We, therefore, think that the words "second offence" mean any offence under the Act committed by a person after his conviction earlier for any <me of the offences punishable under the Act.

It was said that it would be strange if the Act intended to impose a lieavier punishment for a second offence which might be of a trivial nature while the first offence which might have been of a serious nature entailed a lighter punishment. This contention is falladous. There is no foilndation in the Act for distinguishing between trivial and serious offences, for the Act provides the "same punishment for each offence under it. If the punishment is

. UGDISII PllASAD v. STATE (Sakar, J.) ., . 8011 .

'-"" ,.,_',.;,. tht" same, it would follo": that the sttute _considered. thm to be of the same seriousness. T ne weakness, of this argument will further appear if we consider a case where the first offe.nce was of what is called a trivial nature and the second, of a serious nature though constituted by different acts. Itwould be equally strange if the Act iii such a case contemplated the same punishment for the sul:>- scquent and serious offence as would be the case. if the subsequent ottence was not a "seoond offence", This contention lends JlO support to the interpretation sggested by learned counsel for the .

appellant. Learned counsel then said that the word "offence" has to be understood as defined in s. 2(38l of the General Clauses Act, 1897, and therefore means any act or omission made punishable by. any law for the time being in force. If we substitute this definition for the word "offence" in the provision now under consideration, it will mean an act made punishable by the law. That law must be the present Act. This does not assist learned counsel's contention at all; it really goes against him.

 The word "offence" no doubt, refers to an offence under the 'Act. It.cannot possibly meari any offence under any other Act. This view has inv:iriably been taken in all the cases which have been cited to us: see City Board, Saharanpur v. Abdul Wahid(') and Chuttan v .. State('). In In re A uthers(') it was said, "where-the E legislature passes a statute and imposes a penalty of 50 I. for.a. first offence, it must mean, in the absence of express words to . the contrary, that the conviction for the first offence must be under that Act, and the second conviction under the same Act; if it were otherwise, it would be idle to introduce the. warning of a lower

penalty for the first offence, and to impose a higher penalty for the second." This case supports our interpretation of the words "second offence" based on the object of the Act.

Learned counsel for the appellant no doubt agrees that the . second offence must refer to an offence under the Act but he says that since it would amount to adding the words "under the Act", it would justify the addition of further words implying that the second offence had to be of the same type as the first. This. is a · whoUy unfounded contention. lfhe offence contemplated in the expression "second offence" has to be under the Act because that arises from the object of the Act arid. as we shall later shQw, from the necessary implication of the structure of the sul:>-section. There is. no such reason to confine the second offence to an offence of · the same type. We have so far been dealing orJy with that portion of sub-s. (!) of s. 16 which concerns the penalty for the second offence. Con-·

sidering the sub-section as a whole we find that it supports the-

(') AI.R. 1959 All. 695. (') AI.R. 1960 All. 629.

(') 11889), L.R. 22 Q.B.D. 345, 349. -

I - --

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[1965) 3 8.C.B.

interpretationc of the expressiOn "seCO:nd offence" which has appeal- A ed to us. It says that if any person does any of the acts mentioned in els. (a) to (g) in it, he shall be punishable for the first offence with a certain penalty, for the second offence with a higher penalty and for the third a still higher penalty. It is clear that the acts or omissions mentioned in the different clauses constitute offences for which the penalties are provided. From this structure of the sub- B section the implication necessarily arises that the penalties were imposed for offences under the 1\ct only. Now cl. (a) deals With a person importing, manufacturing for sale, storing, selling, or distributing any article of food. in contravention of the provisions of the Act or of any rule made thereunder. This clause contemplates the breaches of various provisions of the C Act and the rules, which are numerous. It covers various types of conduct, act or omission, each of which is punishable and each of which is, therefore, an offence. Turning next to that part of the sub-section which prescribes penalties, we find it provides increasing degrees of punishment for the second offence and the third and D subsequent offences. It follows that an offence contemplated in this part of the statute-and with It we are now directly concerned-- would be constituted by any of the acts which would come within

cl. (a) and likewise within all the other clauses following it. We have pointed out that the acts and omissions contemplated there are of diverse kinds. The words "second offence" must, therefore, E mean any act which is an offence under any.of the clauses in the sub-section .which has been done later in point of time after a con- . viction for an offence under the Act, no matter whether the acts or omissions constituting the two offences are of the same type or not. The appellant must, therefore, be held to have committed the second offence within the meaning of the sub-section on the pre- F sent occasion and was liable to have the heavier punishment awarded to him. The sentence awarding such punishment is unexceptionable.

The appeal fails and it is hereby dismissed.

G Appeal dismissed.

JAGDISH PRASAD

STATE OF U.P

April 15, 1965

A. -K. SARKAR

RAGHUBAR DAYAL

R. S. BACHAWAT, JJ

s. 16(1)

s. 16(1)

s. 16(1)

Section 16(1)

Allahabad High Court

B. C. Misra

P. Rana

Sarkar

s. 16

s. 16

s. 16

General Clauses Act, 1897

s. 16


COMMISSIONER OF INCOME-TAX, ASSAM ETC.

THE PANBARI TEA CO. LTD.

April 19, 1965

[K. SUBBA RAO, J. C. SHAH AND S. M. SIKRI, JJ.J

Indian Income-tax Act (11 of 1922)-"Premium" and "rent"- Distinction-Premium paid in instalments-Whether caPitai gains or revenue receipts.

The assessee leased out its tea estates for a period of ten years in consideration of a sum as and by way of premium and an annual rent to be paid by the lessor to the assessee. As premium a part of the sum was paid at the time of the execution of the lease and the balance was spread over in ten annual instalments; and the annual rent was payable in monthly instalments. The annual instalment paid as premium was taxed by the Income Tax authorities as revenue receipt of the assessee. On reference, the High Court held it to be capital gains. In appeal by certificate.

HELD: The annual instalmeni paid as premium was capital gains.

When the interest of the lessor is parted for a price the price paid is premium or salami. But the periodical payments made for the continuous enjoyment of the benefits under the lease are in the nature (, f rent. The former is a capital income and the latter a revenue receipt.

There may be circumstances where the parties may camouflage the real nature of the transaction by using clever phraseology. In some cases, the sci-called premium is in fact advance rent and in others rent is a deferred price. It is not the form but the substance of the transaction that matters. The nomenclature used may not be decisive or conclusive but it helps the court, having regard to the other circumstances, to ascertain the intention of the parties.

Premium can be paid in a single payment or by instalments. The real test is whether the said amount paid in a lump sum or in instalments is the consideration paid by the tenant for being let into possessi001.

[813 H; 814 E-G]

Raja Bahadur Kamakshya Narain Singh of Ramgarh v.

Commissioner of Income-tax, Bihar and Orissa, (1943) 11 I.T.R. 513 Member for the Board of Agriculture Income-tax Assam v. Sindhurani Chaudhurani, (1957) 32 I.T.R. 169, and Chintamani Saran Nath Sah Dea v. Commissioner of Income-tax, Bihar and Orissa, (1961)41 I.T.R. 506, applied.

The parties, who were businessmen well-versed in their trade must be assumed to have known the differene between the two ex~ pressions 'premium" and "rent", and they had designedly used those two expressions to connote two different payments. The annual rent fixed was a considerable sum of Rs. 54,500/- and the premium, when spread over 10 years would work out to Rs. 22,500 /- a year. There was no reason. therefore, to assume that the parties camouflaged their real intention and fixed a part of the rent in the hape of premium. The J,/P(D)5SC f--13 811

812 Rlil>UEME l.'OUR'l' Rli!POR'l'.~

[1965] 3 S.C.R.

mere fact that the premium was made payable in instalments could .l

not obviously be decisive of the question, for that might have been to accommodate the lessee. [815 B, C]

The construction based on the clause in the lease deed that on the

dfault in the payments of the instalments of the premium or rent, the lessor shall be entitled to recover the balance of the unpaid premium and not the entire balance of the premium, really ignores the main terms of the lease. In the context of the other clauses, this cl.ause B could not be so construed as to override or come into conflict with the main terms of the lease deed. [815 H, 816 BJ .

C1v1L APPELLATE JURISDICTION: Civil Appeal No. 150 of 1964.

Appeal frbm the judgment and order dated March 22, .1960, of the Assam High Court in Income-tax Reference No. 7 of 1959.

C N. D. Karkhanis and R. N. Sachthey, for the appellant. Sampat Ayyangar and J. P. Goyal, for the respondent.

The Judgment of the Cou.rt was delivered by

Sobba Rao, J.

By a registered lease deed dated March 31, 1950, the assessee-company, respondent herein, leased out two tea D estates named "Panbari Tea Estate'' and "Barchola Tea Estate", aloug with machinery and buildings owned and held by it, in Darrang, in the State of Assam, to a firm named Messrs. Hiralal Ramdas for a period of ten years commencing from January l, 1950.

The lease was executed in consideration of a sum of Rs. 2,25,000 /- as and by way of premium and an annual rent of Rs. 54,000 /- to E be paid by the lessee to the lessor. The premium was made payable as follows: Rs. 45,000/- to be paid in one lump sum at the time of the execution of the lease deed and the balance of Rs. 1,80,000/- in 16 half yearly instalments of Rs. 11,250/- Im or before January 31 and July 31 of each year. The annual rent of Rs. 54,000 /- was payable as follows: Rs. 1,000/- per month to be paid on or before F the last day of each month, making in all Rs. 12,000/- per year, and the balance of Rs. 42,000/- on or before December 31 of each year. On February 25, 1957, for the assessment year 1952-53, the Income-tax Officer made the assessment treating the instalment of Rs. 11,250 /- paid towards the premium in the relevant account- G ing year as a revenue receipt of the assessee. On appeal, the Appellate Assistant Commissioner confirmed the order of the Incometax Officer. On further appeal, the Income-tax Appellate Tribunal also held that the premium was really the rerit payable under the lease deed and, therefore, it was chargeable to income-tax. At the instance of the assessee, the Tribunal referred the following ques- H tion to the High Court under s. 66(1) of the Income-tax Act, .1922, ' herein after called the Act:

"Whether on the facts and in the circumstances of the case

 and upon the construction of the terms of the lease, dated 31st March 1950, the sum of Rs. 11,250/- received by the assessee during the year of account is re: venue or capital receip_t".

A The High Court held that the said sum of Rs. l l,25_D/- receved by the assessee during the year of account was a capital receipt and answered the question accordingly. On a certificate issed y the High Court, this appeal has been filed by the Revenue ID this

Court.

B The short question that arises in this appeal is whether the amount described as premium in the lease deed is really rent and, therefore, a revenue receipt. Before we look at the lease deed it will be convenient to notice briefly the law pertaining to the concept of premium, which is also described as salami.

C The distinction between premium and rent was brought out by

the Judicial Committee in Raja Bahadur Kamakshya Narain Singh of Ramgarh v. , Commissioner of Income-tax, Bihar & Orissa (') thus:

"It (salami) is a single payment made for the acquisition of the right of the lessee to enjoy the benefits granted to them by the lease. That general right may properly be regarded as a capital asset, and the money paid to purchase it may properly be held to be a payment on capital account. But the royalties are on a different footing".

It is true that in that case the leases were granted for 999 years; but, thbugh it was one of the circumstances, it was not a decisive

factor in the Judicial Committee coming tG the conclusion that the salami paid under the leases was a capital asset. This Court in Member for the Board of Agriculture Income-tax. Assam v. Sind- F hurani Chaudhurani (') defined "salami" as follows:

"The indicia of salami are (I) its single non-recurring character and (2) payment prior to the creation of the tenancy. It is the consideration paid by the tenant for being let into possession and can be neither rent nor revenue but is a capital receipt in the hands of the landlord."

It is true that in that case the payment was paid in a single lump

sm, but that was not a. conclusive test, for salami can be paid in a smgle payment or by mstalments.

The real test is whether the said amount paid in a lump sum or in instalments is the consideration paid by the tenant for being let into possessibn. This Court again in Chintamani Saran Nath Sah Deo v. Commissioner of Income-tax, Bihar & Orissa(') considered all the relevant decisions on the subject in the context of licences granted to the assessee to

(') [1943] 11 I.T !<. 513, 519.

(') [1957] 32 I.T.R 169.

IUPJl.J:llE COUB.'l' RBPOltTS [1965] :1 s.c.a.

 prospect for bauxite in some cases for 6 months and in others for A a year or two and observed:

"The definition of salami was a general one, in that it was a consideration paid by a tenant for being let into possession for the purpose of creating a new tenancy."

Applying that test tlilis Court held in that case that under the said licences there was a grant of a right to a portion of the capital of the licensor in the shape of a general right to the capital asset.

In view of these three decisions it is aot necessary to multiply citations.

c Under s. 105 of the Transfer of Property Act, a lease of immovable property is a transfer of a right to enjoy the property made for a certain time, express or implied or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, D who accepts the transfer on such terms.

The transferor is called the lessor, the transferee is called the lessee, the price is called the

premium, and the money, share service or other thing to be so rendered is called the rent.

The section, therefore, brings out the distinction between a price paid for a transfer of a right to enjoy the property and the rent to be paid periodically to the lessor.

E When the interest of the lessor is parted with for a price, the price µaid is premium or salami.

But the periodical payments made for the continuous enjoyment of the benefits under the lease are in the nature of rent.

The fom1er is a capital income and the latter a revenue receipt. There may be circumstances where the parties may amouflage the real nature of transaction by using clever F phraseology.

In some cases, the so-called premium is in fact advance rent and in oth.ers rent is deferred price. It is not the form but the substance of the transaction that matters. The nomenclature used may not be decisive or conclusive but it helps the Court, having regard to the other circumstances, to ascertain the intention of the parties.

Bearing the said principles in mind let us scrutinize the lease deed dated March 31, 1950. Under that document interest in two

large. tea estates comprising 320 acres and 305 acres respectively under tea, along with the bungalows, factory buildings, houses. godowns. cooly lines and other erections and structures, was parted H by the lessor to the lessee for a period of 10 years; and during that period the lessee could enjoy the said tea estates in the manner prescribed in the document.

Under the document, therefore, there was a transfer of substantive interest of the lessor in the estates to the lessee and a conferment of a right on the lessee to use the said estates by exploiting .the same. Under cl. 4 of the lease deed for the transfer of the right a premium of Rs. 2.25.000/- bad to be

' ~·

- ...

C.I.T. !'. PA:<HAH! TEA co. (Subba Rao, J.) 816

paid to the lessor and for using the estates the lessee had to pay, an annual rent of Rs. 54,000/-. Both the premium and the rent were payable in instalments in the manner provided in the document.

The parties were businessmen presumably well-versed in the working of tea estates. They must be assumed to have known the difference between the two expressions "premium" and "rent"; and they had designedly used those two expressions to connote two different payments. The annual rent fixed was a considerable sum of Rs. 54,000/- and the premium, when spread.' over 10 years, would work out to Rs. 22,500/- a year. There is no reason, therefore, to assume that the parties camouflaged their real intention and fixed a part of the rent in the shape of I1_femium .. The mere fact that the premium was made payable i11 "instalments cannot obviously be decisive of the question, for that inight have been to accommodate the lessee. Nor is cl. 8 of the lease deed, on which

strong reliance is placed by the learned counsel for the Revenue, a pointer to the contrary. It reads:

"(I) If any of the aforesaid instalments towards the premium or annual rent shall remain unpaid for two months after becoming payable (whether formally demanded or not) or if the lessee shall make default in payment to the Lessor any other sum or any part thereof in due dates or in observing or performing any of the covenants, conditions or stipulations hereinbefore contained and on the part of the Lessee to be paid, observed and performed or if the Lessee's firm is dissolved except for reconstruction or if any of the partners of the Lessee is adjudicated insolvent then and in any such cases it shall be lawful for the Lessor immediately or at any time or times thereafter upon the demised Tea Estates and premises or any part thereof in the name of the whole to re-enter and thereupon this demise shall absolutely determine but without prejudice to the rights of the Lessor to damages or compensation in" respect of any breach of Lessee covenants herein contained and all other rights and remedies including the right to recover the balance of the instalment unpaid premium or.rent payable in that particular year."

The argument is that in the case of default contemplated in this clause it shall be lawful for the lessor to re-enter and in that event H in terms of cl. 8 he will be entitled only to recover the balance of the instalment of unpaid premium and not the entire balance of the premium. This construction, though it appears to be plausible at first sight,. really ignores the main terms of the lease. The default clause is pressed into service to destroy the main term of the lease. Under cl. I of the lease deed the sum of Rs. 2,25,000/- ill the consideration by way of premium to be paid by the lessee to the lessor. Under cl. 4 thereof the said entire premium has to be

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(1965) 3 8.C.R.

paid in instalments; under cl. 8 the lessor has the option to termi- A nate the lease and re-enter the premises in the circumstances mentioned therein without prejudice to all his rights under the document. One of his rights is to recover the premium in instalments.

The fact that one of the rights saved is his right to recover the balance of the instalment of unpaid premium cannot possibly deprive him of all his .other rights which are also expressly saved B thereunder. The drafting of the clause is not artistic and is rather confused; but in the context of the other clauses it cannot be so construed as to override, or come into conflict with, the main terms '' of the lease deed.

Thirdly, it was contended that the income the lessor was C getting under the lease after 1950, i.e., after the execution of the lease deed; viz., the total of the instalments of premium and rent, was not higher than the profits he was getting before the lease and that was an indication that what was rent really was split up into premium and rent for ulterior purposes. This argument is based upon the following data collected from the published accounts of D the assessec-company:

-·------

Year ended Profit Depreci&· Net Divided ti on Profit (tax free) (1) (2) (3) (4) (5) B --·--~--~---

- ------··--- ----·------- -

Re.

Re.

Rs. %

3111 M•rch 194 7 60,186 8,665 51,521 9

1111 M&roh 1948 33,118 7,872 ~3,246 9 lb\ 11.rch 1949 31,581 7,475 24,106 6 llat r arch 1950 41,734 17,868 29,866 12 F

1!11 March 1951 71,888 17,726 54,162 6

1111 March 1952 33,213 15,527 17,686 6

Ila\ 11.rch 1953 69,550 15,410

54,14Q 6

In the accounts of the year to 31st March 1952 there are the 0 tallowing three items of expenditure: -

Transit charges Legal Expenses Gratuity to Managing Director ...

Rs. 10,605

7,518 10,000

28,123

Before comparing the figures given for the two periods, i.e., the period before M(lrch 1950 and the periou thereafter. it is necessary to add back the said three items of expenditure totalling

A Rs. 28,123/- to the net profit of the year ended with 31st March, 1952; if they were added, instead of Rs. 17,686 /-, the profit would be Rs. 45,809 /-. A comparative study of the said figures discloses a higher return in the second period than during the earlier period.

But an attempt is made to show that the figures of the later period include other items and if they are deducted the net profit would be B comparable with that in the earlier period, but there is no agreed data for this attempt and it is not possible on the material placed before us tc scrutinize the figures. In the absence of the relevant material it is not possible to accept the argument built upon the said figures.

El The result is that there is no material placed before us, either direct or circumstantial, to displace the description given in the lease deed to the said amounts as premium and to hold that they are not in fact premium but only rent. Indeed, the circumstances mentioned supra confirm the said description.

D In the result we hold that the High Court has given a correct answer to the question submitted to it by the Income-tax Appellate Tribunal. The appeal is dismissed with costs.

Appeal dismissed.

COMMISSIONER OF INCOME-TAX, ASSAM ETC

THE PANBARI TEA CO. LTD

April 19, 1965

K. SUBBA RAO, J.

C. SHAH

S. M. SIKRI, JJ

Indian Income-tax Act

Assam High Court

C N. D. Karkhanis

R. N. Sachthey

Sampat Ayyangar

J. P. Goyal

Sobba Rao

Darrang

Hiralal Ramdas

January 31 and July 31 of each year

February 25, 1957

s. 66(1)

Income-tax Act

s. 105

Transfer of Property Act

March 31, 1950

cl. 4

Subba Rao

cl. 8

cl. 8

cl. 4

cl. 8