UNION OF INDIA v.

MAHADEOLAL PRABHUDAYAL February 23, 1965. [K. N. WANCHOO, J. R. MuDHOLKAR ANDS. M. SIKRI, JJ.] Indian Railways Act (!f of 1890), ss. 72 and 77-Risk-note in Form Z-Mode of proof of liability of railway administration- Notice under s. 77-When necessary.

Out of a consignment of 60 bales of piece goods despatched by the Railway, under risk-note Form Z, only 29 bales were delivered to the respondent who was the consignee. By sending the consignment thus, the consignor got a specially reduced rate but the burden was thrown on him, of proving misconduct on the part of the railway or its servants, if there was a loss of goods. The risk

note also imposed an obligation on the Railway, to disclose how the consignment was dealt with by it, during the time the consignment was in its i; ossession or control. The respondent wrote a letter to the Chief Commercial Manager of the Railway stating that 60 D bales were booked but only; 29 bales had been delivered, and that a suit for damages would be filed. The letter was sent within 6 months of the booking of the consignment and contained the details as to how the amount of damage was arrived at. Later on, a notice was given under s. 80 of the Civil Procedure Code, 1908, and a suit was filed for damages. But, before the filing of the suit, there was no demand by the consignor for a disclosure as to how the consignment E was dealt with by the Railway throughout the period it was in its possession or control. The Railway however, made a disclosure in its written statement as 'to how the consignment was dealt with throughout that period. Its defence was that, there was a theft in the running train and that was how part of the consignment was lost and not due to any misconduct on the part of the Railway or its eervants. l!:ven after the suit was filed and evidence let in at the

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trial, by 'the ra'.lway there was no statement by the respondent at any stage that the disclosure made by the Railway in the written statement or in the evidence, was in any way inadequate. The respondent never told the court a, fter the evidence of the Railway was over, that he was not satisfied with the disclosure and that the Railway should be asked to make a further disclosure. The suit was dismissed by the trial court but decreed on appeal, by the High Court.

In the appeal to the Supreme Court it was contended that, (i) the suit was barred by s. 77 of the Indian Railways Act, 1890, inasmuch as notice required therein was not given by the respondent, and (ii) under the terms of the risk-note the Railway was absolved from all responsibility for the loss of the goods consigned thereunder, from any cause whatsoever. except upon proof of miscon-

H duct of the Railway or its servants, that the burden of proving such misconduct was on the resp0ndent and th!tt the respondent had failed to discharge the burden.

HELD: (i) A notice under s. 77 of the Act is necessary in the case of non-deHvery which arises from the loss of goods. Though the letter, written by the respondent to the Chief Commercial Manager, was not specifically stated to be a notice under the section it gave all the particulars necessary for such a notice and it was also given within time prescribed. Therefore, the letter was sufllcjent notice for the purpose of the Act. rl49 1)..Fl

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Governor Genera! in Council v. Musaddi!a! [196113 _S.C.R. 647 and Jatmu!! Bhojraj v. The Darjeeling Himalayan Railway Co.

Ud. [19631 2 S.C.R. 832, followed.

(ii) The view of the High Court, that there was a breach of the condition relating to complete disclosure, and that on such. breach the risk-note could be completely ignored and the responsibility of the Railway judged purely on the basis of s. 72(1) of the Act, as if the gceds were consigned at the ordinary rates on the Railway's risk, was not correct. [154 Hl The responsibility of the railway administration t~ disclose to the consignor as _to how the consignment was dealt with throughcut th2 time it was in its possession 'Or control arises t once, nder the risk-note, in either of the cases referred to therein, and is not confined to the stage of litigation. But such disclosure is necessary C'nly where a cons'gnor specifically asks the railway to. make the disclosure. If no such disclosure is asked for, the admm1strat10n need not make it before the litigation. Therefore, if the Railway did not make the disclosure, before the suit was filed, it could not be said to have committed a breach of the term of the contract [153 A-Dl The disclosure envisages a precise statement of how the consignmel)t \vas dealt with by the railway or its servants. If the disclosure is asked for before litigation commences and is not given, or the disclosure is given but it is not considered to be sufficient by the consignor, the dispute has to be judicially decided and it is for the court to say, if a suit is filed, whether there has been a breach of the term.

At that stage, evidence has to be led by the railway in the first instance to substantiate the disclosure which might have been made before the litigation, to the consignor, or which might have been made in the written statement. When the acjministration has given its evidence in proof of the disclosure, if the plaintiff is not satisfied with the disclosure made in evidence, he is entitled to ask the court to call upon the railway to fulfil its obl'gation under the contract, and the railway should then have the opportunity of meeting the demands of the plaintiff. It is then for the court to decide whether the fuTther disclosure desired by the plaintiff sl)ould be made by the railway, and if the court decides that it should be made, the railway has to make such further disclosure as the court orders. If the railway fails to take that opportunity to safisfy the demands of the plaintiff endorsed by the court, the railway, at that stage, would be in breach of its contractual obligation of disclosure. [153 E-154 Bl The effect of the breach however, is not to bring the contract to an end and throw the respon•ibility on the railway as if the case was a simple case of respons'bility under s. 72(1). Th~ risk-note would continue to apply and the court would have to decide whether the misconduct .. can be fairly inferred from the evidence of the railway, :mth the difference ; hat, whe:e the railway has been in breach of its b.hat10n to maKe fulJ disclosure, misconduct may be more readily inferred ~?.d s. 114 of the Evidence Act more readily applied. But the condi ,10ns of the risk-note cannot be complete!~· ignored, simply because. there has been a breach of the condition of r'Omp!ete disclosure. fl54 D-Gl

Surat Cotton Spinning & Weavinq Mills v. Secretary of State for India in Council fl9371 64 I.A. 176,•applied.

av1L APPELLATE JURISDICTION: Civil Appeal No 536 of 1%2 . .

Appeal from the judgment and decree dated March 26 1958 of the High Court at Patna in First Appeal No. 3'40 of J9Sl. '

OIJON v. MAHADEOLAL (Wanchoo, J.) 1(7

A Niren De, Additional Solicitor-General, N. D.

KarkhanLi and B.R.G.K. Achar, for the appellant.

Bishan Narain. P. D. Himmatsinghka, S. Murthy and B. P.

Maheshwari, for the respondent.

The judgment of the Court was delivered by B Wanchoo, J. This is an appeal on a certificate granted by the Patna High Court. The respondent sued the Union of India a~ representing G.I.P. Railway, Bombay and E.I.R. Calcutta for recovery of damages for non-delivery of 31 bales of piece goods, out of 60 bales which had been consigned to Baidyanathdham from Wadibundar. This consignment was loaded in wagon No.

C 9643 on December 1, 1947. It is not in dispute that the consignment reached Mughalsarai on the morning of December 9, 1947 by 192 Dn goods train. After reaching Mughalsarai, the wagon was kept in the marshalling yard till December 12, 1947. It was sent to Baidyanadham by 214 Dn goods train from Mughalsarai at 6-40 p.m. on December 12, 1947 and eventually reached D Baidyanathdham on December 21, 1947. The respondent who was

the consignee presented the railway receipt on the same day for delivery of the consignment. Thereupon the railway delivered 29 bales only to the respondent and the remaining 31 bales were said to be missing and were never delivered. Consequently on August E 31, 1948, notice was g; ven under s. 80 of the Civil Procedure Code and this was followed by the suit out of which the present appeal has arisen on November 20, 1948. The consignment had been booked under risk note form Z which for all practical purposes is in the same terms as risk note form B. The respondent claimed damages for non-delivery on the ground that the non-delivery was due

1 to the misconduct of the servants of the railway, and the claim was for a sum of Rs. 36,461112/-.

The suit was resisted by the appellant and a number of defences were taken. In the present appeal we are only concerned with two defences. It was first contended that the suit was barred by s. 77 of the Indian Railways Act, No. IX of 1890, (hereinafter G referred to as the Act). inasmuch as notice required therein was

not given by the respondent. Secondly it was contended that the consignment was sent under risk note form Z and under the terms of that risk note the railway was absolved from all responsibility for loss, destruction or deterioration of goods consigned thereunder from any cause whatsoever except upon proof of misconduct H of the railway of. its servants, and that the burden of proving such misconduct subject to certain exceptions was on the respondent and that the respondent had failed to dischare that burden. Fljl'-

ther in compliance with the terms of the risk note, the railway made a disclosure in the written statement as to how' the consignment was dealt with throughout the period it was in its possession or control. The .case of the railway in this connection was that there was a theft in the running train between Mughalsarai and

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Buxar on December 12, 1947 and that was how part of the con- A signment was lost. As the loss was not due to. any misconduct on the part of the railway or its servants and as the respm; ident had not discharged the burden which lay on him after the railway had given evidence of how the consignment had been dealt with, there was no liabilitf on the railway.

On the first point, the trial court held on the basis of certain B decisions of the Patna High Court that no notice under s. 77 was

neessary in a case of non-delivery which was held to be different from loss. On the second point relating to the responsibility of the railway on the basis of risk note form Z, the trial court held that it had not been proved that the loss was due to misconduct pf the C railway or its servants. It therefore dismissed the suit.

Then followed an appeal by the respondent to the High Court.

The High Court apparently upheld the finding of the trial court on the question of notice under s. 77. But on the second point the High Court was of opinion that there was a breach of the condition of disclosure provided in risk note Z under which the consignment D had been booked, and therefore the appellant could not take advantage of the risk note at all and the liability of the railway must be assessed on the footing of a simple bailee. It therefore went on to consider the liability of the railway as a simple bailee and held on the evidence that the railway did not take proper care of the wagon at Mughalsarai and that in all probability the seals and E rivets of the wagon had been allowed to be broken there and all arrangements had been completed asto how the goods would be removed from the wagon when the train would leave that station and this could only be done either by or in collusion with the servants o.f the railway at Mughalsarai. In this view of the matter the High Court allowed the appeal and decreed the suit with costs F As the judgment w; is one of reversal and. the amount involved was over rupees twenty thousand, the High Court granted a certificate. and that is how the matter has come up before us.

We shall first deal with the question of the notice. We are in this ::ase cqncerned with the Act as it was in 1947 before its amend- G ment by Central Act 56 of 1949 and Central Act No. 39 of 1961 and all references in this judgment must be read as applying to the Act as it was in 1947. Now s. 77 inter a/ia provides that a per- wn shall not be entitled to compensation for the loss, destruction or deterioration of animals or goods delivered to be carried by railway, unless his claim to compensation has been preferred in H writing by him or on his behalf to the railway administration within six months from the date of the delivery of the animals or goods for carriage by railway. There was a conflict between the High Courts on the question whether non-delivery of goods carried by railway amounted to loss within the meaning of s. 77. Some High Courts (including the Patna High Court) held that a case of non-delivery was distinct from a case of loss and no notiee under

c1NION t'. MAHADEOLAL (Wanclwo, J.-) 149

A s. 77 was necessary in the case of non-delivery. Other High Courts however took a contrary view and held that a case of non-delivery also was a case 0f loss. This conflict has now been resolved by the decision of this Court in Governor-General in Council v. Musaddilal

(') and the view taken by the Patna High Court has been overruled.

This Court has held that failure to deliver goods is the consequence B of loss or destruction and the cause of action for it is not distinct from the cause of action for loss or destruction, and therefore notice under s. 77 is necessary in the case of non-delivery which arises from the loss of goods. Therefore notice under s. 77 was necessary in the present case. If is true that the respondent stated in the plaint in conformity with the view of the Patna High Court C prevalent in Bihar that no notice under s. 77 was necessary as it was a case of non-delivery. But we find in actual fact that a notice was given by the respondent to the railway on April 10, 1948 to the Chief Commercial Manager, E.l.R. in which it was stated that 60 bales of cloth were booked for the respondent but only 29 bales had been delivered and the balance of 31 bales had not been D delivered., Therefore the respondent gave notice that if the bales were not delivered to him within a fortnight, he would file a suit for the recovery of Rs. 36,461/ 12 /-, and the details asto how the amourit was arrived at were given in this notice. It is true that the notice was not specifically stated to be a notice under s. 77 of the Act but it gave all the particulars necessary in a notice under E that section. This notice or letter was sent within six months of

the booking of the consignment. A similar case came up before this Court in JetmuU Bhojraj v. The Darjeeling Himalayan Railway Co. Ltd.(') and this Court held that the letter to the railway in that case was sufficient notice for the purpose of s. 77 of the Act. Following that decision we llold that the letter in the present F case which is even more explicit is sufficient notice for the purpose of s. 77 of the Act. We may add that the learned Additional Solicitor General did not challenge this in view of the decision in .[ennui/ Bhojraj's case(').

This brings us to the second question raised in the appeal.

G We have already indicated that the High Court held that as the burden of disclosure which was on the railway had not .been discharged there was a breach of one of the terms of the risk note Z and therefore the risk note did not apply at all and the responsibility of the railway had to be assessed under s. 72 (1) of the Act.

This view of the law has been contested on behalf of the appellant H and it is urged that after the risk note is executed either in form Z or in form. B, the responsibility of the railway must be judged in accordance with the risk note even if there is some breach of the condition as to disclosure. It may be mentioned that risk note form Z and risk note form B are exactly similar in their terms insofar as the responsibility of the railway is concerned for risk note

(1) fl96ll .~ S.C.R. 647.

(') [1963] 2 S C.R, 832,

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form B applies to individual consignment while form Z is executed A by a party who his usually to send goojs by railway in large numbers. Risk note form Z is general in its nature and applies to all c::>nsignments that a party may send after its execution. It is proved that the consignnent in this case was covered by risk note form Z. 'The main advantage that a consignor gets by sending a consignm:nt unjer fo;-m Z or form B is a specially reduced rate as compa- B red to the ordinary rate at which goods are carried by the railway anj it is because of this specially reduced rate that the burden is thrown on the consignor in a suit for damages to prove misconduct on the part of the railway or its servants in the case of loss etc. of the pods, subject to one exception.

On the other hand the arg_ument on behalf of the respondent is that the view taken by the Patna High Court is right and it is the duty of the railway administration under the risk note, as soon as there is non-delivery and a claim is made on the railway for compensation, to disclose how th~ consignment was dealt with throughc

out while it was in its possession or control and that its failure to D do so results immediately in breach of the contract with the result that the responsib fay of the railway has to be judged solely on the bas:s of s. 72 (!) of the Act ignoring the risk note altogether.

Section 72 (!) defines the responsibility of the railway administration for the loss, destruction or deterioration of animals or goods delivered to the administration to be carried by railway to E be the same as that of a bailee under ss. 152 and 161 of the Indian Contract Act, 1872, subject to other provisions of the Act. Sub-section (2) of s. 72 provides that an agreement purporting to limit the responsibility under s. 72 (!) can be made subject to two conditions, namely, (i) that it is in writing signed by or 011 behalf of the person sending or delivering to the railway adm"lhistration the ani- P mals or goods, an'.! (ii) that it is in a form approved by the Governor-General. Sub-section (3) of s. 72 provides that nothing in the common law of England or in the Carriers Act 1865 regarding the responsibility of common carriers with respect to carriage of animals or goods shall affect the responsibility as in this section defined of the railway administration. So the responsibility of the G railway for loss etc. is the same as that of a bailee under the

Idian. CJntract Act. But this responsibility can be limited as prov.1ded m s. 72 (2). For the purpose of limiting this responsibilty nsk notes form B and form Z have been approved by the Governor-General and where goods are booked under these risk notes the liability is limited in th~ manner provided thereunder. It is B therefore necessarv to set out the relevant terms of the risk note, for the decision of this case will turn on the provisions of the risk note itself.

The risk note whether it is in form B or form z provides that .vhere goods are carried at owner's risk ori specially reduced rates, the owner arees or undertakes to hold the railway administration

T'NION v. MABADEOLAL ( w r:ndwo, J:) 151

A "harmless and free from all responsibility for any loss, deterioration or destruction of or damage to all or any of such consignment from any cause whatever, except upon proof that such loss, destruction, deterioration or damage arose from the misconduct on the part of the railway administration or its servants". Thus risk notes B and Z provide for complete immuni1y .of the railway except upon B proof of misconduct. But to this immunity there is a proviso and it is the construction of the proviso that arises in the present appeal.

The proviso is in these terms : -

"Provided that in the following cases: -

(a) Non-delivery of the whole of a consignment packed in accordance with the instruction laid down in the tariff or where there are no instructions, protected otherwise than by paper or other packing readily removable by hand and fully addressed, where such nondelivery is not due to accidents to train or to fire; (b)

"The railway administration shall be bound to disclose to the consignor how the consignment was dealt with throughout the time it was in its possession or control, and if necessary, to give evidence thereof before the E consignor is called upon to prove misconduct, but, if misconduct on the part of the railway administration or its servants cannot be fairly inferred from such evidence, the burden of proving such misconduct shall lie upon the consignor" It is not in dispute that the present case comes under cl. (a) r of the risk note. An exactly similar provision in risk note form B

came up for consideration before the Privy Council in Surat Cotton Spinning & Weaving Mills v. Secretary of State for India in Council, (') and the law on the subject was laid down thus at pp. 181-182:

"The. first portion of the proviso provides that the Railway Administration shall be bound to disclose to the consignor 'how the consignment was dealt with throughout the time it was in its possession or control, and, if necessary to give evidence thereof, before the consignor is called upon to prove misconduct'. In their Lordships' opinion, this obligation arises at once upon the occurrence of either of cases (a) or (b), and is not confined to the stage of litigation. Clearly one object of the provision is to obviate, if possible, the necessity for litigation. On the other hand, 'the ck•sing words of the obligation clearly apply to the litigious stage. Asto the extent of the disclosure, it is confined to the. period during which the

('I [W7J L.R. LX!V I.A. 176.

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consignment was within the possession or c; ontr?l of the Railway Administration; it does not relate, for mstance, u the perioJ after the goods have been theftuously removed from the premises. On the other hand, it does envisage a precise statement of how the consignment was dealt with by the Administration or its servants. The character of what is requisite may vary according to the circumstances of different cases, but, if the consignor is not satisfied that the disclosure has been adequate, the dispute must be judicially decided. As to the accuracy or truth of tire information given, if the consignor is doubtful or unsatisfied, and considers that these should be established by evidence, their Lordships are of opinion that evidence before a Court of law is contemplated, and that, as was properly done in the present suit, the Railway Administration should submit their evidence first at the trial.

"At the close of the evidence for the Administration two questions may be said to aris~. which it is important to keep distinct. The first question is not a mere question of procedure, but is whether they have discharged their obligation of disclosure, and, in regard to this, their Lordships are of opinion that the terms of the Risk Note require a step in procedure, which may be said to be unfamiliar in the practice of the Court; if the consignor is not satisfied with the disclosure made, their Lordships are clearly of opinion that is for him to say so, and. to call on the Adrninistration to fulfil their obligation under the contract, and that the Administration should then have the opportunity to meet the demands of the consignor before their case is closed; any question as to whether the consignor's demands go beyond the obligation should be then determined by the Court. If the Administration fails to take the opportunity to satisfy the demands of the consignor so far as endorsed by the Court, they will be in breach of their contractual obligation of disclosure.

"The other question which may be said to arise at this stage is whether misconduct may be fairly inferred from the evidence of the Administration; if so, the consignor is absolved from his original burden of proof. But, in this case, the decision of the Court may be given when th< evidence of both sides has been completed. It is clearly for the Administration to decide for themselves whether they have adduced all the evidence which they consider desirable in avoidance' of such fair "inference of misconduct". Thev will doubtless keep in mind the provisions of s. 114 of the Indian Evidence Act".

With respect we are of opinion that 'this rxposition of the law rel11ting to risk note B applies also to risk no1e Z and we accept it

l'SH,~ v. MABADEOLAL (Wanchoo, J.)

A as correct. Thus the responsibility of the railway administration to disclose to the consignor how the consignment was dealt with throughout the time it was in 'ts possession or control arises at om:e under the agreement in either of the cases (a) or (b) and lS not confined to the stage of litigation. But we are not prepared to accept the contention on behalf of the .-espondent that this responsibility B to make full disclosure arises immediately the claim is made by the consignor and if the railway immediately on such claim being made does nol disclosz all the facts to the consignor, there is immediately a breach of this term of the contract contained in the risk note.

It is true that the railway is bound to disclose to the consignor how the consignment was dealt with throughout the time it was C in its possession even before any litigation starts; but we are of opinion that such disclosure is necessary only where the consignor specifically asks the railway to make the disclosure. If no such disclosure is asked for, the administration need not make it before the litigation. In the present case there is no proof that any disclosure was aske:I for in this behalf by the consignor at any D time e:fore the suit w&s Hied. Therefore if the railway did not disclose how the consignment was dealt with throughout before the suit was filed, it cannot .be said to have committed breach of this term of the contract. The disclosure envisages a precise statement of how the consignment was dealt with by the railway or its ser vants. If the disclosure is askd for before the litigation commen- E ces an:! is not givm or the disclosure is given but it is not considerej to be sufficient by the consignor, the dispute has to be judicially decidd anj it is for the court then to say if a suit is brought whether there has been a breach of this term of the contract.

After this, comes the stage where the consigner or th<' con- F signee being dissatisfied brings a suit for compensation. At that stage evidence has to be led by the railway in the first instance to substantiate the disclosure which might have been made before the litigation to the consignor or which might have been made in the written statmcnt in reply to the suit. When the railway administration has given its evidence in proof of the disclosure and o the plaintiff is not satisfied with the cjisclosure made in the evidence, the plaintiff is entitled to ask the court to cal! upon the railway lo fulfil its obligation under the contract and the railway should then have the opportunity of meeting the demands of the plaintiff before its case is closed. Thus in addition to the evidence th<' t the railway may adduce on its own and in doing so the rail- B way has necessarily to keep in mind the provisions of s. 114 of the Indian Ev'dcnce Act, the plaintiff can and should draw •the attention of the court if he feels that full disclosure has not been made. In that case he can ask the court to require the railway to make further disclosure and should tell the court what further dis,; losure he wants. It is then for the court to decide whether the further disclosure desired by the plaintiff should be made by the railway. and if the court decides thav such further disclosure

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houid be made the railway has to make such further disclosure A as the court orders it to make on the request of the plaintiff. If the railway fails to take the opportunity so given to satisfy the demands of the plaintiff, endorsed by the court, the ra1lwav would be in breach of its contractual obligation of disclosure. It is at this stacre therefore that the railway can be truly said to be in breach of its contractual obligaLo; i of disclosure, and that breach arises because the railway falled tJ disclose matters which the court on the request of the plai:itiff asks it to disclose. The question then is what is the effect of this breach.

It is remarkable that the Privy Council did not lay down that as soon as the breach is made as above the risk note comes to an c:ij and the responsibility of the railway is that of a bailee under s. 72 (l) of the Act. In the ob3ervations already quoted, the Privy Council has gone on to say th1t after this stage is over, the question may arise whether miscJnduct may be fairly inferred from

the evidence of the raihyay. It seems to us therefore that even if there is a breach of the term as to full disclosure it does not bring D tl1e contract to an end anj throw the responsibility on the railway : s it the cas~ was a simple c1se of responsibility under s. 72(!) of

the Act; the case is thus not assimilated to a case where the goods are carried at. the ordinary ; ates at raiiway risk. The reason for this seems to be that the gcods have alreudy been carried at the reiucd rates and the consignor has taken advantage of that term E in the cntract. Therefore, even though there may be a breach of the term as to complete disclosure by the railway the consignor cannot fall back on the ordinary responsibility of the railway under s. 72 (!) of the Act as if the goods had been carried at railway's risk at ordinary rates, for he has derived the advantage of

the goods having ben carried at a specially reduced rates. The F r.sk note would in our opinion continue to apply and the court would still have to decide whether misconduct can be fairly i,1ferred from the evidence of the railway, with this difference that where the rnilway has been in breach of its obligation to make full disclosure misconduct may be more readily inferred and s. 114 of the Indian Evidence Act more readily applied. But we do not think that the conditions in the risk n Jte can be completely ignored simply because there has been a breach of the condition of complete disclosure. 1 he view of the Patna High Court that as soon as there is breach of the condition relating to complete disclosure the risk 1nte can be completely ignored and the responsibility of the railway judged purely on the basis of s. 72 (I) as if the goods were H -.:arried at the ordinary rates on railway's risk cannot therefore be .iccepteJ as correct.

We may point out that in Surat Cotton Spinning and Weaving Hills Limited's case, (') the plaintiffs wanted the guard of the train u b~ exammed and he was undoubtedly a material witness. EYcn

(') [1U;7] L.R. LXIY LA. liG.

l:N!Oli v. MAHADEOLAL ( W a.itr4oo, J. )' 155

A so the witness was not examined by the railway. Finally therefore the Privy Louncil allowed lhe appeal with these observations at p. 189:-

"While their Lordships would be inclined to hold that the respondent, by his failure to submit the evidence of Rohead, was in breach of his contractu,, l obligation to give the evidence necessary for disclosure of how the consignment was dealt with, they are clearly oi opinion thal the failure to submit the evidence of Rohead, in the circumstances of this case, entitles the court to presume, in terms of s. 114 (g) of the Evidence Act, that "Rohead's c evidence, if produced, would be unfavourable to the respondent, and that, in consequence, misconduct by complicity in the theft of some servant, or servants of the resp;:indent may be fairly inferred from the respondent's evidence".

These observations show that even though there may be a II breach of the obligation lo give full disclosure that does not mean that the risk note form Z or form B can. be ignored and the responsibility of the railway fixed on the basis of s. 72 (!) as a simple bailee. If that was the effect of the breach, the Privy Council woLld not have come to the conclusion after applying s. 114 (g) of the Evidence Act in the case of Rohead that misconduct by complicity lil in the theft of some servant or servants of the railway may be fairly inferred from the railway's evidence. The appeal was allow ed by the Privy Council after coming to the conclusion that mis-·

conduct by the servant or srvants of the railway might be fairly inferre:J from the evidence including the presumption under 114 (g) of the Evidence Act. It seems to us clear therefore that even 'F if there is a breach of the obligation to make full disclosure in the sense that the railway does not produce the evidence desired by the plaintiff in the suit even though the request d the plaintiff is endorsed by the court, the effect of such breach is not that the risk note is completely out of the way, the reason for this as we have already indicated being that the c; Jnsignor has already taken ad- G vantage of the reduced rates and therefore cannot be allowed to ignore the risk note altogether. But where there is a breach by the railway of _the. obligati_on to make full disclosure the court may more read!ly mfer nmconduct on the part of the railway or its servants or more read_ily presume under s. 114 (g) of the Evidence Act against the railway. This in our opinion is the effect of the II decision of the Privy Council in Surat Cotton Spinning and Weaving Mills Limited's case('). As we have already said we <ore in respectful agreement with the law as laid down there.

So far as the present appeal is concerned, there was no demand by the c.:insign::ir for disclosure before the suit. Even after the suit was fileJ there was no statement by the respondent at any

(1) [lU~7j L.R. , J~ I.A, 17fi.

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REPORTS [1965] 3 s.c.R.

stage that the disclosure made by the appellant in the evidence A was in any way inadequate. The respondent never told the court after the evidence of the railway was over that he was not satisfied with the disclosure and that the railway be asked to make further disclosure by producing such further evidence as the r.espondent wanted. In these circumstances it cannot be said in the present case that there was any breach by the railway of its res- B ponsibility to make full disclosure. In the circumstances we are of opinion that the risk note would still apply and the court would have to decide whether misconduct on the part of the railway can be fairly inferred from the evidence produced by it. If the court cannot fairly infer misconduct from the evidence adduced by the railway, the burden will be on the respondent to prove misconduct.

C That burden, if it arises, has clearly not. been discharged for the respondent led no evidence on his behalf to discharge the burden.

We therefore turn to the evidence to see whether from the evidence produced by the railway a fair inference of misconduct of the railway or its servants can be drawn on the facts of this case.

It is not in dispute in this case that the wagon containing the D consignment arrived intact at Mughalsarai on December 9, 1947.

Besides there is evidence of Damodar Prasad Sharma, Assistant Trains Clerk, Mughalsarai, P.W. 14, who had the duty to receive trains at the relevant time that 192 Dn. goods train was received by him on line No. 4 and that there were two watchmen on duty on that line for examining the goods train and they kept notes of the E same. He also produced the entry relating to the arrival of the train and there is nothing in the entry to show anything untoward with tfiis wagon when the train arrived at Mughalsarai. His evidence also shows that the train was sent to the marshalling yard on December 11, 1947. Finally there is the evidence of Chatterji F (P.W. 8) who is also an Assistant Trains Clerk. It was his duty to make notes with respect to goods trains which left Mughalsarai.

He stated that this wagon was sent by train No. 214 on December 12, 1947 in the evening. He also stated that the wagon wa~ in good condition and prQc!uced the entry relating to this wagon. It appears however from his evidence that rivets and seals are examined by G the watch and ward staff and they keep record of it. Apparently therefore he did not actually inspect the wagon before it left though he says that it was in good condition. The relevance of his evidence however is only this that in his register showing the despatch of trains there is no entry to the effect that there was anything wrong with this wagon when it was despatched.

The most important evidence however is of the guard of the train, Ram Prasad Ram (P.W. 2). He stated that before the train started from Mughalsarai he patrolled both sides of it and the place from where the train started was well Jighted and watch and ward staff also patrolled the area. He also stated that the rivets and seals of all the wagons in the train we e checked at Mughalsarai and there was apparently nothing wrong with them. Now if

UNION "· ll!AllADEOLAL (Wanrhoo, J .) 161' r A the evidence of the guard is believed it would show that the wagon containing the consignment was intact at Mughalsarai upto the time 214 goods train including this wagon left Mughalsarai. If so there would be no reason to hold that anything was done to the wagon before the train left Mughalsarai. It may be mentioned that the trial court accepted the evidence of the guard while the High B Court was 'not prepared to believe it. On a careful consideration of the evidence of the guard we see no reason why his evidence should not be believed. It is obviously the duty of the guard to see that the train was all right, when he took charge of it. It appears that in discharge of his duty the guard patrolled the train on both sides and looked at rivets and seals to see that they were intact. It O is, however, urged that the guard's evidence does not show that the seals which he found intact were the original seals of Wadibundar and the possibility is not ruled out that the original seals might have been tampered with and new seals put in while the train was in the marshalling yard at Mughalsarai for two days, as the evidence of the watch and ward staff had not been produced. It D would perhaps have been better if the evidence of the watch and ward staff had been produced by the railway; but if the evidence of the guard is believed that the seals and rivets were intact when the train left Mughalsarai, the evidence of the watch 'and ward staff is not necessary. It is true that the guard does not say that the seals were the original seals of Wadibundar but it appears from the evi- E dence of Jagannath Prasad (P.W. 9) who was the Assistant Station Master at Dildarnagar that he found when the train arrived there that the northern ftapdoors of the wagon were open while southern flapdoors were intact with the original seals. This evidence suggests that the original seals could not have been tampered with when the train left Mughalsarai and that the guard's evidence that seals and 1 rivets were intact shows that nothing had happened to the wagon

while it was at Mughalsarai. Further it is also in evidence that there is ample light in the marshalling yard at Mughalsarai and that watch and ward staff is posted there as well. So the chances of tampering with the seals and rivets in the marshalling yard in the circumstances are remote. As such the evidence of the guard that G the seals and rivets were intact when he left with the train on the evening of December 12, would apparently exclude the possibility that there was any tampering with the wagon before it left Mughalsarai. It is true that on the last day when the evidence for the railway was recorded and the guard had been recalled for further crossexamina tion it was suggested to him that the railway servants at B Mughalsarai had removed the bales and were responsible for the \ theft. He however denied that. But it is remarkable that if the respondent was dissatisfied with the evidence of the guard which was to the effect that the wagon was all right when he left Mughalsarai with the train on December 12, it did not ask the court to order the railway to produce the evidence of the watch and ward staff with respect to this wagon while it was in the marshalling yard at Mughalsarai. The respondent could ask for such disclosure. If the court

L/B(D)2SC:I-12

SUPREME

COURT

REJ:'ORT8

[1965] 3 S.C.R. • had accepted the request and the railway had failed to produce the A evidence of the watch and ward stall it may have been possible to use s. 114 of the Evidence Act and hold that the watch and ward staff having not been produced their evidence, if produced, would have gone against the railway. But in the absence of any demand by the respondent for the production of the watch and ward staff which he could ask for, we see no reason why the statement of B the guard to the effect that seals and rivets of the wagon were intact when he left Mughalsarai with the train should not be accepted. In the absence of any demand by the respondent for the production of watch and ward staff his mere suggestion that the railway servants at Mughalsarai might have committed the theft cannot be accepted.

C There is the further evidence of the guard as to what happened between Mughalsarai and Buxar. It appears between these two stations the train stops only at Dildarnagar. The evidence of the guard however is that the train suddenly st<:>pped between the warner and home signals before it reached Dildarnagar. He therefore D got down to find out what the trouble was. He found that the hosepipe between two wagons had got disconnected and this resulted in the stoppage of the train. The evidence further is that the hosepipe was intact \\lhen the train started from Mughalsarai. He made . a note of this in his rough memo book which was produced. It is noted by him that the northern flapdoor of this wagon was open.

E He reconnected the hosepipe and went up to Dildarnagar. 1here he reported the matter to the station staff. His further evidence is that there were three escorts with the train and that they were guarding the train when the train was standing between the warner and the home signals befcre it reached Dildarn2gar. Nothing untoward was reported to him by these escorts. It was at this stop F between the two signals that the guard noticed that the rivets

and seals of this wagon on one.side had been broken. The case of the railway is that there was theft in the running train between Mughalsarai and Buxar and that is how part of the consignment was lost. The evidence of the guard does suggest that something happened 'between Mughalsarai and Dildarnagar and then bet- G ween Dildarnagar and Buxar. In addition to this the evidence of the station staff at Dildarnagar is that the flapdoors of this wagon were found open when the train arrived at Dildarnagar. The contents were not checked at Dildarnagar as there was no arrangement for checking at that station ... The wagon was resealed at Dildarnagar, and the fact was noted in the station master's diary. It may H be mentioned that the evidence of the station staff was that the wagon was resealed though the guard says that it was rivetted also at Dildarnagar. The entry in the guard's rough memo. however is only that lhe wagon was resealed. The guard certainly says that it was rivetted also at Dildarnagar but that is not supported by the station staff and the entry in the guard's rough memo. It seems that the statement of the guard may be due to some error on his

UNION v. MAIUDEOI.AL (Wanohoo, J.) 159

A part. That may also explain why, when the train arrived at Buxar. the flapdoor again was found open, for it had not been rivitted at DJdarnagar. Then the evidence of the Buxar station staff is that the northern flapdoors of this wagon were open when the train arrived at Buxar. It was then resealed and rivetted and was detached for checking: The checking took place on December 14th at Buxar.

B It was then found that one side had the original seals of Wadibundar while the other side had the seals of Buxar. On checking the wagon, 27 b3les were found intact, covering of one bale was torn an:! one bale was found loose and slack. This evidence asto what happened between Mughalsarai and Buxar thus makes it probable that there was theft in the running train between Mughalsarai and C Buxar and that may account for the loss of part of the consignment.

It is however contended on behalf of the respondent that no evidence W3S produced from Mughalsarai asto what happened while the wagon was in the marshalling yard and that the seal D bo-:ik which is kept at every railway station "'°ntaining entries of re-sealing when a wagon is resealed was not produced from Mughalsarai and an adverse inference should be drawn from this non

producion. We are however of opinion that the evidence. of the guard to the effect that the seals were intact when he left Mughalsarai with the train is sufficient to show that the wagon was in E tact with the original seals when it left Mughalsarai and therefore it is not possible to draw any adverse inference from the nonproduction of the watch and ward staff or the seal booll: of Mug halsarai in the circumstances of this case. It would have been a different matter if the respondent had asked for the production of the seal book as well as the evidence of the watch and ward 1 staff. But the respondent contented itself merely with the suggestion that a theft might have taken place at Mughalsarai which was denied by the guard and did not ask the court to order the railway to produce this evidence. In these cir.; umstances in the face of the evidence of the guard and the fact that one seal on the southern side of the door was of the original station, we do not think that it Q is possible to draw an adverse inference against the railway on the ground that the .evidence of the watch and ward staff and the seal book at Mughalsarai were not produced. The seal book would have been of value only if the wagon had been resealed at Mugbalsarai but there is in our opinion no reason to think that the wagon had been resealed at Mughalsarai after the evidence of the guard that H he found the seals and rivets intact when he left Mughalsarai with the train. On a careful consideration of the evidence therefore we are of opinion that a fair inference cannot be drawn from the evidence of the railway that there was misconduct by the railway or its servants at Mughalsarai during the time when the wagon was there. If the evidence of the guard is accepted, and we do accept it. there can be no doubt that the loss of the goods took place because of theft in the running train between Mughalsarai and

SUJ.>REME

COURT

RJ!.PORT:S [1~65.J 3 s •. c.1<.

Buxar. There is no evidence on behalf of the respondent to prove A mi.sconduct and_.as miscenduct cannot airly be infrred from. the evidence produced on behalf of the railway, the smt must fail.

We therefore allow the appeal, set aside the judgment and decree of the High Court and restore that of the Additional Subordinate Judge. In the circumstances of this case we order par- B ties to bear their own costs throughout.

Appeal allowed.

UNION OF INDIA

MAHADEOLAL PRABHUDAYAL

February 23, 1965

K. N. WANCHOO, J.

R. MuDHOLKAR ANDS. M. SIKRI, JJ.

Indian Railways Act

ss. 72 and 77

s. 77

s. 80

Civil Procedure Code, 1908

Supreme Court

s. 77

Indian Railways Act, 1890

s. 77

s. 72(1)

s. 72(1)

s. 114

A Niren De

N. D.

KarkhanLi

B.R.G.K. Achar

Bishan Narain

P. D. Himmatsinghka

S. Murthy

B. P.

Maheshwari

B Wanchoo

Patna High Court

Union of India

Bombay

Wadibundar

December 1, 1947

Mughalsarai

Baidyanadham

December 12, 1947

D Baidyanathdham

December 21, 1947

August E 31, 1948

s. 80

November 20, 1948

s. 77

Railways Act

s. 77

s. 77

s. 77

s. 77

Wanclwo

s. 77

s. 77

s. 77

Bihar

s. 77

April 10, 1948

s. 77

s. 77

s. 77

Bhojraj

s. 72

s. 72

Section 72

ss. 152 and 161

Indian Contract Act, 1872

s. 72

s. 72

s. 72

England or in the Carriers Act 1865

s. 72

s. 114

Indian Evidence Act

Wanchoo

s. 114

s. 72

s. 72(!)

s. 72

s. 114

Indian Evidence Act

s. 72

Rohead

s. 114

s. 72

s. 114

s. 114

December 9, 1947

Damodar Prasad Sharma

December 11, 1947

Chatterji F

Ram Prasad Ram

Wanrhoo

Wadibundar

Jagannath Prasad

Dildarnagar

B Mughalsarai

s. 114

Mughalsarai

Buxar

Buxar

Dildarnagar

G ween Dildarnagar

DJdarnagar

December 14th at

C Buxar

Mugbalsarai


STATE OF UTTAR PRADESH

RAMAGYA SHARMA VAIDYA

February 24, 1965

[K. N. W ANCHOO, J. R. MUDHOLKAR AND S. M. SJKRI, JJ.]

Iron and Steel (Control) Order, 1956, ct 7--0btaining permit to pu1chase iron goods for specified purpose-Not using it for anu purpose, whether constitwtes contravention cl. 7.

The respondent obtained permits under the Iron and Steel (Control) Order, 1956 on the representation that he wanted to purchase iron goods for the purpose of bwilding a temple and a dharamshala. '.fhe permits were obtained from .the authr.ities of Ditrict Deoria m 11.P. At the back of the permit a cond1t1on W'as prmted that "the materials required against the permit will be used only for the purpose for which it was asked for and has been given". The respondent was tried for the contravention of cl. 7 of the aforesaid order on the allegation that he had not used the goods purchased under the permits for the purpose for which they were issued. The trial Magistrate found him guilty. In appeal. however, the Sessions Judge acquitted him on the ground that the possitility of his retaining the iron at some other place was not entirely exclooed. The High Court in appeal by the State confirmed the acquittal holding that it had not been proved that the respondent had "used" the iron which he had obtained on the basis of the permit. The High Court further held that it was not possible to look into t!ie application in order to see for what purpose the applicant took the permit and no condition actually printed at the back of the permit had been broken.

By special leave the State appealed to the Supreme Court.

On behalf of the appellant it was urged: (1) the word "use" in

cl. 7 of the order includes "kept for eventual use for another purpose."

(2) The High Cou.rt erred in holding that the application cannot be referred to for the purpose of construing the conditions appearing in the permit.

HELD: The respondent could not be held guilty of a contravention of cl. 7 of the order.

(i) No doubt the legislative intent of the Iron & Steel (Con, trol) G Order is that this essential commodity should be utilised in accordance

witli the conditions contained in the permit, but no clause in the Control Order in question evinces a legislative intent that a mere non-user is also prohibited and made punishable. fl65 Hl The word 'use' must take its colour from the context in which it is used. In cl. 7 the expression "use ... in accordance with the conditions contained" suggests something done positively e.g. utilisation H or disposal. Mere "non-use" is not included in the word "use". fl65 Dl

(ii) The High Court was wrong in holding that it is not petrnissible to look at the application. to determine the purpose for which permit is attained. However in the present case the applications did not disclose that the respondent wanted to build a temple or dharamshala at any particular place. From the mere fact that the applications were made to the authorities in Deoria District, or the fact that in the applications it was mentioned that the goods were not available in Deoria District, it did not necessarily follow that the goods were intendPd to be used in that District. fl66 Hl

SUPREME

COURT

REPORTS

[1965) 3 S.C.R.

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 60 A of 1963.

Appeal by special ieave from the judgment and order dated August 24, 1962 of the Allahabad High Court in Government Appeal No. 1379 of 1962.

B. C. Misra and 0. P. Rana, for the appellant.

J. P. Goyal, for the respondent.

The Judgment of the Court was delivered by Sikri, J. This appeal by special leave is directed against the judgment of the_ Allahabad High Court dismissing the appeal of the State against the judgment of the Sessions Judge allowing the appeal of the respondent and acquitting him.

The respondent obtained permits .under the Iron and Steel (Control) Order, 1956--hereinafter . referred to as the Control Order-for about 28 tons of iron, including 6 tons of rods, 15! tons of joints and 2 tons of G.C. Sheets. He is alleged to have purchased these articles on the basis of the above permits between

July 1957 and March 1958. The permits were obtained on three D applications made by the respondent.

Only two applications are in the printed record. The first application is dated May 23, 1957. and is addressed to the Provincial Iron and Steel Controller, Kanpur, through the District Magistrate, Deoria. In this application the respondent stated that he was a political sufferer and he was constructing a public temple for which he required five tons of M.S.

B Round and eight tons of Girder. He further stated that the requirements were not available at Deoria and as such the application should be considered and forwarded to the Controller for consideration and orders. It appears that this application was forwarded, duly recommended, by the District Supply Officer. Deoria, and ultimately a permit was given to him by the Controller. He P made another application dated September 7, 1957. Jn this application he again stated that he was a political sufferer and he was constructing a public temple and dharamshala for which he requireed certain quantities of iron. He further stated that , the requirements were not available at Deoria and as such the application should be forwarded to the Controller. This application was also G recommended and forwarded and ultimately a permit was given to him.

On January 2, 1958, the accused made another applica- . tion (Ex. Ka 9-not available in the printed record) and a permit was given to him by the District Supply Officer himself. We may mention that the original permits are not printed in the record, and, therefore, we have not been able to see for ourselves as to

B . what are the exact conditions contained in the permits.

It is the case of the prosecution that the respondent after obtaining the materials sanctioned to him under the permits did not construct any temple or dharamshala building at Barhaj Bazar or at any other place, We may mention that Barhaj Bazar is the place where he lives and the applications which are in the record also mention this address.

SfATE V. RAMAGYA SHARMA (Sikri, J.) 163

A Before the Magistrate who tried the case the respondent was

pat the following question:

"It is alleged that the iron obtained under the permits mentiond in questions 2. 3 and 4 wus not utilised for the purpose for which it was taken. What have you to say in this respect?" The respondent's reply was:

"No. Whatever iron I got, I used it in the temple situate in mauza, Tinhari, P. S. Madhuban, district AZamgarh, which is my place of residence as .well." Before the Magistrate the accused had admitted to have purchased about 17 tons cf iron. The Magistrate held it proved that the accused had at!east purchased one ton more from one Mishri Lal, P.W. 7. Thus, he came to the conclusion that the accused had purchased at least 18 tons of iron. He further held that on the evidence it was clear that only 3 / 4 ton of rods had been utilised in the building comtructed at Tinhari, but as the building D had been constructed between 1943-52, no portion of the iron

obtained by the accused had been utilised for the purpose for which it was procured. He further held that the accused had disposed of the iron wrongfully at Kanpur and did not even bring the same to B~.rhaj Bazar or Tinhar. Accbrdingly he held that the respondent had contravened the provisions of cl. 7 of the Cont- E rol Order.

The respondent filed an appeal before the Sessions Judge.

The Sessions Judge held that barring a very small quantity of iron, the remaining quantity that was received by the respondent had not been util:; ed in the temple or dharamshala at Tinhari. Differ- F ing, fr~ the Magistrate, he held that it was not proved by any evidence. that the respondent had actually sold the excess quantity at Kanpur. He then observed that "in the absence of any such evidence the possibility of the appellant retaining the iron at some other place is not completely excluded." Then construing cl. 7 of the Control Order, he observed that "in the aforesaid section G there is no mention that the iron purchased should be utilised at any particular place or within a particular period. The condition in the various permits granted to the appellant was simply this that he should utilise the iron in erecting a temple or dharamshala in the town of Barhai. It may be noted that the main purpose was the-construction of a temple and dharamsha/a; the place H where it was to be constructed does not appear to have much significance. Further no time-limit is given during which the entire quantity of iron should be ¥tilised." Accordingly he held that there had been no contravention of cl. 7 of the Control Order.

The State appealed to the High Court. Srivastava, J., dismissed the appeal holding that there had been no contravention of cl. 7 of the Control Order.

According to him, two essentials are netessary before there can be contravention of cl. 7. "In the

164 SuPREJ4E

OOURT l\El'ORTS [1965] 3 s.c.n.

first place the iron and steel should be 'used'; secondly it should A be used otherwise than in accordance with the conditions contained or incorporated in the docwrient which was the authority for the

acquisition." He held that the first condition had not been fulfilled because it had not been proved that the respondent had used the iron which he had obtained on the basis of the permit. It appears that the findings of the learned Sessions ludge, as well as the B Magistrate, that he had not used or utilised the remaining portions of the iron and steel at all were not questioned before him. According to him, if the remaining quantity of iron was still unutilised or . unused, then the respondent could not be said to have done anything contrary to cl. 7. He further held that the second condition had also not been fulfilled because the' permit itself contained C only one condition printed on its back. This condition was "that the materials required against the permit will be used only for the purpose for which it was asked for and has been given." According to him, it is not permissible to refer to the application made for the permit because the only document that can be looked at is the permit. . He was, however, prepared to concede that "it is n also open to the officer to mention in the permit that it is being granted for the purpose mentioned in the application. That may be a short-cut for avoiding the trouble of entering in the permit the details of the purpose. In that case it may be permissible to refer to the application." In spite of this concession, he concluded that "when even that is not done in fact no condition is mentioned E in the permit at all about the manner in which the iron or steel is to be utilised it cannot be said that a condition of the permit has been broken because the assurance given in the application has not been carried out."

Mr, B. C. M°ISra, learned counsel for the appellant, has urged F before us that on the facts found by the learned Sessions Judge. cl. 7 of the Control Order has been contravened. He says that the word "use" in cl.· 7 includes "kept for eventual use for another purpose." He says that if one stores iron and steel, one uses it and the word "use" does not imply consumption only. Relying on Maxwell on Interpretation of Statutes, Eleventh Edition, p. 266, G he says that we should give a wide construction to the word "use" in cl. 7.

Clause 5 and the relevant portion of cl. 7 of lli.e Control Order are as follows:

"5. Disposals.

No person, who acquires iron or steel under clause 4, or no producer shall dispose of or agree to dispose of or export. or agree to export from any place to which this Order extends any iron or steel, except in accordance with the conditions contained or incorporated in a special or general written order of the Controller.

STATE V. RAMAGYA SHAR)!A (Sikri, J.) 105

7. Use of Iron and Steel to conform to conditions governing

acquisition.

A person acquiring iron or steel in accordance with the provisions of cl. 4 shall not use the iron or steel otherwise than in accordance with any conditions contained or incorporated in the document which was the authority for the acquisition ...... "

We are unable to accede to the aoove contentions. There is no provision in the Control Order requiring that iron or steel acquired under the Control Order should be utilised within a specie fied time. If it had been the intention to include keeping or storing within the word 'use' there would have been some provision regarding the period during which it would be permissible to keep or store the iron, for it is common knowledge that building operations take some considerable time and are sometimes held up for shortage of material or other reasons. Further the word 'use' must D take its colour from the context in which it is used. In cl. 7 the expression "use .. .in accordance with the conditions contained"

suggests something done positively, e.g. utilisation or disposal.

Mere 'non-use', in our opinion, is not included in the word 'use'.

The passage relied on by the learned counsel in Maxwell is as follows:

"Wide Sense given to words: The rule of strict construction, however, whenever invoked, comes attended with qualifications and other rules no less important, and it is by the light which each contributes that the meaning must be determined. Among them is the rule that the sense of the words is to be adopted which best harmonises with the context and promotes in the fullest manner the policy and object of the legislature. The paramount object, in construing penal as well as other statutes, is to ascertain the legislative intent, and the rule of strict construction is not violated by permitting the words to have their full meaning, or the more extensive of two meanings, when best effectuating the intention. They are, indeed, frequently taken in the widest sense, sometimes even in a sense more wide than etymologically belongs or is popularly attached to them, in order to carry out effectually the legislative intent, or, to use Sir Edward Coke's words, to suppress the mischief and advance the remedy."

But this passage does not warrant the giving of a meaning . to a word apart from the context in which it is used. There is no doubt that the legislative intent of the Control Order is that this essential commodity should be utilised in accol'dance with the conditions contained in the permit, but no clause in this Control Order evinces a legislative intent that a mere non-user is also prohibited and made punishable.

SUPRE.-....IE

COURT

REPORTS [1965] 3 s.c.R.

The learned counsel referred to London County Council v.

Wood('), but we do net derive any ass; stance from that case. The head-note brings out the point decided in that case as follows:

"The Highways and Locomotives Act, 1878, provides by s. 32 that "A country authority may ... make ... by-laws for granting annual licences to locomotives. u.sed within their country." And by a by-law made by the London County Council under that section it was provided that

"No locomotive shall be used on any highway within the county of London until an annual licence for the use of the same shall have been obtained from the council by the owner thereof" : - .

Held, that a steam-roller which was not at the time being employed in road-making, but was merely passing through the county to a destination outside was being

"used within the country" within the meaning of the section and the by-law."

In the context, the word "used" was, with respect, properly construed.

Collins, J ., held that "the object of the Act was evidently. to protect the highways, and the effect of a steam-roller upon the highways may be just the same whether it be engaged in mending lhe roads or not".

In conclusion we hold that it has not been established that the respondent had used the iron acquired by him in contravention of cl. 7 of the Control Order.

The learne::I councel further urges that the High Court erred

in holding that the application cannot be teferred to for the pur- F pose of construing the conditions appeari.ng in the permit, the condition being that "the materials acquired against a permit will be used only for the purpose for which it was asked for and has been given." He says that the expression "the purpose for which it was asked for" refers back to the application, and the expression "has been given" refers back to the Order. There is some force in G what he urges.

We are unable to sustain the fin, ding of the High Court that it is not permissible to refer to the application and the order to find out the purpose for which the iron was obtained.

But even if we look at the applications, which. are in the printed record, the purpose mentioned is only construction of a temple, in the application dated May 23, 1957, and temple and dharam- H shalain the application dated September 7, 1957. These applications do not disclose that the respondent wanted to construct the temple and dharamshala at any particular place. It is urged that the sentence which occurs in both the applications, namely that the requirements are not available at Deoria, shows that the purpose for which the iron and steel was required was for construction

(') [1897] 2 Qll 482.

STATE t'. RAMAGYA SHARMA (Sikri, J.)

J 67

of a temple and dharamshala in the district of Deoria. This argument is sJught to be reinforced by asserting that a District Magistrate was not empowered to recommend applications for iron requird for works to be constructed outside the District, and therefore it must be held that the purpose was construction of a temple and dharamshala in the district of Deoria. However, no orders shJwing the j'lrisdiction of the District Magistrate in respect of this matter has been shown to us, and we are unable to conclude from the applications that the purpose was construction of a temple and dharc.mslzala in the district of Deoria alone.

AccJrdingty we hold that the respondent has not contravened

cl. 7 of the Control Order. The appeal accordingly fails and is dismissed

Appeal dismissed.

STATE OF UTTAR PRADESH

RAMAGYA SHARMA VAIDYA

February 24, 1965

R. MUDHOLKAR

cl. 7

cl. 7

Supreme Court

cl. 7

cl. 7

cl. 7

Deoria District

Allahabad High Court

B. C. Misra

. P. Rana

J. P. Goyal

Sikri

May 23, 1957

Kanpur

Deoria

September 7, 1957

January 2, 1958

SfATE V. RAMAGYA SHARMA

Tinhari

AZamgarh

Mishri Lal

Tinhar

cl. 7

cl. 7

Barhai

cl. 7

Srivastava

cl. 7

cl. 7

cl. 7

B. C. M

cl. 7

cl. 7

Clause 5

cl. 7

clause 4

STATE V. RAMAGYA SHAR)!A

cl. 4

cl. 7

Edward Coke

Highways and Locomotives Act, 1878

s. 32

London County Council

London

Collins

cl. 7

STATE t'. RAMAGYA SHARMA

cl. 7


COMMISSIONER, MADRAS HINDU RELIGIOUS AND A

CHARITABLE ENDOWMENTS .

NARAYANA AYYANGAR AND OTHERS

February 24, 1965

(K. SUBBA RAO, J. C. SHAH AND R. S. BACHAWAT, JJ.]

Madras Hindu Religious and Charitable Endowments Act, 19 of 1951, s. 6(13}--'Religious Charity' meaning of-Samaradhanai Fund for the purpo•se of feeding Brahmins attending the celebration of a festival at a temple, whether such charity.

A Samaradhanai Fund was started for the purpose of feeding Brahmin pilgrims attending Sri Venkatachalapathiswami shrine at village Gunaseelam (in Madras State) on the occasion of Rathotsavam festival. On the enactment of the Madras Hindu Religious and Charitable Endo'.'ments Act 19 of 1951 the Deputy Commissioner of Hindu Religious and Charitable Endowments initial•-:! proceedings under s. 57(d) of the Act and held that the a!oresaid fund was a 'religious charity' within the meaning of s. 6(13) of the Act. His order was upheld by the Commissioner. The Trustees of the Fund then filed a suit to set aside the ocder of the Commissioner contending that the Samaradhanai Fund was neither a public charity nor a 'religious charity'. In s. 6(13), 'religious charity' is defined as a "public charity associated with a Hindu festival .or observance of

a religious character, whether it be conected with a math or temple or not". The trial court decided against the trustees but the High E Court held in their favour. According to the High Court feeding the Brahmins was a public charity but it was not a 'religious charity in as much as those who conducted the celebration of the Rathotsavam at the shrine had no control over the feeding of Brahmins out of the SamaTl!ldhanai Fund. On appeal to the Supreme Court by the Commissioner, with special leave.

HELD: Feeding of Brahmins out of the Samaradhanai fund was associated with the celel:ration of the Rathotsavam at the Venkatachalapathiswami shrine.

The expression "associated" in s. 13 of Act 19 of 1951 is used having regard to the history of the legislation the scheme and objects of the Act and the context in which it occurs, as meaning "being connected with" or

11in relation to". The expression does nOt import any control by the authorit!es who manage or administer the festival.

There are many Hindu festivals which are celebrated by the public gener_a!ly without any connection with any temple or math. The definition of "religious charities" includes such general festivals and observances. It cannot be said that there must always be a set of persons who control the celbration of a festival or an ot-servar.CP

f171 D-Gl Nor can it be contended that the expression "associated with a Hindu festival or observance of a religious character" in the definition of "religious charity" implies that the public charity must be an integral part of the Hindu religious festival or observance. There is nothing in the Act which indicates any such intention on the part of the legislature. [171 H] ·

CIVIL APPELLATE JURISDICl10N: Civil Appeal No. 844 of 1963.

COl4MISSIONEll V. NARAYANA (Shah, J.) 169

Appeal by special leave from the judgment and decree date November 1, 1960 of the Madras High Court in Appeal No. 199 of 1957.

A. J{anganadham Chetty and A. V. Rangam, for the appellant.

A. V. Vishwanatha Sastri and R. Thiagarajan, for respondent Nos. I and 2.

The Judgment of the Court was delivered by Shah, J. Venkatarama Iyengar, Kastliuri Iyengar and Ranga Iyengar, residents of the village Kariainanikam in Tiruchirappalli District, with the aid of contributions, subscriptions and donations 0 set up a Samaradhanai Fund for feeding Brahmin pilgrims attending Sri Venkatachalapathiswami shrine at village Gunaseelam on <he occasion of Rathotsavam festival. Between the years 1936 and 1940 seven acres of land were purchased for Rs. I 0,500 to provide a permanent income for the Fund. It was found that the expenses incurred for the Rathotsavam festival did not exhaust the entire D income and the balance was utilised for Vanabhojanam in Kariamanikam village in the month of K artigai and on the Dwadesi following Vaikunta Egadesi day.

The President, Hindu Religious and Charitable Endowments Board, sought to levy for the years 1351 to 1354 F asli contributions E under s. 69 of Madras Act 2 of 1927 in respect of the Fund. But in Suit No. 297 of 1947 of the file of the District Court at Tiruchi rappalli that claim was disallowed. The District Court held that the charity was not a "specific endowment" within the meaning of Act 2 of 1927. After the Madras Hindu Religious and Charitable Endowments Act 19 of 1951 was enacted, the Deputy Com- F missioner of Hindu Religious and Charitable Endowments initiated a fresh proceeding under s. 57(d) of that Act and held that the Samardhanai Fund was a "religious charity" within the meaning of s. 6(13) of the Act. Against that order an appeal was carried by the trustees of the Fund to the Commissioner of Hindu Religious and Cartible Endoens. The C?missioner held that feeding G Brahmms m connect10n with the rehg1ous festival of Hindus was a public charity and also a religious charity within the meaning of s. 6(13) of Madras Act 19 of 1951.

The trustees of the Fund .then instituted Suit No. 181 of 1954 m. the Court of the Subordmate Judge. Tiruchirappalli to set

aside he order of the. Commiss!oner on the plea that the Samar- H dhaai Fund "".as pnvate charity not associated with any Hindu festiyal or service m a temple .and was not religious charity or a specific endowment or a public charity. and that it could in no

mnner be.cme subject t~ control of th~ Commissioner, Madras Hmdu Rehg10us and Charity Endowments. T)le suit was resisted by t~~ Commissioner. ?ontendinll th.at the Fund was held and admm1stered. for a reh&1ous cha_rity viz. feeding Brahmin pilgrims on the occasion of a Hmdu festival.

The Subordinate Judge held

170 :-:.U11RE1t1.E

COURT Hf<; pon:r:-; [1965] 3 s.o.:a.

that the Fund was a public charity and that it was also "a religious A charity" within the meaning of s. 6(13) of the Act, the charity being associated with the Hindu festival of Rat lwtsavam at the Gunaseclam temple.

In appeal against the order of the Subordinate Judge dismissing the suit filed by the trustee;, the High Court of Madras held that the Samardhanai Fund was a public charity within the meaning_ of s. 6(13) of the Act, but not being associated B with any Hindu festival or observance of a religious character it was not a "religious charity" and the Commissioner had no jurisdiction to bring it under his control. The High Court accordingly allowed the appeal and decreed the suit filed by the trustees. With special leave, the Commissioner has appealed to this Court.

The only question which falls to be determined in this appeal C is whether on the facts found by the Court of First Instance and

onfirmed by the High Court, the Samardhanai Fund is a "religious charity" within the meaning of s. 6(13) of Madras Act 19 of 1951.

Clause (13) of s. 6 defines "religious charity" as meaning "a public charity associated with a Hindu festival or observance of a religious character, whether it be conncted with a math or temple or not".

D The definition prescribes two conditions which go to constitute a religious charity: there must be a public charity and that charity must be associated with a Hindu festival or observance of a religious character. If these be fulfilled, a puBlic charity will be a religious charity, even if it is not connected with a math or temple.

The Subordinate Judge held on the evidence .that the "charity in E question is a feeding charity conducted during the ten days of the Rathotsavam in 'the Prasanna Venkatachallapnthiswami temple in Gunaseelam in the month of Purattasi. Only Brahmins are fed and not other community people. There are similar feeding charitks for the different communities conducted by the respective community people. The charity in. question has no connec- 1 tion with the Gunaseelam temple in the sense that the food "prepared is not offered to the deity, and feeding is done not in the temple premises but at a separate place originally in a specially erected panda! and now in Seshagiri lyer's choultry (Dharamshalla). The other communities are not fed at this charity . .

The temple authorities have no voice in the conduct G of the feeding", and the High Court agreed with that view. The Subordinate Judge held on those findings that the Samardhanai Fund was a public charity within the meaning of s. 6(13) and with that view also the High Court agreed.

The Subordinate Judge also held that the charitv was associated with the Hindu festival of Rathotsavam in Sri Prasanna Venkatachallapathiswami temple H in Gunasee1am-Rathotsavam being an observance of a religious character when the deity is taken out in procession in a chariotand therefore the chaity in question was clearly one associated with a Hindu festival and also with the observance of a religious character. In disagreeing with that view, the High Court observed that the expression "associated with a Hindu festival or obs er vance of a religious character" imported some unity of purpose or

COMMISS!O"ER V. :<ARAYA:<A (Shah, J.) 1 71

A common object or common endeavour between the festivl and the charity and in the absence of such umty, common obiect o.r common endeavour, the charity could not be regarded as a r.ehgious charity within the meaning of s., 603) of the At. In the view of the High Court that feeding Brahmm plgnms. durmg the Rathotsavam festival of Sri Venkatachallapath1swami shrme at Guna- B seelam did not constitute an association between the Fund and the Rathotsavam festival itself, for the trustees of the shrine co~

ducting the festival "had no manner of check, control or supervision over the feeding charity or Samardhana! Fund", thy could not insist upon the feeding being done dunng the festival, and "cessation or discontinuance of the feeding by the trustees. of the c feeding charity may constitute a breach of trust on their part but cannot in the least affect the due performance of the Rathotsavam festival itself". They further observed that belief of the founders of the charity that feeding Brahmins on the occasion of an important festival was meritorious. will not establish "any link or connection" between the festival and the charity.

We are unable to agree with the view so expressed by the High Court. The expression "associated" in s. 603) of Act 19 of 1951 is used having regard to the history of the legislation, the scheme and objects of the Act, and the context in which the expression occurs, as meaning "being connected with" or "in relation to".

The expression does not import any control by the authorities who manage or administer the festival.

A Hindu religious festival or observance may have a local significance, in that it is celebrated or observed in a particular locality in connection with a shrine, temple or math, or it may be a festival or observance celebrated generally without any connection with any temple or math. In the case of such general festivals or observances there is no one who c, rn be so said to cantrol the celebrations, and the definition of "religious charity" includes such general festivals and observances.

It cannot be assumed that there must always be a set of persons who control the celebration of a festival or an observance. The test suggested by the High Court that in order that there should be, between the charity and the festival or observance such a relation that the administration of the charity must be controlled by those :vI10 ceebrte th~ festival or observance in a temple or math, besides bemg mapt m the case of general festivals and observances can only be evolved if words which are not found in the definition of "religious charity" are added thereto.

Mr. Vishwanatha Sastri appearing on behalf of the respondenttrutes contended that the expression "associated with a Hindu festival or observance of a religious character" in the definition ?f "religious charity" _implies .at the public charity must be an mtegral part of the Hmdu rehg1ous festival or observance. But there is nothing in the Act which indicates any such intention on !he par~ of , the Legislature., Mr. Sastri sought to give diverse tllustra.ttons m support. of his contention that mere feeding of Brahmms on the occasion of a Hindu festival or cbservance will

l72

SUPREME

COURT

REPORT8 [1965] ; I s.c.R.

not amount to association within the meaning of s. 6( 13). It is un- A . necessary to deal with these illustrations, for the definition contemplates a public charity which alone can be a religious charity if the other conditions are fulfilled.

A voluntary celebration of an event of religious significance by feeding Brahmins does not make it a public charity. There must be an institution which may in law be regarded as a public charity, before it may by its B association with a religious festival or observance be regarded as a religious charity. The association undoubtedly must be real and not imaginary, but to constitute association it is not predicated that the administration of public charity must be controlled by the persons responsible for celebrating the religious festival in a temple or math or be an integral part of the fstival or observance. c

On the facts found, it is clear that on the occasion of the Rathotsavam festival of Sri Prasanna Venkatachalapathiswami shrine, pilgrims from many places attend the festival and the object of the charity is to feed Brahmins attending the shrine on the occasion of this festival. It is not disputed that setting up a Fund for D feeding Brahmins is a public charity. The primary purpose of the charity is to feed Brahmin pilgrims attending the Rat/zotsavam.

This public charity has therefore a real connection with the Rathotsavam which is a Hindu festival of a religious character, and therefore it is a religious char'ty within the meaning of s. 6(13) of Madras Act 19 of 1951. Surplus income of the Fund is used in Vanabhojanam in the month of Kartigai, and on the day following E the Vaikunta Ekadeslzi. It is not suggested that on that account the Fund is not a "religious charity".

We therefore set aside the order passed by the High Court and restore the order passed by the Trial Court. There will be no order as to costs throughout.

F Appeal allowed.

COMMISSIONER, MADRAS HINDU RELIGIOUS AND CHARITABLE ENDOWMENTS

NARAYANA AYYANGAR AND OTHERS

February 24, 1965

K. SUBBA RAO, J.

C. SHAH

R. S. BACHAWAT, JJ.

s. 57(d)

s. 6(13)

s. 6(13)

Supreme Court

s. 13

A. J{anganadham Chetty

A. V. Rangam

A. V. Vishwanatha Sastri

R. Thiagarajan

Shah

J. Venkatarama Iyengar

Kastliuri Iyengar

Ranga Iyengar

Gunaseelam

Kariamanikam village

s. 69

s. 57(d)

s. 6(13)

s. 6(13)

Samar- H dhaai Fund

s. 6(13)

High Court of Madras

Samardhanai Fund

s. 6(13)

Samardhanai Fund

s. 6(13)

s. 6

Seshagiri lyer

s. 6(13)

s. 603

Vishwanatha Sastri

Sastri

s. 6( 13)

s. 6(13)

Vanabhojanam


NAND KISHORE SARAF

STATE OF RAJASTHAN AND ANOTHER

February 24, 1965

(P. B. GAJENDRAGADKAR, C.J., RAGHUBAR DAYAL AND

V. RAMASWAMI, JI.)

Rajasthan Minor Mineral Concessio~ Rules, 1959, Rules 36(7), ~9- Auction for the grant of royalty collection cantract-Whether obltaa.- tor11 on Government to accept highest bid-Whether preferee ca"

be shown t.o workers' coopeative societies against highest bidder.

The appellant offered the highest bid at the auction for the grant of royalty collection contract on January 21, 1964. Repondent No. a a cooperative society of workers was also one of the bidders. Respondent No. 2 made an application on March 5, 1964 to the Government stating therein that the appellant had not deposited 25 per cent of the bid amount as security within the time prescribed by Rule 36(~) of the Rajasthan Minor Mineral Concession Rules, 1959, and that it was prepared to toke the royalty collection contract on the highest bid as made by appellant. On the above application the State Government made an order in favour of Respondent No. 2. The appellant thereupon filed a writ petition. in the High Court which was dismissed. He was however granted a certificate of fitness.

In appeal it was contended that the Government had merely tB confirm the highest bid at the auction by way of formality and was not competent to sanction the contract in favour of someone who ilad not offered the highest bid at the auction.

HELD : (i) The appellant had admittedly failed to deposit per cent of the bid as security in compliance with the provisions of Rule 36(7). The rules did not contemplate adjustment of security deposited for an earlier period as the appellant claimed. He therefore lost what.- ever claim he could have had for the final acceptance of his bid by Government and therefore could not question the grant of the contract to any other person by th" Government. [175 B-C]

(ii) Nothing in Rule 36 requires the Government to accept the highest bid by formally confirming it. The Government has discretion to confirm the bid or not to confirm it. Further Rule 59 provides for the relaxation of any provision of the rules in the interest of mineral development or better working of the mines. [176 A-BJ

(iii) The view taken by the Government in preferring Respondent No. 2 to the appellant cannot be said to be arbitrary or without any justification. The cooperative society is of the labourers who work in the mines and the benefit of the contract would go to the labourers. In view of the spirit underlying Rule 59, Government could therefore relax any such rule which could in any way come in the way or i:ts granting the contract to Respondent No. 2. [176 D-Fl

(iv) The time for .which the contract was granted was shortly to R come to an end, and •t would not be desirable even if the appellant was right to interfere with the contract. fl'76 Gl K. N. Guruswamy v. State of Mysore, [19551 1 S.C.R. 305, relied on.

C1VIL APPELLATE JuRISDICTJON: Civil Appeal No. 79 of 1965.

Appe~I from t!ie judgment and order dated August 5, 1964, of the Ra1asthan High Court, Jodhpur, in D.B. Civil Writ Petition No. 636 of 1964.

J,/B(D)BCI-13

IH 8UPREMll

COURT

MPORTI! [1965] 3 s.o.e..

Sarjoo Prasad, /. B. Dadachanjl, 0. C. Mathur and Ravinder A Narain, for the appellant.

M. M. Tewari, K. K. Jain and R. N. Sachthey, for respondent No. I.

B. B. Tawak/ey and K. P. Gupta, for respondent No. 2.

The Judgment of the Court was delivered by B

Raghubar Dayal, J. This appeal, on certificate granted by the Rajasthan High Court, is against the dismissal of the appellant's writ petition under Art. 226 of the Constitution praying for the issue of a writ of certiorari to the State of Rajasthan, respondent no. I, for the cancelling and setting aside of its order dated April I, c

1964 granting the contract for collecting royalty on building stones excavated from certain area to respondent no. 2, Dharti Dan Shramik Theka Sahkari Samiti Ltd., a cooperative society. The appeal arises in these circumstances.

The appellant offered the highest bid at the auction for the D grant .of royalty collection contract on January 21, 1964. Respondent no. 2 was also one of the bidders, but stopped after offering a bid of Rs. 33,000. The final bid of the appellant was for Rs. 42,200. The State Government made the order in favour of respondent no. 2 on an application made by it on March 5, 1964, stating therein that the appellant had not deposited 25 per cent of E the bid amount as security immediately after the completion of the auction in accordance with r. 36(7) of the Rajasthan Minor Mineral Concession Rules, 1959, hereinafter called the rules, and as per the terms and conditions of the Auction Notification and that it was prepared to take the royalty collection contract on the highest bid of Rs. 42,200. It was further stated in the application that responr dent no. 2 was a cooperative society of the labourers who themselves worked on the mines of the area and therefore in view of Government's policy it should receive preference to an individual bidder. It was further stated that the benefit accruing out of the contract of royalty collection would be shared by the labourers and workers themselves which would go a long way to improve G their socio-economic conditions and thus ultimately would ameliorate the conditions of the workers who were working hard in quarries since long.

The contention for the appellant is that the Government had merely to confirm the higheiit bid at the auction by way of forma- R lity and was not competent to sanction the contract in favour of someone who had not offered the highest bid at the auction.

Rule 34 of the rules provides that royalty collection contracts may be. granted by the Government by auction or tender for a maximum period of two years after which no extension was to be granted. The procedure for auction is provided by r. 36. Sub-rule

NAND KISRORE V. STATE (Dayal, J.) 175

(5) thereof provides that no bids shall be regarded as accepted unless confirmed by Government or the competent authority and sub-rule (7) provides that on completion of the auction the result will be announced and the provisionally selected bidder shall immediately deposit 25 per cent of the amount of bid for one year and another 25 per cent as security for due observance of the terms B and conditions of the lease or contract. It is admitted for the appellant that on completion of the auction he did not deposit 25 per cent of the bid as security in compliance with the provisions of sub-r. (7). He therefore lost whatever claim he could have had for the final acceptance of his bid by Government and therefore cannot question the grant of the contract to any other person by the C Government.

The appellant urges that he held such royalty collection contract for the year 1963-64 and had deposited Rs. 9,250 as security for the due performance of that contract. On February 12, 1964, over three weeks after the auction, he submitted an application to D the Mining Engineer, Jaipur, stating that he had been continuously taking contract for the last three years and that he was depositing Rs. 1,300 and that the balance of the security amount required, i.e.

Rs. 9 ,250 be ad justed against Rs. 9 ,250 with the Government in connection with the earlier contract. This letter was not replied to.

E The request made in this letter could not possibly be accepted. The earlier contract was to continue up to March. 31, and the security money had to remain with the Government upto that date. It is only after March 31, that anything could be said with some definiteness as to how much of the security money in deposit would be available to the contractor. Paragraph 2 of the Form of Agree- • ment of Collection of Royalty on Minor Minerals, prescribed under the rules, and set out in the Schedule to the rules, states that the agreement shall remain in force for a period commencing from first April of a year and ending on March 31 of the next year on which the period of the contract would expire and that the security would be refunded on the termination of the contract.

G Para 6 of the Form provides that for the due fulfilment of the terms

and conditions of the contract the Contractor shall deposit 25 per cent of the contract money in advance as security which will be refunded on the termination of the contract. The appellant alleged that there was a practice of adjusting previous security amounts towards the security for the next contract.. The practice is denied B o.n behalf of respondent no. 1 and the practice against the provismns of the rules cannot be recognized as of any binding effect. It may be mentioned here that the representation which the appellant made to the State Government on April 6, 1964, made no reference

!O his depositing the security by depositing Rs. 1,300 and by makmg a request for the adjustment of the balance from the securitv amount already in deposit and indicates that he too did not consider the request for adjustment of the amount acceptable.

SUPREME

COURT

REPORTS [1965] 3 s.c.n.

There is nothing in r. 36 of the rules which may lead to the A oonclusion that the Government has to accept the highest bid by formally confirming it or that it cannot grant the contract to any person other than one who had bid the highest. A bid is not regarded as accepted unless it is confirmed by Government. The Government has therefore discretion to confirm the bid or not to confirm it. Further, r. 59 provides for the relaxation of any provision of B the rules in the interest of mineral development or better working of mines.

There is the letter dated February 14, 1962 from the Director of Mines and Geology, to All Mining Engineers on the subject of encouragement of cooperative mines and states that cooperative societies ought to be encouraged for mining work also as per C directive of the Government of India. Respondent No. 2 addrssed a letter to the Director of Mines and Geology and referred to Government policy for the encouragement of cooperative societies in connection with royalty collection contracts. The order of Government dated April 1, 1964, after referring to the appellant's offering the highest bid, stated that the Government was satisfied D that the Society, respondent No. 2. was a suitable party for the grant of the said contract. The view takeri by the Government in preferring respondent No. 2 to the appellant for the grant of the contract cannot be said to be arbitrary or without any justification.

The cooperative socie.ty is of the labourers who work in the mines and it is obvious that any benefit arising out of the contract would E .. go to the labourers and thus improve their economic position. In view of the spirit underlying r. 59, Government could therefore relax any such rule which could in any way come in the way of its granting the contract to respondent no. 2.

We therefore hold that the Government was competent to ll' give the contract to respondent no. 2 it being not bound to accept the highest bid at the auction, though usually it accepts such bids.

Another consideration which is decisively against the appellant is that the contract for the collection of royalty for the year 1964-65 is shortly to come to an end and it would not be desirable, even if the appellant's contentions were acceptable, to interfere with 6: that contract.

Reference, in this connection, may be made to the decision of this Court in K. N. Guruswamy v. State of Mysore(') where the appellant was refused a writ solely on the ground that it would have been ineffective, the period of the impugned contract coming to an H end after about a fortnight of the order of this Court. That was a case where on merits the Court was of opinion that the writ should have been issued.

We therefore dismiss the appeal and order the parties to bear their own costs.

Appeal dismissed.

(') [1955] I.S.C.R. 305.

NAND KISHORE SARAF

STATE OF RAJASTHAN AND ANOTHER

February 24, 1965

P. B. GAJENDRAGADKAR, C.J.

RAGHUBAR DAYAL

V. RAMASWAMI

March 5, 1964

Sarjoo Prasad

B. Dadachanjl

C. Mathur

Ravinder A Narain

M. M. Tewari

K. K. Jain

R. N. Sachthey

B. B. Tawak

K. P. Gupta

B

Raghubar Dayal

Art. 226

January 21, 1964

February 12, 1964

Jaipur

April 6, 1964

February 14, 1962

Government of India

April 1, 1964