PHOOLCHAND AND ANR.

GOPAL LAL

March 10, 1967

(K. N. WANCHOO, R. S. BACHAWAT AND V. RAMASWAMI, JJ.]

Code of Civil Procedure (Act 5 of 1908), 0.41, r. I-Preliminary decree in partition suit-Death of some parties-Redistribution of shares-No fresh preliminary decree drawn up-Appeal without copy of preliminary decree-If maintainable.

Practice-If court could pass more than one preliminary decree in a partition suit.

Hindu law-Agarwala Jains-Share given to mother in partition suit-Right, whether absolute or limited.

Will--Circumstances showing genuineness of.

The appellant filed a suit for partition against his father, mother, brother (the respondent) and the. adopted son of a predeceased brother.

The parties were Agarwala Jains. A pret:minary decree was passed specifying the shares of the parties, but before the final decree could be pa'Ssed, the father died~, and soon after, the mother also died.

The res~ pondent claimed the father's share under a will executed by the father in his favour, and the appellant claimed the mo•her's share under a sale deed executed by her in his favour.

The appellant challenged the genuineness of the will, and the respondent contended that as she was only a limited owner, the mother was not entitled to sell her share. The trial Court held in favour of'the appellant on both contentions, and passed an order redistributing the shares, but did not prepare a fresh preliminary decree. The respondent appealed to the High Court but was not in a position to file a copy of the decree with the appeal. Even when time was granted by the High Court and the respondent moved the trial Court for framing a formal decree, the trial Court refmed to do •o. The High Court disposed of the appeal boldin~ that (i) the appeal was maintain able without a copy of the decree; (1i) the varying of the share., by the trial Court, in the preliminary decree already passed by it was " decree in the ci'rcumstances of the present case, and the respondent could appeal from it; (iii) the mother was not entitled to sell her share and so the •ale in favour of the appellant was invalid; and

(iv) the will in favour of the respondent was genuine.

In appeal to this Court HELD: (i) Normally a copy of the decree must accompany e memorandum of appeal.

But the defect in the filing of the appeal m the present case was not due to any fault of the respondent and it could not be held that he •hould be deprived of his righ• of appeal, simply became the trial Court did not do its duty. (157 D, HJ !agat Dhish Bhargava v. Jawahar Lal Bhargava, (1961] 2 S.C.R. 918, referred to.

(ii) So far as partition suits arc concerned, if an event happens after the preliminary decree and before a final deccee is passed, and a change in the shares is necessitated,· the trial court can and should pass a second L 4 Sup. C.1./67-11

SUPREME COURT REPORTS [1967] 3~.c:R.

preliminary decree correcting the shares; and, if there is a dispute in that behalf the order of the court deciding that dispute and making a variation in the shares specified in the preliminary decree already passed is a decree in itself which would be hable to appeal. A partition suit is not finally disposed of till the final decree is passed and the court has jurisdiction to decide all disputes that may arise due to the death of some of the parties after the preliminary decree and before the passing of the final decree. There is nothing in the Civil Procedure Code which prohibits the passing of more than one preliminary decree in a partition suit, if circumstances justify it and if it is convenient and advantageous to do so. [158 E, F, H; 159 A, D-E]

Kasi v. Ramanathan Chettiar,

[1947] 2 M.L.J. 523, Raja Peary Mohan v. Manohar, (1923) 27 Cal. W.N. 989 and Parshuram '"· Hira- .bai, A.I.R. 1957 Born. 59, approved.

Bharat Indu v. Yakub Hasan, (1913) I.LR. 35 All. 159, Kedernath

v. Pattu Lal, I.L.R. [1954] Luck, 557 and loti Parshad v. Ganeshi Lal, AI.R. 1961 Punj. 120, overruled.

(iii) In the absence of a custom to the contrary a Jain widow takes a limited interest in her husband's estate similar to the widow's estate. A custom .. however, to the contrary has been proved among Agarwala Jains that the widow takes an absolute estate in the self-acquired property of her husband, with full powers of alienation. But there is no such custom entitling her to an absolute estate in ancestral property. [160 D-El

In the present ca'Se, the share allotted t6 the mother by the preliminary decree was out of ancestral property, and therefore, the appellant could not take advantage of the sale of that share by the mother, and it must descend equally to the three surviving parties, namely, the appellant, the respondent and the adopted son of the deceased brother.

[160 B-F]

Tulsiram Khirchand v. Chunnilal Panchamsao Parwar, A.I.R. 1938 Nag. 391, referred to.

(iv) The will was duly executed by the father in favour of the respondent. It was genuine, and the testator was competent to will away not only his self-acquired properties, but also the share he got out 0f F the joint family property by severance of status and specification of shares. [162 C-F]

The will was executed after the partition suit had been filed and after a preliminary decree, by which shares were allotted to the ment hers of the family, had been passed. Though the testator was 70 years old at the time of the execution of the will and though the respondent took a prominent part in its execution, the testator lived for 7 years G after its execution and he was mentally and physically competent at the time of its execution.

Further, the will was registered. The w'll was also natural, because., (a) the testator was disgusted with the con- .duct of the appellant; (b) he was pleased with that of the respondent;

(c) he did not give any share to the adopted son of his decea.ed son, because, the adopted son was the natural son of the appellant; and ( d) • he did not provide for his wife for she had already been allo'ted onefifth share by the trial Court's preliminary decree. [161 C-H; 162 Al H

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1313 of

1Q66.

Appeal from the judgment and decree dated April 29, 1964 of the Rajasthan High Court in D. B. Civil Regular First Appeal No. 118 of 1961.

1. P. Goyal and B. P. lha, for the appellants.

B. P. Maheshwari, for the respondent.

The Judgment of the Court was delivered by

Wanchoo, J. This is an appeal on a certificate granted by the Rajasthan High Court and arises in the following circumstances.

Phool Chand appellant had filed a suit in 1937 for partition of his one-fifth share in certain properties mentioned in the schedule to the plaint. The defendants to the suit were Sohanlal, father of the appellant, Gopal Lal, brother of the appellant, and Rajmal, minor adopted son of Gokalchand (deceased) who was another brother of the appellant and Smt. Guiab Ba~ mother of the appellant.

There were two other defendants with whom we are not concerned now. The suit was resisted by the defendants and a large number of pleas were raised with which we are also not concerned now.

That suit was fought right upto the Mahkma Khas (Privy Council) of the former State of Jaipur and a preliminary decree for partition was passed specifying the shares of the appellant and the four defendants mentioned above on August 1, 1942. Before, however, a final decree could be passed on the report of the Commissioner in terms of the preliminary decree, Sohan Lal died on May 13, 1947 and soon after his widow, Smt. Guiab Bai also died on .November 22, 1947.

Disputes seem to have arisen about the shares allotted to these two persons. It appears that Gopa l Lal claimed that his father Sohan Lal had made a will in his favour on June 2, 1940, according to which he bequeathed all his property to Gopal Lal. Phool Chand challenged the genuineness of the will. As to the share of Smt. Guiab Bai, Phool Chand claimed that she had executed a sale deed dated October 19, 1947 and registered on January 10, 1948 by which she sold all her share in movable and immovable properties which came to her by the decree of August l, 1942 to Phool Chand. Gopal Lal, however contended that Smt. Guiab Bai was not entitled to sell the shar~ which she got in the ancestral property as she was a limited owner and therefore her share must be held to have devolved on Gopal Lal, Phool Chand and Rajmal. These disputes were brought before the court. soon after the deaths of Sohan Lal and Smt. Guiab Bai, but nothing seems to have been done for many years.

It was only on July 12, 1961 that the trial court decided the disputes with respect to the shares of Sohan Lal and Smt. Guiab Bai. It came to the conclusion that the will had not been proved. It also upheld the saJe deed in favour of Phool Chand appellant. In consequence the tnal court redistributed the shares indicated in the preliminary

1.56

SUPREME COURTS REPORTS

[1967) 3 S.C.R.

decree of August l, 1942. By this re-distribution, the share of Phool Chand was increased from one-fifth to one-half; the share of Gopal Lal was increased from one-fifth to one-fourth, and the share of Rajmal was increased from one-fifth to one-fourth. The trial court however did not prepare another formal preliminary decree on the basis of this re-distribution of shares.

Thereupon Gopal Lal went in appeal to the High Court and wanted stay of proceedings relating to preparation of final decree.

In these proceedings Phool Chand objected that the appeal was not maintainable as no decree had been prepared by the trial court and no copy of the decree had been filed along with the memorandum of appeal. The High Court thereupon passed an order adjourning the matter to enable Gopal Lal to move the trial court to draw up a formal decree. Gopal Lal thereafter moved the trial court for amending the preliminary decree. But that application was rejected in September 1962. Thus the appeal of Gopal Lal in the High Court proceeded without a copy of the decree being on the record.

A preliminary objection was raised in the High Court on behalf of Phool Chand appellant on the date of hearing that as no copy of the decree had been filed along with the memorandum of appeal, the appeal was not maintainable. It was also objected that in any case there could be no second preliminary decree and that the order of the trial court varying the shares in the preliminary decree could be appealed from, if at all, after the final decree had been prepared. The High Court repelled both these contentions and held that the order of July 12, 1961 varying specification of shares in the preliminary decree passed on August l , 1942 was a decree in the facts and circumstances of this case and Gopal Lal could appeal from it.

The High Court further held that as the trial court had refused to frame a formal decree on the basis of tl)is variation of shares it was not possible for Gopal Lal to file a copy thereof with the memorandum of appeal, but that would not take away the right of Gopal Lal to appeal.

The next point raised in the High Court was that the trial court was wrong in holding that under the Jain custom a widow had the same right as a male co-parcener in ancestral property coming to her share on partition. It. was therefore contended that the sale deed by Smt. Guiab Bai in favour of PhooI Chand appel !ant was inalid and her one-fifth share descended on the remaining th, e derendants to the suit, namely, Phool Chand, Gopal Lal and Rajmal. The High Court accepted the contention and held that Smt. Guiab Bai beirig a limited owner could not sell the property.

The third contention raised before the High Court was that the will of Sohan Lal in favour of Gopal Lal was genuine and the trial court's finding that it was not proved was not correct, The-

High Court accepted this contention also.

The result was that the High Court redistributed the shares and declared that Phool Chand was entitled to four-fifteenths share of the property, Gopal Lal to seven-fifteenths share and Rajmal to four-fifteenths share.

The High Court decree being one of variance, it granted certificate to Phool Chand to appeal to this Court. 8

; Learned counsel for Phool Chand appellant has attacked the findings of the High Court on all the three points. He first contends that as a copy of the decree was not filed along with the memorandum of appeal the appeal was incompetent and relies in this connection on the decision of this Court in Jagat Dhish Bhargava v. Jawahar Lal Bhargava('). In that case it was observed that every memorandum of appeal has to be accompanied by a copy of the decree appealed from, that this requirement of 0. XLI r. 1 of the Code of Civil Procedure is mandatory and in the absence of a copy of the decre.e the filing of the appeal would be incomplete, defective and incompetent. That no doubt is the correct position in law; but as was pointed out in that case, there may be circumstances where an appeal may be competent even though a. copy of the decree may not have been filed along with the memorandum of appeal.

One such exceptional case was dealt with in Jagat Dhish Bhargava's case('). We consider that the present case is another exceptional case where in the absence of the copy of decree the appeal could be maintained. We have already indicated that the trial court did not frame a formal decree when it varied the shares and naturally Gopal Lal was not in a position to file a copy of the decree when he presented the memorandum of appeal to the High Court. Even when time was granted by the High Court and Gopal Lal moved the trial court for framing a formal decree, the trial court refused to do so. In those circumstances it was impossible for Gopal Lal to file a copy of the formal decree.

It is unfortunate that when the matter was brought to the knowledge of the High Court it did not order the trial court to frame a formal decree; if it had done so, the appellant could have obtained a copy of the formal decree and filed it and the defect would have been cured. We do not think it was necessary for Gopal Lal to file a revision against the order of the trial court refusing to frame G .a formal decree, for Gopal Lal's appeal was pending in the High Court and the High Court should and could have directed the trial

ourt in that appeal to frame a dcree to enable Gopal Lal to file 1t and -cure the defect. In such c1rcumstances we fail to see what more Gopal Lal could have done in the matter of filing a copy of the decree. The fact that the trial court refused to frame a formal decree annot in law deprive Gopal Lal of his right to appeal. The defect ID the filing of the appeal in the circumstances was not due to any fault of Gopal Lal and it cannot be held that he should be H

(1) (1961] 2 S.C.R. 918.

SUPREME COURT REPORTS

[1967] 3 S.C.R.

deprived of the right to appeal, if he had it, simply because the A court did not do its duty. We therefore agree with the High Court that in the circumstances the absence of the copy of decree would not deprive Gopal Lal of his right to appeal.

The next contention is that there cannot be two preliminary decrees and therefore when the trial court varied the shares as indicated in the preliminary decree of August 1, 1942 there was no fresh preliminary decree passed by the trial court. It is not disputed that in a partition suit the court has jurisdiction to amend the shares suitably even if the preliminary decree has been passed if some member of the family to whom an allotment was made in the preliminary decree dies thereafter : (see Parshuram v. Hirabai'").

So the trial court was justified in amending the shares on the deaths of Sohan Lal and Smt. Guiab Bai. The only questi©n then is whether this amendment amounted to a fresh decree.

The Allahabad High Court in Bharat Indo v. Yakub Hassan('), the Oudh Chief Court in Kedernath v. Pattu La/(8 ), and the Punjab High Court in Joti Parshad v. Ganeshi Lal(') seem to take the view that there can be only one preliminary decree and one final decree thereafter. The Madras, Bombay anq Calcutta High Courts seem to take the view that there can be more than one preliminary decree : (see Kasi v. V. Ramanathan Chettiar(•) Raja Peary Mohan v. Manohar( 6), and Parshuram v. Hirabai.

We are of opinion that there is nothing in the Code of Civil Procedure which prohibits the passing of more than one preliminary decree if circumstances justify the same and that it may be necessary to do so particularly in partition suits when after the preliminary decree some parties die and shares of other parties are thereby augmented. We have already said that it is not disputed that in partition suits the court can do so even after the preliminary decree is passed. lt would in our opinion be convenient to the court and advantageous to the parties, specially in partition suits, to have disputed rights finally settled and specification of shares in the preliminary decree varied before a final decree is prepared. If this is done, there is a clear determination of the rights of parties to the suit on the question in dispute and we see no difficulty in holding that in such cases there is a decree deciding these disputed rights: if so, there is no reason why a second preliminary decree correcting the shares in a partition suit cannot be passed by the court.

So far therefore as partition suits are concerned we have no doubt that if an event transpires after the preliminary decree which necessitates a change in shares, the court can and should

(1) A.1.R. 1957 Born. 59.

(3) (1945) l.L.R. 2l Luck. 557.

(5) [19471 II Mad. L.J. 523.

(2) (1913) I.L.R. 35 All. 159.

(4) A.I.R. 1961 Punj, 120.

(6) [1923] 27 Cal. W.N. 989.

do so; and if there is a dispute in that behalf, the order of the court decidin§,!!t dispute and making variation in shares specified in the pre · ary decree already passed is a decrel'. in itself. which would be liable to appeal. We should however like to pomt out that what we are saying must be confined to partition suits, for we are not concerned in the present appeal with other kinds of suits in which also preliminary and final decrees are passed. There is no prohibition in the Code of Civil Procedure against passing a second preliminary decree in such circumstances and we do not see why we should rule out a second preliminary decree in such circumstances only on the ground that the Code of Civil Procedure does not contemplate such a possibility. In any case if two views are possible--and obviously this is so because the High Courts have differed on the question-we would prefer the view taken by the High Courts which hold that a second preliminary decree can be passed, particularly in partition suits where parties have died after the preliminary decree and shares specified in the preliminary decree have to be adjusted. We see no reason why in such a case if there is dispute, it should not be decided by the court which passed the preliminary decree, for it must not be forgotten that the suit is not over till the final decree is passed and the court has jurisdiction to decide all disputes that may arise after the preliminary decree, particularly in a partition suit due to deaths of some of the parties. Whether there can be mme than one final decree does not arise in the present appeal and on that we express no opinion. We therefore hold that in the circumstances of this case it was open to the court to draw up a fresh preliminary decree as two of the parties had died after the preliminary decree and before the final decree was passed. Further as there was dispute between the surviving parties as to devolution of the shares of the parties who were dead and that dispute was decided by the trial court in the present case and thereafter the preliminary decree already passed was amended, the decision amounted to a decree and was liable to appeal. We therefore agree with the view taken 'by the High Court that in such circumstances a second preliminary decree can be passed in partition suits by which the shares allotted in the preliminary decree already passed can be amended and if there is dispute between surviving parties in that behalf and that dispute is decided the decision amounts to a decree. We should however like to make it clear that this can only be done so long as the final decree has not been passed. We therefore reject this contention of the appellant.

. This brings us to the question whether the appellant was entitled. to the share of Smt. Guiab Bai by virtue of the sale deed dated October 19, 1947 in his favour.

Now it must be remembered that we are concerned in the present case with only the sale of the share allotted to Smt. Guiab Bai out of the ancestral property

SUPltl!ME COURT REPORTS

by the preliminary decree passed on August 1, 1942. The trial court held that High Courts had recognised the custom amongst Jain.Agarwals that the rights of Jain widows were absolute and not in the nature of a limited owner.

It relied on Tulsiram Khl'rchand v. Chunnilal Panchamsao Parwar('). The High Court however held otherwise and we are of opinion that the High Court was right. It is true that in Tulsiram's case('), the Nagpur High Court stated that "the widow takes an absolute estate among Jains in general and not merely in some particular sub-sects".

The two

ases relied on in Tulsiram's case(') were cases of non-ancestral property, namely, (i) Mt. Sano v. Puran Singh(') and (ii) Trimbakdas v. Mt. Mathabal( 8 ). It is not clear whether the property in Tulslram's case(') was ancestral or non-ancestral. In any case we cannot read Tulslram's case(') as laying down that a Jain widow has absolute rights even in the share she gets on partition out of ancestral property.

We may in this connection refer to Mulla's Hindu Law, 13th Edn. p. 585, para 616 where it is stated that "in the absence of custom to the contrary, a Jain widow takes a limited interest in her husband's estate similar to the widow's estate.

A custom, .however, to the contrary has been proved in several cases that amongst Agarwala Jains the widow takes an absolute <:state in the self-acquired property of her husband and that she has full power of alienation in respect of such property. But there is no custom which entitled her to an absolute estate in ancestral property left by her husband. In the latter case she takes only a widow's estate". This appears to us to be a correct statement of the law. We are concerned in the present appeal with the share which Smt. Guiab Bai got out of the ancestral property by the preliminary decree of August l, 1942; she obviously had only a limited estate or a widow's estate in that share and not an absolute estate.

Therefore she could not sell it in the manner in which she sold to the appellant. The High Court therefore was right in holding that the appellant could not take advantage of the sale of the share of the widow and it must descend on the remaining three surviving parties equally, namely, Phool Chand, Gopal Lal and Raimal.

The contention therefore on this head also fails.

Then we come to the question whether the will by Sohan Lal in favour of Gopal Lal was genuine. We have already indicated that the trial court held that it was not, while the High Court was -0f opinion that it was genuine. The trial court based its finding mainly on some inconsistency in the statements made by Laxmichand, an attesting witness, on two different occasions. It seems that in this suit Laxmichand duly proved the will but on an earlier occasion he had stated that he had not attested the will. There was

(I) A.1.R. 1938 Nag. 391. (2l A.LR. 1925 Na•. 174.

(3) A.I.R. 1930 Nr, g. 225.

another attesting witness who also was produced, namely, Chhotey 'Lal, whose evidence did not suffer from any infirmity. Besides that Basanti Lal, the scribe of the will, was also produced, though he was not present at the time of the execution of the will. His evidence is that he prepared the draft of the will on the instruction of Sohan Lal and handed over the written document either to Gopal Lal or to Sohan Lal. Finally there was the statement of Gopal Lal to prove due execution of the will for he was present when it was executed though he was not an attesting witness. Thus except for the inc.onsistency in the two statements of Laxmichand the evidence of the due execution of the will was over-whelming.

B\lt it is urged that Gopal Lal in whose favour the will was made had taken a prominent part in its execution and Sohan Lal was an old man of about 70 years when the will was executed and therefore we should require strict proof of the due execution of the will. There are several circumstances which in our opinion clearly show that the will was duly executed by Sohan Lal in favour of Gopal Lal.

Firstly, Phool Chand was obviously a thorn in the side of the father and had dragged him into litigation. The will says that Phool Chand separated from the father Jong before and picked up quarrels with him. It further says that Phool Chand had no regard for his duty as a son and had been behaving with the testator in a most improper and shameful way. It goes on to say that the testator was fed up with the improper behaviour of Phool Chand. The testator then says in the wili that contrary to it, Gopal Lal lived with him, served him and was obedient to him and he was impressed with the services of Gopal Lal. He therefore wanted his property to go to Gopal Lal and was making the will in order that Gopal Lal may not be put to any trouble after his death and might live. cmfortaby. The will therefore appears to be a very natural will m the circumstances. Sohan Lal obviously did not provide for his wife for she had been allotted one-fifth share in the properly already by the trial court's preliminary decree As for Rajmal minor, it appears that he was the natural sn of Phool Chand and there was dispute whether he had been adopted y Gokalchand's. wido\\'., though the dispute was eventually settled m favour of Raimal mmor by the court. Jn these circum>tances w~ woul.d not expect Sohan Lal to make any provision for Rajmal or e.ither who had got one-fifth share on'"the basis. of adophon. The will therefore appears to us to be very natural and the fact that Gopal Lal took part in the execution has under the circumstances no significance. It is true that Sohan Lal was about 70 years old when the will was executed.

But he lived almost seven years ater the execution of the will and it is no one's case that he was m any way mentally or physically incompetent to

SUPREME COURT REPORTS [1967] 3. S.C.ll.

make the will when he did so in 1940. It may be added that the will was later registered also, though the Registrar has not been examined as a witness. Finally there is the circumstance that the appellant knew about the will as far back as March 1941 but he never seems to have talked to his father Sohan Lal about it. In these circumstances we agree with the High Court that the due execution of the will has been proved.

The last point that had been urged on behalf of the appellant is that Gopal Lal was not entitled to any movable or immovable ancestral property by virtue of the will, as a Hindu cannot will away joint family property.

We are of opinion that there is nothing in this contention.

The present suit had already been filed by the appellant in 1937 and immediately on the filing of the suit there was severance of status among the members of the joint Hindu family, even if Phool Chand had not separated earlier as stated by Sohan Lal in the will. Further a preliminary decree had also been passed by the trial court in April 193 8 by which various shares were allotted to various members of the family.

In these circumstances Sohan Lal was perfectly competent to will away the share he got out of the joint family property and that is what he did. He has stated in the will that Gopal Lal would be the rightful owner of his self-acquired immovable property. He further stated that Gopal Lal would be the rightful owner of. his share in the ancestral property and finally he stated that Gopal Lal would be the rightful owner of all of his articles, i.e., jewellery, ornaments, clothes, utensils and other domestic articles. The last clause relating to movable property clearly refers both to the share that Sohan Lal got in the movable property by severance of status and specification of shares in the preliminary decree and to any self-acquired movable property.

There is therefore no force in this contention.

The appeal therefore fails and is hereby dismissed with costs.

V. P. S.

Appeal dismissed

PHOOLCHAND AND ANR

GOPAL LAL

March 10, 1967

K. N. WANCHOO

R. S. BACHAWAT

V. RAMASWAMI, JJ.

Code of Civil Procedure

(1961] 2 S.C.R. 918

is nothing in the Civil Procedure Code

Parshuram

Rajasthan High Court

P. Goyal

B. P. lha

B. P. Maheshwari

Wanchoo

Phool Chand

Sohanlal

Gopal Lal

Rajmal

Gokalchand

Guiab Ba~

Jaipur

Sohan Lal

May 13, 1947

Guiab Bai

.November 22, 1947

Gopa l Lal

June 2, 1940

Phool Chand

October 19, 1947

January 10, 1948

August l, 1942

Rajmal

July 12, 1961

August l , 1942

PhooI Chand

the Code of Civil Procedure

Jagat Dhish Bhargava

(1961] 2 S.C.R. 918

August 1, 1942

Allahabad High Court

Oudh Chief Court

Punjab High Court

Madras, Bombay

the Code of Civil Procedure

the Code of Civil Procedure

the Code of Civil Procedure

Tulsiram

Nagpur High Court

Tulslram

Mulla

Agarwala Jains

Raimal

Laxmichand

Chhotey 'Lal

Basanti Lal

Laxmichand

Jong


THAKUR JUGAL KISHORE SINHA v.

SITAMARW CENTRAL CO-OPERATIVE BANK LTD. &

ANR.

March 13, 1967

(J. M. SHBLAT AND G. K. MITTBR, JJ.]

Bihar and Orissa Co-operative Societies Act, 1935-Asslstant Reglstrtlf' Co-operative Societies acting under s. 48-Whether a court-Whether subordinate to the High Court for the purpose of contempt of Courts Act, 1952, •. 3.

The apeellant in an appeal to the Joint Registrar of Co-operative Societies B1har alleged that the Assistant Registrar in deciding a matter

against him under s. 48 of the Bihar and Orissa Co-operative Societies Act 1935 had discriminated against the appellant and had used double standards. In proceedings under the Contempt of Courts Act the High Court of Patna held the appellant guilty.

Appeal :-Vith .certificate W'.15 filed in this Court. The questions that fell to: conSidertlon were : (1) whether the Assistant Registrar of Co-operative Soc1et1es was a court within the meaning of the Contempt of Courts Act 1952; (ii) If a court, whether it was a court subordinate to the Patna High Court; (iii} whether the words used by the appellant in his appeal amounted to contempt.

HELD : The appellant had been rightly convicted.

(i) The Assistant Registrar was functioning as a court in deciding the dispute in question.

His a'djudication was not based upon a private refe rence nor was his decision arrived at in a summary manner, but with all the parapharnalia of a court and the powers of an ordinary civil court of the land. [173 El (Decision confined to cases under the Bihar Act only). [180 G]

Brajnandan Sinha v,. Joyti Narain, (1955] 2 S.C.R. 955 and Shri Virin dar Kumar Satyawadi v. The State of Punjab, [1955] 2 S.C.R .. 1013, relied on.

Shell Co. of Australia v. Federal Coommissioner of Taxation, [1931] A.C. 275, Bharat Bank Lim#ed v. Employees of Bharat Bank Ltd. [1950]

S.C.R. 459, Maqbool Hussain v. State of Bombay, [1963] S.C.R. 730, C:ooper v. Wilson, [1937] 2 K.B. 309, Huddart, Parker & Co. v. Moorehead, ( 1909) 8 C.L.R. 330, Malabar Hill Co-operative Housing Society

v. K. L. Gauba, A.I.R. 1964 Bom. 147, Raja Himanshu Dhar Sing/1 v Kunwar B. P. Sinha, 1962 All. L.J. 57, Sukhdeo v. Brij Bhushan, A.I.R: 1951 All. 667, In re Annamalai, A.l.R. 1953 Madras 362 Kapur Singh

v. lag_at Narain, A.LR. 1951 Punj. 49, Lakhama Pesha ~.

VenkatraD Swamirao, A.LR. 1955 Bom. 103, Budhi Nath Iha v. Manila! Jadav, A.I.R. 1960 Patna 361 and State of Uttar Pradesh v. Ratan Shukla, A.I.R. 1956 AU. 258, referred to.

(H) The Assistant Registrar was a court subordinate to the High Court for the purpose of s. 3 of the Contempt of Courts Act. Under Art. 227 of

the Constitution the High Court exercises judicial control over all courts and tribunals functioning' within the limits of its territorial jurisdiction.

Subordination for the purposes of s. 3 means judicial subordination and not subordination under the hierarchy of courts under the Civil Procedure

Code or the Criminal Procedure Code Article 228 of the Const:tution A does not indicate that unless a High Court can withdraw a case to itself from another court for dispos; ng of a.substantial question of law as to the interp:etation of the Consftution the. latter court is not subordinate to the High Court. [176 D; 179 C, F]

(iii) The words used by the appellant clearly amounted to contempt. [166 El It is in the interes~ of justce and administration of law that litigants should show the >ame respect to a court no matter whether it is the highest in the land or whether it is one of :nferior jurisdiction only. [180 E-F]

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 18 of 1965.

Appeal from the judgment and order dated December 14, c 1964 of the Patna High Court in Original Criminal Misc. No. 6 of 1964.

B. P. Singh, for the appellant.

D. Goburdhun, for respondent No. 1.

U. P. Singh, for respondent No. 2.

The Judgment of the Court was delivered by

Mitter, J.

This appeal by certificate granted by the High •Court at Patna under Art. 134 ( 1 )( c) of the Constitution is directed against the judgment and . order of that court dated December 14, 1964 in Criminal Miscellaneous Appeal No. 6 of 1964 whereby the appellant was found guilty of contempi of court, i.e., of the Assistant Registrar, Co-operative Societies, Sitamarhi Circle, exercising the powers of the Registrar, Cooperative Societies, Bihar under s. 48 of the Bihar and Orissa Cooperative Societies Act, 1935.

The three questions which were argued before us in this appeal were :- ( 1) Whether the Assistant Registrar of Co- operative Societies was a court within the meaning of the Contempt of Courts Act, 1952; (2) Even if it was a court, whether it was a court subordinate to the Patna High Court and ( 3) whether the words used by the appellant in one of his grounds of appeal to the Joint Registrar of Co-operative Societies, which formed the basis of the complaint, did amount to contempt of any court.

The facts necessary for the disposal of the appeal are as follows. The Sitamarhi Central Co-operative Bank Ltd. (formerly named as Sitamarhi Central Cooperative Union) was a society registered under the Bihar and Orisa Co-operative Societies Act, 1935, hereinafter referred to as the Act. The appellant was the elected Chairman of the Society and was in control of its entire

affairs. The bank was engaged in carrying on a business inter alia in salt, sugar and kerosene oil. It was alleged that the appellant entrusted to one Suraj Banshi Choudhary the work of supplying coal for which purpose he was given an advance of R$. 7 ,004-5-0 and that out of this amount a sum <>f Rs. S,014-5-9 could not be. realised from Suraj Banshi Choudhary. Thereafter, a surcharge proceeding under s. 40 of the Act was taken up before the Registrar of Cooperative Societies on December 22, 1953 when a sum of Rs. 14,288-13-9 was held to be realisable from the appellant and another person.

The appellant went in appeal to the State Government and by an order dated March 28, 1957 the amount was reduced to Rs. 5,014-5-9. The bank was not made a party to the appeal before the State Government and it raised. a dispute under s. 48 of the Act that the appellant was liable for the whole of the original amount of Rs. 14,288-13-9 on the ground that the State Government's order being ex parte was not binding on it. This dispute went to the Assistant Registrar of Co-operative Societies exercising powers of the Registrar under s. 48 of the Act.

On May 15, 1964, the Assistant Registrar decided the matter upholding the contention of the bank and making the appellant liable for the entire amount of Rs. 14,288-13-9. In the meantime, however, the appellant had challenged his liability for the amount of Rs. 5,014-5-9 as determined in appeal by the State

Government by a Writ Petition to the High Court of Patna which was dismissed.

He then filed a title suit before the Subordinate Judge of Muzaffarpur who decreed it in his favour and at the time when the contempt matter was heard by the Patna High Court, an appeal preferred by the bank from the said decree was pending before the District Judge, Muzaffarpur. The appellant preferred an appeal to the Joint Registrar of Co-operative Societies against the order of the Assistant Registrar who was made respondent No. 2 in the appeal. One of the grounds of appeal ran as follows:-

"For that the order of respondent No. 2 is ma/a

de inasmuch. as after receiving the order of transfer he smgl_ed out this case out of so many for disposal before makmg over charge and used double standard in judging the charges against the defendants Nos. 1 and 2.

It is prayed that it should be declared that the order of the Assistant Registrar is without jurisdiction, illegal

nd ma/a fide and heavy costs should be awarded makmg respondent No. 2 responsible mainly for such costs."

The bank filed an application in the Patna High Court on August 14, 1964 for starting proceedings in contempt against the appellant.

The aopellant filed a petition showing cause and in grounds 29 and 30 of his petition, he asserted that he was within

his legitimate right to call the decision of the Assistant Registrar

mala fide for the reasons given and that he had the right to criticise. the discriminatory order of the Assistant Registrar as. the said officer had laid down two standards in judging the alleged liability of himself and Sri Jagannath Jha by exonerating Jagannath Jha from the liability for the entire amount of Rs. 14,288-13-9 while holding the appellant liable for the entire amount without examining tlie up-to-date position of payment of the amounts for which the claim had been preferred. In a supplementary affidavit filed on October 28, 1964, the appellant further stated that the order of. the Assistant Registrar was mala fide in that at the time when it was made the Assistant Registrar was due for transfer and he had picked out two or three cases out of about fifty pending before him.

The High Court at Patna turned down all the contentions of the appellant in an elaborate judgment and held that the appellant was guilty of a calculated contempt. He was sentenced to undergo simple imprisonment until the rising of the court and to pay a fine of Rs. 200 in default whereof he was to undergo a further simple imprisonment for two weeks.

The last of the three points urged before this Court was the weakest to be advanced. There can be no doubt that the w0rds used in this case in the grounds of appeal clearly amounted to contempt of court provided the Assistant Registrar was a court and the Contempt. of Courts Act was applicable to the facts of the case. The Assistant Registrar was charged with having acted ma/a fide in that he had singled out the case of the appellant out of many for disposal and used a double standard in his adjudication against the appellant and Jagannath Jha clearly meaning thereby that the Assistant Registrar had fallen from the path of rectitude and had gone out of his way in taking up and disposiRg of the case of the appellant out of many which were pending before him and which he could not possibly have completed because of his imminent transfer.

According to Halsbury's Laws of England (Third Edition-· Vol. 8) at p. 7,:

"Any act done or writing published which is calcu- G lated to bring a court or a Judge into contempt, or to lower his authority, or to interfere with the due course of justice or the lawful process of the court, is a contempt of court.

Any episode in the administration of justice may, however be publicly or privately criticised, provided that the criticism is fair and temperate and H made in good faith.

The absence of any intention to refer to a court is a material point in favour of a person alleged to be in contempt."

A We can find nothing exculpatory in the reply to the show cause notice filed by the appellant before the Patna High Court. There he sought to justify his complaint made in hi9 grounds of appeal.

The criticism of the Assistant Registrar was neither fair nor temperate nor made in good faith. The obvious aim of the appellant m formulating his grou!Jd of appeal in the way it was done was to show that the Assistant Registrar had acted in a manner which was contrary to judicial probity and that he should therefore be B

penalised in costs.

The third ground therefore is devoid of any substance and cannol be accepted.

In order to appreciate whether the Assistant Registrar was functioning as a court, it is necessary to examine certain provisions of the Act. The Act which is both a consolidating and an amending one was enacted to facilitate the formation, working and consolidation of co-operative societies for the promotion of thrift, self-help and mutual aid among agriculturists and other persons with common needs.

S. 2 ( i) defines 'Registrar' as a person appointed to perform the duties of a Registrar of cooperative societies under the Act. Under s. 6 ( 1) the State Government may appoint a person to be Registrar of Co-operati~ Societies for the State or any portion of it, and may appoint persons to assist such Registrar. Under s. 6 sub-s. (2)(a) the State Government may, by general or special order published in E the official gazette, confer on any person appointed under sub-s. ( 1) to assist the Registrar, all or any of the powers of the Registrar under the Act except the powers under s. 26. Under s. 13, the registration of a society makes it a body corporate by the name under which it is registered, with perpetual succession and a common seal and with power to acquire and hold property, F to enter into contracts, to institute and defend suits and other legal proceedings and to do all things necessary for the purposes for which it is constituted.

Chapter V deals with audit 1!111 inspection of societies. Under s. 33 the Registrar must audit or cause to be audited y some rson authorised by him, the accounts of every registered society once at least in every year.

Under sub-s. ( 4) of s. 33 the auditor has to submit a report in- G eluding therein inter alia every transaction which appears to him to be contrary to law, the amount of any deficiency or loss which Bf!nears to have been incurred by. the culnable negligence 8nd misconduct of any person, the amount of anv sum which ought to have been but has not been brought into account by anv oeron and an~ money .or orooertv belonlring to the society which has bee!! m1saooroonated or fraudulently retained by any per•on takml! nart_ in the ore; anisation or manal!ement of the sodtv or H

bv anv oast or present officer of the societv or by any other person S. 35 orovides for certain inquiries by the Registrar. s. 40 oro:

vides inter alia that where as a result of an audit under s. 33 or an inquiry under s. 35 it appears to the Registrar that any person who has taken part in the organisation or management of the society or any past or present officer of the society has made any payment which is contr!ll)' to law or by reason of his culpable negligence or misconduct involved the society in any loss or deficiency, o~ failed to bring into account any sum which ought to have been brought into account, or misappropriated or fraudulently retained any property of the society, he may inquire into the conduct of such person and after giving such person an opportunity of being heard, make an order requiring him to contribute such sum to the assets of the society. Sub-s. (3) of s. 40 provides for an appeal from the order of the Registrar to the State Government on application made by the person or officer against whom the order was passed.

S. 48 enumerates various kinds of disputes touching the business of the registered society which must be referred to the Registrar. Such disputes may be amongst members, past members, persons claiming through members, past members or deceased member and sureties of members, past members or deceased members, or between the society and any past or present officer, agent or servant of the society.

Under sub-s. (2) the Registrar may on receipt of such reference-

( a) decide the dispute himself, or

(b) transfer it for disposal to any person exercising

the powers of a Registrar in this behalf, or E

( c) subject to any rules, refer it for disposal to an arbitrator or arbitrators.

Under sub-s. ( 3) the Registrar may withdraw any reference transferred under cl. (b) of sub-s. (2) or referred under cl. (c) of the said sub-section and deal with it in the manner provided in the said sub-section. Under sub-s. ( 6) any person aggrieved by any decision given in a dispute transferred or referred under

cl. (b) or (c) of sub-s. (2) may appeal to the Registrar. Sub-s. ( 7) gives the Registrar, in the case of dispute under this section, the oower of review vested in a civil court under s. 114 and under

0. XLVII, r. 1 of the Code of Civil Procedure, 1908 as also the inherent jurisdiction specified in s. 151 C.P.C. Sub-s. (8) gives the Registrar the power to state a case and refer it to the District Judge for decision whereupon the decision of the District Judge is to be final. Under sub-s. (9) a decision of the Registrar under this section and subject to the orders of the Registrar on appeal or review, a decision given in a dispute transferred or referred under cl. (b) or ( c) of sub-s. (2) is to be final.

S. 49 gives the Registrar power to summon and enforce the attendance of witnesses and parties concerned and to examine them upon

oath and to compel the production of any books of account, doc?- ments or property by the same means and so far as may be, m the same manner as is provided in the case of a civil court under the Code of Civil Procedure.

S. 50 authorises the Registrar in certain cases to direct attachment of property of any person who with intent to defeat or delay the execution of any order that may be passed against him under s. 48 is about to dispose of the whole or any part of his property or to remove any part of his pmperty from the local limits of the jurisdiction of the Registrar.

S. 57 ( 1) provides that

" ( 1 ) Save in so far as expressly provided in this Act, no civil or revenue court shall have any jurisdiction in respec~ of any matter concerned with the winding up or dissolution of a registered society under this Act, or of any dispute required by section 48 a:> be referred to the Registrar or of any proceedings, under Chapter VII-A."

Chapter VII-A of the Act headed 'distraint' providet for recovery of a debt or outstanding by distraining while in the possession of the defaulter any crops or other products of the earth standing or ungathered on the holding of the defaulter. The Chapter contains sections making elaborate provision for the sale of property distrained.

S. 66 gives the State Government power to frame rules for any registered society or a class of registered societies.

The latest rules are those framed in the year 1959. Rule 68 lays down the procedure for adjudication of disputes under s. 48. It provides for a reference to the Registrar in writing, on receipt whereof the Registrar has to cause notiee of it to be served on the opposite party requiring him to show cause within a specified time. After a written statement is filed, the Registrar may decide the dispute himself or transfer it to any person exercising the powers of a Registrar in this behalf or to an arbitrator. There is

~!so a provision for substitution of the heirs or legal represental!ves of party to the dispute who dies pending the adjudication.

The Registrar or the arbitrator is obliged to give a decision in writing after considering the evidence adduced by the parties.

Before the Registrar or arbitrator, a party has a right to be represented by a legal practitioner.

In this case, the Assistnt Registrar concerned, along with

sevral othe~ persons, was ven the power of the Registrar under vanous sections of the Act mcluding s. 48 [excepting sub-ss. ( 6) and ( 8)] by the State Government. He was not a nominee of the Registrar.

.It will. e noted from the above that the jurisdiction of the ordinary cml and revenue courts of the land is ousteel under s. 57 U Sup. CI/67-12

of the Act in case of disputes which fell under s. 48. A Registrar exercising powers under s. 48 must therefore be held to discharge the duties which would otherwise have fallen on the ordinary civil and revenue courts of the land.

The Registrar has not merely the trappings of a court but in many respects he is given the same powers as are given to ordinary civil courts of the land by the Code of Civil Procedure including the power to summon and examine witnesses on oath, the power to order inspection of documents, to hear the parties after framing issues, to review his own order and even exercise the inherent jurisdiction of courts mentioned in s. 151 of the Code of Civil Procedure. In such a case, there is no difficulty in holding that in adjudicating upon a dispute referred under s. 48 of the Act, the Registrar is to all intents and purposes, a court discharging the same functions and duties in the same manner as a court of law is expected to do.

According to Halsbury's Laws of England (Third Edition- Vol. 9) at p. 342:

"Originally the term "court" meant, among other meanings, the Sovereign's palace; it has acquired the meaning of the place where justice is administered and, further, has come to mean the persons who exercise .iudicial functions unde.r authority derived either immediately or mediately from the Sovereign. All tribunals, however, are not courts, in the sense in which the term is here employed, namely to denote such tribunals as exercise jurisdiction over persons by reason of the sanction of the law, and not merely by reason of voluntary submission to their jurisdiction." Again,

"The question is whether the tribunal is a court, not whether it is a court of justice, for there are courts which are not courts of justice. In determining whether a tribunal is a judicial body the facts that it has been appointed by a non-judicial authority, that it had no power to administer. an oath, that the chairman has a casting vote, and that third parties have power to intervene are immaterial, especially if the statute setting it up prescribes a penalty for making false statements; elements to be considered are (I ) the requirement for a public hearing, subject to a power to exclude the public in a proper case, and (2) a provision that a member of the tribunal shall not take part in any decision in which he is personally interested, or unless he has been present throughout the proceedings." It is not necessary to exam, ine the question at any great length, because of certain authoritative pronouncements of this Court.

D 1

E \.

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F \1

.A In Brajnandan Sinha y. Jyoti Narain(') the question was, whether a commissioner appointed under the Public Servants (Inquiries) Act, 1850 was a court within the meaning of the Conrempt of Courts Act, 1952. There, after referring to authorities like Coke on Littleon and Stroud and Stephen, the Privy Council decision in Shell Co. of Australia v. Federal Commise sioner of Taxation( 2) and the earlier decisions in Bharat Bank Limited v. Employees of Bharat Bank Ltd.(8 ), Maqbool Hussah

v. The State of Bombay(') and Cooper v. Wilson(•) it was observed:

"It is clear, therefore, that in order to constitute a court in the strict sense of the term, an essential condition is that the court should have, apart from having . some of the trappings of a judicial tribunal, power to give a decision or a definitive judgment which has finality and authoritativeness which are the essential tests of a judicial pronouncement." Reference was there made to the dictum of Griffith, C.J. in Hudd11rt, Parker & Co. v. Moorehead(•) where he said :

"I am of opinion that the words 'judicial power' as used in section 71 of the Constitution mean the powers which every sovereign authority must of necessity have to decide controversies between its subjects, or between itself and its subjects, whether the rights relate to life, E liberty or P.roperty. The exercise of this power does not begin until some tribunal which has power to ive a binding and authoritative decision (whether subiect to appeal or not) is called upon to take action." Reference may also be made to the decision of this Court in Shri Virindar Kumar Satyawadi v. The State of Punjab(7). There F the question was, whether a returning officer acting under ss 33

nd 36 of the ~presentation of the People Act, 1951 and did mg on the validity or otherwise of a nomination paper was not a court within the meaning of s. 195(1)(b) 476 and 476-B of the. Code of . Criinal Procedure. Here, to, the authorities wh.1ch were c1.ted m the case ofBrajnandan Sinha's case(') were G reviewed and 1t was said :

"It may be stated broadly that what distinguishes a

curt from a quasi-judicial tribunal is that it is charged w1tl! a duty to. decide disputes in a judicial manner and

declare~ th~ r1gts. f parties in a definitive judgment. -~_decide a Jl1d1c1al manner involves that the parties ff

(1) [195$] 2 S.CR. 955,

(2) [1931] A.C. 275,

(3) !1951') s C.R. 4S9.

(4) [1963] s.c.R. 730.

(5) (1937) 2 K.B. 3 9, 34 .

(6) [1909] 8 C.L.R. 330, 357.

(7) [1955] 2 S.C.R. !013 at 1018,

are entitled as a matter of right to be heard in support of their claim and to adduce evidence in proof of it. And it also imports an obligation on tlle part of the autllority to decide the matter on a consideration of the evidence adduced and in accordance with Jaw. When a question therefore arises as to whetller an autllority created by an Act is a court as distinguished from a quasi-judicial tribunal, what has to be decided is whetller having regard to tlle provisions of the Act it possesses all the attributes of a court."

This Court tllen went on to consider whetller tlle functions and powers entrusted to the returning officer under tlle Act made him a court.. It was noted tllat under s. 36(2) of tlle Act, the returning officer has to examine tlle nomination paper and decide all objections which may be made thereto.

It was noted tllat tlle power was undoubtedly judicial in character but the parties had no right to insist on producing evidence which tlley might desire to adduce in support of tlleir case and tllere was no machinery provided for the summoning Of witnesses, or of compelling production of documents and the ret¥ming officer was entitled to act ruo motu in tl)e matter.

The Court further remarked tllat in a proceeding urider s. 36 there was no Us in which persons with opposing claims were entitled to have tlleir rights adjudicated in a judicial manner but the enquiry was such as was usually conducted by an ad hoc tribunal entrusted with a quasi-judicial pawer.

Consequently it was held that the returning officer decidmg on the validity of a nomination paper was not a court for tlle purpose of s. 195 ( 1 )(b) Cr.P.C. with the result that even as regards the charge under s. 193, the order of the Magistrate was not appealable as the offence was not committed in or in relation to any proceedings in a court.

It will not be out of place to recapitulate what was said in Cooper v. Wilson(')and referred to in Brajnandan Sinha's case( 2).

The passage runs tllus :

"A true judicial decision presupposes an existing dispute between two or more parties, and then involves four requisites :- (1) The presentation (not necessarily orally) of tlleir case by tlle parties to the dispute;

(2) if the dispute between them is a question of fact. the ascertainment of the fact by means of evidence adduced by the parties to the dispute and often with the assistance of argument by or on behalf of the par_ties on the evidence; (3) if the dispute between them 1s a question of law, the submission of legal arguments by

(i).{1937] :i K.B. 309. --

E I"

the parties; and ( 4) a decision which disposes of the whole matter by a finding upon the facts in dispute and an application of the law of the land to the facts so found, including where required a ruling upon any disputed question of law."

In our opinion, all the above requisites 11re to be found in this case.

The question before the Assistant Registrar was whether the appellant and Jagannath Jha had caused loss to the bank and whether they were liable to compensate the bank for it.

This arose out of audit proceedings.

There was a written reference to the Registrar. There was a dispute between the bank on the one hand and the appellant and Jagannath Jha on the other to be decided with the assistance of arguments and on the evidence adduced.

The dispute was a question of law dependent on the facts of the case and the decision disposed of the whole matter by finding the appellant liable for the entire amount. As we have already remarked, the Assistant Registrar had almost all the powers which an ordinary civil court of the land would have, of summoning witnesses, compelling production of documents, examining witnesses on oath and coming to a conclusion on the evidence adduced and the arguments submitted.

Under sub-r.

(10) of r. 68 the parties could be represented by legal practitioners. The result is the same as if a decree was pronounced by a court of law. The adjudication of the Assistant Registrar was not based upon a private reference nor was his decision arrived at in a summary manner, but with all the paraphamalia of a court and the powers of an ordinary civil court of the land,

We were however referred to decisions of certain High Courts in support of the contention that the Assistant Registrar was not a court for the purposes of the Contempt of Courts Act. The latest of these decisions is that of the Bombay High Court in Malabar Hill , Co-_operative Housing\Society v. K. L. Gauba(I).

There an applicalion was made by the society against one K. L.

Gauba for the al!eged contempt .committed by him on the third opponent, a nmrunee '!f the Registrar, appointed under s. 54 of the Bombay Co-operative Societies Act, 1925. The facts of the cas: were as follows.

Gauba and his wife were members of the

oc1ety an~ a~ the mterial time were r, esiding in two flats in one of the society s premises. The terms and conditions on which a flat was allotted to the wife were that an initial oayment of Rs:. 6,?0l had to be .made towards the qualifying shares of the souet} and membersh10 fees and thereafter a payment of Rs. 580 per month.

Mrs. Gauba made the initial payment but failed to

rendr he monthly oayments thereafter.

The society made an apphcalion under s. 54 of the Act to the Registrar of Co-operative

(1> A.1.R. 1964 B1m. 147atIS2.

Societies relating to the dispute arising out of Mrs. Gauba's failure to make the monetary payments. !he dispute was referred to his nominee by the Registrar and the nominee made an award directing Mrs. Gauba to pay a sum of Rs. 49,492-15 to the society.

Being unable to recover the money, the Society made another application to the Registrar under s. 54 of the Act praying for a direction for eviction of Mrs. Gauba from the flat in her occupation. The Registrar, in exercise of his powers under s. 54 referred this dispute to his nominee Mr. C. P. Patel (the third opponent to the petition before the High Court), This case was numbered as Arbitration Case of 1961. In this arbitration case, Gauba appeared on behalf of his wife as her agent. It appears that Mrs. Gauba could not be served for some time and the case had to be adjourned on certain occasions.

After a number of adjournments, when the matter was taken up on February 15, 1962, Gauba is alleged to have abused Mr. Patel calling him "dishonest" and "a cheat".

Mr. Gauba contended before the High Court that on the date on which he was said to have uttered the abuses Mr. Patel, in law, had ceased to function as a nominee of the Registrar, that the. proceedings before Mr. Patel were in the nature of arbitration proceedings, that Mr. Patel was not a court within the meaning of the Contempt of Courts Act and lastly, even if he was a court, he was not a court subordinate to . the Bombay High Court under sub-s. (2) of s. 3-of the Contempt of Courts Act, the alleged contempt being an ex facie contempt amounting to an offence under s. 228 I.P .C.

On the question as to whether Mr. Patel was functioning as a court, the Bombay High Court came to the. conclusion that the tests laid down by this Court in Brajnandan Sinha's case(') had not been satisfied.

According to the learned Judges, the Registrar's nominee although possessing certain trappings of a court, had no independent seisin over the case and the power exercised by him was that of an arbitrator enabling him to make an award.

Such an award would not be equated wit'1 a judgment or a decision given by a Court.

The learned Judges relied strongly on the fact that the Registrar had power to withdraw the dispute from his nominee and that the latter was in duty bound to decide the dispute within two months. AlJ this, in the opinion of the learned Judges, went io establish that the oroceedine:s were those in arbitration and not before a court.

Aftr referring to Brajnandan Sinha's case(') and to Shell Co. of Australia v. Federal Commissioner of Taxation(') the learned Judges concluded their judgment on thi& point observing :

"Thus apart from the fact that the statute refers to the decision of a nominee as an award in express terms,

(2) [1931] A.C. 275.

iii I ' B

c l

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and a reference to him is a reference for his arbitration, the provision of the Act relating to the appointment of a nominee itself indicates that the power, which a nominee derives for deciding the dispute, is not a power derived by him from the State."

17 &

The next decision referred to us was that of a single Judge of the Allahabad High Court in Raja Himanshu Dhar Singh v.

Kunwar B. P. Sinha('). In this case a dispute arising out of certain resolutions passed by the Hind Provincial Flying Club were referred to the Regisfrar of Co-operative Societies under the provisions of the Co-operative Societies Act of Uttar Pradesh and the Registrar delegated his powers to the Assistant Registrar to arbitrate in the matter. The Assistant Registrar issued an injunction that no further meeting should be called and this direction was flouted and disobeyed. The learned Judge came to the conclusion that "only those arbitrators can be deemed to be courts who are appointed through a court and not those arbitrators who function without the intervention of a court."

In our opinion, neither of these decisions lays down any reasoning which would compel us to hold that the Assistant Registrar of Co-operative Societies in this case was not a court.

In the Bombay case, the matter was referred to the Assistant Registrar as a nominee who had to act as an arbitrator and make an award. So also in the Allahabad case, the Assistant Registrar merely acted as an arbitrator. In the case before us, the Assistant Registrar was discharging the functions of the Registrar under s. 6(2) of the Act under the authority of the State Government deleg<1ting the powers of the Registrar to him.

It was sought to be argued that a reference of a dispute had to be filed before the Registrar and under sub-s. 2 (b) of s. 48 the Registrar transferred it for disposal to the Assistant Registrar

and therefore his position was the same as that of a nominee under the Bombay Co-operative Societies. Act.

We do not think that that contention is sound merely because sub-s. (2)(c) of s. 48 authorises. the Registrr to refer a dispute for disposal of an arbitrator or arbitrators. This procedure was however not adopted in this case and we need not pause to consider what would have been the effect if the matter had been so transferred. The Assistant Registrar had all the powers of a Registrar in this case as noted in the delegation and he was competent to dispose of it in the same manner as the Registrar would have done.

It is interesting to note that under r. 68 sub-r. (10) of the Bihar and . Orissa Cooperative Societies Rules, 1959 :

"In proceedings before the Registrar or arbitrator __ a_party may be represented by a legal practitioner."

(I) [196ljAll. L. J. S7.----

In conclusion, therefore, we must hold that the Assistant Registrar was functioning as a court in deciding the dispute between the bank and the appellant and 1 agannath Jha.

Then comes the question as to whether the Assistant Registrar was a court subordinate to the High Court. The foundation of the contention of the learned counsel for the appellant is provided by the difference in the wording of Arts. 227 and 228 of the Constitution. Under sub-s. ( 1) of s. 3 of the Contempt of Courts Act, 1952 every High Court shall have and exercise the same jurisdiction, powers and authority, in accordance with the same procedure and practice, in respect of contempts of courts subordinate to it as it has and exercises in respect of contempts of itself.

Sub-s. (2) lays down that the High Court shall not take cognizance of a contempt alleged to have been committed in respect of a court subordinate to it where such contempt is an offence punishable under the Indian Penal Code .. Under Art. 227 every High Court shall have superintendence over all courts and tribunals throughout the territories in relation to which it exercises jurisdiction.

Under Art. 228 if the High Court is satisfied that a cause pending in a court subordinate to it involves a substantial question of law as to the interpretation of the Constitution the determinati.on of which is necessary for the disposal of the case, it shall withdraw the case and may either dispose of the case itself or determine the said question of law and foturn the case to the court from which the case has been so withdrawn.

On the basis of the difference in language between these two Articles it was contended that the legislature in passing the Contempt of Courts Act in 1952 must be taken to have contemplated the cognizance of contempts of such courts only as would be covered by Art. 228 and not Art. 227. This has given rise to considerable judicial conflict as we shall presently note.

In Sukhdeo v. Brij Bhushan(') the question was whether the Panchayati Adalats constituted under the U.P. Panchayat Raj Act, 194 7 were courts within the meaning of the Contempt of Courts Act. After an exhaustive analysis of the power of superintendence of the High Courts under successive Government of Inoia

Acts 1915, 193.S and the Constitution, a Division Bench of the • Allahabad High Court held that that court, after the Constitution. had the same power of superintendence which it had after the passing of the Government of India Act, 1935 and that "in exercis.e of it it can check the assumotion or excess of jurisdiction bv Pancl1avati Adalats or compel them to exercise their jurisdiction and do their dutv and they were therefore, judicially subordinate to the Allahabad Hil!h Court." In re Annamalai(') the question was whether a civil revision petition against an order in

(I) A.1.R. 1951AU.667.

(2) A.T.R. 1953 Mad. 362.

the nature of an award passed by the Deputy Registrar of Cooperative Societies was entertainable by the High Court acting under Art. 227 of the Constitution and there after examining a number of authorities, a single Judge of the Madras Higl1 Court concluded that the High Court had revisional jurisdiction under A rt. 227 by way of superintendence over the judicial work of a duly constituted . tribunal like the Deputy Registrar under the Co-operative Societies Act.

Of course, the question the court was immediately concerned with there was the scope of the power of superintendence, and it was observed that :

"Superintendence includes power to guide, and encourage Judges of the subordinate Courts, to direct subordinate courts and tribunals to carry out its orders;

and to direct enquiry with a view to take disciplinary action for flagrant mal-administration of justice."

It was not necessary for the purpose of that case to take note of the difference, if any, between the words 'superintendence' and 'subordination'. In Kapur Singh v. Jagat Narain(') a Division Bench of the Punjab High Court took the view that " 'superintendace' would include the power to deal with a contempt of court of a kind not punishable .bY the Court of the Commissioner itself (appointed to hold an inquiry under Public Servants Inquiries Act, 1850) and that for the purpose of the Contempt of Courts Act the word "subordinate" would include all courts and tribunals over which the High Court is given the power of superintendence 11nder Art. 227 of the Constitution." In Lakhama Psha v.

Venkarrao Swamirao(') the question was, whether the Chief Judge of the Court of Small Causes acting as persona designata under the Bombay Municipal Act was a court subordinate to the High Court for the purpose of ss. 2 and 3 of the Contempt of F Courts Act. Chagla, C.J. took the view that

"the power of superintendence conferred upon the High Court under Art. 227 is clearly not only administrative but also juclidal and the restriction imposed upon the High Court by s. 224(2), Government of India Act is thereby removed.

Now, the power of judicial superintendence which has been conferred upon the High Court is in respect not only of courts bui also o( Tribunals throughout the territories in relation to wnich the High Court exercises jurisdiction, and the question that arises is whether in view of this constitutional position it could not be said of a 'persona designata' that it is a court subordinate to the High Court.

(I} A.I.R. 1951 Punj>b 49.

(2) A.LR: 1955 Bombay 1<>3.

Now, the subordination contemplated by s. 3 is a judicial subordination and there can be no doubt that the Chief Judge, although he is a 'persona designara', is a Tribunal which would fall within the purview and ambit of Art. 227."

Further, according to the learned Chief Justice there was no reason or principle on which any distinction could be drawn between a civil court which was subordinate to the High Court and a tribunal which was subordinate to the High Court under Art. 227 of the Constitution.

The nature of jurisdiction exercised by the High Court under Art. 227 of the Constitution was gone into at length by " Full Bench of the Patna High Court in Budhi Nath Jlza v. Mani/!ll

Jadav(').

There it was observed that

"It is also apparent that the power of revision conferred upon the High Court under Art. 227 of the CC'nstitution is similar in nature to the appellate power of the High Court, though the power under Art. 227 is circumscribed by various limitations. These limitations, however do not affect the intrinsic quality of the power granted under Art .. 227 of the Constitution, which is the same as appellate power."

The learned Chief Justice of the Patna High Court relied to a very great extent on a passage from Story reading :

"The essential criterion of appellate jurisdiction is, that it revises and corrects the proceedings in a cause already instituted and does not create that cause.

In reference to judicial tribunals an appellate jurisdiction, therefore, necessarily implies that the subject matter has been already instituted and as; ted upon by some other court, whose judgment or proeeedings are to be revised."

For the purpose of this case, it is no.t necessary to decide whether revisional jurisdiction is the same as the appellate jurisdiction but it is enough to hold that under Art. 227 of the Constitution, the High Court exercises judicial control over all courts and tribunals functioning within the limits of its territorial jurisdiction . • Our attention was drawn to a judgment of the Allahabad High Court in State of Uttar Pradesh v. Ratan Shukla(•). There proceedings were instituted against the respondent, a vakil practising in the District Judgeship of Kanpur, on a report made by the District Judge, Kanpur on being moved by the Additional District Magistrate of Kanpur in whose court the alleged contempt

(I) A.I.R. 1960 Patna 361.

(2) A.1.R, 1956 All. 258.

' F

A was committed by the opposite party.

There both the Judges. were of opinion that the act of the opposite party did not amount to contempt of court, and Beg. J. did not go into the question

as to whether the authority where the contempt of court was said to have been committed was acting as a court or not. Desai, J. however relying to a large extent, on the language of Arts. 227 B and 228 of the Constitution lield that the Magistrate even if he was acting as a court was by no means, in the circumstances, a court subordinate to the Allahabad High Court.

In our opinion, Art. 228 of the Constitution does not indicate that unless a High Court can withdraw a case to itself from another court for disposing of a substantial question of law as to the interpretation of the Constitution, the latter court is not subordinate to the High Court.

This Article is only intended to confer jurisdiction and power on the High Court to withdraw ;1 case for the purpose mentioned above from the ordinary cours

of law whose decision may, in the normal course of things, be takeq up to the High Court by way of an appeal. Art. 227 is of wider ambit; it does not limit the jurisdiction of the High Court to the hierarchy of courts functioning directly under it under the Civil Procedure Code and Criminal Procedure Code but it gives the High Court power to correct errors of various kinds of all courts and tribunals in appropriate cases.

Needless to add that errors as to the interpretation of the Constitution is not out of the purview of Art. 227 although the High Court could not, under the powers conferred by this Article, withdraw a case to itself from a tribunal and dispose of the same, or determine merely the question of law as to the interpretation of the Constitution arising before the tribunal. In our view, the subordination for the purpose of s. 3 of the Contempt of Courts Act means judicial subordi- F nation and not subordination under the hierarchy of courts under the Civil Procedure Code or the Criminal Procedure Code.

It may not be out of place to note that "subordinate courts" have been dealt with in Chapter VI of the Constitution and Art.

2~5 ?f the Constitution gives the High Court "the control over D1stnct Courts and courts subordinating thereto" by providing G for powers like the posting and promotion, and the grant of leave to persons belonging to the judicial service of a State.

Such c?ntrol is not judicial control and a court may be subordinate to a High Court for purposes other than judicial control. Even before the framing of the Constitution s. 2 of the Contempt of Courts Act,. 1926 made express provision giving the High Courts in H ldia the same jurisdiction, power and authority in accordance with the same practice and procedure in respect of contempt of courts subordinate to them as they had in respect of contempts of themselves. The preamble to the Act shows that it was

enacted for the purpose of resolving doubts as to the powers of A High Courts to punish contempts of courts and to define and limit the powers exercisable by the High Courts and Chief Courts in punishing contempts of court. The Contempt of Courts Act, 1952 repealed the Act of 1926 and re-enacted the provisions thereof in substantially the same language.

In England "the Queen's Bench Division has a general superintendence over all B <:rimes whatsoever and watches over the proceedings of inferior courts, not only to prevent them from exceeding their jurisdiction or otherwise acting contrary to law, but also to prevent persons from interfering with the course of justice in such courts" : (See Halsbury's Laws of England-Third Edition), Vol. 8, page 19.

Generally speaking "any conduct that tends to bring the authority and administration of the law into disrespect or disregard or to interfere with or prejudice party litigants or their witnesses during their litigation" amounts to contempt of court : see Oswald

on Contempts page 6.

In order that courts should be able to dispense justice without fear or favour, affection or ill-will, it is essential that litigants who resort to courts should so conduct themselves as not to bring ihe authority and the administration cf law into disrespect or disregard. Neither should they exceed the limits of fair criticism or use language casting aspersions on the probity of the courts or questioning the bona {ides of their judgments.

This applies equally to all Judges and all litigants irrespective of the status of the Judge, i.e., whether he occupies one of the highest judicial offices .in the land or is the presiding officer of a court of very limited jurisdiction. It is in the interests of justice and administration of law that litigants should show the same respect to a court, no matter whether it is highest in the land or whether it is one of inferior jurisdiction only. The Contempt of Courts Act, 1952 does not define 'contempt' or 'courts' and in the interest of justice any conduct of the kind mentioned above towards any person who can be called a 'court' should be amenable to the jurisdiction under the Contempt of Courts Act, 1952. It must be borne in mind that we do not propose to lay down that all Registrars of all Co-operative Societies in the different States are "courts" for the purpose of the Contempt of Courts Act, 1952. Our decision is expressly limited to the Registrar and the Assistant J.legistrar like the one before us governed by the Bihar and Orissa Co-operative Societies Act.

The second point also fails and the appeal is dismissed.

G.C.

Appeal dismissed.

THAKUR JUGAL KISHORE SINHA

SITAMARHI CENTRAL CO-OPERATIVE BANK LTD. & ANR

s. 48

contempt of Courts Act

s. 48

Contempt of Courts Act

High Court of Patna

Contempt of Courts Act 1952

Patna High Court

(1955] 2 S.C.R. 955

VenkatraD Swamirao

s. 3

Contempt of Courts Act

Art. 227

s. 3

Article 228

B. P. Singh

D. Goburdhun

U. P. Singh

Mitter

Art. 134

s. 48

Contempt of Courts Act

Sitamarhi Central Cooperative Union

Suraj Banshi Choudhary

s. 40

December 22, 1953

March 28, 1957

s. 48

s. 48

May 15, 1964

Subordinate Judge of Muzaffarpur

District Judge, Muzaffarpur

August 14, 1964

Jagannath Jha

October 28, 1964

High Court at Patna

S. 2

s. 6

s. 6

s. 26

s. 13

s. 33

s. 33

S. 35

s. 40

s. 33

s. 35

s. 40

S. 48

s. 114

Code of Civil Procedure, 1908

s. 151

C.P.C

S. 49

the Code of Civil Procedure

S. 50

s. 48

S. 57

section 48

Chapter VII-A of the Act

S. 66

s. 48

s. 48

s. 57

s. 48

s. 48

the Code of Civil Procedure

s. 151

the Code of Civil Procedure

s. 48

Brajnandan Sinha

Jyoti Narain

Conrempt of Courts Act, 1952

Littleon

Stroud

Stephen

Griffith

section 71

ss 33

People Act, 1951

s. 195(1)(b)

ofBrajnandan Sinha

s. 36(2)

s. 36

s. 195

Cr.P.C

s. 193

Contempt of Courts Act

Bombay High Court

K. L.

Gauba

s. 54

Bombay Co-operative Societies Act, 1925

Gauba

Gauba

s. 54

s. 54

s. 54

C. P. Patel

February 15, 1962

Patel

s. 3

Contempt of Courts Act

s. 228

Allahabad High Court

Hind Provincial Flying Club

Bombay

Allahabad

s. 6(2)

s. 2

s. 48

s. 48

agannath Jha

Arts. 227 and 228

s. 3

Contempt of Courts Act, 1952

Indian Penal Code

Art. 227

Art. 228

Contempt of Courts Act

Art. 228

Art. 227

Panchayat Raj Act

Contempt of Courts Act

Act

Government of India Act, 1935

Allahabad Hil!h Court

Art. 227

Madras Higl1 Court

Punjab High Court

Public Servants Inquiries Act, 1850

Contempt of Courts Act

Art. 227

ss. 2 and 3

Chagla

Art. 227

s. 224(2)

Government of India Act

s. 3

Art. 227

Art. 227

Art. 227

Art. 227

Art. 227

Art. 227

Beg

Desai

Arts. 227

Art. 228

Art. 227

Art. 227

s. 3

Contempt of Courts Act

Art.

2

s. 2

Contempt of Courts Act

Contempt of Courts Act, 1952

England

Contempt of Courts Act, 1952

Contempt of Courts Act, 1952

Contempt of Courts Act, 1952


COMMISSIONER OF INCOME-TAX, PUNJAB

JAMMl' & KASHMIR & HIMACHAL PRADESH, PATIALA v.

M/S. ALPS THEATRE, PATIALA

March 15, 1967

[J. C. SHAH, S. M. S!KRI AND V. RAMASWAMI, JJ.) Indian /ncometax Act, 1922 (II of 1922), s. 10(2) (4)-Depreciation -If land included.

The Revenue authorities did not allow depreciation on the cost of land alongwith the cost of building standing thereon.

The Appellate Tribunal accepted the assessee's appeal and the High Court answered the question in favour of the assessee. In appeal to this Court by the Revenue: HELD : The appeal must be allowed.

Building under s. 10(2), does not include tho site because there cannot be any question of destruction of the site. (183 El

The word used in s. 10(2) (vi) is "depreciation" and "depreciation" means

11a decrease in value of property through wear, deterioration, or obsolescence, and allowance made for this in book-keeping, accounting etc." In that sense land cannot depreciate. (183 HJ By r. 8 of the Indian Income-tax Rules the rate of depreciation is furnJ on the nature of the structure. It would be difficult to appreciate why the depreciation of land would be dependant on the class of structures. (184 D-El The whole object of s. 10 is to arrive at the assessable income of a building after allowing necessary expenditure and deductions. If depreiation on land was allowed it would give a wrong picture of the true mcome. (184 F-G] Corporation of the City of Victoria and Bishop of Vancouver Island. [1921] 2 A.C 384, distinguished.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 26 of 1966.

Appeal from the judgment and order dated October 28, 1964 of the Punjab High Court in I. T. Reference No. 28 of 1962.

S. K. Mitra, Gopa/ Singh, S. P. Nayyar and R. N. Sachthey, for the appellant.

Veda Vvasa and B. N. Kirpal, for the respondent.

The Judgment of the Court was delivered by SiRri J. At the instance of the Commissioner of Income Tx, the Appllatc Tribunal, Delhi Bench "C", referred the following question : . . "Whether the cost of land is entitled to depreiatton under the , chedule to the Income-tax Act alongw1th the

cost of the building standing thereon?"

This question arose out of the following facts : The respondent, M/ s Alps Theatre, hereinafter .referred to as the assessee, carries on business as exhibitor of films. The Income Tax Officer initiated proceedings under s. 34(1)(b) of the Indian Income Tax Act, 1922, on the ground that in the original assessment deprecia .tion was allowed on the entire cost of Rs. 85,091/·, shown as cost .of the building which included Rs. 12,000 / • as cost of land. The

lnoome Tax Officer, by his order dated February 22, 1959, recomputed the depreciation, excluding cost of land. The assessee appealed to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner upheld the order of the Income Tax Officer.

The assessee then appealed to the Appellate Tribunal which accepted the appeal.

In accepting the appeal it observed .as follows :

"You cannot conceive of a building without the land beneath it.

It is not possible to conceive of a building without a bottom. What Section (10) (2) (vi) of the Act says is that depreciation will be allowed on the building.

The word "building" itself connotes the land upon which something has beeli constructed. It was, therefore, wrong on the part of the authorities below to exclude the value of the land upon which some construction was made. The true meaning of the word 'building' means the land upon which some construction has been made.

The two must necessarily go together."

The High Court answered the question referred to it against the Department. Mahajan, J., obierved that in Section 10(2)(vi) of the Income Tax Act, a building is placed at par with machinery and furniture and is treated as a unit, and, therefore, for the purposes of depreciation a building cannot be split up into building material and land.

He further observed that if the Legislature wanted to exclude land from the build:ng for purposes of depre- . ciation it could have said so. He then added :

"Moreover, depreciation is allowed on the capital.

The capital here is a unit building. If later on it is sold and it fetches more than its written down value the surplus is liable to tax [see in this connection Section

10(2) (vii) proviso.]"

He felt that "the crux of the matter is that the building is treated as a unit for purposes of depreciation or repair, and there is no warrant in the Act which would permit , us to split the unit for the purposes of section 10." He further felt that at :my rate two equal Jy plausible interpretations are possible and the one in favour of !he asscssee should be adopted. ·

' ,,

c.1.T. v. ALPS THEATRE (Sikr1', J.) 183

Dua, J., in a concurring judgment, felt that the question was not free from difficulty, but he answered the question in favour of the assessee on the ground that much could be said for both points of view and the view in support of the assessee's submission had found favour with the Tribunal which had not been shown to be clearly erroneous.

The answer to the question depends upon the true interpretation of.s. 10(2)(vi), and in particular whether the word "building" occurring in it includes land. Section 10 deals with the profits and gains derived from any business, profession or vocation. Section

I 0(2) provides that such profits or gains shall be computed after making certain allowances. The object of giving these allowances is to determine the assessable income. The first three allowances consist of allowance for rent paid for the business premises, allowance for capital repairs and allowance for interest in respect of capital borrowed. Sub-clauses (iv), (v), (vi), (vi-a) and (vii) of s.

I 0(2) deal with allowances in respect of buildings, machinery, plant or furniture.

The word "building" must have the same meaning in all these cla11ses. Sub-Clause (iv) runs as under :

"in respect of insurance against risk of damage or destruction of buildings, machinery, plant, furniture, stocks or stores, used for the purposes of the busin.css, profession or vocation, the amount of any premium paid." "Building" here clearly, it seems to us, does not include the site because there cannot be any question of destruction of the site.

Clause (v) reads :

"in respect of current repairs to such buildings, machinery, plant or furniture, the amount paid on account thereof."

This again cannot include the site. Then we come to sub-cl. (vi), the relevant portion of which reads as under: "in respect of depreciation of such buildings, machinery, plant or furniture being the property of the assessce, a sum equivalent. ... as may in any case 01 class of cases be prescribed."

It would be noticed that the word used is "depreciation" and "depreciation" means :

"a decrease in value of property through wear, deterioration, or obsolescence; the allowance made for this in book-keeping, accounting, etc." (Webster's New World Dictionary').

In that sense land cannot depreciate.

The other words to notice are "such buildings". We have noticed that in sub-els. (iv) and

(v), "building" clearly means structures and does not include site.

That this is the proper meaning is also borne out by r. 8 of the Indian Income Tax Rules, 1922. Rule 8 has a schedule, and as far as buildings are concerned, it reads as under :

Class of asset

1. Buildings -

(I) First class substantial buildings of selected materials .. .

(2) Second class buildings of less substantial construction . ..

(3) Third class buildings of constr•ction inferior to that of second class 'buildings, but not including purely

tempocary erections.

(4) Purely temporary erections such as wooden structutes.

Rate percentage Remarks

2·5 roouble these numbers

) will be taken for fac- 5 I tory buildings, exclud-

~ ing offices, godowns, 7 5 lofticers' and employees' quarters.

No rate is prescribed: renewals will be allowed as revenue expenditure.

The rate of depreciation is fixi; d _on the nature of the structure. If D it is a first class substantial building, the rate is less.

In other words, first class building would depreciate at a much less rate than a second class building. It would be noticed that for purely temporary erections, such as wooden structiires, no rate of depreciation is prescribed and instead renewals are allowed as revenue expenditure. But if the contention of the respondent is right, some E rate for depreciation should have been prescribed for land under the temporary structures. Further it would be difficult to appreciate why the land under a third class building should depreciate three times quicker than land under a first class building.

One other consideration is important.

The whole object of s. 10 is lo arrive at the assessable income of a business after allowing necessary expenditure and deductions. Depreciation is allowable as a deduction both according to accountancy principles and according to the Indian Income Tax Act. Why ? Because otherwise one would not have a true picture of the real income of the business.

But land does not depreciate, and if depreciation was allowed it would give a wrong picture of the true income.

The High Court relied on Corporation of the City of Victoria and Blshop of Vancouver Island('), but in our view this case is distinguishable and gives no assistance in determining the meaning of the word 'buildings'"in the context of s. 10(2)(vi). In this case

th~ rivy Coun?il ha~ to construe s. 197{ 1) of the Municipal Act, Bnllsh _Columbia, which exempted from municipal rates and taxes

(1) [1921] 2 A.C. 384.

c.1.T. v. ALPS THBATRB (Sikri, /.)

!SS

"every building set apart and in use for the public worship of God." The Privy Council held that the above exemption applied to the land upon which a building of the description mentioned above was erected as well as to the fabric. The Privy Council was not concerned with the question of depreciation but with the question of exemption from Municipal rates.

In the result the appeal succeeds, the judgment of the High Court set aside and the question referred is answered in the negative and against the assessee. In the circumstances there will be no order as to costs.

Y. P.

Appeal allowed.

I.4SupCI/67-13

COMMISSIONER OF INCOME-TAX, PUNJAB JAMMU & KASHMIR & HIMACHAL PRADESH, PATIALA

S. ALPS THEATRE, PATIALA

March 15, 1967

C. SHAH

V. RAMASWAMI, JJ.

s. 10(2)

s. 10(2)

s. 10(2)

s. 10

Vancouver Island

Punjab High Court

S. K. Mitra

Gopa/ Singh

S. P. Nayyar

R. N. Sachthey

Veda Vvasa

B. N. Kirpal

SiRri

Income-tax Act

s. 34(1)(b)

Indian Income Tax Act, 1922

lnoome Tax Officer

February 22, 1959

Mahajan

Section 10(2)(vi)

Section

10(2)

section 10

Dua

s. 10(2)(vi)

Section 10

Indian Income Tax Rules, 1922

s. 10

s. 10(2)(vi)

s. 197