BEJOY J, AKSHMI COTION MILLS LTD.

STATE OF WF.ST BENGAL AND ORS.

January 18, 1967

[K. SUBBA RAO, C.J., J. C. SHAH, S. M. SJKRI,

V. RAMASWAMI AND C. A. VAIDIALINGAM, JJ.j

Constitution of India, Art. 166(2) cu1d (3)-Authen1ica1io11 oc:cordin.i.: to Rules made by Governor-Whether conclusive of the Go\•ernor having acted in accordance with law.

We.st Bengal Land Developnren1 and P/anniflg Act, 1948---.Voti{u:ation under s. 4 and declaration under s. 6--Whether required to be nwde 01z c Governor's personal satis/action-Minist.t•r making Standing Order under the Rules of Business made by Governor llnder Art. 166(3)-.Wlrelher proceeding under the Act covered by the Standing Order-Therefore whether required to be dealt with by Minister.

1be Slate Gove.rnment i""ued a notification in February 1955 under s. 4 of the West Bengal Land Development and Planning Act, 1948, to

the effect that certain lands, a major portion of which belonged to the D appellant. wete likely 10 be needed for a public purpose.

This 11Dlifical1on waa signed by the Assistant Secretary in the Land and Revenue Depart ment of the State Government.

A development scheme was then. prepared and after objections to it had been invited and disposed of, rhe Land Planning Committee which is the pre.<cribed authority under 1he Act. n:oommended acceptance of the scheme and the issue of a declaration

under s. 6 of the Act.

This declaration was issued by the Govemmonl in July 1956 and was signed by the Deputy Secretary in the same Drpart- E me-at.

The appellant filed a writ petition under Art. 226 of the C'A.)nstitulion praying.that the notification under s. 4 and the declaration under :-;. 6 be quashed. It was contended hy him that the entire proceedings ""'ere \'oitl

for the reasons, inter alia, (i) that the notification, the declaration, and the sanctioning of the scheme for the notified area were all done by the Assistant or Deputy Secretry and the State Government could not be said to F have applied its mind in the proceedings; inasmuch as the executive power of the State is vested in the Governor ur.der An. 154(1) of the Conslilution, it is satisfaction of the Governor that is contemplated ut"lder ss. 4 and 6 of the Act; (ii) that under the Rules of Business made by the Governor under Art. 166(3), the Ministcr-in-<:harge had issued a Slanding Order on NO\"elllber 29, 1959 specifying matters which were required to ho referred to him: as the proceedings taken under the ATtic1e fe11 within cenain Items of that Standing Order, they could only be deall with hy the G Minister himself and were in fact not so dealt with.

On the other hand, it was contended on behalf of the Slale (i) !hat as tho notification and tho declaration were authenticated according to the Rules made by the Governor under Art. 166(2) and "' they al"° contained a recital that the Govemor was of the opinion tho lands were needed for a public purpose, thus showing that the Governor's satisfaction was made out, it was not open to the appellant to go behind and question H their validitv; and (ii) that the oroccedings taken in the case did not fail

under any of the -items in the Standing Order and did not therefore require to be brought to the notice of the Minister before is.ue of orders.

BEJOY COTTON MILLS V, W. BENGAL 407

The Single Bench that heard the petition, while rejecting the other contentions of the appellant, held that the proceedings taken under the Act fell withm item 18 of the Standing Order which covered all cases proposed to be taken up by the Land Planning Committee and Item 29 relating to cases under the Land Acquisition Act; they should therefore have been referred to the Miniser; as this had admittedly not been done, the entire proceedings were illegal and void.

However, Division each, in appeal, took the view that while item 29 of the Standmg Order did not apply at all, under.item 18 it was only necessary that the proceedmgs after the issue of the notification under s. 4 should be dealt with by the Minister.

It therefore upheld that notification but set aside all the subsequent proceedings.

In appeal before this Court the only uestion for consideration was whether the notification under s. 4 was vahdly issued.

HELD: Dismissing the appeal,

The High Court had rightly upheld the validity of the notification under s. 4 of the Act.

When authentication is in accordance with Art, 166(2) what it makCJ1 conclusive is that the order has been made by the Governor. , But the further question as to whether, in making the order, the Governor has acted in accordance with law, remains open for adjudication. (417 B]

R. Chitralekha v. State of Myso"' [1964] 6 S, C.R. 268, followed.

The Governor's personal satisfaction was not necessary in the present case as this was not an item of business With respect to wh:ch the Governor is, by or unde.r the-Constitution, required to act in his discretion. [418 D-EJ

The terms of s .. 4 make it ciear that it is on the satisfaction of the State Government that any land is needed or is likely to be needed for a public purpose, that a notification is issued. Although in the present case the Land Planning Committee had in fact recommended the acquisition of the land and the issue of a notification under s. 4, there is no provision in the Act or the rules making it obligatory on the part of the State Government to consult the Committee at this stage.

Item 18 of the Standing Order did not therefore apply.

Other items in the order were also not applicable and it was not therefore necessary for the proceedings to be referred to the Minister. [420 E; 421 D-EJ

CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 216 and 217 of 1964.

Appeals from the judgment and order dated March 5, 1959 G of the Calcutta High Court in Appeals from Original orders Nos. 397 and 398 of 1958.

Bishan Narain and B.P. Maheshwari, for the appellant (in both the appeals).

B. Sen, D. N. Mukherjee and P. K. Bose, for the respondents H Nos. I, 2, and 4 (in both the appeals).

S. K. Roy Choudhury, Rameshwar Nath, Mohinder Narain and. P. L. Voltra, for respondent No. 3 (in both the appeals).

The Judgment of the Court was delivered b)

Vaidialingam, J.

These two appeals. on certificate, arc directed against the judgment of the Calcutta High Court. in Appeah from Order. Nos. 397 and 398 of 1958, dated March 5. 1959. in so far as the High Court has held that the notification. issued by the State Government, under s. 4 of the West Bengal Land Development and Planning Act. 1948 (W. B. Acl XX! of 1948) (hereinafter referred to as the Act). is valid. The appcll:tnt and re,- pondents. in both the appeals, arc the same and common questions ari'e for consideration in both.

The Society of Farmers and Rural Industrialists, of whid1 the third respondent is the Secretary, requested the first respondent. the State of West Bengal, to acquire, compulsorily. certain lands for the establishment of an Agricultural Colony for creating better living conditions therein. The first respondent issued " notification. on February 4, 1955, under s. 4 of the Acl, slating

that an extent of about 28 59 acres of lands, more fully described therein. and situated in the villages of Ghola and Natagarh. is likely to be needed for a public purpose. 1i:., the establishment of an agricultural colony and the creation of better living condition~. There is no controversy that a major portion of the lands, comprised in this notification, belonged to the appellant-Mills.

The said notification was published in the Calcutta Gazette, on February 17, 1955. This ·:otification wa> signed by the Assistant Secretary, Land and Revenue Department of the Guvernmcnt of West Bengal.

The first respondent then directed the Society to prepare a development scheme and submit the same to the Collector, to enable him to hear objections as per the rules framed under the :\ct. On or about March 21, 1955, the Society submitted a development scheme and the Collector issued notice, under r. 5 (2) of the West Bengal Land Development and Planning Rules, 1948 \hereinafter referred to as the Rules), inviting objections, within the time specified therein, to the scheme being sanctioned.

Th~ objections filed by the ap;:icllant Mills, to the sanctioning of th~ scheme. were overruled by the Collector.

On February 10, 1956 the Land Planning Committee, which is the prescribed authority, under the Act, recommended acceptance of the scheme submitted hy the Society and for issue of a declaration, by the Government, under s. 6 oflhe Act.

On July 21, 1956, the Government issued the dedaralion, under s. 6 of the Act, which again, was published in the State Gazette, on August 9, 1956. This declaration \\as signed by the Deputy Secretary, Land and Revenue Ocpartmcnl, Government of West Bengal. On August 28, 1956, notice of the intention to take possession of the lands was issued, under r. 8 of the Rules.

BEJOY COTTON MILLS v. W. BENGAL (Vaidialingam. J.) 409

On September 13, 1956, the appellant-Mills filed, in the Calcutta High Court, a writ petition, Civil Rule No. 2620 of 1956, under Art. 226 of the Constitution, and prayed for a writ, in the nature of mandamus, to be issued directing the State Government and its officers, not to give effect or take any steps, on the basis of the notice issued.

It also prayed for the issue of a writ, in the nature of certiorari, quashing the notification, under s. 4, and the declaration, under s. 6, issued by the State Government. Though the appellant raised several grounds of attack, as against the proceedings. leading up to the issue of the notice, under r. 8, the main point that appears to have been urged before the learned Single' Judge, who heard the writ petition, was that, having due regard to the scheme of the Act and the materials available, it cannot be said that the Government have sanctioned any scheme, nor can Government be said to have been satisfied, before issuing the declaration under s. 6 of the Act, that the notified lands were needed for a public purpose.

In short, the appellant's stand appears to have been that the proceedings have been initiated by the Assistant Secretary of the Department and, orders issued either by him or by the Deputy Secretary and hence actions taken by them, though in the name of the State Government, are not valid, inasmuch as they are not in conformity with the Act.

The State Government, on the other hand, contended that there has been due compliance with the provisions of the statute and the proceedings taken by it arc legal and valid, as they have been dealt with by officers who have been authorised to act in that behalf.

Before we refer to the findings recorded by the High Court, in the writ petition, it is necessary to refer to some of the provisions. of the Act and the rules framed thereunder, in order to appreciate the contentions taken by the parties and the opinion expressed by the High Court. It is also necessary to refer to the Rules of Business, issued by the Governor of West Bengal, under Art. 166(3) of the Constitution and the Standing Orders made by the Minister-in-charge of the Department of Land and Land Revenue.

Art. 166 of the Constitution is as follows :

"166. (1) All executive action of the Government of a State shall be expressed to be taken in the name of the Governor.

(2) Orders and other instruments made and executed in the name of the Governor shall be authenticated in such manner as may be specified in rules to be made by the Governor, and the validity of an order or instrument which is so authenticated shall not be called in

question on the ground that it is not an order or instrument made or executed by the Governor.

(3) The Governor shall make rules for the more convenient transaction of the business of the Government of the State, and for the allocatioh amo9g Ministers of the said business insofar as it is not business with respect to which the Governor is by or under this Constitution required to ac•. in his discretion."

In exercise of the power conferred hy Art. 166(2), the Governor of West Bengal had issued, on August 25, 1951, the following rules :

"(I) All orders or instruments made or executed by or on behalf of the Government of West Bengal shall be expressed to be made or executed by or by order of the Governor of West Bengal.

(2) Save in cases where an officer has been specially empowered to sign an order or instrument of the Government of West Bengal, every such order or instrument shall be signed by either a Secretary, Joint Secretary, Deputy Secretary, an Under Secretary or an Assistant Secretary to the Government of West Bengal and such signature shall he deemed to be the proper authentication of such orders or instruments.

Under Art. 166(3), the Governor of West Bengal has framed Rules of Business, on August 25, 1951.

Rules 4, 5, 19 and 20, which alone are material, arc as follows :

"4. The business of the Government shall be transacted in the department specified in the First Schedule and shall be classifkd and distributed between those departments as bid d )Wll therein.

5. The Governor shall ·.in the advice of the Chief Minister allot among the Ministers the business of the Government by assigning one or more departments to the charge of a Minister; .

19. Except as otherwise provided by any other rule, cases shall ordinarily be disposed of by or under the authority of the Minister-in-charge who may by

means of standing orders give suc't directions as he thinks fit for the disposal of case.> in the department.

Copies of such standing orders shall be sent to the Governor and the Chief Minister.

H -

BEJOY COTTON MILLS v. W. BENGAL ( Vaidia/ingam' J.) 411

Provided that until such standing orders are made by a Minister, the standing orders which were made under the Rules of Business existing immediately before the commencement of thse rules and which were in force in the department in charge of such Minister immediately before such commencement shall so far as may be, be deemed to be the standing orders for that department made under this rule.

20. Each Minister shall by means of standing orderao arrange with the Secretary of the department what matters or classes of matters are to be brought to his personal notice. Copies of such standing orders shall be sent to the Governor and the Chief Minister."

The Minister-in-charge of the Department of Land and Land Revenue, with which we are concerned, in these proceedings made Standing Orders, under rr. 19 and 20 of the Rules of Business, on November 29, 1951. Standing Order Ne. I is to the effect that all matters specified therein, are to be brought to the notice of the Minister. Standing Order No. 2 provided that, apart from the matters referred to in Standing Order No. I, the various items mentioned therein, relating to Land ati.d Land Revenue Department, are to be brought to the notice of the Minister. before the issue of orders. According to the appellant, the proceedings taken by the Government under the Act, are covered by item 18, or 28 or 29 of Standing Order No. 2. Therefore, those items alone are referred to by us; and they are as follows :

"18. All cases proposed to be taken up by the Land Planning Committee set up under the Land Development and Planning Act.

28. All schemes relating to :tcquisition and settlement of waste lands.

29. All cases relating to land acquisition by companies and Industrial concerns or by Government under the Land Acquisition Act before there is notification under Section 4 and agreement under Section 41."

Standing Order No. 5 provided that the Secretary may permit the Deputy or Assistant Secretaries to dispose of or submit to the Minister for orders such cases or classes of cases as th~ Secretary may, by general or special order, direct, with the approval of the Minister-in-charge. By virtue of this Standing Order, No. 5, the Secretary, Land and Land Revenue Department: had issued the following Order :

"Suhjcct to the undermentioned provisos, cases A in the different branches of the department shall be disposed of, or when so required by any rule or order shall be submitted to the Minister-in-charge, by 01 under the orders of the Deputy Secretary or the Assistant Secretary, as the cases may be, who is according to the office organisation for the time being in force in charge B of the matters or classes of matters to which the cases respectively appertain.

Provisos •

(I) If the officer dealing with the case decides that it is of such importance that' it should be submitted to a higher officer in the department, it shall be so submitted.

(2) Cases from all branches involving major questions of principles or policy shall be submitted to the Minister-in-charge through Secretary."

We shall now refer to some of the material provisions in the Act. Section 2(b) defines 'development scheme' as a scheme for

the development of land for any public purpose. Section 2(c) defines 'notified area' as an area declared under sub-s. (1) of s. 4 to be a notifird area. Under s. 3, the State Government may appoint, in accordance with the rules, an authority, referred to as E the prescribed authority, for carrying out the purposes of the Act.

There is no controversy that the Land Planning Committee is the prescribed authority appointed under s. 3 of the Act. Under s. 4, the State Government can, by notification in the Gu.ette, declare any area specified in the notification to be a notified area 'if it is satisfied that any land in such area is needed or is likely to be needed for any public purpose ........ '.

Under s. 4A any person interested in any land, within a notified area can file within the time prescribed therein, objections to the acquisition of the land in which he is interested; and the Collector has to give an opportunity to the said objector of being heard; and, after hearing objections and making such further inquiry, the Collector is to submit the case to the State Government along with his report.

Under s. 5, the State Government may direct the pres- cribed authority or authorise any company or local authority to prepare, in accordance with the rules, a development scheme in respect of any notified area. The said section also provides for such schemes being prepared and submitted to the State Government for its sanction. The Government may sanction the scheme either without any modification or subject to such modifications as it considers fit.

Under s. 6, when " development scheme is sanctioned, and when the State Government is satisfied

BEJOY COTTON MILLS v. w. BENGAL (Vaidia/ingam, J.) 4 I:l

that any land in the notified area for which such scheme has been sanctioned, is needed for tlte purpose of executing such scheme,

a declaration to the effect that such land is needed for a public purpose shall be made by the State Government. Section. IO provides for the Government directing the prescribed authority to execute any development scheme. sanctioned by it or cause it to be exected in accordance with the rules.

Section 14 provides for the Govrnment making rules for carrying out the purposes of the Act and, in particular, in respect of matters mentioned in sub-s. (2).

The State Government have framed rules called the West Bengal Land Development and Planning Rules, 1948, earlier referred to.

Under r. 3(1), the authority for carrying out the purposes of the Act is the Land Planning Committee appointed by the State Government. Rule 5 provides for the prescribed authority to prepare and submit a development scheme when the ')tate Government gives such directions to that authority, ; lnd it also deals with the various other matters pertaining to the preparation and submission of such a scheme.

The appellant's writ petition was heard, in the first instance, hy a learned Single Judge of the Calcutta High Court. The appellant raised, broadly, two contentions. The first contention was that the notification, issued under s. 4 as well as the declan1tion, made under s. 6, of the Act, and the sanctioning of the scheme for the notified area, were all done by the Assistant Secretary, Land and Revenue Department of the Government of West Bengal and the Government has not, in any m!nner, applied its mind, in these proceedings, and, therefore, the entire proceedings are void.

Under this head, the appellant also pkaded that, inasmuch as the executive power of the State is vested in the Governor, under Art. 154 (I) of the Constitution, it is the satisfaction of the Governor that is contemplated, under ss. 4 and 6 of the Act. The second contention was that, under the Rules of Business framed by the Governor, under Art. 166( 3) of the Constitution, the business pertaining to the Department of Land and Land Revenue, to which these proceedings relate, is to be dealt with personally by the Minister-in-charge; and the proceedings to be taken under the Act cannot be delegated to the departmental officers, by the concerned Minister. In this particuhr case, inasmuch as the proceedings have b::en taken, and orders issued, either by the Assistant Secretry or the Deputy Secretary, of the Department, without reference to the .Minister-in-charge, the entire proceedings are illegal and void. Alternatively, it was also urged that, even if the Minister-in-charge could delegate any of the.se functions to the subordinate officers, by making appropriate Standing Ordrs, in this case there has been no such delegation, nutho-

SUPRBMB COURT RBPORTS

[1967] 2 S.C.R.

rising the Secretary or the Assistant Secretary to deal with such matters. In this connection, the appellant has relied on items 18, 28 and 29, referred to in Standing Order No. 2, issued by the Minister-in-charge, as indicating that those matters have to be dealt with only by the Minister.

On behalf of the State it was urged that, as the notification issued under s. 4 and the declaration made under s. 6. have been authenticated in the manner, specified by the Rules made by the Governor under Art. 166(2) of the Constitution, it was not open to the appellant to go behind and question the validity of either the notification or the declaration, which contained a recital that the Governor was of the opinion that the lands were needed for a public purpose. According to the State, this recital shows that the Governor's satisfaction is clearly made out. The respondents also pointed out that the Governor had issued the Rules of Business, under Art. 166(3) of the Constitution; and, under rr. 19 and 20, therefore, the Minister-in-charge, of the particular department, has been clothed with authority, by means of Standing Orders, to give such directions, as he thinks fit, for the disposal of the case in his department. By virtue of such authority, conferred on the Minister-in-charge of the Department of Lar.d and Land Revenue, in this case, the Minister has made Standing Orders, on November 29, 1951. The respondents further urged that the proceedings taken in this case, by the State Government, under the Act, do not come under any of the items referred to in Standing Order No. 2, which deals with matters which are to be brought to the notice of the Minister, before issue of orders.

These matters could be "validly dealt with, by the Assistant Secretary of the said Department.

The learned Single Judge, after a consideration of the Rules of Business, issued by the Governor, as well as the Standing Orders, made by the Minister-in-charge and the relevant provisions. of the Constitution, has held that the contention of the appellant, that it is the Governor who has to be satisfied in such matters, cannot be accepted. On the other hand, the learned Judge has held that, in respect of the matters in question. the relevant business of the Government of the State has been allocated, by the Governor, to the Minister concerned, by issuing Rules of Business.

The learned Judge has also held that, under the Rules of Business, the Minister-in-charge has got authority to delegate any particular functions, to be disposed of by his subordinates. But, after a consideration of the Standing Orders, made in this case, by the Minister-in-charge, the learned Judge is of the view that the various proceedings, taken by the Government under the Act, will come under item 18 or 29 of Standing Order No. 2 and, as such, these proceedings should have been referred to the Minister-in-charge,

BEJOY COTTON MILLS v. w. BENGAL ( Vaidia/ingam, J.) 4 I 5

hcfore the issue of orders. It was admitted. by the Advocatc- Gcneral, before the learned Judge, that none of the proceeding,,

which arc under challenge, either in the milter of sanction or satisfaction, received the attention of the Minister, but was dealt with, either by the Assistant Secretary, or the Deputy Secretary So the entire proceedings, beginning from the issue of the notification, under s. 4, d1ted February 4, 1955, and ending with the issue of the notice, dated August 28, 1956, under r. 8 of the Rules, were held to be illegal and void. Jn consequence, the learned Judge granted the prayers, asked for by the appellant, in his writ petition.

This order of the learned Judge was challenged, in two ap peals, before a Division Bench of the Calcutta High Court, viz., Appeals from Orders Nos. 397 and 398 of 1958. One appeal was filed by the State, along with respondents 2 and 4, and the other, by the Farmer• Society, the 3rd respondent herein. fn both the appeals there was a common attack against the order of the learned Single Judge setting aside the entire proceedings taken by the Government, under the Act. The Division Bench has also held that Art. 166(2) is only to the effect that, when authentication is made in the manner ment.ioned therein, what is made conclusive is that the order has been made by the Governor; but, whether, in making the order, the Governor has acted in accordance with the law, still remains open to adjudication. The learned Judges have also held that, by virtue of the power conferred under the Rules of Business issued by the Governor it is open to a Minister, by making proper Standing Orders, to delegate his functions and authorise disposal of such functions to his subordinates. The learned Judges the11 considered the question as to whether there has been such a delegation in the Standing Orders made on November 29, 1951, regarding the Land Revenue Dapartment. They are not prepared to accept the contention of the appellant that item No. 29, of Standing Order No. 2, applies to these proceedings, necessitating their being dealt with by the Minister himself.

The view of the learned Judges is that the said item will relate only to land acquisition, made under the Land Acquisition Act; and, the present proceedings being under the Act, that provision will not apply. The learned Judges are also of the view that the proceedings connected with the issue of a notification under s. 4 of the Act, do not come under item No. 18 of Standing Order

No. 2, made by the Minister. But they are of the view that the said item will apply to all proceedings taken by the Government under the Act, qfter the issue of the notification under s. 4, and, therefore, the Minister-in-charge should have dealt with the matters connected with the sanctioning of the scheme, under s. 5, and the issue of the declaration, under s. 6, But, inasmuch as the Minister has, admittedly, not dealt with those proceedings.

at that subsequent stage, the learned Judges held that all orders passed, and notifications issued, subsequent to the stage of the issue ,, f the notificntion, under s. 4, will have to be set aside as void.

In view of the fact that the learntd Judges held that the issue of a notification, under s. 4, is not a matter which has to be dealt with by the Minister and, as the exercise of the functions i11 that regard have been delegated under the Standing Order, that notification was allowed to stand. Jn consequence, the learned Judh>es modified the order of the learned Single Judge, to the extent indicated above.

In these appeals, by certificate, the only question that arises for c.onsideration is regarding the correctness of the views expressed by the learned Judges of tho Division Bench of the Calcutta High Court, upholding the validity of the notification, dated February 4, 1955, issued under s. 4 of the Act.

On behalf of the appellant, Mr. Bishan Narain, learned counsel, raised substantially the same contentions that were taken in the writ petition before the High Court. According to learned counsel, the reasons given by the Division Bench, for setting aside the notifications and orders issued under ss. 5 and 6 of the Act, as well as the other subsequent proceedings, apply with equal force to the notification issued under s. 4. The learned counsel also urged that, inasmuch as the executive power of the State is vested, under Art. 154, in the Governor, the satisfaction, contemplated before issue of the notification under s. 4 of the Act, should have been arrived at by the Governor himself. Counsel also urged that. even if, under the Rules of Business, issued under Art. 166(3) of the C0nstitution, by the Governor, a Minister-in-charge can delegate his functions, by making suitable Standing Orders in that regard, in this case, the Strnding Orders m1de by the Minister-in-charge, will clearly show that all the m:1tters connected "ith

the proceedings to be taken under the Act, have been reserved to b: dealt with by the Minister himself. Therefore, according to counsel, inasmuch as, admittedly, the Mitlistcr has not dcult with any of these proceedings, even the issue of a notification under s. 4 is illegal and void. In this connection, learned counsel referred us to items 18, 28 and 29, of Standing Order No: 2, made hy the Minister-in-charge, in this case. We may, at this stage, indicate that no contention was taken before us that even if authorised by the Rules of Business, a Minister-in-chrge cannot legally .delegate any such matters to be dealt with by his subordinates, hy making appropriate Standing Orders.

The same contentions taken in the High Court, on behalf of the State, have been advanced before us, by Mr. B. Sen, learned counsel.

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BEJOY COTTON MILLS v. w. BENGAL ( Vaidialingam, J.) 41 7

We have already referred to the Rules of Business and Standing Orders. We are in entire agreement with the views expressed by both the learned Single Judge as well as the Division Bench of the Calcutta High Court regarding the scope of Art. 166(2) of the Constitution. The learned Judges are perfectly correct in their view that what the authentication makes conclusive, under Art. I 66(2), is that the order has been made by the Governor.

But the further question as to whether, in making the order, the Governor has acted in accordance with law, remains open for adjudication.

Jn this connection, we may refer to the decision of this Court in R. Chitralekha 1. State of Mysore('). Subba Rao, J., (as he then was), explains the scope of Art. 166, at p. 376, thus :

"Under Art. 166 of the Constitution all executive action of the Government of a State shall be expressed to be taken in the name of the Governor, and that orders made in the name of the Governor shall be authenticated in such manner as may be specified in rules to be made by the Governor and the validity of an order which is so authenticated shall not be called in question on the ground that it is not an order made by the Governor.

If the conditions laid down in this Article are complied with, the order cannot be called in question on the ground that it is not an order made by the Govenor.

It is contended that as the order in question was not issued in the name of the Governor the order was void and no intezyiews could be held pursuant to that order.

The law on the subject is well-settled.

In Dattatreva Moreshwar Pangarkar v. The State of Bombay (1952 S.C.R. 612, 625) Das J., as he then was, observed : 'Strict compliance with the requirements of article 166 gives an immunity to the order in that it cannot be challenged on the ground that it is not an order made by the Governor. If, therefore, the requirements of that article are not complied with, the resulting immunity cannot be claimed by the State. This, however. does not vitiate the order itself .......... Article 166 directs all executive action to be expressed and authenticated in the manner therein laid down but an omission to comply with those provisions does not render the executive action a nullity. Therefore, all that the procedure established by law requires is that the appropriate Government must take a decision as to whether

[lj (1964) 6 S.C.R. 368.

M!Sup. Court/67-13

the detention orda should be confirmed or not under section 11(1).'

The same view was reiterated by this Court in The State of Bombay v. Purshottam Jog Naik (1952 S.C.R. 674), where it w?s pointed out that though the order in question then was defective in form it was open to the State Government to prove by other means that such an order had been validly made. This view has been reaffirmed by this Court in subsequent decisions : see Ghaio Mall and Sons v. The State of Delhi (1959 S.C.R.

1424), and it is, therefore, settled law that provisions of Art. 166 of the Constitution are only directory and not mandatory in character and, if they are not complied with, it can be established as a question of fact that the impugned order was issued in fact by the State Government or the Governor."

We are also in agreement with the views expressed by the High Court that the Governor's personal satisfaction was not necessary in this case as this is not an item of business with respect to which, the Governor is, by or under the Constitution, re- <juired to act in his discretion. Although the executive Government of a State is vested in the Governor, actually it is carried on by Ministers; and, in this particular case, under rr. 4 and 5 of the Rules of Business, referred to above, the business of Government is to be transacted in the various departments specified in the First Schedule thereof. Item 5 therein is the Department of Land and Land Revenue, and the Governor has allotted the business of that Department to a Minister. We are further in agreement with the views of the High Court that the said Minister-in-charge, has got power to make Standing Orders regarding the disposal of cases, in his Department, under the Rules of Business issued by the Governor, on August 25, 1951, under Art. 166(3) of the Constitution. In this case, there is no controversy that the Minister-in-charge, of the Department of Land and Land Revenue, has made Standing Orders on Novcraber 29, 1951, by virtue of powers given to him under rr. 19 and 20 of the Rules of Business.

According to the appellant, the entire proceedings connected with the acquisition under the Act, in this case, will come under either item 18, 28 or 29 of Standing Order No. 2 i; nd, in consequence, they require to be dealt with by the Minister before orders arc issued. Inasmuch as the validity of the notification, under s. 4, issued under the Act, alone arises for consideration, in these

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BEJOY COTTON MILLS v. w. BENGAL (Vaidialingam, J.) 419

appeals, the only question is as to whether it was necessar)'. for that matter also to be placed before the Minister-in-charge, either under item 18, 28 or 29 of Standing Order No. 2. Those items have been referred to, by us, in the earlier part of this judgment.

We have no hesitation in rejecting the contention of the appellant that item 29 will take in proceedings connected with the issue of the notification, under s. 4. As pointed out by the learned Judges of the Division Bench of the Calcutta High Court, that item relates only to acquisition, under the Land Acquisition Act; and, inasmuch as the issue of the notification, under s. 4, in this case, is under the Act, that is not covered by the said item. So, item 29 does not apply. Learned counsel then urged that this must be considered to be a scheme relating to acquisition and settlement of waste lands, in which case, item No. 28 . will stand attracted. So far as this is concerned, the learned Single Judge, who dealt with the writ peUion, has negatived the contention of the appellant. The learned Judge has found, as a fact, that there is no evidence to show that the lands, which are the subject of the issue of notification, under s. 4, are waste lands; and, therefore, he has held that it cannot be said that the notification relates to acquisition of waste lands. The learned Judge has also stated that, even the appllant, in his writ petition, has not alleged that the land, or any part of it, is waste. In this view, the learned Judge has held that, on the evidence, it is not possible to hold that the acquisition relates to waste lands.

No doubt, the Division Bench has not expressed any opinion on this aspect, but, as the records now stand, we liave to accept the findings recorded by the learned Single Judge, in which case, it follows, that the appellant cannot rely upon item No. 28, eithei.

This leaves us with the question as to whether the issue of a notification under s. 4 of the Act is a matter covered by item No. 18 of Standing Order No. 2, issued by the Minister. If it is a matter covered by the said item, there can be no controversy that, before the issue of the notification under s. 4, the matter should have been dealt with by the Minister-in-charge. In tnis case, as we have already pointed out, the Minister-in-charge has not dealt with those proceedings; and it is admitted that the Assistant Secretary of the Land and Land Revenue Department of the Government of West Bengal, who issued the notification, under s. 4, alone dealt with the matter. The learned Single Judge has, no doubt, accepted the contention of the appellant that item No. 18 of Standing Order No. 2 applies, to all proceedings taken under the Act, including the issue of a notification, under s. 4. On the other hand, the learned Judges of the Division Bench have taken a contrary view, on this

SUPREMB COURT REPORTS

(1967] 2 SC.R.

aspect.

Having due regard to the Act and the Rules, and the matter dealt with by item No. 18, we are in agreement with the views expressed by the learned Judges of the Division Bench that item No. 18, of Standing Order No. 2, does not apply to proceedings connected with the issue of a notification, under s. 4, of the Act.

We have gone through the entire prov1s1ons of the Act, as well as the Rules framed thereunder; and, so far as we can see, the Land Planning Committee, which is the prescribed authority, under s. 3 of the Act, comes into the picture only when the State Government takes action, under s. 5, regarding the preparation of a development scheme, and at subsequent stages. The Land Planning Committee, set up under the Act, does not come into the picture, at the stage when the Government issues a notificaton, under s. 4 of the Act.

Jn this connection, it is necessary to note that the expression 'notified area', under s. 2(c) of the Act, means an area declared, under sub-s. (I) of s. 4, to be a notified area. The State Government is given power, under s. 4, by issue of a notification in the Gazette, to declare any area, specified in the notification, to be a notified area, if it is satisfied that any land, in such area, is needed or is likely to be needed, for any public purpose. There is no provision, either under the Act or the rules framed thereunder, making it obligatory on the part of the State Government, to consult the Land Planning Committee at this stage.

Nor are we able to find any provision, in the Act or the Rules, which gives a right to the Land Planning Committee to be consulted, or to propose any case, bfore a notificatin is issued by the Government, under s. 4 of the Act. There is no duty imposed, or function assigned, to the Land Planning Committee, either under the Act or the Rules, to participate at this stage.

No doubt, Mr. Bishan Narain, in this connectio11, referred us to the proceedings, dated January 21, 1955, of the 270th Meeting of the Land Planning Committee, as supporting his contention that it is the Land Planning Committee that has proposed the acquisition of the lands in question, under the Act, and therefore, the matter comes under item 18 of Standing Order No. 2.

In the proceedings, referred to by learned counsel, it is stated that the Land Planning Committee considered a proposal submitted by the third respondent herein, for acquisition and development of 28 59 acres of land, in the villages of Ghola and Natagarh. There is also a recommendation, by the L:ind

Planning Committee, that the land, referred to by the third respondent, is needed for a public purpose and, therefore, it recommended that a notification, under s. 4 of the Act, be issued.

BEJOY COTTON MILLS l'. w. BENGAL (Vaidialingam, J.) 421

doubt, it is seen that the Vmd Planning Committee has taken some interest in this m1tter and supported the proposal of the third respondent regarding the acquisition. But, the question is as to whether it is one of the duties or functions of the L'lnd Planning Committee, which it is bJund to discharg~, eithr u1d!r the Act or the Rules. The answer, in our view, must be in t!t~ negative. A reference to the Act and the Rules would show that there is no such right given to the Land Planning Comm!ttee. It m1y be that that Committee advises the GJvernment on particular m1tters or mikes suggestions to the GJvernmnt. The GJvernment may also consult that body and act on its advice or suggestions.

But, before item No. 18 of Standing O.-der

NJ. 2, can be made applicable, it must be established that there is a duty or an obligation, on the Government, to issue a notification under s. 4 of the Act, only in consultation with the L'lnd Planning Committee, in which case, it may be stated, that the Committee is discharging a duty under the Act. We do not find any such provision making it obligatory, on the part of the Government, to consult the L'lnd Planning Committee, at that stage. The terms of s. 4 also makes it clear that it is really on the satisfaction of the Governm!nt, th\'t any land is needed or is likely to be needed for a public purpose, that a notification is issued, declaring that area to b~ a notifod area.

The Act and the Rules clearly show that from the stage of s. 5, when the prescribed authority, viz., the Land Planning Committee, is directed to prepare a development scheme by the State Government, the said Committee is discharging its statutory functions, under the Act.

To sum up, we are not inclined, to accept the contentions of the appellant, that the issue of a notification, under s. 4 of the Act, is a m1tter which should have been dealt with by the Minister-in-charge himself, on the basis that it is covered by item 18 of Standing Order No. 2. That item does not, as pointed out above, apply. If that is so, it is clear that the issue of a notification, under s. 4 of the Act, and the satisfaction to be arrived at, that the land, in the area in question, is required or is likely to be required for a public purpose, are matters which do not require to be dealt with by the Minister nimself. Under Standing Order No. 5, the Minister-in-charge has authorised the Secretary to permit a Deputy or an Assistant Secretary of the Department, to dispose of certain types of cases and the Secretary has also issued an order, which has been reierred to earlier, in conformity with standing order No. 5; and it is by virtue of this provision that the notification, under s. 4, was issued by the Assistant Secretary, Land and Revenue Departmrtt

422 SUl'UIQI OOUIT l.BPOl.TS

{1967) 2 S C.R.

Govenment of West Bengal. We are in entire agreement with the reasons given by the Division Bench of the Calcutta High Court for upholding the validity of the notification, dated February 4, 1955, issued under s. 4 of the Act.

Before we conclude, we should also make it clear that' in this case, no contention was advanced that matters connected with the issue of a notification, under s. 4 of the Act cannot be delegated by the Minister-in-charge and that they have to be dealt with by the Minister himself. We had, therefore, no occasion to con&ider this aspect of the matter. As pointed out above, the entire arguments have proceeded on the basis that there has been no such delegation, by the Minister, under the Standing Orders made by him.

The result is, that the appeals fail and are dismissed with costs of the respondents, one set in Civil Appeal No. 216 of 1964.

R.K.P.S.

Appeals dismissed

BEJOY J, AKSHMI COTION MILLS LTD

STATE OF WF.ST BENGAL AND ORS

January 18, 1967

K. SUBBA RAO, C.J.

C. SHAH

V. RAMASWAMI

Constitution of India

Art. 166(2)

s. 4

s. 6

Standing Order under the Rules

Art. 166(3)

s. 4

s. 6

Art. 226

s. 4

ss. 4 and 6

Art. 166(3)

Art. 166(2)

s. 4

s. 4

s. 4

s. 4

Calcutta High Court

Bishan Narain

B.P. Maheshwari

B. Sen

D. N. Mukherjee

P. K. Bose

S. K. Roy Choudhury

Rameshwar Nath

Mohinder Narain

P. L. Voltra

Vaidialingam

s. 4

State of West Bengal

February 4, 1955

s. 4

Ghola

Natagarh

West Bengal

March 21, 1955

February 10, 1956

s. 6

July 21, 1956

s. 6

August 28, 1956

September 13, 1956

Art. 226

s. 4

s. 6

s. 6

Art. 166(3)

Art. 166

Art. 166(2)

August 25, 1951

Government of West Bengal

Art. 166(3)

First Schedule

November 29, 1951

Section 4

Section 41

Section 2(b)

Section 2(c)

s. 4

s. 3

s. 3

s. 4

s. 4A

s. 5

s. 6

Section 14

s. 4

s. 6

Art. 154

ss. 4 and 6

Art. 166( 3)

SUPRBMB COURT RBPORTS

s. 4

s. 6

Art. 166(2)

Art. 166(3)

s. 4

Art. 166(2)

s. 4

s. 4

s. 5

s. 6

s. 4

s. 4

s. 4

Bishan Narain

ss. 5 and 6

s. 4

Art. 154

s. 4

Art. 166(3)

s. 4

B. Sen

Art. 166(2)

Subba Rao

Art. 166

Art. 166

Das

article 166

Article 166

(1964) 6 S.C.R. 368

M!Sup. Court/67-13

section 11(1)

Art. 166

First Schedule

Art. 166(3)

Novcraber 29, 1951

s. 4

s. 4

s. 4

s. 4

s. 4

s. 4

s. 4

s. 4

SUPREMB COURT REPORTS

(1967] 2 SC.R.

s. 4

s. 3

s. 5

s. 4

s. 2(c)

s. 4

s. 4

s. 4

January 21, 1955

s. 4

s. 4

s. 4

s. 5

s. 4

s. 4

s. 4

s. 4

s. 4


RAGHUBANS DUBEY

STATE OF BIHAR

January 19, 1967

[M. HIDAYATULLAH, S. M. SIKRI AND C. A. VAIDIAL!NGAM, JJ.]

Code of Criminal Procedure (Act 5 of 1898), ss. 190(1)(h) and 201-Magistrate taking cognizance of ofjenc.e on police report-Jurisdiction to proceed against accused not sent up by police.

Discharge of accused-Whether possible, when accused not included jn the charge-sheet.

The police investigated into a complaint against the appellant and others, accepted the appellant's plea of alibi and filed a charge sheet against the others for offences, under ss. 302, 201 and 149 I.P.C., before the Sub-Divisional Magistrate. The Magistrate recorded that the appellant was discharged and transferred the case for enquiry to another Magistrate, who. after examining two witnesses, ordered the issue of a non-bailable warrant against the appellant, for proceeding against him along with the other accused unde'r s. 207.A Cr. P.C. The order was confirmed by the Sessions Court and High Court.

In appeal to this Court,

HELD: (I) There could be no discharge of the appellant when he was not included as an accused in the charge-sheet submitted by the police.. [ 426 CJ

(2) The appellant could be proceeded against along with the other accused under s. 207-A Cr.P.C. (426 BJ

The Sub-divisional Magistrate had taken cognizance of the offence upon the written repon of the police, that is, under s. 190(1) (b), Cr.

P.C.

Therefore, the proceeding was instituted under s. 207(a) and not under s. 207(b) Cr.P.C. The cognizance, however, was of the offence only and not of the offenders.

Having taken cognizance of the offence. he had to find out who the real offenders were, and if he came to the conclusion that a,., an from the persons sent up by the police some other persons were involved. It was his duty to proceed against those persons also.

The, SURlmoning of the appellant as an additional accused was part of the proceeding initiated by his taking cognizance of the offence. (427

B-C, 428 C-D]

l'ravin Chandra Mody v. State of A.P. [1965] 1 S.C.R. 269, followed.

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 189 of 1964.

Appeal by special leave from the judgment and order dated April 10, 1964 of the Patna High Court in Criminal Revision No. 896 of 1961.

Danial Lat(fi and K. K. Sinha, for the appellant.

R. N. Sachthey, for the respondent.

424 SUl'JlBMI! OOUllT JlBPORTS

The Judgment of the Court was delivered hy Sikri, J. This appeal by special leave is directed against the judgment of the High Court of Judicature of Patna dismissing Criminal Revision No. 896 of 1961 filed by the appellant Raghubans Dubey. The relevant facts for appreciating the points raised before us are as follows :- The appellant was one of the 15 persons mentioned as assailants in the First Information Report dated July 29. 1959, lodged by one Raja Ram Sah. The police investigated the case and during the investigation the appellant set up an alibi.

The police accepted the alibi and did not include his name as an accused in the final report under s. 173 of the Code of Criminal Procedure. His name was, however, mentioned in column No. 2 of the Charge Sheet under the heading "not sent up"'.

On April 5, 1961, the Sub-divisional Magistrate passed the following order :

"C. S. No. 12 dated 23-3-61 u/s 149/302/201 I. P. C. received against the accused noted in col. 3 and 4 of C. S.

Cog. taken u/s

149/302/201 I. P. C. and case transferred to Sri L. P. Singh Magl. ....... class for enquiry under Chapter XVIII Cr. P. C. Accused not sent up for trial is discharged." On transfer, Shri L. P. Singh, Magistrate, took up the hearing of the case on May 2, 1961.

In the meantime a petition had been filed on April 11, 1961, praying that the appellant be summoned hy the Magistrate. On May 2. 1961, Jagannath Sao, P. W. I, was examined and in his examination-inchief he implicated the appellant as one of the persons who were present in the mob which is alleged to have killed Rupan Singh. On the same day Mahesh Sao, P. W. 2, also implicated the appellant in his examination-in-chief. It appears that the counsel for Raja Ram Sah, the person who lodged the F.l.R., requested the Magistrate to summon the appellant as well for trial. as prayed for in the petition dated April II, 1961, The Magistrate, after hearing the Assistant District Prosecutor as well as the counsel for the informant and the accused, passed the following order:-

"Raghubans is named in F. I. R. and as submitted by A. D. P. 5 witnesses have named him before police and P. W. I examined before me has also named him.

So in my opinion it is proper to add Raghubans Dubey also in this enquiry as accused. At this stage one petition has been filed by lawyer of accused that cross-examination of P. W.s. be allowed to be done after appearance of Raghubans. This contention is quite

RAGHUBANS DUBEY V. STATE (Sikri, /.)

reasonable otherwise cross-examination will have to be done again after appearance of Raghubans and so prayer of defence is allowed. Examined P. W. 2 also in chief.

He has also named Rahgubans to be a member of the mob of these accused at the time of occurrence. So issue non-bailable W/A against Raghubans Dubey according to address given by

P. W.

Mahesh Sah today as the allegation against Raghubans appears to be very serious one. Send the process by special peon returnable by 3-6-196 l. Other accused will re-attend."

The appellant challenged this order before the Sessions Judge.

It was urged before him that the Magistrate had no jurisdiction to summon the appellant because the Sub-divisional Magistrate had already dismissed a protest petition on merits.

The Sessions Judge rejected the argument and held that it was open to the Magistrate to summon any person against whom he found sufficient evidence in the case.

The appellant then filed a criminal revision before the High Court. Before the High Court it was urged, first, that the petition dated April II, 1961, was a petition of complaint and, therefore, summoning the appellant on the basis of a petition of complaint would result in a separate u:.1nplaint case and he could not be tried along with the other accused under s. 207 A of the Code of Criminal Procedure. Secondly, it was urged that the order of the Magistrate was irregular as he had summoned the appellant on the same grounds on which the Subdivisional Magistrate had discharged him. On the first point the High Court held that the order of the Magistrate did not result in a separate complaint case against the appellant as "the present case was instituted when the sub-divisional Magistrate took cognizance of an offence reported by the Police, and therefore, the case shall be deemed to have been instituted on the police report." The High Court further observed that "it is, therefore, clear from the language of section 190 of the Code that the Magistrate takes cognizance of an offence made out in the police report or in the petition of complaint and there is nothing like taking cognizance of the offenders at that stage.

It has to be decided on the materials on record as to who actually the offenders may be only after cognizance of the 'Offence has been taken. On the facts of the instant case, therefore, cognizance of the offence has been taken on a police report, and the order of the transferee Magistrate summoning Raghubans Dubey does not amount to taking cognizance of an offence." On the second point the High Court held that the Magistrate did not summon the appellant only on ihose grounds which were before the Sub-divisional Magistrate as the materials before the

426 SUPlll!ME COURT REPORTS

(1967) 2 S.C.R.

two Magistrates were not identical. The Sub-divisional Magistrate had acted on the Police report alone but the Magistrate took into consideration the evidence of the two prosecution witnesses examined in court as well.

The learned counsel for the appellant, Mr. Danial Latifi• raises two points before us; first that the discharge of the appellant by the order dated April 5, 1961, by the Sub-divisional Magistrate was final, and secondly, that the proper procedure to be observed on the facts of this case was not under s. 207 A but under the subsequent sections in Chapter XVIII of the Criminal Procedure Code. We see no force in these points.

Regarding the fir; t point Mr. Latifi urges that judicial refusal to summon amounts to discharge. There is no. force in this contention because there cannot be any question of discharge when the appellant was not sent up upon the charge-sheet submitted by the police.

Coming to the second point the learned counsel for the appellant contends that no proceeding was instituted against the appellant on a police report within the meaning of s. 207 A of the Code because the appellant's name was not included in the charge sheet.

He says that although congnizance might have been taken of an offence under s. 190(l)(b) no proceeding as such was instituted against the appellant at this stage; the proceeding was instituted when a non-bailable warrant was issued against the appellant and this proceeding was instituted not on the basis of a police report but on the basis of evidence taken before the Magistrate, and, therefore, he says, it is a proceeding falling within s. 207(b).

Section 190(1) and 207 of the Code read as follows :

"190( I) Except as hereinafter provided, any Presi- F dency Magistrate, District Magistrate or Sub-divisional Magistrate, and any other Magistrate specially empowered in this behalf, may take cognizance of any offence-

(a) upon receiving a complaint of facts which constitute such offence; G

(b) upon a report in writing of such facts made by any police officer;

(c) upon information received from any person other than a police-officer, or upon his own knowledge or suspicion, that such offence has beel'. committed.'"

"207.

In every inquiry before a Magistrate where the case is triable exclusively by a court of Session or

llAGHUBANS DUBEY l'. STATE (S/kri, J.)

High Court, or, in the opinion of the Magistrate, ought to be tried by such Court, the Magistrate shall-

(a) in any proceeding instituted on a police report, follow the procedure specified in s. 207A; and

(b) in any other proceeding, follow the procedure specified in the other provisions of this Chapter."

It seems to us that s. 207(a) refers back to s. 190(1)(b); in other words, the police report mentioned in s. 207(a) is the report mentioned in s. 190(1) (b), and once cognizane is taken under s. 190(l)(b), a proceeding is instituted within s. 207(a). Hidayatullah, J., speaking for the Court, while considering the interpretation of s. 251-A of the Code of Criminal Procedure in Pral'iu Chandra Mody v. State of Andhra Pradesh(') observed as follows :

"In our judgment the meaning which is sought to be given to a 'police report' is not correct. In s. J 90, a distinction is made between the classes of persons who can start a criminal prosecution. Under the three clauses of s. 190(1), to which we have already referred, criminal prosecution can be initiated (i) by a police officer by a report in writing, (ii) upon information received from any person other than a police officer or upon the Ma-· gistrate's own knowledge or suspicion, and (iii) upon receiving a complaint of facts.

If the report in this case falls within (i) above, then the procedure under s. 251A, Criminal Procedure Code, must be followed.

If it falls. in (ii) or (iii) then the procedure under s. 252, ' Criminal Procedure Code, must be followed.

We are thus concerned to find out whether the report of the police officer in writing in this case can be described as a 'complaint of facts' or as 'information received' from any person other than a police officer.' That it cannot be the latter is obvious enough because the information is from a police officer. The term 'complaint' in this connection has been defined by the Code of Criminal Procedure and it 'means the allegation made orally or in writing to a Magistrate, with a view to his taking action under the Code, that some person, whether known or unknown, has committed an offence, but it does not include the report of a police officer.' [sees. 4(1)(h].

It, therefore, follows that s. 252, Criminal Procedure Code, can only apply to those cases which are .instituted otherwise than on a police report, that is to say, upon complaints which are not reports of a police officer or upon information received froin persons other than a police officer."

(1) [19651 I S.C.R. 269.

~28 SUPRl!MI!

OOUIT IUIPOllTS

(1967) 2 S.C.R.

Similarly s. 207(h) can only apply if the case was instituted <>therwise than on a polic-e report. On the facts of this case it is quite clear that the case does not fall within s. 19()1 l)(a) or s. l?O(l)(c) because the Sub-divisional Magistrate had taken cognizance of the offence on April 5, 1961.

But, says Mr.

Latif1. that though it is true that cognizance was taken on April 5, 1961, the cognizance was taken of the offence as far as the other accused were concerned and not as far as the appellant was concerned, as a matter of fact the appellant had been rightly or wrongly dis charged. In our opinion, once cognizance has been taken by the Magistrate, he takes cognizance of an offence and not the offenders; once he takes cognizance of an offence it is his duty to find out who the offenders really are and once he comes to the conclusion that apart from the persons sent up by the police some other persons are involved, it is his duty to proceed against those persons.

The summoning of the additional accused is part of the proceeding initiated by his taking cognizance of an offence.

As pointed out by this Court in Pravin Chandra Mody v. State of Andhra Pradesh(') the term "complaint" would include allegations made against persons unknown. If a Magistrate takes cognizance under s. 190{1)(a) on the basis of a complaint of facts he would take cognizance and a proceeding would be instituted even though persons who had committed the offence were not known at that time. The same position prevails, in ou• view. under s. 190( I)( b ).

Mr. Sachthey, the learned counsel for the respondent brought to our notice some decisions which have taken the same view.

The Calcutta High Court in Saifar v. State of West Bmgaf( ), following the Full Bench decision of the Judicial Commissio1:rs, Sind, in Mehrab v. Emperor( ), held that when a Magistrate takes cogni1.ance under s. 190(1)b) on a police report he takes cognizance of the offence and not merely of the particular persons named in the charge sheet, and therefore, the Magistrate is entitled to summon additional accused against whom he considers that there was good evidence, after perusal of the statements r.corded by the police under s. 161 and the other documents referred to in s. 173 even without examination of witnesses in court.

The Punjab High Court in h11ta v. The State( 4) and the Allahabad High Court in Ali Ullah v. The State(5) also expressed a similar view.

In the result the appeal fails and is dismissed.

V.P.S.

Appeal dismissed.

(I) !19651 I S.C.R. 269.

(2) A.l.R. 1962 Cal. 133.

(3) A.l.R.1924Sind71.

(4) A.LR. 1964 Pun. Jll.

(5) [1963] 1 Cr.L.J. 66.

RAGHUBANS DUBEY

STATE OF BIHAR

January 19, 1967

M. HIDAYATULLAH

S. M. SIKRI

Code of Criminal Procedure

ss. 190(1)(h) and 201

ss. 302, 201 and 149

I.P.C

s. 207

s. 207

Cr.P.C

s. 190(1)

s. 207(a)

s. 207(b)

Cr.P.C

[1965] 1 S.C.R. 269

Danial Lat(fi

K. K. Sinha

R. N. Sachthey

Sikri

High Court of Judicature of Patna

Raghubans Dubey

Raja Ram Sah

s. 173

Code of Criminal Procedure

April 5, 1961

s 149

s

149

L. P. Singh Magl

L. P. Singh

May 2, 1961

April 11, 1961

May 2. 1961

Jagannath Sao

Rupan Singh

Mahesh Sao

April II, 1961

Raghubans

Raghubans Dubey

Raghubans

RAGHUBANS DUBEY V. STATE

Rahgubans

Raghubans Dubey

Mahesh Sah

s. 207

Code of Criminal Procedure

section 190

Raghubans Dubey

Danial Latifi•

s. 207

Latifi

s. 207

s. 190(l)(b)

s. 207(b)

Section 190(1) and 207

llAGHUBANS DUBEY

s. 207A

s. 207(a)

s. 190(1)(b)

s. 207(a)

s. 190(1)

s. 190(l)(b)

s. 207(a)

Hidayatullah

s. 251

Code of Criminal Procedure

s. 190(1)

s. 251A

Criminal Procedure Code

s. 252

Criminal Procedure Code

Code of Criminal Procedure

s. 252

Criminal Procedure Code

s. 207(h)

s. 19()

s. 190

s. 190( I)( b )

Sachthey

Calcutta High Court

s. 190(1)

s. 161

s. 173

Punjab High Court

Allahabad High Court


R. B. SETH JESSARAM FATEHCHAND

OM NARAIN TANKHA & ANR.

January 19, 1967

(K. N. WANCHOO, R. S. BACHAWAT AND J.M. SHELAT, JJ.]

Trust-Security deposited with co1npany by sole selling agent-Interest payable by company-Deposit allowed to be mixed with other funds -Deposit whether held by company as trustee-Matters to be taken into consideration.

The appellant firm was appointed sole selling agent of a sugar manufacturing company and deposited Rs. 50,000 as security for due performance of the contract; this amount wao to carry interest at 6 per cent per annum. There was no restriction on the use of the said depoS1t by the company. According to cl. (9) of the agreement the security and mterest were to be refunded at the termination of the apency; in default of such payment the appellant firm was entitled to a commission as if agency had not terminated.

The clause further said that "as lon, g as security with interest is not refunded and commission due is not pt.id this agree--- ment will not be terminated." The company was ordered to be wound up befote the period of agency came to an end. Consequent on the winding up the appellant made an application praying for refund of its security deposit along with interest. It was contended that as the company held the amount of deposit as a trustee the appellant was entitled to priority among the creditors. On behalf of the liquidators it was denied that the amount deposited was in the nature of a trust entitled to preference over other debts. The company judge held that the amount was an ordinary debt. The Division Bench of the High Court also deci<ied against the appellant.

In appeal by special leave to this Court.

HELD: The deposit did not amount to a trust.

The question whether the security deposit in a particular case can be said to be impfessed with a trust will have to be decided on the basis of the terms of the agreement and the facts and circumstances of each case without any leaning one way or the other on the fact that the money was given as a security dePosit. [434 CJ If a trust can clearly be spelled out from the terms of the agreement that ends the matter. But if the trust cannot be spelled out clearly the fact that there was no segregation provided for, and the fact that interest was paid, would go a long way to show that the deposit was not impressed with the character of a trust particularly when the person with whom the deposit was mape could mix it with his own money and could use it for himself.

In such a case the inference would be that the relationship between the parties was that of a debtor and creditor. Further besides these circumstances, if there is any other term which suggests one kin<l of relationship rather than the other that will also have to be taken into account.

[436 B-C] In the present case the company was free to use the money for its own purpose and had to pay interest on it.

Further, in cl. (9) of the agreement the security was put on a par with the commission which was nothing but a debt.

The courts below had therefore rightly treated the security deposit as an ordinary debt. [436 Fl

Peter Donahf Macpherson v. Dugald Mckechine and Ors.

XXVIII (1923-24) Cal. W.N. 721. In the matter of Travancore Natfonal and

SUPREME COURT REPORTS [1967) 2 s.c.a.

Qui/011 Be111k Li11Jitecl, Official Liquidators and A1101her App/ican1s, A.J.R.

1939 ~-fad. 337, Jn re Mn11<'kji Petit Man14fac1urif!g Compc, ny Ltd. A.LR. 1932 Born. 31 l, Ma/ie.'ihir11ri Brothers v. Official Liquidalors, l.l.R. ( 1942) All. 242. Kesh<tra Mo/ia,, Das v. D. C. Basu, I.LR. [1943] 1 Cal. 313.

Gee v. Liddell, (1866) 55 E.R. 1038, K1u11chhull v. Hallett, (1879-80) XIII Ch. D. 696. /11 re llnlle// & Co., [1894] 2 Q.B.D. 237 and Frank M. Mckey v. Maurcie Paraclixe, 81 L. Ed. 75. referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 891 of 1964 Appeal by special leave from the judgment and decree dated October JO, 1961 of the Allahabad High Court in Letters Patent Appeal No. 83 of 1951.

N. C. Clral/erjee, B. C. Mishra, B. R. G. K. Achar and M. V Gos ... ami, for the ; ippellant.

C/Jaman Lal Pandlri and S. L Pandhi, for the respondents.

The Judgment of the Court was delivered by Wancboo, J. This is an appeal by special leave ag~; nst the judgment and decree of the Allahabad High Court. The appellant is a registered partnership carrying on business at Kanpur.

It entered into an agreement in December 1948 with the Vijia Lakshmi Sugar Mills Limited, Doiwala, District Dehra Dun (hereinafter referred to as the Mills) and was appointed sole selling agent of the Mills. According to the terms of the agreement, the appellant deposited a sum of Rs. 50,000/- as security for due performance of the contract, and this amount was to carry interest at the rate of Rs. 6/- per cent per annum to be paid by the Mills.

In November 1949 an order was passed winding-up the Mills and this happened before the period of agency came to an end. Consequent on the winding-up of the Mills, the appellant made an application in September 1950 by which it prayed for refund of security deposit along with interest.

It was also prayed that the Mills held the amount of deposit as trustee and in consequence the appellant was entitled to priority with respect to the amount of Rs. 50,000/-.

Jn addition, there was a claim of Rs. 24,500/- with respect to commission. That claim was given up and we are now not concernd with it.

The liquidators admitted that there had been an agreement as alleged by the appellant and that a sum of Rs. 50,000/- had been deposited with the Mills. But their case was that this amount was an ordinary debt with respect to which the appellant cou Id not clai-n any preference and that the appellant's contention that the amount deposited was a kind of trust with the Mills was not correct. The only question that had to be decided therefore was whether the amount of Rs. 50,000/- deposited as security for due performance of the contract of sole selling agency was in the nature of a trust which was entitled to preference or was an ordinary debt.

The learned Company Judge held on a construction of the agreement that the amount was an ordinary debt. He referred in this connection to the apparent conflict between the decisions of the Calcutta and Madras High Courts on one side and the Allahabad and .Bombay High Courts on the othe!' but was of opinion that this conflict was largely illusory as the question whether the deposit in a particular case was in the nature of a trust or was an ordinary debt depended on the facts and circumstances of each case. He finally held that the deposit in question was not in the nature of a trust and was not entitled to any preference on that ground.

The appellant then went in appeal to a Division Bench. The Division Bench upheld the view taken by the learned Company Judge and dismissed the appeal. The High Court having refused to grant a certificate, the appellant applied for an obtained special leave from this Court, and that is how the matter has come before us.

The two main terms of the agreement, viz., Nos. 8 and 9, between the appellant and the Mills which call for consideration in the present case are these:-

"(8) That the firm has deposited sum of Rs. 50,000/- with the said Mill as a security for the due performance of the contract on their part, on which amount the Mill shall pay interest to the said firm at the rate of 6 per cent per annum.

"(9) That the Mill shall refund the said security deposit of Rs. 50,000/- with interest thereon at the rate on terniination of the agency. In case the said amount is not refunded with interest thereon the firm shall be entitled to commission at the rates mentioned above as if agency has not terminated. In other words as long as security with interest is not refunded and commission due is not paid this agreement will not be terminated."

It may be mentioned that the agreement was for a period of one year which, as already indicated, had not expired before the windingup order was passed on November 8, 1949.

It will be seen from the terms of the agreement already set out that there was no stipulation that the amount of Rs. 50,000/ deposited as security would be kept as a separate fund by the Mills and it would not use it for its own purposes. On the other hand, it is clear that interest had to be paid and there was nothing in the agreement to prevent the Mills from using the money as its own so long as it paid interest on it. It is true that the money was to be refunded along with interest on the termination of the agency, but

cl. (9) further provided that in case the money was not refunded after one year, the appellant would be entitled to commission as if

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the agreement had not terminated. As the agreement itself puts it, A it will remain alive even after the period of one year so long as the security with interest was not refunded and the commission due was not paid. The last words of cl. (9) of the agreement put the security deposit and the commission due on the same footing.

It is because of this provision that the learned Company Judge held that as the scurity deposit and the Commission due were put on the B same footing and the commission could only be a debt, the security deposit in the circumstances of this agreement could not be treated on a higher footing. It seems to us that the view taken by the learned Company Judge so far as this agreement is concerned (which was upheld by the Division Bench) is correct.

We may now refer to the apparent conflict between the Calcutta and Madras High Courts on one side and the Allahabad and Bombay High Courts on the other. on this question. The represrntative cases on one side are: (i) Re: Alliance Bank of Simla: Peter Donald

Macpherso11 v. DuKald Mckechnie and others,( 1) and (ii) In the 111a11er of Trmancore Na1iom1/ and Qui/on Bank Limited, Official Liquidators and other applicant.!(2). On the other side the cases are

(i) In re: Ma11ekji Petit Manufacturing Company limited(') and

(ii) Mahesh1rnri Brothers v. Official liquidators('). The two Calcutta

and Madras cases seem to take the view that where there is a deposit there is creation of some kind of trust even though the deposit may carry interest and the person with whom the deposit is made is entitled to use the money as his own. It may however be mentioned that the Calcutta case was with respect to provident fund of the employees of a bank which went into liquidation while the Madras case was with respect to security deposit by an employee of a bank for due performance of his duties. It may be added that such cases were later provided for specifically by the amendment of the Indian Companies Act (No. VII of 1913) which was made in 1936 and by which s. 282-B was added to the Companies Act along with cl. (e) in s. 230( I) of the same Act.

Even so, these two cases make it clear that the proper approach to the question is to ask whether on the interpretation of the document. if there is one, or from proved or admitted facts and circumstances a trust is established or not.

If a trust is established, a provision for payment of interest by the trustee does not destroy the character of the trust nor does the fact that the money is not segregated.

The matter was again considered by the Calcutta High Court in Kshetra Mohan Das v. D. C. Basu(') in connection with a deposit made by a sole selling agent and the principle for deciding whether the deposit was in the nature of a trust or a loan was put thus:

(I) xxvm (19Z3-24) Cal. W.N. 721.

(2) A.LR. 1939 Mad. 337.

(3) A.l.R. 1932 Born. 311.

(4) l.L.R. (1942) All.24.

(5) I.L.R. (1943) I Cil. 313.

"If the security deposit of an employee or an agent of a company in the hands of such company can be regarded as impressed with trust or held in a fiduciary capacity by such company then such employee or agent is entitled to get back the whole of the security deposit even after such company goes to liquidation. . . . . . . . In the absence of such trust or fiduciary relation the employee or the agent of the company in liquidation is merely a creditor of the company and must share the assets pro rata with other creditors." There canin our opinion be no disagreement with the principle so enunciated, and the conclusion whether the deposit is in the nature of a trust or a loan will depend upon the facts and circumstances of each case, particularly on the terms of the agreement if there is one in writing. The difficulty however arises in the application of the principle to particular cases. But the Calcutta and Madras High Courts seem to lean to the view that where there is a security deposit it will generally be in the nature of a trust.

This brings us to the cases on the other side. The Bombay High Court in Manekji Petit's case(I) was also considering the case of a deposit by an agent. It considered the terms of the agreement which provided for Rs. 6/- per cent interest. Ordinarily the company was entitled to use the deposit as it thought fit, but there was a provision in the agreement that in the event of the company raising a loan secured by debentures of the company or by mortgaging company's property, the moneys deposited by th~ agent were to be forthwith invested in Government securities and to be ear, marked in some manner satisfactory to the agent. It was held on the basis of this last clause in the agreement that there could be no trust till the contingency provided therein came to pass. In that case that contingency had not come to pass and the moneys were mixed with the moneys of the company and used by it. The Bombay High Court held that upto that stage there was no trust created.

In Maheshwari Brothers(2), the question arose whether the security deposited .by the agents for the fulfilment of their obligation under the agreement was impressed with trust. The Allahabad High Court considered the agreement and came to the con- G clusion that as interest was provided and further as the company was entitled to use the deposit as its own and lastly because a floating charge was intended to be created on the assets of the company which failed for want of registration, the deposit was not in the nature of a trust. Thus absence of segregation and presence of interest coupled particularly with a provision for a floating charg~ H which had failed for want of registration inclined the court to hold that the deposit was not in the nature of a trust.

(I) A.l.R. 1932 Bom. 311.

(2) l.L.R. (1942) All. 242.

MlSup. Court./67-14

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It will thus be seen th:it the view of the learned Company Judge that ihe conflict between the Calcutta and Madras High Courts on one side and the Allahabad and Bombay High Courts on the other is more apparent than real is borne out by the fact that in each case the court considered the agreement to decide whether on the terms thereof and facts and circumstances of the case the deposit was impressed with a trust, though it must be admitted that the conclusion reached was not the same.

We are of opinion that the question whether the security deposit in a particular case can be said to be impressed with a trust will have to be decided on the basis of the terms of the agreement and the facts and circumstances of each case, without any leaning one way or the other on the fact that the money was given as a security deposit. If the terms of the agreement, if it is in writing, clearly indicate that the deposit was in the nature of a trust, the court will come to that conclusion in spite of the fact that interest is provided for in the agreement. But where the tenns of the agreement do not clearly indicate a trust, the court will have to cor.sider the facts and circumstances of each case along with the terms to decide whether in fact something in the nature of a trust was impressed on the security deposit. In such a case the fact whether segregation was provided for or not would be one circumstance to be taken into consideration. Where segregation is provided for the court would lean towards the deposit being in the nature of a trust. But where segregation is not provided for and the deposit is pennitted to be mixed up with the funds of the person with whom the deposit is made, the court may come to the conclusion that anything in the nature of trust was not intended, for generally speaking in view of s. 51 of the Indian Trust Act, (No. 2 of 1882) a trustee cannot use or deal with the trust property for his own profit or for any other purpose unconnected with the trust. It is true that where there is a clear trust and the trust deed if any provides that the trustee may use the trust property as he likes, the fact that the trustee can mix the trust property with his own may not make any difference. But where there is no dear indication that a security deposit was impressed with a trust, absence of"segregati<>n would be a circumstance against there being a trust.

Another circumstance which may have to be taken into account in a case where the agreement does not indicate clearly that the security deposit is impressed with a trust is the payment of interest.

Where there is no payment of interest provided for an inference may be readily drawn that the deposit was in the nature of a trust.

But where the person with whom the deposit is made is to pay interest it may be possible to infer that payment of interest is a pointer towards there being no trust.

Further any other provision in the agreement and any other circumstance as to the manner in

SBTR JBSSARAM v. OM NAllAIN (Wanchoo, I.) 4 35

which the deposit was dealt with may also have to be taken into account in coming to the conclusion whether the security deposit in a particular case was impressed with a trust or not.

We may now refer to some English and American cases in this connection. In Gee v. Liddell(!) the facts and circumstances of the case were considered and it was held on those facts and circumstances that there was a trust. In that case £ 2,000 had been left as trust by a will, but the executor who was the son of the testator said that his father had intended to bequelith £ 3,000 and the question was whether the further £ 1,000 was also a trust. On the facts and circumstances of that case it was held that as the amount bequeathed (namely, £ 2,000) was certainly a trust, the addition of £ 1,000 to it by the executor would be of the same kind and would be equally impressed with trust. That case also shows that where a trust can be inferred clearly a provision for payment of interest would be immaterial.

In re: Hallett's Estate, Knatchbul/ v. Hallett(2) it was hllld that if a person held money in a fiduciary character but mixed it up with his own account, the person for whom the money was held could follow It and had a charge on the balance in the bankers' hands.

This case again shows hat the main question that courts have to decide in such cases is whether on the facts and circumstances a fiduciary relationship is established. If it is established, then the fact that the money was mixed with the trustee's money may not make any difference.

In re: Hallett & Co.,(3) segregation was the test used for the purpose of deciding whether there was trust or not.

In Frank M. McKey v. Maurcie Paradise,(<) the question arose with reference to a claim of an employee welfare association against the employer and it was held that without segregating any money as due to the association there could be no trust. This case shows the significance of segregation in arriving at the inference whether there was a trust.

A consideration of these English and American cases also in our opinion shows that the first question in each case where the court is dealing with a security deposit is to ask whether on the agreement in writing, if any, and on the facts and circumstances of the case and conduct of the parties it can be said that the security deposit was impressed with some kind of a trust. If that can be said then the question whether interest was provided for and whether the trustee could mix the deposit money with his own money would not be of importance and would not take away the character of the deposit being impressed with a trust. The. mere fact that money was deposited as a security is not sufficient to come to the conclusion

(I) (1866) SS B.R. 1038.

(2) (1879-80) XIll Ch. D. 6116.

(3) (1894) 2 Q.B.D. 237.

(4) tit L. Ed. 7S.

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that it must be treated as trust money. The court will have to look to all the terms of the agreement if in writing and to the facts and circumstances of the case and to the conduct of the parties before (;()ming to the conclusion whether a security deposit was impressed with a trust. If a trust can clearly be spelled out from the terms of the agreement that ends the matter. But if the trust cannot be spelled out clearly the fact that there was no segregation provided for and the fact that interest was to be paid would go a long way to show that the deposit was not impressed with the characti:r of a trust particularly where the person with whom the deposit was made could mix it with his own money and could use it for himself.

In such a case the inference would be that the relatio11,5hip between tho parties was that of a debtor and creditor. Further besides these circumstances if there is any other term which suggets one kind of relationship rather than the other that will also have to be taken into account. Illustrations of this will be found both in the Bombay case (i.e. in Manekji's case)(') and in the Allahabad case (i.e. Maheshwari Brothers' case(1). In the Bombay case besides abstnce of segregation and presence of interest there was a further fact that in certain circumstances segregation had been provided for.

The court was entitled to take that fact into consideration and hold that the deposit was not impressed with trust till segregation took place. In the Allahabad case a floating charge was created which failed for want of registration, and that circumstance was also used to show that the relationship between the parties was tbat of a debtor and creditor and not that of a trustee and beneficiary.

Let us now apply these principles to the facts of the present case. The facts show that there was no segregation in this case and the Mills could mix the security deposit with its own money and use it for its own purpose. Further because the Mills could use the money for its own purpose, it had to pay interest. In addition to these two circumstances which would incline one to the view that tho relationship was that of a debtor and creditor, there is the further fact that cl. (9) of the agreement provides that even though the period fixed in the agreement comes to an end, the agreement would continue if the security deposit is not refunded and the commission due is not paid. We agree with the learned Company Judge that the last words in cl. (9) make the security deposit and (;()mmission due on a par. The commission due can be nothing other than a debt; the security deposit is put on a par with that.

That is a further indication that the relationship in the present case was that of a debtor and creditor. In the circumstances we are of opinion that the High Court was right in its view as to the nature of the security deposit in the present case.

The appeal therefore fails and is hereby dismissed with costs.

G.C.

Appeal dismissed.

(I) A.LR. 1932 Born. 311.

(2) LL.R. [1942) AIL 242.

R. B. SETH JESSARAM FATEHCHAND

OM NARAIN TANKHA & ANR

January 19, 1967

K. N. WANCHOO

R. S. BACHAWAT

M. SHELAT, JJ.

CIVIL APPELLATE JURISDICTION

Allahabad High Court

N. C. Clral

B. C. Mishra

B. R. G. K. Achar

M. V Gos

Jaman Lal Pandlri

S. L Pandhi

Wancboo

Kanpur

Vijia Lakshmi Sugar Mills Limited

Dehra Dun

Calcutta and Madras High Courts

Allahabad and .Bombay High Courts

November 8, 1949

Allahabad and Bombay High Courts

Calcutta

Madras

Companies Act

s. 282

Companies Act

s. 230( I)

Calcutta High Court

Bombay High Court

Manekji Petit

Maheshwari Brothers(2)

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s. 51

Hallett & Co.

Bombay

Manekji

Allahabad

Maheshwari Brothers