COMMISSIONER OF INCOME TAX, HYDERABAD A

M/S. MOTOR AND GENERAL STORES (P.) LTD.

May 2, 1967

[J. C. SHAH, S. M. SIKRI AND V. RAMASWAMI, JJ.] B

I, ncome-tox Act, 1922 s. 10(2) (vli)-Assessee selling 'cinenut attd <Jther assets in exchange for shares in another Company-Whether transactum one of 'sale' or 'exchange'-Therefore whether difference be. tween book-value of assets and exchange consideration taxable-Deter- 1nining the substance rather than form of transaction in revenue .n1atters-Conditions for.

The respondent private Limited Company owned a cinema house and at a meeting of its Board of Directors on September 9, 1955, it was resolved that the Managing Director may be authorised to nego• tiate with a buyer !or the sale of the entire concern with all its equipment and machinery etc. for a consideration of Rs. 1,20,000.

After an agreement had been concluded to effect a sale and had been confirmed at an extraordinary general meeting of the company on October 4, 1955, an "exchange deed" was entered into on February 21, 1956 =d the consideration was received by the assessee company in the shape of transfer of certain shares of the face value of Rs. 1,20,000

owned by the buyer in another company.

In the course of its assessment to tax for the year 1956-57, the Income-tax Officer computed the respondent's profits under s. 10(2) (vii) hy including an amount of Rs. 43,568 on account of the excess amount

realised over the written down value of the assets sold. The order of the Income-tax Officer was confirmed, in appeai by the Appellate Assistant Commissioner and substantially also by the Tribunal. However, upon a reference under s. 66(2) of the Act the High Court answered the question in favour of the respondent.

In the appeal to this Court it was contended on behalf of the appe!· iant that the money consideration for the assets was fixed at Rs. 1,20,000

and the mode of payment was by transfer of shares so that the tran .saction was really a sale and not transfer by way of exchange; that the resolution of the Board of Directors and of the shareholders reproduc "! in the preamble of the exchange deed showed clearly that what was

authamed was the sale of the entire concern; and that in revenue matters it was the substance of the transaction which must be looked at and not the form in which the parties have chosen to clothe the transaction.

HELD : The Income-tax authorities were not entitled to treat the transaction as a sale and to apply the provisions of s. 10(2) (vii) of the Income-tax Act, 1922. -In essence the ti-ansaction was one of exchange and there was no sale of the properties described in the exhcange deed.

There was no price paid or promised to be paid for the transfer of the properties but there was only a consideration in the shape of transfer <>f shares in another company by the buyer. [883E-G)

It was clear from the operative part of the exchange deed that there was an exchange of the properties desoribed in it for the shares of a

C.I, T. v. MOfOR & GENERAL STORES (Ramaswami, J.) 877

A company. Neither the recital in the preamble nor the resolutions could control the language of the operative portion of the deed or its legal effect. [8830-El

i\1adan1 Pilh; i v. Badrokali An1111al, I.L.R. 45 Madras 612, reft:rrcd to.

The contention that in the present case it was the substance rather than the form of the transaction which should be looked at must be rejected. There was no suggestion on behalf of the appellant of bad faith nor was it alleged that the particular form of the transaction was adopted as a cloak to conceal a different transaction. In the absence of any such suggestion the true principle is that the taxing statute has to be applied in accordance with the legal rights of the parties to the transaction. When the transaction is embodied in a document, the liability to tax depends upon the meaning and content of the language used in accordance with the ordinary rules of construction.

[883H;

884BJ Bank of Cliettinad Ltd. v. C.l.T. Madras, 1940 I.T.R. 522; Duke of 1¥estminster's case,. 19 T.C. 490; and Conunissioner of Inland Revenue

v. IVesloyan and General .11ssuranre Society, 30 T.C. 11, referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 819 of 1966.

Appeal by special leave from the judgment and order dated October 30, 1964 of the Andhra Pradesh High Court in case Referred No. 6 of 1963.

D. Narsaraju, T. A. Ramachandran and R. N. Sachthey for the appellant.

P. Ram Reddy and A. V. V. Nair, for the respondent.

The Judgment of the Court was delivered by Ramaswami, J.

This appeal is brought, by special leave, on behalf of the Commissioner of Income-tax, Hyderabad from the Judgment of the Andhra Pradesh High Court dated October 30,

1964 in a case Referred No. 6 of 1963.

The respondent (hereinafter referred to as the ( 'assesseecompany') is a private limited company owning a cinema house called "Sree Rama Talkies", at Bobbili. It was being taxed on the profits made by exhibition of films therein. At a meeting of its Board of Directors held on September 9, 1955, it was resolved that the Managing Director, the Raja of Bobbili may be authorised to negotiate with the Zamindar of Chikkavaram or his nominr.e for the sale of the entire concern with all its equipment and machinery, fittings etc. for a consideration of Rs. 1,20,000/-.

An agreement was concluded to effect a sale and this was confirmed by the assessee-company at an extra-ordinary general body meeting held on October 4, 1955. Pursuant thereto a deed called the "exchange deed" was brought into existence on February 21, 1956 and the consideration was received by the assesseecompany in the shape of transfer of 5% tax-free cumulative preference shares in Sri Rama Sugar and Industries Ltd., Bobbili, of the face value of Rs. 1,20,000/- held by the Zamindar and Zamindarini of Chikkavaram. Separate valuation was given for the immovable property and for the movables etc. and goodwill, each being valued at Rs. 60,000/·. For the assessment year 1956-57, the assessee-company submitted a return of income showing a sum of Rs. 9,823/- as profits derived from the transaction.

The Income-tax Officer found that the value realised exceeded the written down value by Rs. 43,568/. and accordingly computed the profil!l under s: 10(2) (vii) of the Income-tax Act, 1922 and included the amount in the taxable income of the 11ssessee-company. . The order of the Income-tax Officer was confirmed by the Appellate Assistant Commissioner in appeal and by the Income-tax Appellate Tribunal except for allowing a sum of Rs. 5,000/ - as representing the cost of the goodwill.

As directed by the High Court, the Appellate Tribunal stated a case under s. 66(2) of the Income-tax Act, 1922 on the following question of law:

 "(1) Whether the transaction dated 21-2-1956 amounts io a sale within the purview of the second proviso to section 10 ( 2) (vii) of the Indian Incometax Act; alternatively,

(2) Whether the consideration for the sale is not 'the market value of the shares as on the date of the trans.action, namely, Rs. 95/- per share, but the face value of the shares."

P.fter heaiing the reference the High Court answered the question in favour of the a8sessee-company and against the Comnussioner of Income-tax.

Section 10 ( 2) (vii) of the Income-tax Act, 1922 provides as follows:

"10 .. Business. (2) Such profits or gains shall be computed after making the following allowances, •namely:- .................. , ......... .

(vii) in respect of any such building, .machinery or plant which has been sold or discarded or demolished or destroyed, the !ll1lOunt by which the written down value thereof exceeds the amount for which the building, machinery or plant, as the case may be, is actually sold or its scrap value : Provided that. such amount is aetually written off in the books of the assessee :

Provided further that where the amount for which any such building, machinery or plant is sold, whether during the continuance of the business or after the cessation thereof, exceeds , the written down value, so much of the excess as does not exceed the difference between the original cost and the written down value shall be deemed to be profits of the previous year in which the sale took place: • " It is only if there is a sale of the cinema house and the other asset~ that the taxable profits and gains are to be computed in the present case under s. 10(2)(vii) as the amount by which the wr.ftten down value exceeds the amount for which the assets are actually sold. The words "sale" or "sold" have not been defined in the Income-tax Act, 1922. Consequently, these words have to be construed by reference to other enactments. Section 54 of the Transfer of Property Act defines 'sale' as a transfer of ownership in exchange for a price paid or promised or part paid and part promised.

Section 54 of the Transfer of Property Act reads as follows:

" 'Sale' is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised." There is no definition of the word 'price' in this Act. But it i~ well-settled that the word 'price' is used in the same sense in this section as in s. 4 of the Sale of Goods Act, 1930 (Act III of

1930) (See the decision of a Full Bench f the Madras High Court in Madam Pillai v. Badrakali Ammal)('). Section 4 of the Sale of Goods Act reads as follows :

"(1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part-owner and another.

(:?) A. contract of sale may be absolute or conditional.

(3) Where under a contract of sale the property in the goods. is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled the contract is called an agreement to sell. ' . ( 4) An agreement to sell becomes a sale when the tim.e elapses or the. conditions are fulfilled subject to which the property m the goods is to be transferred."

(I) I.L.R. 45. Madras, 612.

Stion 2(10) of the Sale of Goods Act defines "price" as meanmg the money. cons!dertion for a sale of g.oods. The presence <Jf money consideration 1s therefore an essential element in a tran- -saction of sale. If the consideration is not money but some other valuable consideration it may be an exchange or barter but not a sale.

Section 118 of the Transfer of Property Act defines "exchange' as follows:

"When two persons mutually transfer the ownership of one thing for the ownership of another, neither thing, or both things being money only, the transaction is called an 'exchange'.

A transfer of property in completion of an exchange can be made only in manner proVlded for the transfer of such property by sale."

Section 119 provides :

"If any party to an exchange or any person claiming through or under sucfi party is by reason of any defect in the title of the other party deprived of the thing or any part of the thing received by him in exchange, then, unless a contrary intention appears from the terms of the exchange, such other party is liable to him or any person claiJlling through or under him for loss caused thereby, or at the option of ihe person so deprived, for the return of the thing transferred, if still in the possession of such other party or his legal representative or a transferee from him without consideration."

The definition of exchange in s. 118 of the Transfer of Property

Act is not limited to immovable property but it extends also to F barter of goods. It is clear therefore that both under the Sale of Goods Act and the Transfer of Property Act, sale is a transfer of property in the goods or of the ownership in immovable property for a money consideration. But in exchange there is a reciprocal transfer of interest in the immovable property, the corresponding transfer of interest in the movable property being denoted by the word 'barter'. "The difference between a sale and an ex- G change is this, that in the former the price is paid in money.' whilst in the latter it is paid in goods by way of barter." (Chitty on ., Contracts 22nd Edn., Vol. II page 582).

The question presented for determination in this case is whether the transaction of February 21, 1956 was a sale and H whether the Income-tax authorities were entitled to include the amount of Rs. 43,568/- as profits under s. 10(2) (vii) . of he Income-tax Act as representing the excess of the considerallon

realised by the assessee-company over the written down value of the assets transferred. On behalf of the appellant it was contended that the money consideration was fixed at Rs. 1,20,000/- and the mode of payment was by transfer of shares and the transaction was really a sale and not transfer by way of exchange.

We are unable to accept this argument as correct In the first place, the document is called "exchange deed". The preamble of the document states :

"And whereas the party of the first part as at the Directors meeting held on 3-2-1955 resolved to exchange the property mentioned in Schedule for the property mentioned in Schedule II belonging to the party of the second part and whereas in pursuance of the resolution of the Board of Directors the Managing Director of the party of the first part had handed over possession of the property described in Schedule I hereto on 9-9-1955 to the party of the second part and whereas the general body of the first part at a meeting held on 4-10-1955 resolved to authorise the Managing Director of the party of the first part to negotiate with the zarnindar and zamindarini of Chikkavaram the second part herein and or their nominees for the sale of the party of the entire concern known by the name of Sri Rama Talkies, Bobbili now owned by the party of the first part, with all its equipment machinery fittings spares accessories the old Projector the Jeej car bearing No. M.S.P.

92 8 purchased from its funds all the buildings and out houses either newly constructed or mentioned in the registered sale deed No. 1464/5-9-1949 and in this exchange deed together with entire premises covered thereby and the cash deposits lying with the various distributors and commercial tax department of the State Government more fully described in Schedule I hereto and also the goodwill of the concern for a consideration of Rs. l,2~,~00/- (Rpees one lakh twenty thousand only) consisting of unmovable properties worth Rs. 60,000/- and movable properties worth Rs. _20,0~0/- (sic) total Rs. 1,20,000 which will be

ree1ved m the shape of transfer of 5% tax-free cumulative preference shares of Messrs Sri Rama Sugars & Industries Ltd., Bobbili of the face value of Rs. 1,20,000/- (rupees one lakh twenty thousand only) held by the zanundar and zamindarini of Chikkavaram

th~ pa~ of the second part herein and more fully described m Schedule II herein and to transfer receipt and also hand over records relating to the title and management to enable them to carry on the business. of the

concern and whereas the general body of the part of the A first part at the meeting held on 11-2-1956 resolved that the action of the managing director in handing over possession of the property described in Schedule l to the party of the second part on 9-9-1955 is approved and whereas the parties hereto have agreed to exchange the said properties described in the first and B second Schedule hereto in the manner hereinafter appearing."

The operative part of the document reads as follows :

"Now this deed witnesseth as follows :

( 1) in pursuance of the said agreement and in consideration of the transfer by the party of the second part of the property more fully described in the Schedule II hereto to the party of the first part, the party of the first part hereby grants and transfers to the party of the second part II all the property more fully described in Schedule I hereto to hold the same to the party of the second part absolutely for ever.

( 2) In further pursuance of the said agreement and in consideration of the transfer by the party of the first part of the property in Schedule I hereto to first part of the property in Schedule I hereto to the party of the Second part, the party of the second part, hereby grants and transfers to the party of the first part of the shares more fully described in Schedule II hereto to hold the same to the party of the first part absolutely for ever.

(3) each of the parties hereby covenants (sic) with the other first that the properties hereby transferred by him is free from encumbrance charge or lieu of any kind whatsoever. Secondly that the properties so transferred by each of them shall be quitely entered upon held and enjoyed by the other of them and the rents and profits and dividends received by the other of them without any interruption of disturbance by the party transferring the same or any one claiming through or under them thirdly that each of the parties hereto will at the request of and cost of the other execute every such assurance and so every such act or thinking as shall reasonably be required by such other for further or more.

C.I.T. v. MOTOR & GENEltAL STORES (Ramaswami, /.) 883

(4) The party of the first part covenants and" assurances the party of the second part that all taxes due to the Government or the local bodies and all bills for the supply of electrical energy goods and accessories all salaries due to the staff have been paid upto 9-9-1955 the date of transfer and that the party of the second part will ~. in no way liable for any act done or com1TI1ss10n made by the Rajah of Bobbili .......... "

On behalf of the appellant Mr. Narsaraju referred to tl!e resolution of the Board of Directors dated September 9, 1955 in which it was resolved that the Managing Director will negotiate C with the zamindar of Chikkavaram or his nominee for the sale of the Sree Rama Talkies with all its equipment etc. for a consideration of Rs. 1,20,000/- Mr. Narsaraju also referred to the pre amble in which the resolution of the Board of Directors dated September 9, 1955 is quoted and also the resolution of the meet ing of the general body of the assessee-company held on October D 4, 1955 authorising the Managing Director to negotiate "for the sale of the entire concern known by the name of Sree Rama Talkies". But, in our opinion, neither the recital in the preamble nor the resolution of the Board of Directors dated September 9, 1955 will control the language of the operative portion of the document or its legal effect. There is no ambiguity in the con E struction of the operative part. It is clear from the operative part of the document that there was an exchange of the properties described in Sch. I for 5% tax-free cumulative preference shares of Sri Rama Sugars & Industries Ltd., Bobbili.

It is true that a valuation of Rs. 1,20,000/- was fix.ed to consist of Rs. 60,000/- for immovable properties and the goodwill and Rs. 60,000/- for f movable properties, but that is only for the purpose of payment of stamp duty. In essence the transaction is one of exchange and there was no sale of the properties described in Sch. I for any money consideration. In other words, there was no price paid or promised to be paid for the transfer of the cinema house known as Sree Rama Talkies together with machinery and equipment described in Sch. I to the deed dated February 21, G 1956 but there was a consideration in the shape of transfer of 5 % ta~-free cumulative preference shares of Sri Rama Sugar & Industries Ltd. It follows therefore that the Income-tax authorities were nm entitled to treat the transaction dated February 21, 1956 as a sale and to apply the provisions of s. 10(2) (vii) of the Income-tax Act.

H .

We pass on to onsider the argument of Mr. Narsaraju that in revenue matters. it was the substance of the transaction which must be looked at and not the form in which the parties

have chosen to clothe the transaction. It was contended that, in the present case, there was in substance a sale of Sree Rama Talkies by the assessee-company for a money consideration of Rs. 1,20,000/-, though the mode of payment was by transfer of shares and the resolution of the Board of Directors dated September 9, 1955 clearly indicated that , the intention of the assesseecompany was to sell Sree Rama Talkies along with its equipment concerned for a consideration of Rs. 1,20,000/-. In the present case, however, there is no suggestion on behalf of the appellant of bad faith on the part of the assessee-company nor is it alleged that the particular form of the transaction was adopted as a cloak to conceal a different transaction. It is not disputed that the document in question was intended to be acted upon and there is no suggestion of ma/a fides or that the document was never intended to have any legal effect.

In the absence of any suggestion of bad faith or fraud the true principle is that the trucing statute has to be applied in accordance with the legal rights of the parties to the transaction. When the transaction is embodied in a document the liability to tax depends upon the meaning and content of the language used in accorda.nce with the ordinary rules of construction.

In Bank of Chettinad Ltd. v. C.l.T. Madras('), it was pointed out by the Judicial Committee that the doctrine that in revenue cases the 'substance of the matter' may be regarded as distinguished from the strict legal position, is erroneous. If a person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown seeking to recover the tax cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case migh'. otherwise appear to be. In the Duke of Westminster's case(2 ) deeds of covenant had been executed by the Duke in favour of employees in such amounts that the covenantees, if remaining in the Duke's service, would receive respectively sums equivalent to their wages and salaries. If they left the service of the Duke the payments would still have been due, but it was in nearly all instances explained to the employee that so long as the service continued, wh11e the deed did not prevent his claiming ordinary wages in addition, it was expected that he would not do so. It was argued for the Crown that though in form a <>rant of an annuity, the transaction was in substance merely one here by the annuitant was to continue to serve the Duke at his existing salary, so that the annuity must be treated as salary.

Neither the Court of Appeal nor the House of Lords agreed WI!h

this contention. To regard the payments under the d_eed as m effect payments of salary would be to treat a transctton of one legal character as if it were a transaction of a different legal

(!) 1940 l.T.R. 522.

(2) 19 T.C. 490.

character.

With regard to the supposed contrast between the fonn and substance of the arrangement, Lord Russell of Killowen stated at page 524 as follows :

"If all that is meant by the doctrine is that having once ascertained the legal rights of the parties you may disregard mere nomenclature and decide the question of taxability or non-taxability in accordance with the legal rights, well and good. That is what this House did in the case of Secretary of State in Council of India v.

Scoble, (1903) A.C. 299 (4 T.C. 618); that and no more. If, on the other hand, the doctrine means that you may brush aside deeds, disregard the legal rights and liabilities arising under a contract between parties, and decide the question of taxability or non-taxability upon the footing of the rights and liabilities of the parties being different from what in law they are, then I entirely dissent from such a doctrine.'' In a later case--Commissioners of Inland Revenue v. Wesleyan and General Assurance Society ( 1) Viscount Simon expressed the principle as follows :

"It may be well to repeat two propositions which are well established in the application of the law relating to Income Tax. First, the name given to a transaction by the parties concerned does not necessarily decide the nature of the transaction.

To call a payment a loan if it is really an annuity does not assist the tax-payer, any more than to call an item a capital payment would prevent it from being regarded as an income payment if that is its true nature. The question always is what is the real character of the payment, not what the parties call it.

Secondly, a transaction which, on its true construction, is of a kind that would escape tax, is not taxable on the ground that the same result could be brought about by a transaction in another form which would attract tax."

Fo~ the reasons already _given we hold that the question has been rightly answered by the High Court in the negative and in fa_vour of the assessee-company and this appeal must be dismissed with costs.

R.K.P.S.

Appeal dismissed.

(ll JaT.c.11.

COMMISSIONER OF INCOME TAX, HYDERABAD

May 2, 1967

C. SHAH

S. M. SIKRI

V. RAMASWAMI, JJ.

s. 10(2)

September 9, 1955

October 4, 1955

February 21, 1956

s. 10(2)

s. 66(2)

s. 10(2)

Income-tax Act, 1922

Ramaswami

D. Narsaraju

T. A. Ramachandran

R. N. Sachthey

P. Ram Reddy

A. V. V. Nair

Bobbili

Chikkavaram

Sri Rama Sugar and Industries Ltd.

Zamindarini

Income-tax Act, 1922

s. 66(2)

Income-tax Act, 1922

section 10

Section 10

Income-tax Act, 1922

s. 10(2)(vii)

Income-tax Act, 1922

Section 54

Transfer of Property Act

Section 54

Transfer of Property Act

s. 4

Sale of Goods Act, 1930

Madras High Court

Section 4

Sale of Goods Act

Sale of Goods Act

Section 118

Transfer of Property Act

Section 119

s. 118

Sale of Goods Act

Transfer of Property Act

s. 10(2)

Income-tax Act

Schedule II

Schedule I

Rama Talkies

Schedule I

Rama Sugars & Industries Ltd.

Schedule II

Schedule II

Schedule I

Schedule I

Schedule I

Schedule II

Narsaraju

October D 4, 1955

Sree Rama Talkies

Rama

Sugars & Industries Ltd.

February 21, G 1956

Rama Sugar & Industries Ltd.

s. 10(2)

Income-tax Act

Sree Rama Talkies

Russell

Killowen


HULAS RAI BAIJ NATH

FIRM K. B. BASS & CO ..

May 3, 1967

[R. S. BACHAWAT, J. M. SHELAT AND V. BHARGAVA, JJ.J

Code cf Ciril Procedure, 1908 (Act 5 of 1908). 0.23 r. 1-"1'! ''' rendition of accozmt,~Defendant pleads accounts settled, money due 10 him, and prays for decree of amount due-Preliminary decree nat passed-Whether plaintiff can withdraw suit.

In a suit for rendition of accounts, the defendant pleaded that accounts, had been settled and he was to get certain money from the plaintiff; that there could be no rendition of accounts; and that if the court concluded that rendition of account was necessary, a decree for the amount which may be found due to the defendant with costs end interest may be passed in favour of the defendant after necessary court• fee was realised from the defendant. While no preliminary decree for rendition of accounts had been passed, and, in fact, the defendant was still contending that there .could be no rendition of accounts in the suit, the plaintiff alplied far withdrawal of the suit. The defendant opposed the withdrawa , claiming that in a suit of this nature, his position became

that of a plaintiff and he became entitled to have the accounting done and to obtain a decree, and the withdrawal after protracted duration was to defeat this right of the defendant.

The trial Court allowed the withdrawal, which was upheld by the High Court. In appeal by the defendant, this Court HELD : At the stage of withdrawal of the suit, no vested right in favour of the defendant had come into existence and there was no ground on which the Court could refuse to allow withdrawal of the suit.

There is no provision in the Code of Civil Procedure which requires the Court to refuse permission to \Vithdra\V the suit in such circumstances and to compel the plaintiff to proceed with it. It is, of course, possible that different considerations may arise where a set-off may have been claimed under 0.8, C.P.C., or a counter-claim may have been filed, if permissible by the procedural law applicable t<> proceedings governing the suit. In the present case, the pleadings did not amount to a claim for set-off.

Even if it be assumed that the> defendant could have claimed a decree for the amount found due to him after rendition of accounts, no such right can possibly be held to ei<ist before the Court passed a preliminary decree for rendition of accounts. In the case of a suit between princiJ?al and agent, it is the principal alone who bas normally the right to claun rendition of accounts from the ageot. The agent canne>t ordi nadly claim a decree for rendition of accounts from the principal and, in fact, in the suit, the defendant, who was the agent of the respondent, did not claim any reJ1dition of accounts from the plaintiff.

[888F-H;

889B-D]

Seet!tc.i Ac/ii v. Meyappa C!tettiar a11<l Others, A.I.R. 1934 Mad. 337. refered to

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 897 ()f 1964.

~ a;

HULAS RAJ BAIJ NATH v. K. B. BASS (Bhargava, J.) 887

A Appeal by special leave from the judgment and order dated November 14, 1961 of the Allahabad High Court in Civil Revi sion No. 686 of 1953.

TJishan Narain and M. I. Khowa; a, for the appellant.

Niren De.

Addi. Solicitor-General, M. V.

Goswami and Y ogeshwar Parshad, for the respondent.

The Judgment of the Court was delivered by Bhargava, J.

The respondent firm, K. B. Bass & Co., instituted a suit on 13th April, 1951, for rendition of accounts against the appellant firm, Messrs Hulas Rai Baij Nath, alleging that th<l appellant was the commission agent of the respondent and that the accounts between respondent as the principal and appellant as the agent had not been settled since the dealings began in the year 1941 onwards. Tentatively, a sum of Rs. 2, 100 / - was claimed in the plaint.

In the written statement filed . on behalf of the appellant, the suit was contested on various grounds; but for the purposes of this appeal, we need mention the pleas taken in. only two paragraphs 8 and 11. In paragraph 8, it was pleaded that one Lala Shiva Charan, a partner of the respondent firm, had come with a Munim in the month of Agahan last and accouilt5 were fully explained to him as worked out up to Kartik Sudi 15.

Sambat 2007. In that statement of account, a sum of Rs. 10,677-14-3 wa5 found due to the appellant from the respondent and the representatives of the respondent asked for two months' time for making the payment of the amount fo11nd due.

It was thus urged that there was no occasion for rendition of accounts and the plaintiff's suit was not fit to proceed according to law.

In paragraph 11, the appellant pleaded that "if, in the opinion of the court, the court has jurisdiction to try the suit and it is necessary to render the accounts, it is equitable that a decree for the amount whlch may be found due to the contesting defendant, after rendition of accounts, together with costs and interest be passed in favour of the contesting defendant, after necessary court-fee being realized from the defendant." A number of jssues were framed and the case was taken up for recording of evidence on sevral dales. of hearig. Some of the issues were even given up durmg the tnal.

Ultimately, on 5th May, 1953, after a considerable amount of evidence had been recorded, an application was presented on behalf of the plaintjf-respondent for withdrawal of the suit.

The ground given for withdrawal was that the respondent firm was in the charge of one Bhagwat Charan who had colluded with the appellant and litigation was going on between H the. respondent and Bhaat Charn for effecting partition of the .bus1l\ess.

Consequently, 1t was d1tlicult to prosecute the suit.

No prayer was made for permission to file a fresh suit. The appellant filed an application objecting to this application for with L9Sup. Cl/67-13

888 SUPREME COURT REPORn

[1967] 3 S.C.R.

drawal.

The nrnin ground taken for contesting this application for withdrawal was that, in a suit of this nature, it is permissible to pass a decree in favour of the defendant if, on accounting,

"omething is found due to him against the plaintiff, and it followed that, if the defendant paid court-fee on the amount which was found due to him from the plaintiff, his position became that of a plaintiff himself and he became entitled to have the accounting done and to obtain a decree.

It was urged that the plaintiff's game in withdrawing the suit after pro'tracted duration and considerable expenditure on the part of the defendant was to defeat this right of the defendant.

The trial Court held that the right of the plaintiff in this suit to withdraw under 0. 2J, r. 1 of the Code of Civil Procedure wns inherent and such a right could be exer cised at any time before judgment. All that the defendant could claim was an order for costs in his favour. The Court, therefore, dismissed the suit, awarding costs of the suit to the appellant.

The appellant filed a revision in the High Court of Allahabad

gainst this order, with a prayer that the High Court may set aside the order of the trial Court and remand the suit for trial according to law.

The High Court dismissed the application for revision; and the appellant has now come up to this Court in this appeal by special leave.

The short question that, in these circumstances, falls for decision is whether the respondent was entitled to withdraw from the suit and have it dismissed by the application dated 5th May, 1953 at the stage when issues had been framed and some evidence had been recorded, but no preliminary decree for rendition of accounts had yet been passed.

The language of 0.23, r. l, sub-r. (1 ), C.P.C., gives an nnqualified right t9 a plaintiff to withdraw from a suit and, if no permission to file a fresh suit is sought under sub-r. (2) of that Rule, the plaintiff becomes liable for such costs as the Court. may award and becomes precluded from instituting any fresh suit in respect of that subject-matter under sub-r. ( 3) of that Rule.

There is no provision in the Code of Civil Procedure which requires the Court to refuse permission to withdraw the suit in such circumstances and to compel the plaintiff to proceed with it. It is, of course, possible that different <'.Onsiderations may arise where a set-off may have been claimed under 0. 8 C.P.C., or a counter-claim may have been filed, if pennissible by the procedural law applicable to the proceedings governin11; the suit. In the present case, the pleadings in para- µraphs 8 and 1 l of the written statement. mentioned above .. dearly did not amount to a claim for set-off.

Further, there could be no counter-claim, because no provision is shown under which a counter-claim could have been filed in the trial Court in such a suit.

There is also the circumstance that the application for withdrawal was moved at a stage when no preliminary decree had been passed for renditiOn of account and. in fact, the appellant

• '

' '

,..

HULAS .RA! BAIJ N~TH ~. K. B. BASS (B/zargava, J.) 889

was still contending that there could be no rendition of accounts in the suit, because accounts had already been settled. Even in para "11, the only claim put forward was that, in case the Court found it necessary to direct rendition of accounts and any amount is found due to the appellant, a decree may be passed in favour of the appellant for that amount.

In this paragraph also, the right claimed by the appellant was a contingent right which did not exist at the time when the written statement was filed.

Even if it be assumed that the appellant could have claimed a decree for the amount found due to him after rendition of accounts, no such right can possibly be held to exist before the Court passed a preliminary decree for rendition of accounts. .It is to be noted that in the case of. a suit between principal and agent, it is the principal al0ne who has normally the right to claim rendition of accounts from the agent.

The agent cannot ordinarily claim a decree. for rendition of accounts from the principal and, in fact, in the suit, the appellant, who was the agent of the resJi<>ndenl, did not claim any rendition of accounis from the respondent. In these circumstances, at the stage of withdrawal of t11e suit, no vested right in favour of the appellant had come into existence and there was no ground on which the Court could refuse to allow withdrawal of the suit. It is unnecessary for us to express any opinion as to. whether a Court is bounil to .allow withdrawal of a suit to a plaintiff after some vested right may have accrued in the suit in 'favour•of.the defendant. On the facts of this case. it is 'Clear that the right 0f the plaintiff •to withdraw the sllit was not at all affected by any vested right existing in favour of the appellant and, consequently, the order passed by the trial Court was perfectly justified. On behalf of the appellant, reliance Was placed on the views expressed by a Division Bench of the Madras High Court in Seethai Ahi v. Meyappa Chettiar and Others ('), where the Co1111 held :

"<?rd!narily, when. the Court finds no impediment to the d1snussal of a smt after the announcement of tile withdrawal of he. cla.im .. by the plaintiff,. it will simply say that the su.tt 1s d1sm1ssed as the plaintiff has-withdrawn from 1t.

An order as to costs will also be passe.d.

But several exceptions have been recognised to this generl rule. In suit~ for partition, if a preliminary decree 1s passed declaring and defining the shares of the several parties, the suit will not be dismissed by reason of ny subsequent withdrawal by the plaintiff, for the obvious reason that the rights declared in favour of tile defendants under the preliminary decree would Ix; rendered nugtory if the uit sould simply be dis missed. So also m partnership smts and suits for (I) A. I. R. 1934 Mad. 337.

SUPREME COURT REPORTS

{1967] 3 S.C.R.

accounts, where the defendants too may be entitled to some reliefs in their favour as a result of the settlement of accounts, the withdrawal of the sult by the plaintiff cannot end in the mere dismissal of the suit." We do not think, as urged by learned counsel, that the learned Judges of the Madras High Court were laying down the principle that, in a suit for accounts, a defendant is always entitled to relief in his favour and that the withdrawal of such a suit by the plaintiff cannot be permitted to terminate the suit.

Jn the context in which that Court expressed its opinion about sults for accounts, it clearly intended to lay down that the dismissal of the suit on plaintiff's withdrawal is not to be necessarily permitted, if the defendant has become entitled to a relief in his favour. But such a right, if at all, can in no circumstances be held to accrue before a preliminary decree for rendition of accounts is passed.

In fact. in mentioning suits for partition and suits for accounts, the Court was keeping in view the circumstance mentioned in the earlier sentence which envisaged that a preliminary decree had already been passed defining rights of parties.

In any case, we do not think that any defendant in a suit for rendition of accounts can insist that the plaintiff must be compelled to proceed with thesuit at such a s'tage as the one at which the respolldent in the present case applied for withdrawal of the suit.

The appeal, therefore, fails and is dismissed with costs.

Y.P.

Appeal dismissed.

HULAS RAI BAIJ NATH

FIRM K. B. BASS & CO

May 3, 1967

R. S. BACHAWAT, J.

M. SHELAT

V. BHARGAVA, JJ

the Code of Civil Procedure

C.P.C

Allahabad High Court

TJishan Narain

M. I. Khowa

Niren De

M. V.

Goswami

Y ogeshwar Parshad

Bhargava

K. B. Bass & Co.

Lala Shiva Charan

Kartik Sudi

5th May, 1953

Bhagwat Charan

Bhaat Charn

the Code of Civil Procedure

High Court of Allahabad

C.P.C

the Code of Civil Procedure

C.P.C

HULAS .RA! BAIJ N~TH ~. K. B. BASS

B/zargava

Madras High Court


SECRETARY, HOME (ENDOWMENTS), ANDHRA PRADESH

DIGYADARSAM RAJINDRA RAM DASJEE

May 3, 1967

[M. HIDAYATULLAH AND C. A. VAIDIALINGAM, JJ.)

Madras Hindu Religious and Charitablo Endowments ; Act XIX of I 959, '" 53-respo11de11t claiming to have succeeded as trustee of Math in accordance with procedure under certain agree1nents--other persons also raising disputes and claiming succession-whether vacancy existed to enable exercise of power by Commissioner under s, 53.

After the death of the Mahant of Sri Swami Ha1ibiramji Math, TJCUmalai, Tirueati, in 19471 an agreement was arrived at on October 29, 194 7 resolv1ng certain disputes regarding the suecession to the office of Mabant and laying down a procedure for choosing a suecessor when a vacancy arose.

Furthermore, the Akada Panchayat was constituted the supreme authority in such matters.

One C.D. became the Mahant in 1958.

The respondent challenged the succession by a declaratory suit but eventually there was a compromise and in an agreement dated July 15, 1961, it was agreed that C.D. was entitled to continue as Mabant, and that after his death tlie respondent would succeed him . • :1.·· On the death of C.D. on March 18, 1962, the respondent claimed to have succeeded as Mahant in his own right and the Akada Panchayat approved the succession by a resolution on the same date.

However, the Commissioner Hindu Religious and Charitable Endowments Andhra Pradesh. having received a telegram disputing the respondent's clain1, took action under s. 53 of the Madras Hind.u Religious and Charitable E!1dowments Act XIX of 1959 and a5"umed charge of the Math and its property on March 24, 1964. The respondent thereafter filed a suit for a declaration that he was the rightful successor.

He als11 filed a revision before the Government challenging the action taken under s. 53 whereupon the Government stayed further proceedings wd the respondent therefore withdrew his suit.

On Jooe 5, 1962 the Government issued an order stating that as there were disputes about who was the . rightful successor, unt!I the Civil Court decided this question, it was necessary to make. smtable arrangt; ments for the proper administration of the ath and its endowments; 1t therefore appointed the respondent as 1 terim Mahant subject to various conditions laid down in the order.

In _view 0f the respondent's attitude in the discharge of certain of his

drties. on August 22, 1964, the Government passed an order directing him to show cause why the previous order of June 5 1962 should not hf . "'!ncellhed.

The respondent filed a Writ Petition 'againsi this order c aim1ng t at h~ had succeeded to the office of Mahant in his own ri ht ?"d at no .action ul~ be taken by the Government ooder 8, 53 eit:er ·•pomhng him as mterim Mahan! or cancelling such appointment' th~ Hrfh Court. thereupo!' stayed further proceedings in pursuance of the n~ ice pendmg the drnposal of the writ petition. The State Government t en passed a further order on September 9 1965 framing certa' chares agains~ the resonde'!t, calling for hi; explantions to them and at t e same. lime .. placing htm under suspension.

The respondent filed a, ~cont~ . writ pellt.'on. challeng)ng this new order whereupon the earlier "'' P1• •IJ?n s. d1sm1ssed as mfructuous. The High Court allowed the seconl writ petition.

It was condended on behalf of the appcll:int that (i) on the death or C.D. on l\farch 18, 1962, a vacancy occurred in the office of l\fahant

and there was a dispute between the respondent and two other persons each of whom claimed the right of succession; suits had been filed by each of those two persons to establish their claims and although these had been dismissed, an appeal was pending in respect of one of them; in view of this the necessary conditions exist'ed for invoking the pO\Vcr under s. fi3 for .the. propzr .management of the l\1ath; furthermore, (ii)

th:1t inasmuch as the respondent had been appointed to m~1nagc the institution i,~, the departmznt under s. 53 of the Act, and, as hf.'I was continuing in such management by virtue of that appointment, the State bad ampfe jurisdiction to pass orders either of suspending or even dismissing the respondent.

HELD : Dismissing .the appeal; The High Court had rightly held that there was no jurisdiction for the exercise of the power under s. 53 of the Act. (i) Before s. 53 can he invo!cd. two conditions are necessary 1''iz .. (a) a vacancy must have occurred in the office of the trustee of a Math; and (b) there must be a dispute respecting the right of succession to such office.

Jn the pre~ sent case although it was possible to say that there was a dispute res~

pccting the right of SUfCCession to the office of Mahant, the further condition that there must be a vacancy could not be said to have existed and the High Court had rightly accepted the claim of the respondent that by virtue of the Panchayat agreement of October 29, 1947, the compromise agreement of Julv 15, 1961, and the approval given to his succession by the Akada Panchayat, he had succeeded as Mahant on March 18, 1962, on the death of C.D. [898 B-D. HJ

(ii) If .the respondent had succeeded as Mahan! on the death of

(~ D., in his own right. the mere circumstance that the Govcfnment also

passetl an order aptiointing him as interim Mahant, later would not take away the right of the respondent to function as Mahant. Once it is held that he ""'as not holding the office cxclu'!iively on the basis of th'!: order of the Government of June 5, 1962, it follows that the appellant had no jurisdiction to pass an order, placing the respondent under suspension. as that virtually amounted to a removal of the trustee of a Math which could only 'be done in accordance with the provisions of s. 52 of the Act. [899 G-900 Al

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2586 of 1966.

Appeals from the judgment dated November 17, 1966 of the Andhra Pradesh High Court in Writ Petition No. 1589 of 1965.

P. Ram Reddy and A. V. V. Nair, for the appellants.

l. V. Rangacharya, B. Parthasarathy and P. C. B/wrtari. for the respondent.

The Judgment of the Court was delivered by Vaidialingam, J.

This appeal, by certificate, is directed against the order of the Anclhra. Pradesh High Court, allowing a writ petition, filed by the respondent, under Art. 226 of the Constitution.

The facts leading up to the filing of the Writ Petition, by the respondent, may be briefly indicated.

In respect of Sri Swm i Hathiramji Math. Tirumalai, Tirupati, disputes arose regardm!!

SECAETARY v. RAJINDRA RAM (Valdialingam, J.) 893

the succession to the office of the Mahan't of the Math, after the death, in 1947, of the then Mahan!, Prayag Dossji. An agree~ ment seems to have been arrived at, on October 29, 1947, laying down the procedure for choosing a successor to the office of the Mahant, when a vacancy arises. The Akada Panchayat appears to have been constituted the supreme authority, in such matters.

That agreement also provided, as to who, among the respondent, and one Chetham Doss, was to succeed to the office of the Mahant, on the death of one Narayan Doss.

Narayan Doss died on December 9, 1958, and Chetham Doss succeeded as Mahant. lhe respondent filed O.S. 84 of 1958, in the Subordinate Judge's Court, Chittoor, for a declaration that he is entitled to succeed to the office of Maha:nt. The suit was resisted, by Chetam Dass, on the basis that under the agreement of October 29, 1947, he was legitimately entitled to succeed as Mahant. Sometime later, the respondent and Chetam Dass, entered into a compromise, by virtue of an agreement, dated July 15, 1961. Both of them agreed that Chetam Das was entitled to' continue as Mahan!, and tllat, after his death, the respondent was to succeed as Mahant.

In view of this agreement, the respondent got dismissed, as settled,

0.S. 84 of 1958.

Chetam Dass died, on March 18, 1962, and the respondent .claims to have succeeded as Mahant, in his own right. But, according to the appellant, the Commissioner,

H.R. & C.E ..

Andhra Pradesh, received telegram stating that there was a dispute about the person who was to succeed as Mahant. The Assistant Commissioner, H.R. & C.E., took action, under s. 53 of the Madras Hindu Religious & Charitable Endowments Act, 195 l (Act XIX of 1951), (hereinafter called the Act), which is applicable to the State of Andhra Pradesh, and assumed charge, on March 2-4, 1962, of the Math and its properties. The respondent filed. oil March 26, 1962, 0.S. 24 of 1962, for a declaration that he is the rightful successor to the office of the Mahant of the Institution, in questioi_i.

The Commissioner, H.R. & C.E., was made a party to the suit.

The respondent also filed a revision before the Government, on April 18, 1962, challenging the a1suminir charge. o~ the Math, under s. 53 of the Act, by the Assistant Com'!J.1Ss10ner.

The Government stayed further proceedings: and, m consequence, o.s. 24 of 1962, was withdrawn, by the respondent, on April 24, 1962.

The Government also passed an ord.er, on Jun~ 5, 1962, stating that it was necessary to take act1?n, for makmg suitable arrangements for the proper administratmn of the Math and its endowments, till the civil court decided as to "'.ho should succeed to the office of the Mahan!.

Tn this connection, the State Government referred to an objection, received, .from one Devendra Dass, stating that he is the proper person

entitl~ to succeed to the office of the Mahant. Ultimately, by the S3Jd order, the Government appointed the respondent, as an

interim Mahant, subject to the various conditions, laid down therein.

Devendra Dass filed writ petition No. 602 of 1962, on June 21, 1962, in the High Court, challenging this order of the State Government, dated June 5, 1962. That writ petition was, dismissed on August 27, 1962. In the meanwhile, Devendrn Dass, who was a minor, had instituted two suits, O.S. Nos. 50 of 1962 and 57 of 1962, to declare him as the person entitled to succeed to the office of the Mahan!, on the death of Chetam Dass. In the first suit he was represented, by one Mukundd Doss, as next friend, an\i in the second suit he was represented by one Bhagwant Doss, as the next friend.

When Devendra Doss attained majority, later on, he preferred to continue 0.S. 50 of 1962, and therefore 0.S. 57 of 1962 was dismissed, as unnecessary.

Ou August 22, 1964, the Government passed an order, directing the respondent to show cause why its previous order, dated June 5, 1962, appointing the respondent, as interim Mahant. should not be cancelled.

This appears to have been issued, by the State Government, in view of the fact that the respondent was taking a particular attitude regarding the pada ka'1ikkas received by him.

In the said order, the Government also proceeded, on the basis that it has no jurisdiction to appoint an interim Mahan! when action is taken, under s. 53 of the Act.

On receipt of this ,.notice, the respondent filed writ petitio11 No. 1534 of 1964, challenging the said order.

His claim appear; to have been. tha.t he had succeeded to the office of Mahan!. in his own right, after the death of Chetam Dass, and that no action

can be taken, under s. 53 of .the Act, and therefore, the question of the Government, either appointing him as interim Mahant. or .taking any action to cancel such an order, does not arise.

It is seen that further proceedings; in pursuance of the notice, issued by the Government, were stayed, by the High Court, pending the disposal of the writ petition.

The State Government passed an order, on September 9, 1965,-.framing certain charges, as against the respondent, and directing. him to furnish his explanation. regarding the same, aJ!GI; .. at the same time, placed him under suspension.

The respondent filed, writ petition no. 1589 of 1965. challenging this order of the Government, placing him under suspension.

In view of this writ petition, the earlier writ petition no. 1534 of 1964, was dismissed, as infructuous, on. April 14. 1966.

In the meanwhile, Bhagwant Doss, who had originally instituted O.S. no, 57' of 1962, as the next friend of Devendra Dass, and which suit was; got dismissed by the minor, after attaining majo- H Tity, instituted•another suit, O.S. n9. 69 of 1965 on Sptember 29 1965 clainiing in his own right to be the person en!ltled to sue- . , ceed

1to the office of Mahant.

This suit appears to be still pend-

SECRETARY v. RAJINDRA RAM (Vaidialingam, !.) 895

Ing.

But O.S. 50 of 1962, which was decided to be continued, by Devendra Doss, was contested by the respondent and, ultimately, dismissed, on April 28, 1966. It is stated that an appeal, A.S. No. 476 of 1966, has been filed, on November 17, 1966, against this decree and it is still pending.

The main contention, taken by the respondent, in writ petition no. 1589 of 1965, was that he had already in law succeeded as Mahant, on March 18, 1962, when the presiding Mahant, Chetam Doss, died.

Therefore, according to him, there was no vacancy which can be aid to have occurred,. in the office of the trustee of the Math, so as to give jurisdiction to the Assistant Commissioner, or the Commissioner, H.R. & C.E., to take action, under s. 53 of the Act. The respondent also relied upon the circumstance that the suit filed by Devendra Doss, 0.S. 50 of 1962, had been dismissed and the Court had accepted his title to hold the office of the Mahan!, on the basis of the Panchayat Agreement, dated October 29, 1947, as well as the agreement, dated July 15, 1961, entered into between him and the then Mahan!, Chetam Dass.

The respondent also relied upon the circumstance that his assumption of office, as Mahant, on the death of Chetam Dass, has been approved, on March 18, 1962, by the supreme authority, namely, the Akada Panchayat.

The appellant resisted the claim of the respondent, on the ground that when Chetam Doss died, and the respondent attempted to take charge as Mahant, a claim was made, by one Devendra Doss, that he was the person, lawfully entitled to succeed to the office of the Mahant.

On the death of Chetam Doss, on March 18, 1962, a vacancy occurred, in the office of the trustee of the math, and there is also a dispute, between the respondent amt Devendra Doss, regarding the right of succession to such office.

In view of the fact that the necessary conditions, for invoking s. 53 exist, the assumptiQn of management of the Math was taken over, by the Assistant Commissioner, H.R. & C.E., for the proper management of the institution. It was also pointed out that the suit instituted, by Bhagwant Doss, O.S. no. 69 of 1965 claimino in himself th,!! right to succeed, as a trustee, was still peding and that also shows there is a dispute, regarding succession to the office <;>f the trustee.

The appellant has also urged, that in any event, masmuch as the respondent has been appointed to manaoe the institution, by the department, under s. 53 of the Act, and, s he was continuing in such mna.gei:iie?t by virtue of such appointment, the State had ample 1unsd1ct10n to pass orders either of suspending, or even dismissing the respondent.

The learned Judges of the High Court have held that the respondent has succeeded as Mahant, on March 18 1962 on the death of Chetam Dass, by virtue of the Panchayat' Agree:nent of October 29, 1947, and the compromise agreement, dated July 'ls,

l 961.

Therefore, it cannot be said that there was any vacancy in the oflice of the trustee of the Math, so as to enable the appellant to take action, under s. 53 of the Act.

The High Court has, in this connection, referred to the findings recorded, by the Subordinate Judge's Court, in favour of the respondent, in O.S. 50 of 1962. The mere circumstance that after a person has succeeded to the office of the trustee, other people lay claims to that office, and institute litigation for that purpose, will not, according to the High Court, give jurisdiction to the appellants to take action, under s. 53 of the Act.

The High Court is further of the view that the appellant's action, in placinl( the respondent under suspension. is contrary to the directions given by the High Court, on April 9, 1965, pending the disposal of the writ petition.

The High Court is further of the view that the stand, taken by the appellants, is quite contrary to the earlier stand, taken in their order, dated June 5, 1962, whereit~ they had categorically stated that the civil Court's decision will be conclusive and final, regarding the succession to the office of the Mahant.

This reason, is given by the High Court, as it was of the view that the appellant should give due respect to the decision, in 0.S. 50 of 1962. On these grounds the High Court quashed the order passed, by the State Government, dated September 9, 1966, placing the petitioner, under suspension.

Mr. Ram Reddy, learned counsel appearing for the appellants. has raised the same contentions that were taken, before the High Court.

In addition, counsel has also pointed out that the deci sion, in O.S. 50 of 1962, has not become final, inasmuch as Dcvendra Doss, who lost that litigation, has filed A.S. No. 476 of 1966, which is still pending.

Counsel further points out that, in view of the dispute raised, by Devendra Doss, by making a claim for the trusteeship of the Math, before the Gover.nment, the writ petition, No. 602 of I 962, filed by the said party, as well as the various suits, referred to above, will clearly show that there is a dispute regarding the succession to the office of the trustee of the Math, when a vacancy occurred, on the death of Chetam Dass, on March 18, 1962. Therefore, action taken by the appellant, in the interests of the institution, was perfectly valid.

Counsel also urged that inasmuch as the respondent is functionin!! as Manager of the institution, by virtue of his appointment, on June 5, 1962, by the Government, subject to the conditions mentioned therein, the Government was competent to take disciplinary action, as against the respondent, for breach of those conditions.

Mr. r. V. Rangacharya, learned counsel for the respondeni, fully supports the reasons, given by the learned Judges of the High Court, for accepting the claim made by his client. in the writ petition.

SECRETARY"· RAJINDRA RAM (Vat'<lia/i11ga111, /.) 897'

The short question, that arises, for consideration, is as to whether the Assistant Commissioner, H.R. & C.E., had jurisdiction to. assume management of the Math, in question, under s. 53 of the Act.

That will depend on the further question as to whether the State Government had jurisdiction to place the respondent, under suspension, as they have purported to do, by their order, dated September 9. 1965. The answer to the above question is to be decided, by reference to s. 53 of the Act.

Section 53 of the Act, occurs in Chapter IV, relating to Maths.

Sub-s. ( 1) of that Section enables the commissioner or any two or morepersons having interest and having obtained the consent, in writing, of the Commissioner, to institute a suit to obtain a decree for removing the trustee of a math or a specific endowment attached to a math, for any one or more of the grounds mentioned in els. (a) to (f) therein.

Section 53, which is the material section, and which relates to filling of vacancies, is as follows :

"53. ( 1) When a vacancy occurs in the office of the trustee of a math or specific endowment attached to a math and there is a dispute respecting the right of succession to such office or,

when such vacancy cannot be filled up immediately or when the trustee is a minor and has no guardian fit and willing to act as such or there is a dispute respecting the person who is entitled to act as guardian, or when the trustee is by reason of unsoundness of mind or other mental or physical defect or infirmity unable to discharge the functions of the trustee,

the Assistant Commissioner may take such steps and pass such order as he thinks proper for the temporary custody and protection of the endowments of the math or of the specific endowment, as the case may be-, and shall report the matter forthwith to the Commis-- sioner.

. (2) Upon the receipt of such report, if the Commiss1one~. aft71" makinl! such inquiry as he deems necess_ary. 1s satisfied that an arrangement for the administration of the math and its endowments or of the specific endowment, as the case may be, is necessary. he shall m~e such arrangement as he thinks fit until the disabzhty of the trustee ceases or another trustee succeeds to the office, as the case may be.

. (3) In making any such arrangement, the Commissznr shall have due regard to the claims of thed1sc1ples of the math, if any.

( 4) Nothing in this section shall be deemed to affect anything contained in the Madras Court of Wards Act, 1902."

Section 5 3 (! ) contemplates four contingencies, under which the Assistant Commissioner may talce steps for the temporary custody and protection of the math.

We are concerned, in this case, only with the first contingency, referred to in that subsection.

Before that provision can be invoked, two conditions arc necessary, vi:.., (a) a vacancy must have occurred, in the office of the trustee of a math; and (b) there must be a dispute, re'- pccting the right of succession to such office.

In this case, it is possible to say, in view of the claim made by Devendra Dass. and the litigations referred to, above, that there was a dispute respecting the right of succession to the office of the Mahan!. But in order to give jurisdiction to the appellant to take action, under the first contingency, referred to in sub-s. ( l) of s. 53, the two conditions adverted to above, will have to exist.

In this case. it is the claim of the appellant that there was a vacancy, in th~ otlicc of the trustee of tht"> Math, on March 18, 1962, when Chctam Dass died.

On the other hand, according to the respondent, there was no vacancy in the office cif the Mahant, at that time. because, on the death of Chetam Dass, the respondent succeeded to the office of the Mahan!.

Therefore, the point t<1 he considered is, as to whether a vacancy has occurred, in the ofiice of the trustee of the Math, on March 18, 1962.

That 1here must be an actual vacancy, un-filled, is clear, from the wording of s. 53.( l), when it deals with two different contingencies. providing for the assumption of management.

Under the first contingency, a vacancy should have occurred in the office of a trustee of a Math, and there is a dispute in respect of the succession to such office.

That is, the office has not been filled in. by anybody having a prima facie legal, right to assume management.

Similarly, the second contingency, contemplated under ' 53 (1). when assumption of management can be made by th~

Department, is when a vacancy occurs in the office of a trustee of a Math and when such vacancy cannot be filled up immediately.

This clearly shows that there must be a vacancy, as a fact, in the sense that nobody with any legal right has assumed ,1fficc of the trustee of a Math.

In this case, as we have pointed out earlier, the High Courl has accepted the claim of the respondent that by virtue of the Panchayat agreement dated October 29, 1947, and the compromise agreement, dated July 15, 1961, the respondent has succeeded to the office of the trustee of the Math, on March 18. 1962, on the death of Chetam Dass.

The supreme authority . . according to the High Court, the Akada Panchayat, has also

A •

SECRETARY l'. RAJINDRA RAM ( Vaidia/ingam, J.) 899

approved of the said appointment, by resolution of the same date.

We do not propose to consider the findings recorded in O.S. 50 of l 962, which are no doubt in favour of the respondent, because that decision is the subject of an appeal, in A.S. no. 476 of

1966. Nor do we propose to consider the claim of Bhagwant Doss in O.S. 69 of 1965, which is still pending adjudication, at the hands of the Court.

But even without reference to those litigations, the view of the High Court that there j_s no vacancy in the office of the trustee of the Math which alone will give jurisdiction to the appellant to take action under s. 5 3 ( 1), can be accepted as correct, for the other reasons, mentioned by us, earlier.

Mr. Ram Reddy, learned counsel for the appellants, further points out that, in this case, the respondent is in management of the Math, by virtue of the appointment made, by the State Government, on June 5, 1962, and therefore tile State Government is entitled to take disciplinary action against him for breach of conditions, under which he was holding that ofllce.

Counsel also invited our attention to the averments made by the respondent himself, in Writ Petition No. 602 of 1962, that the State Government has appoin'ted him as interim Mahan!. The stand taken by the respondent, in writ petition no. 602 of 1962, cannot assist the appellant, because he was interested then in fighting the claim made by Devendra Dass, in the said writ petition. In resisting such claim, he has, no doubt, made reference to the fact that hi'

right to function, as Mahant, cannot be disturbed, as the State Government has appointed him as interim mahant. Therefore. the stand taken by the respondent, in the said writ petition, must be understood in the said context.

No. doubt, normally. if it is established that the respondent\ o.nty nght to fuction as Manager of this institution, is cxclu-

"vely o.n the basis of the Government order, dated June 5, 1962. there will be considerable force in the contention of learned counsel for th~ app7llant tht the State Govemment has got jurisdiction to tae d1sc1phnary action, against the respondent.

But the fact> m this ca.se show that the position is entirely different. If tile ; cspondent, as held by the High Court-with which view we nrc m agreement-has succeeded to the office of the trustee of th~ Math .. on the death f Chetam Dass, on March 18, 1962, in hi' own right, the !11e.re c1rumstance that the Government also passc< ar:i order appomtmg him as interim Mahant or Manager ht,,. will not take away the right of the respondent to functlo1; "a~

trustee, on the basis of his original right.

Once it is held that

tc respondent i~ not holding the office of the Mahant. exclu- " vely n the basis of the order of the Government, dated June 5. 1962, 11 fo!lows that the appellant has no jurisdiction to pass an order, placing the respondent under suspension, as that \irtually a111ounts to a removal of the trustee of a Math. The removal of

a trustee of a Math can be done only in the manner, and in the circumstances, mentioned in s. 52 of the Act.

Therefore, the view of the High Court that the order of the Government, placing the respondent under suspension, is not valid, is correct. ·

The result is, that the appeal fails, and is dismissed.. In the circumstances of the case, there will be no order as to costs.

R.K.P.S.

Appeal dismisui.

-,-,

• '

DIGYADARSAM RAJINDRA RAM DASJEE

May 3, 1967

M. HIDAYATULLAH

July 15, 1961

C.D.

March 18, 1962

Mahant

s. 53

March 24, 1964

s. 53

Jooe 5, 1962

August 22, 1964

September 9 1965

s. 53

s. 53

s. 53

October 29, 1947

Julv 15, 1961

s. 52

P. Ram Reddy

A. V. V. Nair

V. Rangacharya

B. Parthasarathy

P. C. B

Vaidialingam

Art. 226

Valdialingam

Akada Panchayat

Chetham Doss

Narayan Doss

December 9, 1958

S. 84

Subordinate Judge's Court, Chittoor

Chetam Dass

Chetam Das

S. 84

Mahant

s. 53

Charitable Endowments Act

State of Andhra Pradesh

March 2-4, 1962

S. 24

s. 53

s. 24

April 24, 1962

Devendra Dass

Devendra Dass

August 27, 1962

Devendrn Dass

Mukundd Doss

Bhagwant Doss

Devendra Doss

S. 50

S. 57

s. 53

s. 53

September 9, 1965,-.framing

April 14. 1966

S. 50

Chetam Doss

s. 53

S. 50

Devendra Doss

s. 53

s. 53

s. 53

S. 50

s. 53

April 9, 1965

June 5, 1962

S. 50

September 9, 1966

Ram Reddy

S. 50

Dcvendra Doss

r. V. Rangacharya

RAJINDRA RAM

s. 53

September 9. 1965

s. 53

Section 53

Section 53

Section 5

s. 53

Chctam Dass

s. 53

RAJINDRA RAM

S. 50

S. 69

s. 5

s. 52