VIRUDHUNAGAR STEEL ROLLING MILIS LIMITED A

THE GOVERNMEl'iT OF MADRAS

January I 0, I 968

[K .. N. WANCHOO, C.J., R. S. BACHAWAT, J. M. SnELAT

G. K. MITTER AND C. A. VAIDIALINGAM, JJ.)

Constitution of India, Art. 32-Peziiion under Art. 226 no notice to respondent-disn1issed by single Judge-Appeal to division bench also dis1nissed by speaking order-Petilioner nor filin~ appeal but a petition

under Art. 32-Whetlter petition barred hy re.; ju<licata.

Madras E/cc1rfcity (Taxation on Consumption) Act, 1962, s. 12-// vio/Gtive of Art. 14.

The petitioner, a public limited con1pany manufacturing various steel and iron products, requested the respondenr ;\ladras Government for an exemption from tax under s. 12 of the Madras Eectricitv Act No. JV of 1962 which provided that wh"e energy of a specified type was consumed in the process of manufacture or production in an industrial undertaking licensed under the Industries (Development and Regulation) 'Act 65 of 1951, no electricity tax shall he payable on the energy so consumed for a period of three years from the date of the commencement of production.

The petitioner's cac; c wa'\ that though it did not require a licence under s. 11 of the later Act in view of the notification issued by the Central Govt. under s. 29-B by which industrial undertakings having fixed assets not exceeding Rs. I 0 lakhs were not required to obtain µ licence, it was still governed by Act 65 of 1951 for the purposes of s. 12 of Madras Act No.

IV of 1962. The respondent Government rejected the claim on the ground that no exemption could he granted under s. 12 of the Madras Act tD undertakings which were not licensed under the Central Act.

Thereupon the petitioner filed a writ petition in the High Court attacking :s. 12 of the Madras Act under Art. 14 of the Omstitution and contending that it should also hae hcen granted the cxemtion claimed. The petition was dismissed by _a Single Judge \\'ithout i<><>ue of notice by a short order to the effect that the pctitior.or was not entitled :o the benefit of s. 12 of the Madras Act and the validi!v of the Sl!'Ction could not be attacked as the exemption provided was based on sohnd principlc<;.An appeal to a Division Bench \\."as also dismissed. The petitioner did not file an appeal from the order of the Division Bench but chose to file the present petition under Art. 32 claiming the same reliefs as in his carl!cr petition to the High Court. The respondnt raic; ed a preliminary objction tha1 the petition wa'\ not maint:linahle -in view of th~ petitioner~ 'failure to file an

ppeal from the order of the Divio; ion Rench.

Jt wa~ also contended on the merits that s. 12 of the Madra> Act wa< not hit by Art. 14.

HELD : dio; miss; ng the petition :

(i) The preliminary objection must he upheld.

The pctitiO'ller did not appeal from the order of the Division Bench.

The High Court made a speaking order dealing with the merits of the case and the fact that no notice was issued to the other side before such an orch..~ was passed v.-as immaterial in the circumstances.

The present

().

ff.

. \·

petition under Art. 32 on the same facts for the same relief based on the same article of the Constitution ws therefore barred. [744 DJ

Where a writ petition is dismissed without notice to the other side but the order of dismissal is speaking orde'r and the petition is disposed o~ .o°: merits, that would still amount to res judicata and would bar a petition under Art. 32. The petitioner's only proper remedy in such a case wol; lld

he to come in appeal from such a speaking order passed on the ments. [743 E-Fl

Daryao v. The State of U.P., [1962] 1 S.C.R. 574; explained and applied.

(ii) Section 12 of the Madras as Act was not hit by Art. 14 of the C.onstitution.

ORIGINAL JURISDICTION: Writ Petition No. 38 of 1967.

Petition under Art. 32 of the Constitution of India for the enforcement of fundamental rights.

R. Gppalakrishnan, for the petitioner.

A. V. Rangam, for the respondent.

The Judgment of the Court was delivered by

Wanchoo, C.J. The petitioner is a Public Limited Company manufacturing bars, rods and agricultural implements out of scrap iron and steel and consumes energy of High Tension Supply for the purpose.

Its case is that it is governed by the Industries (Development and Regulation) Act, No. 65 of 1951, (hereinafter referred to as the Central Act), even though it did not require a licence under s. 11 thereof in view of the notification issued by the Central Government under s. 29-B by which industrial undertakings having fixed assets not exceeding rupees ten lakhs were not required to obtain a licence thereunder irrespective of the number of persons employed in ; uch undertakings.

The petitioner commenced functioning from February, 1963. The Madras Legislature passed the Madras Electricity (Taxation on consumption) Act, No. IV of 1962, (hereinafter referred to as the Madras Act) by which tax was imposed on the consumption of energy both of high 'tension and low tension electricity for various purposes at varying rates. Section 12 of the }'iadras Act however provided that where energy under High Tension Supply is consumed in the process of manufacturing or producing the principal product in any industrial. undertaking licensed under the Central Act, no electricity tax shall be payable on the energy so consumed for a period of three year' from the date of the commencement of the manufacture or production of the principal product in such undertaking.

The petitioner requested the Government of Madras for exemption from tax on the ground that even though it was not

Iinsed under s. 11 of the Central Act, it was governed by that Act. The Madras Government rejected its riayer on the ground that no exemption could be granted to undatakings which were not licensed under the Central Act a' provided in s. 12 of the Madras Act. Thereupon the petitioner filed a writ petition in the High Court of Madras attacking s. 12 of the Mad1as Act under Art. 14 of the Constitution and claiming that it :; hould also have been granted exemption.

The petilion wa' dismissed by a learned Single Judge of the High Court without issue of notice by a short order to the effect that the petitioner was not entitled to the benefit of s. 12 of the Madras Act and the validity oi the section could not be attacked as the exemption provided wa' based on sound principles.

The petitioner then went in Letters Patent Appeal and the appeal was heard by a Division Bench of the High Court. The Division Bench held that the exemption was a concession and could not be claimed as a matter of right and that a' s. 12 did not provide for exemption in favour of undertakings like the petitioner's it could not claim exemption.

The Division Benett also rejected the argument that Art. 14 was applicable in this case.

In consequence, the appeal was dismissed.

The present petition was filed by the petitioner soon after the appeal had been dismissed by the High Court and its contention before us is that it should have been given the exemption under s. 12 of the Madras Act in view of Art. 14 of the Constitution.

The petitioner however did not file any appeal from the order of the Division Bench of the High Court.

The petition has been opposed on behalf of the State of Madras and a preliminary objection has been taken that as the petitioner did not file an appeal from the order of the Division Bench, it is not open to it to file this

petition in view of the decision of this Court in Daryao v. The State of V.P.( 1 ) It is further contended thats. 12 of the Madra, Act is not hit by Art. I 4.

We arc of opinion that the preliminary objection must prevail.

It is urged on behalf of the petitioner that the decision in the ca!IC of Daryao( 1) shows that it was only when notice had been issued on a writ petition and it is decided on contest that the principle of res judicata would apply and a petitioner losing on such coolest in the High Court would not be entitled to come to this Court under Art. 32 of the Constitution.

Jn this connection reference has been made to the observation at p. 592 where thm Court observed ihat "if a writ petition filed by a party under Art. 226 is considered on the merits as a contested matter and is dismissed .ne decision thus pronounced would continue to bind

(I) fl96l] I S.C.R. 374.

H -

the parties unless it is otherwise JllSJdified or reversed by appeal or other appropriate proceedings permissible under the Constitution".

But it was later observed on that very page that "if the petition filed in the High .Court under Art. 226 is dismissed not on the merits but because of the lac hes of the party apr lying for the writ or because it is held that the party had an alternative remedy available to it, then the dismissal of the writ petition would not constitute a bar to a subsequent petition under Art. 32 except in cases where and if the facts thus found by the High Court may themselves be relevant even under Art. 32. If a writ petition is dismissed in limine and an orde: is pronounced in that behalf, whether or not the dismissal would constituie a bar would depend upon the nature of the order. If the order is on the merits it would be a bar; if the petition is dismissed in limine without passing a speaking order then such dismissal cannot be treated as creating a bar of res judicata."

It is true that this Court said in that case that if a writ petition under Art. 226 is dismissed on merits after contest it would bar a petition under Art. 32 on the same facts.

But the later observations at the same page show that that was not the only case in which there would be a bar of.res judicata.

Even where notice might not have been issued by the High Court and the writ petition dismissed in Umine, the question whether such dismissal would bar a petition under Art. 32 would depend upon the nature of the order dismissing it in Umine.

This is perfectly clear from the later observations made at p. 592 in the same case.

Where therefore a writ petition is dismissed without notice to the oth1.; r side but the order of dismissal is a speaking order and the petition is .disposed of on merits, that would still amount to res judicata and would bar a petition under Art. 32. The petitioner's only proper remedy in such a case would be to come in appeal from such a speaking order passed on the merits, even though the High Court may not have issued notice to the other side.

What has been decided in Daryaols case(') is that the High Court should have decided the petition on the merits by a speaking order. If that is done, it is immaterial whether notice was issued to the other side or not before such a decision was given.

The bar arises not because there was a notice issued but because the High Court has dealt with the merits of the petition before it and has passed a speaking order even though no notice might have been issued.

In the present case the petition is clearly barred in view of the decision in Daryan's case('). The learned Single Judge who first dealt with the petition passe\1 a short order dealing with the merits and stating that'l:he validity 'bf s. 12 of the Madras Act could not

be attacked as the exemption was based on sound principles.

He therefore repelled the attack on s. 12 of the Madras Act based on Art. 14 of the Constitution.

The petitioner then went in appeal to the Division Bench.

The order of the Division Bench is more comprehensive than the order of the learned Single Judge and the Division Bench has dealt with the attack under Art. 14 of the Constitution.

It has rejected the contention that there was any clement of hostile discrimination. It has also held that there was no arbitrary or unreasonable classification by s. 12 of the Madras Act.

It has finally held that it could not be said that there was no nexus between the conditions specified in the Madras Act and the Central Act which seeks, for reasons of national development and prosperity, to license and supervise undertakings.

The order of the Division Rench in appeal is clearly a speaking order dealing with the merits of the petition where only ono point under Art. 14 was raised.

In our opinion it bars the making of the present petition under Art. 32 op the same facts for the same relief based on the same article of the Constitution.

The petitioner did not appeal from the order of the Division Bench.

The High Court made a speaking order dealing with the merits of the case and the fact that no notice was issued to the other side before such an order was passed is immaterial in the circumstances.

We therefore uphold the preliminary objection.

We may add that if we were to go into the merits of the case ourselves we would see no reason to differ from the view taken by the Division Bench as to the application of Article 14.

The petition is dismissed with costs.

R.K.P.S.

Petition dismissed.

VIRUDHUNAGAR STEEL ROLLING MILLS LIMITED

A

THE GOVERNMEl'iT OF MADRAS

K .. N. WANCHOO, C.J.

R. S. BACHAWAT, J.

G. K. MITTER

Constitution of India

Art. 32

Art. 226

Art. 32

s. 12

Art. 14

s. 12

s. 11

Central Govt

s. 29

s. 12

s. 12

s. 12

Art. 14

s. 12

Art. 32

s. 12

Art. 14

Art. 32

Art. 32

[1962] 1 S.C.R. 574

Section 12

Art. 14

Art. 32

Constitution of India

R. Gppalakrishnan

A. V. Rangam

Wanchoo

s. 11

Central Government

s. 29

Madras Legislature

Section 12

Government of Madras

s. 11

Madras Government

s. 12

High Court of Madras

s. 12

Art. 14

s. 12

s. 12

Art. 14

s. 12

Art. 14

State of Madras

Daryao

Art. 32

Art. 226

Art. 226

Art. 32

Art. 32

Art. 226

Art. 32

Umine

Art. 32

Umine

Art. 32

Daryaols

Daryan

s. 12

s. 12

Art. 14

Art. 14

s. 12

Art. 14

Art. 32

Article 14


ANGLO AMERICAN DIRECT TEA TRADING CO.

LTD.

COMMISSIONER OF

AGRICULTURAL

INCOME-TAX,

KERALA STATE, TRIVANDRUM lanuary IO, 1968

[K. N. WANCHOO, C.J.,

R. S. BACHAWAT,

J. M. SHELAT, G. K. MI.TTER AND C. A. VAIDIALINGAM, JJ.j

Kera!a ARricultr1rr.l l11co111e-tax Act (20 Of 1950), ss. 2 and 5-Jnco1ne-tat Act (11 of 1922), s. 10 and lnco111e-tax Rules, 1922, r. 24-- lnco1ne derived by cultivation, n1an11facture and sale of teG~Non tlf?ricultural inco111e detennined under s. 10 of the lncon1e-tax Act and r. 24 of the lncon1e-tax Ru/es-Whether con1putation binding on At?ricultural Income-tax Officer.

Kera/a Surcltar,; e on Taxes Act (11 of 1957), Surcharge on agricultural inco1ne for assess1nent year 1951-58-lf can be leiied.

The appellants "W'crc carrying on the business of cultivation, manufacture and sale of tea. Some of them owned tea plantations h<:°'th within and outside the State of Kerala. Income derived from the sale of tea grown and manufactured by the sellr is derived partly from business and partly from agriculture, and. has to be computed under r. 2.4 of the Indian Income-tax Rules, 1922 (corresp011ding to r. 8 of the 1962 Rules) as if it were income derived from business in accordance with the provisions of s. 10 of the lncome,-tax Act, 1922. On the basis of r. 24, the. central income-tax authorities Computed the total tea income of the appellants and 40% thereof, representing the non-agricultural income, was asesscd to non-agricultural income-tax and the balance 60% was le'ft unasesscd as agricultural income. In proceedings under the Kerala Agricultural Incomctax Act, 1950, the agricultural income of the appcilants was determined on an independent computation of their 1ca income.

The agricultural income so determined was higher than that arrived at by th: central income-tax authorities.

In some of the apals, the Agricultural Income-tax Officer levied a surcharge of 5% for the assessment year 1957-58 under the Kerala Surcharge on Taxes Act, 1957.

On the questions : ( 1) whether the Agricultural Income-tax Officer was bound to follow the computation of income from tea made by the Central

Income-tax Officer; and (2) whether the surcharge could be levied, the High Court held against the a.ppellants.

In appeal to this Court,

HELD : There is no provision in the Kcrala Act authorising the Agricultural Income-tax Officer to disregard the computation of the tea income made by the Central income-tax authorities acting under the Central Act, and, the Agricultural Income-tax Officer, in making an assessment of agricultural income is bound to accept the computation of tea income already made by the central income.tax authorities and to assess only 60% of the income so computed, less allowable deductions, c:. agricultural income taxable under the Kerala Act.

[751 B-C]

SUPREME COURT REPORTS (1968] 2 s.c.R.

(a) In view or Arts. 274(1) and 366(1) or the Constitution. the power of the State Legislature to make a law in respect of taxes on agricultural income arising from tea plantations is limited to legislating with respect to the agricultural income determined under s. 10 of the Incometax Act and r. 24 of the Income-tax Rules.

In fact, the E•planation to s. 2(a) (2) of the Kerala Act adopts this rule of computation and therefore, the agricultural income tuable under tho Kerala Act is 60% of the income so computed after deducting therefrom the allowances authorised by s. 5 of the Kerala Act, in so far as the same has not already been allowed in the assessment under the Central Income-tu Act.

Where the agricultural income :s derived from lands panly within and partly without the State the portion of the income attributable to lands within the State is determined under s. 6 of the Kerala Act read with r. 15 of the Kerala

A8ficultural Incom...tax Rules. (750 B-D; 751 A, CD}

Karimthill'uvi Tea Estatts Ltd. Ko11a; am v. State o/ K.trala, [1963] Supp. 1 S.C.R. 823, followed.

(b) It may be difficult to make an use.ument under •. 22 of the Kerala Act or on the ba.sil of the , previous year under 1. 2A of the Kerala N:t in the absenee of any rule fixin1 the income for a broken part of the year with reference to an assessmmt made under the Indian Income-tu Act.

In spite of these and other difllculties in the working of the Ac~ the Agricultural Income-tu Ofllcer cannot ignore the assessment of the tea income

already made by the cmtral income-ta. authorities. [752 B-D]

Commissioner of Agricultural Income-tax, Kerala v. Peruncd Pltmtations, (1965) 56 l.T.R. 193, overruled.

(2) No surcharge on agricultural income can be levied under the Kerala Surchasge on Taxes Act, in respect of the assessment year 1957-58.

[753 DJ

Karimlilaruvi Tea Estates Ltd. v. Stair of Kera/a. [!966} 3 S.C.R. 93 :

(1965) 60 l.T.R. 262 (S.C.), followed.

CIVIL APPELLATE JURISDIC1'ION : Civil Appeals Nos. 9J6- 939 of 1966.

Appeals by special leave from the judgment and order dated

July 16, 1965 of the Kerala High Court in Income-tax Referred F Cases Nos. 53 to 56 of 1964.

AND Civil Appeals Nos. 585 to 588 of 1966.

Appeals by special leave from the judgment and order dated August 18, 1964 of the Kerala High Court in Income-tax Refer- G red Cases Nos. 52 to 55 of 1953 (Agrl.).

AND

Civil Appeals Nos. 589 to 591 of 1966.

Appeals by special leave from the judgment and orders dated August 14. 1964 and July 17, 1964 of the Kerala High Court

H in Income-tax Referred Cases Nos. 50, 51 and 49 of 1963 ( Agrl.) respectively.

M. C. Setalvad, S. K. Dholakia, Joy Joseph and 0. C Mathur, for the appellant (in C.As. Nos. 936-939, of 1966).

M. C. Setalvad, Joy Joseph, 0. P. Malhotra and 0. C. Mathur, for the appellant (in C.As. Nos. 585 to 588 of 1966).

S. T. Desai, Joy Joseph, P. C. Bhartarl and O. C. Mathur for the appellant (in C.As. Nos. 589 to 591 of 1966).

H. R. Gokhale and M. R. K. Pillai, for the respondent (in C.As. Nos. 936 to 939 of 1966).

M. J? K. Pillai, for the respondent (in C.As. Nos. 585 to 591 of 1966).

The Judgment of the Court was delivered by Bacbawat, J. The appellants carry on the business of culti vation, manufacture and sale of tea. They own tea plantations in the State of Kerala. Some of them own tea plantations both within and outside the State. They are assessed to non-agricultural a8 well as agricultural income-tax.

Civil Appeals Nos. 936 to 939 of 1966 arise out of the agricultural income-tax assessments of the Anglo American Direct Tea Trading Co., Ltd .. under the Kerala Agricultural Income-tax Act, 1950 for the years 1958-59, 1959-60, 1960-61 and 1961-62. Civil Appeals Nos. 585 to 588 of 1966 arise out of the agricultural income-tax assessments of the Travancore Tea Estates Co. Ltd. for the years 1957-58, 1958-59, 1959-60 and 1960-61. Civil Appeals Nos. 589 to 591 of 1966 arise out of the agricultural income-tax assessments of the Southern India Tea Estates Co., Ltd. for the years 1957-S-8, 1958-59 and 1959-60. For all the assessment years, the central income-tax authorities computed the total tea income of the appellants and 40 per cent thereof representing the non-agricultural income was assessed to nonagricultural income-tax and the balance 60 per cent was left unassessed as agricultural income.

The appellants produced before the Agricultural Income-tax Assistant Commissioner, Kerala, the central income-tax assessment orders, and requested him to take 60 per cent of the tea income computed by the central income-tax authorities as the gross income derived from agriculture.

The Agricultural Income-tax Assistant Commissioner disregarded the central income-tax assessments, and on independent computation of the tea income determined. the agricultural income of the appellants.

The agricultural income so determined by the Agricultural Income-tax Assistant Commissioner was m, uch higher than 60 per cent of the total tea income assessed by the central incometa,~ authorities.

On appeal, the Deputy Commissioner of Agri-

SUPRDIE COURT REPORTS

(1968] 2 S C.R.

cultural Income-tax and Sales Tax, South Zone, Quilon held that the Agricultural Income-tax Officer could make an independent computation of the tea income and was not bound to adopt the assessment made by the central income-tax officer.

On further appeal, the Kcrala Agricultural Income-tax Appellate Tribunal, Trivandrum held that the Agricultural Income-tax Officer was bound to accept the computation of tea income by the central income-tax authoritie,.

On the application of the respondents, the Appellate Tribunal referred the following question of law to the High Court under s. 60(1) of the Kerala Agricultural Income-tax, 1950 : "Whether the Agricultural Income-tax Officer is to follow the computation of income from tea made by the Central Income-tax Ofliccr or whether he can find out the income from tea plantations applying the provisions of the Income-tax Act and make the assessment exercising his powers under the Agricultural Income-tax Act?". Following its earlier decision in Commissioner of Agricultural Income-tax, Kera/a v. Perunad P/antatiom Ltd. ('), the High Court held that the agricultural Income-tax Officer wo, not obliged to accept the computation of the tea income made by the Income-tax Officer acting under the Income-tax Act, and it was open to him to compute the income independently applying the relevant provisions of the Income-tax Act and the Agricultural Income-tax Act.

From these orders, the present appeals have been filed by special leave.

Before answering the aforesaid question, it is necessary to refer to the relevant constitutional and statutory provisions. Under Entry 46, List IL Seventh Schedule to 1hc Constitu1ion, 1he State Legislature is competent to make laws with regard to "taxes on agricultural income".

Under Enlry 82, List I, Parliament is competent to make laws with respect to "taxes on income other than agricultural income". In view of Art. 366(1 ), agricultural income means "agricultural income as defined for the purposes of the enact men ls relating to Indian income-tax." Article 274 (I) pr?vides that a bill which seeks to vary this meaning requires 1he pnor rccommenda1ion of the President.

These provision of lhe Conslitution correspond to ss. 141 (I), 311 (2), Sch. Vil. List I Entry 54, List II, Entry 41 of the Government of India Acl,

1935. Section 2(1) of the Indian Income-tax Act, 1922 defined agricultural income.

Section I 0 provided for computalion of income derived from business.

Scc1ion 59 empowered the Cenlral Board of Revenue to make rules which took effect as if enacted in the Act.

Rules 23 and 24 of the Indian Income-tax Rules, 1922, framed under s. 59 provided for computalion of

(I) (1965) ~6 1.T.R. 193.

H 1

ANGLO AMERICAN co. v. c.A.I.T. (Bachawat, 1.) 749

the business profits where the income was derived partly from agriculture and partly from business.

Under r. 23, th_e narket value of the agricultural produce used as raw matenal m the business was deducted in c.omputing the business profits.

Rule 24 provided that "income derived from the sale of tea grown and manufactured by the seller in the taxable territ<?ries shall be computed as if it were income derived from bu.smess, and 40 er cent of such income shall be deemed to be mcome, profits and gains liable to tax, provided that in computing such !ncome an allowance shall be made in respect of the cost of plantmg bushes in replacement of bushes that have died or become permanently useless i::. an area already planted, unless such area has previously been abandoned." These provisions correspond Lo ss. 2(1), 28 to 44 and 295.of the Income-tax Act, 1961 and rules 7 and 8 of the Income-tax Rules, 1962. Section 2 (a) of the Kerala Agricultural Income-tax Act, 1950 defines agricultural income.

The Explanation to s. 2(a)(2) provides tl!at "agricultural income derived from such land by the, cultivation of tea means that portion of the income derived from the cultivation, manufacture and sale of tea as is defined w be agricultural income for the purposes of the enactments relating to Indian Income-tax." Section 3 is the charging section.

Section 2(s) read with ss. 4, 5, 9 and 10 defines total agricultural income.

Section 5 provides for compu.tation of agricultural income after making certain deductions.

The proviso to s. 5. lays down that "no deduction shall . be made under this section if it has already been made in the assessment under the Ihdian Income-tax Act, 1922." Section 6 provides for assessment of income derived from lands partly within the State and partly without.

Section 7 relates to the method of accounting.

Section 17 deals with return of income.

Section l 8 provides for assessment of income.

Sections 21 to 29, provide for assessments in special cases.

Section 3 5 provides for assessment of income escaping assessment.

Section 36 provides for rectification of mistakes.

Section 67 empowers the Government to make rules.

Rle 9 of the Keala Agricultural Income-tax Rules, 1951, prescribes the deductions allowable under s. 5 ( 1 ) for depreciation of buildings, machinery, plant and furniture in respect of tea factories.

Rule 15 prescribes the method of apportionment of income derived from lands pa, rtly within the State and part! v without. -

In Karimtharuvi Tea Estates Ltd., Kottayam v.

State of Kera/a(

1 ), this Court held that Explanation 2 to s. 5 of the Kerala Agricultural Income-tax Act added in 1961 disallowing certain ded.uctions in the computation of agricultural income did not apply

(I) [J96JJ Supp. 1 s.c.~. gzJ.

LJ Sup Cl/61"'"'4

SUPRD1E COURT REPORTS

1968] 2 SCR.

10 compulation of agricultural income derived from 1ea plan1a- 1ions. The reasons for this conclusion may be summarised thus : The defini1ion of agricultural income in !he Constitution and the J ndian I ncome-1ax Ac1, 1922 is bound up with r. 24 of the Income 1ax Rules, 1922.

Inrome derived from the sale of 1ca gr<>Wn and manufactured by the seller is to be computed under r. 24 as if it were income derived from business in accordance with the provisions of s. IO of the Indian Income-lax Act.

The Explanation to s. 2(a)(2) of the Kerala Ac1 adoplS !his rule of computation.

Of the income so compured, 40 per cent is to be 1reat:ed as income liable to income-tax and the other 60 per cenl only is deemed to be agricultural inco111e within the meaning of !hat expression in !he Income-tax Act.

The power of the State Legislature to make a law in respect of taxes on agricultural income arising from tea plant~.ion is limited to legislating wi1h respect to the agricultural income so detennined.

The legisla ture cannot add. to the amount of the agricultural income so determined by disallowing any item of deductions allowable under r. 24 read with s. 10(2) (xv) of the Indian Income-tax Ac1.

Explanation 2 to s. 5 of the Kerala Act if applied to income from 1ea planta1ions would creale an agricultural income which is no! conlernplated by the Income-tax Act and the Constitution and would be void, and it should therefore be construed not to apply IO 1he computation cf incvmc from lea plan1a1ions.

The question arising in these appeals is whether the agricul- 1ural Income-tax Officer making an assessment of agricultural income under 1he Kerala Agricultural Income-tax Act is bound lo accept the assessment of the income which has already been made by !he central income-tax authorities under r. 24 of the Income-tax Rules. 1922 read with s. 10 of the Indian Incometax Act, 1922 or under r. 8 of the Income-tax Rules, 1962 read with ss. 28 to 44 of the Income-lax Act, 1961.

We think that this quesiion should be answered in the affirmative.

Income from sale of tea grown and manufactured by the seller is derived partly from business and partly from agriculture.

This income has to be computed as if it were income from business under the Central Income-tax Act and Rules. 40 per cent ·)f the income so computed is deemed to be income derived from business and assessable to non-agricultural income-tax.

Having regard to the decision in Karimtharuvi Tra Estates Ltd .. Kottayam v. State of Kera/a('), we are bound to hold that (a) the Explanation to s. 2 (a )(2) of the Kerala Agricultural Income-tax Act adopts this rule of computation and (b) the balance 60 per cent of the income so computed is aj!Ticultural income within the meaning of the Central Income-tax Act and the Constitution

(l) [196.1) Surp. I S.C.R. Sl'.

) A -

The agricultural income taxable under the Kerala Act is 60 per eent of the .income so computed lifter deducting therefrom the allowances authorised by s. 5 of the Kerala Act in so far as the

same has . not already been allowed in the assessment under the Central Income-tax Act.

There is no provision in the Keraia Act authorising the Agricultural lncom(}-ta .. Officer to disregard the computation of the tea income made by the incom(}-tax authorities acting under the Central Incom(}-tax Acts.. The Agricultural Income-tax Officer in making an assessment of agricultural income is bound to accept the computation of the tea income already made by the central income-tax authorities and to assess only 60 per cent of the income so computed Jei; s allowable deductions as agricultural income taxable under the Kerala Act: Where the agricultural income is derived from lands partly within the State of Kerala and partly outside the State, the portion of the income attributable to lands within the State is detennined under s. 6 of the Kerala Agricultural Income-tax Act read with r. 15 of the Kerala Agricultural Incom(}-tax Rules.

Our attention was drawn to the provisions of (a) ss. 8(2), 24 ( 1) proviso, 24 (2) proviso, 25 ( 4) and 25 ( 5) of the Bengal Agricultural Income-tax. Act, 1944 and rules 7 and 8 of the Bengal Agricultural Income-tax Rules, 1944, (b) s. 8 of the Mysore Agricultural Incom(}-tax Act, 1957 and rule 6 of the Mysore Agrfoultural Income-tax Rules, 1957, (c) s. 8 of the Coorg Agricultural Income-tax Act, 1951, ( d) the second proviso to s. 8 of the Assam Agricultural Income-tax Act, 1939 and rule 5 of the Assam Agricultural Income-tax Rules, 1939, (e) Explanation 1 to s. 2(a) (2) of the Madras Plantations Agricultural Income-tax Act, 1955 and

r. 7 (I ) of the Madras Plantations Agricultural Income-tax. Rules, 1955 and (f) r. 5 of the Bihar Agricultural Income-tax Rules,

1949. Under some Acts and Rules, the Agricultural Income-tax Officer is bound to adopt the assessment of the tea income made by the central income-tax authorities. But under some other Acts and Rules, he is authorised in special cases to disregard this assessment and to make a fresh computation of the tea income. We express no opinion on the construction of these Acts and Rules.

For the purpose of these appeals, it is sufficient to say that the Kerala Agricultural Income-tax Act and Rules do not confer upon the Agricultural Income-tax Officer the power to disregard the assessment of the tea income already made by the central income-. lax authorities. We are unable to introduce by way of implication in a taxing statute a provision which requires explicit statement.

Difficulties may arise in making an assessment of agricultural income under the Kerala Agricultural Income-tax Act on the basis

• 752

SUPREME COURT RF.PORTS

[1968) 2 SC.R.

of the assessment of the tea income made by the Central incometax authorities.

The previous year under s. 2(o)(i1 of the Kerala Act may be different from the previous year under the Indian Income-tax Act.

This difficulty may be resolved by fixing the previous year for this class of income under s. 2(o)(ii) m conformity with the previous year under the Indian Jncometax Act.

But the anificial previous year under s. 2-A is not subject to the provisions of s. 2(o) (ii). Moreover, s. 22 authorises the assessment of income for the period from the expiry of a previous year to the probable date of the depanure qf the asessee from the State.

It may be difficult to make an assessment under s. 22 or on the basis of the previous year under s. 2-A in the absence of any rule fixing the income for a broken part of the year with reference to an assessment made under the Indian Income-tax Act.

In spite of the>e and other difficulties in the working of the Act, -we are unable to agree with the decision in Commissioner of Agricultural Income-tax Keralo v. Pertmad Plantations Ltd. (') or to ho!'' that the Agricultural Income-tax Officer can ignore the assessment of the tea income already made by the central income-tax authorities.

On behalf of the appellants, it was argued that the power to compute business income under r. 24 read with s. I 0 of the Indian Income-tax Act having regard particularly to proviso (a) to sub-s. (2)(vi), the proviso to sub-s. 2(\i-b), sub-clause (g) of the second proviso to sub-s. 2(xiv), sub-s. (4-A) and the first proviso to sub-s. 5 (a) of s. I 0 must be exercised by lhe Central Income-tax Officer alone, that there is no provision in the Kerala Act conferring this power on the Agricultural Incometax Officer and that therefore the assessment of agricultural income must wait until the assessment by the Central Income-tax Officer under r. 24 read with s. I 0.

Thls wider question does not arise for decision and is left open.

In all the cases before us, the assessments by the Central Income-tax Officer were completed before the Agricultural Income-tax Officer proceeded to assess the agricultural income. For the purpose of these appeals, it is sufficient to say that the Agricultural Income-tax Officer acting under the Kerala Agricultural Income-tax Act. 1950 is bound to follow the assessment of i.D.come b.J the Central Incometax Officer under r. 24 of the Income; taxllules, 1922 and r. 8 of the Income-tax Rules, 1962 where such assessment has been made before the Agricultural Income-tax Officer proceeds to make the assc.sment under the Kerala Act.

The question referred to the High Court is answered accordingly. We must not be understood to say that the assessment made by the Central Income-tax Officer under r. 23 of the Income-tax Rules, 1922

(I) (19~) 56 l.T.a. 191.

ANGLO AMERICAN co. V. C.A.J.T. (Bachawat, J.) 753

or r. 7 of the Ir.come-tax Rules, 1962 is in any way binding on the Agricultural Income-tax Officer.

In Civil Appeals Nos. 585 to .588 of 1966 and 589 to 591 of 1966, the Agricultural Income-tax Officer made a surcharge of 5 per cent for the assesi; ment year 1957-58 under the Kerala Surcharge on Taxes Act, 1957.

On appeal, the Deputy Commissioner held that the surcharge was rightly made.

On further appeal, the Appellate Tribunal held that the levy of the surcharge was illegal.

On the application of the respondent, the Appellate Tribunal referred the following additional question of law to the High Court : "Whether on the facts and circumstances of the case the Tribunal is justified in holding that surcharge on agricultural income-tax cannot be levied for the assessment year 1957-58 ?".

The High Court answered this question in favour of the Revenue and against the assessee.

This decision must be set aside.

In Karimtharuvi Tea Estate Ltd. v. State of Ker ala ( 1 ), this Court held that no surcharge on agricultural income can be levied under the Kerala Surcharge on Taxes Act, 1957 in respect of the assessment year 1957-58. The second question is answered accordingly in favour of the assessee and against the

Revenue.

In the result, the appeals are allowed with costs and the judgments of the High Court are set aside. The questions refer- E red to the High Court are answered in favour of the appellants and against the Revenue as indicated in the body of this judgment. There will be one hearing fee.

V.P.S.

Appeals allowed.

(1) [1966] l S.C.R. 93 : [1965] 60 I.T.R. 262.

K. N. WANCHOO, C.J.

R. S. BACHAWAT,

J.

M. SHELAT

ss. 2 and 5

s. 10

s. 10

Kerala

Indian Income-tax Rules, 1922

s. 10

Kerala Surcharge on Taxes Act, 1957

Arts. 274(1) and 366(1)

s. 10

s. 2(a)

s. 5

s. 6

CIVIL APPELLATE JURISDIC1'ION

M. C. Setalvad

S. K. Dholakia

Joy Joseph

. C Mathur

M. C. Setalvad

Joy Joseph

. P. Malhotra

. C. Mathur

S. T. Desai

P. C. Bhartarl

O. C. Mathur

H. R. Gokhale

M. R. K. Pillai

M. J? K. Pillai

Bacbawat

Southern India Tea Estates Co., Ltd.

s. 60(1)

Income-tax Act

Income-tax Act

Income-tax Act

Income-tax Act

Income-tax Act

Seventh Schedule

Parliament

Art. 366(1 )

Article 274

ss. 141

Section 2(1)

Indian Income-tax Act, 1922

Indian Income-tax Rules, 1922

s. 59

ss. 2(1), 28 to 44 and 295

Income-tax Act, 1961

Income-tax Rules, 1962

Section 2

s. 2(a)(2)

Section 3

Section 2(s)

ss. 4, 5, 9 and 10

Section 5

s. 5

Ihdian Income-tax Act, 1922

Section 6

Section 7

Section 17

Sections 21 to 29

Section 3

Section 36

Section 67

s. 5

s. 5

Income-tax Act

1968] 2 SCR.

10

IO of the Indian Income-lax Act

s. 2(a)(2)

Income-tax Act

s. 10(2)

s. 5

Income-tax Act

Kerala Agricultural Income-tax Act

s. 10

Indian Incometax Act, 1922

Income-tax Rules, 1962

ss. 28 to 44

Income-lax Act, 1961

Income-tax Act

s. 2

Income-tax Act

s. 5

Income-tax Act

is no provision in the Keraia Act

s. 6

Income-tax Act

ss. 8(2), 24

s. 8

s. 8

Coorg Agricultural Income-tax Act, 1951

s. 8

Assam Agricultural Income-tax Act, 1939

s. 2(a)

Bihar Agricultural Income-tax Rules

Income-tax Act

Income-tax Act

Income-tax Act

s. 2

s. 2(o)

s. 22

s. 22

s. 2

Income-tax Act

Income-tax Act

s. 2(\i-b)

s. 2(xiv)

s. 5

Income-tax Act

Income-tax Rules, 1962

Income-tax Rules, 1922

Kerala Surcharge on Taxes Act, 1957


T. S. PL. P. CHIDAMBARAM CHETI1AR A

T. K. B. SANTHANARAMASWAMI ODAYAR & ORS.

January 10, 1968

(J. C. SHAH, V. R.AMASWAMJ AND V. BHARGAVA, JJ.] B

Madras Estates Land Act I of 1908, .vs. 3(2)(d), 3(10)(b) and 3(16)-Lalfd.< in Orathur Padugai In Tanjore Palace Estate wheth~ /1111 undtr dtfinition of 'estatt' ;,. s. 3(2) (d)-Tanjort PaJact Estate whether crtatM by grant--Orathur Padugai whether a wholt villDgt or part of a

l'iU~Distinction bttwun 'priwut land' as dtfined in s. 3(10)(h) and 'ryOli lend' as dtfined in' 3( 16).

When the Raja of Tanjore died in 1855 without leaving male iSiue tbe East India Company tool< possession of all his properties including his private property.

However on a memorial being presented by the seruor widow of the late Raja, the Go•ernment of India in 1862 "sanctioned the relinquishment of the whole of the landed property of the Tanjore Raja in favour of the heirs of the late Raja." The Tanjore Palace Estate thus eame into existence. In 1948 the appellant purchased certain lands situate

in Orathur Padugai which was part of the aforesaid Tanjore Palace Estate, and thereafter institute-O suits for possession of these lands from variOUI defendants.

The trial court dismissed the suir. on the ground th•t the lands were situated in an 'estate' unde.- s. 3(2)(d) of the Madras E.italel Lands Act I of 1908 and they were 'ryoti lands' as defined in s. 3(16) in which the defendants had acquired occupancy rights. The Madras High Coult affirmed the decree, whereupon the appellant came to thia Court.

It .,. .. contended on behalf of the appeHant that (i) the lands did Bot form an 'estate' under 1. 3(2)(d) of the afore .. id Act be<:ausc the r....toration of the land to the widows of the Raja of Tanjore did not amount to a fresh grant but only a restoration of the .ftaJus quo aJt1t;

(ii) that Grathur Padugai was not a whole vinage "'' required by the definition ol 'estate'; (iii) the widows of the Raja enjoyed both the •wa..,.ms' and tho

la.ado pW'chascd by the appellant were 'private lands' in•· 3(10)(b) so that the defendants did not have any occupancy rights therein.

HF.LO : (i) The relinquishment by the Government of India in favour of the widows of the Raja in 1862 ..... a fresh grant a.< already held in s~ cases.

In view of the authorities it could no longer be questioned thal the Tanjore Palace E.<tate was an •eswe• within the meaning of s. 3(2)(d) of the Madra.' Estates Landll Act. [759 F-760 Bl

Jijoyiamba Bayi Saiba v. Kamakshi Bayi Saibo,

3 M.H. C.R. 424, Suridaram Ayyar v. Ramachandra Ayyar, l.L.R. 40 Mad. 389, Maharaia nf KollUJpur v. Sondaram lytr, I.L.R. 48 Mad.

I, Sulllfaram v. Dewi Sankara, A.l.R. 1918 Mad. 428 and T. R. Bhawmi Slrankar Joshi v. Soma-

.•11ndiira Moopanar, [1963) 2 S.C.R. 421, relied on.

Chota Raia Saheb Mohitai v. Surodaram l1or, 63 I.A. 224, referred to.

(ii) There was sufficient material on the record to shO\\· that at least

~Ince 1830 -onwards Orathur Padugai was a whole village and therefore an 'estate' -.ithin the meaning of the Act. [762 CJ

(iii) The lands in suit were 'ryoti lands' and not 'private lands'.

The definition in s. 3(10) read as a whole indicates clearly that the ordinary test for 'priv11te land' is the test of retention by the landholder

A for his OW1l personal use and cultivation by him or unde"r his personal supervision.

No doubt, such lands may be let on short leases for the convenience of the liindholder without losing their .distinctive character; but it is not the intention dr the scheme of the Act to treat aS private f.hose lands with reference to which the only peculiarity is the fact that the landlord owns ooth the wararns in the lands and has been letting them out on shon leases. [.765 H-766 BJ

B In the present case there was no proof that the lands were ever directly cultivated by the landholder. The High Court had found that the same tenants continued to cultivate the lands without break or change, and the fact that there were periodical auctions of the lease rights did "not necessarily deprive the tenants of the occupancy rights which they were enjoying._ The. appellant had not been able to adduce sufficient evidence to rebut the presumption under s. 185 of the Act that the lands in the inam village are C not ;>rivate lands. [766 C-G]

Ytrlagadda Malikariuna Prasad Nayudu v. Somayya, l.L.R. 42 Mad. 400 (P.C.), referred to with approval. ·

CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 54 to 65, 67 and 69 to 71 of 1963.

Appeals from the judgment and decree dated January 10. 1956 of the Madras High Court in Appeal Suit Nos. 223 and 224 of 1951, and 264 to 273,275 and 277 to 279 of 1952.

-'R. Kesava Iyengar, R. Thiagarajan and R. Ganapathy Iyer, for the appellants (in all the appeals).

Bishan Narain and 0. P. Malhotra, for respondent No. 1 (in C.A. Nos. 54 and 55 of 1963).

M. R. K. Pi//ai, for respondent No. 2 (in C.A. No. 55 of 1 %3) and for the respondents (in C.As. Nos. 56 to 65, 67 to 7l of 1963). ·

The Judgment of the Cour~ was delivered by

Ramaswami, J. These appeals are brought against the judgment and decree in A.S. nos. 223 and .224 of 1951, 264 to 273 of 1952, 275 of 1952 and 277 to 279 of 1952 of the M:idras High Court dated January _10, 1956 af)irming. the judgment and decree in O.S. nos. 75"; 77 to 81 of 1949 and 19 to 22, 24 to 26, 28 & 30 to 31 of 1950 of the Subordinate Judge, Tanjore.

The appellant instituted the above-mentioned suits for recovery of possession frorri the respective defendants of the disputed lands and for payment of damages at the rate of Rs. 50/- per annum per acre. The case of the appellant was that the disputed lands which were purchased by him by a sale deed dated November IL 1948 (Ex. A-145) are situated in Orathur Padugai which is attached to Pannimangalam, one of the villages comprised in what is known as the "Tanjore Palace Estate'', that

SUPRF.MI! COURT REPORTS

(1968] 2 S CR.

the said lands are not si1ua1ed in an es late as defined by the Madras Estates Land Act I of 1908 (hereinafter referred to as the 'Act') and in any event the said lands are 'private lands' of the appcllanl and no1 'ryoti lands' as defined in the Act and the various defendants are tfespassers in unlawful occupation of the lands and had no right to continue in possession and were therefore liable to ejectment.

The appellant also claimed that the defendants were liable to pay damages at the rate of Rs. SO/- per annum per acre in respect of the lands in their unlawful occupation.

The defence in all the suits was substantially the same.

It was contended by the defendants that the disputed lands are situated in an cstalc within the meaning of s. 3(2) (d) of the Act, that the lands arc 'ryoti lands' in which they have

pcrmannt right of occupancy and that they arc not "private lands" as alleged by the appellant and the civil court had therefore no jurisdiction to entertain the suits and the Revenuo Courts alone had jurisdiction.

By his two judgments dated Octobor 31, 1950 and February 2, 1951, the Subordinate Judge, Tanjore dismissed the suits, holding that the lands were situnted in an estate and w. ce 'ryoti lands' in which the defendants w1rc entitled to occupancy rights.

The appellant took the matter in appeal to the Madras High Court which affirmed the decision of the trial court and dismissed all the appeals.

The two principal questions which are presen1ed for determination in these appeals are : (I) whether the suit-lands are located in an estate within the meaning of s. 3 (2) ( d) of the Act, and (2) if the answer to the first question is in the affirmative. whether the suil-lands are 'private lands' or 'ryo1i lands' as defined in the Act.

Section 3 ( 2 )( d) of the Act. as originally enacted slates :

"3. In this Act, unless 1here is something repugnanl in the subject or context :-

(2) 'Es1a1e' means-

( d) any village of which the land revenue alcn~ has been granted in inam to a person not owning the kudivaram thereof, provided that the grant has been made, confirmed or recognised by the British Government, or

any separated part of such village;'' H

The section was amended by the Madras Estates Land (Third Amcndmenc) Act 18 of 1936 to the following effect :

" ( d) any inam village of which the grant has been made, confirmed or recognised by the British Gowrnment, notwithstanding that subsequent to the grant, the village has been partitioned among .the grantees, or the successors in title of the grantee or grantees.

Explanation ( 1 ) :

Where an inam village is resumed by the Government, it shall cease to be an estate; bui, if any villag~ so rc>- sum¢ is subsequently regranted by the Government as an inam, it shall, from the date of such re-grant be regarded as an .estate.

Explanation (2): • Where a portion of an inam village is resumed by the Government, such portion shall cease to be part of the estate, but the rest of the village shall be deemed to be an inam village for the purposes of this sub-clause.

If the portion so resumed or any part, thereof is subsequently regranted by the Government as an inam, such portion or part shall, from the date of such re-grant be regarded as.forming parl of the inam village for the purposes of this sub-clause."

By s. 2 of the Madras Act II of 1945 s. 3 of the Act was further amended as follows :

"Section .2 : ( 1)

In sub-clause ( d) of clause ( 2) of s. 3 of the Madras Estates Land Act, 1908 (hereinafter referred to as the said Act) Explanations (.I) and (2) shall be renumbered as Explanations (2) and (3) respectively and the following shall be inserted as Explanation ( l), namely:

Explanation ( 1 ) :

Where a grant as an inam is expressed to be of a named village, the area which forms the subjectmatter of the grant shall be deemed to be an estate notwithstanding that it did not include certain lands in the village of that name which have already been granted on seryice or other tenure or been reserved for communal purposes :

(2) The amendment made by sub-section (1} be deemed to have had effect as from the date on which the Madras Estates Land (Third Amendment) Act,

SUPREME OoUl\T REPORTS

(1968] 2 S.CR.

1936 came into force and the said Amendment shall be read and construed accordingly for all purposes;"

Section 3 ( 19) of the Act has defined a "Village" as follows :

" 'Village' means any local area situated in or .:onstituting an estate which is designated as a village in the revenue accounts and for which the revenue accounts arc separately maintained by one or more kamams or which is now recognised by the State Government or may hereafter be declared by the State Government for the purposes of this Act to be a village, and includes any hamlet or hamlets which may be attached thereto."

The .history of what is known as the "Tanjore Palace Estarc'.' is wcll•known and will be found in various reported decisions of the Judicial Committee and of the Madras'High Court : (Sec

Jijoyiamba Bayi Saiba v.

Km1u.lshi Bayi Saiba('), Su11daram Ayyar v. Ramachandra Ayyar('), Maharaja of Kolhapur v. Sundaram Iyer (3) and Chota Raja Saheb Mohitai v. Sund ram Iyer('). In 1799, Serfoji, the then Raja of Tanjore, surrendered

his terri1ory into the hands of the East India Company, but he was allowed to retain possession of certain villges and lands which constitu1ed his private property.

When his son the lasl }{aja died in 1855 without leaving male issue. the East India Company took possession of all his properties including his private property.

Thereupon the senior widow.

Kamachee Boye Sahaba filed a Bill on the Enquiry Side of the Supreme Court of Madras, and obtained a decree lhat the seizure of the private properties was wrong.

On appeal by lhc Secretary of State in Council of India, the Privy Council reversed lhe decree, and ordered the dismissal of the Bill.

Thereafter, a memorial was submitted to the Queen and in 1862 the Government of India which had succeeded the East India Company "sanctioned the relinquishment cf the whole of the landed property of the Tanjore Raj in favour of the heirs of the late Raja".

Under instructions from the Government of India, the Government of Madras, on August 2 f, 1862, passed an order the material part of which is as follows :

"In Col. Durand's letter above recorded the Govrn ment of India have furnished their instructions with

reference to the disposal of the landed property of the Tanjore Raj regarding whicfi this Government addressed them under date the 17th May last.

Their decision

(I) 3 M.H.CR. 424.

(l) 1.t.R. 48 Mad. I.

(2) U.R. 40 M•d. 389

(4) 61 I.A. 224.

is to the effect, that 'since it is doubtful whether the Jandl; in question can be legally dealt with . as State property, and since the plea in equity and policy, for treating them as the private property of the Raja is so stront1 that it commands the unanimous support of the members of the Madras Government,' the whole of the lands are to bq relinquished in favour of the heirs of the late Raja (page 228)."

The Tanjore Palace Estate came into being as a result of this grant.

The question in these appeals is whether the property involved in the suits being a part of the Tanjore Palace Estate can be considered to be. an "estate" within the meaning of the term in the Act.

It was conceded by the Counsel for the appellant that if it was part of all' inam it would be an 'estate' within the meaning of that Act.

It was, however, contended that the manner in which the property reverted to the widows of the Raja in l 862 after an act of State did not show that the estate was freshly granted but wls restored to the widows who enjoyed both the wararns, in the same way as the warams were enjoyed before.

To put it differently, the argiiment was that the effect of restoration or relinquishment was only the undoing of the wrong and therefore if the villages were the private properties of the Raja at the time of the seizure then the same character is maintained when tliey were handed back to his widow.

The contention was that what actually happened in 1862 was the restoration of the status quo anttt rather than a fresh grant by the British Government. The

arment is not a new one but has been raised before arid reiected in a number of authorities. In Jijayiamba Bayi Saiba v.

Kamakshi Biryi Saiba(') it was held by the Madras High Court that the Government Order, 1862 was a grant of grace and favour to persons .who had forfeite.:1 aJJ claims to the personal properties of the Rajah by the act. of State and was not a revival of any antecedent rights which they might have had. A similar orinion of the grant was expressed in a Full' Bench case of the Madras High Court in Sumlaram Ayyar v. Ramachandra Ayyar(').

But in Maharaja of Kolhapur v. Sundaram Iyer(•), Spencer, 0.C.J.,

appeare<l to doubt the decision -0f Scotland, C.J., in Jijqyi.::mba Bayi Saiba v; Kamakshi Bayi Saiba(') that there was a grant of grace and favour in 1862. A similar view was taken in Sundaram

v. Deva Sankara('), but these cases have been subsequently ex-

(I) 3 M.H.C.R. 424.

(3) I.LR• 48 Mad. I:

(2) I.L.R. 40 Mad. 389.

(4) A.1.R. l918 Mad. 428.

SUPREME COURT REPORTS

I 1968] 2 S.C.R

Plained or not accepted on this point. In T.R. Bhavani Shankar Joshi v. Somasundra Moopanar('), it was held by this Court that the act of State having made no distinction between the private nnd public properties of the Rajah the privalc properties were lost by the Act of State leaving no right outstanding in the existing claimants.

The Government Order, 1862 was therefore a fresh grant due to the bounty of the Government and not because of any antecedent rights in the grantees.

It was pointed out that the words "relinquished" or "restored" in the Government Order did not have the legal effect of reviving any such right because no rights survived the act of State. The root of title of the grantees was the Government Order of i 862 and it was therefore held that the restoration amounted to a grant in inam by the British. Government within the meaning of the Act.

But the question whether wich regard to any particular area bat was granted in inam is a whole village or less than a whole village is a question that has to be decided with reference to the facts of each particular case.

The question therefore arises .whether the area in question, viz., Orathur Padugai, constitutes a whole village and therefore nn estate within the meaning of s. 3(2) (d) of the Act.

It was contended for the appellant that the suit-lands were not comprised in a whole inam village.

The contention was rejected by both the lower courts which concurrently held that the lands were located in Orathur Padugai, a whole village by itself or a named village and therefore an estate within the meaning of the Acl.

It was argued on behalf of the :ippcllant that the finding of the lower courts is vitiated in law because it is based on no evidence.

In our opinion, there is no justification for this argument.

On behalf of the respondents reference was made to Ex. A-64.

Pannimancalam Vattam Jamabandhi Accoun: individual-war. Fasli 1296, which shows in column no. 3 Orathur Padugai as a village.

Similarly, in Ex. A-78(a), Cess account for Pannimangalam Vattam and Ex.

A-79, the Village war Jamabandhi Account Fasli 1309 Orathur Padugai village is shown as a whole village.

Ehibit A-82, Village war Jamatandhi Individual War, Fasli 13 JO. Ex. A-84. Jamabandhi Ghoshpara for the village, Fasli 1311 and Exs. A-153 to A-157 all mention Orathllr Paduj!ai as a village. All the leases, lease-auctions and receipts given for payment of rent speak of Orathur Padugai as a separate village.

Even the sale deeds, Exs. B-6, B-31, B-32 and B-33 contain a recital of Orathur Padugai as a separate village.

It is manifest therefore that there is sufficient mattrial to how that at least since 1830 onwards Ordthur Padugai is a whole village.

On behalf of the appellant reference was ; nade

(I} (1963) 2 S'c.R. ~21.

 . . ,

to Ex. A-128 and Ex. A-129 dated April 6, 1800 and July 5,

1800. Exhibit A-128 is a letter from the President, Tanjore to the Secretary to the Government of Madras in which there is a reference to Pannimungalam. Jt is stated therein that "the fields of Pannymungalam to the westward of Tanjore which from time immemorial have been reserved for the pasture of the drear cow do remain in the Raja's possession. There is neither village nor cultivation on these lands".

In answer to this letter there is a communication from the Chief Secretary to the Government to the Resident, Tanjore, Ex. A-129. In para 5 of this letter it is stated: "The fields of Pucanymangalam containing neither village nor cuitivation shall remain in the hands of Rajah for the pasturage of His Excellency's cows." Much reiiance was placed 6y Counsel for the appellant on these two documents, but the High Court has rightly pointed out that the identity of the lands referred to in Exs. A-128 and A-129 is doubtful. The lands in suit arc situated at least 30 miles south-east of Tanjorc town In Mannargudi taluk but in Exs. A-128 and A-129 the lands are described as westward of Tanjore. That there was Orathur village in existence even as early as 18 30 is clear from Ex. A-l 5J because in describing certain boundaries of another village it is mentioned as to the north of assessed Orathur village nadappu karai (bund pathway). Exhibit A-4 of 1868 is a Debit and Credit Balance account relating to Orathur Padugai attached to Mukasa Pannimangalam Thattimal. It is clear from this Exhibit that the entire village except the waste land was assessed. From Exhibit A-5 dated September 4, 1870, it appears that the punja lands. in Orathur village were taken on lease from the Collector of Tanjore who was the receiver and manager of the estate of the Rajah of Tanjore for a period of 5 years on payment of a total sum of Rs. 122/9/3. Exhibits A-7, A-8, A-12 to A-16 and A-18 are either Adaiyo/ai muchi/lkas or lease deeds for leasing the lands in. Orathur padugai village for a term granted by the Collector of Tanjore.

In all these documents the description is that the lands are situated in Orathur Padugai in Mokhasa Pannymangalam Thattimal.

The documents range between the years 1870 to 1875. In Ex.A-63 which is. the individual war settlement register for Pannymangalam vattam for Fasli 1296 against column 6 it is stated that the income in the matter of the anumi cultivation of sugarcane, etc., on 95 kullis is 'Rs. 4 and it is in Orathur padugai village, Pannymangalan1 vattam. Exhibit A-61 is the debit and credit balance account of Orathur padugai for Fasli 1294.

Similarly, in Ex. A-64, the individual war settlement register for Pannimangalam vattam, column 3 relating to the villaie of Orathur states ihat tlie Orathur padugai is a village and the vattam is Panniniangalam. There arc similar dos-

762 SUPl.ElllE COUllT l.EPORTS

(1968) 2 S.C.R.

criptions of Orathur as a village in Ex. A-65 which is the settlement register for Pannirnangalam vattam for Fasli 1297. Exhibit A-80 contains a similai description <>f Orathur village in Pannimangalam vattam.

Exhibits A-153 to A-155 and A-157 ire all lease deeds between the years from 1901 to 1906 relating to lea'le of lands in Orathur padugai. It is manifest that there is sufficient evidence to show that from 1868 right up to 1907 Orathur padugai was considered as a separate village. It was contended for the respondents that even after the passing of the Act Orathur padugai was treated as a separate village. Reference was made in this connection to a number of documents, E:ts. A-158, A-105,

A-159, A-106, A-116, A-161, B-17, A-117 to

A-120,

B-18, A-121, A- I 62 and A-163. In our opinion, the finding of the lower courts that Orathur padugai is a whole village and therefore on stitutes an 'estate' within the meaning of the Acl is supported by p1 o; ier evidence and Counsel for the appellant is unable to make good his argument that the finding of the lower courts is in any way defective in law.

We proceed to consid.er the next question arising in •his case, viz .. whether the suit-lands are 'private lands' within the meaning of s. 3 ( I 0) ( b) of the Act which reads as follows :

"3. In this Act, unless there is something repugnant in the subject or context-

(I 0) 'Private land'-

(b) in the case of an estate within the meaning <>f subclause ( d) of clause (2), means-

( i) the domain or home-farm land of the landholder, by whatever designation known, such as, kambattam, khas, sir or pannai; nr

(ii) land which is proved to have been cultivated as private land by the landholder himself, by his own servants or by hired labour, with his own or hired stock, for a continuous period of twelve years, immediately before the first day of J\llY 1908, provided that the landholder has retained the kudivaram ever since and has not converted the land into ryoti land; or

(iii) land which is 1_Jroved to have been cultivated by landholder himself, by his own servants or by hired labour, with his own or hired stock. for a continuous period of twelve yeallS immediately before the first day of NDvember 1933, provided that the landholder has

j '

retained the lmdivaram ever since and has not converted the land into ryoti land; or

(iv) land the entire kudivaram in which was acquired by the landholder before the first day of No_vember 1933 for valuable consideration from a person owning the kudivaram but not the melvaram, provided that the landholder has retained the kudivararii ever since and has not converted the land into ryoti land, and provided further that, where the kudivaram wa~ acquired at a sale for arrears of rent the land shall not be deemed. to be private land unless it is proved to have been cultivated oy the land holder himself, by his own servants or by hired labour, with his own or hired stock, for a continuous period of twelve years since the acquisition of the land and before the commencement of the Madras Estates Land (Third Amendment) Act, 1936.''

Section 3(16) of the Act defines 'Ryoti land' as follows:

" 'Ryoti land' means cultivable land in an estate other than private land out does not include-·- ( a) beds and bunds of t; mks and of supply, drainage, surplus or irrigation channels;

(b) threshing-floor, cattle-stands, village-sites, and other lands situated in any estate which are set apart for the common use of the villagers; ( c) lands granted on service tenure either free of rent or on favourable rates of rent if granted before the passing of this Act or free of rent if granted after that date, so long as the service tenure subsists."

Section 185 of the Act enacts a presumption that land in inam village is not private land and reads as follows :

"185. When. in any suit or proceeding it becomes necessary to determine whether any land is the landholder's private land, regard shall be had--

( 1) to local custom,

(2) in the case of an estate within the meaning of subclause (a), (b), (c), or (e) of clause (2) of section 3, to the question whether the land was before the first day of Jtily 1898, specifically Jet as. private land, and

(3) to any other evidence that may be produced :.

Provided that the land shall be presumed not to be private land until the contrary is proved:

[ J 968] 2 S.C.R.

Provided f11rther that in the cao; e of an estate within A the meaning of sub-clause (d) of clause (2) of section 3-

( i) any expression in a lease, patta or the like, executed or issued on or after the first day of July, 1918 to the effect or implying that a tenant hs no right of occupancy or that his right of occupancy is limited or restricted in any manner, shall not be admissible in evidence for the purpose of proving that tile land concerned was

pivate land at the commencement of the tenancy; and

(ii) any such expression in a leae, patta or the like, executed 0r issued before the first day of July 1918, shall not by itselfbc. sufficient for the purpose of proving that the land concerned was private land at the commencement of the tenancy."

Secticn 6 is to the following effect :

"6. (I) Subject to the provisions of this Act, every ryoi now in possession or who shall hereafter be admitted by a landholder to possession of ryoti land situated in the estate of such landholder shall have a permanent right of occupancy in his holding.

Explanation ( 1 ) .-For the purposes of this sub-seciion, the expression 'every ryot now in possession' shall in elude every per; on who, having held land as a ryot continues in possesion of such la.'!d at the commencement of this Act. "

The Subordinate Judge and the High Court have concurrently come to the conclusion, upon consideration of the e\•idence, that the lands in suit are not private lands but ryoti lands. On hehalf of the appellant Mr. Kesava Iyengar conceded that onus is on the appellant to show that the lands are 'private lands' within the meaning of the Act, but the argument was stressed that t}ie lower courts have failed to take into account certain important documents filed on behalf of the appellant, viz .. A-128, A-129 and the Paimash account dated August 25, 1830, Ex. A-147 and the Land Registor, Ex.A-134. In our opinion. there is no warrant for the argument advanced on behalf of the appellant.

As regards Exs. A-128 and A-129 it is apparent that apart from the question as to the identity of the land, they relate to a period p=-ious to the grant of 1862 which alone constitules the root of title of the grantees and there is no question of restoration or revival of any anterior right.

The same rcallOtjing applies to the Paimash account dated August 25, 1830, Ex.

A-147 which

, ...

,,.~··

CH!DAMBARAM v. T. K. B. ODAYAR (Ramaswami, I.) 765

cannot, therefore, be held to be of much relevance in this connection.

Reliance was placed on behalf of the. appellant on Ex.

A-134, the Land Register for Pannimangalam which shows that in Orathur Thauimal Padugai" which consists of Punjais (dry lands) and arc rain-fed, the land-holder (the Tanjore Palace Estate) owns both the warams (lruwaram in vernacular). It was argued for the appellant that the expression 'lruwaram' means that the land was owned as Pannai or private Janda.

Reference wa' made to the record of rights and Irrigation Memoir dated January ) 3, 1935, Ex. B-8 which shows that. the Janda are lr111mram and there are no wet lands.

But the use of the expression "Jruwaram" in these dccuments is not decisivt; of the question whether the land is private land of the appellant or not.

Under s. 3 ( 10) of the Act. private land comprises of two cam. gories. private hmds technically so-called. and lands deemed to be private lands.

Jn regard to private lands technically so-called, it must be the domain or home-farm land of the landholder aa understood in law.

The mere fact that particular lands are described in popular parlance as pannai kambattam. sir, khas, is not decisive of the question unless the lands so-called partake of the characteristics of domain or homefarm lands. In our opinion the correct test to ascertain whether a land is domain or. home-farm is that accepted by the Judicial Commi1tee in Yerlagadda. Malikarjtma Prasad Nayudu v. Somayya('), that is, whether it is land which a zamindar has cultivated himself and intends to retain as resumable for cultivation by himself even if from time to time he demises for a season. The Legislature did not use the words 'domain or home-farm land' without attaching to them a meaning; and it is reasonable to suppose that the Legislature would attach to these words the meaning which would be given to them in ordinary English.

It seems to us that the sub-clause {b )(i) of the' definition is intended to cover those lands which come obviously within Y:hat would ordinarily be recognised as the domain or home-farm, that is to say, lands appurtenant to the landholder's residence and kept for his enjoyment and use: The home-farm is land which the landlord cultivates himsef, as distinct from land which he lets out to tenants to be farmed. The first clause is, therefore meant to include and signify those lands which are in the ordinary sense of . the word home-farm lands.

The other clauses of the definition appear to deal with those lands which would not r.ecessarily be regarded as home-farm lands in the ordinary usage of the term; and with reference to those lands there is a proviso that lands purchased at a sale for arrears of revenue shall not he regarded as private lands unless cultivated directly by the landlord for the required nerimL It seems to us that the definition reads as a whole

(ll .1.1..R. 42 Mad. 4

(P.C.).

L3 Sup. Cl/68-5

166 SUPREME COURT llEPOllTS

[1968] 2 S.C.R.

indica~ clearly that the ordinary test for 'private land' is the test of retention by the landholder for his personal use and cultivation by him or under his personal super>'ision.

No doubt, auch lands may be let on short leases for the convenience of the landholder without losing their distinctive character; but it is not the intention or the scheme of the Act to treat as private those lands with ref.erence to which the only peculiarity is the fact that the landJgrd owns both the warams in the lands and has been letting them out on short term leases. There must, iu our opinion be something in the evidence either by way of pro0f of direct cultivation o• by some clear indication of an intent to regard these lands as retained for the personal use of the landholder and his establishment in order to place those lands in the apecial c; itegory of private lands in which a tenant under the Act cannot acquire occupancy rights.

In the present case there

i~ no proof that the lands were ever directly cultivated by the landholder.

Admittedly, soon after the grant of 1862 the estate came under the administration of Receivers, who always let out the lands to the tenants t0 be cultivated. In Ex. B-8, the Record of Rights the lands are entered in column 5 as Punja ot dry land. In column 4 which requires the entry to be made as private land they arc not entered as private lands. Ii was argued for the appellant that the lands are sometimes called 'Padugai' and that the expression meant that the lands were within the ftood bank

and forming part of the river bed.

But the description of the land as 'Padugai' is not of much consequence because they are also called as Orathur 'Thottam', thottam meaning a garden where garden crops are raised to distinguish it from paddy fields.

It appears that the lands actually lie between two rivers and comprise more than l 00 acres, and by their physical feature cannot be 'padugai' in the sense in which the term is normally used. The argument was stressed on bel}alf of the appellant that leasing rights of the land were auctioned periodically. But the Righ Court has observed that one and the same tenant continued to bid at the auction and there was evidence that tenants continued

to cultivate the lands without break or change, and the fact that there were periodical auctions of the lease right~ ldid not necesc sarily deprive the tenants of the occupancy tjghts which they. were enjoying. We accordingly hold that the appellant has. not G adduced sufficient evidence to rebut the presumption under s. 185 of the Act that the lands in the inam village are not private lands . and the argument of the appellant on this aspect of the case must be rejected.

For the reasons expressed we hold that the judgment of the Madras High Court dated January 10, 1956 is correct and these appeals must be dismissed with costs--0ne set of hearing fee.

G. C.

Appeals dismis.fed.

T. S. PL. P. CHIDAMBARAM CHETI1AR

C. SHAH

V. BHARGAVA, JJ.

Madras Estates Land Act

s. 3(2)

s. 3(10)(h)

s. 3(2)(d)

Lands Act I of 1908

s. 3(16)

Madras High Coult

Tanjore

Grathur Padugai

Government of India

s. 3(2)(d)

Estates Landll Act

[1963) 2 S.C.R. 421

s. 3(10)

s. 185

January 10. 1956

Madras High Court

R. Kesava Iyengar

R. Thiagarajan

R. Ganapathy Iyer

Bishan Narain

. P. Malhotra

M. R. K. Pi//ai

Ramaswami

Subordinate Judge, Tanjore

Pannimangalam

Land Act I of 1908

s. 3(2)

Octobor 31, 1950

February 2, 1951

s. 3

Section 3

s. 2

Madras Act II of 1945

s. 3

s. 3

Madras Estates Land Act, 1908

(1968] 2 S.CR.

1936

Section 3

Madras'High Court

Serfoji

East India Company

aja

Kamachee Boye Sahaba

Supreme Court of Madras

Tanjore Raj

Raja

Madras

August 2 f, 1862

Durand

India

Madras Government

British Government

Scotland

British. Government

Orathur Padugai

s. 3(2)

Orathur Padugai

Ordthur Padugai

Pucanymangalam

Rajah

Mannargudi taluk

nadappu karai

Orathur Padugai

Mukasa Pannimangalam Thattimal

September 4, 1870

Orathur village

Orathur padugai village

Orathur padugai

Orathur padugai

s. 3

Section 3(16)

Section 185

section 3

section 3

Kesava Iyengar

August 25, 1830

January ) 3, 1935

s. 3

s. 185

January 10, 1956