TUKARAM G. GAOKAR

R. N. SHUKLA & ORS.

March 8, 1968

[M. HIDAYATULLAH, C.J., R. S. BACHAWAT,

C. A. VAIDIALINGAM, K, S. HEGDE

AND A. N. GR.OVER, JJ.)

The Sea Customs A.ct, 1962, ... Ill, 112, 135-PrDHCutlon Hfo11 Magistrate for smuggling gold under •· 135-Colkctor of Custonv also iJsuing notice under ss. 111and112 to sholv cause why contrdband gn/d should not he confiscated and penlllly iniposed-Jssue of notice whether constitutes co11te11ipt of cri111inal court-1vhe1her contravenes Art, 20(3) Constitution of India, 1950.

Jn Septcml>r 1966 the Customs authorities seized certain contrabanJ gol<l from the possession of the appellant. Thereafter the appellant along with certain other persons was charged befor~ a Magistrate for oJfcnccs

in cQnncction with the smuggling of gold under s. 120 B of the Indian Penal Code read with s. 135 of the Sea Customs Act, r. 131-11 of the Defence of India Ruros and s. 8 of the Foreign Exchange Regulation Act.

Before the commencement of the trial the Assistant Collector of Customs issued a notice to the appellant to show cause why the gold should not he confiscated under s. J 11 of the Sea Customs Act and why a penahv .,.hould not be imposed on him under s. 112 of the same Act. Thereupon

tbe appellant under Art. 226 of the Constitution a<ked the High Court for a writ of prohibition restraining proceedings for imposition of P'naJty .on him in pursuance of the aforesaid notice.

The contention as tht 1hc thrcatenc<l proceedings (i) amounled to contempt ot the MagistnH..:

hcforc whom the trial was imminent and (ii) were in violation of Ar:.

20(3) inasmuch as he \•louJd be compelled to go into the witness ho\: to rebut the evidence of an accomplice witness. The High Court rejccll!<l 1hcsc contentions, but granted a certificate to appeal to this Court.

HELD: (i) Identical issues arise in proceedin~ for impMition of penalty under s. I 12(b) of the Sea Customs Act, 1962 and in a !, rial for an offence punishable under s. 135(b) of the sam~ Act.

Jf a pCrson incurs liability under s. 111 he may be proceeded against under s. 112lhl and also under s. 135(b). Similar issues arise in the trial for contraven

tion of r. 131 B of the Defence of India Rules and s. 8 of the Foreign Exchange Regulation Act. The customs officers will have to enquire inlo these issues though the same issues will later be tried by the criminal court.

Seclion 127 expressly provides that the award of a penalty under s. J 12 is not bar to th-~ infliction of punishment under s. 135.

Th~ offender may be punished under s. 135 without prejudice to any othr action that may he taken under the Act, [424 E--HJ

The Customs Officers were acting hona fide and discharging thir statutory duties under ss. 111and112:. The power of adjudicating penahr and confiscation under those sections is vested in them alone. The criminal court cannot make this adjudication. The issue of the show..cal1s~

notice and proceedings theundcr were authorised by the Act and v; cre 110t calculated to obstruct the cou'rsc of justice in any Court. There "'as

no justification for holding that the proceedings amounted lo contempt of Court. 1425 Cl

Reg v. Gmy, [19j)O] 2 Q.B. 36, Arthur Reginald Perera v. 7"/ie King, [1951) A.C. 482, Saihnl K11m.ar Gupta v. B. K. Sen, [1961] 3 S.C.R. 460 :mJ S. S. Rny v. Stcl, le of Omsa, A.l.R. 1960 S.C. 190, referred to.

' (ii) The customs officers have a discretion to stay the ptocecdio~ under ss. 111 and 112 during the pendency of the trial in the criminal court.

In 1he exercise of their disc'rction they had refused to stay the proceedings, It was not shown that thir action Was 111ala fide or arbitrary.

The Court would not issue a 11uiudanuu to control this' exercise of their di, crction, [425 Hl ~

dii) The proceedings unde'r ss. 111 and 112 could not be said to be in violation of Art. 20(3) 06' he Constitution, The possibility of h:.aving to en1cr tho witness-box to rebut the evidence of an accomplice y; as no! such a compulsion as would attract the, provisions of proceeding_, from another person or authority. If an accused voluntarily gives evidence. in his defence he is not being compelled to be a witness against himself. [The Court however obs~-ed that~ different considerations might arise if the 01ppellant was summoned by the clistoms authorities under s. 108 to give evidence in tile proceedinK-'! under ss. 111 and 112.) [4,26 D-F)

C1v1L APPELLATE JURISDICTIO!'f : Civil Appeal No. (591 of 1967. •

Appeal from' the judgment and order dated March 31,-1967 - of the Bombay High Court in Appeal No. 11 of 1967.

Jethmalani, N. H. Hingora11i and K. Hingora'ni, for the appellant ·

K. G. Khandalawa/a, H. R. Khanna and S. P. Nayar, for the respondents.

The Judgment of the Court was delivered by Bacha"fl'.at, J. This is an appeal by certificate against an order of the Bombay High Court on Letters Patent appeal confinning an order of dismissal of a writ petition by which the appellant Tukaram G. Gaol}; lr asked for a wi:it of prohibition restraining proceedings for imposition of a penalty on him for alleged complicity in the smuggling of gold in pursuance of a notice dated November 16, 1966 issued under s. 112 of the sea Customs Ac\,

l 962.

The appellant's contention is that the threatened proceedings amount fo contempt of the magistriite before whom his trial for offences in connection with the smuggling 9f gold is imininent are and in vioJation of the constitutional protection of Ari.'20(3) of the Constitution. The High Court rejected these

cOntentions~ The main facts may be stated briefly. On septembef 14 and 17, 1966, "the customs officers tii1ded a number of premises in the cit}i of Bombay" and seized 65,860" tofas of foreign gold and some gold bangles worth aboilt Rs. 1, 14,20,270. On September

14, 1966, "the appellant was arrested on charges of complicity in the .. smuggling of gold and other articles. After several remands,

'"$,)

he was released on bail. On October 6, 1966, the customs officers lodged a first information report charging the appellant, .one John D'Sa and other persons with offences in connection with the smuggling of gold under s. 120B of the Indian Penal Code read with s. J 35 of the Sea Customs Act, r. 131-B of the Defence of India Rules and s. 8 of the Foreign Exchange Regulation Act.

The trial of the appellant on these charges before a magistrate is imminent. On November 16, 1966, the Assistant Collector of Customs, Preventive Department, Bombay issued a notice to the appellant to show cause why the gold should not be confiscated under s. 111 of the1Sea Customs Act and why a penalty should not be imposed on him under s. 112 of. the same Act. The notice alleged that he acquired possession of an<fwas concerned in carrying, removing, depesiting, harbouring, keeping, concealing and dealing With gold which he knew or had reason to believe was liable to confiscation under s. 111 and that in relation to such gold he was knowingly concerned in fraudulent evasion of customs duties and of the prohibitions imposed under the laws in force.

The notice relied on several. documents and the statenu:nt of John D'Sa.

The appellant disclaims any interes! in the gold seized by the customs officers. He resisis the imposition of penalty on him for alleged complicity in the smuggling.

It is quite clear that iden'.ical issues arise in proceedings for imposition of penalty under s. 112(b) of the Sea Customs Act, 1962 and in a trial for an offj'nce punishab1e under s. 135 (b) of the same Act. If any person acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing wih any goods which he knows or. has reason to believe are liable to confiscation under s. 111, he may be proceeded against under s. 1 l2(b) and also under s. 135(b). On the same set of facts, a penalty may be imposed on the offender under s. 112(b) and he may be punished with imprisonment and fine under s. 135 (b). Similar issues arise in !he trial of offences for contravention of r. 131-B of the Defence of India Rules ands. 8 of the Foreign Exchange Regulation Act.

The customs officers will have to enquire :into these issue-, though the same issues will

later be tried by the criminal court. The Sea Customs Act contemplates parallel proceedings of.- thi& kind. Section 127 expressly provides that the award of a penalty under s. 112 is not a bar to the infliction of punishment under s. 135. The offender may be punished under s. 135 without prejudice to any other action that may be taken under the Act. The customs officers are empowered to confiscate smuggled goods and to levy penalties on persons concerned with the smuggling. They may initiate proceedings for confiscation of the goods and for imposition of the

penalty though the trial of those persons in a criminal. court for connected offences is imminent. The initiation and continuance of those proceedings in good faith cannot amount to contempt of the criminal court. To constitute contempt of court, there must be involved some "act done or writing published calculated to bring

a court or a judge of the court into contempt or to lower his authority" or something "cakulated to obstruct or interfere with the due course of justice or the lawful' process of the courts", see Reg v. Gray('), Arthur Reginald Perera v. The King( 2 ). The customs officers dld nothing of this kind. They are acting bona fide and di; charging lheir statutory duties under ss. 111 and 112.

The power of adjudicating penalty and confiscation under those sections is vested in them alone. The criminal court cannot make this adjudicatiop. The issue or the show-cause notice and proceedings thereunder are authorised by the Act and are not calculated to obs'.ruct the course of justice in any court. We see no justiftcation for holding that the proceedings amount to contempt of court.

The decided cases do not support -the appellant's contention.

In Saibal Kumar Gupta v. B. K. Sen('), it was held that an enquiry by a special committee .. appointed by the Corpora ii on of Calcutta to enquire in'.o the conduct of the Commissioner in the matter of appointment of municipal officers pending_ criminal proceedings against him in respect of certain offences did not amount to contempt of court. The special committee could not be said to hold a parallel enquiry on matters pending before the court, though the enquiry might extend to those matters incidentally. It may be noted tha'. there was no express provision in the Calcutta Municipal Act authoris:ng a special committee to hold an enquiry into

any matter in issue before a CQurt. In S. S. Roy v. Statt of Orissa('), a magistrate issued an order restraining the execution of a warrant of arrest issued by a civil court. The order was in excess of his jurisdiction and was not warranted by s. 144 of the Code of Crim 'nal Procedure. The court held that he could not be punished for contempt of court in the absence of wilful error proceeding from improper or corrupt motives. In the present case also, 1the customs officers are not actuated by any oblique motive.

Moreover, their action is authorised by ss. 111 and 112 and is not in excess of their jurisdiction.

The customs officers have a discre'.ion to stay the proceedings under ss. 111 and 112 during the pendency of the trial in the

(I) (1900j2 Q.B. 36.

(3) [1%1) 3 S.C.R. 460.

(2) (19511A.C.482, 488.

(4) A.T.R.1960S.C. 190.

criminal court. In the .exercise of their discretion they have refused to stay the proceedings. It is not shown that their action is ma/a fide or arbitrary. The court will not issue a mandan11t.1 to control this exercise of their discretion.

The appellant then claims that the proceedings under ss. 111 and 112 are in violation of Art. 20(3) of the Constitution. He says that unless the proceedings are stayed he will he compelled to enter the witness-box to rebut the evidence of John D'Sa and will be forced in cross-examination to give answers incriminatinn himself.

Article 20(3) affirms that "no person accused of any offence shall be compelled to be a witness against himself." The first information report has been lodged and formal accusation has been made in it against the appellant charging him with offences in connection with the smuggling of gold. The appellani is, therefore a person accused of an offence. But it is not possible at this stage to say that he is compelled to be a witness against himself. There is no compulsion on him to enter ther witness-box.

He may, if he chooses, not appear a$ a witness in the proceeding.< under ss. 111 and 112. The necessity to enter the witness-box fl?r

substantiating his defence is not such a compulsion as would attract the protection of Art. 20(3). Even in a criminal trial. any person accused of an offence is a competent wifuess for the defence under s. 342-A of the Criminal Procedure Code and mav give evidence on oath in disproof of the charges made against him.

It may be very necessary for the accused person to enter the witness-box for substantiating his defence. But this is no reason for saying that the criminal trial compels him to be a witness against himself and is in violation of Art. 20(3). Compulsion in the coniext of Art. 20(3) must proceed from another person or :rnthority. The appellant is not compelled to be a witness if he voluntarily gives evidence in his defence. Different considerations may arise if he is summoned by the customs authoriti~~ unde1 s. 108 fo give evidence in the proceedings under ss. 111 and 112.

But he has not yet been summoned to give evidence in those proceedings.

We express no opinion on the question whether in the event of fiis being summoned he can claim the protection under Art. 20(3) and whether in the event of his being then com pelled to give incriminating answers he can invoke the protection of the proviso to s .. 132 of the Indian Evidence Ai:t against the use of those answers in the criminal oroceedings. It may be noted that counsel for the customs authorities gave an undertaking in the High Court that they would not use h1 any criminal proceed ings the statement, if any, that might be made by the ap1>ellant during the course of the adjudication proceedings.

Before the High Court, , the appellant took the further point that the proceeding-; under ss. 111 and 112 were in violation of

A Art. 14 of the Consiitution. The High Court repelled this contention. That point has now been abandoned by the appellant and does not survive.

ln the result, the appeal is dismissed. There will be no order as to costs.

G.C.

Appeal dismissed.

L7 Sup.C.I/68~3

TUKARAM G. GAOKAR

R. N. SHUKLA & ORS

March 8, 1968

M. HIDAYATULLAH, C.J.

R. S. BACHAWAT

S. HEGDE

ss. 111

Constitution of India

s. 120

Indian Penal Code

s. 135

Customs Act

s. 8

Customs Act

s. 112

Art. 226

Sea Customs Act, 1962

s. 135(b)

s. 111

s. 112

s. 135(b)

s. 8

s. 135

s. 135

ss. 111

[1961] 3 S.C.R. 460

ss. 111 and 112

ss. 111 and 112

Art. 20(3)

s. 108

ss. 111 and 112

APPELLATE JURISDICTIO!'f

Jethmalani

N. H. Hingora11i

K. Hingora'ni

K. G. Khandalawa

S. P. Nayar

Tukaram G. Gaol

s. 112

septembef 14 and 17, 1966

Bombay

October 6, 1966

John D'Sa

s. 120B

Indian Penal Code

Customs Act

s. 8

November 16, 1966

s. 111

Sea Customs Act

s. 112

s. 111

John D'Sa

s. 112(b)

Sea Customs Act, 1962

s. 135

s. 111

s. 1

s. 135(b)

s. 112(b)

s. 135

Customs Act

Section 127

s. 112

s. 135

s. 135

ss. 111 and 112

Calcutta

s. 144

ss. 111 and 112

ss. 111 and 112

ss. 111 and 112

Art. 20(3)

Article 20(3)

ss. 111 and 112

Art. 20(3)

s. 342

Art. 20(3)

Art. 20(3)

s. 108

ss. 111 and 112

Art. 20(3)

ss. 111 and 112

Art. 14


MOHD, USMAN

STATE OF BIHAR

March 12, 1968

(S. M. S!KRI, J. M. SHELAT AND V. BHARGAVA, JJ.] B

l11dia11 Explosives Act, 1884 (4 of 1884), s. 5(3)-Minors permitted to enter licensed pre.niises-Punish1nent under "tt•hich cl. of s. 5(3).

Explosive Rules, 1940, r. 16-Ji.tinors pernzitted to inter licensed pre mises-Punislunent under which cl. of s. 5(3).

The appellant, a manufacturer of fireworks was convicted under s. 5 ( 3) of the Indian Explosives Act as he. had allowed minors to work in the manufacture of fireworks thus contravening r. 16 of the Explosives Rules.

HELD: Clause (a) of s. 5(3) deals with a person who imports or manufactures in .contravention of tho Rules; cl. (b) deals with a person who 'possesses; uses, sells or transports any explosive in contravention of the Rules; and cl. (c) deals with the contravention of the Rules in other ca5es. If there is a breach of a rule, it has to be ascertained in each case whether the rule or part of it relates to activities mentioned in cl. (a) of s. 5(3) or cl. (b) of s. 5(3). If it does not relate to any of the activities mentioned in cl. (a) or cl. (b) of s. 5(3) the breach of the rule would fall under cl. (c), of s. 5(3). [430 A-B; 431 HJ

Jn this case, though it. was established that the minors were employed 1n or allowed to enter the premises, it was not proved that the minors were employed in any of the activities mentioned in cl. (a) or cl. (b) of s. 5(3). Nor it has been proved that any manufacture of fireworks was <lone on that day.

So the contravention of r. 16 on the facts found, could only be punishable under cl. (c) of s. 5(3). [432 BJ

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 134 of 1965.

Appeal by special leave from the judgment and order dated May 14, 1965 of the Patna High Court in Government Appeal No. 25 of 1962.

N11r-ud-dit1 Ahmed and A. K. Nag, for the appellant.

D. P. Singh, Anil Kumar and S/rivpujan Singh, for the respondent.

The Judgment of the Court was delivered by Sikri, J. This appeal by sial leave is directed against the judgment of the fatna High Court allowing the appeal filed by the State Govemmept and convicting the appellant, Mohd.

Usman, under s. 5(3)(a) of the Indian Explosives Act. 1884 (IV of 1884 )-hereinafter referred to as the Act-and sentencing him to undergo rigorous imprisonment for two years and also to pay a fine of Rs. 2,000, in default to undergo rigorous

MOHD. USMAN. v,. BIHAR (Sikri, J.) 429

A imprisonment for a further period of six months. The High Court, however, agreed with the Magistrate that the appellant could not be held guilty under s. 304A, IPC. The High Court did not find the two other accused persons, Abdul Rahman and Abdul Aziz, guilty, and State appeals against them were dismiss.. ed.

B The prosecution c; ise, in brief, is that an explosion occurred in appellant's factory at Matkuria, PS Dhanbad, on April 28,

1960. As a result of the explosion Kashi Bhakta, Gobardhan Bhokta and Mohan Bour died. On that day, the appellant, who manufactures fireworks, had allowed minors (under 16 years of age), viz., Kashi Bhokta, Guhi Bhokta Gobardhan .and Subhas Chamar to work in the man11facture of fireworks, thus oOiltravening r. 16 of the Explosives Rules, 194hereinafter referred to as the Rules-made under the Act, and had thereby committed an offence punishable under s. 5 ( 3 )(a) of the Act. The High Court, disagreein~ with the Magistrate .who tried the case, held that "the three mlnor boys, Kashi, Guhi and Subhas, were employed and Gobardhan, in any event, was allowed to enter the premises licensed under the Rules for manufacture of explosives" in contravention of r. 16, anu convicted the appellant as already stated.

Section 5 ( 3) of the Act reads thus: "Any person contravening the rules made under this section shall lbe punishable-

(a) if he imports or manufactures any explosive in such contraventibn, with . imp$nment for a term which may extend to three years, or with fine which may extend to five thousand rupees, or with both;

( b) if he possesses, uses, sells or transports any explosive in such contravention with imprisonment .for a term w.hich may extend tc two years, or with fine which may extend to three thousand rupees, or with both; and.

(c) in any other case, with fine which may extend to one thousand rupees."

Rule 16 of the Explosives Rules provides:

"16. Children and intoxicied persons-No child under 16 years of age and no person who is in a state of intoxication shall be employed on the loading, unloading or •transport of explosives, or be employed in or allowed to enter any premises licensed under these rules."

SUPRBMB ~T llBPO&TS

(1968) 3 S.CR.

The first question which arises is whether every breach of r. 16 falls under s. 5(3)(a) of the A<:t. In our opinion, the answer is in the negative. It will be. noticed thai cl. (a) of s. 5

(3) deals with a n who imports or manufactures in contravention of the; Rules; cl. (b) deals with a person who possesses, uses, sells or transports any explosive in contravention of the Rules; and cl. (c) deals wtth contraventions of the Rules in other cases. It seems to us that the scheme of this sul>section is to divide the contravention of the Rules into three categOries. In the first category fall rules which a person must observe while he imports or manufactures. In other words, rules relatable to

the import or manufacture of exp!OsiVes would fall in the first category. For example, clause 11 of the licence issued to the c appcllant provides: ·

"Not more than four persons shall be allowed at any one time in any one building or tent in which the explosive is being manufactured and only persons actually employed in manufacturing or superintending manufacture shall be allowed iDsiile the place of D manufacture."

Clause 12 of the Licence provides:

"No iron or steel implements shall be used in the manufacture. OnJ.y copper gun-methl or wooden tools are permissible."

N<>W, if the appellant had infringed the provisions of these clauses it could be said that the contravenuon would fall under

cl. (a) of s. 5(3). We may mention that r. 81 provides that

"no explosive shall be manufactured, possessed, used or sold except under and in accordance with the conditions of a licence granted under these rules", and a breach of the conditions would F be contravention of r. 81. Bui su~ the appellant had contravened clause 2 of the licence-his licence is for the manufacture, possession and sal~ . of 25 pounds of fireworks-which prescribes the modes in which the explosives shall be kept in the premises, i.e. "(a) in a building substantially constructed of brick-stone or concrete or in a securely constructed fire-proof safe; or (b) in an excavation formed in solid rock or earth .... ", G he would be g_uilty under cl. (b) of s. 5(3) and not cl. (a) of s. 5(3). Similarly, a contravention of clau•e 18. which provides ihat "all sales of explosives under this licence must be effected on the premises described on the face of the licence. and an explosive shall not be sold to any person under the age of 16 years" would fall under cl. (b) of s. 5(3).

The learned counsel for the appellant contends that on the facts found by the High Court the conviction of the appellant

MOHD. USMAN \', B!HAR (Sikri, J.) 431

under cl. (a) of s. 5(3) cannot be sustained. He says that there is no finding or evidence that the four minors were engaged to manufacture or were taking part in the manufacture of fireworks.

We have gone through the evidence and we find that no witness states that these minor boys were employed by the al'pellant to manufacture fireworks.

Subhas Chamar, P.W. 1, says that he "was working in' the workshop of explosives at Matkuria owned by Usmap .... We were working in the normal manner and in the same place at the time of occurrence." Puran Bhokta, P .W. 2, father of Kashi and Gobardhan, says that all his sons "worked in the explosive workshop of Matkuria owned by Usman." He does not enlighten us about the nature of work done by his sons. Guhl Bhokta, P.W. 8, only states that "about

18 months ago, on a Thursday, I was working in the explosive shop in village Matkuria under the supervision of Rahman accused ...• " There is no other evidence bearing on this point.

From this evidence it cannot be definitely inferred that the four minors were actually employed in the manufacture of explosives on April 28, 1960. In fact, there is no evidence at all that any fireworks were being manufactured that day. It was for the prosecution to prove all the ingredients of the offence, and. s. 106 of the Evidence Act does not, as contended by the learned counsel for the State, absolve the prosecution from proving its case.

There is no doubt that tlif, te has been a contravention of r. 16, inasmuch as the four minors were employed in or allowed to enter the premises licensed under the Rules. But r. 16 is a comprehensive rule and applies to employment of minors in

the premises for various purposes--manufacture and sale of explosives it would also apply to employment of a minor to sweep floors and keep the premises clean.

If a minor is employed to keep clean the premises, would this contravention fall under cl. (a), cl. (b) or cl. (c) of s. 5(3)?

It seems to us that if cl. (a) and cl. (b) are read widely so as to cover every activity which might take place on the premfaes,

cl. (c) would be rendered redundant. This is not a permissible way of reading statutes. Ii will be noticed that the legislature regards an offence under cl. (a) of s. 5 ( 3) to be more serious than one under cl. (b) and an offence under cl. (b) to be more serious than one under cl. (c). Further, the rules are many; some regulate minor matters, and it would be absurd to treat the breach of every rule to be a breach of cl. (a) or cl. (b).

In our opinion, if there is a breach of a rule, it has to be ascertained in each case whether the rule or part of it relates to

acivities mentioned in cl. (a) of s. 5(3) or cl. (b) of s. 5(3).

It JI does not relate to any of the activities mentioned in cl. \ u)

432 SUPREME COUP.T REPOllTS

[1968] 3 S.C.R.

or cl. ( b) of s. 5 ( 3), the breach of the rule would fall under A

cl. (c) of s. 5(3).

In this case the prosecution has not proved that the four minors were employed in any of the activities mentioned in cl

(a) or cl. (b) of s. 5(3). Nor has it proved that any manufacture of fireworks was done on April 28, 1960. It follows that the contravention of r. 16, on the facts found, can only come B under cL (c) of s. 5(3).

We may mention that the learned counsel for the appellant challenged the findings of fact made by the High Court, but, in our opinion, they are not vitiated in any manner.

In the result, the appeal is partly allowed.

The conviction is altered to one under cl. ( c) of s. 5 (3) of the Act,. and the

aJ>pellant is sentenced to pay a fine of Rs. 1,000 and in default to undergo rigorous imprisonment for a period of three months. Fine, if paid in excess, shall be refunded.

Y.P.

Appeal partly allowed.

MOHD, USMAN

STATE OF BIHAR

March 12, 1968

M. SHELAT

V. BHARGAVA, JJ.

Explosives Act, 1884

s. 5(3)

s. 5(3)

Explosive Rules, 1940

s. 5(3)

s. 5

Explosives Act

s. 5(3)

s. 5(3)

s. 5(3)

s. 5(3)

s. 5(3)

s. 5(3)

s. 5(3)

Ahmed

A. K. Nag

D. P. Singh

Anil Kumar

rivpujan Singh

Sikri

Mohd.

Usman

s. 5(3)(a)

Explosives Act

s. 304A

IPC

Abdul Rahman

Abdul Aziz

PS Dhanbad

April 28,

1960

Kashi Bhakta

Gobardhan Bhokta

Mohan Bour

Kashi Bhokta

Guhi Bhokta Gobardhan

Subhas Chamar

s. 5

Kashi

Guhi

Subhas

Gobardhan

Section 5

SUPRBMB

s. 5(3)(a)

s. 5

clause 11

Clause 12

s. 5(3)

clause 2

s. 5(3)

s. 5(3)

s. 5(3)

MOHD. USMAN

B!HAR

s. 5(3)

Subhas Chamar

Matkuria

Usmap

Puran Bhokta

Kashi

Usman

Guhl Bhokta

Rahman

s. 106

s. 5(3)

s. 5

s. 5(3)

s. 5(3)

s. 5

s. 5(3)

s. 5(3)

April 28, 1960

s. 5(3)

s. 5


AYODHYA PRASAD VAJPAI

STATE OF U.P. & March 13, 1968

[M. HIDAYATULLAII, C.J., R. S. BACHAWAT, C. A. VAIDIAL!NGAM,

K. S. HEGDE AND A. N. GROVER, JJ.)

, U.P. Kshettra Samities and Zita Pa,.islrads Adhiniyam, 1961 (33 of 1963), ss. 3, 4, 8 a11d 8A-Abolitio11 of Khands and tenninc.1io11 of Saniities-lf Executive Governnient has power-Power to ter1nitU1tc-.lf

etcessive delecation-lf violative of Art .. 14 o/ tl1c Constitution.

The appellant was elected Pramukh of a Kshcttra Samiti and his term of office which was co-terminus with that Of the Sarniti, was for five years.

fhe Government of Uttar Pradesh issued two notification's t\ndcr ss. 3 and 8 of the Ulla\- Pradesh Kshcttra Samities and Zila Parishads Adhini yam, 1961, by \Vhich the rural areas in the district Ylerc redivided into i1ew Khands, the Khand relating to the appellant's Samiti was abolished and the term of the Samiti was brought to a close. As a consequence, the appellant lost the office of Pramukh of the Samiti. His writ petition in the High Court challenging the notifications was dismissed.

In appeal to this Court it wps contended that: (I) The two notifica tions arc repugnant to th~ scheme of the Act; (2) Sections 3 and 8 are i:ontrary to the other provisions of the Act under \vhich a San1iti once constituted had a corporate existence v+'ith perpetual succession owning prope'rty and a fund, and \\'hose existence for 5 years v; as contemplated under the Act with the possibility of further continuance; (3) Sections 3 .ind 8 \Vere invalid because they involved excessive delegation of Jcgisl~· tive functions to the State Government, and (4) Th~ sections violate :\rt.

14 of the Constitution because they furnish an indirect tncthod of re moving the Pramukh, Uppramukh and members of a K!:ihcttra Samlti without resorting to the app'ropriate pro\'isions in the Act.

HELD: (1) The notifications fiO\V fron1 an express grant of po'~'er to the Executive by the Legislature. [438 BJ

The Act \\'as -jntcndcd to make dcn1ocracy broa<l-h:tct.l and to ;.ve training, in the art of administration and running dcn1ocracy, to the rur11.I -t:)()J>ulation.

Its scheme indicates that the a'rea of the district is required io be divided into many Khands with a Kshettra Samiti in each Khand. 'fhe po\\--cr to create Khands nn1st he read with the: po\\er to abolish Kbands and create new Khands in their place.

Sections 3, 4, 8 and SA confer po\\er upon the Sh1te Governn1cnt to alter the area of th~ Khand,

abolish old Khands, constitute nc\v Khands nnd re-establish old one<;; and this po., vcr is given by the Legislature advisedly, so that the \Vorking of dcmoc'racy in the rural areas in Kshcttra Samitics and Zila Parishds reav be smooth and without difficulty, [435 D-E; 437 G-H; 538 GJ -

(2) The provisions of ss. 3 and 8 cannot be said to negative the other provisions of the Act, vYhich merely indicate \\'hat a Kshettra San1iti is required to do as Jong as it cxisls. Perpetual succession only means succession of one S.arniti to another, hut docs not entail perpetual existence of any Samiti or any Khand not\\ithstanding the inadvisability of conti nuing it for administrative or other valid reason<;.

Simila'rly, tho fct lhat thl.! San1ities arc rcquird to function \\"ith right to hold property, to

434 SUPIU!MB COURT lll'OltTS

[1968] 3 S.C.R •

posselis fund and to carry on administration, does not show that the power given. by the Act to reconstitute Khands is in any way impail:ed or frustrated. The lint power exists whon the Samities are established and continue; and the se<:Olld come& into play when the need for the re coastitution of a .K:band emerges. [438 B-FJ

(3) The Act has not erred by conceding unfettered or uncanalized power to the State GOVWIDlent. [439 DE]

1be underlying policy and the objective of the legislation is set out in the preamble and o!her provisions of the Act and the Act gives ample indication of what the puipose of making a Khand is and the duties wb1cb the Samlti must p"form. The del3ils of how big a Khand should be, what territory it should involve and. how many Samities should be con stituted in each diStrict, etc. cannot be the subject of detailed legislation and th.ey are eminently matters which can be left to the determination of the Executive which is to act in conformity with the wishes of the local e, the political exigency of the situation and the i"equirements of administrative control.

On this subject the legislative will has been expressed in sufficient detail giving guidance to the State Government in mating its notifications to implement it. [438 G-H; 439 C-EJ

State .of Bhopal cit Ors. v. Champa/al cit Ors., [1964] 6 S.C.R. 35, followed.

( 4) Sections 3 and 8 do not .violate Art. 14. The provision in ihe Act on the •ubject of nmoval of members of a Samiti and that dealing with the subject of re"pnisation of Khands deal with dilferent powers

and cannot be c~~ at all. One is concem..i dlrectlY with the re moval of Pramukb, Up-Pramukh and other members, while the other is concerned diroctly with tlie abolition and reconstitution of Kbands. It may be that by abolishina: al Kband and its Kshettra Samiti. the members, including the Pramutb, must also go; but, that is the comequence of the E exercise of a dilferent power. If, however the actiOn in abolishing the Khand is for the direct purpoae of the removal of a Pramukh, Up- Pramukh or member of a Samiti, the action of the Executive Government can be struck down as ma/4 fide. In the present case, there is no evidence of any ma/4 {ides. [439 0-H; 440 A-CJ

Ram Dial and Ors. v. State of Pun; ab, [19651 2 S.C.R. 858. distin guished.

F CIVIL APPELLATE JUJtlSDICTION : Civil Appeal No. 1805 of 1967.

ApJJ.elll by special leave from the judgment and order dated the 20th October 1967 o~ the Allahabad High Court in Special Appeal No. 864 ot 1967.

R; K. Garg, S. C. Agarwala, Anil Kumar, Shiv Punjan Si11g/1 N. M. Ghatate, for the appell\lnt.

C. B. Agarwala and 0. P. Rana, for the respondents.

The Judgment of the Court was delivered by Hidayatullah C.J. This is an appeal against the judgment of a division Bench, October 20, 1967, in a Special Appeal (No. 864 of 1967) of the High Court of Allahabad affirming the dis-

A. P. VAJPAI V. u:P. STATE (Hidtiyatullah, C.J.) 435

A missal of 61 writ petitions by a learned single Judge of the High Court. This appeal arises from one such petition. The appellant was elected Pramukh of Sarwan Khera Kshettra Samiti and his term of office which was co-terminus with the term of the Samifi, extended to five years. He challenges in this appeal, (as he did in the High Court), two Government notifications issued B by the Government of Uttar Pradesh under the Uttar Pradesh

Kshettra Samities and Zila Parishads Adhiniyam, 1961 (Act 33 of 1963). By these notifications the Government of Uttar Pradesh has redivided the rural area in the district to which the matter relates into neVI' Khands specifying the limits and constituents of their areas and as a consequence has abolished a few khands and created new Khands in their place. The Khand C relating to the appellant's Samiti has been abolished by the first notification and by the second notification the term of the Samiti has also been brought to a close. Both the notifications are of July I, 1966. 'The appellant challenges these notifications as also ss. 3 and 8 of the Act on various grounds. To understand his contentions we may begin by setting -out how the Act is D constructed. ·

The Act was passed in 1961 for the establishment of Kshettra Samities and Zila Parishads in Uttar Pradesh. h was intended to make democracy broad-based and to give training in the art of administration and running democracy to the rural population.

E It is a long Act of 27.4 sections and 8 schedules. It is not possible tof"ve more than a brief idea of the constitution of the Samitis an their functions and organisation. The preamble of the Act states as follows :

"Whereas it is expedient to provide for the establishment of Kshettra Samitis and Zila Parishads in the F districts of Uttar Pradesh to undertake certain governmental functions at Kshettra and district levels respectively in furtherance of the principle of democratic decentralisation of governmental fupctions and for ensuring proper municipal government in rural areas, and to correlate the powers and functions of Gaon G Sabhas under the United Provinces Panchayat Raj Act, 1947, with Kshettra Samitis and Zila Parishads;"

The Act goes on to define a Kshettra Samiti as a Kshettra Samiti established under s. 5 of the Act and a Khand as an area of the district specified as such by the State Government under s. 3 Chapter II of the Act deals inter alia with the establish- H ment of Kshettra Samitis and s. 3 provides as follows :-

"The State Government shall by notification in the Gazette divide the rural area of each district into khands

436 SUPllBMB COURT llBPOllTS

(1968] 3 S.C.R

specifying each Khand by a name and the limits or constituents of its area and may likewise change the names or make modifications in the areas and limits of the Khands by including therein or excluding therefrom areas or create new Khands."

This section allows the State Government to divide the rural area of each district into Khands. It also enables the Government to change the name of a Kshettra Samiti and to make modifications in the areas and limits of the Khands and to create new Khands. Section 4 specifies the effect of change in Khands

and the temporary and permanent consequences thereof are provided for.

Section 5 then deals with the establishment and C incorporation of Kshettra Samitis for each Khand bearing the name of the Khand for which it .is established. It says inter alia that every Kshettra Samiti is a body corporate having peqietual succession ap.d common seal and subject to any restrictions or

qualificatio~ imposed by any other enacfuumi.s, possesses , the power to acquire, hold and dispose of property and to enter into contracts and may by its corporate name sue and be sued.

D Section 6 details the composition of Kshettra Samitis providing for elections and cooptions. Section 7 lays down the procedure for the election of the Pramukhs. and the Up-Pramukhs of the Kshettra Samitis and its members and s. 9 in the same way deals with the term of the Pramukhs and the Up-Pramukhs.

Section 10 then enables the Government to ararnge for the constitution of the first Kshettra Samiti for every Khand and for the

rec:onstitution thereof on the expiry of the first and each subsequent term or when otherwise required under the Act having regard io the provisions of s. 6.

Sections 11-16 deal with the resigilatio11 of Pramukhs, Up-Pramukhs and members, filling of casual vacancies, disqualifications for being chosen or co-opted as members,, disputes as to membership or disqualification and motion of non-confidence in Pramukh or Up-Pramukh and removal of Pramukh or Up-Pramukh. Jn this way complete local self-government is established. ·

In 19.65 by a Sanshodan Adhiniyam, 1965 certain changes were introduced in the parent Act. In s. 8 a second proviso was inserted which read: ''Provided further that where the State Government is of opinion that it is necessary or expedient so to do with a view. to re-organisation of Khands, it may by notification in the Gazette determine the term of all or any Kshettra Samitis.'' The Amending Ac.t also added section SA of which the second sub-section is material for our purpose and may be read here.

A. P. VAJPAI v. U.P. STATE (Hidayatullah, C.J.) 437

A "Where on account of changes in the areas of the .Kharids under section 4, a Khand ceases to exist, or where under the second proviso to sub-section ( 1 ) of Section 8 the term of the .Kshettra Sarniti of any Khand is determined, the Pramukh and the memlier of the .Kshettra Samiti of such Khand who are members of B the Zila Parishad under clauses (i) and (ii) respectively of sub-section (1 ) of Section 18 shall, notwithsthanding anything contained in Sections 18 and 20, continue to be members of the Parishad for the residue of the term of the Parishad."

When the .Kshettra Samitis were formed Khands were estab- 1.isb.ed and the appellant was the Pramukh of .Kshettra Samiti relating io a .Khand called Sarwan Khera.

By the impugned notifications, the Khand and its Kshettra Sarniti have been abolished and the appellant loses the office of Pramukh of the Kshettra Samiti concemeil. He challenged in the High Court the two notifications as ultra vires and repugnant to the scheme and the purpose of the Act. He challenged also ss. 3 and 8 as suffering from excessive delegation of legislative functions and involving a violation of Art. 14 of the Constitution.

These arguments were repelled concurrently in the High Court and his further allegation that the action was ma/a. fide was also discountenanced. He urged the same arguments.before us.

Mr. R. K. Garg on behalf of the appellant took us through the provisions of the Act pointing out that the Sarniti once constituted had a corporate existence with perpetual succession and it was not possible for the State Government to destroy a corpor3.tion so set up and which. owned property and a fund and whose

exiatence for five years was contemplated under the Act . with F possibility of further continuance. It is noi necessary to refer to these sections because they are to be found .in all legislation

deiiling with the establishment of corporate local self-Govern ment bodies. The question is not whether Kshettra Samitis enjoy peipetua1 succe8sion. The question is whether the Kshettra Samitis once established enjoy perpetual existence. The schenie G of the Act clearly indicates thai the area of the district is required to 9c divided into many .Khands with a Kshettra Sainiti in each Khand. Sections 3, 4, 8 and SA confer power upon the State Government to alter the . area of the Khand, constitute new Kh:inds and n;-establish old ones. This power is . given by the legislature advisedly so that the working of democracy in the

rural areas in the Kshettra Sarnitis and Zila Parishads may be smooth and without difficulty. The reorganisation of the .Khands B

may e necessary because of circumlltances too numerous to mention here. Power has, therefore, been reserved to Govern-

SUPREME COURT RBPORTS

(1968] 3 S.C.R.

ment to make the alterations as stated above.

It will be seen that the latter part of s. 3 gives specific power to .create new Khands in addition to the change of areas of the existing Khands wllich means that new Khands may be brought into existeoce and old Khands abolished. In fact, ss. 4 and SA and the newly added provisO to section 8 bear upon the abolition of existing Khands.

In other words, what the State Government did was by an express grant from the legislature. The other provisions o[ the Act to which our attention was drawn merely indicate what Kshettra Samiti is required to do as long as the Kshettra Samiti exists.

Similarly the term of the Kshettra Samitis is to apply to a Kshettra Samiti which is not abolished but continues. The perpetual succession in this context means successions of one Kshettra Samiti to another but in fact it does not entail perpetual existence of any Samiti or any Khand notwithstanding the inadvisability of continuing it for administrative or other valid reason.

The power exercised by the Government in issuing the two notifications flow clearly from the provisions of the law under which Government was acting.

It is for this reason that the attack of Mr. Garg was next directed against ss. 3 arid 8 of the Act. He compared .the power to make new Khands and to reorganise the old ones with the other scheme of the Act under which the Kshettra Samitis are required to function with right to hold property, to possess fund and to carry on administration. All this does not show that the power given by the act to reconstitute Khands is in any way impaired or frustrated. The two pgwers are quite distinct. The first power exists when the Samitis are established and Continue.

The second power comes into play when the need for reconstitution of the Khand emerges. The provisions of ss. 3 and 8 cannot thus 'be said to negative the other J>rDVisions to which our atiention was drawn. ·

It was next contended by Mr. Garg that ss. 3 and 8 were invalid because they involved excessive delegation of legislative functions to the State Government and being_ not supported by adequate safeguards or guides, 1nust be struck down. This argument is not valid. The Act speaks for itself and is self-contained. Its policy is .stated in clear terms and the power to create Khands must be read with the power to abolish Khands and create new Khands in their place. The details of how big a Khand should be, .wat territory it should involve and so on and so forth cannot be the subject of detailed legislation.

The Act gives ample indication of what the pui:pose of making a Khand is and the duties which the Kshettra Samitis must perform.

On t11is subject the legislative will has been sufficiently expressed and must, therefore, guide the State Government in making its notifi-

A. P. VAJPAI v. U.P. STATE (Hidayatul/ah, C.J.) 439

A cations. This case is analogous to the one reported in State o.f Bhopal and others v. Champa/al and other~('). In that case 11 was observed that the pteamble and long utle of ll Act made it clear that the enactment was ''.for the reclamation and the development of the land by the eradication of Kans weed in certain areas in the State." The purpose being specified as the a eradication of kans in area infested with it, the Act was said to

be valid although the selection of the land was left to the cutive. The legislative policy behind the provisions of Jaw were held to be writ large on it, and what remained or was left to the

Executive was to carry out the mandate and give effect to the Jaw to achieve the purpose of the Act. c

In present case also the underlying policy and the obtive of the legislation is cleilrly set out and the details of the duues ot the Kshettra Samitis are indicated. It has, however, been left to the State Government to determine what the Khands should be and how many Kshettra Samitis sho_uld be constituted in each district. This is not a subjt for detailed legislation because it is eminently a .matter which can be left to the determination of the Executive which is to act in conformity with the wishes of the 1oca1 people, the political exigency of the situation and the requirements of administrative control. In our opinion, the Act has not erred by conceding unfetrered or uncanalised power to the State Government as is contended. On the other hand, it has itself spoken on the relevant subject in full detail so as to outline its own will which alone the Executive is supposed to implement.

It was next contended that ss. 3 and 8 violate Art. 14 because they furnish an indirect method of removal of the Pramukh, the

Up-Pramukh and the Members of a Kshettra Samiti without hav- F 1ng to take recourse to the provisions for their removal as laid down. i.n the A7t. . Reliance in this connection is placed upon

~ deem on of this Court in Ram Dial and others v. StatP of Punjab (1). That case iseasily distinguishable.

ere the Punjab Municipalities Act contained two provis10ns for the i:e!Doval of a mem})er in the public G mterest. By one prov1s100 he was entitled to a hearing and by the other not. This Court held .that as it was open to choose one: method . rather than the other and that there was room for arbitrary action. Here the provision on the subject of removal of embers of th~ K;9hettra Samitis are not congruous with the

llbJec! of fC?rgan1Sat1on of Khands. The two provisions operate H m entirely different fields.

One is concerned directly with the remov~ o! the Pramukh, Up-Pramukh and the members.

The other is directly concerned with the abolition of the Khands and

(2) [19551 2 S.C.R. 858.

SUPREME COURT REPORTS [1968] 3 S.C.ll.

rec:Onstiution of different Khands.

These are two different If. powers and cannot be compared at all. It may be that by

abolishing a Khand and its Kshettra Samiti !he members also must go, but that is a consequence of the exercise of quite a different power. Of course, if the action in abolishing the Khand could be shown to be directly connected with the removal of the Pramukh, Up-Pramukh or a member of the Kshettra Samiti the B action of the Executive Government can be struck down as mala fide.

It was for this purpose that 1lhe appellant pleaded in the High Court ma/a {ides on the part of the Government. The two judgments now under appeal negative the existence of any ma1a fide intention. No material was placed before us io establish ma/a {ides nor could the findings be. attacked since tl)ey were concurrently reached. In this view of the matter we must hold that the State Government in exercising its powers acted honestly and within the four corners of its jurisdiction.

[n the result the appeal must be !J.eld to be without substance.

It will be dismissed with costs.

V.P.S.

Appeal dismissed.

AYODHYA PRASAD VAJPAI

STATE OF U.P. & March

R. S. BACHAWAT

K. S. HEGDE

A. N. GROVER, JJ.

ss. 3, 4, 8

Government of Uttar Pradesh

ss. 3 and 8

Sections 3 and 8

Sections 3

Pramukh

Uppramukh

Act

Sections 3, 4, 8

ss. 3 and 8

[1964] 6 S.C.R. 35

Sections 3 and 8

Art. 14

Pramukb

Pramutb

Up- Pramukh

K. Garg

S. C. Agarwala

Anil Kumar

Shiv Punjan

N. M. Ghatate

C. B. Agarwala

0. P. Rana

Hidayatullah C.J.

High Court of Allahabad

Hidtiyatullah

ss. 3 and 8

Uttar Pradesh

s. 5

s. 3

Chapter II of the Act

s. 3

Section 4

Section 5

Section 6

Section 7

s. 9

Section 10

s. 6

Sections 11

Sanshodan Adhiniyam

s. 8

section 4

Section 8

Section 18

Sections 18 and 20

ss. 3 and 8

Art. 14

R. K. Garg

Sections 3, 4, 8

s. 3

ss. 4

section 8

Garg

ss. 3

ss. 3 and 8

ss. 3 and 8

Kshettra Samitis

ss. 3 and 8

Art. 14

SUPREME COURT REPORTS [1968] 3 S.C.ll


ISHWARDAS v.

MAHARASHTRA REVENUE TRIBUNAL & ORS.

March 13, 1?68 [M. HlDAYATULLAH, C.J., R. S. BACHAWAT, C. A. VAIDIALINGAM,

K. S. HEGDE AND A. N. GROVER, JJ.] .

Bombay 1 c1ra11c, v <n<I Agricu//ura/ Land~ (Vldarbha Region) Act, 1958 ss. 2(12), 36(1)-Bombay Public Trusts Act s. 2(18)-1/ manag. ing trustee of a trust is (landlord) and tan •cultivdte personally' wi1hb1 s. 2(12) to be able to claim possession of 1/and under s. 36(1).

The appellant was the Managing Trustee of a public charitable trust

maitaining a Dharamshala.

He filed ,.an application under the provisions of the Bombay Tenancy ana Agricultural Lands (Vidarbha Region) Act, XClX of 1958 before the Naib Tehsildar, the third respondent to direct the fourth rc.'\pondent. the tenant, to. surrender foUr acres of land, on the ground that the lands were required for personal cultivation; According to the appellant, ihe necessary notices, te.rminating the tenancy of the fourth respondent, had been given and he was entitled to get pas session of the lands!

The tenant raised a legal CQDtention th.at inas much as the lands belonged to the Trust, the appellant could not be con 'idered .the landlord; the trust itself could not 'cultivate personally' the lands within the meaning Of the Act and therefore the appellant's application was not mairitainable. This contention was overruled and the tenant ordered to surrender poSBCssion of the land to the appellant. How ever, the ant's appeal to the Special Deputy Collector, Tenancy Appeals, Akola, the second respondent, was allowed and this decision was confirmed in revision by the Maharashtra Revenue Tribunal, Nagpur. A writ petition filed by the appellant was summarily rejected by the High Court.

On appeal to this Cou<t,

HELD : The appeol must be allowed and the order of the Naib Tchsildar restored. ·

Under s. 2(18), of the Bombay Public Trusts Act, a Trustee has been Jefined as mCanina a person, in whom either alone or in aociation wUh other per.1ons. the trust property is vested and includes a manager In view of this definition, it is clear that in the present case the properties ?f the Trust ve$t in the Managing Trustee the appellani; and he is the landlord •. '!nder cl. (32). of s, 2. As trustee, he would have to administer the properties for the purpose of carrying out the objects of the Trust but, as the properties vest in him and he is a 'landlord\ be can 3sk fo; a surrender from the tenant of the lands of the Trust 'to cultivate per sonally'.

He ciln cultivate the lands, either by his own labour or under •he per.1onal supervision of himself, by hired labour or by ,;, rvants as contemplated under sub-els; (i) or (iii), of cl. (12) of s. 2. As the properties vest in him, in law, cultivation by him. is to be considered 'on one's own account..' [444 H-445 CJ ·

Sliri Kala11ka Del'i samtha11, .Pat11r v. Pandu Maroti [1963) Mh L J. 249, referred 11>. ' •

. B11rasaheb v . . Yes11 Krishna, (1960) N.L.J. 219 and Keslieoraj Deo Sanst/ir.n, Karanja v. Bap11rao, ( 1964) Mh. L.J. 589, distinguished.

442 SUPREME t:OUllT REPORTS

[1968] 3 S.C.R

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 641 of 1966.

Appeal by speciiil leave from the judgment and orded dated July 27, 1964 of the Bombay High Court, Nagpur Bench in Special Civil Application No. 32 of 1964.

R. V. S. Mani, for the appellant.

The respondent did not appear.

The Judgment of the Court was delivered by

Vaidialingam, J. In this appeal, by special leave, the appel !ant attacks the judgment and order, dated July 27, 1964, of the Nagpur Bench, of the Bombay High Couri, dismissing Special C Civll Application No. 322 of 1964.

Badridatta Ishwardas Trust is a publi9 charitable trust, maintaining a Dharamshala.

The appellant, the Maoaginjl Trustee of the said Trust, filed an appficaiion, under the provt sioos of the Bombay Tenancy and Agricultural LaD!ls (Vidar- 0 bha Region) Act, 1958 (Bombay Act XCIX of 1958) (hereinafter called the Act), before tbii Naib Tehsildar, Balapur (the third respondent, herein), io direct the fourth respondent,. the tenant, to surrender four acres of land, on the .ground that the lands were required for being cultivated personally. According io the appellant, the necessary notices, terminating the tenancy of the fourth respondent, had been given, under the Act, and E that he was entitled to get possession of the lands, in question.

The fourth respondent raised various objections, on merits; but all those objections were over-ruled, )>y the third respondent.

The fourth respondent raised a legal contention that, i.nasmuch as the lands, in question, belonged to the Trust, the appellant- F Managing Trustee could not be considered to be the landlord.

He further contended that the Trust itself could not 'cultivate personally' the lands and, therefore, the application, filed by the appellant, was not maintainable. The third respondent o\rerruled these objections, on the ground that the Managing Trustee was a person in whom the properties of the Trustee vested in law and, therefore, it was open io him to make a claim for posses- G sion of the lands from a tenant, on the ground that they were required for 'personal cultivation'.

In this view, the third respondent further held that the Managing Trustee was a Jandlord, under the Act, entitled to get possession of the lands. Finally, the third respondent ordered the tenant to surrender possession -of the land, as required by the. appellant. B

The order of the third respondent was challenged, by the tenant, in appeal, before the Special Deputy Collector, Tenancy

H l

Appeals Akola (the second respondent).

The latter, by order dated October 30, 1963, reversed the decision of the Naib Tehsildar. The. second respondent accepted the appellant's plea that he was the Managing Trustee of the Trust, in question, but took the view that a claim, on behalf of a Trust, for personal cultivation, under the Act, could not be made, as a Trust was incapable of cultivatin!l lands personally.

The second rC3pondent followed, in this regard, the decision of the Maharashtra Revenue Tribunal, in Shri Kalanka Devi Sansthan, Patur v.

Pandu Maroti(1), which had held that a Deity or Sansthan, which is a juristic person, could hold property, but could not act, except through a Wabiwatdar or Manager, and, as such, was incapable of cultivating lands personally. In this view the second respondent held that the appellant was not a person capable of cultivating land personally and, as such, was not entitled io ask for surrender of the lands, from the tenant.

The appellant went up, in revision, against this order, .before the Maharashtra Revenue Tribunal, Nagpur (the first respondent). That Tribunal took the view that the case was goveme by' the decision of the Bombay High Court, in Buvasaheb ' Yesu Krishna('), and dismissed the revision.

The High Com summarily rejected 1he writ petition, filed by the appellant, against this order.

Mr. R. V. S. Mani learned counsel, appearing for the appel !ant, raised two contentions before us: (i) that the appellant, being a Managing Trnstee of the Public Charitable Trnst, the properties of the Trust vested in law in him and so he was the landlord, under the Act, entitled to ask for possession of the lands for personal cultivation; and (ii) if the Manaing Trustee was not so entitled, under the Act, such of the provisions of the Act, which were to be construed, as denying the fundamental rights of the appellant, would have to be struck down, as violative of Arts. 14 and 19(l)(f), of the Constitution. There has been no appearance, before us, on behalf of the_ respondents.

A.t the. outset; it has to be stated tha~ i~ the grounds of appeal, filed m this Court, there has been a nuxmg up of the provisions of the Bombay Tenancy and Agricultural Lands Act, 1948 (Bombay Act LXVII of 1948), and the Act; but, on a careful perusal of the proceedings, before the Revenue Tribunals it is seen that the proceedings were initiated, by the appellant, 'under the Act and, therefore, we shall refer to the material provisions of that Act. We may further add that, in the view that we take garding the contruction to be placed, on the material provi: s1ons of the At, 1t mes unnecessary for us to consider the second contention, ratsed by Mr. Mani, for the appellant.

(I) (1963) Mh, L.l. 249.

(2) (1960) N.L.J. 219' L 7Sup.C. L/68-4

4:44 SUPRBMB OOUllT lUIPOllTS

[1968] 3 S.C.R.

Section 2, of the Act, contains the definitions, of the various

expions, occurring in the Act.

Clause ( 12), omitting the Explanations, reads.:

"(12) 'to cultivate personally' means to cultivate on one's own account-

(i) by one's own labour, 01

(ii) by the labour of any member of one's family, or

(iii) under the personal supervision of one-self or of any member of onc's family by hired labour or by servants on wages payable in cash or kind but not jn crop share;"

Clause ( 31) defines 'tenancy' as meaning that relationship of landlord and tenant. Under clause (32), 'tenant' means a person who holds land on lease and includes (a) a person who is deemed to be a tenant under sections 6, 7 or 8; (b) a person who is a protected lessee or occupancy tenant, and the word 'landlord' shall be constructed, accordingly. It must be noted that there is no separate definition of the word 'landlord', but, as provided in

cl. (32), the word 'landlord' has to be construed accordingly.

There is no controversy, in this case, that the fourth res~ dent is a 'tenant', as defined in cl. (32) of s. 2. The appellant gave the necessary notice, as required bysub-s. (1) of s. 38, claiming that he bona fide required the land, for cultivating it personally. It was, after complying with the provisions of this section, that he applied for possession of the land, under s. 36 (1) of the Act.

The claim, of the Managing Trustee, in this case, is that he intends to 'cultivate personally', the lands in question.

The objection, raised by the fourth respondent, to the appellant's claim, was that the properties belonged to the Trust, and a Trust could not 'cultivate personally' lands. It was further urged that if the Managing Trustee cultivated the lands of the Trust, he could not be considered to 'cultivate on one's own account,' as any cultivation, by the Managing Trustee, of Trust lands, must necessarily be on account of the Trust, therefore, s. 2(12) will not be satisfied. 'Ibis objection found favour with respondents 1 and 2. The High Court also appears to agree whh their views, as is evident from the fact, that it dismissed the writ petition of the appellant, summarily.

To. consider the si>undness of the objection, raised by the tenant, it is necessary to refer, in law, to the position of a Trustee vis-a-vis Trust properties. Under s. 2(18), of the Bombay Public Trusts Act, a Trustee has been defined, as meaning a persOn, in

A whom, either alone or in association with other persons, the trust propeny is vested, and includes a Manager. In view of tltls definition, it is clear that, in this case, the properties of the Trust vest in the Managing Trustee, Pandit Ishwardas, and he is the 'landlord', under cl. ( 32) of s. 2. No doubt, as Trustee, he will have to administer the properties, for the purpose of carrying O!lt the B objects of the Trust; but, as the properties vest in him and he is a 'landlord', he can ask for a surrender, from the tenant, of the lands of the Trust 'to cultivate personally'. He can cultivate the lands, either by his own labour, or under the personal supervision of himself, by hired labour, or by servants, on wages payable in cash or kind, a<; contemplated under sub-els. (i) or (iii); of cl. (12), c of s. 2. As the propertfos vest in him, in law, cultivation, by him, as indicated above, is. to be considered 'on one's own account.' Thus the requirements of s. 38(1), read \Vith s. 2(12), are amply satisfied, in this case. It follows that the applicatjon, filed by the appellant, was maintainable, and the order of the third respondcn'., accepting the appellant's claim, is correct.

I!'

In our opinion, the decision of the Bombay High Court. in Buvasaheb's case('),. relied on by the Maharashtra Revenue Tribunal, for disallowing the claim of the appellant, has no application, to the case on hand. The question, that arose for consideration, in that decision, was as io whether a Wahiwatdar, or Manager, of lands belonging to a Deity, was entitled to apply, under s. 34, read with s. 2(6), of Bombay Act LXVII of 1948, for surrender of lands, from the tenant, for personal cultivation.

The High Court held that there was a distinction, between a Tru!ltee, in whom the properties of ihe trust vest in law, and a Manager or a Shebait of the properties, which vest in an idol, which is the legal owner. On this basis, the learned Judges have held that, inasmuch aey the 1egal ownership of the properiy, in. the case before them, vested in the idol, and as the Manager or Wahiwatdar of such property, was no more than an administrator of the properiy, managing that property, for and on behalf of the idol, he was not a 'landlord' and hence could not apply, for surrender of lands from a tenant, on the ground of personal cultivation. It is their further view that it is only the person in whom the legal. ownership of the lands vest, who can be rega; ded as the

Jadlord, and who alone can apply, on the ground that he reqmres the land, bona fide, for personal cultivation. The expressions 'to cultivate personally', 'tenant' and 'landlord', which the learned Judges had to consider, in Bombay Act LXVII of 1948 are substantially similar to the definitions, contained in the Act. '

We .may also reer, to a later decision, of the Bombay High Court, 111 Kesheora1 Deo Sansthan, Karanja v .. Bapurao( 2 ). In

(I) (1960)N.L.J. 219.

(2) (1964) Mh.L.J. 589.

SUPREME COURT REPORTS

that decision, the learned Judges bad to consider the identical provisions of the Act. . The claim, for personal cultivation, in that

case, was made by the Manager of a private Sansthan. The learned Judges held that Sansthan is a juristic person, in whom the properties vest.

They further held that cultivation, through an agency, like a Manager, on behalf of a juristic person, did not come within the ambit of the definition 'to cultivate personally,' ins. 2(12) of the Act. They also held that an idol, or a juridical person, like the Sanstban, was not capable of cultivating personally. and hence the tenancy of a tenant of land, owned by a Deity or Sansthan, could not be terminated, under s. 38 of the Act.

We do not propose to express any opinion, as to whether a .Manager or Shebait, of the properties of an idol, or the Manager of a Sansthan, can or cannot apply, for surrender, by a tenant, of lands for personal cultivation. It is enough to point out that the learned Judges of the Bombay High Court, in both the decisions, cited above, have indicated that a Trus:ee, in whom the properties vest in law, stands 011 a different footing, from a Shebait or a Wahiwatdar, or Manager. This distinction, pointed out by the learned Judges of the Bombay High Court, has not been properly appreciated, by the Revenue Tribunal, in the present c::is-e.

To conclude, the appellant, the Managing Trustee, is a person, in whom .the legal ownership of the property is vested and, as such, he was entitled to apply for surrender, by the tenant, of the lands in question, 'to cultivate personally', under s. 38, read with s. 2(12), of the Act.

Inasmuch as all the other points, on facts, have been held in the appellant's favour, it follows that this appeal will have to be allowed. In consequence, the order of the third respondent, dated June 29, 1963, will stand restored. There will be no order as to costs.

R.K.P.S.

Appeal allowed.

ISHWARDAS

MAHARASHTRA REVENUE TRIBUNAL & ORS

March 13, 1?68

R. S. BACHAWAT

K. S. HEGDE

A. N. GROVER, JJ.

ss. 2(12), 36(1)

Bombay Public Trusts Act

s. 2(18)

s. 2(12)

s. 36(1)

Maharashtra Revenue Tribunal, Nagpur

Naib Tchsildar

s. 2(18)

s. 2

R. V. S. Mani

Vaidialingam

Badridatta Ishwardas Trust

Bombay Act XCIX of 1958

October 30, 1963

Naib Tehsildar

Maharashtra Revenue Tribunal

Bombay High Court

Buvasaheb ' Yesu Krishna

R. V. S. Mani

Arts. 14 and 19(l)(f)

Bombay Act LXVII of 1948

Mani

Section 2

sections 6, 7

s. 2

s. 38

s. 36

s. 2(12)

s. 2(18)

Pandit Ishwardas

s. 2

s. 2

s. 38(1)

s. 2(12)

Buvasaheb

s. 34

s. 2(6)

Bombay Act LXVII of 1948

Bombay Act LXVII of 1948

s. 38

s. 38

s. 2(12)


STATE OF GUJARAT

CHJNUBHAI GOPALDAS

March 13, 1968

[M. HIDAYATULLAH, C.J., C. A. VAIDIALINGAM AND

A. N. GROVER, JJ.]

Bombay Prohibition Act, ss. 66(b) and 98-Acquittal of person charged with offence under s. 66( b )-Properly in respect of which offeirce committed may still be confisccted under s. 98.

A stock of bottles apparently containin~ cosmetic preparations was iound from the possession of the respondent On analysis the bottles which were taken as samples were found to eo'htain alcohol and as the respondent did not have any licence for possessiitg alcohol he was prollOCUled under s. 66(b) of the Bombay Prohibition Act. The trying Magistrate acquitted him on the ground that he did not hold the bottles on his own but only as the agent of a wholesale dealer who acknowledged his ownership.

While acquitting the respondent the Magistrate ordered the confiscation of the remaining bottles under s. 98 of the Prohibition Act.

The respondent went to the High Court against the order of confiscation.

The learned Single Judge ordered return of the bottles because according to him it was not proved that the 1500 and odd other bottles also contained intoxicants. and therefore the order under s. 98 of the Act y:as illegal.

The State appealed,

HELD : U oder s. 98 what has to be seen is whether an offence under the Prohibition Act in respect of the property in que5tion has been com milted or no~ An offence may be demonstrated to be committed although the accused who committed it may not be successfully prosecuted.

On proof that there is a contraband artic1e in respect of which an offence has been committed the obvious course is to confiscate it to tbc State.

Therefore in the prcsont case if the court was satisfied that lhe bottles contained contraband article the bottles could be confiscated.

[449 C-EJ .

[Order of the High Court set aside \\ith the direction that a few bottles at random should be analysed and if contraband stuff against the prohibition act was found the whole stock should be confiscated.]

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 162 of 1965.

G Appeal by special leave from the judgment and order dated January 8, 1965 of the Gujarat High Court in Criminal Appeal No. 345 of 1964,

Urmi/a Kapur and S. P. Nayar, for the appellant.

The .respondent did not appear.

H The Judgment of the. Court was delivered by

Hidayatwllah C.J. This is an appeal by special leave against the judgment and order of a learned Single Judge of the High

SUPREME COURT REPORTS

(1968) 3 S.C.R.

Court of Gujarat, January 8, 1965, by which an order confiscat: ing 1500 and odd bottles said to contain intoxicating liquor by the City Magistrate, 8th Court, Ahmedabad, has been set aside.

The facts of the case are as follows.

On January 9, 1963, Sub-Inspector, Benot of Ahmedabad City raided a godown consisting of two rooms in Serial No. 1510/0 and Survey No. 324/0.

He found several deal boxes which were opened and each box was found to contain 144 bottles packed with grass, each bottle containing 4 oz. of some liquid. Bottles were of two kinds, one containing yellow liquid and the other a red liquid. The bottles co11ng ye)liOw liA, uJd were labelled 'U. D. Colbn Solvek Cosmetics Bombay, 28.', and the bottles containing red liquid were labelled 'Jasmine Batch No.

3. Solvek Cosmetics Bombay.' From these bottles, two bottles, one of each kind, were selected and were sent to the Chemical Examiner. Baroda for test. Before sending them, the Panchas were allowed to .. seal the bottles with paper slips containing the

sinatre 'of panchas pasted on them for identification. On anuiysi.s;.they were found to contain alcohol and the respondent Chinubhai Gopaldas was prosecuted under s. 66(b) of the Boinbay P, rohibition Act.

The other bottles numbering 1584 containing 6336 oz. of alleged alcohol were kepi intact.

Gopal Das's prosution failed.

He was acquitted by the City Magistrate, because according to him, it was not proved beyond reasonable doubt that he was in possession of these bottles on his own. It was found that he possessed them as

agent~ of a wholesale merchant. It is in evidence however that he did not poscss a permit or licence for possessing alcohol.

The Magistrate while acquitting him ordered the confiscation of the remaining bottles under s. 98 of the Prohibition Act.

The State Government did not appeal against the acquitt; tl.

Gopaldas went to the High Court 'in appeal against the order of confiscation.

The learned Single Judge of the High Court ordered return of the bottles, because according to him it was not proved that the 1500 and odd other bottles also contained intoxicants.

He therefore held that the confiscation of the bottles was illegal as no order under s. 98 of the Bombay Prohibitim~ Act could be passed.

In this appeal by the State of Gujarat it is contended that s. 98 applies to the case.

That section reads as follows :

"Whenever any offence punishable under this Act has been ·, committed, ff

(a) any intoxicant, hemp, shora, flowers, molasses, materials, still, ntensil, implement or

GUJARAT v. C!IlNUBHAI GOPAL DAS (Hidayatullah, C./.) 449

apparatus in respect of which the offence has been committed,

shall be confiscated by the order of the Court."

The short question therefore is whether it can be said that in respect of the 1500 and odd bottles, an offence punishable under the Prohibition Act had been committed. It is no doubt true that the person who was charged with committing an offence was found not guilty, but the question is not whether the accused has been successfully brought to book, but whether the offence in respect of the property has been committed or not.

There is distinction between the two. An offence may be demonstrated to be committed although the accused who committed it may not be sucoessfuly prosecuted. We may give an example.

Suppose in a house a vast quantity of contraband opium is found.

The householder may get off because the opium was found from a place which was open and had access to strangers. He may get the benefit of doubt and be acquitted, but it is clear that in so far as the opium is concerned, an offence must be deemed to have been committed, and if it is proved that the contraband article was opium, it would be remarkable that the order should be that the opium be returned to the householder.

In these circumstances, on proof that the contraband article in respect of which an offence has been committed is proved to exist, the obvious course would be to confiscate it to the State.

In the present case, the two bottles which were sent to the Chemical Examiner were said to contain alcohol although there was some doubt in the mind of the Magistrate as to whether ther(l was no chance of any malpractice. Be that as it may, there are the other 'bottles intact. There is some evidence to show that they were in the original packing and were a proprietary product. The manufacturer came as a witness and deposed that the liquids were bottled by him as a proprietary manufacture. In these circumstances, it would be fair to assume that all of them were of the same kind as the ones which were sent for chemical examination.

However an examination of random samples can be made and if they satisfy the court that the bottles contain contraband articles the bottles can be confiscated. The order of the High Cort is thus set aside, but instead of restoring the order of confiscation we order that a few bottles at random should be analysed and if contraband stuff against the Prohibition Act is found the whole stock shall be confiscated.

The appeal is allowed and the case is remanded as ordered.

G.C.

Appeal allowed.

STATE OF GUJARAT

CHJNUBHAI GOPALDAS

March 13, 1968

M. HIDAYATULLAH, C.J.

A. N. GROVER, JJ.

Bombay Prohibition Act

ss. 66(b) and 98

s. 66( b )

s. 98

s. 66(b)

s. 98

s. 98

s. 98

S. P. Nayar

Hidayatwllah

January 9, 1963

Ahmedabad City

U. D. Colbn Solvek Cosmetics Bombay

Solvek Cosmetics Bombay

Chinubhai Gopaldas

s. 66(b)

Gopal Das

s. 98

Gopaldas

s. 98

State of Gujarat

s. 98


FORT GLOSTER INDUS'IRIES LTD.

SEDllA MERCANTILE (P) LTD.

March 19, 1968

[1. C. SHAH, V; RAf.usWAMI AND G. K. MITTER, 11.] B

Forward Contract-Discrepancy behveen bought and sold 11otes- Contrac1 whether binding-Other evidence whether may be looked inJD- Forward Controcts (Regulation) Act 14 of 1952, s. 11-Bye-/aws framed under-Effect of bye-laws 1(c) and 8(b) on construction of contract.

The appellant and the respondent were both members of the East lrulia Jute aod Hessian Exchange Ltd., aod were bound by its rules and regulations framed under s. 11 of the Forward Contracts (Regulation) Act 74 of 1952 for regulating aod conl!Olliog forward cootraets in the jute trade.

The appellant in August 1960 agreed to purchase aod the respondent to sell 750 bales of Pakistan raw jute for delivery during October and/orNovember, 1960. According to the custom of the trade which was recognised by the bye-laws. the brokers sent a sold note on behalf of the respondent to the appellant, and issued a• bought oote oo behalf of the appellant which was sent to the respondent.

Differences arose between the parties in respect of the execution of the contract and the appellant referred a claim against the respondent to the Tribunal of Arbitration of the Bengal Chamber of Commerce aod Industry.

The respondent thereupon moved oo the original side of the Calcutta High Court, a petition under s. 33 of the Arbitration Act, 1940 challenging the existence and validity of the alleged arbitration agreement between the parties.

The principal ground in support of the petition was that the terms of the bought and sold notes in respect of payment and otherwiso

did not tally, and on that account there was no concluded contract. lo the affidavit filed by the appellant the genuineness of the sold note set up hr the respondent was questioned. The High Court decided in favour of the resporulent and the appellant by special leave came to this Court.

HELD : (i) The term as to payment is an important term of a written conll"act. The bought and the sold notes have the bye-laws to be in writing and in the prescribed form and if. there be any discrepancy between the two i.e. the tenns as to payment are specified in one note and not in the other, prima facie, there is no concluded contract. [455 B-CJ

(ii) In view. of the bye-laws of the Association which make it obligatory on the parties that the terms of the contract shall be in writing and that they shall be in the fo'rm prescribed, it could not be held tha~ apart from the terms of the bought and the sold notes which by custom of the market are issued, evidence may be Jed to prove that the parties had aifeed to certain terms not set out in the bought and sold notes. [456 El

(iii) The bought note did not comply with bye-law 7(c) in so far as the latter required a letter of authority to import Pakistan jute.

In bye-law 8(b) two alternative methods of payment were provided; the bouaht note mentioned one of them, while the sold note mentioned neither.

In these circumstances, even if bye.Jaws 7(c) and 8(b) were read into the contract it. could not be said that there was no discrepancy between the houltht and the sold notes. The bought and sold notes as produced in Court could not be regarded as creating a binding contract.

(457 F-458 CJ

(iv) The question whether the sold note produ""d in Court was genuine must be decided by the trial court after taking fresh evidene<:.

(Case remanded to trial court for this purpose.) [458 DJ

Cowie & Ors. v. Wil/iani Remjry and others, 3 M.I.A. 448.

Durga Prosad Sureka & Ors. v. Bhajan Lall & Ors. L.R. 31

I.A, 122 and Rodhakrislma Sil'adutta Rai & Ors. v. Tayebol/i Dawoodbhal, [1962) Supp. 1 S.C.R. 81, referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 573 of 1965.

Appeal by special leave from the judgment and order dated July 26, 1962 of the Calcutta High Court in Awaid No. 181 of 1961.

S. T. Desai, S. Tibriwala, Sobhag Mal Jain and B. P. Maheshwari, for the appellants.

S. V. Gupte, C. M. Kohli and G. R. Chopra, for the respondent.

The Judgment of the Court was delivered by

Shah, J. The East India Jute & Hessain Exchange Ltd.- hereinafter called "the Association"-is recognized for the purpose of the Forward Contracts (Regulation) Act 74 of 1952 as an association concerned with the regulation and control of forwaid contracts in jute and jute g$0ds. The Association has, under s. 11 of the Forwaid Contracts (Regulation) Act, with the previous approval of the Central Government, made bye-laws to regulate and control forwaid contracts in jute and jute goods, and for trading in Transferable Specific Delivery Contracts in raw jute and jute goods. Clause 1 (a) in Ch. V of the bye-laws provides that no trading in Transferable Specific Delivery Contracts in any delivery or deliveries in raw jute and/or jute goods shall be effected otherwise than between members or through or with any member, or where the servi\:e5 of a broker, who is not a member, are employed by a member, otherwise than through a licensed broker.

Clause l(b) provides that all Transferable Specific Delivery Contracts shall be in writing in the prescribed forms.

The appellant and the respondent are members of the Association. On August 11, 1960, the appellant agreed to purchase and the respondent agreed to sell 750 bales of Pakistan raw jute. at the rate of Rs. 103 per bale of 400 lbs. net ex-NaiayanganJ and/or Daulatpur and/or Khulna for delivery during October and/or NoVember 1960. In the transaction W. Haworth & Co. (P) Ltd. acted as brokers for both the paities. According to the CU$!Om of the trade which is recognized by the bye-laws, the brokers sent a sold note on behalf of the respondent to the appellant, and issued a bought note on behalf of the appellant which

was sent to the respondent.

The goods contracted to be pur chased by the appellant were to be imported from Pakistan. The appellant was in terms of the sold note to furnish to the respon dent import licence and a letter of authority issued by the proper officer authorising the respondent or his nominee to import the requisite quantity of jute from Pakistan for delivery to the appel !ant. For importing jute from Pakistan, a letter of credit had, under the terms of the contract, to be opened by the respon dent.

Differences arose between the parties in respect of the execution of the contract and on January 11, 1961, the appellant referred its claim for Rs. 1, 17,7 50/ • against the respondent to the Tribunal of Arbitration of the Bengal Chamber of Commerce and Industry, on the plea that the respondent had failed to open a letter of credit for importing the stipulated 750 bales of "jute cuttings" from Pakistan according to the terms of the contract.

On June 26, 1961, the respondent moved, before the High Court of Judicature at Calcutta on its original side, a petition under s. 33 of the Arbitration Act, 1940, inter alia, for the following orders :

(a) that the existence or validity or otherwise of the alleged arbitration agreement dated August 11, 1960, between the appellant and the respondent be adjudicat

ed upon and determined by the High Court; and

(b) that it be declared that the alleged arbitration agreement is void, illegal and ineffective and of no effect and such arbitration agreement to be set aside.

The principal ground in support of the petition was that the terms of the bought and sold notes did not tally, and on that account there was no concluded contract.

In support of the petition one Sobania! Sethia a director of the respondent affirmed an affidavit. The appellant filed its affidavit in reply contending, inter alia, that the sold note set up by the respondent in support of its petition under s. 33 of the Arbitration Act was not the sold note issued by the brokers at the time when the contract was entered into. An order was passed by the High Court under the proviso to s. 33 of the Arbitration Act directing that the petition be set down for hearing on evidence on the following iss11es :

"1. (a) Do the Bought and Sold Notes vary in mate rial particulars as alleged in paragraph 2 of the petition ?

(b) If so, what is the effect thereof ?

2. (a) Is the Sold Note which has been produced in

F. G, INDUSTRIES V, S. l\AllCANTILE LTD. (Shah, J.) 4U

Court by the seller. the original Sold Note?

(b) If so, what is the effect thereof ?

3. Is there a subsisting arbitration agreement between the parties ?" One Jitendra Nath Basu, Manager of the respondent, and one Sudhir Kumar De, Head Clerk of W. Haworth & Co. (P) Ltd .. were examined in support of the case of the respondent.

On behalf of the appellant Shib Narayan Mundhra, an employee of the appellant, was examined. A. N. Ray, J ., declared that there was no concluded arbitration agreement dated August 11, 1960, between the parties. Against that order, this appeal has been preferred with special leave.

Two questions arise in this appeal : (1 ) Whether there was a lawful contract for sale and purchase of jute cuttings between the appellant and the respondent; and ( 2) Whether the sold note set up by the respondent was a fabricated document set up in collusion with W. Haworth & Co. (P) Ltd.

The Hir, h Court has answered both the questions in the negative.

The form of contract prescribed by the Bye-laws of the Transferable Specific Delivery reads as follows :

"The East India Jute & Hessian Exchange Ltd., Calcutta

APPENDIX IV

Transferable Specific Delivery Contract for Raw Jute.

Calcutta .......... 19 .. ..

F No ................ .

To Messrs ................. .

Dear Sirs,

We have, subject to the terms and conditions hereinafter referred to, this day, bought from/sold to .... . . . . . . . . by/your order and on your account, the following goods which are *Pakistan Jute/Jute:- ---------------·-------- Crop 19 .... 19. . . . maunds/kilograms, bales of jute/mesta/Bimli/ cuttings, of the inark, assortment and quality as per margin and in sound, dry storing condition at the rate of :- H Rupees Rupees Rupees

•Score out if not applicab~

free to buyers' mill, siding and/ or ghat.

Weight guaranteed at buyers' mill.

Delivery to :- Shipment or despatch during :- Payment:- Arbitration :- Re-weighment :-

[1968] 3 S.C.R.

The foregoing terms and conditions as well as other terms and conditions applicable to this contract are as per the terms and conditions of the Transferable Specific Delivery Contract for raw jute of the East India Jute & Hessian Exchange Ltd., Calcutta, and are subject to the bye-laws of that Exchange for trading in Transferable Specific Delivery Contracts for raw jute in force for the time being.

Brokerage at . . . . per cent.

Yours faithfully, Member/Licensed Broker.

The East India Jute & Hessian Exchange Ltd. --------------------------

(CONFIRMATION SLIP) Received from Shri/Messrs . . . . . . . . . . . . his/their Contract No. , ....... dt. .......... and I/we confirm having bought from/sold to ............ through him/them .............. "

The respondent claimed that the terms of the bought and lhe sold notes issued by the brokers did not tally and there was on that account .no contract between the parties. They claimed 'that whereas in the bought note under the heading "payment" it was recited : "Cash on presentation in Calcutta a full set ot shipping documents and insurance cover", in the sold note tendered in evidence by the respondent no entry was n1ade under that heading.

In both the notes there was a note to the following .effect:-

"Buyers to provide import licence, during the shipment period serially to their purchase of Pakistan cuttings.

In case of non-availability of licence in full or part thereof, the quantity thus remained will be treated as cancelled without any difference to either parties." At the foot of the bought note it was .recorded-"Sellers to open Letter of Credit", but no such recital was found in the sold note.

Again at the foot of the bought note the rate of brokerage was

not incorporated, whereas in the sold note it was stated that the rate of brokerage was 1 per cent. Ray, J., observed that the bought and the sold notes differed and on that account there was no contract between the parties. The learned Judge did not set out in detail what in his opinion were the differences between the two notes.

But it is clear that he relied upon the discrepancy in the recital under the heading "payment''. The term as to payment is an important term of a written contract.. The bought and the sold notes have by the bye-laws to be in writing and in the prescribed form, and if there be any discrepancy bet - ween the two, i.e., the terms as to payment are specified _in one note and not in the other, prima facie, there is no concluded contract. In Cowie and others v. William Remfry and others(') the bought and the sold notes in respect of a contract for -the purchase and sale of indigo differed in certain material terms. In an action brought by the sellers against the purchaser for nonperformance of the contract contained in the sold note, the Judicial Committee held that the transaction was one by bought and the sold notes, and that the circumstances attending the purchaser's alteration of the_ sold note and affixing his initials, were not sufficient to make that note, alone, a binding contract, and that there being a material variation in the terms of the bought note with the sold note, they together did not constitute a binding contract.

Counsel for the appellant urged that a discrepancy between the terms of the bought and the sold notes may be explained bv extraneous evidence, and'that Cowie's case (1) merely lays down a presumption and not an absolute rule. Counsel relied upon the observations in Remfry's Sale of Goods in British fndia-Tagore Law Lectures 1910 at p. 69, and upon the opinion expressed in Woodroffe & Ameer Ali's Law of Evidence, 11th Edn., at p. 1533, that the rule laid down by the Judicial Committee raises merely a presumption which may be rebutted by evidence. Counsel also relied upon the observations of the Judicial Committee in Durga Prosad Sureka and others v. Bhafan Lall and others ('} that:

"In India a contract of sale can be proved by parol : and the bought and sold notes having in this instance been falsified, the aggrieved purchaser was entitled to disregard them and prove his contract by other and antecedent material. This he has done conclusively by the evidence of the broker and by the telegram." But in Durga Prosad's case(') it was established that the notes had been falsified; there was also evidence to show that' the real contract was, and effect was given to that contract. In Cowie's

(I) 3M.I.A. 448.

(~J L.R. 31 I.A. 122.

case('): apart from the bought and sold notes there was no evidence of the tenns of the contract, and sinee the terms of the bought and sold notes differed, the parties were not ad idem.

In Durga Prosad's case(') there was evidence of a parol contract and the bought and sold notes did not, because of fraud, correctly record the tenns of that contract.

Again in neither of these cases, the contract was required by Jaw to be in writing and in a fonn statutory prescribed. But the l!'ansaction between the parties in the case in hand is governed by special rules of the Association which make it obligatory that the contract shall be in a particular form and in writing. Durga Prosad's case {') can, therefore, have no application in the present case.

In Radhakrishna Sivadutta Rai and others v. Tayeballi Dawoodbhai(8) this Court cited Cowie's case(') with apparent approval. In that case the contract was by the bought and sold notes. Gajendragadkar, J., speaking for the Court proceeded to consider the effect of the bought and sold notes according to the established custom of the mercantile world and accepted the contention for counsel for the respondent that according to the established commercial usage if there is any variation or disparity between the bought and sold notes, the consequence follows, from aff legal principles, that no binding contract has resulted.

In view of the bye-laws of the Association which make it obligatory on the parties that the terms of the contract shall be in writing and that they shall be in the fonn prescribed, we are unable to hold that, apart from the tenns of the bought and sold notes which by cus(om of the market are issued, evidence may be led to prove that the parties had agreed to certain terms not set out in the bought and sold notes.

In the bought note the price was made payable in "Cash on presentation in Calcutta a full set of shipping documents and insurance cover". There was no term in the sold note about the payment of price. Counsel for the appellant, however, contended that under the prescribed fonn the contract is made subject to the terms and conditions hereinafter referred to and it is expressly recited that "the foregoing tenns and conditions as well as other terms and conditions applicable to this contract are as per the terms and conditions of the Transferable Specific Delivery Contract for raw jute of the East India Jute & Hessian Exchange Ltd., Calcutta, and are subject to the bye-laws of that Exchange for trading in Transferable Specific Delivery Contracts for raw jute in force for the time being". He submits that bye-laws 7 ( c) and 8(b) framed by the Association being made part of the contract, there is in truth no discrepancy between the bought anc'

(I) 3M.I.A. 448.

(2) L.R. 311.A. 122.

(3) [1962] S"pp, I S.C.R. 81.

F. O. ISDUSTRIES V. S. MERCANTILE LTD. (Shah, J.) 457

sold notes.

Jn Ch. IX, bye-law 7 ( c) insofar as it is material, reads:-

"In the case of Pakistan Jute, buyers to deliver to sellers, or sellers' nominee, letter of authority to import the Pakistan Jute or open confirmed, irrevocable Letter of Credit in terms of paragraph S(b)(ii) within 14 working days from the commencement of the delivery period of the contract failing which there shall be free extension for delivery equal to the period of. delay occurring ter

the 14 working days, . . . ., If buyers do not dehver Jetter of authority or open confirmed irrevocable Letter of Credit within one month from the commencement of the delivery period of the contract, the sellers shall be entitled to exercise any one of the following options

" Bye-law S(b) which relates to payment or what is called "reimbursement" states, insofar as it is material :

"In the case of Pakistan jute reimbursement shall be either:-

(i) Cash, on presentation in Calcutta of a full set of shipping documents and insurance cover. . . . .

(ii) By confirmed irrevocable Letter of Credit for 100% of the value of goods, less transit insurance, Bengal Raw Jute Tax (as applicable to West Bengal) and freig4t "to pay", if any, to be opened by buyers with a scheduled Bank in Pakistan within 14 working days from the commencement of the delivery period of the contract . . . . "

Bye-law 7 ( c) contemplates two alternatives.

Where there is a contract for the sale and purchase of Pakistan Jute, the buyer has to deliver to the seller, or seller's nominee, a letter of authority to import Pakistan Jute or to open confirmed, irrevocable Letter of Credit in terms of paragraph S(b)(ii).

Bye-law 8(b) also contemplates two alternatives : in the case of a contract for sale and purchase of Pakistan Jute payment has to be made in cash on presentation in Calcutta of a full set of shipping documents and insurance cover or by confirmed irrevocable Letter of Credit for 100% of the value of goods. In the bought note in question it was recited that the buyer had to provide the import licence during the shipping period. Nothing was stated about the Letter of authority to import Pakistan Jute and the stipulation relating to the application to provide the import licence cannot be equated with the issue of. a letter of authority to import Pakistan Jute. It is true that under bye-law 7(c) the buyer has to do one of the two things-he has to issue a letter of authority to

impon Pakistan Jute or to open a Letter of Credit in terms of .t paragraph 8(b) (ii) and under bye-law 8(b) payment maybe either in cash on presentation of a full set of shipping documents and insurance cover or by confirmed irrevocable Letter of Credit.

When nothing was written in the sold note, under the head "Payment", either of the two alternatives could be adopted. In the endorsement at the foot of the note, it was recorded that the B seller had to open Letter of Credit, but thJs is not found in the sold note.

This further emphasizes that the two parties could not be said to have agreed on how the payment wasto be made.

If the sold note produced in Coun is genuine, we are unable to agree with counsel for the appellant that the terms of the contract were agreed upon between the parties. The bought and sold notes as produced in Coun cannot be regarded as constituting a C binding contract.

But the question whether the sold note "was fabricated" still remains to be considered. Ray, J., observed, after briefly summarising the evidence, that. he was unable to act on the "suggestion of suspicion" and he did not believe that there was any foun- D dation in the plea of fabrication of the document.

[Their Lordships remanded the case to the High Court with ap!propriate directions].

G.C.

Appeal remanded.

FORT GLOSTER INDUS'IRIES LTD

SEDllA MERCANTILE (P) LTD

March 19, 1968

1. C. SHAH

G. K. MITTER

s. 11

s. 11

Forward Contracts (Regulation) Act

Calcutta High Court

s. 33

Arbitration Act, 1940

Pakistan

CIVIL APPELLATE JURISDICTION

S. T. Desai

S. Tibriwala

Sobhag Mal Jain

B. P. Maheshwari

S. V. Gupte

C. M. Kohli

G. R. Chopra

Shah

Forward Contracts (Regulation) Act

s. 11

Central Government

Clause 1

August 11, 1960

NaiayanganJ

Daulatpur

Khulna

W. Haworth & Co. (P) Ltd.

January 11, 1961

June 26, 1961

High Court of Judicature at Calcutta

s. 33

Arbitration Act, 1940

Sobania! Sethia

s. 33

s. 33

Jitendra Nath Basu

Sudhir Kumar De

W. Haworth & Co. (P) Ltd

Shib Narayan Mundhra

A. N. Ray

W. Haworth & Co. (P) Ltd.

East India Jute & Hessian Exchange Ltd.

Calcutta

Ray

and'that Cowie

Remfry

Woodroffe

Ameer Ali

India

Durga Prosad

Cowie

L.R. 31 I.A. 122

Gajendragadkar

East India Jute & Hessian Exchange Ltd.

F. O. ISDUSTRIES V. S. MERCANTILE LTD