SHAH DHANSUKHLAL CHHAGANLAL v.

DAUCHAND VIRCHAND SHROFF AND OlllERS

March 1, 1968

(J.C. SHAH, R. S. BACHAWAT ANDG. K. MITTER, JJ.) Bombay Rents Hotel and Lddging House Rates Control Act, 1947-Ss. 12(1) and 12(3)(b)-Conditions for benefit under.

The appeJlant was a tenant of the respondent. Havjng fallen into arrears of rent he was given a notice (a) demanding arrears of ront and permitted increases nnder the Bombay Rents. Hotel and Lodging House Rates Control Act, 1947, and (b) terminating his tenancy in terms of s. 106 of the Transfer of Property Act, Receiving no response to the notice the respondent filed a suit against the appellant. On the first day of the hearing of the suit and during its pendency the appellant deposited part of the arr,.rs in Court but not the full amonnt due. The trial Court passed a decroe against him which was confirmed by the appellate Court.

The High Court dismissed his revision petition. With special leave he appealed to this Court and urged that (i) he was entitled to the benefit of s. 12(1) of the Act and that (ii) even ifs. 12(3)(b) was applied he was not liable to be ejected.

HELD : (i) Section 12(1) must be read with the Explanation and so read it means that a tenant can only be considered ''to be ready and willing to pay" if, before the expiry of the period of one month after notice referred to in sub-s. (2), he makes an aPPlication to the court under subs. (3) of section 11 and hereafter pays or tenders the amount of rent or permitted increases specified by the court. The readiness and willingness to pay has to be judged in the light of the facts of the case.

Where as in the present case a suit is filed on the ground that the tenant was in arrears for a period of more than six months and although raising a dispute as to the standard rent or permitted increases recoverable under the Act, the t->nant makes no application in terms of s. 11(3) he cannot claim the protection of s. 12 (1) by merely offering to pay or even paying ail arrears due from him when the court is about to pass a decree against him. [351 H-352 BJ

Shah Bho; rai Kuver; i Oil Mills arrd Ginning Factory v. Subbash Cha11dra Yograi Sinha, [1962] 2 S.C.R. 159, distinguished.

(ii) The case did not come under s. 12(3)(b), To be within the protection of that provision, the tenant must not only pay alt the arrears due from him on the first day of the hearing of the suit, but he must , thereafter continue to pay or tender in court regularly the rent and the

permitted increase till the suit is finally decided. There was a failure on the part of ti>, appellant to pay or tender in court all the amounts which fell due, and he could not therefore get the protection o~ s. I2(3)(b) of the Act. [353 B-El

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 455 of 1965.

Appeal by special leave from the judgment and order dated September 11, 1962 of the Gujarat High Court in Civil Revision Application No. 150 of 1960.

G. L. S.u1ghi, and B. R. Agarwala, (or the appellant.

0. P. Malhotra and Ravi11der Narain, for the respondents Nos. 1 to 4.

The Judgment of the Court was delivered by Mitter, 1. This is an appeal by special leave from a judgment of the High Court of Gujarat passed in a Civil Revision Application arising out of a suit filed by the plaintiff-respondent against the defendant-appellant to recover possession of certain premises situate in Surat.

The facts are as follows. The appellant became a tenant of the respondent under a rent note executed on February 27, 1947 whereby rent was fixed at Rs. 40 per month and the tenancy was to be for a period of one year from 22nd February, 1947.

After the expiry of the said period, the appellant continued as a monthly tenant on the same terms and conditions as were to be found in the rent note. He fell into arrears of payment of rent and the respondent sued him for eviction some time in 1951.

The suit was eventually compromised by a petition put in court bearing date September 16, 1952, Under the terms of the compromise, the defendant continued as a tenant from September 1, l 952 .on the terms and conditions of the rent note dated February 27, 1947: the original conditions in respect of rent also continued excepting that the rate was lowered from Rs. 40/- -to quote the words of the compromise-to "standard rent of Rs. 27"

and "'in the matter of taxes and interest also the defendant was to act in accordance with the conditions of the aforesaid rent note." Paragraph 2 of the compromise petition contained an account of payments made by the defendant the final result thereof being that it was agreed between the parties that the defendant had paid Rs. 104-5-3 "which amount was to be reimbursed by the plaintiff to the defendant when accounting the future payment of rent." It should be noted here that according to the rent note of 194 7 the tenant had agreed to pay the monthly rent of Rs. 40 together with interest at Rs. 0-12-0 per cent per annum in respect of any balance due for rent.

Even after the compromise, the defendant fell in arrears again. The only payments made thereafter up to the institution of the second suit out of which the present proceedings ha\'e arisen were a sum of Rs. 250 on July 19, 1954 and Rs. 200 on March 17. 1955.

The defendant did not make any payment to the plaintiff in respect of the permitted increases under the Bombay Rents, Hotel

and Lodging House Rates Control Act, 194 7 from the I st cf April. 1954; neither did he pay the taxes agreed upon.

The plaintiff gave a notice to the defendant on April 18, 1955 demanding the arrears of rent and permitted increases in terms of the said Act and also terminating the tenancy of the defendant with effect from May 31, 1955 in terms of s. 106 of the Transfer of Property Act. The notice was received by the detendant on April 21, 1955.

No reply was sent thereto nor was any payment made to the plaintiff. The suit for ejectment was filed on March 15, 1956 the ground thereof as laid in the plaint being that the defendant was in arrears of payment of rent and permitted increases aitd as such not entitled to the pro.tection of the Act. In paragraph 6 of the plaint the dues under various heads were specified showing the arrears of rent, increases permitted thereon, interest in terms of the rent note and taxes for three years. It was pleaded by the defendant .in the written statement that rent at Rs. 27 had been fixed by the court without going into the merits of the case and that standard rent or reasonable rent of the property in suit had to be fixed first and a preliminary issue in that respect should be framed.

The defendant did not admit the claim to the arrears as laid in paragraph 6 of the plaint.

He also pleaded that the notice of ejectment was not a valid one as the tenancy was to be reckoned in terms of the Gujarati calendar and not the Gregorian calendar.

The date fixed for settlement'of issues was September 3, 1956 which can be taken to be the date of the first hearing of the suit for the purposes of the Act. On that day the defendant deposited in court a sum of Rs. 1,000.

Thereafter the defendant .made a deposit of asum of Rs. 150 on February 25, 1957. The suit was decreed by the trial Judge on March 25, 1957. The trial Judge after considering the evidence on record determined the standard rent of the premises at Rs. 27, exclusive of the permitted increasts and water tax and sanitary tax, payable by the defendant to the plaintiff.

Holding that the defendant had not complied with section 12(3)(b) of the Act he passed a decree for eviction. The defendant went in appeal to the District Judge, Surat.

He raised no contention even at the hearing of the appeal either in regard to the standard rent of the premises or in regard to interest on arrears of rent or municipal taxes or permitted increases.

The finding 'of the trial Judge that the standard rent of the premises exclusive of permitted increases and water tax and sanitary tax was Rs. 27/- per month was not challenged by the defendant.

Nor was any question raised as to the finding that the defendant was liable to pay the plaintiff a sum of Rs. 123-4-0 as and by way of interest on arrears of rent, a sum of Rs. 81 as and by way of water tax and sanitary tax for a period of three years prior to the date of the suit and a sum of R,. 2-1-9 per month as and by way of permitted increases from April 1, 1954.

The point regarding the validity of the notice of ejectment was however raised fa the appeal. According to the judgment of the High Court, "the only contention urged

A ,

before the learned Assistant Judge was, whether the defendant had or had not complied with the requirements of section 12(3)(b) of the Rent Act." The Assistant Judge concluded that there had been no compliance with that section and upheld the decree for eviction.

In revision three contentions were raised before the High Court, namely, (1) as to the validity of the notice of ejectment;

(2) whether s. 12(3)(a) or 12(3)(b) of the Act applied; and ( 3) whether the defendant was entitled to protection under s. 12(1) of the Act. The High Court held that it was not open to the tenant to raise the question of the validity of the notice in a revision application. Moreover, there was no substance in it as the compromise petition expressly recorded that the tenancy in terms of it should commence on September 1, 1952. With regard to the second question the High Court held that "it was ' common ground between the parties before the Assistant Judge that the case of the defendant fell within section 12(3) (b) of the Rent Act." The learned Judge of the High Court noted :

(a) The trial Judge turned down the applicability of s. 12(3)(a) of .the Act holding that the defendant had disputed the municipal taxes and permitted increases;

(b) The conditions under s. 12(3) (b) of the Act were not fulfilled;

(c) No contention about the applicability of 12(3)(a) was raised before the Assistant Judge in appeal and he therefore did not go into the question at all; and

( d) The conditions necessary for the applicability of s. 12(3 )(a) were not present, as besides the amount of Rs. 27 mentioned in the compromise petition, the tenant had to pay other sums not due from him every month.

The High Court further found that after the first date of hearing of the suit on September 3, 1956 rent of the premises which fell due on !st October 1956, !st November 1956, !st December 1956, !st January 1957, !st February 1957 and 1st March, 1957 remained unpaid on March 25, 1957 when the suit was disposed of. As the defendant did not pay or deposit .in court regularly the amount of standard rent which became due on the aforesaid dates barring the lst"of March 1957 (taking into account the deposit of Rs. 150 on February 25, 1957) there was default on the part of the defendant attracting the operation of s. 12(3)(b) of the Act.

350 SUPREME COURT llEPOllTS

The High Coun turned down the contention based on A s. 12(1) of the Act.

At the hearing of the appeal before us, learned counsel for the appellant raised two points, namely :

( 1) The provisions of s. 12( 1) of the Act were applicable throughout the hearing of the suit and down to B the date of the final hearing. If at that stage it was found that the defendant had paid up all arrears due from him he could not be ejected.

(2) Even applying s. 12{3)(b) there was no default on the part of the defendant which would render him liable to eviction.

In order to appreciate the first contention it is necessary to set out section 12 of the Act as it stood at the relevant time :

"12( 1) A landlord shall not be entitled to the recovery of possession of any premises so Jong as the tenant pays, or is ready and willing to pay, the amount of the standard rent and permitted increases, if any, and observes and performs the other conditions of the tenancy, in so far as they are consistent with the provisions of tliis Act.

(2) No suit for recovery of possession shall be instituted by a landlord against a tenant on the ground of non-payment of the standard rent or permitted increases due until the expiration of one month next after notice in writing of the demand of the standard rent or permitted increases has been served upon the tenant in the manner provided in section I 06 of the Transfer of Property At, 1882.

(3) (a) Where the rent is payable by the month and there is no dispute regarding the amount of standard rent or permitted increases, if such rent or increases are in arrears for a period of six months or more and the tenant neglects to make payment thereof until the expiration of the period of one month after notice referred to in sub-section (2), the Court may pass a decree for eviction in any such suit for recovery of possession.

(b) In any other case, no decree for eviction shall be passed in any suit, if, on the first day of hearing of the suit or on or before such other date as the Court may fix, the tenant pays or tenders in Court the standard rent and permitted increases then due and thereafter continues to pay or tender in court regularly such rent and permitted increases till the suit is finally decided and also pays costs of the suit as directed by the court.

t 4) Pending the disposal of any such suit, the Court may out of any amount paid or tendered by the tenant pay to the landlord such amount towards payment of rent or permitted increases due to him as the Court thinks fit.

Explanurwn.-ln any case where tnere is a dispute as to the amount of standard rent or permitted increases recoverable under this Act the tenant shall be deemed to be ready and willing to pay such amount if, before the expiry of the period of one month after notice referred to in sub-section (2), he makes an application to the Court under sub-section ( 3) of Section 11 and thereafter pays or tenders the amount of rent or permitted increases specified in the order made by the Court." Learned counsel drew our attention to a judgment of this Court in Shah Bhojraj Kuverji Oil Mills and Ginning Factory v. Supbash Chandra Yograj Sinha('). There the landlord had filed a suit for possession of the premises on April 25, 1957, the period of tenancy fixed under the rent note having expired on March 14,

1957. Under s. 6 of the Act a notification was issued applying Part II of the Act to the area where the property was situate.

The appellants claimed protection of s. 12 of the Act and the main question which engaged the attention of this Court was, whether by virtue of the fil'St proviso to s. 50 of the Act, all the provisions in Part II including s. 12 were made expressly applicable to all suits; and secondly, whether by virtue of s. 12(1) of the Act the suit was rendered incompetent. This Court turned down the contention of the respondent that the operation of s. 12( 1) was limited to suits filed after it came into force in a particular area and observed that under s. 12(1) the landlord was not to be entitled to recover possession and the point of time when the sub-section would operate was when the decree for recovery of possession would have to be passed.

It appears to us that there is no substance in the contention put forward on behalf of the appellant. Section 12(1) must be read with the Explanation and so read it means that a 1enant can only be considered "to be ready and willing to pay" if, before the expiry of the period of one month after notice referred to in sub-section (2), he makes an application to the court under subs. (3) of section 11 and thereafter pays or tenders the amount of

(l) [1962) 2 S.C.R. 159.

rent or permitted increases speciljed by the court.

We have already noted that the tenant made no payment within the period of one month of the notice of ejectment and although in his written statementhe raised a dispute about the standard rent he made'no application in terms of s. 11(3) of the Act. The readiness and willingness to pay has therefore to Ile judged in the light of the facts of the case.

Where as here a suit is filed on the ground that the tenant was in arrears for a period of more than 6 months and although raising a dispute as to the standard rent or permitted increases recoverable under the Act, the tenant makes no application in terms of s. 11(3) he cannot claim the protection of s. 12(1) by merely offering to pay or even paying all arrears due from him when the court is about to pass a decree against him.

In Vora Abbasbhai Alimahomed v. Haji Gulamnabi Haji Safibhai(') it was pointed out thats. 12(1) of the Act applied to a tenant who continued to remain in occupation even after the expiry ofthe contractual tenancy so long as he paid or was ready and willing to pay the amount of the standard rent and permitted increases. The. protection was howsoever available to a tenant subject . to the provisions of s. 13 .and to the limitations contained ins. 12(2) and s. 12(3)(a) of the Act.

In Mrs. Manorama Masurekar v. Mrs. Dhanlaxmi G. Shah and another(') rent was in arrears for a period of more than six months and the tenant neglected to make payment of the same within one month of the notice under s. 12(2). There the rent was payable by the month and there was no dispute regarding the amount of the rent. It was held that if the conditions of sub-s. (3)(a) of s. 12 were satisfied the tenant could not claim any protection from eviction by tendering the arrears of rent after the expiry of one month from the service of notice under sub-s. (2). It was observed :

"It is immaterial whether the tender was made before or after the institution of the suit.

In a case falling within sub-s. (3)(a), the tenant must be dealt with under the special provisions of sub-s. (3)(a), and he cannot claim any protection from eviction under the general provisions of sub-s. (l)."

As already noted, if sub-s. (3)(a) is not attracted, the tenant, if he is in arrears, cannot sit quiet and offer to pay all the amount due from him at the time of the hearing of the suit so as to get the protection of ;;, 12(1). To be within the protection of subs. (1) where he raises a dispute about the standard rent payable, he must make an application to the court under sub-s. (3) of s. 11 and thereafter pay or tender the amount of rent and permitted

(2) [1967] I S.C.R. 135.

increases, if any, specified in the order made by the Court. If he does not approach. the court under s. 11 (3), it is not open to him thereafter to claim the protection of s. 12(1).

The case clearly does not come within s. 12(3)(b).

To be within the protection of that provision, the tenant must not only pay all the arrears due from him on the first day of hearing of the suit, but he must thereafter continue to pay or tender in court regularly the rent and the permitted increases till the suit is finally decided. Before the date of the suit, the appellant was entitled to a credit of Rs. 104-5-3; the total payihents up to the date of the first hearing including the sum of Rs. 1,000 come to Rs. 1,554-5-3, The. amounts due from him. up to that 'date were:

(a) rent at the rate of Rs. 27 per month for 48 months.

Rs. 1296-0-0

(b) permitted increases from 1-4-54 to 1-9-56. 61-3-9

(c) taxes. 81-0-0

(d) Interest on arrears at 9% p.a. 123-3-0

making a total of Rs. 1561-6-9

Moreover, there was failure on the part of the appellant to pay or tender in court the amounts which fell due from the 1st of October 1956 to the 1st of March,

1957. Thus, leaving out of consideration the question of costs awarded against him under the decree, the appellant cannot get the protection under s. 12(3)(b) of the Act. A faint attempt was made to raise the pdint about the invalidity or the notice of ejectment on the plea that the same had to comply with s. 12(2) of the Act. This is clearly fallacious as the said section merely lays down the manner in which a notice of demand of standard rent and permitted increases has to be made.

The contentions raised on behalf of the appellants are therefore without any merits and the appeal is dismissed with costs.

G.C.

Appeal dismissed.

SHAH DHANSUKHLAL CHHAGANLAL

DAUCHAND VIRCHAND SHROFF AND OlllERS

March 1, 1968

R. S. BACHAWAT ANDG. K. MITTER, JJ.

Ss. 12(1) and 12(3)(b)

s. 106

Transfer of Property Act

s. 12(1)

Section 12(1)

section 11

s. 11(3)

s. 12

Shah Bho

rai Kuver

[1962] 2 S.C.R. 159

s. 12(3)(b)

G. L. S.u1ghi

B. R. Agarwala

P. Malhotra

Ravi11der Narain

Mitter

Surat

22nd February, 1947

September 16, 1952

September 1, l 952

February 27, 1947

July 19, 1954

March 17. 1955

and Lodging House Rates Control Act

April 18, 1955

May 31, 1955

s. 106

Transfer of Property Act

April 21, 1955

March 15, 1956

September 3, 1956

February 25, 1957

March 25, 1957

section 12(3)(b)

District Judge, Surat

April 1, 1954

section 12(3)(b)

s. 12(3)(a)

s. 12(1)

September 1, 1952

section 12(3)

s. 12(3)(a)

s. 12(3)

s. 12(3 )(a)

s. 12(3)(b)

s. 12(1)

s. 12( 1)

s. 12

section 12

Section 11

April 25, 1957

March 14,

1957

s. 6

s. 12

s. 50

s. 12

s. 12(1)

s. 12( 1)

s. 12(1)

Section 12(1)

section 11

[1962) 2 S.C.R. 159

s. 11(3)

s. 11(3)

s. 12(1)

s. 13

s. 12(3)(a)

s. 12(2)

s. 12

s. 11

s. 11

s. 12(1)

s. 12(3)(b)

1st of October 1956

1st of March,

1957

s. 12(3)(b)

s. 12(2)


MADAN LAL AAM CHANDRA DAGA ETC. v.

SfATE OF MAHARASHTRA

February 5, 1968

(M. HIDAYATULLAH, R. S, BACHAWAT AND K. S. HEGDE, JJ.j B

Practice and Procedure-Criminal appeti/-Offtnc• o' cheatlng--0/ftr by accused to return 1noney if sentence 'M'OS rtduct!d-Higlt Court willing to consider-Propriety.

The three appellants were a partner, munim and clerk of the R. R. firm and were closely related to one another. In the course of their deolings with. the J. R. firm, who were Bankers and CoinmisMon Ajents, the appellants were alleged to have, inlla!ed the invoices of goods drawn up exaggerated lmndies, and borrowed money from the J. R. finii on the security of such invoices and hundks. The J. R. firm came to know 1he fact! when the hundios were not honoured; but before the hundies were tendered to the R. R. firm, its partners were declared inlolvenL 'lbe

ppellants were charged with the offence of cheatinJI the J. R. firm. In the High Court, the partner offered to pay his sbaro of the losses of tbe J. R. firm if the sente11ee passed on him by the trial court was reduced. 1be High Court adjourned the appeal to enable him to deposit the money

but did not. reduce the sentence though it recovered the fine imposed from the money. deposited.

In appeal to this Court it was contended that : (I) there was no evidence against the clerk; (2) the High Court should have , reduced the smtence; and (3) the partner and munim would pay to the J. R. firm tbe amounts wrongly realised by them and this Court may reduce the aenteru:e.

HELD : (I) As regards the clerk there was nothing to show that he took prut in the negotiations with the J. R. firm, or that any r-ntation was made by him to that firm, or thaJ he made the inflated invoices and hundies.

The only evidence against htm was (a) that he wrote some invoices which were not inflated, (b) that he took to the J. R. firm, and (c) that he drew up some pay-in-slips on behalf of the J. R. firm.

In the absence of a charge of conspiracy, the evidenal was not relevant and F the clerk could not be held guilty of the offence of cheating. [38 A-Fl

(2) It is very wtong for courts to enter into a barpin with the accused by which money is recovered for the complainant through their agency.

Offences should be tried and punished according to the guilt of the accused, and if any leniency is to be shown in the 'sentence it should be on the faots of the case.

The High Court should not have agn:ed to consider lhe question of sentence and the offer of the accused in this Court could ltot also be accep ed. [39 E--GJ

( 3) The sentences were however reduced, because, but for the supuvening ilsolvency, the ac:Cused might have paid back the money as they had done in the past. [39 HJ

CRIMINAL

APPELLATE

JURISDICTION : Criminal Appeals Nos. 99 to 104 of 1964.

Appeals by special leave from the judgment and order dated March l 0, 1964 of the Bombay High Court in Criminal Appeals

MADAN LAL v. MAHARASHTRA (Hidayatul/a/1, /.) 35

Nos. 1323 to 1325 of 1962 and 1073 to 1075 of 1962 respectively.

Nurudclin Ahmed, G. L. Sanghi and 0. C. Marhur, for the appellants (in all the appeals).

M. S. K. Sastri and S. P. Nayar, for the respondent (in all the appeals).

Purshottam Trikamdas and I. N. Shroff, for the complainants (in all the appeals).

The Judgment of the Court was delivered by

Hidayatullah, J. . This judgment shall govern the disposal of C Criminal Appeals Nos. 99-104 of 1964.

These appeals arise from a number of criminal prosecutions started against four persons for cheating. In the original court there were as many as nine cases filed against them which were tried simultaneously, three of the same kind being tried together, as required by the Code of Criminal Procedure. As a result of the trial the lirst D and the fourth accused were acquitted. Accused Nos. 2 and 3 were convicted.

They were sentenced in the aggregate to rigorous imprisonment for two years and were imposed fines lotalling Rs. 15,000 each.

The convicted accused appealed to the High Court.

The State Government also appealed against the acquittal of accused No. 4. The High Court maintained the E conviction and sentences qf accused Nos. 2 and 3 and further set aside the acquittal of accused No. 4 who on conviction was sentenced to rigorous imprisonment for two years but no fine was imposed on him.

The convicted accused have now filed these appeals by special leave.

The case started on tlie complaint of one Bansilal who was a partner in a firm Jawarmal Ramkaran of Kalbadevi, Bombay.

It had five or six partners. This firm deals as Bankers and Commission Agepts.

The accused are connected with another .firm the name of which is Ramnarayan _Rajmal Rathi. The t

accused ( Laxminarayan Ramchandra) and the second accused (Murlidhar Daga) were partners of this firm and were doing business at Jhaveri Bazar, Bombay. The third accused Motilal, who is the brother of accused No. 2 was working as a Muilim in the firm.

Accused No. 4, Madan Lal, is a nephew of accused Nos. 2 and 3 and was working as a clerk.

The third firm which is involved in the narration of facts was called Satyanarayan Shymsunder Firm at Tejpur, Assam.

Accused No. 4 is a partner of that firm. In the High Court the first firm is shortly described as J. R. Firm. the second as R. R. Firm and 'the , third as S. S. Firm.

We shall adhere to these abbreviations in this judgment.

It is an _admitted fact that the R. R. Firm had dealings with the J. R. Frrm for several years and had borrowed in the past large sums of money from the J. R. Firm. In September, 1959 accused No. 3 approached Bansilal representing that the R.R'.

Firm had tci supply cloth to certain constituents in Assam and that the R.R. Firm needed money for this pu1pose.

Accused No. 3 offered to the J .R. Firm a commission of 2 as. on every Rs. 100 and 6t per cent interest. It appears that Bansilal wanted that some security should be furnished and accused No. 3 promised that the railway receipts, invoices and .the hundies drawn upon the S.S. Firm would be handed over as security.

For a time things went on quite regularly and honestly.

As many as 110 hundies and railway receipts were .tendered and the liability was also met.

This involved a sum of no less than Rs. 1,20,000. .Later, however, the R.R. Firm began to inflate its invoices and to draw hundies for exaggerated amounts. When these hundies and the invoices reached the S.S. Firm they were returned. Thy hundies and the railway receipts were then returned and .the Bank got back the goods from the railway. authorities.

The parcels were opened and surveyed.

T t was found that the goods represented by the invoices were not in the parcels and that cloth very much less in value was actually despatched. In other words, it was apparent that the RR. Firm was inflating the invoices and drawing up exaggeraed hundies although cloth which was being sent was very much less in value. In other words, the drawing of the money on the security of the invoice& and hundies from the J.R. Firm was an act of cheati"ng pure and simple because if the J.R. Firm knew that the invoices and hundies were worthless or at any rate not of sufficient worth they would not have advanced such large sums of money to the R.R.

Finn. It ffi\lY be mentioned here that in this way 40 invoices and

hundis were found to be inflated and they invofved a sum of Rs. 1, 10,000 or thereabouts.

The matter might not have come to a head but for an event which made the R.R. Firm incompetent even to pay the hundies if tendered .to them. A . petition in insolvency was filed against them and they were declared insolvent on December 30, 1959.

The first hundi and invoice which was rejected by the S.S. Firm was as far back as October 8, 1959. Although the R.R. Finn wrote to .the J.R. Firm that the hundies may be tendered to them for payment no action appears to have been taken. Jn this way" the offence of cheating which really arose when the inflated if,. voices and hundier were tend.red representing not the full value in tenns of bales was made out.

Accustd Nos. 2 and 3, 'vho were partner and Muni.m, respectively were held to be responsible for this cheating.

Accused. No. 1 was acquitted because he was only a financing partner and had no knowledge about .these

MADAN LAL v. MAHARASHTRA (Hidayatul/ah, /.) 37

happenings.

His acquittal was allowed to remain because th~ State did not appeal against his acquittal. Accused No. 4, who

was only a clerk, was also acquitted by the court of trial on the ground that he had made no representation to the J. R. Firm and thus was not guilty of any offence. It may be stated here that no charge of conspiracy was made. If it had been, other considerations might have applied.

Since accused No. 4 was directly charged with cheating some representation on his behalf had to be made out. It is on this point that the court o[ trial aiid the High Court have differed, .the court of trial having held that there was no such representation and the High Court, taking the view, on evidence, which we shall consider presently, that accused No. 4 must be held to be equally guilty.

In this appeal it is practically admitted that the offence was committed although Mr. Nuruddin Ahmed described it as rechnical because (a) Bansilal knew what was being done, (b) this ruse was adopted so that the other partners of the J. R .. firm may not object, and ( c) but for the intervention of inso!Vency the hundies if they had been presented for payment to the RR Firm would have been .met. He draws our attention to the fact tha'. as many as 110 invoices and hundies were regular and also met by the R.R. Firm. He pleads for a mitigation of the sentence on this ground.

As regards accused No. 4, Mr.

Nuruddin Ahmed submits .that his case has been wrongly viewed by the, High Court which has read too much into his actions and has. thus erroneously held that he was responsible for cheating the I.R. Firm.

Mr. Nuruddin Ahmed also draws our attention to what the High Court did during the hearing of the appeal. Jt appears that it was, represented to the High Court that accused No .. 2 was willing to bring the money in payment of his share of the losses caused to the J.R. Firm. The High Court adopted an unusual procedure by adjourning the appeal and affording accused No. 2 an opportunity of tendering his share of the amount.

Accµsed No. 2 brought a sum of Rs. 35,000 and deposited it in Court. It appears from the High Court judgment that it had assured his counsel that the question of reduction of sentence would be heard after the amount was deposited.

When the amouRt was deposited the matter was heard again.

The High.

Court found it difficult to reduce the sentence. It returned the balance of the amount after retaining the gross amount of fine . :mp<ised upcin accused No. 2 in the case. Mr. Nuruddin .Ahmed contends thai the High Court should have reduced the sentence . and taken over the money which had been deposited fo.r payment to ttie complaiiiant. He contends also that the High Court was. in error in deducting the amount of fine when no qurion of reduction of sentence was to be considered. We shall say something 'ab<iut the procedure adopted in the High-Court preserttly.

We may .begin first by considering the case of the fourth ac:cused. Evidence shows .that he was a mere cl.erk in the R.R. firm.

No doubt he is a nephew of accused Nos. 2 and 3 but there is nothing to show that he took any part in the negotiations or in .the making out of the inflated invoices and hundies. We have already said that no charge of conspiracy was made and his action as a mere clerk is capable of a different inteJ1lretation untess we can attribute to him an intention to cheat the J .R.

Firm as did the other accused, On this part there is no evidence whatever. The only evidence is that being a clerk he wrote sl>me of the invoices and took to the J .R. Firm. There is also evidence that at the instance of the J.R. Firm he drew up some pay-inslips which were later submitted, not by him, but by the J.R: Firm to the Bank with the hundies. In our judgment this evidence falls short of the requirements of the law. No representation was made by the fourth accused to induce the J.R. Firm to part with the funds. If a charge of conspiracy had been made this evidence might have been relevant under s. 10 of the Evidence Act but as no charge of conspiracy was made the charge of cheating by the fourth accused had. to be made out on good and proper evidence. There is nothing to show that the fourth accused knew that the hundies were not going to be met or that the invoices were in fact inflated.

In the absence of any such proof it is diflicult to hold (as did thei High Court) that accused No. 4 was also guilty of the offence of cheating. None of the invoices which were written by the fourth accused was found to be inflated.

The bad invoices were apparently written by someone else and he was only instrumental in taking them to the J :R. Firm as the servant of the R.R. Firm. Even if he wrote some of the bad invoices or the pay-in-slips some more evidence was needed before it could be held that he was instrumental in cheating the J.R. Firm. On these grounds he was entitled to an acquittal and the High Court erred in setting it aside in the apr.al of the State Government.

We accordingly allow his appeal and order his acquittal. He need' not surrender his bail which was granted by this Court. The bail bond is cancelled.

This brings. us to the question of the sentence of the remain- G ing accused, viz,., accused Nos. 2 and 3.

From what we have said above it is quite clear that these accused seem now to admit that they were guilty of cheating the J. R. Firm. Their case is that Bansilal knew that the invoices and the hundies were inflated, but that is no excuse because Bansilal was not the only person involved. There was the J. R. Firm who as Bankers H and Commission Agents would never have lent such large sums of money if they knew that the invoices and hundies did not. represent the proper villue of the goods. It is also to be noticed that

MADAN LAL v. MAHARASHTRA (Hidaj'atul/ah, J.) 39

Bansilal denies alJ this and the suggestion of the second and the third accused that he knew everything is merely an assertion. It appears to us that having found a financier who was willing to lend money on the security of invoices and hundies, the second and the third accused engineered a plan under which a larger sum could be borrowed than what could be if the true facts were known.

In other words, they devised a method under which inflated invoices and false hundies would enable them to get at larger loarts than the actual value of the goods represented.

There was thus cheating and their conviction must be held to be proper. We do not think that the offence can be described as merely technical. It was quite clearly a bold attempt .to ge.t more money through false documents which were to form secu rity for the loans. It is true that in some way they might even have paid this money if the hundies had been tendered to them but there is nothing to show that they were in a position to meet the liability because the insolvency which supervened clearly indicates that they were not in possession of funds. It is their insolvency or lack of funds which must have induced them to adopt this method.

Having, therefore, held that the offence against them is prov ed we are now to consider the question of sentence in the case.

We pointed out that the High Court adopted an unusual .course in the case. In fact a similar course was suggested to us at the hearing by submitting that we should increase the fine and reduce the sentence to the period und.'!rgone.

In other words, the accused were adopting the same method which they did in the High Court, namely, that they will pay the amount which they have wrongly realised from the J.R. Firm and this may be taken in mitigation of the punishment imposed on them. In our opinion, it is very wrong for a court to enter into a bargain of this character Offences should be tried and punished according to the guilt of the accused. If the. Court thinks that leniency can be shown on the facts of the case it may impose a lighter sen tence.

But the court should never be a party to a bargain by which money is recovered for the complainant through their agency.

We do not approve of the action adopted by the High Court and for the same reason we would refrain from accepting the suggestion of Mr. Niµ11ddin Ahmed that we should inerease the fine with a view to reducing the sentence of imprisonment.

We, however, think that in this case, but for the supervening insolvency the accused might have paid back the money to the J .R. Finn. The fact that they were on this occasion and also in the High Court willing to pay shows that if the matter had not been concluded against them by .the insolvency they might even have attempted to satisfy the J.R. Firm. They were influenced

by the ease with which they could borrow money and therefore tempted to depart from the strict path of honesty to meander into an offence of cheating. Taldng this into consideration we think that although we cannot condone such offences there is room for reduction of the sentence of imprisonment imposed upon these two appellants. We reduce their sentence to one year's rigorous imprisonment.

The sentence of fine imposed on them shall stand. With this modification the appeal of the second and the third accused will stand dismissed. Their bill is cancelled and they shall , urrender forthwith.

V.P.S.

Sentence reduced and Appeal dismisseil..

MADAN LAL AAM CHANDRA DAGA ETC

SfATE OF MAHARASHTRA

February 5, 1968

M. HIDAYATULLAH

BACHAWAT

K. S. HEGDE, JJ

J. R. firm

Nurudclin Ahmed

G. L. Sanghi

0. C. Marhur

M. S. K. Sastri

S. P. Nayar

Purshottam Trikamdas

I. N. Shroff

Hidayatullah

Code of Criminal Procedure

Bansilal

Jawarmal Ramkaran

Kalbadevi

Bombay

Ramnarayan _Rajmal Rathi

Laxminarayan Ramchandra

Murlidhar Daga

Motilal

Madan Lal

J. R. Frrm

Assam

R.R.

Finn

December 30, 1959

S.S. Firm

October 8, 1959

Nuruddin Ahmed

Nuruddin Ahmed

Nuruddin

s. 10

Niµ11ddin Ahmed

J .R. Finn


RAM CHARAN & ORS.

STATE OF U.P.

March 1, 1968

[S. M. SIKRI, J. M. SUELAT AND V. BHARGAVA, JJ.]

Code of Criminal Procedure (Act S of 1898), s. 164-Smttment of wilness recorded under section-Evidence given by him in Court-Wtig/11 <Jf.

The statements of eye witnesses to a murder were recorded under s. 164, Criminar Procedure Code, and a certificate waa appended to each of the statements to the effect, that the deponent waa warned that he was making the statement before a Magistrate and that it might be used against him.

On the question as to the weight to be attached to the evidenC< given by the witnesses in court.

HELD : It dld not follow from the endorsement that anv threat was given to the witnesses or that it necessarily made their evidence in court

uspect or less believable. [357 Gl If a witness, in his evidence in court sticks to the .wsion given by him in the statement under s. 164, Cr. P.C. the mere fact that the statement was previously recorded under the section is not suftlcient to discard his <:vidence. The only inferenee that can be drawn is that there was a time

when the police thought the witness may change his eviden<1>. The Court, however, ought to receive the evidence with caution. [358 DJ

Observations in Parmanand v. Emperor, A.i.R. 1940 Naa. 340, 344 and In re: Gopisetti Chinna Venkatarubbiah .• I.L.R. [1955] A.P. 633, 639, approved.

Observations contm in Emperor v. Manu Chik, A.I.R. 1938 Patna 290, 295, disapproved.

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 175 of 1967.

Appeal by special leave from the judgment and order dated May 17, 1967 of the Allahabad High Court, Lucknow Bench in Criminal Appeal No. 72 of 1967 and Capital Sentence Reference No. 9 of 1967.

S. P. Sinha and M. I. Khowaja, for the appellants.

G. N. Dikshit and 0. P. Rana, for the respondent.

The Judgment of the Court was delivered by Sikri, J.-This appeal by special leave by Ram Charan, Dnlarey and Ram Bux is directed against the judgment of the Allahabad High Court, Lucknow Bench, confirming the convictions under. s. 302, read with s. 34, I.P.C. Ram Charan and Dularey were sentenced to death while Ram Bux was sentenced to imprisonment for life.

The relevant facts in brief are as follows : On December 24, 1965, at about 8 a.m. four persons started fo( Lucknow on two cycles; Shanker Singh and Radhey Shyam were on one cycle and

Surat Singh and Bachchu Lal on another. Radhey Shyam had some business in Lucknow, including consulting Sri Pal Singh, Advocate,· P.W. 20, regarding the preparation of a reply to a notice received by him. After the work was finished the four left Lucknow. It appears that Radhey Shyam was sitting on the carrier of the cycle driven by Shankar Singh, and Bachchu Lal was sitting on the carrier of the cycle driven by Surat Singh: Raclhey Shyam carried a leather bag in which he had kept money which he had received as the sale proceeds of jau sold by him in Lucknow. For some reasons which need not be detailed, Shankar Singh and Radhey Shyam went ahead of Surat Singh and Bachchu.

Lal, and the distance between them when they came near about the scene of occurrence was, according to Surat Singh, between

1t and 2 furlongs.

When Shankar Singh and Radhey Shyam reached near the drain of Rastogi, they met Ram Charan, accused.

Radhey Shyam got down from the cycle and started walking with Ram Charan, while Shankar Singh followed a little behind. Then the attack on Radhey Shyam took place and is described thus by Shankar Singh :

"When we reached the grove of Durga Maharaj then Ram Bux and Dularey accused were sitting at the well. Then Ram Charan by extending his hands (Kantiya Kar) caught hold of Radhey Shyam and threw him down on his face and after drawing his hands towards his back sat down catching him. Dularey and Ram Bux came up running .. Dularey had a Banka and Ram Bux had a lathi. Ram Charan told Dularey, 'Bring the Banka, why are you delaying it.' Thereupon I cried ou(. Then Dularey gave 5-6-7 Banka blows to Radhey Shyam on his neck. As I was crying so Ram Charan said 'Beat Thakurwa. He will go to the village and tell !hat such and such persons had hacked Radhey Shyam.' At this Ram Bux gave 5-6 Lathi blows to me.

By that time Surat Singh and Bachoo Mahraj also came there and Rupan also came.'' Surat Singh corroborates. this statement. He says that he saw all this from a distance of H furlongs. Bachchu La], P.W. 7, also corroborates this version. He says that on seeing the attack he and Surat Singh ran towards the scene of occurrence. He further adds that when they were at a distance of about 30-35 paces, the accused ran away. The First Information Report was lodged at the police station four miles from the scene of the occurrence at 17.30 hours by Shanker Singh.

SUPREME COURT REPORTS [1968] 3 s.c.R.

The learned counsel for the appellants says that the First Information Report was written much later than the time mentioned above.

He relies first on the fact that the first page of the First Information Report was written verj closely and the second page written not so closely. . He suggests that the draft W!1$ prepared sometime later and then it was copied into the Register in ' which first information reports are written; the writer having left only two pages for the report to be transcribed wanted to be quite certain that the report would finish in two pages.

This suggestion is, however, denied by Liaqat Hussain, P.W. 6, who was posted as Head Moharrir at the police station Kakori in

1965. He says that he wrote on the first page of the report closely1 because he wanted that the whole matter should be completed On that page and that there was no other reason; after finishing the first page when he started writing on the second page then he did not write closely as the report had come to an end. He denied the suggestion that two pages were left for writing this report. This explanation seems to be true. The special report of this case was sent, according to this witness, on December 24, 1965, at 7.55 p.m. through Abdul Rashid, Constable, who was called as Court Witness. He says that he delivered the special report at the place of S.S.P. 1 at 9.10 a.m. on December 25,

1965. The special report was sent to S.S.P. D.M., Additional S.P.C.O., S.D.M., anq D.C.R.R.S. on Invoice Book at No. 54 which was exhibited in Court. The learned counsel criticizes his evidence. on the ground that there is .no reason why he should have slept' on the way.

The reason given by Abdul Rashid for breaking his journey on the way is that the ekka drivers and riksha drivers were charging too much.

In our view, there is no force in this contention of the learned counsel for the appellants.

The second ground of attack against the First Iilforniation Report is that the report itself discloses that it could not have been dictated by Shanker Singh. He says that Shanker Singh was literate and yet the First Information Report bears his thumb mark.

He further says' that it mentions the names of the fathers of Radhey Shyam, Ram Charan; Mata Pershad, Dayal, Lallu and Ram Bux, but in cross-examination Shanker Singh admitted that he did not know the names of Ram Charan's father and Ram Daya)'s father, and also he did not know the name of Ram Bux's father. He,· however, further added in cross-examination that at the time he gave the First Information Report, the names of the fathers of Ram Charan and Ram Dayal were then in his memory.

Another fact relied on by the learned counsel is that the First Inform11tion Report contains the word "sazish" while in crossexamination Shanker Singh admitted that he did not know the . m, eaning of this word. He urges that looking at all . these circumstances it is clear that the First Information Report was either

written at the scene of occurrence after the Investigating Officer had gone there or that a draft was first written on a piece of paper some people supplying the names of the fathers of the various persons and suggesting words.

We are, however, unable to accede to this contention. It may well be that the chowkidar who accompanied Shanker Singh supplied the name of the father of a pat1icular person and the Head Moharrir may have substituted a word or two of his own, without changing the meaning.

The Investigating Officer went straightaway to the scene of the occurrence and started investigation. None of these facts, in our opinion, cast doubt on the prosecution story. It may be that Shanker Singh is able to sign but he put his thumb impression not only on the First Information Report but on his statement under s. 164, Cr. P.C., and his statement before the Committing Magistrate. It may be that if was felt safer to have his thumb impression which he could not effectively deny later.

But the fact that the special report was sent on December 24, 1965, in the evening, dispels any doubt about the fact that the First Information Report was lodged at 5.30 p.m. on December 24, 1965.

Dealing with the eye-witnesses, the learned coun&el drew our attentionJo the endorsement which was made by the Magistrate who too down the statements under s. 164, Cr. P.C. Below the statement• is appended a certificate in the following form :

"Certified that the statement has been made voluntarily.

The deponent was warned that he is making the . sta1 ement before the 1st class Magistrate and can be used against him. Recorded in my presence. There is no police here.

The witness did not go out until all the witnesses had given the statement."

This certificate appears below the statements of Shanker Singh, Surat Singh and Bachchu Lal. The learned counsel rightly suggests that the endorsement is not proper. But we are unable to say that it follows from this endorsement that any threat was given to these witnesses or that it necessarily makes the evidence given by the witnesses in Court suspect or less believable,

The learned counser further relies on the following passage from the judgment of Dhavle J., in Emperor v. Manu Chlk(')

"There is yet another circumstance which calls for remark, and that is the examiliation of Ladhu and Rebi among other witnesses under s. 164, Criminal P.c.· It was pointed out by Prinsep, J., in the well-known case in Queen Empress v. Jadub Das(') that a statement of a

(I) A.I.R. 1938 Pal 290-295.

(2) 27 Cal. 295.

358 SuPllBMB COUllT llBPORTS

(1968) 3 S.C.R.

witness obtained under this section always raises a suspicion that it has not been voluntarily made, and that the section was not intended to enable the police to obtain a statement from some person (in that case it was an incriminating statement) and as it were to put a seal on that statement by sending in that person to a Magistrate practicalJy under custody, to be examined before the judicial inquiry or trial, and therefore compromised in his evidence when judicial proceedings are regularly taken." These observations were dissented from by the Andhra Pra desh High Court in In re: Gopisett/ Chinna Venkata Subbiah('}, and Subba Rao, C.J., preferred the following observations of the Nagpur High Coun in Parmanand v. Emperor(")

"We are of the opinion that if a statement of a witness is previously recorded under section 164, Criminal Procedure Code, it leads to an inference that there was a time when the police thought the witness may change but if the witness sticks to the statement made by him throughout, the mere fact that his statement was pre viously recorded under section 164 will Jiot be sufficient to discard it. The Court, however, ought to receive it with caution and if there are other circumstances on record which lend support to the truth of the evidence of such witness, it can be acted upon."

We agree with Subba Rao, C.J., that the observations of the learned Judges of the Nagpur High Court lay down the law correctly.

In the result the appeal fails and is dismissed.

V.P.S.

(I) I.L.R. [19SS] A.P. 633-38. (2} A.I.R. 1940 Nag. 340.

Appeal dismissed.

) • I

RAM CHARAN & ORS

STATE OF U.P

March 1, 1968

S. M. SIKRI, J.

V. BHARGAVA, JJ.

Code of Criminal Procedure

s. 164

s. 164

Criminar Procedure Code

s. 164

Allahabad High Court, Lucknow Bench

S. P. Sinha

M. I. Khowaja

G. N. Dikshit

0. P. Rana

Sikri

Ram Charan

Dnlarey

Ram Bux

s. 302

s. 34

I.P.C

Dularey

December 24, 1965

Lucknow

Shanker Singh

Radhey Shyam

Surat Singh

Bachchu Lal

Pal Singh

Shankar Singh

Raclhey Shyam

Bachchu

Lal

Rastogi

Durga Maharaj

Kantiya Kar

Bachoo Mahraj

Rupan

Bachchu La

Liaqat Hussain

Kakori

Abdul Rashid

December 25,

1965

S.S.P. D.M.

Abdul Rashid

Mata Pershad

Dayal

Lallu

Ram Daya

Ram Dayal

s. 164

s. 164

Dhavle

Ladhu

Rebi

s. 164

Prinsep

Andhra Pra desh High Court

Subba Rao

Nagpur High Coun

section 164

Criminal Procedure Code

section 164

Nagpur High Court


CHIEF COMMISSIONER, DELHI ANDO~.

CHADHA MOTOR TRANSPORT CO.

March 4, 1968 a

[J, C. SHAH, R. S. BACHAWAT AND G. K. MITTER, JJ.]

Motor Vehicles Act, 1939, s. 68(2) (ww)-P.,.soru doing th• bwinoss of collecting, forwarding and distributing goods carrl•d by public carri<rs required by notification under S<ction to takt out /lc<ne<g-Validity of notification and section.

'The respondent was engaged in the busines.'I of collecting, forwarding and distributing goods carried by public carriers in Delhi, The Chief CommiMioner, Delhi issued a notification under s. 68(2) (ww) of the Motor Yehic!Q Act, 1939 whereby the respondent and those en23l!ed in similar businas were required to take out licen=. The respondent filed a writ

petition in the Punjab High Court challenging cl. (ww) of s. 68(2) and tho aforesaid notification on various grounds and askin~ for an order quashing the notification. The High Cowt allowed the wnt petition holding that as the rules frame undtt s. 68 can be made only for the purpose of carrying into effect the provisions of Chapter IV of tho Act, and in Chapter IV there was no substantive provision requiring agents engaged in the business of collecting, forwarding and distributing goods carried by public carriers to take out licences, the lej!islature had no power to enact

cl. (WW) of s. 68(2) authorising the framing of the rules f<t the licensing of sudl agents. The appellants came to this Court with certificate,

HELD : The appeal must be allowed.

Section 68(2) specifically enumerates the matter on which rulea under the ooelion can be made for the purpose of carrying into effect tbe provisions of Chapter IV. Clau5e (ww) of o. 68(2) is an expression of the will of the legislature that rules for the licensing of agents engaj!ed in

the business of collecting. forwarding and distributing goods carried by public carriers may be made for the purpose of carryin~ into effect the provisions of Chapter IV. The proposition that the legislature must in the first instance incorporate in the Act a oection requiring a class of persons to take out licences before it can enact a section authorising the mding of rules for such licensing is unsound and must be rejected. Within the limits of their legislative powers, parliament and the State legislatures have plenary powers of legislation and th!')' may. delegate to an executive authority the power to make rules for the licensing of any class of persons.

[360 H-361 C]

[Csse remanded to High Court for considering other contentions raised in the petition.]

CIVIL APPELLATE JURISDICTION : Civil App\llll No. 466 of 1965.

Appeal from the judgment and order dated January 31, 1961 of the Punjab High Court Circuit Bench at Delhi in Letters Patent H Appeal No. 15-D of 1958.

B. R. L. Iyengar and S. P. Nayar, for the appellants.

Mohan Behari Lal, for the respondent.

L6 Sup, C.L/61!-10

SUPREME COURT REPORTS

[1968] 3 S.C.R.

The Judgment of the Court was delivered by

Bachawat, J. The respondt carries on the business of col-. lecting, forwarding and distributing goods carried by public carriers in Delhi. On October 27, 1956,. the. Chief Commissioner, Delhi issued a notification under s. 68(2)(ww) of the Motor Vehicles Act, 1939.

Under this notification, the respondent and other agents engaged in the business of collecting, forwarding and distributing goods carried by public carriers are required to take out licences.

The respondent filed a writ petition in the Punjab High Court challenging cl. (ww) of s. 68(2) and the aforesaid notification on various grounds and asking for an order quashing the notification. A single Judge of the High Court struck down cl. (ww) and allowed the writ petition. He held that the clause was ultra vires and invalid and therefore the notification issued under it was also invalid.

His decision was affirmed on Letters Patent Appeal by a Division Bench of the High Court.

The appellants have preferred the present appeal from this order after obtaining a certificate from the High Court.

Chapter N of the Motor Vehicles Act, 1939 provides for control of transport vehicles. The chapter contains ss. 42 to

68. Section 68(1) provides that a State Government may make rules for the purpose of carrying into effect the provisions of Chap. N. Section 68(2) provides that without prejudice to the generality of the, foregoing power, rules under the section may be made with respect to all or any of the matters enumerated in •.he various sub-clauses thereof. Clause (ww) of s. 68(2) provides that the State Government may make rules for ''the licensing of agents engaged in the business of collecting, forwarding and distributing of goods carried by public carriers." This clause was in8erted in s. 68(2) by Delhi Act No. 5 of 1954 and also later by Central .Act No. 100 Of 1956.

The High Court held that as the rules framed under s. 68 can made only for the .Purpose of carrying into effect the prov1S1ons of Chap. N, such rules must relate to a substantive provisionof law in the chapter.

As there was no substantive provision in Chap. N requiring agents engaged in the business of collecting, forwarding and distributing goods carried by public carriers to take out licences, the legislature had no. power to enact cl. (ww) of s. 68(2) authorising the framing of rules for the licensing of such agents.

The legislature must, in the first #!stance, make a law requiring such agents to take out licences.

As the legislature did not make such a law, the clause is ultra vires its powers and is invalid.

We are unable to accept this line of reasoning. Section 68(2) specifically enumerates the matters on which rules under the

CHIEF COMMR. DELHI v. CHADHA MOTOR (Bachawat, !.) 361

section can be made for the purpose of carrying into effect the provisions of Chap. IV. Clause (ww) of s. 68(2) is an expression of the will of the legislature that rules for the licensing of agents engaged in the business of collecting, forwarding and distributing goods carried by public carr!e; s may be made for the purpo~. of carrying into effect the prov1s10ns of Chap. IV. The propos1t10n that the legislature must in the first instance incorporate in the Act a section requiring a class of persons to take out licences before it can enact a section authorising the making of rules for such licensing is unsound and must be rejected.. Within the limits of their legislative powers, Parliament and the State legislatures have plenary powers of legislation, and they may delegate to an executive authority the power to make rules for the licensing of any class of persons. This law may be open to attack on the ground that it is not on a matter on which the legislature is competent to legislate or on the ground that there is excessive delegation of legislative power.

But it cannot be struck down on the ground that . the fogislature has made no other provision for licensing in the body of the Act. There is no constitutional prOhibition against the making of a law authorising the making of rules onany topic without the support of another substantive provision of law in the body of the Act. Take Chap. VII of the Motor Vehicles Act dealing with motor vehicles temporarily leaving or visiting India. That chapter contains one section, namely, s. 92. The section provides for the making of rules only. It authl>rises the Central Government to make rules inter a/ia for the grant and authentication of travelling passes, certificates or authorisations to persons temporarily taking motor vehicles out of India to any place outside India and prescribing the conditions subject to which motor vehicles brought temporarily into India from outside India by persons intending to make a temporary stay in India may be possessed and used in India. There is no other substalltive provision of law in Chap. VII or any other Chapter of the Act on the subject of motor vehicles temporarily leaving or visiting India. But the absence of such a substantive provision does not render either s. 92 or the rules made under it invalid.

If the Central Government frame• rules under s. 92, such rules must be complied' with.

We, therefore, hold that cl. (ww) of s. 68(2) cannot be struck down on the ground that there is no other substantive provision of law in the body of the Act requiring the taking out of licences.

On behalf of the respondent it was suggested that the clause is invalid on the ground that it is a law on a subject on which the

legisl_ae is not competent to legislte. It was also suggested that 1t 1s bad o_n the ground of excessive delegation of legislative power. The High Court has not struck down the clause on either of these grounds. . Nor has the High. Court considered the othct

362 SUPRBMB COURT RBPOllTS [1968) 3 S.C.ll.

grounds raised in the petition challenging the validity of the noti A fication dated October 27, 1956. As the High Court has not dealt with the other contentions raised in the petition, the matter must be remanded to the High Court.

In the result, the appeal is allowed, the order of the High Court is set aside and the matter is remanded to the High Court, so that the High Court may deal with it in accordance with law.

In the circumstances of the case, there will be no order as to costs in this Court.

G.C.

Appeal 11llowed.

CHIEF COMMISSIONER, DELHI ANDO

CHADHA MOTOR TRANSPORT CO

March 4, 1968

C. SHAH

R. S. BACHAWAT

G. K. MITTER, JJ.

Motor Vehicles Act, 1939

s. 68(2)

s. 68(2)

Punjab High Court

s. 68(2)

s. 68

Chapter IV of tho Act

s. 68(2)

Section 68(2)

B. R. L. Iyengar

S. P. Nayar

Mohan Behari Lal

Bachawat

October 27, 1956

s. 68(2)(ww)

Motor Vehicles Act, 1939

s. 68(2)

ss. 42 to

68

Section 68(1)

Section 68(2)

s. 68(2)

s. 68(2)

s. 68

s. 68(2)

Section 68(2)

s. 68(2)

Parliament

VII of the Motor Vehicles Act

India

s. 92

Central Government

VII or any other Chapter of the Act

s. 92

s. 92

s. 68(2)

SUPRBMB COURT RBPOllTS [1968) 3 S.C.ll


STATE OF MYSORE AND ANR.

11.

SYED MAHMOOD AND ORS.

March 4, 1968 [J. c. SHAH, R. s. BACHAWAT AND G. K. MITTER, JJ.]

Mysore State CivU Services General Recruitment Rules, 1951, r, 4(3) (b)-Promotion to next grade-P1Tsons eligible no/ considered and juniors in seniorit, v promoted-High Court directs their promotion-Vclldlty.

Rule 4(3)(b) of the Mys0re State Civil Services General Recruitment Rules, 1957 requires promotion to be made by selection on the basis of seniority.., um-merit, that is seniority subject to the fitness of the candidate to discharge the duties of the post from among persons eligible for pro. molioo.

While making selections for promotions to the posts of .Uor statistical assistants from the cadre of junior statistical assistants, the State Governmen did not consider the case of the respondents' who were junior alatistical assistsnts, and published a list promoting persom ranking below them in point of seniority. The respondents filed writ petitions, in which the High Court refused to quash the seniority list but directed the appellant- State to promote the respondents as from the dates on which their juniors were promoted and treat their promotion as effective from that date.

Allowing the appeal, this Court, HELD : While making sei..ctions for promotion to the posts of senior statistical assistants ftom the cadre of junior statistical assiatants in 1959, the State Government was under a duty to consider whether having regard to their seniority and fitness they should be promoted. The promotions were irregularly made and they were, therefore, entitled to ask tho State Government to reconsider their case, In the circumstanceo, tho High Court could issue a writ to the State Government compelling it to perform its duty and to t'ODSider whether having regard to their seniority and fitness they should have been promoted on the relevant dates when officers junior to them were promoted.

Instead of issuin1: such a writ, the Hiah Court wrongly issued writs directing the State Govetnment to promote them with retrospective effect. The High Court ought not to have issued sucli writs without giving the State Government an opportunity in the first insfance to consider their fitness for promotion in 1959. [365 B-DJ

Promotion to the post of senior statistical assistant was based on soniority.., um-merit. In spite of their seniority, offioers junior to them could he promoted if they were unfit to dischar!I" the duties of th~ post; Promotion could not be claimed as a matter of right by virtue of seniority alone. [366 C-D) ·· State of Mysore v. H. M. Bal/ary, [1964) 7 S.C.R. 471, distinguished, CML APPELLATE JURISDICTION : Civil Appeals Nos. 31 and 32 of 1968.

Appeals by special leave from the judgment and order dated January 25, 1967 of the Mysore High Court in Writ Petitions Nos. 774 and 2171 of 1965.

R. H. Dhebar, Shyamala Pappu and S. P. Nayar, for the appella11ts (in both the appeals).

S. S. Java/I and M. Veerappa for respondent No. - (in both the appeals).

SUPREME COURT REPORTS

[1968] 3 S.CR.

The Judgment of the Court was delivered by Bachawat, J, On the reorganisation of States on November I, 1956, the services of Syed Mahmood and Bhao Rao were allotted to the State of Mysore and they wen~ employed there as junior statistical assistants. On January 16, 1958 the Head of the Department of Statistics under the directions of the Government of State of Mysore prepared a tentative seniority list of nongazetted staff of that department treating junior statistical assistants and senior statistical inspectors of the former State of Hyderabad, junior statistical assistants and senior compilers of the former State of Mysore, statistical assistants and statistical inspectors from Bombay and the head compiler of Coorg as holding the equivalent posts of junior statistical assistants in the State of Mysore. In 1959, before revising this tentative seniority list the State Government directed that all the statistical assistants and statistical inspectors of Bombay State and the head compiler of Coorg should be treated and promoted as senior statistical assistants.

As a result of this direction officers ranking below Syed Mahmood and Bhao Rao in the seniority list published on January 16, 1958 were promoted to the higher posts. In making their promotions, the State Government did not consider the fitness of Syed Mahmood and Bhao Rao for promotion at all. At a much later date, they were promoted as senior statistical assistants.

On May 3, 1963, the State Government published a revised seniority list placing inspectors from Bombay and head compilers from Coorg in the category of senior statistical assistants. Syed Mahmood and Bhao Rao filed separate writ petitions in the High Court of Mysore asking for appropriate writs quashing the seniority list published on May 3, 1963, and direct ing the State Government to consider their case for promotion as senior statistical assistants with retrospective effect.

As the Objections to the seniority list published on May 3, 1963 were still under consideration by the State Government the High Courl refused to quash this seniority list but it directed the State Government to promote Syed l14ahmood and Bhao Rao as from the respective dates on which respondents junior to them were promoted as senior statistical assistants and to treat such promotions as effective up to May 3, 1963. The State of Mysore has filed the present appeals from the orders directing the promotion of Syed Mahmood and Bhao Rao after obtaining special leave.

Promotion to the posts of senior statistical assistants is made from the cadre of junior statistical assistants and progress assis tants.

Rule 4(3)(b) of tlie Mysore State Civil Services General Recruitment Rules, 1957 requires such promotions to be made by selection on the basis of seniority-cum-merit, that is seniority subject to the fitness of the candidate to discharge the duties of the post from among persons eligible for promotion. In 1959 .

MYSORE v. SYED MAHMOOD (Bachawat, I.) 36&

the seniority of junior statistical assistants was governed by the seniority list published on January 16, 1958. Syed Mahmood and Bhao Rao were junior statistical assistants.

While making selections for promotion to the posts of senior statistical assistants from the cadre of junior statistical assistants in 1959, the State Government was under a duty to consider whether having regard to their seniority and fitness they should be promoted. But.without considering their case at all, the State Government promoted junior statistical assistants ranking below them in point of seniority.

The promotions were irregularly made and they were, therefore, entitled to ask the State Government to reconsider their case. In the circumstances, the High Court could issue a writ to the State Government compelling it to perform its duty and to consider whether having regard to their seniority and fitness they should have been promoted on the relevant dates when officers junior to them were promoted. Instead of issuing such a writ, the High Court wrongly issued writs directing the State Government to promote them with retrospective effect. The High Court ought not to have issued such writs without giving the State Government an opportunity in the first instance to consider their fitness for promotion in 1959.

Mr. Javali submitted that Syed Mahmood and Bhao Rao by virtue of their seniority were entitled to promotion at the time when persons junior to tliem were promoted. The argument overlooks the fact that promotion to the post of senior statistical assistant was based on seniority-cum-merit. In spite of their seniority officers junior to them could be promoted if they were unfit to discharge the duties of the post. Promotion could not be. claimed as a matter of right by virtue of seniority alone.

Mr. Javali argued that even in the case of promotion based on seniority-cum-merit, an officer is entitled to promotion by virtue of seniority alone, and he relied on the decision in State of Mysore v. H. M. Be/lary('). In that cast, an officer of the Bombay Government was sent on deputation from his parent department to another department. After long and satisfactory service and a number of promotions in the new department, he was reverted to his parent department and was posted in a lower grade though in the meantime an officer next below him in the parent department had been promoted to a higher grade.

The promotion to the higher grade was based on seniority-cum-merit.

The Court held that under r. 50(b) of the Bombay Civil Services Rules and the circular of the Government of Bombay dated October 31, 1950, an officer on deputation in another department on reversion to his parent department was entitled to be restored to the position he would have occupied in his parent department had he not been deputed. Rule SO(b) treated the service of an

(1) (1964]7 S.C.R. 471.

SUPREME COURT REPOJ.TS

[1968] 3 S, C.R.

officer on deputation in the new department as equivalent to service in the parent department.

As he rendered satisfactory service and was considered fit for obtiiining increments and promotions in the new department, he should be deemed to be fit for promotion in the parent department and was entitled to promotion in that department when an officer next below him there was getting promotion based on seniority-cum-merit. In official language, this is the ''next below rule" under which aa officer on deputation is given a paper promotion and shown as holding a higher post in the parent department if the officer next below him there is being promoted. In our opinion, this case is entirely distinguishable. It decided that under the relevant service rules the fitness for promotion of an officer on deputation in the uew department was equivalent to fitness for promotion in the parent department and the officer was entitled to promotion in the parent department when the officer next below him there was obtaining promotion based on seniority-cum-merit. But it is not an authority for the proposition that the officer on deputation is entitled to promotion in either the new or the parent department as .a matter of right by virtue of his seniority alone, or that he should be deemed to be promoted whenever the officer next below him is being promoted. Where the promotion is based on senioritycummerit the officer cannot claim promotion as a matter of right by virtue of his seniority alone.

H he is found unfit to discharge the duties of the higher post, he may be passed over and an officer junior to him may be promoted; We are of the opinion that the State Government should be directed at this stage to consider the fitness of Syed Mahmood and Bhao Rao for promotion in 1959. If on such examination the State Government arbitrarily refuses to promote them, different considerations would arise.

The State Government would upon such consideration be under a duty to promote them as from 1959 if they were then fit to discharGe the duties of the higher post and if it fails to perform itS duty, the Court may direct it, to promote them as from 1959.

In the result, we allow the appeals and set aside the orders passed by the High Court. We direct the State Government to consider whether Syed Mahmood and Bhao Rao should have been promoted to the posts of senior statistical assistants on the relevant dates when officers junior to them were promoted, and if so, what consequential monetary benefits should be allowed to them. While granting special leave, this Court directed that the appellants shall pay the costs of the respondents in any event.

Accordingly, the appellants are directed to pay the costs of these appeals to the respondents.

One hearing fee.

Y.P.

Appeals allowed.

STATE OF MYSORE AND ANR

SYED MAHMOOD AND ORS

March 4, 1968

c. SHAH

R. s. BACHAWAT

G. K. MITTER, JJ.

[1964) 7 S.C.R. 471

R. H. Dhebar

Shyamala Pappu

S. P. Nayar

S. S. Java

M. Veerappa

Bachawat

Syed Mahmood

Bhao Rao

State of Mysore

Head of the Department of Statistics

Hyderabad

Mysore

Bombay

Coorg

Bombay State

January 16, 1958

May 3, 1963

High Court of Mysore

Syed l14ahmood

Javali

Bombay Government

Government of Bombay

October 31, 1950

SUPREME COURT REPOJ.TS

[1968] 3 S, C.R.


P. S. L. RAMANATHAN CHE'ITIAR & ORS.

O. RM. P. RM. RAMANATHAN CHETl'IAR March 4, 19&8 B [J. C. SHAH, V. RAMAswAMI AND G. K. MrrTBI., JJ.]

M.aaras Agriculturists R•U•f Act IV of 1938, ss. 3(iii) and 19(2); If relief by way of 8Caling down of deer .. avldlable In cas• of a d•PDllt-

WMl/ur 'd•pollf a 'd•bf within the ""'aning of s. 3(iil)-D•poslt in court prnding appral-Wlutlur amounts to sallsfaction of d.cre, within

1. 16(1U) of Modrm Act 23 of 1948-lf decr"-holdtr can claim lntmst c after date of deposit In court.

The respondent's father made a deposit of Rs. 5,000 with the appellant's father ill 1926 which was repayable with interest. A demand was made fQr repayment in 1944 and a suit for recovery decreed in 1946 for RI. 11,459. The High Court cOnfumed the decree ill appeal in September

1951 and thereafter tho appellant's father deposited Rs. 11,098 to obtain a stay of execution of the dec:ree.

Although the judpnent-dcbtors had made no attempt in the trial court ' or before the appeal court to take any advantage of the provisions of the Madru Aaricuftillista Relief Act IV of 1938 on execution proceedings beiq commenced they filed an application under the Act for scaling down the deaee under s. 19(2). The Subordinate Judge who heard the applicaion rejected certain objections raised by the decree holder and modified the decree. The High Court in appeal, reversed the <tder of the Sub-Judge holding that the money entrusted to the plaintilfs' father being a d<posit with a banker was not payable until there was a demand for it : the money became payable only on 2nd October, 1944 I.e. after the coming into force of Act IV of 1938 and consequently the provisions of s. 19(2) of the Act were not applicable and the decree was not liable to be scaled down.

In the appeal to this Court it was also contended on behalf of the respondent that the. word "debt" implied a pre-existing loan and as such it p could not apply to a deposit; and furthermore that the decl-ee bad already hem satillled and as such s. 16(3) of Madras Act XXUI of 1948 was applicable.

HELD : The appeal must be allowed and the order of the subordinale Judge aca1ing down the decree upheld.

(i) The definition of "debt" in s. 3(iii) of the Act is of a very wide import and would include any liability of an agriculturist with the exceptiOllll specified Section 4 specifies and takes out of the ambit of the ddlnition various liabilities and impositions on the ag'riculurist. If therefore thue is a liability of an agriculturist not ill terms excepled by sec. 3(iil) '* sec. 4 of the Act, it would be a 'debt' within the meaning of the de&ition giwn in s. 3(iil). There can be no doubt that on a deposit being made, the depositee incurred a liability although the limo fer ropay- mont wnuld come only when a demand was made and the cause of action for the suit would arise on such a demand. (370 H; 371 D-Bl

Narayanan Chettiar v. Anrwmalai Chettiar. (1959] Supp. 1 S.C.R. 237 and K11oram Industries v. Commissioner of Wealth Tax, (1966] 2 S.C.R.

688. refdrred to.

368 SUPREME COURT llEPORTS

[1968) 3 S.C.R.

(ii) The definition in s. 3(iii) clearly negatives the respondent's con tention that the word "debt" implied a pre-existing loan and could not apply to a deposit. If loans alone were meant to be covered by the uae of the word

1debt', there was no rea$00 to exclude i'elit from the purview of the expression. In that case there would have been no need 'to IDc:onon expressly revenue, tax or cess or liability arising out of a breach of !rust or in respect of "Maintenance under a decree of court or otherwise" in s. 4. [371 EF]

(iii) The fact of a judgment-debtor's depositing a sum in court to purchase peace by way of stay of execution of the decree on terms that the decree-holder can draw it out on furnishing security, does not pass title to the money to the decree-ohlder. He can if he likes take the money

ollt in terms of the o<der; but so long as he does not do so, there is nothing to prevent the judgment debtor from taking if out by furnishing other security, say, of immovable property, if the court allows it and on his losing 1he appeal putting the decretal amount in court in terms of Order 21 rule 1 C.P.C. in satisfaction of the decree. [373 A, BJ

The real effect of the deposit of money in court as was done in thi! case was to put the money beyond the reach of the parties pending the disposal of the appeal. The decree-holder could only take it out on fur. nishing security which means that the payment W88 not in satisfaction of the dedree and such security could be proceeded against by the judgment debtor in case of his success in the appeal. Pending the determination ot the same, it was beyond the reach .of the judgment debtor. [373 C-D]

Chowthmull Maganmull v. The Calcutta Wheat and Seeds Association, I.LR. 51 Calcutta 1010, distingui&hed.

Keshav/a/ v. <; handulal, 37 Bombay Law Reporter 200, referred to.

Held also : There was no force in the content on that the decree-holder cannot claim any amount by way of interest after the deposit of the money in court. There is no substance .in this point because the deposit in this case was not unconditional and the decree-.holder was not free to withdraw it whenever he liked even before the disposal of the appeal. In case he wanted to do so, he had to give security in terms of the order. The deposit was not in terms of Order 21 rule 1 C.P.C. and a.s such, there is no question of the stoppage of interest after the deposit. [373 F]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 462 of 1965.

Appeal by special leave from the judgment and order dated August 8, 1959 of the Madras High Court in A.A.O. No. 171 of 1953.

M. S. K. Sastri and M. S. Narasimhan, for the appellants.

R. Thiagarajan, for the respondent.

The Judgment of the Court was delivered by Mitter, J. This is an appeal by special leave against an order of the High Court of Madras dated August 8, 1959 reversing an order of the Subordinate Judge, Devakottai scaling down the decree passed in O.S. No. 33 of 1945.

The facts necessary for the disposal of the appeal are as follows.

The respondent's father made a deposit of Rs. 5,000/·

with the appellants' father in 1926 repayable with. interest at Rangoon Nadappu rate.

A demand was made for re-payment on 1944 and a suit for recovery of the amount was fixed on March 16, 1945. The trial court decreed the suit in the year 1946 for Rs. 11,459-14-0. The appellants' father preferred an appeal therefrom to the High Court and pending disposal of the same deposited Rs. 3,500/- in court on April 16, 1947.

The High Court confirmed the decree on September 14, 1951.

There is some dispute about the actual date but there is no contest that the appellants' father deposited Rs. 11,098-10-2 to obtain stay of execution of the decree.

On August 20, 1947 the court passed an order to the effect that the decree-holder would be allowed to draw out the amount on furnishing security.

Although an Act styled The Madras Agriculturists Relief Act, 1938 was passed on 22nd of March of that year wherein pro- Yision was made for giving relief to agriculturist debtors, inter <tlia, by scaling down decrees passed against them, no attempt was made by the defendants to take advantage thereof either in the trial court or before the court of appeal.

On execution proceedings being commenced, the judgment-debtors filed an application under the aforesaid Act for scaling down the decree under s. 19(2) thereof.

The decree-h.older raised various objections thereto.

The Subordinate Judge who heard the application in the first instance turned down the contentions of the decree-holder and modified the decree. An appeal therefrom was preferred by the decree-bolder to the Madras High Court. There being conflicting decisions in the High Court as to whether a judgmentdebtor who had not claimed relief under the Act before the passing of the decree, could do so subsequently thereto, the appeal was directed to be heard by a Full Bench. An appeal from another decision of the same High Court embracing the identical question

was disposed of by this Court in Narayanan Chelliar v. Annamalai Chettiar(').

There after referring to the Act of 1938 as also to s. 16 of Madras Act XXIII of 1948 amending the Act of 1938, it was held that "the appellant was entitled to the benefit of s. 19(2) of the Act read with s. 16 cl.· (ii), of the Amending Act."

The Full Bench of the Madras High Court constituted for the purpose of hearing the appeal from the order of the Subordinate Judge held that the lower court was competent to give relief under s. 19(2) of the Act by way of scaling down the decree passed by the High Court, and referred the matter back for decision by a bench.

The Bench decided inter alia that the application was properly presented bef0re the Subordinate Judge i.e., the court which passed the decree.

It refused to go into the question as to whether the plainitff was an agriculturist in

(I) [19l9] Supp, 1 S.C.R. 237

SUPREME COURT REPORTS

[1968] 3 S.C.R.

view of the concession before the Full Bench. It further negatived the plea that the decree had become satisfied by payment of money into court on Iuly 24, 1947. It however reversed the order of the Subordinate' Judge by holding that the money en trusted to the plaintiff's father being a deposit with a banker was not payable until there was a demand for it : the money became payable only .on 2nd October, 1944 i.e. after the com ing into force of Act IV of 1938 and consequently the provisions of s. 19(2) of the Act were not applicable and that the decree was not liable to be scaled down. The present appeal is against this order.

Section 19 of the Act which we have to consider is set fQl'th below:

"(l) Where before the commencement of this Act, a court has passed a decree for the repayment of a debt, it shall, on the application of any judgmentdebtor who is an agriculturist or in respect of a Hindu joint family debt, on the application of any member <>f the family whether or not he is the judgment-debtor or on the application of the decree-holder, apply the provisions of this Act to such decree .and shall, not withstanding anything contained in the Ccide of Civil Procedure, 1908, amend the decree accordingly or enter satisfaction, as the case may be :

Provided that all payments made or amounts recovered, whether before or after the commencement <>f this Act, in respect of any such decree shall first be applied in payment of all costs as originally decreed to the creditor.

(2) The provisions of sub-section (1) shall also apply to cases where, after the commencement of thia Act, a court has passed a decree for the repayment of a debt payable at such commencement." 'Debt: has been defined in s. 3(iii) of the Act as meaning "any liability in cash or kind, whether secured or unsecured, due from an agriculturist, whether payable under a decree or order of a civil or revenue court or otherwise, but does not include rent as defined in clause (iv), or 'kanartham' as defined in section 3(1)(1) of the Malabar Tenancy Act, 1929."

It will be noted that the definition is of a very wide import and would include any liability due from an agriculturist with the exceptions specified.

Section 4 takes out of the ambit of the definition various liabilities and impositions on the agriculturist expressly specified therein. If therefore there is a liability

of an agriculturist not in terms exctcd by sec. 3(iii) or sec. 4 of the Act it would be a 'debt' withm the meaning of the definition given in s. 3(iii).

In Kesoram Industries v. Commissioner . of Wealth Tax(1} this Court had to consider the meaning of the expression "debts owed by the assessee" which had to be taken into account in computing his net Wealth in terms of s. 2(m) of the Wealth Tax Act. One of the questions there raised was, whether the amount of the provision for payment of income-tax and super-tax in respect of a particular year of account was a debt owed within the meaning of s. 2(m) and as such deductible in computing the net wealth of the assessee. It was held by this Court that even though the Finance Act may be passed later "the tax liability at the latest will arise on the last day of the accounting year". 'The Court went elaborately into the question as to the meaning of the word 'debt' and held that it could be defined as a liability to pay in presenti or in futuro an ascertainable sum of money. As regards the meaning of the word 'owed' it was observed that "it did not really add to the meaning of the word 'debt' ".

In the light of this decision there can be no doubt that on a deposit being made, the depositee incurred a liability although the time for repayment would come only when a demand was. made and the cause of action for the suit would arise on such a demand. ·

On behalf of the respondent, it was argued that the word 'debt' implied a pre-existing loan and as such it could not apply to a deposit. The definition in s. 3(fu) clearly negatives such a propositiou. If loans alone were meant to be covered by the use of the word 'debt', there was no reason to exclude rent from the purview of the expression. In that case there would have been no need to mention expressly revenue tax or cess or liability arising out of a breach of trust or in respect of ''maintenance under a decree of collrt or otherwise" in s. 4.

The plea of the decree-bolder which succeeded before thct High Court cannot therefore be accepted.

G It was however argued that the decree had been satisfied already and as such s. -16 cl. (iii) of Madras Act XXIII of 1948 was applicable. That section for our purpose runs as .follows : ·

"The amendments made by this Act shall apply to the following suits and proceedings, namely :-

(i) •

(ii)- •

(l} [1966)'2 S.C.R. 688.

372 SUPREME COURT RBPOllTS

[1968) 3 S.C.R.

(iii) all suits and proceedings in which the decree or order passed has not been executed or satisfied in full before the commencement of this Act :

It was argued that as the full amount of the decree had been put in court before 1948, the judgment-debtors could not apply for scaling. down thereafter. In this connection, reliance was placed on a decision of the Calcutta High Coun in Chcrwthmull Maganmu// v. The Calcutta Wheat and Seeds Association('). There the defendant-appellant )lad appealed from a decree for Rs. 21,850/· with interest. and costs passed against it and on the respondents taking steps to execute the decree had obtained an order for stay of execution thereof on depositing the said sum in court as security to the credit of the suit.

Thereafter an order was made adjudicating the appellants as insolvents.

The Official Assignee did not proceed with the appeal and the respondent applied for the appeal being dismissed and the money being paid over to them.

The Official Assignee claimed the money as belonging to the insolvents' estate and for the benefit of the general body of creditors.

It was 'held that the effect of the order of August 29, . 1923 directing stay of execution on terms of a deposit being made was that "the money was paid into Coun to give security to the plaintiff that in the event of their succeeding in the appeal they should obtain the fruits of their success," and the "money which was paid into coun belonged to the party who might be eventually found entitled to the sum." On the other hand, there is a decision of the Bombay High Court in Keshav/al

v. Chandulal(') where a judgment-debtor had obtained an order for stay of execution of the decree on his depositing the decretal amount in court.

Later on the application of the judgmentdebtor the deposit was invested in Government promissory notes which. appreciated in value by the time the appeal was heard.

The appeal resulted in a small sum being disalloweQ. from the decree whereupon the judgment-debtor applied for i. return of the investment to him on his paying into court the amount due under the decree.

But the decree-holder claimed the securities which represented the decretal amount at the time the deposit was made.

On behalf of the decree-holder reference was made to the above judgmenf of the Calcutta High Court. There distinguishing the Calcutta judgment,_ Macklin, J. said that the amount in court "was primarily a deposit of security rather than a deposit of the decretal debt, and the decree-holder cannot claim it as his own unless the judgment-debtor fails to satisfy the decree by the payment of the money due under the decree."

(1) I.L.R. SI Cal. 1010.

(2) 37 B.L.R. 20Q.

P.S.L.R. CHETTIAR v. 0.R.M.P.R.M. CHETTIAR (Mitter, !.) 373

On principle, i.t appears to us that the .facts of a judgmentdebtor's depositing a sum in ourt to purchase peace by way of stay of execution of the decree on terms that the decree-holder can draw it out on furnishing security, does not pass title to the money to the decree-holder. He can if he likes take the money out in terms of the order; but so long as he does not do it, there is nothing to prevent the judgment-debtor from taking it out by furnishing other security, say, of immovable property, if the court allows him to do so and on his losing the appeal putting the decretal amount in court in terms of Order 21 rule 1 C.P.C. in satisfaction of the decree.

. The real effect of deposit of money iu court as was done in this case is to put the money beyond the reach of the parties pending the disposal of the appeal. The decree-holder could only

take it out on furnishing security which means that the payment was not in satisfaction of the decree and the security could be proceeded against by the judgment-debtor in case of his success in the appeal. Pending the determination of the same, it was beyond the reach of the judgment-debtor.

The observations in Chowthmull's case(1) do not help the respondent. In that case, the appeal was not proceeded with by the Official Assignee. Consequently, the decree-holder could not be deprived of the money which had been put into court to obtain stay of execution of the decree as but for the order, the decree-holder could have levied execution and obtained satisfaction of the decree even before the disposal of the appeal.

The last contention . raised on behalf of the respondent was that at any rate the decree-holder cannot claim any amount by way of interest after the deposit of. the money in court. There is no substance in this point because the deposit in this case was not unconditional and the decree-holder was not free to withdraw it whenever he liked even before the disposal of the appeal. In case he wanted to do so, he had to give security in terms of the order. The deposit was not in terms of Order 21 rule 1 C.P.C. and as such, there is no question of the stoppage of interest after the deposit. ·

In the result, the appeal is allowed, the order of the High Court set aside and that of the Subordinate Judge restored. The respondent will pay the costs of this appeal.

R.K.P.S.

Appeal allowed.

(I) I. L.R. SI Cal. 1010.

P. S. L. RAMANATHAN CHE'ITIAR & ORS

O. RM. P. RM. RAMANATHAN CHETl'IAR

March 4, 19&8 B [J.

C. SHAH

V. RAMAswAMI

M.aaras Agriculturists

ss. 3(iii) and 19(2)

s. 3(iil)

Relief Act IV of 1938

s. 19(2)

2nd October, 1944

s. 19(2)

s. 16(3)

s. 3(iii)

Section 4

sec. 3(iil)

sec. 4

s. 3(iil)

(1966] 2 S.C.R.

688

s. 3(iii)

s. 4

Order 21 rule 1

C.P.C

Order 21 rule 1

C.P.C

Madras High Court

M. S. K. Sastri

M. S. Narasimhan

R. Thiagarajan

Mitter

High Court of Madras

August 8, 1959

Subordinate Judge, Devakottai

March 16, 1945

April 16, 1947

September 14, 1951

August 20, 1947

s. 19(2)

s. 16

Madras Act XXIII of 1948

s. 19(2)

s. 16

s. 19(2)

Iuly 24, 1947

s. 19(2)

Section 19

s. 3(iii)

section 3(1)(1)

Malabar Tenancy Act, 1929

Section 4

sec. 3(iii)

sec. 4

s. 3(iii)

s. 2(m)

s. 2(m)

s. 3(fu)

s. 4

Madras Act XXIII of 1948

Calcutta High Coun

August 29, . 1923

Bombay High Court

Calcutta High Court

Calcutta

Macklin

Order 21 rule 1

C.P.C

Chowthmull

Order 21 rule 1

C.P.C