STATE OF MADHYA PRADESH

February 20, 1968

[J. C. SHAH, V. RAMASWAMI AND G. K. MITTER., JJ;] B

Mcdhya Pradesh Abolition of Proprietary Rights (Estates, Mahal<.

Alienated Lands) Act, 1950 (Act 1 of 1951)-Right to collect /-st produce-Whether a pr_oprietar, v righ~Whtther vests in State under pro-- •visions of Act.

ComtitUlion of India, Art. 299-Contract not complying with Article whether valid.

Indian Contract Act (9 of 1872), s. 10-Applicability of-Conditions 'lUr/der which restitution should be made.

Before the coming into force on April 1, 1951 of the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act,

1950 (Act 1 of 1951), the appellant had purchased from certain proprieton D .of land the right to collect forest produce from the said land dunna the years !951, 1952 and 1953. The right was to be enjoyed after April l, 1951 on which date under the aforesaid Act, the propnetary rights cam< . lo vest in the State of Madhya Prad .. h. The Deputy Commissioner achng

under s. 7 of the Act prevented the appellant from enjoying the rights he had acquired from the proprietors, and in April 1951 auctioned the right to

collect forest produce from the land. 11te appellant deposited Rs. 10, UOO to acquire the right of collecting lac from the said land during 1951, 1952 E and 1953. He collected some lac but thereafter filed a suit clatmtcg refund of the deposit of Rs. 10,000 on the basis that there was no valid .contract between him and the State of Madhya Pradesh as the provistoo&

of Art. 299 of the Constitution were not complied with and the contract was void. The trial court granted him a dec'ree but the High Court dtci <led against him. With certificate the appellant came to this Court.

HELD : (i) .The right to collect fOrest produce was a proprietary ri)!ht F and vested in the State Government by the operation of s. 4(1)(a) of the Abclition Act. The contrary view taken in Chhotabhai J.ihabhai Patti & .

Co.'s case, was expressly overruled by this Court in State of Madhya 'Pradesh v. Yakinuddin.

The present case was directly coveted by the latler case. [219 G-220 CJ

Stall! of Madhya Pradesh v. Yakinuddin [1963) 3 S.C.R. 13, relied on.

Chhotcbhai lethabhai Patel & Co. v. State of Madh.va Pradesh, [1953) s.C.R. 476 and Mahadco v. State of Bombay, [19591 2 Supp. S.C.R. 339, :referred to.

(ii) The provisions of Art. 299(1) of the Constitution like the l'rovisi"'1S of s. 175(3) of the Government of India Act, 1935 have not

been enacted for the sake of mere form but they have been enacted fo• saieguarding the Government against unauthorised contracts. The formalities which arc embodied therein on grounds of public policy cannot be

waived or dispensed with. The appellant was right in his contention hat the contract cn~'red into by him was void because Art. 299 bad not been .complied with. [221 E-Fl

Seth Bikhraj Jaipuria v. Urrion of India, [1962) 2 S.C.R. 880. and State of West Bengal v. Mis. B. K. Monda/&: Sons, [1962) 1 Supp, S.<;.R. 876, relied on.

(iii) However the refund of Rs. 10,000 claimed by the appellant could not be allowed as he did not satisfy the conditions of s. 70 of the Indian Contract Act. 1be person who seeks restitution has a duty to account to the def<mdant for what he has received in the transaction from which his right to restitution arises.· The appellant had not produced sufficient evidence to show to what extent he worked the contract and wnat was the profit made by him in the year 1951 and the succeeding y<.arS. In the absence of reliable evidence on this point the appellant was not entitled to restitution or refund of the deposit he bad made.

[223 A-CJ

Fibrosa v. Fairbairn, [1943) A.C. 32 and Nelson v. N'7ho/t [1948] 1 K.B. 330 applied.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 393 of 1965.

Appeal from the judgment and decree dated March 21, 1961 of the Madhya Pradesh High Coun in First Appeal No. 34 of 1958.

D. N. Mukherjee, for the appellant.

I. N. Shroff, for the respondent.

The Judgment of the cOun was delivered by Rammwami, J. This appeal is brought by certificate on E behalf of the plaintiff from the judgment of the High Court of Madhya Pradesh dated March 21, 1961 in First Appeals Nos. 34 and 64 of 1958.

The appellant had purchased a right to pll!ck, collect and remove the forest produce Jike Jae, tendu leaves etc. from the proprietors of the different Malguzari jungles for the years 1951 1952 and 1953 as detailed in Sch. A attached to the plaint. This right he had acquired before the proprietary rights in those forests came to vest in the State of Madhya Pradesh under the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950 (Act No. 1 of 1951}, hereinafter called the 'Abolition Act', and the rit was to be enjoyed by the appellant after April l, 1951 on which date the proprietary rights came to vest in the State of Madhya Pradesh. It was alleged by the appellant that the Deputy Commissioner of Balaghat acting under s. 7 of the Abolition Act took charge of the entire Malguzari jungles on April 1, 1951 and prevented the appellant from enjoying the rights he had already acquired. In the month of April. 1951 the Deputy Commissioner auctioned the forest produce of villages covered under the purchases of the appellant.

Out of the forest produce only the tendu leaves crop for the year 1951 was allowed to be enjoyed by the appellant on his depositing a sum of Rs. 3,000 in the Government Treasury, Balaghat under

216 SUPl.U!Ml! COURT REPORTS f1968] 3 s.c.R.

a written permit dated April 30, 1951.

The deposit was made by the appellant to save the tendu leaves crop of 1951 from being sold to others by the Deputy Commissioner of Balaghat.

The case of the appellant was that he was entitled to the refund of the amount as therigh"t to collect tendu leaves for the year 1951 had already .been purchased by him.

Similarly, the appellant claimed refund of the amount of Rs. 10,000 which he was required to deposit towards the right to collect lac from those

forest~ for the years 1951, 1952 and 1953. The refilnd was claimed on the basis that there was no valid contract between the appellant and the State of Madhya Pradesh as the provisions of Art. 299 of the Constitution were not complied with and the contract was void.

The respondent contested the suit mainly on the ground that the Deputy Commissioner, Balaghat had validly taken charge of the Malguzari jungles under the provisions of the Abolition Act and the appellant having removed lac fron1 the jungles on the basis of the contract, was not entitled to any refund.

The trial Judge held that the appellant was not entitled to claim the refund of the sum of Rs. 10,00,0, firstly, on the ground that the contract was good even though not in conformity with Art. 299 of the Constitution; and secondly, because the appellant was allowed to enjoy the right of collecting lac and theappellant actually availed himself of that right. As regards the appellant's claim for damages for breach of contract, the trial court was of the view that the contracts were mere licences and enforeable against the State of Madhya Pradesh even after vesting of the proprietary interests under the Abolition Act. Acting in accordance with the view expressed by this Court in Chhotabhai Jet/ta bhai Patel & Co., v. The State of Madhya Pradesh(') the trial court held that the appellant was entitled to enforce the contracts against the State of Madhya Pradesh and was consequently entitled to damages for breach of the contracts.

The trial court accordingly gave a decree in favour of the appellant to the extent of Rs. 57,281 and dismissed the rest of the claim of the appellant.

The State of Madhya Pradesh took tlle matter in appeal to the High Court of Madhya Pradesh.

The appe!Jant also preferred an appeal to the High Court with regard to the claim which was disallowed by the trial court. By its judgment dated March 21, 1961, the High Court allowed the first appeal of the respondent and set aside the decree of the District Judge in Civil Suit No. 24-B of 1954 and dismissed the entire suit. The appeal preferred by the appellant was also dismissed. 'Ilte High Court took the. view that the decision of this Court in CTthotabhai Jethabhai Patel & Co. v. The State of Madhya Pradesh(') was overruled in a later decision of this Court in Mahadeo v. The State of Bombay(2),. and in contracts similar to those of the present case it

(I) (1953] S.C.R. 476.

(2) [1959] 2 Supp; S.C.R. 339.

MULAMCHAND v. M. P. STATE (Rama; wami, J.) 217

was held that there was a transfer of proprietary rights in the estates to the grantees and the effect of the Abolition Act was that all such proprietary rights vested in the State with effect from April 1, 1951 free from all encumbrances and the State could therefore lawfully exclude the grantees from enjoying any such rights secured to them under the contracts.

Section 3 of the Abolition Act states :

"3. Vesting of proprietary rights in the State.-( 1) Save as otherwise provided in this Act, on and from a date to be specified by a notification by the State Government in this behalf, all proprietary rights in an estate, mahal, alienated village or alienated land, as the case may be, in the area specified in the notification, vesting in a proprietor of such estate, mahal, alienated village, alienated land, or in a person having interest in such proprietary right through the proprietor, shall pass from such proprietor or such other person to and. vest in the State for the purposes of the State free of all encumbrances.

(2) After the issue of a notification under subsection ( 1), no right shall be acquired .in or. over the land to which the said notification relates, except by succession or under a grant or contract in writing made or entered into by or on behalf of the State .and no fresh clearing for cultivation or for any other prpose shall be made in such land except in accordance with such rules as may be made by the State Government in this behalf.

" .................. ' ....................... .

Section 4 (1 )(a) provides :

"4. Consequences of the vesting.-

( 1) When the notification under sec. 3 in respect of any area has been published in the Gazette, then, notwithstanding anything contained in any contract, grant or document or in any other law for the time being in force and save as otherwise provided in this Act, the consequences as hereinafter , setfcirth shall, from the be&inning of the date specified in such notification (heremafter referred to as the date of vesting) ensue, namely :-

(a)· all rights, title and interest vesting in the proprietor or any person having interest in such proprietary riht through the proprietor in such area including

218 SUPllMB COUll.T lll!PORTS [196SJ 3 s.c.R.

land (cultivable or barren), grass land, serub jungle, forest, trees, fisheries, wells, tanks, 'ponds, water channels, ferries, pathways, village sites, hats, bazars and melas; and in all subsoil, including rights, if any, in mines and minerals, whether being worked or not, shall cease and be vested in the State for purposes of the State free of all encumbrances; and the mortgage debt or charge on any proprietary right shall be a charge on the amount of compensation payable for such proprietary right to the proprietor under the provisions of this Act;" ·

Section 5 is to the fol!owing effect :

"5. Certain properties to continue in possession of proprietor or other person.-Subject to the provisions in Secs. 47 and 63-

(u) all open enclosures used for agricultural or domestic purposes and in continuous possessions for twelve years immediately before 1948-49; all open house-sites purchased for consideration; .aJl buildingi; places of worship; wells situated in and tres standing on lands included in such enclosures or house-sites or land appertaining ta such buildings or places of ownership; within the limits of a village-site belonging to or held by the outgoing proprietor or any other person shall continue to belong to or be held by such proprietor or other person, as the case may be; and the land thereof with the areas appurtenant thereto shaJ1 be settled :with him by the State Government on such terms and conditions as it may determine;

( b) all private weUs and buildings on oceuplcd land belonging to or held by the outgoing proprietor or any other person shall continue to belong to or be held by such proprietor or other pers'on;

( c) all trees standing on land comprised in a homcfarm or homestead and belonging to or held by the outgoing proprietor or any other person shall continue to belong to or be held by such proprietor or other person;

( d) all trees standing on occupied land other than fand comprised in home-farm or homestead and belongill.g to or held by a person other than the outgoing proprietor shall continue to belong to or be held by such r.erson; ·

( e) all tanks situate on occupied land and belonging to or held hy the outgoing proprietor or any other

person shall continue to belong to or be neld by such proprietor or other person; ( f) all tanks, belonging to or held by the outgoing proprietor which are situate on land other than village site or occupied land and in which no person other than such proprietor has any rights of irrigation, shall belong to or be held by .such proprietor;

(g) all tanks and embankments (bandhans) belonging to or held by the outgoing proprietor or any other person which are situate on land other than village site or occupied land and the beds of which are under cultivation of such proprietor or such other person .. shall belong io or be held by such proprietor or such other person and the land under such tanks and embankments shall be settled with such prorietor or such other person on such terms and conditions as the State Government may determine;

(h) all groves wherever situate and recorded in village papers in the name of the outgoing proprietor or any other person shall continue to belong to or be held by .such proprietor or such other person and the land under such groves shall be settled with such proprietor or such other person by the. State Government on such terms and conditions as it may determine."

Section 6(1) states:

"6, Certain transfers to be void.-( 1) Except as provided in sub-section (2), the transfer of any right in the property which is liable to ves.t in the. State under this Act made by the iiroprietor at imy time after the 16th March, 1950 shall, as from the date of vesting, be void."

It was contended, in the first place, on behalf of the appellant that the contracts did not confer settlement of any interest in immoval1le property and as such the appellant could not be equated with a person having interest in the proprietary right falling within G the purview of the Abolition Act It is not possible for us to accept.this argument The' question has already been the subjectmatter ofconsideration by this Court in State of Madhya Pradeshv. Yakinuddin (1). In that case also, the respondents. by grants from and agreements with the proprietors, acquired the rit tri propaAAte lac, collect tendu leaves and gather fruits and !lowers H of Mahua leaves in certain estates; It was held by this Court that whatever rights the respondents had acquired from the proprietors ceased to have effect by the operation of s. 4 (1 )(a) of the Aboli-

(ll (1963] 3 S.C.R. 13.

SUPREME COURT REPORTS

[1968] 3 S.C.R.

tion Act. It was further held that the rights claimed by the respondents were in the nature of proprietary rights falling within s. 4(1) (a) of the AboHtion Act and upon the issue of a notification under s. 3 of the Abolition Act the rights of the respondents had passed and became vested in the State of Madhya Pradesh.

It was further pointed out that the rights created by the transactions between the respondents and the grantors did not come under s. 5 of the Abolition Act.

In the course of this judgment the previous judgment of this Court in Chlwtab/iai Jethabhai Patel & Co. v. The State of Madhya Pradesh ( 1 ) was expressly overruled.

In our opinion the present case falls directly within the ratio of the decision of this Court in State of Madhya Pradesh v. Yaki11-

11ddin('). It follows that the argument of the appellant on this aspect of the case must be rejected.

We proceed to consider the next question raised on behalf of the appellant, viz., whether he was entitled to a refund of the deposit of Rs. 10,000 which he had made towards the right to collect lac from the forests for the years 1951, 1952 and 1953. The contention put forward on behalf of the appellant is that the contracts were not in confonnity with Art. 299 of the Constitution and were consequently void and had no effect.

It was claimed that the appellant was entitled to compensation under s. 70 of the Indian Contract Act which is applicable to the case. It is not disputed on behalf of the respondent that there was no formal compliance of the provisions of Art. 299 of the Constitution but it was said that the bids were accepted by the Deputy Commissioner Balaghat and were communicated to the appellant who worked the contracts and actually collected lac in the forests in question.

The trial court refused to grant a decree to the appellant in this case with regard to this claim on the ground that the contract was not void and although there was no conformity with the provisions of Art. 299 of the Constitution there was nothing to prevent the ratification of such contracts if they are for the benefit of the Government.

The trial court further observed that the appellant had performed his part of the contract and worked and collected lac from the jungles in pursuance of the agreement and was therefore not entitled to refund of the amount in deposit. The Jin ding of the trial court on this point has been affirmed by the High Court which also came to the conclusion that the appellant had worked for some time on the basis of the contracts granted to him but tho appellant abandoned the contracts of his. own accord and the State cannot therefore be held liable for, the refund of the amount of deposit. In our opinion, the reasoning adopted by the trial court and by the Hih Court for rejecting the claim of the appellant is not

c?rret_. _!!now well-established that where a contract between

(11 (1953J S.C.R. 476.

(2) [1963J 3 s.c.R. tJ,

the Dominion of India and a private individual is not in the form required bys. 175(3) of the Government of India Act, 1935, it was void and could not be enforced and therefore the Dominion of India cannot be sued by a private individual for breach of such a contract (See the decision in Seth Bikhraj Jaipuria v. Union of lndta('). It was stated in that case that under s. 175(3) of the Governmeht of India Act, 1935, the contracts had (a) to be expressed to be made by the Governor-General, (b) to be executed on behalf of the Governor-General and ( c) to be. xecuted by officers duly appointed in that behalf and in such manner as the Governor-General directed or authorised. The evidence in the case showed that the contracts were not expressed to be made by the Governor-General and were not executed on his behalf. It was held by this Court that the provisions of s. 175(3) were mandatory and the contracts were therefore void and not binding on the Union of India which was not liable for damages for breach of the contracts.

The same principle was reiterated by this Court in a later case-State of West Bengal v.

M/s. B. K. Monda/ and D Sons('). The principle is that the provisions of s. 175(3) of the Government of India Act, 1935 or the corresponding provisions of Art. 299(1) of the Constitution of India are mandatory in character and the contravention of these provisions nullifies the contracts and makes them void.

There is no question of estoppel or ratifkation in such a case.

The reason is that the provisions of

section 175 (3) of the Government of India Act and the corresponding provisions of Art. 299 ( 1) of the Constitution have not been enacted for the sake of mere form but they have been enacted for safeguarding the Government against unauthorised contracts.

The provisions are embodied in s. 175 (3) of the Government of India Act and Art. 299(1) of the Constitution on the ground of public policy--0n the ground of protection of general publicand these formalities cannot be waived or dispensed with. If the plea of the respondent regarding estoppel or ratification is admitted that would mean in effect the repeal of an important constitutional provision intended for the protection of the general public.

That is why the plea of estoppel or ratification cannot be permitted in such a case.

But if money is deposited and goods are supplied or if services are rendered in terms of the void contract, the provisions of s. 70 of the Indian Contract Act may be applicable.

Tn other words, if the conditions imposed by s. 70 of the Indian Contract Act are satisfied then the provisions of that section can be invoked by the aggrieved party to the void contract.

The first condition is that a person should lawfully do something for another person or deliver something to him; the second condition is that !n doing the said thing or delivering the said thing he must not mtend to act gratuitously; and the third condition is that the other

(I) (t96212 S.C.R. 880.

(2) [1962] I Supp. S.C.R. 875.

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

person for whom something is done or to whom something is delivered must enjoy the benefit thereof. If these conditions .are satisfied, s. 70 imposes upon the latter person the liability to make compensation to the former in respt of, or to restore, the thing so done or delivered.

The important point to notice is that in a case falling under s. 70 the person doing something for another or delivering something to another cannot SUe for the specific performance of the contract, nor ask for damages for the brl'l!ch of the contract, for the simple reason that there is no contract between him and the other person for whom he does something or to whom he delives something.

So where a claim for compensation is made by one person against another under s. 70, it is not on the basis of any subsisting contract between. the parties but on a different kind of obligation.

The juristic basis of the obligation in such a case is not founded upon any contract or tort but upon a third category of law, namely, quasi contract or restitution.

In Fibrosa v. Fairbairn(') Lord Wright has stated the legal position as follows :

" ............ any civilised system of law is bound to provide remedies for cases of that has been called unjust enrichment or unjust benefit, that is, to prevent a man from retainine the money of, or some benefit derived from, another which it is against conscience that he should keep.

Such remedies in English Law are generally different from remedies in contract or in tort, and

are now recognised to fall within a third category of the common law which has been called quasi-contract or restitution." In Nelson v. Larholt("f Lord Denning has obseryed as follows:

"It is no longer appropriate to draw a distinction between law and equity. Principles have now to be stated in the light of their combined effect. Nor is it necessary to canvass the niceties o( the old forms of action. Remedies now depend on the substance of the right, not on whether they can be fitted into a particular framework. The right here is not peculiar to equity or contract or tort, but falls naturally within the imprtant category of cases where the court orders restitution if the justice of the case so requires." Applying the principle to the present case, it is manifest that the appellant would have been entitled to compensation under s. 70 of the Indian Contract Act if he had adduced evidence in support of his claim, but the trial court has examined the evidence on this point and reached )he conclusion that the appellant did

(I) (19431 A.C. 32, 61.

(2) (194811 K.JI, 330, 343.

collect lac in the jungles in the year 1951 but later on abandoned the working of his own accord. It is well-established that a person who seeks restitution has a duty to account to the defendant for what he has received in the transaction from which his rigi11 to restitution arises. In other words, an accounting by the plainti.if is a condition of restitution from the defendant (See 'Restatement of the Law of Restitution', American Law Institute, 1937 Edn., p. 634). The appellant did not produce sufficient evidence to show to what extent he worked the contract and what was the profit made by him in the year 1951 and the succeeding year. In the absence of reliable evidence on this point the appellant was not entiUed to restitution or refund of the deposit he had made.

The case of the appellant with regard tu this part of his claim was therefore rightly disallowed both by the trial court and the High Court and the respondent is therefore not liable to refund the amount of deposit.

For these reasons we hold that there is no merit in this appeal which is accordingly dismissed wih costs.

G.C.

Appeal dismissed.

STATE OF MADHYA PRADESH

February 20, 1968

C. SHAH

V. RAMASWAMI

G. K. MITTER

Art. 299

Indian Contract Act

s. 10

s. 7

State of Madhya Pradesh

Art. 299

s. 4(1)(a)

Chhotabhai J.ihabhai Patti

[1963) 3 S.C.R. 13

Art. 299(1)

s. 175(3)

Government of India Act, 1935

Art. 299

[1962) 2 S.C.R. 880

s. 70

Indian Contract Act

CIVIL APPELLATE JURISDICTION

D. N. Mukherjee

I. N. Shroff

Rammwami

High Court of Madhya Pradesh

March 21, 1961

Madhya Pradesh

Balaghat

s. 7

April 1, 1951

Art. 299

Art. 299

State of Madhya Pradesh

MULAMCHAND

Section 3

Section 4

sec. 3

Section 5

Section 6(1)

16th March, 1950

s. 4

(1963] 3 S.C.R. 13

s. 4(1)

s. 3

s. 5

Art. 299

s. 70

Indian Contract Act

Art. 299

Art. 299

Dominion of India

Government of India Act, 1935

s. 175(3)

Governmeht of India Act, 1935

s. 175(3)

Union of India

s. 175(3)

Government of India Act, 1935

Art. 299(1)

Constitution of India

section 175

Art. 299

s. 175

Art. 299(1)

s. 70

Indian Contract Act

s. 70

Indian Contract Act

SUPREME COURT REPORTS [1968]

s. 70

s. 70

s. 70

Wright

s. 70

Indian Contract Act


SOUTH BIHAR SUGAR MILIS LTD., ETC.

UNION OF INDIA & ORS.

February 5, 1968

[K. N. WANCHOO, C.J., R. S. BACHAWAT, J. M. SHELAT AND C. A. VAmIALINGAM, JJ.J

Central Excise & Salt Act. 1944 Schedule 1. Item 14A-Appellants manufacturing mixture of gases containlng carbon dioxide by burning limestone with coke in lime-Using only the carbon dioxide from the mixture for refining sugarcane juice and for producing soda ash by solvay ammonia soda process-Whether tire mixture of gases was kiln gas or compressed carbon dioxide covered by Item 14-H.

The appellant companies manufactured sugar by carbonation process and paid excise duty on sugar manufacture(! by them under Item 1 of Sch.

I to the Central Excise and Salt Act, 1944. According to an affidavit filed on behalf of the respondents, these manufacturers employed a process of burning lime-stone with coke in a lime kiln with a regulated amount of air whereby a mixture of gases was generated consisting of carbon dioxide, nitrogen, oxygen and a small quantity of carbon monoxide. The gas thus produced was thereafter compressed so as to achieve pressure exceeding atmospheric pressure and then passed through a tank containing sugarcane juice so as to remove impurities from it and to refine the juice. For this process of refining it was only the .carbon dioxide in the gas which was used and the other gases i.e. nitrogen, oxygen and carbon monoxide escaped into the atmosphere by a vent provided for the purpose: The carbon dioxide r.ontent in this mixture of gases ranged from 27 to 36.5%. Similarly, another company manufactured soda ash by solvay ammonia soda process for which also carbon dioxide is required and this was produced by the petitioner by burning lime-stone with coke in a kiln in the same man .. ner as the appellant sugar manufacturing companies employing the carbon ation process. - The respondents regarded all the companies as manufacturers of complressed carbon dioxide and levied excise duty on them under Item 14-H in Sch. 1 to the Act.

The appellants filed writ petitions in the High Court challenging the validity of this excise duty but these petitions were dismissed.

It was contended, inter alia, on behalf of the appellants that the lime kiln was maintained. to generate a mixtw"e of gases and not carbon dioxide and at no stage in the process of generating this mixture and passing it through the sugarcane juice was carbon dioxide-which formed orie of the contents of the mixiure-either compressed, liquidified or .solidified. The mixture of gases so generated was not carbon dioxide as known to the market nor was it according to the specifications laid down by the Indian Standards JnstitU1ion which required the carbon dioxide content to be at least. 99%.

Therefore the excise duty sought to be recovered on the content of carbon dioxide in the mixture of gases could not fall under Item 14-H. Furthermore the duty being on goods it could be charged only on goods known as carbon dioxide in the trade and marketable as. such.

HELD : The .8'1-! generated by the appellant compani.,. was kiln gas .and not. carl;>on dioxtde as known to the trade, i.e., to those who deal in it or who use 1t The kiln gas in questioo therefore is neither carbon dioxide nor compressed carbon dioxide known as such to ihe commercial community and therefore cannot attract Item 14-H in the First &:hedule.

Ir was not correct to say that because the sugar manufacturer wants .carbon dioxide for. °'!fbonation P'!'J?OSCS and sets up a kiln for it that he produces carbon d1oxtde alid not lilln gas. In fact what he produces is a mixture known both to trade and science as kiln gas one of the oonstituents of which is, no doubt, carbon diexide. The kiln gas which is generated in th"8C cases is admlttedly never liquified nor solidified and is therefore

neithtr liquified nor solidified carbon dioxide, assuming that it can be mrroed carbon dioxide.

It cannot be called compressed carbon dioxide as un9erstood in the market among those who deal in compressed carbon dioxide. Compressed carbon dioxide is understood gene<ally as carbon dioxide compressed in cylinders with pressure ranging from 1,000 to 1,800 lbs. per sq. inch. The mere fact that at one stage or the other kiln gas is pressed at 40 to 45 lbs. per sq. inch by a pump or otherwise cannot mean that it is comp"'ssed carbon dioxide. At the same time the duty being on manufaoture and not on sale the mere fact that kiln gas generated by theoe concerns is not actually sold would not make any drence if what they generate and use in their manufacturing processes is carbon dioxide.

The fact that the gas so generated ha~ carbon dioxide below 99% and does not conform to the specifications Of the Indian Standards Institution also would not matter for the gas may be sub-<tandllrd, provided what is produced is carbon dioxide. [32 D-H)

Union of India v. Del/ii .Cloth & General Mills Ltd. {1963) Supp. I S.C.R. 586, referred to.

CIVIL APPELLATE/ORIGINAL JU1USDICTION : Cilvil Appeal!> Nos" 289 to 311 of 1965 and 999 to 1001 of 1967.

Appeals from the judgments and orders dated July 13, 1964 of tlle Punjab High Court in Civil Writs Nos. 587-D, 590-D,

592-D, 595-D, 643-D, 851-D, 852-D, 1163, 1164, 1167 and 1196 of 1963, 45-D of 1964, and 994, 588-D, 589-D, 591-D, 593-D, 594-D, 1165, U66, 1168, 1169, 1197, 1240, 1216 and 1155 of 1963 respectively and Writ Petition No. 212 of 1966. ·

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

S. V. Gupte, Rameshwar Nath and Mahinder Narain, for the appellants (in C.As. Nos. 289 to 311 of 1965). .

Rameshwar Nath and Mahinder Narain, for the appellants (in C.A. No. 999 of 1967). s: Sorabji, D. S. Dang and Ravinder Narain, for the appellants

(in ~: A. No. 1000 of 1967)'.

S. V. Gupte and K. K. Jain, for the appellants (in C.A. No. 1001 of 1967). ·

A N. A. Palkhivala; F. N. Kaka, 0. P. Malhotra, (); C. Mathilr aod Ravinder Narain, for the petitioner (in W .P. , No .. 21'.l. of 1966). . . . .

C. K. Daphtary, Attorney-General, B. Sen, R. H. Dhebar and S. P. Nayar, for the respondents (in W. P. No. 212 of 1966-) 8 and the respondents (in C.A. Nos. 289 to 311 of 1965).

C. K. Daphtary, Attorney~General, and R. H. Dhebar for the respondents (fu C.As. Nos. 999, 1000 and 1001 of 1967.).

N.· A. P-alkhivala, 0. C. Mathur and Rilvinder Narain, 'fw <: the intervener (in C.As. Nos; 28 9 tci 311 of 1965).

The Judgment of. the Court was delivered by

Shelat, J. These appeals, by certificate, are against the com, mon judgment of the High Court of Punjab. which dismissed the writ petitious filed by the. appellant companies challenging the legality' of eitcise dufy levied: against them under Item 14-H in 8 Sch. 1 to the Central Excise and Salt Act, 1 of 1944. Writ Petition 212 of 1966 by Tata Chca!s Ltd. also raises the same. question.

As both the appeals and the writ petition raise a common question of law they were heard together and are disposed of by this common judgment. • ·

The appellant companies manufacture sugar by carbonation E process as against sulphitation process employed by some other manufacturers of sugar and pay excise duty on the sugar manufactured by them under Item 1 of Sch. 1 -to the Act. According to the affidavit of V. J. Bakre, Deputy Chief Chemist of the Cent; ral Revenue Control LaboratOfY, these manufacturers bum timeitone with coke in a lilile kiln with a regulatea amount of F 3ir and generate. it mixture of gases consisting of carbon dicrude, nitrogen; oxygen. and a .small .quantity of carbon monoxide. Most of the oxygen. from the air is used up by the coke in the process of burning itself.

The coke so burnt supplies the heat whicl:\ decomposes the limestone so as to generate carbon dioxide. The gas thus produced is suclald by a pump through a pipe which G connects the kiln with the inlet side of the pump. The gas entera the chamber of the pump and is then immediately compressed by means of the compression stroke of the pump. At this stage the gas is forced into a narrower space and as a result of the compression stroke it acquires pressure exceeding the atmospheric pressure. The gas so compressed is let into the delivery pipe whioh connects the outlet side of the pump with the iank containiil.g ff the sugarcane juice and enters the sugrcane juice with_ the acquired pressure behind it. But for the compression resulting in pressure the gas would not bubble in the sugarcane juice. In the

t.ank there is besides the sugarcane juice milk of lime which is A ed so as t? rmove. the impurity in and refine the juice. Thus, it JS carbon d1ox1de which reacts on the lime and what is produced is an. insoluble content known as calcium carbonate. Tue .oilier gases, viz., nitrogen, oxygen, carbon monoxide do not contnbute

iii. the process of clarification of lhe sug; ircane juice. These are innocuous so far as the process of clarification of sugarcane juice B i.s concerned, and escape into the atmosphere by a vent provided in the sugarcane juice tank.

Along with these gases a cert3in amount of carbon dioxide which remains unabsorbed also escapes.

The carbon dioxide content iii the mixture of gases ranges. from 27 to . 36.5 % . Thus, the process involves the forcing of impure carbon dioxide into a narrower space within the cliamber of the c pump where it is compressed and pushed first into the delivery pipe and then into the tank containing the juice. The respondents' case therefore was that the process employed by the appellant companies involves compressing carbon dioxide and with the pressure achieved pushing it through sugarcane iuiCll.

The appellant companies theref2re produced carbon diide 0 through the lime kiln which was taken first to the Co2 pump and there compressed and then pushed into the tank.

The Tata Chemi; cals J.-td. manufactuJJes among other products soda ash by solvay animonia soda process.

The solvay process as described by the said V. J. Bai>re is as follows :-'

First common salt is dissolved in water and animonia gas is passed through such dissolved salt called brine. The ammonia

gas. gets absorbed in the brine. The solution so formed, is called AB solution, that is, ammoniated brine.

The AB solution is introduced at the top of a carbonating tower and passed from section to section. from the top to the bottom o~ the tower. At the bottom of the tower compressed carbon dioxide is forced F through at a pressure of 40 to 50 pounds per square inch and is bubbled through the liquid in all the sections of the tower. The chemical reactions involved in the tower are: (i) Ammonia Gas plus, (ii) Carbon dioxide plus, (iii) water of the brine solution. These react together to form ammonium bicarbonate which reacts with salt in brine to produce sodium bicarbonate and aminonium chloride. The sodium bicarbonate thus formed being much less soluble in the liquid is precipitated and is then taken out from the bottom of the tower. It is then filtered and the sodium bicarbonate in moist condition is left on the bed of the filter and the solution which is mostly of ammonium chloride is pumped to animonia reaction tower where ammonia is produced. Moist sodium bicarbonate is then washed and is heated in a calciner at 200° centigrade.

The sodium bicarbonate gets decomposed to give s0da ash, water and carbon dioxide. Carbon

d.;.xide thus produced is reutilised in the cycle of manufacture of soda ash.

It contains. 853 pure carbon dioxide (according to the Company's expert 50 to 603) and is mixed with carbon

dioxide sucked by the compressor from the lime kiln. The whole

mi.rure, which contains about 60% of pure carbon dioxide is compressed in the compressor to a pressure of 40 to 45 lbs. per sq. inch.

Thus carbon dioxide is essential in the production of .; oda ash and is produced by burning limestone with coke in a kiln in the same manner as by the sugar manufacturing concerns which employ carbonation process.

The carbon dioxide so produced in the kiln is first compressed in the compressor during the compression stroke, and thereafter the piston compresses the gll!' in the said cylinder at p_ressure of more than 40 to 50 pounds per square inch.

The gas so compressed is compressed carbon dioxide which comes out of another valve in the cylinder and

oomes into the delivery side of the compressor admixed with carl>on dioxide from the calciner.

This gas is throughout at a pressure of 40 to 45 lbs. per sq. inch. This gas so manufactured .

is independent of soda ash.

The compressed carbon dioxide so produced does not lose its identity of being compressed carbon dioxide.

Pure compressed carbon dioxide is isolated from the admixture of gases in the carbonating tower where chemical reaction takes place and is used in the manufacture of soda ash.

According to the Revenue the processes employed by the appellant companies and by _Tata Chemicals Ltd. thus involve production of compressed carbon dioxide which is amenable to excise duty.

Item 14-H of Sch. I reads as {ollows :

"14-H. Compressed, liquefied or solidified gases, the following :

(iv) Carbon acid (carbon dioxide) Fifty per cent ad va/orem

l>y a notification dated March 2, 1963 issued under r. 8 (I) of the Central Excises Rules, 1944 the Central Government exempt.ed

a.~ from April 24, 1962 carbonic acid utilised in manufac!ure of sugar within the factory of production for clarifying and bleaching sugm:cane juice or syrup from so much of the excess of ~- 25 /- per metric tonne.

Tue contentions raised on behalf of the appellant companies :md Tata Chemicals Ltd. may be summarised as follows :--

(l) that the lime kiln is maintained to generate a mixture oi gases and ; not carbon dioxide;

L~.C.1./68-3

(2) that at no stage in .the process of generating this mixture and sucking it into the sugarcane juice for refining, carbon dioxide which forms one of the contents of tire said mixture is either compressed, Jiquidified or solidified;

( 3) that the mixture of gases so generated is not carbon dioxide as known to the market;

( 4) that according to the specifications laid down by the Indian Standards Institution carbon dioxide content has to be at least 993;

( 5) that the mixture of gases so generated has no other use except for processing sugarcane. juice;

( 6) that the said mixture is neither sold nor is marketable nor known to the trade;

(7) that the exc.ise duty sought to be recovered on the content of carbon dioxide in the said mixture of gases cannot fall under Item 14-H;

( 8) that these concerns are not manufacturers of carlioo dioxide as carbon dioxide is not separated from the said mixtw:e of gases by any process nor is the carbon dioxide content in the said mixture compressed, liquefied or solidified;

(9) that the mere fact that the said mixture of gases is passed E through a conduit pipe by a process of suction cannot mean that carbon dioxide becomes compressed carbon dioxide at that or any other stage; .

( 10) that the term "compressed" in Item 14-H contemplates the form in which the. article sought to be levied is manufactur- F ed.

There is no separation of carbon dioxide from the said mixture at any stage nor is it compressed or stored as carbon dioxide in cylinders; and lastly

( 11 ) that the duty being. on goods it can be charged only on goods known as carbon dioxide in the trade and marll:etable as •uch.

The contentions of the Revenue, on the other hand; were :-

( 1 ) that the mixture of gases generated as aforesaid is nolfling but impure carbon dioxide in the sense that during the process of burning limestone with coke a small quantity of cadlon monoxide is released by the burning of coke, the other gases in 8

the mixture being nitrogen and oxygen derived from the air which is Jet into the kiln to aid CCllllbustion;

BiHAll. SUGAR MILLS V. UNION (She/at, J.) 27

(2) that these concerns require carbon dioxide for refining sugarcane juice and manufacture it out of limestone and coke.

The other gases which get mixed up are unavoidable on account of the process employed by them;

(3) that these extraneous gases can be separated and the manufacturers would separate them if what they require is pure carbon d; oxide.

They do not do so because carbon dioxide mixed with other gases produces the same effect in the process of refining as without them;

( 4) that the fact. that iii the process of its manufacture carbon dioxide gets mW:d up with other gases does not mean that C carbon dioxide which is intended to be and is in fact produced loses its cbaracteris?cs as such. The gas thus produced contains

30 to 35 % carbon dioxide;

( 5) that the specifications laid down by the Indian Standards Institution are not relevant as .they are for cylindered carbon dioxide bought and sold in the market as pure carbon dioxide;

( 6) that carbon dioxide produced by these concerns can be sold in the condition in which it is produced and used by other sugar mills and by factories manufacturing soda ash by solvay process.

In support of their contentions the appellant companies as also the Tata Chemicals Ltd. relied on the specifications laid down by the Indian Standards Institution and the several affidavits made by concerns using carbon dioxide for the manufacture of their respective goods.

As most of them are identical, it is sufficient to take the affidavit of one Shantilal Patel as typical.

The deponent there asserts that the company of which he is the senior chemist uses carbon dioxide in considerable quantity in manufacturing. aerated waters, that carbon dioxide so used contains 99 .5 % of pure carbon dioxide, that compressed liquidified or solidified carbon dioxide as known to the trade or sold in the market contains a minimum of 993 carbon dioxide confom1ing to the specifications of the Indian Standards Institution, that such G carbon dioxide is contained in steel cylinders under a pressure of minimum of 1000 lbs. per sq., inch and .that kiln or calciner gas is not known to the trade as carbon dioxide nor is it marketed as such. Dr. Homi Ruttonji whose affidavit was produced by Tata .Chemicals Ltd. states that for the purpose of manufacturing carbon dioxide an elaborate plant shown in the annexure to H his affidavit would have to be set up separate from the plant and

equipment used in ; the manufacture of soda ash and refutes the statement of the said Bakre that compressed carbon dioxide is forced through at a pressure of 40 to 45 lbs. per sq. inch or that

at the bottom of the said carbonating tower pure compressed carbon dioxide is or can be isolated from the mixture of gases . in that tower where chemical reaction takes place. He also refutes the statement that the. pro~. of generating kiln gas is independent of the manufacture of soda ash and states that the process of manufacture of soda ash is a continuous and integrated process wherein a certain quanti(¥ of kiln gas is released • which is directly utilised without removal or storage in the manufacture of soda ash.

According to him, _kiln gas released during the manufacture of soda ash is never known as carbon dioxide in the market.

To obtain. J11arketable carbon dioxide from kiln gas an elabora'.e plant would be required for separation and purification and it is such carbon dioxide which becomes c marketable after it is compressed at a pressure of 1000 i.o 1800

lbs. per sq. inch in cylinders of the specUications laid down by the Government of India under Rule 11 of the Gas Cylinder Rules, 1940.

Notwithstanding the divergence of opinion between the two experts one thing is clear and that is that in the case of both D sugar and soda ash the manufacturer does require carbon dioxide for the purpose of producing the two articles and sets up lime kiln for that purpose. The question is whether what he actually produces by combusting limestone with coke is carbon dioxide and if so whether i: is compressed carbon dioxide as contemJilatd by Item 14-H.

In the cour£.e of their arguments counsel referred .to certain 1; orks on Chemistry in general" and sugarcane industry in particular.

There are observations in som~ of them which might throw some light on the question before us.

The Handbook of Cane Sugar Engineering by E. Hugot (1960 ed.) at pp. 286 to 289 states that carbon dioxide necessary for the carbonaticin pro-

J!' cess is produced at the same time as lime in a limekiln adjacent to the sugar factory. The combustion of limestone with coke produces kiln gases consisting of carbon dioxide, carbon monoxide, oxygen, nitrogen and a certain amount of moisture.

The proportion of carbon dioxide in these kiln gases varies from 25 to 33% averaging about 30%. The carboh dioxide leaving the

G washer is at a temperature of 60°C. Its pressure at the suction of the pump varies from 1.6 to 5 in. of mercury and lhedelivcry pressure varies from 4 to 10 lbs. per sq. inch. It"is also stated that the pumps known as Co2 pumps are fuUy analogotis 10 air ptimps. (see also Cane Sugar Handbook by Guildord L.

Spencer and G. P. Meade, p. 138). The carbonatiOn H according to Hut is one of the ceapest, clea~( and . most reliable process m the sugarcane industry ensuring standard

quality of sugar. Roger's Industrial C/ieniistry, {6th ed.) p. 415

in the chapter dealing with "Alkali and Chlorine production• states thus :-

"The kilns used in the process are built and operated with special precautions to produce as high a concentration of Co, as possible.

In practice 41 to 43 per cent of Cods obtained in kiln gases with very little Co or 02, the rest of the gas being N15/2." At pp. 415 to 417 of the said work the solvay process is descril>- ed in the same terms as in the affidavit in support of the petition of Tata Chemicals Ltd. J.A. Timm in his General Chemistry,

(4th ed.), p. 4 70 states that commercial carbon dioxide can be obtained as a bye-product of certain industries, e.g., flue gases.

R. Norris Shreve in his Chemical Process Industries, (3rd ed.) states that there are three important processes for commercial production of carbon dioxide, viz., flue gases by burning carbonacious material, bye-product from fermentation industries through dextrose breakdown into alcohol and carbon dioxide and byeprcduct of lime kiln operation. He also states that an absorption system is used for concentrating Co, gas obtained from sources 1 and 3 to over 99%, and that in all cases the almost pure carbon dioxide must be given various chemical treatments for the removal of minor impurities which contaminat.~ the gas. Similarly, Kirk- Othmer in the Encyclopedia of Chemical Technology, (2nd ed) Vol. 1 :p. 722 observe as follows :-

"The carbon dioxide evolved consists of both that generated by the decomposing limestone and that resulting from combustion of the carbon in the coke.

The kiln gases are considerably diluted with nitrogen from the air used to burn the coke; they usually contain 37% to 42% carbon dioxide together with stone dust, coke ash, particles and gaseous impurities.

The gas is cooled to some extent in the kiln itself by the upper layers of stone; it is further cooled and purified in water scrubbers until it is absolutely free from dust and tarry matters, and then, in the more modern plants which make a very pure soda ash, the gas is finally purified electrostatically." Arthur and Elizabeth Rose, in their Condensed Chemical Dictionary, (7th ed.) p. 178 divide commercial carbon dioxide into two grades, both of them having at least 99% carbon dioxide.

Such carbon dioxide when solidified is packed in 50 lbs. blocks in insulated boxes and is at a temperature of 109' below zero.

When liquified it is packed in steel cylinders.

The uses of solidified or liquefied carbon dioxide are refrigeration of foods, carbonated beverages, industrial refrigeration, fire extinguishers, welding etc.

These extracts show that commercial carbon dioxide as brought to the market for being bought or sold and used for the purposes enumerated above has content of at least 993 of carbon dioxide and is either compressed and packed in steel cylinders or liquefied or solidified.

As the Revenue argued these concerns undoubtedly require carbon dioxide in the processes employed by them while manufacturing sugar and soda ash and to meet their requirement they have set up lime kilns by which they produce kiln gas which includes carbon dioxide to the extent of about 30 to 353, which they in fact use after compressing it through a pump or otherwise, at one stage or the other in their manufacturing processes. Nonetheless, is it possible to say that the lime kilns set up for the aforesaid purpose produce carbon dioxide and even if it be so, that, at one stage or the other, through the pump or otherwise, the carbon dioxide so produced becomes compressed carbon dioXide as envisaged by the legislature when it decided to introduce Item 14-H in the First Schedule ? It cannot be gainsaid that by burning Jime5tone with coke in the kiln the manufacturer actually produces kiln gas of which one of the constituents undoubtedly is

carbon dioxide and which he utilises while producing his ultimate excisable goods. But if it is possible to say that what he produces is carbon dioxide during the process which Mr. Palkhiwala termed as an integrated and continuous manufacturing process or separately as the Revenue insisted, it is equally possible to say that the combustion of limestone with coke results in the manufacture of nitrogen, whose content in the kiln gas is about 53 % .

As the text-books produced before us and the affidavits show, the correct !Jicture is that what is produced is kiln gas which consists of several gases, viz., carl?<>n dioxide, carbon monoxide, oxygen and nitrogen,. the last one being in a larger quantity than carbon dioxide. The mixture of gases so generated is known as kiln gas in the trade, i.e. to those who manufacture sugar and soda ash.

The affidavits of concerns which use carbon dioxide definitely assert that. kiln gas is never known in the market as carbon ilioxide nor is it a marketable article in the sense that it is loose and is not transportable nor is it bro.ugh! to the market for being bought and sold unless carbon dioxide is extracted out of it.

Such extraction requires an. elaborate plant.

After extraction it would have to be compressed in cylinders of certain pecifications or liquefied or solidified before it can become a marketable article.

It is true as .the Revenue contended that the gas produced through thei kiln can be made marketable in .the sense that it can be sold in the very same condition in which it is produced to concerns interested in the carbonation process through, for example, pipes. But, apart from such a method of disposal being

uneconomic and hardly likely to be employed by the trade, though it is possible in theory, what would be transported is that which is produced through the kiln, viz., the kiln gas containing among other things a certain quantity of carbon dioxide.

As one of the text-bO\lks points out carbonation process is employed by manufacturers of sugar because it is one of the cheapest methods to ensure production of sugar of standard quality.

The fact is that employing carbonation process the manufacturer who requires carbon dioxide produces kiln gas and as that mixture of gases contains carbon dioxide he pumps through a pipe that mixture of gases and not carbon dioxide alone extracted from it. Therefore, in truth and in fact what he uses is the kiln gas produced by him in the lime kiln. Even assuming that this gas is compressed either through a narrow pipe what is compressed is. the kiln gas and it is that kiln gas containing no doubt a certain percentage of carbon dioxide which is inducted in the sugarcane juice for refining. The same must also be said of the solvay process used in the production of soda ash though in that case the percentage of carbon dioxide is larger than in the case of refining sugarcane juice.

The Act charges duty on manufacture of goods.

The word "manufacture" implies a change but every change in the raw material is not .manufacture. There must be such a transformation that a new and dilferent article must emerge having a distinctive name, character or use.

The duty is levied on goods.

As the Act does not define goods, the legislature must be taken to have used that word in its ordinary, dictionary meaning. The

dictionary meaning is that to become goods it must be something which can ordinarily come to the market to be bought and sold and is known to the market. That it would be such an article which would .attract the Act was brought out in Unio11 of India v. Delhi Cloth & General Mills Ltd.(1) The contention there was that in the course of manufacture of vanaspati, a vegetable product from groundnut and ti!· oil, the respondents brought into existence at an intermediate stage of manufacturing refined oil which fell within the description of "vegetable nonessential oil, all sOrts," in Item 23 of the First Schedule.

The contention would seem to assume that the goods subjected to duty must be goods known as such in the market. The contention was that the respondents, after they bought raw' oil with all its impurities, manufactured, by application of certain Processc:-~ of refinement, refined oil which was the same as refined oil available in the market and that it was "refined oil" which became after further processes the ultimate vege!able product. It was argued that the fact that the vegetable product was the ultimate

(I} (1963] Supp. I S.C.R. 586.

32 SUPRE.ME COURT llPORTS (1968] 3 s.c.R.

product and was chargeable to duty did not alter the position that at an earlier stage, the respondents manufactured "refined oil" as known to the market and that the fact that they did not put this "refined oil" in the market but used it to produce the finished product did not affect their liability. This Court held that if a new substance was brought into existence from raw materials and that substance was the same as "refined oil" as known to the.market it would be subject to duty. The question, therefore, was, was the subs!ance sought to be charged "refined oil" known to the market ? The affidavits showed that deodorization was nec:essary before the product could be called "refined oil". It was not .in dispute that that process was employed after hydrogenation and not at the stage when what was called "refined oil" came into, existence at an intermediate stage. No evidence was produced by the Union of refined oil being brought to the market without deodorization.

It was held that raw oil purchased by the respondents for the purpose of manufacturing vanaspati did not become at any stage "refined oil" as known to the consumers and the commercial community.

The affidavits filed in the instant cases and the scientific works referred to above show that the mixture of gases produced from the kiln 'is known bo'.h in trade and in science as kiln gas and not as carbon dioxide. The Revenue has not produced any affidavit of persons dealing in carbon dioxide to show that kiln gas. is known to the market as carbon dioxide.

The aforesaid affid'avits show that carbon dioxide known to and brought in the marl<:et for being bought and sold for its diverse uses is carbon

dioxide compressed, liquefied or solidified as Item 14-H describes it. the analogy given by the learned Attorney-General of a manufacturer of cotton cloth also producing at ah intermediate stage cotton yarn and such cotton yarn being liable to excise duty would not help the Revenue as cotton ya~ obtained by such a manufacturer is known as such in the commercial community and brought to the market for being bought and sold. That cannot be said of kiln gas. If kiln gas were to be offered in discharge of a contract to supply carbon dioxide it would certainly be rejected on the ground that it is no'. carbon dioxide but is kiln gas. It is also not correct to say that because the sugar manufacturer wants carbon dioxide for carbonation purpose and sets up a kiln for it that he produces carbon dioxide and not kiln gas. In fact what he produces is a mixture known both to trade and science as kiln gas, one of the constituents of which is, no doubt, carbon dioxide.

The kiln gas which is generated in these cases is admittedly never liquefied nor solidified and is therefore neither Equefied nor solidified carbon dioxide, assuming that it can be tenned carbon dioxide. It cannot be called compressed carbon dioxide as

A understood in the market among those who deal in compressed carbon dioxide.

Compressed carbon dioxide is understood generally as carbon dioxide compressed in cylinders with pressure ranging from 1000 to 1800 lbs. per sq. inch. The mere fact that at one stage or the other kiln gas is pressed at 40 to 45 lbs. per sq. inch by a pump or otherwise cannot mean that it is compressed B carbon dioxide. At the same time the duty being on manufacture and not on sale the mere fact that kiln gas generated by these concerns is not actually sold would not make any difference if what they generate and use in their manufacturing processes is carbon dioxide. The fact that the gas so generated has carbon dioxide below 99% and does not conform c to the specifications of the Indian Standards Institution also would not matter for the gas may be sub-standard, provided what is produced is carbon dioxide.

In our view, the gas generated oy these concerns is kiln gas and not carbon dioxide as known to the trade i.e., to those who deal 'in it or who use it. The kiln gas in question therefore is D neither carbon dioxide nor compressed carbon dioxide known as such to the commercial community and therefore cannot attract Item 14-H in the First Schedule.

In this view it is not necessary for us to consider certain other contentions raised by the appellants and the petitioners in the writ petition.

In the result, the appeals and the writ petition must be allowed and the orders passed by the High Court in the appeals must be set aside.

We hold that the demand notices served on these concerns are illegal and must be quashed. The respondents in these appeals as also in the writ petition wi]] pay costs to the appellants and the petitioner in the writ petition. The costs will be one hearing fee for the appeals and a separate set of costs in respect of the writ petition.

R.K.P.S.

Appeals" and Petition allowed.

SOUTH BIHAR SUGAR MILIS LTD.

UNION OF INDIA & ORS

February 5, 1968

K. N. WANCHOO, C.J.

R. S. BACHAWAT, J.

M. SHELAT

Schedule 1

Central Excise and Salt Act, 1944

Art. 32

Constitution of India

S. V. Gupte

Rameshwar Nath

Mahinder Narain

Sorabji

S. Dang

Ravinder Narain

K. K. Jain

A N. A. Palkhivala

F. N. Kaka

. P. Malhotra

C. Mathilr aod Ravinder Narain

C. K. Daphtary

B. Sen

R. H. Dhebar

S. P. Nayar

A. P-alkhivala

C. Mathur

Rilvinder Narain

Shelat

High Court of Punjab

Tata Chca!s Ltd.

V. J. Bakre

V. J. Bai

Tata Chemicals Ltd.

Central Excises Rules, 1944

Indian Standards Institution

Shantilal Patel

Homi Ruttonji

Tata .Chemicals Ltd.

Gas Cylinder Rules, 1940

E. Hugot

Guildord L.

Spencer

G. P. Meade

Roger

R. Norris Shreve

Kirk- Othmer

Arthur

Elizabeth Rose

First Schedule

Palkhiwala

First Schedule

First Schedule


TARAK NAm GHOSH v.

STATE OF BIHAR & ORS.

February 22, 1968

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

S. M. SIKRI, J.M. Sm!LAT,

V. BHARGAVA AND C. A. VAJDIAL!NGAM, JJ.)

Co11sti111tion of India, Art. 314-All India Servict9 Act, 1951-The Indicn Police ServU:e C&cruitment) Rules 1954; The All India ServU:u '(Discipline and Appeal) Rules 19SS; Civil Services (C/IJSsificatlon, Contr0l

and Appeal) Rules, 1930, r. SS-Appellant recruited to the Indian Police in 1931-Enquiry ordered against him and susp.enslon under 19SS Ru/ts -:If valid-Whether he became member of Indian Police Strvice-Therefore iJ gov_erned b, y service conditions accordingly.

The appellant was appointed to the Secretary of States ServiQ! known as the Indian .Police in 1937. On June 29, 1965 while he was wrotina as a Deputy Inspector-General of Police in Bihar, an order was mad< by the State Government placing him under suspension pending an enquiIJ.

Later, this order was partially amended by_ the Central Government which itself passed an order of. suspension in vie.w of the pending enquiry. Tho appellant challenged these orders by a writ petition It was contended by him that he had never become a member of the Indian Police Service which was constituted in August 194 7, therefore the All India Service (Discipline and Appeal) Rules, 19SS, did not apply to him and consequently the enquiry directed under rr. 4 and S could not be instituted against him under these rules, that in any case in view of r. SS of the Civil Services (Classification, Control and Appeal) Rules, 1930, which applied to him by virtue of Ari. 314 of the Constitution, the Bihar Government had no power to order an enquiry against him as it was not the authority entitled to pass an order of dismissal removal or reduction in rank; only the Central Government could have, have ordered the inquiry. It was 1urther contended that if the enquiry itself had been invalidly instituted, the order of suspension automatically became invalid.

The High Court dismissed the petition. On appeal to this Court, HELD : dismissing the appeal,

On the passing of the Indian Independence Aet, the appellant ceased to be a member of the service constitut<:d by the Secretary of State but he continued to serve the Government of India and the Province of Bihar, as a result of which certain rights relating to conditions of service and disciplinary matters. "'hich \\"ere earlier applicable to him. were presened.

At the time when the Indian Polioe (Cadre) Rules, 1950, were framed,

the appellant was not a member of any regularly constituted service and G his position remained the same until, under the Indian Police Service (Recruitment) Rules, 19S4, he was included in the Indian Police Service and again became a member of a regularly constituted service; he could be competently incl)lded in that service, because on that date he was only holding a cadre post, but \\'as not a member of any other regular service.

Consequently, the contention that the Rules of 1955 did not apply to the appellant must he rejected, because. when those Rules came into force, the appellant was already a member of the Indian Police Service. [229 H- H

230 DJ Those persons, who were. appointed to the Indian Police under the Crown before Independence, ceased to be members of any regularly co.n

•tituted Service when the Indian Independence Act came into force in 1947.

Coder the agreement that was entered into by the new Indian Government with the British GovernmenJ, provision was made that members of the previous Secretary of State's Service could continue to serve tho Govern nlent of India on a provincial Government and certain rights were preserved to them if they continued to do so. There was, however. no pro~ vision that the old Secretary of State's Service would continue, so that with the passing of the Indian Independence Act, Secretary of State's Police

ceased to exist. [228 G, HJ

Stotc of Madras & Anr. v. K. M. Rajagopalan, [19SS] 2 S.C.R. S4!, R. p, Kapur v. Union of India & Anr. [1964J $.C.R. 431, referred to.

Under Ari. 314 of the Constitution, the right that continued to enure to the benefit of the appellant was that the enquiry to be held in his con. duct nfost comply with the requirements of r. 55 of the Rules of 1930.

An enquiry ordered under the Rules of 19S5 is in no way detrimental to tlie interest of the person against whom the enquiry is held as compared with an enquiry under r. SS of the Rules, of 1930. Under both sets of Rules, the enquiry could be ordered by the authority under whom the person concerned happened to be serving, so that the order made bv the Bibar Government for enquiry did not in any way violate the rights which tlie appellant possessed under r. SS of the Rules of 1930 and which were preserved to him by Art. 314 of the Constitution. The preliminary enquiry under r. SS of the Rules of 1930 was not required to be initiated or to be held by the Secretary of State in the case of a member of an All India Service, and it was only at the subsequent stage when the order of dis missal had to be passed that the Secretary of State was required to give 111 opportunity of showing cause to the officer concerned under s. 240(3) of the Government of India Act. The language used in r. SS shows that that rule is only concenred with the holding of an enquiry and lays down the procedure for the enquiry.

It does not at all deal v1ith the question E of passing an actual order of dismissal, removal or reduction. It is clear that that rule \Vas confined to making provision for an enquiry whereafter, if an order of dismissal had to be made, the appropriate auhority under s. 240(2) of the Government of India Act, 193S had to take up the p!'°"eedings and pass the final order. The expression "authority concerned"

in. r. 55 in these circumstances, must clearly be interpreted as referring to the authoriiy under which the officer concerned happcnc; to be serving at the relevant time. [231 F-232 C; 232 A-CJ F

. High Commissioner for India and H; gfi Comn1irsfoner for Pakistan Y.

I. M. Lal. 1S I.A. 225. referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2432 of 1966.

Appeal from the judgment and order dated October 4, 1966 of the Patna High Court in Civil Writ Jurisdiction Case No. 784 of 1965.

B. C. Ghosh and P. K. Chatterjee, for the appellant.

V. A. Seyid Muhammad and S. P. Nayar, for the respondents.

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

The appellant, Tarak Nath Ghosh, was appointed y the Secretary of Stat~ for India to the Secretary of State's Semce known as the Indian Police on 25th January, 1937.

When agreement took place with the British Government for inde-

226 SVPR.EMB COUllT REPORTS

[1968] 3 S C.R.

A pendence of India, the Central Government, on 21st October, . 1946, in agreement with a number of Provincial Governments in.-

clading the Government . of Bihar, constituted another S'ervioe blown as the Indian Police Service. Recruitment to this Indiaa

Police Service began on 15th August, 1947, after India attained Dominion status.

Subsequently, on 23rd January, 1950, the Governor-General, in consultation with the Provincial Govern ments, promulgated rules for forming a cadre for the Police Officers. The Rules, known as the Indian Police (Cadre) Rules, 1950, came into force on 23rd January, 1950, and laid down that ; i number of posts mentioned in the Schedule would be treated as cadre posts and no cadre post shall be filled otherwise than by a cadre officer. Amongst the cadre officers defined in the Rules were included. members of the Indian Police and of the Indiaa.

C Police Service. On 26th January, 1950, the Constitution of India came into force and provision was made in Art. 312(1) empowering Parliament by law to provide for the creation of one or more .~India services common to the Union and the States, and to

Tlate the recruitment and conditions of service of persons al>'

pointed to any such service. Article 312(2) laid down that the services known at the commencement of the Constitution as the Indian Administrative Service and the Indian Police Service shall

be deemed to be services created by Parliament under this article.

In pursuance of the power given to Parliament under this Article,.

Parliament passed an Act for constituting all-India services. That Act is fin: Ail-Iu.:liii &ryices Act, 1951 (No. 61 of 1951) (hercinl\fter referred to as "the Act"). The Act recognised the existence of the two All-India Services mentioned in Art. 312(2) of the Constitution and, by section 3, empowered the Central Government, after consultation with the Governments of the States concerned, 10 make rules for the regulation of recruitment, and the conditions of service of persons appointed to an All-India Service. Section 4 laid down that all rules in force immediately before the commencement of the Act and applicable to an All-India Service shall continue to be in force and shall be deemed to be rules made 11nder this Act. In exercise of the powers granted by s. 3 of the Act, the Central Government promulgated the Indian Police Ser vice (Recruitment) Rules, 1954. Under these Rules, it was laid down that. the Indian Police Service was to consist of the following persons, viz. :-

(a) members of the Indian Police;

(b) members recruited to .the Service before the commencement of these rules; and

(c) persons recruited to the Service in accordance with the provisions of these rules. ff The Rules defined "member of the Indian Police" to mean a person who, having been appointed to the police service under the Crown

in India, known as th\) Indian Police, continues on and after the commencement of these rules, to serve under the Government. of India, or a State. Thus, under these Rules, persons appointed to the Indian Police, who had been appointed by the Secretary of State and had continued to serve the Government of India, became members of the Indian Police, and Under clause 3 of the Rules, the Indian Police Service included these members of the Indian Police. Subsequently, in exercise of the. powers conferred by s.

3(1) of the Act, the Central Government, after consultation with the Governments of the States concerned, made rules for regulating the dicipline in the Indian Police Service. These Rules, which were enforced with effect from 1st September, 1955, came to be known as the All-India Services (Discipline and Appeal) Rules.

1955 (hereinafter referred to as "the Rules of 1955"). Rule 4 of these Rules was amended subsequently on 23rd July, 1960.

On 29th June, 1965, while the appellant was working as the Deputy Inspector-General of Police in Bihar, an order was made by the State Government placing the appellant under suspension pendipg an enquiry. This order was partially amended by the Central Government by pas.gng an order of suspension of the appellant in view of the enquiry instituted by the State Government.

On 13th JUiy, 1965, the appellant filed a writ petition under Article 226 of the Constitution in the High Court at Patna challenging these orders passed against him. The order for institution of an enquiry made by the State Government, which had been directed in pursuance of Rules 4. and 5 of the Rules of 1955,. was challenged on two grounds. One ground was that the appellant had never become a member of the Indian Police Service and these Rules did not, therefore, apply to him, so that no enquiry could be instituted against him under these Rules. The second ground was that, in any case, in vie.w of Rule 55 of the Civil Service.s (CidSsification, Control and Appeal) Rules, 1930 (hereinafter referred to as "the Rules of 1930") read with Article 314 of the Constitution, the Government of the State of Bihar had no power to order institution of an enquiry against the appellant, even if it be held that he had become a member of the Indian Police Service. The order of suspension was challenged <in the sole .ground that if the enquiry itself had been invalidly instituted, the order of ; uspension automatically became invalid. The High Court dismissed the writ petition holding on both points against the appellant and consequently, the appellant has come up to this Court under certificate gra1!ted by the High Court.

The first contention put forward by learned counsel for the appellant that the appellant never became a member of the Indian

Police Service as deem¢ to have been created by virtue of Art. 312(2) of the Constitution has no force. It is true that the appellant was originally appointed on 25th January, 1937 to the Secretary of State's Service known as the Indian Police and when the

"228 SUPllJ!MB CO'UllT UPOllTS

[1968] 3 S.C.R.

Indian Police Service was first constituted on 21st October, 1946, persons, who were members of the Secretary of State's Service known as the Indian Police, did not bel; ome members of this newly constituted Indian Police Service. The Indian Police (Cadre) Rules, 1950 also did not bring about any merger of the two Services. All that those Rules did was to constitute cadre posts which were to be filled by Officers belonging to either the Indian Police -0r the Indian Police Service as it existed at that time. Article .312(2) of the Constitution simply provided that the existing Indian

Police Service constituted on 21st October, 1946 shall be deemed .to be created by Parliament underr that Article. Thereafter, Par

liamcnt passed the All-India Services Act, 1951 and under section 3 of the Act the Indian Police Service (Recruitment) RuleS, 1954 were promulgated laying down that persons, who had been .appointed to the Secretary of State's Servico-Indian Police, were to be inciuded in the Indian Police Service. Consequently, from the time that these Recruitment Rules of 1954 came into force,' all persons, who had been appointed to the Secretary of Staie:s Service-Indian Police, became members of the Indian Police Service, so that, thereafter, they were governed by the provisions of the Act and the Rules framed thereunder. The submission of learned counsel for the appellant was that the provisions in the Recruitment Rules of 1954 that the Indian Police Service shall .consist, inter alia, of members of the Indian Police, could not make them members of the Jndian Police Service, because, under the Act, the only power that was conferred on the Central Government was to make Rules regulating recruitment to the Service, and conditions of service of persons appointed to the Service, and did not empower the Government to include within the Service persons who were already members of another Service. The argu ment has to be rejected, because, in our opinion, the provisi<m

laying down that the Indian Police Service shall consist, inter alio of members of the Indian Police, amounts to a rule recruiting the members of the Indian Police to this Indian Police Service. It may be mentioned that those persons, who were appointed to. the Indian Police under the Crown before Independence, ceased to be members of any regularly constituted Service when the Indian Independence Act came into force in the year 194 7. When independence was achieved by India, the Secretary of State and the crown ceased to have any authority in India, so that no Service of the Secretary of State or the Crown could continue thereafter.

Under the agreement that was entered into by the new Indian Government with the British Government, orovision was made that members of the previous Secretary of State's Service could continue to serve the Government of India or a Provincial Government and certain rights were preserved to them if they continued io ·-do so. There was, however, no provision that the old Secretary <Of State's Service would continue, so that with the passing of the

A Indian. Independece Act, Secretary of State's Services. like the Indian Civil Service and the Indian Police ceased to exist.

The cffect of the Indian Independence Act on the Secretary of State's Services was considered in detail by this Court in State of Madras and Another v. K. M. Rajagopalan(') and it was held :

"Thus, the essential structure of the Secretary of State Services was altered and the basic foundation of the contractual-cum-statutory tenure of the service disappeared.

It follows that the contracts as weU as the statutory protection attached thereto came to an automatic ilbd legal tcnnjnatiOn ....•... " C The effect of the decision in that case was also noticed by this Court in the case of R. P. Kapur v .. Union of India and Another(') where this Coun held that in the case of K. M. Rajagopalan ( 1) it had been decided that :

"the conferral of Independence on India brought about an automatic and legal termination of service on the date of Independence. But all persons previously holding civil posts in India are deemed to have been appointed and hence to continue in service, except those governed by 'general or special orders or arrangements' affecting their respective cases. The guarantee about prior conditions of service and the previous statutory safeguards relating to disciplinary action continue to apply to those who are thus deemed to continue in service but not to others." In.the latter case of R.P. Kapur('), the Court proceeded further to take notice of s. I 0 of the Indian Independence Act under which every person appointed by the Secretary of State to a civil

service of the Crown in India, who continued on and after the appointed day to serve under the Government of either of the new Dominions or of any Province or part thereof, was entitled to receive the same conditions of service as respects remuneration, leave and pension and the same rights as respects disciplinary matters or, as the case may be, as respects the tenure of his office, or rights as similar thereto as changod circumstances may permit G as . that person was enritl-d to immediately before the allOOinted day, I.e., Angust lS, 1947. This, it was clearly reccgniaed by this Court that the Services constituted by the Secretary of Stateearlier disappeared with the passing of the Indian Indeoendence Act, though persons, who continued to serve thereafter under the Indian Dominion or any Province, were entitled to Cl':11ain e rights in reg~ to remner!li"?n, !ave, pensi11n and disciolinary matters. In View of th1s dec1s10n, 1t has to be held that OTI the passing of the Indian Independence Act, the anpellant ~Sl!d to

(I} (19SS] 2 s.c.R. 541, 662. .

(2) (1964) 'S.C.R. 431.

SUPREME OOUP.T UPO&TS [1968] 3 s.c.R.

be a member of the Service constituted by the Secretary of State A but he continued to serve the Government of India and the Province of Bihar, as a result of which certain rights relating to conditions of service and disciplinary matters, which were earlier applicable to him, were preserved. At the time when the Indian Police (Cadre) Rules were framed, the appellant was not a member of any regularly constituted Service and bis position remained 8 the same until, under the Recruitment Rules of 1954, he was included in the Indian Police Service. With effect from the date of enforcement of these Rules, he again became a member of a regulady constituted service and he could be competently included in that service, because on that date he was only holding a cadre post, but was not a member of any either regular service. While he was simply holding a cadre post, there was no bar to the Central C Government making a Rule llllder s. 3 of the Act so as to illclude him in the Indian Police Service. Consequently, the first ground of attack on behalf of the appellant that the Rules of 1955 did not apply to him must be rejected, because, when those Rules came into force, the appellant was already a member of the Indian Police

Service which service was governed by those Rules. o

The second grouJ!d of attack on behalf of the appellant is based on the contention that under Art. 314 of the Constitution the appellant was entitled to the same rights as respects.' disciplinary matters, or rights as similar thereto as changed circumstances permitted as the appellant was entitled to immediately before the commencement of 'the Constitution. According to the appellant immediately before the commencement of the Constitution, he was governed in the matter of discipline by the Rules of 1930, so that the rights which he was entitled to under those Rules were preserved to him under Art. 314.

This proposition is not disputed op behalf of the respondents. What is, however, disputed is the interpretation sought to be put on behalf of the appellant on r. 55 of the Rules of 1930. The appellant urged that, under r. 55 of those Rules, an enquiry against a member of the Indian Police could only be instituted at the instance of the authority entitled to pass an order of dismissal, removal or reduction and by no other authority. On this ground, it was urged that until the Indian Independence J\ct c; une into force, an enquiry could only be ordered by the Secretary of State, whereas, thereafter, until the enforcement of the Constitution, the enquitr could be ordered by the Central Government only, because, dunng these two periods, the Secretary of Stat~ and the Central Government were the appropriate authorities entitled to pass orders of dismissal or removal.

We are unable to accept this interpretation of r. 55 urged on behalf of the appellant.

Rule 55 of the Rules of 1930 is as follows:-

"Without prejudice to the provisions of the Public Servants Jnquitjes Act, 1850, no order of dismissal,

T. N. GHOSH v. BIHAll (Bhargava, I.)

removal or reduction shall be passed on a mber of a Service (other than an order based on facts which have led to his conviction in a criminal court or by a Court Martial) unless he has been informed in writing of the grounds on which it is proposed to take action, and has been afforded an adequate opportunity of defending himself. The grounds on which it is propos~ to take action shall be reduced to the form of a definite charge or charges, which shall be communicated to the person charged togeth.\:r t~ a statement of the allegatins on which each charge 1s based and of any other cU"Cumstances which it is proposed to take into considertion in passing orders on the case.

He shall be required, within a reasonable time, to put in a written statement of his defence and to state whether he desires to be heard in person. If he so desires or if the authority concernned so direct, an oral inquiry shall be held.

At that inquiry oral evidence shall be heard as to such of the allegations as are not admitted, and the person charged shall be entitled to cross-examine the witnesses, to give evidence in person and to have such witnesses called as he may wish, provided that the officer conducting the inquiry may, for special and sufficient reason to be recorded in writing, refuse to call a witness.

The proceedings shall contain a sufficient record of the evidence and a statement of. the findings and the grounds thereof."

It is true that the first sentence of this Rule purports to lay down the procedure where an order of dismissal, removal or reduction is sought to be passed. In the next sentence, the Ruic requires that the grounds on which.it is. proposed to take action must be reduced to the form of a definite charge or charges and they must be communicated to the person charged, together with other necessary material.

The person charged is then required to put in a written statement of his defence within a. reasonable time and to state whether he desires to be heard in person. After this stage comes the mntion of the authority who is .to take action by laying down that, 1f the person charged so desires or if the authority concerned so directs, an oral inquiry shall be held.

The argument is that the autllority concerned referred to in. this sentence must necessarily mean the autllority entitled to pass the order of dismissal, removal or reduction.

We are unable to accept this submission.

The language used in r. 55 shows tllat that rule is only concerned with the holding of an enquiry and Jays down the procedure for tile enquiry. It does not at all deal with the qnest!on of passin~ an actual order of dismissal, removal or reduct10~. At tile tim!l .when t!te appell3!1t was appoin_ted to the Indian Police,. the prov1S1on which prescribed tile authority who could L6Sup.C.J./68-2

SUPIU!MJI COT.11.T UPO&TS [1968] 3 s.c.R.

pass an order of dismissal . in respect of the appellant was contained in sub-s. (2) of section 240 of the Government of . India Act, 1935, as a result of which the appellant .could only be dismissed from service by the Secretary of State who had appointed him. Rule 55 of the Rules of 1930, which then applied to him, did not, however, require that the enquiry under that rule must be initiated by the Secretary of State. In fact, that rule made no mention at all of the authority who was empowered to pass the order of dismissal. On the face of it, it is clear that that rule was confined to making provision for an enquiry whereafter, if an order of dismissal had to be made, the appropriate authority under s. 240(2) of the Government of India Act, 1935 had to take up the proceedings and pilss the final order, The expression "authority concerned" in r. 55, in these circumstances, must clearly be interpreted as referring to the authority under. which the officer concerned happens to be Serving at the relevant time. If the officer was serving under. the Government of India, the Government of India or such officer thereof as may be competent in that 11ehalf would be the authority to take proceedings under r. 55 and, in doing so, to initiate the proceedings also. If the officer happened to be serving under a Provincial Government, that Government or such officer thereof as may be competent in that behalf would be the authority concerned for initiating and holding the enquiry.

Thereafter, of course, if the officer happened to be a member of the Secretary of State's Service, neither the Government of India nor the Provincial Govent could pass an order of dismissal, and, on conclusion of the enquiry, the report necessarily would have to be submitted to the Secretary of State who alone could pass the order of dismissal. At that stage, the officer was entitled to a fresh"Show-cau!l!l notice under s. 240(3) of the Government of India Act, 1935 as held by the Privy Council in the case of

High Commissioner for India and High Commissioner for Pakistan v. I. M. Lal('), It is clear in these circumstances that the preliminary enquiry under r. 55 of the Rules of 1930 was not required to be initiated or to be held by the Secretary of State in the case of a member of an All-India Service, and it was only at the subsequent stage when the order of dismissal had to be passed that the Secretary of State was required to ive an opoortunity of showing cause to the officer concerned under s. 240(3) of the Government of India Act. . In this connection, we may take notice of the fact that the High Court has held that, as a matter of fact also, prior to the Independence of India, whenever an enquiry was initiated in the conduct of a member of one of the Secretary of State's Services, the order was made by the Government of India and not by the Secretary of State, so that even at that time the Secretary of State as well as the Government proceeded on this very interpretation of r. 55 which we are inclined to accept.

(I) 7S I.A. 225.

T. N. GHOSH v. BIHAll (Bhargava, !.) 233.

The result of the view that we have taken is that, under Art 314 of the Constitution, the right that continued to enure to the benefit of the appellant was that the enquiry to be held in his conduct must comply with the requirements of r. 55 of the Rules of

1930. We find that an enquiry ordered under the Rules of .1955 is in no way detrimental to the interest of the person against whom B the enquiry is held as compared with. an enquiry under r. 55 of the Rules .of 1930. The Rules of 1955 lay down the .same. type of opportunity to be given as did rule 5? of the Rules of 1930.

Under both sets of Rules, the enquiry could be ordered by the autliority under whom. the person concerned happened to be serving, so that, in the case of the appellant, the order made by the.

C Government of Bihar for enquiry does not in any way violate the rights which the appellant possessed under r. 55 of the Rules of

1930 and which were preserved to him by Art. 314 of the Constitution. The second ground of attack also, therefore, fails.

The appeal is dismissed, but, in the circumstances Of this case, we make no order as to costs .

.R.K.P.S.

Appeal dismissd.

TARAK NAm GHOSH

STATE OF BIHAR & ORS

February 22, 1968

K. N. WANCHOO, C.J.

S. M. SIKRI, J

V. BHARGAVA

Art. 314

June 29, 1965

Bihar

Central Government

Bihar Government

Government of India

India

Bibar Government

Art. 314

s. 240(3)

s. 240(2)

CIVIL APPELLATE JURISDICTION

B. C. Ghosh

P. K. Chatterjee

V. A. Seyid Muhammad

S. P. Nayar

Bhargava

Tarak Nath Ghosh

Government . of Bihar

15th August, 1947

23rd January, 1950

Indiaa.

C Police Service

26th January, 1950

Constitution of India

Art. 312(1)

Parliament

Article 312(2)

Art. 312(2)

section 3

Section 4

s. 3

Indian Police Service

Government. of India

Indian Police

clause 3

s.

3(1)

1st September, 1955

23rd July, 1960

29th June, 1965

13th JUiy, 1965

Article 226

High Court at Patna

Article 314

Government of the State of Bihar

Art. 312(2)

25th January, 1937

21st October, 1946

section 3

Jndian Police Service

Indian Government

British Government

K. M. Rajagopalan

R.P. Kapur

Angust lS,

SUPREME OOUP.T UPO&TS [1968] 3 s.c.

Central C Government

s. 3

Art. 314

Art. 314

section 240

India Act, 1935

s. 240(2)

Government of India Act, 1935

s. 240(3)

Government of India Act, 1935

s. 240(3)

Art 314

Government of Bihar

Art. 314