NAGARMAL TEKRIWAL

STATE OF BIHAR

March 4, 1970

[M. HIDAYATULLAH, C.J., A. N. RAY AND I. D. DUA, JJ,]

Bihar Foodgrains Dealer's Licensing Order, 1966, Para, 3(2)-Presumption from storage of foodgrains when to be drawn-Exemption for agriculturists.

Evidence Act, 1812-Lease-deeds even if not registered can be used in criminal case for collateral purpose-Oral evidence not lo be rejected on mere ground that it is of next-door neighbours.

On search of the appellant's premises foodgrains above quantities permitted under the Bihar Foodgrain Dealer's Licensing Order 1966 were found. He was prosecuted under s. 7 of the Essential .Commodities Act for violation of cl'. 3 QI the Order. The appellant produced oral and documentary evidence to show that he was an agl'iculturist and therefore the presumption under cl. 3(2) of the order that he had' stored the foodgrains for sale could not be drawn against him. The documentary evidence aforesaid consisted of lease deeds executed by the appellant and his brother in favour of lessees. The oral evidence showed that he and his brother were in possession of 80--90 bighas of land on which the foodgrains found in his possession were grown.

The documentary evidence was. rejected by the trial Rlagistrate on the ground that the leasedeeds not being registered were not admissible in evidence under s. 49 of the Registration Act. The Sessie>ns Judge in appeal did not 'rely on the lease.deeds for the reason that such documents could be brought into existence at any time. Both the trial magistrate and the Sessions Judge rejected the oral evidence as unreliable because it was given by persons who were next door neighbours and as· such interested in the appellant.

The appellant's revision petition before the High Court was summarily rejected.

By special leave he appealed to this Couict.

HELD : ( i) Cl. 3 ( 2) of the Or\ler expressly excludes bona fide consumers and agriculturists from the presumption to be drawn from proof of storage. only. It is obvious that the sub-01ause speaks of storage for sale as a dealer although the words 'as a deale<' are not there because storage has reference to business as a dealer and that is the essence of the order. The fiction in the second sub-clae must becarried to its

loc~ conclusion, [902 Bl

(ii) No doi.ibt the lease-deeds were not registel'ed" but in a criminal" case it had to be seen whether they were genuine or not and whether an inference of innocence could be based on them They served the collateral purpose of showing that the> lands about which the witne8ses spoke. orally were held by him for purposes of cultiVJltion. [902 DI

(iii) There is no reason why the evidence of a nex\ door neighbour should be rejected unless there is something intrinsically wrong witll it.

[902 E-FJ (iv)The tOtal circumstances in the case showed that the appellant was in fact carrying on agricultural operations. He executed a number of lease-<leeds, prodl!ced receipts and proved by ocal evidence, that he

900 SUPllEME COUllT 11.JIP()llTS

[1970] 3 S.C.R.

\i..as an agriculturist.

In his case therefore '8e presumption under cl.

A .,-·~ 3(2) could not be drawn. If that presumption was not drawn, the case ;.1gainst him stood unproved because of the exemption which agricul turists enjoy. [902 F-G]

The appeal must accordingly be allowed.

CRIMINAL APPELLATE JURISDICTION: Crimital Appeal No. 40 of 1968.

Appeal by special leave from the judgment and order dated January 23. 1968 of the Patna High Court in Criminal Revision No. 91 of 1968.

D. P. Singh, D. N. Milhra and Gmind Das, for the appellant.

R. C. Prasad, for the respondent.

The Judgment of the Court was delivered by

Hidayatullalt, C. J.

On May 28, 1966, Bhola Prasad Manda!, Supply Inspector Pathargama with other officers searched a godown belonging to Nagarmal Tekriwal (appellant) and found stored therein 45 quintals of rice, 90 quinta!s of paddy. 5-50 quintals of grains, 3 quintals of wheat, one quintal Arhar and 207 quintals of Khesari together with weighing scale and weights and measures.. As Nagarmal did not possess a licence under the Bihar Foodgrains Dealer's Licensing Order, 1966, he was prosecuted under s. 7 of the Essential Commodities Act for violation of cl. 3 of the order. _He was conVicted by the Munsif Magistrate.

First Class and sentenced to undergo rigorous imorisonment for six months.

The foodgrains found in his possession were also ordered to be forfeited to the State.

He appealed unsuccessfully to the Sessions Judge, Santhal Parganas. Dumka and his revision in the Hiah Court was summarily dismissed.

He now appeals by special leave granted by this Court.

The defence of the appellant was that he was an agriculturist and that the fn&dgrains were grown by him on the lands he had taken on lease from various parties.

In support of his defence. he produced both documentary and oral evidence.

The documentary evidence consisted of cer!ain lease-deeds executed by him dnd his brother in favour of the lessors.

Oral evidence showed that he and. his brother were in possession of 80-90 bighas of land on which paddy and other foodgrains found in his poscssiqn. vre grown.

NAGARMAL v. STATE OF B!HAR (Hidayatullah, C.J.) 90 l

A The case proceeded against him on the basis of the presumption under para 3 of the Order. It may be read here :

"Licensing of wholesale and retail dealers :

( 1) No person shall carry on business as a whole-sale

dealer or retail dealer except under and in accordance with the terms and conditions of a licence issued in this behalf by licensing authority.

(21 For the purpose of this clause, any person other than a bona fide consumer or an agriculturist, who stores any foodgrains in any quantity shall, unless the contrary is proved, be deemed to store the food grains for the purpose of sale."

It was held that as he had stored foodgrains above the permitted quantities for a wholesale dealer, he would be regarded as a wholesale dealer within the order.

The defence before us again is that he is an agriculturist and is not liable to the penalty under the law, because the presumption in his case cannot be drawn.

It is also submitted that his case that he was an ariculturist stands completely proved in this case. -

The learned Magistrale rejected the documentary evidence on the ground that the lease-deeds were not registered and were not admissible in evidence under s. 49 of the Registration Act. The learned Sessions Judge did not accept this ground; at least he did not say anything about it.

He held that such documents could be brought into existence at any time and were thus not reliable.

Both the Magistrate and the Sessions Judge did not accept the evidence of the witnesses on the ground that they were interested in the appellant.

Mr. B. P. Singh, in arguing the case has drawn our attention to a ruling of this Court in Manipur Administration v. M. Nila C lwndra Singh( 1 ) and contended that, the appellant cannot be regarded as doing business as a dealer unless a series of transacliom by him of ; ale were proved against him.

The ruling does sav that the words "carrving on the business" in the context of_

the Act postulate a course of conduct and continuity of transactions. The ruling may not be applic:ible fri certain circumstances. as for example where even a single transaction can be demonstrntcd to be in the course of business.

Carrying on of business may be found in one instance or more. depending upon the circumstances of the case:

SUPREME COURT REPORTS

(197.0J 3 S.C.R.

However, in the present matter we need not worry about the .carrying on of business, because in our opinion, the appellant .has successfully proved that he is an agriculturist and the presumption under paragraph 3 ( 2) of the order cannot be drawn .against him.

That paragraph expressly excludes bona-fide consumers and agriculturists from the presumption to be drawn from proof of storage only. It is obvious that sub-paragraph speaks of storage for sale as a dealer although the words "as a dealer" are not there; because storage has reference to 'business as a dealer and that is the essence of the Order. The fiction in the second sub-paragraph must be carried to its ogical conclusion. In the _present case, the appellant produced a number of ]ease-deeds in which leases of various parcels of land are shows to have been , granted to him. He also produced receipts of payment of lease money and he cited witnesses who deposed on oath that he and .his brother cultivated 80-90 _bighas of land. No doubt, the lease deeds are not registered, but for the purpose of a criminal prosecution, we have to see whether they are genuine or not and whether an inference of innocence can be based upon them.

In .-0ur judgment they serve the collateral purpose of showing that the lands about which the witnesses spoke orally were held by him for purposes of cultivation. If that be so, then, he is an agriculturist and it is easy to see that the evidence which was brought forward of witnesses deposing orally was not concocted to set up a false defence. Indeed no adequate reasons were given for rejecting the testimony of witnesses.

The learned Magistrate rejected the testimony of one witness on the ground that he is the next door neighbour and has a "soft corner for him".

We do not know why the evidence of the next door neighbour should be rejected; it can only be rejected if there is something intrinsically wrong with that evidence.

The total circumstances in the case show that the appellant was in fact carrying on agricultural operations. _He executed a number of lease-deeds, produced receipts and proved by oral evidence that he was an agriculturist.

In. his case, therefore, the presumption under para 3 ( 2) could not be drawn. If that presumption is not drawn, then the case against him stands unproved because of the exemption which agriculturists enjoy.

On the whole, we are satisfied that his conviction was improperly reached. We allow the appeal and set aside his conviction.

His bail bonds are cancelled.

The order of forfeiture

of foodgrains is also set aside.

We are informed that the foodgrains were sold.

If any money has been recovered by sale of H the foodgrains, it shall be handed over to the appellant.

G.C.

Appeal allowed.

NAGARMAL TEKRIWAL

STATE OF BIHAR

March 4, 1970

M. HIDAYATULLAH, C.J.

A. N. RAY

I. D. DUA, JJ

Evidence Act, 1812

s. 7

cl. 3(2)

s. 49

Registration Act

Cl. 3

Patna High Court

D. P. Singh

D. N. Milhra

Gmind Das

R. C. Prasad

Hidayatullalt

Bhola Prasad Manda

Nagarmal Tekriwal

Nagarmal

s. 7

Essential Commodities Act

cl. 3

Santhal Parganas. Dumka

s. 49

Registration Act

B. P. Singh


KANPUR SUGAR WORKS LTD.

STATE OF BIBAR & ORS.

March 6, 1970

[J. C. SHAH, K. S. HEGDE AND A. N. GROVER, JJ.] '

Bihar Land Reforms Act (30 of 1950), ss. 5(1) and 7(1)-'Uwl tlS factory-Scope _of.

The appellant was engaged in he business of manufacture of sugar, 10 the respondent-State.

It was in possession of Zamindari propertv.

Part of the area in its possession consisted of two enclosures The , factory buildings were situated in the inner enclosure and the outer W•lS used for residential, quarters, garages, kitchens, clubs, dispensaries, retit houses, out houses, office buildings, tubewell and wate< tank, godown, oattle shed, weighbridge house etc.

Under the notification issued under the Bihar Land Reforms Act, 1950, the Zamindari vested in the State but homestead lands and lands of the factory remained in the occupation of the appellant.

On the question whether the outer enclosure was homestead land not liable to assessment under s. 5 ( 1) of the Act or was liable to assessment under s. 7 (I).

HELD : Under s. 5 ( 1) an intermediary is entitled to retain possession of homestead lands as a tenant under the State free of rent; and under s. 7(1) an interme4iary is entitled to retain possession as a tenant buildings or structures together with the lands on which they stand, subject to. payment of such fair -and equitable ground rent as may be determined by the Collector if the'y are used as golas, factories or mills, for the purpose of trade, manufacture or commerce.

The expression employed is 'used Gs' and not 'used for'.

Therefore, merely , because a factory has for the benefit of the workmen and managerial staff working in the factory, constructed buildings as quarters, clubs, kitchens, garage. dispensary, rest houses, out houses etc., they cannot he deemed to fall under s. 7 (I) when they are not directly used a.< factdry or mill buildins.

The definition of 'factory' in the Factories' Act whose object and scheme are entirely different, cannot be a guide in determining the n1eaning of the expression 'factory' as used in Bihar Land Refo1ms Act. r907 B-GJ

CIVIL APPELLATE JURISDICTION : Civil Appeal No. ~69 of 1967.

Appeal from the judgment and decree dated October 28. 1965 of the Patna Hih Court in Misc. Judicial Case No. 1262 of 1962..

M. C. Chagla, D. N. Mishra, J. B. Dadachanji and 0. C. Mathur, for the appellant.

D. Goburdhun, for the resiiondents.

The Judgment of the Court was del!vered by

Shah, J.

Kanpur Sugar Works Ltd.-a public limited Company-is engaged in the business of manufacturing sugar m village Marhowrah, District Saran, in the State of Bihar: Prior

to 1956 it possessed a considerable -zamfndari property.

Under a notification issued in exercise of the power under the Bihar Land Reforms Act 30 of 1950 the entire zam1'ndari vested in the State with effect from January 1, 1956. But by the provisions of the Act homestead lands and lands of the factory remained in the occupation of the Company. The Circle Officer commenced a rent assessment proceeding under the Bihar Land Reforms Act for determining. the rent payable by the Company.

The Company cliamed to dassiiy lands n its occupation under three heads : (i) 12 bighas 9 kathas 7 dhurs on which the factory buildings stood, and cin that account assessable to rent under s. 7 of the Bihar Land Reforms Act, 1950; (ii) 50 bighas 3 kat!zas J 3 dl111rs of cultivable land under Khas cultivation of the Company liable to assessment of rent under s. 6 of the Ac!: and

(iii) 71 big!za.· 2 katlws 12 dlmrs as homestead land not liable to assessment under sub-s. (I) of s. 5 of the Act.

By order dated Februar; I 0, 196 J the Circle Officer fixed rent at the rate of Rs. 187-8-0 per acre in respect of 80 bighas

16 kat/zas 15} d!z11rs of land under s. 7 of the Act. The Circle Officer rejected the contention of the Company that 7 I bighas I! 2 katlws 12 dlwrs of land on which there stood residential bungalows, quarters, garage, kitchens, clubs, dispensary, rest house, outhouses, oftice buildi!lgs, tube-well and water tank, godown,

cattle-shed, weighbridge house etc. was homestead and was on that account exempt from liability to pay rent.

Appeal against that order w:i; dismissed by the Collector of Saran by his order r dated August 6, 1962

The Company then moved a petition in the High Court of Patna for a writ quashing the order of the Circle Oillcer and the Collector fixing the rent under s. 7 of the Bihar Land Reforms Act, 1950, in respect of the land claimed to be homestead.

The High Court rejected the petition.

In the view of the High Court the expression "factory" could not mean merely the place where

the machinery is installed and the process for the manufacture of sugar or distillation of liquor is carried on, but the whole area of land. including the courtyard necessary for earring on various operations.

The High Court recorded the conclusion as follows : " ...... the buildings and structures used for the , Uoresaid ancillary purposes of the factory must also be held to form part of the factory and the land on which

they stand must include not only the actual site on which the structures are erected but also the adjacent land necessary for the convenient use of the said structures and buildings.

The whole of the land covered by the outer enclosure would, therefore, be, on a reasonable interpretation of s. 7 ( 1) of the Act, included within the words -"buildings or structures" used as factories for the purpcise of the said sub-section, eventhough that area may include some vacant land as wdl."

The High Court further observed that the proviso to s. 5 ( 1; , if the Act had no application, because ( 1) the staff quarters cannot be clearly demarcated from the other structures and buildings located within the outer enclosure used for the purpose of the factory, such as rest house, outhouses, office-buildings, tubo-well, water tanks, godowns, cattle-shed, weighbridge etc.; a; nd (2) though the occupants of the staff quarters pay rent to the factory, nevertheless it cannot be said that those quarters are used "for, the purpose of letting out on rent".

Th~ High Court rhn proceeded to state that "the mere fact that oome rent is incidentally collected from the occupants will not detract from the main purpose for which the quarters are used, namely, to facilitat~ the proper working of the factory.

The occupation by a mer:ibor of the staff of the factory of those quarters is that of a servant of the factory and not that of an ordinary tenant.

It was not alleged, nor is there a finding to the effect, that he can continue to occupy the quarters if he ceases to be a member of the staff of the factory or else that he can sub-let the house to some othr person like an ordinary tenant.

The relationshb between the occupant of these quarters and the factory continues to be that of a master and servant and not that of an ordinary landlord and tenant" Against the order dismissing the writ netition. this a'Jpeal has been filed with certificate granted by the High Court.

In our view, the order passed by the High Court cannot be !Mlstained.

It appears that there are two enclosures whicli comprise the total area of 83 bighas odd in respect of which the dispute arises.

One is the inner enclosure in which are situate the buildings of the factory in which sugar is manufactured and the process of distillation of liquor is carried on.

The outer enclosure consists of an area of 71 bigha~ 2 kathas and 12 dh11r<.

In the statement of land in the Khas oossession of the Comnanv all these lands are described as used for residential 01rnrters.

H rntcheri, disrensary, rest-house. bunalnws. outhouse<. l<itrhen quarters, latri.nes, garage. club. control office. water-tanl<. halrerv house, cane office quarters, godowns. cattle-shed. weighbridge MtoSup Cl (NP)/70~13

house, tube-well etc." The dispute raised by the Company is A f !hat the land on which these buildings stand is homestead, and is governed by s. 5 of the Act.

By a notification issued under s. 3 of the Bihar Land Reforms Act, 1950, the State Government may declare that an estate or tenure of the proprietor or tenure-holder, specified in the notifi- B cation has passed to and become vested in the State. The consequences of vesting are set out in s. 4.

But the vesting under ss. 3 & 4 is subject to the provisions of ss. 5, 6 & 7.

Under sub-s. (I) of s. 5 it is provided :

"With effect from the date of vesting, all homestead~ comprised in an estate or tenure and being in the possession of an intermediary on the date of such vesting shall, subject to the provisions of sections 7 A and 7B be deemed to be settled by the State with such intermediary and he shall be entitled to retain possession of the land comprised in such homesteads and to hold it as a tenant under the State free of rent :

Provided that such homesteads as are used by the intermediary for purposes of letting out on rent shall be subject to the payment of such fair and equitable ground-rent as may be determined by the Collector in

th~ prescribed manner."

Section 6 deals with the right of the previous holder of land used for agricultural or horticultural purposes which were in khas possession of an intermediary on the date of vesting.

In this case, we are not concerned with any dispute relating to such land.

By s. 7 ( l), insofar as it is relevant, it is provided :

"Such buildings or structures together with the lands on which they stand, other than any buildings used primarily as offices or cutcheries referred to in clause (a) of section 4, as were in the possession of an intermediary at the commencement of this Act and used as go/as, factories or mills, for the purpose of trade, manufacture or commerce or . . . and constructed or established and used for the aforesaid purposes before the first day of January 1946, shall, . . . . be deemed to be settled by the State with such intermediary and he shall be entit1ed to retain possession of such buildings or structures together with the lands on which they stand as a tenant under the State subject to the payment of such fair and equitable ground-rent as may be determined by the Collector . . . . "

It is clear from a bare perusal of sub-s. ( 1) of s. 7 that the build ings which are primarily used as offices or cutcheries referred to in cl. (a) of s. 4 as were in the possession of an intermediary at the commencement of the Act are excluded from the terms of s. 7 ( 1). Again, sub-s. (1) only applies to such buildings or structures together with the lands on which they stand which are used as golas, factories or mills for the purpose of trade, manufacture or commerce or used--for storing grains or keeping cattle or implements for the purpose of agriculture. The expression employed by the Legislature is "used as go/as, factories or mills" and not "used for go/as, factories or mills". The expression "lands on which they stand" may include the land which is necessary for the efficient user of the buliding for the purpose for which it is intended to be used. We are unable however to hold that because a factory has, for the benefit of the workmen and managerial staff working in the factory, constructed buildings used as bungalows. quarters for employees, clubs, kitchens, garage, clubs, dispensary, rest house, outhouses •etc., but which are not directly used as factory or mill buildings, the buildings would be deemed to fall within s. 7 ( 1) as buildings in the possession of an intermediary and used as go/as, factories or mills. In our judgment, these lands are homestead and are claimable by an intermediary under s. 5 ( 1) : if thoy are used for the purpose of letting out they would be liable to pay fair and equitable ground-rent under the proviso E . to sub-s. (1) of s. 5.

The High Court was, we think:, in error in relying upon the definition of "factory" used in the Factories Act, 1948. The scheme and object of the Factories Act are different : the Act is intended to regulate labour in factories, to protect workmen from being subjected to unduly long working hours, for making provision for healthy and sanitary conditions of service, and for protecting the workmen from industrial hazards. The definition of

"factory... in the Factories Act cannot be a guide, much less a useful guide, in determining the meaning of the expression "factory" as used in the Bihar Land Reforms Act, 1950.

The liability to pay rent under the Bihar Land Reforms Act, 1950, on the footing that the land remained in the possession of the intermediary on which buildings or structures used as golas, factories or mills, for the pugmse of trade, manufacture or commerce must be determined on the terms used in the Bihar Land Reforms Act, and not by incorporating words used in another statute of which the scheme and object are different.

The revenue authorities erred in holding that the entire area of 83 bighas odd was liable to be assessed to rent under s. 7 ( 1) of the Bihar Land Reforms Act, 1950. Undoubtedly an area of

908 SUPREME COUl.T UPOl.TS

[1970) 3 S.C.R.

12 bighas 9 kathas 7 dhurs in liable to be use8ICd to rMt under A ., s. 7 ( 1 ) of the Act.

U there are other lands which strictly fall within . the expression "buildin~ or structures together with the lands" used as galas, factories or mills fur the purpose of trade, manufacture or commerce, it will be open to the Collector . to assess those lands to rent under s. 7 ( 1l, but the lands not covered by buildings and structnres used for golas, factories or mills, will B be governed by s. 5 ( 1) of the Act.

We are, on the materials on the record, unable to specify the buildings and lands falling within s. 7 of the Act for the purpose of determination of assessment of rent.

The evidence on the record before us is not clear as to what structures or buildings stand on the lands in the outer enclosure and the purpose for which they are used. We are also not clear as to the precise meaning of the expression "go/as" used in s. 7-the expression not being defined in the Act.

The appeal is allowed and the orders of the Circle Officer and of the Collector assessing_rent in respect of 71 bighas 2 kathas and 12 dhurs in the outer enclosure in respect of which renf has been assessed under s. 7 of the Bihar Land Reforms Act,· 1950, are quashed.

The appellant will be entitled to its costs in this Court and in the High Court.

Y.P.

Appeal allowed.

KANPUR SUGAR WORKS LTD

STATE OF BIBAR & ORS

March 6, 1970

C. SHAH

K. S. HEGDE

A. N. GROVER, JJ.

Bihar Land Reforms Act

ss. 5(1) and 7(1)

s. 5

s. 7

s. 5

s. 7(1)

s. 7

CIVIL APPELLATE JURISDICTION

October 28. 1965

Patna Hih Court

M. C. Chagla

D. N. Mishra

B. Dadachanji

0. C. Mathur

D. Goburdhun

Shah

Kanpur Sugar Works Ltd.-a

s. 7

Bihar Land Reforms Act, 1950

s. 6

s. 5

s. 7

Saran

August 6, 1962

High Court of Patna

s. 7

Bihar Land Reforms Act, 1950

s. 7

s. 5

s. 5

s. 3

Bihar Land Reforms Act, 1950

s. 4

ss. 3 & 4

ss. 5, 6 & 7

s. 5

sections 7

Section 6

s. 7

section 4

s. 7

s. 4

s. 7

s. 7

s. 5

s. 5

Factories Act, 1948

Factories Act

Factories Act

Bihar Land Reforms Act, 1950

s. 7

Bihar Land Reforms Act, 1950

[1970) 3 S.C.R.

12

s. 7

s. 7

s. 5

s. 7

s. 7

s. 7


. '

SIDDANNA APPARAO PATIL

STATE OF MAHARASHTRA

March 6, 1970

[A. N. RAY AND l D. DuA, JJ.J

909.

Code of Criminal Procedure (5 of 1898), s. 410-Appeal to Higb Court involving substantial and arguable questions-Appeal dis1nissed in in limine summarily-Propriety.

The appellant and another were char&ed under s. 302 read with s. 34, I P.C. The second accused was acquitted but the appellant was convicted and sentenced to imprisonment for life by the Sessions Court. In appeal to the High Court, the appellant raised various arguable and substantial questions of law and fact, but the High Court dismissed the appeal in li1nine summarily-Propriety,

I appeal to this Court by special leave,

D HELD : The order of dismissal of the appeal should be set aside and

the matter remitted to tbe High Court for fresh consideration. [912 DJ

The High Court has undoubtedly the power to dismiss summarily an appeal under s. 410 Cr. P.C .. but, it should not do so if the appeal

raises arguable and substantial points.

Further, in such appeals. the High Court should give reasons for the rejection of the appeal. [910 E; 912 Cl

Mushtak Hussain v. State of Bombay, [1953] S.C.R. 809, Govirtda Kadtuji Kadam & Ors. v. St>ate of Maharashtra, [1~70] 3 S.C.R. 525 and Chittaranjan Das v. State of West Bengal [1964] 3 S.C.R 237, followed. 2n. followed.

CRIMINAL

APPELLATE JURISDICTION : Criminal Appeal No. 180 of 1967.

Appeal by special leav.e from the order .dated December 5, 1966 of the Bombay High Court in Criminal Appeal No. 1444 of 1966.

The appellant did not appear.

M. S. K. Sastri and s: /'. Nayar, for the respondent.

The Judgment ol the Court was delivered by

Ray, J.

This is an appeal by special leave against the judgen~ f te J:li~ Court of Bombay dated 5 December, 1966 d1sm1ssmg m limme the appeal preferred against the judgment and order dated 16 August, 1966 passed by the Sessions Judge Sholapur.

The High Court by an order datCd 3 April 1967 also refused leave to appeal to this Court. '

The appellant was accused No. I.

He was convicted under section 302 read with section 34 of the Indian Penal Code and sentenced to imprisonment for life.

Broadly stated, the charge against the appellant was that he in conspiracy with his brother, accused No. 2 committed murder

of Revansidhappa Shivappa Patil and Mahadeo Sidran Patil.

The B defence of both the appellant and his brother was one of total denial.

The right to prefer an appeal from sentence of Court of Sessions is conferred by section 410 of the Criminal Procedure Code. The right to appeal is one both on a matter of fact and a matter of J.aw.

It is only in cases where there is a trial by jury that the C right to appeal is under section 418 confined only to a matter of law.

This Court in several decisions dealt with section 410 of the Criminal Procedure Code and the rights of the appellant thereunder. Reference may be made to one of the earlier decisions of D this Court in Mushtak Hussain v. Tire State of Bombay(') and the recent decision in Govinda Kadtuji Kadam & Or.•.' v.

State of Maharashtra(') where several previous decisions of this Court have been noticed.

The following principles emerge from the decisions; first, the Appellate Court undoubtedly has power of summary dismissal; E secondly, if the appeal raises arguable and substantial points the High Court should give reasons for rejection of appeal; thirdly, rejection of an appeal by using only one word of dismissal causes difficulties and embarrassment in finding out the reasons which weighed with the High Court in dismissal of the appeal in limine; fourthly this Court in Chittaranjan Das v. State of West Bengal(') F held that the High Court should not summarily reject criminal appeals if they raise arguable and substantial points.

As to what is an arguable and a substantial point may be illustrated with reference to a few decisions.

In Nara.van Swami v. State of Maharashtra(') this Court stated G that a ground in preferring an appeal from the judgment of the Sessions Court that a gross illegality was committed in relying upon the evidence given by a co-accused in a dacoity case and using the answers given by him as a co-accused against the accused appellant would be a substantial question.

Again it was noticed that denial of an opportunity to a:n appellant in a dacoity H

(I), {1953] S.C.R. 809.

(J) [19641 l S.C.R. 237.

(2) !1970] 3 S.C.R. 525.

(4) [1968] 2 S.C.R. 88.

SIDDANNA V. MAHARASHTRA (Ray, J.) 911

case of being heard as required under section 479A of the Criminal Procedure Code would be an arguable point.

in an unreported decision of this Court in Bhanwar Singh v.

State of Rajasthan('), it was held that failure to consider the position in which the appellant was placed when his immediate superior admittedly ordered him to bring out the currency notes which were required not for the purpose of investigation of any case but only for the purpose of being shown to a person whom the sub-inspector wanted to help in laying down a new trap would be a substantial ground in a conviction under Prevention of Corruption Act and section 409 of the Indian Penal Code.

In another unreported decision of this Court in Vishwa1J0th Shankar Beldar v. State of Maharashtra(') it was said that if the trial Judge did not accept the witness as a wholly truthful witness in the light of reports sent by police officers and his statement under section 162 of the Criminal Procedure Code and remarked that a portion of the evidence was clearly an improvement it was necessary for the High Court to consider the evidence afresh.

In another unrepotted earlier decision of this Court in Bashir -Husain Peshimani v.

The State of Maharashtra(') the offences alleged were under the Indian Penal Code, the Sea Customs Act, 1887 and the Foreign Exc\lange Regulation Act, 1947 in respect of gold alleged to have bee, n brought into India in pursuance of a conspiracy.

There was oral testimony of accomplices.

That evidence was held by the trial Court to have been corroborated by the actual finding of gold from the place of one of the accused.

Another piece of evidence was the recovery of duplicate set of keys at the residence of accused No. 2.

Reliance was placed by the trial court on the confession of the appellant which had been retracted as corroborative evidence of the accomplice witnesses.

In preferring appeal to the High Court the grounds urged were that there were serious infirmities in the evidence and the manner in which the keys were recovered was open to objection.

The High Court dismissed the appeal in limine: This Court remitted the matter back to the High Court for disposal of the appeal in accordance with law by expressing the view that these were arguable points. In the same case ir was said that it would be open to the appellant to canvass before the High Court in appeal every point even on a question of fact in his favour to demolish by reference to other material the evidence that had been used against him.

In the preseni case, one of the contentions of the appellant in the appeal preferred was that the appellant was charged under

J) Criminal Appeal No. 38of1969 decided on 17 September, 1969.

(2) Criminal Appeal :No. 95of1969 dececided on 18 September 1969.

(3) Criminal Appeal No. 262of1968 decided on 20 Dcchml:er, 19f8.

section 302 read with section 34 of the Indian Penal Code for committing murder of both the Patils in furtherance of the common intention of the appellant and accused No. 2 and on accused No. 2 bing acquitted the appellant could not be convicted with the aid of section 34. ln aid of that contention reliance was placed on the decisions of this Court in Prabhakar Navale v. State of Bombay(') and Krishna G. Patil v. State of Maharashtra(').

Another contention raised in the appeal was that it would be an error to hold that there was inititnacy between the appellant and Nilava wife of Babanna on the evidence of third parties when neither Babanna or Nilava gave evidence.

We have only referred to two contentions amongst several others to illustrate both arguable and substantial matters of law and of fact.

In the present case the High Court dismissed the appeal by a single word and it is not possible to know the reasons which persuaded the High Court to dismiss the appeal.

In the result the appeal is allowed.

The order of dismissal of the appeal is set aside.

The matter is sent back to the High Court for fresh con; ideration on hearing the parties.

V.P.S.

Appeal allowed.

----------·----

(I) A.LR. 1963 S.C. 51.

(2) A.LR. 1963 S.C. 1413.

SIDDANNA APPARAO PATIL

STATE OF MAHARASHTRA

March 6, 1970

A. N. RAY

l D. DuA, JJ

Code of Criminal Procedure

s. 410

s. 302

s. 34

s. 410

[1964] 3 S.C.R 237

M. S. K. Sastri

Ray

section 302

section 34

Indian Penal Code

Revansidhappa Shivappa Patil

Mahadeo Sidran Patil

section 410

section 418

section 410

1970] 3 S.C.R. 525

[1968] 2 S.C.R. 88

SIDDANNA V. MAHARASHTRA

section 479A

Prevention of Corruption Act

section 409

Indian Penal Code

section 162

Indian Penal Code

Sea Customs Act, 1887

Regulation Act, 1947

India

17 September, 1969

18 September 1969

section 302

section 34

Indian Penal Code

section 34

Nilava

Babanna


CHAMAN LAL

THE STATE OF PUNJAB

March 6, 1970

[A. N. RAY AND I. D. DUA, JJ.J

Indian Penal Code, 1860, ss. 499 and 500-Plea of justification under exception.\· 1, 8 and 9 of s. 499-Scope of-When docu111ents privileged,

The appellant, who was the President of the local Municipal Com mittee. was convicted under Section 500 of the Indian Penal Code on a complaint that he had made defamatory remarks in respect of the character of the complainant, a Nurse attached to the Civil Dispensary, at a public meeting; that he wrote a letter to the Civil Su'rgeon which contained defamatory statements against he•r character and also repeated the defamatory allegations before the Civil Surgeon.

The appellant's plea of justification under excptions 1, 8 and 9 of s. 499_ I.P.C. was rejected by the trial court and his appeal to the High Court was also dis missed.

On appeal to this Court

HELD : On the facts, the appeal must be dismissed.

In order to come within the First Exception to s. 499 it has to be established that what has been imputed concerning the respondent is true and the publication of the imputation is for the public good.

The onus of plroving these two ingredients was on the appellant but he tota1ly

ailed to establish these pleas.

On the contrary, the evidence showed that the imputation concerning the respondent was not true but was motivated by animus of the appell'111t against the r<Spondent. [917 HI

The Eighth Exception to s. 499 indicates that an accusation in good faith against the person to any of those who have lawful authority over that person with respect to the subject matter of the accusation is not defamation, but in the present case there was utter lack of gl?od faith in the accusation.

Good faith 'requires care and caution and prudence in the background of context and circumstances.

The position of the person making the imputation will regulate the standard of care and caution.

1918 C]

The Ninth Exception provides that if the in1putation is made in good faith for the protection of the person making it or for another person or for the public good it is not defamation. Apart from the Jack of good faith there was no evidence to support the plea that the imputation was for the public good.

Furthermore the interest has to be real and legitimate when communication is made in protection of the interest of the person makin2 it. [918 DJ

The plea that the Jetter to the Civil Surgeon was privileged because as the President of the local Municipal Committee the appellant had to Mite to, the Civil Sµrgeon about the work of the .cur.1plaint ws not taken at the trial and there was no, evidence to support it. Purthirinorc,

the privilege extends only to a communication upon the subject with resM pect to which the privilege extends and the privilege can be claimed in exer .. cise of the right or safeguard of the interest which creates the privilege.

In the present case the concurrent findings of fact repel any suggestion

of pirotection of the interest of the appellant in making the insinuations A against the respondent contained in the letter fom1ing the subject matter of the complaint. [918 G]

CRIMINAL

APPELLATE JURISDICTION : Criminal Appeal No. 138 of 1967.

Appeal by special leave from the judgment and order dated B May 26, 1967 of the Punjab and Haryana High Court in Criminal Revision No. 675 of 1965.

R. L. Kohli, for the appellant.

Harbans Singh and R. N. Sachthey, for the respondent.

The Judgment of the Court was delivered by

Ray, J. This appeal is by special leave from the judgment of the High Court of Punjab and Haryana dated 26 May, 1967.

The High Court upheld the conviction of the appellant under section 500 of the Indian Penal Code and sentenced him to three months simple imprisonment and imposed a fine of Rs. 1000

and in default thereof a further simple imprisonment for three months.

The case started on a complaint filed by Bishan Kaur on 23 October, 1963.

The complaint was that the appellant Chaman Lal who was at that time Pre.sident of Municipal Committee, Sujanpur in the District of Gurdaspur had made defamatory remarks against her character at a public meeting held at Sujanp_ur on 29 July, 1962 aild that he further wrote a letter on 2 August, 1962 to the Civil Surgeon, Gurdaspur which contained defamatory statements against her character and further that on 27 August, 1962 the appellant repeated those defamatory allegations before the Civil Surgeon.

The appellant pleaded justification under Exceptions l, 8 and 9 to section 499 of the Indian Penal Code.

The First Exception states that it is not defamation to impute anything which is true concerning any person, if it be for the public good that the imputation should be made or published.

Whether or not h is for the public good is a question of fact.

The Eighth Exception states that it is not defamation to prefer in good faith an accusation against any person to any of those who have lawful authority over that person with respect to the subject-matter of accusation.

The Ninth Exception states that it is not defamation to make an imputation on the character of 1lnother provided that the imputation be made in good faith for the protection of the interest i;>f the person making it, or of !lny other person, or for the pubhc good.

' c

F -

The letter written by the appellant dated 2 August, 1962 which was marked as Exhibit P.W. 4/ A, inter alia, states, "It

is a matter of grave concern and consideration that Smt. Bishan Kaur, Nurse Dai attached with Civil Dispensary is earning very bad reputation having illegal relations with one Shri Prakash Chand. a cycle repairer of Sujanpur.

A meeting of the Co-ordinate Civic-body of Sujanpur was convened, to create civic sense .... on 29 July at 8 A.M. in the Town Hall wherein leading men bf all communities were present.

The issue about the character of Smt. Bishan Kaur was discussed in open house and the public felt this point seriously.

The matter has been brought to the notice of the worthy Deputy Commissioner, Gurdaspur personally by me on 1 August, 1962 and he assured to take immediate action against her.

I feel my assumption to bring to your notice and request for immediate transfer of her in the public interest"

The appellant claimed that the residents of Ward-5 of Sujanpur had submitted a complaint in writing dated 25 July, 1962 against the serious misbehaviour of the respondem Bishan Kaur and that allegations were made against the character of Bishan Kaur in that application.

The appellant further claimed that the said application marked Exhibit D.W. 1/ A was read by the Secretary of the Municipal Committee, Sujanpur at the meeting on 29 July, 1962.

The further defence of the appellant was that a resolution was passed at that meeting requesting the appellant to approach the higher authorities regarding the said application and it was pursuant to that resolution that the appellant wrote the letter dated 2 August; 1962 forming the subject matter of the complaint. The resolution on which the appellant relied was marked as Exhibit D.C.

Counsel for the appellant contended that good faith of the appellant was established by two features; first that as President he had to act in public interest, and, secondly, large number of people who signed the application and passed the resolution were present at the meeting on 29 July, 1962 and there were allegations against the respondent.

It was, therefore, said by counsel for the appellant that the appellant acted not only in good faith but also for public good.

Public good is a question of fact.

Good faith has also to be established as a fact.

The concurrent findings of fact by the Sessions Court and the High Court with. regard to meeting on 29 July 1962 are three fold; first that there was no record of the proceedings of the meeting c alleged to have been held on 29 July, 1962 at the Town Hall of Sujanpur.

It was not therefore dependable to rely only on the oral evidence of the complainant that the appellant had defamed the complainant at the meeting, and, therefore, benefit of doubt

was given to the appellant on that charge.

The sceond finding is that the application dated 29 July, l "62 alleged to have been made by the residents of Sujanpur and further alleged to have been 'ead ovrr by the Secretary of the Municipal Committee at the meet- . ·ng on 29 July, 1962 was a manufactured document.

Thirdly, the resolution alleged by the appellant to have been passed by the residents of Sujanpur at the meeting on 29 July, 1962 was also a forged document.

One of the reasons given by both the Courts for rejecting both the application and the resolution from consideration was that none of these alleged documents was put to any of the prosecution witnesses some of whom admittedly attended the meeting on 29 July, 1962.

The genuineness of the.documents was rightly disbelieved.

In the background of these findings of fact the plea of good faith of the appellant that he wrote the letter dated 2 August, 1962 pursuant to the application and the resolution of the residents of Sujanpur loses all force and has no foundation.

In order to establish good faith and bona fide it has to be seen first the circumstance under which the letter was written or words were uttered: secondly. whether there was any malice: thirdly, whether the appellant made any enquiry before he made the allegations; fourthly. whether there are reasons to accept the version that he acted with care and caution and finally whether there is preponderance of probability that the appellant acted in good faith.

The appellant said that he verified the allegations and then wrote the letter forming the subject matter of the complaint.

The appellant has not given any evidence as to what steps he took for verifying the allegations.

On the contrary, it appears to be established on evidence that during five years preceding the letter written by the appellant to the Civil Surgeon there was not a single instance or occasion of any complaint against the respondent Bishan Kaur.

The further finding is that the appellant in defence sought to produce witnesses who tried to establish that the respondent was a woman of doubtful virtues.

Three of the witnesses on behalf of the appellant were a potato chop seller, a tongawala and a petty shop-keeper and they went to the extent of sayh1g that they had illicit connections with her.

These defence witnesses were disbelieved.

That also proved that the appellant did not act in good faith.

The appellant was the President o! the Municipal Committee and it would not be an act of good faith or prudence and caution to rely on such persons as a tongawala or a petty shop-keeper in making allegatio.ns against the character o.f the respondent.

F -

Counsel for the appeilant relied on Exhibits D.A. and DB. and submitted that the High Court c:1d not talce these two letters into consideration in finding out tl1e good faith of the appellant Exhibit D.A. is dated 18 September, 1962 and is a letter addrs

sed by the Civil Surgeon to the appcllam. Exhibit D.B. is ir memorandum by the residents of Sujanpur to the Civil Surge •n

and bears the date 27 August, 196'.:. In Exhibit D.B. !he alleged signatories wrote to the Civil SurgeOJ, rhat they had to attend the enquiry by the Civil urgeon in.co rhe conduct of Bishan Kaur and that the enquiry was at thtdemand of the general public and further that there were complaints against the respondent and 'it was not desirable to retain such a person on the noble job of a nurse.

The letter of the Civil Surgeon dated 1 September, 1962 was that a large number of people were present and bulk of them expressed their views against Biishan Kaur and some of the persons met the Civil Surgeon subsequent to the enquiry at his office.

The High Court found that some of the persons who submitted the alleged representation against the respondent to the Civil Surgeon later on Ct'ntroverted the allegations against the respondent awl th is evidence established that the complainant was an ordinary nurse awl that is ho"' the appellant had manoeuvred discussion f die. ;,,_,1; ilainant's -:haracter at the enquiry before the Civil Surge.:m on 27 Augu; t, 1962.

The appellant cannot rely on Exhibit D.B. dated 27 August, 1962 to estao1i.; h good faith in writing the letter dated 1 August,

1962. Furthermore, Exh'bi: D.B. which is alleged to have been written by tht rc, idents of S"rrnpur was not proved by calling persons who are alleged to have signed.

Documents do not prove rhemselves.

Exhibit D.B. wa> not proved by the persons who are alleged' to have signed the rnme nor was the truth of statements contained in Exhibit D.B. prc; ved.

The enquiry made by the Civil S1rgeon on 27 August, l %2 was found by the High Court to have been engineered by the private animus of the appellant against the respondent by sending some residents to-the place of enquiry.

This finding not only disproves good faith but establishes total lack of care and prudence on the part of the appellant.

The letter written by the appellant indicates that the appellant wac. setting his seal of approval to matters contained in that letter.

There is no proof that the appellant made any enquiry about the matters before he \vrote the letter.

There is no evidence that the appellant acted with reasonable care.

On the contrary, circumstances suggest that the appellant acted without any sense of responsibility and propriety. The. appellant was a President of the Municipal Committee and there he was. required to act .with utmost orudence and caution.

In order to come within the First Exception to section 499 of the Indian Penal Code it has to be established that what has

en impud con?ern!ng the respo':1dent is true and the publication of the imputation 1s for the pubhc good.

The onus of proving these two ingredients, namely, truth of the imputation and the publication of the imputation for the public good is on the appellant.

The apJJP, llant totally failed to establish these pleas.

On the contrary, the evidence is that the imputation concerning the respondent is not true but is motivated by animus of the appellant against the respondent. ·

The Eighth Exception to section 499 of the Indian Penal Code indicates that accusation in good faith against the person to any of those who have lawful authority over that person with respect to the subject matter or the accusation is not defamation.

We have already expressed the view that there is utter lack of good faith in accusation.

The Ninth Exception states that if the imputation is made in good faith for the protection of the person making it or for another person or for the public good it is not defamation.

There is no evidence whatever to support the plea that the imputation was for the public good.

The accusation was not also made in good faith.

Good faith requires care and caution and prudence in the background of context and circumstances. The position of the person making the imputation will regulate the standard -Of care and caution. Under the Eighth ExceptiQD statement is madeby a person to another who has authority to deal with the subject matter of the complaint whereas the Ninth Exception deals with the statement for the protection of the interest of the person making it.

Interest of the person has to be real and legitimate when communication is made in protection of the interest of the person making it.

Counsel for the appellant contended that the communication to the Civil Surgeon was privileged, because as the President of the Municipal Committee be had to write to the Civil Surgeon

about the work of the complainant.

It will be a question of . fact as to what the duty of the appellant was in relation to the work of the respondent in making a statement to the Civil Surgeon.

This plea was not taken and there is no evidence to support it.

Furthermore, the privilege extends only to a communication upon the subject with respect to which the privilege xtends and the privilege can be claimed in exercise of the right or safeguard of the interest which creates the privilege. In the present case, the concurrent findings of fact repel any suggestion of protection of the interest of the appellant in making the insinuations contained in the letter forming the subject matter of the com- . plaint. There is also no matrial to sow as t? ow the letter was written by the appellant m protection of his mterest.

A ""(

F '!.

,, .

The letter writttn by the appellant contains imputations and insinuations against the character of the respondent.

One of the allegations was that a cycle repairer was on intimate terms with the respondent.

This was a serious allegation against the character of the respondent. The appellant made baseless and reckless allegations.

They are baseless because they have not been proved.

They are reckless because the appellant claimed to qe the President of the Municipal Committee but he acted in a totally irresponsible manner by havillg gone out of his way to make the allegations against the character of a poor and helpless

widow.· The appellant was a man.of power and wealth.

That is all the more why he should have acted with restraint and decorum. He failed in both. There was po good faith.

The appellant .cannot be said to have acted in public good.

Counsel for the appellant submitted that if there was a reduction of sentence from three months to two , months that would save him from disqualification.

There is no merit in that submission.

This is not a case where th~ should be a reduction of sentence

particularly when the Courts have found facts which dispel any , semblance of good faith and indicate on the contrary lack of prudence and dignity with which a person occupying the office of tlie President should act.

The appeal, therefore, fails and is dismissed. The appellant is directed to surrender to the bail bond to undergo the unexpired term of his imprisonment

R.K.P.S.

Appeal dismissed.

LAL

THE STATE OF PUNJAB

March 6, 1970

A. N. RAY

I. D. DUA, JJ

Indian Penal Code, 1860

ss. 499 and 500

s. 499

Section 500

Indian Penal Code

s. 499

I.P.C

s. 499

s. 499

Purthirinorc

R. L. Kohli

Harbans Singh

R. N. Sachthey

Ray

High Court of Punjab and Haryana

section 500

Indian Penal Code

Bishan Kaur

Chaman Lal

section 499

Indian Penal Code

Prakash Chand

Sujanpur

Gurdaspur

29 July, 1962

Bishan Kaur

1 September, 1962

Biishan Kaur

section 499

Indian Penal Code

section 499

Indian Penal Code


UNION OF INDIA

THE LONAVLA BOROUGH MUNICIPALITY OF LONA VLA,

DISTRICT POONA, BY ITS CHIEF OFFICER, AND

ANOTHER March 9, 1970.

[S. M. SIKRI AND V. BHAR.GAVA, JI.]

Bombay District Municipal Act 3 of 1901-S. 59 Bomoay Municipal Boroughs Act 18 of 1905-S. 13-Scope of-Collection of taxes from railway as consolidated tax under cl. (c) second proviso instead of separate tnxes under the other provisions of the two SiCtiOnl -V alid.f.''

The respondent Municipality, which at the time vfu governed by the Bombay District Municipal Act 3 of 1901 levied a tax on lands and buildings situated within its municipal limits at 4 per cent of the annual rental value.

However, no such tax was levied on the buildings and lands of the G.l.P. Railway situated within its limits in view of s. 135 of the Indian Railways Act. 9 of 1890. In 1914, the Government of India issued a notification under s. 135 persuant to which the G.I.P. Railway admmistration was required to pay house tax to the respondent.

Upto 19! he respondent municipality used to draw water from the Railway's res.::rvoft' but constructed its own reservoir during that year.

Both prior to 1:1d after this date, no water rate was charged by the respondent municipality from. the railway.

On 4th May, 1916 the res:iondent promulgated new rules for taution and instead of charging separate house tax under s. 59(1)(i) or a general water rate under s. 59(1 )(viii) of the Act of 1901, it decided to charge a consolidated tax assessed as a rate on buildings and lands in accordance with clause (c) of the proviso to s. 59(i). Although the respondent demanded this consolidated tax from the railway in respect of its lands and buildings, the railway resisted payment contending that under the notification of 1914, house tax only was payable by it.

On 26th July, 1917, the Government of India issued a fresh notification under s. 135 of the Railways Act whereby the railway administration was rendered liable to pay what was described as "tax on lands and buildings".

Thereafter the respondent charged the railway the consolidated tllx until some time in 1927 when the G.I.P. railway was taken over by the Government. In the rules p<omulgated on 4th May, 1916, the consolidated tax was not chargeable on Government property.

Relying on this provision, an objection was ntised that the charge of tax was illegal when the railway had become Government property. The respondent Municipality amended its rules and promulgated fresh rules on 6th October, 1931 under the provisions of the Bombay Municipal Boroughs Act 18 of 1925 under which enactment the resj>ondent Municipality had by that time been consi tituted into a Borough.

Under these rules the exemption in respect of Government propeny was deleted.

In pursuance of these amended rules the respondent started collecting from the railway the consolidated tax assessed as a rate on its buildiniz:s and lands which was by then being levied under the provisions of s.73 of the Act of 1925 that were similar to those of s.59 of the Act of 1901.

In 1940 the railway administration preferred an appeal under s. 110 of the Act of 1925 against one of the demand n"tices. Although the

• UNION v. LONAVLA MUNICIPALITY

92I

First Court- "Set aside the demand notice, a_u"-; ppel --~-; eventually dismissed by the High Court with the remark that the proper 'remedy to be sought was by means of a suit. The Union of India which -had become the owner of the railway, field a suitin November 1954 for refund of the entire_ amount which was collected by the respondent from the railway in pursuance of the rules of 1931.

The Trial Court granted a decree holding that the levy of this tax was void inasmuch as, under the notification issued on the 26th July, 1917, only the rate on lands and buildings was payable by the Railway Administration.

On appeal, the High.

Court disagreed with the trial court and set aside the decree. 011 appeal to _ this Court by a certificate under Art. 133 of the Constitution.

HELD : Dismissin!!. the appeal, On the prc:iper-- interpretation of the language used in two Acts, ihe Ru!es, the notification, and taking into account the circumstances under which the notification of 1917-was issued, the only conclusion that could be arrived t was that the Railway was made liable tQ the consolidated tax. ·

It is true that all taxes 3re not rates; bt all !rates are taxes. A rate on buildings and lands is a tax on buildings; so also any other tax assessed as a rate on buildings and lands becomes a tax on buildings -and lands.

It \\oas not possible to accept the submission of the appellant that the ex:.. pression "tax on buildings and lands" used in the notification of 26th July, 1917 could only refer to a rate on buildings and lands under clause (i) of s. 59( I) and would not cover the consolidated tax referred to in_ clause

(c) of the second proviso.

Although the tax under clause (c) of the second proviso is not identical with, and is different in nature from, the rate on buildings and 1ands imposed under clause_ (i), that circumstance does not imply that it is not a tax on buildings and lands. The mere use of the word ••consolidated" cannot make any difference to this. interplre~ tation.

The intentionappears to be that, thoughthe funicipality was empowered to impose four different kinds of taxes, it was permitted under clause (c) of the second proviso to simplify matters by having a single tax on buildings and lands in lieu of those multiple :::;.xes. Su..:n sin; le tx

had to be assessed as a rate on buildings and lands. This being the nature, it obviously -becomes a tax on buildings and lands, so that the notification of 26th July, 1917 clearly makes the Railway liable to payment ot this tax. The, position_ under the Act of 1925 is exactly the same where also the language of clause ( c) to the second proviso is identical with that contained in the Act of 1901, so that the liability imposed on the Railway bv the notification of the Government dated 26th July, 1917 unders.135(1) of the Railways Act continued even under the Act of 1925. [927 B-Hl ·

Borough Municipality, Ahmedabad v. Ahmedabcd Manufacturing and Calico Printing Co. Ltd., A.I.R. 1939 Born. 478; Raza Buland Sugar Co.

Ltd. Rampur v. Municipal Board. Rampur, A.l.R. 1962 Allti. 81: M11r.icipal Council, Cuddappch v. M. & SM. Ry. Co. Ltd., A.IR 1929 Mad. 746: and Patel Gordhandas Hargovindas v. Municipal Commissioner, Ahmeda~ bad,, [19641.~ S.C.R. 608; referred to.

cMi. APPELLATE JURISDICTION : Civil Appeal No. 1641 of 1966.

Appeal from the judgment and decree dated March 10, 11, 1965 of the Bombay High Court in Appeal No: 26 of 1958 from Original Decree.

L!OSip CI(NP)/70-14

L. M. Singhvi and B. D. Sharma, for the appellant.

H. R. Gokhale, Y. S.

Chitale, Janendra Lal and B.

Agarwala, for respondent No. 1.

The Judgment of the Court was delivered. by

Bhargava, J.

The Union of India, as the owner of the Central Railway, instituted a suit for refund of Rs. 2,76,967 I - collected as tax from the Railway Administration by the respondent Municipality during the period from 1931 till the institution of the suit in November, 1954. The facts leading up to the suit are that the G.l.P. Railway, which was a Private Company, had land situated within the limits of the respondent Municipality.

On this land, stood the railway station, their Water Reservoir at Bhusi, bungalows of Officers, and certain other buildings.

There were also vacant lands and some lands on which. railway lines were laid out. In this area, which belonged to the G.1.P. Railway, the Railway. Company itself built roads, supplied water from its Bhusi Reservoir, arranged for the lighting, and provided other services.

In fact, up to the year 1916, the Railway used to supply water even to the Municipality from its Bhusi Reservoir on payment.

The Municipality was governed, at that time, by the Bombay District Municipal Act No. 3 of 1901 (hereinafter referred to as "the Act of 190 l ") under which a tax on lands and buildings situated within the municipal limits used to be charged @ 4 per cent of the annual rental value, but no tax was levied on the buildings and lands of the G.l.P. Railway in view of section 135 of the Indian Railways Act No. 9 of 1890. In the year 1914, the Government of India issued a notification under s. 135 of the Railways Act declaring that the Adlllinistration of the G.l.P. Railway shall be liable to pay, in aid of the funds of the local authorities set out in the Schedule, the taxes specified against each of those authorities. Against the name of Lonavla Municipality, which is the respondent n this case, the tax mentioned was house-tax.

Thus, the exemption granted to the Railway Administration was taken away by this notification in respect of house-tax and house-tax became payable by the G.I.P. Railway to the respondent.

In 1916, the respondent constructed its own water reservoir and became independent of the Railway for water supply, but no water rate was charged from the Railway even thereafter, though water charges for actual quantities of water supplied in three of the bungalows was charged from the occupants of the bungalows.

The rest of the Railway Colqny continued to be supplied with water from the Railway Reservoir at Bhusi.

OJI 4th May, 1916, the respondent promulgated new rules for taxation and, instead of charging separate house-tax and water rate it decicled to charge a consolidated tax assessed as a rate on

UNION v. LONAYLA MUNICIPALITY (Bhargava, /.) 923

buildings and lands in accordance with clause (c) .of the proviso to section 59(1) of the Act of 1901. Thereafter, 1t appears that the respondent deman_ded this consolidated tax from the Railway in respect of the Railway lands and buildings. The Railway felt that, since, under the notification of 1914, house-tax only was payable by the Railway Administration, there was no justification for the respondent to charge consolidated tax from it and, consequently, protested against this payment. Thereafter, on 26th July, 1917, the Government of India issued a fresh notification under s. 135 of the Railways Act, whereby the Railway Administration was rendered liable to pay what was described as "tax on lands and buildings".

On the issue of this notification, the respondent started charging the G.I.P. Railway this consolidated tax and this continued until some time in the year 1927 by which time the G.I.P.

Railway was taken over by the Government and became a Government undertaking. In the Rules promulgated on 4th May, 1916, the consolidated tax described as a general rate on buildings and lands was not chargeable on government property.

Relying on this provision in the Rules, an objection was raised that the charge of the tax was illegal when the Railway had become government property.

Subsequently, the respondent Municipality amended its Rules and promulgated fresh Rules on the 6th October, 1931. By this time, the respondent Municipality had been constituted into a Borough under the Bombay Municipal Boroughs Act No. 18 of 1925 (hereinafter referred to as "the Act of 1925"). These new Rules were thus promulgated under this Act of 1925. Under these Rules, the exemption in respect of government property to the charge of the general rate on buildings and lands, which was contained in the Rules of 1916, was deleted and all lands and buildings within the Municipal Borough became chargeable irrespective of their being owned by the Government. A separaJ.e clause was incorporated giving certain exemptions, but, since they do not affect the case before us, they need not be mentioned. In pursuance of these Rules of 1931, the respondent started collecting the consolidated tax assessed as a rate on buildings and lands of the Railway from it.

In the year 1940, the Railway Administration preferred an appeal under section 110 of the Act of 1925 against one of the demand notices issued in respect of this tax on the 6th October, 1940.

This appeal came up before the Sub-Divisional Magistrate, Western Division, Poona, who held that the levy of this consolidated tax was ultra vires and set aside the demand notice. On a revision by the respondent under section 111 of the Act of 1925, the District and Sessions Judge set aside the order of , he Sub-Divisional Magistrate, holding that the imposition of the tax was valid.

Against this decision, the Railway Administration filed a revision

before the High Court of Bombay under section 115 of the Code A of Civil Procedure. The High Court, on 12th February, 1945, refused to exercise its sp_ecial powers under section 115, C.P.C., with the further remark that the proper remedy to be sought was by means of a suit.

Under these circumstances, the Union of India, which had come to be the owner of this Railway under the name of the Central Railway, filed the suit on 27th November, 1954 for refund of the entire amount which was collected by the respondent from the Railway in pursuance of the Rules of 1931. The trial court held that the levy of this tax was void inasmuch as, under the notification issued on the 26th July, 1917, only the rate on lands and buildings was paya]?le by the Railway Administration. The suit for the refund filed by the Union of India was, on this ground, decreed. On appeal, the High Court disagreed with the trial court and held that even the consolidated tax was payable in view of the notification of 26th July, 1917, so that the tax had been rightly collected.

The High Court, thereupon, set aside the decree of the trial court and dismissed the suit.

It is against this decree that the Union of India has come up in this appeal by certificate under Article 133 of the Constitution.

In order to appreciate the submissions made by counsel for parties in this appeal, it is necessary to set out the relevant provisions of section 59 of the Act of 1901 and of section 73 of the Act of 1925 which are as follows :-

"Section 59 of the Act of 1901.

59. (1) Subject to any general or special orders which the State Government may make in this behalf, any Municipalitymany impose, for the purposes of this Act, any of the following taxes, that is to say,

( i) a rate on buildings or lands or both, situate within the municipal district;

(vii) a general sanitary cess for the construction or maintenance, or both construction and maintenance of public latrines, and for the removal and disposal of refuse; ·

(viii) a general water-rate or a special water rate or

bot~ for watr supplied by the Municipality, which may be nnposed m the form of a rate assessed on buildings

UNION v. LONAVLA MUNICIPALITY (Bhargava, J.) 925

and lands, or in any other form, including that of charges for such supply, fixed in such mode or modes, as shall be best adapted to the varying circumstances of any class of cases or of any individual case;

(ix) a lighting tax;

Provided further that-

(c) the Municipality in lieu of imposing separately any two , or more of the taxes described in clauses (i), (vii), (viii) and (ix) may impose a consolidated tax as- , sessed as a rate on buildings or lands, or both situate within the municipal District."

"Section 73 of the Act of 1925

. '73. (1) Subject to any general or special orders which the State Government may make in this behalf and to the provisions of sections 75 and 76, a municipality may impose for the purposes of this Act any of the following taxes, namely :-

(i) a rate on buildings or lands or both situate within the municipal borough;

(viii) a general sanitary cess for the construction and maintenance of public latrines, and for the removal and disposal of refuse;

(x) a general water-rate or a special water-rate or G both for water supJ:>lied by the municipality, which may be imposed in the form of a .rate assessed on buildings and lands or in any other form, including that of charges for such supply, fixed in such mode or modes as shall be best adapted to the varying circumstances of any class of cases or of any individual case;

(xi) a lighting tax;

Provided further that-

(c) the municipality in lieu of imposing separately ' any two or more of the taxes described in clauses (i), (viii), (x) a.nd (xi) may impose a consolidat~ tax ases sed as a rate on buildings o~ lands or both situated within the municipal borough;''

In the year 1914, the respondent Municipality had only levied a rate on buildings l!nd.lands under clause (i) of s. 59(1) of the Act of 1901.

There was no question of imposing a general or special water rate as the respondent had no water works of its own and was taking water supply from the G.I.P. Railway.

It was in these circumstances that the notification was issued by the Central Government dated the 13th May, 1914 making the Railway Administration liable to py house-tax to the Municipality of Lonavla. The notification was obviously intended to make the Rai!Way liable to pay the tax which had been imposed as a rate on buildings and lands under s. 59(l)(i) of the Act, of 1901 by the respondent.

SubseqJ!ently, in the year 1916, the respondent Municipality not only arranged for water supply and imposed a general water rate, it proceeded to make rules for imposition of a consolidated tax assessed as a rate on buildings and lands under clause (c) of the second proviso to s. 59(1) in lieu of the existing tax imposed as a rate on buildings and lands under clause (i) as well as the water rate imposed under clause (viii) of s. 59(1).

Thereafter, the Central Government issued the notification dated 26th July, 1917 under s. 135(1) of the Railways Act making the G.I.P. Railway liable to tax on buildings and lands imposed by the Lonavla Municipality. It is to be noted that, in this notification, the Government used the word "tax" and not the word "rate". The tax imposed under s. 59(1) was described as "a.rate on buildings and lands". If the intention of the Government had been that the G.l.P. Railway should be liable to that tax only, it could have used the word "rate" instead of the word "tax" in the notification.

In fact, if the notification had been left untouched, the liability of the G.I.P. Railway would have continued to be in respect of the rate on buildings or lands because of the erlier notification of 1914, under which the Railway had been made liable to House-tax.

The notification of 26th July, 1917 made the Railway liable to tax on buildings and lands obviously because the Government intended that the Railway should be liable to the consolidated tax tinder clause (c) of the second proviso to s. 59(1).

Clituse (c) permits the imposition of a consolidated tax assessed as a rate on buildings or lands, or both. The moment a tax is assessed as a rate on buildings or lands, it naturally becomes a tax

. '

F •

. ,

UNION v. LONAVLA MUNICIPALITY (Bhargava, J.) 927

on building and lands.

The fact that it was a consolidated tax was immaterial. It was this consolidated tax which was intended to be made payable by the G.I.P. Railway when the Central Government used thei expression "tax on buildings and lands" in plce of the earlier words "House Tax" and chose not to refer to the hability being in resp!lCt of a rate on buildings and lands. It is true that all taxes are not rates; but all rates are taxes.

A rate on buildlligs and lands is a tax on buildings, so . also any other tax assessed as a rate on , build ings and lands becomes a tax on buildings and lands. We are unable to accept the submission mad\: by counsel for the appellant that the expression "tax on buildings and lands" used in the notification of 26th July, 1917 could only refer to a rate on buildings and lands under clause (i) of s. 59(1) and would not cover the consolidated tax referred to in clause (c) of the second proviso. It is true, as urged by him, th.at the tax under clause (c) of the second proviso is not identical with, and is different in nature from, the rate on buildings and lands imposed under clause (i), but that cir-

D cumstance does not imply that it is not a tax on buildings and lands. The mere use of the word "consolidated" cannot make any difference to this interpretation. It is also significant that clause

(c) of the second proviso does not purport to lay down that the consolidated tax win be the sum-total of the taxes described in clauses (i), (vii), (viii) and (ix).

The consolidated tax envisaged by that clause is in lieu of separate imposition of any two or more of the taxes described in clauses (i), (vii), (viii) and (ix) which means that the power to impose this consolidated tax has been given for the purpose of substituting it for the multiple taxes which could be imposed under those clauses. This consolidated tax cannot, therefore, be held to be of the same nature as the taxes in all those clauses.

The intention appears to be that, though the Municipality was empowered to impose four different kinds of

txes,_ it was permittaj nder :lause (c) of the second proviso to s!lllphfy matters by hav1ng a smgle tax on buildings and lands in lieu of those multiple taxes. Such a single tax had to be assessed as a rate on buildings and lands. This being the nature, it obviusly becomes a tax on buildings and lands, so that the notification of 26th July, 1917 clearly makes the Railway Hable to pay- G ment of this tax. The position under the Act of 1925 is exactly e se whe!e also the language of clause (c) to the second pro- .v!So s t~?en~1cal with that contained in the Act of 1901, so that the .11ab1hty imposed on the Railway by the notification of the Government d.ated 26th July, 1917 under s. 135(1) of the Railways Act continued even under the Act of 1925.

H It is als~ ignficant. to note that the Rules, which were framed by the Mumc1pahty under the Act of 1901 and by the Municipal Borough later under the Act of 192S which were promulgated on

928 SUPREME COURT REPOllTS [1970] 3 S.C.ll

the 4th May, 1916 and the 6th October, 1931 respectively, described the tax as a general rate on buildings and lands in rule 1. It is true that, in the heading of the Rules, the expression used was that "the Rules were for the levy of a consolidated rate on buildings and lands", but, . in the main provision, the tax was described only as "a general rate on buildings aind lands". A general rate on buildings and lands is obviously a tax on buildings and lands and would, therefore, be covered by the notification of the Central Government dated 26th July, 1917.

Apart from this interpration which we have arrived at on the basis of the language used in the two Acts, the Rules, and the notification of the Central Government, there are two circumstances which indicate that this must be the correct construction of the notification issued by the Central Government. The first circumstance is that, when this notification was issued, the only tax which was being imposed by the Lonavla Municipality which the Central Government could have intended should become payable by the G.l.P. Railway was the consolidated tax under clause ( c) of the second proviso.

There was no other tax which could have been coverd by this notification.

In fact, the notification would be meaningless if we were to hold that this consolidated tax is not covered by the expression "tax on buildings and lands".

This notification was issued while the earlier notification of 1914 was already in existence and, if the intention was to cover only the rate mentioned in clause (i) of s. 59(1), there was no need to .issue this fresh notification as the liability of the Railway to pay that tax already existed under that notification of 1914.

The second circumstance that we can take notice of is the -- historical background in which this notification of 26th July, 1917 was issued.

It appears that, after the Rules for imposition of F this consolidated tax came into force in 1916, the Municipality demanded payment of this consolidated tax from the G.I.P. Railway. Thereupon, the Agent of the G.l.P. Railway Company wrote a letter to the Secretary, Railway Board, Simla, on the ls! December, 1916, stating that the Company did not agree that it should pay the new consolidated tax as it com- G prised a house tax and a water rate.

The Company had its own arrangements for the supply of water and it was obviously unfair that it should be called upon to pay any tax which includes a water rate, when no municipal water was being consumed by the Railway at Lonavla.

The Secretary, Railway Board, forwarded this letter to the Secretary to the Government of Bombay, General H Department, with a letter dated 12th December, 1916, enquiring whether the Agent's information was correct and, if so, whether the Bombay Government had any remarks to offer on the gent's

 ..

UNION v. LONAYLA MUNICIPALITY (Bhargava, J.) 929

contentions. On 11th May, 1917, the Secretary to'the Government of Bombay replied to the Secretary, Railway Board, pointing out that, originally, the Municipality proposed to levy a general water rate on all houses, in addition to the existing house tax, but, . on representations from property ownes of Lonavla and Khandalla, it had decided to impose a consolidated rate on buildings and lands in lieu of the house-tax and the proposed general water rate. Consequently, they were levying, in lieu of housetax, a consolidated rate, which included a general water rate, on a sliding scale, on all propertis situated within the municipal limits. The water rate imposed was not intended to cover expenses on any service rendered in the nature of a general tax as opposed to a service tax.

In equity, the Railway Company's property in Lonavla had no better right to exemption than the properties of private individuals who, although they did not take private pipe connections, were paying the general water rate.

In these circumstances, a reauest was made ta the Secretary, Railway Board, to move the Government of India to declare the Administration of the G.l.P. Railway liable to pay to the Lonavla Municipality the consolidated tax on buildings and lands in lieu of the housetax in respect of the railway properties situated within the municipal limits.

It was suggested that the Schedule annexed to the notification dated 13th May, 1914 may be amended accordingly.

It was in pursuance of this move by the Bombay Government thar the notification of 26th July, 1.917 was issued by the Central Government. That the notification of 26th July,"1917 was issued ill' pursuance of this correspondence is clarified by the Memorandum dated' 17th August, 1917, with which a copy of the new notificatin was forwarded by the Government of India, Railway Department (Railway Boatd) to the Secretary to the Government of Bombay.

These circumstances, in which the notification of 16th July, 191 T

. F }vas issued, make it plain that the Government of India, when they ed the expression "tax on buildings and lands" in the notification, mtended to make the G.I.P. Railway liable to the consolidated tax which had been imposed by the Municipality under the Rules of 1916 .

. The decision of the Bombay High Court in Borough Municipality, Ahmedabad v. Ahmedabad Manufacturing and Calico Printing Co. Ltd.(') on interpretation of section 73 and 11 O of the Act of 1 ~25 also supports the view that we have taken above. The

quetton that al'qse in that case was whether the right of an appear envisaged by usi~.g.the expression "in the case of a rate on buildings or lands or both m. sectton 110 could be availed of in respect of a gen.era! water rate imposed under clause (x) of section 73(1) which described that tax as ll general water rate imposed in the form of a

(I) A.J.R. 1939 Born. 478.

:rate assessed on buildings and lands. It was held that there was no

.distinction between a rate on buildings or lands and a tax in the form of a rate assessed o.n buildings or lands. In the case before us, on that analogy, a consolidated tax assessed as a rate on buildings . and lands cannot be distinguished from a tax on buildings and lands.

Reference may also be made to a decision of the Allahabad High Court in Raza Buland Sugar Co., Ltd. Rampur v. Mun, icipal Board, Rampur(') where it was held that a water rate is a tax on buildings and lands and is not, in fact, a service tax chargeable in respect of water supplied. Counsel for the appellant referred to a decision of the Madras High Court in Muni'cipal Council, Cuddappah v. M & S. M. Ry. Co. Ltd. (2); but that case is of no assistance as it turned on the special language which had been used in the Act and the notification which came up for consideration in that case. In fact, the expression that had to be interpreted was

"property tax" and not "tax on buildings and lands". We agree with learned counsel for the appellant that much assistance cannot be derived from the decision of this Court in Patel Gordhandas -Hargovindas v. Municipal Commissioner, Ahmedabad(8 ) which was relied upon by the High Court. However, as we have held .above, on the proper interpretation of the language used in the two Acts, the Rules, and the notification, and taking into account the drcumstances under which the notification <>f 1917 was issued, the only conclusion that cain be arrived at is that the Railway was made liable to this consolidated tax, so that the decision of the High Court is perfectly correct.

The appeal fails and is dismissed with costs.

R.K.P.S.

(1) A.I.R. 1962 Alld. 83.

(2) A.LR. 1929 Mad. 746.

(3) [1964) 2 S.C.R. 608

Appeal dismissed.

A f

- E

UNION OF INDIA

THE LONAVLA BOROUGH MUNICIPALITY OF LONAVLA, DISTRICT POONA, BY ITS CHIEF OFFICER, AND ANOTHER

March 9, 1970

S. M. SIKRI

Bombay District Municipal Act

S. 59

Bomoay Municipal Boroughs Act

S. 13

s. 135

Railways Act

Government of India

s. 135

4th May, 1916

s. 59(1)(i)

s. 59(1 )(viii)

s. 59(i)

26th July, 1917

s. 135

Railways Act

6th October, 1931

s. 110

LONAVLA MUNICIPALITY

Although the

• UNION v. LONAVLA MUNICIPALITY

92I

First Court- "Set aside the demand notice, au"-; ppel --~-; eventually dismissed by the High Court with the remark that the proper 'remedy to be sought was by means of a suit.

Union of India

The Union of India which -had become the owner of the railway, field a suitin November 1954 for refund of the entire amount which was collected by the respondent from the railway in pursuance of the rules of 1931.

Art. 133

s. 59( I)

Railways Act

L. M. Singhvi

B. D. Sharma

H. R. Gokhale

Y. S.

Chitale

Janendra Lal

B.

Agarwala

Bhargava

Union of India

G.l.P. Railway

Bhusi

G.1.P. Railway

section 135

Railways Act

s. 135

Railways Act

Lonavla Municipality

section 59(1)

s. 135

Railways Act

G.I.P. Railway

G.I.P.

Railway

section 110

6th October, 1940

section 111

High Court of Bombay

section 115

12th February, 1945

section 115

C.P.C

27th November, 1954

Article 133

section 59

section 73

Section 59

Section 73

sections 75 and 76

s. 59(1)

Central Government

13th May, 1914

Lonavla

s. 59(l)(i)

s. 59(1)

s. 59(1)

s. 135(1)

Railways Act

Lonavla Municipality

s. 59(1)

s. 59(1)

s. 59(1)

s. 135(1)

Railways Act

s. 59(1)

Simla

Bombay

12th December, 1916

Bombay Government

11th May, 1917

Khandalla

26th July, 1.917

26th July,"1917 was

17th August, 1917

Government of Bombay

16th July, 191 T

. F

Bombay High Court

section 73 and 11

section 73(1)

Allahabad High Court

Madras High Court

[1964) 2 S.C.R. 608