MATHURALAL

KESHAR BAI AND ANOTHER February 20, 1970

[S. M. SIKRI, V. BHARGAVA AND G. K. MITTER, JJ.J:

Mortgage-Mortgagee given possession of mortgaged house-Leasing house to mortgagor under rent note executed simultaneously with mortgage deed-Preliminary decree passed in suit. for enforcement of mortgage-.- Application for final decree time barred-Subsequent suit for ejectment pf lnortgagor filed by niortgagee whether maintainable-Rights of mortgagee whether merged in preliminary decree-Relevance of Limitation ACt, 1908, s. 28.

On July 29, 1945 the predecessor-in-interest of the appellant mortgaged his house in Ratlam to K for a sum of Rs. 3,100 with possession.

According to the deed of mortgage interest would run on the said sum at Rs. C>-10-0 per cent per annum till realisation. The period elf redemption was two years.

Simultaneously with the mortgage a rent note was executed by and between the parties under which the mortgagor was to continue to occupy the premises at a rental of Rs. 20/ - per month. The rent note provided inter alia that if the executant (i.e. mortgagor) made default in payment of two months' rent the mortgagee would be entitled to get him evicted.

The mortgagee was also entitled to increase or decrease the rent and the executant was to vacate the house whenever asked to do so. K filed a suit on his mortgage in 1954 and a preliminary decree was passed in hie favour.

On his death his legal representatives were substituted in his place on record.

For some reason no application for a final decree for sale of the property was made within the period fixed under the Limitation Act. The application for this purpose made by the executors to the estate elf K was dismissed on July 29, 1960 as barred by limitation. On December 27, 1960 the said executors filed a suit for ejectment of the appellant alleging that the rent for the premises had remained unpaid from September 19, 1957 till November 28, 1960. The trial judge dismissed the suit. In first appeal the plaintiff's claim was allowed in full. The High C'.ourt in second appeal maintained the decree of the appellate court.

Appeal by special leave was filed in this Court against the High Court's judgment. It was contended by the appellants that : (i) The rent note

~ecuted simultaneously with the mortgage was a mere device to secure payment of interest and did not represent an independent transaction.

FL!rther it did not create any relationship of landlord and tenant; (ii) The plaintiffs'' right as mortgagee merged in the decree and execution thereof being barred by the Jaws di limitation the plaintiffs had lost all their rights;

(iii) The mortgage beingextinguished the mortgagor could not bring a suit for redemption on account of s. 28 of the Limitation Act, 1908.

HELD : The appeal must be dismissed. ( 1) The contents of the documents executed by the parties showed that the relationship between the parties was not simply that of a mortgagee and mortgagor-the creditor also had the rights of a landlord qua his tenant besides other rights conferred on him which were greater than those possessed by an ordinary landlord. [728 F]

In all such cases the leasing back of the property arises because of the mortgage with possession. It cannot however be held that the mortgagee 724

MATHURALAL v. KESHAR BM tMitter, J.) 725

does not secure to himself any rights under the deed of lease but must proceed on his mortgage in case the amount secured to him under the deed of lease is not paid. If the security is good and considered to be sufficient by the mortgagee there is no reason why he should be driven .to file a .suit on his mortgage when he can file a suit for realisation of the' moneys due under the rent note. The position of the creditor is strengthened where as in the present case, the interest on the amount of the mortgagee is not the same as the rent fixed. If during the continuance of the security the mortgagee wanted to sue the mortgagor on the basis of the rent note and take possession himsel1I or to induct some other tenant thereby securing to himself the amount which the mortgagor had covenanted to pay, there could be no legal objection to it.

Under the provisions of 0.34 r. 4 of the Code of Civil Procedure he could deprive the mortgagor of his right to redeem excepting by proceeding on his mortgage. It m, ay be (without a final opinion being expressed on the poin.t) that a mortc gagee who secured decree for payment of rent cannot put the property to sale fO£ realisation of the amount decreed, but there cas be no <>bjretion to his suing for possession. if the rent note entitles him to do so.

So long u the; mortgagor has a right to redeem the mortg8ge he can always pay off tbe mortgagee 'and get back pos9e5sion. This position would continue so long as the property is not sold under a :final decree for sale under the provisions of 0. 34 C.P.C. [732 D-G]

La/chand v. Nenuram, LL.R. 12 , Rajasthan, 947, approved.

Hari/al Bhagwanii v. Hemshanker, A.l.R. 1958 Bombay 8, Ramnarain

v. Sukhi, A.l.R. 1957 Patna 24, Umeshwar Prasad v. Dwarika Prasad, A.I.R. 1944 Patna 5, Ganpat Ruri v. Mad. Asraf Ali, A.I.R. 1961 Patna 133 arid Jankidas v. Laxminarain, I.LR. 7 Rajasthan 268, referred to.

(ii) Since the mortgagee had only lost his right to recover the money by sale of the mortgaged property, his security otherwise remaining intact, and the mortgagor also continued to have his right to redeem the property, the contention on behalf of the appellant that the rights of the mortgagee merged in the prelimirrary decree could not be accepted. [732 HJ

(iii) If the mortgagee had an independent right on the strength of the rent note which continued to be in force notwithstanding that the period for a final decree for sale had expired; there could be no extinction of .his right to sue for possession because of s. 28 of the Limitation Act. [733 C]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 774 of 1967.

Appeal by special leave from the judgment and order dated February 6, 1970 of the Madhya Pradesh High Court in Second Appeal No. 327 of 1963.

D. N. Mukherjee, for the appellant.

Janardan Sharma, for the respondents.

The. Judgment of the Court was delivered by

Mitter, J. This is an appeal by special leave fron.i a judgment of the Madhya Pradesh High Court dated 6th February 1967 dismissing a Second Appeal by the appellant before this Court against

a decree passed by the Additional District Judge of Ratlam for ejectment of the appellant from a house mortgaged by the predecessor-in-interest of the appellant to one Kesharimal for Rs. 3,100 and further decreeing a claim for arrears of rent amounting to Rs. 731-35 and mesne profits at the rate of Rs. 20 per month until eviction.

The relevant facts are as follows. On July 29, 1945 Mathuralal, predecessor-in-interest of the appellant, mortgaged his house , in Ratlam to Kesharimal for a sum of Rs. 3,100 with possession.

The deed of mortgage contained the following terms :-

1. That interest would run on Rs. 3,100 at Rs. 0-10-0 per cent per mensem till realisation.

2. The period of redemption would be two years.

3. Duri, ng the period of mortgage "the tenant as may be shall execute the rent notes in favour of the mortgagee and whatever rent shall be realised will be credited in lieu of interest and if the amount of rent shall exceed the amount of interest, the difference shall be deducted from the original sum due, but if the amount of interest shall exceed the amount of i.nterest, the difference shall be deducted from the original sum due." But if the amount of interest shall exceed the amount of rent, then the mortgagor shall pay it.

4. Notwithstanding any vacancy during the period of the mortgage the rent would continue.

5. During the period of the mortgage an accol!Jllt of the rent and interest shall be settled after every six months.

6. The mortgagor undertook to keep the house in repairs during

the period of the mortgage and in default of ; epairs by him the F mortgagee was to be entitled to execute the necessary repairs and add the cost to his dues.

7. "The burden of the mortgage money shall be on the mortgaged house.

In case the amol!Jllt is not realised from the house, the moragagee shall have a right to take steps to realise his money" from the mortgagor and his property of every kind.

On the same day the mortgagor executed another document in favour of the mortgagee reciting that his house in Ratlam was mortgaged with possession to the creditor who was "having its possession" and the mortgagor had taken the same on rent at Rs. 20 per month on the following terms :-

1. The executant would pay the rent every month regularly and in default of payment of two months' rent the mortgagee would be entitled to get him evicted.

2. The executant would white-wash and repair the house and keep it in good condition.

3. Kesharimal would be entitled to increase or decrease the rent.

4. The executant would vacate the house whenever asked to B do so.

5. The executant would hand over possession of the house in the same condition in which he had received it.

Kesharimal filed a suit on his mortgage in 1954 a; nd a preliminary decree for sale for the amount of Rs. 5,637-6-0 besides interest at the rate of Rs. 0-10-0 per cent per mensem for six months on the sum of Rs. 3,600 was duly passed The defendant was directed to pay the full amount of the decree before .the 24th May 1955 and in case of his doing so the property was to be released from the mortgage and the plaintiffs were to hand over all the documents which they had in their possession, but in case of failure to pay the plaintiffs would be entitled to file an application for the execution of the decree and get the property auctioned; 'and in case of non-satisfaction of the decree by the sale, the plaintiffs were to be at liberty to recover the balance of the decretal claim by a personal decree against the defendant.

It appears that Kesharimal had died during the pendency of the suit and his legal representatives were brought on record and the preliminary decree passed in their favour. Whatever be the reason no application for a final decree 'for sale of the property was made withm the period fixed under the Limitation Act. The application for this purpose made by the executors to the estate of Kesharimal was dismissed on July 29, 1960 as barred by !imitation.

On December 27, 1960 the said executors filed a suit for ejectment against the appellant alleging that the rent for the premises had remained unpaid from September 29, 1957 till November 28, 1960.

An amount of Rs. 731-75 was arrived at by totalling the rent for the period mentioned and mesne profits from 29th November 1960

to 26th December 1960 at the same rate and incidental charges and expenses and deducting therefrom the rent for two months which was barred by the lapse of time the plaintiffs asked for a decree for ejectment and further mesne profits.

The trial Judge dismissed the suit.

But on appeal this was set aside and the plai.nltiffs' claim allowed in full.

The High Court in Second Appeal maintained the decree of the appellate court.

The points urged by counsel for the appellant before us were :

1. The rent note executed simultaneously with the mortgage was a mere device to secure payment of interest and did not record

an independent transaction. Further it did not create any relation- A ship of landlord and tenant.

2. The plaintiffs' right as mortgagee merged in the decree and execution thereof being barred by the laws of limitation the plaintiffs had lost all their rights.

3. The mortgage being extinguished the mortgagor could not bring a suit for redemption.

Before examining the contentions urged we propose to note the substance of the two documents and what the parties sought to achieve thereby. It is clear that the mortgage was with possession of the house and that the mortgagee wanted to make sure of Rs. 20

per month irrespective of the fact as to whether the mortgagor or some other person occupied the house and notwithstanding any vacancy during the period of the mortgage. The sum of Rs. 20 per mcinth which the mortgagee wanted to ensure payment of every month exceeded the interest stipulated for by Rs. 0-10-0 per month.

There was to be no decrease in this amount even if the mortgagor were to repay a portion of the principal.

The mortgagee had further the right to increase or decrease the rent and the mortgagor covenanted to vacate the property whenever the mortgagee asked for possession.

In other words if the mortgagee chose to go into possession himself, the mortgagor would be entitled to have Rs. 20 p.m. credited towards the dues on the mortgage so long as he continued in possession.

Even during the period of redemption when the mortgagee could not have sued for the mortgage money he still had a right to evict the mortgagor in case the latter defaulted in_ payment of Rs. 20 a month for two months.

It would appear that the relationship between the parties was not simply that of a mortgagee and mortgagor : the creditor also had the rights of a landlord qua his tenant besides other rights conferred on him which were greater than those possessed by an ordinary landlord.

There can be no doubt that by leasing the property back to the mortgagor in the way mentioned above the mortgagee tried to e, nsure the regular payment of interest but his rights were not limited to that alone.

In case he decided to go into possession himself the only remedy left to the mortgagor was to sue for redemption. This right under the Limitation Act of 1908 was to enure for 60 years from the date of the mortgage and the mortgagor had not lost his right to redeem notwithstanding the passing of the preliminary decree in the mortg'age suit.

The mortgage security cQlltinued even after the passing of the said decree : if the mortgagee had continued in possession of the property after the passing of the preliminary decree and did not apply for a final decree, he would only lose his right to recover the mortgage money

by sale of the property unless he applied for that purpose within the period of limitation fixed by the Limitation Act.

After the mortgagee had lost his right to apply for a final decree for sale, he did not lose his status as a mortgagee : he only lost his remedy to recover the mortgage money by sale.

The mortgagor did not lose his right to redeem.

I We may now examine the authorities which were cited at the Bar i.n aid of the respective contentions.

In aid of his first proposition Mr. Mukherjee relied principally on the decisions of the Bombay High Court in Bari/a/ Bhagwanji v. Hemshanker(') and Ramnarai11 v. Sukhi(').

The facts of the Bombay case were as follows.

The defendant-appellant mortgaged with possession the house in suit for Rs. 7 ,500/- on August 23, 1952.

Under the deed of mortgage the principal amount was to carry interest at 9% and both principal and interest were charged on the mortgaged property.

A portion of the house was already in the occupation of the plaintiff as the defendant's tenant on a monthly rental of Rs. 15 and another portioo was let out to one Mansukhlal at the rate of Rs. 17 p.m., the defendant himself occupying the remaining part of the house.

Simultaneously with the mortgage a rent note was executed on thip same day in respect of the portion of the house in the defendant's occupation which was leased back to him by the plaintiff for a term of six months at the rate of Rs. 24-4-0 per month.

The plaintiff sued the defendant for possession of the said portion and for arrears of rent on the strength of the rent note.

The defence was that the rent note was a nominal document executed for securing payment of interest and that no relationship of landlord and tenant was created.

It was contended that the principal money and interest were to be realised from the mortgaged property and a suit for rent alone which was in reality interest would not lie. It was held by the High Court that the fact that the two documents had varying periods of operation would not make acy difference in the determination of the question as to whether they formed part of the same transaction or not. Further the rent to be realised from the tenant Mansukhlal was to be credited towards interest and the significant circumstance was that the rent payable by the defendant under the rent note was fixed with a viw to making up the interest on the mortgage sum at 9%. Although the mortgage deed recited that the plaintiff could let out the property to anyone he liked but as the property was already wh9lly occupied, the High Court took the view that the question of leasing it out to another tenant was not \n contemplation of the parties.

As a result of the above findings the court held that the rent note was a mere device for securing payment of interest.

Reliance was placed on Rflmnarain v.

Sukhi(') and it was held that although the decree for eviction of

(1) A. I. R. 1958 Bombay 8.

(2) A.l.R.1957 Patna 24.

LIOSupCI(NP) '70-~

the defendant from the suit property could not stand, that awarding . arrears of rent was to be maintained.

In Ramnarain v. Sukhi(') an application was made by the defendant for setting aside the decree of the Small Causes court evicting him.

The defendt had executed a usufructuary mortgage in favour of the plaintiff and by a kerayanama executed on the same day had taken back the house on a rent of Rs. 6 per month from the plaintiff. He had not paid any rent for over three years and the suit was brought for recovery of arrears of rent for the said period. It was his contention that the agreemCU!t between the parties WllS not for execution of a usufructuary mortgage but one of a simple mortgage. It was further contended on his behalf that the mortgage and the kerayanama were one and the same transaction and no relationship of la.ndlord and tenant was created and the ijara term having expired the plaintiff's remedy to recover the house rent which represented the interest the mortgage money could only lie under s. 68 of the Transfer of Property Act.

The High Court referred to several decisions and came to the conclusion that the intention of the parties was that the mortgagee would not get possession of the mortgaged property but would only get interest on the amount advanced in the shape of rent so long as the lease continued and the amount payable under the kerayanama was interest on the mortgage money and not rent for use and occupation of the mortgaged property. The mortgage bond and the kerayanama being part of the same transaction the mortgagee in execution of his decree for mqney obtained in respect of the so:-called rent of the house against the mortgagor would not be entitled to execute the decree for arrears of rent by sale of the property, as such a case would be governed by 0. 34 R. 14 Civil Procedure Code. In the result the claim of the creditor in excess of 9% p.a. was rejected but as the defendant had been in occupation of the house, although under an invalid lease, he was directed to pay compensation to the plaintiff for use and occupation of the house for the period of his occupation.

Reference may also be made to the case of Umeslnvar Prasad

v. Dwarika Prasad(").

In this case the mortgagor executed a usufructuary mortgage of certain properties for Rs. 14,400 for a period of seven years.

Soon therefter the mortgagee leased back the entire property to the mortgagor for a period of about seven years at the annual rent of Rs. 432 which was equal to the interest on the sum advanced.

It was held by the Patna High Court that the mortgage bond and the lease deed were parts of the same trMsaction and the fact that the periods of the two deeds were not identical was immaterial and the case was governed by 0. 34 r. 14

(l) A.I.R. 1957 Patna 24.

(2) A.I.R. 1944 Patna 5.

A and as such the mortgagee could not execute the decree for arrear of rent by sale of equity of redemption.

In Ganpat Ruri v. Md. Asraf Ali(') the plaintiff had filed a suit claiming arrears of rent at the rate of Rs. 20 per mo.nth in respect of a house which had been given to him by the defendant in usufructuary mortgage by a registered document, the property being let out to the defendant on lease on the same day at the monthly rent of Rs. 20. Applying the test as to whether on a reasQ!lable construction of the two documents the property given in security was not only for the principal amount secured under the bond but also for the interest accruing thereupon, the court held that the transactions were two different transactions and for this reliance was placed on the fact that no rate ol interest was prescribed in the bond and Rs. 20 p.m; could not possibly be treated as interest due on the principal amount of Rs. 500.

In contrast with the above cases reference may be made to the case of Jankidas v. Laxminarain('). Jiti this case the plaintiffs who were usufructuary mortgagees of a house gave a lease of it to the defendant mortgagor on rent and put the lessee in posses1ion thereof on the same day.

The rent remaining unpaid the plaintiff filed a suit for arrears of rent and ejectment. Ultimately however the High Court of the former State of Marwar granted a decre for arrears of rent but refused the prayer for ejectment. The plaintiff thereupon filed the suit in 1953 claiming arrears of rent amounting to Rs. 126/- for three years preceding the date of the suit.

The suit was resisted by the defendant who, among other pleas, contended that the suit was barred by 0. II r. 2 C.P.C.

There was said that although the mortgage aintI the deed of lease represented one transaction that would not mean that no tenancy came into existence by the execution of the deed of lease.

It was . held that the right which arose to the mortgagees to sue for rent was an ndependent obligatio~ though it might be part of the same transact10n in the seinse that it was brought into existence bv an arrangement madeat the same time for a common purpose. ·

In La/chand v. Nenuram( 8 ) the defendants had executed a mortgalle iin favour of the plaintiffs agreeing to pay interest at 8 % p.a: which came. to Rs. 27-8-0 per month.

The mortgagors had

del!red possesSJOn to th~ mortgagees and a registered qabuliat

rec11in~ that they were takmg on lease the property described at a monthly rental of Rs. 27-8-0.

The lower courts took the view that the mortgage deed was a rent note and part and parcel of the same transaction and the plaintiffs were not qn1itled to get a decree for

(I) A.l.R. 1961 Patna 133.

(2) I.L.R. 7 Rajasthan :68.

(3) I.L.R. 12 Rajasthan ,947;

ejectment on the basis of the rent note. Rejecting this the Rajasthan A High Court observed at p. 952 :

"Whether the two documents represent one transaction or two different trainsactions, a court of law should be anxious to give effect to the terms in both the documents instead of being unduly critical about them. . . . Having secured the possession of the mortgage, the mortgagee is further entitled to lease it out even to the mortgagor.

It is in the interest of the mortgagor that the property is leased out to him as he can better look after it.

There is nothing objectio, nable in this, nor is ttiere any statutory prohibition for such transactions. '\ow if the parties do this by executing proper documents, it is the duty of the court of Jaw to give effect to them."

The reasoning of the Rajasthan judgmerit seems to be logical and commends itself to us.

In all such cases the leasing back of the property arises because of the mortgage with possession but we find ourselves unable to hold that the mortgagee does not secure to himself any rights under the deed of lease but must proceed on his mortgage in case the amount secured to him under the deed of lease is not paid. If the security is good and considered to be sufficient by the mortgagee 'there is no reason why he should be driven to file a suit on his mortgage when he can file a suit for realisation of the moneys due under the rent note.

The position of the creditor is strengthened where as in this case the interest on the amount of the mortgage is not the same as the rental fixed.

If during the continuance of the security the mortgagee wants to sue the mortgagor on the basis of the rent note aind take possession himself or to induct some other tenant thereby securing to himself the am,, unt which the mortgagor had covenanted to pay, there can be no iegal objection to it.

Under the provisions of 0. 34 r. 4 he cannot deprive the mortgagor of his right to redeem excepting by proceeding on his mortgage. Although we express no final opinion on this point it may be that a mortgagee who secures a decree for payment of arrears of rent cannot put the t>roperty to sale for realisation of the amount decreed but there can be no objection to hi.> suing for possession if the rent note entitles him to do so. So long as the mortgagor had a right to redeem the mortgage he can always pay off the mortgagee and get back possession.

This position would continue so Jong as the property is not sold under a final decree for sale under the provisions of 0. 34 C.P.C.

In our opinion the second contention put forward on behalf of the appellant has no force.

The rights of a mortgagee do not meroe in his rights under the preliminary decree for sale.

alredy mentioned, the mortgagee Jost his right to recover the money

A by sale of the mortgaged property; otherwise his security remained

iintact and the mortgagor continued to have his right to redeem the property.

As regards the third point the only statutory provision to which a reference was made was section 28 of the Limitation Act of 1908 B which provided that :

"At the determination oi the period hereby limited to any person for instituting a suit for possession of any property, his right to such property shall be extinguished."

If the right of the mortgagee arose on the strength of the rent JI.Ole which continued to be in force notwithstanping that the period for applying for a final decree for sale had expired, there could be no extinction of his right to sue for possession because of s. 28 of the Limitation Act.

In the result the appeal fails and is dismissed with costs.

G.C.

Appeal dismissed.

MATHURALAL

KESHAR BAI AND ANOTHER

February 20, 1970

S. M. SIKRI

V. BHARGAVA

G. K. MITTER, JJ

Limitation ACt

s. 28

July 29, 1945

Ratlam

Limitation Act

July 29, 1960

December 27, 1960

September 19, 1957

November 28, 1960

s. 28

Limitation Act, 1908

the Code of Civil Procedure

C.P.C

s. 28

Limitation Act

D. N. Mukherjee

Janardan Sharma

Mitter

Additional District Judge of Ratlam

Kesharimal

Mathuralal

Duri

24th May 1955

Limitation Act

September 29, 1957

29th November 1960

Limitation Act

Limitation Act

Mukherjee

Bombay High Court

August 23, 1952

Mansukhlal

s. 68

Transfer of Property Act

Civil Procedure Code

Patna High Court

C.P.C

Rajasthan A High Court

C.P.C

section 28

Limitation Act

s. 28

Limitation Act


PANCHAMAL NARAYAN SHENOY

BASTHI VENKATESHA SHENOY

February 20, 1970

[S. M. SIKRI, V. BHARGAVA AND C. A. VAIDIALINGAM, JJ.J B

Mysi>re Rent Control Act (Mys. 22 of 1961), s. 21(l)j-Reasonably and bona fide required for immediate demo/ition...:...Whether has reference to condition of p'l'emises.

Under s. 21(1)(j) of the Mysore Rent Control Act, 1961 the court may on an application order the recovery of possession of any premises in favour of the landlord, if "the premises are reasonably . and bona fide required by the landlord for the immediate purpose of demolishing them and such demolition is to be made for the purpose of enacting a new building in place of the premises sought to be demolished,". The respondent-landlord applied under s. 21 ( 1 )(j) for eviction of the tenantsappellants, claiming that the premises were reasonably and bona fide required by him for the immediate purpose of demolishing and erecting of a

new building, that the premises were old and were not suitable for continued occupation. The respondent claimed to have obtained the necessary D licence and to have made all preparations for demolishing the existing building and erecting new building. The appellants-tenants contested the claim. The Rent Controller accepted the respondent-landlord's claim and ordered eviction, which in appeal, and further revision to the High Court was upheld. In appeal to this Court for the appellant-tenant, it was contended that unless the landlord was able to establish that the condition of the building was such that it required immediate demolition and reconstruction, no eviction of the tenant could be onlered under s. 2l(l)(j).

Rejecting this contention and dismissing the appeal,

HELD : The requirement contemplated under clause (j) of the proviso to sub-s. (I) is that of the landlord and it does not have any reference to

the condition of the building as such. What is necessary under that clause is that the landlord must satisfy the Court that be reasonably and bona fide requires the premises for the immediate purpose of demolishing it and such demolition is for the purpose of erecting a new building in the place of the F old one.

No doubt, whether the landlord's requirement is reasonable and bona fide has to be judged in the . light of the surrounding circumstances, which will include his means for reconstruction of the building, and other steps taken by him in that regard. [737 G, HJ

In considering the reasonable and bona fide requirements of the landlord under this clause, the desire of the landlord to put the property to a more profitable use after demolition and reconstruction is also a factor that G may be taken into account in favour Of the landlord. It is not necessary that the landlord should go further and establish under this clause that the condition of the building is such that it requires immediate demolition. [738 DJ

Neta Ram v. liwan Lal, [1962l Supp. 2 S.C.R. 623, referred to.

Meltsin Bhai v. Hale & Company, (1964) II M.L.J. 147, contra observation disapproved.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1552 of 1966.

Appeal by special leave from the judgment and order dated June 8, 1966 of the Mysore High Court in C.R.P. No. 1118 of 1964. .

M. C. Chag/a and R. Gopalaktishnan, for the appellant.

M. R. Ramamurthi, S. S. Javali and M. Veerappa, for the respondent.

The J udgmt1D't of the Court was delivered by

Vaidialingam, J. 1his appeal, by special leave, is against the judgment of the Mysore High Court, dated June 8, 1966 in Civil Revision Petition No. 1118 of 1964.

The respondent land-lord filed an application, dated July 6, 1962 unde.r s. 2l(l)(j) of the Mysore Rent Control Act, 1961 (Mysore Act XXII of 1961) (hereinafter called the Act) before the Rent Controller for evictiqn of the tenants (the appellants herein) on the ground that the premises were reasonably 3illd bonafide required by him for the immediate purpose of demolishing and erecting of a new building. According to the respcndent the premises were old and were jllOt suitable for continued occupatmn.

The respcndent had also stated in his application that he had obtained the necessary licence for erecting a new building after demolition of the existing building and that he had made all preparations for demolition aind erection of new buildings on the site.

The appellant-tenant contested the claim of the landlord on several grounds. He pleaded that the premises were not old and that it was quite suitable for occupation and it does not require any re-construction or remodelli\Ilg.

The allegations that the building was old and required to be re-constructed were not bona fide and had been made by the landlord only as a pretext for evicting the tenant. The tenant further pleaded that the requirement of the landlord was neither reasonable nor bona fide. In any eveint, the tenant claimed that he should be entitled to be paid the value of the improvements that had been effected by him.

The Rent Controller, by his order dated January 22, 1964 accepted the claim of the rllSpOl!dent and ordered eviction of the appell3!1t granting the tenant one ~10nth's ime for deliveriing vacant possess10n.

Though the Consultmg Engmeer who gave evidence as P.W. 2 on behalf of the respondent had stated that the building was over 60 years old but nevertheless it could go qit for about 15 years more, the Rent Controller actually found that the building was more than 50 years old and that it was an old-fashioned one.

He further found that when the landlord desired to pull it down

3!1d put up a modern building thereon, it could inot under the c1rcumstances, be said that his claim was not bona fide oi: reasonable

SUPREME COURT REPORTS [1970] 3 s.c.R.

and that the intention of the landlord in pulling down the building and erectiing a new one to get a better return was certainly understandable. The Rent Controller further found that the landlord had proved that he had sufficient means to construct the building and that he had also obtained the necessary sanction from the Municipality concerned for recqnstruction of the building. In view of all these circumstances, the Rent Controller found that the requirement of the landlord was quite reasonable and oona fide. Regarding the claim of the tenant for payment of improvements before eviction is ordered, the Rent Cqntroller found that such a claim, even if established, could not stand in the way of the landlord getting possession of the premises.

Ultimately the application filed by the landlord was allowed.

The findings recorded by the Rent Controller were confirmed by the learned District Judge, by his judgment dated October 19, 1964 in A.S. No. 43 of 1964 taken before him by the tenant.

The revision filed by the appellant before the High Court was rejected by order dated June 8, 1966.

Mr. Chagla, learned counsel appearing for the appellant, contended that the interpretation placed by all the Courts on s. 21(1)(j) of the Act was erroneous.

According to the learned counsel, Uillless the landlord was able to establish that the condition of the building was such that it required immediate demolition and re-construction, no eviction of the tenant could be ordered under s. 21 (l) (j) of the Act.

On the findings of the Courts, based upon the evidence of the Engineer, that though the building was old it could continue to exist for another 15 years, it should have been held that the conditiQDS mentioned in s. 21 ( 1) (j) were not attracted to justify an order of eviction of the ten'ant.

Mr. Ramamurthi, learned counsel for the respondent, pointed out that in order to attracts. 21(1) (j) it was not necessary that the landlord should establish that the condition of the building was such that it required to be demolished immediately.

On the other hand, the sub-section made it clear that the requirement contemplated was that of the landlord and once his requirement had been held by all the Courts to be reasonable and bona fide, the order passed for eviction of the tenant was fully justified.

Having due regard to the scheme of the Act, we are satisfied that the interpretation placed upon s. 21 ( 1) (j) by the High Court is correct.

Section 21(1), while placing a general embargo against a landlord from evicting a tenant, recognises, in its proviso the circumstances under which a landlord could seek recovery of

PANCHAMAL v. BASTHI (Vaidia/ingam, J.) 737

possession of a premises.

The ground upon which Ihe landlord asked for eviction, in the present case, was based on s. 21 ( 1 )(j).

The material provision is as follows :

"21. (1) Notwithstanding 3illylhing to Ihe contrary contained in any other law or contract no order or decree for the recovery of possession of any premises shall be made by any court or olher authority in favour of the landlord against the tenant ;

Provided that the court may on an application made to it, make 3j1l. order for Ihe recovery of possession of a premises on one or more of the following grounds only, namely:-

(j) that the premises are reasonably and bona fide required by Ihe laindlord for the immediate purpose of demolishing them and such demolition is to be made for the purpose of erecting a new building in place of the premises sought to be demolished;

According to Mr. Chagla, the words 'reasonably and bona fide required', occurring in this clause, must be interpreted to have reference to the condition of the. building, the demolition of which is sought to be made and those words have no reference to any intention entertained by the landlord. The mere fact that a landlord may bona fide and reasonably entertain an idea of demolishing the building 3i1ld reconstructing the same with a view to putting the property to a more profitable use after construction, will not satisfy the requirements of the said clause.

That is, according to the learned counsel, the condition of the building must be such that it is immediately necessary to demolish it, in which case alone eviction under cl. (j) could be ordered.

We are not incliined to accept this construction sought to be placed by the appellant on the clause in question.

The proviso to s. 21 ( 1) enumerates the various circumstances under which a landlord may seek to recover possession of the property from his tenant.

The requirement contemplated under clause (j) of the proviso to sub-s. ( 1) is that of the landlord and it does not have any reference to the condition of Ihe building as such.

What is necessary under that clause is that the landlord must satisfy

the Court that he reasonably and bona fide requires the premises for Ihe immediate purpose of demolishing it and the demolition is for the purpose of erecting a new building in the place of the old one.

No doubt, as to whether the landlord's requirement is reason-

73~ SUPREME COUl.T REPORTS

[1970] 3 S.C.R.

able and bona fide has to be judged by the surrounding circum- A stances, which will include his means for recQ!lstruction of the

building, and other steps aken by him in that regard.

In considering the reasonable anJ bona fide.requirement of the landlord under this clause, the desire of the landlord to put the property to a more profitable use after demolition 3llld reconstruction is also a factor that may be taken into account in favour of the B landlord.

In our opinion, it is not necessary that the landlord should go further and establish under this clause that the condition of the building is such that it requires immediate demolition. That the cqndition of the property rriay be such which requires immediate demolition is emphasized in cl. (k) of the proviso.

When such a specific provision has been made in cl. (k), the condition C of the building cannot come into the picture nor could it have been dealt with again in cl. (j). So the requirement under cl. (j) is that of the landlord ajDd cannot have any reference to the building.

This Court, in Neta Ram v. Jiwan Lal(') in interpreting no doubt a slightly differently worded provision in s. 13(3)(a)(iii) of the Patiala and East Punjab States Union Urban Rent Restriction Ordinance, 2006 B.K. (8 of 2006 BK) held that one of the circumstances which could be taken into account in considering the requirements of the landlord with reference to the existing building is 'the possibility of its being put to a more profitable use after construction'. In the case before us all the Courts have concur~

rtly held. that the requirement of the landlord is reasonable and bona fide and that he had obtained the necessary sanctioo from the municipality concerned and that the landlora had also the means for reconstruction of the building. If the landlord does not commence demolition of the premises withi/rr the period specified in the order of the Court, the tenant is given a right under s. 26(1) to issue a notice to the landlord of his intention to occupy the premises from which he had been evicted and also to apply to the Court for relief if the landlord does not comply with his request.

Again under s. 27, the tenant has got a right to occupy the new building on its completion provided lie satisfies the requirements contained in that section.

Under s. 28 ( 1), the landlord is bound to intimate the tenant from whom he had received a notice under s. 27 the date on which the erection of the new building will be completed from which date the tenant will be entitled to occupy the same.

Mr. Chagla has referred us to a decision of the Madras High Court in Mehsin Bhai v. Hale & Company( 2 ). The.section which came up for consideration before the Madras High Court was s. 14(3) of the Madras Buildings (Lease and Rent Control) Act,

1960 (Act XVIII of 1960) which was as follows:

(!) [1962] Supp. 2 s.c.R. 623.

(2) [1964] 2 , M.LJ. 147.

"14(1)(b) that the building is bona fide required by the landlord for the immediate purpose of demolishing it and such demolition is to be made for the purpose of erecting a new building on the site of the building sought to be demolished, pass an order directing the tenant to deliver possessiO)ll of the building to the landlord before a specified date."

That clause is substantially similar to s. 21(1 )(i) of the Act.

In the Madras case it is seen tht the building from which the tenant was sought to be evicted was in good condition and there was no danger of its falling for another 20 years though the building was old. Under those circumstances when the landlord applied under s. 14(1) (h) of the Madras Act for eviction on the ground that he wished to demolish the building for the purpose of erecting a new building thereon, the High Court affirmed the decision of the Subordinate Court declining relief to the landlord.

Though the learned Judge states that landlords may bona fide require such buildings, particular:y old buildings in their own interest for demolitiQil and reconstruction, he holds that it is equally possible that the mere fact that a building is old may be taken advantage of by a landlord to put forth such pretext, his real object being ulterior and not bona fide for the purpose of reconstruction.

We have no hesitation in agreeng with the_ learned Judge's observation that the landlord must prove the reasonableness and bona fide nature of his requirement.

But, if the learned Judge intended to lay down a proposition of law that under s. 14(1)(b) of the Madras Act, similar to s. 21 ( l)(j) of the Act a landlord ca1:1not recover possession of the property for the purpose of reconstruction so as to put the property to a more profitable use, we are of the view that the decision of the Madras High Court must be considered to be erroneous. There is absolutely no _justification for putting such a narrow interpretation on the clause in question.

Mr. Chagla further urged that before his client is evicted his claim for compensation should have been considered by the Rent Controller. It is enough to say that, as pointed out by the High Court, that claim does not arise for consideration in these proceedings.

We may also state that a further contention regarding the nlidity of the notice to quit issued by the landlord which was taken before the High Courr and held against the appellant. has not been canvassed before us.

In the result, the appeal fails and is dismissed with costs. The petitioner/appellant undertaken to vacate the premises within a month from today.

Y.P.

Appeal dismissed.

PANCHAMAL NARAYAN SHENOY

BASTHI VENKATESHA SHENOY

February 20, 1970

S. M. SIKRI

V. BHARGAVA

Rent Control Act

s. 21(l)

s. 21(1)(j)

Mysore Rent Control Act, 1961

s. 21

s. 2

R. Gopalaktishnan

M. R. Ramamurthi

S. S. Javali

M. Veerappa

Vaidialingam

s. 2

Mysore Rent Control Act, 1961

Mysore Act XXII of 1961

January 22, 1964

October 19, 1964

June 8, 1966

Chagla

s. 21(1)(j)

s. 21

s. 21

Ramamurthi

s. 21

Section 21(1)

s. 21

s. 21

s. 13(3)(a)(iii)

s. 26(1)

s. 27

s. 28

s. 27

Madras High Court

s. 14(3)

s. 21(1 )(i)

Madras

s. 14(1)

s. 14(1)(b)

s. 21


THE ALOTE ESTATE & ANR.

R. B. SETH HIRALAL KAL YANMAL & ORS

February 20, 1970

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

Company-Shares in Conipany-Allotment in consideration of al/ottee .transferring land to Co1npany--Jf in winding up proceedings enquiry can be 1nade into value of land ll'ithout rectification of Company's registration.

The Appellants were allotted 18,000 fully paid up shares in a company in consideration of transferring 6,000 acres of agricultural )and to the con1pany for cultivation o'f sugar-cane. After a petition was filed for \\'inding up the company, two joint Liquidators were appointed and they took steps to settle the list of contributories. While these proceedings were pending an application was filed by Respondent No. 1 praying that an enquiry be made in respect of the price paid by the Appellant for the 6,000 acres of land. It was urged that such enquiry would show the value of the land to be well below the consideration for which the shares were allotted and that the Appellants would therefore be liable as contributories in respect of the difference.

The company Judg.., held that in a proceeding for winding up and while settling the list of contributories it was not open to go behind the transaction entered into at the time of the formation of the company and that the consideration which had been freely accepted by the company could not be challenged as being inadequate in the absence of any allegation of fraud.

However. the Division Bench, in appeal. held that an inquiry would be necessary as there ,,,.as an indication that the allottees of the shares had paid only a fraction of the nominal value.

On appeal to this Court,

HELD : Allowing the appeal,

It cannot be disputed that a shareholder of fully paid up •hares will not be placed on the list of contributories or made to contribute towards the assets of the company unless the register is rectified and it is determined in appropriate proceedings that he is not a fully paid up shareholder.

No steps were taken by the liquidators to have the register rectified or the contract entered into by the company with the appellants avoided by means of appropriate proceedings. Even in the application filed by respondent No. 1 there was no allegation of fraud.

The facts stated related more to inadequacy of price or consideration and not to its being illulory or the like.

The learned sin, gle judge. was therefore right and the Division Bench was in error in directing an inquiry i_nto the question whether the appellants had paid consideration which was inadequate. [743 F, 744 CD]

In re Innes & Co., Limited, [1903] 2 Ch. Div. 254, 262, referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1010 of 1966.

Appeal by special leave from the judgment and order dated July 9, 1965 of the Madhya Pradesh High Court, Indore Bench in Letters Patent Appeal No. 24 of 1962.

S. V. Gupte, N. D. Karkhanis and A. G. Ratnaparkhi, for theappellants.

Mohan Behari Lal, for respondent No. 1.

C. K. Daphtary, C. P. Lal and N. N. Sharma, for respondents e Nos. 2 to 4.

The Judgment of the Court was delivered by

Grover, J.

This is an appeal by special leave from a judgment of the division bench of the Madhya Pradesh High Court reversing the order of the Company Judge in an application made by respo, ndent No. 1 for an inquiry into the allegation that the consideration for 18,000 shares of the Vikram Sugar Mills Ltd. (now under liquidation) valued at Rs. 18 lakhs was not fully paid up by the shareholders, namely, the present appellants.

The facts may be succintly stated.

Appella; nt No. I, the A!ote Estate, was a firm consisting of two partners at the material time.

It came into existence in 1944 when Vikram Sugar Mills Ltd., hereinafter called the "company", was proposed to be floated. The two partners of the firm were His Highness Col. Sir Vikramsingh Rao Pawar, Ruler of the State of Devas (Senior) and R. K. N.

Gajapati Raju of Vaizagapatnam who died sometime in 1946 with the result that the firm was dissolved.

In 194 7 the ruler of Dewas

(senior) was taken in adoption by Her Highness the Senior Dowager Maharanisaheba of Kohlapur. He assumed the uame and title of His Highness Maj. Gen. Sir Shahaji Chhatrapati Maharaja of Kohlapur.

After the constitution of the firm called the Alote Estate, the company was incorporated in February 1944. The firm held extensive agricultural land which was suitable for cultivation o{ sugarcane. It had transferred 6,000 acres out of its holding to the company in lieu of 18,000 fully paid shares of Rs. 100/- each which were registered in the name of the firm.

Respondent No. I was originally a director of the company.

He made a proposal for advancing debenture loan of Rs. 20 lakhs to the company which proposal was accepted by the Board of Directors as also .at an e-xtraordinary general meetmg of. the company on September 16, 1946.

He was appointed Managmg Agent of the company.

On the same date at the meeting the shareholders of the company passed a resolution that out of 6,000 acres of land

acquired 'hy the company from the Alote Estate 2,000 acres selected by respondent No. 1 or his representative be returned and retransferred to the Estate.

In consideration of such transfer ~,000 shars were to be surrendered by the Estate. Effect was given to this resolution and in the list of shareholders the number of shares held

-.--.-_-;-,.'..;'~- '";

. . -.i._-_.'.,•_~-· . -~- "- /'/ • .::-- • < __ --.; _-_._ ~---r .

~ ·,,~-~-\' ··-\ .:'.-.:

I>;\~-·, t ; • ,\- - ' '742 .• ,

' .. SUPREME. COURT REPORTS . • [1970] 3 s:c.R -'.. ,, ' . ·" ;_. ---.-. ~-·->--~------ . '~)

- . _- ~- ,_ .. - - ' --- ' . lly the firm was shown 'as 9,000 instead of 18,000 subject to confirmation by the court. A resolution was passed on October 27, 1947 for reduction of the capital from 60 lakbs to Rs. 35 lakhs. The court was 'also moved for. giving permission for reduction of the capital. On January 23, 1950, Prabhakar Paiashuramji Pandit-·

a shareholder-filed before .the High Court a petition under ss. 166 and 162 of the Compa, nies Act 1913 for winding up the company ..

On April 2, 1951 two joint liquidators were appointed.

The liquidators took steps to settle the list of contributories and objections were raised by His Highness the Maharaja of Kohlapur as also by the firm against inclusion of their names in that list. While these proceedings were pending an application was filed by respondent No. 1 on October 31, 196 l praying that an inquiry be made in .respect of the price paid for 6,000 acres. of land before the allotment of. the shares and "to hold the-Alote Estate and His Highness the Maharaja of Kohlapur liable as contributories to the extent of money's worth not found to have been fully paid in addition to and independently of the liability for Rs. 9 lakhs" which according to the joint liquidators was the amount of liability of the Maharaja as a contributory. It was alleged, inter alia, that on an average the price per 'acre paid for 6,000 acres of land before the allotment of the shares was approximately Rs. 30.

On that basis the Maharaja and the Alote Estate were liable as contributories in the sum of Rs. 16 lakhs as the shares weie not fully paid by value

in kind.

The Maharaja and the Alote Estate in reply took up th~ E position that in the absence of rectification of register by appropriate action they were not liable to pay as contributories because they held shares which were fully paid up.

As regards the company's resolution to give up 2,000 acres out of 6,000 acres and reduce the value of shares allotted to 9 lakhs it was maintained that the same was an independent transaction and its effect could be considered only in appropriate proceedings in accordan.ce with law.

The learned Company Judge by his order dated July 31, 1962 held that in a proceeding for winding up and while settling the list of contributories it was not open to go behind the transaction entered into at the time of the formation of the company and that the consideration which had been freely accepted by the company could not be challenged as being inadequate 1n the absence of any allegation of fraud. He was further of the view that the contention of respondent No. 1 that the valuation of the land was Rs. 30 and not Rs. 300 per acre could not be inquired into and it w'as not necessary to consider whether such inquiry was barred by limitation in view of s. 235 of the Act.

It was, however, observed that if the allegation of respondent No. 1 was that the A!ote Estate as an officer of the company was guilty of misfeasance or breach <Jf trust the application having been made more than three years

• -~

'.. ..

from the date of first appointment of liquidators would be clearly barred. Reference was made to numerous English and Indiain

decisions for coming to the conclusion that a fully paid shareholder could not be called upon to contribute towards the assets of the company in respect of such shares held. by him. . Other points were left for decision after the petition .for confirmatio.n of the resolution of the company was disposed @f. ·

Res.P?ndent No. 1 filed an appeal under the Letters .Patent.

The division bench hearing the appeal seems to have been influenced by the possibility that the land had been purchased by the A!ote Estate at .a sma:JI fraction of value for which it had been sold to the company largely owing to the Maharaja being all powerful in the conduct of its affairs.

It was considered that 8Jll inquiry would be necessary when there was a prima facie indication that the allottee of the shares had paid only a fraction of the nominal value.

Nows. 156 of the Act deals with the liability as contributories.

Clause (iv) of &ub-s. (I) provides that in the case of a company limited by shares no contribution shall be required from ainY member exceeding the amount unpaid on the shares in respect to which he is liable as a present or past member.

Section 158 defines the term "contributory". It means every _person liable to contribute to the assets of a company in the event of its beiing wound up.

Under s. 184 the court shall settle the list of contri butories with power to rectify the register of members in all caSes where rectification is required in pursuance of the Act.

Sections 185 and 186 confer power on the court to require delivery of property from a contributory and to order payment of debts

detenniined by it.

The material question, therefore, was whether the appellants could be placed on the list of contributories. It could hardly be disputed that a shareholder of fully paid up shares will not be placed on the list of contributories and made to contribute towards the assets of the company unless the register is rectified and it is determined in appropriate proceedings that he is not a fully paid up shareholder.

In Engla, nd the rule which bas been accepted as settled is that although the court can inquire into. an allegation that owiing to fraud the contract relating to fully paid up shares was vitiated but unless the contract is impeached mere inadequacy of price is not sufficient of itself to invalidate the contract. In the words of Vaughan Williams, L.J. in In re Innes & Co.('), Limited : H "You must shew that, these shares not having been paid for at all, the contract for purchase was a colour-

(1) (1903) 2 Ch. Div. 254, 262.

SUPREME COUJ!, T REPORTS

(1970] 3 S.C.R.

able transaction, and that fu truth and in fact, qua value, these shares were not part of the consideration .... "

As stated in Palmer's Company Law, 21st Edition, pages 190-191, the considera1ion for the allotmemt of shares may be money or money's worth e.g., the transfer to the company of property. H a valid contract is made for the acceptance by the company of specified property in payment of shares the court will not whilst the contract stands inquire into the value of. the consideration even at. the i, nstance of the liquidator.

Where, however, the contract is fraudulent or shows on the face of it that the consideration given to the company is illusory or is clearly not equivalent to the nominal value of the shares the shares cannot, to this extent, be treated as fully paid and the shareholder may be held liable to pay for them in full. It is significant that no steps were taken by the liquidators to have the register rectified or the contract entered into by the company with the appellants avoided by means of appropriate proceedings.

Even in the application filed by respondent No. I in October 1961 there was no a!legation of fraud.

The fact sfated related more to madequacy of price or consideration and not to its being illusory or the like. In our judgment the learned single judge was right and the Division Bench was in error in directing an inquiry into the question whether the appellants had paid consideration which was inadequate.

The appeal is consequently a!lowed and the order of the Division Bench is set aside and that of the learned single judge restored with costs.

R.K.P.S.

Appeal allowed

•.' J

THE ALOTE ESTATE & ANR

R. B. SETH HIRALAL KAL YANMAL & ORS

February 20, 1970

C. SHAH

K. S. HEGDE

A. N. GROVER, JJ.

Conipany-Allotment

Innes & Co., Limited

CIVIL APPELLATE JURISDICTION

Madhya Pradesh High Court, Indore Bench

S. V. Gupte

N. D. Karkhanis

A. G. Ratnaparkhi

Mohan Behari Lal

C. K. Daphtary

P. Lal

N. N. Sharma

Grover

Vikram Sugar Mills Ltd.

Vikramsingh Rao Pawar

State of Devas

R. K. N.

Gajapati Raju

Vaizagapatnam

Dewas

Kohlapur

Shahaji Chhatrapati Maharaja

September 16, 1946

October 27, 1947

January 23, 1950

Prabhakar Paiashuramji Pandit-

ss. 166 and 162

April 2, 1951

October 31, 196

Maharaja

Maharaja

July 31, 1962

s. 235

Section 158

s. 184

Sections 185 and 186

Engla

Palmer


JANAPADA SABHA, CHHINDWARA ETC.

THE CENTRAL PROVINCES SYNDICATE LTD. AND ANR.

ETC.

February 23, 1970

[J. C. SHAH,

K. S. HEGDE, A. N. GROVER, A. N. RAY

AND I. D. DUA, JJ.J

Retrospectil'ity-Madhya Pradesh Kaya/a Upkar (Manyatakaran) Adhinayam (18 of 1964), ss. 2(fl)(b) and 3(1)-Act purporting to validate levy of cess notwithstanding the judgment of a coiut to the contrary, but. nature and text of aniendment not specified-Effect of Validating A.ct.

In 1935, the Independent Mining Local Board, Chhindwara, constituted under C.P. Local Self Government Act, 1920, resolved to levy a cess on coal e<tracted within the area at 3 pies per ton. The sanction of the Local Government, as required bys. 51(2) of the Act, was obtained for the levy.

In 1943, the levy was enhanced to 4 pies, in 1946 to 7 pies and in 1947 to 9 pies. The validity of the enhanced levy was challenged and this Court, in appeal, held that the increased levy would also require the previous sanction of the Local Government and such sanction not having been obtained, the levy at a rate higher than 3 pies was illegal. The State Legislature thereafter enacted the Madhya Pradesh Koyala Upkar (Manyatakaran) Adhinayam, 1964. Section 2(a) of the Act dOfines 'Board' to mean the Independent Mining Local Board, Chhindwara and its successor body the Janapada Sabha, Chhindwara (appellant) constituted under the C.P. and Berar Local Government Act, 1948', ands. 2(b) defines 'ccss' to mean 'a cess imposed by the Independent Mining Local Board, Chhindwara or its successor'. Section 3 ( !) provides that 'notwithstanding a judgment of any court, cesses imposed, assessed or co1lected by the Board in pursuance of the notificatjbns notices specified in the Schedule shall, for all purposes, be deed to be, and to have always been validly imposed, aSllessed or collected as if the enactment under which they were issued stood amended nt material times so as to empoWer _the Board to issue the said notifications.

F , In the Schedule were specified the three notifications enhancing the rate df cess.

On the question whether the enhanced levy was validated by the 1964 Acr.

HELD : The Act did not give legal effect to the imposition of cess at the enhanced rates.

By a diction s. 3(1) of the 1964-Act deems the Act of 1920 and the rules framed thereunder to have been amended. But the text or even the nature of the amendments is not disclosed. Section 51 (2) of the 1920- Act could not be deemed to have been repealed by the 1964 Act, because,

the latter. Act, in terms is limited in its application to the Independent Mining Local Board, Chhindwara, and its successor body and only in respect - H of the three notifications specified in the Schedule. An Act so limited in its app1ication to oneLocal Board and to specified notifications cann.ot re~ peal the sub-section which applies to all Boards. Nor is tere anythmg to 1ndicate that notifications issued by the appellant-Board without the sanc- L\OSup Cl (NP)/70-3

tion of the Stte Government must be deemed to have been issued validly.

uch an intendment cannot be implied, without express language, in a taxing statute, It was open to the Legislature within certain lin1its to amend the provisions o'f an Act retrospectively and to declare what the law shall be deemed to have been.

But the Legislature, in the present cast\ attempted to_ overrule or set aside a decision of the court.

It is not open to the Legislature to -say that a judgment of a court porperly constituted and rendered in cxercis~ ot its powers in a matter brought before it shall be deemed to be ineffective either as a precedent or between the panics. l750 E-F:

751 A-OJ

Commissioner of Income-tax v.

Ajax Products Lui., 55 1:r.R. 741

(S.C.) and Commissioner of Income-tax v. B. M. Khanvar, [1967] 2 S.C.R. 650, followed.

CIVIL APPELLATE JURISDICTION : Civil Appeal; Nos. 125 to 134 of 1967. ·

App.eals from the judgment and order dated May 3. 1966 of the Madhya Pradesh High Court in Misc. Petitions Nos. 552 of 1964 etc.

B. Sen, S. K. Seth and I. N. Shroff, for the appellant fin C.As.

Nos. 125 to 133 of 1967).

I. N. Shroff, for the appellant and respondent no. 6 (in C.A.No. 134 of 1967). ·

N. D. Karkhanis and A. G. Ratnaparkhi, for respondent no. 1. (in C.As. Nos. 125 to 133 of 1967).

Sachin Choudhary, R. K. P. Shankardass, A. K. Verma and

0. C. Mathur, for respondents Nos. 1 and 2(in C.A. No. 134 of 1967)

 The Judgment of the Court was delivered by

Shah, J.

These appeals are filed !>Y the Janapada Sabha, Chhindwara-h.ereinafter called 'the Sabha'-against the judgment of the High Court of Madhya Pradesh declaring that the Madhya Pradesh Koyala Upkar (Manyatakaran) Adhiniyam [Madhya Pradesh Coal Cess (Validation) Act] 18 of 1964 does not "give legal effect to the imposition of cess at the rate of 4 pies, 7 pies and 9 pies per ton under the notifications" issued by the Independent Mining Local Board on December 22, 1943, July 29, 1946 and July 19, 1947 respectively, "nor to anything done in pursuance of those notifications".

The Independent Mining Local Board, Chhindwara, a Board constituted under the Central Provinces Local Self-Government Act 4 of 1920, resolved on Marc!! 12, 1935 to levy a H cess under s. 51 of the Act at the rate of 3 pies per ton on coal extracted within the area.

Sanction of the local Government was obtained to that levy.

On December 22, 1943, the rate !"" I

was enhanced to 4 pies per ton: it was enhanced on July 29, 1946 to 7 pies per ton and on July 19, 1947 the cess was enhanced to 9 pies per ton.

The Central Provinces Local Self- Government Act 4 of 1920 was repealed with effect from June 11, 1948 by the C.P. and Berar Local Government Act 38 of 1948.

By s. 192 of Act 38 of 1948 it was enacted, inter alia that all rules, bye-laws and orders made, notifications and notices issued. taxes imposed or assessed, cesses, fees, tolls or rates levied under Act 4 of 1920 and in force immediately before the commencement of Act 38 of 1948 shall continue to be in force and shall be deemed to have been respectively made, issued, granted, imposed or assessed, levied and taken under Act 38 of 1948, and all rates, taxes and cesses due to the Independent Local Board shall be deemed to be due to the Sabha to whose area they pertain.

The levy of coal cess by the Sabha was challenged by the Amalgamated Coalfields Ltd. & Others on diverse grounds in petitions filed in this Conrt under Art. 32 of the Constitution.

This Court rejected the petitions holding that Act 4 of 1920 had received ihe assent of the Governor-Gnereal and its validity was

not liable to be challenged and that "on a proper interpretation of s. 51 of the Act th© levy of coal cess was not excluded from the purview of the local authority." It was also held that the levy of the cess was valid even after the coming into force of the Government of India Act, 1935, and the Constitution of India, in view of s. 143 of the Government of India Act, 1935 and Art. 277 of the Constitution.

But the Court declined to allow the petitioners to urge that the increase in the rate of tax by resolutions in the years 1943, 1946 and 1947 was invalid: Amaigamated Coal-fields Ltd. v. Janapada Sabha, Chhindwara(').

Validity of the enhanced levy was then challenged in petitions filed before the High Court of Madhya Pradesh by the Amalgamated Coal-fields Ltd. and Others.

In appeals against the order of the High Court of Madhya Pradesh, this Court held that since neither the Act nor the Rules prescribed a ceiling on the levy, the expression "first imposition" occurring in s. 51 (2) would include every increase of the levy after its initial imposition and the increased levy would require the previous sanction of the Local Government and such sanction not being there, the levy at the rate of 9 pies per ton was illegal.

The Court accordingly allowed the appeals and orjlered that the appropriate directions be issued restraining the Janapada Sabha from recovering the tax at a rate higher than 3 pies per ton and also restraining the Sabha from recovering any additional tax in respect of the years for which

(1) f1962] I S.C.R. l.

tax had already been assessed against the petitioners : The Amalgamated Coalfields Ltd. v. The Janapada Sabha, Chhindwara(').

To rectify the defect pointed out by this Court in the imposition of the cess, the Legislature of Madhya Pradesh enacted the Madhya Pradesh Koyala Upkar (Manyatakaran) Adhiniyam Act 18 of 1964. Bys. 2(a) "Board" means "the Independent Mining Local Board, Chhindwara, constituted under the Central Provinces Local Self Government Act, 1920 (IV of 1920), and its successor body, the Janapada Sabha, Chhindwara, constituted under the Central Provinces and Berar Local Government Act, 1948 (XXXVIII of 1948)".

Sectin 2(b) defines "cess" as meaning "'a cess imposed by the lndependem Mining Local Board, Chhindwara, or its successor body, on coal, coal dust or coke, from time to time, as the case may be, produced or manufac tured at the mines, so1d for export outside the State, or sold otherwise than for export by rail within the territorial jurisdiction of !he said Board'', and by s. 2(c) "enactment" is defined as meaning "the Central Provinces Local Self Government Act, 1920 (IV of 1920), or the Central Provinces and Berar Local Government Act, 1948 (No. XXXVIII of 1948), as the case may be, and rules made thereunder".

By s. 3 it is provided:

"(!) Notwithstanding anything contained in any judgment, decree or order of any Court, cesses imposed, assessed or collected or purported to have been imposed, assessed or collected -by the Board in pursuance of the notifications/notices specified in the Schedule shall. for all purposes, be deemed to be, and to have always been, validly imposed, assessed or collected as if the enactment under wh.ich they were so issued stood amended at all material times so as to empower the Board to issue the said notifications/notices and accordingly :-

(a) all acts, proceedings or things done or taken by the Board or by any officer of the Board in connection with the imposition, assessment or collection of such cess shall, for all purposes, be deemed to be and to have always been done or taken in accordance with law;

(b) any cess imposed or assessed in pursuance of the said notifications/notices before the 20th day of May, 1964 but not collected before such date may be recovered (after assessment of the cess where necessary) in the manner provided therefor;

(c) no suit or other proceeding shall be maintained or continued in any Court against the Board or any person

or authority whatsoever for the refund of any cess so paid; ( d) no Court shaU e.nforce any decree or order directing the refund of any cess so paid.

(2) For the removal of doubts, it is hereby declared that nothing in sub-ction (1) shall be construed as preventing any person-

(a) from questioning in accordance with the provisions of the enactment, the assessment of such cess for any period.

(b) for claiming refund of the cess paid to him in excess of the amount due from him under the enactn1ent."

In the Schedule, notificaitons dated December 22, 1943, July 29, 1946 and July 19, 1947, enhancing the rate of cess were referred to.

The levy of coal cess validated by the provisions of Act 18 of 1964 was again challenged by the Central Provinces Syndicate Ltd. and other producers of coal, by petitions filed in the High Court of Madhya Pradesh.

It was claimed by the petitioners that Act I 8 of 1964 was "ultra vires and ineffective", and the notices issued pursuant thereto were liable to be quashed.

Dixit, C.J., and Pandey, J., who heard the petitions differed.

In the view of the learned Chief Justice the Amending Act which purported to amend Act 4 of 1920 by seeking to empower the Mining Board to issue the notifications specified in the Schedule to the Act without reviving the Act of 1920 was ineffective, and that in any event the Act did not validate the levy of coal cess which had been imposed under the three notifications.

Pandey. J., ex" pressed a contrary view.

He held that the provisions of s. 3 of Act 18 of 1964 were not invalid, "nor were they ineffective". The petitions were then referred to Shiv Dayal, J.

The learned.

Judge agreed with Dixit, C.J., and held that Act 18 of 1964 did not give legal effect to the imposition of cess at the rate of 4 pies, 7 pies or 9 pies per ton under the notifications issued by the Independent Mining Local Board nor to anything done in

pursuance of those notifications.

The preamble of the Act states that it is "An Act to validate the imposition and collection of cess on coal by certain local authorities". Act 18 of 1964 is a taxing statute whiclj purports to rectify the defects pointed out by this Court.

This Court declared invalid the levy of cess by the Independent Mining Local Board, Chhindwara, at a rate exceeding three pies per ton. . If

the Act does not by the plain language used therein carry out the object, the Court will not be justified in supplying deficiencies in the Act.

As observed by Rowlatt, J., in Cape Brand.v Syndi care v. Commissioners of Inland Revenue('):

"In a taxing Act one has to look merely at what is clearly said.

There is no room for any intendment: There is no equity about a tax.

There is no presumption as to a tax.

Nothing is to be read jn, nothing is to be implied.

One can only look fairly at the language used."

These observations were approved by the House of Lords in Cana dian Eagle Oil Co. Ltd. v. King('). This Court has also adopted the same rule in Commissioner of Income-tax v. Ajax Products Ltd.("); and Com111issioner of Income-tax v. B. M. Kharwar(4).

The relevant words which purport to validate the imposition, assessment and collection of cess on coal may be recalled : they are "cesses imposed, assessed or collected by the Board in pursuance of the notifications/notices specified in the Schedule shall, for all purposes, be deemed to be, and to have always been validly imposed, assessed or collected as if the enactment under which they were so issued stood amended at all material time~ so as to empower the Board to issue the. said notifications/notices,.. Thereby the enactments, i.e., Act 4 of 1920 and the Rules framed under the Act pursuant to which the notifications and notices were issued, must be deemed to have been amended by the Act.

But the Act does not set out the amendments intended to be made in the enactments.

Act 18 of 1964 is a piece of clumsy drafting.

By a fiction it deems the Act of 1920 and the rules framed thereunder to have been amended without disclosing the text or even the nature of the amendments.

Mr. B. Sen appearing on behalf of the Sabha contended that the intention of the Legislature was to repeal with retrospective effect sub-s. (2) of s. 51 of Act 4 of 1920.

Bys. 51 of Act 4 of 1920 it was provided :

"( 1) <; ubject to the provisions of. ay law or. enactment for the time being in force, a D1stnct Council may, by a resolution passed by a majority of no.t less tan two-thirds of the members present at a special meeting convened for the purpose, impose any tax, toll or rate

(I) 12 T.C. 358.

(l) 55 I.T.R. 74l (S.C.l

(2) 27 T.C. 205 (H.L.l.

.JANAPADA SABHA V. CENTRAL.PROVINCES (Shah, J.) 75!

(2) The first imposition of any tax, toll or rate under sub-section (1) shall be subject to the previous sanction of the Provincial Government.

But the Act in terms is liniited in its application to the Independent Mining Local Board, Chhindwara, and its successor body the Jamapada Sabha, Chhindwara constituted under Act 38 of 1948, and only in respect of the three notifications specified in the Schedule.

Obviously the Act limited to one local Board in its application and to certain specific notifications cannot operate to repeal the clause insofar as it applied to other Boards.

The nature of the amendment made in Act 4 of 1920 has not been indicated.

Nor is there anything which enacts that the notifications issued without the sanction of the State Government must be deemed to have been issued validly under s. 51(2} without the sanction of the Local Government. On the words used in the Act, i~ is plain that the Legislature attempted to ovecrule or set aside the decision of this Court. That, in our

judgment, is not open to the Legislature to do under our constitutional scheme.

It is 'open to the Legislature within certain limits to amend the provisions of an Act retrospectively and to declare what the law shall be deemed to have been, but fo is not open to the Legislature to say that a judgment of a Court properly constituted and rendered in exercise of its powe.rir in a matter brought before i~ shall be deemed to be ineffecive and the interpretation of the law shall be otherwise than as declared by the Court.

This Court in The Amalgamated Coalfields Ltd.'s(') case held that the cess was not validly imposed and levied because the sanction of the State Government was not obtained at the time of enhancing the rate of levy of tax.

That judgment was binding between the parties and also by virtue of Art. 141 binding on all Courts in the territory <if India.

The Legislature could not say that that declaration of law was either erroneous, invalid or ineffective either as a precedent or between the parties.

It is unnecessary then to consider whether the repealed Act may be amended without re-enactment.

The appeals fail and are dismi<ed with costs.

One hearing fee.

V.P.S.

Appeals dismissed •.

JANAPADA SABHA, CHHINDWARA ETC

C. SHAH

K. S. HEGDE

A. N. GROVER

A. N. RAY

I. D. DUA, JJ

ss. 2(fl)(b) and 3(1)

Local Self Government Act, 1920

Section 2(a)

Berar Local Government Act, 1948

Section 3

s. 3(1)

Section 51

[1967] 2 S.C.R. 650

CIVIL APPELLATE JURISDICTION

B. Sen

S. K. Seth

I. N. Shroff

N. D. Karkhanis

A. G. Ratnaparkhi

Sachin Choudhary

R. K. P. Shankardass

A. K. Verma

C. Mathur

Shah

High Court of Madhya Pradesh

December 22, 1943

July 29, 1946

July 19, 1947

Marc!! 12, 1935

s. 51

June 11, 1948

Berar Local Government Act

s. 192

Amalgamated Coalfields Ltd.

Art. 32

s. 51

Constitution of India

s. 143

Government of India Act, 1935

Art. 277

Amalgamated Coal-fields Ltd.

s. 51

Legislature of Madhya Pradesh

Janapada Sabha, Chhindwara

s. 2(c)

s. 3

20th day of May, 1964

Central Provinces Syndicate Ltd.

Dixit

Pandey

s. 3

Shiv Dayal

Rowlatt

B. Sen

s. 51

.JANAPADA SABHA V. CENTRAL.PROVINCES

Jamapada Sabha, Chhindwara

Art. 141

India


ASBESTOS CEMENT LTD. v.

P. D. SAWARKAR & ORS.

February 23, 1970

[J. M. SHELAT AND G. K. MITTER, JJ.)

Cons1i1utio11 of India, Arts. 133(1) & 226-Final order-Jnterbn a1rard ./Jy arbitrators under Industrial Disputes Act, 1947 deciding one of sel'eral

issues-Other iss11es left to be decided later-Ati<•ard published in Gazette under s. 17 of Act-Such award 1vhether an interlocutory order-High Court's decision dis111issi11g writ petition against such cntard M-'hether a 'final order'.

The 4th respondent \Vas a union of workmen in one of the factories owned by the appellant company.

By an agreement between the 4th respondent and the company a charter of workmens demands was referred to adjudication by arbitrators under s. JOA of the Industrial Disputes Act,

1947. The arbitrators dec_ided first the dispute relating to dearness allowance, leaving other disputes to be considered later. This Part I award \\-as published in the Government Gazette under s. 17 of the Act. Aggrieved by the said award the company filed a writ petition under Art. 226 <ii the Constitution. The petition was dismissed by the High Court.

The company applied to the High Court for leave to appeal to this Court. This was refused on the ground that the arbitration was not completed and therefore neither the award in question nor the High Court's order dismissing the writ petition was a fin'al order within the meaning of Art. 1~3(1) of the Constitution. Against the High Court's ordr refusing lea\'<. the company, by specinl leave, app1ied to this Court.

HELD: (i) Under sub-s. 4 of s. 10-A, the arbitrators submitteJ the Part I Award duly signed by all of them to the Government.

As required bys. 17(1), the said Part 1 Award was published in the manner prescribed therefor by the State Government and thereupon under s. 17 (;) it became final nod could not be called in question in any court in J.ny manner whatsoever.

Under s. 17A(l) the award became en'forceable on the expiry of 30 days from the date of its publication. Therefore so tar as the question of dearness allowance among other disputes, was concerned, Part I Award became final and binding on the parties.

It was not an interlocutory order in the se.nse of any dispute in respect of its subjectmatter remaining to be finally adjudicated by the arbitrators or the rights of the parties in relation thereto remaining pending any further determination. [755 B-El

(ii) The petition filed by the appeUant-company for a v; rit of certiorari and for quashing the said Part I Award under Art. ~26 \\-'as a proceeding independent of the dispute between the parties.

Such a \vrit proceeding \Vas not an interlocutory proceeding nor the order dismissing it an interlocutory order leaving any question raised in the writ petition to be detcrn1ined at any later stage. The effect of the dismissal of the \\1rit petition by the High Court was that the said Part I Award, suhjcct to any appeal to this Court. was not liable to be questioned on the ground:; aJlegcd in that writ petition and the appellant-company woulJ he hound l"O pay to its \\'~1rkn1cn dearness allowance at the rates provided in that award. The controversy between the parties on questions raised in the \\'rit petition

\VI.ls finallv detern1ine<l and brought to an end as a re.;; ult of the ord_er .dismissal. In vie\v of the decision of this Coutt in Ranteslr "· Seth Gend~;/al

the High Court must be said to be in error i~ holding that its. order dismissing the writ petition was not a finaI order w1th1n te man1ng of t.

133(1) and that no appeal, therefore, lay therefrom tn thIS Court. [755

F-G; 766 BC]

Ramesh v. Seth Gendalal, [1966] 3 S.C.R. 198, applied.

CIVIL APPELLATE JUR1so1cnoN : Civil Appeal No. 2448 of 1969.

Appeal by special leave from the order dated Nov~ber 2~, 1968 of the Bombay High Court in Supreme Court Civil Apphcation No. 2687 of 1968.

V. M. Tarkunde, P. N_. Tiwari, anci O. C. Mathur, for the appellant. ' B. Sen and S. K. Dholakia, for respondent No. 4.

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

This appeal, by special leave, raises the question as to whether an order dismissing a writ petition challenging the validity of an industrial award, which disposes of one of the items of a charter of demands by workmen but Jeaves the rest of the demands to be adjudicated by a subsequent award, is a final order iin . a civil proceeding of a High Court within the meaning o.f Art. 133 (1) of the Constitution.

The following are the relevant facts :

The appellant-company conducts factories at Mulund in Greater Bombay, Kymore, Calcutta and Podanur. The present dispute relates to the factory at Mulund where the company employs more than 1700 workmen and has its Head Office also. On

September 21, 1962 the 4th respondent union on behalf of the workmen of the Mulund factory submitted a charter of demands consisting of 20 items including the demand for increased dearness allowance.

By an agreement dated November 26, 1964

btween the appellant-company and the 4th respondent union made under s. l 0-A of the Industrial Disputes Act, 1947, the said demands were referred for adjudication to a board of arbitrators consisting of respondents 1 to 3. A notification dated December 5, 1964 referring the said disputes to respondents .1 to 3 was issued by the Maharashtra Government and published in the Government Gazette.

Demand No. 1-A in the said charter of demands related to dearness allowance to be paid to both monthly and daily rated workmen at the rates threin sef out.

The arbitrators decided to hear and dispose of, first, the dispute as to dearness 'allow:mce and then to deal with the rest of the

SUPREME COURT REPORTS

disputes relating t? other demands.

Accordingly, the parties

wre heard and ultimately the arbitrators gave their award which they called Part I Award dated March 27, 1965. The said award was a majority decision in the sense that one of the arbitrators dissented from the opinion of the other two.

So far as the present appeal is concerned, it is not necessary to set out the contents of the award.

The said Part I award was thereafter published in the Government GazeHe dated April 15, 1965 and became enforceable under s. 17-A of the Act on the expiry of 30 days from the date of its publication. If the Appellant-company were to be right, the said award imposed a burden of about Rs. 40 lacs by way of arrears, the award having beeui made retrospective in operation, and Rs. 5 .5 8 lacs as and by way of recurring liability every year. • Aggrieved by the said award the appellant-company filed a writ petition under Art. 226 of the Constitution being Special Civil Application No. 824 of 1965 in the High Court of Bombay for quashing the said award on diverse grounds.

The writ petition came up for hearing before a Division Bench and was dismissed on merits by an order dated April 10, 1968. The appellant-company thereupon filed an application being Supreme Court Civil Application No. 2687 of 1968 for leave to appeal to this Court.

That application was rejected by an order dated November 25, 1968 which stated:

"No application lies under article 226 of the .Constitution as there is further arbitration."

It appears that the words "Art. 226" were mentioned in the said order through inadvertence.

What was meant was that as the arbitration proceedings were still pending and the board of arbitrators had yet to adjudicate on the rest of the reference, the disputes between the parties could not be said to have been finally disposed of, and that therefore, the said Part I award was an interlocutory order.· Consequently, neither that award nor the order dismissing the writ petition against that award was a final order within the meaning of Art. 133(1).

This appeal challenges the correctness of this order.

The only questic.n arising in this appeal, is whether the High Court's order dated November 25, 1968 dismissing the writ petition is a final order within the meaning of Art. 133(1).

There is no dispute that the question of dearness allowance along with several other questions was, by agreement between the .Parties, referred to the arbitration of respondents 1 to 3 as provided by. s. 10-A of the Act and that a copy thereof was publishea in the

I A

Government Gazette as required by sub-s. 3 of that section.

There is similarly no dispute that the arbitrators, instead of detefllllining all the disputes at one ti.me, first took up the question of dearness allowance, deciding to take up the rest of the dispu:es at a subsequent stage and gave their award calling it Part I Award.

Under sub-s. 4 of s. 10-A, the arbitrators submitted the said Part r Award duly signed by all of them to the Government. As required by s. 17(1), the said Part I Award was published in the manner prescribed therefor by the State Government and thereupon under s. 17(2) it became final and could not be called in question by any court in any manner whatsoever.

Under s. 17 A(l), the award became enforceable on the expiry of 30 days from the dafe of its publication under s. 17-in the present case, as from May 15, 1965. Therefore, so far as the question of dearness allowance, among other disputes, was concerned, Part I Award became final and binding on the parties and nothing further remained to be done or determined in respect of the controversy between the parties en the question of dearness allowance.

The award, therefore, was not an interlocutory order in the sense of any dispute in respect of its subjectmatter remaining to be finally adjudicated by the arbitrators or the rights of the parties in relati.on thereto remaining pending any further determination; In this sense there can be no doubt that so far as the dispute as to dearness allowance was concerned, the arbitrators by the said Part I Award finally adjudicated it and gave their decision leaving nothing to be adjudicated or decided upon at any subsequent stage of the arbitration.

Quite apart from this consideration, the petition filed by the appellant-company for a writ of certiorari and for quashing the said Part I Award under Art. 226 was a proceeding independent on the dispute between the parties.

Such a writ proceeding was not an interlocutory proceeding nor was the order dismissing it an interlocutory order leaving any question raised in the writ petition to be determined at any later stage.

Once the High Court dismissed the writ petition, the controversy between the parties raised therein was finally determined and therefore came to an end. In Ramesh v. Seth Gendalal(') a similar question arose for consideration and this Court held that a writ petition under Art. 226 is a civil proceeding of a High Court, that such a proceeding is quite independent of the original controversy between the parties and that a decision in exercise of jurisdiction under. that article, whether interfering with the proceedings impugned or declining to do so, is a final decision in so far as the High Court is concerned, if the effect is to terminate the controversy before it and the order must in that case be-

(t) [1966/ 3 S.C.R. 198.

SUPREME COURT REPORTS [1970] 3 S.c.Il.

regarded as final for the purpose of an appeal to the Supreme Court. (See also Mohan/al Magan/a/ Thacker v. State of Guja rat(').

It is clear that the effect of the dismissal of the writ petition by the. High. Court was that the said Part I Awilrd, subject to any appeal to this Court, was not liable to be qoned on the _grounds alleged in that writ petition and the appellant-company would be bound to pay to its workmen dearness allowance at the rates provided in that awilrd.

The controversy between the par ties on questions raised in the writ petition was finally determined and brought to an end as a result of the order of dismissal. In view of the decision in Ramesh v. Seth Gendalal(') the High Court must be said to be in error in holding that its order dismissing the writ petition was not a final order within the meaning of Art. 133(1) and that no appeal, therefore, lay therefrom to this

Court.

The appeal succeeds. The High Court's order dated November 25, 1968 is set aside and the case is sent back to the High Court for disposal in accordance with law.

In the circumstances of the case there will be no order as to costs.

The Special Leave Petition No. 148 of 1969 filed against the High Court's judgment and order dated April 10, 1968 dismissing the said writ petition is allowed to be withdrawn. Stay granted by this Court will continue for ten days from today.

-G.C.

Appeal allowed.

(I) [1968] ~- S.C.R. 685. (~) [1966] .1 S.C.R. l9g.

ASBESTOS CEMENT LTD

P. D. SAWARKAR & ORS

February 23, 1970

M. SHELAT

G. K. MITTER, JJ.

Arts. 133(1) & 226

s. 17

JOA of the Industrial Disputes Act

s. 17

Art. 226

Art. 1

s. 4

s. 10

s. 17

s. 17A(l)

[1966] 3 S.C.R. 198

CIVIL APPELLATE JUR1so1cnoN

Supreme Court

V. M. Tarkunde

P. N_. Tiwari

B. Sen

S. K. Dholakia

Shelat

Art. 133

Mulund

Bombay

Kymore

Calcutta

Podanur

September 21, 1962

November 26, 1964

Industrial Disputes Act, 1947

December 5, 1964

s. 17

Art. 226

High Court of Bombay

April 10, 1968

November 25, 1968

article 226

Art. 226

Art. 133(1)

Art. 133(1)

s. 10

s. 3

s. 4

s. 10

s. 17(1)

s. 17(2)

s. 17

s. 17

May 15, 1965

Art. 226

Art. 226

Art. 133(1)