R.L.KAPUR

STATE OF MADRAS

February 8, 1972

(J. M. SHELAT AND H. R. KHANNA, JJ.]

~17

Penal Code-S. 70 read with S. 25 of the General Clauses Act 189i- Whether security deposited in Court in certain contenipt matters can be adjusted against a fine ilnposed upon him in those proceeding$ after the lapse of 6 years.

The appeal is directed against the order of the High Court of Madras directing a sum of Rs. 500/. deposited in the High Court as security for the appellant's appearance before ii in certain contempt of Court proceedings, to be adjusted against the fine imposed upon him in those proceedings. The contempt of Court proceedings (No. 3 of 1962) were taken against the appellant in the High Court in respect of a letter written and addressed by the appellant to the then Cl!!ef .Justice of the High Court and which contained certain remarks in-: resard to the di•· missal of the appellant'• revision application by a single judge of the High Court. The contempt with which the plaintiff was charged in those proceedings was contempt of the High Court and not tile City Civil Court, in which the appellant had filed the suit 'from which, the said revision application arose. In those proceedings, the High Court by its judgment, held the appellant guilty of contempt of Court and sentenced him to 6 months' simple imprisonment and fine. The appellant served out the sentence of imprisonment but failed to pay the fine.

The said amount of Rs. 500, deposited in the said contempt proceed ings remained unattached till 1971. when two applications were filed in the High Court-one bl the appellant for refund and the other by the State for adjustment o the said amount towards the fine remaining unpaid and tho High Court allowed the State's application for payment of the said sum towards satisfaction of the said unpaid fine.

Counsel for the appellant relied on S. 70 of the Penal Code and urged that six years having elapsed since the passing of the order imposing fine upon the appellant, the State application was time barred and the High Court could not pus the impugned order. Further, counsel relied on S. 2S ot the General Cla111es Act 1897 which provides that Sections 63 to 70 of the Penal Code and the provisions of the Criminal Procedure Code in relation to the issue and execution of warrants for the levy ot fines shall apply to all fines imposed under any Act, Regulation etc., and since a fine which was imposed upon the appellant, was an order passed under the Contempt of Court Act 1952, Section 70 of the Penal Code was applicable. Dismissing the appeal,

HELD : (i) Sec. 5 of the Penal Code provides, inttr alia, that its provisions are not to affect the provisions of any special or local law and under Art. 215 of the Constitution, every High Court being a Court of

H Record, have all the powers of such a Court including the power to t punish for contempt of itself. The jurisdiction is a special one. not arising or derived from the Contempt of Courts' Act 1951, and therefore, not within the purview of either the Penal Code or the Code of Criminal Procedure. The Jaw as to contempt of Court, as administered by the

fid: .is High Court.. in the present case, is a special la\v and therefore,

S. 70 of the Penal CoJe does not apply to the facts and circumstances of the case~ Further since such a special law does not prescribe any period of limitation for collecting and satisfying a fine imposed there undc.:· no question of limitation \vould arise. [420 Al

(ii) The power of the High Court to punish for contempt of itself arises not under any Act, such as Contempt of Courts'' Act, but the Constitution itself vests these rights on every High Court, and no Act of a Legislature could take away that jurisdiction and confer it afresh by virtue of its 0'1i'n authority and since the sentence of fine

~1nd imprisonment passed against the appellant \Vas not imposed under :tny act or statute, Section 25 of the General Clauses Act has no applicati0:1 :o the present case. [420 EF]

Sukhdev Singh Sondhi v The Chief Justice and Judges of tlte Pepsu

llih Court [1954] S.C.R. 454 referred to.

CRIMINAL APPELLATE JURISDICTIOl'i : Criminal Appeal No. 185 of 1971. ·

Appeal by special leave from the judgment and order dated June 19, 1971 of the Madras High Court in Application Nos, 1171 and 1172 of 1971.

S. l'{. Prasad, for the appellant.

A. V. Rangam. for the respondent.

The Judgment of the Court was delivered by

Shela!, J. This appeal, by special leave, is directed against the order of tl!e High Court of Madras, directing a sum of Rs. 500, deposited in the High Court as security for the appellant's appearance before it in certain contempt of court proceed ings, to be adjusted against the fine imposed upon him in those proceedings. It appears that the contempt of court proceedings, being No. 3 of 1962, were taken against the appellant in the High Court in respect of a letter written and addressed by the appellant to the then Chief Justice of the High Court and which contained certain remarks in regard to the dismissal of the appellant's revision application by a single Judge of the High Court.

Thus, the contempt with which the plaintiff was charged in those proceedings was contempt of the High Court, and not the City Civil Court, Madras, in which the appellant had filed the sait from out of which the said revision application arose. In those proceedings, the High Court, by its judgment and order, dated February 25, 1964, held the appellant guilty of contempt of court and sentenced him to six months' single imprisonment and fine.

The appellant served out the sentence of imprisonment, but failed <o pay the fine.

R. L. KAPUR v. MADRAS STATE (She/at, J.) 419

A It ppars that. the said amount of Rs. 500, deposited, as a.foresa1d, m the said contempt proceedings, remained unattached till 1971. In 1971, two applications were filed in the High Court, one by the appellant for refund of the said amount and the other on beb, alf of the State for adjustment of the said amount towards the fine remaining unpaid. By an order, dated June 29, 1971, B the High Court dismissed the appellant's application for refund and allowed the State's application for payment of the said mm t'bwards satisfaction of the said unpaid fine.

As against the said order, counsel for the appellant relied on sec., 70 of the Penal Code and urged that six years having elapsed since the passing of the order imposing fine upon the appellant, the State's application was time barred and the High Court could not pass the impugned order, the diect of which was to collect the said fine from out of the said deposit. If sec. 70 were to apply to tqe said contempt of court proceedings, there is no doubt that the State's application would be time barred as that section in tenns provides that such fine can be levied within six years after the passing of the order of conviction and sentence.

But sec. 5 of the Penal Code provides, inter alia, that its provisions are not to affect the provisions of any special or local law. Under sec. 41 of the Penal Code, a special law is one applicable to a particular subject. Therefore, if the law as to contempt of court, as administered by the High Court of Madras, a chartered High E Court, were to be regarded as special law, sec. 70 of the Penal Code, obviously, cannot apply, and since such a sp.o-eial law does not prescribe any period of !imitation for collecting and satisfying a fine imposed thereunder, no question of !imitation would arise.

Counsel, however, relied on sec. 25 of the General Clauses Act, 1897 which provides that secs. 63 to 70 of the Penal Code F and the provisions of the Code of Criminal Procedure in relation to the issue and execution of warrants for the levy of fines shall apply to all fines imposed under "any Act, Regulation, rule or bye-law" unless such Act, Regulation, rule or bye-law contains an express provision to the contrary. The argument was that the order of sentence which imposed upon the appellant the fine was and must be regarded as an order passed under the Contempt of G Courts Act, XXXII of 1952, and consequently, sec. 70 of the Penal Code was applicable.

The question is, does the power of the High Court of Madras to punish contempt of itself arise under the Contempt of Courts Act, 1952, so that under sec. 25 of the General Clauses Act,

1897. secs. 63 to 70 of the Penal Code and the relevant provisions of the Code of Criminal Procedure would apply? The answer to such a question is furnished by Art. 215 of the Constitution and the provisions of the Contempt of Courts Act, 1952

themselves.

Art. 215 declares that every High Court shall be A a court of record and shall have all powers of such a court including the power to punish for contempt of itself. Whether Art.

215. declares the power of the High Court already existing in it by reason of its being a court of record, or whether the Article confers the power as inherent in a court of record, the jurisdiction is a special one, not arising or derived from the Contempt B of Courts Act, 1952, and therefore, not within the purview of either the Penal Code or the Code of Criminal Procedure. Such a position is also clear from the provisions of the Contempt of Courts Act, 1952. Sec. 3 of that Act provides that every High Court shall have and exercise the same jurisdiction, powers and authority in accordance with the same procedure and practice in respect of contempt of courts subordinate to it as it has and exer- 'C cises in respect of contempts of itself. The only limitation to the power is, as provided by sub-sec. (2), that it shall not take cognizance of a contempt committed in respect of a court subordinate to it where such contempt is an offence punishable under the Penal Code. As explained in Sukhdev Singh Sodhi v. The Chief Justice and Judges of the Pepsu High Court,(') sec. 3 of the Act D is similar to sec. 2 of the 1926 Act, and "far from conferring a new jurisdiction, assumes, as did the Old Act, the. existence of a right to punish for contempt in every High Court and further assumes the existence of a special practice and procedure, for it says that every High Court shall exercise the same jurisdiction, powers and authority "in accordance with the same procedure E and practice .... ". In any case, so far as contempt of the High Court itself is concerned, as distinguished from that of a court subordinate to it, the Constitution vests these rights in every High Court, and so no Act of a legislature c<iuld take away that jurisdiction and confer it afresh by virtue of its own authority.

No doubt, sec. 5 of the Act states that a High Court shall have jurisdiction to inquire into and try a contempt of itself or of a court F subordinate to j.t whether the alleged contempt is committed within or outside the local limits of its jurisdiction and whether the contenmor is within or outside such limits; Tli!> effect of sec. 5 is only to widen the scope of the existing jurisdiction of a special kind and not conferring a new jurisdiction. It is true that under sec. 4 of the Act the maximum sentence and fine which can be G imposed is respectively simple imprisonment for six months and a fine of Rs. 2,000, or both. But tha't again is a restriction on an existing jurisdiction and not conferment of a new jurisdiction.

That being the position, sec. 25 in the General Clauses Act, 1897 cannot apply. The result is that sec. 70 of the Penal Code is no impediment by way of limitation in the way of the recovery of H the fine.

(I) [19l4] S.C.R. 454, at 463.

R. L •. KAPUR v. MADRAS STATE (Shelat, J.) 4 21

It is true that the deposit was made for a particular purpose, that is, to secure the presence of the appellant at the time of the hearing of the said contempt proceedings. But the High Court, as a court of record, being clothed with a special jurisdiction, has also all incidental and necessary powers to effectuate that jurisdiction, <;:onsequently, it had the power to order satisfaction of fine imposed by it from out of an available fund deposited by or on behalf of or for the benefit of the appellant.

In our view, the C!)ntentions raised on behalf of the appellant cannot, for the reasons aforesaid, be sustained. The appeal fails and is dismissed. There will be no order as to costs.

s.c.

Appeal dismissed.

R.L.KAPUR

STATE OF MADRAS

February 8, 1972

M. SHELAT

H. R. KHANNA, JJ.

Penal Code

S. 70

S. 25

General Clauses Act

High Court of Madras

S. 70

Penal Code

S. 2S

Sections 63 to 70

Penal Code

Contempt of Court Act 1952

Section 70

Penal Code

Sec. 5

Penal Code

Art. 215

Penal Code

Code of Criminal Procedure

S. 70

Section 25

General Clauses Act

Sukhdev Singh Sondhi

S. l'{. Prasad

A. V. Rangam

Shela

City Civil Court, Madras

February 25, 1964

Penal Code

sec. 70

sec. 5

Penal Code

sec. 41

Penal Code

sec. 70

Penal Code

sec. 25

General Clauses Act, 1897

Penal Code

Code of Criminal Procedure

sec. 70

Penal Code

sec. 25

General Clauses Act

Penal Code

Code of Criminal Procedure

Art. 215

Art. 215

Art.

215

Contempt B of Courts Act, 1952

Penal Code

Code of Criminal Procedure

Sec. 3

Penal Code

Pepsu High Court

sec. 3

sec. 2

sec. 5

sec. 5

sec. 4

sec. 25

General Clauses Act, 1897

sec. 70

Penal Code


SHY AM LAL SHARMA, ETC.

STATE OF l\IADHYA PRADESH

February 9, 1972

[P. JAGANMOHAN REDDY AND H. R. KHANNA, JJ.J

C, vde of Cri111i11t1l Procedure, ss. 165, 537-Reasons for search not recorded-Alleged illegality of search on this ground does not give to accused right to obstruct s11ibsequent investigation by physical assault and

wrongful confine1nent of p'erson conducting investigation-Conviction of those wh~ do so u11der s. 353 and 342 l.P.C. is justified.

Because of allegations that the lnspetor of a traffic barrier was de .. nlanding bribe from a lorry d'river u trap was arranged. It was led by a Circle Inspector (P.W. !). The decoy witness handed over Rs. 4-0 in currency notes to constable N inside the harrier office. Thereafter a signal was given to the police party.

When N saw P.W. 1 approaching he hid the aforesaid currency nots in an inner apartment of the office under nn overcoat. P .W. 1 made a search of the premises and recOvered the notes from under the -overcoat. When he was preparing the Panchnama appellant U arrived on the scene and took P.W. 1 to task for having entered his office without permission or reference to him.

He then asked N not to sign the seizure memo.

While this altercation \\as going on appellant S, the Barrier Inspector, arrived there and he also reprimanded P.W. 1 and questioned his authority. Even though P.W. I asserted that authority was conferred on him to make a search, S asked him to give him in writing that he had entered the barrier office without the permission of the person in-charge otherwise he would not be allowed to go out.

P.W. 1 agreed to give the writing at the Dak Bungalow and moved out of the office but he was brought back by force and a threat to beat him with a danda was held out.

Under threat from S and U P.W. 1 8'!'V• them a copy of the seizure memo as also a \\tiling to the effect that a search was taken. On these facts, S. U and N were charged under ss. 353 and 342 of the Indian Penal Code. The trial 'Court while holding that assault, wrongful restraint and wrongful confinement were proved against the appellants nevertheless acquitted them because the provisions of s. 165 CriminaL Procedure Code relating to search were not complied with. The High Court in appeal by the State held that the non-observance of the provisions of s. 165 Cr.P.C. were a mere irregularity and on this view convicted the appellants under ss. 332. 353 and 342 of the Indian Penal Code. The appellants in appeals by special leave contended before this Court that (i) since the search was made without recording reasons as required under s. 165 Cr.P.C. they had a right to' obstruct it and (ii) since P.W. 1 did not give them a copy of the seizure memo as required by s. 103 Cr. P.C. the entire investigation was vitiated and consequently any obstruction caused in the subsequent process of investigation \vould not constitute ariy offence.

HELD : It may be that an obstruction during the course of a search not conducted in conformity with the provisions of s. 165 Cr. P.C. might be justified but there was no warrant for the further submission that the person in \VhoSe premises a search is made or from whom articles are selzed is entllled to act in the manner the appellants had acted in preventing P.W. 1 from discharging his official duties. Obstruction to search

is to the act of the person conducting a search.

It is a defensive act but where search has ended and the persons conducting the search have left the premises, to bring them back and make them do things against their will is not an obstruction to an act but a compulsion to rnak~ them act. [ 426 H; 429 H]

There was no noncompliance with s. 103 Cr. P.C, by P.W. l. He was preparing a copy of the seizure memo as required by the section but he was prevented from completing it 'by the appellants who asked N not to sign it.

Moreover P.W. 1 had asked the appellants to come to the Dak Bungalow and take the copy. Section 103 does not say that the copy should be given then and there though qrdinarily that will be implied.

It could be given soon after the search so long as there is no opportunity to raise any suspicion or doubt as to the authenticity of articles seized. [429 D-E]

Not to allow P.W. 1 to go to the Dak Bungalow and take him forcibly from the road into the office and threaten hi!]) with a lathi to write ar.d give a memo that he had searched the office when he was willing to do so at the Dak Bungalow, was to wrongfully confine him durin~ the period he did not comply with that demand. Nor can the illegality of the search continue as contended during the whole process of investigation till the filing of the charge-sheet under s. 173 Cr.P.C. The effect of ace<pting such a proposition would be to thwart public justice. [429 F-0]

On the facts of the case the conviction of the appellant S under ss. 342 and 353 and of.. appellant U under ss. 353 and 342 read with s. 34 was justified. [430 Al

[In vie\V of the above finding the conviction of the appellants linde.r s. 332 was set aside without going into the legality of the convit.1ion under that section].

State of Madhya Pradesh v, Mubarak Ali, [1959] Supp, 2 S.C.R. 201, State of Rajasthan v. Raliman, [1960]1 S.C.R. 991, Bai Radha v. Stare of Gujarat, [1969]2 S.C.R. 799 and Public Prosecutor, Andhra Prades/1 v.

Uttaravalli Nageshwararao, A.l.R. 1965 A.P. 176.

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal N<1S. 80 and 81 of 1969.

Appealsby special leave from the judgment and order dated October 7, 1968 of the Madhya Pradesh High Court in Criminal Appeal No. 519 oi 1966.

V. A. Seyid Muhammad and B. R. G. K. Achar, for the appellant (in Cr. A. No. 80 of 1969).

R. A. Gupta, for the appellant (in Cr. A. No. 81 of 1969).

I. N. Shroff and R. P. Kapur, for the respondent (in bpth the appeals).

The Judgment of the Court was delivered by

P. Jaga11moha11 Reddy, J. The appellants along with another accused, Narayan Singh, were convicted by the High Court under sections 332, 353, 342 of the Indian Penal Code and were sentenced

to one years' rigorous imprisonment on each count, the sentences A to run concurrently. These two appeals are by special leave.

On 26-5-1965, Sardar Jagat Singh, owner of a lorry made an application to the Vigilance Commissioner, Bhopal Division that the appellant in Cr!. Appeal No. 80/69 Shyam Lal Sharma, Barrier Inspector at Village Multai, District Betul, has seized the B licence of his Driver stating that if he has to pass from 1!he Barrier, he should bring Rs. 5 per trip or Rs. 40 p.m. but the Driver refused to pay him anything and has declined to go there as a result of which he is likely to suffer heavy loss. He, therefore, offered to give currency notes which may be signed and requested that a proper person may be given to him to arrest the Barrier Inspector C Sharma and his staff and sa_ve him from the corruption. On this application, Circle Inspector Rana Ranjit Singh, P.W. 1 was asked to attend to it. Accordingly, he along with Jagat Singh, his Driver and Panchas Hardeet Singh, P.W. 6 and Muana Lal, P.W. 7 proceeded to Multai Barrier by truck to arrange for a trap and catch the culprits red-handed. On arriving at the Barrier Gate, 4 cur- D reucy notes of R.s. 10 each were given by Jagat Singh, P.W. 2, to his Driver who was sent to the Barrier office along with P.W. 6 and P.W. 7 to give the same, if demanded, and after they were accepted an agreed signal was to .be given. Accordingly, the Driver went to the Barrier office along with P.W. 6 Hardeet Singh and P.W. 7 Munna Lal and after the amount was received by accused Narayan E Singh, P.W. 6 Hardee! Singh came out of the offiee and gave the agreed signal. Immediately, P.W. 1 Ranjit Singh proceeded'to the office and when the accused Narayan Singh saw him coming, he felt suspicious, went inside the inner apartment of the office and concealed the notes under the over-coat lying there. As soon as P.W.

I. entered the office, the Driver Jeet Singh informed him that the Constable has concaled the notes under the over-coat in the inner P apartment. P.W. 1 then disclosed his identity and after having his person searched, went inside the inner apartment and recovered the currency notes lying beneath the over-coat. The notes were seized and while he was preparing the Panchnama, accused Udho Prasad-appellant in Crl. Appeal No. 81169-arrived on the scene and started taking P.W.1 to task for having entered his office G without permission or referenee to him. He then asked 'llccused Narayan Singh not to sign the seizure memo. While this altercation was going on, the accused Shyam Lal arrived there and he also reprimanded P.W. 1 and questioned his authority. Even . though P. W. 1 asserted that authority was conferred upon him to make a search, accused Shyam Lal asked him to give him in writing that he had entered the Barrier office without the permission of the H person incharge otherwise he would not be allowed to go out.

Shyam Lal also picked up the notes from the table but they were

A given back on the potest of P.W. 1. P.W. ~.then assured him that he would give the seizure memo and the wntmg to say that he searched at the Dak Bungalow opposite and that accused should accompany him. He was accordingly. allowed and he then lef~ the otlice without getting the signature of the accused Narayan Smgh on the seizure Memo. But no sooner had P.W. 1 come out of the

office on to the road, Udho Prasad again insisted on the writing being given whereupon Shyam Lal caught P.W. 1 by his wait and forcibly lifted him, took him to the Barrier office and threw hin; i on a chair. The accused Udho Prasad asked accused Narayan Smgh 10 take out a Danda so that these Police officials raiding the office may be taught a lesson. Accused Shyam Lal insisted that unless P.W. 1 gives him then and there a copy of the seizure memo as also a writing to the effect that search was taken, the latter would not be allowed to leave the office.

P.W. 1 faced with this situation could not but comply with the demand made by Udho Prasad and Shyam Lal. It is only after he had given in writing that he had made a search, he was allowed to return to the Dak Bungalow and that too when Misra, Station Officer, P.W. 8 who had come there D went to telephone. Thereafter P.W. 1 gave a written information, Ex. P-4 on 2-6-65, as follows :-

"It is submitted that today-at 7 .25 a.m. I had arranged the trap at the traffic barrier Multai. After taking the search of the Barrier currency notes ofRs. 40 were found beneath the over-coa(. While I was recording the seizure-memo of these notes, Shri Sharma, Station Officer Traffic abused me and uttered bad words. Thereafter, he said to me, "You have no powers of trap". I repeatedly told him that recently the State Government have authorized the Circle Inspectors for trapping. But he did not agree and he created obstruction while I was discharging my duties. He grappled with me. This act of the Sub-In!pector traffic barrier falls under section 353 Indian Penal Code.

At that time many persons were present on the spot. Kindly offence be registered and a challan be put up in the Court according to Jaw".

We may here state, and it is not denied,· that P.W. 1 did not G record in writing the grounds of his belief that anything necessary for. t.he purpos~ of ivestigation into any offence cannot in his op1mon be obtamed without undue delay which is a condition precedent to effect a search under section 165, Cr. P.C. The trial Court wh!le accepting tlie evidence and holding that as8au!t, wrong• ful restramt and wrongful confinement are proved against the

apllants, none-the-less acquitted them because the provisions of sectmn 165, Cr. P.C. relating to search had not been complied with.

On. an appeal by the State, the High Court also accepted the prosecul!on case and agreed with the findings of the trial Court but rejected the contention of the appellants that the search was illegal A and entitled the appeliants to obstruct and man-handle P.W. 1. fa this view the non-observance of the provisions of sec. 165, Cr. P.C. were held to be a mere irregularity as P. W. 1 was throughout conducting himself in an honest and bonafide manner in the discharge of his duties and the appellants were not justified in claiming the right of private defence. In this view, it reversed the order of ace quittal and convicted the accused of the offences as aforesaid.

On behalf of the appellants it is contended that notwithstanding the findings of both .the Courts that the appellants had wrongfully restrained and obstructed P.W. 1 and also assaulted and used criminal force against him, the several acts alleged against them do not constitute any offence as they had a right to obstruct a search made C in contravention of the provisions of sec. 165, Cr. P.C. which.made the search illegal. It is accordingly submilted that when reasons are not recorded as required by sec. 165, Cr. P.C. for making a search during investigation and as P.W. 1 did not, as required under section 103, Cr. P.C., give a copy of the list of the currency notes seized from Narayan Singh to the appellants, the entire in- D vestigation is vitia\ed and consequently any obstruction caused in the subsequent process of investigation will not constitute any offence inasmuch as an investigation continus upto the date of filing a charge-she.et under sec. 173.

There is, in our view, a fallacy in these submissions. That the investigation commenced when the information of a cognizable E offence was given and a trap was laid and P.W. 1 proceeded to the barrier for laying a trap and entered the office to make a search, does not admit of doubt. This Court also held it to be so in the State of Madhya Pradesh.v. Mubarak Ali('), in which the requirements of section 165 to be complied with have been set out and analysed. Even so, to further contend that the appellants were en- F titled to act in the manner they did merely because 11he search was illegal, would be to confer a licence and afford them an unwarranted excuse to commit each and every criminal act. The provisions of section 165 deal with 5earch and seizure.

The non-conformity with any of the requirements of that provision must be confined to that part of the investigation which relates to the actual search and G seizure but once the search and seizure is complete that provision ceases to have any application to the subsequent steps in the investigation. All cases citd deal with the situation arising out of the actual search and seizure alone. Jt may be that an ob&truction during the course of a search not conducted in conformity with the provisions of sec. 165, Cr. P.C. might be justified but there is no warrant for the further submission that the person in whose premises a search is made or from whom articles are seized is entitled H

(I) [1959] Supp. 2 S.C.R. 201.

A to act in the manner the appellants have acted in preventing P.W. 1 from discharging his official duties.

The decisions of this Court to which a reference will be made, do not support the submissions made on behalf of the appellants that since the search is illegal, even for the moment accepting that to be so, the entire invtigation till the laying of the c]large-sheet 8 under sec. 173, Cr. P.C. is to be treated as illegal and would afford a justification for the acts of the appellants as held proved in this case. In The Stare of Rajasthan v. Rahman( 1) a Deputy Superintendent of Central Excise, who accompanied by an Inspector of

Central Excise, a Sepoy, a chowkidar and two motbirs, without complying with the provisions of ec. 165, Cr. P.C. had gone to the C house of the respondent with a view to search the house for finding out whether he had stored tobacco there. When they declared their intention to do so, the respondent and one Dhaman, it is alleged, obstructed the making of the search with the result that the Deputy

Supdt. fell down and received some injuries. The respondent and Dhaman were prosecuted for an offence under sec. 353, I.P.C.

D No doubt, this Court (Gajendragadkar and Subba Rao n~, as, they

then were), had held that the search made by the Qy. Superintendent in contravention of the provisions of sec. 165 of the Code was illegal but even so, it did not go into the question whether the omission to record the reasons was only an irregularity and that tlie respondents had no. right to prevent the officer from making the search because as that contention had not been raised till then it felt that there was no justification to allow it to be raised before it for the first time.

This ca9~ considered in Bai Radha v. State of Gujarat(') by Shah J. (ash then was), Ramaswami & Grover JJ.

There a search was made under sec. 15 of the Suppression of Immoral Traffic in Women & Girls Act, 1956, the proviions of which

were in pari materia with sec. 165, Cr.P.C. in that (1) if the special police officer empowered to search the premises has reasonable grounds for believing that an offence punishable under that Act has been or is being committed in respect of a woman or a girl living in any premises and that such search of the premises with warrant cannot be made without undue delay, such officer may, after recording the grounds of his belief, enter and search such premises without a warrant; (2) before making a search the special police officer was required to call upon two or more respectable inhabitants (at least one of whom shall be a woman) of the locality in which the place to be searched is situa'te, to attend and witness the search. It was contended that since, these provisions have not been complied with, the conviction of the appellant was illegal. The High Court in that case was of the view that the power to conduct the search was derived from the statute and not from the recording of the reasons and, therefore, the search was not rendered illegal on

(1) [1960] l S.CR. 991. f2, !1969] 2 S.C.R. 799.

account of the contravention of sec. 15(1) of the Act, nor was there A any provision in law which rendered 1jhe evidence of the Pancha witnesses inadmissible even though sec. 15(2) had been contravened. In this view; it did not agree with the decision of the Andhra Pradesh-High Court in Public Prosecutor, Andhra Pradesh v.

U ttaravalli N ageshwararao ('), which held that the directions contained in sub-sec. 2 were of a mandatory nare. After referring B to the State of Rajasthan v. Rahman's(2 ) case, Grover, J. pointed out that that case could not be of much assistance to the appellant because no question was involved in the case before them of any public servantbeing obst:ructed in the course of a search conducted under sec. 165, Cr. P.C. The trial of the appellants was for contravention of certain provisions of the Act and the search was made in respect of this offence. In these circumstances, the non-obser- C vance of the provisions of section 15(2) was held to be not an illegality but a mere irregularity having regard to the provisions of sec. 53 7 of the Criminal Procedl!re Code, and unless it is shown that such irregularity has caused a failure of justice, t:he conviction cannot be set aside. It would, therefore, appear that this Court has not finally decided whether a sear.h already made in contravention D of the provisions of sec. 165, Cr. P.C. makes it illegal or void or merely provides a justification for an obstructtion to the search when it is in.tended or in the process of it being conducted.

On the findings in this case, i( is unnecessary to resolve. this doubt because even if the search is illegal, it does not justify any E obstruction or other criminal acilS committed against the persons who had conducted the search. The facts undisputably disclose that even after P. W. 1 was allowed to go away on the assurance that he would give a copy of the seizure memo and writing to say that a search was made, at the Dale Bunglow had asked the appel• !ants to accompany hini there, and had gone out of the office and was on the road he was forcibly seized, lifted, taken into the office F and thrown on a chair. Thereafter he was confined, there and threatened with a lathi, till1he"had complied with the demand of the appellants to give in writing that he had taken a search of the. barrier. The evidence of P.W. 1, P.W. 6, P.W. 7 and of the Station

Officer'P. N. Misra. P.W. 8, clearly supports the findings of both the courts.

G It may be observed that sec. 342, Cr. P.C. is not confined to offences against public servants but is a general section and makes a person who wrongfully restrains another, guilty of the offence under that section. A wrongful coi$lement is a wrongful restraint in such a manner as to prevent that person .from proceeding beyond a certain circwtmcribed limits. This offence has nothing to do H with the inyestigation or search and, therefore, the argument that

{l) A.LR. 1965, A.P. 176.

(2) [1960J I S.C.Jl. 991.

s. L. SHARMA v. M.P. STATE (Jaganmohan Red~, J,) 429

A the accused were entitled to obstruct P, W. 1 because he did not conform to the provisions of secion 165, Cr. P.C. is an argument of desparation. It is again contended that all that the appellants did was to request P.W. 1 to give.them in writing that a search was , made which they were entitled to ask. To put it thus is to make the act an innocuous one but considered in the light of the inexor- B able facts as established in this case, clearly make the acts of the appellants culpable. Iiy no stretch of logic or reason can the justification for obstruction during the course of a search in contravention of the provisions of sec. 165 entitle a person to force a public servant or any other person to do acts contrary to their volition. It may be mentioned that section 103 which is applicable to searches C under section 165, Gr. P.C. by virtue of clause 4 thereof, requires the person conducting the search to prepare a list of the things taken into possession .and give the person searched a copy of that list. It was exactly that which was, being done by P.W. 1 when he prepared a seizure-memo in which the details of the currency notes were written but he was prevented from completing it by the appellants asking Narayan .Smgh in whose presence in the office they D were seized by not to sign it. In these circumstances when it

appeared that the appeJ)ants had become abusive and agi:ressive, P. W. 1 told them to c2me to the Dak Bungalow wherll he would give them a copy. This in our view cannot be said to amount to non-compliance with the provisions of sec. 103 Cr. P.C. as P.W. 1 was prevented from complying therewith. Section 103 does not E say that the copy should be given then and there thouglu>rdinarily that would be implied. It could be given soon after the search so long as there is no opportunity to raise any suspicion or doubt as to the authenticity of articles seized. Not to allow P. W. 1. to go to the Dak Bungalow and take him forcibly from the road into the office and threaten him with a lathi to write and give a memo that F he had searched the office when he was willing to do so at the Dak Bungalow, is to wrongfully confine him during the period he does not comply with that demand nor can in our view the illegality of the search, if it was an illegality, continue as contended during the whole process of investigation till the filing of a charge-sheet under sec. 173, Cr. P.C. H this proposition is accepted, namely, that if the investigation at any stage is illegal, that illegality continues to G effect the subsequent investigation and justifies a person considering hlmself to be aggrieved to impede, obstruct and unlawfully prevent its further progress, then the logical implication would be to encourage people to take the law into their hands, frustrate the investigation of crimes and thwart public justice. That apart, obstruction to search is to the act of the person conducting a search. It is a H defensive act but where search has ended and the persons condut ina the search have left the premises, to bring them back and to make them do things against their will is not an obstruction to an act but a compulsion to make them act. In this view, the conviction

and sentence of. l; he appellant Shyam Lal Sharma under sec. 342 and 353 and of appellant Udho Prasad under section 353 and 342 read with sec. 34 are justified. In so far as their conviction under se.:tion 332 is concerned, the contention of the learned Advocate

is that the appellants were not charged with this offence and, therefore, they are en.t!tled to an acquittal as they are prejudiced thereby. The learned advocate for the respondent does not insist on this conviction being upheld In any case as we are confirming the conviction and sentence under the other two sections, it is not really necessary to go into the legalify of the conviction under sec.

332. Accordingly, we set aside the conviction, and sentence under

sec 332 and confirm the convictfons and sentence of the appellants under sections 342 and 353, Cr. P.C. The appeal except to the C extent indicated is dismissed.

G.C.

Ordered accordingly.

SHY AM LAL SHARMA, ETC

STATE OF l\IADHYA PRADESH

February 9, 1972

P. JAGANMOHAN REDDY

H. R. KHANNA, JJ

ss. 165, 537

s. 353 and 342

ss. 353 and 342

Indian Penal Code

s. 165

CriminaL Procedure Code

s. 165

Cr.P.C

ss. 332

Indian Penal Code

s. 165

Cr.P.C

s. 103

s. 165

s. 103

Section 103

s. 173

Cr.P.C

ss. 342 and 353

ss. 353 and 342

s. 34

s. 332

V. A. Seyid Muhammad

B. R. G. K. Achar

R. A. Gupta

I. N. Shroff

R. P. Kapur

P. Jaga11moha11 Reddy

Narayan Singh

sections 332, 353, 342

Indian Penal Code

Sardar Jagat Singh

Multai

Betul

C Sharma

Rana Ranjit Singh

Jagat Singh

Panchas Hardeet

Muana Lal

s. 10

Jagat Singh

Hardeet Singh

Munna Lal

Narayan E Singh

Hardee! Singh

Ranjit Singh

Jeet Singh

Udho Prasad

Shyam Lal

Narayan Smgh

Udho Prasad

Shyam Lal

Narayan

Misra

Sharma

section 353

Indian Penal Code

section 165

sec. 165

sec. 165

sec. 165

section 103

sec. 173

section 165

section 165

sec. 165

sec. 173

Dhaman

sec. 353

I.P.C

Gajendragadkar

Subba Rao

sec. 165

Shah

Ramaswami

Grover

sec. 15

Girls Act, 1956

sec. 165

Cr.P.C

1969] 2 S.C.R. 799

sec. 15(1)

sec. 15(2)

Andhra Pradesh-High Court

sec. 2

sec. 165

section 15(2)

sec. 53

sec. 165

N. Misra

sec. 342

sec. 165

section 103

section 165

clause 4

Narayan

sec. 103

Section 103

sec. 173

Shyam Lal Sharma

sec. 342 and 353

section 353 and 342

sec. 34

sec.

332

sec 332

sections 342 and 353


GANGA DEVI & ORS. ETC.

STATE OF U.P.

February 11, 1972

[A. N. RAY ANP M. H. BEG, JJ.]

U.P. Zamindari Abolition.and La11<I Reforms Act, 1950, s. 39(l)(e)

(i) and (ii)-A.verage annual income how deterniined-Fortst inco1ne. ij includes income dtrived by processing wood.

The forests of the appellants vested in the respondent-State as a result <>f the notification µnder the U.P. Zamindari Abolition and Land Reforms Act, 1950, and the Compensation Officer determined the basis of compensation.

Jn appeal by the respondent the High Court held that the Compen sation Officer in determining the compensation was wrong in arriving at the average annual income by adding the annual income, under s. 39( I) ( e )( i) on the basis of a period of 25 years and the appraioemtnt of the annual yield, under s. 39(1)(e)(ii), on the date of vesting.

Jn appeals to this Court,

HELD : ( 1) The High C.ourt was correct in holding that the average annual income from forest under s. 39(1)(e) of the Act cm.Id not be computed by arithmetical addition of the figures arrived at on the basis of cl. ( i) and on the ba, is of cl. (ii). The section ,,,,,.xi of computa ti0n of average annual income from forest, (i) on t1'c basis of ioc<; ime for a period of 20 to 40 agricultural years immedialely ,-ding the date of vesting as the Compensation Officer may consider rca!OflabJe.

and (ii) on the appraisement of the annual yield of the forest on the date of vesting.

Under the first clause. the actual income derived from the forest for a number of years before the date of vesting as the Compensation Officer may consider reasonable is to be taken and the average calculated.

Under the second clause the annual yield as on the date of vesting is to be appraised. This should be done, Inter alia. by taking ihto considetation the num'Oer and age of trees, the area pf cultivation and the produce. Therefore. the compensation officer has to compute the 'average annual income' by taking recourse to both the iPethods but not by adding the figures on the basis of cl. (i) and on tlic., h!ll of ct (ii l [435 DH; 436 A-BJ '

(2) The High Court rightly held that forest income was reftnhlc lo price of the standing timber. Hence any income which the appenants derived by processing wood, was income in the nature of trade and would not be forest income. [436 E-GJ

CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 41 to 46 of 1967.

Appeals from the judgment and order dated September 1. 1965 of the Allahabad Hig, h Court in First Appeals Nos. 513 of '1955 etc. 15-L8R7S, pCJ/72

SUPREME COURT REPORTS [1972] 3 S.C.ll.

M. C. Chagla, S. R. Agarwala, A. T. M. Sampath and E. C.

Agarwala, for the appellants (in all the appeals).

L. M. Singhvi and 0. P. Rana, for the respondent (in all the appeals).

The Judgment of the Court was delivered by B Ray, J. These six appeals are by certificate from the judgment dated 1 September, 1965 of the High Court at Allahabad, Lala Triloki Nath and Lala Digambar Prasad filed four appeals and the State two in the High Court agaiust the order dated 6 September,

1955 of the Compensation Officer. During the pendency of the appeals the Lalas died and the appellants were brought on record.

The High Court allowed the appeals filed by the State and allowed in part the appeals filed by the appellants. The appellants have come up by certificate in these six appeals.

Each of the Lalas held equal one half share in each of the forests in the villages of Chharba and Prithipur in Dehra Dun District.

By a notification dated 1 July, 1952 under the U.P. Zamindari Abolition and Land Reforms Act, 1950 (hereinafter called the Act) the entire furest vested in the State of Uttar Pradesh.

On 2 May, 1953 the Lalas received the Draft Compensation Assessment Rolls under section 46 (1 )(b) of the Act which showed annual compensation to be paid to the Lalas as nil.

The Lalas thereafter on 20 May, 1953 filed their objections against the draft compensation roll and claimed compensation under the provisions of the Act.

With regard to village Chharba the Lalas claimed that it was a valuable sal forest comprising 225 acres.

The Lalas assessed .the worth of the forest at Rs. 3,40,000. Tkey claimed that sayar F income during the 10 agricultural years immediately preceding the date of vesting should be computed separately and added to the gross income from the forests.

They further claimed that income by selling poola grass was to be within sayar income.

The next head of claim was that they did not have accounts of the income of the forest for the previous 20 years but they were able to pro- G duce accounts for four years from 1944 up to 194 7 and the share of each of the Lalas on the basis of the income derived for the said four years came to Rs. 1274-12-0 and on the basis of the appraisement of the annual yield on the date of vesting it came to Rs. 5457 /-.

On, this basis each of the Lalas claimed Rs. 46740/- as compensation in respect of village Chharba, H

With regard to the Prithipur forest the Lalas claimed that they had worked the forest during the years 1945 to 1952 and that the

A average annual income of each of their share from the Pri!hipur forest on the basis of 20 agricultural years immediately preceding the date of vesting came to Rs. 5106/-. The Lalas stated that on the basis of appraisement of the annual yield on the date of vesting of the forest Prithipur the share oi each came to Rs. 7955/-. On this basis each of the Lalas claimed a sum of Rs. 101114 and odd B as compensation for the forest Prithipur.

The Compensation Officer decided that the income from the poola grass was not sayar income but forest income and disallowed income from poola grass in entirety. The Compensation Officer however allowed some sayar income in each forest and decided that the average annual income of the forest under section C 39(1) (e) of the Act should be calculated on the basis of the period of 25 years immediately preceding ; he date of vesting an<j. not 20 years as the Lalas had claimed.

With regard to the forest in village Chharba the Compensation Officer arrived at the figure of Rs. 55292/- consisting , of Rs. 4300/- as sayar income and Rs. 50992/- as the forest income for computation of average D annual income on the bas.is of the period oi 25 years and thus arrived at the annual income of Rs. 2211-8-0 under; section 39(l)(e)(i) of the Act. With regard to the computation of average annual income on the appraisement of the annual yield of the forest on the date of vesting as contemplated in section 39(1) (e)(ii) of the Act the Compensation Officer held that the ]1 representative area was not specified by the Lalas with enumeration or location and the enumeration figures of the Lalas were bas ed on estimated and presumed calculations.

The Lalas appraised Rs. 11000/- as the annual yield on the date of vesting. The Compensation Officer found that the forest F had been felled about 6 to 8 years before vesting and the age of the crop for that reason could not be more than 8 Jears for coppice. The Compensation Officer thus appraised Rs. 800/- as the annual yield and determined Rs. 2211-8-0 and Rs. 800/· aggregating Rs. 3011-8-0 as the average annual income to be added to the gross asets for assessment of compensation.

G With regard to the forest in village Prithipur the Lalas cl-aimed Rs. 5106/- as the annual income for a period of 20 agricultural years immediately preceding the date vesting and appraised the annual yield on the date oi vesting at Rs. 7955/-. The Lalas claimed one tenth of the sayar income for 10 agricultural yea's at Rs .. 2007-8-0. The Compensation Officer disallowed income from H poola grass but allowed sayar income of Rs. 23550/. and added the same to the forest income of Rs. 113914/- aggregating .

Rs. l 37464/- on the basis of a period of 25 years and thus amved at the average annual income of the forest under section

39(1) (e) of the Act at Rs. 5496-8-0. The Compensation Offi- A cer appraised the annual yield , at Rs. 1650/- and thus arrived at the total sum of Rs. 7146-8-0 to be added as gross assets of forest income.

. In the High ourt th~ State. contended that the Compensation Officer was m error m adding the annual income on the B basis of a period of 25 years and the appraisement of the annual yield in order to arrive at the average annual income under section 39 ( 1 )( e) of the Act. The contentions of the Lalas in the High Court were these : First. the income from poola grass was sayar income and should have been allowed and added separately to the average annual income.

With regard to Prithipur c forest it was said that the Compensation Officer wrongly rejected the 5ayar income for the Fasli years 1352 and 1353 amounting to Rs. 4600/- and Rs. 4500/' respectively.

Secondly, the average annual income from forest should have been detennined on the basis of income for a period of 20 and ncit 25 years.

Thirdly, the Compensation Officer was in error in not accepting 0 the whole income of the Prithipur forest for the Fasli years

135~. 1356, 1357 and 1358 by holdin.11: that the income durin.11: those four years had been derived by processing wood and therefore the income was made by activities in the nature of trade and was not forest income.

Fourthly, the Compensation Officer should have accepted the appraisement of the annual yield of the forest on the date of vesting as claimed by the Lalas.

The High Court came to the conclusion that the Lalas were entitled to income from poola grass as sayar income and thus allowed the appeals of the Lalas in part.

The sayar income is not to be c1ubbed with the average annual income but is to be dealt with separately.

Sayar income is dealt with in section 39(1)(c) of the Act.

Sayar is not defined in the Act but in section 3 (26) of the Act the word 'sayar' is to have the meaning assigned to it in the United Provinces Te!lancy Act, 1939. In the 1939 Tenancy

Act sayar includes whatever is to .. be paid or elivered by a leasee or Iicencee on account of nght of gathenng produce.

G forest rights, fisheries and the use of water for irrigation from artificial sources. Therefore the income derived by 'the landlord from persons who have been given licences to cut and remove poola grass from forest has been held by the High Court to be sayar. We agree with the reasoning of the High Court.

The High Court was correct in holding that the sayar income H during 1 O agricultural years immiatel)'. preeding th~ ate of vesting should be taken into cons1deratton m determmmg the gross assets under section 39 of the Act.

Counsel for the appellants submitted that the High Court did .not deal with the finding of thte Compensation Officer with regard to income from poola grass for the Fasli years 1352 and 1353 in respect of Prithipur forest.

The Lalas claimed for the Fasli year 1352 a sum of Rs. 4600/- and for the Fasli year 1353 a sum of Rs. 4500/ • as income from poola grass. The Compensation Officer gave the additional reason for rejecting the income from poola grass for these two years that in the extract of khatauni it was not mentioned as to what the source of income was.

Exhibit P-3 being the extract from khatauni for the Fasli year 1352 would show that Rs. 4600/- was the rent for clause 13 sawai items.

Again, Exhi!>it P-10 for the Fasli year 1353 in respect of Prithipur forest would show the sum of Rs. 4500/- on account of rent for sayar.· Therefore when the Compensation Officer will deal with sayar income he will take into consideration Exhibits P-3 aM P-10 for the Fasli years 1352 and 1353.

In the High Court it was contended that the Compensation Officer was wrong in taking 25 years to be the period on the basis of whicb annual average income of the forest was to be computed under section 39 (l) ( e) of the Act. The High Court did not accept that contention.

This contention was not repeated in this Court.

The High Court held that the Compensation Officer was wrong in arriving at the average annual income by adding the annual income on the basis of a period of 25 years and the aopraisement of the annual yield on the date of vesting.

The High Court said that the two clauses in section 39(1) (e) of the Act were independent methods of finding out the average annual income from forest and it was not intended that the average annual income should be arrived at by adding the two methods.

Section 39 ( 1 )( e) of the Act speaks of computation of average annual income from forest (i) on the basis of income for a period of 20 to 40 agricultural years immediately preceding the date of vesting as the Compensation Officer may consider reasonable and (ii) on the appraisement of the annual yield of the forest on the date of vesting.

The two are separate matters. It cannot be said that the Compensation Officer will adopt either of the clauses.

The Compensation Officer. has to refer to both the clauses in order to compute the average annual income from forest.

The High Court is correct in holding that the average annual income from forest under section 39 (I )( e) of the Act cannot be computed by arithmetical addition of the figures arrived at on the basis of clause (i) and on the basis of clause (ii). It is the average annual income from forest which is to be computed.

The words of importance are 'average annual income'.

Under the first clause the actual income derived from the forest for a number of years before the date of A vesting as the Compensation Officer may consider reasonable is to be taken and the average calculated.

Under the second clause the annual yield as on the date of vesting is to be appraised.

The Compensation Officer is to compute the average in- . come by taking recourse to both the methods. The sec9nd clause which speaks of appraisement of the annual yield will be done g inter alia by taking into consideration the number and age of trees, the . area of cultivation and the produce.

In the present appeals the High Court found on the 'mte rials that the forest had been felled almost completely during the last 9 or 10 years preceding the date of vesting.

The evidence further established that there were no mature trees for c felling and that the bulk of the crop that had existed had grown within a period of 8 years.

It was therefore clear that the whole of the forest's income derived during those 9 or 10 years for which accounts of the Lalas were available represented the whole grnwth of the forest during the last 40 years and even if the forest had been gradually cut during the last 40 years the income derived would not have been substantially more than what have been derived during the last 9 or 10 years preceding the date of vesting.

The High Court assessed the evidence. We do not find that there is any error in regard to the appreciation or assessment of evidence by the High Court and the conclusion that under section 39(1 )(e) of the Act the annual average income of Prithi- E pur forest came to Rs. 4396.56 and of village Chharba at Rs. 2039.68.

Counsel for the appellants contended that the Compensation Officer did not consider the entire forest income for the Fasli years 1352, 1356, 1357 and 1358 for the Prithipur forest on the ground that the entire income was not the sale price of F forest but that the Lalas worked the forest and a portion of the income was from the sale of the timber of that forest.

The High Court rightly held that the forest income was referable to the price of the standing timber and income which the Lalas derived by processing wood would not be within forest income.

For these reasons we uphold the judgment and order of the G High Court with this modification that when the Compensation Officer will deal with the income from poola grass as . sayar in• come as derived by the High Court the Compensation Officer will also take into consideration the income from poola grass for the Prithipur forest for the years 1352 and 1353 Fasli.

In the facts and circumstances of the case the appeals are H dismissed.

The parties will pay and bear their own costs.

V.P .S.

Appeals dismissed.

GANGA DEVI & ORS. ETC

STATE OF U.P

February 11, 1972

A. N. RAY ANP M. H. BEG, JJ.

Reforms Act, 1950

s. 39(l)(e)

s. 39( I)

s. 39(1)(e)(ii)

s. 39(1)(e)

M. C. Chagla

S. R. Agarwala

A. T. M. Sampath

E. C.

Agarwala

L. M. Singhvi

. P. Rana

B Ray

Lala Triloki Nath

Lala Digambar Prasad

Chharba

Prithipur

Dehra Dun District

State of Uttar Pradesh

2 May, 1953

section 46

Lalas

20 May, 1953

section 39(l)(e)(i)

section 39(1)

section

39(1)

section 39

section 39(1)(c)

section 3

section 39

clause 13

section 39

section 39(1)

Section 39

section 39

section 39(1 )(e)


UNION OF INDIA & OTHERS

N. K. PRIVATE LIMITED & ANOTHER

February 11, .1972

[K. S. HEGDE, P. JAGANMOHAN REDDY AND K. K. MATHEW, JJ.)

Constitution of Jndi'a, Art. 299-Whether the Secretc..ry to the Railwa, v Board can enter into a conu<ct on behalf of the Prellident of India

reprtstntd by the Ministr1v of Rilways.

A global tender to sell surplus serviceable and scrap rails was issued to established (myers by the Government Of India and pursuant to this tender notice, the respondents by their letter dated 21-5-68 offered to bu¥ the rails at a particular price and Shri P. C. Oak, Deputy Director, Railway Stores, Railway Board, on behalf of the Secretary. Railway Board, accepted t.he respondents' offer with the terms and conditions mentioned in the letters sent by the respondent on 15-7-68. Negotiations for the final contract, however, took place between the parties and on 15-7-68, the respondents complained that some of the Railways who were holding stocks are selling the steel rails which they have no right to sell in view of the concluded contract; i>ut Shri P. C. Oak for Secretary, Railway Board, replied that subsequent to 15-7-68, there were negotiations for the vital terms and conditions of the contract and so the question of the existence of a concluded Contract did not arise. At this, the respondents filed a petition in Court under s. 20 of the Arbitration Act, after setting out the relevant correspondence leading upto the letter of acceptance of !5th July 1968 and it was stated that, theJetter was a definite acceptance of the offer and constitute a valid and binding contract between the parties.

In the written statement, . the appellants raised a preliminary objection that the petition was misconceived as there was no arbitration agreement' between the parties and so the question of enforcing the afoitration c:lause in the alleged contract did not arise: Further, it was contended by the appellants that the letter of acceptance and the subsequent letters were not by the Director of Railway Stores, but by the Secretary to the R.ailway Board, who was not a person authorised to enter into the agreement between the President Of India represented by the Ministry of Railwa}'1 and the respondents as required undr Art. 299 of the Constitution.

Allowing the appeal.

HELD : The Secretary to the Railway Board, on whose behalf the offer of the respondents waa accepted, waa not the person nuthorised to enter into a contract on behalf of the President of India, as required under Art. 299, and therefore, the contract, if nny, was not binding on the appellants. Further, it was not correct to say that Clause 43 of Part XVIII and Part XLI empowered the Secretary, Railway Board to enter into such contracts; because Oau'e- 9 specifically provided for the

contracts connected with the sale of sc'rap: ashes coal, du•t, empty containers and stores; and relayable rails, bein~ part of the stores, it was covered by Oause 9 and the Secretary, Railway Board, was not empowered by the President to enter into a contract on his behalf. (445 Bl

Seth Bikhra/ Jaipur/a vs, Villon of India, [1962] 2 S.C.R. 880, referred to,

CIVIL APPELLATE JURISDICTION: C.A. No. 1067 of 1971.

Appeal by special leave from the judgment and order dated October 30, 1970 of the Delhi High Court in F.A.0. (O.S.) No. 40 of 1970.

N. A. Palkhivala, D. Mukherjee, R.H. Dhebar andA. !. Rane, for the appellants.

V. M. Tarkunde, G. L. Sanghi, B. R. Agarwala and Jane11dra Lal, for respondent No. 1.

A. K. Sen, G. L. Sanghi and B. R. Agarwala, for respondent No. 2.

 The Judgment of the Court was delivered by

Jaganmohan Reddy, J.

This appeal is by special leave. The question for consideration is whether there is a binding, valid and concluded contract between the appellants and the respondents.

On an application ll!ed by the respondents under section 20 of the Arbitration Act a single Judge of the Delhi Higlr Court directed the appellan!S to file the arbitration agreement to refer the disputes between lh~ partil)S arising under the .contract to arbitrators. An appeal ag<.1nst that order to a Division Bench was dismissed.

In order to understand the scope of the controversy, a few facts may be stated. On the 21st March 1968, a notice of , Global Tender No. 1 of 1968 was issued by the President of India, therein referred to as the Government of India, Ministry of Railways (Railway Board), proposing to sell 80,000 tonnes of surplusreleased serviceable and scrap rails, as per details given in the schedule thereto, to established buyers abroad or their accredited F agents.

It invited offers in respect thereof to be addressed to the President of India and sent to Shri R. No. Mubayi, Director, Railway Stores, Railway Board. With this notice were enclosed the general conditions of tender, special conditions of tender, instruc.• ions to tenderers, including proforma for performance guaralltee. and deed bonds as in clauses 4A and 4B, shipping G term; and schedule of stocks available as on 1st March 1968.

In the general conditions the seller was defined to mean the President of India acting through the Director, Railway Stores, Railway Board, unless the context otherwise provided.

The delivery F.O.B. (Free on Board)/F.A.S. (Free Alongside Ship) invoices and freight were dealt with in clause 9.

The default clause in H clause 11 provided that where a buyer fails to execute the contract the seller was to have power under the hand of the Director.

Railway Stores, Railway Board, to declare the contract at an end

at the risk and cost of the buyer.

The special conditions of tender dealt with prices, quotations, payments, terms of shipment, weighment, basis of sales and handling at ports force majeuie arbitration, legal jurisdiction, acceptance of o!Ies and title and risk. In the instructions to tenderers, the tenderers were requested to quote their highest offer indicating the price per metric tonne inclusive of export incentive of 5% of F.O.B. value currently applicable as guarantee by the Government of India which will always be to the sellers benefit for handing over of the rails F.O.B. docks/F.A.S./F.O.B. Indian Port or C.l.F. destination port. The tenderer was required to offer comments clause by claUSe on the ::; 'general conditions of tender' and the 'special conditions of tender' either confirming acceptance of the clauses or indicating deviation therefrom, if any. It was further provided that the contract will come into force from the date the buyers' letter of credit is accepted by the sellers' nominee. In 4A of these instructions the proforma deed bond was given which was to be signed by the tenderer and the acceptance was to be signed for and on behalf of the President of India by the person designated for that purpose.

Similarly, para 4B gave the proforma per.ormance guarantee bond to be addressed to the President of India executed by the tenderer and accepted for and on behalf of the President of India by the person so designated. The terms and conditions also set out the shipping terms in detail, though a few of them were also mentioned in the special conditions under the headings Shipment, Terms of Shipping and Receiving Notice. It appears that the terms and conditions enclosed with the tender notice annexed to the petition filed in court were not full and complete. Consequently the appellant has anne11.ed a true copy of the enclosures with the special leave petition and prayed that this may be admitted in evidence. As there was no dispute in respect of the contents thereof, we have allowed this prayer because without them it is not possible to arrive at a just conclusion.

Pursuaut to this tender notice, the respondents, by their letter, Ex. 'B', dated 21-5-1968, offered to buy 80,000 tonnes of rails at $45.1 per tonne F.O.B. Indian Ports on the term and conditions set out therein. In reply thereto, by a letter dated 25-5-1968, the Dy. Director, Railway Stores, Railway Board, P.C. Oak in.para 1(6) categorically stated by reference to para 14 of the conditions of the letter of the respondents that as shipping terms have financial implications they were requested to indicate with reference to the tender which yarticular clauses they desire to re-negotiate and settle. In para 2 it was stated that the offer of the respondents was not addressed to the President of India as required under clause 1 ( 3) of the Instructions to the Tenderers and, therefore, the Respondents were required to confirm that their offer .was deemed to have been addressed to the President of India and is

A open for acceptance on behalf of the President. It was further stated in para 4 that they should send the reply addressed to the President of India through the Director of Railway Stores, Railway Board covering all the points indicated therein, to reach them not later than 28-5-1968. No reply was, however, received by the time indicated in the letter of the appellants and while so stating another letter was addressed to the Respondents on 3-6-68 B by C. Parasuraman for Secretary, Railway Board, seeking further clarification in respect of items Nos. 26 and 27 of the offer contained in the aforesaid letter of the Respondents dated 21-5-1968.

There were also two other clarifications in respect of the weight of the tonne for which $45.1 was quoted and the option to transfer the contract in the name of the foreign principles which it was 'tated, could not be agreed to straightaway unless and until they knew the names of the foreign principles and their willingness c

to enter into a legal binding guarantee of all the terms and conditions of the contract. The Respondents wrote subsequently t6 the Director; Railway Stores on the 15th June, 29th June, 8th July and the three letters on 10th July and one on the 15th July D 1968, some of which were written after a discussion with the Director of Railway Stores in the presence of the Director of Finance, Mr. Datta. On the same day as the letter of 15th July was sent by the Respondents, P. C. Oak signing for the Secretary of the Railway Board, addressed the following letter of acceptance, No. 68/RS(G)/709/10 to the Respondents :-

"Subject:-Tender No. 1 of 1968 for Export sale of used re-rollable and relayable steel rails.

Reference:-Your letter Nos. Nil dated 21-5-68, 15-6-68, 29-6-68, 8-7-68, 10-7-68 and 15-7-68.

Kindly be advised that your offer (at $39 per long F ton F.O.B. Indian Port for export and Rs. 458/- per long ton for indigenous consumption) with terms and conditions referred to in your above letters is hereby accepted. Formal contract will be issued shortly.

2. Kindly acknowledge receipt.

Yours faithfully, Sd./- P. C. Oak.

for Secretary, Railway Board".

Thereafter, it is alleed that several draft agreements were exchanged regarding which there is a dispute but ultimately before us it is not contested that a draft agreement, which the appellants say is the Sth draft, but according to the Respondents is

A the final draft, was handed-over to the Respondents by P. C. Oak on 27-8-68 but this, however, was not signed. Clause 2 of this draft agreement states that the contract has been concluded by the issue of seller's 11; tter No. 68/RS(G)/709/10 dated 15-7-68 to the buyers; that the term of the contract shall be three years from 1-11-1968 to 31-10-1971; that the buyers reserve the right B to act upon the contract any time before 1-11-68 and start inspection and take delive1y of the goods but this will not in any manner effect the terms of the contract. Even thereafter there was further correspondence between the parties. By letter dated 18-9-68 the Respondents wrote to the Director, Railway Stores, agreeing to several other matters to be included in the final draft and request- C ed him to issue the 'final contract' without delay. On the 21st September 1968 the Respondents again wrote to the Director.

Railway Stores, complaining that the info1mation provided by the various Railways was not complete and requested him to contact the various Railways and obtain the required information as soon as possible. After the receipt of this Jetter the Joint Director, Railway Stores (G), wrote to the general Manager (S), All Indian D Railways with a copy to the respondents calling for the required information. In that letter the Joint Director stated thus :-

" .. the Board have finalised an export-cum-internal sale contract with M/s. N. K. (P) Ltd., New Delhi for a period of 3 years, entitling them to export stock of such surplus rails available with the Railways. The detailed terms and conditions of the contract will be ap prised to you when finalised"

On the 23rd October 1968, C. Parasuraman, for Secretary, Railway Board, replied to the letter of the Respondents of the 21st September 1968, stating that it was not correct that their office has assured them that it would arrange to get the missing details

from -the concerned C.O.Ss. After this letter two other letters were written by the Respondents to the Director, Railway Stores, dated 7th and 23rd November 1968. In the first letter it was. stated thus :-

"In pursuance of your invitation we submitted our tender for purchase of used relayable and re-rollable steel rails on 21-5-68. After some negotiations the terms of the contract were finalised and the Secretary, Railway Board by his letter No. 68/RS(G)70910 dated 15-7-68, accepted our offer and concluded the contract.· We were informed that the formal contract will be issued shortly. A draft of the formal contract was handed over to us on 27-8-68. In our letter of 18-9-68, some agreed terms were set out which had to be incorporated" in the formal contract. Since the acceptance of our

offer we have made all arrangement for the sale of the material.

We beg to inform you that out of the total quantity of 88,936 tonnes of Rails already offered to us for our approval we approve and shall take delivery of 53,807 Tonnes as per list enclosed herewith. The ab9ve quantity may kindly be reserved for us and arrangement be made for their delivery in terms of the contract . ... "

In the second letter, the respondents complained that though the contract for sale of used rerollable and relayable steel rails was. concluded on 15-7-68 they regretted that they had not received the formal contract so far and requested that it should be sent without any further delay. In the last paragraph of that letter, C the Respondents complained that they came to know that some <:J. the Railways who were holding stocks are selling the steel rails which they have no right to do and requested them to stop such sales. To this, P. C. Oak for Secretary, Railway Board, replied :

"Kindly refer to correspondence resting with your letters dated July 26, 1968, 18th September 1968 and No. RB/Rails/68/1/114, dated 2nd December 1968.

Your contention contained in your letter No. RB/Rails/ 68/1 dated 23-11-68 that the Railway Board is not authorised to sell rails to other parties because of their having concluded a contract with you is factually incorrect.

No doubt, letter Nq. 68/RS(G)/709/10 dated 15-7-68 iodicatan intention to enter into a contract with you, but subsequent to this, discussions had been held with you over a number of sittings on 20-7-68,

12-8-68, 26-8-68, 27-8-67 cuhninating in your letter dated 18-9-68. '.\his would amply indicate that no agreement had 'been reached on vital terms and conditions, and the question of the existence of a concluded contract does not arise .... "

The Respondents replied to this letter by their letter dated 25-1-1969 expressing surprise and contesting the stand taken by

the Railway Board. In the petition of the Respondents filed in Court after setting out the relevant correspondence leading upto G the letter of acceptance of P. C. Oak dated 15th July 1968, t

was stated that that letter was a definite acceptance of the offer and constitutes a binding and valid contract between the parties.

With respect to the draft agreement of the 27th August 1968 handed over to the Respondents embodying the agreement between the parties, the averment was that the then Acting Director of Railway Stores desired certain additional terms to be embodied H in the terms that were agreed to. The additional terms were agreed to by the plaintiffs (Respondents) by their letter to the

UNION v. N. K PVT. LTD. (iaganmohan Reddy, J.) 443

A Director, Railway Stores, dated 18-9-1968.

In para 16 it wa' further alleged that after the letter of acceptance by the appellants the then Acting Director of Railway Stores and the Director of Finance proposed to the plaintiffs that the price offered by them should be increased or in the alternative certain alterations be made in the agreed terms, but the plaintiffs having justly refused B to do so, the 2nd defendant (C: Parasuraman). falsely wi; ote to the plaintiffs on 15-1-1969 that no concluded contract had taken place and that the Railway Board was; therefore, not precluded from selling rails to other parties.

The appellants in their written statement, raised a preliminary objection, namely, that the petition was mis-conceived as there was no arbitration agreement between. the parties and so the question of enforcing the arbitration clause in the alleged contract did not arise. It also reiterated its stand earlier taken that the letter dated 15-7-68 written by Oak on behalf of the Secretary, Railway Board, was not a letter of acceptance of the offer of the Respondents so as to amount to a concluded contract binding on D the Union of India , nor could it, be construed as such in view of the mandatory provisions of Article 299 of the Constitution of India. The contention was that unless and until a formal instrument of contract wa~ executed in the manner required by Article 299 of the Constitution and by the relevant notifications, there

would not be a contract binding on the Union of India and at any rate no such agreement was entered into as it was alleged that though interviews had taken place at various times between the plaintiffs and the several officers of the Railway Board, no agreement had been reached on vital terms and conditions.

Two submissions were urged on behalf of the appellants, namely :

(I)

(2)

that apart from the contention relating to Ar.t. 299 of the Constitution, there was no concluded contract between the parties, because

(a) the essential terms were not agreed to between them on the date when the acceptance letter was issued by P. C. Oak on 15-7-68. and (b) even if there was an acceptance as alleged, that acceptance was conditional upon a formal contract being executed by the appellants;

that the three mandatory requirements of Art. 299 of the Constitution for a valid and binding contract made in exercise of the executive power of the Union have not been complied with. namely, (a) that the contract. was not expressed to be in the name of the President, nor (b) was

it executed on behalf of the President, or ( c) A by a person authorised to execute it on his behalf.

The crucial question which arises for detennination is whether there was a concluded contract, and if there was one whether the mandatory requirements of Article 299 of the <;:nstitution for entering into a valid and binding contract have been satisfied?

It is now settled by this Court that though the words 'expressed' and 'executed' in Article 299 (1) might sugg.,'St that it should be by a deed or by a fonnal written contract, a l:iinding contract by tender and acceptanc., can also come info existence if the acceptance is by a person duly authorised on this behalf by the President of India. A c; ontract whether by a fonnal deed or otherwise by persons not authorised by the President cannot be binding and is absolutely void.

We do not for the present consider it necessary to go into the question whether and to what extent the requirements of Art. 299 have been complied with in this case. What we have to first ascertain is whether apart from the contention relating to Article 299, a concluded contract has come into existence as alleged by the Respondents.

Before us detailed arguments were addressed on behalf of the appellants to show that notwithstanding the letter of acceptance of 15th July 1968, no concluded contract had in fact come into existence and though that letter accepted certain tenns, there were other essential terms of• the contract which had to be agreed to and were the subject matter of further negotiations between the parties; that it was the intention of the parties that all those terms were to be embodied in a formal contract to be executed which contract alone was to be binding between the parties; and that in any case the letter of acceptance and the subsequent letters were not by the Director of Railway Stores but by the Secretary to the Railway Board who was not a person authorised to enter into the agreement between the President of India represented by the Ministry of Railways and the Respondents. On the other hand, the stand taken by the Respondents was that all the essential terms of the contract were agreed to and the contract was concluded on 15th July 1968, though at the instance of the Director, Railway Stores further terms with respect to the execution of the contract were the subject-matter of negotiations between the parties and in any case these did not pertain to the essential terms and could not on that account detract from the binding nature of a concluded contract. It was also contended that the letter of aceptance by P. C. Oak though signed on behalf of the Secretary, Railway Board was in fact on behalf of the said Board which was authorised to enter into such a contract.

It is in our view unnecessary to consider the several contentions as to whether all the essential terms of the contract had been agreed to or that the contract was ooncluded by the acceptance

.<•

UNIONV. N. K. PVT. LTD. (Jaganmohan Reddy, J.) 445

letter of 15th July 1968 or whether the parties intended it to re a tenn of the contract that a fonnal contract should be entered into between .them in order to bind the parties. In this case, we are of the view that the Secretary to the Railway Board, on whose behalf the offer of the Respondents was accepted, was not the person authorised to enter into a contract on behalf of the President B of India. As can be seen from the various documents already extracted that the tender notice invited offers to be addressed to the President of India through the Director of Railway Stores, Railway Board. Under the general conditions the seller was defined to mean the President of India acting through the Director, Railway Stores and in the default clause it was provided that where the buyer fails to execute the contract, the seller shall have power under the hand of the Director, Railway Stores, Railway Board, to declare the contract at an end. In the letter written by Oak on 25-5-68, as earlier noticed, it was pointed out to the' Respondents that their offer was not addressed to the President of India as required under clause 1 ( 3) of the Instructions to the Tenderers and, therefore, the Respondents were required to confinn

D that their offer can be deemed to have been addressed to the President and is open for acceptance on behalf uf the President and their reply should be addressed to the President of India, through the Director of Railway Stores, Railway Board.

Even the draft contract dated 27-8-68 in terms of which the Respondents were insisting on a final contract to be issued to them by the E appellants was to be executed by the' Respondents as buyers on the one part and the President of India acting through the Director, Railway Stores, Ministry of Railways (Rail}Vay Board) as the sellers, on the other. There is little doubt that the only person authorised to enter into the contract on behalf of the President is the Director, Railway Stores. It is true that the noti- F fication of the Ministry of Law issued in exercise. of the powers under clause 1 of Article 299 of the Constitution shows that the President directed the authorities named therein to execute on his behalf the contracts and assurances of property specified therein.

But notwithstanding this, the President is fully empowered to direct the execution of any specified contract or class of C0!1 tracts on ad hoc basis bv authorities other than those specified m the said notification. This Court had in . Seth Bikhrai Jaipuria

v. Union of India, (1) earlier held that the authority to execute G

contracts may be conferred on a person not only by mies expressly framed and bv formal notifications issued in this behalf but may also be SPeclficallv conferred. In this case the letter of acceptance dated 15-7-1968 was on behalf of the Secretary, Railway H Board. who is not authorised to enter into a contract on behalf of the President.

(!) [1962] (2) S.C.R. 880.

It is contended that clause 43 of part XVIII and Part XII empower the Secretary, Railway Board to enter into such contracts.

Clause 43 of Part XVIII provides that all deeds and instruments other than those specified in that part may be executed by the Secretary or the Joint Secretary or the Deputy Secretary or the Under Secretary in the Railway Board or a Director, Joint I>irector, Deputy Director or Assistant Director in the Railway Board. It is submitted that as nothing has been specified in Part XVIII relating to the contract of the type we are considering, the Secretary, Railway Board is authorised to enter into a contract on behalf of the President. This submission is untenable because clause 9 specifically provides for the contracts connected with the sale of scrap, ashes, coal, dust, empty containers and stores. The tender, it will be observed, is for rails which are scrap as well as rerollable and relayable but it is urged that relayable rails 1l1'e not stores nor can they be considered as scrap and as these are not covered by clause 9, the Secretary, Railway Board is fully empowered by the President to enter into a contract on his behalf.

We cannot accept this argument because in our view relayable rails are part of the stores. It may be that some of these rails which are part.of the stores may be considered to be in a c6ndition which the authorities concerned think should be disposed of.

The contracts relating to the goods of the nature specified in the tender notice are, therefore, dealt with by clause 9, as such clause 43 will have no application. Part XLI empowers the Secretaries to the Central Government in the appropriate Ministries or Departments to execute any contl¥lct or assurances of property relating to any matter whatsoever and i~ in these terms :-

"Notwithstanding anything heieinbefore contained any contract or assurance of property relating to any matter whatsoever may be executed by the Secretary or the Special Secretary or the Additional Secretary or a Joint Secretary or a Director or where there is no Additional Secretary or a Joint Secretary or a Director, a Deputy Secretary to the Central Government in the appropriate Ministry or Department and in the case of .. "

The con ten ti on on behalf of the Respondents is that since Railway Board is a Department of the Government, the Secretary to the Department is authorised to enter into a contract under the above provision.

This submission in our view, is equally misconceived because reading the above requirement carefully it will appear that the persons there mentioned should be Secretary, Special Secretary etc., to the Central Government in the appropriate Ministry or Department and not that the Secretary to any Department or office of the Government of India is empowered thereunder.

It is however contended that the Secretary to the

Railway Board is a Joint Secretary to the Government of India and as such under the above provision the acceptance letter should be considered to have been executed on behalf of the President

Even tb.is submission lacks. validity because as pointed out on behalf of the appellant, at the relevant time. the Secretary to the Railway Board did not have any status as Secretary to the Central Government. The status of a Joint Secretary was only conferred on him by a notification by the Government of Jndia in the Ministry of Railways for the first time on 15-9-1969 with effect from that date.

An affidavit of the Deputy Secretary to the Railway Board (Ministry of Railways) has been filed before us setting out the above fact and enclosing the said notification. Then again it was urged that the members of the Railway Board were Secretaries to the Central Government and hence the Board on whose behalf the Secretary communicated the acceptance could enter into a binding contract.

This submission also is without force because there is no material before us to conclude that the Board was so authorised.

In these circumstances, even if the correspon&nce shows that the formalities necessary for a . concluded contract have been satisfied and the parties were ad idem by the time the. letter of acceptance •of the 15th July 1968 was written, about which we do not wish to express any opinion, there is no valid or binding contact because the letter of acceptance, on the evidence before us, is not by a person authorised to execute the contracts for and on behalf of the President of India.

E On the evening before the day the judgment in the case was due to be delivered, an application dated 7-2-72 was filed enclosing an affidavit of R. N. Mubayi who was Director, Railw11.y- Stores, between 18-12-1965 to 30-9-1969 as also an affidavit of R. B. Lal, Managing Director of the Respondent No. 1 to take them in evidence and consider the facts stated therein before judgment is delivered, and if necessary, to call for the file and F give a re-hearing. The affidavit of Mubayi states that only after he recorded on the relevant file and issued instructions to his Deputy Director, Shri P. C. Oak to convey the acceptance of the offer of M/s. N. K. Private Limited, that the acceptance was conveyed by Shri P. C. Oak to the said company. The affidavit of R. B. Lal says that though the affidavit filed by P. Lal, Deputy G Secretary, Railway Board stating that the Secretary, Railway Board, did not have the status of Secretary, Special Secretary, Additional Secretary, Joint Secretary or Deputy Secretary to the Government of India in the Ministry of Railway, he has not denied that the Secretary did not have the status of a Director.

It is further submitted in that affidavit that the Secretary of the H Board had the status of a Director at the relevant time and as mentioned in Part XLI of the Notification of the Ministry of Law, 'a Director' is authorised to accept offers.

L887Suli.Clj72

Apart from the question whether we should admit additional A cvid.ence at stage in this case and though we had rejected an earlier sublll1Ss1on to call for the files, having regard to the facts stated by R. N. Mubayi, Director of Railway Stores during the relevant period that it was he who had asked P.C. Oak to accept the offer and had so endorsed it on the file, as also the affidavit of R. B. Lal that the Secretary to the Board was the Director of Railway Storefi, we withheld the judgment and called for the file to satisfy ourselves.

The file has been submitted to us by the appellants along with an affidavit of R. Srinivasan, Joint Director, Railway Board in which it is categorically averred that at the relevant time, namely, 15-7-6&, the Secretary Railway Board did not have the status of the Director under Para XLI of the Notification of the Ministry of Law or at all. A perusal of the relevant

- file relating to the letter of acceptance would show that on 15-7-68, Shri Oak made the following endorsement: "Reference to Board's orders at page 38/N, draft letter accepting M/s. N.K.

(P) Ltd., offer is being issued today. D.R.S. may kindly see before issue", and this endorsement was merely signed by R.N.

Mubayi. We are not here referring to the other proceedings on the file as to whether the execution of a formal contract was a condition precedent and as one of the terms of the contract but even the above endorsement does not show that the Jetter of acceptance of 15-7-68 was issued on the orders and directions of Mubayi as alleged by him in the affidavit. What it in fact shows is that it is the Board that issued the orders of acceptance and that the acceptance Jetter was only to be seen by him. Even the draft letter issued does not contain his initials or his signature in token of his having seen or apProved it. The letter of acceptance not having been issued on the orders of the Director, Railway Stores, there was no concluded contract as on that date, by a person authorised to enter into a contract. There is also nothing to show that the Secretary to the Board was the Director, Railway Board as further alleged in the affidavit of R. B. Lal.

In this view the appeal is allowed and the application under section 20 of the Arbitration Act is dismissed but there will be no order as to costs of the appellants. On the other hand, we direct the appellants to pay the costs of the Respondents because special G leave was granted on . condition that the petitioner will pay the costs of the Respondents in this appeal in any event. s.c.

Appeal allowed.

UNION OF INDIA & OTHERS

N. K. PRIVATE LIMITED & ANOTHER

February 11, .1972

K. S. HEGDE

P. JAGANMOHAN REDDY

K. K. MATHEW, JJ.

Art. 299

C. Oak

P. C. Oak

s. 20

Art. 299

Art. 299

Clause 43

[1962] 2 S.C.R. 880

N. A. Palkhivala

D. Mukherjee

R.H. Dhebar

andA. !. Rane

V. M. Tarkunde

G. L. Sanghi

B. R. Agarwala

Jane11dra Lal

A. K. Sen

Jaganmohan Reddy

section 20

Delhi Higlr Court

21st March 1968

India

R. No. Mubayi

1st March 1968

clause 9

clause 11

Government of India

clause 1

C. Parasuraman

15th June, 29th June, 8th July

15th July D 1968

Datta

Clause 2

s 11

21st September 1968

All Indian D Railways

M/s. N. K. (P) Ltd.

New Delhi

23rd October 1968

7th and 23rd November 1968

iaganmohan Reddy

Parasuraman

Oak

Union of India

Article 299

Constitution of India

Article 299

Art. 299

Article 299

Article 299

Art. 299

Article 299

15th July 1968

Ministry of Railways

UNIONV. N. K. PVT. LTD

clause 1

clause 1

Article 299

clause 43

Clause 43

clause 9

clause 9

clause 9

clause 43

Central Government

Government of Jndia

R. N. Mubayi

R. B. Lal

Mubayi

N. K. Private Limited

P. Lal

R. Srinivasan

Secretary Railway Board

N.K.

(P) Ltd.

A perusal of the relevant
file relating to the letter of acceptance would show that on 15-7-68, Shri Oak made the following endorsement: "Reference to Board's orders at page 38/N, draft letter accepting M/s. N.K.

(P) Ltd., offer is being issued today.

R.N.

Mubayi

section 20