COLLECTOR OF ESTATE DUTY

MIS R. KANAKASABAI AND ORS.

March 16, 1973 (K. S. HEGDE, P. )AGANMOHAN Rl!DDY AND H. R, KHANNA, JJ.)

Estaie Duty Act, 1953 ss. 10 and 12-Applicability of.

R dies in 1959 leaving behind him four sops, some grandsons, wife and daughter.

These accountable persons furnished an account of the properties passing on the death di R to the Deputy Controller of Estate Duty.

The Deputy Controller added to the return made the value of certain properties settled by the deoeased on his wife, sons, grandsons and daughter on the ground that the deceased had reserved to himself an interest for life in the properties comprised in the above settlements, within the meaning of s. 12 of the Estate Duty Act 1953.

The deed in favour of the sons and the minor grandsons contained a R'rovision to the effect that these would have to pay to the deceased during his lifetime a sum of Rs. 1,000/. a year for his domestic expenses; the deed in favour of the daughter contained a Provision that she would have to maintain him and bi.s wife for their lifetime; the deed in favour of the wife expressed a hope that she would support him in his lifetime.

In al'peal the Central Board of Direct Taxes held that the settlements fell within the scope of s. 12 or at any rate t s. JO of the Act. The High Court in reference held (I) thats. 12 was wholly inapplicable to the facts of the cue;

(ii) that even under s. IQ, !IOI the entir~_yalue of the property settled on the various beneficiaries but only the value of the interest reserved by the deceased to himself during his life time could he taken into consideration :

(iii) that the deed in favour of the wife did not reserve any benefit in favour of the dtoceased as it expressed only a hope. The Revenue as well as the asmsees appealed to thIS Court.

Allowing the appeal of the assessees, HELD : (i) So far as the stipulation contained in the deed in favour of the wife of the deceased was concerned it was merely a hope and expectation and no enforceable liability as such was created. The High Court was therefore right in holding that no part of the property tied on the wife of the deceased could be taken into consideration in computing the value of the property that passed on the death of the dOC<Oased. [751A-Bl

(ii) The High Court was further right in holding that s. 12 was wholly inapplicable to the facts of the case. It wls n(!body's oase that the beneficiaries became entitled to the properties settled on them after the death of the deceased.

There was no support for the contention of the Revenue that an interest in the propei-ties settled was reserved to the deceased during his lifetime or fur any period after the properties were settled; nor was. there any provision in the deeds enabling the deceased to reclaim the property or its possession under any circumstances.

None of the conditions laid down in s. 12(1) were attracted to the provisions contained in the deeds of settlement.

(7510-FJ

(iii) lhe facts of the case also did not come within the scope of s. IO, The provisions for .., niml payments and maintenance made in the deed• were not cha; ged on the prol'°rties settled. Hence the deceased could . not he said to have retained any mterest in tne pro, P; rties settled. Therefore it could not be said that he retained any benefit either in the properties settled or in respect of their possession. !7S4 A-BJ

If, as contended by the Revenue, the expression "of any benefit to him by contract or otherwise" in s. 10 mean any benefit under the gift, the legislature should have said so.

There was no difficulty in saying so. It is a well accepted rule of construction that if a taxing prgvision i& ambiguous and is reasonably capable of more than one interpretation, that interpretation which is beneficial to . the subjecl must be adopted. It is impermissible for the court to read into a taxing provision any words which are not there or exclude words which are there.

The. words found in the provisiop must be given their natural meaning. [753F-Gl George De Costa v. Controller of Estate Duty Mysore, 51 I.T.R. 497, considered and applied.

Mohammad Bhai and Anr. v. Controller of Estate Duty, Andhra Pradesh, 69 I.T.R. 770, held inapplicable.

CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1770 of 1970 and 474 1973. Appeals by special leave from the judgment and order dated April 9, 1969 of the Madras High Court in Tax Case No. 2 of 1966 (Referenee No. 1 of 1966).

N. D. Karkh;, is, S. P. 'Nayar and R. N. Sachthey, for the appellant (in C.A. No. 1770170) and for respondents (in No. 474173).

M. C. Setalvad, K. Srinivasan and T. A. Ramachandran, for respondents (in C.A. No. 1770170 and for appeals (in C.A. No. 474/73).

The Judgement of the Court was delivered by HEGDE, J. Both these appeals, by special leave arise from the judgment of the High Court of Madras in a Reference under s. 64(1) of the Estate Duty Act, 1953 (to be hereinafter referred to as the Act).

The question of law referred in that case is :

"Wllether, on the facts and in the circumstances of the case, the properties settled It' the deceased by the six deeds of settlement (two of them dated 26th June, 1951 and four of them dated 30th June 1951) valued at Rs. 7,38,656/- or any part thereof was not liable for inclusion in the estate of the deceased as property deemed to pass on his death." The High Court answered that question partly in favour of the Revenue and partly in favour of the assessee. It opined that the value of the property gifted in favour of the wife ol the deceased is not to be taken into consideration in computing the value of the property that passed on the death of the deceased. In respect of the properties gifted to the sons, grandsons and the daughter of the deceased only the annual payments that had to be made to the deceased as well as his right to maintenance should be valued for the purpose of determining the extent of the right that passed .on his death.

The facts oi the case material for the purpose of deciding the question of law formulated above as could be gathered from the case stated are as follows :

One Ratnasabapathy Pillai was the owner of the properties with which we are concemed in this case. He died on February 5, 1959 leaving btehind him his four sons, some grandsons, wife and daughter who are the accountable persons. They furnished an account oi the properties passing on the death of the deceased to the Deputy Controller of Estate Duty, Madras who was the assessing authority.

The Deputy Controller did 1110! accept the correctness of the return made by them. He added to the return made, the value of the following properties settled by the deceased on his wife, sons, grandsons and daughter.

Value of property settled

Rs.

I. Deed dated the 26th June, 1951 settling 67.60!

acres ()f agricultura1 lands on Shri D. Na taraja Pillai, son 1,10,408

2. Deed dated the 25th June, 1951 settling 74.91 acres of agricultural lands on Shri R. Ramalingarn Pillai, son 1,12,365

3. Deed dated the 30th June. 1951 settling 80.72 acres of agricultural lands on Shri R. Subramania Pillai, son 1,21,080

4. Deed dated the 30 June, 1951 settling 67.95

acres of agricultural 1ands on Ganapathi PiUai and Sivakumar Pillai, minor grandsons of the deceased 1,01,925

5. J"ed dated the 30th June, 19SI settling 133.55 acres of agricultural lands of Snit. T. Sivakumu AmmaJ,.daughter l,99,623

6. Deed dated the 26th June, 1951 settling 68.17

acres of agricultural lands on the wife, Smt.

Rajambal 1,02,255

Total 7,38,656

By the deeds in question the deceased settled the properties in favour of the beneficiaries absolutely and with full power of aliena. tion. The deeds in favour of his sons and the minor grandsons contained a provision as under :

"You have to pay me during my life time a sum of Rs. 1000/ • per year for my domestic expenses." The deed in favour of the daughter contained a provision :

"You have to maintain myself and my wife during our life time." The deed in favour of the wife contained the followil!g words:

"In the hope that you will support me during my life-time, I do hereby settle .... "

1he Deputy Controller held that the deceased had reserved to himself an interest for life in the properties comprised in the above settlements, within the meaning of s. 12 of the Act. He accordingly included the value of 'those properties for the purpose of determining the value of the properties that passed on the death of the deceased.

The accountable persons appealed to the Central Board of Direct Taxes, New Delhi.

They contended before the Board that the conditions or stipulations contained in the deeds of settlement in faVO!Jr of the sons, minor grandsons and daughter merely amounted to an expression oJ' a desire and hence could not be interpreted as a reservation within '; l; ie meaning of s. 12 as those conditions or stipulations did not detract from the. absolute character of the settlements. With regard to the settlement made in favour of the wife, it was argued before the Board that the deceased had expressed only a hope that his wife would support him and maintain him ducing his lifo time, and the words used in the deed were vague and unenforce_able in law as a stipulation.

The Board rejected these contentions.

It opined tha_t the main point in issue in the case was whether an interest in the property was reserved by the deceased. It held that all the settlements fell within the scope of s. 12 or at any rate it came withins. 10 of the Act.

Thereafter at the instance of the accountable persons, the question set out earlier was referred to the High Court.

We have earlier set out the answer given by the High Co)lrt.

The High Court .held that s. 12 was wholly inapplicable to the facts of the case and the case has to be considered only under , s. 10. Even under that section, the High Court opined, the entire value of the property settled on the various beneficiaries cannot be taken into consideration. All that can be taken into considera" tion is the value of the interest reserved by the deceased to himself during his life time. Further it held that the value of the properties settled on the wife of the deceased should be wholly excluded from consideration as the expression of a wish that his wife should suppon him during his life time did not amount to a retention of any benefit in the property settled. On behalf of the Revenue, the conclusion reached by the High Coun was challenged. It is contended that the value of the entire property settled by the deceased should have been taken into consideration.

But, on the other hand it was contended on behalf of the accountable persons that neither s. 12 nor s. I 0 is applicable to the facts of the present case. Before considering whether ss. 10 and 12 or either of them is applicable to the facts of the case, it is necessary to mention that in respect o.f the amount made payable by the sons and grandsons to the deceased, no charge on the property settled was created.

Similarly no charge was created on the property settled on the daughter in respect of her liability to maintain her father and mother. So far as the stipulation contained in the deed in favour

( I

• ...

of the wife of the deceased, it was merely a hope and expectatioa and no enforceable liabi!fty as such wis created. Hence we are in agreement with the High Court that no part of the property set'lJej on the wife of the deceased can be taken into consideration in computing the value iJf. the property that passed on the death of the deceased. We are also in agreement with the High Court that s. 12 is wholly inapplicable to the facts of the. case.

That section to the extent material for our present purpose: reads: "12 ( 1) Property passing under any sett!erii'ent made by the aeceased by deed or. any other instrument not taking effect as a will whereby an interest in such property for life or an'y other period determinable by reference to death is reserved either expressly or !ly implication to the settler or whereby the settlor may have reserved to himself the right by the exercise of any power, to restore to himself or to reclaim the absolute interest in such property shall be deemed to pass on the settler's death." D [The provisos to the Section, the explanation as well as sub-s-

(2) of s. 12 are not relevant for our present purpose.] ·

So far as the applicability of s. 12(1) is concerned, it is no." body's case that the beneficiaries became entitled to the properties settled on them after the death of the deceased. There is no support for the contention ct the Revenue that an interest in the properties settled was reserved to the deceased during his. life time or for any period after the properties were settled; nor is there any provision in the deeds enabling the deceased to reclaim the property or its possession under any circumstance.

None of the. conditions laid down in s. 12 ( 1) are attracted to the provisions contained in the deeds ct settlement.

Now turning to s. 10,' the portion that is material for our pre, ent purpose is found in the main section. . The provisos to that section are not relevant.

The material part of the section reads : · · ·

''.Property taken under any gift, whenever made, shall be deemed to pass on the donor's death to the extent that bona fide possession and enjoyment of it was not

immediately assumed by !he donee and thenceforward re<ained to the entire exclusion of the donor or of any benefit to him by contract or otherwise." This section provides that unless a bona fide possession aiid enjoyment of the property gifted is assumed immediately after the gitt by the donee and thenceforward retained to the entire exclusion of the donor' or of any benefit to him by contract or otherwise,. the said property wil! be deemed to have passed on the death of

the donor.

In other words the section has two parts viz. ( 1) the donee must bona-fide liave assumed possession and enjoyment of the property which is the subject matter of the gift to the exclusion of the donor immediately upon the gift and (2) the donee must have retained such possession and enjoyment of the property to the entire exclusion of the donor or of any benfit to him by contract or otherwise. Both these conditions are cumulative. Unless each ol. these conditions is satisfied the property would be liable to estate duty under section 10 of the Act-see the decision of this Court in George Da Costa v. Controller of Estate Duty Mysore(1).

Therein the scope of s. fO came up for consideration. Speaking for the Court this is what Ramaswami J. observed in that case :

"A gift of itnmovae property under s. 10 will. however, be dutiable unless the donee assumes imme-. -diately exclusive and bona fide possession and enjoyment 1lf the subject-matter of the gift and there is no beneficial interest reserved to the donor by contract or otherwise. The section must be grammatically construed as follows: "Property taken under any gift, whenever made, of which property bona fide possession and enjoyment shall not have been assumed by the doriee immediately upon the gift, and of which property bonafide possession and enjoymei:it shaU not have been thenceforward retained by the :lonee to the entire exclusion of the donor from such possession and enjoyment, or of any benefit to him, by contract or otherwise". The crux of the section lies in two parts: (1) the donee must bona fide have assumed possession and enjoyment of the , property, which is the subject matter of the .ift, to the exclusion o.f the donor, immediately upon the gift, and

(2) the donee must have retained such possession and enjoyment of the property to the entire exclusion of the donor or of any benefit to him, by contract or otherwise As a matter of construction we are of opinion that both these conditions are cumulative. Unless each of these conditions is satisfied. the property would be liable to estate duty under s. 10 of the Act".

Proceeding further the learned judge observed :

"The second part of the section has two limbs: the deceased must be entirely excluded, (i) from the pro- perty, and (ii) from any benefit by contract or otherwise.

It was argued for the appellant that the expression "by contract or otherwise" should lie construed

(I) SJ T.T.R. 497.

ejusdem generis and reference was made to the decision of Hamilton J. in Attorney General v. Seccombe (1911 )2, K. B. 688. On this aspect of the case, we think that the argument of the appellant is justified. In the context of the section, the word "otherwise" should in our opinion, be construed ejusdem _ generis and it must be interpreted to mean some kind of le.gal obligation or some transaction enforceable at Jaw or in equity which, though not in the form of a contract, may confer a benefit on the donor.

It was contended on behalf of the assessee that the expression "of any benefit to him by contract or otherwise" in s. 10 must be in the property settled and not a benefit arising from the ttansac--

tion resuHing in the gift. To put it differently 'the assessee's contention was that the benefit biy contraot or otherwise must be re-- ferrable to the property gifted because all the earlier conditions stipulated in the section refer to the_ property gifted. If it was otherwise, the Counsel for die assessee urged, s. 10 cannot be considered to have two parts as held in Da Costa's case (supra); but it must be held to have three pans viz. (1) that the donee must bona fide have assumed possession and enjoyment of the property which is the subject matter of the gift to the exclusion of the donor immediately upon the gift; (2) the donee must have retained such possession and enjoyment of the property to the en1ire exclusion of the donor and ( 3) the donor should not have retained any benefit to him by contract or otherwise under the gift. It was further urged that it is impermissible for the court to add the words "under the gift" after the words "of any benefit to him by contract or otherwise". On the other hand it was contended on behalf of the Revenue that if the donor is entitled to any benefit under the gift, whether the same is charged on the properties settled or not, the properties gifted must be deemed to have passed on his death. The main part of s. 10 is not happily worded. It is difficult to find out the true effect of the expression "of any benefit to him by contract or otherwise". Do these words mean any benefit under the gift ? If that was so, the legislature should have said so. There was no difficulty in saying so. If a taxing provision is ambiguous and is reasonably capable of more than one interpretation, that interpretation which is beneficial to the sutect must be adopted. This is a well accepted rule of construction. It is impermissible for the. court to read into a taxing provision any words which are not there or exclude words which are there.

The words found in the provision must be given their natural meaning. In Da Costa's case, this Court opined that there are only two parts to the section. We have set out those parts earlier. The contention of the Revenue runs counter to the reasoning adopted in Da Costa's case. The contention advanced on be-

'; UPREME COURT REPORTS

[J 973] 3 S.C.R.

half of the assessee finds support from some of the observatbns found in Da Costd s case.

The provisions for annual payments and maintenance made in the deeds as seen earlier are not charged on the properties se'ttled.

Hence the deceased cannot be said to have retained any interest in the properties settled. Therefore it cannot be said that he re'tained any benefit either jn the properties settled or in respect of their possession.

Hence in our opinion the facts of case (', J not come within the scope of s. 10.

We, accordingly, allow the appeal of the assessee and hold that the value oi the properties gifted or any part thereof is not liable to be included in computing the value of the estate that passed on the death of the deceased. In this :view, it is not necessary for us to consider the meaning of the word

extent" found in s. 10. The decision of the Andhra Pradesh High Court in Mohammad Bhai and Anr. v. Controller of Estate Duty, Andhra Pradesh(1) rendered by one of us (Reddy J.) does not bear on the question of law that we have decided.

In the result we allow the appeal of the assessee (Civil Appeal No. 474 of 1973), vacate the answer given by the High Court and answer the question referred by the Tribunal in the affirmative and in favour of the assessee.

The appeal of the Revenue (Civil Appeal No. 1770 of 1970) is dismissed. The Revenue shall pay the costs of the assessee-one hj:arlng fee.

G.C C. A. No. 474 of 1973 allowed.

C.A. No. 1770 of 1970 dismissed.

COLLECTOR OF ESTATE DUTY

MIS R. KANAKASABAI AND ORS.

1973 (K. S. HEGDE

KHANNA, JJ.

Estaie Duty Act, 1953

ss. 10 and 12

s. 12

Estate Duty Act 1953

s. 12

s. 12

s. 12(1)

s. 10

Madras High Court

N. D. Karkh

S. P. 'Nayar

R. N. Sachthey

M. C. Setalvad

K. Srinivasan

T. A. Ramachandran

HEGDE

High Court of Madras

s. 64(1)

Estate Duty Act, 1953

26th June, 1951

30th June 1951

Ratnasabapathy Pillai

February 5, 1959

Madras

s. 12

s. 12

s. 12

s. 12

s. 10

s. 12

ss. 10 and 12

s. 12

s. 12

s. 12(1)

s. 12

s. 10

section 10

Ramaswami

s. 10

s. 10

Hamilton

s. 10

s. 10

Da Costa

s. 10

s. 10

s. 10

Andhra Pradesh High Court

Reddy


STATE OF ANDHRA PRADESH

NARAYANA VELUR BEEDI MANUFACTURING FACTORY

& OTHERS March 26, 1973

[A. N. GROVER, K. K. MATHEW AND A. K. MUKHERJEA, JJ.1

Minimum Wages Act, 1948, s. 9-'Independent persons'-[/ include Government officials.

The appellant-Government passed an order revising inimum wages in the Bidi industry. It was based on the recommendat10n of a Committee of six members consisting df persons representing employers and employees "!'d the Chief I~r and Deputy Chief Insptor of Factories.

Section 9 of the Mm1mum Wages Act, 1948, rcqu1res that the Committee shall consist of an equal number of repiesentati\'es of the employer and the employees and of Independent persons not exceeding one third of its total number. On the question whether the two Government officials could be regarded as independent persons,

HELD : The mere fact that they happened to be Government officials or Government servants will not divest them of the character of independent persons. [76Jq

The language <if s. 9 does not contain any indication that persons in tile employment of the Government would be excluded from the category of 'independent persons'. These words have essentially been employed in contradistinction to representatives of employers and employees. In other words, apart from the representatives of employers and employees there should be persons who should be independent of them. [760G-HJ

Further, the presence of high government officials, who may have actual working knowledge about the problems of employers and employees can afford a good deal of guidance and assistance in formulating the advice which is to be tendered. It may be that in .certain circumstances .such persons may cease to have an independent character. iC!he quettion

of fixation of mininium wages in an employment in which the appropiblte Government is directly interested, ari.es. . It would therefore depend upon the facts <if each particular case whether the penons who have been appointed could be regarded as independent or not. It is not correct to say that a Government official will have a bias onhat he may favour the policy which the appropriate Government may be inclined to adopt, because, when he is a member of an Advisory "Committee he is expected-to give an impartial and independent advice and not merely carry out what e Government may be incHncd to do.

Government . officials are responsible persons and are capable of takin~. a detached and impartial vie\\',

[760H; 761A-E) Jaswan.t Ra! Beri & Others v. State of Punjab & another,

A.LR. 1958 Pun). 425, D. M. S, Rao & Others v. The State of Kera/a & A"'?ther, A.LR. 1963 Kerala 115, Bengal Motion Pictures Employees Unwn, C<icutta v. Kohinoor .Pictures Private Ltd. & Ors. A.LR. 1964 Cal. 619, .Ramkrlshna Ramnath Nagpu' & Another v.

The State of Maharasht; a & Anorber, A.LR. 1964 Born. 51, Chandrabhave Boarding and Lodging & Others v. Stcte of Mysore, A.LR. 1968 Mys. 156 and P. Gangadharan Pillai v. State of Kera/a & Others A.LR. 1968 Kerala 218, approved. '

Norotamdas Harjivandas v. P. V.

Gourikar, Inspector, Minimum Wages, A.LR. 1961 M.B. 182 a; nd Kohinoor Pictures (Private) Ltd. v.

State of West Bengal & Others, (1961] 2 L.L.J. 741, over ruled.

CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1659 to 1662 of 1967.

Appeals by certificate from the judgment and order dated January 31, 1964 of the Andhra Pradesh High Court at Hyderabad in Writ Petition Nos. 337 /63, 746/62, 735/62 and 807 /62, respectively.

P. Ram Reddy and A. V. V. Nair, for the appellant.

M. C. Chagla, H. K. Puri and 'Niranjana Shah, for the respondents (in C. A. No. 1659) respondents 1 to 10, 12 to 14, 16 and 19 to 29 (in C.A. No. 1660), Respondent No. 1 (in C.A. No.

1661) and Respondents Nos. 1 to 5 (in C.A. No. 1662).

The Judgment of the Court was delivered by

GROVER, J .-The sole question which has to be decided in these appeals by certificate from a judgment of the Andhra Pradesh High Court is the meaning of the word "independent" in s. 9 of the Minimum Wages Act, 1948, hereinafter called the "Act".

The Act was enacted to provide for fixing the minimum rates of wages in certain employments. Section 2 gives the definition of various expressions. Clauses (e) (h) and (i) give the meaning of the words "employer", "wages'' and "employee" respectively.

Section 3 provides for fixing of the minimum rates of wages by the appropriate government and their review at certain intervals.

Section 5 gives the procedure for fixing and revising minimum wage<s. Section 5 reads :- s. 5 ( 1 ) "In fixing minimum rates of wages in respect of any scheduled employment for the first time under this Act or in revising minimum rates of wages so fixed, the appropriate government shall either- ( a) appoint as many committees and sub-committees as it considers necessary to hold enquiries and advise it in respect of such fixation or revision, as the case may be, or ·

(b) . by notification in the Official Gazette, publish its proposals for the information of persons likely to be affected thereby and specify a date not less than two months from the date of the notification, on which the proposals will be taken into consideration.

( 2) After considering the advice of the committee or committees appointed under clause (a) of sub-section

( 1) or as the case may be, all representations received by it before the date specified in the notification under clause (b) of that sub-section, the appropriate government shall, by notification in the Official Gazette, fix, or, as the case may be, revise the minimum rates of wages in respect of each scheduled employment, and unless such notification otherwise provides, it shall come

into force on the expiry of three months from the date of its issue : Provided .......................... " Section 9 relates to composition of committees etc. and is in these terms:

S.9. "Each of the committees, sub-committees and the Advisory Board shall consist of persons to be nominated by the appropriate Government representing employers and employees in the scheduled employments, who shall be equal in number, and independent persons not exceeding one-third of its total number of members; one of such independent persons shall be appointed the Chairman by the appropriate Government." The Government Order which was challenged related to the revision of minimum wages in the Bidi industry. It was based on the recommendation of a committee consisting of six m'nbers •. two of whom were Chief Inspector of Factories, Hyderabad, and Deputy Chief Inspector of Factories, Hyderabad; the former being the Chairman. These two officers were to be on the committees from among the category of independent persons mentioned in s. 9. The whole controversy has centered on the question whether the aforesaid two officers could be regarded as independent persons. There are a number of decisions of the High Courts. In majority of them, namely, Jaswant Rai Beri & Others v. State of Punjab & Another;('') D. M. S. Rao & Others v. The State of Kera/a & Another,(') Bengal Motion Pictures Employees Union, Calcutta v. Kohinqor Pictures Private Ltd. & Others;(') Ramkrishna Ramnath Nagpur & Another v. The State of Maharashtra & Another;(') Chandrabhava Boarding & Lodging and Others v.

State of Mysore(') and P. Gangadharan Pillai v. State of Kera/a & Others, (6 ) it has been held that the mere fact that a person happens to be i government servant or that he is an officer, he does not cease to be an independent person within the meaning of s. 9. The only two decisions in which a contrary view has been taken are Narottamdas Harjivandas v. P. V. Gowarikar, Inspector,

(l) A.1.R. 1958 Punj. 425.

(3) A.LR. 1964 Cal. 519.

(5) A.l.R. 1968 Mys. 156. 16-L761Sup.C.l. /73

(2) A.LR. 1963 Kerala 115.

(4) A.LR. 1964 Bom. 51.

(6) A.l.R. 1968 Kerala 218.

Minimum Wages(') and Kohinoor Pictures (Private) Ltd. v.

State of West Bengal & Others;(') the latter is a judgment of the learned single Judge of the Calcutta High Court. It may be mentioned. that in the judgment under appeal the Andhra Pradesh High Court has also taken the same view as the Madhya Pradesh court.

~.1e reasoning of Bishan Narain J .. in the l'unjab case is quite simple. The leai:ned Judge considered that in the context of s. 9 an independent person means a person who is neither an employer nor an employee in the employment for which minimum wages are to be fixed, The presence of independent persons is necessary to safeguard the interests of those whose requirements are met by the trade concerned. In a welfare State, according to him, it is the business of the Government to create conditions wherein private employers can carry on their trade profitably as long as the workmen are not exploited. In such circumstances the appointment of a Labour Commissioner, who is conversant with the employment conditions, cannot be objected to on the ground that he was not an independent -person. In the first Kera la case C. A.

Vaidialingam J .. as he then was, gave some additional reasons for supporting the view of Bishan-Narain J. He referred to s. 2(i) of the Industrial Disputes Act 194 7 for illustrating that a person shall be deemed to be independent for the nurnose of his anl'ointment as Chairman or other members of a Board. Court or Tribunal if he was unconnected with the industrial dispute referred to such Board, Court or Tribunal or with any industry directly effected by such dispute. This is what the learned Judge observed with reference to the provisions of s. 9 :

"When it speaks of persons to be nominated by the Government to the committee representing employers and employees in the scheduled employments and also of nominating an "independent person", in my view, the object of the enactment is that the "independent person" should be who has nothing to do with the employers or employees in the scheduled employment in question.

It may that under particular circumstances, when an industry, in which the State Government as an employer may also be vitally interested and in which case it can be considered to be an employer, it may not be proper to nominate an official to the committee treating him as an independent member".

A division bench of the Calcutta High Court consisting of Bose C. J. and G. K. Mitter J .. as he then was, in Bengal Motion Pictures Employees Union v. Kohinoor Pictures P. Ltd.(") referred

(t) A.T.R. 1961 M.P. IR2.

(2) 1961 2 LL.I. 741.

(3) A.1.R. 1964 Cal. 519.

to the legislative policy underlying the enactment of the Act. What is aimed at is the statutory fixatiOn of minimum wages with a view to obviating the chances of exploitation of labour. Such being the main object it was natural to expect that the Government would seek the assistance of persons who were well conversant with the conditions of labour, industrial competition, profits from the industry and various other relevant factors which are to be considered in fixing the minimum wages. It could hardly . be doubted tbat persons like the Labour Commissibner or the Deputy Labour Commissioner are most suitable persons to be consulted for the purpose.

The other reason given in the Calcutta ase was similar to the one which prevailed with Bishan Narain J., -in the Punjab case. In the Bombay case the Division Bench referred to certain rules framed under s. 30 of the Act by the Government of Bombay. According to Rule 4 provision was made for terms of office of members of the Board and a distinction was made in subrules 2 and 3 between the non-official member and the official member of the Board. From the scheme of the rules it was inferred that even Government officials were contemplated tci fall within the category of "independent persons".

It is unnecessary to refer to the other decisions which favour the majority view.

In the Madhya.Pradesh case P. V. Dixit, C.J., delivering the judgment of the Bench said that the expression "independent persons" did not mean persons who were independent only of employers and employees in the scheduled employment and included officials. The ordinary connotation of the word "independent person", it was pointed out, is of a person who is not dependent on any body, authority or organisation and who is able to form his own opinion without any control or guidance of any outside agency.

It appears that in this case the learned Judges were infiuenced by the consideration that the State is actively interested in the wage earners and in the matter of fixation of minimum wages. That precluded Government officials from fall' ing within the class of independent persons provided for by s. 9.

In Kohinoor Pictures case(') a learned single judge while appreciating that the advisory committees constituted under 5 read with s. 9 of the Act have a purely advisory function, took the view that the appropriate Government in fixing the minimum rates of wages was not at all a disinterested person. He also took into consideration the interest which the Government may have in fixing the minimum waes. According to him the fixation of minimum wages is an operation compelling the employer to make a payment whether he wishes it or not and in most cases contrary to his

wishe~. Three partie1 are involved in such compulsory fixation. namely, the Government, the employer and the employed. If

--(I-) il9611 2 L.LT.741. -

the advisory committee is really to consist of independent persons they should be independent of all the three categories. A

Mr. Chagla for the respondents has relied a great deal on the dictionary meanings of the word "independent" as given fn Shorter Oxford English Dictionary. One of the principal meaning given is "not depending upon the authority of another; not in position n of subordination; not subject to external control or rule". Accord ing to Mr. Chagla a Government official cannot be regarded as independent because he is to depend upon the authority of the government and is in position of subordination and is subject to external control.

It has been strenuously urged that the whole object of having an advisory committee is to get an impartial c opinion or advice in the matter of fixing of miniinum wages. The committee has to consist of representatives of employers and the employees in the scheduled employment who have to be equal in number. The presence of independent persons not exceeding one third of the total number of members is necessary to ensure that a proper balance is maintained between the view of the representatives of the employers and the employees respectively. If a D government official and, in particular, one associated either with labour or factories in his official capacity is brought into the committee he is likely to be biased in his views for various reasons.

He may know the policy of the government or he may himself have participated in the formulation of that policy. He may have certain prediliction because of special knowledge obtained by him E while setving in a department which is connected with labour or industry. All these matters would divest him of the character of an independent person. ·

In our judgment the view which has prevailed with the majority of the High Courts must be sustained. The committee or the F advisory board can only tender advise which is not binding on the government while fixing the minimum wages or revising the same as the case may be. Of course the government is expected, partii cularly in the present democratic set up, to take that advice seriously into consideration and act on it but it is not bound to do so. The language of s. 9 does not contain any indication whatsoever that persons in the employment of the government would be G excluded from the category of independent persons. These words have essentially been employed in contradistiction to representatives of employers and employees. In other words, apart from the representatives of employers and employees there should be persons who should be independent of them. It does not follow that persons in the service or employ of the government were H meant to be excluded and they cannot be regarded as independent persons vis-a-vis the representatives of the employers and empleyees. Apart from this the presence of high government officials.

'·

who may have actual working knowledge about the problems of employers and employees can afford a good deal of guidance and assistance in formulating the advice which is to be tendered under

~. 9 to the appropriate government It may be that in certain circumstances such persons who are in the service of the government may cease to have an independent character if the question arises of fixation of minimum wages in a scheduled employment in which the appropriate government is directly interested.

It would, therefore, depend upon the facts of each particular case whether the persons who have been appointed from out of the class of independent pei:sons can be regarded as independent or not. But the mere fact that they happen to be government officials or government servants will not divest them of the character of independent persons. We are not impressed with the reasoning adopted that a government official will have a bias or that he may favour the policy which the appropriate government may be inclined to adopt because when he is a member of an advisory committee or board he is expected to give an impartial and independent advice and not merely carry out what the Government may be inclinded to do. Government officials are responsible persons and it cannot be said that they are not capable of taking a detached and impartial view_

' For the reasons given above the appeals are allowed and the . judgment of the High Court is hereby set aside. As other matters E were left unecided in the writ petitions c;>ut of which these appeals have arisen the case shall go back to the High Court for disposal in accordance with Jaw. Costs shall abide the event.

V.P.S.

Appeals allowed.

STATE OF ANDHRA PRADESH

March 26, 1973

A. N. GROVER

K. K. MATHEW

A. K. MUKHERJEA, JJ.

Minimum Wages Act, 1948

s. 9

Section 9

Wages Act, 1948

s. 9

CIVIL APPELLATE JURISDICTION

P. Ram Reddy

A. V. V. Nair

M. C. Chagla

H. K. Puri

Niranjana Shah

GROVER

Andhra Pradesh High Court

s. 9

Minimum Wages Act, 1948

Section 2

Section 3

Section 5

Section 5

s. 5

Section 9

Hyderabad

s. 9

s. 9

Minimum Wages

Madhya Pradesh court

Bishan Narain

s. 9

C. A.

Vaidialingam

Bishan-Narain

s. 2(i)

Industrial Disputes Act

s. 9

Calcutta High Court

Bose

G. K. Mitter

Calcutta

Punjab

Bombay

s. 30

Government of Bombay

Madhya.Pradesh

P. V. Dixit

s. 9

Kohinoor Pictures

s. 9

Chagla

s. 9


MANAGEMENT OF TOURNAMULLA ESTATE v.

WORKMEN March 26, 1973

[A. N. GROVER, S. N. DwlVEDI AND C. A. VAIDIAL!NGAM, JJ.1

ia.bour Law-Gratuity Sclienie-Wprkmen clisn1issed for 111isconduc1- Gratui1y whethtr can be forfeitecl.

Clause ( 4) of the Scheme of gratuitty applicable to the appellant Estate provided that a dispute regarding a claim for payment c!l gratuity of a workman who had been dismissed for misconduct shall be referred to the Labour Court for decision. One of workmen of the appellant was charge-sheeted in respect of riotous and disorderly behaviour for having assaulted a tea-maker inside the factory of the appellant. A departmental enquiry was held and being found guilty of mi.sconduct he was dismissed.

As a dispute arose about the payment of gratuity the matter was referred to the Labour Court. Before the Labour Court it was not disputed that the dismissal o'f the workman was on account of .misconduct consisting of riotous and disorderly behaviour and assaulting a tea.maker: The Labour Court, relying upon the decision of this Court in State of Punjab v. Sura; Prakash Kapur, [1962] 2 S.C.R. 711 decided the question in favour of the workman. Appeal by special leave, was filed in this Court. Allowing the appeal,

HELD : According to the decision of this Court in the Delhi Cloth Mills case misconduct could be of three kinds, (I) technical misconduct which leaves no trial of indiscipline; (2) mis.conduct resulting in damage to the employer's property which might be compensated by forfei ture of gratuity or a part thereof, and ( 3) serious misconduct such a• acts of violence against the management or other employees or disorderly behaviour in or near the place of the employmen4 which though not directly causing damage is conJucive to. grave indiscipline.

The first should involve no forfeiture, the second may involve forfeiture of an amount equal to the loss directly suffered by the employer in consequence of the misconduct, and the third will entail forfeiture of the gratuity payable to the workman.

In other words, according to this deci5ion, if a workman is guilty of a serious misconduct of the third category, then his gratuity can be forfeited in its entirety. [7640]

The decision in the Delhi Cloth Mills as applicable to the facts af the present case and the appeal must accordingly be allowed.

Dtl/Ii Cloth & General Mi!ls Co. Ltd. v. Workmen and Others, etr:. [1969) 2 S.C.R. 307, referred to.

(ii) The contention that the Labour Court did not apply its mind to the nature and degree c!f the misconduct committed and therefore the matter should be remitted to that court for decision iri accordance with

Jaw, could not be accepted because the facts were not in dispute before H the Labour Court. (7650]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 698 of 1968. '

TOURNAMULLA ESTATE v. WORKMEN (Gro11er, J,) 763

A Appeal by special leave from the Award dated August I 0. 1'967 of the Labour Court, (Kerala State), Quilon, Camp Dt Calicut, in Industrial Dispute No. 70 of 1965 published in the Kerala Govt. Gazette No. 39 dated 3-10-67.

G. B. Pai, Bhuvanesh Kumari and O. C. Mathur, for the appe]. lant.

B A. S. Nambiyar, for the resJ)Ondent.

The Judgment of the Court was delivered by

GROVER, J.-This is an appeal by special leave from an award of th~ Labour Court, Quilon (Kerala State) The point before us is simple. The workman concerned was charge-sheeted in respect of riotous and disorderly behaviour for having assaulted a tea maker Shri U. M. Abdul Kadar on May 29, 1965, inside the factory. A departmental enquiry was held wherein, it is said, he was given every opportunity to fully participate. He was found guilty of misconduct by the domestic tribunal and was accordingly dismissed. There was a scheme of gratuity in force, which was and is not challenged by the respondent. Clause 4 of that scheme, which is called "Terms of Agreement", provides that if a dispute arises regarding. a laim for l'l':Y

ment of gratuity of a workman who has been d1sm1ssed for misconduct, such a dispute shall be referred to the labour court having jurisdiction, for decision. As a dispute arose with regard to the payment of gratuity, the matter was referred to the Labour court. Before that court, in the statement of case submitted by the Secretary of the Malabar Estate Workers' Union, it was stated in clause ( c) as follows :

"The worker was not paid gratuity on. dismissal, in spite of making a request for the same. There is a gratuity scheme applicable to this estate and p.s. per the terms of the scheme if a dispute arises regarding the payment of gratuity to a dismissed workman, the same is left open to be decided by this Court. The allegations of misconduct levelled against the worker in this case cannot be considered to be one which by its nature disentitles the worker_ to claim gratuity.

Even if the allegation is true the same! does not involve any question of moral turpitude or cause any financial loss to the company. Any allegations of misconduct do not impose

(sic) disentitle the workmen for gratuity. Hence in this particular case it is submitted that the worker is entitled for gratuity as claimed. The worker has put in 18 years of service and as such he is entitled to get at the rate of 15 days wages based on last draw wage rate for every completed years of service."

SUPREME COURT REPORTS [l 973] 3 S.C.R.

In reply, which was filed by the management, the facts which have been set out above and the circumstances in which the dismissal was directed, were fully given.

Before the Labour court, there seems to have been no dispute whatsoever that the dismissal of the respondent workman was on account of misconduct consisting of behaving in a riotous and disorderly manner and having assaulted a tea maker (supervisor). . The Labour court, however, referred to the judgment of this Court in State of Punjab v. Suraj Parkash Kapur, etc.(') in which the general argument was not accepted that in all cases where services of an employee are tenninated for misconduct, gratuity should not be paid to him. However, this Coiirt has had occasion to considerilf detail the various circumstances in which gratuity ":would tfe"liable to forfeiture for misconduct of a particular nature. It was laid down in t>elhi

Cloth & General Mills Co., Ltd., v. Workmen and Others, etc.(') that the object of Jiaving a gratuity scheme is to provide a retiring benefit to workmen who have rendered long and unblemished service to the employer and thereby contributed to the prosperity of the employer, and it is, therefore,. not correct to say . that no misconduct however grave, may not be visited with forfeiture of gratuity. Miseonduct could be of three kinds, ( 1) technical misconduct which 'leaves no trail of indiscipline,

(2) misconduct resulting in damage t!> the employer's property which might be compensated by forfeiture of gratuity or part thereof, and ( 3) serious misconduct such as acts of violence against the management or other employees or riotous or disorderly behaviour in or near the place of employment, which, though not direct}y causing damage, is conducive to grave indiscipline. The first should in volve no fol!feiture, the second may involve forfeiture of the amount equal to the loss directly suffered by the employer in consequence of the misconduct and the third will entail forfeiture of gratuity due to the workman. In other words, according to this decision, if a workman is guilty of a , serious misconduct of the third category, then, his gratuity can be forfeited in its entirety.

In yet another case in Remington Rand of India Ltd. v. The Workmen,(') one of the questions was whether a provision can be made in a gratuity scheme that if the misconduct is a gross one, involving violence, riotous behaviour, etc., the qualifying period should be limited to fifteen years of continuous service. The earlier decision in Delhi Cloth and General Mills Ltd., was dis' . cussed and reference was made to it. The Court expressed agreement with the decision in the earlier case that matters which had impact on the discipline and the working of the concern, require a different treatment in the matter of forfeiture of gratuity. It is

TOURNAMULLA ESTATE v. WORKMEN (Grover, J.) 765

significant that ins. 4(6)(b) of the Payment of Gratuity Act, it has been provided as follows : .

"the gratuity payable to an employee shall be wholly forfeited-( i) if the services of such employee have been terminated for his riotous or disorderly .conduct or any other act of violence on his part, . . . . " Although the provisions of this statute would not g0vern the decision of the present case, the importance of the enactment lies in the fact that the principle which was laid down in the Delhi C/Oth Mills case with regard to forfeiture of gratuity in the event of commission of gross misconduct of the nature .mentioned above, has been incorporated in the statute itself. Even otherwise,. such a rule is conducive to industrial hannony and is in consonance with public policy. ·

Learned counsel for the respondents has not been able to show how the rule laid down in the Delhi Cloth Mills case would not be applicable if the concerned workman was guilty of the kind of D misconduct mentioned above. His sole contention has been that the Labour court did not apply its mind to the nature and degree of the disconduct committed, and, therefore, the matter should be i-ernitted to that court for a decision in accordance. with law. In our opinion, it is not necessary to send the matter to the labour court, because the .facts were no_t in dispute before it.

E For the reasons given above, the appeal is allowed and the award of the Labour Court is set aside. Jt is hereby declared that the concerned workman will not be. entitled to .the gratuity earned by him. The respondents will be entitled to costs in view of the order already made by this Court on February 1, 1968. ·

G.C.

Appeal allowed.

MANAGEMENT OF TOURNAMULLA ESTATE

WORKMEN

A. N. GROVER

Prakash Kapur

[1962] 2 S.C.R. 711

Delhi Cloth Mills

[1969) 2 S.C.R. 307

CIVIL APPELLATE JURISDICTION

G. B. Pai

Bhuvanesh Kumari

O. C. Mathur

B A. S. Nambiyar

GROVER

U. M. Abdul Kadar

May 29, 1965

Clause 4

Malabar Estate Workers' Union

Delhi Cloth and General Mills Ltd.

Payment of Gratuity Act

February 1, 1968


FATIMA BI & ANR. v.

DEPUTY CUSTODIAN GENERAL EVACUEE PROPERTY.

NEW DELHI March 27, 1973

[A. N. RAY, D. G. PALEKAR AND M. H. BEG, JJ.]

Ad111inistra1iorl of Evacuee Property Act, 1950, Sections 2(b), 2(c), 6(2), 7A. 27 and 28-0rder of Assistant Cust.odian declaring appellant 11on-evact1e<·-Rel'1°sion of order by Dy. Custodian General on ground of fraud and illea/it}'-Ortler.r ,\ought to be revised whetler final under Section 28-Fresh Proceedi11J(s whether barred under section 1A or under Section 21-0rder of Dy.

Custodic .. n General held valiJly 1nade- Ccrtiorari wi!I not lie.

The first appellant (the wife of the second appellant) alleged that she \Vas the owner of certain property at Delhi.

By an ex .. parte order LlatcJ 25-11~1953, th!! Asstt. Custodian declared her as an evacuee and her property to be evacuee property.

On appea1, the ex .. parte order was set aside and the Asstt. Custodian was directed to decide on merits the appellant's case.

By an order dated I J.1-1956 the Asst!. Custodian held that the first appellant was non-evacuee owner of the property.

On 29-4-1964, a notice u/s. 27 of the Act was issued to the first appellant to 'sho\v cause \vhy the order dated ll-1·56 should not be revised. The grounds for the notice were (i) that the first appellant .had left for Pakistan in 1947, and it was fraudulently averred that she was a non--evacuee and was residing at Calcutta with the second appellant; and (ii) that in order to establish the first appellant's non-ev.acuee status, as well as to secure the release of the property, forged documents and perjured evidence were tendered before the Asstt. Custodian.

The first appellant applied for cancellatiort of the show cause notice.

On t-2-1965, the Dy. Custodian General rejected the objections of the first appellant and authorised

th~ Dy. Custodian to expedite recording of evidence and submiion of report.

The appellant filed .a \Vrit petition in the High Court for quashing the two orders dated 29-4-1964 and 1-2-1965 contending (i) that the order dated ll 1-56 had become final by virtue of Sec. 28 of the Act and it could not be re-opened; (ii) that fresh proceedings were barred under section 7A of the Act; and (iii) that the proc;!Cdings u/s. 27 of the Act v.'cre barred by limitation. The High Court rejected these contentions n.rrd dismissed the writ petition.

On appeal by special leave to this Court, dismissing the appeal.

HELD: (i) The order dated 11-1·56 was not final and it could be re-opened. The power. of revision u/s. 27 was not taken away by s. 2s of the Act.

[768E]

(ii) Sec. 7 A of the Act did not constitute a bar to the issue of notice u/s. 27. The bar in Sec. 7A is that no property shall be declared to be cvac?ee property n or afte~ 7-5-54. The proviso to Sec. ,7A is that not!'mg contaied m the secon shall apply to any property in respect of which proceedJJlgs are pending on 7-5-54.

When the •xparle order

lated 25-11-53 was set aside. the High Court held that. the proceedings m respect of the P.roperty were pending on 7-5-54 and that is how an order was passed on 11-1-56 in. favour of the first appellant.

[768F-GJ

(iii) The power u/s. 27 of the Act is not curtailed by any limitation of time. l768G-H]

(iv) The order dated 29-4-1964 was validly made by the Custodian General.

The relevant authorities have power to call for the record of any proceedings in which any Custodian has passed an order for the purposes of s9tisfying as to the legality or propriety of such an order. Sine.: the order has n questioned by the authorities on the $f0Und tht the. first appellant obtained the order fau<lulently, _and fraud 1s a qesuon ol fact it is open to the first appellant to establish that she obta1ne<l the

ordr properly.

Certiorari will not He as the authorities have jurisdiction to issue the notice. (7690-E]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1279 of 1970.

Appeal by special leave from the judgment and order dated November 21, 1969 of the Delhi High Court at New Delhi, in L.P.A. No. 101-D/66.

S. K. Mehta, A. N. Aurora, K. R. Nagaraja and M. Qamr11ddi11, for the appellants.

P. Parameshwara Rao and S. P. Nayar for Respondent No.

N. C. Sikri, for Respondent No. 2.

The Judgment of the Court was delivered by

RAY, J.

This is an appeal by special leave against the judgment dated 21 November, 1969 of the Delhi High Court disinissing the writ petition of the appellants.

The appellants made an application under Article 226 of the Constitution in the Delhi High Court. The appellants asked for quashing two orders dated 29 April, 1964 and 1 February, 1965.

On 29 April, 1964 the Deputy Custodian General issued a notice to the appellant Fatima Bi to show cause why the order dated 11 January, 1956 should not be revised as the same was obtained by fraud and was illegal. The appellant Fatima Bi made am application for cancelling the notice requiring her to show cause.

On I February, 1965 the Deputy Custodian General passed arr order rejecting the objections of the appellant Fatima Bi. By thesd order dated 1 February, 1965 the authorised Deputy Custodian was asked to expedite recording of evidence and submissiorr of repoi:.t.

The appellant Fatima Bi. is the wife of the appellant Mohd.

Sayeed. The appellant Fatima Bi's case is that she is the owner of certain property at Delhi. By an ex-parte order dated 25 November, 1953 the Assistant Custodian declared her as evacuee

an~ her property to be evacuee property. She filed an appeal agamst the ex-parte order.

The ex-parte order was set aside. The Assistant Custodian was required to decide on merits the appellant

SUPREME COURT REPORTS [1973] 3 s.c.R.

Fatima }3i's case. By an order dated 11 Janul!ry, 1956 the A .Assistant Custodian held that the appellant Fatima Bi was a non- evacuee owner of the property. On ~9 April, 1964 a notice under section 27 of the Administration of evacuee Property Act, 1950 ·(hereinafter referred to as the Act) was issued to show cause why the order dated 11 January 1956 should not be revised. The gtounds for the notice were that the appellant Fatima Bi had left B for Pakistan in 1947, and it was fraudulently averred that she was a non-evacuee and was residing at Calcutta with the appellant Mohd. Sayeed. The other ground alleged in the notice was that in order to establish the appellant Fatima Bi's non-evacuee status as well as to secure the release .of the property forged documents and perjured evidence was tendered before the Ar.sistant Cus c todian.

The appellants raised three contentions in the High Court.

First, that the order dated 11 January, 1956 had become final and could not be re-opened, by virtue of section 28 of the Act. ' Second, fresh proceedings were barred under section 7-A of the Act.

Third, the proceedings under section 27 of the Act were D barred by limitation. . ..

The High Court held that the order dated 11 January, 1956 .

Was not final and it could be re-opened. Section 28 ofthe Act was held by the High Court not to be a bar to the powers of revi- sion under section 27 of the Act. Section 28 makes orders final save as otherwise expressly provided in Chapter V. Sec.lions E '27 and 28 both occur in Chapter V. Therefore, the High Court rightly held that the power of revision under section 27 was not taken away by section 28 of the Act.

The High Court also held that section 7-A of the Act did not constitute a bar to the issue of notice. under section 27. The bar in section 7-A is that no property shall be declared to be evacuee l' property on or after 7 May, 1954. The proviso to section 7-A is that nothing contained in the section shall apply to any property in respect of which proceedings are pending on 7 May, 1954.

When the ex-parte order dated 25 November, 1953 was set aside the High Court held that the proceedings ht respect of the property were pending on 7 May, 1954 and that is how an order was G passed on 11 January 1956 in favour of the appellant Fatima Bi.

The High Court also held that the notice under section 27 of the Act was issued several years after 11 January, 1956 order had been passed but the power under section 27 of the Act was not curtailed by any limitation of time.

Counsel on behalf of the appellants repeated the contentions H which had been advanced in the High Court. The High Court rightly rejected the appellants' contentions.

An_additional contention .was advanced, viz., that the order dated 29 April, 1964 was not passed by the Cuodian General.

The Custodian General is defined in section 2(b) of the Act to mean the Custodian General of Evacuee Property in India appointed by the Central Government under section 5 of the Act.

Section 2 ( c) defines 'Custodian' to mean the Custodian for the State and includes any Additional, Deputy or Assistant Custodian of evacuee property appointed in that State. Section 6(2) of the Act states that subject to the provisions of the Act all Custodians, Additional, Deputy and Assistant Custodian of evacuee property shall discharge the duties imposed on them by or under this Act under the general superintendence and control of the Custodian, General. The order dated 29 April, 1964 was validly made for Custodian General.

The petition of the appellants was utterly misconceived. The relevant authorities have power to call for the record of any proceeding in which any Custodian has passed an order for the pur- D , pose of satisfying as to the legality or propriety of such order. In the present case the order h<\S been questioned by the authorities on the ground that the appellant Fatima Bi obtained the order fraudulently.

Fraud is a question of fact.

It is open to the appellant Fatima Bi to establish that she obtained the order properlv, Certiorari will not lie for the ohlvious reason that the E authorities have jurisdiction to issue the notice. There is neither excess of jurisdiction nor usurpation.

It was said on behalf of the appellants that the order of 1956 was called in question in 1964. _Several years have passed. The relevant authorities will take steps to expedite the hearing In the matter.

For these reasons, the appeal is dismissed. Each party will pay and bear their own costs.

SRW.

Appeal dismissed,

FATIMA BI & ANR

DEPUTY CUSTODIAN GENERAL EVACUEE PROPERTY, NEW DELHI

A. N. RAY

D. G. PALEKAR

M. H. BEG, JJ.

Evacuee Property Act, 1950

Sections 2(b), 2(c), 6(2), 7A

Section 28

section 1A

Section 21

s. 27

Pakistan

Calcutta

Sec. 28

section 7A

s. 27

s. 27

s. 2

Sec. 7

s. 27

Sec. 7A

s. 27

S. K. Mehta

A. N. Aurora

K. R. Nagaraja

M. Qamr11ddi11

P. Parameshwara Rao

S. P. Nayar

N. C. Sikri

RAY

Article 226

Fatima Bi

Mohd.

Sayeed

section 27

Mohd. Sayeed

11 January, 1956

section 28

section 7

section 27

Section 28

section 27

Section 28

section 27

section 28

section 7

section 27

section 7

7 May, 1954

section 7

section 27

section 27

29 April, 1964

section 2(b)

section 5

Section 2

Section 6(2)


STATE OF MYSORE & ANR. v.

K. G. JAGANNATH March 27, 1973

(A. ALAGIRISWAMI AND C. A. VAIDIALINGAM, JJ.]

/'.lysore Motor Vehicle Rules, 1963, r. 116(1)-Power to fix 111i11i111t1n1 .seating capacity in a vublic service i:ehicle-lf valid.

Rule 216(2) of the Mysore Motor Vehicle Rules, 1963, provides for the fixation of minimum seating capacity of a public service vehicle.

Under a permit granted to hin1 the respondent was running a bus with a seating capacity of 30.

He wanted to rCplace the bus with a new one and applied for permission to alter t'he seating capacity of the new bus from 40 to 30, but, the permission was refused.

In a petition tor the issue of a Vr'rit of 111andamus, the High Court struck down the rule and directed the Regional Transport Officer to grant the necessary permission.

Allowing the appeal to this Court, HELD: (i) The power conferred by s. 70 of the Act is wide enough to enable the making of the impugned rule.

The validity of the rule has to be considered not merely from the . poi:nt of view of the effect it ha.5 on the particular individual like the respondent but from the point of .view of the generality of the motor vehicle operators as welt as the public.

There is no reason for not accepting the statement made on behalf of the State that passenger traffic on every route in the State had increased considerably, that generally it was found that stage carriage operators were carrying passengers in excess o'f the seating capacity specified in the registration certificate and the permit to the seripus incon~ venience and discomfort of the travelling public

, in additiqo to causing loss of revenue to the State, and that it was with a view to eliminate such evils that the impugned rule had been framed. Jt is true that fhc state has necessary machinery to check such contravention, but it cannot always succeed in doing so.

[774D; 775D; 776B-D]

(2) There is no -difficulty in getting the pern1it amended in order to -allow for the increased capacity, because. under Rule 131. the procedure for replacing any vehicle covered hv a permit by a vehicle of a ditf.erent type or of a different capacity is made simple.

1775B-C]

(3) The tax on a bus with a minimum capacity of 40 is more than the tax on a bus with a minimum capacity of 30; but there is no basis for the contention that the ru1e is intended to secure more revenue indirectly; because, the State can do it directly by increasing the rate of tax.

!776A-B]

( 4) The High Court erred in holding that any regulation rel!.arding the minimum number, being uncommon has to be specially defended.

The High Court also erred in ho1din~ that the State had not taken into

account the prevailin~ conditions in the country with regard to the manufacture and availability of bus chassis.

When a certain chassis is capable o'f havin~ a body constn1cted on it so that it can carrv a certain number of passengers to construct a lesser number of seats is waste of \'aluahle transportation facility.

[774E-F; 776D-FJ

(5) Stage carriage operators, exclusively in cities and towns, form a class by themselves and the exemntion in their case has a direct relation to the objectil'es sought to be achieved. Therefore, there is no question

of anv arbitrary -or excessive invnsion of the respondent's rights. The rule iS o:ic of &eneral app'icatiofl' in the interest of the general travelling passengers.

[776F-G] CIVIL APPELLATE JURISDICTION : Civil Appeal No. 141 of 1972.

Appeal by special leave from. the judgment and orde~ date~ April 15, 197 l of the Mysore High Court at Bangalore m Wnt Petition No. 5109 of 1970.

H. B. Datar, and R. B. Datar, for the appellants.

M. C. Setalvad and K. N. Bhatt, for the respondent.

The Judgment of the Court was devlivered by

 ALAGIRISWAMI, J.

This is an appeal against the judgment ot the High Court of Mysore striking down Rule 216(2) of the Mysore Motor Vehicles Rules, 1963, introduced on 7th October, 1969, on the ground that it violates Article 19( l )(g) of the.

Constitution.

The respondent, who is a transport operator plying buses between Doddaballapur and Tumkur, wanted to replace one of his buses running on that route with a new one.

Under the permit granted to him, which was valid up to 30-10-1975, his bus had a seating capacity of 30.

On 2-11-1970 he applied to the Regional Transport Officer, Bangalore Region, for prnnission to alter the seating capacity of the new bm, which he had acquired. from 40 to 30. This application having been ejected he filed a

petition fori ssue of a writ of Mandamus directing the Regional Transport Officer to grant the necessary permission, and that petition having been allowed the State of Mysore has come on appeal to this Court by special !eave.

The contention of the operator was that the impugned ruk which fixed the minimum seating capacity of buses is really intended indirectly to compel the operators to pay more taxes. that he is already operating on a narrow margin of profit and if he ;,; compelled to increase the number of scats in his. bus he would incur losses because of the additional tax which.he will have to pay and this is an interference with his right to carry on his business.

According to the State the impugned Rule was intended to eliminate the evil of stage-carriage operators carrying passengers in excess of the seating capacitv specified in the regislrution cerlificate and the permit, to the serious inconvenience and discomfort of the travelling public, in addition to causing loss of revenue to the State. There is no dispute that the bus hi question can have a seating capacity of 40.

The impugned Rule, in so far as it is relevant, reads as follows

"216 (1) ................... .

(2) The minimum seating capacity of a Public Service vehicle shall be directly proportionate to the wheel base of the vehicle. In all Public Service vehicles other than motor cabs the minimum number of seats to be provided shall be as sp_ecified in column (2) of the Table below :

Provided that the operator may increase the capacity cone

sistent with the other rules rlating to seating capacity and with due regard to the type of the chassis on which the body is fitted :

Wheel base

(1)

2S4 to 293 cm.

294 to 305 cm.

306 to 343 cm.

344 to 407 <in.

408 to 432 cm.

433 to 496 cm.

497 to 534 cm.

above 535 cm

TABLE

No. of seats (Mini n1um seating capa

city)

(2)

(3) Nothing in sub-rule (2) shall apply to,-

(i) stage carriages proposed to be operated exclusively in towns and cities; and

(ii) stage carriages registered prior to the coming into force of the Mysore Motor Vehicles (V Amendment) Rules, 1969 :

Provided that when the body of a stage carriage specified in item (ii) is reconstructed, the seats shall be so arranged as to face the front .and maximum number of.seats to the satisfaction of the Registering Autho

rity, shall be provid~."

It is agreed by both the parties that there are only four manufacturers of bus chassis in the cotry '\Vith wheel bases and number

of seats as given below :

Section 70 of the Motor Vehicles Act enables rul~ to be made regulating the construction, equipment and maintenance of motor vehicles. In addition there is power to make rules regarding the seating arrangements in public service vehicles. Under section 48 ( 3) of. the Act there is provision for fixing the maximum number of passengers that may be carried on , any specified vehicle or on any vehicle of a specified type. One of the conditions that may be attached to a permit under clause (xx) of that section is that the conditions of the permit shall not be departed from, save with the approval of the Regional Transport Authority. Under

section 60 of the Act a permit may be cancelled or suspended if the holder of the permit uses or causes or allows a vehicle to be used in any manner not authorised by the pennit. Under section 123 whoever drives a motor vehicfe or causes or allows a motor vehicle to be used in contravention , of any conditions of a permit in regard to the maximum number of passengers that may be carried on the vehicle is also liable to punishment with a fiiie which .may extend to one thousand rupees for the first offence and imprisonment that may extend to six months or with fine which may extend to two thousand rupees, or with both for subsequent offences. Under Rule 137 of the Mysore Motor Vehicles Rules any of the conditions of the permit (which naturally includes

the condition regarding the maximum number of passengers that might be carried) can hie varied only alter followil!g the prescribed procedure. In view of these circumstances it is contended on behalf of the respondents that it is not possible for the transport operator to overload his buses in contravention of the conditions of his permit and that that cannot be a reason for fixing a minimum number of seats in a bus, It is also argued that while there is a specific section which enables the maximum number of passengers that can be carried on a biJs to be prescribed, there is no such power to prescribe the minimum number of passengers that can be carried in a bus.

It must be made .clear that all that is insist~ upon under the impugned Rule is the minimum number of seats to be provided in the bus. It has been urged on behalf of the State that the intention behind provic; ling buses with bigger bodies with lesser number of seats than they can be provided with is really intended to carry a larger number of passengers and pay a lesser tax.

Though it is true that the State has the necessary machinery to check such contravention it cannot always succeed in doing so.

However, we do not consider that the mere possibility of such overloading can justify the making of the impugned rule. It has been urged on behalf of the State that the demand for transport has been rising by leaps and bounds every year, whereas on behalf of the respondent it has been contended that the average number of passengers carried in his bus on this route is about 25.

The great demand for transport and the rush for seats in buses is too well-known to need emphasis. It appears to us that when a certain chassis is capable of having a body constructed on it so that it can carry a certain number of passengers, to construct on tliat body a lesser number of seats is a waste of valuable transportation facility.

Even on this route there are 14 buses plying between the two points 'in addition to longer distance buses, of which the stage between Doddaballapur and Tumkur forms a section. So it cannot be said that the demand here is as little as is urged on behalf of the respondent. There is no reason to disbelieve the' averment made on behalf of the State on this point.

The difference in taxation between a bus which carries 30 passengers and a bus carrying 40 passengers is about Rs. 400/ -

per quarter or Rs. 1600/· per year whereas the difference is Rs. 225 /- per quarter between a bus carrying 30 and one carrying 35 passengers. That is because only five standing passengers are allowed in a bus with a carrying capacity of 30 and 10 stand ing passengers are allowed in a bus with a carrying capacity of an!I above. The tax payable in respect of standing p11$sengers ts Rs. 10 per quarter. The tax payable under the Mysore Motor

MYSOll v. K, G. JAGANNATH (A/agiriswami, J,) 715

Vohicles (Taxation on Passengers and Goods) Act, 1961 need not detain us for long because under that Act the operator is enabled to pass on the tax to the passengers.

The difficulty mentioned on behalf of the respondent about the need to get the permit amended in order to allow for the in creased capacity im)l95Cd by Rule 13 7 and provision of section 48 (3 )(xxi) regarding the v?fiation of the conditions of the permit need not detain us for long because under the new section 59(2), as amended by Act 56 of 1969, the holder of a permit may, with the permission of the authority by \_Vhich the permit was granted replace any vohicle covered by the permit by any other vehicle of the same nature. Under Rule 13.1 the prncedure

for replacing any vehicle covered by a permit by a vehicle of a different type or of 'a differen~ capacity is also µiade clearly very simple and where it is of the same type or capacity the variation has to be granted within a week. We are also of opinion that the power conferred by section 70 of the Act is wide enough to enable the making of the impugned Rule.

The validity of the Rule at present has to be considered not merely from the point of view of the effect it has on a particular individual like the respondent. It has to be looked at from the point of view of the generality of the motor vehicles oper.ators as well as the public.

We have shown . above that the vehicles with the minimum capacity available in this country can carry 35 passengers and if, as is alleged by the respondent, the averai:e number of passengers in buses over this route is only 25, the proper thing to do in due course is to reduce the number of vehicles plying on this route. Otherwise, it would mean unnecessary waste of valuable transport space and facility.

Buses so released could be used elsewhere to much greater advantage to the travelling public. There :ire many areas and many routes crying for transport facilities and they would be better served. We arc unable to place any weight on the basis of an argument which affects one or two individuals, where by insisting upon this provision of a minimum seating capacity the larger public interest m be served. If it causes some inconvenience to a few individuals like the respondent they have got to face the situation. It appears from the additional affidavit filed by the petitioner (respondent herein) that he has got four buses running between Doddaballapur and Tumkur.

If it is found that the average number of passengers only 25, the proper thing to do would be for him to cut down his buses on this route from four to three.

In that case there can be no question of his suffering any losses or his being affected in any way in the matter of his carrying on his business.

Though it is not in evidence it may be presumed that the cost of operation of a bus whether it is provided with 30 or 40 seats

may not be very much different and there will be the additional facility available to the public if the bus has more seats. Moreover, as traffic grows, as it has a tendency to grow everywhere, the public will be better served. . We are 'unable to accept the contention that the Rule providing for minimum number of seats is intended. to secure more revenue indirectly. The State can do it directly by increasing the rate of tax .

It is really a rule intended for the benefit of the travelling public.

We see no re; ison not to accept the statement made on behalf of the State that the passenger traffic on every i:oute in the State has increased by leaps and oounds, that generally it was found that the stage carriage operators were carrying passengers in excess of the seating capacity specified jo the Registration Certificate and the permit to the serious inconvenience and discomfort of the iravelling public in addition to causing loss of revenue to the State, and it was with a view to eliminate the above evils that the impugned Rule has been framed.

We are unable to agree with the High Court that as usually there are only replations regarding the maximum number of seats, any regulation regarding the minimum. number of seats being very uncommon has to be specially defended. We have shown above that the regulation is really in the interest of the general travelling public.

Nor are we able to agree with the High Court that the State has not taken into account the prevailing conditions in the country with regard tc;> the manufacture and availabality of bus chassis.

The minimum number of seats insisted upon defends upon the chassis.

In this very case itself as we have seen the respondent really wants to provide 30 seats in the chassis which can provide 40 seats. It is not necessary to say anything regarding the luxury buses which were considered by the High Court because that matter was not argued before us.

Apparently the State has decided to make the necessary provision in this regard.

Stage carriage operators exclusively in cities and towns form a class by themselves and the exemption in their case has a direct relation to the dbjective sought to be achieved.

There is no question here of any arbitrary or excessive invasion of the respondent's rights.

The Rule is one of general application which can be justified as being in the interest of the generat travelling public.

The appeal is, therefore. allowed and the order of the Mysore High Court is set aside.

The respondent will pay the appellants' costs.

V.P.S.

Appeal al/owtd.

L761Sup.(C!)/73-2S00--4·9-74-GIPF.

STATE OF MYSORE & ANR

K. G. JAGANNATH

March 27, 1973

A. ALAGIRISWAMI

Motor Vehicle Rules, 1963

Mysore Motor Vehicle Rules, 1963

s. 70

H. B. Datar

R. B. Datar

M. C. Setalvad

K. N. Bhatt

ALAGIRISWAMI

Mysore Motor Vehicles Rules, 1963

Article 19( l )(g)

Doddaballapur

Tumkur

Bangalore Region

State of Mysore

Section 70

Motor Vehicles Act

section 48

section 60

section 123

section 48

section 59(2)

section 70

Mysore High Court


BISHAMBAR NATH AND OTHERS

TIJE AGRA NAGAR MAHAP ALlKA AGRA AND ANO; HER

March 28, 1973 ·

[J. M. $HELAT, ACTING C.J., 5. N. DWIVEDI AND B .

Y. V. CHANDRACHUD, JJ.] .

u.P. Municipalities Act, Sec. 244, "An article of food or drink apptars to be intended for tire conswnptio1r of man,"-Un{it condition ._ fl/ foodstuff i~ to e determine~ by . an objccthe test and not 011

subjective salls/actlOii of the mspectmg o[Jicer-Whethl!r the order re gu/ating sale of alia for animal consumplioli a/id undu Sec. 244.

The appellant purchased certain quantity of wheat flour from the

~Jilitary Dairy Farm, Agra. which was declared unfit for human consumption. He exposed it for sale with a sign-board that the wheat flour

11'015 uniit for human consumption.

The appellant wanted to sell it for lchi or for manure or for animal consumption.

On complaint by the second respondent, the District l\(agistrate, Agra, passed an order pro- D hibiting the sale umler section 144 of the Cr. P.C. The appellant was

also prosecuted under U.P. Prevention of Food Adulteration Act, but was acquitted: The appellant applied to the Corporation for permission to sell the wheat flour.

On September !7, !945, Respondent No. 1 passed

n order under section 44 of the U.P. Municipalities Act permitting the disposal of the flour under certain conditions.

On representation made lty the appellant, Respondent No. 1 passed a second order on October_ 8,

19~5. intr alia, directing that tile flour should not be sld for fedm~ E aJJ~J is kept for dairy purposes. The appellant filed. a sm.t fo: damage,

az; r?>t the respondents for stopping the sale and for IIDJ?OSID,!l' illegal restnctJo:JS elfcc:tively preventing the s:J!e, resulting in dctenorattn of tc nour and Ia<..~ of profit,.

The trial court • decreed . the swt but tnc All;, habad High Court set it aside.

On app.:al to th1s Court, the ques 1'0:1 for consideration wa5 whether the order purported to be passcJ by ropondt:llt no. 1 under section 2-U was a valid order, and whether res- •. PoJL!ent No. 1 was liable to pay damages.

1. HElD~ The phrase, "an article of foou or drink appeas t!-> ba:~= f~d fo• conumption of man," does not conteptate subJt'C{;~~ 5ellcr ,11ct1011 of the inspecting officer :u held by t.he Htgll Court: Hi~ in-

~tulrJ i.nll:nJ tn sell nn article of food for human consun;;~iJence as a

r~,.'on It <in ohjective fact which shoulJ. be pro~ ny,; ucis intent.kd fc>t {; hu,; nJble rn:.n will believe that lh>! -:rt, de of f ' 111 40 con\lllnption. (781 11 . f huntan conumption. It ~Iron 244(1) contempbte' a direct safe •'fIJ indirect sal~ for hum not contemplate, a~ the I ligh Court ha~ ~~ t' th~ nour is sold for ftc,/0 conumption. The Ili!:h Court hdd t_ 1 n it would be a sale for

1h~ OJih.:h animal~ or animal'S whoe lles~JS ntt\; r;:nd prevention or

lle roman consumptio:1.

The legilature \. 1 J by sub-section ( 1) 0

St<: , or con\umption of animal~ to be regu a.: .

'-44. f7BIHJ

, ~~~ ppeal was partly ·· l1sl snmg the quantum

P. CIJ73

aii.Jwed and remanded 0 ( Jamagi:S.

to the High Court for

,· .... ,..-·

I I J

SUPREME COURT REPORTS

[1973] 3 S.C, R.

CIVIL APPELLATE JURISDICTION : . Civil Appeal No. 1809 of

J 967.

Appeal by certificate from the judgment and decree dated May 25, 1962 of the Allahabad High Court in Appeal No. 328 of 1950.

C. K. Daphtary and Rameshwar Nath, for the appellants.

R. N. Sharma and C. P. Lal, for the respondn<ts.

The Judgment of the Court was delivered by

DWIVEDI, J.-The appellants instituted a suit against the res~ pondents for recovery of Rs. 34,000 as damages.

The suit wus grounded on tortious liabtility. The trial coun decreed the suit, but the High, Court of Allahabad reversed the decree and dismissed the suit. The present appeal is directed against the decree of the High Court.

The appellants are the partners of the firm Shiam Lal Radhey Lal. The first respondent is the Agra Mahapalika; the second respondent is the Health Officer of the Mahapalika. The Military Dairy Farm at Agra was in possession of a certain quantity of wheat flour.

It was declared unfit for human consumption .. It was purchased for the firm.

According to the appellants, it was fit for being used as lehi, manure and ratab for consumption by animals. Broadly stated, their case was that the respondents initially stopped them from selling the flour and subsequently im~ posed restriction on its sale, "which effectively prevented the sale." Loss was cause to them on account of delay in sale due to their intervention.

The respondents denied their liability. They said that their action was bona fide and in the interest of public safety and health and in pursuance of the directions given by the magistrate. According to themt the appellants took no steps to prevent the sale of flour for hl, Iman consumption.

The two central issues are : ( i) whether the respondents are liable to pay damages in the circumstances of the case; and (2) if so, what is tiJ8. quantum of their liability. On the first issue the High Court has held that the respondents are not liable at alt.

On the second issue the High Court has given no finding.

The appeHM!s started selling the flour from March 20, 1945.

On May 17, f945, the second respondent reported to the Administrator of the Nagarpalika that the flour was in a decomposed and deteriorated condition and was unfit for human consumption. He admitted in the report that the firm of the appellants "has set up a placard to say it (flour) is condemned atta and unfit for consumotion." The Nagarpalika reported the matter to the District

BISHAMBAR NATH v.· AGRA NAGAR MAHAPALIKA (Dwivedi, J.) 779

Magistrate, Agra. On July 26, 1945 an order was issued under s. 144 Cr. P. C. prohibiting the appellants from selling the flour for one month. This order was extended till September 20, 1945 by another order, dated September 18, 1945.

The appellants were prosecuted for offences under ss. 4 and 14 of the U.P. Prevention of Adulteration Act and s. 273 I.P.C, . The flour was

seized by the order of the magistrate ru1d kept in the custody of the appellants until further orders. the magistrate acquitted the appellants on September 5, 1945. In the operative portion of the judgment he gave this direction : "Since this Atta is noxious to public health and it is not possible to prevent its reaching consumers (even though the accused had best intention) without effective regulation 1 order that the entire Atta still be taken possession oi by the Municipal medical officer of Health who will kindly regulate its disposal in consonance with considerations to the owner as is necessry to prevent its being used as food. The Atta has already been kept frozen for too long a time and I would request the medical officer to kindly expedite action in this. Copy , of this order may be sent to medical officer of Health immediately."

On September 17, 1945 the second respondent issued an order under s. 244 of the U.P. Municipalities Act. The order was with respect to 2048 bags of Atta seized by the magistrate in connection with the crimmal case. The order permitted the appellants to dispose of the ftour subject to the following conditions, : ( 1) they E should engage a salesman approved by the second respondent to sell the Atta; (2) they should keep -a separate stock book and sales-book in respect of the Atta. In the sales book the nan1.es

and addresses of all buyers should be mentioned. There should be a column for the signature of the buyers; (3) the Atta should be sold onlyfor being used as lehi to recognised book-binders and F shoe-merchants etc.; and ( 4) they should submit weekly return of sale to the Nagarpalika. By their letter, dated September 22, 1945, the appellants replied to this letter. They said that the Atta could also be used for animal food and wanted pennission to :.eH it for animal food after mixing gram dal chuni with it.

They ended the letter by saying that immediate attention should be paid to their request as they have "already suffered great loss at their G hands due to wrongful seizure etc. and as the delay affects the quality of the Atta." They sent a reminder on September 24,

1945. The respondents, by their letter, dated September 27, 1945. infonned them that the appointment of Nanu Mal as salesman was awroved. It was emohasised in the letter that the directions mentioned in the letter of September 17, 1945 should be carried It out by them .. ; J'hey gave no reply to the request of the appellants for the sale of flour for animal food. By his letter, dated October 6, 1945, the second respondent, however, oennitted them to sell the flour for animal food under certain conditions. By the letter,

[1973] 3 S.C, R.

dated October 8, 1945, the second respondent issued the followjng directions to the appellants under s. 244 of the Municipalities Act : (1) The Atta should not be sold for feeding animals kept for dairy purposes; (2) flour less than one full bast should not

be sold to one individual; (3) there should be a distinctive label on every bag containing the warning that the conte:q.ts could be used for animals only and were unfit for human consumption; and ( 4) any officer of the N agarpalika not below the rank of a Sanitary Inspector would be allowed free access to the shop in which the Atta was stored for the purpose of inspecting sales and examining the account books.

We do not think that the respondents are liable for the stoppage of sale from July 26 to September 20, 1945. During that period the sale was stopped biY an order of the magistrate under s. 144 Cr. P.C. The question is whether they are liable tor loss incurred by the appellants for any period after September 20,

1945.

The appellants ground their claim on the respondents' orders passed under section 244 of the Municipalities Act between September 17 and October 8, 1945. They say that the orders arc invalid and malafide.

The IJ'Spondents seek to escape -liability in two ways : (1) firstly, they acted in accordance with the order of the magistrate, dated September 5, 1945; secondly, their orders under s. 244 were valid and made bonafide.

The magistrate's order can 'afford them no protection. The magistrate had no power to make that order. Counsel for the respondents did not bring to our notice any provision of law empowering the magistrate to make that order. It is now to be seen whether the respondent's action is protected by the provisions of section 244.

Section 244 finds place in Chapter VIII of the Municipalities Act. Chapter VIII deals with markets, slaughter houses and sale of food etc.

Sections 239, 242 and 243 are also included in Chapter VIII.

Section 239 materially provides that "whenever it appears to the District Magistrate to be necessry for the preservation of the pub1ic peace or order, he may .. ; ... prohibit or regulate, the slaughter within the limits of a municipality of animal or animals of any specified description for purposes other than sale and prescribe the mode and route in and by which such animals shall be brought to, and meat shall be conveyed from, the place of slaughter.'' Section 242 reads : "Whoever feeds or allows to be fed, an animal which is kept for dairy purposes, or may be used for food, on filthy or deleterious substance, shall be liable to conviction to a fine which may extend to fifty rupees. Section 243 is in these words : "The President, the executive officer, or the medical officer of health and, if authorised in this behalf by resolutjon, any other member, officer or servant of the board may. without notice, at any period of the day or night, enter into and

BISHAMBAR NATH V. AGilA NAGAR MAHAPALIKA (Dwivedi, J.) 781 . .

inspect a market, shop, stall or place used for the sale of food or drink for man, or as a slaughter-house, or for the sale of drugs and inspect and examine any articles of food or drink, or any animal or drug which may be therein." Section 244 reads : ( 1 ) If, in the course of the inspection of a place under the preceding section, an article of food or drink or an animal appears to be intended for the consumption of man and to be unfit therefor, the board may seize and remove the same, or may cause it to be destroyed,. or to be so disposed of as to prevent its bein~ exposed for sale or use for such consumption." Section 244( 1) IS not happily worded. However, when the phrase "an article of food or drink or an animal appears to be intended for the consumption of man" is read in the context of s. 243, the implication of the phrase becomes plain. It implies that' the sale of an article of food or drink or an animal should appear to be intended for human consumption and should be unfit therefor. Admittedly, th~ flour was unfit for human consumption. So the real issue js as to whether its sale appeared to be intended for human oonsuinption.

According to the High Court, the phrase "appears to hie intend~ ed lor the consumption of man'' connotes that the sale of an article of food should appear to the inspecting officer to be intended for humari consumption. His subjective satisfaction about this matter is decisive. The High Court has also taken the view that sub- E section ( 1 ). aims to prevent a direct as well as an indirect sale for human consumption. According to the High Court, if the flour is sold for feeding milch animals or animals whose flesh is eaten, it would be a :; ale for human consumption. In our opinion, s. 244( 1) is not susceptible of those meanings. e phrase "an article of food or drink appears to be intended for the consumption of man''

does not contemplate any subjective satisfaction. The seller F should intend to sell an article of food for human .consumption.

His intention is an objective fact. There should be present some facts or circu.nma.nces which would incline a reasonable man to believe that the sale of an article of food or drink or an -animal was intended for human consumption. The language of subsection ( 1) of s. 244 is radically different from the lanuage of G s. 239. Under s. 239 the District Magistrate is empowered to act whenever it appears to him to bte necessary for the preservation of public peace. or order.

These words are not used in s. 244( 1).

Again, the phrase "an article of food or drink or animal appears to be intended for the consumption of man, does not contemplate an indirect purpose of sale. It contemplates sale for human con- H sumption, If an article mentioned in sub-section ( 1) of s. 244 is sold for feeding an animal which is kept for dairy purposes, the seller shall be liable on conviction to a fine which may extend to fifty rupees. (See section 242) . If the Legislature had intanded

[1973] 3 S.C, R.

to prevent sale for animal consumption also, it would have clearly said so in sub-section ( 1) of s. 244.

It is true that the object of s. 244 (1) is laudable. But it is not legitimate to strain the language of the section as the High Court has done in aid of such object. It is open to the legislature to amend the section if it intends to give greater protection to municipal action.

It is clear from the evidence on record that the appellants had taken steps to inform the buyers that the flour was unfit for human consumption. They had pla<::ed a sign-board in which it was clearly stated that the flour was unfit for human consumption. The oral evidence adduced by the appellants is to the same effect. It is admitted by the respondents that the appellants had placed a placard informing that the flour was unfit for human consumption.

Their oral evidence does not show that the appellants were selling flour for human consumption. The appellants mixed mai2Je flour with the condemned flour. But this act also would not show thatthey intended to sell the mixed flour for human food. The respondents could not therefore take action under s. 244. The orders passed by them under section 244 are invalid.

It is immaterial that the respondents had acted bona fide and in the interest of preservation of public health. There motive may be good but their orders are illegal. They would accordingly be liable for agy loss caused to the appeants. by their action.

The High Court has not recorded any finding on the quantum of their liability. In view of our finding that the respondents are liable, the, case will now have to go back to the High Court for giving a finding on the issue regarding damages.

We allow the appeal and set aside the judgment and decree of the High Court. The case is remanded to the High Court ior deciding the issue about damages. Costs will abide the decision of the High Court on the question of damages.

S.B.W.

Appeal allowed.

BISHAMBAR NATH AND OTHERS

THE AGRA NAGAR MAHAPALIKA AGRA AND ANOTHER

5. N. DWIVEDI

Y. V. CHANDRACHUD, JJ.

Sec. 244

Sec. 244

section 144

Prevention of Food Adulteration Act

section 44

section 2

C. K. Daphtary

Rameshwar Nath

R. N. Sharma

C. P. Lal

DWIVEDI

High, Court of Allahabad

Shiam Lal Radhey Lal

Agra Mahapalika

Agra

March 20, 1945

May 17, f945

Nagarpalika

July 26, 1945

s. 144

September 20, 1945

September 18, 1945

ss. 4 and 14

Prevention of Adulteration Act

s. 273

I.P.C

September 5, 1945

September 17, 1945

s. 244

September 22, 1945

September 24,

1945

September 27, 1945

Nanu Mal

October 6, 1945

October 8, 1945

s. 244

July 26 to September 20, 1945

s. 144

September 20,

1945

section 244

September 17 and October 8, 1945

s. 244

section 244

Section 244

Chapter VIII of the Municipalities Act

Sections 239, 242 and 243

Section 239

Section 242

Section 243

Dwivedi

Section 244

Section 244( 1)

s. 243

s. 244( 1)

s. 244

s. 239

s. 239

s. 244( 1)

s. 244

section 242

s. 244

s. 244

s. 244

section 244