SANTOKH SINGH

DELHI ADMINISTRATION February 20, 1973

[A. ALAGIRISWAMJ, I. D. DUA AND C. A. VAIDIALINGAM, JJ.J

Constitutwn of India, Article l9(l)(a)-Punjab Security of State Act (No. 12 of 1953)-Sec. 9 whether violates Article 19(1)(a)- Speech or statement which "tends to over throw the State"-whether restriction unreasonable-Constitution of India, Art. 136-Appeal by Speciui leave on a pure queStion of law effecting constitutional validity of

an Act-lvhether can be raised for first time in Supreme Court-Scope of appeal lln special [eave-whether apper/ant can claini adjudicction on n1crits as of right.

The appellant was prosecuted under section 9 of the Maintenance of Punjab Security of State Act for addressing a public meeting in which it was alleged that he had incited th• defence employees to commit offences prejud'icial to security of the State or to the maintenance of public order. Sec. 9 of the Act prohibits speeches or staten1ents etc, which have effect of undermining the security of the State, friendly .relations with foreign States, public order decency or morality or which am, ount to contempt of court, defamation or incitenlent to an offence prejudicial to the security of th~ State or the maintenance of public order or Wlhich tends to over throw the State._ On perusal of the documents filed u/s. 173 of the Cr.P.C., the Magistrale came to the conclusion that the prima facie case was established.

The appellant unuccessfuJiy challenged the said 1nter-locutory order before the Sessions Court and then in th~ High Court.

On appeal by special leave, the appellant raised the questio.o of constitutional validity of Sec. 9 of the ,\ct. The appellant contended: (i) that Sec. 9 of the Punjab Security of State Act waSI violative of the fundamental right guaranteed under Art. 19(1) (a) of the Constitution, and (ii) in the altern11tive, thE ope'ration of Sec. I) should be limited only to suc}1 matters as involve incitement to violence or intention or tendency to create publi~ disorder or cause disturbance tc> public peace.

Jn di!'- missing the appeal.

HELD : (i) Except the words "tends to o\er throw the State" the rest of the provisions of Section 9 rep<oduce the provisions of Art. 19(2) of the Constitution. The prohibition relating to offending speech, wod!s or the . other publications wbic!) tend to over throw the State clearly fall within the sweep of the expression "incitemeiit to an offence prejudicial to the security of the State". Restriction, therefore, is prima facie reasonable restriction. rs37 C-El

. Superintendent of Central Jail, Fatehgarh v. Ram Manohar Lohia 11962] 2 S.C.R. 321, distinguished on facts.

(ii) Reasonable restrictions in respect of matters specified in Art. 1?(2). are essential for integrated development on egalitarian. progres- OJve lines of any peace lovin~ civilised society. Art. 19(2) thus save• the constitutional validity of Sec. 9 of the Act. The analogy between s: 124( I) !PC and Sec. 9 of the Act is wholly misoonceived and in vrew of he comprehensive sweep of Art. 19(2). Sec. 9 of the Act cannot be . retncted to those speeches and expressions which ir.cite or tend to mc1te viclence only.

Sec. 9 cannot be interpreted in a restricted 2-L 761 SuPCl/73 .

manner Sec'. 124( 1) IPC was interpreted in Kedarnath Singh v. State of A Bihar r.1966 Supp, 2 S.C.R. 7691. [539 A-Cl

(iii) 'fhc Supreme Court may allow the question of law elf~ the constitutional validity of an Act for the first ti~ to be k"aised in Supreme Court.

In an appeal by special leave under Art. 136 of the Constitution, the scope of the '-.ippeal is not enlarged after leave and the appellant cannot as of right claim adjudicaticm on merits.

The B Court would not pronounce its opinion on the merits of the charge framed against the appellant.

[540 C-E]

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 197 of 1972.

Appeal by special leave from the judgment and order dated 24th day of February 1972, of the Delhi High Court in Cr. Rev. c No. 469 of 1970.

S. C. Agarwala and A. K. Gupta for the appellant.

D. P. Bhandari and R. N. Sachthey, for the respondent.

The Judgment of the Court was delivered by

DuA, J.

This appeal by special leave is directed against the judgment and order of a learned single Judge of the High Court of Delhi dated February 24, 1972 rejecting the appellant's revision petition under ss. 430 and 561-A of the Code of Criminal Procedure. In that revision he had prayed that the charge franwd

against him by a Magistrate, First Cl'ass, New Delhi on July 3,

1969 under s. 9 of the Punjab Security of State Act (Punjab Act no. 12), 1953 (hereinafter called the Act) be quashed. The special leave petition originally came up for preliminary hearing before a bench of this Court on August 18, 1972 when notice to show cause was issued. On September 19, 1972 the hearing was again adjourned for a week to enable the petitioner's counsel to file a writ petition. It appears that no writ petition was filed but on September 26, 1972 this Court granted special leave on uwal terms. The appeal was also directed to be heard on the existing paper book with liberty tb the parties to file such additionaJI documents as they wished to file from the record. The appeal was directed to be_listed for hearing in the second week of Januar:y,

1973. Sometime in January, 1973 the aopellarit presented criminal miscellaneous petition no. 32 of 1973 seeking permission to urge additional grounds. In that application the constitutional validity of s. 9 of the Act was questioned. The said section, according to the averment in that petition, infringes the fundamentjd right of speech guaranteed under Art. 19(1)(a) of the ConsQ. tution.

It is alleged by the prorecution that the aooe!lant had addressed a public' meeting of the employees of the Defence Department on

A October 9, 1968 and in the course of his speech he had incited the said employees to commit offences prejudicial to the security of the State or to the maintenance of public order. The Magistrate had, on perusal of the documents filed under s. 1973, Cr. P.C. framed a charge against the appellant punishable under s. 9 of the Act.

According to the judgment of the High Court the offending por- B tion of the speech which had been delivered in Hindi reads as follows :

"There will be hunger strike at Chavan Sahib's kothi No. 1 Race Course Road.

If Chavan Sahib thinks that they will be"in position to .crush us with the assistance of C.R.P. and B.S.F. then that is his misunderstanding.

Chavan Sahib when the Britishers had to leave this country then the same military and police will push you out. Because these children of military and police personnels are also hungry they also require bread for eating. Therefore, the day has to come when after their unity these workers will send you out. Comrades the Government suffered the moral death when it promulgated the ordinance. Because we had no idea of starting any violance, when we demanded bread, clothes and house. This struggle of ours will continue. If Government servants die then other labourers will take this struggle ahead. One thing more I want to tell you that if there will be no celebration of Diwali in the house of our .fifty thousand people, then there shall be darkness in the houses of these ministers. I want to tell you Chavan Sahib that if your repression continued in the same way, one Udham Singh will be born amongst these labourers who will not let you live as U dham Singh killed Dyre after going to London .

Annexures I and II attached to the petition under Art. 136 of the Constitution stated in para 4 thereof to be the English translation of the statements of the two police officers on the basis of which the charge sheet had been filed in court contained a couple of more sentences which do appear to be of some importance. But we consider it unnecessary for our-present purposes to refer to them.

The High Court considered the part of the speech reproduced

above and after referring to the decisions of this Court in Srate of Bihar v. Shrimati Shailba/a Devi('), Ram Manolwr Lohia v. State of Bihar(') and Sudhir Kumar Saha v. The Commissioner of Police(') dismissed the revision holding that prima facie the remarks made by the appellant in his speech amounted to an offence under s. 9 of the Act. It was, however. added that it was open to the petitioner either by cross-examination of the prosecution

(1) A.l.R. 1952 S.C. 320.

(21 A.T.R. 1966 S.C. 740.

(3) [19701 I S.C.C. 149.

(1973] 3 S, C.R.

witnesses or by adducing evidence in defence to show that in the circumstances under which these remarks were made they did not amount to an incitement to an offence prejudicial to the security of the State or the maintenance of public order. The High Court felt that at that stage it could not be_ said that there was no prima facie case against the petitioner under s. 9 of the Act.

In this Court Shri S. C. Agarwal questioned the vires of s. 9 of the Act, contending tijat this section is violative of the fundamental right guaranteed by Art. 10 (I)( a) Of the Constitution.

No doubt, this point was not raised in the High Court and in this Court also it was specifica!Iy sought to be raised only in the subsequent applications presented in January, 1973 but as the speech in/question was itself 5ought in para 5 of the petition for special leave to be protected , by Art. 19 (I) (a) and as it was a pure question! of law raising the constitutionality of s. 9 of the Act we permitted the counsel to raise it.

Section .9 of the Act reads :

'9. Dissemination of rumours, etc.- Whoever

(a) makes any speech, or

(b) by words, whether spoken or written, or by signs or by visible or audible representations or otherwise publishes any statement, rumour or report, shall, if such speech, statement, rumour or report undermines the security of the State, friendly relations with foreign States, public order, decency or moraljty, .. QJ: amounts to contempt of , Court, defamation or incitement to an offence prejiidicial tq the security of the State

or the maintenance Of public order, or tends to overthrow the !?tate, be punislfaple with impri!IO'ninent which may extend to three years dr with fine or with both." This section on its own plain Ieiding• taken within its fo(d all the objectionable matters which had been taken by sub-Art. (2) of Art. 19 out of the guaranteed freedom of speech and expression protected by cl. (a) of Art. 19(1). In order to fully understand f!ie f; e7®m of speech and expression guaranteed by the Constitution 1t 1s necessary to reproduce Art. 19(l)(a) and (2) :- Right to Freedom 19(1) All citizens shall have the right- ( a) to freedom of speech and expression;

(2) Nothing in sub-clause (a) of clause (1) shall affect the operation of any existing law, or prevent the

'! •

"' '

State from making any Jaw, in so far as such law imposes reasonable restrictions on the exercise of the right conferred by the said sub-clause in the interests of the soverQignty and integrity of India, the security of the State, friendly rel!ltions with foreign st!!tes, public order, de.- oency or morality, or in relation to contempt of court, defamation or incitement to an offonce".

It may appropriately be.pointed out here that sub-Art. (2) was amended in 1963 so as to include in the limitation contained therein reasonable restrictions in the interest of the sovereignty and integrity of India. This !imitation was not in this sub-Article in 1953 but as it does not affect the question raised in this case we need say notlting more about it.

Reading s. 9 of the Act and Art. 19 ( 2) of the Constitution it is obvious that the only matter specifically contained in s. 9 in addition to those stated in Art. 19(2) relate to the offendinr, speech, words or other publications which ''.tends to overthrow the State". Now this matter would clearl1 also fall within the sweep of the expression "incitement to an offence. prejudicial to the security of the State" contained ins. 9 and within Art. 19(2) where it speaks of "reasonable restrictions .... in the interest of. . . . the security of the State". Anything tending to overthrow the State lmliSt necessarily be prejudicial to the security of the State and. therefore, a law can be made placing reasonable restrictions on the right of freedom of speech and expression in this respect in the interests of security of State. Prima facie, therefoi:e, s. 9 clearly falls within the express language of Art. 19 ( 2) .

On behalf of the appellant great stress was laid on Superilllendent of Central Jail, Fatehgarh v. Ram Manohar Lohia(1) where ihis Court struck down as unconstitutional s. 3 of the U.P. Special F Powers Act (U.P. Act 14 of 1932). That section reads:

"3. Whoever by word, either spoken or written or by signs or by visible representations or otherwise, instigates, expressly or by implication, any person or class of persons not to pay or to defer payment of ani liability,

nd whoever does any a7t with intent or.knowing it to be likely. tat any w<;>rd~, Sls or visible reprntation> contammg such mstigation shall thereby be communicated directly or indirectly to any person or class of

prsos, iry. any manne.r whatsoever, shall be punishable with imprisonment which mav extend to si1C months or with fine, extending to Rs. 250, or with both." '

On the face of its plain language this section is materially different from s. 9 of the Act. It therefore does nor require elaborate argu-

{1) [1962] 2 S.C.R. 321.

538 SUPllEME C()UllT llEPOllTS (1973] 3 S.C.ll.

ment for distinguishing this decision. _Sec!ion 3 of the U.P. ct is clearly hit by Art. 19(1) (a) and can on no reasonable or rational

argument be saved by Art. 19(2). There being absolute!y no 1similarity between that section and s. 9 of the Act with whi.c.h we are concerned, the ratio of that decision cannot serve as a precedent for invalidating s. 9 Of the Act. The appellant's learned counsel then drew our attention to Kedarnath Singh v. State of bihar (1) in which ss. 12A and 505, I.P.C. were held to be in the interest of public order and within the almbit of constitutional limitations contemplated by Art. 19(1) (a) rell!l with Art. 19(2). On

!f; hQ analogy of s. 124A as construed in decision it was contended that in order to bring s. 9 of the Act within the constitutional limits of Art. 19(2) it must similarly be construed narrowly so that the fundamental freedom of speech and eXpression is not unduly, restricted. The operation of s. 9 of the Act, it was submitted, should be limited only to such matters as involve incitei; nent

to violence or intention or tendency to create public disorder or . cause !disturbance of public peace.

The fundamental right guai:anteed by Art. 19( 1) (a) and the interest of public order protected by Art. 19(2) according to Shri Agarwal's submission. must be !properly adjusted and a correct balance struck between two.

Jn our opinion, the principle governing the construction of Art. 19(1)(a) read with Art. 19(2) is well crystallised by now in various decisions of this Court and it is unnecessary to cover the whole ground over again by going through them extensively,

We of course agree with Shri Agarwal that the fundamentar right guaranteed by Art. ~9( 1) (a) and the interest of public protected by Art. 79(2) must be properly adjusted and reasonable balancd struck between the two. There can be no dispute that there is no such thing as absolute or unrestricted freedom of speech and expression wholly free from restraint for that would amount to uncontrolled licence which would tend to lead to disorder and anarchy. The right to freedom of speech and expression is undoubtedly a valuable and cherished right possessed by a citizen in our Republic. Our governmental set up being elected, limited and: responsible "".e need requisite freedom of animadversion, for our social interest ordinar\ly demands free propagation of views. Free-·

dom. to think as one likes. and to speak as one thinks are as a ru,1e, indisjiensable to the discovery and soread of truth and' wit.bout 11ree s.l>eech discussion may well be futile. But at the same' . time we can only ignore at our peril the vital importance of our

social interest in, inter alia, public order and security of our State.

It is for this reason that our Constitution has rightly attempted to strike a proper balance between the various competing social inrn [19661 Supp. 2 S.C.R. 769.

t '

terests. It has permitted imposition of reasonable tri_ctions m the citizen's right of freedom of speech and expression_ m the interest of, inter alia, public order, security of State, decency or morality and impartial justice, to serve the larger coUective inerest Of the nation as a whole. Reasonable restriction in respect of matters specified in Art. 19(2) are essential for integrated development on egalitarian, progressive lines of any peace-loving, civilised s0ciety. Article 19(2) thus saves the constitutional validity of s. 9 of the Act. The analogy between s. 124A, l.P.C. and s. 9 of the Act is wholly misconceived and in view of the comprehensive

sweep of Art. 19(2) we are unable to restricts. 9 of the Act only tp ltliose shes and expressions which incite or te, nd to incite violence. ' Learned counsel also tried to refer us to some American decisions for developing the argumnt that the guaranteed freedom of speech and expressiop. should be broadly construed buf we 'did not . consider it necessary to go into the American decisions, notwith-. standing the fact that in Express Newspapers (P.) Ltd, v. Union D of l11dia(') it was observed that .American decisions were relevant for the purpose of understanding the scope of Art. 19(1) (a). In our opinion, it is hardly fruitful to refer to the American decisions particularly when this Court has more than once clearly enunciated the scope and effect of Art. 19(1)(a) and 19(2). The test of reasonableness of the restriction has to be considered in each case gin the light of .the nature of the right infringed, the purpose of the restriction, the extent and the nature of the mischief required to be suppressed and the prevailing social and other conditions at the time. There can be no .abstract standard '1r general pattern of reasonableness. Our Constitution provides reasonably precise, general guidance in this matter. It would thus be misleading to F construe it in the light of American decisions given in different bontext. (Section 9 of the Act is, in our view, plainly within the le!tlslative competence of th~ Punjab Legislature and it would be for the court in which the appellant is being tried to decide as to how far the appellant's_ speech is covered by this section.

Shri Agarwal made a strenuous effort to persuade us to cons- . true the offending portion of the speech as reproduced in the judglllllnt of the High Court and express our opinion whethee or not the charge against him has been lawfully framed. The charge reads as under :

"That you. on or about the 9th day of October, 1968 at 4.30 to 5.55 p.m. near the Railway Pathak in the area of Delhi Cantt. made a speech at a public meeting organised by Delhi Defence employees in which you

(I) [1959] S.C.R. 12.

demanded or caused incitement to an offence prejudicial to the security of the State or the maintenance of public order and therein committed an offence punishable under section 9 of the P.S. Act and within my cognizance." The appellant, it may be pointed out, had approached the sessions Court on revision to .have this charge quashed.

That court apparently did not agree with the appellant.

He then approached the High Court on revision where also he failed.

Th_~ impugned judgment of the High Court does not .show any serious legal infirmity resulting in failure of justice which should induce this Court to interfere under Art. 136 of the Constitution. The submission that at this Court has already granted special leave we must decide the question of the legality of the charge on the merits has not appealed to us.

Even at the final hearing of an appeal by special leave this Court has to apply the same test which is attracted at the preliminary stage when the leave to appeal is asked. for. After leave the scope of the appeal is not enlarged and even at that stage the appellant cannot as of right diiim adjudication on the merits if this Court feels .that there is no grave injustice done to the appellant as a result of any serious legal infirmity.

We are unable to find any such infirmity in the impugned judgment. The additional factor against our interference in this case in the interlocutory character of the order sought to be quashed.

We have, however, no doubt that the learned Magistrate trying the appellant's case will deal with all the points raised before him O!.J the merits without being iciluenced by the tentative view expressed by the High Court which the appelfant himself invited.

We also hope that . this case which relates to a peech said to have been delivered in October, 1968 and in which the prosecution was initiated as far back as January, 1969 when the charge was put into-court, would be disposed of with due dispatch and without avoidable delay. This appeal fails and is dismissed.

S.B.W.

Appeal dismissed.

SANTOKH SINGH

DELHI ADMINISTRATION

February 20, 1973

I. D. DUA

Punjab Security of State Act

Sec. 9

Article 19(1)(a)

Constitution of India

Art. 136

section 9

Sec. 9

s. 173

Cr.P.C

Sec. 9

Sec. 9

Art. 19(1)

Section 9

Art. 19(2)

1962] 2 S.C.R. 321

Art. 1

Art. 19(2)

Sec. 9

Sec. 9

Art. 19(2)

Sec. 9

Sec. 9

IPC

Supreme Court

Art. 136

S. C. Agarwala

A. K. Gupta

D. P. Bhandari

R. N. Sachthey

DuA

ss. 430 and 561

Code of Criminal Procedure

New Delhi

July 3,

1969

s. 9

August 18, 1972

September 19, 1972

September 26, 1972

s. 9

Art. 19(1)(a)

s. 1973

s. 9

Chavan Sahib

Udham Singh

U dham Singh

Dyre

London

Art. 136

s. 9

s. 9

S. C. Agarwal

s. 9

Art. 10

Art. 19

s. 9

Art. 19

Art. 19(1)

Art. 19(l)(a)

India

s. 9

Art. 19

s. 9

Art. 19(2)

Art. 19(2)

s. 9

Art. 19

s. 3

Special F Powers Act

s. 9

[1962] 2 S.C.R. 321

Art. 19(1)

Art. 19(2)

s. 9

s. 9

ss. 12A and 505

I.P.C

Art. 19(1)

Art. 19(2)

s. 124A

s. 9

Art. 19(2)

s. 9

Art. 19( 1)

Art. 19(2)

Agarwal

Art. 19(1)(a)

Art. 19(2)

Art. 79(2)

Art. 19(2)

Article 19(2)

s. 9

s. 124A

s. 9

Art. 19(2)

Art. 19(1)

Art. 19(1)(a) and 19(2)

Section 9

section 9

Art. 136


UNION OF INDIA OWNER OF THE EASTERN RAILWAY

THE COMMISSIONER OF SAHIBGANJ MUNICIPALITY

February 22, 1973

(S. M. SIKRI, C.J., A. N. RAY, 0. G. PALEKAR, S. N. 0WIVEDI

AND A. K. MUKHERJEA, JJ.]

The Railways (Local Authorities Taxation) Act, 1941. Ss. 3 and 4--Scope of-Liabii!ity of Railway Administrc.:tion to pa, v nuuzicipa/ tox with respect to their buildings under s. 154, Goi•enunent o/ India :Act,

1935, and Art. 285 of the Constitution.

Pursu-anl to s. 135 of the Indian Railways Act, 1890, the G, ovcrnor General in Council issued '3. notification dated 24 August, 1911. declaring that the administration of the East India!O' Rail"'!ay shall be liable to pay in aid of the funds of the local authorities s-et out in the Schedule thereto the taxes spec'ifie9, therein.

Jn one of the local -aatho4 fities so set out, the railway administration constructed 32 blocks of buildings, sorne after 31 March 1937 and some after 25 Januarv 1950.

Thee buildings were assessed to municipal tax by the responden~ with effect from the fourth quarter of 1965-66. The appellant con'.ended that there \Vas no liability to pay the municipal tax because of s. 154 of the Government of India Act, 1935, and Art. 285 of the Con-; titution.

The High Court held that the notification issued by the Government in 1911 continued by virtue of s. 4 of the Railways (Lo::-al

Autorities Taxation) Act, 1941, that t~ 1941-Act was a feder; il law, that the 1911 notification was not in respect of a.ny particular property, and that. therefore, the railway properties whether in existence before 1st J\pril, 1937, dr coming into existence thereafter, were liabl~ to pay the tr.xcs.

Allowing the appeal to this Court,

HELD : The High Court was ln error in construing that the notification iS&ued in 1911 under the 1890-Act confinued by virtue of s. 4 of the 1941-Act. r544G-HJ

Under s. 154 of the 1935-Act all property vested in His Majesty for purposes of the Federation shall save in so fa'r as any Federat law may otherwise provide, be exempt from all taxes imposed by. or by oany authority within, a Province or a State.

The proviso to the section states that until any Federal law other\vise provides ainy property so vested, which was immediately before the commencement of Part Ill of the 1935-Act liable to any such tax sha11, so long U:i that tax continues, continue to be liable.

Article 285 of the Consiitution also provides that the property of the Union shall, save in s0 far a$ Par1iameiat may by law otherWise provide. be exempt from all taxes imposed by a State or by any authority within a State, and, cl. (2) of t!Jat Article states that nothing in cl. (1) shall, until Parliament by law er other\Vlse provides, prevent any authority in a State from levying any tax on any property of the Unio.n to which such property was 1n1mcc.iiatelv before "the commencement of the Constitution liable, so Jong as that tax continues to be levied in that State. (543B-FJ

The 32 blocks of buildings were not in existence before 1 Aj*il, 1937, llil!d hence were not ves~ in His Maje.ty for purposes of the Federation. and were not liable to pay the municipal tax before that

daflt. They were, theretore, exempt from all taxes imposed by any .+- authority within a Provine;, until a Fed"{al law otherwise provided; and could be made liable only if Parliament, by law, provided to , that effect.

Section 4 of the 1941-Act did not provide for payment Of taxes in respect of Railway property. Sectiqn 3 of the Act, however staks that a j'a'ilway administration shall be , liable to pay any tax in aid of the funds of any local authority if t~.e Cntral government by notifica tfon in the official gazctkc declares it to be so liable. But no such B notification declaring railway properties to be liable to pay any tax in aid of the funds of any local authority under s. 3 of the 1941-Act bas been issued. f544C-FJ

Corporation of Calcutta v. Governors of St. Thomas School, CalcuttG:. [1949] F.C.R. 368, applied.

CIVIL APPELIATE u&1smcnoN : Civil Appeals Nos. 2304 c and 2042 of 1968.

Appeals by certificate from the judgments and orders dated 22nd September 1965 and 2nd July 1968 of the Patna High Court at Patna in C.W.J.C. Nos. 431 of 1962 and 344 of 1968.

F. S. Nariman, Addl. Solicitor-General of India, B. D.

Sharma and S. P. Nayar, for the appellant.

M. C. Setalvad and D. Goburdhun, for the respondent

The Judgment of the Court was deivered by

RAY, J. The only question which falls for determination in. these two appeals by certificate is whether the respondent Municipality is entitled to levy and collect taxes on 31 blocks of buildings some constructed after 31 March, 1937 and some after 25 January, 1950.

The buildings are situated within the municipal limits of the Sa_hibganj Municipality in the State of Bihar.

Pursuant to section 135 of the Indian Railways Act, 1890 referred to as the 1890 Act, the Governor General in Council by a Railway Department, Railway Board notification No. 225 dated 24 August, 1911 declared that the administration of East India Railway shall be liable to pay in aid of the funds of the local authorities set out in the Schedule thereto annexed, the taxes specified in the second column thereof. In the Schedule the names of various local authorities are set out. Sahibganj is one such.

In the second column the taxes are me_ntioned. In respect of Sahibganj Municipality the taxes specified are House rate and latrine fees.

In 1961 the Sahibganj Municioality revised the valuation of the buildings and premises with effect from 1 April, 1961. The 32 blocks of buildings forming subject matter of these two apoeals were assessed with effect from the fourth quarter of 1965-66. '

UNION V. COMMR. SAHIBGANJ MUNICIPALITY (Ray, J.) 543

It is common ground that these 32 blocks of buildings and. premises were constructed sOlllle after 31 March, 1937 and some. after 25 January, 1950.

The appellant contended that these 32 blocks of buildings could not be made liable to pay the municipal tax by virtue of the provisions contained in section 154 of the Government of India Act, 1935 and Article 285 of the Constitution.

Part III of the Government of India Act, 1935 referred to as the 1935 Act came into force on 1 April', 1937. Under section

154 of the 1935 Act all property vested in 'His Majesty' for purposes to the Federation sall, save in so far as any Federal law may otherwise provide, be exempt from all taxes impos\!d by, or by any authority within, a Province or Federal State.

The proviso to section 154 of the 1935 Act states that until any Federal law otherwise provides, any property so. vested which was immediately before the commencement of Part III of the 1935

Act liable or treated as liable, to any such tax shall, so long as that tax continues, continue to be liable, or to be treated as. liable, or to be treated as liable thereto.

Articde 285 of the Constitution also provides that the pro-- perty of the Union shall, save in so far as Parliament may by law otherwise provide, be exempt frQm all taxes imposed by a State or by any authority within a State. Clause (2) of Article 285 states.

tha~ nothing in clause (1) shall, until Parliament by law otherwise provides, prevent any authority within a State from levying any tax on any property of the Union to which such property was immediately before the commencement of this Constitution liable

or ireated as liable, so long as that tax continues to be levied in that State.

The High Court held that the Railways Locat Authorities.

Taxation) Act, 1941 referred to as the 1941 Act was a federal law and section 4 of the 1941 Act thereof rendered the buildings liable to taxation. The reasons given by the High Court werethese. The notification issued by the Government in 1911 under

the :1890 Act continued by virtue of the provisions contained in section 4 of the 1941 Act. The 1911 notification was not in respect of any particular property.

Therefore the railway properties whether in existence before 1 April 1937 or coming into existence after that date were liable to pay taxes.

Section 4 of the 1941 Act provided as follows .The Central Government may be notification revoke or vary any notification issued under clause (1) of section 135 of the 1890 Act. Wherea notification is so revoked any liability arising out of the notification to pay any tax to the legal authority shall cease. Where a

notification is so varied the liability arising out of the notification A shall be varied accordingly. There was neither revocation nor variation of the aforesaid notification issued under section 135 of the 18 90 Act.

The High Court overlooked the effect of section 3 of the 1941 Act. Section 3 provides that any railway property vested for purposes of the Central Government shall be liable to pay tax in aid of the funds of a local authority if the Central Government by notification declares it to be so liable.

This section therefore requires a notification declaring liability to pay. The notification under the 1941 Act creates a liability for railway property coming into existence after the 1941 Act.

But no such notification was issued.

The 32 blocks of buildings were not in existence before 1 April, 1937.

These 32 blocks of buildings were therefore not vested for purposes of the Government of the Federation before the commencement of Part III of the 1935 Act. These 32 blodks of buildings were thus exempt from all taxes imposed by. any authority within a province until a federal law otherwise provided.

Section 4 of the 1941 Act did not provide for payment of taxea in respect of railway property.

Section 3 of tire 1941 Act stated that a railway administration shall be liable to pay any tax in aid of the funds of any local authority if the Central Government by notification in the official gazette declares it to be so liable. It is an admitted feature in these appeals that there was no notification under section 3 of the 1941 Act declaring the railway properties to be liable to pay any tax in aid of the funds of any local authority.

Under Article 285 of the Constitution property of the Union was exemvt from all taxes until Parliament by law otherwise provides.

There is no such Jaw providing for taxation of rai!way 'Jlroperty.

Clause (2) of Article 285 speaks of liability of railway pro- perty to pay taxes where such property was immediately before the commencement of the Constitution liable or treated as liable to pay any tax levied by any authority within a St<rte.

These 32

block~ of buildings were not liable to pay any tax because they were not in existence before, !st April 1937 or before the commencement of the Constitution.

The High Couvt was in error in construing the notification issued in 1911 under the 1890 Act to continue by virtue of the 'JlfOVisions contained in section 4 of the 1941 Act.

These 32 blocks of buildings vested in the Union some of thm after 1 April 1937 and some after ithe Constitution came into el(istence. These properties could be made liable to pay tax to the municipality only if Parliament by law provided to that effect.

UNION V. COMMR. SAHUIGANJ MUNICIPALITY (Ray, J.) 545

The High Court referred to the dedsion of 1this Court in Corporation of Calcutta v.

Governors of St. Thomas' School, Calcu11a(') 1949 F.C.R. 368 and held that th~ ruling in that decision did not apply to the facts in the present appeals by reason of section 4 of the 1941 Act rendering the properti~ liable to.tax.

The High Court misconstrued the provisions of section 4 of the 1941 Act. . The decision of ithis Court in St. Thomas' School case

(supra) directly applies to these appeals. St. Th.omas School was situated at 4, Diamond Harbour Road, Calcutta. Tl}e buildings were constructed before April, 1942. The premises were assessed to consolidated rates under the Calcutta Municipal Act. In April,

1 942 the premises were requisitioned for the purposes o{ the Central Government.

After tlte requisition the Central Government erected several structures on the premises. In 1944-45 there was a general revaluation by the Corporation of Calcutta.

The cost of the additional structures erected by the Central Government was taken into account in determining the annual value of the premises.

The Governors of St. Thomas School. objected to the valuation and claimed that the value of the buildings put up b} the Government should be excluded in the revaluation.• The Ca1cutta High Court held that section- 154 of the Government of India Act, 1935 applied to the buildings constructed by tl1e Central Government and the proviso to section 154 of the 1935 Act was not applicable. This Court held that the buildings constructed by the Central Government were vested in the Government.

In view of the fact that the additional structures were put up by the Central Government after 1942 it was held that these were net subfiect to municipal tax before April, 1937 .

. The 32 .blocks of buildings in the present appeals were not in existence before 1 April, 1937 and 26 January, 1950.

The notification under the 1890 Act did not apply to these 32 blocks of buil<Jlngs.

There is no law declaring these 32 blocks of buildings to be liable to payment of municipal tax as claimed by the respondent municipality.

For these reasons the judgment of tlte High Court is set aside and the appeals are allowed. Each party will pay and bear their own costs.

V.P.S.

Appeal allowed.

February 22, 1973

S. M. SIKRI, C.J.

A. N. RAY

0. G. PALEKAR

A. K. MUKHERJEA, JJ.

Ss. 3 and 4

s. 154

Art. 285

s. 135

Indian Railways Act, 1890

24 August, 1911

25 Januarv 1950

s. 154

Government of India Act, 1935

Art. 285

s. 4

s. 4

s. 154

Article 285

Parliament

1 Aj*il, 1937

Section 4

s. 3

[1949] F.C.R. 368

CIVIL APPELIATE

F. S. Nariman

B. D.

Sharma

S. P. Nayar

M. C. Setalvad

D. Goburdhun

RAY

Sa_hibganj Municipality

Bihar

section 135

Indian Railways Act, 1890

East India Railway

Sahibganj

Sahibganj Municipality

Sahibganj Municioality

31 March, 1937

25 January, 1950

section 154

Government of India Act, 1935

Article 285

1 April', 1937

section

154

section 154

Article 285

section 4

section 4

Section 4

Central Government

section 135

section 135

section 3

Section 3

1 April, 1937

Section 4

Section 3

section 3

Article 285

Article 285

section 4

1949 F.C.R. 368

section 4

section 4

St. Thomas' School

St. Th.omas School

Calcutta

Ca1cutta High Court

Government of India Act, 1935

section 154

26 January, 1950


AVADH SUGAR MILLS LTD. v.

THE SALES TAX OFF1CER, SITAPUR & ANOTHER

February 22. 1973

.[K. S. HEGDE, P. JAGANMOHAN REDDY AND H. R. KHANNA, JJ:]

U. P. Sales Tax Act 1948-Purchase tax on oilseeds-Groundnuts .whether oilseeds.

The petitioner appellant purchased groundnuts mostly from cultiva tors for the m""1facture of oil. lying on decisions of the Madhya Pradesh and Punjab High Court he coo.tended that grc>undnuts were .not oilseeds and thus not liable .to be subjected to purchase-tax under

the UJ'. Sales Tax Act. The Allahabad High Court rejected the contention. In appeal by certificate,

HELD : In fipding out the tru~ meaning of term 'oilseeds' found in the SalesT'llX law in question the Co.urt must refer not to tl\i! dictionary meaning but the meaning ascribed to the term in commercial parlance.

1bere can hardly be any doubt that in commercia.1 circles groun<tnut is d, ealt with as oilseed. The commercial journals refer to groundnuts as a species of oilseeds. [5470-F!

Commissioner of Sales Tax, Mcdhya Pradesh, Indore v. laswant Singh Cluzran Singh, ( 19 S.T.C. 469), relied on.

A seed is one which germinates. It is not disputed that the groundnut germinates. Hence it is undoubtedly seed. It is mostly used for the manufacture of groundnut oil which is an edible oil. The decision relied OP by the appelhlllt mu•t accordingly be held to be wrong and 1he appeal must be dismissed. [547F-G]

Commissioner of Sal.es Tax, Madhya Pradesh, Indore v. Bakhat Rai cl Co. (18 S.T .. C. 285) and Hans Rai Choudhri v. l. S. Rajyana, Excise and Taxation Officer, (19 S.T.C. 489), disapproved.

CIVIL APPELLATE JURISDICTION : CivHAppeal No. 1352 of 1970.

Appeal by certificate from the judgment and order dated 7th day of August 1967of the.Allaliabad High Court in Special Appeal No. 94 of 1967. .

M. C. Chag/a, Suresh Sethi, Ji. K. Maheshwari, Maya Krirhan and B. P. Maheshwari, for the appellant.

N. D. Karkhanis ; ind 0. P. Rana, for the respondents.

The Judgment of the Court was delivered by HEGDE, J ...... This is an appeal by certificate. The only question that arises for decision is whether groundnut is oilseed. The High Court has come to the conclusion that the groundnut is oilseed.

The question is to the nature of groundnut came up for consideration !n connection with the levy of purchase-tax on the purchase of oilseed. The assessee in-this case is a manufacturer of oil and the assessee appears to have purchased groundnuts in

D ,

AVADH SUGAR MILLS V. S.T.O., SITAPUR (Hegde, /.) 547

A large quantity for the manufacture of oil. He contended before the assessing authorities as well as before the High Court, unsuccessfully, that groundnut is not oilseed.

In support of that contention, he relied on the decision of the Madhya Pradesh High Court in Commissioner of Sales Tax, Madhya Pradesh, Indore v.

Bakhat Rai & Co. (18 S.T.C. 285) and the decision of a single B Judge of Punjab & Haryana High Court in Ha~ Raj .Choudhri

v. J. S. Rajyana, Excise and Taxation Officer (19 S.T.C. 489).

These two decisions undoubtedly support his c\)ntention.

The learned Judge of the Allahabad High Court have not , accepted those decisions as laying down the law correctly and we are in agreement with the view taken by the learned Judges of the c Allahabad High Court.

The petitioner in his Writ Petition has definitely , stated that he purchased groundnuts mostly from cultivators for the manufacture of oil. Hence there is no doubt that he purchased groundnut for the purpose of manufacturing oil.

We shall now proceed to consider whether groundnuts are seeds and further whether they are oilseeds. In finding out the true meianing of term "oilseeds" found in the Sales-tax law in question, we are not to refer to dictionaries. We are to find out the meaning ascribed to that term in commercial parlance. See the decision of this Court in Commissioner of Sales Tax, Madhya

Pradesh, Indore v. Jaswant Singh Charan Singh (19 S.T.C. 469) ..

There can hardly be any doubt that in commercial circles growljfnut is dealt with as oilseed. The commercial journals and newspapers while quoting the market price of oilseeds list groundnuts 'as one of the species ol oilseeds. From this, it is clear that in rommercial circles groundnut is treated as oilseed.

A seed is one which germinates. It is not disputed that the groundnut germinates. Hence it is undoubtedly seed. The next question .is whether it is generally used for manufacture of -oil.

Here agam, there can hardly be any doubt that groundnut is mostly used for 1the manufacture of groundnut oil which is used in the

anufacture of Dalda and other cooking media. Groundnut ts one of the items which is mostly used in this country for the manufacture of cooking media.

In '?ur opinion, bolh; the Madhy:a Pradesh High Court and ithe Pun1ab & Haryana High Court were wrong in holding that groundnut is not oilseed. ·

For the reasons mentioned above, this appeal iS dismissed with B costs •

.G.C.

Appeal dismiued.

AVADH SUGAR MILLS LTD

THE SALES TAX OFFICER, SITAPUR & ANOTHER

February 22. 1973

K. S. HEGDE

P. JAGANMOHAN REDDY

H. R. KHANNA, JJ

Sales Tax Act 1948

Sales Tax Act

Allahabad High Court

CIVIL APPELLATE JURISDICTION

M. C. Chag

Suresh Sethi

Ji. K. Maheshwari

Maya Krirhan

B. P. Maheshwari

N. D. Karkhanis

P. Rana

HEGDE

Madhya Pradesh High Court

Madhy:a Pradesh High Court

Pun1ab & Haryana High Court


RAJENDRAPAUL RAMASARAN DASS SHARMA

STATE OF MAHARASHTRA ' February .23, 1973 [A. ALAGIRISWAMI, l. D. DUA AND C. A. VAIDIALINGAM, JJ.)

Whether High Court should give a. :Jpeaking order in dismissing •1n appeal or merely disniiss the appeal in limine.

The appellant was running a Octroi Cleari, ing Agency at 'Mulund Check-Post' in th, e State of Maharashtra.

He used to attend to certain transactions of Montgomery Transport Co. also.

On December 16, 1968, a truck of the said transport copany arfived at the Check-Post with a machine to be delivered to M/IS. Imperial Tobacco Co.

The appellant i.nformed the Manager of the Transport Company to arrange for the payment of Octroi whii:::h amounted to mor_e than Rs. 8,000/-.

Accordingly, a sum of Rs. 8,1961was haned over to the appe1lant in the J.'resence of the Driver of the truck.

It was found out after investigation that the receipt for the payment of Octroi held by the Imperial Tobacco Co. was not genuine a.00 on a complaint lodged by the Company, theappe11ant \Vas arrested and committed for trial to the Court Of Sessions, under S. 467, 471 read With S. 467 and S. 420 of J.P .C.

The Trial Court convicted the appellant for an offence under s. 471 read with s. 467 I. P. C. and for an offe; rn::e under s. 420 I. P. C.

The appeal to the High Court was dismissed in limine with the word "dismissed". The _point raised before this Court was whether the High Court was justified in dismissing the appeal in limine with one word "dismissed'', without making a speaking order indicating the reason-; for dismissal.

Remandng the cas.e to the High Court for reheadng.

HELD : (i) The importance of the opinion of the High Court on arguable points requiring consideration in appeal in that Court when questions of fact or law are open to challenge by the appellant . was emphasised more than 20 years ago by this Court in Mustaq Hussain

v. The State of Bombay, [1953] S.C.R. 809.

Sinoo then, in a series of decision~ this Court has consistently drawn the attention of the High courts to the desirability of giving an indiCation of their views on ., te points . raised in rguable cases in ac<:ordait< with the legal position enunciated by .this Court.

[552-AB.]

(ii) In K. TS:. Jain v. State of Maharashtra, A.I.R. 1973

S.C. 243 it was reiterated that . reason~ before the High Court for dismissing the appeal, if recorded, would be a valuable assistance to this Court in finally dismissing of the appeal on merits.

Another advantage of recording . iucb reasons is that the accused-appellant, who may not always be present in the court, would have , the satisfaction of knowing from the judgment that the points appropriately arising for cQooideration in his case, were actually argued and duly considered by this High Court while dismis!ling .his appeal. In the present case, since the High Court did not record its reasons for dismissing the appeal, this ceurt has no option but to remaJl(! the case to the High Court for rehearing and deciding the appeal after considering the points raised and

recording its reasons in accordanee with law. [S52FG&553AJ

RAJBNDRAPAiJL v. STATE (Dua, J,) SU

Mustaq Husmin v. State of Bombay, [19S3] S.C.R. 809, iind K. K. lain v. State of Maharashtra, A.LR. 1973 S.C. 243, refetkd to.

CRIMINAL APPELLATE JuRisDICTION : Criminal Appeal No. 264 of 1972.

Appeal by special leave from the judgment and order dated March 6, 1972 of the Bombay High Court at Bombay in Cr. A.

No. 164 of 1972.

M. N. Sharma, for the appellant.

S. B, Wad and Rine Sachthey, for the respondent.

The Judgment of the Court was delivered by

DUA, J .-The appellant in this appeal by special leave was tried in the court of Session for Greater Bombay !ft Bombay for offences under s. 467, under s. 471 read withs. 467 and under s.

420, I.P.C. Accordiilg to the prosecution the appellant was running an octroi clearing agency under the name and style of "National Octroi Clearing Agency" at the Mulund check-post. He used to attend to certain transactions relating to the transport companies, one of those companies being the Montgomery Transport Com pany. On December 16, 1962 a truck belonging to the said transport company bearing no. MPR 2147 arrived at the check-post carrying a Depleix Machine to be delivered to Messrs Imperial Tobacco Company. There were two drivers and one cleaner in the truck. On being approached by them the appellant telephoned to manager Bakshi of the Transport Company to arrange for the payment of octroi which amounted to more than Rs. 8,000/-. The Manager, Bakshi and Director, Inderjit Singh went to the Imperial Tobacco Company the following day and after getting Rs. 8,196/· for the octroi reached the Mulund Check-post. The amount was handed over to the appellant in the presence ofthe driver. Actually only Rs. 8,1801were required for the o_ctroi with the.result that Rs. 16 I were paid back to Messrs Imperial Tobacco Company by means of a cheque. During the investigation of another case arising out of an alleged forged receipt relating to octroi in respect of some imports by Messrs Pure Drinks Private Ltd., it came to light that proper octroi had not been paid on December 17 ,.

1968 in respect of the transaction in question in the present case.

The Assistant Assessor and Collector, Shri Karkhanis, after sending his superintendent Govind Charan to the office of Messrs Imperial Tobacco Company he hilriself also visited the Company's office and they both felt that the receipt for the payment of octroi held by the said Company was not genuine.

Having failed to trace the necessary relevant docume]lts in the . office files Shri Karkhanis lodged the complaint in February, 1969 and a case

3-L161Sup. Cl/73 •

SUPREME COURT REPORTS [1973] 3 S.C.ll.

was registered.: After preliminary nquiry under Cb. XVIll A Cr. P.C. the appellant was committe4 for trial to the court. of Session. According to the trial court the following points arose for detennination :

"l. Whether it is proved that the receipt, Article A is a forged document ?

2. Whether it is proved thait it is the accused who forged that receipt with intent .to commit fraud ?

3. Whether it is proved that rthe accused used this receipt as genuine knowing it to be forged ?

4. Whether U is proved that he cheated the Bombay

Municipal Corporation, as alleged ?

S. Whether it .is proved that the accused cheated the Imperial Tobacco Co. of India Ltd., as alleged?" The conclusions of the trial court on these points were :

"l. Ln the affirmative ..

2. Not proved.

3. In the affirmativ~.

4. In the affirmative.

S. Not proved."

The evidence in this case is mai:i'ln~ not wholly, circumstantial and about 20 witnosses wer& ex including a handwriUna expert. The trial court felt that the case required evaluation of the evidence of. Bakshi (P.W. 4), Inderjit Singh (P.W. 18) and Handwriting Expett (P. W. 17) . Driver Balwant Singh was riot examined in the case. The trial . court in a lengthy judP.Jlent exhaustively discussed the evidence of these witnesses. It did not plac.e implicit reliance either on Bakshi (P .W. 4) or on Inderjit Singh (P.W. 18) 11$ indeed in the testimony of both of them the trial court found partly' reliable and pattly unreliable statements.

The court did not feel inclined to hold that their evidence was wholly unreliable. On evaluation' of the evidence of the Hand writing Expert the ttial court felt that the receipt in questjon could not necessarily be held to have beQll forged by the appellant. Afte'r tDJS 'ObServation follows the following passage ijl tl:!e jUdgment :

"I do not, however, feel that this earns an acquittal for him. The direct charge regarding the forgery could be taken as not proved we will have however to .weigh the other evidenco for findin.J out whether he could have used the document Which JS nece$sarily a foged docu ment, as a genuine document. For this Jlurpose we will have to apJ)reciate the evidence of the twO witnesses .

about whom I have spoken quite a long time and we have also to appreciate the interval of time, What exactly the accused did within that half an hour when he took the money and returned, will have to bo surmised, particularly ip. the absence of categorical evi dence showin¥ that the disputed receipt is executed by him. The evtdence shows, it is a forged reqeipt. It is not prepared at tho counter. We may not be sure in finding out as to who wrote it. The accused may have had his associates ii he himself has not written it. Considering the way in which coumers are stated to be working, considering the amount involved and the short time limit when the accused reappeared legitimate payment across the counter will have to be ruled out. That is not even suggested on behalf of the accused. He may have his own collaborators. If we accept the version, which I do, then it was this receipt which was in the .hands of the accused that was given over to the driver and from there bnwards it reached the firm Messrs Imperial Tobacco Co. of India Ltd. I feel, the accused ought to be supposed to be aware that the real payment was made and what he carried could not be tho real receipt.

It is for this reason that I am feeling that the charge of using a forged receipt knowing it to be forged could be brought home to him."

The trial court thereafter dealt with the charges of chDating and ultimately convicted the appellant for offence under ss. 471 read with 467, I.P.C. and for an offence under s. 420, I.P.C. Under the former he was sentenced to five years' rigorous imprisonment and a fine of Rs, 500/. with six months' further rigorous imprisonment in case of default. Under. s. 420 he was sentenced to rigorous imprisonment for two years. The substantive sentences were directed to be concurrent.

The appeal to the High Court was dismissed in limine with one word "Dismissed".

Before us on appeal by special leave the short point but one G of vital importance to the appellant requiring our decision is whether the High Court was justified oo the facts and circumstances of this case in unceremoniously dismissing the appeal in limiM . with one word "Dismissed" without making a speaking order indi

cating the reasons for the dismissal. The facts briefly stated by °' and .a close study of the lengthy judgment of the trial court quite H clearly show that the appeal in the High Court did raise pointl which were ID.Ot only arguable but were aJSo substantial requiring critical scrutiny and serious appraisal and -evaluation of the prosecution evidence and the circumstances of. the case. The impor

SUPREME COURT RBPOR TS [1973] 3 S, C.ll.

tance of, the opinion of the High Court on arguable points requiring consideration on appeal iin that court when questions of fact or law are open to challenge by the appellant was emphasised more than 20 years ago by this Couit in Mushtak f:t1sseln v. The State of Bombay(') when Mahajan J., (as he then was) observed at p, 820:

"With great respect we are however constrained to observe that it was not right for the High Court to have dismissed the appeal preferred br, the appellant to that court summarily, as it certainly raised some arguable points which required consideration 'though we have not thought it fit to deal with all of them. In cases which prima facie raise no arguable issue that course is, of course, justified, but this court would appreciate it if in arguable cases the summary rejection order gives some indication of the views of the High Court on the points raised. Without the opinion of die High Court on such points in special leave petitions under article 1315 of the Constitution this Court sometimes feels embarrassed if it has to deal with those matters without the benefit of that opinion."

Since then in a series of decisions (quite a number of them reported and several unreported) this Court has consistently drawn the attention of the High Courts to the eminent desirability of giving an indication of their views on the points raised in arguable cases in accordance with the legal position enunciated by this Court.

Such a course is normal in cases which raise fairly arguable questions of fact or law. In one of the latest decisions of this Court in K. K. Jain v. State of Mahaiashtra(') some of the earlier decisions were again noticed and it was considered necessary to repeat the emphasis laid on ithe. necessity of recording reasons by the High Court for dismissing appeals raising questions which cannot be considered to bie unsubsta.ntial or not arguable. In that decision it was reiterated, inter alio, that reasons prevailing with the High Court for dismissing the appeal, if recotded, would have been of valuable assistance to this Court in finally disposing of the appeal on merits.

Another advantage of recording such reasons is that the accused-appellant who may not always be present in court would have the satisfaction of knowing from the judgment that the points appropriately arising for consideration in his case were actually argued a.nd only considered by the High Court while dismissing . his appeal. This would, inter alia, tend to promote confidence of the parties concerned in our judicial process. In the present case had lhe High Court recorded its reasons for dismissing the appeal it would have better enabled the appellant's lawyer to consider the advisibility of appealing

(!) [1953) S.C.R. 809.

(2) A.I.R. 1973 S.C. 243.

under Art. 136 of the Constitution and after filing the appeal would have afforded valuable assistance both to the counsel appear ing in this Coi:rt .and to us in the final disposal of the appeal without feeling the necessity of remanding the case to the High Court for re-hearing.

The remand no doubt must result in further delay in the final disposal of the appellwt's appeal in the High Court and this indeed is regrettable. But in the absence of the opinion ol

the High Court which that Court was under the law expected to record we are left guessing abput the line of reasoning the High Court would have adopted after appropriate scrutiny of the evi dence on the record. The appellant is entitled to have a proper

deision on the points arising in his appeal by the High Court on due appraisal of the evidence in accordance with Jaw. The legal position on the point in .question has been authoritatively settled

and declared by this Court and the same has been frequently reite rated in its decisions. The law reports are so full of them that it appears to us to be somewhat surprising that the counsel appearing in the appeal in the High Court should have been unaware of it.

It, however, does seem that the attention of ithe High Court was not drawn to these decisions, for had that Court been apprised of the law as authoritatively declared by this Court, it is inconceivable that the present appeal .would still have been dismissed without indicating the reasons in support of it. Had the High Court recorded reasons the delay necessitated by this remand could have been avoided. But in the circumstances we have no optioll but to allow the appeal and remand the case to the High Court for re hearing and deciding the appeal after considering the points raised a.nd recording its reasons in accordance with law. We have taken care not to express any opinion on the merits of the case either way.

It is hoped that this appeal would now 1* disposed of by the High Court expeditiously and without avoidable delay.

SC.

Appeal allowed.

RAJENDRAPAUL RAMASARAN DASS SHARMA

February .23, 1973

A. ALAGIRISWAMI

l. D. DUA

e State of Maharashtra

Montgomery Transport Co.

December 16, 1968

Imperial Tobacco Co.

S. 467, 471

S. 467

S. 420

s. 471

s. 467

s. 420

Sinoo

M. N. Sharma

S. B, Wad

Rine Sachthey

DUA

s. 467

s. 471

s.

420

I.P.C

Montgomery Transport Com pany

December 16, 1962

Imperial Tobacco Company

Bakshi

Inderjit Singh

Messrs Pure Drinks Private Ltd.

December 17 ,.

Karkhanis

Govind Charan

Imperial Tobacco Co. of India Ltd.

Bakshi

Inderjit Singh

Handwriting Expett

Balwant Singh

ss. 471 read with 467

I.P.C

s. 420

I.P.C

s. 420

Mahajan

article 1315

Art. 136


CONTROLLER OF ESTATE DUTY, MADRAS v.

C. R. RAMACHANDRA GOUNDER

February 27, 1973

[K. S. HEGDE, P. JAGANMOHAN REDDY AND H. R. KHANNA, JJ.]

Estate Dut, v Act (34 of 1953), s. IQ-Scope of.

The father of the r.espondept was a partner in a firm.

He owned property which the firm was occupying as a tenant at will.

Jn 1953 he executed a deed. of settlement under which he transferred that prop.erty to two of his sons absolutely and irrevocably.

After the transfer the firm continued as tenant paying rent to tihe two donees by

credittng each of tir accounts in the account books of the firm in

rqutl shares. The father also wrote to the firm to transfier from his account five sums of Rs. 20,000 each with effect from April, 1953, to the credit of his five sons in the firm's books.

The sons did llOt withdra\v any amount from their accounts in the firm and the amounts continued to be invested in the firm for which interest at 7 l % per annum \\'as paid to them. The father continued to be a partner of the firm even after the transfr rill 1957, when the firm was dissolved.

On his death thereafter the property leased out to the firm .which was transferred to two of his sons as well as Rupees o~ lakh gifted to the five sons, were sought to be included in the estate of the deceased on the ground that the donees had not been in possessiOJl and enjoyment of the subject matter of the gifts to the entire exclusion of the donor within the meaning of s. 10 of the Estate Duty Act, 1953.

The High Court. on reference, held against the Revenue.

Dismissing the a.ppeal to this Coud.

HELD : Neither the property gifted to the dQJ1Ces nor the amount of Rs. 1 lakh, gifted to the five sons could be included in the estate of the deceased. f81A-B]

Section 10 consists of two conditions, namely, (1) 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 1lhe donor immediately upa, l the gift and (2) the donee must have retained such possession and enjoyment of the property to the entire exclusion of lhe donor or of any _benefit to him by contract or oth, erw'ise; and unless both are satisfied the property would be liable to Estate duty. 1-;, e second part of the section has two limbs, namely, the decead must be entirely excluded, (a) from the propefty, and (b) ffom any benefit by contra.ct or otherwise. The word "otherwise" must be cvnstrued ejusdem generis and it must be interpreted to mean sOme kind of 1egal obligation or some transaction enforceaWie at law Or in equity, which, . though iiot in the form of a contract, may confer a benefit on the donor. [557F-H; 558A-Cl

In the present case, the first two conditions are satisfied because of the unequivocal transfer of the properties and the last limb of the condition relating to any benefit to the do:nor by contract or otherwise is .inapplicable. The donor. on the date when he gifted the property

h1ch was leased out. to the firm~ had two rights. namely, o.wnership in te property and nght to terminate the tenancy aJld obtain posses-

CONTROLLER ESTATE DUTY v. RAMACHANDRA 555 (Jaganmohan Reddy, J.) sion thereof.

He has transferred the ownership and has given such POSBession as the circumstances and the nature of the propefty admit.

It could not be said that since the d<n>r was a partner in the :firm which had taken the property on lease, he derived benefit therefrom and was therefore not entirely excluded from the possession and enjoyment thereof. The benefit the donor had as a member of the partnership was not a benefit referable in any way to the gift but is unconnected therewith. [558CAJ

George Da <; osta v. Controller of Estate Duty, Mysore, 63 I. T. R. 497, followed.

Munro &nd Others v. CommisJioner of Stamp Duties, [1934] A.C. 61, Clifford John Chick and Another v. Comfnissioneir of Stamp Duties, 37 I.T.R. (E.D.) 89 and Commissioner of Stamp Duties of New South Wales v. Perpetual Trustee Company Limited, [1943] A.C. 425, referred to.

Controller of Estate Durv, Mysore v.

Aswath.anurayana Setty and Another, 72 I.T.R. 29, approved.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1391 of 1970.

Appeal by certificate from the judgment and order dated November 25, 1968 of the Madras High Court in Tax Case No. 103 of 1965.

B. B. Ahuja, S. P. Nayar and R. N. Sachthey, for the Appellant.

T. A. Ramachandran, for the respondent.

The Judgment of the Court was delivered by

JAGANMOHAN REDDY, J.-This appeal is by certificate against the judgment of the Tamil Nadu High Court. which has answered the following two questions referred to ii, in favour of the assessee and against the Revenue :

(1 ) Whether on the facts and in the circumstances

ol 1he case the Tribunal was right in law in kolding that the house property in Avanashi Road. Coimbatore, is not liable to estate duty as property deemed lo pass on the death of the deceased under section 10 of the Estate Duty Act, 1953 ?

(2) Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the sum of Rs. 1 la~ gifted by the H deceased to his sons in 1953 is not liable to estate duty as property deemed 10 pass on the death of the deceased under section 1 O of the Estate Duty Act, 1953 ?

These questions arose on the facts set out in the statement of tl\o

cas.e which are : one Ramaiah Gounder was a partner in the fum called N. Desai Gounder & Co., Coimbatore. He owned property which the firm was occupying as tenant-at-will. In August 1953, he executed a deed of settlement under which he transferred t4e property leased out to the firm to his two sons Lingish and Krishnan, absolutely and irrevocably. After this transfer, the firm continued to be in occupation of the premises paying rent thereof at Rs. 300/- p.m. to the two donees by crediting each of their accounts in the account books of the firm in equal shares.

It may be mentioned that Ramaiah the father continued to be ll partner of the firm even after the transfer till April 13, 1957, when the firm was dissolved.

He had also an account with the firm Desai Gounder & Co., and on March 30, 1953, he requested the firm by a letter to transfer from his account five sums of Rs. 20,000/- each with effect from Aprill, 1953 to the credit of

his five sons in the firm's books. He also wrote to the five sons informing them of the transfer.. Though the sons did not withdrl!VI'. any amount from their accounts in the firm, the amounts continued to be invested in the firm for.which interest at 7t% per annum was paid to them.

On the death of. Ramaiah Gounder on May 5, l957, the Assis tant Controller of Estate Duty, included in the estate of the de

ceased, the property leased out to the firm which was transfelT!'ll to his two sons. According to him, possession and enjoyment of the subject-matter of the gift had not been assumed by the donees mor had they retained possession thereof to the entire exclusion of the donor, inasmuch as the partnership in which the donor was a partner with other parties, continued to be in possession and enjoyment of the gifted property as tenants at will of the donees.

With respect to the gift of Rs. 1 lakh to the five sons of the d.,_ ceased, the Assistant Controller held that the qonees had not be!; n

in possession and enjoyment of the subject-matter of the gift to the entire exclusion of the donor within tb_e meanil)g of s. 10 of the Estate Duty Act. He, therefore, included tl)is sum of. Rs. 1 lakh in the principal value of the est". of the c;!eceased.

The accountable persons aeJ?ealed to the Appellate Controller who confirmed the said inclusion.

The Tribunal on a further appeal, however, disagreed with the findings of."tne Assistant Controller and the Appellate Controller.

It hel<i that the firm, of which. the d.eceased was a: partnec, occupied the property but thirt such interest was not as owner of the property, and therefore, the gift ha.d b~ made without the nor retaining a, ny interest, as much it could 1not be inchided in the estate ot the deceased under s. 1 O of the Estate Duty Act. It f.ur:lber hp!\{ t®t the sum of Rs. 1 lakh gifted to the sons was givc; a by t\le sons to the firm

C'.ONTROLLER ESTATE DUTY v. RAMACHANDRA 5 57 (Jaganmohan Reddy, J.) which had benefit of the money and that the fa1her could not be

said to have enjoyed the benefit of the money as partner of the firm.

In this view, the Tribunal excluded the sum of Rs. 3 lakh from the esfate of the deceased.

The High Court agreed with these findings.

It is contended before us by the learned Advocate for the Revenue that both the Tribunal and the High Court were in error in holding that the property as well as the sum of Rs. 1 lakh were enjoyed by the donees to the exclusion of the donor or that the . deceased did not derive blenefit therefrom within the meaning of s. 10 of the Estate Duty Act, because, firstly, the donor was a partner in the firm which had occupied the property as tenants-atwill even after the gift, and secondly, the amount of Rs. 1 lakh, though entered in each of the accounts of the donor's five sons in the books of the firm, w!ls not utilised or enjoyed by them in any manner. Section 10 of the Estate Duty Act, as in .force on the date of the death of the deceased, was as follows :

"IO. Property taken under any gift, whenever made, shall be deemed to pass on the donor's dea'th to the extent that bona fide possession and enjoyment of it was not immediately assumed by the donee and thenceforward retained to the entire exclusion of rthe donor of any benefit to him by contract or otherwise;

"Provided that the property shall not be deemed to pass by reason only that it was not, as from the date of the gift, exclusively retained as aforesaid, if, by means of the surrender of the reserved benefit or otherwise, it is subsequently enjoyed to the entire exclusion of the donor or of any !Jkonefit to him for at least two years before the death : .......... " The crux of the above section as pointed out by this Court in George Da Costa v. Controller of Estate Duly, Mysore,(') lies in two parts : ( 1) the donee must bona fide have assumed possession

and. enjoyment of the property which is rthe subject-matter of the gift to the exclusion of the donor, immediljtely upon the gift; and

(2) the donee must have reta.ined such possession and enjoywenl of the property to the entire exclusion of the donor or of any benefit to him by contract or otherwise.

Boll) these COl)ditions are cumulative. Unle.ss each of these conditions is satisfied, the property would be liable to estate du.ty unqer s. 10 of the Act. The second part of the section has two llmbs: ti)e deceased must be

eritily. excluded (i) f; om th~ property, and (ii) from ny ~! by contract or ot!Jerw1se. The words "by contra~! or otherwise' ii)' th~ second limb! of the section will not control the, words ''tv

(!.) 63 I.T.R,. 497, at p. SOI.

the entire exclusion of the donor" in the firs't limb. The first limb may be infringed if the doillor occupies or enjoys the property or its income, .even though he has no right to do so which he could legally enforce against 'the donee. In other words, in. order to attract the section, it is not necessary that the possess10n of the donor of the gift mus't be referable to some contractual or other arra'!lgement enforceable in law or in equity. In the conte.xt of the section, the word "otherwise" should be construed ejusdem generis and it must be ill'terpreted to mean some kind of legal obligation or some transaction enforceable at law or in equity, which, though not in the forni of a contract, may confer a benefit on the donor.

There is no doubt on the facts of this case, the first two conditions are satisfied because there is an unequivocal transfer of the property and also of the money, in the Oille case 1jy a settlement deed, and in the other by crediting the amount of Rs. 20,000/- in each of the sons' account with the firm which thenceforward became liable to the sons for the payment of the said amount and the interest at 7t% per annum thereon. In these circumstances, the Revenue has failed to establish that the donees had not retained possession and enjoyment of the property or the amount and that the deceased was not entirely excluded from the possession and enjoyment thereof. The last limb of the condition relating to any benefit to the donor by contract or otherwise is inapplicable in this case. The donor on the date when he gifted the property to his sons which was leased out to the firm, had two rights, namely, of ownership in the property and the right to terminate the tenancy and obtain the possession thereof. There is no dispute that the ownership has been transferred subject to the tenancy at will granted to the firm, to the donor's two sons because 1he firm from thenceforward had attorned to the donees as their tenant by crediting the rent of Rs. 300/. to the respective accounts in equal moity. The donor could, therefore, only transfer possession of the property which the nature of that property was capable of, which in this case is subject to the tenancy. He could do nothing else to transfer the pc-ssession in any other manner unless he was required to effectuate 'the gift for the purpose of s. 10 of the Act by getting the firm to vacate the premises and lianding-0ver possession of the same to the donees leaving the donees thereafter to lease it out to the firm.

Even then the objection of the learned Advocate that since the donor was a partner in the firm which had taken the property on lease, he derived benefit therefrom and was, therefore, not entirely excluded from the possession and enjoyment thereof, will neverthel.ess remaiin unsatisfied. To get over such an objection,

te donees will have to lease out the property after getting possession from the firm to some other person totally unconnected with the donor.

Such an unreasonable requirement the law does not

CONTROLLER ESTATE DUTY v. RAMACHANDRA 559 (Jaganmohan Reddy, J.) postulate. The possession which the donor can give is the legal possession which the circumstances and 1the nature of the property would admit. 1his he has given. The benefit the donor had as a member of the partnership, was not a benefit referable in any way to the gift but is uncon.ne()!ed therewith.

The Privy Council in Munro and others v.

Commissioner of Stamp Duties(') was dealing .with a case oi a similar nature. The donor in that case by six registered transfers in the form prescribed, transferred by way of gift all his right, title and interest in portions of the land . to each of his four sons and .to trustees for each ol' his two daughters and their children.

The four sons and the two daughters were, prier to this transfer, on a verbal agreement with the donor, treitted as partners of the busi.ness carried on by him as grazier of the land owned by him. The evidence showed that 1the transfers were taken subject to the partnership agreement and on the understanding that any partner could withdaw and work his land separately. On an analogous provision of the law, the Privy Council thought it unnecessary to determine the precise nature oi the right of the partnership at the time of the transfers because it was either a tenancy during the term of the partnership or a licence coupled with an interest. Lord Tomlin, giving his opinion, observed at p. 67, that "the benefit which the donor had as a member of the partnership in the right to which the gift was subject was not in their Lordships' opinion a benefit referable bn any way to the gift". This decision was referred to and distinguished in O/ifford John Chick ant! another v. Commissioner of Stamp Duties('), and though it was. considered to have no application to the case at point, Viscount Simonds oterved at p. 97 : "It must often be a matter of fine distinction "'hat is the subject-matter of gift. If, as in Munro's case, the gift is of a property shorn of certain of the rights which appertain to complete ownership, the donor cannot, merely because

'le remains in possession and enjoyment of those rights, be said within the meaning of the section not to be excluded from possession and enjoyment of that which he has given." In the Commissioner of Stamp Duties of New Sov/h Wales v.

Perpetual Trustee Company Limited(') .. the Privy Council further elaborated the concept of the nature of possession required to be given to the donee as not to attract the analogous provisions of the Commonwealth Act. Lord Russel of Kill ow en observed at p. 440 :

"The linking of possession with enjoyment as a com - posite object which has to be assumed by tile donee indicate. •hat the possession and enjoyment contemplated is

ben~,.dal possession and enjoyment by the object of the donor's bounty ................ because the son was (through the medium of the trustees) immediately put

(I) [1934] A.C. 61.

(2) 37 l.T.R. [E.D.] 89 (3)

S'JPREME COURT REPORTS

[1973] 3 S.C.R.

in such bona fide beneficial possession and enjoyment of the property comprised in the gift as the nature of the gift and the circumstances permitted. Did he assume it, and thenceforth retain it to the entire exclusion of the donor ? The answer, itheir Lordships think, must be in the affirmative, and for two reasons : ( 1) the settlor had no enjoyment and possession and enjoyment as he had from the .fact that the legal ownership of the shares

veted in him and his co-trustees as joint tenants, was had by him solely on behalf of the dooee. In his capacity as don6r he was entirely excluded from possession and enjoyment of whai he had given to his son.

Did the donee retain possession and enjoyment to the entire exclusion of anv benefit to the settlor of whatever kind or in any way whatsoever ? Clearly yes." .

The views expressed by the Privy Council are in complete accord with our views already expressed.

This was also the view held in Controller of Estate Duty, Mysore v. S. Aswathanarayana &tty and another('), where a Bench of the Mysore High Court considered both the case of Olifjord John Chick and of . Munro above referred to. In that case, on June 30, 1954, the deceased transferred to his two sons Rs. 57,594 l:\feing half of the share standing to his credit as on that date in the books of a firm in which he was a partner and from July 1, 1954, the sons were also taken as partners in the firm. On the death of the deceased on November 16, 1957, the Assistant Controller held that the amount transferred to the sons must be deemed to pass as per the provisions of s. 10

of the Estate Ducy Act, which decision was confirmed by the Appellate Controller. The Tribunal, however, held that the sum which subsequently was rectified to be Rs. 73,695 was not so includible.

One of us (Hegde, J., as he then was), speaking for the Bench, <>bserved at p. 32 :

"On the .facts of the case, it cannot be said that, after the gifts, the donees did not retain the property ifted to the entire exclusion of the donor or that the donor had any benefit either by contract or otherwise in the property gifted. That in order that the property could deem fo pass and estate duty could be leviaWe in such cases, the benefit of the donor must be a benefit referable to his own property. The view, that if it is once found ithat the deceased had some benefit in the property, that in itself was sufficient to bring the case wit!Jjn the ambiJ of section 10 imspective of the question whe>ther that benefit was referable or not referable to the gift, in our opinion, is erroneous."

(1) 72 l.T.R. 29

CONTROLLER ESTATE DUTY v. RAMACHANDRA 561 (Jaganmohan Reddy, J.) In our view, neither the property gifted to the donees, nor the amount of Rs. 1 lakh gifted to the five sons, could be included in the estate of the deceased. The appeal is accordingly dismissed with costs.

V.P.S.

Appeal dismissed.

CONTROLLER OF ESTATE DUTY, MADRAS

C. R. RAMACHANDRA GOUNDER

February 27, 1973

K. S. HEGDE

P. JAGANMOHAN REDDY

H. R. KHANNA, JJ.

s. 10

Estate Duty Act, 1953

Section 10

Jaganmohan Reddy

B. B. Ahuja

S. P. Nayar

R. N. Sachthey

T. A. Ramachandran

JAGANMOHAN REDDY

section 10

Estate Duty Act, 1953

section 1

Estate Duty Act, 1953

Ramaiah Gounder

N. Desai Gounder & Co.

Coimbatore

Lingish

Krishnan

Ramaiah

April 13, 1957

Desai Gounder & Co.

March 30, 1953

May 5, l957

s. 10

s. 1

s. 10

Section 10

s. 10

s. 10

Tomlin

Viscount Simonds

Munro

Russel

Mysore High Court

Olifjord John Chick

June 30, 1954

July 1, 1954

November 16, 1957

s. 10

Hegde

section 10


BRIJ KISHORE PRASAD SINGH AND OTHERS

JALESHW A; R PRASAD SINGH AND OTHERS

March 2, 1973

[A. N. GROVER, K. K. MATHEW AND A. K. MUKHERJEA, JJ.] Code of Civil Procedure, 1908, S. 41.-Partition suit co111pro1nised-- No decree drcwn up or executed-Subsequent suit o.r possession of property allotted under compromise whether barred.

Bihar Lan<! Reforms Act 1959, s. 5-Constructive possession suffi- , cient to confer iright under section.

A partitio, n suit between K and his brothers was compromised on July 4, 1947 and different schedules were prepared for the property iallotted to the sharers. However none of the parties tg the compromise produced the necessary stamp paper as dij:ected bv. the Court, and no -decree was drawn up by t_he Court. The present suit was filed by the successors-in-interest of K for possession of certain property which under the afdresaid compromiSe had fallen to the share of K.

De fenda, uts 1 and 2 contended .. that K while he was alive executed a hukumn, ama in their favour and they were put in possess'ion of the plaint property as lessees, and so they were entitled to retain possession.

They further contended that the suit was barred by limitation and al!o by section 47 of the Civil Procedure Code. The Trial Court decreed the suit. The decree was ctfirmed in appeal.

In second appeal the High Court held that the plaintiff should have paid stamp fee and got the decree drawn up in the partition suit and executed it_ and so the suit was barred by sec. 47 of Civil Procedure Code.

The Court further held that since the plaint property had vested in the Bihar Government under the Bihar Land Reforms Act, 1959 the plaintiffs we're not e; t>title to maintain the suit. The High Court accordingly allowe<l the appeal and dismissed the suit.

In appeal by special leave to this Court two questions that arose for consideration were : ( 1) whether the suit was barred by section 47 of the Civil Procedure Code and (2) whether under the provi•ions of the Reforms Act the plaint property had vested in the Government and therefore the plaintiffs were incompetent to maintain the suit. - Allowing the appeal, HELD : (i) It was clear froin the compromise petition that ihe defendants were permitted to occupy the plaint property until the structure which was constructed in the property was removed by them. They no doubt 'remained in physical possession but that was not with any intention to possess the property for themselves, but because they were permitted to remain i.p possession until the sU"ucture constructed by them was removed. The only right which they claimed in the written statement was that they were tenants under K by virtue of the hukumnc.ma executed by him in the'ir favour. At no time they asserted or claimed any right to remain in possession otherwise than as te:nant. lbeir case that K put them in psession was found against them by the Trial as well as the First Appellate Court.

But that would not 'in any way affect the permissive nature of their possession. after the Compromise.

Therefore it must be held that K was in constructive possessiap of the property after the compromise and the suit for recovery of khas possession \Vas not barred by section 47 of the Civil l'rocedure Code. [565CE]

(ii) The High Court wrongly took the view that since K was not in possession of the property at the time the property vested in the State he \Vas not entitled to retain possession of the plaint projperty under s. 5 of the Bihar Land Reforms Act 1959, as a te1nant under the State free of rent.

There was no dispute that the plaint property 'answered the description of a homestead in s. 5 of the Act. The constructive possession of K was sufficient to enable him to retain possession as tenant under th:~ section.

In other words on the date of vesting of the property in the Government, K was, for the purpose of s. 5 in possession of the plaint property.

Whereas s.6 speaks of k/ias possession sction 5 speaks only of possess'ion.

On the date. of vesting of the plai:nt property in the State K was in possession for the purpose of s. 5 -and he became a tenant under the State free of rent.

Accordingly the suit for recovery of possession was maintainable. f565H]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1466 of 1967.

Appeal by special leave from the judgment and decree dated 24th November 1964 of the Patna High Court in appeal from Apellate Decree No. 1029 of 1968.

S. C. Agarll'ala, and V. J. Francis, for the appellants.

D. Goburdhan, for respondent Nos. 1 to 3 & 10.

The Judgment of the Court was delivered by

MATHEW, J.-This is an appeal, by special leave, by the plaintiffs from a decree passed in appeal by 1he Patna High Court dismissing their suit for recovery of the, plaint property with mesne profits.

Plaintiffs I to 4 are the daughter's sons of one Kishundeo Singh, plaintiffs 5 and 6 are his daughters and plaintilf 7 is his widow.

The plaint property together with some other properties belonged to the joint family of which Kishundeo Singh and his brothers were the members.

Suit No. 60/34 of 1944-46 was instituted for partition of the properties.

That suit was compromised on July 4, 1947 and different schedules were prepared for the property allotted to the shares nd sons property was Mt in the joint possession of all of them. The plaint property fell to the share of Kishundeo Singh under the compromise. It may be mentioned that as none of the parties to the compromise produced the necessary stamp paper as directed b!y the Court, no decree was drawn up by the Court.

In the. suit for recovery of possession of the plaint property filed by the plaintiffs, defendnts I and 2 contended that Kishundeo Singh, while be was alive, executed a hukumnama in 1354 Fs. in their favour and they were put in possession of the plaint property as lessees and so they were entitled to remain in possession. They further contended that the suit was barred by limitation and also by s. 47 of the Civil Procedure Code.

SUPREME COURT REPORTS

[1973] 3 S.C.R.

The Trial Court found that Kishundeo Singh o1Jllained possession of the plaint property on the basis of the compr9ntlse, that the case of the defendants 1 and 2 that Kishundeo Singh had executed a hukumnama in their favour and that they obtain possession of the plaint property under it was false, that the suit wru;

not barred by limitation or bys. 47 of the Civil Procedure Code and decreed the suit. This decree was confirmed in appeal.

It was again&! this decree that ithe second appeal was filed by the defendants before the High Court.

The High Court held that the plaintiff should have paid the stamps fee and got the decree drawn up in Suit No. 80/34 of 1944-46 and executed it and so the suit was barred by s. 4 7 of the Civil Procedure Code. The Court further held that since the plaint property had vasted in the Bihar Government under the Bihar Land Reforms Act, 1959, hereinafter referred to as the Act, the plaintiffs were not entitled to maintain the suit. Therefore, the High Court allowed the appeal and dismissed the suit.

The two questions that arise for consideration in this appeal are: whether the suit was barred by s. 47 of the Civil Procedure Code and whether under the provisions of the Act, the plaint property had vested in the Government and, therefore, the plaintiffs were incompetent to maintain the suit.

As the first question, the High Court was of the view that, though none of the parties to the compromise had produced the necessary stamps paper as directed by the Court and no formal decree was drawn up, t11e plaintiffs could not have instituted a fresh suit for recovery of possession of the plaint properly as their only remedy was to execute the decree in suit No. 80/34 of 1944-

46. In other words, !he High Court held that the plaintiffs should hawe produced the necessary stamp paper and got the final drawn up and executed it, instead of filing a Sl•it for the relief which they could have obtained by executing the decree and so, the suit was barred by s.47 of the Civil Procedure Code.

The Trial Court had found that Kishundeo Singh obtained possession of the plaint property without the assistance of the Court in pursuance of the compromise but that he allowed the defendants to occupy the same. To put it in other words, the finding of the

Trial Court was that the defendants were in permissive occupation.

The Trial Court also found that the definite case of the defendants was that they were put in possession of the property under the hukumnama and, therefore, their possession was clearly that of lessees under an agricultural lease.

The lower appellate Court held that there was no allegation in the plaint that Kishundeo Singh obtained khas possession under the com1'f01llise nor was there any evidence to show that he obtained

khas possession but that defendants 1 and 2 continued in as before the compromise.

Before the compromise, Kishundeo Singh and the defei_idants were in possession as tenants-in-common. The actual possession of the defendants, of the plaint property, was also the constructive possession of Kishundeo Singh. So, when the lower appellate Court said that the defendants continued in possession as before, it can only mean that after the compromise the defendants were in possession acknowledging the title of Kishundeo Singh. That apart, defend11nts l and 2 had no case that they intended to possess the property as their own. It is clear from the compromise petition that the defendants were permitted to occupy the plaint property until the structure which was constructed in the property. was removed by them. They, no doubft, remained in physical posses, sion, but that was not with 11ny intention to possess the property for themselves but because they were permitted to ramain . in possession until the structure constructed by them was removed.

The only right which they claimed in the written statement was that they were tenants under Kishundeo Singh by virtue of the hukumnama executed by him in their favour. At no time they asserted or claimed any right to remain in possession otherwise than as tenant. As already stated, their case that Kishundeo Singh put them in possession under the hukumnama was found against by the Trial as well as the First Appellate Court. But that would not in any way affect the permissive nature of their possession after the compromise. Therefore, we think that Kishundeo Singh was in constructive possession of the property after the compromise and, the suit for recovery of khas possession was not barred by s.4 7 of the Civil Procedure Code.

The second ground on which the High Court dismissed the suit was that the plaint property had vested in the State of Bihar under the Act a.nd the plaintiffs had; therefore, no right to proceed with the suit and obtain a decree for possession. The suit was instituted on March 7, 1953; die property vested in the State on Jan.uary 26, 1955, under the Ac~ .. There is no dispute that the plamt property answers the description of a homestead in s. 5 of the Act.

The ~Ugh Court was of the view that since Kishundeo. Singh was not m possession at the time die property vestC'.d in the State, he was not entitled to retain possession of the plaint property under

s. 5 as a tenant under the State free of rent. We are of the opinion that the constructive possession of Kishundeo Singh was sufficient to enable him to retain possession as a tenant under the section. In other words, on the date of the vesting of the property in the

Goveent, Kishundeo Singh was, for the purpose of s. S, in possession of the plaint property. In this oontext, it may be noted

4-L761Sup, CIJ73

SUPJ!.EME COURT REPORTS

that tbe language of s. 5 is in sharp contrast with that of s. 6. The A material pa rt of s. 5 states : "5. Hcmesteads of inW!rmediaries to be retained by them as tenants-( 1) With effect from the date of vesting, all homesteads comprised in an estate or tenure and being in the possession of, an intermediary on the date of such vesting shall, subject to the provisions of sections 7 A and 7B, be deemed to be settled by the State with such ill'lermediary and he shall be entitled to retain possession of the land comprised in such homesteads and to hold it as a tenant under the Staie free of rent." The relevant portion of s. 6 is in these terms : "6. Certain other lands in khas possession of intermediaries to be retained by them on payment of rent as raiyats having occupancy rights-( 1) On and from the date of vesting all lands used

for agricultural or horticultural purposes, which were in khas possession of an intermediary on the date of such vesting, .... "

Whereas s. 6 speaks of khas possession, s. 5 mentions only of possession. We find that on the date of vesting of the plaint D property in the State, Kishundeo Singh was in possession for the purpose of s. 5 and that he became a tenant under the State free of rent and that the suit for recovery of possession was maintainable.

In the result we allow the appeal and set aside the decree of the High Court and restore the decree passed by the lower appellate E Court, but we make no order as to costs.

G.C.

Appeal allowed.

BRIJ KISHORE PRASAD SINGH AND OTHERS

JALESHW A; R PRASAD SINGH AND OTHERS

March 2, 1973

A. N. GROVER

K. K. MATHEW

A. K. MUKHERJEA, JJ.

Code of Civil Procedure, 1908

S. 41

Reforms Act 1959

s. 5

section 47

sec. 47

Civil Procedure Code

section 47

section 47

s. 5

Bihar Land Reforms Act 1959

s. 5

s. 5

s. 5

Patna High Court

S. C. Agarll'ala

J. Francis

D. Goburdhan

MATHEW

Kishundeo Singh

July 4, 1947

s. 47

s. 4

s. 47

Bihar

March 7, 1953

Jan.uary 26, 1955

s. 5

Kishundeo. Singh

s. 5

s. 5

s. 6

s. 5

sections 7

s. 6

s. 6

s. 5

s. 5