RAMANLAL BHOGILAL SHAH AND ANOTHER A v.

D. K. GUHA AND OTHERS

January 24, 1973

{S. M. SIKRI, C. J., A. N, RAY, D. G. PALEKAR, M. H. BEG AND

S. N. DWIVEDI, JJ.J B Constitution of India, Art. 20(3)-Whether accused mentioned in an F.J.R. is bound to appear before Enforcement officer to give evidence In

connection with the same offence.

The point of law being same in both the writ petitions, the facts of writ petition No. 164 of 1972 are as follows:-

The p, etiti<>i>er was the General Manager of United Comm.

Ban~ till January 17, 1968 when he became its Chainmn and wholetime Director and after nationalisation of the bank, he was appointed Custodian thereof.

In 1966, the United Comm.

Bank had booked a forward .exch-.inge contract for Htndustan Motors for £ 9,32,617 at th<! rate -0f Is. 529/32d. per rupee.

Thereafter, the rupee was devalued and on May 24, 1971 the petitioner was served with summons under s. 19-F of tju, Foreign Exchange (Regulation) Act, 1947 to give evidence in an enquiry held by respondent No. 1 into certain offences under the Foreign Exchange Act. The petitioner was examined on June 3, 16 .and 17, 1971.

According to the petitioner, the entire examination these days related to the booking by the bank of the said forward exchange , contract.

On August 31, 1971, the petitioner was arrested under s. 19B of the Foreign Exchange Act. Sub-s. 1 of S . 19B of the Act provides that "if any officer of Enforcement .... has reason to believe that any person in India etc., has been guilty of an offo.nce punishable under the Foreign Exchange Act, he may arl'est such person and shall. as soon .as may be, inform him of the ground of such arrest." Sub.sec. (2) p~

vides that every person arrested under sub section ( 1) shall, without necessa'ry delay, be take, tl to a Magistrate. Sub-s. (3) empowers the -0fficer concerned to release an arrested person on bail and he has the same powers and as that of an O/c of a police station.

The grounds, -served on the petitioner, for the offence under s. 4(2), and uinder s. 22 of the Act punishable under s. 23, are elaborate.

Paras 31 to 40 of the grounds of arrest are inter alia, :-conversion of pound sterling not at the prescribed rate, false information fur, oished to the Reserve Bank in contravention of Sec. -22 of the Act etc.

[The question arose whether after these grounds had been served <>n the petitioner, it ciluld be said that he was a person accused of an off-e within Art. 20(3) of the Constitution].

Th, e petitioner was later produced before the Chief PresideQCy Magistrate who released him on bail with a direction that he should .contact the investigating officer from time to time.

Thereafter, an F. I. R. was recorded under s. 154 Cr .P .C. by the• D.S. P., C. B. I., New O,, lhi and an order was obtained from the 438

Chief Presidency Magistrate Calcutta permitting the il>vestigation to be made under s.155(2). Cr. P.C .. The offences alleged in the F.I.R. are s.120B read with s.420 I.P.C. and under s.4(2) read with •· 23(1) (b) of the Exchange Act.

The names and addreases of the accused were given as tlie Management and other o111cers of the

Unitd Commercial Bllll!k and the Management and otlloers of Hindustan Motors Ltd.

On April 17, 1972 another summons was issued to the petitioner under s. 19F of the Exchange Act to appear before the Enfdroement Directorate and to give evidence regarding the transaction of Exchange Contract booked from Hilndustan Motors Ltd.

After objecting to appear before the Enforcement Directorate as .

Witness the petitioner filed the present writ petition before this Court.

It was contended by the petitioner that after the Enforcement officer had xamined the petitionr and put his CO!llClusions in the grounds of afrest, the petitioner was definitely a "person accused of an offence" within the meaning of Art. 20(3) of the Constitution of India and at any rate, the petitioner was accused of an offence when the F .. I. R, was recerded and therefore. the summons dt.

April 17, 1972 was illegal.

Allowin~ the petition, . HELD : (i) It is wll settled that with the lodging of a First Informati01' .Report a person is accused of an offence Within the meaning of Art .. 20(3). [445E-Fl . Ramesh Chandra Mehta v. State of West Bengal [1969] 2 S.C.R. 461 Raja Narayan/al Brlslla/ v, Manack Phiroz Mistry [1961] 1 S.C.R.

417 and M. P. Sharma v. Satish Chandra, [1954] S.C.R. 1077, re forred to.

(ii) Although the petitioner is a person accused of an offence within thlo meaning of Art. 20(3), the only protection that Art. 20(3) gives to him is that he caninot be compelled to be a witness against himself; but it.his does not mean that he need not give information regarding matters whic'h do J>Ot tend to incriminate him.

[4460-H] State of Bombay v, Kathi Kalu Oghad, [1962]

3 S .C.R. 1032,

refed to. l'herefore in the present case the summons must not be set aside.

The petitio; ner must appear before the enforcement Directorate and answer such questions as do not tend to incriminate him. [447C-D]

ORIGINAL JURISDICTION.: Writ Petitions Nos. 164 and 165 of 1972.

Petitions under Art. 32 of the Constitution of India for the enforcement of fundamental rights.

A. K. Sen, (in W.P. No. 164) B. Sen, (in W.P. No. 165) Krishna Sen, S. R. Agarwala and R. K. Khanna, for the petitioners.

F. S. Nariman, Additional Solicitor-General of India and S. P.

Nayar, for the respondents.

The Judgment of the Court was delibered by SIKRI, C.J. The same point of law arises in both the writ petitions and it will suffice if facts in writ petition No. 164 of 1972 are set out. The petitioner, Ramanlal Bhogilal Shah, was the Gene-

SUPREME COURT REPORTS (1973] 3 S.Cl.R,

ral Manager ol United Commercial Bank Ltd. till January 17, 1968 when he became the Chairman and wholetime Director of the said bank. Upon nationalisation of the bank, the petitioner was appointed Custodian thereof and he continued as Custodian till September 1, 1971.

On June 4, 1966 the United Commercial Bank had booked a forward exchange contract for Hindustan Motors for £ 9,32,617 at the rate of ls. 529/32d, per rupee. On June 6, 1966, the rupee was devalued. On May 24, 1971 the petitioner was served with summons under s. 19-F of the Foreign Exchange (Regulation) Act, 1947-hereinafter referred to as the Exchange Act to give evidence in the enquiry which Shri D. K. Guha, Deputy Director, Enforcement Directorate, Was making into certain offences under the Exchange Act. The petitioner was examined on June 3, 1971, June 16, 1971 and June 17, 1971.

According to the petitioner, the entire examination on the said dates related to the booking by the United CommercialBank of the aforesaid forward exchange contract dated June 4, 1966. On August 31, 1971, the petitioner was arrested under s. 19B of the Exchange Act. Sub-section ( 1) of s. 19B provides that "if any officer of Enforcement. . . . . has reason to believe that any person

in India or within the Indian customs waters has been guilty of an offence punishable under the Exchange Act, he may arrest 'such person and shall, as soon as may be, inform him of the grounds for such arrest." Sub-section (2) provides that "every person arrested under sub-section ( 1) shall, without unnecessary delay, be taken to a Magistrate." Sub-s. (3) empowered an officer of Enforcement arresting any person to release such person on ball or otherwise. In this connection he has the same powers and Is sµbject to the same provisions as the officer-in-charge of a polfoe litation.

The grounds of arrest served on the petitioner are elaborate.

These give detailed reasons why the enforcement officer had .reasons to believe that the petitioner had been guilty of an offence under

s. 4(2) and under s. 22 of the Exchange Act punishable under s. 23 thereof. We may reproduce paras 31 to 40 of the grtl\inds of arrest. ·

"31. AND WHEREAS by such criminal acts the Bank converted pound sterling not at the rate prescribed by the Foreign Exchange Dealers Association of India effective from 8-6-66 as aforesaid but at the rate of Rs. 1-5 29/32d.Re. 1 during the period of 8-7-66 to 3-3-67 on the total amount of £ 9,32,617-0-od;

32. AND WHEREAS the aforesaid amount of £ 9,32,617-0-0d has been converted into Indian currency at rates other than the rates authorised by the Reserve Bank of India;

33. AND WHEREAS such unauthorised conversion has been made without fulfilling the condition prescribed in Section XXVIII of the Exchange Control Manual published by the Reserve Bank of India as aforesaid.

34. AND WHEREAS such conversion of pound sterling into Indian currencies has been made in contravention of Section 4(2) of the said Act;

35. AND WHEREAS false information has been furnished to the Reserve Bank of India thereby contravening the provisions of Section 22 of the said Act;

36. AND WHEREAS the aforesaid contraventions, have been committed by the said Bank or have taken place with the consent of the said R. B. Sha\!;

37. AND WHEREAS at the time of the aforesaid contraventions were committed, the said R. B. Shah was in charge of, or was responsible to the United Commercial Bank Limited for the conduct of the business of the said Bank;

38. AND WHEREAS lhe said R. B. Shah failed tQ prove in course of his statements made under Sec!iQll

19F of the said Act before Shri D. K. Guha, Deputy Director of Enforcement that the contravention tooll:

place without. his knowledge or that he exercised all due diligence to prevent the aforesaid contravention, as

reqltired under Section 23C of the said Act.

39. AND WHEREAS, in view of the aforesaid facts 1111d circumstances, I, Onkar Nath Chattopadhyay, Enforcement Officer, Enforcement Directorate, l)epaJitment ot Personnel, Cabinet Secretariat, Government of India, being an officer of Enforcement authorised .by the Central Government to exercise 'the powers under Section 19B of the said Act, have reason to believe that the said R. B. Shah in India has been guilty of oll'ences under Section 4(2) and under Section 22 of the said Act punishable under Section 23 of the said Act; ·

40. NOW, THEREFORE, I arrest the said R .. B. • Shah on the grounds stated herein above, todav the 3 ls t August, 1971 at 10.35 a.m. under Section 19E{i) of the Foreign Exchange Regulation Act, 1947." The question arises with which we will presently deal with, whether after those grounds have been served on the petitioner,

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

it could be said 1hat he was a person accused of an offence within art. 20(3) of the Constitution.

The petitioner was produced before the Chief Presidency Magistrate, Calcutta, on August 31, 1971, who released him on bail of Rs. 10,000 with the direction that the petitioner should con

tact the Investigating Officer every alternate day during the next two weeks and thereafter as and when called for.

On September 6, 1971, the Chief Presidency Magistrate, Calcutta, recorded : ,; Both accused are on C.B. and present. Perused report submitted by 1.0. 1.0. prays for three months time for submitting further report. Time allowed till 6-12-71 for submission of report."

On December 6, 1971, the order is recorded as follows :

"Both accused are on C.B. and present.

Persued report submitted by Enforcement Directorate. Further three" months time. Time allowed till 6-3-72 for compl~ tion of investigation. 1.0. is directed to expedite and file complaint, if any, at an early date."

On March 6, 1972, it was inter alia ordered : ". , ... Since no regular complaint has till now been filed, personal exemption prayed for is allowed.'' The order further proceeds :

_ "Considered I.O.'s remand report. He submits that the matter is pending before the Supreme Court and concerned documents remain sealed in that connection.

He further says complaint will be filed soon after the matter .is disposed by the Supreme Court. Considering such 'aspects of the qµestion 1.0. is. allowed time till 5-6-72 for a report about progress of investigation and submission of regular complaint, if any, against the accused persons.'' It is alleged in the petition that "pursuant to enquiries made in this behalf, your petitioner has come to learn that the Supreme Court proceedings referred to by the respondent No. 4 before the C.-'hief Presidency Magistrate, Calcutta, as recorded in his order dated 6th March 1972 arose out of a writ petition filed by Hindusthan Motors Ltd. before the Hon'ble High Court at Cakutta challenging inter a/ia the search at the premises of Hindusthan Motors Ltd. conducted by the Enforcement Directorate in or about October 1969 and the seizure of documents as a result

thereof." In the course Of this enquiry the petitioner learnt that a case had. been registered on a First Information Report dated

November 9, 1971, recorded under s. 154 of the Criminal Procedure Code and an order dated November 25,1971 had been obtained from the Chief Presidency Magistrate, Calcutta, permitting the investigation to be made under s. 155(2) of the Code of Criminal Procedure, 'This First Information Report des with the forward exchange contract purported to have been entered on June 4, 1966 by M/s Hindusthan Motors Ltd. and the United Commercial Bank Ltd. The offences alleged in the first Information Report are s. 120B read with s. 420 I.P.C., and urtder s. (2) read with s. 23(1) (b) of the Exchange Act, and the names and addrs.1es of the accused are given as the Management and other officers of the United Commercial Bank and the Management and officers of the Hindusthan Motors Ltd.

On April 17, 1972 another summons was issued to the petitioner under s. 19-F of the Exchange Act tei appear before the Deputy Director, Enforcement Directorate, on April 28, 1972 to give evidence relating to the transaction of exchange contract booked from Hindusthan Motors Ltd. on June 4, 1966. The petitioner wrote to the Deputy Director submitting that the summons was violative of art. 20(3) of the Constitution: In this conneetion he submitted as follows :

"I remind you that after examining on the 3rd June, 1971, 16th June. 1971and17th June 1971 proceedings have been initiated atia!was arrested on the 3 lst August, 1971 and in the grounds of arrest .one of the grounds of accusation mentioned is the transaction referred to by you in the summons."

The petitioner requested the Deputy Director to withdraw !he summons.

On April 22, 1972 the Deputy Director informed the petitioner that the contentions had no substance at all. He further informed the petitioner that the summons issiied on April 17, 1972 could not be withdrawn and requested the petitioner to comply with the name.

TI1e petitioner thereupon filed the present petition on April 27, 1972.

The learned counsel for the petitioner, Mr. A. K. Sen, contends that on the facts given above the petitioner fell within the description of a "person accused of an offence" within the meaning of art. 20(3). He contended that after the Enforcement Officer had examined the petitioner and put his conclusions in the grounds of arrest, the petitioner was definitely accused of an offence under the Exchange Act. He next contends that at any rate, the petitioner was accused of an offence when the J:'.irst l3-L 796Sup.C.l./73

SUPREME COURT REPORTS

Information Report was recorded under s. 154, Cr.

P.C., by Shri J. N. Prabhakar, Deputy Superintendent of Police, Central

Bureu of Investigation, Special Police Investigation Unit, New

Delhi.

The learned Additional Solicitor General says that tb.e first point is concluded by the decision of this Court in Romesh Chandra, Mehta v. State of West Bengal.(1') He strongly relies on the following passage at p. 4 79 :

"It was strenuously urged that under s. 104 of the Customs Act, 1962, the Customs Officer may arrest a person only if he has reason to believe that any person in India or within the Indian Customs waters has been guilty of an offence punishable under s. 135 and not otherwise and he is bound to inform such person of the grounds of his arrest. Arrest of tlle person who is guilty of the offence punishable under.'s. 135 and information to be given to him amount, it was contended, to a formal accusation of an offence and in any case the person who has been arrested and who have been informed of the nature of the infraction committed by him stands in the character of an accused person.

We are unable to agree with that contention. Section

104(1) only prescribes the conditions in which the power of arrest may be exercised. The officer must have reason to believe that a person has been guilty of an offence punishable under s. 135, otherwise he cannot arrest such person. But by informing such person of the grounds of his arrest the Customs Officer does not formally accuse him with the commission of an offence.

Arrest and detention are only for the purpose of holding effectively an inquiry under s. 107 and 108 of the Act with a view to adjudging confiscation of dutiable or prohibited goods and imposing penalities. At that stage there is no question of the offender against the Customs Act being charged before a Magistrate. Ordi• narily after adjuding penalty and confiscation of goods or without doing so, if the Customs officer forms an opinion that the offender should be prosecuted he may prefer a complaint in the manner provided under s. 137 with the sanction of the Collector of Customs and until .a complaint is so filed the person against whom an inquiry is commenced under the Customs Act does not stand in the character of a person accused of an offence under s. 135.

The learned counsel for the petitioner, however, contends that the facts here are different. He says that under the Exchange Act the position is slightly different. He further says tha~ in Romesh Mehta's case('') no enquiry had been made while in the present case an enquiry under s. l 9F had been made and the Deputy !Director had come to a definite conclusion that the petitioner was guilty of an offence. He further says that the next steri would be an enquiry under s. 23 of the Exchange Act which might result in a penalty under s. 23(1)(a) or the case being sent to a Court for trial. He says that as far as the enquiry under s. 23(1 )(a) is concerned, it is an enquiry in respect o~ an offence and no further charge or complaint is necessary before undenaking the enquiry.

He contends that the protection under art. 20(3) extends not only to criminal trials, but also to trials of all offences under the Exchange Act because for the same offence one person may be convicted and penalty levied under s. 23(l)(a) or convicted by a Court and sentenced to imprisonment.

These aspects have not been considered by this Court i11 any case which has been brought to our notice, but we do not think that it is necessary to dispose of these contentions because "e arc of the .opinion that the second point raised by Mr. A.

Sen must prevail.

It is well settled that with the lodging of a' first information

repor~ a person is accused of an offence within the meaning of art.

20(3). In M. P, Sharma v. Satish Chandra(') where search warrants were issued against persons who had been included in the category of accused in the first information report, Jagannadhadas, J., obserYed at p. 1088 :

"Nor is there any reason to think that the Protection in respect of the evidence so procured is confined to what transpires at the trial in the court room. The phrase used in article 20(3) .is "to be a witness' and not to "appear as a witness"; It follows that the protection afforded to an accused in so far as it is related to the phrase "to .be a witness" is not merely in respect of testimonial compulsion in the court room but may well extend to compelled testimony previously obtained from him. It is available therefore to a person against whom a formal accusation relating to the commission of an offence has been levelled which in the normal course may result in prosecution. Whether it is available to other persons in other situations does not call for decision in t)lis case."

(!) !19691 2 S.C.R. 46L

(Z} [19541 S.C.R. 1011.

446 SUPREME COURT REPORiS

Jn Raja Narayan/al Bansilal v. Maneck Phiroz Mistry (') it was observed :

"Similarly, for invoking the constitutional right against testimonial compulsion guaranteed under Art'. 20(3) it must appear that a formal accusation has been made against the party pleading the guarantee and that it relates to the commission of an offence which in the normal course may result in prosecution."

In Ramesh Chand Mehta v. State of West Bengal(') Shah, J., after reviewing a number of authorities, observed at p. 4 72 :

"Normally a person stands in the character of an accused when a First Information Report is lodged against him in respect of an offence before an Officer competent to fnvestigate it, or when a complaint is made relating to the commission of an offence before a

Magistrnte competent to try or send to another D MagislnM for trial of the offence."

The Additional Solicitor General says that the petitioner had not been specifically named as accused in the First Information Report and, therefore, he is not entitled oo the protection under Art. 20(3). We are unable to agree with him in this respect. The petitioner was the General Manager of the United Commercial I.

Bank and it was alleed in the grounds of arrest that the petitioner was in charge of, or was responsible to the United Commercial Bank Ltd. for the conduct of the business of the said Bank, and that he failed to prov_e _in course of his statements made under s. 19F before Shri D. K. Guba, Deputy Director of Enforcement, that the contravention took pfaee withqu~ his knowledge or that f he exercised all due diligence to prevenf the aforesaid contraven tion, as required under s. 23C of the Exchange Act.

In view of these allegations i~ is idle to cqntend that the petitioner was nqt included in the priqn "the management and other qfljcs of the U~~ CO~tj~ Bll1!1c Ltd." V!e. have r. already mentioned that m the Fust Inf91lll811i!>D Report 1t is lbe " si@eforwarit i:change Gn\traet which is titil sul>iectmll~ ol chll1"ge.

Although we held that the ., etitioncr is a person accuaod of an oll'encc within the meaning of art. 20(3), the only protection that art.20(3) gives to him is that he cannot be compelled to be H a witness against himself. But this does not mean that he nCed not give information regarding matters which do not tend to lncriml-

(1) [1961] 1S.C.R.417; 438.

(I) [1969J 2'5.C.R. 461.

nate him. This Court observed in State of Bombay v. Kathi Kalu Oghad('1) as follows :

"In order that a testimony by an accused person may be said to have been self-incriminatory the compulsion of wjiich comes within th~ prohibition of the constitutional provision, it must l>e pf such a cliaracter that by itself it shcn!ld have the ten<le11cy' pf ffici'imim\ting the

accimi~. if ii!\! also q( actully doing so .. 'Ill other words. it s!\pilld pe' a s!l)teffieilt which ni~~ !ll@ c~ gains!

he ..

1 :f.cuse4' prson alteast prol>ple, considered by

1te +·

'.fherfpre we are uµabli: to set asi4e ~~ sulllmons, The petilirmer ffi1lsl appear befor~ tl)e J?ep1Jl¥ 1J,1rector 311<! qswer such 8., IJestions as do qot tencj IP 1µcr11qjµat~ im, as xpla1qed by this t,.:pµrt. .

The pe\itioq is &Fcor<linsly iillowaj ta tjle extent that it is clraj ~t tjie titionef is a peiln accus~4 pf n olfnce withi!l art. ~Q(3). The fcts jll Writ Petitioll Np. 165 of 197211re similar and the

~; unc decl:iraljon is given.

Pet#jpn allowed.

(I) (1962) 3 S.C.R. 10 32.

RAMANLAL BHOGILAL SHAH AND ANOTHER

D. K. GUHA AND OTHERS

S. M. SIKRI

RAY

D. G. PALEKAR

M. H. BEG

S. N. DWIVEDI, JJ

Constitution of India

Art. 20(3)

Htndustan Motors

May 24, 1971

s. 19

June 3, 16 .and 17, 1971

August 31, 1971

s. 19B

s. 1

India

s. 4(2)

s. 22

s. 23

Art. 20(3)

s. 154

I.P.C

April 17, 1972

s. 19F

Hilndustan Motors Ltd.

Enforcement Directorate

Art. 20(3)

Constitution of India

[1969] 2 S.C.R. 461

[1961] 1 S.C.R.

417

Art. 20(3)

Art. 20(3)

Art. 32

Constitution of India

A. K. Sen

B. Sen

Krishna Sen

S. R. Agarwala

R. K. Khanna

F. S. Nariman

S. P.

Nayar

SIKRI

Ramanlal Bhogilal Shah

September 1, 1971

June 4, 1966

United Commercial Bank

Hindustan Motors

June 6, 1966

s. 19

D. K. Guha

United CommercialBank of

s. 19B

s. 19B

s. 4(2)

s. 22

s. 23

Reserve Bank of India

Section 4(2)

Section 22

R. B. Sha\

R. B. Shah

United Commercial Bank Limited

Section 23C

Onkar Nath Chattopadhyay

Central Government

Section 19B

Section 4(2)

Section 22

Section 23

Section 19E

Foreign Exchange Regulation Act, 1947

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

art. 20(3)

Chief Presidency Magistrate, Calcutta

September 6, 1971

December 6, 1971

March 6, 1972

Supreme Court

6th March 1972

Hindusthan Motors Ltd.

High Court at Cakutta

s. 154

November 25,1971

s. 155(2)

Code of Criminal Procedure

United Commercial Bank Ltd.

s. 120B

s. 420

I.P.C

s. 23(1)

s. 19

art. 20(3)

3 lst August, 1971

April 27, 1972

art. 20(3)

s. 154

J. N. Prabhakar

s. 104

Customs Act, 1962

s. 135

s. 135

Section

104(1)

s. 135

s. 107 and 108

s. 137

Customs Act

s. 135

says that under the Exchange Act

Romesh Mehta

s. 23

s. 23(1)(a)

s. 23(1 )(a)

art. 20(3)

s. 23(l)(a)

A.

Sen

art.

20(3)

Jagannadhadas

article 20(3)

Art. 20(3)

United Commercial I.

Bank

The petitioner was the General Manager of the United Commercial I.

Bank and it was alleed in the grounds of arrest that the petitioner was in charge of, or was responsible to the United Commercial Bank Ltd. for the conduct of the business of the said Bank, and that he failed to prove in course of his statements made under s. 19F before Shri D. K. Guba, Deputy Director of Enforcement, that the contravention took pfaee withqu~ his knowledge or that f he exercised all due diligence to prevenf the aforesaid contraven tion, as required under s. 23C of the Exchange Act.

s. 19F

D. K. Guba

s. 23C

art. 20(3)

(1962) 3 S.C.R. 10


THE COMMISSIONER OF INCOME-TAX, WEST BENGAL I,

CALCUTTA

MIS. VEGETABLES PRODUCTS LTD.

January 29, 1973 B.

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

Income Tax Act (43 of 1961), ss. 143, 156 and 21l(l)(a)(i)- Penc..-lty-Whether related to tax assessed or tax payable.

The assessee failed to furnish the return of itsincome within the time allowed but submitted the return after a notice under s. 28(3) of the J; ncometax Act, 1922, was served on him.· A provisional assess ment was made by the lncometax Officer under s. 23B of the 1922-Ac! and the assessee deposited the amount. The Income-tax Act, 1961, having come into force thereafter. the Income-tax Officer completed the assessment under the provisions of that Act, determined the tax due and the penalty payable by. the asscssee.

In doilllg so, he did not take into consideration the amount deposited by the asses.see, that is, he took into consideration not the amount demanded under s. 156 of the 1961-Act but the amount assessed under s. 143. The Appellate Assista:nt Commissioner confirmed the order; but the Tribunal held that the penalty under s. 271 (1 )(a)(i) is to be levied on the tx assessed minus the amount paid under the provisional assessment order, and the High Court, on refe're(lce, agreed with the Tribunal.

Dismissing the appeal by the Revenue to thi& Court,

HELD : ( 1) The acceptance of one or the other ijnterpretation sought to be placed on s. 271(1)(a)(i) by the parries would lead to some inconvenient result; but the duty of_ the Court is to. read the section, understand its language and give , effect to it. If the language is plain, the fact that the consequence of gMng effloct to it may lead to some absurd result is not a factor t'o be taken into account in interpreting a provision.

It is for the Legislature to step in and remove the absu'rdity.

On the "Other hand, if two reasonable constructions of a taxing provision are possible that construction which favours the assessee must be adopted.

[451D-F]

(2) Section 271(J)(a)(i) stipulates that the Income-tax Officer may direct ti1at the assessee shall pay by way of penalty, "in addition to the amount of tax, if any, payable by' him a sum equal to two per cent of the tax for everv month ............ " Qua:Mifiootion of the tax payable is always refefred to in the Act as .a tax "assessed". A tax payable is not the same thing as tax assessed.

The tax payable is that A'lmovnt for which a demand not_ice is issued under s. 156. Hence, there can be no doubt that the -expression 'the amount of tax, if any, payable by him' referred to in the first part of the section refers to the tax payable under a demand ; notice. The definite article 'the' in the words "the tax" in the lattet pal-! of the provision, shows that it refers to the tax, if any, payable by the assessee-, mentioned in the first part of the section.

[452D-G; 453A-B]

(3) At any rate, the provision is capable of more tOOn one reasonable interprietation, and since the provisiqn, is not merely a taxproyision but a penalty provision as well the interpretation in favour of the assessee must be accepted.

[453B-D]

M. M. A.nnaioh v. Commissioner of Income-tax, Mysore, 76, I.T.R .. 582, approved.

Vir Bhan Bansi Lal v. Commissioner of Income-tax, Punjab, 6 J.T.R. 616 and Commissioner of Income-tax, Delhi v.

Hindustan Industrial CorpOTation, 86 I.T.R. 657, disapproved.

CJv1L APPELLATE JURISDICTION : Civil Appeal No. 497 of 1970.

Appeal by Certificate from the Judgment and order date June 26, 1969 of the Calcutta High Court in Income-tax Reference No. 145 of 1966.

S. C. Manchanda, T. A. Ramachandran, S. P. Nayar and R. N. Sachthey, for the appellant.

B. Sen, S. Sadhu Singh, J.M. Khanna and S. Ramachandran, for the respondent.

S. V. Gupte, T. S. Viswanatha Rao and A. T. M. Sampat, for the intervener.

The Judgment of the Court was delivered by HEGDE, J.-This appeal by certificate arises from the decision of the Calcutta High Cout in a case stated by the Income-tax

Appellate Tribunal, 'B' Bench, Calcutta.

After setting out the relevant facts, the Tribunal solicited the opinion of the High Court on the following question of law : 'Whether on the facts and in the circumstances of the case, the Tribunal was right in holding tha1t in calculating the penalty leviable under section 271 (I) (a)

(i) of. the Income-tax Act, 1961 the amount paid by the assessee under the provisional assessment under section 23B of the Indian Income-tax Act, 1922, was to be deducted from the amount of tax determined under section 23 (2) of that Act in order to determine the amount of tax on which the computation of the penalty was to be based and in reducing the amount of the penalty imposed on the assessee to Rs. 2,737 /-." The High Court answered that question in the affirmative and in favour of the assessee.

Aggrieved by that decision, the Commissioner has brought this appeal.

Let us now. proceed to state the facts relevant for deciding the point in issue, as could bl: gathered from the statement of the case.

In Ibis case we are concerned with the assess's assessment for the assessment year 1960-61, the relevant account year ending on December 31, 1959. In that regard the Income-tax Officer issued a notice under s. 22(2) of the Indian Income-tax Act, 1922 (ro

be hereinafter referred to as the "1922 Act") on June 1, 1960.

The same was served on the assessee on June 13, 1960 .. That notice required the assessee to submit its return on or before July

1~, 1960. On July 18, 1960, the assessee moved for extension oi time for submitting its return.

The Income-tax Offier extended the time by two months and at rthe same time the informed the assessee that no fuI'ther time would be allowed. The assessee failed to furnish its return within the extended time.

Thereafter a notice under s.28(3) of the 1922 Aot was served on the assessee on January 16, 1961. On the very next day viz. January 17, 1961, the assessee filed its return for the assessment year in question.

The assessment was completed by the Income-tax Offii; er only on October 31, 1962.

Meanwhile on April 1, 1961 jhi: Income-tax Act, 1961 to be hereinafter referred to as the "A.ct") came into force. As under the provisions of s.297(2)(g) of the Act, the proceedings for the imposition of the penalty jlad to be initiated and completed under the Act, a fresh notice under s. 27 4 (I) of the Act was served on the assessee.

The assessee objected to the validity of the notice but that objection was overruled. At present we are not concerned with that objection. We are also not concerned with the other objections tal>:en by tjle assessee which were negatived by the Tribunal. The lµcome-tx Officer determined the tax due frorn the assessee for the assesswem year at Rs. 1,25,512/10 P. and on that basis, th, e penalty pay~le by the assessee was fixed at Rs. 12,734/10 P. At this stagl_l' it may l:>e mentioned that on February 2,1961, a provisional assess!llellt was made by the Income-tax Officer under s. 23B of the j 922 Act.

Immediately thereafrer the assessee deposited Rs. 92)94/55 }l.

In determining the penalty due from the assessee, th<? Income-tax Officer took into consideration not the aqu11t llenianded under s. 156 oi the Act but the amount assessed under s. 143 of the Act.

In appeal, the Appellate Assistant Commissioner confirmed the order of the Income-tax Officer. On a further appeal, the Tribunal came to the conclusion that the penahy under s.271 (I )(a)(i) is to be levied on the tax assessed minus the amount paid under the provisional assessment order namely Rs. 92,294/55 P.

On the biasis of that finding, it determined the penalty p; iyable by the assessee at Rs. 2,737 /44 P. The conclusion of the Tribunal was accepted as correct by the High Court.

Learned Counsel for the Revenue, Mr. Manchanda contended

that on a proper construction of s. 27l(l)(a)(i) it would be G seen 1that the penalty had to be determlnod on the basis of the tax assessed under s. 143 of the Al;¢.

Counsel urged that if that is not the true construction then. the effectiveness of the section may be taken away by the assessee paying the tax due by him a day before the demand notice is serv"l<i on him.

In support oi the interpretation placed !)y him, Mr. Manchanda relided on the deciff sions of the Lahore l{igh Court in Vir Bhan Bansl Lal v. Commissioner of Income-tax, Puniab(') and the decision of the Delhi

6 1.T.R. 616.

High Court in Commissioner of Income.tax, Delhi v. Hindustan Industrial Corporation('). The Delhi High Court followed the decision of the Lahore High Court. On the other hand, it was urged by Mr. B. Sen, learned Counsel for the assessee and Mr.

S. V. Gupta, learned Counsel for the interveners that on a proper interpretation of the provision mentioned earlier, it would be clear that the penalty can be only imposed on the amount payable under s. 156. In suppoll\ of their contention, they relied on the decision oi the Mysore High Court in M. M. Annaiah v. Commissioner of Income-tax, Mysore.('). They further urged that if interpretation placed by the Revenue on s. 2 71 ( 1 )(a) ( i) is accepted as correct, the result would be that the advance tax paid or taxes deducted at the source cannot be taken into consideration in determining !be penalty payable. If that be true, the Counsel urged that even if the assessee had paid more tax than he need have paid, but had not submitted his return within the time fixed, he would be liable to pay penalty on the entire amount assessed.

According to them the law cannot be presumed to be so harsh at that.

There is no doubt that the acceptance of one or the other inter pretation sought to 1?e pla~ on s. 271(l)(a)(i) bly the parties woµld lead ito some mconveruent result, but the duty of the court !$ fu read the sectio11, understand its langtiage and give effect to the same. I( the language is plain, the fact that the consequence qf'giyiµg elj'ect to it may lead to some absurd result is not a factor tfl J:1e taken into acC!)unt in interpreting a provision. Jit is for the 1egis1ature to step in and remove the ab5urdity. On the other han\f, it two reasonable constructions of a taxing provision are possible thafc(lllStnictiOll which favours the as5essee must be adopted This

1~ a well accpt¢ :iJle of constniction recognised by thi~ '(::ourt J1l severM of lf$ ec1S1ons. Hence a\l that we have to see 1s, wa'I ' is the trut:. ~t pf. !he language eployed in s. 271 (1 )(a)(1). ¥ we find tha\ liinguage to be iirob1p; uous pr capable of more

m~!IJllngs han oµe, then We have to adopt that interpretatioq which

f!miµrs the assessee, more particµlarly so bcause the provision

r~\l\tes ~P impa5ition pf penalty.

Let µs 11ow rell\l section 211(\)(a)(i). The section to the extent material flw our prese11t purpose rea~ :

"If the Income-(ax Officer or the Appellate Assistant Commissioner in the course of any proceedings under' this Act, is satisfied that any person- ( a) has without reasonable cause failed to furnish

the return of total income which he was required to furnish. . . . . . by notice given under su~

(I) 86. I.T.R. 657.

(2) 74 I.T.R. 582

section(2) of section 139 ...... or has without reasonable cause failed to furnish it within the time allowed and in the manner required .... by such notice he may direct that such person shall pay by way of penaky,-

( i) in the cases referred to in clause (a) , in addition to the amount of the tax, if any, payable by him a sum equal to two per cent, of the tax for every month during which the default continued, but not ex9CedinJ1: in the aggregate fifty per cent, of the tax."

(emphasis supplied)

Section 271 ( !) ( a)(i) slipulates that the Income-tax Officer may direct that the assessee shall pay by way of penalty, in cases similar to the one that we are considering "in addition to the amount of the tax, if ariy, payable by him a sum equal lo 2 per cent of the tax for every moll'th during which the! default continued but not exceeding in the aggregate 50 per cent of the tax''.

We must firs! determine what is the meaning of the expression "the amount of the tax, if any, payable by him" ins. 271 (1 )(a) (i), Does it mean the amount of tax assessed under s. 143 or the amount of tax payable under s. 156. The word "assessed" is a term often

used in taxation laws. It is used in several provisions in the Act.

Quantification of the tax payable is always referred to in the Act as a tax "assessed". A tax payable is not the same thing as tax assessed.

The tax payable is 'that amount for which a demand notice is issued under s. 156. In deterrnininJ!: the tax payable, the tax already paid has to be deducted. Hence there can be no doubt that the expression "the amount of 1he tax, if any, payable by him" referred to in the first part of s. 271(1) (a)(i) refers to the tax payable under a demand notice. We next come to the question what is the meaning to tie attached to the words "the tax" found in the laHer part of that provision. It may be noted that the expression used is not "tax" but "the tax". The definit~ article "the" must have reference to something said earlier. It can only refer to the tax. if any, payable by the assessee mentioned in the first part of s. 271(1)(a)(i). It is true the expression "tax" is defined in s. 2 ( 43) thus :

" "tax" in relation to the assessment year commencing on the 1st day of April, 1965 and any subsequent assessment year means income-tax chargeable under the provisions of this Act. and in relation to any other assessment year income-tax and super-tax chargeable under the provisions of this Act prior to the aforesaid date."

But the difficulty in this case is, as mentioned e_arlier the expression used is not "tax" but "the tax". That expression can reasonably understood as referring to the expression earlier used in the provision namely "the amount of the tax, if any payable" by the assessee. At any rate, the provision in question is capable of more than one reasonable interpretation. Two High Courts namely Calculla and Mysore have taken the view that the expression "the tax" ins. 271(1)(a) (i) refers to "the tax, if any, payable"·

(by the assessee) mentioned in the earlier part of .the section. It is true that Lahore and Delhi High Courts have taken a different view.

But the view taken by the Calcutta and Mysore High Courts cannot be said to be untenable view. Hence, particularly in view of the fact that we are interpreting, not merely a taxing provision but a penalty provision as well, the interprettion placed' by the Calcutta and Mysore High Courts cannot be rejected.

Further as seen earlier, the consequences of accepting the interpreta1ion placed by the Revenue may lead to harsh results.

!'er the reasons mentioned .above, this appeal is dismissed with• costs.

V.P.S.

Appeal dismissed;

MIS. VEGETABLES PRODUCTS LTD

January 29, 1973

K. S. HEGDE

P. JAGANMOHAN REDDY

H. R. KHANNA JJ.

Income Tax Act

ss. 143, 156 and 21

s. 28(3)

s. 23B

Income-tax Act, 1961

s. 156

s. 143

s. 271

s. 271(1)(a)(i)

Section 271(J)(a)(i)

s. 156

S. C. Manchanda

A. Ramachandran

S. P. Nayar

R. N. Sachthey

B. Sen

S. Sadhu Singh

J.M. Khanna

S. Ramachandran

S. V. Gupte

T. S. Viswanatha Rao

A. T. M. Sampat

HEGDE

Calcutta High Cout

section 271

Income-tax Act, 1961

section 23B

Indian Income-tax Act, 1922

section 23

s. 22(2)

Indian Income-tax Act, 1922

June 13, 1960

January 16, 1961

January 17, 1961

October 31, 1962

April 1, 1961

Income-tax Act, 1961

s. 27

February 2,1961

s. 23B

s. 156

s. 143

Manchanda

s. 27

s. 143

Delhi High Court

Lahore High Court

B. Sen

S. V. Gupta

s. 156

Mysore High Court

s. 2

s. 271(l)(a)(i)

s. 271

section 211(\)(a)(i)

section 139

Section 271

s. 143

s. 156

s. 156

s. 271(1)

s. 271(1)(a)(i)

s. 2

1st day of April, 1965

Calculla

Mysore

Lahore and Delhi High Courts

Calcutta and Mysore High Courts


FAQIR CHAND v.

SHRI RAM RATI'AN BHANOT

January 30, 1973 (With connected appeal)

'[A. ALAGIRISWAMI, I. D. DUA AND C. A. VAIDIALINGAM, JI.]

The Delhi Rent Control :A.ct, 1952, s, 14-Lease of land by Improvr. ment Trust to landlord prohibiting use of land /or comm<rclal purposes-Landlord neverthelers leasing out part of building on land for commercial purpose-Le..se is not void-Landlord is not estopped from suing tenant for evictl'on-No estoppel agai'nst statutt-<;:ontroller muJt exercise one or the other of the two alternatires g, iven to hint, under s.14(1)-Clause (c) and (k) of the proviso to s. 14(1), applicability of, The respo; ndents were Jandldrds of two houses in the Karol Bagh area of Delhi. The bOuses were built !1tl lands given on Jong lease by the Delhi Improvement Trust to the rights, liabilities and a15ets of which the Delhi Development Authority subsequently succeeded.

Under the terms of the leases the buildings erected on the lands were to be used for residential purposes only. If they were used for any other purpose without the approval of the lessor the leases would become void.

Portiotns of the buildings in question were however let out for commercial purposes-viz. a barber shop and a scooter repair shop.

The Delhi Development Authority gave notice to the landlords that since the buildings had been permitted to be used for commercial purposes the leases were liable to be determined.

They were called upon to discontinue the use of the land for commercial . purposes failing which they were asked to show cause why their leases should not be determined and the laind together with the buildings thereon be not reentered upon without compensation. Thereupon the landlords issued notice to the tenants asking them to stop the commercial use of the buildings.

The landlords later on instituted proceedings against the tenants under the Delhi Rent Control Act, 1958 but the Controller dismissed the petitions. Their appeals were dismissed. The Division Bench of the High Court decided in favour of the landlords.

In appeal to this Court by special leave the question for c'onsideration was whether the landlords were estopped or otherwise prohibited from getting possession of the property from the tenants because they themselves had let it out for commercial purposes.

The Court had to considr the question in the light of the provisions of s. 14 of the Act.

HELD : (i) If it is a case \Vhere the. tenant has contrary to the terms of his tenoocy used the buildings for a commercial purpose the landlord could take actio, n under clause (c) of the proviso to s. 14(1).

He need not depend upon clause (k) at all.

The only situation in which clause (k) can take effect is when the lease is fdr a commercial purpose agreed upon both by the landlord and the tenant but that is <:ontrary to the terms of the lease of the land in favour of the landlord.

[459E-G]

(ii) The policy of the legislatures seems to be to put an end to unauthorised use of the leased lands rather than merely to enable the authorities .to get back possession of the leased lands. This concluai<*I is further fortified by a reference to sub-section 11 of section 14. The lease is not forfeited merely because the building put upon the leased land is put to unauthori90d use.

The tenant is given an opportunity

PAQIR CHAND v. R. R. BRANOT (Alagiriswami, /.) 455

to oomly with the condition imposed on the landlord by any of the authorities referred to in clause (k) of the proviso to sub-s, ection (I).

As !()Ill& as the condition imposed i1 complied with there is no forfeiture.

It even enables the controller to di'rect compensation to be paid to the authority for a breach of the conditions, which must be done in the presence of the authority. [459H; 460A-D]

(iii) The anxiety of the U.jislatul'e is to prevent unauthorised user rather than protection of the tenaint or strenathening the hands of the Development Authority in effectina forfeiture. The Development authority can always resort to the terms of the least, [460F-0]

There is no estoppel here because both the landlord and the tenant knew that the tenancy was not Q\llO permitted unde'r the terms of the lease cf the land.

In any case there can be no estoppel against the statute. It would not benefit the tenant even if it is held that the landlord can:not, under the circumstances evict him.

The landlord will lose bis property and the tenant will also lose.

He cannct after the Development Authority takes over the building use it for a commercial purpose. [4600-H]

Therefore the conclusion must be that the lease in its inception was not void ncir is the landlord estopped from claimi:i>g possession because he himself was a party to the breach of the conditions under which the land was leased to him. Neither the clear weirds of the section nor a consideration of the policy of the Act lead us to th, e conclusi<ln that the lease was void in its inception if it was for an u.rnauthorised user. [461A] Smt. Uma Kumari v. Jc.swant Rai Chopra, P .L.R. (1960) 460 and S. P. Arora v. Ajit Singh, l, L.R. (1970) II Delhi 120, disapproved.

Wan1an Shriniwas Kini v. Rati Lal Bhagwandas, A.1.R. 1959 S.C. 689, referred to. [The Court found that s. 14 of the Delhi Develapment Act was inapplicable to the case. The matter was sent back to the Controller for deciding the questio,1> under sub-section (11) of Section 14 whether he should exercise the one or the other of two alternatives mentioned therein.] CIVIL APPELLATE JURISDICTION : Civil Appeal No. 846 and 1343 of 1972.

Appeal by special leave from the judgment and order dated November 22, 1971 of the Delhi High Court in S.A.0. No. 83-D of 1965 And Civil Appeal No. 1343 of 1973 [Appeal by Special leave from the judgmenl and. order dated November 22, 1971 of the Delhi High Court in SAO No. 239-D of 1965.

V. M. Tarkunde, S. S. Shukla and A. P. Gupta, for the appellant (in C. A. No. 846).

S. P. Pandey, Shiv Prakash Pandey and S. S. Shukla, for the appellant (in C. A. No. 1343).

D. N. Mukherjee, for respondent (in C. A. No. 846) . . Bakshi Man Singh and Harbans Singh, for the respondell't (in C.A. No. 1343).

Sardar Bahadur Saharya, Vishnu Bahadur Saharaya and Y.

Khushalani, for the Intervener (in C.A. No. 846).

The Judgment of the Court was delivered by

ALAGIRISWAMI, J.-These two appeals by special leave arc against the judgmem of the High Court of Delhi allowing the appeals filed by 'the two respondents.

The respondents are landlords of two houses in the Karol Bagh area of Delhi. The houses are built on lands given on long lease by the Delhi Improvement Trust to the rights, liabilities and assets of which the Delhi Development Authority has since sucecdcd.

Under the terms of the lease, subject to revision of recrt, the lessees were to put up residential buildings on the leased lands and the lessees undertook :

"(vi) not to use the said land and buildings that may be erected thereon during the said term for any other purpose than for the purpose of residential house without the consell'! in writing of the said lessor; provided that the lease shall become void if the land is used for any purpose than that for which 1the lease is granted not being a purpose subsequently approved by the lessor."

The present landlords are not the original lessees but their successors in interest.

Portions of buildings have been leased for commercial purposes, a barber shop in C.A. 846 and a scooter repair shop in C.A. 1343. The Delhi Development Authority appears to have given notice to them drawing their attention to the provision of the lease extracted above and that as they had permitted the buildings to he used for commercial purposes contrary to the terms of the lease deed, the lease was liable to be determined and called upon them to discontinue the use of 'the land for commercial purposes, failing which they were asked to show cause why their lease should not bie determined and the land, together with the buildings theron. reen1ered upon without any compensation to tnem.

Thereupon the landlords issued notice to the tenants asking them to stop the commercial use of the buildings and later instituled the proceedings out of which these appeals arise. In both these cases the buildings had been put to commercial use even before 1957 when th! Delhi Development Authority Act of 1957 came into force.

The Con1roller dismissed thr petitions filed by the landlords and the appeals filed by them were dismissed.

They thereupon filed appeals to the High Court. A learned single Judge of the High Court taking a view contrary to two earlier decisbns in

Smt. Uma Kumari v. Jaswant Rai Chopra(') and S. P. Arora v.

Ajit Singh(') referred 'the question that arise in these appeals to a Division Bench which took a view contrary to that taken in the two earlier decisions above referred to, and decidd in favour ol the landlords.

The question that arises for decision in these cases is this : Are the landlords esitopped or otherwise prohibited from getting posse~

ssion of the property from the tenants because they themselves had let it out for commercialpurposes. We shall set out the relevant portion of the statutory provisions regarding this question. Section 14 of the Delhi Rent Control Act 1958, which deals with the question of protection to tenants agail\st eviction, in so far as it is relevant, .is as follows :

"14. ( 1) Notwithstanding anything to the c0ntrary contained in any other law or contract, no order or decree for the recovery of possession of any premises shall be made by any court or Controller in favour of the landlord against a tenant :

Provided that the Controller may, on an application made to him in the prescribied manner, make an order for the recovery of possession of the premises on one or more of the following grounds only, namely- ( c) that the tenaRt has used the premises for a purpose other than that for which they were let-

(i) if the premises have been let on or after the 9th day of June, 1952, wMhout obtaining the consent in writing of the landlord; or

(ii) if the premises have been let before the s1id

date without obtaining his consent.

J_k) that the tenant has, notwithstanding previ0us notice, used or dealt with the premises in a manner contrary to any condition imposed on the landlord by the Government or the Delhi Devel!Jpment Authority or the Municipal Corporation of Delhi while giving him a lease of the land , m which the premises are situate.·•

Sub-section 11 of the same seotion, which is also relevan:., reads :

" ( 11) No order for the recovery of possession of any premises shall be made on the ground specified in clause (k) of the proviso to sub-section (I). if the tenant, within such time as may be specified in this

(I) P.L.R. (1960\ 460.

(2) l.L.R. (1970) !I Delhi 130.

behalf by the Controller, complies with the condition imposed on the landlord by any of the authorities referred to in that clause or pays to that authority such amount by way of compensation as the Controller may direct."

Section 14 of the Delhi Development Act 1957 is as follows : 8 "14. After the coming into operation ol any of the plans in a zone no person shall use or permit to be used any landor l:Juilding in that zone otherwise than in conformity with such plan : Provided that it shall be lawful to continue to use upon such terms and condition as may be prescribed C by regulations made in this behalf any land or building for the purpose and to the extent for and to which it is being used upon the date on which such plan comes iiito force."

Before this Act was passed the United Provinces Town Improve- D ment Act 1919 was in force in Delhi and the Delhi Improvement Trust was constituted thereunder.

It was this Trust which had leased the lands to the predecessors of the two landlords in the present appeals.

The Delhi Development Authority established under the Delhi Development Act 1957 succeeded to the asets, rights and liabilities of the Delhi Improvement Trust. We shall deal first with the question that arises under the Delhi Rent Control E Act. .

Clause (k) ol the proviso to sub-section (I) of Section 14 provides that the Controller may, on an application made to nim in the prescribed manner, make an order for the recovery of possession of the premises on the ground that the tenant has, notwithstanding previous notice, used or dealt with the premises in a F manner contrary to any condition imposed on 'the landlord by the Government or the Delhi Development Authority or the Municiphl Corporation of Delhi while giving him a lease of the land on which the premises are situate. In this case the lease granted by the Delhi Improvement Trust, the predecessors in interest of the Delhi Development Authority, to the predecessors in interest of G the landlords contains 'l condition that any building to be erected on the land shall not be used for any purpose other ithan residential purpose. There is no dispute that part of each of the buildings is being used in a manner contrary to that condition. The landlord has also given notice asking the tenant to cease JJSing the building for that purpose. The two earlier decisions rclerred to held that H notwithstandihg this provision the landlord was not entitled to get possessi.on of the land because he himself had leased the building for a commercial purpose and was, therefore, estopped from

FAQIR CHAND v. It .R. l!HANOT (Alagiriswami, !.) 459

claiming possession. The result will ~~ this : The Delhi Develo~ ment Authority can enforce the conditions of the lease and forfeit the leased land with the buildings thereon. In that case both 1!1e landlord as well as the tenant stand to lose. The landlords pomt

out 'this. situation and say that they are not interested in evicting the tenants but are interested only in seeing that the tenants do not use the buildings for commercial purposo with the consequences that they may have to lose the land and the buildings and the tenants also cannot any longer use it for a commercial purpose.

It has been argued on behalf of the tenants that this clause will apply only where the tenant has used the land after previous notice from the landlord, i.e., if the landlord had told him at the beginning of the tenancy that the building was not to be used for commercial purpose and notwithstanding that the tenant used it for a commercial purpose. They, therefore, contend that as in this case both the landlord and the tenant were aware of the use

to which the building was to be put there is no question of any notice from the landlord asking the tenant not to use the building for commercial purpose and by merely issuing such notice the landlord cannot take advantage of clause (k) . This is really another way of putting the argument that the landlord having granted the lease for a commercial purpose is estopped from comending that the tenant should not use it for commercial purpose. While the argument appears to be plausible we are of opinion that there is no substance in this argument. If it is a case where the otenant has contrary to the terms of his tenancy used the build ing for a commercial purpose the landlord could take action under clause (c).

He need not depend upon clause (k) at all. These two clauses are intended to meet different situations. 'there was no need for an additional provision in clause (k) to enae a landlord to get possession where the tenant has used the building for a commercial purpose contrary to the terms of the tenancy. An intention to put in an useless provision in a statute cannot be imputed to the Legislature.

Some meaning would have to be given to that provision. The only situation in which it can take effect is where the lease is for a commercial purpose agreed upon by both the landlord and the tenant but tht is contrary to the terms of the lease of the land in favour of the landlord. That clause does not come into operation where there is no provision in the lease of the land in favour of the landlord, prohibiting its use for a commercial purpose.

The legislature has clearly taken note of the fact that enormous extents of land have been leased by the three authorities mentioned in that clause, and has expressed by means of this clause its anxiety to see that these lands are used for the purpose for which they were leased. Tho policy of the legislature seems to be to put an

14-1<796Sup.C.T./73

end to unauthorised use of the leased lands rather than merely to enable t!ie authorities to get back possession of the leased lands.

This conclusion is further fortified a reference to sub-section l l of section 14. The lease is not forfeited merely because the building put upon the leased land is put to an unauthorised use. The tenam is given an opportunity to comply with the conditions imposed on the landlord by any of the authorities referred to in clause (k) of the proviso to sub-section ( 1). AB long as the condition imposed is complied with there is no forfeiture. It even enables the Controller to direct compensation to be paid to the authority for a breach of the conditions. Of course, the Controller cannot award the payment of compensation to the authority except in the presence of the authority.

The authority may not be prepared to accept compenswtion but might insist upon cessation of the unauthorized use. The sub-section does not also say who is to pay the compensation, whether it is the landlord or the tenant. Apparently in awarding c-ompensation the Controller will have to apportion the responsibility for the breach between the lessor and the tenant.

The provision of clause (k) of the proviso to sub-section ( 1) of section 14 is someil:hing which has' to be given effect to whatever the original contract between the landlord and the tenant. The leases were granted in 1940, and the buildings might have been put up even before the Delhi and Ajmer Rent Control Act 1952 came into force. It was that Act that for the first time provided the kind of remedy which is. found in clause (k). The relevant provision in that Act enabled the landlord to get 110ssession where the tenant whether before or after the commencement of the Act used or dealt with the premises in a manner contrary to any condition imposed on the landlord by the Government or the Delhi Improvement Trust while giving him. a lease of the land on which the premises are situate notwithstanding previous notice. The anxiety of !he legislature is to prevent unauthoriz.ed user rather than protection of the tenant or strengthening the hands of Development Authority in effecting forfeiture.

The Development Authority can always resort to the tenns of the lease. There is no estoppel here because both the landlord and the tenant knew that the tenancy was not one permitted under the terms of the lease of the land. Iri any case there can be no estoopel against the statute.

It would not benefit the tenant even ii it is held that the landlord cannot, under the circumstances, evict him.

The landlord will li:>se his property and the tenant also will lose. He cannot, after the Development Authority takes over the ilding use it for a commercial purpose. We thus reach the conclusion that the lease in its inceotion. was not void nor is the landlord estooped from claiming possession because he himself was a party to the breach of the conditions under which the land was leased to him.

Neither the clear words of the section, as in Waman Shriniwas

Kini v. Rati Lal Bhagwandas('), nor a consideration of the policy of the Act lead us to the conclusion that the lease was void in its inception if it was for an unauthorised user.

We are also of the opinion that the High Court was not justified in leaving to the Controller no option but to pass an order for eviction. 'fhat would make rthe alternative provided in subsection ( 11) of section 14 useless. The High Court is not correct in saying that since the Authority has no power to legalize the misuser of land contrary to ithe plans by acceptance of compensation under the Development Act, the Controller cannot order the payment of compensation by the tenant to 'the Delhi Development Authority. This is in effect nullifying part of the provisions contained in sub-section ( 11) of section 14.

The High Court has arrived at i'ts conclusion on the basis that section 14 of the Delhi Development Act applies to this Case. We shall presently show that that section has no relevance to the decision of this case.

It is under !he terms of the lease granted by the Delhi Improvement Trust that the use of this building for commercial purpose is prohibited and not under the Delhi Development Act.

"Furthermore, section 14 applies not only to lands leased by au1horities like the Delhi Development Authority containing conditions against unauthorised user as well as to lands which do not belong to rthat category. Its provisions are not intended to enforce the conditions in those leases. The proviso to that section deals with the use to which a land or b1uilding may continue to be put after rthe coming into force of any plan subject to such terms and conditions as may be prescribed by regulations, provided that building or land had been used for that purpose prior to the coming into force of the plan. The section does not therefore contemplate complete prohibition of the use of a land or building for purposes other than that permitted in the plan. Such uses can be continued subject to the terms and conditions prescribed by the regulations provided it had been so used even 1*fore the plan. It is admitted that no such regulations have been framed.

Therefore, if a plan had come into operation in this area, the previous use can be continued till the regulations are framed and after t!:te regulations are framed, they will be subject to the terms and conditions of those regulations. We are of opinion, there.fore, rthat s. 14 of the Development Act has no relevance in deciding the question at issue in this case."

The appeals are alloy; ed and the judgment of the High Court is set aside. The matter will have to go back to the Controller for

(I) A.l.R. 1959 S.C. 6R9.

deciding the question under sub-section ( 11) of section 14 whether he should exercise the one or the other of the two alternatives mentioned therein. As already mentioned, no order awarding compensation under the second alternative given in that sub-section

can be made except in the presence of the Delhi Development Authority. In the circwnstances of rthis case we direct the parties to bear their own costs.

G.C.

Appeals allowed.

FAQIR CHAND

RAM RATI'AN BHANOT

January 30, 1973

A. ALAGIRISWAMI

I. D. DUA

s. 14(1)

Karol Bagh

Delhi

Delhi Improvement Trust

Delhi Development Authority

s. 14

s. 14(1)

section 11

section 14

s. 14

Section 14

V. M. Tarkunde

S. S. Shukla

A. P. Gupta

S. P. Pandey

Shiv Prakash Pandey

S. S. Shukla

D. N. Mukherjee

Bakshi Man Singh

Harbans Singh

Sardar Bahadur Saharya

Vishnu Bahadur Saharaya

Y.

Khushalani

ALAGIRISWAMI

Delhi Development Authority Act

Section 14

Delhi Rent Control Act 1958

9th day of June, 1952

Delhi Devel!Jpment Authority

Municipal Corporation of Delhi

section 11

Section 14

Delhi Development Act 1957

Section 14

Municiphl Corporation of Delhi

Delhi Develo~ ment Authority

section 14

section 14

Delhi and Ajmer Rent Control Act 1952

section 14

section 14

section 14

Delhi Development Act

Delhi Development Act

section 14

s. 14

section 14