SWANTRAJ & ORS.

\ v.

STATE OF MAHARASHTRA

February 5, 1974

(V. R. KRISHNA IYER AND R. S. SARKARIA, JJ.)

Drugs a11d Cosmetics Act, (23 of !940), S. IS(IJ(c)-'Stocked for sale', if uicludes. te1nporary storage for sale not at the place of storage but elsewhere-

Whe!her fonns for licnces provided are intlexible or suitable licences with nrodificat101is can be. issuel/.

Section 18(c) of the Drugs and Cosmetics Act, 1940, provides that no

prsn -shall manufacture for sale, or sell, or stQck or exhibit. for sale .or

distribute any drug except under a Jicence and s. 27(b) provides for punish- . ment for its contravention.

The appeJJant was a wholesale dealer and distributor of drugs and bad

_te _necessary licences prescribed under the Act. Itbad also the necessary

licences autbo!ising i~ to sell, stock oi exhibit for sale or distribute by wholesale through its motor van. The appellant booked certain drugs by tony but as the motor van was delayed, the drugs were reteasCd from the Jorry and temporarily kept in the godown of a local drugs dealer.

On the questiOns, ( 1) whether the licence which permitted stocking and selling in a specified vehicle, covered the brief interval of storage in the god own before loadirig on to the appeilanfs van, and ( 2) whether the act of the appellant in temporarily storing drugs, not for immediate sale there, but for ultimate sale in various parts of the State,· is contrary to s. 18(c) and punishble under s. 27(b),

HEID: ( l) (a) A licence in_ terms for a vehicle cannot do duty for one to keep druJS in a fixed place.

Assuming that none of the prescribed forms provide for an itinerant wholesale distributor and that it would be impossible to furnish the very ma.ny possible places where for short intervals drugs may

have to be stored awaiting the arrival of the van, an argumentunJ ab. incon- "Veniend cannot be a defence; if the law requires a 'licence for aplace and

drup are lept in such a place without the licence, even as a stop-gap arrangement. The paramount purpose of regulation through licensing is, to set in motion vigilant medical watch over the proper protection of drugs and medi .. cines. verification of the expiry of the time of their efficacy, and t~.e jection of spuriou.11 products. If god.owns, temporary stores etc .• can be unhcensed, 1heY can become foci of -dubious, deceptive and harmful drugs. Therefore, levery place Whre stornge is made must be licensed.

[290 D-F; 292 A-OJ -

(b) The rules made under the Act, while they visualise wholesale distrl- "bution licences, the. forms hve not provided fOr licences for . mobile vans or

distn"bution depots so essential for a wholesale <futribution system. The . licence aivcn to the appellants' vehicle is an improvised innovation without the. law. There is no express power to thus modify the forms or innovate according to need. But such an authority to grant sutable Hcen11es under rr. 61 and '62 (proviso), including the wayside depots or 'emergency' stores,

coUld be implied. The appellant should therefore have applied fOr and

obtain~ the n'ecessary Jiccnc~ for the temporary storge. (291 C-HJ

(LIJw Lexicon of British- India comiltd and edited by Ramanati1a1 Ai}'ar, sale there' or. stocked for sale elsewhere later'. TDe Central Governmen.t should'.howevtr clarify the rules and nrovide for al'?nropriate forms .. The first interpretation permits abuse through loophole~,. while the .seCQDd llJ<!llens ~P 'but" caSts on the dealer the burden. of. obta1n1ng more licences. Since nsk

SUPREME COURT REPORTS ( ft974 l 3 S.C.It.

of life and health is avoided by the latter interpretation, it must be held that

th~ storage, even though for short spelJs "and on ad hoc basis

1 and without intent to sell at that place but as part of the sales business, comes within stocking for sale in s. IS(c) dOd r. 62.

[293 C-EJ

CRIMINAL APPELLATE JuR1smcTioN : Criminal Appeal No. 177 of 1970.

From the judgment and order dated the 7th August 1969 of the Bombay High Court in (Nagpur Bench) at Nagpur in Criminal Appeal No. 25 of 1968.

S. C. Manchanda and 0. P. Verma for the appellant.

M. C. Bharldare and M. N. Shroff, for the respondent.

The Judgment of .the Court was delivered by KRISHNA IYER, J .-Every legislation is a social document and judi< cial construction seeks to decipher the statutory mission, language permitting, taking the cue from the rule in Heydon's( 1) case of suppressing the evil and advanciRg the remedy. The .Drugs and Cosmetics Act, 1940 (the Act, for short) is a life-saving statute one of the provisions of which, together with a bunch of rules and fotms, falls for interpretation and application to the substantially admitted facts set out concisely in the order granting certificate of fitness to appeal.

The Bench projected the factual-legal issue in these words :-

"It is not in dispute that the petitioners have a wholesale dealers' licence to stock .durgs at Bombay and hve a further licence to distribute the drugs through the motor van throughout the territory of the state of Maharashtra.

Accordingly, their motor van started filled with drugs and reached the Vidarbha area.

The petitioners booked certain drugs for which they have already a licence to distribute, by lorry to Y eotmal.

The idea was that the moto~ van, which was touring the Vidarbha area, should reach Yeotmal by about the time when the goods were due to arrive and the person in charge of the motor van would collect the drugs so hooked from the lorry and distribute them as per instructions given by the firm.

But Ul)fortunately the motor van was delayed by about three days nd one of the partners of the petitioner-firm who was movmg , with the van, went ahead of Yeotmal, rleased the goods 'from the transport operator and temporanly kept them m

the godown of a local drugs dealer. .Th~ intention was to load the van with those drugs and distnbute the drugs as permitted by the licence.

In, the appeal in this Court, these facts have .bec_n found as pleaded by the accused persons. However, 1t 1s held that the temporary deposit of the goods _in the godown of a local drugs dealer amounts to stocking for sala as ccntcmplated. by clause (c) of section 18 of the Drugs

.(1) 3 co:R~-; a-Maxwcll n the interPretation ofStatutes-12 Edition-p .. 40:

SWANTRAJ v. MAHARASHTRA (Krishna Iyer, J.) 289.

and Cosmetion Act, 1940.

For the purpose of stocking the drugs, either for sale or for distribution, the accused persons had no licence for the premises at Y eotmal and this act amounted to a breach of the conditions of the licence and, as such, breach of rule 62, amounting to an offence under section 27 (bl of. the Drugs and Cosmetics Act, 1940.

The point, whether a temporary deposit of drugs or temporary retention of drugs in a place outside Bombay for which place the petitioners have no licence to stock the goods, amounts to stocking for sale or distribution, is a point of law which appears to us of general importance."

C The appellant :has been concurrently convicted but hopefully challenged. Sec. 18 (e) of the Act forbi0s manufacture for sale or sell or stock. or exhibit for sale, or distribute any drug without licence under this Chapter (Ch. IV). Sec. 27 (b) is the penal provision for contravention of the provisions of Ch. IV of the Act or the rules made thereunder.

Rule 62 is claimed to have been violated and so may be read here together with the sister rule, i.e. R. 6 ! : D

"61. Forms of licences to sell drugs-·

(I) A licence to sell, stock or exhibit for sale, or distribute drugs other than those specified in Sc.hedules C and C

(I) by retail, on restricted licence or by wholesale shall be issued in Form 20, 20-A or 20-li as the case may be.

Provided that a licence in form 20-A shall be valid for only such drugs as are specified in the licence :

(2) A licence to sell, stock or exhibit for sale, or distribute drugs specified in Schedules C and C(') by retail, on restricted licence or by wholesale shall be issued in Form 21, 21-A or 21-B as the case may be:

Provided that .a licence in form 21-A shall be valid for only such drugs as are specified in the licence.

62. Sale at more than one place-If drugs are sold or stocked .. for sale at more than one place, separate application shall be made, and a separate licence shall be issued, in respect of each such place :

G Provided that this shall not apply to itinerant vendors who have no specified place of business and who will be licensed to conduct business in a particular area within the jurisdiction, of the licensing authority.''

The appellant is a wholesale dealer and distributor-and has a licence for his Bombay shop in Form 20B and another in Form 21B, H one for drugs specified in C and C (1) Schedules and the other for

other drugs (Ex. 37 and 38). The firm has one more licence issued under R.61(2) in Form 218 authorising it to sell, stock or exhibit for

SUPREME COURT REPORTS

[ 1974] 3 S.C, R.

tlet' or tstribute by wholesale on the premises situated at through . . a 10~ agan o. MHR 1279 in the state of Maharashtra . the fohllo0wmg categories of drugs specified in Schedule c and C(l)' to t e rug Rules, 1945 :-

- Categories of drugs: for items of Schedule C(l) drugs not requiring Cold Storage.

_ 2. Thi~ lience shall be in force for two years from the date 0£ issue of this licence:

3. Ti~ licence is subject to the conditions stated below and to 11\e Prov1s1ons of the Drugs Act, 1940 and the rules thereunder.

The question is wether !he act of the appellant in temporarily stor- 1_ng df?gs, not for mimediate sale there but mtended for ultimate sale m various parts of the Stae,_is. contrary to sec. l~(c) and punishable under Sec. ~7 \b)? Even f 1t 1s, an Ex. 39, which permitted stockmg and selltng m the specified vehicle of the accused, cover the brief mterval of storage between taking delivery from the railway or other public transport and loading into the appellant's mobile van ?

Agreeing with the High Court, we may make short shrift of the second contention first. If a brief storage for sale in the circumstances of this case necessitates a licence a legal issue we will examine separately-does Ex. 3 9 fill the bill ? A licence in terms for a vehicle cannot do duty for one to keep drugs in a fixed place. The grievance

asuming it to be real, that none of the prescrib.ed forms provide for an itinerant wholesale distributor or that it would be a fantastic possibility to furnish the possible places-likely to be numerous-where for short intervals drugs may have to be stored awaiting the arrival of the van, is no defence. If the law asks for a licence for a place and you do not have it and still keep the articles there you are asking for criminal trouble, whether it is a stopgap stocking or not.

The argumentum ab inconvenienti affords no answer. The Act mandates the taking of a licence for every place where you stock drugs for sale, the words of Sec.18(v) and rule 62 being plain and admitting of no exceptions.

You ask four questions.

Is it a drug? If it is, is it stored in a place or is it in transit ? If it is stored in a place is the storag~ for sale? If it is, a licence for that place--

half way house, may be-is the only answer to a prosecution. 1:herc is none here ex confessio.

Of course, what looms large then ts as to whether sch a stop gap storing is one for sale.even if, admittedly. no sale is intended in that drug shelter?

Counsel for the State Shri Bhandare counters the argument of absence of prescribed forms and difficulties in mentioning many places for temporary storage of drugs, in two ways. Firstly, statutory forms are samples for guidance, not exhaustive prescriptions unamcnable to addition modification or improvisation as the circumstances require. The forms in the appendices to the Civil Procedure Code illustrate this point. Of course, it is not as sample as that. Sec. 18 which regulates manufacture and sale of drugs prohibits these activities "except under and in accordance with the conditions of a licence

isscd for such purpose ...... " No inflexible fonnula nor petrified

SWANTllAJ v. MAHAllASHTRA (Krish11a Iyer, I.) 29 [

form is built into the section, suitable forms dictated by pragmatic considerations and conditions of business being not ruled out. The rules, however, are a little confusing .

Rule 2(b) defines 'Form' as a form set forth in Sch. A and does not profess to be illustrative and that Schedule applies 6 forms under R. 61 (1) and (2) and none for peripatetic wholesale distributors who may. transport to and stock in central places and radiate from there to remote retailers.

The licence Ex. 39 for the accused's vehiele is an improvised innovation without the law but prompted by practical sense. The sub-rules of Rs. 61 state that licences there under shall be issued in forms 20A, B and C, 21A, B and C. Rule 62 leaves no rocm for variations to suit exigenciCll' although its proviso envisages licences for itinerant vendors for an area and R 62A takes cognisance Of. travelling agents and itinerent Venaors who are required to take licences in Form 21A. But it is a glaring deficiency that while the rules visualise wholesale distribution licences the forms do not spell out licences for mobile vans or distribution depots so essential for a wholesale distribution system. There is no doubt that if a scientific system of over-seeing wholesale . distribution and a viable scheme of protected distribution is to be devised, licences for large and wellequipped conveyances ancl storage depots is desirable, nay, necessary.

Indeed, storage in transit must also be licensed so that medicines du not suffer in the process.

At present, no rules take care of transit by road or rail. .Actually, cold storage or air-conditioned facilities for sensitive medicines are scarce in nationalised and private transpor11

; e)'Vices and the drugs legislation winks at. it. Likewise, the fo; ms do not provide for storage depots or medical vans for wholese supplies. Social guilt attaches to legal lacunae, the' community beg the victim.

Arguments in this case have exposed these shortfalls m the Jaw and we state them for legislative attention.

The statUtory scheme does provide for retail and wholesale saks and storages for sale. It does prescribe forms for itinerant retailers for specified areas, travelling representatives supplying samples and the like. But storage for sale in mobile wagons or vans resorted to by wholesalers is not expressly covered by statutory forms .. That is why Ex, 39 is an adaptation not found in the fasciculus of prescribed forms. There is no express power to modify the forms conferred by the rules, or innovate according to need, desirable though it is.

As the Jaw now stands, we are disinclined to invalidate Bx. 39. qn the other hand the Act and the rules must prevail over the forms and, therefore ;_,. are inclined to overlook the technical deficiencies in the rules' and, nf.ling _the law to save life, uphold the implied athc:··

rity to grant swtllble licences under R. 61 and 62 (prov1So) een .1f liberties have to be taken with those given !n Schedule A., Thi> wll! extend to grant of such licences for way side depots or emergency stores. But li.cences there must be for every storage for sale (S. 18(C) •

Sri .Manchanda's plea that licences should not be insisted on for every place of make-shift storage in a far-tlung area served bv .~

wholesaler may look wasonabte.

The police power of the State J,

SUPREME COURT REPORTS [ 1974 J 3 S.C.ll.

exercised to ensure safe and potent drugs for a people peculiar[y

susceptibl~ to ailments and largely ignorant of health hazards. The paramount purpose of regulation through licensing is, inter alia, to set in motion vigilant medical watch over the proper protection of drugs and medicines and the verification of the expiry of their life and the spuriousness of the products. If godowns, temporary stores anJ depots can remain unlicensed, they escape official attention and can deteriorate into foci of dubioµs or .deceptive drugs harmful to society.

Every place where storage for sale is made must be licensed.

That is the plain meaning of Sec. 18 ( c) in fulfilment of the clear puQOS<', the sensitive defence of the sick.

The only surviving issue is whether the medicines in this case were stocked for sale in the house of Jaswani at Y ootmal. Admittedly, they were kept not for sale in those premises. Admittedly, they were meant for sale c>entually to rural retailers elsewhere. lf so, were they stocked for sale? Either contention has some claims to acceptance but what must tilt the balance is the purpose of the statute, its potential frustration and judicial avoidance of the mischief by a construction whereby the means of licensing meet the ends of ensuring pure and potent remedies for the people. This liberty with language is sanctified by great judges and textbooks. Maxwell (') instructs us in these words :-

"Th•re is no doubt that 'the office of the Judge is, to make such construction as will suppress the mischief, and advance the remedy, and to suppress all evasions for the continuance of the mischief.' To carry out effectually the object of a statute, it must be so construed as to defeat all attempts to do, or avoid doing, in an indirect or circuitous manner that which it has prohibited or enjoined : quando aliquid prohibetur, prohibetur et omne per. quod devenitur ad il/ud.

This manneP of construction has two aspects.

One is that the courts, mindful of the mischief rule, will not. be astute to narrow the language of a statute so as to allow persons within its purview to ascape its net. The other is that the statute may be applied to the substance rather than the mere form of transactions, thus defeating any shifts and contrivances which parties may have devised in the hope of thereby falling outside the Act. When the. courts find an attempt at concCalment, they will, in the words of Wilmot C.J., 'brush away the cobweb varnish, and shew -the transactions in their true light." This benignant 1ule originated four hundred years ago in Heydcm's case which resolved -

"that for the sure and true interpretation of all statutes in general (be they penal or beneficial, restrictive or enlarging of the common law) four things are to be discerned and considered: (!st). What was the comon law before

(1) Manwcll on the lnterprctati1:>n of Statutes12th Edition p. 137.

sWANTRAJ v. MAHARASHTRA (Krishna Iyer,!.) 293

the making of the Act.

(2nd) .

What was the misch1d and defect for w;1ich the common Jaw. did not provide. (3rd).

What remedy the Parliament hath resolved and appointed to cure the disease of the commonwealth.

Ancl, (4th). The true reason of the remedy; and then the office of all the Judges is always to make such ccmstruction as shall suppress the mischief, and advance the remedy, and to suppress subtle inventions and evasions for continuance of the mischief, and pro privata commodo, and. to add force. and life to the cure and remedy, according to the true mtent oflhc makers of the Act, pro bono publico."

if.any godown, depot or premises become the nidus of spurious, time-expired or unscientifically stored drugs, can they be allowed to escape the coils of the penal Jaw on the plea that they are not to be sold there, without great peril to patients? . Then legal shelter for spurious drug rackets would be judicially ensured. And this colours construction.

Stocke<l for sale there and then? or io be sold certainly but elsewhere later? are the two alternatives flowing from the language of Sec. 18 (1) ( c) .

The former permits abuse througti loopholes, the latter ugh tens up but loads the dealer\ with expenses and need for more hC-'nces.

Since risk to life and health is avoided by the latter interpretation, we hold 'that the storage, even though for short spells and on d:i\ /we basis and without intent to sell at that place but as part of !he sales business, comes within the scupe of "storage for sale' in Sec. 18(c) artd R. 62. To loosen the Jaw m its

joints is to play wilh life and therefore anti-humanist.

On the admitteu facts, the offence is not serious . On the face of it, the law is a little defective. Our interpretation makes the accused guilty and clarifies the legal position although the Central Government wi)I do well to tidy •lp and tighten the provisions by a close. second took at the Jaw in tho book. We need ha•aly say that a law 1s eec tive not b, Y making it perfect on paper but by providing a sufficient and conscientious cadre of officers.

The sentence is light but here it is enough. We dismiss the appeal for the reasons . above set out.

V .. P. S.

Appeal dismissed.

SWANTRAJ & ORS

STATE OF MAHARASHTRA

February 5, 1974

V. R. KRISHNA IYER

R. S. SARKARIA, JJ.

Section 18(c)

Drugs and Cosmetics Act, 1940

s. 27(b)

s. 18(c)

s. 27(b)

S. C. Manchanda

P. Verma

M. C. Bharldare

M. N. Shroff

KRISHNA IYER

Heydon

Drugs and Cosmetics Act, 1940

Bombay

Maharashtra

Vidarbha

Yeotmal

section 18

Krishna Iyer

Cosmetion Act, 1940

section 27

Drugs and Cosmetics Act, 1940

Sec. 18

Sec. 27

Schedule C

Drugs Act, 1940

Bhandare

Sec. 18

Krish11a Iyer

S. 18(C)

.Manchanda

Sec. 18

Jaswani

Maxwell

Wilmot

Heydcm

Parliament

Sec. 18

Sec. 18(c)

Central Government


MUNICIPAL COUNCIL, TIRUPATHI

TIRUMALAI TIRUPATHI DEVASTHANAM

February 6, 1974

[P. N. BHAGWATI AND P. K. GOSWAMI. JJ.]

Madras District Municipalities Act, 1920-S. 83(l)(b)-Wllt't.her Tirumaltd .Tirupathi Devasthana1n New Choultry is exempt front. property tax,

The. plaintiff/respondent filed a suit in the court of Subordinate Judge, for a declaration that the building, known as ·~Tirumala Tirupathi Devasthanam New Choultfy'' is exempt from property tax u/s. 83(1)(b) .of the Madras

District Municipalities Act, 1920 and for directing the defendant, the Muni- C cipal Council, Tirupathi, to refund the. sum of Rs. 22,306.40 paid under protest.

According to the plaintiff, the said building is a free Devasthanam Cboultry intended purely for the convenienee of the visiting pilgrims and therefore, exempt from property tax.

The defendants' case is that while pilgrims are accommodated in the ground floor free of charge, the rooms in the first floor are rented out to pilgrims and __ others. Further, the plaintiff waS deriving a very large income from the various stalls and shops situated inside the premises D of the choultry and therefore not exempt from tax.

The learned Sub-Judge dismissed the 90.it but on appeal, the High Court reversed the judgment and decree of the trial court and decreed the plaintiff's suit holding that the plaintiff is Cntitled to exemption under s. 83 of the Act.

S. 83(1) of the Act provides as follows :-

''The following building and lands shall be exempt from the property tax :-

(a) ......

(b) choultries for the occupation of which no rent is charged and choultries the rent charged for the occupation of which is used exclusively for charitable purposes;" Dismissing the appeal,

HELD: (i) The word "choultry" is not' defined in the Act. the word

however~ means a shelter or resting place for travellers.

(Law Lexicn11 of British Tndia Co111.pilcd a11d edited by RiinUinatha Aiyar, 1940 Ed,)

(ii) Chouiiry .is indeed an ancii;.nt institution and is principally meant for lodging of pilgnms and travellers. It is conceivable that in 1884,, when. the first Municipal Legislation was passed in Madras1 such institutions were some G hun1ble sheds; but in course of time, such institutions grew in size and more and more demands were made oI them for comfort and convenience Of the pilgrims. Therefore, it would be necessary to look at the institution from the point of view of the predominnnt intention which guides the building up of the complex as a whole.' ·

(iii) In the present case, the choultry cannot be divorced from the other offices, shi:>os and concerns which are mainly located within its precincts in H order to render much-needed services to the pilgrims.

It is clear that lhe

entir~ income is used exclusively for the purpose of the choultry which is indeed a charitable purpose. Therefore, the case f<i1ls squarely under sec.

SI ( l)(b) and therefore exempt fron1 property tax.

MIJN!CIPAL COUNCIL v. T. T. DBVASTHANAM (Goswami,/.) 295.

Ktsarpalli A.ntaneyufu and another v. Eluru Mr111icipalily by its Executive- Offectr. Tire conunissioner a11d a1101f1er, [1964] I.L.R. Anctfua Pradesh (Part lV) 379, Sri Kayakaparameswari Anna Satranz. represented by the Secretary, Sri Bmchil Venkateswarlu v, The Vijayawada Municipalily, represented by its Ex"utit'e Officer. The Municipal Co1nmissioner [1959] 2 And.bra Weekly Reporter, 325; Kandandarani Pillai v. The Municipal Council, Trichinopoly, [1933)"

65. M.W. 678 and Pandaras!lnnadhi, Tiruvan11amalai Adhinam v. The Corpo"4 rancn of Madras, [1941] 2 M.L.I. 544, rcfed to and distinguished.

CmL APPEL'LATE JuR1sn1n10N : Civil Appeal No. 568 of 1969.

From the judgment and decree dated. the 27th February, 1968 of the Andhra Pradesh High Court in Appeal No. 117 of 1963.

J;.i M. Nattsan, K. Jayaram and R. Chandrasekheran, for the appellant Krishnarao, E. Kalyanaram and G. N. Rao, for the respondent. c

The Judgment of the. Court was delivered by

GOSWAMI, J.-This appeal by the defendent in the original •uit is by certificate grantect by the High Court of Andhra Pradesh to appeal against the judgment and decree of the said Court of 27th February, '

1968. The facts may briefly be stated.

The respoqdent (hereinafter to be described as the plaintiff) is the Tirumalai Tirupathi Devasthanarn represented by its executive officer.

The plaintiff instituted a suit in the court of the Subordinate Judge, .Chittoor, on 10th March, 1961, praying for a declaration that the building known as 'Tirumala Tirupathi Devasthanam New Choultry" situated within the area of the Municipal Council Tirupathi (hereinafter described as the defendant) bearing assessment No. 5361 of Tirupati Municipality, is exempted from property tax under section 83 ( 1) (b) of the Madras District Municipalities Act 1920 (Madras Act V of 1920) , briefly the Act, and for directing the defendant to refund the sum of Rs. 22,306.40, the amount of tax so far paid under protest. It appears that the plaintiff paid property tax in respect of this building for several years under protest and without prejudice to its right to file a suit. After the plaintiff failed to get redress from the authorities, thQ suit was filed.

The plaintiff states in the plaint "that the silk! building is a free Devasthanamas choultry intended purely for the convenience of the pilgrims visiting the famous Holy Shrine of Sri Venkateswara Swami at Tirumala and other Devasthanams attached to the. plaintiff Devasthanams and is used solely and exclusively for the said purpose and no other". The plaintiff further, inter alia, avers in para 7 of the plaint as follows :-

"The defendant has failed to itote and take into consideration, as it ought to have the !ct that the canteen, the Firewood stores, the Transport Office Workshop, Garages, the galvanised Iron Sheet sheds for parking the Transport vehicles, the Railway Booking Office, .the Mysore Government Trao8port Office, the Devasthana.ms Sanitary Inspector's Office, ihe Enquiry Office, Garages of cars, shed for Water pump, Laundry, Hair-cutting Saloon, the Post Office and

Free Medical Dispensary, are all located within the schedule A mentioned premise~ only with a view to providing conveniences which the plaintiff is under a statutory obligation to provide to the visiting pilgrims without deriving any rents, returns, profits or other receipts.' 1

The defendant resisted the suit. It denied in the written state men! that the building "is an out and out free Choultry". The defendant B further avers that "while pilgrims are accommodated in the ground :floor portion of the Choultry free of charge, the rooms in the first floor are rented out to Pilgrims and others. Further in the mam building, .as well as in the other buildings within die compound of the chouitry, there are several shops, stalls and offices. . There is the canteen, which • admittedly caters not only to the pilgrim visitors staying in the choultry but also to the general public.

There is a brass vessel shop, a fire C wood depot, a Transport Office, a motor workshop with 9 garages, a Railway Booking Room", a Mysore Transport Office Room, the Sanitary Inspector's Office Room, Enquiry Office, 6 gara.ges, (2) residential portions for Superintendent, .a water pump shed, a laundry, a barber shop, and a Post Office. It will be seen that the busine!ls in several of the above shops and stalls and the amenities provided therein are not solely connected with the purpose of either the. choultry or the

D . worship in the temple. The plaintiff is deriving a very large income from the said stalls and shops ........ The annual rental value of the "building was calculated only after excluding the portions tlrat are beior

used for the purposes of the free choultry".

By consent of parties, a large number of documents were marked as exhibits, and the plaintiff examined only the Superintendent of the E New Choultry as the s01e witness while the defendant did not adduce' any oral evidence. The Subordinate Judge dismissed the suit observing as follows :-

"On considering all these aspects I am of opinion that neither the several offices and shops situated within the premises of the choultry, nor the furnished rooms in the F main choultry are entitled" to exemption from property tax under section 83 of the Madras District Municipalities Act".

The Trial Court relied upon the decisions in Sri Ka1iyak1Jparame.- wari Anna Satram, represented by the Secretary, Sri Batchu Venkatesswar v. The Vi; ayawada Municipality, represented by its Executive Officer, the Municipal Commissioner(') and Madura Municipal G Council through its Commissioner, Rajiah D. Paul v. Madura etc., Devasthanams represented by its Executive Officer, R. S. Nayudu( 1)

and rejected the plaintiff's claim. On appeal by the plaintiff to the High Court of Andhra Pradesh, the Division Bench reversed the judgment H and decre_e of the Trial Court and decreed the plaintiff's suit holding that the plaintiff is entitled to exemption under section 83 of the Act.

(I) 1959 (2) Andhra Weekly Reporter 325.

(2) A. I. R. 1942 Madras 658.

The evidence in the case is absolutely one sided and there is noo controversy about the facts.

The High Court has found that "there is only one institution, one building and that building provides for rest of the. pilgrims who visit the place and the pilgrims are numerous to common knowledge. It is not enough to have merely accommodation in building but the people would like to have other amenities and it is the other amenities that are provided as stated above. Therefore we have to treat all these including the rooms as one single unit which is intended for resting of the pilgrims who visit the place and should not as the lower court did, separate these amenities from the main institution. No rent is charged except in one cas~ where there ii one brass co-operative store which pays Rs. 30 /- per month towards rent.

In this case the test laid down for deciding whether the institution is a choultry or not is fully satisfied as there is much accommodation in the ground and first floor for resting place. What is objected to and contended is that it ceases to be a choultry with all these amenities provided there. In our opinion if the institution is essentially one for providing rest and shelter for pilgrims, the mere fact that there are amenities attached to the institution should not detract from its being a choultry.

On the other hand it amplifies and provides more comforts to the pilgrims without charging anything for them". The High Ccurt also found that "the amount collected for services and other amenities is far less and it is not sufficient to meet the expenditure to run the choultry .......... What is derived by the choultry is only an amount of Rs. 15000/- and odd which is service charges. But over and above that a large amount which equals double the amount . is spent. The charges, therefore, must necessarily, have been spent and are spent, as accounts show, for purposes of charity and whatever is collected, whether from the cooperative society at the rate of Rs. 30/-

per mensem or service charges levied from the pilgrims, it is only a small amount. All this amount is. not sufficient lo. meet the annual expenditure of the institution and the balance must come from the pocket of the Devasthanam.

It is therefore difllcult to accept the contention that there is no proof that the collections were applied exclusively for the choultry. The expenditure is one, the institution is one and the collections are also exclusively for services connected with the institution and not by way of rent. All these indicate and point to the conclusion that the collections are applied only for purposes of charity.

It is not a business and the institution is not making any profit and profit-motive is not behind the actions of the Devasthanam in levying small charges for the service< rendered. All these charges are meant mainly for the 30 rooms in the first floor."

The High Court came to the above findings and also noticed "that the learned Subordinate Judge over-looked the fact that there were rooms on the ground floor and they are also used for the pilgrims'.

II Mr. Natesan, learned counsel for the appellant, subniit< that the plaintiff cannot in law claim exemption under section 83 ( 1) (b) of the Act. We may, therefore, read the material provisions . in the section with which we are concerned :

83 ( 1) "The following buildings and lands shall be A exempt from the property tax :- x x x x

(b) choultries for the occupation of which no rent is charged and choultrics the rent charged for the occupation of which is used exclusively for charitable purposes;'' /

x x x x

'The word "choultry" is not defined in the Act.

The word is defined in the Law Lexicon of British India compiled and edited by Ramanatha Aiyar, 1940 edition, as follows :-

"Choultry : Chatram, A choultry is a corruption of chavadi. It means a shelter or resting place for travellers.

A chathram (corruption of the Sanskrit Sathram) is a house where pilgrims and travellers arc fed".

In the Shorter Oxford English Dictionary, choultry is described as an Anglo-Indian word "being corruption of Telugu chawadi" and its 1neaniog is given as "A caravanserai". In Wilson's Glossary of Judicial and Revenue Terms, second edition, page 108, the word is given in different forms such as Chawati or Chauti, corruptly, Choltry or Choultry and the meaning is given as "A public lodging place, a >helter

for travellers".

The earliest Act on the subject in Madras is the Madras District Municipalities Act of J 884.

Even there under section 63 (1). amongst others, choultries were exempted from payment of tax on

buildings and lands. The word choultry was not defined even in that Act. The present Act of 1920 has repealed the aforesaid old Act under section 2 read with Schedule I. In the absence of a statutory definition in the Act, recourse has to be taken to the meaning attributed to the word in the dictionaries and the law lexicons as well as to the popular concept of the term. Choultry is indeed an ancient institution and is principally meant for lpdging of pilgrims and travellers. 1t is conceivable that in 1884, when the first municipal legislation was passed in Madras. such institutions were some humble sheds and other structures to enable the pilgrims to stay for a short while when they came to visit temples and other religious places. This institution, like similar others elsewhere, has come to stay as a symbol of religious and charitable disposition of human mind translated into physical manifestation in the shape of safe shelter for the pilgrims. As man advances and ideas grow and expand, with his ver increasing desire for comfort and convenience, the. shape of the choultry must needs also change.

It is, therefore, only to be expected that with the growing funds of the Devasthanams, such choultries will be constructed in a modern way catering to the needs and requirements of the pilgrims and visitors of all classes in a self-contained unit or complex. It would be necessary to look at the institution from the point of view of the predominant intention which guides the building up of the complex as a whole.

D :

The object for which a choultry is built is advanced and facilitated by making provisions for so many incidental conveniences which the visitors and pilgrims coming from far and wide may need in order to make their short stay in the neighbourhood of the .temple comfortable and convenient from all points of view so that they are not required to go to and fro and face difficulties. The concept of a choultry to-day may, therefore, be completely different from that with which one may be familiar a hundred years ago. There must, however, be no idea of profit motive in running or administering a choultry.

Besides the expenditure for running a choultry with amenities should not be made with an idea to realise it from the visitors using the same.

Jn other words, the choultry must in truth and reality bear the hallmark of a charitable institution and should not partake of the character of a hotel run for profit. The aP.pellant concedes that the first floor as well as the ground floor of the building which are used for lodging of the pilgrims may be exempted from tax and indeed tax has not been realised in respect of the rooms on the ground floor of the choultry. The appellant, however, ubmits that the offices, shops and

o!ller concerns some of which are located in the choultry and others within the campus, cannot be considered as part and parcel of the choultry and, therefore, are not exempt from tax.

We have examined • the entire evidence in this case and have given careful consideration to the findings of the High Court with regard to the same'l>t1ond are clearly of opinion that the choultry cannot be divorced from the other offices, shops and concerns which are mainly located within its precincts in order to render much-needed and other necessary services to the pilgrims coming to pay homage to the Holy Shrine of Sri Venkateswara Swami. fa the absence of a precise definition of the word "choultry" in the Act exduding such offices, shops and concerns in the precincts, we are unable to restrict the term "choultry" in the context of the economic development and improved standard of living of our people, to only that portion of the building which is directly used for lodging of visitors and pilgrims. We are, therefore, ot the view that the High Court is right in holding that the appellant is not entitled to charge tax on the choultry as claimed.

Under section.Bl of the Act, property tax is leviable if the Municipal' Council by resolution determines that it shall be levied on buildings and lands within the municipal limits save and except those exempted by or under the Act or any other law.

Then section 83 provides forgeneral exemption under various heads and categories.

There are exceptions within exceptions in section 83 itsel! with a proviso and explanation with which we are not directly concerned in this appeal. Some light is, however, thrown by explanation to section 83 which it may be appropriate tQ quote :

"Explanation-The exemption granted under this section shall not extended to residential quarters attached to schools and colleges not being hostels or to residential quarters attached to hospitals, dispensaries and libraries".

Similarly there is a proviso in the section with reference to clauses (a), (c) and (e) to the effect that nothing contained in thes.c clauses

"shall be deemed to exempt from property tax any building or land for which rent is payable by the person or persons using the same for the purposes referred to in the said clauses". Nothing similar to this has been superimposed upon the exemption allowed under the Act to choultries .inder section !B ( 1) (b) and the matter is kept unabridged even without attempting to define the word and there 1s no carving out of any exception within the exception as in the case of schools, hospitals, etc.

Even then a line will have to be drawn to distinguish between what is incidental or subservient to the main object and purpose of the choultry and the oblique motive of profit-making to deprive the Municipality of its rightful dues.

It is well recognised that there is no equity or morality about a tax and a taxing statute or provision has to be construed strictly on its plain meaning where possible. Similarly who so ever claims exemption from tax under the law, has to estab1ish his own case as falling within the exemption clau'Se. In case of any ambiguity the benefit will, however, go to the tax payer ..

Not being unmmdful to the above principles, we arc unablo to hold in this case that the New Choultry with iIS expending beneficial complex, as established m the evidence, not viable by itself but maintained in a substantially large measure out of the Dcvasthanam funds predominent)y in the interest of numerous visiting pilgrims from far and wide, is not exempt from tax under sccllon 83(1) (b).

In the view we have taken about the choultry in this cast\, 1we hold that there is no evidence to show that any rent as such is charged for the occupation of the choultry and the minimal service cltitrges even for the rooms in the first floor cannot be treated as rent.

There is only evidence of realisation of rent of Rs. 30/- per month from the . braSs cooperative store within the campQ.S,. but that is a very insignificant item when we consider that everything else is found by the High Court to be rent-free.

The evidence has established that the entire income from whatever sources from the choultry is not sufficient for the maintenance of the same.

It is, therefore, obvigus that the entire income, including even the nominal rent charged from the brass cooperative store, is used exclusively for the purpose of the choultry which is indeed a charitable purpose.

The case, therefore, falls squarely under section 83 (I) (b) of the exemption clause:

The appellant relied. upon a decision of the Andhra Pradesh High G Court in Kesarapalli Anjaneyulu and Another v. Eluru Munii:ipality,

by it• Executive Officer, The Commissioner and Another('), where the question arose as to whether a portion of choultry, which is used for shops, can be brought within the purview of section 83 (1) (b) of this very Act.

The High Court held that the clause is attracted only to cases where rent is charged in regard to a building used as a cboultry i.e. where tent is collected from persons who temporarily occupy H

(t) (t964) I. L. R. Andhra Pradesh (Part IV) 379.

, D

the rooms, such as pilgrims and travellers, and it hs no. applicatio~ to cases where the building is not used as a choultry. It is not _posSIle to find from the very short judgment in this case as to the entire ir cumstances with regard to the connection of the_ shops with the choultry.

The decision is, therefore, not of much assistance to the appellant and we express no opinion on its correctness.

The next decision cited by the appellant is in the case of Sri Kanyakaparameswari Anna Satram (supra). In this case ten buildings that were involved in the suit were situated outside the choultry building.

It was alleged in the plaint that these ten buildings were rented and the income realised therefrom was used and applied for maintaining the choultry.

The High Court. held that "the exemp'.ion is only to choultrics ancj if a building does not satisfy the definition of a houltry, it is not entitled to the exemption.

Any building or house property acquired by the plaintiff-committee cannot be called a choultry, and if the plaintiff-committee should acquire a cinema-houoo and appropriate the 1nco:n< therefrom for the charitable p 1rpose", ic cannot be said that lhc cinema-house is a choullry.

The High Court relied upon two decisiuns of the Madras High Court in Kodandaram Pillai v.

The Municipal Council, Trichinopoly,(') and Pandarasannadhi, Tirul'annamalai Adhi- 11am v. The Corporation of Madras(') . . The facts of this case arc entirely different from those of the present case where shops, o'.lices and other concerns ar<, intended to provide facilities and amenities to pilgrin1sand travellers staying in the choultry without there being any motive of profit-making and aie therefore part of the choultry.

The appellant also relied upon MUllicipal Councii, Pal11i v.

Sri Dlzandayuthapa•i Devasthanam Pal11i( 3 ), where the High Court was

dealing with the words "places set apart for public worship and either actually so used or used for another purpose" under section 83( I) (a) of th~ Act with which we are not concerned.

The decision is, therefore, of no assistance to the appellant. the appellant also relied upon R•jahmundry Municipal Council v. Tripurari Mallf); yya('). The High Court on the particular facts and circumstances of the case held :

"If the property is a choultry when the tax accrues due then the. tax cann9t be levied. If it is not a choultry on that

date, being used for other purposes, then the tax is leviable ev.en though in the past the prO]Jerty had been a choultry aud might become one again in the future".

This decisicn is also, therefore, of no assistance to the appellant.

At any rate, we have looked at the matter from a.n entirely different angle. and. have come to the conclusion that section 83 (l )(b) is

attaced m .thts case. . The appeal is, therefore, dismissed and the plambff's suit, IS decreed as held by the High Court.

We wiil however,. make no order as to costs in this appeal. '

S.C.

A ppea/ dismiHfrJ~

(I) A. I. R. 1933 Madras 782: (1933) 65 M. L. J. 678.

12) A. I. R. t J41 Madras 908 : (1941) 2 M. L. J. 544.

OJ A. I. R. 194t Madras 185.

(4) A. I. R. 19i8 Madras 923 .. 7-!.954SuoCI /74

MUNICIPAL COUNCIL, TIRUPATHI

TIRUMALAI TIRUPATHI DEVASTHANAM

February 6, 1974

P. N. BHAGWATI

P. K. GOSWAMI

S. 83(l)(b)

s. 83(1)(b)

District Municipalities Act, 1920

s. 83

S. 83(1)

Chouiiry

Kayakaparameswari Anna Satranz

M. Nattsan

K. Jayaram

R. Chandrasekheran

Krishnarao

E. Kalyanaram

G. N. Rao

GOSWAMI

High Court of Andhra Pradesh

Tirumalai Tirupathi Devasthanarn

Subordinate Judge, .Chittoor

Tirupati Municipality

section 83

Madras District Municipalities Act 1920

Madras Act V of 1920

Venkateswara Swami

Tirumala

section 83

Madura Municipal G Council

R. S. Nayudu

section 83

Devasthanam

Natesan

section 83

Ramanatha Aiyar

Wilson

Madras

section 63

section 2

Schedule I

section 83

section 83

section 83

section 83

Andhra Pradesh High G Court

section 83

Kanyakaparameswari Anna Satram

Madras High Court

section 83( I)

section 83


HINDUSTAN

HOSI~'RY INDUSTRIES

F. H. LALA AND ANOTHER

Febmary 8, I974

[S. N. DWIVEDI AND P. K. GOSWAMI, JJ.]

Bo111b.ay [ndustrial -Rf!lations Act, 1946-:-w'orkmen's de1nand for rew.wnn of basic wages and dearness allowance of timt-rated and pitct-ratcd workers with retrospectil'f' eflect-Co11ct>pts of 111'11!rnun1 wage, fair wage, and livl"g wnJ:e.

Principles of wage fixation.

Co11s!itutio11 of /f1dai .A rt. 136-Practice-Principlts go1•erni11g interference C with awards of Industrial Tribunals-Power not to ht exercised so as (o co111ert Suprcnie Court into a court of appeal.

On a demand by the Mill Mazdoor Sabha for the revision of basic wages for time-rated and piece-rated workers and for the rev1s1on of dearness nllowance, reference was made to the Industrial Court Maharashtra u/s 73-A of the Bombay Industrial Relations Act. The Court follnd that on the face of it, the wages provided for the work.men of the factory were inadequate and low and i; ven in a loss-making concern, such wages have to b! raised: The Court further held that although the business was started by the appellant in 1967, it had earned profits of Rs. 1,51,000/- in 8 months of 1967 with a capital of Rs. 2,28,000/-. The appellant Company also earned profits of Rs. 1,88,000/- on the capital of Rs. 3,42,000/- in 1~68. The Court, therefore, held that the appellant-company was prosperous and its financial position was sound so as to tak:e the burden of the revision of pay scitles and dearness allowance.

The J ndustrial Court fixed the minimum Wages at Rs. S /- and fixed bigher wacs in a graded ntanner to the maximum. of Rs .. 8.SO per day.' The Tribunal also granted for every rise of 10 _points or part thereof, above the index bracket 621-630, dearness allowance @ lOP per day.

The wages of the piece-rated workers were raised by 30 per cent.

On appeal by special leave to this Court, the apllant raised the following contentions : (i) the Tribunal erred in ignoring the difference between ntinimum wage and fair wage; it was infact granting fair wage .and did not take into account the well-settled relevant factors in making the award; (ii) the tribunal absolutely ignored the aspect of the capacity of the appellant to bear the burden of the additional rise in -wages on account of the award; (iii) there is no justi- F fication whatsoever for allowing the present increase of wages without following :1ny piinciple and :ven higher than the statutory minimum waae fixed in respect of iJther industrits in the state.

fhe Sabha, on the other hand, submitted as follows: {i) the Tribunal has awllrdcd only minimum wage; (ii) even if it is assumed that the wage awarded is a little higher than the minimum: "'age, it is certainly tower than the lowest level of the fair wage; and (iii) in order to allow the wage increases the Tribunal had before it materials from the evidence famished in the Strctchlon A.ward G ::i.s well as the trend of wage rates with which the Tribunal must be ex:pectcd to be familiar, in the region and in the ind1,1stry.

Dismissine, the appeal,

HELD: (i) From a perusal of the award it is clear that the Tribunal was coni dering the case from h~ poinf of_ view of .grantina omethiog hig_her than ~c subsistence or bare m1n1mum wage bordenng on fair waac. 'Ilus conc1us1on has been reached since th.! yardstick of the present award is the Stretchlon H awai-o which was seeking to determine some kind of fair wage, [307Cl

(ii) from an ex:amiation of lhe decisions of this Court, it is clear that the floor _level is the bare minimum wage or subsistence wage.

In fix.in~ this

wage: Industrial Tribunals will. ave to consider the position from the Point

f VIC\\'.. of the wokcr. 1!1e capacity of the employer to pay sch a wage being irrelevant.

The fair wage also must take note of the economic reality of the situation and the minimum needs of the working class having a fair sized falilily with, an eye to the prc!ervation of his efficiency as a work.er. [310D)

Exprtss Newspaptrs (Prii-att) Ltd. and a11other v. Union of India and othtrl fl9.S9] S.C.R. 12, Mtsser.f. Crown Al1a11itti1u11 Works v. Their Workmen [1958] S.C."R. 651 quoted in [1953] S.C.R. 12, Kama11i Metals a11d Alloys Ltd. v.

Tl1tir Workmen [1967) 2 S.C.R. 463/467 Hydro Engineers (Pl't.) Ltd. v. Thr Work, nu:ri {1969] I L.L.J. 713/716 Mfs Jaydip Industries, Tlia11t v.

T!te Workmen [1972] 1 L.L.J. 244/247 V. U11ic/1oyi v.

State of Kuala [1962] J S.C.R. 951, quoted in [1972] 1 L.L.J. 244/247 and MIS Uniclie111 Laborat"ries Ltd. v. The Workmen [1972) 1 L.L.J. 5161590/591, referred to.

Piece-rate is what is paid by results or outturn of work.

There is greater consideration to quantity in fiXing piece-rates in some particular types of work in some industries with a guaranteed minimum.. The same standard may not be appropriate in all types of piece work. Factors such as the importance of man rather than the machine employed. correlation of piece-rates with time-rates of•the same or similar class of workers. special skill of the. worker with or without machine. the time factor in work and payment of a guaranteed ruinimuin will have to be considered.

There may be a -misty penumbra which has got lo be P.ierced through upon all available materials on record and also on what the Tnbunal, in fairness, can lay its hands on, with notice to the p<irties. for the purpose of fixing the piece-rates balancing all aspects.

The central figure in the adjudication, however, is the wage-earner who should have a fair deal in the bargain in a rCal sense as far as can be without at the same time ignoring the vital interests of the industry whose viability and prosperity ure ulso the

mainstay of labour. [310G]

(iii) 4tt 136 of the Constitution does not create a right of appeal in favour of any person. Jt confers power on the court which should not be so exercised

as to convert the court into a court of appeal. Though Art. 136 is couched in the Widest terms. it is necessary for this Court to exercise its dicretionary jurisdiction only in cases where awards are made in violation of the principles of natural justice. causing substantial and grave injustice to parties or raises. an important principle of industrial Jaw requiring elucidation and final dech.1011 by this Court or discloses such othei exceptional or special circumstances which merit the consideration of this Court.

Taking a comprehensive view of the facts and circumstances of the case, no intervention is called for with th\! <1wanl.

13 l!E]

Bengal C./iemical and PIUlnnaceutical Works Ltd. v. Their Workn1en, [1959] Supp. 2 S.C.R. 136, !cfcrred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 548 of 1970.

Appeal by Special Leave from the Award dated the 29th Janu ary, 1970 of the Industrial Court, Maharashtra, Bombay, in rder-. ence (IC) N.o. 2 of J 969.

G. B. Pai, Prakash Mehta., 0. C. Mathur an<l P. C. Bhartari. for G the appeUant.

fl. K. Sowani, P. H. Parekh and S. Bhandare, for the rospondent.

The Judgme11t of the Court was delivered by-

GoswAMI, J. This appeal by special ]eave is directed against an award of the Industrial Court. Maharashtra (hereinafter referred to for brevity as the Tribunal) of 29th January, 1970.

There was a reference by the Mill Mazdoor Sabha, Bombay (briefly the Sabha) under section 73A of the Bombay T ndustrhl Relations Act~ 1946, in

SUPRE].!E COURT REPORTS

[ 1974-J 3 S.C, R •.

pursuance of a notice of change dated 22nd August, 1968. The .Sabha. demanded revised, basic wages for the time-rated workme)l of several categories and also a rise of 50% in the wage of th• piccerated workers in the Consumers' Price Index bracket 621--030 (old series).· The Sabha also demanded dearness allowance of iO paise per day for every rise of 10 points or part thereof abov.e the said stab.

They also claimed the benefits retrospeetively fr0m 1st June, 1968.

The Sabha submitted its statement of claim on 14th February, 1969.

It appears that the appellant is a . partnership firm which was constituted and commenced production in April 1967. Tne lirm manufactures and sells nylon and hosiery goods such as socks, undergarments, and tbe like. It is registered with the Maharashtra State.

Directorate of Industries as a small scale industry.

Prior to April 1967, .all the partners of .the appellant were partners of a firm knOwn as M/s. Hindustan I:Iosfory Factory. That firm again was constituted and commenced business on and from 15th December, 1963, after the dissolution of India I:Iosiery Factory on 14th December, 1963, due to . differences amongst the partners.

On the same date, some other partners of India I:Iosiery Factory constitu•ed another firm k, nown as Stretchlon Private Ltd. While Stretchlon Private Ltd. continued to function, I:Iindustan I:Iosiery Factory was closed in August 1966 and the appellant constituted and commenced business in the name_ and style of I:Iindustan I:Iosiery Industries with effect from 17th April, 1967, on which date another firm also commenced business. under the name and style of I:Iindustan I:Iosiery Mills.

I.t appears that all these three firms, namely, Stretchlon Private Ltd., the appellant and the Hindustan I:Iosiery Mills are off shoots of tbe India I:Iosiery Fac• tory with a complement of 800 workmen which was actually the pioneer in tbe industry.

The Sabha contended before the Tribunal that the consolidated wages paid to the employees were extremely low.

According to the Sabha, tbe time-rated workmen got as tow a wage of Rs. 2.50 per day a.nd never higher than Rs. 3.50 per day.

The piece-rated wor ker9, who, according to the Sabha, are skilled workers, earned between Rs. 6Jand Rs. 7fper day. The Sabha, therefore, claimed a revision of the wages _of both the categories.

The appellant resisted the claim. According to tbe appellant,. it is a new concern and has employed some of the workers of the Hin dustan Hosiery Factory. The average dat1y wages of the piece-rated .iobs vary from Rs. 6Jto Rs. I 0120 per dav and are adequate. The work involved in the jobs is not of highly skilled nature. The aopeltant further contended that the compaay was only of two years standing and the wages prud by it are higher than those earned bv em ployees of other concerns in the industry. Its financial position also cannot be assessed as it is hardly two years old.

The demands are excessive and the appellant cannot bear the additional burden arising -0ut of these demands.

HJNDUSTAN HOSIERY INDUSTRIES v. F. H. LALA (Goswami, J.) ! :ios

The appellant has in its employme.nt about 250 workers. . The Tribunal had before it a statement (Ext. C-2) filed by the appellant showing the number of employees receiving wages below Rs" 51per day, another statement (Ext. C-3) with regard to the o'.her employees and also the books filed by the appellant and observed that many of the piece-rated and time-rated employees got as low a wage as Rs. 4.60 per day and Rs. 2.50 per day respectively.

It, therefore, held that "on the face of it the wages provided for the workmen of the factory appear to be inadequate and low and even in a lossmaking concern such wages have to be raised".

The appellant started its business on 17th April, 1967.

The Tribunal found from the sta'.emcnt, Ext. U-1, filed by the Sabha regarding its financial position that the appellant "earned substantial profits in the period of 8 months in 1967 and in 1968". The Tribunal found that during' the period of 20 months since April, 1967, the appellant has earned a profit of Rs. 1,51,000jin eight months of 1967 and Rs. 1,88,000jin 1968.

These profits are after deduction of depreciation, interest and .bonus.

The Tribunal observed that the appellant having a capital of Rs. 2,28,000Iin 1967 and Rs. 3,42,0001- .in '1968 was prosperous and. i's financial position was sound.

Tne Tribunal also observed that "the wages paid to the employees on the piece-rate and the time. rate are very low and require revision".

The appellant wanted the Tribunal to follow the wage scale of William Industries submitted by the appellant as per Ext.C-1.

But the Tribuual in the absence of any details with regard to the fina11cial p0sition of ti1at company or its profit making capacity, did not consider it appropriate to consider that as a comparable unit.

The Sabha, on the other hand, contended that the appellant was more prosperous than Stretchlon Private Ltd. and produced an award of the Industrial Court in the case of Stretchlon Private Ltd. dated 10th April, 1967, published in the Maharashtra Gazette of 11th May, 1967. It appears that the demand for increase of wages in the case of Stretchlon Private Ltd. was mnde in 1966 within three years of its functioning from 15th December, 1963, and before the Industrial Court in that case profit and loss accounts for the years 1963-64 and 1964-65 were made available.

It further appears that in the said award the Industrial Court took nole of the position of three other smaller concerns, some of which were even running at a loss and still were paying wages higher than the Stretchlon Private Ltd. The Industrial Court. therefore. awarded Rs. 5/- per day "as a reasonable and fair minimum wage to the Stretch- Jon employees of the lowest category in the Consumers' Price Index bracket 621-630".

Although the Sabha in this case has asked for different rates of basic wages for employees in five categories the Tribunal directed that the first 13 categories being the lowest potld workers should receive Rs. 51per day in the Index bracket 621-630.

The nel; t group serial Nos. 14 to 19 were given Rs. 5.50 per day in the same l>raket, serial Nos. 20-21 were given Rs. 7/- per day, serial No. 22 Rs. 7.50 per day and serial No. 23 Rs. 8.50 per day in the af'?resaid bracket.

The Tribun.al also. granted for every rise of 10 pomts or part thereof, aboe the mdex bracket 621-630, dearness allowance at the rate of 10 paise per .day.

Wi!h regard IQ the claim for

SUPR~ME COURT 11.EPORTS

[ 1974] 3 S.C.R.

5()% rise in piece-rates, the Tribunal only granted 30% in the Index bracket 621-630 and the same dearness allowance as above. The Tribunal also granted the benefits retorspectively with effect from I st February, 1969.

It is contended on behalf of the appellant that the Tribunal erred in ignoring the difference between minimum wage and fair wage.

It is submitted that tlie Tribunal was in fact granting fair wage and did not take into account the well-settled relevant factors into consideration in making the award.

The appellant emphasises that the Tribunal absolutely ignored the aspect of the capacity of the appellant to bear the burden of the additional rise in wages on account of this award. The appellant also submitted that the Tribunal ought not to have ignored the settlement with regard to wage arrived at by the Hindustan Hosiery Mills with the Sabha. lly that settlement, the said partnership firm constituted by the other group of partners of Hindustan Hosiery Factory agreed with the Sabha to give an increase of Re. 1 /" per day in the wages of the workers getting Rs. 5/- per day or less and an increase of 50 paise pe~ day in the wages of the workers getting more than Rs. 51per clay.

The appellant was prepared to allow this increase which would have imposed an additional burden of Rs. 56,022/- pcr year

The respondent, on the other hand, submits that the Tribunal has awarded only minimum wage.

Even if it is '15Sumed' that the wage awarded is a little higher than the minimum wage, it is certainly lower than the lowest level 'of the fair wage.

The learned counsel submits that in order to allow. the wage increase the Tribunal had before it materials from _the evitlence furnished in the Stretchlon award as well as the trend of wage rates with which the Tribunal must be expected to be familiar in the region.and in the industry.

It is well seJtled that no industry can be allowed to carry on its business if itis unable to pay the minimum wage to its employees. The iiluustry with which we are concerned is, however, not a scheduled industry in Which the State Government has fixed any minimum wage under the Minimum Wages Act.

The appellant submitted from certain GaZ.elte Notifications the minimum rates of wages prescribed by the State Government fu case of some eight different industries between the years 1969 and 1972 where the monthly wages have been fixed between Rs. 90/- and Rs. 128/- per month.

The appellant submits that there is no justification whatsoever for allowing the present increase of wages without following any principle and even higher than the statutory minimum wage fixed in respect of other industries in the Statec In the written statement filed before the Court the Sabhastated in paragraphs 5 and 6 .s follows :-

"5. The present wages of botli the piece-rated and timerated workers are excessively low and are much lower thali those considered to be the absolute minimum payable by any employer to his workers in the Bombay Region.

These wages are also much lower than those paid by comparable concerns in the Industry.

HINDUSTAN HOSIERY INDUSTlllES v. F: H. LA'LA {Goswami, J.) 307

6. The Second Party Concern is well in a position to bear the additional burden that may be placed upon it by the revision of the wages and the grant of dearness allowance as demanded by the Sabha".

The appellant, however, in para 5 of their written statement before the Tribunal stated that it could not "bear the additional burden which may arise on account of the revision of wages and D.A. as demanded by the first party and submits that for awarding wages and also D.A. it is not only the. ability but also the stability of the concern which shpuld be considered by this Honourable Court".These being the rival contentions of the parties before the Tribunal, it was required to consider whether it was a ease of bare minimum wage or some thing higher than it.

From a perusal of the award, we are clearly of opinion that the Tribunal 'was considering the Gase from the point of view of grant- ; ng something higher than the subsistence or bare minimum wage bordering on fair wage.

We have reached this conclusion since the yardstick of the present award is the Stretchlon Award which was obviously seeking to determin.e rather some kind of fair wage as will be clear from the following extract from that Award :-

"It (the company) can, therefore offer to pay higher minimum wages to lowest category of employees.

On due consideration of all the relevant facts and circumstances I find that Rs. 51per day should be the reasonable and fair minimum wage to the lowest category of employees of the company".

Coming to the piece; ates also the Tribunal di.d not give any specific reasons for awarding 30% increase as against the demand of the Sabha. fru: 50% rise in addition to Dearness Allowance.

The Tribunal, however, observed that "this increase would give adequate average daily earnings to the piece-rated employees. This increase would bring the emoluments near the level of minimum '\"age payable in the region and it would not place a very heavy burden on the

employer~'. We will now consider the principles settled by this Court in the matter of wage fixation. In Express Newspapers (Private) Ltd., and Ant>!IU!r v. TM Union of India and 0tMrs(1 ), this Court was considering in an exhaustive judgment, inter alia, the concept of minimum wage, fair wage and living wage and approvingly quoted from page 9, para 10, of the Report of the Committee on Fair Wages, to the following effect:

"We consider that a minimum wage must provide not merely for the bare sustenance of life but for the preservation of the efficiency of the worker.

For this purpose, the minimum wage must also provide for some measure of education, riiedical requirements and amenities".

This Court further observed : ''There is also a distinction between a bare subsistence or toinimum wage .and a statutory minimum wage.

The

(I) [1959] S.C.R. 12. 83-86.

former is a wage which would be sufficient to cover the bare physicai needs of a worker and his family, that.is a rate which hasgot to be paid to the worker irrespective of the capacity of the industry to pay. If an industry is unable to pay to its workmen at least a bare minimum wage it has no right to exist". (See Messrs Crown Aluminium Works. v.

Their Workmen(').

It was further observed :

"The statutory minimu, m wage however is the minimu1n which is prescribed by the statute and it may be higher than the bare subsistence or minimum wage, providing for some measure of education, medical requirements and amenities, as contemplated above. . . . . . . . . . While the lower limit of the fair wage must obviously be the minimum wage, the upper limit is equally .. set by what may _broadly be called the capacity of industry to pay. 'fhis will pepend not only on the present economic position of the industry but on its future prospects ........ It will be noticed that the "fair wage" is thus a mean between the living wage and the minimum wage and even the minimum wage contemplated above is something more than the bare minimum or subsistence wage which would. be sufficient to cover the bare physical needs of the worker and his family, a wage which woul<) provide also for the preservation of the efficiency of the worker and for some measure of education, medical requirements and amenities" .............. This concept of minimum wage is in harmony with the advance of thought in all civilised countries and approximates to the statutory minimum wage whkb the State should strive to achieve having regard to the Directive Principle of State Policy mentioned above". ft was further observed :

"It will also he noticed that the content of the expression "minimum wage", *fair wage' and 'living wage' is not fixed and static.

It varies and is bound to vary from time to time.

With the growth and development of national economy, living standards would improve and so would our notions about the respective categories of wages expend and be more progressive".

In Kwnani Metals & AJloys Ltd. v. Their Workmeri( 2 ), this - Court observed as follows :- . "Fixation of a wage-structure is always a delicate task because a balance has to be struck between the demand of social justice which requires that the workmen should receive their proper share of the national income which they help to produce with a view to improving their standard of living, and the depletion which every increase in wages makes. in the profits as this tends to drivert 'capital from industry into other channels thought to be more profitable.

The task ·-(I) [t95B] S.C.R. 651 quoted in [t959] S.c.R. !2. (2) 11958] 2 S.C.R. i63, 467.

is not rendered any the easier because conditions vary from region to region, industry to industry and establishment to establishment.

To cope with these differences certain principles on which wages are fixed have been stated from time to time by this Court. Broadly speaking the first principle is lhat there is minimum wage which, in any event, must be paid, irrespective of the extent of profits, the financial condition of the establishment or the availaliility of workmen on lower wages. This minimum wage is independent of the kind of industry and applies to all alike big or small. It sets the lowest limit below which wages cannot be allowed to sink in all humanity.

The •econd principle is that wages must be fair, that is to say, suflicient!Y high t? provide a standard family wih food, sheJte:, clothmg, medical care and educal!On of children appropriate to the work- 1nan but not at a rate exceeding his wage earning capacit.Y in the class of establishment to which he belongs. A fair

wage is thus related to the earning capaci; y .and th~ :ivorkload. It must, however, be realised that _fair. wae .ts not 'iiving wage' by which is meant a wage which ts sufficient o provide not only the essentials abov~-:nentioned . but a fatr measure of frugal comfort with an ab1hty to provide .f'!r old age and evil days.

Fair wage lies between the. ; nm1mum wage, which must be paid in any event, and the hvmg wage, which is the goal"

In Hydro (Engineers) (Private) Ltd. v. Their Workmen,(') this Court obser.ved as follows : -

"lt is thus clear that the concept of minimum wages does take in the factor of the prevailing cost of essential commodities whenever such minimum wage is to be fixed.

The idea of fixing such wage in the light of cost of living at a

particular juncture of time and of neulralizing the rising prices of essential commodities by linking up scales of minimum wages with the cost of living index cannot, therefore, be said to be alien to the concept of a minimum wage".

In M /s. Jaydip Industries, rhana v. The Workmen,(') this Court rctcrred to the observation in an earlier decision of this Court in U.

Unichoyi v. State of Kera/a, (3 ) as follows :-

"Sometimes the minimum wage is described as a bare minimum wage in order to distinguish it from the wage structure which is 'subsistence plus' or fair wage, but too much emphasis on the adjective 'bare' in relation to the minimum wage is apt to lead to the erronous assumption that the maintenance wage is a wage which enables the worker to cover his bare physical needs and keep himself just above starvation.

That clearly is not intended by the concept of minimum wage.

On the other hand, since the capacity of the employer to pay is treated as irrelevant, it is but right il)[T969]1T. i..-J:-713; 716..

(2) [[19721 IL. L. J. 244, 217. (J) [1902] [ S. C.R. 957 quoted in [1972] IL. L. J. 244, 247.

that. no addition should be made to the components of the A minimum wage near the lower level of the fair wage but the

contens of this concept must ensure for the cmplyec not only his sustennce and that of his family but must also preserve his efficiency as a worker".

Jn M/s Unichem Laboratories Ltd. v The Workmen(') this Gourt further observed as follows :- B

."In the fixation of wages and dearness allowance the legal position JS well established that it has to be done on an

1dust_ry-cum-region. basis having due regard to the financial capacity of the umt under consideration. . . . . . Industrial adjudication should always take into account, when revising the wage structure and granting dearness allowance the problem of the additional burden to be imposed o~ the employer and ascertain whether the employer can reasonably be called upon to bear such burden ...... As pointed out in Greaves Cotton and Co. and others v. Their Workmen (') . One of .. tbo principles to be adopted in fiixing wages and dearness allowance is that the Tribunal should take into account the wage scale and dearness allowance -prevailing in comparable concerns carrying on the same industry in the region".

From an examination of the aecisionS of this Court, it is clear that the floor level is the bare mir)imum wage or subsistence wage.

Jn lixing this wage, Industrial Tribunals will have to consider the position from the point of view of the worker; the capacity of the employer to pay such a wage being irrelevant.

The fair wage also most take note of the economic reality of the situation and the minimum needs of the worker having a fair-sized family with an eye to the pre~ scrvation of his. efficiency as a worker.

Wage fi0ation is an important subject in ·, ny social welfare progrc, mme.

Wage cannot be fixed in a vacuum and has necessarily to take note of so many factors from real life a worker lives, or is reaso nably expected to live or to look forward to with hope and fervency ir..the entire social context. It is obvious that some principles have to be evolved from the conditions and circumstances of actual life.

Piece rate is what is paid of results or outturn of \VOrk which is nften described as a "task".

There is greater consideration to quantity in fixing piece rates in some particular types of work in some indus:\rics with a guaranteed minimum. The same standatd mav not b, appropriate in all types of piece work With reference to particular work the importance of man rather than the machine enwloyed may have to be dealt with differently. Even in piece rates it will be necessary to look aroll!ld to find some correlation with time rates of the same or similar class. of workers, for example, the contribution of the worker to the job, the nature of tile work. the part

(Ii [1972] 1 L L. J. 57~, 590, 591. m [19641 S S. C.R. 362 quoted in [1972] I L. L. J. 576.

pla)ed by the machine, the incentive Io work and above all protection against any creation of industrial unrest bec.ause of the existence side by sid' o[ two categories of workers, particularly if there is no pbssibility ol transfer of labour from one type of work to the other from time to time. Again tliere may be some work where special skill of the worker with or without machine may be necessary and that factor will have to be then considered. It will vary from indus-· try to industry and from the process to another. No hard and fast rule can be laid down nor is it possible or helpful. The Tribunal, in "" industri:il adjudication. will have to see that piece-rates do not drive workers to fatigue to the limit o! exhaustion and hence will keep an eye on the time factor in work. Then again a guaranteed minimum mav also have to be provided so that for no fault of a diligent worker he docs not stand to lose on any account. There may be a misty penumbra which has got to be pierced through uponal! available materials on record and also on what the Tribunal, in fairness. can lav its hands pn, with notice to the parties, for the pur- P<l!>e of fixing the piece-rates balancing all aspects.

We have only indicated broadlv the bare outlines o! approach in a inatter so involved and sensitive as wage fixation particularly when no one at the orcscnt time can shut one's eyes to the rising spiral of prices of essential c-0mmodities.

The central figure in the adjudication, how-· ever. is the wage-earner who should have a fair deal in the bargain in a real sense as far as can be without at the same time ignoring the vital interests of the iiidustrv whose viability and prosperity are also the mainstay of labour.

How the various competing claims have to be balanced in a given case should mainly be the function of an imoortia! adjudicator in an industrial proceeding unless the legislature chooses to adopt other appropriate means and methods.

Article 136 of the Constitutiord!oes not create a right of appeal in favour of anv person.

It conf'ers power on the Court which should not he so exe1cised as to convert the Court into a Court of appeal. "Industrial Disputes Act is intended to be a seif-contained one and it seeks to achieve special justice on the basis o! collective bargaining. conciliation and arbitration'.. Awards are _given on circumstances occuliar 10 each dispute and th.e tribunals are, to a large extent, free from the restrictions of technical consitlerations imposed on courts.

A free and liberal exercise of the power under Article 136 may mate•

riallv affect the fundamental basis of such decisiors. namely. quick solution to such disputes to . achieve industrial peace.

Though Article 136 is couched in widest terms, it is necessary for this Court to exercise its discretionat'V jurisdiction only in cases where awards arc made in violation of the principles of natural justice, causing

substantial and iuave injustice to oarties or raises an imoortant princiole of industrial law requiring elucidation and final decision by this Court or disclosure~ such other exceptional or special circwnstances which merit the CC!Usideration of this Court". per Subba Rao.

J. in IBeneal Chemical and Pharmaceutical Works Ltd. v. Thrir WorkmPn(I). None of the_ arj!11ments raised by the appellant sllould br ufficient to persuade the Court to inteqlOse relief in its fnvour

(I) (1959] Supp. 2s: c. R: t36 at 140.

'°n. the facts and circumstances_ of this case. It is not quiic correct to say that the Industrial Court bas not followed the principles of wage-revision expounded by this Court.

The lndustrial Court ha;; taken into account the prevailin_g minimum wa_ge rates in the region, .and the. capacity of the appellant lo bear the burden of th~ increased wages.

Counsel for the appellant could not show to us that the wall" rates fixed by the lndustri_al Court arc unfair for the appellant . or thrit it cannot bear the load of increased wa.ges. -The wages of the piece rated workmen had to be increased in line with the in- .creased wages of the time-rated workmen with the object of avoiding .discrimination and heart-burning among workers and maintenance of industrial peace among them.

Taking a comprehensive view of the facts and circumstances of the case, we are satisfied that no intervention is called for 'Yith the award.

In the result, the appeal is dismissed.

We will. however, make no order as to costs in thio .appeal.

:S.B.W.

Appeal llis111isfed.

HINDUSTAN

HOSI~'RY INDUSTRIES

F. H. LALA AND ANOTHER

Febmary 8, I974

S. N. DWIVEDI

P. K. GOSWAMI, JJ.

Industrial Court Maharashtra

s 73

[1967) 2 S.C.R. 463

Art. 136

G. B. Pai

Prakash Mehta

C. Mathur

P. C. Bhartari

K. Sowani

P. H. Parekh

S. Bhandare

GoswAMI

Mill Mazdoor Sabha, Bombay

section 73A

14th February, 1969

Tne lirm

Directorate of Industries

Stretchlon Private Ltd.

I:Iindustan I:Iosiery Industries

17th April, 1967

I:Iindustan I:Iosiery Mills

Hindustan I:Iosiery Mills

Sabha

Hin dustan Hosiery Factory

William Industries

10th April, 1967

11th May, 1967

15th December, 1963

1974] 3 S.C.R.

5

Hindustan Hosiery Mills

Hindustan Hosiery Factory

Bombay

Article 136

Industrial Disputes Act

Article 136

Article 136

Subba Rao


.. c

SASTHI KEOT

THE STATE OF WEST BENGAL

FebruaryS, 1974

[V. R. KRISHNA IYER AND R. S: SARKARIA, JJ.]

Maintenance of ltuernal Security Act, 1971 s. 3(3)-Vagueness of grounds_: Opportunity 11ot afforded for making representation-Effect of.

Pursuant to an order of detention issued under s. 3(1) read withs. 3(2) of the _Maintenance of Internal Security Act, 1971 the petitioner was detained. One of the grounds of detention, which wei$hed with the detaining authority, the Government and the Advisory Board was that the petitioner was a "man of desperate habits and dangerous character and also prone to committing theft of undergrou.nd cables".

Allowing the petition under Art. 32 of the Constitution,

HELD: The order of detention_ is in violation of both ArL 22(5) of the Constitution and s. 3 (3} of the Act and therefore must be quashed: Thegrounds "desperate habits" and "dangerous character'.' cannot be regarded as any~ thing but vague grounds.

Apart from the vice of vagueness every desparate or dangerous man cannot be run down under s. 3 of the Act.

Moreover, the vitat yet injurious dossier about the petitioner has not been communicated to him and' opportunity afforded for making a proper representation.

[314 B]

CRIMINAL ORIGINAL JURISDICTION : Writ Petition No. 1697 of 1973.

Under Art. 32 of the Constitution for. issue of a writ in the nature of habeas corpus.

Sadhu Sinph. for tho petitioner.

/)a/ip Sin11h ami G. S. Chatter; ee, for the respondent.

The Judgment of the Court was delivered by

KRISHNA IYER, J .-The petitioner has moved this Court under art 32 of the Constitution for the issuance of a writ of habeas carpus, he being under detention by order of the District Magistrate, Burdwan, under sub-s.(1), read with sub-s.(2) of s. 3 of MISA (Maintenance of Internal Security Act, 1971). Various grounds, similar to those considered by us in Bhut Nath Mate v. Slate of West Bengal( 1), have beerr

urged, and our conclusions thereon are similar to those we hav~ already express:d in the other writ petitions.

It is important to note that in the aflidavit-in-opposition, filed 011 behalf of the respondent we find a statement as under :

"! further state that it appears from the records that the detenue petitioner is a man of desperate habits and dangerous character and also prone to committing theft of underground tele-communication cable."

Ct) Writ Pctitio; N;-1456 or-i91J; judgment delivered on February 8, 1974.

31~

SUPRE~1E COURT REPORTS

[ 1974] 3 S.C.R.

This has been relied upon by the State as additional ground 111 A support of the detention, apart from the theft of cables, recited in the detention order and repeated in tho counter affidavit. Counsd camlidl; admitted that this additional circumstance had been placed bdorn the

State Government and the Advisory board, and certainly was before the District Magistrate when he passed the detention order.

It i' perfectly plain that the authorities have been influenced by the 1cpon of lhe police that the petitioner was "a man of desperate habits and 8 uangeruus character and also prone to committing theft of underground cables." We do not regard 'desperate habits' and 'dangerous .:haractcr" aS anything but yague. Apart from the vice of vagueness which perhap~ may not matter so far as the satisfaction of the authorities is concerned. every desperate. or dangerous man cannot be run down under s. 3 of th...:: MISA. Moreoy, cr, this vital yet injurious dossier about the petitioner has not hecn communicated to him and opportunity afforded for making C a proper representation contra. Therefore there is violation both of art. 22(5) of the Con, titution and of s.3(3) of the Aet. In this vie1L we are constrained to quash the dctcn.tion order on the petitioner and direct his release. ·

P.B.R.

Petition allowed.

...

c

SASTHI KEOT

THE STATE OF WEST BENGAL

V. R. KRISHNA IYER

R. S: SARKARIA, JJ.

s. 3(3)

s. 3(1)

Art. 32

s. 3

s. 3

Art. 32

Sadhu Sinph

KRISHNA IYER

art 32

s. 3

February 8, 1974

s. 3

MISA. Moreoy

art. 22(5)