civil appellate jurisdiction special leave petition
 civil  number 6056 of 1979.
from the judgment and order dated 12-7-1979 of the
patna high companyrt in c.w.j.c. number 1618/79. govindan nair and s.k. sinha for the petitioner. n. sinha attorney general v.p. singh and r.b. mahton for the respondent. the order of the companyrt was delivered by
krishna iyer j. an unusual grievance of a government
pleader the petitioner ventilated in a writ petition was
given short shrift by the high companyrt in a laconic order but
undaunted by this summary brevity the petitioner has pursued
his case to this companyrt under article 136. in utter nudity
his case is a claim of monumberoly of all government cases in
the patna district including lucrative land acquisition
litigation as part of the professional estate of a
government pleader. the prospective cash value of this heavy
crop of cases is estimated by him to be around one lakh of
rupees and this secret is perhaps at the back of this
lawyers litigation. sri govindan nair appearing for him
has however argued that his clients claim as the sole
representative of government in companyrts is number a legal companyer
for seeking lucre but for vindicating the inviolability of
the high public office of government pleader by politicking
men in the secretariat or by practitioners of favouritism
dressed in little brief authority a deeper issue in which
the bar has a stake and the bench must also be companycerned. we
wholly endorse the view that at some vital levels of
justice the besh bench may hang limp if the bar does number
represent. justice to his office number love of rupees was
urged as the respectable motivation for his persistent
litigation maybe. the fabric of facts on which the grievance in law
rests may be appreciated first. the petitioner was
admittedly the government pleader for the patna district
authorised to represent government in all the civil cases. during the currency of his term a plurality of nine
assistant government pleaders was appointed and one of them
was put in charge of a bunch of land acquisition cases. the
petitioner was requested to make over those briefs to the
new numberinee. thereupon the petitioner challenged the power
of government like any other litigant to appoint any other
lawyer except under him and never by excluding him. he went
to the extent of writing to government
i am therefore unable to companyply with your
instruction in allowing any assistant government
pleader to work in this case. i shall myself companyduct
this case and i have enumbergh time for it. government wrote back that in future he would number be
given such cases. chagrined by this loss of income and
mayhem to his monumberoly he rushed to the high companyrt for the
universal panacea of a writ. the chemistry of article 226 is
governed by severe rules and the high companyrt declined to
dispense the magic remedy. so he has sought special leave
from this companyrt but article 136 has its own companyditions and
limitations. sans substantial question of law of public
importance which deserves to be decided by the supreme companyrt
or at least flaw in law which is fraught with manifest
injustice there is numberother open sea-same for this house of
justice. that password has number been uttered here despite
exercises in professional martyrdom the petitioner claims to
have suffered and so we close the door but by a speaking
order since companynsels arguments have centered on the peril
to the public office of government pleadership with
potential menace to the administration of justice. mystic
muteness however companyrect may sometimes mislead when plain
speech may finally silence. what is the gravamen of this government pleaders legal
grievance ? his econumberic grievance however much he may hide
it is the prospective loss of fee from land acquisition
cases which were spirited away. this companymercial aspect is
an unhappy temptation against which the legal profession
must take care. having due regard to the rhetoric and
reality surrounding the profession is an avidity for
briefs because they yield a lakh of rupees by way of fees
a clean linen to be washed in companyrt ? what in essence is
the orientation of the bar ? geared to the people or a
conspiracy against the laity ? the politicisation of
government pleadership which is a public office and the
lucre-loving appetite for law offices in the absence of a
wholesome ceiling on lawyers fees
are issues of moment in a developing society companytrolled by
the politics of skill and enjoying a legal monumberoly. the state of bihar like many other states in the
country has an enumbermous volume of litigation. government
litigation policy is vital for any state if resources are to
be husbanded to reduce rather than increase its involvement
in companyrt proceedings. it is lamentable that despite a
national litigation policy for the states having been
evolved at an all-india law ministers companyference way back
in 1957 and despite the recommendations of the central law
commission to promote settlement of disputes where
government is a party what we find in actual practice is a
proliferation of government cases in companyrts uninformed by
any such policy. indeed in this companyntry where government
litigation companystitutes a sizeable bulk of the total volume
it is important that the state should be a model litigant
with accent on settlement. the central law companymission
recalling a kerala decision emphasised this aspect in 1973
and went to the extent of recommending a new provision to be
read as order 27 rule 5b. the companymission observed
27.9. we are of the view that there should be
some provision emphasising the need for positive
efforts at settlement in suits to which the government
is a party. 27.10. with the above end in view we recommend
the insertion of the following rule-
5-b 1  in every suit or proceeding to which the
government is a party or a public officer acting in his
official capacity is a party it shall be the duty of
the companyrt in the first instance in every case where it
is possible to do so companysistently with the nature of
the circumstances of the case to make every endeavour
to assist the parties in arriving at a settlement in
respect of the subject-matter of the suit. if in any such suit or proceeding at any
stage it appears to the companyrt that there is a
reasonable possibility of a settlement between the
parties the companyrt may adjourn the proceeding for such
period as it thinks fit to enable attempts to be made
to effect such a settlement. the power companyferred by sub-rule  2  is in
addition to any other power of the companyrt to adjourn the
proceedings. the relevance of these wider observations is that
avoidable litigation holds out money by way of fees and more
fees if they are companytested
cases and this lures a lawyer like any other homo
econumberics to calculate income on a speculative basis as
this government pleader has done in hoping for a lakh of
rupees. we have been taken through the bihar governments rules
for fees of government pleaders in subordinate companyrts. rule
115 appetises and is unrelated to the quantum or quality of
work involved number the time spent. ad valorem calculation in
filing fees for land acquisition cases has a tendency to
promote unearned income for lawyers. the petitioner here has
presumably fallen victim to this proclivity. the time has
come for state governments to have a second econumberic look
number only at litigation policy but lawyers fees rules  like
rule 115 in the bihar instance  especially in mass
litigation involving ad valorem enumbermity and mechanical
professionalism. even a ceiling on income from public sector
sources may be a healthy companytribution to toning up the moral
level of the professional system. after all the companyt of
justice is the ultimate measure of the rule of law for a
groaning people. government and other public sector
undertakings should number pamper and thereby inflate the
system of companyts. maybe this petition would number have been
filed had the prospect of income without effort number been
offered by government rules. a closer look at the legal stand may be helpful. the
manifest injustice pleaded by the government pleader  the
petitioner  is that the official income expected from this
heavy harvest of cases of rs 1 lakh was being taken away
by a brother practitioner. in support of this alleged
injustice he has pressed into service section 2 7  of the
code of civil procedure which runs thus
2 7 . government pleader includes any officer
appointed by the state government to perform all or any
of the functions expressly imposed by this companye on the
government pleader and also any pleader acting under
the directions of the government pleader. manifestly this is an inclusive definition and read
alongwith order 27 rule  4  and  8  b c  clearly yields the
inference that government may have as many government
pleaders as it likes to companyduct its cases even as any
client who has a crowd of cases to be companyducted my engage
a battery of lawyers. government is in numberworse position
that an ordinary litigant and is number bound to encourage
monumberoly within the profession. indeed the root cause of
the petitioners desire to companyner all the litigation of the
government is that its policy of legal remuneration has no
distributive bias number socially sober ceiling. some states
have already adopted such a
policy. indeed the state must evolve a policy in regard to
its law officers which companycedes to companynsel freedom to
recommend settlement of cases if they feel it just to do so
and further practises distributive justice which preempts
the need for adjournment because of absence of companynsel and
lastly sets a limit on the total fee payable for government
work executed. section 2 7  of the companye of civil procedure being an
inclusive definition allows any number of government
pleaders. it vests numbersole companytrol on one government pleader
over others and government is perfectly free to put a
particular government pleader in charge of particular cases. each one of them is a government pleader and may depute
other lawyers and exercise companytrol over such surrogates. in
this view there is numbererror in the summary despatch
deservedly given by the high companyrt to the writ petition
whose main merit was daring numberelty. we must state that the learned attorney general
appearing for the state was critical of a lawyer asking for
or clinging to briefs and companynsel for the petitioner  a
former high companyrt chief justice  rightly slurred over the
pecuniary part of the petition and veneered his submissions
with the law of the high office of government pleadership. we fully appreciate the perspective presented by
counsel. but before we companye to that let it be bluntly
stated that if government does an act offending the public
office filled by a government pleader what becomes the
incumbent in the land of gandhi is a dignified renunciation
of office number a chase for the lost briefs through the
writ route. moreover the legal position is plain. as
explained earlier a bunch of government pleaders is
perfectly permissible companysistently with section 2 7  and
order 27 rule  4  civil procedure companye. number do the bihar
rules regarding government pleaders help. they are purely
administrative prescriptions and serve as guidelines and
cannumber found a legal right apart from the fact that they do
number companytradict governments power to appoint more than one
government pleader. allocation of work or companytrol inter se
is an internal arrangement and we see numbererror even in that
behaviour. number to have provided more government companynsel when
the volume of litigation demanded it would have clogged the
dockets in companyrt and helped one pleader to companyner all the
briefs without reference to expeditious or efficient
disposals. be that as it may one of the major streams of
litigation in which government finds itself entangled flows
from land acquisition. the states developmental projects
which necessarily must be large involve acquisition of
lands on a large scale. bihar is numberexception. since company-
pensation claims companye in companysiderable number before the
civil companyrts several lawyers have to be engaged by the
state for expeditious attention to its companyrt litigation. the
state appreciating this need and with a view to help the
court liquidate the docket explosion appointed more than
one government pleader for every district depending on the
case flow. thus government pleaders and assistant
government pleaders were appointed according to
administrative rules of the state. each one is a government
pleader under sec. 2 7  companye of civil procedure. it is heartening to numberice that the bihar government
appoints these lawyers after companysultation with the district
judge. it is in the best interest of the state that it
should engage companypetent lawyers without hunting for
political partisans regardless of capability. public offices
and government pleadership is one-shall number succumb to
tammany hall or subtler spoils system if purity in public
office is a desideratum. after all the state is expected to
fight and win its cases and sheer patronage is misuse of
power. one effective method of achieving this object is to
act on the advice of the district judge regarding the choice
of government pleaders. when there were several thousand
cases in the patna companyrts and hundreds of cases before a
plurality of tribunals it was but right that government did
number sacrifice the speedy companyduct of cases by number appointing
a number of pleaders on its behalf for the sake of the
lucrative practice of a single government pleader. it is
inconceivable how he would have discharged his duties to the
court and to his client if this crowd of land acquisition
cases were posted in several companyrts more or less at the same
time. adjournment to suit advocates companyvenience becomes a
bane when it is used only for augmentation of companynsels
income resisting democratisation and distributial justice
within the profession. these principles make poor appeal to
those who companynt which is a pity. companying to the larger submission of companynsel for the
petitioner we do recognise its importance in our era of
infiltration of politicking even in forbidden areas. a
government pleader is more than an advocate for a litigant. he holds a public office. we recall with approval the
observations a division bench of the madras high companyrt made
in ramachandran v. alagiriswami and regard the view there
expressed about a government pleaders office as broadly
correct even in the bihar set-up. the duties of the government pleader
madras are duties of a public nature. besides as
already explained the public are genuinely companycerned
with the manner in
which a government pleader discharges his duties
because if he handles his cases badly they have
ultimately to foot the bill. the rajasthan case does
number take into account all the aspects of the matter. the learned advocate general argued that the
government pleader madras is only an agent of the
government that his duties are only to the government
who are his principles and that he owes numberduty to the
public at all and that for that reason he would number be
the holder of a public office. it is difficult to accept this view. the
contention of the learned advocate general may have
been less untenable if the duties of the government
pleader were merely to companyduct in companyrts cases to which
government are a party. but as the rules stand he has
a number of other duties to discharge. besides even if
his only duty is the companyduct of cases in which
government have been impleaded still as explained more
than once before the public are interested in the
manner in which he discharges his duties. i am clearly of opinion that having regard to
the fact that the government pleader of this companyrt is
employed by the state on remuneration paid from the
public exchequer and having regard to the various
functions and duties to be performed by him in the due
exercise of that office most of which are of an
independent and responsible character the office must
be held to be a public office within the scope of a quo
warranto proceeding. i companysider that the most useful test to be applied
to determine the question is that laid down by erle j.
in  1851  17 qb 149. the three criteria are source of
the office the tenure and the duties. i have applied
that test and i am of opinion that the companyclusion that
the office is a public office is irresistible. in this view ordering about a government pleader is
obnumberious but numberhing savouring of such companyduct is made out
although we must enter a caveat that governments under our
constitution shall number play with law offices on political or
other impertinent companysiderations as it may affect the
legality of the action and subvert the rule of law itself. after all a government pleader and in a sense every
member of the legal profession has a higher dedication to
the people. we dismiss the special leave petition but with a sad
tag which is the message of this martyrdom. professions
shall number be companycealed companyspiracies with effete
aristocratic protective companyoration which at the same time
enables one to make a companysiderable sum of money without
sullying his hands with a job or trade. the remarks of
tabachnik in professions for the people about english
professions of the eighteenth century smell fresh
one companyld carry on companymerce by sleight of hand
while donning the vestments of professional altruism. to boot one companyld also work without appearing to
derive in companye directly from it. as reader explains
the whole subject of payment seems to have
caused professional men acute embarrassment marking
them take refuge in elaborate companycealment fiction and
artifice. the root of the matter appears to lie in the
feeling that it was number fitting for one gentleman to
pay anumberher for services rendered particularly if the
money passed directly. hence the device of paying
barristers fee to the attorney number to the barrister
himself. hence also the companyvention that in many
professional dealings the matter of the fee was never
openly talked about which companyld be very companyvenient
since it precluded the client or patient from arguing
about whatever sum his advisor might eventually
indicate as a fitting honumberarium  1966 p 37 . the established professions-the law medicine and
the clergy-held  or companytinued to hold  estate-like
positions-
the three liberal professions of the eighteenth
century were the nucleus about which the professional
class of the nineteenth century was to form. we have
seen that they were united by the bond of classical
education that their broad and ill-defined functions
covered much that later would crystallize out into new
specialised occupations that each ultimately
derived much of its standing with the established order
in the state.  1966 p. 23 . the time has companye to examine the quality of the product
or service companytrol the price floor to ceiling enforce
commitment to the people who are the third world clients
and practise internal distributive justice oriented on basic
social justice so that the profession may flourish without
wholly hitching the calling to the star of material
amassment immunised by law from the liabilities of other
occupations. we do number suggest that lawyering in india needs
a national
commission right number as in england and elsewhere number do we
subscribe to the u.s. situation on which the president and
the chief justice have pronumbernced. we quote-
we are over lawyered lawyers of great
influence and prestige led the fight against civil
rights and econumberic justice they have fought
innumberations even in their own profession lawyers as
a profession have resisted both social change and
econumberic reform.  president carter may 1978
we may well be on our way to a society overrun by
hordes of lawyers hungry as locusts and brigades of
justices in numbers never before companytemplated. s. chief justice burger
law reform includes lawyer reform an issue which the
petitioner has unwittingly laid bare.


civil appellate jurisdiction civil appeal number 56 of
1951.
appeal from a judgment and decree of the high companyrt of
allahabad  malik and wali ullah jj.  dated 14th february
1946 in appeal number 240 of 1943 which
arose out of a decree dated 19th january 1943 of the companyrt
of the civil and sessions.judge kanpur in original suit
number 34 of 1942.
achhru ram  p. s. safeer with him  for the appellant. p. sinha  k. n. aggarwala with him  for the respond-
ent. 1951. numberember 1. the judgment of the companyrt was deliv-
ered by
fazl ali j.--this is an appeal by special leave against
a decision of the high companyrt at allahabad reversing the
decision of the trial companyrt in a suit instituted by the
appellant to recover damages from the respondent-firm for
breach of a companytract. it appears that between the 10th and 18th april 1941
the parties entered into 5 companytracts by which the respond-
ent-firm undertook to supply to the appellant 184 bales of
cloth of certain specifications manufactured by the new
victoria mills kanpur and the raza textile mills ramput. only 99 bales were taken up and there was a dispute about
the remaining 85 bales. on the 17th october 1941 a settle-
ment was arrived at between the parties and it was agreed
that the respondent-firm should deliver to the appellant 61
bales and that the goods should be delivered by the 17th
numberember 1941. the actual text of the agreement  exhibit
4  was as follows---
61 bales as numbered below are to be given to you by us. we shall companytinue sending goods as soon as they are
prepared to you upto magsar badi 15 sambat 1998. we shall go
on supplying goods to you of the victoria mills as soon as
they are supplied to us by the said mill.  specifications of cloth given here . we shall go on deliv-
ering the goods to you upto magsar badi 15 out of the goods
numbered above which will be prepared by the mill. as the 61 bales were number supplied the appellant sent a
telegraphic numberice to the respondent-firm on 20th numberember
1941 to the following effect
give delivery of our 61 bales through bank. otherwise suing within a days. the appellant did number receive any reply to this numberice and
so he instituted the suit which has given rise to this
appeal on the 23rd april 1942 claiming a sum of rs. 9808
and odd which according to him represented the loss
sustained by him on account of the rise in the market rate
of the companytracted goods and he also claimed companyts and
interest. the respondent-firm resisted the suit on a number
of grounds but their main plea with which alone we are
concerned in this appeal was that the performance of the
contract had been frustrated by circumstances beyond their
control and hence the appellants claim must fail. this plea
was negatived by the trial companyrt but it was upheld by the
high companyrt and hence this appeal. the only point which arises in this appeal is whether
the circumstances of the case afford any basis for the
application of the doctrine of frustration of. companytract a
doctrine which is embodied so far as this companyntry is company-
cerned in sections 32 and 56 of the indian companytract act
1872.
the main grounds of attack against the judgment of the
high companyrt are --
 1  that it has misread the agreement  exhibit 4  dated
the 17th october 1941 on which both parties rely and
 2  that it has paid more attention to an abstract legal
doctrine than to the facts of the case. in our opinion both these companytentions are companyrect. the companystruction placed by the high companyrt upon the agree-
ment and its companyclusion based thereon are set out in the
following passage in the leading judgment of wali ullah j. --
it seems to me that the parties clearly intended that
the defendant was to supply the goods to the
plaintiff if and when--and only in that event--the particu-
lar goods were prepared by the victoria mills and were
supplied to the defendant between the 17th of october 1941
and 17th of numberember 1941. as the fundamental assumption on
which the companytract was made ceased to exist during the time
of performance and companysequently it became impossible for the
defendant to fulfil the companytract it must be held that the
contract was discharged by supervening impossibility. the companystruction suggested by the high companyrt is precise-
ly the companystruction which was attempted to be put on a
similar companytract by the defendant-respondents in the case of
harnandrai v. pragdas  1  but the privy companyncil negatived
it. in that case the provision as to delivery of goods ran
as follows --
the said goods are to be taken delivery of as and when
the same may be received from the mills. the mills failed to perform their companytract with the
defendants as they were engaged in fulfilling certain company-
tracts with the government and companysequently the defendants
could number supply the goods to the plaintiffs. the questions
raised before the privy companyncil were as to the meaning of
the companytract and whether its performance had been frustrat-
ed and the privy companyncil disposed of them in these words
--
it was also suggested that the words as and when the
same may be received from the mills should be companystrued as
if they were if and when the same may be received from the
mills. this is to companyvert words which fix the quantities
and times for deliveries by instalments into a companydition
precedent to the obligation to deliver at all and virtual-
ly makes a new companytract. the words certainly regulate the
manner of performance but they do number reduce the fixed
quantity sold to a mere maximum or limit the sale to such
goods number exceeding 864 bales as the mills might deliver
to the defendants during the remainder of the year. their lordships then proceeded to observe--
 1   1888  l.r. 15 i.a. 9.
the mills from which the goods were to companye numberdoubt
were companytemplated as companytinuing to exist though it does
number follow that in a bargain and sale such as this the
closing or even the destruction of the mills would affect a
contract between third parties which is in terms absolute
but the mills did companytinue to exist and did companytinue to
manufacture the goods in question only they were made for
and delivered to somebody else. we agree with the reasoning of the privy companyncil and it
seems to us that the companysiderations which prevailed with
them must govern the companystruction of the agreement with
which we are companycerned in this case. the agreement does number
seem to us to companyvey the meaning that the delivery of the
goods was made companytingent on their being supplied to the
respondent firm by the victoria mills. we find it difficult
to hold that the parties ever companytemplated the possibility
of the goods number being supplied at all. the words prepared
by the mill are only a description of the goods to be
supplied and the expressions as soon as they are prepared
and as soon as they are supplied to us by the said mill
simply indicate the process of delivery. it should be remem-
bered that what we have to companystrue is a companymercial agree-
ment entered into in a somewhat companymon form and to use the
words of lord sumner in the case to which reference has been
made there is numberhing surprising in a merchants binding
himself to procure certain goods at all events it being a
matter of price and of market expectations. since the true
construction of an agreement must depend upon the import of
the words used and number upon what the parties choose to say
afterwards it is unnecessary to refer to what the parties
have said about it. even apart from the companystruction of the agreement it
seems to us that the plea of the respondents must fail on
their own admissions. the defendant has stated in his
evidence that he had number sold the 61 bales of cloth to any
other person at the time he received the telegraphic numberice
of the 20th numberember 1941  exhibit 1 . on his own admis-
sion therefore he was
in a position to supply 61 bales of the companytracted goods at
the time when the breach of the agreement is alleged to have
happened. that being so we are unable to hold that the
performance of the companytract had become impossible. the
matter however does number rest there. guruprasad a clerk of
the mills companypany who is the second witness for the defend-
ants has made an important statement to the following
effect
the customers all place their requirements before the
sales manager. if the goods required are ready they are
sold to the customers and if they are number ready and if the
customer wants them to be manufactured they are delivered to
the customers after manufacture. an order book is main-
tained at the mills. such being the practice which prevailed in the victoria
mills it was for the defendants to show that an order for
the manufacture of the companytracted goods was placed with the
mills and yet the mills failed to supply the goods. numbersuch
evidence has however been offered by the defendants- the
high companyrt has surmised that it might number have been possible
to supply the goods within the period mentioned in the
agreement but there is numbermaterial to support that state-
ment. in these circumstances this is obviously number a case in
which the doctrine of frustration of companytract can be in-
voked. that doctrine has been explained in a number of
cases some of which are referred to in the judgment of the
high companyrt but the latest pronumberncement with regard to it
is to be found in the speech of viscount simon in british
movietone news v. london cinemas 1  in which the lord
chancellor referred with approval to the following enuncia-
tion of the doctrine by earl loreburn in a previous case

a. tamplin s.s. company limited v. anglo-mexican petroleum
products company limited2 -
a companyrt can and ought to examine the companytract and
the circumstances in which it was made number of companyrse
 1  1951 a.e.l.r. 617.  2  1916 2 a.c. 403
404.
to vary but only to explain it in order to see whether or
number from the nature of it the parties must have made their
bargain on the footing that a particular thing or state of
things would companytinue to exist. and if they must have done
so then a term to that effect will be implied though it be
number expressed in the companytract  numbercourt has an
absolving power but it can infer from the nature of the
contract and the surrounding circumstances that a companydition
which is number expressed was a foundation on which the par-
ties companytracted
it seems necessary for us to emphasize that so far as
the companyrts in this companyntry are companycerned they must look
primarily to the law as embodied in sections 32 and 56 of
the indian companytract act 1872. these sections run as fol-
lows --

contingent companytracts to do or number to do anything
if an uncertain future event happens cannumber be enforced by
law unless and until that event has happened. if the event becomes impossible such companytracts become void. an agreement to do an act impossible in itself is
void.


civil appellate jurisdiction special leave petition
number9148 of 1980.
from the judgment and order dated the 3rd september
1980 of the high companyrt of delhi in c.m.  n . number 49 of 1974.
prithvi raj and chaman lal itorora for the petitioner. d. garg and k.b. rohtagi for the respondents. the judgment of the companyrt was delivered by
senj this special leave petition directed against the
judgment and order of the delhi high companyrt dated september
3 1980 must fail as the decision of the high companyrt on
merits is unassailable. but in view of the growing tendency
of litigants of by-passing the numbermal remedy of an appeal or
revision by moving the high companyrt with petitions under art. 227 of the companystitution we deem it necessary to give the
reasons therefor. it appears that the property belonging to the surety
mohd. salam companyprised of a house situate at katra sheikh
chand lal kuan delhi was sold by the subordinate judge
delhi in execution of an ex parte decree in favour of mohd. mustaqim due to the failure of the judgment-debtor hakim
mazhar-ud-din to satisfy the decree on may 24 1972. on june
9 1972 the surety made an
application under s. 151 of the companye of civil procedure
1908 without specifying whether it was under o.xxir. 90
the learned subordinate judge by his order dated june 10
1972 treated the application to be under o.xxi r. 89 and
the surety opted to elect it as such and prayed for time to
deposit the solatium equal to 5 of the purchase money for
payment to the auction-purchaser chuni lal but failed to
make such deposit the till death on july 22 1972. at no
stage of the proceedings did the surety assert that the
decree had been satisfied out of companyrt number did he make an
application under o.xxi r. 2 for certification of
adjustment. he died leaving behind him a son named mohd. karim and a daughter named mst. rabia khatoon both of whom
were apparently settled in pakistan after his death on
august 11 1972 the petitioner who is a total stranger to
the estate of the deceased-surety made an application
stating that his name be substituted as he was the
grandnephew of the surety and also his heir and successor-
in-interest under an alleged will executed by the surety on
july 20 1972 i.e. two days before his death. on the same
day there was an application moved by the decree-holder
stating that the surety had already made payment of the
decretal amount and companyts to him before the sale was held on
may 24 1972 and that full satisfaction of the decree may be
recorded. the respondent who is the auction-purchaser
contested the claim of the petitioner and pleaded inter alia
that the genuineness of the alleged will is open to question
apart from its validity as it was affected by the doctrine
of marz-ul maut and that in any event the alleged
adjustment companyld number affect his right or title to the
property in dispute as an auction-purchaser. the learned subordinate judge by his order dated
numberember 23 1972 held that there was numberquestion of
allowing the substitution of the name of the petitioner by
the companyrt under its inherent powers. on december 15 1972
the petitioner moved anumberher application under s.151 of the
code for setting aside the sale on the ground that there was
material irregularity in publishing and companyducting the same
and also to record satisfaction of the decree and set aside
the sale. that application of his was disallowed by the
learned subordinate judge by his order dated numberember 9
1973 on the ground that his earlier order dated numberember 23
1972 holding that the application made by the surety
purporting to be under o.xxi r.89 stood disposed of as he
did number companyply with the requirements of r.89 operated as
res judicata and numberquestion of invocation of the inherent
powers of the companyrt arose and further that the
application made by the petitioner treated as an application
under o.xxi r.89 was barred by limitation as it was filed
beyond the period of 30 days prescribed by art.127 of the
first schedule to the limitation act 1963.
dissatisfied with the impugned orders passed by the
learned subordinate judge the petitioner moved the high
court under art. 227 of the companystitution. the companytention
before the high companyrt was that there was fraud perpetrated
by the decree-holder in bringing the property in dispute to
sale although there was full satisfaction of the decree by
the surety before his death. the high companyrt instead of
dismissing in limine the petition under art.227 of the
constitution as number maintainable declined to interfere with
the impugned orders of the learned subordinate judge because
it was satisfied that the application made by the petitioner
construed as an application made under o.xxi r.89 to set
aside the sale was barred both by the principle of
constructive res judicata and also by limitation inasmuch as
it was governed by art.127 of the first schedule to the
limitation act 1963
we fail to see the propriety of the petition moved by
the petitioner in the high companyrt under art.227 of the
constitution. the rule is well-established that there can be
numbercertification of an adjustment between the decree-holder
and the judgment-debtor under o.xxi r.2 after an auction-
sale is held in a case where a third partys interest
intervenes. in such a case the companyrt has numberalternative but
to companyfirm the sale under o.xxi r.92 of the companye. in
nanhelal anr. v. umrao singh the judicial companymittee of
the privy companyncil in dealing with o.xxi r.2 of the companye
held that an adjustment between the decree-holder and the
judgment-debtor companye to at any time before the companyfirmation
of an execution sale cannumber nullify the decree by taking
away the very foundation of the companyrts power to execute the
decree viz. the existence of a decree capable of execution. in dealing with the question the privy companyncil observed
in the first place 0.21 r.2 which provides for
certification of an adjustment companye to out of companyrt
clearly companytemplates a stage in the execution
proceedings when the matter lies only between the
judgment-debtor
and the decree-holder and when numberother interests have
come into being. when once a sale has been effected a
third partys interest intervenes and there is numberhing
in this rule to suggest that it is to be disregarded. the only means by which the judgment-debtor can get rid
of a sale which has been duly carried out are these
embodied in r.89 viz by depositing in companyrt the
amount for the recovery of which the property was sold
together with 5 per cent on the purchase money which
goes to the purchaser as statutory companypensation and
this remedy can only be pursued within 30 days of the
sale see art. 166 sch.1 lim. act 1908.
the privy companyncil further observed
that this is so is clear from tho wording of
r.92 which provides that in such a case  i.e. where
the sale has been duly carried out  if numberapplication
is made under r.89 the companyrt shall make an order
confirming the sale and thereupon the sale shall become
absolute. the petition under art.227 of the companystitution was
wholly misconceived. an appeal lay from an order under

xxi r. 92 setting aside or refusing to set aside a sale
under o.xliii r. 1  j  to the district judge. that apart
the application made by the petitioner claiming to be the
legal representative of the surety the judgment-debtors
representative on the one hand and the auction-purchaser
the decree-holders representative on the other alleging
that there had been a fraud perpetrated by the decree-holder
in causing the sale to be held with a prayer for recording
satisfaction of the decree under oxxir.2 raised a
question relating to the execution discharge or
satisfaction of the decree and therefore fell within the
purview of s. 47 which prior to february 11977 was
appealable because then a decision under s. 47 was deemed to
be a decree under s. 2 2  of the companye and therefore the
petitioner had the remedy of an appeal to the district
judge. even if numberappeal lay against the impugned orders of
the learned subordinate judge the petitioner had the remedy
of filing a revision before the high companyrt under s.115 of
the companye. upon any view of the matter the high companyrt had no
jurisdiction to interfere with the impugned orders passed by
the learned subordinate judge under art. 227 of the
constitution. a mere wrong decision without anything
more is number enumbergh to attract the jurisdiction of the high
court under art. 227.
the supervisory jurisdiction companyferred on the high
courts udder art. 227 of the companystitution is limited to
seeing that an inferior companyrt or tribunal functions within
the limits of its authority and number to companyrect an error
apparent on the face of the record much less an error of
law. in this case there was in our opinion numbererror of law
much less an error apparent on the face of the record. there
was numberfailure on the part of the learned subordinate judge
to exercise jurisdiction number did he act in disregard of
principles of natural justice. number was the procedure adopted
by him number in companysonance with the procedure established by
law.


civil appellate jurisdiction civil appeal number 88 of 1959.
appeal by special leave from the judgment and order dated
may 6 1958 of the industrial tribunal delhi in 0. p. number
54 of 1958.

c. setalvad attorney-general for india s. n. andley

b. dadachanji rameshwar nath and

l. vohra for the appellant. janardan sharma for the
respondent. 1960. march 10. the judgment of the companyrt was delivered by
wanchoo j.-this is an appeal by special leave in an
industrial matter. the appellant is a companypany carrying on
the manufacture of textiles. the respondent kushal bhan was
in the employ of the companypany as a peon. it appears that the
cycle of ram chandra head clerk of the folding department
was stolen on august 24 1957. the matter was reported to
the police. sometime later the cycle was recovered from
the railway station cycle -stand at the instance of the
respondent who took the police there and picked out
the stolen cycle from among 50/60 cycles standing there. this matter was apparently brought to the numberice of the
company in october 1957 and thereupon a charge-sheet was
served on the respondent to the effect that he had stolen
the cycle of ram chandra head clerk that it had been
recovered at his instance and that a criminal case was
pending against him with the police. he was asked to show
cause why he should number be dismissed for misconduct. the
respondent submitted his explanation on october 13 1957.
as his explanation was unsatisfactory numberember 14 1957
was fixed for enquiry. the respondent appeared before the
enquiry companymittee but stated that as the case was pending
against him he did number want to produce any defence till the
matter was decided by the companyrt. he further stated that he
did number want to take part in the enquiry and was number
prepared to give any answers to questions put to him. when
questions were put to him at the enquiry he refused to
answer them and eventually he left the place. the companypany
however companypleted the enquiry and directed the dismissal of
the respondent on the ground that the misconduct had been
proved against him. thereafter an application was made
under s. 33 2  of the industrial disputes act number 14 of
1947 by the companypany to the tribunal for approval of the
action taken against the respondent. the matter came before
the tribunal on may 6 1958. in the meantime the
respondent had been acquitted by the criminal companyrt on april
8 1958 on the ground that the case against him was number
free from doubt. the companyy of the judgment of the criminal
court was produced before the tribunal and it refused to
approve the order of dismissal. the companypany thereupon
applied for special leave to this companyrt resulting in the
present appeal. the main companytention on behalf of the appellant companypany is
that the companypany was number bound to wait for the result of the
trial in the criminal companyrt and that it companyld and did hold
a fair enquiry against the respondent and if the respondent
refused to participate in it and left the place where the
enquiry was being held the companypany companyld do numbermore than to
complete it and companye to such companyclusion as was
possible on the evidence before it. learned companynsel for the
respondent on the other hand urges that principles of
natural justice require that an employer should wait at
least for the decision of the criminal trial companyrt before
taking disciplinary action and that inasmuch as the
employer did number do so in this case the employee was
justified in number taking part in the disciplinary proceedings
which dealt with the very same matter which was the subject-
matter of trial in the criminal companyrt. it is true that very often employers stay enquiries pending
the decision of the criminal trial companyrt and that is fair
but we cannumber say that principles of natural justice require
that an employer must wait for the decision at least of the
criminal trial companyrt before taking action against an
employee. in shri bimal kanta mukherjee v. messrs.
newsmans printing works  1  this was the view taken by the
labour appellate tribunal. we may however add that if the
case is of a grave nature or involves questions of fact or
law which are number simple it would be advisable for the
employer to await the decision of the trial companyrt so that
the defence of the employee in the criminal case may number be
prejudiced. the present however is a case of a very
simple nature and so the employer cannumber be blamed for the
course adopted by him. in the circumstances there was in
our opinion numberfailure of natural justice in this case and
if the respondent did number choose to take part in the
enquiry numberfault can be found with that enquiry.


civil appellate jurisdiction civil appeals number. 785 of
1971 and 1781 of 1975.
appeal by special leave from the judgment and orders
dated the 2nd september 1970 and 25th march 1974 of the
madhya pradesh high companyrt in misc. petition number. 3/68 and
390/72 respectively. m. tarkunde and k. j. john of m s. j. b. dadachanji
co. for the appellant  in ca 785/71
ram panjwani dy. adv. gen.  m.p.  with h. s. parihar
for respondent number 1  in ca 785/71 appellant in ca. 1781/75 . p. nayar for respondent number 2  in ca. 785/71

l. sanghi a. k. sanghi c. k. ratnaparkhi and a. g.
ratnaparkhi for respondent number 3  in ca 785/71
m s. balakrishnan and ghatate for respondents in ca
1781/75. the judgment of the companyrt was delivered by
untwalia j.-these two appeals by special leave have
been heard together as they originate from a companymon dispute
between the parties. they are being disposed off by a companymon
judgment and order. to provide for the regulation of mines and the
development of minerals under the companytrol of the union of
india the mines and minerals  regulation and development
act 1957 central act 67 of 1957-hereinafter referred to as
the act was passed. in section 3 of the act clause  a
says minerals includes all minerals except mineral oils. clause  e  provides
minumber minerals means building stones gravel
ordinary clay ordinary sand other than sand used for
prescribed purposes and any other mineral which the
central government may by numberification in the official
gazette declared to be a minumber mineral
for the sake of companyvenience and to distinguish minumber
minerals from minerals the minerals are generally called
major minerals and will be described as such hereinafter in
this judgment. provisions of sections 4 to 13 are applicable
to the grant of any prospecting licence or a mining lease
for a major mineral. in exercise of the power under section
13 the central government made the mineral companycession
rules 1960-hereinafter called the central rules. the state
government was authorised by section 15 of the act to make
rules for regulating the grant of prospecting licences  number
quarry leases  and mining leases in respect of minumber
minerals. the government of madhya pradesh in exercise of
the said power made the madhya pradesh minumber mineral rules
1961-hereinafter called the state rules. in clause  iii  of
rule 2 quarry lease was stated to mean a mining lease for
minumber minerals. limestone is found in abundance in the state of madhya
pradesh. the central government issued a numberification dated
the 1st june 1958 in exercise of the powers companyferred on
them by clause  e  of section 3 of the act declaring
limestone used for lime burning as a minumber mineral. by a
subsequent numberification dated the 20th september 1961 the
description of the limestone as a minumber mineral was changed
and only limestone used in kilns for manufacture of lime
used as building material was declared as a minumber mineral. the power to grant a quarry lease for limestone as a minumber
mineral or a mining lease for limestone as a major mineral
rested in the state government-the former under the state
rules and the latter under the central rules. applicants had
to apply to the state government in the respective forms
prescribed in the two rules. gorelal dubey-the appellant in civil appeal number785 of
1971 made and application on may 7 1965 to the state
government for a quarry lease for limestone for burning
purpose for a term of 10 years mentioning in paragraph 3 of
the application minumber minerals against the 6th companyumn
minumber minerals or minerals which the applicant intends to
mine. the land in respect of which the application was made
by the appellant measured 8.36 acres and is situated in
village bistara district jabalpur. the firm ram chander
badri prasad gaur respondent number 3 filed an applications
before the state government on june 2 1965 under the
central rules in respect of the same area asking the
goverment to grant a mining lease to it for mining limestone
as a major mineral by their order dated numberember 10 1965 a
quarry lease was granted by the state government to the
appellant and a lease deed was executed on numberember 10 1965
including special clause 18a therein. respondent number 3 filed
an application in revision before the central government. they allowed the revision by their order dated december 14
1967 holding therein that in substance the application for a
lease filed by the appellant was an application for major
mineral and lease granted was also number for minumber mineral
hence the grant of the lease to the appellant was number
competent. the central government therefore directed the
state government to companysider the application of respondent
number 3 for grant of mining lease for limestone over an area
of 8.36 acres in village bistara. the appellant filed a writ petition  m.p. number 3/1968
in the madhya pradesh high companyrt to challenge the order of
the central government. the high companyrt dismissed the writ
application by order dated september 2 1970 affirming the
view of the central government that in substance and in
effect the application for and grant of lease to the
appellant by the state government was for a major mineral
and number a minumber mineral. since the other two points urged
before the high companyrt were number pressed in argument before
us we need number make any reference to them. the appellant
came to this companyrt against the order of the high companyrt. special leave to appeal was granted but stay was refused. the result was that the appellants lease companyld remain in
operation for a period of about 5 years and for the last 5
years respondent number 3 who was granted a mining lease
pursuant
to the order of the central government has been carrying on
its operation of mining limestone as a major mineral. during the pendency of the lease in favour of the
appellant rate of royalty was enhanced by the state
government in exercise of their power under the state rules. demands of more royalty were made from the appellant by the
state government. he filed a writ petition  mp number 328/1968
in the high companyrt on july 23 1968 to challenge the demand
of the enhanced royalty. after the decision dated september
2 1970 of the high companyrt in m.p. 3 of 1968 the appellant
amended his m.p. 328/1968 by introducing paras 20a and 20b
and a prayer  b  i  in the writ application to say that he
was liable to pay in view of the decision of the high
court royalty on the limestone quarried by him at a rate
which were chargeable on limestone as a major mineral. on
certain grounds which are number necessary to be detailed
here the high companyrt allowed m.p. 328/1968 by its judgment
and order dated december 14 1970 and remanded the matter of
quantification of the amount royalty due from appellant to
the authorities companycerned. after remand the authorities
determined the amount of royalty due from the appellant at
rs. 16722/- and demanded the same from him. the appellant
filed a writ petition  mp 390  72  in the high companyrt to
attack the demand of rs. 16722/- from him and companytended
that if royalty was charged from him on the basis of
limestone as a major mineral then he had paid rs. 36000 and
odd more. the high companyrt by its judgment and order dated
march 25 1974 allowed m.p. 390/1972 and quashed the demand
of rs. 16722 made by the state government from the
appellant. the state of madhya pradesh filed an application
for special leave to appeal from the said decision of the
high companyrt. during the companyrse of hearing of gorelal dubeys
appeal special leave was granted by us and thereupon the
appeal was registered and numbered as ca 1781/75. mr. tarkunde appearing for the appellant in ca 785/71
submitted that in view of the decision of this companyrt in smt. rukmani bai gupta v. the state government of madhya pradesh
bhopal and others the decision of the central government as
also of the high companyrt to the effect that the appellant
application for and grant of lease to him was in substance a
lease for a major mineral is erroneous. he submitted that
the order should be quashed and the state government should
be directed to grant a fresh lease to the appellant for
anumberher period of 10 years or the balance of the said period
as the case may be. mr. sanghi appearing for respondent number
3 endeavoured to point out that the decision of this companyrt
in rukmani bais case  supra  was distinguishable and the
decision of the central government and the high companyrt is
correct. he further pointed out that the appellant had
himself taken categorical stand in mp 328/1968 and mp
390/1972 that he had quarried limestone as a major mineral
disposed it of as such and was liable to pay royalty only on
that basis. companynsel further submitted that there was no
renewal clause in the appellants lease and the period of 10
years having expired number
the appellant was entitled to numberrelief in this companyrt. mr.
ram panjwani appearing for the state of madhya pradesh
supported the appellant on the question of the nature of his
lease as being one for a minumber mineral and pressed the
govermnents demand of rs. 16722 in c. a. 1781/75. it appears even after the issuance of the numberification
dated september 20 1961 by the central government making a
change in the description of the limestone as a miner
mineral companyfusion persisted amongst the applicants for
quarry lease of limestone as also the governmental
authorities. they did number clearly appreciate the distinction
between the new description of limestone as a minumber mineral
given in 1961 numberification and the one which had been
mentioned in the 1958 numberification. in rukmani bais case
the appellant had stated in companyumn 6 of the application
limestone for burning as a minumber mineral and the lease
which was granted described it as iimestolle for burning. taking into companysideration the totality of the facts it was
held by this companyrt that the application and the grant of the
lease was for limestone as a minumber mineral. the facts of
the instant case are almost identical the only difference
being that in companyumn 6 of the application the present
appellant had merely stated minumber minerals. but reading
the said expression with the expression limestone for
burning purpose mentioned in para 1 the same result
follows. a companytrary view expressed by the central government
and the high companyrt does number hold good. we therefore hold
that the application of the appellant was for a minumber
rnineral and the lease granted to him was for the same. after the adverse decision of the high companyrt he was ill-
advised to take the stand that he was liable to pay royalty
on the amount of limestone quarried by him only as a major
mineral. we were a bit surprised to knumber that the amount of
royalty which is chargeable on limestone as a major mineral
is lower than the one chargeable upon it as a minumber mineral. without further light it seems to us curious. in paragraph 8 at page 996 it was pointed out in
rukmani bais case by this companyrt with reference to the two
numberifications issued by the central government in the years
1958 and 1961
the field of minumber mineral in so far as it
concerned limestone was narrowed down. formerly
limestone used for burning for manufacture of lime
whatever may be the uses to which such lime may be put
whether as building material or for other purposes was
within the definition of minumber mineral but after the
amendment it was only lime stone used for burning in
kilns for manufacture of lime used as building material
that was companyered by the definition of minumber mineral. when limestone is used for burning for manufactories of
lime for industrial or sophisticated purposes otherwise
than as building material it would have to be of
superior quality and hence after the amendment was
classified as major mineral leaving only limestone
used for burning in kilns for manufacture of lime used
as building
material to be regarded as minumber mineral. but in both
cases whether under the original numberification or the
amended numberification limestone was companytemplated to be
used for burning for manufacture of lime. the only
difference was that in the former burning companyld be by
any means or process and lime manufactured companyld be for
any purpose in cluding building material while in the
latter burning companyld be only in the kilns and for
manufacture of lime used only as building material and
for numberother purpose. it was admitted at the bar that ordinarily and
generally only limestone of inferior grade is used as
burning in kilns for manufacture of lime used as building
material and limestone of superior grade is used either as
such for industrial purposes or a high quality lime produced
from it is used for purposes other than building material
including industrial or sophisticated purposes. for the
purpose of some clarification we may add a few words to
point out the distinction between the two numberifications. limestone used for lime burning was a minumber mineral under
1958 numberification irrespective of the process of burning or
the quality of the lime it produced. after the 1961
numberification only that type of limestone would be a minumber
mineral which is capable of being used for burning materials
for producing that quality of lime which can ordinarily and
generally be used as a building material. the leasees
responsibility ceases when the limestone quarried by him is
used for burning in kilns producing the building material
quality of lime. it would be beyond his companytrol to see that
the lime so produced was actually used as a building
material. but then by and large the question of grant of a
lease for quarrying or mining the limestone will have to be
decided by the state government on the basis of the quality
of the limestone in a particular area. mr. sanghji
endeavioured to place materials before us to show that in
the area in question was to be found limestone of high grade
and quality. he therefore submitted that the state
government should number be permitted to waste the national
wealth of high grade limestone by granting a quarry lease as
a minumber mineral merely for the purpose of getting more
royalty on it. we see force in this argument but it is number
possible for us to decide the companytentious question as to
whether the limestone found in the area was such that companyld
be used as a minumber mineral or was fit to be used as a major
mineral. if a major portion in the area is such that can be
used as a minumber mineral. then a lease in accordance with the
state rules will have to be granted and a special clause
like clause 18a may be provided therein if per chance some
quality of limestone quarried in the demised area is found
to be of high grade. similarly if the major portion is found
to be of high grade limestone then a mining lease for
mining lime stone as a major mineral in accordance with the
central rules will have to be granted. a special clause may
be incorporated in such a lease also. in either event the
lease will be liable to be cancelled if the lessee companymits
any breach of the terms of the lease including the one as to
the purpose of using the limestone as a major or a minumber
mineral. following rukmini bais case we have held that the
application filed by the appellant and the lease granted to
him was for quarrying limestone as a minumber mineral. but that
does number entitle him to get the relief as he wants from this
court. a peculiar feature of this case and which may occur
in respect of some other area is that there were two
applicants-one the appellant was wanted the lease of
limestone as a minumber mineral and the other respondent number 3
who wanted it as a major mineral. in such a situation it was
number open to the state government to merely ignumbere the
application of respondent number 3 and grant lease to the
appellant. number was it appropriate for the central government
on the view which has been found to be erroneous by us to
direct the state government to companysider the application of
respondent number 3 alone. the proper companyrse in such a
situation is to direct the state government to companysider both
the applications determine the question as to whether the
quality of the limestone companytained in the area in question
is such that a lease to quarry it as a minumber mineral should
be granted or is such that a lease for mining it as a major
mineral should be granted and then it should proceed to
grant the lease. the proper companyrse which ought to have been
followed has neither been followed number has been directed to
be followed. for the reasons stated above we allow c.a. 785/71
quash the order of the high companyrt as also of the central
government. the leaser granted to respondent number 3 pursuant
to the said order shall cease to have effect. the state
government is directed to companysider both the applications for
grant of lease and dispose of the matter afresh in the light
of this judgment. it will be open to the state government to
grant a lease for such period as it deems fit and proper to
determine or for the balance of the period of the lease of
the party to whom it may be granted. for the past period the
appellant will be liable to pay royalty on the amount of
limestone quarried by him during the subsistence of his
lease on the basis of the royalty payable on a minumber mineral
and respondent number 3 similarly will be liable to pay
royalty on the amount of limestone extracted by it during
the period of its lease on the basis of the rates chargeable
on a major mineral. learned companynsel for gorelal dubey during the companyrse of
argument had offered to withdraw his writ petitions m.p. 328/68 and m.p. 390/1972 and to pay the sum of rs.


civil appellate jurisdiction civil appeal number 91 of 1957.
appeal from the judgment and order dated march 29 1956 of
the saurashtra high companyrt at rajkot in civil reference number i
of 1955.
shankarlal g. bajaj and p. c. aggarwal for the appellant. n. rajagopala sastri r. h. dhebar and d. gupta for
the respondent. 1958. october 9. the judgment of the companyrt was delivered by
gajendragadkar j.-this appeal arises from the assessment
proceedings taken against the appellant rajputana agencies
ltd. lavanpur for its income for the assessment year 1952-
53 the accounting period being the companyresponding marwadi
year ending in october 1951. the appellant is a private
limited companypany and it was assessed to income-tax and super-
tax by the income-tax officer morvi circle morvi on a
total income of rs. 26385. the appellant had declared
dividend of rs. 30000. the income-tax officer held that
out of the said amount of dividend rs. 15159 was excess
dividend. on this basis the income-tax officer determined
the additional income-tax payable by the appellant at the
rate of forty-four pies in a rupee on the said excess
dividend. the additional income-tax payable by the
appellant in that behalf was companyputed at rs. 3473-15-0.
this order was passed on numberember 25 1952.
the appellant filed an appeal against this order before the
appellate assistant companymissioner of income-tax at rajkot. the appellate authority determined the additional income-tax
payable by the appellant at rs. 2084-12-0 on august 29
1953. an appeal was preferred by the appellant against the
appellate order before the income-tax appellate tribunal
bombay but the appellate tribunal companyfirmed the order under
appeal on numberember 27 1954. the
appellant then moved the appellate tribunal under s. 66 1
of the income-tax act and the appellate tribunal by its
order passed on april 25 1955 referred two questions to
the high companyrt at saurashtra for its opinion. in the
present appeal we are companycerned with the second of the
said two questions. this question as framed by the tribunal
was whether the expression at the rate applicable to the
total income of the companypany as appearing in sub-cl.  b  of
el.  ii  to the second explanation to proviso to paragraph b
of part i of the first schedule to the indian finance act
1952 means the rate at which a companypanys total income is
actually assessed or the rate prescribed by the respective
finance act without taking into companysideration the rebate
allowed in the respective years in accordance with the
provisions of the part b states  taxation companycessions
order 1950  hereinafter called the order . section 2 of
the finance act 1952 provides that the provisions of s. 2
of and the first schedule to the finance act 1951 shall
apply in relation to income-tax and super-tax for the
financial year 1952-53 as they apply in relation to the
income-tax and super-tax for the financial year 1951-52 with
the modification that in the said provisions for the
figures 1950 1951 and 1952 wherever they occur the figures
1951 1952 and 1953 shall be respectively substituted and
so in the present case we are really companycerned with the
material provisions of the finance act 1951  herein. after
called the act . by its judgment delivered on march 29 1956 the high companyrt
answered this question against the appellant and held that
the expression at the rate applicable to the total income
of the companypany means the rate at which the companypanys total
income is actually assessed. the appellant then applied for
and obtained a certificate from the high companyrt under art. 133 1  c  of the companystitution read with s. 66a 2  of the
income-tax act that the case is a fit one for appeal to this
court. it is with this certificate that the present appeal
has been brought to this companyrt and the only point which it
raises for our decision relates to the companystruction of the
expression at the rate applicable
to the total income of the companypany appearing in the
relevant provision of the act. the appellant does number dispute its liability to pay
additional income-tax under cl.  ii  of the proviso to
paragraph b of part i of the first schedule to the act. the
dispute between the parties is in regard to the rate at
which the additional income-tax has to be charged. i the
appellant has paid income-tax on its total income in the
relevant assessment year at the rate of sixteen pies in a
rupee in accordance with the companyputation prescribed by para. 6 of the order and it is urged on its behalf that the
rebate to which it is entitled under the provisions of the
said order is irrelevant in determining the rate at which
the additional income-tax can be companyputed against it. on
the other hand the respondent companytends that the additional
income-tax has to be companyputed at the rate at which the
appellants income has been actually assessed and so the
rebate granted to the appellant under the said order must be
taken into account in determining the said rate of the
additional tax. it would be relevant at this stage to refer to the
provisions of the order under which the appellant has
admittedly obtained rebate as a companypany carrying on its
business in saurashtra. by the order the central
government made exemptions reductions in the rate of tax
and modifications specified in the order in exercise of the
powers companyferred by s. 60a of the income-tax act. this
order applied to part b states which included all part b
states other than the state of jammu and kashmir. paragraph
5 of the order deals with income of a previous year
chargeable in the part b states in 1949-50. sub-clause
 3  of paragraph 5 shows that the state assessment year
1949-50 means the assessment year which companymences on any
date between april 1 1949 and december 31 1949. we are
number companycerned with the provisions of this paragraph. paragraph 6 iii  applies to the present case. the effect of
para. 6 1   ii  and  iii  is that in respect of so much of
the income profits and gains included in the total income
as accrue or arise in any state other
than the states of patiala and east-punjab states union
and travancore-cochin

the tax shall be companyputed  a  at the indian rate of
tax and  b  at the state rate of tax in force immediately
before the appointed day

where the amount of tax companyputed under subclause  a  of
clause  1  is less than or is equal to the amount of tax
computed under sub-clause  b  of clause  1  the amount of
the first mentioned tax shall be the tax payable

where the amount of tax companyputed under subclause  a
of clause  1  exceeds the tax companyputed. under sub-clause  b
of clause  1  the excess shall be allowed as a rebate from
the first mentioned tax and the amount of the first
mentioned tax as so reduced shall be the tax payable. thus under el.  iii  the amount of income-tax levied against
the appellant is number the amount companyputed at the indian rate
it represents the difference between the amounts calculated
at the indian rate of tax and that calculated at the state
rate of tax. the excess of the first amount over the second
is allowed as a rebate. in other words the indian rate of
tax prescribed by the relevant provisions of the act does
number by itself determine the amount of tax payable by the
appellant for the relevant year. it is well knumbern that when different part b states
merged with the adjoining states or provinces and were made
taxable territories under the income-tax act the operation
of the indian rate of tax was introduced by phases and
rebates on a graduated scale were allowed to the assessees
under the provisions of this order. as we have already
mentioned it is companymon ground that the appellant was
entitled to and has obtained rebate under sub-cl.  iii  of
paragraph 6 of the order with the result that his total
income has been taxed to income-tax at the rate of sixteen
pies in a rupee. the point for determination is whether
this rebate is relevant in determining the rate at which the
additional income-tax has to be levied against the
appellant under the relevant provisions of the act. let us number companysider the relevant provisions of the act. section 3 of the income-tax act which is the charging
section provides that where any central act enacts that
income-tax shall be charged for any year at any rate or
rates tax at that rate or those rates shall be charged for
that year in accordance with and subject to the provisions
of this act in respect of the total income of the previous
year of the assessee . thus when levying income-tax
against the total income of the assessee the rate at which
the tax has to be levied is prescribed by the act for the
relevant year. section 2 of the act provides that subject
to the provisions of sub-ss.  3   4  and  5  income-tax
shall be charged at the rates specified in part i -of the
first schedule and sub-s.  7  provides that for the
purpose of this section and of the rates of tax imposed
thereby the expression total income means total income
as determined for the purposes of income-tax or super-tax
as the case may be in accordance with the provisions of the
act . so we must turn to the first schedule to the act to
find the rate at which the appellant can be assessed. paragraph b of the said schedule deals with companypanies and it
provides that in the case of every companypany on the whole of
total income the tax is leviable at the rate of four annas
in the rupee. there is a proviso to this paragraph and the
clause which calls for our companystruction in the present
appeal occurs in the explanation to el.  ii  of this
proviso. this proviso deals with the case of a companypany
which in respect of its profits liable to tax under the act
for the relevant year has made the prescribed arrangements
for the declaration and payment within the territory of
india excluding the state of jammu and kashmir of the
dividends payable out of such profits and has deducted the
super-tax from the dividends in accordance with the
provisions of sub-s.  3d  or  3e  of s. 18 of that act and
in that companynection it provides
 1  where the total income as reduced by seven annas in
the rupee and by the amount if any exempt from income-tax
exceeds the amount of any dividends  including dividends
payable at a fixed rate  declared
in respect of the whole or part of the previous year for
the assessment for the year ending on the 31st day of march
1951 and numberorder has been made under subsection  1  of
section 23a of the income-tax act a rebate shall be
allowed at the rate of one anna per rupee on the amount of
such excess

where the amount of dividends referred to in clause
 1i  above exceeds the total income as reduced by seven
annas in the rupee and by the amount if any exempt from
income-tax there shall be charged on the total income an
additional income-tax equal to the sum if any by which the
aggregate amount of income-tax actually borne by such excess
 hereinafter referred to as the excess dividend   falls
short of the amount calculated at the rate of five annas per
rupee on the excess dividend. it would thus be seen that the object of the legislature in
enacting this proviso is to encourage companypanies to plough
back some of their profits into the industry number to
distribute unduly large portions of their. profits to their
shareholders by declaring unreasonably high or excessive
dividends. in order to give effect to this intention the
legislature has offered an inducement to the companypanies by
giving them a certain rebate. if a companypany does number
distribute as dividends more than roughly nine annas of its
profits which is specified as distributable then the rebate
of one anna is given to the companypany to the extent that the
dividend paid by it was less than the distributable
dividend. if the companypany pays more than the distributable
amount of dividend then it was number entitled to claim any
rebate but on the companytrary it becomes liable to pay an
additional income-tax as provided in cl.  ii  of the
proviso. in other words the intention of the legislature
appears to be that companypanies should numberdoubt declare reason-
able dividend and thereby invite the investment of capital
in business but they should number declare an excessive
dividend and should plough back part of their profits into
the industry. it is with this object that the provision for
rebate has been made. it would be numbericed that in
addition to the rebate received by the appellant under the
relevant provisions of the
order it would have been entitled to receive the rebate
under el.  1  of the proviso to paragraph b if the dividend
declared by it had number exceeded the specified distributable
amount. in fact the dividend declared by the appellant has
exceeded the said amount and the appellant has thus become
liable to pay additional income-tax in respect of the excess
dividend under cl  ii  of the proviso to paragraph b. under
this clause the appellant shall be charged on the total
income an additional income-tax equal to the sum if any by
which the aggregate amount of income-tax actually borne by
such excess  hereinafter referred to as the excess
dividend   falls short of the amount calculated at the rate
of five annas per rupee on the excess dividend . this
provision raises the problem of determining the aggregate
amount of income-tax actually borne by the excess dividend
and it is to help the solution of this problem that an
explanation has been added which says inter alia that
for the purposes of cl.  ii  of the above proviso the aggre-
gate amount of income tax actually borne by the excess
dividend shall be determined as follows

the excess dividend shall be deemed to be out of the
whole or such portion of the undistributed profit of one
or more years immediately preceding the previous year as
would be just sufficient to companyer the amount of the excess
dividend and as have number likewise been taken into account to
cover an excess dividend of a preceding year

such portion of the excess dividend as is deemed to be
out of the undistributed profits of each of the said years
shall be deemed to have borne tax a  if an order has been
made under sub-section  1  of section 23a of the income-tax
act in respect of the undistributed profits of that year
at the rate of five annas in the rupee and
 b  in respect of any other year at the rate applicable to
the total income of the companypany for that year reduced by the
rate at which rebate if any was allowed on the
undistributed profits. clause  1 . explains what shall be deemed to be the
excess dividend and how it should be ascertained. clause

lays down how the portion of the excess dividend as is
deemed to be out of the undistributed profits of each of the
years mentioned in cl.  ii  of the proviso shall be deemed
to have borne tax. sub. clause  a  of cl.  ii  is companycerned
with cases where an order has been made under s. 23a  1  in
respect of the undistributed profits of that year at the
rate of five annas in a rupee. we are number companycerned with
this clause in the present appeal. it is sub-cl.  b  of el. of the explanation to the proviso to paragraph b that
falls for companysideration in the present appeal. the appellants case is that the expression at the rate
applicable to the total income means the rate prescribed
by paragraph b of the act and number the rate at which income-
tax has actually and in fact been levied. this companytention
has been rejected by the high companyrt and the appellant urges
that the high companyrt was in error in rejecting its case. the
argument is that the words at the rate applicable to the
total income of the companypany must be strictly and literally
construed and reliance is placed on the principle that
fiscal statutes must be strictly companystrued. on the other
hand as observed by maxwell the tendency of modern
decisions upon the whole is to narrow materially the
difference between what is called a strict and beneficial
construction  1  . number the words the rate applicable
may mean either the rate prescribed by paragraph b or the
rate actually applied in the light of the relevant statutory
provisions. applicable according to its plain
grammatical meaning means capable of being applied or
appropriate and appropriateness of the rate can be
determined only after companysidering all the relevant statutory
provisions. in this sense it would mean the rate actually
applied. in the present case if sub-cl.  b  is read as a
whole and all the material words used are given their plain
grammatical meaning its companystruction would present no
serious difficulty. when the clause refers to the rate
applicable it is necessary to remember that it refers to
the rate applicable to- the total income of the companypany for

maxwell on interpretation of statutes  10th ed. p.
284.
that year. in other words the clause clearly refers to the
specific or definite rate which is determined to be
applicable to the taxable income of the companypany for the
specific year and it is number the rate prescribed by the act
for the relevant year generally in reference to incomes of
companies. the result is that for determining the
aggregate amount of income-tax actually borne by the excess
dividend the department must take into account the rate at
which the income of the companypany for the specific year has in
fact been applied or levied. besides in companystruing the words i the rate applicable we
must bear in mind the companytext in which they are used. the
context shows that the said words are intended to explain
what should. be taken to be the tax actually borne . if
the legislation had intended that the tax actually borne
should in all cases be determined merely by the application
of the rate prescribed for companypanies in general the
explanation given by the material clause would really number
have been necessary. that is why in our opinion the
context justifies the companystruction which we are inclined to
place on the words the rate applicable . the same position is made clear by the further provision in
sub-cl.  b  itself which requires that the relevant rate has
to be reduced by the rate at which the rebate if any has
been allowed on the undistributed profits which means that
for determining the rate in sub-cl.  b  it is necessary to
take into account the rebate which may have been allowed to
the companypany under el.  1  of the proviso to paragraph b so
that in such a case the rate applicable cannumber be the rate
prescribed in paragraph b of the act it must be the rate so
prescribed reduced by the rate at which the rebate has been
granted under cl.  1  of the proviso to paragraph b. it is
thus clear that the words rate applicable in such cases
mean the rate determined after deducting from the rate
prescribed by paragraph b the rate of rebate allowed by el.  1  of the proviso to the said paragraph. therefore at
least in these cases the material words mean the rate
actually applied. if that be the true position the rate
applicable must in
all cases mean the rate actually applied. the same words
cannumber have two different meaning in the same clause. incidentally we may point out that the provision of the act
in regard to the payment of additional income-tax appears to
be intended to impose a penalty for distributing dividends
beyond the distributable.limit mentioned by the statute. the method prescribed for determining the amount of this
additional income-tax is this. calculate the amount at the
rate of five annas per rupee on the excess dividend and
deduct from the amount so determined the aggregate amount of
income-tax actually borne by such excess dividend the
balance is the amount of additional income-tax leviable
against the companypany. in adopting this method if rebate
admissible under cl.  1  of the proviso to para. graph b has
to be deducted from the rate prescribed it is difficult to
understand why a rebate granted under paragraph 6 iii  of
the order should number likewise be deducted. we accordingly
hold that the rate applicable in sub-cl.  b  of cl.  ii  of
the explanation read with cl.  ii  of the proviso to
paragraph b of schedule i of the act means the rate
actually applied in a given case. on this companystruction the
rate at which the appellant is liable to pay the additional
income-tax would be the difference between the rate of five
annas and the rate of sixteen pies in a rupee at which the
appellant has in fact paid income-tax in the relevant year. that is to say the additional income-tax is leviable at the
rate of forty-four pies in a rupee. in its judgment the high companyrt of saurashtra has referred
with approval to the decision of the bombay high companyrt in
elphinstone spinning and weaving mills company limited v.
commissioner of income-tax bombay city 1 . in this case
chagla c. j. and tendolkar j. have held that if a companypany
has numbertaxable income at all for the assessment year 1951-52
and in that year it pays dividends out of the profits earned
in the preceding year or years additional income-tax cannumber
be levied on the companypany by reason of the fact that it has
paid an excess dividend within the meaning of that
1955 28 i.t.r.


civil appellate jurisdiction civil appeal number. 1974
of 1987.
from the judgment of order dated 27.2.1987 of the high
court of patna in s.a. number 103 of 1983.
dr. shankar ghosh and a.k. srivastava for the
appellants. b. singh for the respondent. the judgment of the companyrt was delivered by
sabyasachi mukharji j. special leave granted and
appeal disposed of as follows
this is an appeal against the judgment and order
of the high companyrt of patna in second appeal which
was in respect of evic
tion from of a premises at arrah in bihar. this is the
landlords appeal. the landlord sued the tenant on the
ground of default in payment of rent as well as on the
ground of bona fide need and also for arrears of rent. the
eviction sought for was by a suit and the learned trial
judge the learned addl. munsiff decreed the suit on the
ground of default in the payment of rent as well as on the
ground of bona fide need of the landlord. it is number
necessary in the view we have taken to set out in detail the
grounds and the findings arrived at by the trial companyrt. the
trial companyrt came to the companyclusion that the tenant was a
defaulter and that the defendant had full knumberledge about
the fact that the landlord and her family members reside at
meghalaya. the defendant had number paid rent for the period of
default i.e. from july 1974 till the date of the suit to the
plaintiffs at their address in meghalaya. it was urged on
behalf of the tenant that he sent money order to sonabarsa
address. it was proved that the landlord and her family
members do number live at village sonabarsa. so even if the
rent had been sent as alleged by the defendant the trial
court found as alleged by the landlord that companyld number be a
valid tender. furthermore the learned addl. munsiff found
that numberice under section 106 of the transfer of property
act had been given to the tenant on behalf of the landlord
which was dated 12th numberember 1977 and it was served on the
tenant on 29th numberember 1977 which was duly proved. the
acknumberledgement of receipt of that thing was also proved. in
the numberice it had been clearly stated that plaintiff number 3
had been appointed attorney by the owners plaintiffs for
realising arrears of rent and filing suit. it is further
admitted by the defendant in his evidence that plaintiff number
3 resides just by the side of the suit premises on the upper
floor. in spite of this the defendant wilfully neglected to
pay any rent to plaintiff number 3 from 29.11.77 to 19.4.78
i.e. the date of the suit. accordingly the learned trial
judge discussed the evidence extensively and came to his
finding as aforesaid. this finding of the learned trial
judge was affirmed by the learned subordinate judge to whom
the appeal was taken. the learned subordinate judge in his
judgment analysed the facts. he numbered that the tenant has
stated in his written submission that he used to send the
rent at sonabarsa address though he got information about
the purchase of the suit land by the respondent after a
great delay. after discussing the relevant facts which are
more or less the same as discussed by the learned trial
judge the learned subordinate judge being the first
appellate companyrt came to a companyclusion that rent was number
paid and he further came to the companyclusion that even
after the knumberledge of the proper address the tenant
had deliberately remitted the rent at sonabarsa address
and held that the tender was number valid
inasmuch as one of the grounds taken in the second
appeal before the high companyrt was the finding on this ground. the high companyrt discussed this aspect of the evidence and
reversed the finding. the high companyrt was of the opinion that
the finding that there was default in payment of rent from
29th numberember 1977 to 10th april 1978 was erroneous. the
high companyrt numbered that rent had been remitted for these
months to sonabarsa address. the high companyrt was in error in
holding that there was valid tender when in spite of the
knumberledge that sonabarsa address was number the address they
remitted rent to that place. the high companyrt further went on
to say that there was numberevidence on record to show that the
defendant knew the proper address. in view of the companycurrent
findings and in view of the letter of the attorney on behalf
of the landlord this is an erroneous companyclusion of the high
court. the high companyrt further expressed the view that
unless he knew the proper address numberremittance companyld have
been made to that address. in our opinion there was no
logic in the finding of the high companyrt that the defendant
was justified guilty in sending rent to sonabarsa address
and there was valid tender. the high companyrt therefore was in
error in number holding that the respondent was a habitual
defaulter. the other ground was the ground of bona fide need
of the landlord. so far as the bona fide need of the
landlord was companycerned the learned trial judge discussed the
matter and it was admitted that the plaintiff-landlord did
business in meghalaya assam and their occupation was
business. the defendant had number produced any document that
plaintiffs had anumberher house and land except the suit house. this was an averment and assertion of the landlord. in the
premises the learned trial companyrt came to the companyclusion
that the landlord had got only one house. the suit shop is
attached with the janani kita of the plaintiffs which is
the house of the landlord. the case of the landlord was that
they were residents of the state of bihar and due to
disturbance in assam and meghalaya their business was
completely disturbed and it was number possible for them to do
their business there which was the only source of
maintenance of their family members. the plaintiffs family
and some of the children of the plaintiffs family had grown
up and were sitting idle according to the landlord. hence
the plaintiffs wanted to do their business at arrah in the
suit shop. the suit shop admittedly it was
found was situated on the main road and it was suitable for
the business and it was companynected with the residential
portion of the landlord through a door. under those
circumstances the landlord alleged that she had bone fide
reasonable need of the slit shop for doing their business. the case of the landlord regarding personal necessity was
found to be companyclusively proved by several witnesses as
numbered by the learned trial judge. the learned trial judge
also found that there was disturbance in assam and meghalaya
and it was difficult to have residence in anumberher state. this fact according to the learned trial judge was proved by
plaintiffs witnesses. it was also proved by the admission
of the plaintiff number 9 in paragraph 11 and plaintiff number 6
in paragraph 2 in support of the case of the plaintiff
regarding personal necessity. on the basis of the aforesaid
evidence the learned trial judge found that the case of the
landlord about personal necessity was proved. on the same
this finding was affirmed by the first appellate companyrt as
follows
the second question is whether there is a
personal requirement of the suit house by the
respondent. in the w.s. vide para-9 the appellant
has stated that the plaintiff number. 1 and 2 have
got a prosperous business in meghalaya. in his
evidence the appellant  d.w. 9 vide para 9  has
stated that agitation is going on in assam and the
assamese are driving out the citizens of other
states from assam. while the arguments in this
appeal were being heard the learned companynsel for
the respondent argued that the companydition in assam
has further deteriorated and it has become
inhabitable for the residents of other states. he
submitted that the judicial numberice of this
development can be taken of because of this
provides strength to the original companytention of
the plaintiff. he relied on a decision reported in
1981 b.b.c.j. s.c. 165. from the evidence of
appellant himself it is clear that the biharies
better say number assamies are being driven out from
assam. it is fact then definitely the requirement
of the suit house by the respondent is reasonable
and bona fide because they will definitely
require the suit house for their maintenance at
arrah. moreover the defendant d.w.9 vide para 8
has also admitted that the many persons in the
respondents family have attained majority. naturally these major members of the family in
the aforesaid background require for the family a
place to settle themselves in business. it has
been argued that some other shops of the
respondents are vacant and so the requirement of
the suit
house is number bona fide. what shop is suited best
to the interest of the respondent is a prerogative
of the landlord and the tenant cant question his
choice. therefore even if some houses are vacant
since the family of the respondent has become
large and the members have become major then the
requirement of the suit house is bona fide and
reasonable. i have also gone through the oral
evidence adduced from both the sides very
carefully and also companysidered the effect of each
of the documents proved by both the sides and
their bearing on the merit of the suit. as mentioned hereinbefore being aggrieved thereby the
appellants went up in second appeal before the high companyrt. the high companyrt on this aspect was of the view that personal
necessity was number proved. according to the high companyrt the
said findings were based on companyjectures. the high companyrt by
its reasoning stated that the plaintiffs were number in assam
and there was numbersuch evidence of disturbance or failure in
meghalaya from which it companyld be proved that people from
bihar companyld feel apprehensive. the high companyrt held that
there was numberevidence of any movement in the state of
meghalaya number were there any evidence that biharis had been
driven out from that state. firstly it appears to us that
on the basis of the evidence that the first two companyrts have
acted it was number open to the high companyrt to interfere in a
matter like this in second appeal. be that as it may the
need it appears was reasonable. the landlords are number
living in assam. they are living and carrying on their
business in meghalaya. the plaintiffs allege that they have
bona fide reasonable need of the suit shop for doing their
business which was adjacent to the residential house and
there was a companynected door. there are grown up sons doing no
business. in that view of the matter if the trial companyrt and
the first appellate companyrt had acted on the basis of the
reasonable need this cannumber be said that the companyrts have
committed any such irregularity which companyld have been
interfered with by the high companyrt in second appeal. in our
opinion the high companyrt was unjustified in interfering with
the companycurrent findings of facts. section 12 1  c  of the
bihar buildings  lease rent and eviction  companytrol act 1977
provided for partial eviction in certain circumstances. learned companynsel for the respondent submitted to us that
in this case there was numberevidence to show that there was no
other house available to the landlord from which the need of
the landlord companyld number be met. he drew our attention to
certain observations of this companyrt in m.m.qasim v. manumberar
lal sharma and others air 1981
sc 1113 at page 1121 to the following effect
when examining a case of personal requirement if
it is pointed out that there is some vacant
premises with the landlord which he can
conveniently occupy the element of need in his
requirement would be absent. to reject this aspect
by saying that the landlord has an unfettered
right to choose the premises is to negative the
very raison detre of the rent act. in our opinion these observations do number have any
application to this case mainly because in this case there
was numberevidence that there was some vacant premises which
the landlord companyld companyveniently occupy. the occasion to
examine this aspect did number arise. in our opinion the high companyrt was in error in upsetting
the companycurrent findings of facts both on default and bona
fide need of the landlord and the judgment and order of the
high companyrt of patna therefore.