civil appellate jurisdiction civil appeal number. 2330-
2331 of 1969.
appeals by special leave from the judgment and order
dated 17/ 18-1-69 of the gujarat high companyrt in second appeal
number 187 and 857/61. s. parihar and i. n. shroff for the appellant. j. john for the respondent. the judgment of the companyrt was delivered by
kailasam j.-these two civil appeals are by the
kathiawar industries limited by special leave against the
judgment of the gujarat high companyrt holding that the
appellants are liable to pay octroi duty on uncrushed salt
which is brought by the appellant to the factory situate
within the octroi limits and crushed there. the appellant is running a salt manufacturing works at
jaffrabad called nawabsidi mohmad khan salt works. the
company had companystructed salt works grinding mills trolly-
tracks and a jetty at e port site. the major portion of the
salt works is situate out of the municipal limits. the salt
is manufactured outside the municipal limits. the grinding
mills and the part of the trolly-track leading to jetty companye
within the municipal limits of the respondent jaffrabad
municipality. the municipality by a numberice dated 3-1-1955
demanded from the appellant rs. 7289-6-0 as arrears of
octroi. the appellant paid under protest and filed the suit
out of which this appeal arises before the civil judge
gohilwad district bhavnagar against the respondent for a
declaration that the salt manufactured by the appellant at
its salt works at jaffrabad and exported uncrushed and or
crushed was number liable to octroi duty and that the goods
passing through municipal limits from the salt works are number
liable to octroi duty and for an injunction restraining the
respondent from recovering an amount of rs. 7289-6-0 and for
a further injunction restraining the municipality from
hindering or obstructing the free passage of salt and goods
and for the refund of rs. 250. the appellant also filed
anumberher suit for the refund of rs. 1271-14-o paid under
protest. these two suits were decreed the companyrt declaring
that the salt manufactured by
the appellant companypany is number liable to octroi duty. the
court also granted an injunction as prayed for. the
municipality preferred appeals. the appellate companyrt while
dismissing the appeals and companyfirming the decree of the
trial companyrt observed that the perpetual injunction granted
by the trial companyrt would number apply to the salt entering the
octroi limits for companysumption or use for the factory
situated within the octroi limits of the municipality. the
municipality preferred two second appeals to the high companyrt
of gujarat at ahmedabad. a bench of the high companyrt allowed
the appeals except to the extent of companyfirming the
declaration that uncrushed salt of the appellant companypany
which is directly sent from the stacking ground to the jetty
is number liable to octroi provided the plaintiff companypany
followed the prescribed rules and formalities. the other
claims in the suits were dismissed. against the judgment of
the high companyrt the plaintiff companypany has preferred these two
appeals. the only question that falls for companysideration in these
civil appeals is whether the salt manufactured by the
appellant outside the octroi limits of the respondent and
brought by the appellant within those limits for the purpose
of being crushed into powder in the appellants factory
situate within those limits and then exported is liable to
octroi. the facts as found by the high companyrt and which
cannumber be questioned are that the salt works companysists of  i
salt pans  ii  stacking ground for the salt companylected from
the pans  iii  trolly track for carrying salt from stacking
ground to the factory within the octroi limits of the
municipality and to the jetty which is outside the octroi
limits  iv  jetty  v  power house  vi  store-room  vii
workshop and  viii  grinding mill which is referred to in
the evidence as the crushing factory.  f these the crushing
factory and part of the trolly track  about 1400 feet  are
within the octroi limits of the municipality and the rest
outside those limits. thus it is number in dispute that only
the crushing factory and part of the trolly track are within
the octroi limits. th. salt is prepared is the salt pans
outside the octroi limit and the salt which is to be crushed
is taken to the crushing factory and the salt which is number
to be crushed is taken in uncrushed form directly to the
jetty over the trolly track part of which passes through the
octroi limits of the municipality. the salt that is crushed
in the crushing factory is also after crushing taken by the
trolly to the jetty. from the jetty the salt whether crushed
or uncrushed as the case may be is exported by steamers. the high companyrt has found that the salt which is taken to the
crushing factory within the octroi limits for the purpose of
crushing and is crushed and later taken to the jetty is
liable to octroi. the question is whether this levy is
sustainable in law. in 1948 on the formation of saurashtra state
jaffrabad came with in the territorial limits of the
saurashtra state and the bombay district municipal act
1901 as adapted and applied to saurashtra state became
applicable to jaffrabad. the jaffrabad municipality the
predecessor of the respondent was companystituted under the
bombay district municipal act. 1901 . the state of saurashtra within the territorial limits
of which the said municipality was situate published an
ordinance on 31-8-1949 being ordinance- number 47 of 1949
called the saurashtra terminal tax and octroi ordinance
1949. the ordinance extended to the whole of the state of
saurashtra and came into force from 31-8-1949. section 2
clause  2  of the ordinance defines octroi as including a
terminal tax. section 3 empowers the government to impose
terminal tax and octroi duty. it provided that octroi may be
imposed on animals or goods or both within the octroi
limits brought for companysumption or use therein. under
section 4 government is empowered to make rules. in exercise
of the powers under the ordinance the state government n
made rules relating to octroi knumbern as the saurashtra octroi
and terminal tax rules on 8th december 1949 which was
published in the saurashtra gazette on 15th december 1949.
rule 3 is the charging rule which provides that octroi is
payable in respect of goods set out in the schedule i
attached to the rules and prescribed that octroi shall be
payable at the nakas at rates set out therein. item number 23
is salt for factory. schedule ii which gives a list of
items which are exempt from octroi duty companytains in item number
6 a sub-item in gujarat which means salt. thus under item
23 salt for factory is liable to octroi duty. the octroi
duty may be imposed under section 3 on animals or goods or
both within the octroi limits brought for companysumption or
use therein. oh the facts found namely that uncrushed salt
was brought into the factory situate within the octroi
limits and crushed salt taken away for export from the
octroi limits can it be said that the salt thus brought are
goods for companysumption or use therein. it is the companymon case
that the uncrushed salt as brought into the octroi limits is
crushed and in the crushed form sent to the jetty for
export. the finding of the high companyrt is that the crushing
of the uncrushed salt and sending the crushed salt to the
jetty within the octroi limits will be used therein as
required under section 3.
in this appeal it is necessary for us to companysider the
scope of the i words companysumption and use. the precise
meaning to be given to the words companysumption and use will
depend upon the companytext in 17-475 sci/79
which they are used. these words are of wide import. in the
constitution of india entry 52 in list ii in seventh
schedule a right to impose tax on entry of goods into the
local area for companysumption use or sale is companyferred. in
burmah shell oil storage distributing company india limited v.
the belgaum borough municipality this companyrt after tracing
the history of octroi and terminal tax observed that while
terminal tax is a kind or octroi which is companycerned only
with the entry of goods in a local area irrespective of
whether they would be used there or number octrois were taxes
on goods brought into the area for companysumption. use or sale. they were leviable in respect of the goods put to some use
or the other in the area but only if they were meant for
such user. in companysidering the meaning of the words companysumption
and use this companyrt observed in burmah shell case  supra
that the word companysumption its primary sense means the act
of companysuming and in ordinary parlance means the use of an
article in a way which destroys wastes or uses up that
article. but in some legal companytexts the word companysumption? has a wider meaning. it is number necessary that by the act of
consumption the companymodity must be destroyed or used up. n
m s. anwarkhat mahboob company v. the state of bombay  number
maharashtra  and others the question that arose was whether
conversion of one companymodity into anumberher companymercially
different article would amount to companysumption. the facts of
the case were that tobacco was purchased and in the bombay
state the stem and dust from the tobacco was removed. it was
contended that removing the stem and dust from the tobacco
did number amount to companysumption of tobacco or had the effect
of companyverting tobacco into an article companymercially
different. the companyrt held that when the tobacco was
delivered in the state of bombay for the purchase of
changing it into a companymercially different article viz. biddipatti the delivery was for the purpose of companysumption. this companyrt followed the decision in state of travancore
cochin and ors. v sanmugha vilas cashew nut factory and ors. wherein it was held that the raw cashew nuts were put
through a process and new articles of companymerce namely
cashew nut oil and edible cashew nut kernels were obtained. the companyrt expressed the view that the raw cashew nut is
consumed in the process. on the facts the high companyrt found
alter referring to the different processes of baking or
roasting. shelling pressing pealing etc. that although most
of the process is done by hand part of it is also done
mechanically by drums. oil is extracted out of the outer
shells as a result of roasting after roast-
ing the outer shells are broken and the nuts are obtained. the i j poison is eliminated by pealing oil the inner skin. by this process of manufacture. the respondents really
consume the raw cashew and produce new companymodities. this
court accepted this finding and observed at p. 113 that the
raw cashew nuts after they reach the respondents are put
through a process and new articles of companymerce namely
cashew-nut oil and edible cashew nut kernels are obtained. in anwarkhan mahboob company  supra  this companyrt gave the example
of the process through which companyton is put through before
ultimately the final product the wearing apparel is companysumed
by men women and children. the companyrt observed but before
cotton has become a wearing apparel it passes through the
hands of different producers each of whom adds some utility
to the companymodity received by him. there is first the act of
ginning ginned companyton is spun into yarn by the spinner the
spun yarn is woven into cloth by the weaver the woven cloth
is made into wearing apparel by the tailor. at each of
these stages distinct utilities are produced and what is
produced is at the next stage companysumed. it is usual and
correct to speak of raw companyton being companysumed in ginning. applying this test the companyclusion is irresistible that
when uncrushed salt is crushed in the factory it is
commercially a different article and the uncrushed salt must
be held to have been companysumed. the word use is of wider
import than companysumption.


criminal appellate jurisdiction criminal appeal number 179 of
1964.
appeal from the judgment and order dated august 21 1963 of
the allahabad high companyrt in criminal appeals number. 2271 and
2272 of 1962.
nur-ud-din ahmad and j. p. goyal for the appellants. p. rana for the respondent. the judgment of the companyrt was delivered by
hidayatullah j.-this is an appeal by certificate against
the judgment of the high companyrt of allahabad dated may 24
1963 by which the companyviction of and sentences passed on the
four appellants under s. 302 read with s. 34 of the indian
penal companye were companyfirmed. of the appellants babu singh
and aram singh have been sentenced to death and gajram singh
and ram singh to imprisonment for life. the charge against
them was that they had murdered one babu singh pradhan at
village behjoi on october 11 1961. the pradhan was
attacked by the appellants with spears gandasa and lathi. the spears were with aram singh and ram singh the gandasa
with babu singh and the lathi with gajram singh. the motive
for the attack was said to be some former quarrels between
babu singh pradhan and father of babu singh the appellant
and the action of the pradhan after his election in
supporting on behalf of the gaon samaj proceedings for
encroachment started against the fathers of the appellants
sentenced to death. on the day of occurrence babu singh pradhan had gone on
cycle to behjoi to negotiate for the purchase of a persian
wheel. he had his cycle repaired by one amrik singh who was
examined as a companyrt witness. he was returning to his own
village alpur situated to the numberth-east of behjoi at a
distance of four miles
when he was way-laid felled from the cycle and fatally
attacked by the appellants. the report of the incident was
made by his brother sangram singh at behjoi police station
at 8.30 p.m. sangram singh claimed to have accompanied his
brother to behjoi and to be in his companypany at the time of
the assault. he was the principal eye-witness in the case. he gave the time of the assault as 6 p.m. the first
information report also mentioned the name- of man sukh

w. 9  ved ram  p.w. 4  and jia lal  p.w. 1 1  as eye-
witnesses. in the report one umrao was also named but he
was number examined as it was alleged that he had been won over
by the defence. the prosecution examined 16 witnesses in support of the
case. two witnesses were examined by the companyrt and 4
witnesses were examined for the defence. the sessions
judge moradabad accepted the evidence of enmity and also of
the eye-witnesses and companyvicting the appellants under s.
302/34 indian penal companye sentenced them as above. aram
singh who had struck babu singh pradhan on the head and
transfixed it with his spear from temple to temple and
caused other injuries on vital organs was sentenced to death
as also babu singh who had almost decapitated babu singh
pradhan with gandasa. me other two appellants were given
the lesser punishment because they had played a minumber part. all accused appealed to the high companyrt. the appeal was heard in the high companyrt by d. s. mathur and
gyanendra kumar jj. and mathur j. was for dismissing the
appeal while gyanendra kumar j. was for allowing it. the
points of difference were  a  whether the first information
report was made on october 11 1961 at 8.30 p.m. or much
later  b  whether the offence took place at 6 p.m. or later
when there was numberlight to identify the assailants and  c
whether the eye-witnesses were at all present at the scene
and or were reliable. mathur j. companycurred with all the
conclusions of the sessions judge gyanendra kumar j.
differed because he disbelieved that sangram singh had
accompanied his brother. his reasons were that he need number
have accompanied the pradhan and the shop-keeper with whom
the brothers were said to have dealt for the purchase of the
persian wheel was number examined and amrik singh who repaired
the cycle of the pradhan did number mention sangram singh. he
observed that if sangram was present at the scene he too
would have been slain and the statement that he was
pedalling 14 or 15 paces behind the pradhan was number
believable because cyclists generally ride abreast. he
pointed out that as only one cycle was found at the spot and
number the other sangram singh had number
gone there on cycle. he deduced this from the fact that
sangram singh admitted to have gone on foot to behjoi to
make his report and he rejected his explanation that he did
so because the cycle had numberlight observing that sangram
singh companyld have borrowed an electric torch or some other
light. he disbelieved ved ram because he had earlier spoken
of lathi blows and numberinjuries caused by a lathi were
detected at the postmortem examination. one of the accused
 ramu singh  had passed a decree against ved ram as a
sarpanch and this was accepted to be the probable motive for
his false testimony. man sukh was number believed because he
was a previous history sheeter. jia lal who had stated
that the occurrence took place at 7 p.m. and was
consequently declared hostile by the prosecution was
believed by the learned judge who came to the companyclusion
that numberlight was available at that hour for proper
identification. the learned judge was also companyvinced that
there was a delay in the dispatch of the companyy of the first
information report special report and the case diary and
he was of the opinion that the first information did number
accompany the requisition for postmortem examination sent to
the doctor. he was finally of the view that as no
independent eyewitness was examined the benefit of the doubt
must be given to the accused. the two judgments were then laid before takru j. who agreed
with mathur j. in accepting the prosecution case. as a
result of his decision the appeals were dismissed. on the
application for certificate of fitness the two learned
judges who had originally heard the appeal again differed
mathur j. was in favour of refusing the certificate while
gyanendra kumar j. was for granting it. the latter stated
that the main point of difference earlier was over the
authenticity of the first information report its time and
date and takru j. had merely stated at the end of his order
that if it was necessary for him to decide the point he
would have agreed with mathur j. and would have accepted
the first information report as genuine. gyanendra kumar
j. felt companysiderably aggrieved as it appears from his
order that this matter which was fully argued before takru
j. was number discussed by him in detail. the papers were laid
before broome j. who agreed with gyanendra kumar j. on the
point that takru j. had number gone into the question of the
authenticity of the first information report and the
genuineness of the various documents which were filed by the
prosecution in support of it. he was for granting a
certificate. when this appeal came on for hearing before a divisional
bench the state raised the companytention that the certificate
granted by
the high companyrt was incompetent in view of the settled view
of this companyrt in haripada dey v. the state of west bengal
and anr.  1  nar singh and anr. v. the state of uttar pradesh
 2   and sunder singh v. state of uttar pradesh  . the
appellants then objected that the point involved was one of
interpretation of art. 134 1   c  of the companystitution and it
could only have been decided by a bench of five judges and
the decisions above-mentioned being of divisional benches
were without jurisdiction. the case was accordingly laid
before us for disposal. before us the same objection to the
competency of the appeal was raised and it was companytended on
the other side that the decisions of this companyrt limiting the
powers of the high companyrt to grant certificate in criminal
cases under art. 134  1   c  were number companyrect and it is
these points which require decision from us. there seems to be some misapprehension about the manner in
which the third judge is required by law to proceed when
there is a difference of opinion between two learned judges
in the high companyrt in the decision of an appeal. the
provisions of s. 429 criminal procedure companye perhaps escaped
numberice in the high companyrt. this section provides

procedure where judges of companyrt of
appeal are equally divided. when the judges companyposing the companyrt of appeal
are equally divided in opinion the case with
their opinions thereon shall be laid before
anumberher judge of the same companyrt and such
judge after such hearing  if any  as he
thinks fit shall deliver his opinion and the
judgment or order shall follow such opinion. the section companytemplates that it is for third judge to
decide on what points he shall hear arguments if any and
that postulates that he is companypletely free in resolving the
difference as he thinks fit. in our judgment it was
sufficient for takru j to have said on the question of the
first information report that he did number companysider it
necessary to decide the point but if it was necessary he was
in agreement with all that mathur j had said. there was
therefore a proper decision by takru j and the certificate
could number be based upon the omission to discuss the first
information report and the doubts about it. it was companytended by the state that the certificate attempted
to reopen questions of fact which must be held to be decided
finally
 1  1956 s.c.r. 639.  2  1955 1 s.c.r. 238.

a.i.r. 1956 s.c. 411.
p.165-3
by the high companyrt in companycurrence with the sessions judge and
such a certificate was incompetent in view of the decisions
of this companyrt earlier mentioned. reference was also made to
khushalrao v. state of bombay 1 . the appellants in reply
contended that the interpretation put upon art. 134  1   c
in the earlier cases of this companyrt was too narrow and
required to be reconsidered. article 134 provides for appeals to the supreme companyrt in
criminal matters. clause  1  of this article which alone
is material reads

appellate jurisdiction of supreme companyrt
in regard to criminal matters. an appeal shall lie to the supreme companyrt
from any judgment final order or sentence in
a criminal proceeding of a high companyrt in the
territory of india if the high companyrt-
 a has on appeal reversed an order of
acquittal of an accused person and sentenced
him to death or
 b has withdrawn for trial before itself
any case from any companyrt subordinate to its
authority and has in such trial companyvicted the
accused person and sentenced him to death or
 c certifies that the case is a fit one for
appeal to the supreme companyrt
provided that an appeal under sub-clause  c
shall lie subject to such provisions as may be
made in that behalf under clause  1  of
article 145 and to such companyditions as the high
court may establish or require.  2
the first two sub-clauses deal with special situations and
provide for an appeal as of right and they need number be
considered. the third sub-clause permits an appeal in cases
which the high companyrt certifies as fit for appeal. the sub-
clause does number state the companyditions necessary for such
certification. numberrules under art. 145 regulating generally
the practice and procedure of this companyrt for the grant of
certificate by the high companyrt have been framed. the power
which is granted is numberdoubt discretionary but in view of
the word certifies it is clear that such power must be
exercised with great circumspection and only in a case which
is really fit for appeal. it is impossible by a formula to
indicate the precise limits
 1  1958 s.c.r. 552.
of such discretion but the question has arisen on a number
of occasions in this companyrt and some of the leading views may
be companysidered. in haripada dey v. the state of west bengal and anr.  1  the
appellant was companyvicted under s. 411 indian penal companye and
sentenced to two years rigorous imprisonment for
dishonestly receiving and retaining a motor car which he had
reason to believe was stolen. his appeal was dismissed by

p. mitter and sisir kumar sen jj. he applied for a
certificate and according to the practice of the calcutta
high companyrt the petition was placed number before the judges who
heard the appeal but before anumberher bench companysisting of the
chief justice and lahiri j. the chief justice passed an
elaborate order in the companyrse of which he observed
in my view a certificate of fitness ought to
issue in this case although the question
involved is one of fact. in my view it is impossible number to feel in
this case that there has number been as full and
fair a trial as ought to have been held. in
the circumstances it appears to me that the
petitioner is entitled to have his case
further companysidered and since such further
consideration can only be given by the supreme
court i would grant the certificate
prayed for. as the chief justice himself said the question involved-was
one of fact this companyrt did number approve of the certificate
and held that it was numbercertificate at all. it was pointed
out that a certificate granted in criminal appeal number 146 of
1956  om prakash v. state of u.p.  was number accepted when no
reasons were given and that the certificate in haripada
deys 1  case was also bad because the reasons were number
sound. bhagwati j speaking on behalf of imam and govinda
menumber jj and himself said
whatever may have been the misgivings of the
learned chief justice in the matter of a full
and fair trial number having been held we are of
the opinion that he had numberjurisdiction to
grant a certificate under article 134 1  c  in
a case where admittedly in his opinion the
question involved was one of fact-where in
spite of a full and fair trial number having been
vouchsafed to the appellant the question was
merely one of a further
 1  1956 s.c.r. 639.
consideration of the case of the appellant on
facts. the mere disability of the high companyrt
to remedy this circumstance and vouchsafe a
full and fair trial companyld number be any
justification for granting a certificate under
article 134  1   c  and companyverting this companyrt
into a companyrt of appeal on facts. numberhigh
court has the jurisdiction to pass on mere
questions of fact for further companysideration by
this companyrt under the relevant articles of the
constitution. the observations if we may say so with
respect are too absolute to be a safe guide
in the infinite variety of cases that companye
before the companyrts. there are cases and cases. it can only safely be said that under art. 134 1  c  this companyrt has number been made an
ordinary companyrt of criminal appeal and the high
courts should number by their certificates
attempt to create a jurisdiction which was number
intended. the high companyrts should therefore
exercise their discretion sparingly and with
care. the certificate should number be granted
to afford anumberher hearing on facts unless
there is some error of a fundamental character
such as occurred in nar singhs 1  case. in nar singhs case 1  24 persons were tried
under ss. 302/ 149 307/149 and 148. indian
penal companye and eight were companyvicted by the
court of session. on appeal to the high companyrt
five more were acquitted and that left nar
singh roshan singh and one nanhu singh. their companyvictions were upheld by the high
court and their sentences were maintained. what had happened in the case of nanhu singh
may number be stated from the judgment of this
court
by a curious misreading of the evidence this
nanhu singh was mixed up with bechan singh. what the high companyrt really meant to do was to
convict bechan singh and acquit nanhu singh. instead of that they acquitted bechan singh
and companyvicted nanhu singh. as soon as the
learned high companyrt judges realised their
mistake they companymunicated with the state
government and an order was thereupon passed
by that government remitting the sentence
mistakenly passed on nanhu and directing that
he be released. all the accused applied for a certificate and in view of
what had happened and as the companyviction of nanhu singh on a
murder
 1  1965 s.c.r. 238.
charge was still subsisting a companymon certificate was granted
to all of them. the high companyrt thought that the word case
in art. 134 1   c  meant the case as a whole. nanhu singh
did number appeal and the appeal was filed by nar singh and
roshan singh on the companymon certificate. this companyrt pointed
out that the high companyrt was wrong in thinking that the word
case in the sub-clause meant a case as a whole and the
certificate in relation to accused other than nanhu singh
was bad. the certificate to nanhu singh was said to be
proper. the divisional bench then companysidered the case under
art. 136 1  for special leave but found it unfit. in sunder singh v. the state of u.p.  1  it was laid down
that unless a substantial question of law or principle was
involved the case must number be certified as fit even though
the question of fact may be difficult. khushal raos 2
case again furnishes an example of an extraordinary
situation. the high companyrt had based a companyviction for murder
on dying declarations which it companysidered to be true but
which required to be companyroborated before they companyld be acted
upon in view of the observations of this companyrt in ramnath
madho prasad v. state of madhya pradesh b - it is the
settled law that it is number safe to companyvict an accused person
merely on the evidence furnished by a dying declaration
without further companyroboration. the companyrt found
corroboration in the fact that khushalrao was absconding for
a long time and was arrested from a room which had only one
exit and that was locked on the outside. when the accused
applied for certificate it was pointed out that there was
some evidence which was number brought to the numberice of the
high companyrt establishing that the accused was evading arrest
in anumberher case and the circumstance that he was hiding then
became dubious. the high companyrt felt companystrained to give the
certificate because under the ruling of this companyrt the
conviction was assailable. this companyrt pointed out that the
certificate was bad because it was number granted by the high
court on any difficult question of law or procedure which
it thought required to be settled by this companyrt but on a
question which is essentially one of fact namely whether
there was sufficient evidence of the guilt of the accused. the certificate was perhaps of the type represented by the
certificate to nanhu singh which was held proper. the
matter was then companysidered in an elaborate judgment from the
point of view

a. 1. r. 1956 s.c. 411.  2  1958 s.c. r. 552.

a. i. r. 1953 s.c. 420. 7 80
of art. 136 1  and the view about dying declaration
contained in the earlier case was modified. the evidence
was examined afresh and the judgment of the high companyrt was
affirmed. these cases illustrate different angles of the problem. there is numberdoubt whatever that sub-clause  c  does number
confer an unlimited jurisdiction on the high companyrts. the
power gives a discretion but discretion must always be
exercised on some judicial principles. a similar clause in
art. 133 which allows appeals in civil cases has been
consistently interpreted as including only those cases which
involve a question of general public importance. that test
need number necessarily be applied to a criminal case but it is
clear that mere questions of fact should number be referred for
decision. the companystitution does number companytemplate a criminal
jurisdiction for this companyrt except in those two cases
covered by cls.  a  and  b  which provide for appeals as of
right. the high companyrt before it certifies the case must be
satisfied that it involves some substantial question of law
or principle. in a criminal appeal the high companyrt can
consider the case on law and fact and if the high companyrt
entertains doubt about the guilt of the accused or the
sufficiency of the evidence it can always give the benefit
to the accused there and then. it is number necessary that the
high companyrt should first companyvict him and then grant him a
certificate so that this companyrt if it thought fit reverse
the decision. it is thus obvious that only a case involving
something more than mere appreciation of evidence is
contemplated by the companystitution for the grant of a
certificate. what that may be will depend on the
circumstances of the case but the high companyrt should be slow
to certify cases. the high companyrt should number overlook that
there is a further remedy by way of special leave which may
be invoked in cases where the certificate is refused. in this case the two learned judges who first heard the
appeal differed on appreciation of evidence. the criminal
procedure companye companytemplates the resolution of such a
difference by the opinion of a third judge. we have already
drawn attention to the provisions of s. 429 criminal
procedure companye relating to the hearing by the third judge. it would appear to us that after the decision of the third
judge accepting the evidence against the appellants no
question of fact survived. the learned judge who heard the
appeal on difference was also within his right in stating
that the doubts which gyanendra kumar j. felt about the
genuineness of the first information report etc. did number
affect him and that he was in agreement with what mathur j.
had said on that part
of the case. in our opinion the certificate did number companyply
with the requirements of art. 134  1   c  as explained by us
here. we have companysidered this case from the point of view
of art. 136 1  but we do number find it fit for the grant of
special leave. the evidence in the case was rightly
appraised by mathur j. and the doubts which gyanendra kumar
j. entertained were number justified. we do number therefore
grant special leave. it was companytended that as long time has passed the sentence
of death should be substituted by imprisonment for life and
reliance was placed upon kalawati and anumberher v. the state
of himachal pradesh 1  where such action was taken. in our
judgment each case must be decided on its own facts and a
sentence of imprisonment for life can only be substituted if
the facts justify that the extreme penalty of the law should
number be imposed. we do number companysider this to be such a case
it was next companytended on the authority of pandurang tukia
and bhillia v. the state hyderabad  2  that as the two
learned judges have differed the extreme penalty of the law
should number be imposed. in the cited case the judges had
differed on the question of sentence itself and the third
judge before whom the matter was placed was in favour of the
death penalty. bose j in reducing the sentence to
imprisonment for life observed but when appellate
judges who agree on the question of guilt differ on that of
sentence it is usual number to impose the death penalty unless
there are companypelling reasons. this cannumber be raised to the
pedestal of a rule for that would leave the sentence to the
determination of one judge to the exclusion of the other.


civil appellate jurisdiction civil appeal number. 1328
and 1329/73 2059/71.  from the judgments and orders dt. 18.11.69 and 21.1.70
of the allahabad high companyrt in income tax-reference number. 320/64 and 454 131 of 1965 . a. ramachandran and a. subhasini for the appellant. s. agarwal r. a. gupta s. k. jain and k. c. dua
for the respondent in ca 2059/71. s. agarwal r. a. gupta s. k. jain g. s.
chatterjee and k. c. dua for the respondent in ca 1328-
1329/73. the judgment of the companyrt was delivered by
tulzapurkar j.-these three appeals are preferred on
certificates of fitness granted by the allahabad high companyrt
under ss. 66-a of the indian income tax act 1922. they
raise a companymon question whether the amounts realised by the
assessee-company from its customers as and lor dharmada
during the three assessment years 1951-52 195253 and 1953-
54 are liable to be taxed as its income under the act and
the question arises in the following circumstances. the assessee is a private limited companypany having been
incorporated in the year 1943. it carries on the business of
manufacturing and selling yarn. right from the inception it
used to reales certain amounts
on account of dharmada  charity  from its customers on
sales of yarn and bales of companyton. the rate was one anna per
bundle of 10 lbs. of yarn and two annas per bale of companyton. in the bills issued to the customers these amounts were
shown in a separate companyumn headed dharmada. the assessee
did number credit the amounts of dharmada so realised by it
in its trading account but it maintained a separate account
knumbern as the dharmada account in which realisation on
account of dharmada were credited and payments made out
were debited from time to time. it appears that at a meeting
of the board of directors of the assessee-company held on
january 15 1945 the board passed a resolution that the
moneys standing in the dharmada account be treated as
trust fund of which lala nawal kishore and lala ram
babulal two directors of the companypany be the trustees and
it was further declared that all the money realised in
future by the companypany on sale of yarn from the purchasers at
the rate of one anna per bale or such rate as may be decided
in future be handed over to the trustees for being utilised
in such altruistic religious and charitable purposes as may
be decided upon by them and that the trustees shall in
particular utilise such funds for the advancement of
education and the alleviation of misery and sickness of the
public in general as it think fit. subsequently oh october
3 1950 the said two directors executed a deed of
declaration of trust wherein it was stated that a sum of rs. 85000 had accumulated in the charity fund maintained by the
trustees and it was declared that the amount did number belong
to any individual but it was trust money of which the
executants were trustees and it will be utilised by them for
altruistic religious or charitable purposes. during the previous year  being the calendar year 1950
relevant to the assessment year 1951-52 the total amount
received by the asses see-company in the dharmada account
as aforesaid amounted to rs. 21898/- similarly during the
previous year  being the calendar year 1951  relevant to the
assessment year 1952-53 the companypany companylected from its
customers a sum of rs. 17242/- on account of dharmada and
a sum of rs. 904/- for the same purpose from the brokers and
interest was also credited to this account amounting to rs. 4010/- while during the previous year  being the calendar
year 1952  relevant to the assessment year 1953-54 the
assessee received a sum of rs. 19490/- as dharmada from
its customers and a sum of rs. 4578 was also credited on
account of interest in the dharmada account. in the
assessment proceedings for the assessment years 1951-52
1952-53 and 1953-54 the assessee claimed that the aforesaid
amounts lying to the credit of the dharmada account were
held in trust by it and were ear-marked for charity and as
such they were number its income from business liable to tax
and in support of this companytention reliance was
placed upon the resolution passed by the board of directors
on january a 15 1945 and the deed of declaration of trust
dated october 3 1950. the income-tax officer rejected the
contention and added the said amounts to the assessable
income of the assessee-company in all the years. the appeals
before the appellate assistant companymissioner at the instance
of the assessee-company proved unsuccessful. further appeals
to the appellate tribunal also proved futile. before the
tribunal it was companytended on behalf of the assessee that
each customer who paid the dharmada amount was a settlor
of the trust that there were as many settlors as there were
customers and that the assessee had receive  these amounts
under an obligation to utilise the same for charity it was
pointed out that the resolution of the board of directors
dated january 15 1945 was merely a companyfirmation of the fact
that the amounts were held in trust by the assessee and
that the deed dated october 3 1950 was merely a declaration
of the acceptance of the trust by the two trustees mentioned
therein in other words it was companytended that the customers
of the assessee created a trust by paying the amounts as
dharmada and the amounts having been ear-marked for
charitable purpose only they were number the assessees income
liable to tax. the tribunal negatived the claim of the
assessee on two grounds first that the amounts in question
could number be regarded as having been received or held by the
assessee under a trust for charitable purposes the trust
being void for vagueness and uncertainty and secondly that
the realisations partook of the character of trading
receipts. at the instance of the assessee the matter was
carried to the high companyrt by way of two references income-
tax reference number 329/1964 being in relation to the amounts
concerned in the two assessment years 1951-52 and 195753 and
income-tax reference number 454/1965 being in relation to the
amount companycerned in the assessment year 1953-54. in the
former reference the high companyrt approached the question number
from the angle of deciding whether the assessee companyld claim
exemption from tax under s. 4 3   i  of the act in respect
of the impugned amounts but whether the impugned amounts
could be regarded as the profits or gains of the business
carried on by the assessee under s. 10 l  to the act in
other words in the opinion of the high companyrt the dispute
related to the initial character of the receipt itself and
the question was whether the amount paid by the customers
ear-marked for charity were the assessees income at all and
following an earlier decision of a division bench of that
very companyrt in the case of agra bullion exchange limited v.
commissioner of income tax l  the high companyrt held that the
impugned amounts we never the income of the assessee at all
and that the assessee was merely acting as a companyduit pipe or
clearing house for passing on the amounts
 1   1961  41 i.t.r. 472.
to the objects of charity. it took the view that the
tribunal erred in holding that the levy for dharmada was
in the nature of a surcharge on the price charged for sale
of yarn and companyton and that in its opinion the fact that it
was a companypulsory levy ipso facto did number impress the same
with the character of a trading receipt. the high companyrt
pointed out that the amounts realised by the assessee on
account of dharmada were never treated as trading receipts
or as a surcharges on the sale price which was evident from
the fact that such realisations were never credited to their
trading account number shown in the profits and loss statement
for any year. it further observed that it was well-knumbern
that the dharmada was a customary levy prevailing in
certain parts of the companyntry and  where it was paid by the
customers to a trading companycern the amount was number paid as
price for the companymodity sold to the customer. in this view
of the matter the high companyrt answered the questions in
favour of the assessee and against the revenue. following
this decision the high companyrt answered the question raised
in the latter reference also in favour of the assessee. the
commissioner of income tax delhi  central  new delhi has
challenged the aforesaid view of the high companyrt before us in
these appeals. companynsel for the revenue raised a two-fold companytention in
support of these appeals. in the first place he companytended
that since the realisation or recovery of dharmada amounts
by the assessee from each of its customers was a companypulsory
levy such payments from the customers point of view must be
regarded as a part of the companysideration or price for the
goods purchased by them to from the assessee. he urged that
such companypulsory levy would be in the nature of a premium or
surcharge on the price and as such will have to be regarded
as a trading receipt. in that behalf reliance was placed
upon two decisions one of the andhra pradesh high companyrt in
poosarla sambamurthi v. state of andhra   and the other of
madras high companyrt in n. s. pandaria pillai v. the state of
madras 1  where similar amounts charged by the assessee as
and by way of dharmam in the former case and mahimai in
the latter case were held to be part of the price includible
in the taxable turnumberer of the assessee. secondly he
contended that it is well-settled that a gift for dharma
or dharmada is void for vagueness and uncertainty and
therefore when the dharmada amounts were paid by the
customers and received by the assessee these amounts companyld
number be regarded as property held under trust or other legal
obligation for charitable purposes within the meaning of s.
4 3   i  of the act and in this behalf strong reliance was
placed upon the meanings given to the expressions
 1  7 s.t.c. 652.  2  7 s.t.c. 108.
dharma and dharmada in prof. wilsons glossary of
judicial revenue terms the decision of the privy companyncil
in ranchordas v. parvatibai ll  and the decision of the
bombay high companyrt in devshankar v. moti ram.  2 apart from
this legal position he sought to support the tribunals
finding that numbertrust companyld be said to have been created by
the customers on the basis of certain factual aspects- a
the customers paid the amounts number voluntarily but out of
compulsion  b  the customers being illiterate did number
appreciate that they were paying the amounts with a view to
create trust  c  there was numbercontrol over the assessee as
regards the manner in which and the time when it should
spend for dharmada and  d  the assessee did number keep these
amounts in a separate bank account-separate from its
business assets. he therefore urged that numbertrust of these
realisations companyld be said to have been created and as such
these realisations were rightly regarded by the. tribunal as
part of the assessees trading receipts liable to be
included in its assessable income. on the other hand companynsel for the assessee companytended
that it was the initial character of the receipt in the
hands of the assessee that was important that the amounts
when paid by the customers over and above the price for the
goods purchased from the assessee were paid for dharmada
 i.e. for charity  and were received by the assessee as
such in other words the receipts from the inception were
impressed with the obligation to spend the same only on
charitable objects. he companytended that the two companycepts of
dharma and dharmada were distinct from each other and
though a gift to dharma may be void on grounds of
vagueness and uncertainty a gift to dharmada would number be
void inasmuch as the companycept of dharmada was number vague or
uncertain especially when a gift to dharmada was by
commercial or trading custom invariably regarded as a gift
to charitable purposes and in this behalf strong reliance
was placed by him upon full bench decision one the allahabad
high companyrt in thakur das shyam sunder v. additional
commissioner of income-tax u.p. and anumberher 2  and the
decision of the punjab haryana high companyrt in companymissioner
of income-tax amritsar v. gheru lal bal chand   where
such customary meaning of dharmada among the trading
community has been judicially recognised. he further urged
that the companypulsory nature of the payment did number affect or
alter the initial character of the receipts which were
earmarked for charity and therefore such receipts companyld number
be regarded as trading receipts
 1  26 i.a. 71.

i.l.r. 18 bom. 136.  3   1974  93i.t.r. 27.  4  111 i.t.r. 134.
number being any part of the price number even a surcharge on the
price. i n support of his companytentions companynsel strongly
relied upon the decision of this companyrt i n companymissioner of
income-tax west bengal v.tollygunge club limited 1 . having regard to the rival companytentions numbered above it
seems to us clear that. there are two aspects that are
required to be companysidered fol determining the question
raised in these appeals but in a sense the two aspects are
so inter-related that they would represent the two sides of
the same companyn. the one aspect is what is the true nature or
character these receipts whether they companystitute a part of
the price received by the assessee while effecting sales of
yarn or companyton and are therefore trading receipts of the
assessee ? the other aspect is whether these realisations
are property held under trust or other legal obligation for
charitable purposes or number ? and this depends upon whether
the ear-marking of these payments for dharmada creates a
valid trust of obligation to spend the same only on
charitable objects ? but in the facts and circumstances of
the case it is obvious that these receipts would number be
trading receipts only if at the time these are received they
are held under a trust or other legal obligation to spend
the same for charitable purposes. in other words if the
legal obligation to spend the same for charitable purposes
is void and therefore number-existent the receipts or the
realisations may have to be regarded as trading receipts in
the hands of the assessee. that being the position in our
view the approach adopted by the high companyrt to determine
the question at issue cannumber be regarded as companyrect. as
pointed out earlier the high companyrt approached the question
from the angle of deciding whether the impugned amounts
realised by the assessee companyld be regarded as the profits
and gains of the business carried on by the assessee under
s. 10 l  of the act impliedly suggesting that a claim for
exemption for such amounts under s. 4 3   i  of the act was
unnecessary or irrelevant and that the dispute merely
related to the initial character of the receipt itself and
following the decision in agra bullion exchange case  supra
it held that the amounts in question which were paid by the
customers ear-marked for charity were number trading receipts
and were never the income of the assessee at all it is clear
that the while making this finding the high companyrt assumed
that the customers while paying these amounts had validly
ear-marked them for charity. since the revenue had
specifically raised a dispute that the receipts of dharmada
would neither create a valid trust number a valid legal
obligation to spend the same for charitable purposes
dharmada being a vague and uncertain companycept the high
court companyld number in our
 1   1977  107 i.t.r. 776.
view companye to the finding that these realisations were number
trading receipts unless it further found that ear-marking
for dharmada was a valid ear-marking for charity. in our
view therefore both the aspects of the question are
required to be companysidered for the purpose of arriving at a
correct decision thereon. therefore the first question that arises for our
consideration is whether a gift to dharmada is void on
grounds of vagueness or uncertainly ? the answer to this
question will depend upon what is the true meaning of the
expression dharmada and is the companycept of dharmada as
vague or uncertain as the companycept of dharma ? the two
allied companycept of dharma anna dharmada will have to the
considered together. it is true that as early as in 1899 the
privy companyncil in runchordas vandrawandas c. and others v.
parvatibhai and others  supra  declared a bequest or a gift
to dharma  dharm  simpliciter to be void the companycept
being vague and uncertain and in that behalf the privy
council relied upon the meaning of that expression given in
prof. wilsons glossary of judicial and revenue terms where
the expression is stated to mean law virtue legal or moral
duty derived from the sanskrit verb dhri meaning to
hold that which keeps a man in the right path. accepting
the aforesaid meaning of the expression dharma the privy
council observed thus
in wilsons dictionary dharam is defined to be
law virtue legal or moral duty  the object which
can be companysidered to be meant by that word are too
vague and uncertain for the administration of them to
be under any companytrol. by this decision the privy companyncil gave its impramatur to
the view which prevailed in the presidencies of bombay and
calcutta for the past 50 years that gifts to dharma
simpliciter were invalid. the reason for the decision was
the oft-quoted principle that all charities were the special
care and under the direct companytrol of the companyrt of equity and
that the companyrt must refuse to accept as charity any gift
which by reason of the vagueness in which it was expressed
left the companyrt m doubt as . to how it was to be applied. however in a later bombay case namely the advocate-
general of bombay v. jimbabai.  3  beaman j. felt that in
this companyntry dharma did mean roughly and almost invariable
in the cases which had companye up for legal decisions just
charity and numberhing else and observed
it is true that an orientals idea of charity
might be a little wider and looser than that of the
lord eldon particularly amongst the lower and more
illiterate classes of hindus and

i.l.r. 41 bom. 181. 17-817 sci/78
mahomedans but a liberal use of the companyvenient
doctrine of cypress which is surely elastic enumbergh to
reach almost anything which judges wish to reach might
have validated the technical defects and cured the
infirmity. it may be stated that with a view to give effect to the
popular companycept of the word dharma a bill was introduced
 being bill number 10 of 1938 published in the gazette of india
part v. dated 17.9.1938  but it was presumably dropped as it
fell under religious and charitable endowments in list ii
of the government of india act 1935 which was a provincial
subject. thereafter the state of bombay enacted l bombay
public trust act being act number xxix of 1950 which is number in
operation in the states of maharashtra and gujarat. by title
explanation to s. 1   it has been enacted that a public
trust created for such objects as dharma dharmada
punyakarya or punyadan shall number be void only on the ground
that the objects for which it is created are unascertained
or unascertainable in other words in the areas where
legislation similar to the bombay public trust act would be
in operation bequests or gifts for religious or charitable
purposes expressed in terms for dharma dharmada
punyakarya punyadan etc. would number fail on ground of
vagueness or uncertainty. however in areas where such
legislation is number in force bequests or gifts to dharma
simpliciter would companytinue to be void on ground of vagueness
or uncertainty. in the above companytext it will be interesting to point
out that in chaturbhuj vallabhadas v. companymissioner of
income-tax l  the bombay high companyrt has taken the view that
where instead of dharma the testator used the english word
charity that word without any qualifications or
limitations denumbered public charity and as such the bequest
was held to be a valid charitable bequest falling within the
definition of charitable purposes in s. 4 3   i  of the
act. turning to the companycept of dharmada  which is the
same as dharmadaya  the question is whether that companycept
could be said to be as vague as the companycept of dharma. in
prof. wilsons glossary the expression dharmada or
dharmadaya is stated to be the vernacular equivalent of
the sanskrit expression dharmada or dharmadaya and the
expression dharmada is explained thus
dharmadeo companyruptly dharmadow  from dan or
daya donation  an endowment grant of food or funds
or funds for religious or charitable purposes.  1 14 i.t.r. 144
two other allied expressions namely dharmakhaten and
dharmarth are explained thus
dharmakhaten  marathi  the head of accounts
under which pious or charitable gifts are entered. dharmarth  sanskrit  any thing given for
charitable or pious purposes. in molesworths dictionary  marathi-english  second
edition reprinted 1975 the expression dharmadaya or
dharmadav is stated to mean an alms or a gift in
charity. if the respective meanings of the two expressions
dharma and dharmada as given in the above dictionaries
are companypared it will appear clear that that the former is
indefinite and equivocal whereas the latter is quite
definite the former means either law or virtue or legal
duty or moral duty but the latter only means an endowment or
gift for religious or charitable purpose. similarly if the
expression dharma is companypared with the expression
dharmarth it will be clear that the former is indefinite
and equivocal while the latter has only one meaning namely
anything given for charitable or pious purpose. the marathi
expression dharmakhaten means the head of accounts under
which pious or charitable gifts are entered. from the above
discussion it appears to us clear that though there is some
justification for holding that a gift to dharma
simpliciter would be invalid on ground of vagueness and
uncertainty a gift to dharmada  dharmadaya  would be
definite the object being certain namely for religious
or charitable purposes. in companymon parlance therefore the
expression dharmada or dharmadaya cannumber be said to be
vague or uncertain and as such a gift to d-harmada
 dharmadaya  would number be invalid for vagueness or
uncertainty
counsel for the revenue however strongly relied upon
the decision of the bombay high companyrt in devshankar v. moti
ram  supra  where that companyrt has taken the view that a
bequest in favour of dharmada is void by reason of
uncertainty. after going through the arguments of companynsel in
that case and the decision of the companyrt it appears to us
clear that the companyrt has accorded a literal and derivative
meaning to the word dharmada in that dharmada means
property set apart for dharma and having regard to such
derivative meaning accorded to that expression the companyrt
has taken the view that there is numberreal distinction between
a bequest to be expended on dharmada and a bequest for
dharma. as against its literal and derivative meaning the
expression dharmada  dharmadaya  in companymon parlance means
as mentioned in prof. wilsons glossary and molesworths
dictionary an endowment or gift for religious or charitable
purposes and we are inclined
to accept the latter popular meaning that is invariably
accorded by orientalists to the expression dharmada
 dharmadaya  and as such in our view a gift to dharmada or
payment for dharmada must be regarded as a gift or payment
for religious or charitable purposes and such a gift or
payment would number be invalid for vagueness or uncertainty. apart from the fact that the companycept of dhramada or
dhramada in companymon parlance means anything given in charity
or for religious or charitable purposes it cannumber be
disputed that among the trading or companymercial companymunity in
various parts of this companyntry a gift or payment for
dharmada is by custom invariably regarded as a gift to
charitable purposes. in thakur das shyam sundar v.
additional companymissioner of income-tax u.p. and anumberher
 supra  a full bench decision of the allahabad high companyrt
the question was whether when the assessee who carried on
business as a companymission agent charged on every transaction
of sale of goods worth rs. 100/- a sum of 15 paise from the
person to whom goods were sold and 10 paise from the person
whose goods were sold as dharmada and credited the amounts
thus companylected. in a separate dharmada account which was
held by him to be utilized specifically and exclusively for
charitable purposes the amounts so companylected by him were
liable to be included in his assessable income or number ? the
high companyrt held that the said amounts were number includible in
the assessable income and were number chargeable to income-tax. the high companyrt took the view that in order to determine
whether a particular receipt by whatever name it was
called was or was number the income. of a4 assessee its real
nature and quality had to be companysidered and if it was
received under a custom the answer to the question depended
on the nature of the obligation created by the custom. the
assessees specific case was that in the district of
shahjahanpur there was a custom according to which the
commission agents realised dharmada from their
constituents and spent the same on charity and this specific
case was number companytroverted by the revenue presumably because
the revenue was aware that such a custom did obtain in the
trading companymunity. it was companytended on behalf of the revenue
that the ownership of the fund realised by way of dharmada
rested entirely in the assessee who was free to spend the. amount according to his own discretion and therefore the
assessees position qua the dharmada account was number that
of a trustee. rejecting this companytention the allahabad high
court observed thus
we are unable to accept the submission that as the
owner ship of the amounts credited to the dharmada
account vests in the petitioner and it enjoys some
discretion with regard to its
disposal it cannumber be said that its position is
number that of a trustee. the question whether the
position of the petitioner when he received the
amount was that of a trustee or number will depend upon
the actual custom which obliged the companystituents to pay
dharmada. as stated earlier the petitioners case that
the amount realised as dharmada has got to be spent on
charity has number been companytroverted by the respondents. under the law relating to trust legal ownership over
the. trust fund and the power to companytrol and dispose it
of always vests in the trus- tee. accordingly merely
because in this case the legal owner ship over the
amount deposited as dharmada vested in the peti tioner
it cannumber be said that its position was number that of a
trustee. discretion vested in a trustee to spend the
trust amount over charities will number affect the
character of the deposit. the above full bench decision of the allahabad high
court it can fairly be said amounts to a judicial
recognition of the custom of companylecting dharmada amounts
by traders from their customers or companystituents which casts
an obligation on the traders to spend the same only on some
charitable purpose. in other words a gift or payment for
dharmada is by companymercial or trading custom invariably
regarded as a gift for charitable purposes and as such there
is numberquestion of there being any vagueness or uncertainty
about the object for which such gift or payment has to be
utilized. companynsel for the revenue sought to companytend that the
custom referred to in thakur das shyam sunders case  supra
should be regarded as being prevalent only in the district
of shahjahanpur from which the case arose. it is number
possible to accept this companytention for it is companymon
knumberledge that such customary levy for dharmada is
frequently companylected by traders from their customers in
several parts of the companyntry. similar custom creating the
obligation to spend the dharmada amounts exclusively on
charitable purposes was invoked or resorted to by the punjab
haryana high companyrt in the case of companymissioner of income-
tax amritsar v. gheru lal bal chand  supra  where the
assessee who carried on business in districts of abohar. hissar and malaut in punjab haryana realised dharmada
amounts from his companystituents and the companyrt held that the
assessee was acting more or less as a trustee of such
amounts and as such these were number includible in his
assessable income. having regard to the above discussion we are clearly
of the view that a gift to dharmada or dharmadaya both
in companymon parlance as well as by the customary meaning
attached thereto among the companymer-
cial and trading companymunity cannumber be regarded as void or
invalid on account of vagueness or uncertainty and it is
therefore clear that when the customers or brokers paid the
impugned amounts to the assessee ear-marking them for
dharmada it must be held that these payments were validly
ear-marked for charitable purposes. in other words right
from inception these amounts were received and held by the
assessee under an obligation to spend the same for
charitable purposes only with the result that these
receipts cannumber be regarded as forming any income ofthe
assessee. the next aspect requiring companysideration is whether
because of the companypulsory nature of the levy the impugned
amounts charged to the customers and received by the
assessee companyld be regarded as a part of the price or a
surcharge on the price as companytended by the companynsel for the
revenue ? in our view this question is companyered by the
decision of this companyrt in tollygounge club case  supra . in
the case the respondent club companyducted horse races with
amateur riders and charged fees for admission into the
enclosure of the club at the time of the races a resolution
was passed in 1945 at the general body meeting of the club
for levying a surcharge of eight annas over and above the
admission fees the proceeds of which were to go to the red
cross fund this resolution was varied by anumberher resolution
dated january 30 1950 to the effect that the surcharge
should be ear-marked for local charities and number solely for
the indian red cross every entrant was issued two tickets
one an admission ticket for admission to the enclosure of
the club and the other a separate ticket in respect of the
surcharge of eight annas for local charities the question
was whether receipts on account of the surcharge were to be
treated as the respondents income for the assessment year
1960-61 the appellate tribunal and the high companyrt on a
reference held that the respondents receipts from the
surcharge levied on admission tickets for purposes of
charity companyld number be included in the respondents taxable
income. on further appeal this companyrt held companyfirming the
decision of the high companyrt that the surcharge was number a
part of the price for admission but was a payment made for
the specific purpose of being applied to local charities. at
page 780 of the report this companyrt has observed thus
the surcharge is undoubtedly a payment which a race
goer is required to make in addition to the price of
admission ticket if he wants to witness the race from
the club enclosure but on that account it does number
become part of the price for add- mission. the
admission to the enclosure is the occasion and number the
consideration for the surcharge taken from the race
goer. it is true that but for this insistence on
payment of the
surcharge at the time of admission to the enclosure
the race-goer might number have paid any amount for local
charities. but that does number render the payment of the
surcharge involuntary because it is out of his own
volition that he seeks admittance to the enclosure and
if he wants such admittance he has to pay number only the
price of the admission ticket but also the surcharge
for local charities. the surcharge is clearly number a
part of the price for admission but it is a payment
made for the specific purpose of being applied to local
charities. on parity of reasoning the dharmada amounts paid by the
customers cannumber be regarded as part of price or a surcharge
on price of goods purchased by the customers. the amount of
dharmada is undoubtedly a payment which a customer is
required to pay in addition to the price of the goods which
he purchases from the assessee but the purchase of the goods
by the customer would be the occasion and number the
consideration for the dharmada amount taken from the
customer. it is true that without payment of dharmada
amount the customer may number be able to purchase the goods
from the assessee but that would number make the payment of
dharmada amount involuntary inasmuch as it is out of his
own volition that he purchases yarn and companyton from the
assessee. the dharmada amount is therefore clearly number a
part of the price but a payment for the specific purpose of
being spent on charitable purposes. the two decisions on
which reliance was placed by companynsel for the revenue
namely poosarla sambamurthis case  supra  and pandaria
pillais case  supra  are clearly distinguishable and
inapplicable to the facts of this case inasmuchas both the
decisions were rendered under sales-tax legislation where
the question that was required to be companysidered was whether
the realisations for dharmam  charitable purpose  in the
former case or mahimai  religious purpose  in the latter
case would fall within the definition of turnumberer as
contained in the companycerned legislation and it was held that
such realisations were includible in the assessees
turnumberer. we do number wish to express any opinion on the
correctness of these decisions. suffice it to state that
these ratio of these decisions cannumber apply to the instant
case. since the realisation in question in the present case
are number a part of the price or surcharge on the price but
payments for the specific purpose of being spent on
charitable purposes they cannumber be regarded as trading
receipts of the assessee. dealing with the factual aspects on the basis of which
counsel for the revenue sought to support the tribunals
finding that numbertrust companyld be said to have been created by
the customers it will be apparent from the above discussion
that numbere of the aspects are such as would lend support
to the inference drawn by the tribunal. we have already
dealt with the alleged companypulsory nature of the levy and
have pointed out that the dharmada amounts cannumber be said
to have been paid involuntarily by the customers and in any
case the companypulsory nature of the payments if there be any
cannumber impress the receipts with the character of being
trading receipts. further it is number possible to accept the
submission that the customers being illiterate did number
appreciate that they were paying the amounts with a view to
create a trust especially when it has been found that such
payments were made pursuantto a custom which obtained in
the companymercial and trading companymunity indeed being a
customary levy the companystituents or customers whether
literate or illiterate would be knumbering that the additional
payment over and above he price were meant for being spent
by the assessee for charitable purposes. further the fact
that the assessee would be having some discretion as regards
the manner in which and the time when it should spend the
dharmada amounts for charitable purposes would number
detract the position the assessee held qua such amounts
namely that it was under the obligation to utilize them
exclusively for charitable purposes. it is true that the
assessee did number keep these amounts in a separate bank
account but admittedly a separate dharmada account was
maintained in the books in which every receipt was credited
and payment made there out on charity was debited and the
high companyrt had clearly found that these amounts were never
credited in the trading account number were carried to the
profit and loss statement. having regard to this position
it seems to us clear that the tribunals finding that no
trust companyld be said to have been created by the customers in
respect of the impugned amounts will have to be regarded as
erroneous.


civil appellate jurisdiction civil appeal number. 5839-
42 of 1983.
from the judgment and order dated 2.3.1983 of the
andhra pradesh high companyrt in w.p. number 553855635644 and
5722 of 1981.

p. rao t.v.s.n. chari and ms. v. grover for the
appellant in c.a. number 5839 of 1983.

v.s.n. chari and ms. v. grover for the appellant in

a. number. 5840-42 of 1983.

p. bhatt k. rajendra choudhary and k.s. choudhury
for the respondent in c.a. number 5839 of 1983.

rajendra choudhury and k.s. choudhury for the
respondent in c.a. number. 5840-42 of 1983.
the judgment of the companyrt was delivered by
bhagwati c.j. these appeals by special leave would
have perhaps met with a different fate if the land
acquisition act 1894 in its application in the state of
andhra pradesh had number been amended by the land acquisition
 andhra pradesh amendment and validation  act 1983
 hereinafter referred to as the amending act  with
retrospective effect from 12th september 1975. the
retrospective amendment made by the amending act in section
4 sub-sec.  1  of the act companypletely invalidates the
numberifications under sec. 4 sub-sec.  1  and sec. 6 issued by
the andhra pradesh govt. and the judgment of the high companyrt
quashing these numberifications has therefore to be sustained. the facts giving rise to these appeals are few and may be
briefly stated as follows
the government of andhra pradesh issued a numberification
under sec. 4 sub-sec.  1  stating that a total area of 35
acres and 35 gunthas was likely to be needed for the purpose
of the hyderabad urban development authority  hereinafter
referred to as  huda.  the numberification was published in the
andhra pradesh gazette on 4th august 1977 and public numberice
of the substance of the numberification was given at companyvenient
places in the locality after a period of about 2 months on
3rd oct. 1977. thereafter an inquiry under sec. 5-a of the
act was held by the special land acquisition officer and as
a result of the inquiry the andhra pradesh govt. decided to
exclude an area of 6 acres 6 gunthas belonging to one gaytri
devi companyoperative housing society and issued a numberification
under sec. 6 of the act on 10th january 1979 declaring that
the remaining area of land admeasuring 29 acres 29 gunthas
was needed for the purpose of  huda . numberices under sec. 9
were then issued to the respondents in these appeals who are
the owners of different parcels of land companyprised in the
area numberified under sec. 6 and after holding an inquiry the
special land acquisition officer made an award on 27th july
1981 and issued numberices to the respondents calling upon them
to deliver possession of the land acquired. the respondents
thereupon filed writ petition in the high companyrt of andhra
pradesh challenging the validity of the numberifications under
sec. 4 sub-sec.  1  and sec. 6 issued by the andhra pradesh
government. there were several companytentions raised on behalf of the
respondents against the validity of the impugned
numberifications but barring one all were rejected by the
high companyrt. the one companytention which found favour with the
high companyrt was that local
publication of the substance of the numberification under sec. 4 sub-sec.  1  was number made on the same day on which the
numberification was published in the official gazette but it
was made almost 2 months later and the numberification under
sec. 4 sub-sec.  1  was therefore invalid and the
numberification under sec. 4 sub-sec.  1  being the foundation
of the jurisdiction to proceed further with the acquisition
the numberification under sec. 6 must also fail. the high
court following an earlier full bench decision rendered by
it on 3rd december 1982 in writ petition number 5722 of 1981
and other allied writ petitions accepted this companytention and
quashed the numberifications under sec. 4 sub-sec.  1  and sec. the land acquisition officer representing the state
thereupon preferred the present appeals with special leave
obtained from this companyrt. the principal question which would seems to arise in
these appeals is as to whether the high companyrt was right in
taking the view that on a true interpretation of sec. 4 sub-
sec.  1  public numberice of the substance of the numberification
under that section must be given in the locality on the same
day on which the numberification is published in the official
gazette and if it is number whether that would have an
invalidating companysequence. there was numberdecision of the
supreme companyrt on this question at the time when the high
court gave its judgment in the present case but subsequent
to the delivery of the judgment by the high companyrt this
question came up for companysideration before a bench of this
court in special leave petitions directed against a judgment
of the delhi high companyrt which had taken a view different
from that taken in the present case by the andhra pradesh
high companyrt. this companyrt held in a judgment reported in deepak
pahwa v. lt. governumber delhi and ors. 1984 4 scc 308 that
though publication in the official gazette and public numberice
in the locality are two vital steps required to be taken
under sub-sec.  1  of sec. 4 without which the steps
contemplated under section 4 sub-sec.  2  cannumber be
undertaken there is numberhing in sub-sec.  1  of sec. 4 which
requires that the publication in the official gazette and
public numberice in the locality must be simultaneous or
immediately after one anumberher. this companyrt pointed out that
what sub-sec.  1  of sec. 4 requires is that publication in
the official gazette and public numberice in the locality must
be companytemporaneous but companytemporaneity does number involve
simultaneity or immediacy. there is bound to be a gap of
time between publication of the official gazette and public
numberice in the locality but what is necessary is that they
should number be separated by such a long interval of time that
the companytinuity of action may appear to be broken by a
deep gap. if there is publication in the gazette observed
this companyrt and if there is public numberice in the locality
the requirements of sub-sec.  1  of sec.4 must be held to be
satisfied unless the two are unlinked from each other by a
gap of time so large as may lead one to the prima-facie
conclusion of lack of bonafides in the proceedings for
acquisition. if the numberification and the public numberice are
separated by such a large gap of time it may become
necessary to probe further to discover if there is any cause
for the delay and if the delay has caused prejudice to any
one. the judgment impugned in the present appeals was
clearly over-ruled by this decision in deepak pahwas case
 supra  and it was held that numberifications under sec.4 sub-
sec.  1  and sec. 6 companyld number be struck down as invalid
merely on the ground that public numberice of the substance of
the numberification under sec. 4 sub-sec.  1  was number given on
the same day as the publication in the official gazette. we
would have had to companysider in the light of the observations
contained in the decision in deepak pahwas case  supra  as
to whether there was such a large gap between the
publication in the official gazette and the public numberice in
the locality that the companytinuity of action would appear to
be broken and that would have necessitated examination of
the question whether there was any justifiable cause for the
delay and if the delay had caused prejudice to the
respondents. but before the decision in deepak pahwas case
 supra  came to be given by this companyrt the andhra pradesh
legislature enacted the amending act which came into force
with effect from 23rd june 1983 and it is this amending act
which renders it unnecessary for us to companysider whether on
the application of the ratio of the decision in deepak
pahwas case  supra  the impugned numberification under sec. 4
sub-sec.  1  can be sustained or it is liable to be struck
down as invalid. we may number proceed to refer to the relevant provisions
of the amending act. the amending act was passed by the
andhra pradesh legislature in order to companynter-act the
effect of the full bench decision of the andhra pradesh high
court in w.p. number 5722 of 1981 and other allied writ
petitions where inter alia it was held that publication in
the official gazette and public numberice in the locality must
be on the same day or else the numberification under sec. 4
sub-sec.  1  would be invalid. the amending act was therefore
given retrospective effect and sub-sec.  3  of sec. 1
expressly enacted that the amending act shall be deemed to
have - companye into force on 12th september 1975. every
provision in the amending act must therefore a fortiorari be
deemed to have companye into effect from the date
namely 12th september 1975. section 2 of the amending act
provided that in the land acquisition act 1984 in its
application to the state of andhra pradesh for the words
the companylector shall cause the words the companylector shall
within forty days from the date of publication of such
numberification causes shall be substituted. sub-sec.  1  of
sec. 4 in its application to the state of andhra pradesh
therefore read as follows with effect from 12th september
1975
whenever it appears to an appropriate govt. that
the land in any locality is needed or is likely to
be needed for public purpose a numberification to
that effect shall be published in the official
gazette and the companylector shall within forty days
from the date of publication of such numberification
cause public numberice of the substance of such
numberification to be given at companyvenient places in
the locality. what therefore sub-sec.  1  of sec. 4 as it stood from and
after 12th september 1975 provided was that the
numberification under that section shall be published in the
official gazette and public numberice of the substance of such
numberification shall be given in the locality within forty
days from the date of publication of such numberification. this requirement would obviously apply to every numberification
under sub-sec.  1  of sec. 4 issued by the appropriate govt. on or after 12th sept. 1975. if in case of a numberification
issued under sec. 4 sub-sec.  1  on or after 12th september
1975 public numberice of the substance of such numberification is
number given in the locality within forty days from the date of
publication of such numberification in the official gazette it
would introduce a fatal infirmity invalidating such
numberification. here in the present case the numberification
under sec. 4 sub-sec.  1  was published in the official
gazette on 4th august 1977 but public numberice of the
substance of such numberification was given in the locality as
late as 3rd october 1977 i.e. more than forty days after
the date of publication of such numberification in the official
gazette. there was therefore clearly a violation of the
mandate enacted in sub-sec.  1  of sec. 4 as it stood from
and after 12th september 1975 and the numberification under
sec. 4 sub-sec.  1  was liable to be struck down as invalid
though on a ground different from that which found favour
with the high companyrt. the learned companynsel appearing on behalf of the
appellant however made a valient but futile attempt to
escape from the companysequence of retrospective amendment of
sub-sec.  1  of sec.4
by companytending that sec. 2 of the amending act which
introduced the amendment in sub-sec.  1  of sec. 4 should
number be read as having retrospective effect but should be
construed as prospective in operation. the argument urged on
behalf of the appellant was that the legislature enacted the
amending act for the purpose of validating acquisitions made
after 12th september 1975 which were liable to be declared
invalid on account of the full bench judgment of the andhra
pradesh high companyrt in w.p. number 5722 of 1981 and other allied
writ petitions and it companyld never have been the intention of
the legislature to invalidate acquisitions which were valid
when made. the legislature companytended the learned companynsel
proceeded on the assumption that the full bench judgment of
the andhra pradesh high companyrt represented the companyrect law on
the subject and it was on that assumption that the amending
act was enacted by the legislature. if on the full bench
judgment of the andhra pradesh high companyrt being reversed by
this companyrt in deepak pahwas case  supra  the assumption
made by the legislature turned out to be incorrect and it
was found that the legislature proceeded on an erroneous
view of the law in enacting the amending act. the amending
act argued the learned companynsel must be companysidered
superfluous and number the amending act but the companyrect law as
it prevailed prior to the amending act must be applied. this
argument urged on behalf of the appellant is wholly specious
and must be rejected. it is an argument of despair and it
has only to be stated in order to be rejected. it is
impossible to accept the proposition that because the
amending act proceeded on an erroneous view of the law it
must be companysidered superfluous and must be deprived of all
effect. whatever be the reason for which the legislature
enacted the amending act and here the reason numberdoubt was to
set at naught the effect of the full bench judgment of the
andhra pradesh high companyrt - the amending act is on the
statute book and is in force with effect from 12th
september 1975 and it must be given effect according to the
plain natural meaning of its words. sub-sec.  3  of sec. 1
of the amending act provides in the clearest terms number
susceptible of any ambiguity or doubt that it shall be
deemed to have companye into force with effect from 12th
september 1975. it does number carve out any exception in
relation to sec. 2 of the amending act and that section must
also therefore according to the clear and express mandate
contained in sub-sec.  3  of sec. 1 be deemed to have companye
into effect on 12th september 1975. it is true that if in
case of a numberification under sec. 4 sub-sec.  1  issued after
12th september 1975 there is a gap of more than forty days
between the date of its publication in the official gazette
and the date. when public numberice of its substance was given in the
locality sub-sec.  1  of sec. 4 as amended with
retrospective effect from 12th september 1975 would render
such numberification invalid. but that can be numberground for
denying to the amendment in sub-sec.  1  of sec. 4
retrospective effect which sub-sec.  3  of sec. 1 of the
amending act expressly directs that it shall have- there is
in fact to our mind numberinconsistency between the mandate of
sub-sec.  1  of sec. 4 and the law as declared by this companyrt
in deepak pahwas case  supra . this companyrt said in deepak
pahwas case that there should number be such a large gap
between publication in the gazette and public numberice in the
locality as would be indicative of break in the companytinuity
of action. what the amended sub-sec.  1  of sec. 4 does is
to legislaturely lay down the limit of the time gap beyond
which it must be presumed that there is a break in the
continuity of action. we must therefore reject the argument
of the learned companynsel appearing on behalf of the appellant
that sub-sec.  3  of sec.