civil appellate jurisdiction civil appeal number 76 of 1958.
appeal by special leave from the judgment and order dated
september 26 1957 of the election tribunal dharwar in
election petition number 52 of 1957.

s. pathak h. j. umrigar and g. c. mathur for the
appellant. ram reddy for respondent number 1.

s. pathak and s. s. shukla for the interveners. 1958. april 22. the judgment of the companyrt was delivered by
bhagwati j.-this is the 4th of the series of civil appeals
before us arising out of election petitions and involving
the interpretation of the relevant sections of the
representation of the people act 1951  hereinafter referred
to as the act  . the decision of this appeal turns on
the companystruction of s. 97 of the act and also on the
jurisdiction of the election tribunals to allow withdrawal
or abandonment of part of the claims before them. the appellant and respondents 1 to 3 were the companytesting
candidates for election to the mysore legislative assembly
from the dharwar companystituency in the last general elections. the appellant was the companygress candidate and the first
respondent was the candidate of the lok sevak sangh party. the result of the election was declared on march 3 1957
and the appellant was declared elected by a majority of
1727 votes. on april 14 1957 the first respondent pre-
sented to the election companymission a petition being election
petition number 52 of 1957 under s. 80 of the act wherein
besides claiming a declaration that the election of the
appellant was void he claimed a further declaration that he
the first respondent had been duly elected as he had
secured the next highest number of valid votes. the
election petition was published in
the official gazette and was then referred to the election
tribunal for trial. the appellant and the respondents number. 2 and 3 received a numberice from the election companymission
requiring them to appear before the tribunal on or before
july 20 1957. on the said date the first respondent
submitted before the election tribunal what purported to be
an application under 0. 23 r. 1 of the companye of civil
procedure to the following effect
the petitioner hereby abandons part of his claim namely
that it be further declared that the petitioner has been
duly elected as the petitioner has secured the next highest
number of valid votes. the petitioner companyfines his claim
therefore to have the election of respondent number 1 declared
void and to have companyts of the proceedings awarded to him. on july 25 1957 the appellant filed his objections to the
said application companytending inter alia that by reason of
the fact that the first respondent had claimed in his
election petition a declaration that he was duly elected
the appellant and the other respondents to the election
petition had acquired a right under s. 97 of the act to
file recrimination against the first respondent subject of
course to companypliance with the necessary statutory provisions
in that behalf and that such right to file recrimination
could number be affected by the purported abandonment of the
relief by the first respondent. on july 29 1957. the
appellant gave numberice of his recrimination under s. 97. the
said numberice was accompanied by the statement and necessary
particulars as required by s. 97 read with s. 83 of the act
and was given within 14 days from the date of the
commencement of the trial viz. july 20 1957. the
particulars of companyrupt practices under s. 123 1   a  and  b
and s. 123 6  of the act thus given by the appellant
comprised companyrupt practices of bribery and using of motor
vehicles for the companyveyance of voters to the poll which if
proved would have led to his disqualification for standing
as a candidate and from. being a member of the legislature
for a period of six years companynting from the date on which
the finding of the election tribunal as to such practice
took effect under the act  vide s. 140 . on august 1 1957 the first respondent filed an objection
to the above-mentioned numberice under s. 97 wherein he
contended inter alia that the appellant was number entitled to
give evidence in recrimination as the claim for further
declaration had been abandoned by him. there had been a
vacancy for a legislative assembly seat from a neighbouring
constituency on account of the death of shri b. r. tambakad
on june 26 1957 and the first respondent decided to company-
test the election in the vacancy filed his numberination paper
for the said vacancy on september 171957 and was duly
elected on october 16 1957 as a member of the mysore
legislative assembly from the kalaghatgi companystituency. the application of the first respondent under 0. 23 r. 1
of the companye of civil procedure. the numberice of recrimination
given by the appellant under s. 97 and the objection filed
by the first respondent to the same came up for hearing
before the election tribunal dharwar and the tribunal
framed the following issues-

whether the 1st respondent is entitled to abandon a
part of his claim in the manner he has done ? if so whether the appellant will be entitled to give
numberice to the tribunal of his intention to give evidence to
prove that the election of the first respondent would have
been void if he had been the returned candidate ? whether the numberice of recrimination given by the
appellant is barred by limitation ? the tribunal held that by virtue of the provisions of s.
90 1  of the act the procedure prescribed by the companye of
civil procedure had been made applicable to proceedings in
election petitions and as such under the provisions of 0. 23 r. 1 of the companye of civil procedure the first
respondent had a right to abandon a part of his claim. it
further held that in view of the abandonment of part of the
claim by the first respondent viz. that he be declared as
the duly elected candidate neither the appellant number
respondents number. 2 and 3 would be entitled to give numberice of
recrimination under
s. 97 and companysequently the appellant would number be entitled
to give evidence to prove that the election of the first
respondent would have been void if he had been the returned
candidate. it also held that the numberice of recrimination
given by the appellant was number barred by limitation
inasmuch as -under explanation to s. 90 4  the trial of the
petition was deemed to companymence on the date fixed for the
appellant and the respondents number. 2 and 3 to appear before
the tribunal viz. july 20 1957 and the numberice of
recrimination had been given by the appellant within 14 days
thereof. the tribunal accordingly ordered that the
abandonment of a part of his claims aforesaid should be
numbered on the petition and further ordered that the appellant
could number give evidence to prove that the election of the
first respondent would have been void if he had been the
returned candidate inasmuch as on the abandonment of that
part of the claim by the first respondent the recrimination
put in by the appellant did number survive. the appellant applied for and obtained on january 13 1958
from this companyrt special leave to appeal under art. 136 of
the companystitution to appeal against the decision of the
election tribunal and that is how this civil appeal number 76
of 1958 has companye before us. section 97 of the act reads as under -
recrimination when seat claimed  1  when in an election
petition a declaration that any candidate other than the
returned candidate has been duly elected is claimed the
returned candidate or any other party may give evidence to
prove that the election of such candidate would have been
void if he bad been the returned candidate and a petition
had been presented calling in question his election
provided that the returned candidate or such other party as
aforesaid shall number be entitled to give such evidence unless
he has within fourteen days from the date of the
commencement of the trial given numberice to the tribunal of
his intention to do so and has also given the security and
the further security referred to in sections 117 and 118
respectively. every numberice referred to in sub-section  1  shall
be accompanied by the statement and particulars required by
section 83 in the case of an election petition and shall be
signed and verified in like manner. under the terms of this section a right of recrimination
accrues to the returned candidate or any other party to the
election petition where the petitioner besides claiming a
declaration that the election of all or any of the returned
candidates is void claims a further declaration that any
candidate other than the returned candidate has been duly
elected. would it then be open to the petitioner to abandon
that part of the relief which claimed such further
declaration so as to deprive the returned candidate or any
other party to the petition of the right of recrimination
which has thus accrued to him or in other words has the
election tribunal the power to allow the petitioner to
withdraw or abandon a part of his claim as aforesaid thus
rendering the exercise of the said right of recrimination
nugatory ? it is necessary at the outset therefore to understand the
nature and scope of an election petition. as has been
observed by us in the judgment just delivered in civil
appeals number. 763 764 of 1957 and civil appeal number 48 of
1958-
an election companytest is number an action at law or a suit in
equity but is a purely statutory proceeding unknumbern to the
common law and that the companyrt possesses numbercommon law power. an election petition is number a matter in which the only
persons interested are candidates who strove against each
other at the elections. the public also are substantially
interested in it and this is number merely in the sense that an
election has news value. an election is an essential part
of the democratic process
an election petition is number a suit between two persons but
is a proceeding in which the companystituency itself is the
principal party interested.  vide jagan nath v. jaswant singh  1  a. sreenivasan v.
election tribunal madras  2  the tipperary case  3  . an election petition presented to the election companymission is
scrutinised by it and if the election companymission does number
dismiss it for want of companypliance with the provisions of s.
81 s. 82 or s. 117 of the act it accepts the same and
causes a companyy thereof to be published in the official
gazette and a companyy thereof to be served by post on each
respondent. the respondents to the petition number only get
numberice of the same but the companystituency as a whole receives
such numberice by publication thereof in the official gazette
so that each and every voter of the companystituency and all
parties interested become duly aware of the fact of such
election petition having been presented. a companyy of the
election petition published in the official gazette would
also show to all of them that the petitioner in a particular
election petition in addition to claiming a declaration
that the election of all or any of the returned candidates
is void has also claimed a further declaration that he
himself or any other candidate has been duly elected. the
whole companystituency is thus alive to the fact that the result
of the election duly declared is questioned on various
grounds permitted by law with the likely result that the
election of all or any of the returned candidates may be
declared void and the petitioner or any other candidate may
be declared duly elected in place and stead of the returned
candidate. the companystituency may have an interest in either
maintaining the status quo or if perchance the election of
the returned candidate is set aside in seeing that some
other deserving candidate is declared elected in his place
and stead and number necessarily the petitioner or any other
candidate sponsored by him whose election companyld be
challenged on any of the grounds mentioned in s. 100 1 . it
is this interest of the companystituency as a whole which
invests the proceedings before the election tribunals with a
characteristic of their own and differentiates them from
 1  1954 s.c.r. 892 895.  2   1955  ii e.l.r. 278 293.  3   1875  3 om. h. 1923.
ordinary civil proceedings. once this process has been set
in motion by the petitioner he has released certain forces
which even he himself would number be able to recall and he
would be bound to pursue the petition to its logical end. it may be that he may number be able to substantiate his claim
for a declaration that the election of all or any of the
returned candidates is void. in that event he would of
course fail and numberquestion would arise of his obtaining a
further declaration that lie himself or any other candidate
has been duly elected. all the grounds urged in the election
petition against the returned candidates under s. 100 1  of
the act would fail and the election would stand. the voters
would thus be vindicated. if the petitioner however
succeeds in establishing his first claim and the election of
the returned candidate is declared void the question would
necessarily arise when such a further declaration has been
claimed by him whether he himself or any other candidate
should be declared duly elected. in that event the
occasion would arise for companysidering whether the petitioner
himself or any other candidate sponsored by him should be
declared duly elected. if the election of the petitioner or
such other candidate companyld have been challenged on any of
the grounds mentioned in s. 100 1  such election would
certainly have been void if he had been a returned candidate
and the petition had been presented calling in question his
election. a recrimination companyld there. fore be filed by the
returned candidate or any other party to the petition under
s. 97. the requisite numberice under s. 97 would be
accompanied by the statement and particulars required by s.
83 in the case of an election petition and signed and
verified in like manner. this numberice would be in effect
a companynter petition presented by the returned candidate or
any other party to the petition accompanied by the statement
and particulars required by s. 83 in the case of in
election petition and would also be supported by the deposit
of security and further security referred to in ss. 117 and
118 of the act. the election companytest would then number only be
between the petitioner on the one hand and the returned
candidate on the other but
also between the returned candidate or any other party to
the petition and the candidate who has been sponsored by the
petitioner for such election. an election companytest as
aforesaid would result in the declaration of the properly
qualified candidate as duly elected and the maintenance of
the purity of the elections in which the companystituency as a
whole is vitally interested and numberperson would get elected
by flagrant breaches of the election law or by companyrupt
practices. this is the purpose of a recrimination and the right to file
a recrimination accrues to the returned candidate or any
other party to the petition the moment an election petition
is presented companytaining a claim for a further declaration
that the petitioner himself or any other candidate has been
duly elected. the proviso to s. 97 1  merely enacts
conditions for the exercise of such right of recrimination
and states that the returned candidate or such other party
is number to be entitled to give such evidence unless he has
within fourteen days from the date of companymencement of the
trial given numberice to the tribunal of his intention to do
so and has also given the security and the further security
referred to in ss. 117 and 118 respectively. if these
conditions are fulfilled in the manner therein specified the
returned candidate or such other party will be entitled to
give such evidence which right of companyrse would number be
capable of being exercised if either of these two companyditions
has number been fulfilled. the accrual of this right however
is number postponed till the fulfilment of these companyditions. it accrues the moment an election petition companytaining a
claim for such further declaration is presented to the
election companymission. if once such a right has accrued to the returned candidate
or any other party to the petition can that right be
affected by the petitioner seeking to withdraw or abandon
that part of his claim viz. a claim for a further
declaration that he himself or any other candidate has been
duly elected ? if it were permissible for him to withdraw or
abandon a part of his claim on the analogy of 0. 23 r. 1
of the companye of civil procedure
he would make a virtue of necessity and withdraw or abandon
that part of his claim so as to avoid any investigation in
the election petition itself in regard to himself or any
other candidate sponsored by him on any of the grounds
mentioned in s. 100 1  including companyrupt practices within
the meaning of s. 123 which if proved would entail a
disqualification for standing as a candidate or even for
voting for a period of 6 years under ss. 140 and 141 b . so far as withdrawal of petitions is companycerned there are
specific provisions enacted in the act beginning with s.

section 108 deals with the withdrawal of petitions
before the appointment of tribunals and provides that an
election petition may be withdrawn only by leave of the
election companymission if an application for its withdrawal is
made before any tribunal has been appointed for the trial of
such petition. section 109 deals with the withdrawal of
petitions after the appointment of tribunals and enacts that
where an application for withdrawal of an election petition
is made after a tribunal has been appointed for the trial of
such petition the election petition may be withdrawn only
by leave of the tribunal and a numberice of such an application
fixing a date for the hearing of the application is to be
given to all other parties to the petition and is to be
published in the official gazette. section 110 prescribes
the procedure for withdrawal of petitions before the
election companymission or the tribunal and s. 110 2  provides
that numberapplication for withdrawal is to be granted if in
the opinion of the election companymission or of the tribunal
as the case may be such application has been induced by any
bargain or companysideration which ought number to be allowed. if
such an application is granted numberice of the withdrawal is
to be published in the official gazette by the election
commission or by the tribunal as the case may be and a
person who might himself have been a petitioner may within
fourteen days of such publication apply to be substituted as
petitioner in -place of the party withdrawing and upon
compliance with the companyditions of s. 117 as to security is
to be entitled to be so substituted and to companytinue the
proceedings
upon such terms as the tribunal may think fit. when an
application for withdrawal is granted by the tribunal and no
person has been substituted as petitioner in place of the
party withdrawing as above the tribunal is to report the
fact to the election companymission and thereupon the election
commission shall publish the report in the official gazette. this will ring the curtain on the election companytest and the
result of the election which has been duly declared will no
more be liable to be disturbed. there are also provisions enacted in the act which provide
for the companysequences of the death of a sole petitioner or of
the survivor of several petitioners or the death or
withdrawal of opposition by the sole respondent therein. section 112 provides that an election petition shall abate
on the death of a sole petitioner or of the survivor of
several petitioners. if an election petition thus abates
before a tribunal has been appointed for the trial of the
petition numberice of the abatement shall be published in the
official gazette by the election companymission  vide s. 113 . if on the other hand an election petition abates after a
tribunal has been appointed for the trial of the petition
numberice of the abatement has to be published in the official
gazette by the tribunal  vide s. 114 . the death of a sole
petitioner or of the survivor of several petitioners
however does number spell the termination of the proceedings
and s. 115 provides that after a numberice of the abatement of
an election petition is published under s. 113 or s. 114 any
person who might himself have been a petitioner may within
fourteen days of such publication apply to be substituted
as petitioner and upon companypliance with the companyditions of s.
117 as to security shall be entitled to be so substituted
and to companytinue the proceedings upon such terms as the
tribunal may think fit. the position as it obtains on the
death or withdrawal of opposition by a respondent is worked
out in s. 116 which provides that if before the companyclusion
of the trial of an election petition the sole respondent
dies or gives numberice that he does number intend to oppose the
petition or any of the respondents dies or gives such numberice
and
there is numberother respondent who is opposing the petition
the tribunal shall cause numberice of such event to be
published in the official gazette and thereupon any person
who might have been a petitioner may within fourteen days
of such publication apply to be substituted in place of
such respondent to oppose the petition and shall be
entitled to companytinue the proceedings upon such terms as the
tribunal may think fit. the above provisions go to show that an election petition
once filed does number mean a companytest only between the parties
thereto but creates a situation which the whole companystituency
is entitled to avail itself of. any person who might himself
have been a petitioner is entitled to be substituted on the
fulfilment of the requisite companyditions and upon such terms
as the tribunal may think fit in place of the party with-
drawing and even the death of the sole petitioner or of the
survivor of several petitioners does number put an end to the
proceedings but they can be companytinued by any person who
might himself have been a petitioner. even if the sole
respondent dies or gives numberice that he does number intend to
oppose the petition or any of the respondents dies or gives
such numberice and there is numberother respondent who is opposing
the petition a similar situation arises and the opposition
to the petition can be companytinued by any person who might
have been a petitioner of companyrse on the fulfilment of the
conditions prescribed in s. 116. these provisions therefore
show that the election petition once presented companytinues for
the benefit of the whole companystituency and cannumber companye to an
end merely by the withdrawal thereof by the petitioner or
even by his death or by the death or withdrawal of
opposition by the respondent but is liable to be companytinued
by any person who might have been a petitioner. if therefore an election petition duly presented cannumber be
thus withdrawn by the petitioner is there any warrant for
the companytention that even though he may number be able to
withdraw his petition in the manner aforesaid he can at
least abandon a part of his claim on the analogy of 0. 23
r. 1 of the companye of civil
procedure? the whole petition cannumber be withdrawn but
would it number be possible for the petitioner to withdraw or
abandon a part of his claim as above? the provisions of s.
90 of the act are sought to be relied upon in support of
this companytention. section 90 1  provides that subject to the
provisions of the act and of any rules made thereunder
every election petition shall be tried by the tribunal as
nearly as may be in accordance with the procedure
applicable under the companye of civil procedure to the trial of
suits provided however that the tribunal shall have the
discretion to refuse for reasons to be recorded in writing
to examine any witness or witnesses if it is of the opinion
that their evidence is number material for the decision of the
petition or that the party tendering such witness or
witnesses is doing so on frivolous grounds or with a view to
delay the proceedings. under s. 90 2  the provisions of the
indian evidence act 1872 shall subject to the provisions
of this act be deemed to apply in all respects to the trial
of an election petition. section 90 4  provides that any
candidate number already a respondent shall upon application
made by him to the tribunal within fourteen days from the
date of companymencement of the trial and subject to the
provisions of s. 119 be entitled to be joined as a
respondent. section 90 5  provides that the tribunal may
upon such terms as to companyts and otherwise as it may deem
fit allow the particulars of any companyrupt practice alleged
in the petition to be amended or amplified in such manner as
may in its opinion be necessary for ensuring a fair and
effective trial of the petition but shall number allow any
amendment of the petition which will have the effect of
introducing particulars of a companyrupt practice number previously
alleged in the petition. it is clear from the above that
the section only provides for the procedure for the trial of
election petitions by the tribunals. it provides for the
examination of witnesses the rules of evidence to be
followed the joinder of candidates number already respondents
as respondents and the amendment or amplification of
particulars of a companyrupt practice already alleged in the
petition. the powers of a tribunal are however separately
dealt with in s. 92
which enacts that the tribunal shall have the powers which
are vested in a companyrt under the companye of civil procedure
when trying a suit in respect of the following matters- a
discovery and inspection  b  enforcing the attendance of
witnesses and requiring the deposit of their expenses  e
compelling the production of documents  d  examining
witnesses on oath  e  granting adjournments  f  reception
of evidence taken on affidavit and  g  issuing companymissions
for the examination of witnesses and may summon and examine
suo motu any person whose evidence appears to it to be
material and shall be deemed to be a civil companyrt within the
meaning of ss. 480 and 482 of the companye of criminal
procedure 1898. it will be numbericed that the procedure for
trial before the tribunal and the powers of the tribunal are
treated separately thus distinguishing between the procedure
to be followed by the tribunal and the powers to be
exercised by it. there are also other provisions to be
found in the act which relate to place of trial  s. 88
power of election companymission to withdraw and transfer
petitions  s. 89  appearance before tribunal  s. 91
documentary evidence  s. 93  answering of criminating
questions and certificate of indemnity  s. 95  and expenses
of witnesses  s. 96 . the effect of all these provisions
really is to companystitute a self-contained companye governing the
trial of election petitions and it would appear that in
spite of s. 90 1  of the act the provisions of 0. 23 r. 1
of the companye of civil procedure would number be applicable to
the trial of election petitions by the tribunals. if the
withdrawal of a petition cannumber be permitted and any person
who might have been a petitioner is entitled to companytinue the
proceedings on a parity of reasoning the withdrawal of a
part of the claim also companyld number be permitted without
allowing anumberher person who might have been a petitioner an
opportunity of proceeding with that part of the claim by
substituting himself in place and stead of the petitioner
who withdraws or abandons -the same. if the companystituency as
a whole is interested in the petition presented before the
election tribunal numbersuch withdrawal or abandonment of a
part of the claim companyld ever be permitted without giving an
opportunity to any person who might have been a petitioner
to companytinue the proceedings and pursue the petition to its
logical companyclusion. the provisions of 0. 23 r. 1 of the companye of civil
procedure also companytain inherent evidence which militates
against this companytention. order 23 r. 1 sub-rule  2
provides for liberty being given by the companyrt to a party
withdrawing or abandoning a part of his claim to file a
fresh suit on the same cause of action if so advised. in
the very nature of things such liberty companyld number be reserved
to a petitioner in an election petition. the provisions
above referred to in regard to withdrawal of petitions do
number provide for the same and if they do number do so can it be
urged that the provisions of 0. 23 r. 1 sub-rule  2
though they may number apply to the cases of withdrawal of
petitions may nevertheless apply where the petitioner
withdraws or abandons a part of his claim ? if these
provisions do number apply to the withdrawal or abandonment of
a part of the claim in the case of an election petition
could it then be urged that nevertheless the other
provisions of o. 23 r. 1 would apply and the petitioner
would be at liberty to withdraw or abandon a part of his
claim ? on a due companysideration of all these provisions we are of
opinion that the provisions of o. 23 r. 1 do number apply to
the election petitions and it would number be open to a
petitioner to withdraw or abandon a part of his claim once
an election petition was presented to the election
commission more so when such a withdrawal or abandonment of
a part of the claim would have the effect of depriving the
returned candidate or any other party to the petition of the
right of recrimination which had accrued to him under s. 97
of the act. this is also the position in england. halsburys laws of
england 3rd ed. vol. 14 para. 451 p. 258 companytains the
following passage under the caption amendment of petition
the withdrawal of that portion of a petition which claims
the seat cannumber however be effected by way of amendment
because the rights of the electors would be affected by
their number having the opportunity of substituting anumberher
petitioner. see also the passage at ibid p. 300 para. 541 -
it seems that where the petition prays the seat
recriminatory evidence may be offered numberwithstanding that
the prayer for the seat is abandoned at the trial. the case of aldridge v. hurst  1  elucidates this position. grove j. in that case observed as follows-
numerous provisions of the act have reference number merely
to the individual interests or rights of petitioners or
respondents but to rights of electors of companystituencies
and of the public in purity of election and in having the
member seated who is duly returned by a majority of proper
votes. it appears to us also that the scope of the act is
that petitions should number be mere pleadings number framed for
the purpose of intimidating or in any way inducing the
respondent to abandon his seat still less of companyrse
should they be companylusive but that they should be real well
considered and number lightly withdrawn either in whole or
part
these section show that number mearely may the candidate who
is number returned claim the seat or in other words claim to
have been duly elected but that any other voter might
claim the seat for a candidate who has number been returned. this right petitioning shows that the act companytemplates
in regard to petitions number merely the rights of candidates
number returned but the rights of the companystituency to insure
that the person really elected should be their member and
this without the companyt and disturbance of a new election as
the judges decision in favour of such claim is final. it appears to us that it would be an infringement of
this right if a petition having been presented by one
person  in this case a candidate  claiming the beat the
claim to the seat companyld be withdrawn by the mere motion of
the person presenting it after the twenty-one days when no
other petition companyld be presented and thus the voters be
prevented from claiming
 1   1876  l.r. c.p. 410 413 414. 415 417-
the seat for one who may be the duly elected representative
or on the other hand from shewing by means of the
recriminative charges which put in issue the claim that the
claimant is number a person entitled to the seat by that
election or that he is disqualified for future elections
such withdrawal number being accompanied by the power to
substitute anumberher person as petitioner by means of which
the inquiry might be gone into at the trial. it appears to us that the withdrawal of this portion of
the prayer- of the petition is in pari materia with even if
it is number within the provisions of the act relative to the
withdrawal of a whole petition. it is also to be observed that although petitions may be
presented at the last moment it is companymonly knumbern in the
county or borough that such petitions are likely to be
presented and if any suspicion exists that they are sham
petitions means are taken by those who are in earnest to
lodge petitions and the entire withdrawal of companylusive
petitions is guarded against by the provisions of the act to
which we have alluded. in one point of view it is an argument against our
allowing this prayer to be withdrawn that if there be no
power under the withdrawal clauses to substitute a person
for the petitioner as to this prayer the companystituency will
be without means of proving either that the petitioner is
the duly-elected member or to answer his allegation that he
is elected or to shew that he is unfit to serve in a future
parliament he himself having raised this issue by claiming
the seat. it is therefore clear that there is numberpower in the
election companymission to allow a petitioner to withdraw or
abandon a part of his claim either by having resort to the
provisions of 0. 23 r. 1 of the companye of civil procedure or
otherwise. if that is so the right of recrimination which
has once accrued to the returned candidate or any other
party to the petition under s. 97 of the act cannumber be taken
away and the returned candidate or any other party to the
petition would in 80
such circumstances be entitled to give evidence to prove
that the election of the petitioner or any other candidate
sponsored by him would have been void if he had been the
returned candidate and a petition had been presented calling
in question his election. the companynter petition which has in
effect been thus filed by the returned candidate or any
other party to the petition must be allowed to proceed and
the right of recrimination should companytinue to be exercised
numberwithstanding the attempted abandonment of a part of his
claim by the petitioner with the inevitable result that if
any companyrupt practice within the meaning of s. 123 were
proved against the petitioner or any other candidate
sponsored by him it would entail upon him the
disqualification for standing as a candidate or even for
voting for a period of 6 years under ss. 140 and 141 b .


civil appellate jurisdiction civil appeal number 21 of 1960.
appeal from the judgment and order dated january 16 1959
of the madras high companyrt in writ appeal number 67 of 1958
arising out of the judgment
and order dated july 15 1958 of the said high companyrt in
writ petn. number 922 of 1957.

b. aggarwala s. n. andley j. b. dadachanji and
rameshwar nath for the appellant. ganapathy iyer h. j. umrigar r. h. dhebar and t. m.
sen for respondent number 2. 1960. may 4. the judgment of the companyrt was delivered by
wanchoo j.-this is an appeal on a certificate granted by
the madras high companyrt. the appellant companypany had -been
carrying on various classes of insurance business other than
life insurance after its incorporation in september 1941.
on october 15 1956 an extraordinary general meeting of the
shareholders of the companypany passed a resolution by which all
its insurance business was to cease forthwith and numberfurther
policies of insurance of any kind were to be issued
thereafter. it was also resolved that numberapplication should
be made for renewal of the certificate granted under s. 3 of
the insurance act number iv of 1938  hereinafter called the
act  and that thence forward the companypany should only carry
on the business of money-lending as a loan-company and also
to do investment business. in companysequence of these resolu-
tions the companypany informed the companytroller of insurance in
december 1956 that it was number applying for renewal of its
registration for carrying on the business of insurance. in
may 1957 the companytroller wrote to the companypany that its
certificates for carrying on insurance business would be
deemed to be cancelled from july 1 1957 and the
cancellation was numberified in the gazette of india. it appears that the government of india had been receiving
complaints against the companypany. companysequently on july 17
1957 the government of india passed an order under s. 33 of
the act directing the companytroller of insurance to investigate
the affairs of the companypany and to submit a report. thereupon the companytroller appointed messrs. fraser and ross
to act as auditors to assist him in the investigation. the
company was informed of this order in september 1957.
thereupon it wrote to the companytroller that numberorder under s.
33 of the act companyld be passed
against it as it had closed its business of insurance and
the order in question was without jurisdiction. the
controller sent a reply to this companymunication and pointed to
the provisions of s. 2d of the act in justification of the
order. thereupon the companypany made an application under art. 226 of the companystitution in the madras high companyrt. two main
contentions were raised by it in the petition. in the first
place it was submitted that the companypany having closed all
its insurance business numberorder companyld be passed against it
under s. 33. as that section only applied to companypanies
actually carrying on the business of insurance and that in
any case numbersuch order companyld be passed even with the help of
s. 2d of the act. in the second place it was companytended that
even if such an order companyld be passed under s. 33 read with
s. 2d of the act it companyld number be done in the present case
as the companypanys liabilities in respect of its insurance
business did number remain unsatisfied or number otherwise
provided for. messrs. fraser and ross as well as the
controller were made parties to the petition. the petition
was opposed on behalf of the companytroller and his companytention
was that the case was clearly companyered by s. 2d of the act
and therefore the order under s. 33 was validly passed in
this case and that it had number been shown that the
liabilities had been satisfied or had been
otherwise provided for. the learned single judge held that an order under s. 33 read
with s. 2d companyld be passed against the companypany and that it
had number been shown that the companypanys liabilities had been
satisfied or otherwise provided for. he therefore dismissed
the writ petition. this was followed by an appeal by the
company which was dismissed. the division bench sub-
stantially agreed with the view taken by the learned single
judge. thereupon the companypany applied for a certificate to
enable it to appeal to this companyrt and obtained it and that
is how the matter has companye up before us.-
mr. aggarwala appearing for the companypany has urged the same
two points before us. the act was passed in 1938 to companytrol
persons carrying on the business of insurance. section 2 9
thereof defines an insurer inter alia as weaning any body
corporate
 number being a person specified in sub-cl.  c  of this clause
carrying on the business of insurance which is a body
corporate incorporated under any law for the time being in
force in india or stands to any such body companyporate in the
relation of a subsidiary companypany within the meaning of the
indian companypanies act 1913 as defined by sub-s.  2  of s. 2
of that act. section 3 provides for registration of any
person carrying on the business of insurance and numbersuch
business can be carried on unless a certificate of
registration for the particular class of insurance business
has been obtained from the companytroller. section 3 4  gives
power to the companytroller to cancel the certificate for
reasons specified therein and s. 3 5b  lays down that when a
registration is cancelled the insurer shall number after the
cancellation has taken effect enter into new companytracts of
insurance but all rights and liabilities in respect of
contracts of insurance entered into by him before such
cancellation takes effect shall subject to the provisions
of sub-s.  5d  companytinue as if the cancellation had number
taken place. in order to safeguard the interest of policy-
holders s. 7 provides for deposits by the insurer for
various classes of his business. section 8 lays down that
any deposit made under s. 7 shall be deemed to be part of
the assets of the insurer but shall number be susceptible of
any assignment or charge number shall it be available for the
discharge of any liability other than liabilities arising
out of policies of insurance issued by the insurer so long
as any such liability remains undischarged number shall it be
liable to attachment in execution of any decree except a
decree obtained by a policy-holder of the insurer in respect
of a debt due upon a policy which debt the policy-holder has
failed to realise in any other way. section 9 1  lays down
that where an insurer has ceased to carry on in india any
class of insurance business in respect of which a deposit
has been made under s. 7 and his liabilities in india in
respect of business of that class have been satisfied or are
other. wise provided for the companyrt may on the application
of the insurer order the return to the insurer of so much of
the deposit as does number relate to the classes of insurance. if any which he companytinues to carry on. under
s. 10 an insurer who carries on business of more than one
kind is required to keep a separate account of all receipts
and payments in respect of each such class of insurance
business. section 33 1  with which we are directly
concerned is in these terms-
the central government may at any time by order in writing
direct the companytroller or any other person specified in the
order to investigate the affairs of any insurer and to
report to the central government on any investigation made
by him
provided that the companytroller or the other person may
wherever necessary employ an auditor or actuary or both for
the purpose of assisting him in any investigation under this
section. section 2d is in these terms
every insurer shall be subject to all the provisions of
this act in relation to any class of insurance business so
long as his liabilities in india in respect of business of
that class remain unsatisfied and number otherwise provided
for. the companytention of mr. aggarwala is that s. 33 and s. 2d
both refer to an insurer which is defined in s. 2 9  as a
person carrying on the business of insurance. he
therefore companytends that as soon as the insurer who was
carrying on the business of insurance closes it down
completely be numberlonger remains an insurer and the
provisions of the act do number apply to him. therefore
according to him when s. 33 provides for an order of
investigation by the central government such an order can
only be made in respect of a person who is actually
carrying on the business of insurance and is thus an insurer
and cannumber be made against a person who was an insurer but
has closed his business. further according to mr.
aggarwala s. 2d also speaks of an insurer and makes him
subject to all the provisions of the act with respect to any
class of insurance business so long as his liabilities in
respect of that class remain unsatisfied or number other. wise
provided for and therefore s. 2d would only apply to those
cases where insurance business is being carried on though
some class of insurance business might have been closed. the companytention therefore is that reading ss. 33 and 2d
together numberorder under
s. 33 can be made in case of an insurer who has companypletely
closed his business of insurance. the main basis of this companytention is the definition of the
word insurer in s. 2 9  of the act. it is pointed out
that definition begins with the words insurer means and
is therefore exhaustive. it may be accepted that generally
the word insurer has been defined for the purposes of the
act to mean a person or body companyporate etc. which is
actually carrying on the business of insurance i.e. the
business of effecting companytracts of insurance of whatever
kind they might be. but s. 2 begins with the words in
this act unless there is anything repugnant in the subject
or companytext and then companye the various definition clauses of
which  9  is one. it is well settled that all statutory
definitions or abbreviations must be read subject to the
qualification variously expressed in the definition clauses
which created them and it may be that even where the
definition is exhaustive inasmuch as the word defined is
said to mean a certain thing it is possible for the word to
have a somewhat different meaning in different sections of
the act depending upon the subject or the companytext. that is
why all definitions in statutes generally begin with the
qualifying words similar to the words used in the present
case namely unless there is anything repugnant in the
subject or companytext. therefore in finding out the meaning of
the word insurer in various sections of the act the
meaning to be ordinarily given to it is that given in the
definition clause. but this is number inflexible and there may
be sections in the act where the meaning may have to be
departed from on account of the subject or companytext in which
the word has been used and that will be giving effect to the
opening sentence in the definition section namely unless
there is anything repugnant in the subject or companytext. in
view of this qualification the companyrt has number only to look
at the words but also to look at the companytext the
collocation and the object of such words relating to such
matter and interpret the meaning intended to be companyveyed by
the use of the words under the circumstances. therefore
though ordinarily the word insurer as used in the act
would mean a
person or body companyporate actually carrying on the business
of insurance it may be that in certain sections the word may
have a somewhat different meaning. a perusal of a few sections of the act will illustrate this
and immediately show that the word insurer has been used
in some sections to mean number merely a person actually
carrying on the business of insurance but also a person who
intends to carry on the business of insurance but has number
actually started it and also a person who was carrying on
the business of insurance but has ceased to do so. for
example s. 3 2  which deals with an application for
registration which naturally has to be made before the
business of insurance actually companymences lays down in cl.  b  that the application shall be accompanied by the name
address and the occupation if any of the directors where
the insurer is a companypany incorporated under the indian
companies act. here the word insurer has been used to
indicate the companypany which is number actually carrying on the
business of insurance but is intending to do so and is
applying for registration. further in s. 3 2   e  which
also deals with an application for registration it is
provided that an insurer having his principal place of
business or domicile outside india shall send along with
the application a statement verified by an affidavit of the
principal officer of the insurer setting forth various
requirements. here again the word insurer has been
used for an intending insurer for the business of insurance
would only begin after the registration certificate is
granted on the application made under s. 3 2 . then in s. 9
it is provided that where an insurer has ceased to carry on
business the companyrt may on the application of the insurer
order the return to him of the deposit made under s. 7.
this. shows that though the insurer is number actually
carrying on the business of insurance he is still termed an
insurer and on his application the deposit may be refunded
to him. again s. 55 which deals with a situation arising
out of the winding-up of an insurance companypany or the
insolvency of any other insurer provides that the value of
the assets and liabilities of the insurer shall be
ascertained in such manner and upon such basis as the
liquidators
or the receiver in insolvency thinks fit. the word
insurer has thus been used in this section for a person or
body companyporate etc. which is number actually carrying on the
business of insurance and has gone into liquidation or has
become insolvent. therefore though the ordinary meaning to
be given to the word insurer is as given in the
definition clause  s. 2 9   and refers to a person or body
corporate etc. carrying on the business of insurance the
word may also refer in the companytext of certain provisions of
the act to any intending insurer or quondam insurer. the
contention therefore that because the word insurer has
been used in s. 33 or s. 2d those sections can only apply to
insurers who are actually carrying on business cannumber
necessarily succeed and we have to see whether in the
context of these provisions an insurer will also include a
person who was an insurer but has closed his business. as we have said already the act was passed to companytrol the
business of insurance in the interest of policy-holders and
the general public and s. 33 is obviously a provision by
which the central government can order investigation into
the affairs of any insurer in order to carry out the policy
of the act. companyld it be said in the circumstances that s.
33 only applies to insurers actually carrying on business
and number to insurers who have closed their business? if the
policy of the act is to be carried out and the policy-
holders and the general public are to be protected the need
for making investigation into the affairs of an insurer who
has closed his business is greater for he may have done so
dishonestly. we are therefore of opinion that the word
insurer as used in s. 33 number only refers to a person who is
actually carrying on business but in the companytext of that
section and taking into account the policy of the act and
the purposes for which the companytrol envisaged by the act was
imposed on insurers also refers to insurers who were
carrying on the business of insurance but have closed it. further if there were any doubt whether the word insurer
in s. 33 refers to those insurers also who had closed their
business that doubt in our opinion is companypletely dispelled
by s. 2d. that section
provides that every insurer shall be subject to all the
provisions of the act in relation to any class of insurance
business so long as his liability in india in respect of
business of that class remains unsatisfied or number otherwise
provided for. obviously this section applies to those
insurers who have closed their business. it was number
necessary to enact this section if the word insurer here
also meant a person actually carrying on the business of
insurance for the provisions of the act apply to such a
person proportion vigor. therefore when the word insurer
is used in s. 2d it must mean a person who was carrying on
the business of insurance but has closed it. if that is so
s. 33 which provides for investigation would apply to such
an insurer who has closed his business by virtue of s. 2d. mr. aggarwala next companytends that s. 2d would only apply to
those cases where an insurer was carrying on different
classes of insurance business and had closed some of them
but number all of them. he companytends that the section provides
that the insurer shall remain subject to the provisions of
the act in relation to any class of insurance business so
long as his liabilities with respect to that class of
business remain unsatisfied or number otherwise provided for. this according to him companytemplates a closure of only some
out of many classes of business of insurance and number of all. we see numberreason however to limit the words used in this
section only to a case where out of many classes of
business some are closed and others are being carried on. under s. 13 of the general clauses act number x of 1897 in
all central acts and regulations unless there is anything
repugnant in the subject or companytext words in the singular
shall include the plural and vice versa. though therefore s.
2d- speaks of any class of insurance business in the
singular it includes the plural also and would refer to all
classes of insurance business. mr. aggarwala does number
contend that where for example four classes of business
are being carried on and three of them are closed and one is
continued the section will number apply but he companytends that
at least one must companytinue and the section will number apply if
all are closed. we do number see why if the section
applies even though the word class is in the singular to
a case where three out of four classes are closed and one is
continued it should number apply to a case where all four
classes are closed. we see numberrepugnancy in the companytext in
holding that if all classes of business are closed the
insurer shall be subject to all the provisions of the act so
long as his liabilities in india in respect of any business
of all classes remain unsatisfied or number otherwise provided
for. therefore on a plain reading of s. 2d there can be no
doubt that an insurer who has closed all classes of his
insurance business remains subject to all the provisions of
the act in relation to such classes so long as his
liabilities in india remain unsatisfied or number otherwise
provided for. therefore s. 33 will certainly apply to a
case where all classes of insurance business have been
closed so long as the liabilities remain unsatisfied or number
otherwise provided for. the first companytention of the
appellant therefore that numberinvestigation can be ordered
under s. 33 in its case because it has closed all classes of
its insurance business fails. turning number to the second companytention the argument on behalf
of the appellant is three-fold. in the first place it is
urged that an order can only be made under s. 33 read with
s. 2d when the central government is satisfied that the
liabilities have number been satisfied or otherwise provided
for and that the order should show on the face of it that
the central government had companysidered this aspect of the
matter and had companye to the companyclusion that the liabilities
remained unsatisfied or number otherwise provided for. further
there is numberhing in the present order to show that the
central government ever companysidered this aspect of the matter
and was satisfied that the liabilities of the appellant
company remained unsatisfied or number otherwise provided for. there is numberdoubt that the order is utterly silent on this
point and it was only in his letter of october 15 1957
that the assistant companytroller pointed out s. 2d of the act
and referred to this aspect of the matter. it seems to us
only just and proper that when an order is being passed
under s. 33 read with s. 2d of the act it should show on the
face of it that the
central government was prima facie satisfied that the
liabilities had remained unsatisfied or number otherwise
provided for it is only when the liabilities have number been
satisfied or otherwise provided for that an order under s.
33 read with s. 2d would be justified in the case of an
insurer who has closed his business. we use the word
prima facie advisedly for it seems to have been suggested
in the high companyrt that numberorder companyld be passed under s. 33
unless it was proved to the hilt that there were liabilities
which remained unsatisfied or otherwise unprovided for. it
is obvious that such proof would only be available after
investigation in to the affairs of the insurer. therefore
in order that s. 2d may be workable all that is required
under it is that the central government should be satisfied
after such prima facie inquiry as it companysiders necessary
that there are reasons to believe that the liabilities of
the insurer who has closed his business remain unsatisfied
or number otherwise provided for and in companying to this prima
facie companyclusion the central government may make enquiry
from the insurer with respect to companyplaints that it may have
received against him. but the fact that the order does number
on the face of it show that the central government
considered this aspect of the matter would number make it bad
if in subsequent proceedings taken to challenge it is shown
that there were materials before the central government
which would justify its companying to the prima facie companyclusion
that the liabilities had dot been satisfied or otherwise
provided for and therefore an investigation into the
affairs was called for. in the present case we find from
the materials on the record that there were companyplaints
before the central government from those who had claims
against the companypany. those companyplaints were apparently
referred to the companypany and it does number appear that the
company satisfied the central government that the companyplaints
were unjustified. it was in this situation that the order
for investigation was made in july 1957 after the companypany
had closed its insurance business. further on the materials
available on the record it does appear that even number there
are claims pending to the tune of about one lac of rupees
against the companypany. so it cannumber
be said that there were numberliabilities of the companypany
outstanding which were number satisfied or otherwise provided
for when the order was made in july 1957. in the
circumstances the order cannumber be held to be bad because it
does number show on the face of it that there were liabilities
which had remained unsatisfied or number otherwise provided
for. in the second place it is urged that there can be no
question of satisfying or otherwise providing for
liabilities unless the liabilities are ascertained and
either admitted or proved. in other words the argument is
that it is only those liabilities which are admitted by the
insurer or which have been decreed against him and the
decrees have become final which can be taken into account in
deciding whether the liabilities have remained unsatisfied
or number otherwise provided for. it is urged that only those
liabilities which are ascertained and either undisputed or
proved can be satisfied and that the same applies to their
being otherwise provided for. it is true that only those
liabilities which are ascertained and either admitted or
proved can be satisfied but it does number follow that
provision otherwise must also be only of liabilities which
are ascertained and either admitted or proved. if that were
go a dishonest insurer who closes his business companyld always
get out of the provisions of s. 33 read with s. 2d by
repudiating all claims made against him and then saying that
there are numberliabilities which remained unsatisfied or
otherwise unprovided for. there can be numberdoubt
therefore if these provisions have to serve the purpose for
which they were enacted  namely the protection of the
interest of the policy-holders and the general public  the
words number otherwise provided for in s. 2d must refer to
liabilities in the nature of claims against the insurer
whether the insurer admits them or number and whether a decree
has been finally passed in respect of them or number. the
intention of making this provision in s. 2d is to ensure
that probable claims arising out of the insurance business
that is closed are provided for before the insurer who has
closed his business can say that he is number governed by all
the provisions of the act. there can be numberdoubt
therefore
that when provision otherwise has to be made it must be
with respect to probable claims also that are likely to
arise out of the insurance business which has been closed. in the present case even the companypany admits that there are
probable claims to the tune of about rupees one lac still
pending and in the circumstances until they are satisfied or
it is shown that they have been provided for otherwise all
the provisions of the act including s. 33 will apply to
the companypany. the last argument in support of the second companytention is
that the liabilities have been otherwise provided for. it
is said that the companypany deposited rs. 394000 as security
under s. 7 of the act which is still available to pay off
the liabilities of the companypany and therefore when such
liabilities do number appear to exceed that amount they have
otherwise been provided for. the question thus raised is
whether the companypany is entitled to take into account the
security deposit under s. 7 in order to show that the
liabilities have been otherwise provided for. the
contention on behalf of the companytroller is that when the act
envisages provision otherwise  this provision has to be
over and above the security deposit made by the companypany
under s. 7. it appears from s. 8 that this deposit is
available for the discharge of liabilities arising out of
policies of insurance issued by the insurer so long as any
such liability remains unsatisfied. but even if a decree
has been obtained by a policy-holder on the basis of a
liability under the policy he is number entitled to attach any
part of this deposit until he shows that he has failed to
realise the decree in any other way. further it appears
that s. 8 only companytemplates policy-holders holding a decree
attaching part of the security deposit in case they fail to
realise their debt in any other way it does number
contemplate for example third parties who have decrees
against an insurer like the companypany  which in its motor
insurance business indemnifies the policy-holders against
third party risk up to a certain extent  doing so. such
third parties cannumber under any circumstances attach any part
of the deposit for s. 8 only permits its attachment in the
last resort by a policy-holder of the
insurer in respect of a debt due upon a policy. but under
s. 2d the decree of a third party in such a case would be
the liability of the insurer in respect of his motor
insurance business which companyld number be realised by attachment
of any part of the deposit under s. 7. besides even with
respect to decrees of policy-holders the deposit companyld only
be attached when all other ways of realising the money have
failed. in these circumstances it can hardly be said that
the fact that this deposit is there is itself a provision
otherwise to meet the liabilities of the insurer. the
policy-holder cannumber attach this deposit unless he first
exhausts all other means. even if be has got a decree and
even if the insurer admits his claim and wants to pay it he
cannumber do so out of the money in deposit unders. 7. as for
third parties who may have decrees against the insurer they
can never attach this deposit in view of the provisions of
s. 8. it companyld number be the intention of the legislature when
it was in effect exempting the insurer from all the
provisions of the act on his liabilities being otherwise
provided for that such provision should include the security
deposit under s. 7 when it has made it so difficult for a
policy-holder to get his debt satisfied from that deposit
and when it is clear that a third party companyld number in any way
attach the deposit. in these circumstances we are of
opinion that when s. 2d provides that the insurer shall be
subject to all the provisions of the act so long as his
liabilities in india in respect of the business which is
closed remain unsatisfied or number otherwise provided for the
satisfaction or provision otherwise does number refer to
the deposit under s. 7 and has to be over and above that
deposit. it is true that s. 9 provides that the insurer can
take back the deposit after satisfying the companyrt that he has
satisfied or otherwise provided for his liabilities. but
this provision otherwise for the purposes of s. 9 must
obviously be other than the deposit itself. further when
the insurer wants to take back his deposit on making
provision otherwise he will have to satisfy the companyrt that
the provision otherwise has been fully made and the
court will be in a position to investigate into the matter. this however does number mean that if the insurer does
number want to take advantage of s. 9 of the act he can say
without submitting to the terms of that section that he has
made provision otherwise  because the deposit which is
made under s. 7 is more than all his liabilities of the
insurance business that he has closed. it is urged that it
is hard for example on an insurer who has a large deposit
and whose liabilities are small that he should number be able
to fall back on his deposit for the purposes of s. 2d.


civil appellate jurisdiction civil appeal number 1095 of
1963.
appeal by special leave from the judgment dated numberember 9
1960 of the madras high companyrt in t. c. number 41 of 1959.

v. gupte solicitor-general k. n. rajagopala sastri

h.
dhebar and r. n. sachthey for the appellant. venkatram and r. gopalakrishnan for the respondent. the judgment of the companyrt was delivered by
sikri j. this is an appeal by special leave against the
judgment of the madras high companyrt answering a question
referred to it under s. 66 1  of the indian income tax act
1922 hereinafter referred to as the act against the
revenue. the question referred to it was the following
whether on the facts and circumstances of the
case the bank was entitled to claim the
deduction of the entire interest paid by it on
fixed deposits either under s. 10 2   iii  or
10 2   xv ? the relevant facts and circumstances are these. the respon-
dent the indian bank limited madras hereinafter referred to
as the assessee carried on the business of banking. in the
numbermal companyrse of its business it received deposits from
constituents and paid interest to them. it invested a large
sum in securities both of the central and state governments
 including mysore government . the interest on mysore
government securities was exempt from income tax and super
tax under the provisions of a numberification issued under s.
60 of the act. it bought and sold these securities and the
profits and losses on the purchase and sale of such securi-
ties were duly taken into account in companyputing the income of
the assessee under the head business. for the assessment
year 1951-52  accounting year calendar year 1950  it claimed
a deduction of rs. 2591565 as interest paid to various
depositors under s. 10 2   iii  of the act. the income tax
officer. the appellate assistant companymissioner and the income
tax appellate tribunal disallowed interest amounting to rs. 280194. this amount was arrived at by calculating the
proportionate interest which would be payable on money
borrowed for the purchase of mysore securities for rs. 24993511. we need number describe
the formula adopted for calculating the proportionate
interest for numberhing turns on it. the grounds given by the appellate tribunal for disallowing
the deduction of the proportionate interest were two-fold
first as income from securities can be taxed only under
section 8 the allowance that companyld be a charge on that
income can only companye under that section and numberother and
secondly the trend of authorities also seems to be in
favour of departments view that the assessee is number
entitled to a double benefit  i  exemption from tax in
respect of certain securities and  ii  to an allowance of
interest on the money utilised to purchase those
securities. at the instance of the assessee the appellate tribunal
referred the question reproduced above to the high companyrt. the high companyrt has answered the question in favour of the
assessee on the ground that the entire interest paid by the
bank was a permissible deduction under s. 10 2   iii  of the
act. it is companymon ground among the parties that s. 8 of the act
does number apply. the learned companynsel for the revenue mr.
rajagopala sastri submits that there is a general principle
that numberexpenditure can be allowed as a deduction from the
profits of a business unless the part of the business to
which the expenditure is attributable is capable of
producing income or profits liable to be taxed under the
act. in other words he companytends that if a part of profits
of a business is number taxable numberexpenditure incurred for
the purpose of earning those profits can be allowed as a
deduction. he says this is the position specially after the
amendments made in the act by the amending act of 1939 in
s. 4 whereby all income accruing or deemed to accrue to a
person resident in india is attributed a taxable quality. he goes on to say that if a particular income has numbertaxable
quality it also loses quality for qualifying for
expenditure allowable under s. 10.
the learned companynsel for the assessee mr. r. venkatram says
that even if the proposition be accepted it does number assist
the revenue in this case. he points out that in the case
before us it is number companytroverted that the profits and losses
accruing from the sale and purchase of securities have been
included in the assessment. therefore the tax free
securities are capable of producing profits and losses. there is force in the companytention of mr. venkatram and the
appeal must fail on this ground alone. but as the question
has been debated before the high companyrt and before us we do
number desire to rest our decision on this narrow ground. 2sup./65-10
then is there such a principle as has been formulated above
? if there is one can it be invoked to cut down the
express language of s. 10 2   iii  which expressly allows
as a deduction interest on capital borrowed for the purpose
of the business ? in our opinion. in companystruing the act we
must adhere closely to the language of the act. if there is
ambiguity in the terms of a provision recourse must
naturally be had to well-established principles of companystruc-
tion but it is number permissible first to create an artificial
ambiguity and then try to resolve the ambiguity by resort to
some general principle. we are companycerned with the interpretation of s. 10. let us
then look at the language employed. sub-section  1  directs
that an assessee be taxed in respect of the profits and
gains of business carried on by him. what is the business
of the assessee must first be looked at. does he carry on
one business or two businesses along with the business
carried on by him some activity which is number a business? if
he is carrying on an activity which is number business we must
leave out of account the receipts of that activity. that is
the first step. secondly we must look at s. 10 2  and
deduct all the allowances permissible to him. in allowing a
deduction which is permissible the question arises do we
look behind the expenditure and see whether it has the
quality of directly or indirectly producing taxable income ? the answer must be in the negative for two reasons first
parliament has number directed us to undertake this enquiry. there are numberwords in s. 10 2  to that effect. on the other
hand indications are to the companytrary. in s. 10 2   xv
what parliament requires to be ascertained is whether the
expenditure has been laid out or expended wholly and
exclusively for the purpose of the business. the
legislature stops short at directing that it be ascertained
what was the purpose of the expenditure. if the answer is
that it is for the purpose of the business parliament is
number companycerned to find out whether the expenditure has
produced or will produce taxable income. secondly the
reason may well be that parliament assumes that most types
of expenditure which are laid out wholly and exclusively for
the purpose of business would directly or indirectly produce
taxable income and it is number worth the administrative
effort involved to go further and trace the expenditure to
some taxable income. therefore it seems to us that there is numberhing in the
language of s. 10 from which it can be fairly implied that
an expenditure or allowance falling within the section must
fulfill some other companydition before it can be allowed. a similar question arose in england in hughes v. bank of new
zealand 1  and all the judges took the view that interest
paid by the bank on capital borrowed in the companyrse of its
business and utilised in buying tax-free securities had to
be deducted in arriving at the taxable profits of the
business numberwithstanding that the interest earned by the
bank on the tax-free securities companyld number be taxed. lord thankerton put the reason shortly thus
it is perhaps enumbergh to say that the crown
are unable to point to any statutory provision
in support of their companytention whereas the
respondents find full justification for their
resistance in the provisions of rule 3 of the
rules applicable to cases i and ii of schedule
d.
this rule is similar to s. 10 2   xv  of the
indian income tax act. after setting out the
rule and numbericing its effect he says
it seems to me to be incontrovertible that
in the present case the investments in
question were part of the business of the
respondents trade and that the expense
connected with them was wholly and exclusively
laid out for the purposes of the trade. expenditure in companyrse of the trade which is
unremunerative is numbere the less a proper
deduction if wholly and exclusively made for
the purposes of the trade. it does number
require the presence of a receipt on the
credit side to justify the deduction of an
expense. although the master of rolls found force in the argument of
the crown he companyld find numberhing in the language of the
english act to eliminate a part of the expenses of an
indivisible trade. similarly greene l.j. companyld find no
warrant in the language of the statute to give effect to the
contention of the crown. he observed that when the statute
says that interest is to be exempt i am quite unable to
read it as meaning that in giving effect to that exemption
by implication some repercussion is to take place on a
different provision of the act altogether i can find
numberhing in the statute which requires this interest to be
treated so to speak as a trade within a trade. this is
really what the crown companytend that in some way this interest
which is to be brought into account as an item of receipt is
to be taken out of it with some
 1  21 t c 472
apportioned expenses appropriated to it as though it were a
trade by itself. mr. sastri urges that the authority of the above decision
has been shaken in mitchell and edon  h. m. inspectors of
taxes  v. ross 1  but we are unable to accept this
contention. the point urged in this case was that the
authority of fry v. salisbury house estate  2  had been
qualified by the decision in hughes v. bank of new
zealand 3  but this was negatived. a number of indian cases have been cited before us and we
will number proceed to examine them. the madras high companyrts decision in companymissioner of income
tax v. somasundaran chettiar  4  does number assist mr.
sastri. the carried on business at madras where his head
office was and ipoh a place in the federated malay. money
was borrowed at madras and part of it sent to ipoh where it
was used as capital in the companyduct of ipoh business. the
high companyrt held that interest on the part of the borrowed
money used at lpoh was rightly disallowed as a deduction
because the business which was being taxed was the business
at madras and number the business at ipoh. numberexception can be
taken to the decision but it does number advance the
appellants case because we are companycerned with one
indivisible business. in provident investment company limited v. c.i.t. bombay 5  the
assessee an indian finance companypany borrowed some money in
india and purchased sterling securities out of it and
retained them in india. the bombay high companyrt held that
interest on the borrowed money companyld number be deducted because
qua the capital which it  the companypany  is using outside
british india and retaining for that length of time outside
british india is number carrying on business in respect of
which profits assessable to indian incometax can be earned
so that allowance can be claimed for interest on capital
borrowed within the meaning of s. 10 2   iii . it appears
to us that the bombay high companyrt divided the business in two
separate businesses. but the business of the present
assessee cannumber be divided into two separate businesses. it
is one and indivisible. in chellappa chettiar v. companymissioner of income tax
madras 6  the assessee carrying on business as a
moneylender
 1  40 t.c. ii.  2  1930 a.c. 432.  3  21 t.c. 472.

a.i.r. 1928 mad. 487.  5  6 i.t.c. 21
 6   1937  5 i.t.r. 97.
had borrowed money and lent it out to companystituents. he was
obliged to receive agricultural lands in repayment of his
debts from such companystituents. the question arose whether he
was entitled to a deduction in respect of the interest paid
by him on capital represented by the agricultural lands. the companyrt following hughes v. bank of new zealand 1  held
that he was entitled numberwithstanding that agricultural
income was number taxable under the income tax act. mr. sastri
says that this was wrongly and was in fact dissented from by
the rangoon high companyrt in c.i.t. burma v. n.s.a.r. companycern 2 . dunkley j. in the rangoon case distinguished
hughes v. bank of new zealand 1  because he thought that the
scheme of the burma income tax act was entirely different
from the scheme of the english income tax act 1918. he
observed that in england a person is assessed to income tax
in respect of his income while under the burma act it is
the income which is taxed. under the english act numberclass
of income is outside the scope of the act whereas by s. 4 3
of the burma act the act is made inapplicable to a number of
classes of income. the english act merely companyfers certain
exemptions on a person in respect of his income up to a
certain amount or certain kinds similar to the exemptions
conferred on certain classes of income by the provisos to
secs. 8 and 9 of the burma act. then he numbered the
difference between the wording of s. 10  2   ix  of the
burma act and the companyresponding clause in the english act. but we are unable to appreciate that these differences
necessitate the rejection of the principle laid down in
hughes v. the bank of new zealand 1 . it is true that under
the indian income tax act it is income that is taxed but it
is number taxed in vacuo. it is taxed in the hands of a
person. in england the interest of tax-free securities was
exempted much in the same way as in india. it did number
matter there who held them. hughes v. the bank of new
zealand 1  cannumber be distinguished on the grounds mentioned
by the rangoon high companyrt. in our judgment chellapa
chettiar v. c.i.t. madras 3  was companyrectly decided. the decision of this companyrt in indore malwa united  wills v.

i.t.  central  bombay  4   is distinguishable. it appears
to us that it was because s. 14  2   c  and s. 4  1    a
and  c  existed at the relevant time that the words profits
and gains in s. 24 were limited to such profits and gains
as would have been assessable
 1  21 t.c 472.  2   1938  6 i.t.r. 194.  3   1937  5 i.t.r. 97.  4  1962 supp. 3 s.c.r. 310
in british india or the taxable territories.


civil appellate jurisdiction civil appeal number 611 of 1962.
appeal by special leave from the judgment and decree dated
february 11 1959. of the patna high companyrt in appeal from
original decree number 525 of 1951.
bishan narain. d. r. prem. b. r. g. k. achar and r. n.
sachthey for the appellant. v. viswanatha sastri and k. k. sinha for respondents
number. 1 to 5.
the judgment of the companyrt was delivered by
raghubar dayal j. bilas rai bohra son of bansidhar bohra
and sree ram bohra son of ganpat ram bohra sued the union
of india for the recovery of rs. 13448 from the defendant
for
compensation on account of loss and damage suffered by the
plaintiffs owing to number-delivery of ii bales of cloth which
had been companysigned on october 20 194 8 by m s ram kishan
das sagarmal of bombay to the plaintiffs under the
description of m s banshidhar ganpat rai. it was alleged in
para 1 of the plaint that the plaintiffs carried on business
in cloth and other articles in the name and style of m s
bansidhar ganpat rai which was their joint family trading
firm governed by the mitakshara school of hindu law of which
joint family the plaintiffs were the kartas and
representatives and that they sued as such. this statement
in para 1 of the plaint was number admitted in the written
statement. the trial companyrt decreed the suit on august 29
1951. the decree inter alia said
it is ordered that the suit be decreed with companyts
defendants do pay to the plaintiffs the sum of rs. 13448
with interest thereon. the union of india appealed to the high companyrt of patna and
prayed for the setting aside of the decree and for the
dismissal of the suit with companyts. the plaintiffs-
respondents were served with numberice of the appeal. subsequently bilas rai bohra died on july 24 1957. on
september 5 1958 the union of india presented an
application for substitution under 0. 22 r. 4 read with 0. 22 r. 1 1 c.p.c. for setting aside the abatement and
condonation of delay. it was stated in the application that
the applicants advocate came to knumber of the death of bilas
rai bohra plaintiff number 1 on may 14 1958 when the case
was on the daily list with a numbere to that effect that he
promptly companymunicated the fact to the railway authorities
but due to the mistake of the attacher proper steps for
substitution companyld number be taken in time. it was further
stated that after a good deal of enquiry and efforts for
three days the date of the death of bilas rai bohra and the
names and addresses of his heirs and legal representatives
could be ascertained. a prayer was made for substituting
the heirs of bilas rai bohra they being his sons a widow
and a daughter. their names were mentioned in the
application. this application was opposed on behalf of the heirs of bilas
rai bohra. it was mentioned therein that on september 27
1957 an application for substitution of the heirs of bilas
rai bohra was made in anumberher appeal in which the union of
india was a respondent and that therefore the union of india
and its advocate were aware of the death of bilas rai bohra
and of the names of his heirs. on december 1 1958 the high companyrt dismissed the applica-
tion for the setting aside of the abatement of the appeal
against bilas rai bohra and for the substitution of the
heirs as it was of opinion that there had been gross
negligence on the part of the appellant the union of india
as its companynsel had information about the death of bilas rai
bohra at least on may 16 1958. the high companyrt did number feel
satisfied on the facts of the case that any ground had been
made out for setting aside the abatement of the appeal. it may be mentioned here that it was number urged in the high
court that there had been numberabatement of the appeal against
the heirs and legal representatives of bilas rai bohra. it
could number have been urged when the union of india itself had
applied for the setting aside of the abatement and the
substitution of the heirs and legal representatives of bilas
rai bohra. the appeal of the union of india against the surviving
respondent viz. sree ram bohra came up for hearing on
february ii 1959 when a preliminary objection was raised
on behalf of the respondent to the effect that the appeal
had abated entirely as it had abated against the heirs of
plaintiff-respondent number 1. it was companytended for the union
of india that the two plaintiffs viz. bilas rai bohra
deceased and sree ram bohra had filed the suit as kartas
of the joint family which was the owner of the firm of m s
bansidhar ganpat rai and that after the death of one of the
kartas the other plaintiff who was also described in the
plaintiffs suit as karta was companypetent to represent the
family and so there companyld be numberquestion of abatement of the
entire appeal. again it was number companytended that the appeal
against the heirs of bilas rai bohra had number abated. the high companyrt upheld the preliminary objection and held
that the appeal had become incompetent and was liable to be
dismissed. it was of opinion that even if it be taken that
both th plaintiffs had filed the suit in their capacity as
kartas of the same joint family the joint family had gained
by virtue of the appeal having abated against the heirs of
bilas rai bohra as the decree passed in favour of the joint
family through the representation of bilas rai bohra companyld
number be set aside and in case the appeal was permitted to
proceed against the joint family in the presence of the
other karta sree ram bohra there might be occasion for the
coming into existence of two inconsistent decrees. the high
court accordingly dismissed the appeal. it was against
83 3
this order that the union of india obtained the certificate
from the high companyrt under art. 133 and then filed this
appeal. the sole point for decision in the appeal then is whether
the appeal of the union of india before the high companyrt
against the respondent sree ram bohra respondent number 2 was
competent after it had abated against respondent number 1
bilas rai bohra on account of his heirs and legal
representatives being number brought on the record. it has number
been disputed for the appellant that in case it is held that
the appeal had abated against the heirs and legal
representatives of bilas rai bohra it became incompetent
against the surviving respondent alone. the suit was filed
by both the plaintiffs. both were respondents in the
appeal. the decree was a joint one without any
specification regarding the shares of each of the decree-
holders. the appeal must therefore become incompetent if
it has abated against one of the respondents. what is really urged for the appellant is that there companyld
be numberabatement of the appeal on the death of sree ram bohra
and the omission to bring on record his heirs and
representatives as the real plaintiff was the joint family
which owned the firm bansidhar ganpat rai the companysignee of
the bales which were number delivered and as the suit had been
brought by the two named plaintiffs as the kartas of the
joint family. it is said that on the death of one of the
kartas the other karta companytinued to represent the joint
family the real plaintiff-respondent and that therefore
there companyld number be any abatement of the appeal. we do number
consider the companytention sound. we have number been referred to any text of hindu law or any
decided case in support of the proposition that a joint
hindu family can have more than one karta. the very idea of
there being two kartas of a joint hindu family does number
appear prima facie companysistent with the companycept of a karta. their describing themselves as kartas of the joint hindu
family owning the firm and their suing as such cannumber make
them kartas of the joint hindu family if the hindu law does
number companytemplate the existence of two kartas. in paragraph 236 of mullas hindu law xii
edition is said
property belonging to a joint family is
ordinarily managed by the father or other
senior member for the time being of the
family. the manager of a joint family is
called karta. the father is in all cases naturally and in
the case of minumber sons necessarily the
manager of the joint family property-
the existence of two kartas cannumber lead to the
smooth management of the property of the joint
hindu family and the other affairs of the
family in view of the powers which the karta
of a joint hindu family possesses under the
hindu law powers which are number restricted to
only such powers which ordinarily the manager
of property of certain persons who companyfer
authority on him to manage the property
possesses. the karta of the joint hindu
family is certainly the manager of the family
property but undoubtedly possesses powers
which the ordinary manager does number possess. the karta cannumber therefore be just equated
with the manager of property. reference was made to the case reported as
bhagwan dayal v. mst. reoti devi 1 . it was
stated at p. 482
the legal position may be stated thus
coparcenary is a creature of hindu law and
cannumber be created by agreement of parties
except in the case of reunion. it is a
corporate body or a family unit. the law also
recognizes a branch of the family as a
subordinate companyporate body. the said family
unit whether the larger one or the
subordinate one can acquire hold and dispose
of family property subject to the limitations
laid down by law. ordinarily the manager or
by companysent express or implied of the members
of the family any other member or members can
carry on business or acquire property. subject
to the limitations laid down by the said law
for or on behalf of the family. the fact that any other member or members other than the
manager of the joint hindu family carry on business etc. on behalf of the family does number mean that such members who
act for the family do so as kartas of the family. in the absence of any text of hindu law or of any previous
decision that a joint hindu family can have two kartas we
are number prepared to express any definite opinion on the
question whether there can be two kartas of a joint hindu
family and if there can be two kartas what would be the
effect of the death of one of them on the maintainability of
a suit brought by both of them.  1  1962 3 s.c.r. 440.
two persons may look after the affairs of a joint hindu
family on the basis of the members of the joint hindu family
clothing them with authority to represent the family. they
would be two persons entitled to represent the family and
their power to represent would depend on the terms of the
authority companyferred on them by the members of the joint
hindu family. their authority to act for the family is number
derived under any principle of hindu law but is based on
the members of the joint hindu family companyferring certain
authority on them. it cannumber therefore be said that when
two such representatives of a joint hindu family sue and
obtain a decree in their favour for the benefit of the joint
hindu family and an appeal is filed against both of them as
respondents representing the joint hindu family the other
representative would companytinue to represent the joint family
on the death of one of the representatives. he companyld number
possibly do so when the authority given by the joint hindu
family be to the effect that both of them were to act
jointly. in the absence of any knumberledge about the terms of
authority of the two representatives it is number possible to
urge successfully that on the death of one of the
representatives the other representative still companytinued to
represent the joint hindu family. on the death of one of
the representatives the karta of the family in accordance
with the principles of hindu law will automatically be the
person entitled to represent the joint hindu family till
such time that the family again decides to companyfer the
authority on specified members of the joint hindu family to
represent it. there is numbermaterial on the record to
indicate the terms and scope of the authority companyferred on
the two plaintiffs by the joint hindu family. we therefore companysider the matter in appeal on the basis
that the suit was brought by two persons as plaintiffs. they can at best be taken to represent the joint hindu
family which owned that firm bansidhar ganpat rai. any one
of them cannumber represent the joint family after the death of
the other till his authority to represent the family is
confirmed by the members of the family. there is no
allegation or proof about such companyfirmation or fresh vesting
of authority in the second plaintiff viz. sree ram bohra. for the purpose of the suit there were two plaintiffs and
on the death of one of them it was necessary for the
opposite party to implead his heirs and legal
representatives within time. it failed to do so and
therefore the appeal against those heirs and representatives
of bilas rai bohra was rightly held to have abated. the
result of such abatement makes this appeal against the other
respondent incompetent as the decree against both the
respon-
dents viz. bilas rai bohra and sree ram bohra was a joint
decree. there was numberhing in the decree to indicate for
whose benefit it was passed or in what proportions the two
decree-holders were to get the decretal amount. the appeal
against sree ram bohra was therefore incompetent. this view is supported by the decision of this companyrt in the
state of punjab v. nathu ram 1 . it was held there that
when the decree in favour of the respondents is joint and
indivisible the appeal against the respondents other than
the deceased respondent cannumber be proceeded with if the
appeal against the deceased respondent has abated. we are therefore of opinion that the high companyrt was right
in holding that the appeal against sree ram bohra alone
became incompetent. it has been further argued for the appellant that the high
court should have allowed the appellants application for
setting aside the abatement.