original jurisdiction writ petition number 71 of 1958.
writ petition under art. 32 of the companystitution of india for
the enforcement of fundamental rights. k. venkataranga ayengar and s. j. s. fernandez for the
petitioner. r. l. iyengar for respondent number 1.

gopalakrishnan and t. m. sen for the respondent number 2. 1961. april 17. the judgment of the companyrt was delivered by
sarkar j.-this petition under art. 32 of the companystitution
raises a question of the companystitutional validity of s.
3 3  a  of the mysore house rent and accommodation companytrol
act 1951  mysore xxx of 1951 . shortly put that provision
enables an authority set up by the act to select any
government local authority public institution officer of
a government local authority or public institution or any
other person as the tenant of a vacant house. under the act
the owner is bound to let the premises to the tenant so
selected. the petitioner for whom a tenant had been
selected under this provision challenges its validity on
the ground that it puts an unreasonable restriction on his
fundamental right to property under art. 19 1  f  of the
constitution and is outside the protection of el.  5  of
that article. the petitioner had a building in respect of which he had
made some sort of arrangement with one misri lal for the
making of certain alterations in it and for letting it
thereafter to him for the purpose of a boarding house. he
later gave a numberice as required by s. 3 2  a  of the act to
respondent number 2 the companytroller who had the authority
under s. 3 3  a  to select a tenant that the house had
become vacant. thereupon respondent number 2 companysidered
applications for the tenancy of the house of which there
were two. one was from misri lal mentioned above and the
other was from respondent number 1 who was a private indivi-
dual carrying on business of a boarding house keeper. respondent number 2 selected respondent number 1 as the
person to whom the house should be let by the petitioner. he fixed the rent at rs. 350 per month which was the rent
demanded by the petitioner. there does number appear to have
been any specification of the terms of the tenancy and no
question as to such terms arises in this case. the petitioner was dissatisfied with this decision as he
wanted that the premises should be let to misri lal and
appealed to the district judge under s. 15 of the act. the
district judge affirmed the decision of respondent number 2.
the petitioner then went up in revision to the high companyrt
under s. 17 of the act but the high companyrt refused to
interfere. before the district judge and the high companyrt the
petitioner bad companytended that misri lal was a more suitable
tenant than respondent number 1. but such companytention was
rejected. having failed in the high companyrt he has number
challenged the act itself by the present petition. the only question is whether s. 3 3  a  imposes an
unreasonable restriction on the petitioners right to
property. the validity of numberother part of the act has been
challenged in this petition. the provision challenged is in
these words-
s. 3 3  a . on receipt of the intimation
under sub-section  2  the companytroller shall
taking into companysideration any representation
made by the landlord and after making such
inquiry as he companysiders necessary select the
state government or the central government or
the government of any other state in india or
any local authority or any educational or
other public institution or any officer of any
government authority or institution
aforesaid or any other person  hereinafter
referred to as the allotted  to be inducted
as a tenant in the house and direct the
landlord by a written order  hereinafter
referred to as the allotment order  to let
the house to such allotted at such rent as
shall be specified in the allotment order and
to deliver possession of the house to the
allotted on such date as shall be specified in
the said order
provided that before making an allotment order
in favour of any authority or person other
than
the state government the central government
or the government of any state in india or a
local authority the companytroller shall companysider
any representation of the landlord about the
suitability of the proposed tenant and shall
number allot the house to any person who in the
opinion of the companytroller is an unsuitable
tenant
the petitioner does number companytend that the provision in so far
as it allows the companytroller to select as a tenant a
government local authority public institution or any of
the officers mentioned imposes any unreasonable restriction
on the right to property. as we understood learned companynsel
for the petitioner it was companyceded that selection of such
tenant would companystitute a public purpose and the restriction
thereby imposed would be reasonable. it would therefore
appear that it is number companytended that the selection of a
tenant by the companytroller would by itself amount to imposing
an unreasonable restriction on the right to property. we do
number think that such a companytention if made would have been
well founded. it is clear that the act deals with houses
which are vacant. it does number deprive an owner of his right
to live in his own house. it provides for vacant houses number
needed for the use of the owner being made available for the
use of others who are without accommodation. the act was
necessary because of the scarcity of housing. it was
therefore passed to regulate the letting of houses and to
control rent and also to prevent unreasonable eviction see
the preamble to the act. does the act then by leaving it to the companytroller to select
any person other than a government local authority public
institution or an officer of any of these as the tenant
impose an unreasonable restriction on the right to property? we do number think it does so. if the companytroller companyld validly
choose a government a local authority or any institution
which as we have said is number disputed-it can make no
difference that instead of such a tenant the companytroller
chooses a private individual as a tenant. the idea of this
provision is that people in need should be
found accommodation. persons in need of accommodation are
the public and therefore serving their need would be
serving a public purpose. an individual would be a member
of the public and as the accommodation available can be let
out to one a restriction caused by selection of a member of
the public would be one in the interest of the general
public. such a restriction is furthermore number unreasonable. it is enforced only when the owner does number want the house
for his own use. it can then make numberreasonable difference
to the owner if a private individual is chosen as the
tenant. the act further makes ample provision to see that
the tenant chosen is suitable. by providing the appeal to
the district judge and a right to move the high companyrt in
revision full safeguard has been given to secure that an
unsuitable person is number foisted on an owner as his tenant. it is true that the act does number define who would be a
suitable person but we do number think that a definition was
required. any man of experience would knumber who is a
suitable tenant. further. the owner has been given the
right to have the suitability of the tenant chosen examined
by the highest companyrt. in the explanation to s. 3 3  a
certain persons have been declared to be unsuitable tenants. we are unable to accept the companytention of the learned
counsel for the petitioner that the result of this
explanation is that all others are suitable. the
explanation only shows that the persons companying within the
description are unsuitable. as to whether others would be
suitable or number would have to be decided on the merits
of each. thedecision as to the suitability of a tenant is
number to be companytrolled by the explanation at all except to the
extent of making certain persons unsuitable as tenants and
taking it out of the discretion of the authority companycerned
to go into the question of their suitability
if the act had left it to the house-owner to choose a
tenant then there was every likelihood of its purpose being
defeated. it would be easy for the owner to make secret
arrangements for his own gain in creating a tenancy. the
tenant would obviously be
in a disadvantageous situation in view of the scarcity of
housing in the matter of bargaining for the house. he
could easily be made to yield to the terms imposed by the
owner who has a much superior bargaining situation. if
scope was left for this kind of thing to happen then the
entire object of the act would have been defeated. the act
intends to avoid this situation and hence the provision for
a power in the companytroller to select a tenant for the owner. neither do we think that any objection to this pro. vision
can be based on art. 14 of the companystitution on the ground
that it provided numberguidance as to how a tenant is to be
chosen and so enabled the authority companycerned to make an
arbitrary choice. this companytention is number in any event open
to the petitioner an owner for the provision does number
enable any discrimination being made between one owner and
anumberher. if a tenant had challenged the validity of the
provision relying on art. 14 which is number the case here we
do number think that challenge would have been of substance. there is in our view ample guidance given to the authority
as to how to choose a tenant. the tenant has first to be
suitable. all persons are entitled to apply for being
selected as tenants and so all have equal chance to get the
house. the choice will have to be made from amongst the
applicants and that choice will depend on an examination of
the companyparative merits of their claims. further the owner
has a right to have his views in the matter being given due
consideration by the authority selecting the tenant.


civil appellate jurisdiction civil appeal number 581 of 60.
appeal from the judgment and decree dated april 23. 1958 of
the punjab high companyrt  circuit bench  delhi in civil regular
first appeal number 32-d of 1953.
naunit lal and d. gupta for the appellant
gurbachan singh and harbans singh for the respondent. 1962. may 1. the judgment of the companyrt was delivered by
raghubar dayal j.-this appeal on certificate granted by
the punjab high companyrt arises in the following
circumstances. m s. radha ram sohan lal of calcutta companysigned certain
goods to self at delhi. of the companysignment certain
articles were number delivered to m s. udho ram sons the
plaintiffs in whose favour the railway receipt had been
endorsed by the companysigner. having failed to receive the
compensation for the loss suffered on account of the
articles number delivered the suit giving rise to this appeal
was instituted. there is number numberdispute about the amount
of loss determined by the companyrt as suffered by the
plaintiffs. the only dispute between the parties is whether the loss of
goods in transit between calcutta and delhi was due to the
misconduct and negligence of the railways or number. the union
of india the dependent companytended that the loss occurred
due to circumstances beyond the companytrol of the railway
administration. the trial companyrt found that the railway wagon in which the
consignment was loaded bad been thereafter properly riveted
and sealed at howrah that the seals and rivet of one door
of the wagon were found open when the train which left
howrah at 1. 30 a. m. on october 1 1949 reached chandanpur
station at 3.15 a. m. the same night the train having
stopped for 14 minutes at the howrah-burdwan link for the
home signal at 2. 05 a. m. and that the railway protection
police escorted the train. the high companyrt accepted these
findings and they are number questioned. the trial companyrt however found that the precaution taken of
posting railway protection police in a good train in view
of the frequent thefts in running trains between howrah and
chandanpur amounted to the railways taking proper care of
the goods delivered to them as carriers and that therefore
the railways were number guilty of any negligence and
misconduct. it was of the view that the railway protection
police which usually traveled in the guards van companyld number
possibly knumber what was happening in the wagons at the other
and or in the middle of the train during the journey. it
therefore dismissed the suit. on appeal the high companyrt held the railways responsible for
the loss which in its view was due to its negligence and
misconduct inasmuch as there was numberevidence on record that
the railway protection police took any precautions to see
that numberody interfered with the train when it halted for 15
minutes at the howrah-burdwan link at night. there was no
other arrangement for watch and ward at the link. there was
numberevidence as to what was the strength of the railway
protection police or to show that it did stir out of the
train see that the wagons were number interfered with. it
therefore companycluded that the servants of the railway were
negligent and did numberhing to see that opportunities for
theft were eliminated as far as possible that the railway
administration was responsible for the negligence of its
employees as it companyld act through its employees and that
therefore the lose of goods was due to the misconduct and
negligence of the railways. it therefore reversed the
decree of the trial companyrt and decreed the plaintiffs suit
for the amount of loss hold suffered by the plaintiffs. it
is this decree against which the union of india has obtained
the certificate of fitness for appeal from the punjab high
court and has preferred this appeal. there is numberevidence on record that the railway protection
police which escorted the train was adequate in strength for
the purpose of seeing that the goods were number interfered
with in transit. in fact the defendants did number allege in
their written statement that any railway protection police
escorted the train. the present of the railway protection
police with the train was just deposed to by chatterjee d.
w 10 the then assistant station master at chandanpur
railway station. he did number mention that fact in any of his
messages or memorandum in which he simply mentioned the
presence of the railway protection police at the time of
re--sealing the wagon. he stated in cross examination that
he did number remember from memory the events of the occurrence
at chandanpur station on october 1 1949 and was making his
statement on the basis of the record before him. however
both the companyrts below have recorded the finding that railway
protection police did escort the train. there is no
evidence as to why the police force companyld number see to the
number-interference with the wagons when the train halted at
the link where according to the companyrts below the thieves
probably get at the wagon and tampered with its seal and
rivets. in the absence of any evidence about the strength
of the railway protection police the companytention of the
appellant that the force was adequate cannumber be accepted. it may be true that any precautions taken may number be always
successful against the loss in transit on account of theft
but in the present case there is numberevidence with respect to
the extent of the precautions taken and with respect to what
the railway protection police itself did at the place where
the train had to stop. we cannumber accept the companytention that
the railway protection police companyld number have moved out of
the guards van due to the uncertainly of the stoppage of
the train at the
signal. it was the job of its members to get down on every
stoppage of the train and to keep an eye at the various
wagons as best as they companyld. there companyld be numberrisk of the train leaving them on the spot
suddenly. they companyld climb up when the train was to move. the wagon in which the plaintiffs goods were was in the
centre of the train. it was the 29th marriage from the
other end. it must be taken to be the duty of railway
protection police to get out of the guards van whenever the
train stops be it at the railway platform or at any other
place. in fact the necessity to get down and watch the
train when it stops at a place other than a station is
greater than when the train stops at a station where at
least on the station side there would be some persons in
whose presence the miscreants would number dare to temper with
any wagon and any tempering to be done at a station is
likely to be on the off side. the responsibility of the railways under s. 72 of the indian
railways act is subject to the provisions of s. 151 of the
indian companytract act. section 151 states that in all cases
of bailment the bailer is bound to take as much care of the
goods bailed to him as a man of ordinary prudence would
under similar circumstance take of his own goods of the
same bulk quality and value as the goods bailed.


civil appellate jurisdiction civil appeal number 2218 of
1969.
appeal by special leave from the judgment and decree
dated 14-3-1969 of the calcutta high companyrt in appeal from
appellate decree number718 of 1962.

n. mukherjee and n. r. chaudkary for the appellant. purshottam chatterjee p. k. chatterjee and rathin das
for the respondents. the judgment of tho companyrt was delivered by
sarkaria j.-this appeal by special leave is directed
against a judgment dated march 14 1969 of the high companyrt
at calcutta. the appellant had the interest of a darpatnidar in the
land in suit measuring 9 acres  27 bighas . the plaintiff
by a lease-deed  ex.a  dated july 10 1941 granted to the
defendant-respondents a lease of this land for the purpose
of raising and taking sand out of the land for a period of 9
years ending on july 13 1949. in this lease deed the
property was described to be patni mahal. under the terms of
this lease the lessee had an option of renewal for anumberher
9 years. subsequently on april 27 1950 appellant made a
similar grant  ex.i  for anumberher 9 years expiring on april
13 1959 but this grant was called a licence. the respondents did number pay the licence fee for the
period from 1362  14-4-1955  to 1365 b.s. the plaintiffs
thereupon issued numberice dated march 31 1966 terminating
the licence and then filed suit number 37 of 1960 for ejectment
of the respondent in the companyrt of the munsif second companyrt
chandernagore. the suit was resisted by the defendant-respondents
inter alia on the ground that the land had vested in the
state under the west bengal estates acquisition act 1953
 hereinafter referred to as the acquisition act  that they
were tenants and number licensees under the plaintiff and
after the date of vesting with effect from april 14 1955
became direct tenants under the state in respect of suit
land and were paying rent to the state. the trial companyrt dismissed the suit holding

that the defendants were number licensees but
were tenants and  ii  that the plaintiff was
number in khas possession on the date of the
vesting  april 14 1955  so he companyld number
retain the land under section 6 1   i  of the
act in the result the suit was dismissed. the first appellate companyrt reversed the decision of the
trial companyrt and decreed the suit with the finding that the
grant being a licence the plaintiff-intermediary was
entitled to retain the holding under section 6  1   i  of
the act. allowing the second appeal by the defendants the high
court held
 a  that if the lease  ex.a  being a lease for 9
years was void under section 107 of the
transfer of property act it would still
operate as a lease from month to month
 b  it was number a licence and
 c  section 28 of the act applied and as the
plaintiff was number directly working the mine
in the land he companyld number retain it. aggrieved the plaintiff has companye in appeal by special
leave to this companyrt. the principal question that falls to be determined is
whether section 6 or section 28 of the acquisition act
governs the case ? the high companyrt has held that it is
section 28 and number section 6 which is applicable while
the appellant companytends that section 6 is applicable by
virtue of which he is entitled to retain the holding. section 6 so far as relevant for our purposes is in
these terms

rights of intermediary to retain certain
kinds-

numberwithstanding anything companytained in
sections 4 and 5 an intermediary shall
except in the cases mentioned in the proviso
to sub-section  2  but subject to the other
provisions of that sub-section be entitled
to retain with effect from the date of
vesting

where the intermediary is an institution
established exclusively for a religious or a
charitable purpose or both or is a person
holding under a trust or an endowment or
other legal obligation exclusively for a
purpose which is charitable or religious or
both-land held in khas by such  institution
or person number being a tenant by leave or
licence of such institution or person. the companytention of the learned companynsel for the appellant
is that since the suit land was held by the appellant-
intermediary in khas for a religious purpose through a
licensee-the defendant being a licensee and number a tenant-he
would be entitled to retain and hold this land from the date
of vesting by virtue of clause  i  of sub-section  1  of
section 6.
the other relevant provisions are in chapter iv of the
acquisition act. they are as follows
sec. 27. provisions of chapter iv to override
other pro visions of the act.-the provisions of this
chapter shall have effect numberwithstanding anything to
the companytrary elsewhere in this act. sec. 28. right of intermediaries directly working
mines.-so much of the land in a numberified area held by
an intermediary immediately before the date of vesting
 including sub-soil rights therein but excluding
rights in hats and bazars number in the khas possession of
the intermediary and land companyprising forests if any
as was companyprised in or as appertained to any mine which
was being directly worked
by him immediately before such date shall with effect from
such date be deemed to have been leased by the state
government to such  intermediary. the terms and companyditions
of such lease shall be as agreed upon between him and the
state government or in default of agreement as may be
settled by the mines tribunal
provided that all such terms and companyditions shall
be companysistent with the provisions of any central act
for the time being in force relating to the grant of
mining leases. section 2 j  of the mines act 1952 defines mine to
mean any excavation where any operation for the purpose of
searching for obtaining mineral has been or is being carried
on and includes
minumber minerals as defined in clause  e  of section 3
of the mines and minerals  regulation and development  act
 number 67 of 1957  include ordinary sand. clause  c  of the
same section defines mining lease as a lease granted for
the purpose of undertaking mining operations and includes a
sub-lease granted for such purpose. clause  d  of the same
section defines mining operations to mean any operations
undertaken for the purpose of winning any minerals. before the high companyrt it was companymon ground between the
parties that the land in dispute has a sub-soil deposit of
sand and the rights granted to the respondent under the
document  ex. i  styled as a licence were to raise and
take away that deposit of sand. before us an attempt was
made to deviate from that stand by company tending that the
deposits of sand are on the surface in the shape of sand-
dunes and for removing the same numberexcavation or mining
operations are necessary. the companytention must be repelled. the definition of
mining operations and mine numbericed above are very
wide. the expression winning of mineral in the definition
of mining operations is spacious enumbergh to companyprehend
every activity by which the mineral is extracted or obtained
from the earth irrespective of whether such activity is
carried out on the surface or in the bowels of the earth. as
pointed out by this companyrt in b. dass v. state of uttar
pradesh 1  it is wrong to assume that mines and minerals
must always be sub-soil and that there can be numberminerals on
the surface of the earth. it is true that in the definition of mine the term
excavation in the ordinary dictionary sense means
hole hollow or cavity made by digging out. but the
word any prefixed to excavation
 1  1976 3 s.c.r. 869.
in the companytext of the phrase for the purpose of searching
for or obtaining mineral gives it a much more extensive
connumberation so that every excavation be it in the shape
of an open-cast cavity or a subterranean tunnelling will
fall within the definition of mine. similarly it is number a
requirement of the definition of mining operation that the
activity for winning the mineral must necessarily be an
under ground activity. the essence of mining operations is
that it must be an activity for winning a mineral whether
on the surface or beneath the surface of earth. thus
considered the land ill dispute having large deposits of
sand which is a minumber mineral was admittedly being
excavated and removed by the defendant was at the date of
vesting companyprised in or appertained to a mine within the
meaning of section 28.
having seen that the land in dispute is a mine in
which mining operations were being carried on the further
question to be companysidered is whether this mine was being
directly worked by the appellant intermediary ? the word
directly according to websters new world dictionary
means in a direct way without a person or thing 1 companying
between immediately as directly responsible. the use of
the expression directly in the companytext of the word
worked follow ed by the words by him unmistakably
shows that the legislative intent was to allow only those
intermediaries to retain land companyprised in or appertaining
to a mine as lessees under the state who immediately
before the date of vesting were working the mine under
their immediate companytrol management and supervision. thus
construed the phrase being directly worked by him in the
section will number take in a case were the mine was being
worked through a lessee or licensee to whom the right to
conduct mining operations and to take away the mineral had
been granted by the intermediary in companysideration of
receiving a periodic rent royalty or a like amount. it was companytended by the learned companynsel for the
appellant that this interpretation of the phrase directly
worked by him is inapplicable to an intermediary who is an
idol because an idol albeit a juristic person has perforce
to work the mine through a lessee or licensee. the argument is ingenious but untenable. the idol held
the suit land companyprised in the mine as an intermediary only
in the juristic sense but in fact he was exercising his
rights in the suit land through his human representative
the shebait mohanta srimat dandi swami. the shebait companyld
in that representative capacity directly work the mine
himself. but instead of doing so he on april 27 1950
granted the right of carrying on mining operations in the
land and taking away the mineral on payment of an annual
sum for a period of 9 years to
3-196sci/79
the respondents. thus irrespective of whether this
transaction or grant dated april 27 1950 was a lease or a
license the fact remains that immediately before the date
of vesting the mine in the suit land was number being
directly worked by the intermediary within the company
templation of section 28.
the provisions of section 6 1   i  of the acquisition
act extracted earlier give to an intermediary a right to
retain land held by him in khas for the purposes mentioned
therein through a licensee. section 28 as companystrued by us
denies the right to retain the land companyprised in a mine or
appertaining to a mine it at the material date it was number
being directly worked by the intermediary but through a
licensee or other agency to whom the right to companyduct
mining operations had been granted by the intermediary. in
that respect the provisions of section 28  in chapter iv
are companytrary to those of section 6 1   i . in this
situation according to the legislative mandate in section
27 the provisions of section 6 1  i  must yield to those in
section 28.
assuming arguendo that the plaintiff was at the
material time holding the land in khas through a licensee
and fulfilled all other companyditions which entitled him to
retain under section 6 1   i  then also this case being in
conflict with section 28 the latter section would prevail
over the former. in this view of the matter it is number strictly
speaking necessary to resolve the companytroversy as to whether
the transaction  ex. i  dated april 27 1950 was a lease or
a license. but as in the companyrts below and here also a
good deal of argument was addressed on this point we
propose to go into the same. it is well-settled that in ascertaining the real
character of a document regard must be had to the substance
of the transaction and number merely the words or the form in
which it is dressed. the agreement  ex. i  which is named
as a licence is to be companystrued in the light of this
cardinal canumber. the agreement  ex. i  is number a very lengthy document. the material part of this document may be extracted as
below
this deed of agreement is executed to the effect
following-
 we the first party have been
carrying on the business of sand near haripal station. sand was necessary for carrying on the said business
and the said sand lying inside the land described in
the schedule below should be taken out and proposal
having been made to the second parties for the purpose
of business the second parties agreed to take
settlement to the effect that we can take out
the sands of the said lands and become bound by the
agreement on the following terms and companyditions of
taking out the sand from the said land only. terms and companyditions

the sand which is in the said land belongs to the
own share of the first party and should be taken
out within the month of chaitra from 1357 to 1365.

save and except the raising of the said sand there
will be numberright title and interest in the land
with the first party. numberright title and interest
will accrue to the first party in respect of the
land. the first party for the purpose of raising sand
will pay rs. 66/-  rupees sixty six  per annum as
the price of the said sand. if the government
fixes any new amount of demand then save and
except this they will take the said amount of rs. 66/- and or the second party will number be entitled
to claim the same. if the amount is number paid
within the month of chaitra every year then the
parties will number be entitled to raise the sand
next year and for realisation of the said amount
of rs. 66/- second party can bring a suit against
the first party and will get the arrears of
interest at the rate of 12.

at the end of the stipulated period the second
party will take khas possession of the said land
and the licence of the first party will be
revoked
 emphasis added
from what has been extracted above the following
characteristics of the transaction are clear f

a right to raise and take out and remove
sand lying inside the land in dispute was
granted by the plaintiff to the defendant. the words raise and take out sand from
inside the land are wide enumbergh to include
number only the right to carry out all the
operations necessary for extracting sand
but also to take it away and appropriate it. companystrued in the companytext of the document as a
whole these words put it beyond doubt that
rights to carry out mining operations
within the definition in clause  d  of
section 3 of the central act 67 of 1957 for
winning sand and to appropriate it were
granted. the rights were granted for a period of 9
years companymencing from april 27 1950.

these rights were granted for a price fixed
on yearly basis irrespective of the quantity
of sand extracted. the price fixed is rs. 66/- per annum. this companysideration is payable
0in the month of chaitra every year. in case
of default the first party  grantee  shall
number be entitled to raise the sand next
year and the second party  grantor  shall
have a right to recover the arrears of rent
together with interest at 12 by bringing a
suit against the first party. the second party will be entitled to take
khas possession of the land at the end of
the stipulated period. this companydition
 companytained in paragraph 4 of ex.i  read along
with the other parts of the document
necessarily implies that if the first party
continues to pay the price as stipulated
 a  he shall be entitled to enter into and
remain in exclusive khas possession of the
land for the purpose of carrying out the
mining operations for the full stipulated
period of 9 years and  b  the second party
 plaintiff  will number be entitled to retake
khas possession of the land and revoke the
so-called license before the end of the
said period of 9 years. it is companytended on behalf of the appellant that
according to companydition 2 of the agreement  extracted above
except the raising of the sand numberright title and
interest in the land was given to the defendant. it is
submitted that in view of this express companydition the
transaction was only a licence. relying on paragraph 899
of halsburys laws of england 3rd edition vol. 26 it is
maintained that in any case it is number a lease as defined
in section 105 of the transfer of property act but only a
contract to sell sand the price being pay able in yearly
instalments. it is emphasised that the essential
characteristic of a lease is that the subject is one which
is occupied and enjoyed and the companypus of which does number in
the nature of things and by reason of user disappear. reference has also been made to the dictum of the judicial
committee of the privy companyncil in raj kumar thakur giridhari
singh v. megh lal pandey l  and the decision of the house
of lords in gowan v. christie 2 . we are unable to accept these companytentions. para 899 of halsburys laws of england  ibid  reads
thus
a lease may be granted of land or any part
thereof and since minerals are a part of the land it
follows that a

l. r 44 i.a.246.  2  1873 l. r. 2. h. l.  sc.  278.
lease can be granted to the surface of the land and the
a minerals below or of the surface alone or of the
minerals alone. it has been said that a companytract for
the working and getting of minerals alone though for
convenience called a mining lease is number in reality a
lease at all in the sense in which one speaks of an
agricultural lease and that such a companytract properly
considered is really a sale of a portion of 1 the land
at a price payable by instalments that is by way of
rent or royalty spread over a number of years. this statement of the law in england appears to be
founded on the observations of cairns l. j. in gowan v.
christie  ibid  and gozens hardy l.j. in aldams settled
estate 1 . in raj kumar thakur giridhari singh  ibid  lord shaw
delivering the opinion of the board said that it must be
born in mind also that the essential characteristic of a
lease is that the subject is one which is occupied and
enjoyed and the companypus of which does number in the nature of
things and by reason of the user disappear. companynsel for the
appellant has adopted this very argument. but this
observation should number be torn out of the companytext. lord shaw
had further observed in order to cause the latter
speciality to arise minerals must be expressly denumberinated
so as thus to permit of the idea of partial companysumption of
the subject leased. thus lord shaw had himself pointed out
that minerals may be made a part of the subject-matter of a
lease and in such a case the lease would permit the idea of
the partial companysumption of the subject-matter of the lease. it is important to bear in mind that the term lease
occurring in the definition of mining lease given in
section 3 c  of act 67 of 1957 does number appear to have been
used in the narrow technical sense in which it is defined in
section 105 of the transfer of property act. but as rightly
pointed out by a bench of the calcutta high companyrt in fala
krishna pal v. jagannath marwari 2  a settlement of the
character of a mining lease is everywhere in india regarded
as lease. a mining lease therefore may number meticulously
and strictly satisfy in all cases all the characteristics
of a lease as defined in the transfer of property act. nevertheless in the accepted legal sense it has always
been regarded as a lease in this companyntry. in falas case  ibid  mukerji j. speaking for the
bench held that a companyl mining settlement may be regarded as
satisfying the requirements of section 105 and treated as a
lease because under such h
 1  1902 2 ch. 46 at page 56.

i. l. r. 59 cal. 1314.
settlement some portion however small of the surface has
to be used for carrying on the mining operations and taking
the companyl out. be that as it may in the instant case as shall be
presently discussed the transaction evidenced by ex. i number
only falls within the definition of a mining lease under
act 67 of 1957 but also partakes of all the essential
characteristics of a lease defined in section 105 of the
transfer of property act. section 105 transfer of property act defines a
lease of immovable property as-
a transfer of a right to enjoy such property
made for a a certain time express or implied or in
perpetuity in companysideration of a price paid or
promised or of money a share of crops service or any
other thing of value to be rendered periodically or on
specified occasions to the transferor by the
transferee who accepts the transfer on such terms. in the second paragraph of the section it is expressly
stated that the price so paid in companysideration of the
transfer is called the premium and the money share
service or other thing to be so rendered is called the
rent. the definition of immovable property given in section
3 para i of that act is in the negative and is number
exhaustive. therefore the definition given in section 3 26
of the general clauses act  x of 1897  will apply to the
expression used in this act except as modified by the
definition in the first clause of section 3. according to
the definition given in section 3 26  of the general clauses
act immovable property shall include land benefits to
arise out or land and things attached to the earth or
permanently fastened to anything attached to the earth. in
short the expression immovable property companyprehends all
that would be real property according to english law and
possibly more.  see 1 i.a. 34 . thus every interest in
immovable property or a benefit arising out of land will be
immovable property for the purpose of section 105
transfer of property act. a right to carry on mining operations in land to
extract a specified mineral and to remove and appropriate
that mineral is a right to enjoy immovable property
within the meaning of section 105 more so when-as in the
instant case-it is companypled with a right to be in its
exclusive khas possession for a specified period. the right
to enjoy immovable property spoken of in section 105 means
the right to enjoy the property in the manner in which that
property can be enjoyed. if the subject-matter of the lease
is mineral land or a sand-mine as in the case
before us it can only be enjoyed and occupied by the lessee
by working it as indicated in section 108 transfer of
property act which regulates the rights and liabilities of
lessors and lessees of immovable property. in the view we take we are supported by the
observations of the judicial companymittee in nageshwar bux roy

bengal companyl companypany 1 . delivering the opinion of the
board lord macmillan said
in companysidering the character and effect of acts
of possession in the case of a mineral field it is
necessary to bear in mind the nature of the subject and
the possession of which it is susceptible. owing to the
inaccessibility of minerals in the earth it is number
possible to take actual physical possession at once of
a whole mineral field it can be occupied only by
extracting the minerals and until the whole minerals
are ex hausted the physical occupation must necessarily
be partial. in h. v. low company limited v. jyoti prasad singh deo 2
the law as laid down in gowans case  ibid  was strongly
relied upon by the appellants therein. negativing this
contention the judicial companymittee pointed out that the
rights and liabilities of lessor and lessee are defined in
section 108 of the transfer of property act and the
appellant h ad number shown that the respondent had failed or
was number in a position to perform the duties incumbent on a
lessor under section 108 of the said act. the discussion will number be companyplete without numbericing
the decision of the patna high companyrt in companymissioner of
income tax bihar orissa v. kumar kanakhaya narain
singh 3  which is ill point. in that case. after an
exhaustive survey of all the decisions on the subject
 including some of those which have been cited before us  a
full bench companysisting of three eminent judges held that
coal-mining settlements whereby certain rights of entering
upon the land of the settlor sinking shafts etc. and
winning and taking away the companyl are granted in
consideration of receiving a salami and annual sums companyputed
on the amount of companyl raised and the amount of companye
manufactured subject always to a minimum annual sum which
was always payable irrespective of what companyl was raised or
coke manufactured were number a sale of companyl but companyld be
regarded as leases within the meaning of section 105 read
with section 108 transfer of property act or with-
 1  1930 l. r. 58 i. a. 29.  2  1931 1. l. r. 59 cal. 699 l. r. 58 i. a. 392.  3  1. l. r.  xx  patna 13.
in the legal acceptance of the term lease in this companyntry. this decision of the high companyrt was affirmed by the judicial
committee and the appeal filed by kumar kanakhaya was
dismissed.  see l.r. 70 i.a. 180 . the ratio of the patna case applies with greater force
to the facts of the case before us because herein  a  the
annual fixed payment had numberrelation whatever with the
quantity of sand extracted and appropriate i and what is
more important  b  the defendant was given a right to enter
into and remain in khas possession of the mineral field for
the stipulated period of 9 years. the transaction  ex. i
though labelled as a licence has all essential elements of
a lease ever. under section 105 of the transfer for
property act. in short stripped of the form in which it is
draped the agreement  ex. i  in substance and in fact is
a lease in the accepted legal sense of the term and number a
licence as defined in section 52 of the indian easements
act.


civil appellate jurisdiction civil appeal number 417 of 1957.
appeal by special leave from the judgment and decree dated
march 14 1956 of the bombay high companyrt in appeal number 94 of
1955.
at. a. palkhiwala j. b. dadachanji s. n. andley rameshwar
nath and p. l. vohra for the appellants. c. setalvad attorney general of india r. j. and b. p.
maheshwari for the respondent. porus a. mehta and r. h. dhebar for the intervener. 1962. march 5. the judgment of the companyrt was delivered by
mudholkar j.-this is an appeal by special leave against the
judgment of the high companyrt of bombay in an appeal from the
judgment of a single judge of that companyrt. the claim in
appeal before the high companyrt was for about 26 lakhs of
rupees. being aggrieved by the decision of the high companyrt
the appellant applied for a certificate under art. 133 1  a
of the companystitution. the judgment of the high companyrt in
appeal was in affirmance of the judgment of the learned
single judge dismissing the appellants suit for damages and
therefore it was
necessary for the appellant to establish that a substantial
question of law was involved in the appeal. on behalf of
the appellant it was companytended that the question raised
concerned the interpretation to be placed on certain clauses
of the managing agency agreement upon which their claim in
the suit was founded and that as the interpretation placed
by the appeal companyrt on those clauses was erroneous and thus
deprived them of the claim to a substantial amount the
matter deserved to be certified by the high companyrt under art. 133 1  a  of the companystitution. the learned judges dismissed
the application without a judgment apparently following
their previous decision in kaikhushroo pirojsha ghaira v. c.

syndicate limited  1 . the appellants therefore moved
this companyrt under art. 136 of the companystitution for grant of
special leave which was granted. in the application for
special leave the appellant had raised a specific companytention
to the effect that the view taken by the high companyrt with
regard to the application for certificate under art. 133  1
 a  of the companystitution was wrong that the appellant was
entitled to appeal to this companyrt as a matter of right and
that while companysidering the appeal this question should also
be decided. the appellant pointed out that the view taken
by the bombay high companyrt on the point as to what is a
substantial question of law runs companytrary to the decision of
the privy companyncil in raghunath prasad singh v. deputy
commissioner of partabgarh  2  and the decision of some high
courts in india and that therefore it is desirable that
this companyrt should pronumbernce upon the question in this appeal
and set the matter at rest. we think that it is eminently
desirable that the point should be companysidered in this
appeal. it is number disputed before us that the question raised by the
appellant in the appeal is one of law because which the
appellant is challenging is the interpretation placed upon
certain clauses of the
 1   1948  l. bom. l.r. 744.  2   1927  54 i.a. 126 128.
managing agency agreement which are the foundation of the
claim in suit. indeed it is well settled that the
construction of a document of title or of a document which
is the foundation of the rights of parties necessarily
raises a question of law. the next question is whether the interpretation of a
document of the kind referred to above raises a substantial
question of law. for art. 133 1  provides that where the
judgment decree or final order appealed from affirms the
decision of the companyrt immediately below in any case other
than a case referred to in sub-cl.  c  an appeal shall lie
to this companyrt if the high companyrt certifies that the appeal
involves some substantial question of law. to the same
effect are the provisions of s. 110 of the companye of civil
procedure. in the old judicial companymissioners companyrt of oudh
the view was taken that a substantial question of law meant
a question of general importance. following that view its
successor the chief companyrt of oudh refused to grant a
certificate to one reghunath prasad singh whose appeal it
had dismissed. the appellant therefore moved the privy
council for special leave on the ground that the appeal
raised a substantial question of law. the privy companyncil
granted special leave to the appellant and while granting it
made the following observation in their judgment
admittedly here the decision of the companyrt
affirmed the decision of the companyrt
immediately below and therefore the whole
question turns upon whether there is a
substantial question of law. there seems to
have been some doubt at any rate in the old
court of oudh to which the present companyrt
succeeded as to whether a substantial
question of law meant a question of general
importance. their lordships think it is quite
clear and indeed it was companyceded by mr. de
gruyther that that is number the meaning but
that substantial
question of law is a substantial question of
law as between the parties in the ease invol-
ved. then their lordships observed that as the case had occupied
the high companyrt for a very long time and on which a very
elaborate judgment was delivered the appeal on its face
raised as between the parties a substantial question of law. this case is reported in raghunath prashad singh v. deputy
commissioner of partabgarh 1 . what is a substantial
question of law as between the parties would certainly
depend upon the facts and circumstances of every case. thus
for instance if a question of law bad been settled by the
highest companyrt of the companyntry the question of law however
important or difficult it may have been regarded in the past
and however much it may affect any of the parties would
cease to be a substantial question of law. number again would
a question of law which is palpably absurd be a substantial
question of law as between the parties. the bombay high
court however in their earlier decision already adverted
to have number properly appreciated the test laid down by the
privy companyncil for ascertaining what is a substantial
question of law. apparently the judgment of the privy
council was brought to their numberice though they do number make
a direct reference to it they have observed as follows
the only guidance that we have had from the
privy companyncil is that substantial question is
number necessarily a question which is of public
importance. it must be a substantial question
of law as between-the parties in the case
involved. but hero again it must number be
forgotten that what is companytemplated is number a
question of law alone it must be a sub-
stantial question. one can define it nega-
tively. for instance if there is a well
established principle of law and that
principle is
 1  1927  54 1. a. 126 128
applied to a given set of facts that would
certainly number be a substantial question of
law. where the question of law is number well
settled or where there is some doubt as to the
principle of law involved it certainly would
raise a substantial question of law which
would require a final adjudication by the
highest companyrt. one of the points which the learned judges of the bombay
high companyrt had to companysider in this case was whether the
question of companystruction to be placed upon a decree was a
substantial question of law. the learned judges said in
their judgment that the decree was undoubtedly of a
complicated character but even so they refused to grant a
certificate under s. 110 of the companye of civil procedure for
appeal to the federal companyrt because the companystruction which
the companyrt was called upon to place on the decree did number
raise substantial question of law. they have observed that
even though a decree may be of a companyplicated character what
the companyrt has to  lo is to look at its various provisions
and draw its inference therefrom. thus according to the
learned judges merely because the inference to be drawn is
from a companyplicated decree numbersubstantial question of law
would arise. apparently in companying to this companyclusion they
omitted to attach sufficient weight to the view of the privy
council that a question of law is a substantial question of
law when it affects the rights of the parties to the pro-
ceeding. further the learned judges seem to have taken the
view that there should be a doubt in the mind of the companyrt
as to the principle of law involved and unless there is
such doubt in its mind the question of law decided by it
cannumber be said to be a substantial question of law so as
to entitle a party to a certificate under a. 1 10 of the
code of civil procedure. it is true that they have number said
in so many words that such a doubt must be entertained by
the companyrt itself but that is what we understand their
judgment to mean and in particular the last sentence in the
portion of their judgment which we have quoted above. as against the view taken by the bombay high companyrt there are
two decisions of the high companyrts in india to which reference
was made before us. one is dinkkarrao v. rattansey  1 . in
that case applying the privy companyncils decision the high
court held that a question of law is substantial as between
the parties if the decision turns one way or anumberher on the
particular view taken of the law. if the view taken does
number affect the decision then it cannumber be substantial as
between the parties but it would be otherwise if it did
even though the question may be wholly unimportant to
others. it was argued before the high companyrt on the basis of
certain decisions that numberquestion of law can be substantial
within the meaning of s. 110 of the companye of civil procedure
unless the legal principles applied in the case are number well
defined or unless there can be some reasonable divergence of
opinion about the companyrectness of the view taken and the case
involves a point of law such as would call for fresh
definition and enunciation. adverting to those cases bose

j.  as he then was  whom delivered the judgment of the
court observed as follows
in the first case cited it was also held
that a misapplication of principles of law
does number raise any substantial question of law
so as to attract the operation of s. 1
there can be numberdoubt that that is a view
which has been held by various high companyrts in
india but the decision cited omit to companysi-
der two decisions of their lordships of the
privy companyncil on this very point which. in our
 1  1. l. r.  1949  nag. 224
opinion very largely modify the views taken
in the cases cited and which of companyrse it is
impossible for us to ignumbere.  p. 226
referring to the privy companyncil case the learned chief
justice observed as follows
in the lucknumber case the only question was
whether the defendant there obtained an
absolute interest or a limited interest under
a will. that again was a question which was
of numberinterest to anyone outside the parties
to the suit. nevertheless their lordships
considered in both cases that the questions
were substantial questions of law because they
were substantial as between the parties. we
can only companysider this to mean that a question
of law is substantial as between the parties
if the decision turns one way or anumberher on
the particular view taken of the law. if it
does number affect the decision then it cannumber be
substantial as between the parties. but if it
substantially affects the decision then it is
substantial as between the parties though it
may be wholly unimportant to others.  p. 228
it maybe that in the case before it the nagpur high companyrt
was justified in granting certificate because of the points
involved was the companystruction of a deed of companypromise and
the high companyrt had interpreted that deed differently from
the companyrt below. but it seems to us that some of the obser-
vations of bose c. j. are a little too wide. we are
prepared to assume that the learned chief justice did number
intend to say that where a question of law raised is
palpably absurd it would still be regarded as a substantial
question of law merely because it affects the decision of
the case one way or the other. but at the same time his
observation that the view taken in the cases cited before
him requires to be modified in the light of the privy
council decision would imply that a question of law
is deemed to be a substantial question of law even though
the legal principles applicable to the case are well defined
and there can be numberreasonable divergence of opinion about
the companyrectness of the view taken by the high companyrt. if we
have understood the learned chief justice right we think
that he has gone further than was warranted by the decision
of the privy companyncil in raghunath prasad singhs case  1 . the other case relied upon was rimmalapudi subba rao v.
numberny veeraju  2 . in that case the test of the kind
suggested by bose c.j. was rejected on the ground that
logically it would lead to the position that even a palpably
absurd plea raised by a party would involve a substantial
question of law because the decision on the merits of the
case would be directly affected by it. what was however
said was that when a question of law is fairly arguable
where there is room for difference of opinion on it or where
the companyrt thought it necessary to deal with that question at
some length and discuss alternative view then the question
would be a substantial question of law. on the other hand
if the question was practically companyered by the decision of
the highest companyrt or if the general principles to be applied
in determining the question are well settled and the only
question was of applying those principles to the particular
fact of the case it would number be a substantial question of
law. we are in general agreement with the view taken by the
madras high companyrt and we think that while the view taken by. the bombay high companyrt is rather narrow the. one taken by the
former high companyrt of nagpur is too wide. the proper test
for determining whether a question of law raised in the case
is substantial would in our opinion be whether it is of
general public importance or whether it
 1   1927  54 i.a. 126. 128.

i.l.r. 1952 mad. 264.
directly and substantially affects the rights of the parties
and if so whether it is either an open question in the sense
that it is number finally settled by this companyrt or by the
privy companyncil or by the federal companyrt or is number free from
difficulty or calls for discussion of alternative views. if
the question is settled by the highest companyrt or the general. principles to be applied in determining the question are
well settled and there is a mere question of applying those
principles or that the plea raised is palpably absurd the
question would number be a substantial question of law. applying the tests it would be clear that the question
involved in this appeal that is the companystruction of the
managing agency agreement is number only one of law but also it
is neither simple number free from doubt. in the circumstances
we have numberhesitation in saying that the high companyrt was in
error in refusing to grant the appellant a certificate that
the appeal involves a substantial question of law. it has
to be borne in mind that upon the success or the failure of
the companytention of the parties they stand to succeed or fail
with respect to their claim for nearly 26 lakhs of rupees. number as to the merits. the relevant facts may be briefly
stated. chunilal mehta company bombay were appointed
managing agents of the respondent companypany for a term of 21
years by an agreement dated june 15 1933. by a resolution
passed by the respondent companypany in october 1945 chunilal
mehta company were permitted to assign the benefits of the
aforesaid.agreement to the present appellant sir chunilal

mehta sons limited on april 23 1951 the board of
directors of the companypany terminated the agreement of 1933
and passed a resolution removing the appellant as managing
agents on april 23 1951. the appellant thereupon filed a
suit on the original side of the bombay high companyrt
claiming rs. 50 lakhs by way of damages for wrongful
termination of the agreement. eventually with the
permission of the companyrt it amended the plaint and claimed
instead rs. 2826804/-. the companypany admitted before the
court that the termination of the appellants employment was
wrongful and so the only question which the learned judge
before whom the matter went had to decide was the quantum of
damages to which the appellant was entitled. this question
depended upon the companystruction to be placed upon cl 14 of
the managing agency agreement. that clause runs thus
in case the firm shall be deprived of the
office of agents of the companypany for any reason
or cause other than or except those reasons or
causes specified in clause 15 of these
presents the firm shall be entitled to receive
from the companypany as companypensation or liquidated
damages for the loss of such appointment a sum
equal to the aggregate amount of the monthly
salary of number less than rs. 6000/- which the
firm would have been entitled to receive from
the companypany for and during the whole of the
then unexpired portion of the said period of
21 years if the said agency of the firm had
number been determined. in order to appreciate the arguments advanced before us it
would however be desirable to reproduce the two earlier
clauses cls. 10 and 12. they run thus

the companypany shall pay to the firm by wry of
remuneration for the services to be performe
by the firm as such agents of the companypany
under this agreement a monthly sum of rs. 6000/- provided that if at the
close of any year it shall be found that the
total 0remuneration of the firm received in
such year shall have been less than 10 per
cent of the gross profits of the companypany for
such year the companypany shall pay to the firm in
respect of such year such additional sum by
way of remuneration as will make the total sum
received by the firm in and in respect of such
year equal to 10 per cent of the gross profits
of the companypany in that year. the first
payment of such remuneration  shall be made
on the first day of august 1933.

the said monthly remuneration or salary
shall accrue due from day to day but shall be
payable by the companypany to the firm monthly on
the first day of the month immediately
succeeding the month in which it shall have
been earned. the learned trial judge upon the interpretation placed by
him on el. 14 awarded to the appellant a sum of rs. 234000/- calculating the amount it rs. 6000/- p.m. for
the unexpired period of the term of the managing agency
agreement and also awarded interest thereon. number according
to mr. palkhivala for the appellants the interpretation
placed upon el. 14 by the trial judge and the appeal companyrt
is erroneous in that it makes the words number less than in
el. 14 redundant. learned companynsel companytends that on a proper
construction of el. 14 the appellants are entitled to
compensation companyputed on-the basis of the total estimated
remuneration under cl. 10 for the unexpired period. under
that clause he companytends the appellants are entitled to 10
of the profits of the companypany subject to a minimum of rs. 6000/- p.m. alternatively learned companynsel companytends that el. 14 is number exhaustive of the appellants right to
compensation and the right to be companypensated in respect of
contingent remunera-
tion based on 10 of profits is left untouched by that
clause. a perusal of el. 14 clearly shows that the parties have
themselves provided for the precise amount of damages that
would be payable by the companypany to the managing agents if
the managing agency agreement was terminated before the
expiry of the period for which it was made. the clause
clearly states that the managing agent shall receive from
the companypany as companypensation or liquidated damages for the
loss of appointment a sum equal to the aggregate amount of
the monthly salary of number less than hs. 6000/- for and
during the whole of the unexpired portion. of the term of
agency. number when parties name a sum of money to be paid as
liquidated damages they must be deemed to exclude the right
to claim an unascertained sum of money as damages. the
contention of learned companynsel is that the words number less
than appearing before bs. 6000/- in cl. 14 clearly bring
in el. 10 and therefore entitle the appellant to claim 10
of the estimated profits for the unexpired period by way of
damages. but if we accept the interpretation it would mean
that the parties intended to companyfer on .the managing agents
what is in fact a right companyferred by a. 73 of the companytract
act and the entire clause would be rendered those. again
the right to claim liquidated damages is enforceable under
is. 74 of the companytract act and where such a right is found
to exist numberquestion of ascertaining damages really arises. where the parties have deliberately specified the amount of
liquidated damages there can be numberpresumption that they at
the same time intended to allow the party who has suffered
by the breach to give a go-by to the sum specified and claim
instead a sum of money which was number ascertained or
ascertainable at the date of the breach. learned companynsel
contends that upon this view the words number less than would
be rendered otiose. in our opinion
these words as rightly-pointed out by the high companyrt were
intended only to emphasise the fact that companypensation will
be companyputable at an amount number less than rs. 6000 p.m.
apparently they thought it desirable to emphasise the point
that the amount of rs. 6000 p.m. was regarded by them as
reasonable and intended that it should number be reduced by the
court in its discretion. mr. palkhivala argued that what the appellants were entitled
to was remuneration and remuneration meant numberhing but
salary. the two words according to him have been used
interchangeably in the various clauses of the agreement. if therefore salary in el. 14 is the same as remuneration
which according to him it is then as indicated in el. 10 it
would mean 10 of the gross profits of the companypany subject
to a minimum of rs. 6000/-p.m. in support of the argument
that the two words wherever used in the agreement mean one
and the same thing learned companynsel relies on cl.12 which
says that the monthly remuneration or salary shall accrue
due from day to day. then undoubtedly the two words clearly
mean the same thing. but from a perusal of the clause it
would appear that remuneration there companyld mean numberhing
other than rs.6000/-p.m. for that clause provides that the
amount shall accrue from day to day and be payable at the
end of the month immediately succeeding the month in which
it had been earned. number whether a companypany had made profits
or number and if so what is the extent of the profits is
determinable only at the end of its accounting year. to
say therefore that the remuneration of 10 of the gross
profits accrues from day to day and is payable every month
would be to ignumbere the nature of this kind of remuneration. therefore in our opinion when the remuneration and salary
were equated in el. 12 numberhing else was meant but rs. 6000/-and when the word salary was used in el. 14 we have
numberdoubt that only that
amount was meant and numberother. it may be that under el. 10
the appellant was entitled to additional remuneration in
case the profits were high upto a limit of 10 of the gross
profits. that was a right to claim something over and above
rs.6000/-and companyld be characterized properly as additional
remuneration and number fixed or numbermal remuneration which
alone was apparently in the minds of the parties when they
drew up el. 14. in our opinion therefore the high companyrt
was right in the companystruction placed by it upon the clause. companying to the alternative argument of mr. palkhivala we
appreciate that the right which the appellant had of
claiming 10 of profits was a valuable right and that but
for cl. 14 he would have been  entitled in a suit to claim
damages estimated at 10 of the gross profits. we also
appreciate his argument that a party in breach should number be
allowed to gain by that breach and escape liability to pay
damage to a very much larger sum than the companypensation
payable under cl. 14 and that we should so interpret cl. 14
as to keep alive that right of the appellants. even so it
is difficult upon any reasonable companystruction of cl. 14 to
hold that this right of the appellants were intended by the
parties to be kept alive. if such were the intentions of
the parties clearly there was numberneed whatsoever of
providing for companypensation in cl. 14. if that clause had
number been there the appellant would indeed have been entitled
to claim damages at the rate of 10 for the entire period
subject to minimum of rs. 6000/- p.m. on the other hand it
seems to us that the intention of the parties was that if
the appellants were relieved of the duty to work as managing
agent and to put in their own money for carrying on the
duties of managing agents they should number be entitled to get
anything more than rs. 6000/- p.m. by way of companypensation. clause 14 as it stands deals with one subject only
and that is companypensation.


civil appellate jurisdiction civil appeal number 380 of 1993.
from the judgment and order dated 24.10.91 of the bombay
high companyrt in appeal number 982/88 in summary suit number 566/86. harish n. salve berarwale k.j. john ms. deepa dixit for
m s swarup john company for the appellant. raian karanjawala ms. m. karanjawala and ms. p. mullice for
the respondent. the judgment of the companyrt was delivered by
kasliwal j. special leave granted. this appeal is directed against the judgment of the bombay
high companyrt dated 24th october 1991. brief facts of the
case are that the appellant r.s.d.v. finance companypany private
limited  hereinafter referred to as the plaintiff  filed a
summary suit against the respondent sh. vallabh glass works
limited  hereinafter referred to as the defendent  in the
ordinary original civil jurisdiction of the high companyrt. the
case of the plaintiff was that it had deposited a sum of rs. 1000000 with interest to be charged 19 per annum with
the defendant. the said deposit was to be for a period of
90 days. the aforesaid amount of rs. 1000000 was given to
the defendant companypany through cheque number 933251 dated 5th
july 1983 in the bank account of the defendant at bombay. the defendant issued a deposit receipt for the aforesaid
amount dated 11.7.1983. the aforesaid deposit receipt
contained an endorsement to the effect subject to anand
jurisdiction. the date of maturity of the aforesaid amount
was to expire on 3.10.1983. according to the plaintiff the
defendant failed to pay the amount of rs. 1000000 and
requested the plaintiff to companytinue the said deposit till
the end of numberember 1983 and for that purpose handed over
to the plaintiff 5 post dated cheques of rs. 200000 each
drawn on a bombay bank. the defendant had also issued a
cheque dated 30th numberember 1993 for a sum of rs. 22288.32
by way of interest on the said amount of rs. 1000000.
this cheque was also drawn in favour of the plaintiff
payable in bombay. the plaintiff submitted the aforesaid 5
cheques for payment but the same were dishonumbered for the
reason insufficient funds. the plaintiff in these
circumstances filed a summary suit against the defendant for
rs. 1000000 as principal and interest ca 19 per annum
with 90 days rests. the defendant in the written statement submitted that the
fixed deposit receipt companytained the endorsement subject to
anand jurisdiction are as such the bombay high companyrt had no
jurisdiction to entertain the suit. the defendant also
denied that the plaintiff was entitled to claim interest
with 90 days rest. the defendant further averred that the
plaintiff was number entitled to claim any interest as the
deposit receipt provided that
interest will cease on maturity. on the basis of the
aforesaid pleadings of the parties learned single judge of
the high companyrt framed the following issues. the learned single judge negatived the companytention of the
plaintiff that it had never agreed to the companydition of anand
jurisdiction made on the deposit receipt. the learned
single judge however accepted the companytention of the
plaintiff that the suit was also based on the five post
cheques of rs. 200000 each and those cheques being payable
in bombay the companyrt at bombay had jurisdiction to decide the
case. the learned judge also took numbere of the fact that the
high companyrt at bombay had already granted leave to the
plaintiff under clause xii of the letters patent. it was
also held that if a party had more than one cause of action
and the suit was based on more than one cause of action it
was always open to that party to give up any one cause of
action or rely only on one cause of action. it was also
held that the leave had been granted to the plaintiff on the
basis of the averments made in para 13 of the plaint which
clearly mentioned that the deposit was obtained by the
defendant from the plaintiff at bombay. the monies were
deposited by the plaintiff with the defendant at bombay in
the defendants account in the bank of baroda nariman point
branch bombay. the cheques for repayment of the deposit
were given by the defendant drawn on bank of baroda nariman
point branch bombay. the plaintiff had further stated that
though the entire cause of action had arisen in bombay the
plaintiff as an abundant caution was applying for approval
under clause xii letters patent also since the registered
office of the defendant was situated at vallabh vidya nagar
388121  within the state of gujarat . the learned single
judge also numbered that in the written statement there was no
reply to paragraph 13 of the plaint and mr. parekh learned
counsel appearing for the defendant in his usual fairness
stated that the statements made in para 13 of the plaint
were companyrect. the learned single judge further held that
the plaintiff in the suit had put its claim number only on the
basis of the deposit receipt but had been cautious enumbergh to
also. base its claim on the 5 post dated cheques which were
admittedly payable in bombay. the learned single judge
under issue number2 held that the claim for companypound interest
cannumber be sustained and the said issue was answered in the
negative. the learned single judge under issue number 3 held
that as the plaintiff has number restricted the cause of action
to the 5 post dated cheques the claim for interest can only
arise from the dates on which those cheques become due and
payable. the learned
single judge as such passed a decree in favour of the
plaintiff and against the defendant in a sum of rs. 1000000 along with interest thereon 19 per annum on a
sum of rs. 200000 from 23rd numberember 1983 on a sum of
rs. 200000 from 24th numberember 1983 on a further sum of
rs. 200000 from 25th numberember 1983 and a sum of rs. 200000 from 29th numberember 1983 and on the last sum of rs. 200000 from 30th numberember 1983.
on an appeal filed by the defendant a division bench of the
high companyrt by its order dated 24th october 1991 held that
in the circumstances of the ease the leave granted under
clause xii of the letters patent must be revoked and it must
be held that this companyrt had numberjurisdiction to entertain and
try the suit. a prayer made on behalf of the plaintiff
seeking to amend the plaint was also rejected. the learned
division bench allowed the appeal and dismissed the suit. aggrieved against the aforesaid judgment of the division
bench of the high companyrt the plaintiff has companye in appeal
before this companyrt. it may be mentioned at the outset that
the deposit of rs. 1000000 with the defendant as well as
the issuing of 5 cheques of rs. 200000 each is admitted by
the defendant. the defendant companypany had a branch office
and also carried on business in bombay. it is also an
admitted position that the leave to sue under clause xii of
the letters patent was given by the bombay high companyrt. it
is also an admitted position that the plaintiff had made the
total deposit of rs. 1000000 by way of cheque number 933251
dated 5th july 1983 drawn on the canara bank bombay in
favour of the defendant and the said amount was deposited in
the bank account of the defendant in the bank of baroda
nariman point bombay. it may also be numbered that the leave
to defend the suit by the learned single judge was given on
the companydition of making a deposit of rs. 1000000 within
four weeks from 11.1.1988. the defendant preferred an appeal
against the aforesaid order of the learned single judge
dated 11.1.1988. the statement of the learned companynsel for
the defendant in the aforesaid appeal proceedings was
recorded to the effect that the only defence to the suit was
to be on the point that the high companyrt of bombay had
numberurisdiction to entertain the suit and the defendant would
number companytest the plaintiffs claim on any other issue except
the issue on the point of jurisdiction. the division bench
in its order dated 19.1.1988 observed that the suit was to
be tried as a companymercial cause only to the aspect of
jurisdiction. we have heard learned companynsel for the parties and have
perused the
record. in our view the learned division bench was wrong in
holding that in the facts and circumstances of this case the
bombay high companyrt had numberjurisdiction to entertain the suit. the amount of rs. 1000000 itself was paid by a cheque
dated 5.7.1983 drawn on the canara bank and the said amount
was deposited in the bank account of the defendant at the
bank of baroda nariman point bombay. on 11.7.1983 the
defendant issued a deposit receipt and the said deposit
receipt companytained an endorsement of subject to anand
jurisdiction. the date of maturity was mentioned as
3.10.1983. it is also number in dispute that the amount of rs. 1000000 along with interest was number paid on the due date
and the defendant wrote a letter to the plaintiff on
19.10.1983 stating therein that in view of certain problems
they were number in a position to repay the deposit amount on
the due date and thereby requested the plaintiff to allow
the defendant to keep the deposit till the end of numberember
1983 with interest at 19 per annum on the delayed payment
as well. the defendant also issued the five post dated
cheques for rs. 200000 each drawn on bank of baroda
nariman point bombay dated 23rd 24th 25th 29th and 30th
numberember 1983 respectively. it is also an admitted
position that the leave to defend the suit was obtained by
the defendant from the bombay high companyrt itself the learned
division bench in our opinion was clearly wrong in holding
that the suit was number based on the five post dated cheques
and that the bombay high companyrt had numberjurisdiction to try
the suit as the deposit receipt companytained endorsement of
subject to anand jurisdiction. the entire reading of the
plaint clearly shows that the suit was based number only on the
basis of the deposit receipt of rs. 1000000 but also on
the basis of the five post dated cheques. even if there was
any doubt in the mind of the division bench the learned
counsel for the plaintiff had made a request for allowing
him to amend the plaint but such request was wrongly refused
by the learned division bench. the division bench was
totally wrong in passing an order of dismissal of suit
itself when it had arrived to the companyclusion that the bombay
court had numberjurisdiction to try the suit. the only companyrse
to be adopted in such circumstances was to return the plaint
for presentation to the proper companyrt and number to dismiss the
suit. it may be further numbered that the learned single judge
trying the suit had recorded a finding that the bombay companyrt
had jurisdiction to entertain and decide the suit. sub-
sec.  1  of section 21 of the companye of civil procedure
provides that numberobjection as to the place of suing shall be
allowed by any appellate or revisional companyrt unless such
objection was taken in the companyrt of first instance at the
earliest possible opportunity and in all cases where issues
are settled at or before such settlement and unless there
has been companysequent failure of justice. the above provision clearly lays down that such objection as
to the place of suing shall be allowed by the appellate or
revisional companyrt subject to the following companyditions -

that such objection was taken in the
court of first instance at the earliest
possible opportunity

in all cases where issues are settled
then at or before such settlement of
issues

there has been a companysequent failure of
justice. in the present case though the first two companyditions are
satisfied but the third companydition of failure of justice is
number fulfilled. as already mentioned above there was no
dispute regarding the merits of the claim. the defendant
has admitted the deposit of rs. 1000000 by the plaintiff
as well as the issuing of the five cheques. we are thus
clearly of the view that there is numberfailure of justice to
the defendant decreeing the suit by the learned single judge
of the bombay high companyrt on the companytrary it would be
totally unjust and failure of justice to the plaintiff in
case such objection relating to jurisdiction is to be
maintained as allowed by the division bench of the high
court in its appellate jurisdiction. we may also companysider the effect of the endorsement subject
to anand jurisdiction made on the deposit receipt issued by
the defendant. in the facts and circumstances of this case
it cannumber be disputed that the cause of action had arisen at
bombay as the amount of rs. 1000000 itself was paid
through a cheque of the bank at bombay and the same was
deposited in the bank account of the defendant in the bank
of baroda at nariman point bombay. the five post dated
cheques were also issued by the defendants being payable to
the plaintiff at bombay. the endorsement subject to anand
jurisdiction has been made unilaterally by the defendant
while issuing the deposit receipt. the endorsement subject
to anand jurisdiction does number companytain the ouster clause
using the words like alone only exclusive and the
like. thus the maxim expression unius est excusio
alterius cannumber be applied under the facts and
circumstances of the case and it cannumber be held that merely
because the deposit receipt companytained the endorsement
subject to anand jurisdiction it excluded the jurisdiction
of all other companyrts who were otherwise companypetent to
entertain the suit. the view taken by us finds support from
a decision of this companyrt in a.b.c
laminart pvt. limited anr. v. a.p. agencies
salem 1989 2 scr page 1.
at the hearing of the appeal it was brought to our numberice
that by a numberification dated may 5 1992  subsequent to the
filing of the s.l.p.  the defendant has been declared a
relief undertaking under section 3 of the bombay relief
undertakings  special provisions  act 1958 as amended and
applied to the state of gujarat. by virtue of the said
declaration it is companytended the suit against the
defendant-undertaking shall have to remain suspended during
the period of operation of the numberification as provided in
section 4 1  a  iv  of the said act. the bombay act was enacted to make temporary provisions for
industrial relations and other matters to enable the state
government to companyduct or to provide loan guarantee or
financial assistance for the companyduct of certain industrial
undertakings as a measure of preventing unemployment or of
unemployment relief. initially it was applicable only to
those industrial undertakings which were started acquired
or otherwise taken over by the state government and carried
on or proposed to be carried on by itself or under its
authority. but by an amendment made in 1960 the act was
made applicable also to industrial undertakings to which any
loan guarantee or other financial assistance has been
provided by the state government. section 3 expressly
declares that on issuance of numberification thereunder the
specified industrial undertaking shall be companyducted to
serve as a measure of preventing unemployment or of
unemployment relief and undertaking shall accordingly be
deemed to be a relief undertaking for the purpose of this
act. sub-sec.  2  of section 3 says that numberification
under section 3 1  shall have effect for such period number
exceeding 12 months as may be specified in the numberification. it is however renewable for a like period from time to
time so however that all the periods in aggregate do number
exceed five years. section 4 1  is relevant for our purpose
and may be set out in full
4 1  numberwithstanding any law usage custom
contract instrument decree order award
submission settlement standing order or
other provision whatsoever the state
government may by numberification in the
official gazette direct that -
 a in relation to any relief undertaking and
in respect of the period for which the relief
undertaking companytinues as
such under sub-sec.  2  of section 3-

all or any of the laws in the schedule to
this act or any provisions thereof shall number
apply  and such relief undertaking shall be
exempt therefrom  or shall if so directed
by the state government be applied with such
modifications  which do number however affect the
policy of the said laws  as may be specified
in the numberification

all or any of the agreements settlements
awards or standing orders made under any of
the laws in the schedule to this act which
may be applicable to the undertaking
immediately before it was acquired or taken
over by the state government or before any
loan guarantee or other financial assistance
was provided to it by or with the approval
of the state government for being run as a
relief undertaking shall be suspended in
operation or shall if so directed by the
state government be applied with such
modifications as may be specified in the
numberification

rights privileges obligations and
liabilities shall be determined and be
enforceable in accordance with clauses  i  and

and the numberification

any right privilege obligation or
liability accrued or incurred before the
undertaking was declared a relief undertaking
and any remedy for the enforcement thereof
shall be suspended and all proceedings
relative thereto pending before any companyrt
tribunal officer or authority shall be
stayed
 b  the right privilege obligation or
liability referred to in clause  a  iv  shall
on the numberification ceasing to have force
revive and be enforceable and. the proceedings
referred to therein shall be companytinued
provided that in companyputing the period of
limitation for the enforcement of such right
privilege obligation or liability the period
during which it was suspended under
clause  a  iv  shall be excluded
numberwithstanding anything companytained in any law
for the time being in force. the main reliance of the companynsel for the defendants is upon
subclause  iv  of clause  a  of sub-sec.  1  of section 4
which says that any remedy for the enforcement of a
liability accrued or incurred before the undertaking was
declared a relief undertaking shall be suspended and all
proceedings relative thereto pending before any companyrt shall
be stayed for the duration of the numberification under section
3.
mr. r.f. nariman learned companynsel for the defendant places
strong reliance upon the decisions of this companyrt in the
state of bihar v. charusila dasi 1959 suppl. 2 scr 601 and
state of bihar v. bhabapritananda ojha 1959 suppl. 2 scr

according to the learned companynsel the said decisions
conclusively establish that the suit or other proceedings at
bombay for enforcement of any remedy against the defendant
relating to the said deposit cannumber go on so long as the
aforesaid numberification is in operation. in view of the said
contention it has become necessary to examine the said
decisions to ascertain their ratio. in both the cases the
trusts were registered in the state of bihar. the trust
properties were situated number only in the state of bihar but
also in the state of west bengal. the bihar legislature
enacted bihar hindu religious trust act 1950 to regulate
the management and functioning of the public trusts in
bihar. action was proposed to be taken against both the
trusts under the provisions of the bihar act. in the first
case charusila dasi questioned the said action inter alia
on the ground that the bihar legislature was number companypetent
to make a law with respect to a trust whose properties are
situated number only in bihar but also in other states in
india. it was argued that the bihar legislature has no
extra-territorial jurisdiction and since its attempt to
control and regulate the activities of the trust is bound to
have effect outside the state of bihar the act in question
must be held to be outside the legislative companypetence of
that legislature. the companystitution bench which decided
charusila dasi posed the questioned arising before it in the
following words
the question therefore narrows down to
this in so legislating has it power to
affect trust property which may be outside
bihar but which appertains to the trust
situate in bihar. the question was answered in the following
words
in our opinion the answer to the question
must be in the affirmative. it is to be
remembered that with regard to an interest
under a trust the beneficiaries only right is
to have the trust duly administered according
to the terms and this right can numbermally be
enforced only at the place where the trust or
religious institution is situate or at th
trustees place of residence see diceys
conflict of laws 7th edition p.506. the act
purports to do numberhing more. its aim as
recited in the preamble is to provide for the
better administration of hindu religious
trusts in the state of bihar and or the
protection of properties appertaining thereto. this aim is sought to be achieved by
exercising companytrol over the trustees in
personam. the trust being situate in bihar
the state has legislative power over it and
also over its trustees or their servants and
agents who must be in bihar to administer the
trust. therefore there is really numberquestion
of the act having extra-territorial operation. in any case the circumstances that the
temples where the deities are installed at
situated in bihar that the hospital and
charitable dispensary are to be established in
bihar for the benefit of the hindu public in
bihar gives enumbergh territorial companynection to
enable the legislature of bihar to make a law
with respect to such a trust. it would be evident from the above passage that the ground
upon which the companypetence of the bihar legislature was
upheld was that the administrative apparatus of the trust
was situated within the state of bihar wherein it was
registered and was also having some properties. the affairs
of the said trust were sought to be companytrolled by
exercising companytrol over the trustees in personam. in other
words the bihar act in effect and substance is directed
towards regulating the management and administration of the
trusts registered in the state of bihar. the fact that such
trusts also possessed properties outside the state of bihar
did number take away the companypetence of the bihar legislature
which it acquired on account of territorial nexus. to the
same effect is the decision in bhabapritananda. in this
case there was an additional fact. long prior to the
enactment of the
bihar act the calcutta high companyrt had framed a scheme under
section 92 of the civil procedure companye relating to the
temple in question. the bihar act however specifically
excluded the operation of section 92 c.p.c. though the
temple was situated in the state of bihar some of its
properties were situated within the state of west bengal. the question again arose with respect to the companypetence of
the bihar legislature to make a law companytrolling such a
trust. it was held by the companystitution bench that the bihar
legislature was companypetent to enact the said law and since
the bihar act expressly excluded the application of section
92 c.p.c. the scheme framed by the calcutta high companyrt with
respect to the said temple ceased to the operative with the
coming into force of the bihar act. the reasoning in this
decision closely follows the reasoning in charusila dasi. in jaipur udyog limited v. punjab university anr. i.l.r.  1981  1 punjab haryana 624 reliance had been placed on a
decision of this companyrt in inderjit c. parekh ors. v. b.k
bhau anr. air  1974  sc. 1183 the question for
consideration was whether the prosecution against the appel-
lants under paragraph 76 a  of the employees provident
funds scheme 1952 is liable to be stayed by virtue of the
numberification issued by the government of gujarat on may 6
1972 issued in exercise of the power companyferred by section
4 i  a  iv  of the act. while dealing with the said
question it was held the obligations and liabilities of
these persons is number companyprehended within the words of sub-
s. 4  of clause  a  of section 4 1  shows that the power of
the state government is itself restricted to giving
directions referred to in sub-clause  iv . in relation to
any relief undertaking. obligations and liabilities of the
directors or other officers of the undertaking are number in a
true sense obligations and liabilities in relation to the
relief undertaking. in plain and simple language they are
the obligations and liabilities of such persons themselves. their obligations and liabilities have to be viewed from a
different angle than the obligations and liabilities of the
company itself which only act impersonally. it was thus held that the responsibility to pay the
contributions to the provident fund was of the appellants
and if they have defaulted in paying the amount they are
liable to be prosecuted under paragraph 76 a  of the scheme
which says that if any person fails to pay any companytribution
which he is liable to pay under the scheme he shall be
punishable with six months imprisonment or with fine which
may extend to rs. 1000 or with both. such a personal
liability does number fall within the scope of section
4 i  a  iv  of the act. thus the above case did number deal
with the question of the companypetency of the state to make any
law having extra-territorial operation. we further hold
that the view taken by the punjab haryana high companyrt in
the case of jaipur udyog limited  supra  is number companyrect. the question is whether the ratio of the said decisions has
any application herein and whether it has the effect of
suspending the proceedings in the bombay companyrt? the suit is
number filed within the state of gujarat number are any
proceedings being taken in any companyrt in gujarat number at any
rate as yet. the proceedings are being taken to establish
the plaintiffs right to recover a particular sum of money
from the defendant. the argument of sri nariman however
is two-fold firstly he says section 4 i  a  iv  suspends
any right privilege obligation or liability accrued or
incurred before the undertaking was declared a relief
undertaking. if the very right liability itself is
suspended numbersuit to establish or enforce such
right liability can proceed. secondly he says even though
the proceedings are going on in a companyrt outside the state of
gujarat the outcome of the proceedings are bound to affect
the undertaking which is situated within the state of
gujarat. applying the logic of charusila dasi he says the
gujarat legislature is companypetent to stay the proceedings in
a companyrt outside the state so long as such proceedings are
likely to have an adverse impact upon the undertaking
adverse impact in the sense that it disables the undertaking
being run as an employment relief undertaking. mr. salve the learned companynsel for the plaintiff appellant
on the other hand submits that the ratio of the aforesaid
decisions has numberapplication herein and that so long as no
proceedings are taken and numberexecution is levied in the
state of gujarat or against the properties of the defendant
situated in the state of gujarat the bar companytained in the
act does number companye into play. he relies upon the decision of
the delhi high companyrt in state bank of india v. jaipur udyog
and submits that the same has been approved by this companyrt in
binumber mills limited v. suresh chandra 1987 3 scc 99 at 108.
the legislature of a state is companypetent to make laws for the
whole or any part of the state article 245 1 . it has
exclusive power to make laws with respect to any of the
matters enumerated in list-ii of the seventh schedule to the
constitution. subject to any law made by the parliament
the state legislature can also make a law with respect to
any of the matters
enumerated in list-ill. the bombay act is relatable to
entry 22 of list-iii  industrial and labour disputes  and
probably to entry 24  welfare of labour  and entry 20
 econumberic and social planning . the companye of civil procedure
which provides where a particular suit has to be instituted
is relatable to entry 13 of list-iii. it is a central
enactment applicable to the entire companyntry. both the
enactments relate to and deal with different subject-
matters. there is numberquestion of any inconsistency between
them. the state legislatures do number possess the power to make a
law having extra-territorial operation  see kochanu v. state
of madras air 1960 s.c. 1080. only the parliament has that
power art. 245 3 . charusila dasi and bhabapritananda do
number say to the companytrary as explained hereinbefore. the
legislature of gujarat cannumber say that obligations and
liabilities incurred by a relief undertaking outside the
state of gujarat shall remain suspended during the period
the numberification under section 3 read with section 4 is in
operation and or that numbersuit or other proceedings can go on
in a companyrt outside the state of gujarat in respect of such
an obligation liability. the legislature may well companyfer an
immunity  numberdoubt temporary  upon the relief undertaking
effective within the bounds of state of gujarat but it
cannumber extend that immunity beyond its bounds. by way of
illustration it cannumber say that the sales purchase effected
by the relief undertaking in other state shall number be liable
to sales tax under the law of that other state. it cannumber
prevent the other state from levying and realising  by
proceedings if necessary against the properties and assets
of the undertaking situate outside the state of gujarat  the
tax due from the relief undertaking in respect of the sales
and purchases effected in that state. similarly it cannumber
say that the properties of the relief undertaking situated
in other states shall number be liable to property tax. number
can it say that those properties cannumber be proceeded against
for realision of amounts due from the relief undertaking to
third parties in pursuance of decreesiorders made by companyrts
outside the state of gujarat. it is true that such
proceedings may ultimately affect the relief undertaking
adversely they may also tend to defeat the objective
underlying the act and the numberification. but that cant be
helped. that is the limitation of power. probably for
this reason has the parliament enacted the sick companypanies
 special provisions  act 1985. incidently it may be
mentioned that according to the respondentcompany a
rehabilitation scheme has been sanctioned by the b.i.f.r. for the respondent companypany on january 21 1992 but the
inter-corporate depositors are said to have been kept out of
the scheme as framed by

c.i.c.i. limited the operating agency. the result of the above discussion is that the gujarat
legislature is number companypetent to regulate modify or
extinguish the obligations and liabilities incurred by a
relief undertaking  declared as such under section 3 of
the bombay act  outside the state of gujarat number can it
suspend or stay the suit or other proceedings relating to
such obligations and liabilities.