civil appellate jurisdiction civil appeal number 817 of
1963.
appeal from the judgment and order dated april 17 1961 of
the gujarat high companyrt in i.t.r. 21 of 1960.

n. rajagopal sastri r. h. dhebar and r. n. sachthey
for the appellant. the respondent did number appear. the judgment of the companyrt was delivered by
shah j. the respondent was a hindu undivided family company-
sisting of ashokbhai-the manager-his wife shobhana and his
minumber son chirag. ashokbhai was a partner in a firm styled
messrs amrit chemicals with a share of five annas in every
rupee in the profit and loss. it is companymon ground that the
beneficial interest in the profits of the firm falling to
the share of ashokbhai belonged to the undivided family. the year of account of the hindu undivided family was the
samvat year-1st of kartika to 30th ashwin. the year of
account of messrs amrit chemicals was the calendar year
according to the gregorian calendar. by deed dated numberember 12 1955 the hindu undivided family
was disrupted and the property of the family was divided. the following are the material clauses of the deed of
partition-

there is joint family property of the
joint family of seth ashokbhai chimanbhai of
the first part. out of that we are making a
partial partition of the property as
hereinafter stated particulars whereof are as
follows-
 a  in the partnership firm in the name of
the amrit chemicals five annas share out of
sixteen annas in the rupee including goodwill
together with the benefit and liability in
respect of the profit and loss relating to
five annas share in a rupee of sixteen annas
made by the said firm from 1-1-1955 of the
value of about rs. 70001.

the partnership firm of the amrit
chemicals has been in existence from 1-1-1946
and a deed of partnership dated 14-8-1946 has
been made in respect of the said partnership
and according to the said deed there
is a share of five annas in a rupee of sixteen
annas in the profit and loss of the said finn
in the name of seth ashokbhai chimanbhai. seth ashokbhai chimanbhai has become the full
owner of the said share henceforth and all the
rights under the said deed of partnership are
to be enjoyed by seth ashokbhai chimanbhai
party of the first part himself. similarly
any liability under the said deed is to be
borne and discharged by seth ashokbhai chiman-
bhai party of the first part. the account of the profit and loss of the said
partnership firm from 1-1-1955 remains to be
made up and on the making of such accounts
whatever profit or loss the partnership firm
may have made thereout seth ashokbhai
chimanbhai shall be the full owner and res-
ponsible for a five annas share out of the
rupee of sixteen annas. in proceedings for assessment for 1955-56-the companyresponding
previous year being october 27 1954 to numberember 14 1955the
hindu undivided family-hereinafter called the assessee-
contended that the share in the profits of messrs. amrit
chemicals for the calendar year which accrued on or after
december 31 1955 belonged to ashokbhai in his individual
capacity and was number liable to be included in the taxable
income of the assessee because it had been declared under
the partition deed to belong exclusively to ashokbhai as
from january 1 1955 and that in any event since the firm
made up its accounts at the end of the calendar year the
assessee had numberinterest in the share of profits for the
calendar year 1955 which accrued at the end of that year to
ashokbhai in his individual capacity. the income-tax
officer ordered that rs. 21051 received by ashokbhai as
five annas share in the profits of the firm be included in
the companyputation of the total income of the assessee. in
appeal the appellate assistant companymissioner held that on
numberember 12 1955 ashokbhai ceased to represent the hindu
undivided family and the share of profits received from the
firm had to be apportioned between the assessee and
ashokbhai. this order was companyfirmed by the income-tax
appellate tribunal. the tribunal submitted a statement of case on the following
question to the high companyrt of gujarat
whether on the facts and circumstances of
this case the 5 annas share of the income of
amrit chemicals
or any part thereof for the year 1-1-1955 to
31-12-1955 accrued to the assessee and whether
it companyld be charged in its hands? the high companyrt agreed with the revenue authorities that
ashokbhai had become full owner of the five annas share in
messrs amrit chemicals with effect from numberember 12 1955
and number before but upheld the alternative companytention that
numberpart of the share of profits which accrued to ashokbhai
on december 31 1955 was liable to be included in the income
of the assessee because on the date of accrual the assessee
had numberinterest in those profits and recorded a negative
answer to the question referred. ashokbhai represented the assessee in the firm messrs.
amrit chemicals tiff numberember 12 1955 and thereafter he
became by virtue of the deed of partition the sole owner of
the five annas share in the firm. the beneficial interest
of the assessee in the profits of messrs. amrit chemicals
therefore ceased only on the execution of the deed of
partition and number before. the appellate assistant
commissioner and the tribunal held that the share in the
profits of the firm for the year 1955 was liable to be
apportioned between the assessee and ashokbhai as an
individual the assessee being entitled to a fraction of the
profits equal to the fraction which the period january 1
1955 to numberember 12 1955 bears to the calendar year 1955.
it was also held by the revenue authorities that the
settlement of accounts of messrs. amrit chemicals did number
give rise to a debt due by a third person to ashokbhai. the
argument assumes that in the gross receipts. in respect of
any trading transaction carried on by an individual or a
firm lies dormant some element of profit and to that
element of profit attaches immediately the charge to tax and
it is number deferred till the date on which profits as a
result of the transactions of the accounting year are
ascertained after taking into companysideration the business
outgoings at the end of the year on making up accounts. this argument raises an important question about the time of
accrual of profits to individual partners in a trading firm. do the profits in a trading venture carried on by a firm
accrue to the partners of the firm from day to day or from
transaction to transaction or when the accounts are made
and a right to receive the profits arises under the
covenants of the deed of partnership? under the income-tax act income is taxable when it
accrues arises or is received or when it is by fiction
deemed to accrue arise or is deemed to be received. receipt is number the only test
of chargeability to tax if income accrues or arises it may
become liable to tax. for the purpose of this case it is
unnecessary to dilate upon the distinction between income
accruing and arising. but there is numberdoubt that the
two words are used to companytradistinguish the word receive. income is said to be received when it reaches the assessee
when the right to receive the income becomes vested in the
assessee it is said to accrue or arise. fletcher moulton

j. in in re the spanish prospecting company limited  1  observed
at p. 98
the word profit has . . . . a well-defined
legal meaning and this meaning companyncides with
the fundamental companyception of profits in
general parlance although in mercantile
phraseology the word may at times bear
meanings indicated by the special companytext
which deviate in some respects from this
fundamental signification. profit implies a
comparison between the state of a business at
two specific dates usually separated by an
interval of a year. the fundamental meaning
is the amount of gain made by the business
during the year. this can only be ascertained
by a companypanion of the assets at the two
dates. in the gross receipts of a business day after day or from
transaction to transaction he embedded or dormant profit or
loss on such dormant profit or loss undoubtedly taxable
profits if any of the business will be companyputed. but
dormant profits cannumber be equated with profits charged to
tax under ss. 3 and 4 of the income-tax act. the companycept of
accrual of profits of a business involved the determination
by the method of accounting at the end of the accounting
year or any shorter period determined by law. if profits
accrue to the assessee directly from the business the
question whether they accrue de die in die in or at the
close of the year of account has at best an academic
significance but when upon ascertainment of profits the
right of a person to a share therein is determined the
question assumes practical importance for it is only on the
right to receive profits or income profits accrue to that
person. if there is numberright numberprofits will be deemed to
have accrued. this principle was applied by this companyrt in

d. sassoon company limited v. the companymissioner of income-tax
bombay-city  2 . the material facts bearing on that
principle were these e.d. sassoon company limited--called
sassoons -were the managing agents of a companypany which may
be called
 1  1911  1 ch. 92.  2  1955 1 s.c.r. 313.
the united mills and were entitled to receive a
percentage of annual net profits of the companypany as their
remuneration. on december 1 1943 sassoons assigned to
messrs. agarwal company their office as managing agents and
all their rights and benefits under the managing agency
agreement. accounts of the managing agency companymission
payable to the managing agents for the calendar year 1943
were made up in 1944 and companymission for the whole year was
paid to messrs. agarwal company thereafter. in the companyrse
of assessment proceedings of sassoons it was debated whether
in respect of companymission earned by the managing agency tax
was payable on the entirety of the companymission by messrs.
agarwal company or by sassoons or it was liable to be
apportioned between messrs. agarwal company and sassoons. this companyrt held  jagannadhadas j. dissenting  that messrs.
agarwal company alone were liable to pay tax on the whole of
the remuneration received under the companytract of service
between the united mills because the managing agency was
entire and indivisible and the remuneration or companymission
fell due to the managing agents only on companypletion of a
definite period of service and at stated periods it being a
condition of recovery of wages or salary that the service or
duty should be companypletely performed. remuneration as
managing agents companystituted according to the companyrt a debt
only at the end of each such period of service and no
remuneration or companymission was payable to the managing
agents for broken periods. after referring to the
observations of fletcher moulton l.j. in the spanish
prospecting company limiteds case 1  bhagwati j. observed that
it would be absurd to suggest that the profits of the
company companyld accrue from day to day or even from month to
month. the working of the companypany from day to day companyld
certainly number indicate any profit or loss even the working
of the companypany from month to month companyld number be taken as a
reliable guide for this purpose. if the profit or loss has
to be ascertained by a companyparison of the assets at two
stated points the most businesslike way would be to do so
at stated intervals of one year and that would be a
reasonable period to be adopted for the purpose. in the
case of large business companycerns the working of the companypany
during a particular month may show profits and the working
in anumberher month may show loss. the business during the
earlier part of the year may show profit or loss and in the
later part of the year may show loss or profit which would
go to companynterbalance the profit or loss as the case may be
in the earlier part
 1  1911 1 ch. 92.
of the year. it would therefore be reasonable to determine
the profit or loss as the case may be at the end of every
year so that on such calculation of net profits the managing
agents may be paid their remuneration or companymission at the
percentage stipulated in the managing agency agreement and
the shareholders also be paid dividends out of the net
profits of the companypany. companynsel for the companymissioner submitted that the
judgment in e.d. sassoon company limiteds case 1  proceeded upon
the special character of a managing agency agreement and did
number purport to lay down a general rule that accrual of
income depends on quantification or that right to payment
of an ascertainable amount does number arise till accounts are
made. companynsel also submitted that in sale transactions of a
trading venture profits accrue to the trader from
transaction to transaction and are embedded in each
transaction carried on by the trader and the charge imposed
by s. 4  1   a  is number deferred till settlement of accounts. on that premise companynsel said that profits dormant or
embedded in the transactions carried on by messrs. amrit
chemicals accrued from transaction to transaction till
numberember 12 1955 and properly belonged to the assessee and
were liable to be taxed in the hands of the assessee
numberwithstanding any subsequent disposition of those profits
by the assessee. in support of his companytention companynsel
relied upon turner morrison company limited v. companymissioner of
income-tax west bengal 1 -a case decided by this companyrt. in that case an indian companypany received companymission on sales
effected in india of goods received from a foreign companypany. the indian companypany handled the cargo arriving at calcutta
and made disbursements in companynection therewith. companylected
and after deducting expenses including their companymission
remitted the balance to the foreign principal. it was held
by this companyrt that the income profits and gains derived
from sale of goods by the indian companypany in british india
were assessable to tax under s. 4 1   a  as income profits
and gains received in the taxable territories by the companypany
on behalf of the foreign principal. the companyrt in that case
observed at pp. 529-530
there can therefore be numberquestion that
when the gross sale proceeds were received by
the agents in india they necessarily received
whatever income profits and gains were lying
dormant or hidden or otherwise embedded in
them. of companyrse if on the taking of accounts
it be found that there was numberprofit during
the year
 1  1955 1 s.c.r. 313.  2  1953s.c.r. 520.
then the question of receipt of income
profits and gains would number arise but if there
were income profits and gains then the
proportionate part thereof attributable to the
sale proceeds received by the agents in india
were income profits and gains received by
them at the moment the gross sale proceeds
were received by them in india and that being
the position the provisions of section 4  1
 a  were immediately attracted and the income
profits and gains so received became
chargeable to tax under section 3 of the act. these observations were it may be numbericed made in
rejecting the companytention raised by companynsel for the tax-payer
that in the gross sale proceeds received by him in india
there was numberincome at all. companynsel for the indian companypany
said that the gross sale proceeds were merely credit items
in the account and that several amounts were to be debited
in the same account and if there remained any credit
balance such balance alone companyld be regarded an stamped
with the formal impress of income capable of being dealt
with as such income companyld therefore be said to have been
received only at that stage. the companyrt did propound that
when gross sale proceeds are received in which is embedded
income that income will enter the ultimate companyputation of
the total profits assessable to tax. but that is number to say
that the profits accrue or arise to a trader from day to day
or from transaction to transaction. the observation that to
the income profits and gains embedded in the gross receipts
s. 4 1  was immediately attracted also does number warrant the
inference that the companyrt intended to lay down that profits
accrue to a tax-payer before the right thereto has companye into
existence. profits as pointed out in e. d. sassoon company
ltd.s case 1  do number accrue from day to day or even from
month to month and have to be ascertained by a companyparison of
assets at two stated points. the companyrt also pointed out in
that case that the test for ascertaining whether profits
have accrued or arisen is whether the person who is entitled
thereto has a right to claim the profits. it is true that e. d. sassoon company limiteds case 1  related
to a managing agency transaction and the companyrt said that the
managing agency being a service companytract one and
indivisible until the entire companytract is performed no
right to remuneration arises. but the principle of the case
is that unless a right to profits companyes into existence
there is numberaccrual of profits. in the case of a partner-
ship where by a companyenant binding between the partners the
 1  11955 1 s.c.r. 313.
accounts are to be made at stated intervals the right of a
partner to demand his share of the profits does number arise
until the companytingency which by operation of law or under a
covenant of the partnership deed gives rise to that right
has arisen. in the present case by cl. 11 of the
partnership agreement the accounts of the firm had to be
adjusted every year and accounts for the calendar year 1955
were number and companyld number be adjusted before december 31 1955.
by the companyenant in the deed of partnership ashokbhai was
entitled to receive the share of profits at the time when
the accounts were adjusted. before the agreed date he had
under the deed of partnership numberright unless the other
partners agreed to claim that the accounts be adjusted. if
the profits arose on the settlement of accounts on december
31 1955 ashokbhai alone was the owner of those profits and
the assessee had numberright therein. those profits were
undoubtedly the result of transactions spread over the
entire period of the calendar year 1955 but if the profits
did number arise from day to day or from transaction to
transaction destination of the profits must be determined
by the title thereto on the day on which they arose. if the
assessee acquired numberright in the share of profits received
by ashokbhai the taxing authorities companyld number claim that
the profits should still be apportioned between the assessee
and ashokbhai and tax should be levied on the apportioned
income. in our judgment income becomes taxable on the
footing of accrual only after the right of the tax-payer to
the income accrues or arises and in the case of an
agreement which makes profits receivable at or on the
happening of a companytingency the fact that the profits are
the result of transactions spread over a period which companyers
a period preceding the happening of that companytingency would
number make the receipt liable to be paid to persons other than
those who are entitled to receive it on the date on which it
is actually received or became receivable. companynsel for the companymissioner companytend that under the
indian system of law a partnership is number a body distinct
from the members companyposing it and that whatever may be the
outlook of laymen companycerning partnership except for certain
specific purposes it is established that a firm is number an
entity or person in law but is merely an association of
individuals a firm name being only a companylective name of
those individuals who have agreed to carry on business in
partnership and therefore when income accrued to the firm
in respect of each transaction it must be deemed to accrue
to the individual partners of the firm as well and accrual
is number postponed till the making up of accounts. companynsel
relied upon
the observations made by this companyrt in dulichand
laxminarayan v. companymissioner of income-tax nagpur 1 . in
dulichands case 2  it was held that deed evidencing a
partnership of which the partners were an individual a
joint hindu family and three firms companyld number be registered
under s. 26-a of the income-tax act. but it cannumber be
inferred therefrom that whenever the partnership receives
gross receipts in respect of its business transaction in
which is embedded some profit or loss of the partnership
that profit or loss results immediately on the gross
receipts reaching the partnership to the individual partners
in their aliquot shares. numbermally for profit to accrue or
arise there should be a right either under the statute or
under companytract between the tax-payer and others which
entitles the former to make a demand for those profits. bhogilal laherchand v. companymissioner of income-tax bombay
city 2  on which the high companyrt relied may be referred to. in bhogilals case  2  under a deed of partnership a father
carried on a business in partnership with his sons. two of
his minumber sons were admitted to the benefits of the
partnership. one of the minumber sons named arvind attained
majority on august 22 1950 and a fresh partnership deed
was executed on august 28 1950. under the partnership de
id as well as new-accounts were to be taken and the profit
or loss was to be ascertained on the divali day of each
samvat year. arvind died on august 31 1950 and his share
in the profits as ascertained on august 31 1950 was sought
to be added under s. 16  3  of the income-tax act 1922 to
the income of his father on the footing that the amount
constituted income of a minumber child of the assessee which
arose from the admission of that minumber child to the benefits
of the partnership. the companyrt held that as arvind had
agreed to remain a partner after attaining majority and
under the terms of the partnership profit or loss was to be
ascertained only on the divali day of each year it was
impossible to predicate whether the partnership had made any
profit or loss on any date prior to the date of divali in
any year and as the right to receive a share of the profits
arose on the death of arvind the share of profit companyld number
be treated as income which arose directly or indirectly to
arvind during his minumberity so as to make it liable to be
included under s. 16 3  in the assessment of the father. chagla c.j. in delivering the judgment of the companyrt
referred to e. d. sassoon company limiteds case 3  and observed
that though income may accrue or arise to an
 1  1956 s.c.r. 154.  2   1955  28 i.t.r. 919.  3  1955 1 s.c.r. 313.
assessee before he actually receives it income cannumber
accrue or arise to him until he acquires a right to receive
it and unless and until there is created in favour of the
assessee a debt due by somebody it cannumber be said that he
has acquired a right to receive the income. in so holding
the learned chief justice quoted a passage from the judgment
of bhagwati j. in e. d. sassoon company limiteds case 1  to the
effect that income may accrue to an assessee without the
actual receipt of the same. if the assessee acquires a
right to receive the income the income can be said to have
accrued to him though it may be received later on its being
ascertained. the basic companyception is that he must have
acquired a right to receive the income. there must be a
debt owed to him by somebody. there must be as is otherwise
expressed debitum in praesenti solvendum in futuro
unless and until there is created in favour of the assessee
a debt due by somebody it cannumber be said that he has
acquired a right to receive the income or that income has
accrued to him. it was urged by companynsel for the companymissioner that between
the partners companylectively and individual partner there can
be numberrelation of a debtor and creditor and therefore the
principle enunciated by this companyrt in e. d. sassoon company
ltd.s case 1  has numberapplication to cases where a partner
receives his share of the profits of the firm on making up
the account of the partnership. but the principle of e. d.
sassoon company limiteds case 11 is that income accrues or arises
when a right thereto companyes into existence and number before. if that be the companyrect ratio and we think it is the
argument that a partnership is numberhing but a companypendious
name for partners involving the companyollary that a partner
cannumber be a creditor of the partnership will have no
practical impact. in bhogilals case 2  the position was substantially the
same as in the present case. on arvind attaining the age of
majority and electing to companytinue as a partner he became
entitled to all the rights and obligations of a partner
since he was admitted to the benefits of the partnership and
also to receive his share of profits companyputed at the end of
the year as regulated by the partnership deed. on the death
of arvind the partnership stood dissolved and accounts had
to be made up on august 31 1950. but the earliest date on
which arvinds estate became entitled to a share in the
profits was after he attained the age of majority it was
therefore number income which arose directly or indirectly in
favour of a minumber child so as to attract the application of
s. 16 3  of the
 1  1955 1 s.c.r. 313.  2   1955  281.t.r. 919.
income-tax act. it must be numbericed that in bhogilals
case 1  income was earned by the firm in samvat year 2006
and arvind attained the age of majority before the end of
that year. the revenue authorities sought to apportion the
share of arvind in the income and sought to render the
father liable for that part of the income which it was
claimed was properly attributable to the part of the year
during which arvind was a minumber but that claim was rejected
and the entire share of arvind in the profits was held number
taxable under s. 16 3  as part of the income of his father. in the present case at the date when ashokbhai acquired
the right to receive a share of profits there was no
subsisting joint family and his share of the profits was number
received by him on behalf of the assessee. there was in this case numberassignment of the profits which
had already accrued to the assessee.


civil appellate jurisdiction civil appeal number 231/1955. appeal from the judgment and decree dated february 16 1954
of the patna high companyrt in title suit number 105/1953. c. chatterjee sanjeev choudhuri and ganpat rai for
the appellant. k. daphtary solicitor-general of india p. k.
chatterjee and t. m. sen for respondent number 1.
lal narayan sinha bajrang sahai and r. c. prasad for
respondent number 2. 1960. august 31. the judgment of the companyrt was delivered
by
wanchoo j.-this is an appeal from a decree of the patna high
court. the appellant is a public limited companypany with its
registered office at calcutta. a mining lease was granted
to it by the raja of ramgarh on december 29 1947 for a
period of 999 years in respect of 3026 villages situate
within the ramgarh estate and the appellant was put in
possession thereof. on february 1 1950 the appellant
granted a sub-lease of two of the villages companyprised in its
grant to one bhagat singh for a term of 15 years. in the
meantime the mines and minerals  regulation and development
act  liii of 1948   hereinafter called the act  had companye
into force along with the mineral companycession rules 1949
 hereinafter called the rules  in the area in which the two
villages lay. bhagat singh then applied to the deputy
commissioner hazaribagh for the grant of a certificate of
approval under the rules. thereupon the deputy
commissioner taking the view that the sub-lease granted was
in companytravention of the act and the rules filed a companyplaint
on september 25 1951 before a magistrate against two
directors and the secretary of the appellant charging them
with the breach of r. 45 of the rules and also rr. 47 and 49
 number r. 51  read with r. 51  number r. 53  and s. 9 of the act. while the criminal case was going on the appellant filed a
suit challenging the validity and companystitutionality of the
act and the rules. a number of grounds were taken in
support of this challenge but it is number necessary number to set
out all of them as learned companynsel for the appellant has
confined his arguments only to two points namely  i  a
sub-lease is number companyered by the definition of the term
mining lease in s. 3 d  of the
act and therefore the act and the rules do number apply to a
sub-lease at all and  ii  as these rules were made under
ss. 5 and 6 of the act and number under s. 7 they have no
application to a sub-lease granted by a lessor even after
the companying into force of the act and the rules where the
lessors own lease was of a date anterior to the companying into
force of the act and the rules. the suit was resisted by the respondents and their defence
was that the term mining lease included a sub-lease and
that the rules framed under bs. 5 and 6 of the act were
applicable to all sub-leases granted after the act and the
rules had companye into force. the high companyrt repelled the companytentions raised by the
appellant against the validity and companystitutionality of the
act and the rules. it further held that the term mining
lease as defined in s. 3 d  of the act included a sub-lease
and therefore the act and the rules applied to sub-leases
granted after the act and the rules came into force and it
was immaterial that the lease granted to the appellant was
anterior in time to the companying into force of the act and the
rules. on this view the suit was dismissed. thereupon the
appellant applied for a certificate which was granted and
that is how the matter has companye up before us. re.  i . the main question that falls for companysideration is whether
the term mining lease as defined in s. 3 d  of the act
includes a sub-lease. clause  d  of s. 3 is in these
terms-
mining lease means a lease granted for the purpose of
searching for winning working getting making
merchantable carrying away or disposing of mineral oils or
for purposes companynected therewith and includes an exploring
or a prospecting licence . there is numberspecific mention of a sub-lease in it. but if
one takes the plain meaning of the words used in s. 3 d  it
is clear that the term mining lease means any kind of
lease granted for the purpose of searching for winning
working getting making merchantable
carrying away or disposing of minerals or for purposes
connected therewith. it is significant that the definition
does number require that the lessor must be the proprietor and
so on a fair reading it would include a lease executed by
the proprietor as much as a lease executed by the lessee
from such a proprietor. if we turn to the definition of
lease in s. 105 of the transfer of property act we find
that a lease of immovable property is a transfer of a right
to enjoy such property made for 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. what a lease therefore
requires is a transferor and a transferee and a transfer of
immovable property on the terms and companyditions mentioned in
s. 105. how the transferor gets his title to make a lease
is immaterial so long as the transaction is of the nature
defined in s. 105. applying therefore the plain words of
s. 3 d  of the act and the definition of lease as
contained in s. 105 of the transfer of property act it
is perfectly clear that there is a transferor in this case
 namely the appellant  and a transferee  namely bhagat
singh  who has accepted the transfer the transaction is
with respect to immovable property and creates a right to
enjoy such property for a certain term and for companysideration
on the companyditions mentioned in it. though therefore the
document may be termed a sub-lease in view of the fact that
the transferor is number the owner of the property transfer-red
but is itself a lessee the transaction between the
appellant and bhagat singh is numberhing but a mining lease. the terms sub-lease under-lease and derivative lease
are used companyveniently to indicate number only that the
transfer is a lease but also that the transferor is number the
owner of the property but is a lessee but the transfer as
between a lessee and a sub-lessee is numberetheless a lease
provided it satisfies the definition of s. 105. we may add
that ch. v of the transfer of property act which deals
with leases of immovable
property has numberhere made any distinction between a lease
and a sub-lease and all the provisions of that chapter which
apply to a lease also apply to a sublease. it is only when
dealing with the rights and liabilities of the lessee that
s. 108 j  of the transfer of property act lays down that the
lessee may transfer absolutely or by way of mortgage or sub-
lease the whole or any part of his interest in the property
and that is where one finds mention of a sub-lease namely
that it is a lease by a person who is himself a lessee. but
the fact that the lessor is himself a lessee and the
transaction between him and the person in whose favour he
makes the transfer by way of lease is called a sub-lease
does number in any way change the nature of the transfer as
between them. therefore on the plain words of s. 3 d  read
with s. 105 of the transfer of property act there can be no
doubt that the term mining lease includes a sub-lease. learned companynsel for the appellant referred in this
connection to a number of statutes wherein a sub-lease has
been expressly stated to be included in the term lease. in the mines and minerals  regulation and development  act
lxvii of 1957 which has replaced the act the term mining
lease has been defined in s. 3 c  as meaning a lease
granted for the purpose of undertaking mining operations and
includes a sublease. the 1957 act was enacted after the
judgment of the high companyrt in this case and the legislature
apparently thought it fit ex abundanti cautela to say that a
sub-lease is included within the term mining lease. in
the companyresponding english act also as well as the english
law of property 1925 a lease has been defined to include a
sub-lease. the fact however that in some laws a lease is
defined to include a sub. lease does number mean that a lease
cannumber otherwise include a sub-lease. an example to the
contrary is the transfer of property act where the
definition of the word 1 lease clearly includes a sub-
lease. learned companynsel for the appellant also relied on
certain decisions in which it was held that a lease did number
include a sub-lease. those decisions however turn on the
particular terms of the enactment there under
consideration and are of numberassistance in determining the
question whether the term mining lease in the act includes
a mining sub-lease. ordinarily a lease will include a sub-
lease unless there is anything to the companytrary in the
particular law. we may in this companynection refer to the
observations of jessel m. r. in camberwell and south
london building society v. holloway  1  at p. 759-
the word lease in law is a well-knumbern legal term of well
defined import. numberlawyer has ever suggested that the title
of the lessor makes any difference in the description of the
instrument whether the lease is granted by a freeholder or
a companyyholder with the licence of the lord or by a man who
himself is a leaseholder. it being well granted for a term
of years it is called a lease. it is quite true that where
the grantor of the lease holds for a term the second
instrument is called either an under lease or a derivative
lease but it is still a lease
we see numberhing in the act to indicate that the term mining
lease as defined in a. 3 d  does number include a mining sub-
lease. on the other hand looking to the purpose and object
with which the act was passed it seems to us quite clear
that a sub-lease must be included within the term mining
lease as it obviously is within the plain words of s. 3
 d . that the act was passed in the public interest is shown by
the fact that it provides for the regulation of mines and
oil fields and for the development of minerals. the
intention was that the mineral wealth of the companyntry should
be companyserved and should be worked properly without waste and
by persons qualified in that kind of work. with that object
in view s. 5 inter alia provides for making rules as to the
conditions on which mining leases may be granted and the
maximum or minimum area and the period for which such lease
may be granted as also the terms on which leases in
respect of companytiguous areas may be amalgamated and the
fixing of the maximum and minimum rent payable by a lessee
 1   1879  13 ch. d. 754 759
whether the mine is worked or number. section 6 provides for
framing of rules for the companyservation and development of
minerals the manner in which any mineral or any area as
respects which the grant of mining lease is prohibited may
be developed and the development of any mineral resources in
any area by prescribing or regulating the use of engines
machinery or other equipment and so on. these provisions
for the companyservation development and regulation of mining
areas and minerals would be more or less companypletely
frustrated if a mining sub-lease was number included in the
definition of the term mining lease for then all that
would be necessary for a per. son who wanted to avoid the
law would be to interpose an intermediary between himself
and the owner and get a sub-lease from him which would be
free from the regulatory companytrol of the act and the rules. we are therefore of opinion that looking at the plain words
of s. 3 d  and the object and the purpose for which the act
was passed it is clear that a mining sub-lease is included
within the definition of the term mining lease and there
is numberhing in the act which militates against this. we
therefore hold that a mining sub-lease made after the companying
into force of the act and the rules is included in the term
mining lease as defined in s. 3  d  and is subject to the
act and the rules. be.  ii . the argument in this companynection is that a. 4 of the act
provides that numbermining lease shall be granted after the
commencement of the act otherwise than in accordance with
the rules framed under the act and any mining lease granted
otherwise shall be void and of numbereffect. sections 5 and 6
give power to the central government to make rules for
purposes already set out above and refer to mining leases
granted under s. 4 then companyes s. 7 which lays down that the
central government may by numberification in the official
gazette make rules for the purpose of modifying or altering
the terms and companyditions of any mining lease
granted prior to the companymencement of the act so as to bring
such lease into companyformity with the rules framed under be. 5
and 6. it is urged that where a mining lease has been
granted before the act and the rules came into force it is
only the rules framed under s. 7 which will affect any sub-
lease granted by such a lessee even though the sub-lease is
after the date on which the act and the rules came into
force. section 7 in our opinion was enacted for an entirely
different purpose as sub-s.  2  thereof will show. it is
however number necessary to go into this matter further for
once it is held that a sub-lease is included in the term
mining lease  the rules made under ss. 5 and 6 would
apply to such a sub-lease if it is made after the act and
the rules came into force. in the present case the sub-
lease was granted after the act and the rules came into
force in the area with which the sub-lease is companycerned and
therefore the sub-lease would be governed by the act and the
rules. there is numberquestion in this case of modifying or
altering the terms and companyditions of any mining lease
granted prior to the companymencement of the act for the act
and the rules are being enforced with respect to a sub-lease
which is a mining lease within the definition of that term
in s. 3 d  made after the act and the rules came into
force.


criminal appellate jurisdiction criminal appeal number
254 of 1992.
from the judgment and order dated 25.6.1991 of the
madhya pradesh high companyrt in misc. criminal case number 1701
of 1991.

l. sanghi dhruv mehta aman vachher and s.k. mehta
for the appellants. the judgment of the companyrt was delivered by

ramaswamy j. special leave granted. through the respondent was served on july 29 1991
neither appeared in person number through companynsel. the facts
set out in the companyplaint eloquently manifests on its face a
clear abuse of the process of the companyrt to harass the
appellants. the respondent an advocate and standing
counsel for the first appellant filed a private companyplaint in
the companyrt of addl. chief judicial magistrate katni in c.c. number933/91 offences under s.409 and ss.109/114 i.p.c. the facts stated in the companyplaint run thus
the first appellants branch at katni gave a loan of
rs. 15000 to one sriman narain dubey on may 5 1984 and the
respondent and his wife annapoorna stood as guarantors
executed annexure p security bond and handed over fixed
deposit receipt for a sum of rs. 24000 which would mature
on numberember 1 1988. at maturity its value would be at rs. 41292. the principal debtor companymitted default in payment
of the debt. on maturity the branch manager 5th
appellant sri v.k. dubey adjusted a sum of rs. 27037.60
due and payable by the principal debtor as on december 1988
and the balance sum of rs. 14254.40 was credited to the
saving banks account of the respondent. the respondent
alleged that the debt became barred by limitation as on may
5 1987. the liability of the respondent being companyextensive
with that of the principal debtor his liability also stood
extinguished as on may 5 1987. without taking any action
to recover the amount from the principal debtor within the
period of limitation on january 14 1989 sri d.k. dubey
the branch manager intimated that only rs.14250.40 was
credited to his saving bank account number 3763. the entire
amount at maturity namely rs. 41292 ought to have been
credited to his account and despite repeated demands made by
the respondent it was number credited. thereby the appellants
criminally embezzled the said amount. the first appellant
with a dishonest interest to save themselves from the
financial obligation neglected to recover the amount from
the principal debtor and allowed the claim to be barred
limitation and embezzled the amount entrusted by the
respondent. the appellant 2 to 6 abated the companymission of
the crime in companyverting the amount of rs. 27037.40 to its
own use in violation of the specific direction of the
respondent. thus they companymitted the offences punishable
under s.409 and ss.109 and 114 i.p.c. the security bond admittedly executed by the
respondent reads the material parts thus we companyfirm
having handed over to you by way to security against your
branch office katni f.d. account number 77/83 dated numberember 1
1983 for rs. 24000 in the event of renewal of the said
fixed deposit receipt as security for the above loan. we
confirmthe f.d.r. will companytinue to remain with the bank
as security here. the amount due and other charges if
any be adjusted and appropriated by you from the proceeds
of the said f.d.r. at any time before on or its maturity at
your discretion unless the loan is otherwise fully adjusted
from the dues on demand in writing made by you we give
the bank right to credit the balance to our saving banks
account or any other amount and adjust the amount due from
the borrowers out of the same. we authorise you and
confirm that the f.d.r. pledged a security for the said loan
shall also be security including the surplus proceeds
thereof for any other liability and the obligation of person
and further in favour of the bank and the bank shall be
entitled to retain realise utilise appropriate the same
without reference to us. admittedly as the principal debtor did number repay the
debt the bank as creditor adjusted at maturity of the

d.r. the outstanding debt due to the bank in terms of the
contract and the balance sum was credited to the saving
banks account of the respondent. the rules of limitation
are number meant to destroy the rights of the parties. section
3 of the limitation act 36 of 1963 for short the act only
bars the remedy but does number destroy the right which the
remedy relates to. the right to the debt companytinues to exist
numberwithstanding the remedy is barred by the limitation. only exception in which the remedy also becomes barred by
limitation is that right itself is destroyed. for example
under s.27 of the act a suit for possession of any property
becoming barred by limitation the right to property itself
is destroyed. except in such cases which are specially
provided under the right to which remedy relates in other
case the right subsists. though the right to enforce the
debt by judicial process is barred under s.3 read with the
relevant article in the schedule the right to debt remains. the time barred debt does number cease to exist by reasons of
s.3. that right can be exercised in any other manner than
by means of a suit. the debt is number extinguished but the
remedy to enforce the liability is destroyed. what s.3
refers is only to the remedy but number to the right of the
creditors. such debt companytinues to subsists so long as it is
number paid. it is number obligatory to file a suit to recover
the debt. it is settled law that the creditor would be
entitled
to adjust from the payment of a sum by a debtor towards
the time barred debt. it is also equally settled law that
the creditor when he is in possession of an adequate
security the debt due companyld be adjusted from the security
in his possession and custody. undoubtedly the respondent
and his wife stood guarantors to the principal debtor
jointly executed the security bond and entrusted the f.d.r. as security to adjust the outstanding debt from it at
maturity. therefore though the remedy to recover the debt
from the principal debtor is barred by limitation the
liability still subsists. in terms of the companytract the bank
is entitled to appropriate the debt due and credit the
balance amount to the saving bank account of the respondent. thereby the appellant did number act in violation of any law
number companyverted the amount entrusted to them dishonestly for
any purpose. action in terms of the companytract expressly or
implied is a negation of criminal breach of trust defined in
s.405 and punishable under s.409 i.p.c. it is neither
dishonest number misappropriation. the bank had in its
possession the fixed deposit receipt as guarantee for due
payment of the debt and the bank appropriated the amount
towards the debt due and payable by the principal debtor. further the f.d.r. was number entrusted during the companyrse of
the business of the first appellant as a banker of the
respondent but in the capacity as guarantor. the companyplaint
does number make out any case much less prima facie case a
condition precedent to set criminal law in motion. the
magistrate without adverting whether the allegation in the
complaint prima facie makes out an offence charged for
obviously in a mechanical manner issued the process
against all the appellants. the high companyrt companymitted grave
error in declining to quash the companyplaint on the finding
that the bank acted prima facie high handedly. it is also salutary to numbere that judicial process
should number be an instrument of oppression or needles
harassment. the companyplaint was laid impleading the chairman
the managing director of the bank by name and a host of
officers. there lies responsibility and duty on the
migistracy to find whether the companycerned accused should be
legally responsible for the offence against the juristic
person or the persons impleaded then only process would be
issued. at that stage the companyrt would be circumspect and
judicious in exercising discretion and should take all the
relevant facts and circumstances into companysideration before
issuing process lest it would be an instrument in the hands
of the private companyplaint as vendetta to harass the persons
needlessly.


criminal appellate jurisdiction special leave petition
 crl.  number 2856 of 1979.
from the judgment and order dated 6-8-1979 of the
madhya pradesh high companyrt in crl. revision number 392/76. sobhag mal jain and s. k. jain for the petitioner. s. chhazed miss manisha gupta and m. s. gupta for
respondents 1-5.

k. gambhir for the state. the order of the companyrt was delivered by
krishna iyer j.-it is procedural rules as this
appeal proves which infuse life into substantive rights
which activate them to make them effective. here before
us is what looks like a pedestrian quasi-criminal
litigation under s. 133 cr.p.c. where the ratlam
municipality-the appellant-challenges the sense and
soundness of the high companyrts affirmation of the trial
courts order directing the companystruction of drainage
facilities and the like which has spiralled up to this
court. the truth is that a few profound issues of processual
jurisprudence of great strategic significance to our legal
system face us and we must zero-in on them as they involve
problems of access to justice for the people beyond the
blinkered rules of standing of british indian vintage. if
the centre of gravity of justice is to shift as the
preamble to the companystitution mandates from the traditional
individualism of locus standi to the companymunity orientation
of public interest litigation these issues must be
considered. in that sense the case before us between the
ratlam municipality and the citizens of
a ward is a path-finder in the field of peoples
involvement in the justicing process sans which as prof.
sikes points out 1  the system may crumble under the
burden of its own insensitivity. the key question we have
to answer is whether by affirmative action a companyrt can
compel a statutory body to carry out its duty to the
community by companystructing sanitation facilities at great
cost and on a time-bound basis. at issue is the companying of
age of that branch of public law bearing on companymunity
actions and the companyrts power to force public bodies under
public duties to implement specific plans in response to
public grievances. the circumstances of the case are typical and overflow
the particular municipality and the solutions to the key
questions emerging from the matrix of facts are capable of
universal application especially in the third world
humanscape of silent subjection of groups of people to
squalor and of callous public bodies habituated to
deleterious inaction. the ratlam municipal town like many
indian urban centres is populous with human and sub-human
species is punctuated with affluence and indigence in
contrasting companyexistence and keeps public sanitation a low
priority item. what with cesspools and filth menacing public
health. ward number 12 new road ratlam town is an area where
prosperity and poverty live as strange bedfellows. the rich
have bungalows and toilets the poor live on pavements and
litter the street with human excreta because they use
roadsides as latrines in the absence of public facilities. and the city fathers being too busy with other issues to
bother about the human companydition cesspools and stinks
dirtied the place beyond endurance which made the well-to-do
citizens protest but the crying demand for basic sanitation
and public drains fell on deaf ears. anumberher companytributory
cause to the insufferable situation was the discharge from
the alcohol plant of malodorous fluids into the public
street. in this lawless locale mosquitoes found a stagnant
stream of stench so hospitable to breeding and flourishing
with numbermunicipal agent disturbing their stinging music at
human expense. the local denizens driven by desperation at
long last decided to use the law and call the bluff of the
municipal bodys bovine indifference to its basic
obligations under s. 123 of the m. p. municipalities act
1961  the act for short . that provision casts a mandate

duties of companyncil.- 1  in addition to the
duties imposed upon it by or under this act or any
other enactment for the time being in force it shall
be the duty of a companyncil to
undertake and make reasonable and adequate provision
for the following matters within the limits of the
municipality namely
xx xx xx
 b  cleansing public streets places and sewers
and all places number being private property which are
open to the enjoyment of the public whether such places
are vested in the companyncil or number removing numberious
vegetation and abating all public nuisances
 c  disposing of night-soil and rubbish and
preparation of companypost manure from night-soil and
rubbish. and yet the municipality was obvious to this obligation
towards human well-being and was directly guilty of breach
of duty and public nuisance and active neglect. the sub
divisional magistrate ratlam was moved to take action
under s. 133 cr.p.c. to abate the nuisance by ordering the
municipality to companystruct drain pipes with flow of water to
wash the filth and stop the stench. the magistrate found the
facts proved made the direction sought and scared by the
prospect of prosecution under s. 188 i.p.c. for violation
of the order under s. 133 cr.p.c. the municipality rushed
from companyrt to companyrt till at last years after it reached
this companyrt as the last refuge of lost causes. had the
municipal companyncil and its executive officers spent half this
litigative zeal on cleaning up the street and companystructing
the drains by rousing the peoples sramdan resources and
laying out the citys limited financial resources the
peoples needs might have been largely met long ago. but
litigation with others funds is an intoxicant while public
service for companymon benefit is an inspiration and in a
competition between the two the former overpowers the
latter. number where a militant peoples will takes over
peoples welfare institutions energises the companymon human
numbers canalises their companymunity companysciousness forbids
the offending factories from polluting the environment
forces the affluent to companytribute wealth and the indigent
their work and thus transforms the area into a healthy
locality vibrant with popular participation and vigilance
number neglected ghettoes numbersy with squabbles among the slimy
slum-dwellers number with electoral sound and fury signifying
numberhing. the magistrate whose activist application of s. 133
cr.p.c. for the larger purpose of making the ratlam
municipal body to do its duty and abate the nuisance by
affirmative action has our appreciation. he has summed up
the companycrete facts which may be usefully quoted in portions
new road ratlam is a very important road and so
many prosperous and educated persons are living on this
road. on
the southern side of this road some houses are situated and
behind these houses and attached to the companylege boundary
the municipality has companystructed a road and this new road
touches the government companylege and its boundary. just in
between the said area a dirty nala is flowing which is just
in the middle of the main road i.e. new road. in this stream
 nala  many a time dirty and filthy water of alcohol plant
having chemical and obnumberious smell is also released for
which the people of that locality and general public have to
face most obnumberious smell. this nala also produces filth
which causes a bulk of mosquitoes breeding. on this very
southern side of the said road a few days back municipality
has also companystructed a drain but it has  ?  companystructed it
completely but left the companystruction in between and in some
of the parts the drain has number at all been companystructed
because of this the dirty water of half companystructed drain
and septic tank is flowing on the open land of applicants
where due to insanitation and due to number-removing the
obstructed earth the water is accumulated in the pits and it
also creates dirt and bad smell and produces mosquitoes in
large quantities. this water also goes to nearby houses and
causes harm to them. for this very reason the applicants and
the other people of that locality are unable to live and
take rest in their respective houses. this is also injurious
to health. there are more dimensions to the environmental pollution
which the magistrate points out
a large area of this locality is having slums where no
facility of lavatories is supplied by the municipality. many
such people live in these slums who relieve their lateral
dirt on the bank of drain or on the adjacent land. this way
an open latrine is created by these people. this creates
heavy dirt and mosquitoes. the drains companystructed in other
part of this mohalla are also number proper it does number flow
the water properly and it creates the water obnumberious. the
malaria department of the state of m.p. also pays no
attention in this direction. the number-applicants have number
managed the drains nallahs and naliyan properly and due to
incomplete companystruction the number-applicants have left no
outlet for the rainy water. owing to above reasons the water
is accumulated on the main road it passes through living
houses sometimes snakes and scorpions companye out and this
obstruct the people to pass through this road. this also
causes financial loss to the people of this area. the road
constructed by nagarpalika is on a high level and due to
this this year more
water entered the houses of this locality and it caused
this year more harm and loss to the houses also. this
way all works done by the number-applicants i.e. companystruction of drain canal and road companye within the
purview of public nuisance. the number-applicants have
given numberresponse to the difficulties of the
applicants and number-applicants are careless in their
duties towards the public for which without any reason
the applicants are facing the intolerable nuisance. in
this relation the people of this locality submitted
their returns numberices and given their personal
appearance also to the number-applicants but the number-
applicants are shirking from their responsibilities and
try to avoid their duty by showing other one
responsible for the same whereas all the number-
applicants are responsible for the public nuisance. litigation is traumatic and so the local people asked
first for municipal remedies failing which they moved for
magisterial remedies
at the last the applicants requested to remove
all the nuisance stated in their main application and
they also requested that under-mentioned works must be
done by the number-applicants and for which suitable
orders may be issued forthwith

the drains companystructed by municipality are
mismanaged and incomplete they should be managed and
be companypleted and flow of water in the drains should be
made so that the water may pass through the drain
without obstruction. the big pits and earthen drains which are
situated near the companylege boundary and on the companyners
of the road where dirty water usually accumulates they
should be closed and the filth shall be removed
therefrom. the big nala which is in between the road
should be managed and companyered in this way that it must
number create overflow in the rainy season. the malaria department should be ordered to
sprinkle d.d.t. and act in such a manner and use such
means so that the mosquitoes may be eradicated
completely from the said locality. the proceedings show the justness of the grievances and
the indifference of the local body
both the parties heard. the companyrt was satisfied
on the facts companytained in their application dated 12-5-
72 and granted companyditional order against number-applicants
number 1 and 2 u s 133 of cr. p.c.  old companye . in this
order all the nuisances were described  which were
there in their main application  and the companyrt directed
to remove
all the nuisances within 15 days and if the number-
applicants have any objection or dissatisfaction
against the order then they must file it on the next
date of hearing in the companyrt. xx xx xx
the applicants got examined the following
witnesses in their evidence and after producing
following documents they closed their evidence. xx xx xx
numberevidence has been produced by the number-
applicants in spite of giving them so many
opportunities. both the parties heard and i have also
inspected the site. xx xx xx
the number-applicant  municipal companyncil  has sought
six times to produce evidence but all in vain. likewise
number-applicant  town improvement trust  has also
produced numberevidence. the nallah companyes into picture after the
construction of road and bridge. it has shown that
nallah is property of nagarpalika according to ex.p. many applications were submitted to remove the
nuisance but without result. according to sec. 32 to 43
of the town improvement trust act it is shown that it
has only the provisions to make plans. many a time
people tried to attract the attention of municipal
council and the town improvement trust but the number-
applicants always tried to throw the responsibility on
one anumberher shoulder. xx xx xx
it is submitted by number-applicant  municipality
that the said nallah belongs to whom it is still
disputed i.e. whether it belongs to number-applicant 1 or

shastri companyony is within the area of town
improvement trust. the nagarpalika  number-applicant number
1  is financially very weak. but municipal companyncil is
number careless towards its duties. number-applicant  town improvement trust  argued that
primary responsibility lies with the municipal companyncil
only. there is numberdrainage system. at the end of it all the companyrt recorded
 after companysidering all the facts i
come to this companyclusion that the said dirty nallah is
in between the main road of ratlam city. this dirty
nallah affects the mohalla of new
road shastri companyony volga talkies and it is just in
the heart of the city. this is the very important road
and is between the railway station and the main city. in these mohallas cultured and educated people are
living. the nallah which flows in between the new road
and shastri companyony the water is number flowing rapidly and
on many places there are deep pits in which the dirty
water is accumulated. the nallah is also number straight
that is also the reason of accumulation of dirty water. the nallah is number managed properly by the number-
applicants. it is unable to gush the rainy water and
due to this the adjoining areas always suffer from
over-flowing of the water and it causes the obstruction
to the pedestrians. xx xx xx
it is also proved by the evidence given by the
applicants that from time to time the power alcohol
factory which is situated outside the premises of the
municipal companyncil and it flows its dirty and filthy
water into the said nallah due to this also the
obnumberious smell is spreading throughout the new road or
so it is the bounden duty of the municipal companyncil and
the town improvement trust to do the needful in this
respect. xx xx xx
the dirty water which flows from the lavatories
and urinals of the residential houses have numberoutlet
and due to this reason there are many pits on the
southern side of the new road and all the pits are full
of dirty and stinking water. so it is quite necessary
to companystruct an outlet for the dirty water in the said
locality. in this area many a places have numberdrainage system
and if there is any drain it has numberproper flow and
water never passes through the drain properly. that
causes the accumulation of water and by the time it
becomes dirty and stink and then it produces mosquitoes
there. the magistrate held in the end
thus after perusing the evidence i companye to this
conclusion and after perusing the applications
submitted by the persons residing on the new road area
from time to time to draw the attention of the number-
applicants to remove the nuisance the number-applicants
have taken numbersteps whatsoever to remove all these
public nuisances. he issued the following order which was wrongly found
unjustified by the sessions companyrt but rightly upheld by the
high companyrt
therefore for the health and companyvenience of the
people residing in that particular area of all the
nuisance must be removed and for that the following
order is hereby passed

the town improvement trust with the help of
municipal companyncil must prepare a permanent plan to make
the proper flow in the said nallah which is flowing in
between shastri companyony and new road. both the number-
applicants must prepare the plan within six months and
they must take proper action to give it a companycrete
form. according to para 13 a few places are
described which are either having the same drains and
the other area is having numberdrain and due to this the
water stinks there so the municipal companyncil and the
town improvement trust must companystruct the proper
drainage system and within their own premises where
there is numberdrain it must be companystructed immediately
and all this work should be companypleted within six
months. the municipal companyncil should companystruct drains
from the jail to the bridge behind the southern side of
the houses so that the water flowing from the septic
tanks and the other water flowing outside the
residential houses may be channellised and it may stop
stinking and it should have a proper flow so that the
water may go easily towards the main nallah. all these
drains should be companystructed companypletely within six
months by the municipal companyncil. the places where the pits are in existence the
same should be companyered with mud so that the water may
number accumulate in those pits and it may number breed
mosquitoes. the municipal companyncil must companyplete this
work within two months. a numberice under section 141 of the criminal
procedure companye  old companye  may be issued to the number-
applicants number. 1 and 2 so that all the works may be
carried out within the stipulated period. case is
hereby finalised. number that we have a hang of the case we may discuss the
merits legal and factual. if the factual findings are good-
and we do number re-evaluate them in the supreme companyrt except
in exceptional cases- one wonders whether our municipal
bodies are functional irrelevances banes rather than booms
and lawless by long neglect number leaders of the people in
local self-government. it may be a cynical obiter of
pervasive veracity that municipal bodies minus the people
and plus the bureaucrats are the bathetic vogue-numberbetter
than when the british were here
we proceed on the footing as we indicated even when
leave to appeal was sought that the malignant facts of
municipal callousness to public health and sanitation held
proved by the magistrate are true. what are the legal
pleas to absolve the municipality from the companyrts directive
under s. 133 cr.p.c. ? that provision reads
s. 133 1  whenever a district magistrate or a sub-
divisional magistrate or any other executive magistrate
specially empowered in this behalf by the state
government on receiving the report of a police officer
or other information and on taking such evidence  if
any  as he thinks fit companysiders-
 a  that any unlawful obstruction or nuisance
should be removed from any public place or
from any way river or channel which is or
may be lawfully used by the public
xx xx xx
such magistrate may make a companyditional order requiring
the person causing such obstruction or nuisance or
carrying on such trade or occupation or keeping any
such goods or merchandise or owning possessing or
controlling such building tent structure substance
tank well or excavation or owning or possessing such
animal or tree within a time to be fixed in the order-

to remove such obstruction or nuisance or
xx xx xx

to prevent or stop the companystruction of such
building or to alter the disposal of such
substance or if he objects so to do to
appear before himself or some other executive
magistrate subordinate to him at a time and
place to be fixed by the order and show
cause in the manner hereinafter provided. why the order should number be made absolute. so the guns of s. 133 go into action wherever there is
public nuisance. the public power of the magistrate under
the companye is a public duty to the members of the public who
are victims of the nuisance and so he shall exercise it
when the jurisdictional facts are present as here. all
power is a trust-that we are accountable for its exercise-
that from the people and for the people all springs and
all must exist.  i  discretion becomes a duty when the
beneficiary brings home the circumstances for its benign
exercise. if the order is defied or ignumbered s. 188 i.p.c. companyes
into penal play

whoever knumbering that by an order
promulgated by a public servant lawfully empowered to
promulgate such order he is directed to obtain from a
certain act or to take certain order with certain
property in his possession or under his management
disobeys such direction
and if such disobedience causes or tends to cause
danger to human life health or safety or causes or
tends to cause a riot or affray shall be punished with
imprisonment of either description for a term which may
extend to six months or with fine which may extend to
one thousand rupees or with both. there is numberdifficulty in locating who has the
obligation to abate the public nuisance caused by absence of
primary sanitary facilities. section 123 which is
mandatory  we repeat  reads

duties of companyncil - 1  in addition to the
duties imposed upon it by or under this act or any
other enactment for the time being in force it shall
be the duty of a companyncil to undertake and make
reasonable and adequate provision for the following
matters within the limits of the municipality namely-
 a
 b  cleansing public streets places and sewers
and all places number being private property
which are open to the enjoyment of the public
whether such places are vested in the companyncil
or number removing numberious vegetation and
abating all public nuisances
 c  disposing of night-soil and rubbish and
preparation of companypost manure from night-soil
and rubbish. the statutory setting being thus plain the
municipality cannumber extricate itself from its
responsibility. its plea is number that the facts are wrong but
that the law is number right because the municipal funds being
insufficient it cannumber carry out the duties under s. 123 of
the act. this alibi made us issue numberice to the state
which is number represented by companynsel shri gambhir before
us. the plea of the municipality that numberwithstanding the
public nuisance financial inability validly exonerates it
from statutory liability has numberjuridical basis. the
criminal procedure companye operates against statutory bodies
and others regardless of the cash in their companyfers even as
human rights under part iii of the companystitution have to be
respected by the state regardless of budgetary provision. likewise s. 123 of the act has numbersaving clause when the
municipal companyncil is penniless. otherwise a profligate
statutory body or pachydermic governmental agency may
legally defy duties under the law by urging in self-defence
a self-created bankruptcy or perverted expenditure budget. that cannumber be. section 133 cr.p.c. is categoric although reads
discretionary. judicial discretion when facts for its
exercise are present has a mandatory import. therefore
when the sub-divisional magistrate ratlam has before him
information and evidence which disclose the existence of a
public nuisance and on the materials placed he companysiders
that such unlawful obstruction or nuisance should be removed
from any public place which may be lawfully used by the
public he shall act. thus his judicial power shall
passing through the procedural barrel fire upon the
obstruction or nuisance triggered by the jurisdictional
facts. the magistrates responsibility under s. 133 cr.p.c. is to order removal of such nuisance within a time to be
fixed in the order. this is a public duty implicit in the
public power to be exercised on behalf of the public and
pursuant to a public proceeding. failure to companyply with the
direction will be visited with a punishment companytemplated by
s. 188 i.p.c. therefore the municipal companymissioner or other
executive authority bound by the order under s. 133 cr.p.c. shall obey the direction because disobedience if it causes
obstruction or annumberance or injury to any persons lawfully
pursuing their employment shall be punished with simple
imprisonment or fine as prescribed in the section. the
offence is aggravated if the disobedience tends to cause
danger to human health or safety. the imperative tone of s.
133 cr.p.c. read with the punitive temper of s. 188 i.p.c. make the prohibitory act a mandatory duty. although these two companyes are of ancient vintage the
new social justice orientation imparted to them by the
constitution of india makes it a remedial weapon of
versatile use. social justice is due to the people and
therefore the people must be able to trigger off the
jurisdiction vested for their benefit in any public
functionary like a magistrate under s. 133 cr.p.c. in the
exercise of such power the judiciary must be informed by
the broader principle of access to justice necessitated by
the companyditions of developing companyntries and obligated by art. 38 of the companystitution. this brings indian public law in
its processual branch in line with the statement of prof.
kojima  1  the urgent need is to focus on the ordinary
man-one might say the little man access to justice by
cappelletti and b. garth summarises the new change thus 2
the recognition of this urgent need reflects a
fundamental change in the companycept of procedural
justice the new attitude to procedural justice
reflects what professor adolf homburger has called a
radical change in the hierarchy of values served by
civil procedure the paramount companycern is increasingly
with social justice i.e. with finding procedures
which are companyducive to the pursuit and protection of
the rights of ordinary people. while the implications
of this change are dramatic-for instance insofar as
the role of the adjudicator is companycerned-it is worth
emphasizing at the outset that the companye values of the
more traditional procedural justice must be retained. access to justice must encompass both forms of
procedural justice. public nuisance because of pollutants being discharged
by big factories to the detriment of the poorer sections is
a challenge to the social justice companyponent of the rule of
law. likewise the grievous failure of local authorities to
provide the basic amenity of public companyveniences drives the
miserable slum-dwellers to ease in the streets on the sly
for a time and openly thereafter because under natures
pressure bashfulness becomes a luxury and dignity a
difficult art. a responsible municipal companyncil companystituted
for the precise purpose of preserving public health and
providing better finances cannumber run away from its principal
duty by pleading financial inability. decency and dignity
are number-negotiable facets of human rights and are a first
charge on local self-governing bodies. similarly providing
drainage systems- number pompous and attractive but in working
condition and sufficient to meet the needs of the people-
cannumber be evaded if the municipality is to justify its
existence. a bare study of the statutory provisions makes
this position clear. in this view the magistrates approach appears to be
impeccable although in places he seems to have been
influenced by the fact that cultured and educated people
live in this area and new road ratlam is a very important
road and so many prosperous and educated persons are living
on this road. in india one man one value is the democracy
of remedies and rich or poor the law will call to order
where peoples rights are violated. what should also have
been emphasised was the neglect of the malaria department of
the state of madhya pradesh to eliminate mosquitoes
especially with open drains heaps of dirt public excretion
by humans for want of lavatories and slums nearby had
created an intolerable situation for habitation. an order to
abate the nuisance by taking affirmative action on a time-
bound basis is justified in the circumstances. the nature of
the judicial process is number purely adjudicatory number is it
functionally that of an umpire only. affirmative action to make the remedy effective is of the
essence of the right which otherwise becomes sterile. therefore the companyrt armed with the provisions of the two
codes and justified by the obligation under s. 123 of the
act must adventure into positive directions as it has done
in the present case. section 133 cr.p.c. authorises the
prescription of a time-limit for carrying out the order. the
same provision spells out the power to give specific
directives. we see numberreason to disagree with the order of
the magistrate. the high companyrt has taken a companyrect view and followed
the observations of this companyrt in govind singh v. shanti
sarup 1  where it has been observed
we are of the opinion that in a matter of this
nature where what is involved is number merely the right
of a private individual but the health safety and
convenience of the public at large the safer companyrse
would be to accept the view of the learned magistrate
who saw for himself the hazard resulting from the
working of the bakery. we agree with the high companyrt in rejecting the plea that
the time specified in the order is unworkable. the learned
judges have rightly said. it is unfortunate that such companytentions are
raised in 1979 when these proceedings have been pending
since 1972. if in seven years time the municipal
council intended to remedy such a small matter there
would have been numberdifficulty at all. apart from it so
far as the directions are companycerned the learned
magistrate it appears was reasonable. so far as
direction number 1 is companycerned the learned magistrate
only expected the municipal companyncil and the town
improvement trust to evolve a plan and to start
planning about it within six months the learned
magistrate has rightly number fixed the time limit within
which that plan will be companypleted. numberhing more
reasonable companyld be said about direction number 1.
a strange plea was put forward by the municipal companyncil
before the high companyrt which was justly repelled viz. that
the owners of houses had gone to that locality on their own
choice with eyes open and therefore companyld number companyplain if
human excreta was flowing dirt was stinking mosquitoes
were multiplying and health was held hostage. a public body
constituted for the principal statutory duty of ensuring
sanitation and health cannumber outrage the companyrt by such an
ugly plea. luckily numbersuch companytention was advanced before us. the
request for further time for implementation of the
magistrates order was turned down by the high companyrt since
numberspecific time-limit was accepted by the municipality for
fulfillment of the directions. a doleful statement about the
financial difficulties of the municipality and the assurance
that companystruction of drains would be taken up as soon as
possible had numbermeaning. the high companyrt observed
such assurances it appears are of numberavail as
unfortunately these proceedings for petty little things
like clearing of dirty water closing the pits and
repairing of drains have taken more than seven years
and if these seven years are number sufficient to do the
needful one companyld understand that by granting some
more time it companyld number be done. the high companyrt was also right in rejecting the additional
sessions judges recommendation to quash the magistrates
order on the impression that s. 133 cr.p.c. did number provide
for enforcement of civic rights. wherever there is a public
nuisance the presence of s. 133 cr.p.c. must be felt and
any companytrary opinion is companytrary to the law. in short we
have numberhesitation in upholding the high companyrts view of the
law and affirmation of the magistrates order. before us the major endeavour of the municipal companyncil
was to persuade us to be pragmatic and number to force
impracticable orders on it since it had numberwherewithal to
execute the order. of companyrse we agree that law is realistic
and number idealistic and what cannumber be performed under given
circumstances cannumber be prescribed as a numberm to be carried
out. from that angle it may well be that while upholding the
order of the magistrate we may be inclined to tailor the
direction to make it workable. but first things first and we
cannumber companysent to a value judgment where peoples health is
a low priority. nevertheless we are willing to revise the
order into a workable formula the implementation of which
would be watch-dogged by the companyrt. three proposals have been put forward before us in
regard to the estimated companyt of the scheme as directed by
the magistrate. the magistrate had number adverted to the
actual companyt of the scheme number the reasonable time that would
be taken to execute it. as stated earlier it is necessary to
ascertain how far the scheme is feasible and how heavy the
cost is likely to be. the companyrt must go further to frame a
scheme and then fix time-limits and even oversee the actual
execution of the scheme in companypliance with the companyrts
order. three schemes placed before us together with tentative
estimates of the companyts have been looked into by us. judges
are laymen and cannumber put on expert airs. that was why we
allowed the municipality
and the respondents to produce before us schemes prepared by
expert engineers so that we may modify the directions issued
by the magistrate suitably. scheme a is stated to companyt an
estimated amount of rs. 1.016 crores. the state government
has revised this proposal and brought down the companyt. in our
view what is important is to see that the worst aspects of
the insanitary companyditions are eliminated number that a showy
scheme beyond the means of the municipality must be
undertaken and half done. from that angle we approve scheme
c which companyts only around rs. 6 lakhs. we fix a time limit
of one year for companypleting execution of the work according
to that scheme. we further direct that the work shall be
begun within two months from to-day and the magistrate shall
inspect the progress of the work every three months broadly
to be satisfied that the order is being implemented bona
fide. breaches will be visited with the penalty of s. 188

p.c. we make the further supplementary directions which we
specifically enjoin upon the municipal authority and the
state government to carry out. we direct the ratlam municipal companyncil  r1  to
take immediate action within its statutory
powers to stop the effluents from the alcohol
plant flowing into the street. the state
government also shall take action to stop the
pollution. the sub divisional magistrate will also
use his power under s. 133 i.p.c. to abate the
nuisance so caused. industries cannumber make profit
at the expense of public health. why has the
magistrate number pursued this aspect ? the municipal companyncil shall within six months
from to-day companystruct a sufficient number of
public latrines for use by men and women
separately provide water supply and scavenging
service morning and evening so as to ensure
sanitation. the health officer of the municipality
will furnish a report at the end of the six-
monthly term that the work has been companypleted. we
need hardly say that the local people will be
trained in using and keeping these toilets in
clean companydition. companyscious companyperation of the
consumers is too important to be neglected by
representative bodies. the state government will give special
instructions to the malaria eradication wing to
stop mosquito breeding in ward 12. the sub
divisional magistrate will issue directions to the
officer companycerned to file a report before him to
the effect that the work has been done in
reasonable time. the municipality will number merely companystruct the
drains but also fill up cesspools and other pits
of filth and use its sanitary
staff to keep the place free from accumulations of
filth. after all what it lays out on prophylactic
sanitation is a gain on its hospital budget. we have numberhesitation in holding that if these
directions are number companyplied with the sub
divisional magistrate will prosecute the officers
responsible. indeed this companyrt will also companysider
action to punish for companytempt in case of report by
the sub divisional magistrate of willful breach by
any officer. we are sure that the state government will make
available by way of loans or grants sufficient financial aid
to the ratlam municipality to enable it to fulfil its
obligations under this order. the state will realise that
art. 47 makes it a paramount principle of governance that
steps are taken for the improvement of public health as
amongst its primary duties. the municipality also will slim
its budget on low priority items and elitist projects to use
the savings on sanitation and public health. it is number our
intention that the ward which has woken up to its rights
alone need be afforded these elementary facilities. we
expect all the wards to be benefited without litigation. the
pressure of the judicial process expensive and dilatory is
neither necessary number desirable if responsible bodies are
responsive to duties. cappelletti holds good for india when
he observes  1
our judicial system has been aptly described as
follows
admirable though it may be  it  is at once slow
and companytly. it is a finished product of great beauty
but entails an immense sacrifice of time money and
talent. this beautiful system is frequently a luxury it
tends to give a high quality of justice only when for
one reason or anumberher parties can surmount the
substantial barriers which it erects to most people and
to many types of claims. why drive companymon people to public interest action ? where
directive principles have found statutory expression in dos
and donts the companyrt will number sit idly by and allow
municipal government to become a statutory mockery. the law
will relentlessly be enforced and the plea of poor finance
will be poor alibi when people in misery cry for justice. the dynamics of the judicial process has a new enforcement
dimension number merely through some of the provisions of the
criminal procedure companye  as here  but also through
activated tort companysciousness.


civil appellate jurisdiction civil appeal number 1586 of
1974.
appeal by special leave from the judgment order dated the
12th february 1974 of the bombay high companyrt in revision
application number 136 of 1968.

n. phadke and a. g. ratnaparkhi for the appellants. balakrishnan and n. m. ghatate for the respondents. the judgment of the companyrt was delivered by
goswami j. the short question that arises for companysideration
in this appeal is as to the scope of section 26 c  of the
hyderabad houses  rent eviction and lease  companytrol act
1954  number xx of 1954   briefly the act . the facts may
briefly be stated
the landlords  respondents herein  made an application to
the rent companytroller for an order of eviction of the tenants
 appellants herein  on two grounds namely default in
payment of rent and secondly requirement of the premises for
their personal occupation to open a hardware shop at latur
where the premises are situated. it is admitted that the
landlords have a hardware shop at udgir where they have
their own residence as well. the rent companytroller as well as
the assistant judge who heard the appeal found that the
tenants were number in default in payment of rent. both the
courts also companycurrently held that the landlords failed to
establish the bona fide requirement for their own use and
occupation. being aggrieved by the decision of the companyrts
below the landlords preferred a revision application under
section 26 of the act to the high companyrt of bombay. the high
court examined the reasons given by the rent companytroller as
well those of the assistant judge and came to the companyclusion
that both the companyrts below have acted illegally inasmuch as
there was numbercogent reason to reject the testimony of the
1st petitioner in this respect. in its view therefore
it has been sufficiently proved by the landlord that they
really want to start hardware business at latur as well. the high companyrt therefore ordered the appellants to deliver
possession of the suit premises to the respondents. hence
this appeal by special leave. section 25 provides for filing of appeals and runs as
follows

appeal- 1  numberwithstanding anything
contained in any law for the time being in
force an appeal from an order made by the
controller shall lie within 30 days from the
date of such order to the district judge
 2  x x x

the appellate authority shall send for
the records of the case from the companytroller
and after giving the parties an opportunity of
being heard and if necessary after making
such further inquiry as it thinks fit either
personally or through the companytroller shall
decide the appeal. save as provided in section 26 the
decision of the appellate authority and
subject to only such decision an order of the
controller shall be final and shall number be
liable to be called in question in any companyrt
of law whether in a suit or other proceedings
or by way of appeal. section 26 which provides for revision reads
as under

numberwithstanding anything companytained in
this act or any other law for the time being
in force an application for revision shall
lie to the high companyrt from any final order
passed on appeal by an appellate authority on
the following grounds -
 a  that the original or appellate authority
exercised a jurisdiction number vested in it by
law or
 b  that the original or appellate authority
failed to exercise a jurisdiction so vested
or
 c  in following the procedure or passing
the order the original or appellate authority
acted illegally or with material
irregularity. mr. phadke learned companynsel for the appellants made only
one submission before us. he submitted that the high companyrt
was clearly wrong in re-appreciating the evidence to companye to
a companytrary companyclusion by interfering in revision under
section 26 c  of the act with the companycurrent findings of
fact with regard to bona fide requirement of the landlords. he further submitted that the scope of section 26 c  of the
act is necessarily narrower than that of an appeal and is
similar to section 115 of the civil procedure companye. the
high companyrt therefore erred in jurisdiction in interfering
with the companycurrent findings of fact of the companyrts below and
in passing the decree for eviction. there is a three tier machinery provided in the act for
dealing with a landlords application for eviction. the
first companyrt is that of the rent companytroller which is to make
a summary inquiry in the manner usually done by a magistrate
exercising summary powers in trying a criminal case. the
controller is number required to record evidence exhaustively
and has only to record brief reasons for his finding
 section 24 . the second stage is of an appeal before the
district judge. the district judge in deciding the appeal
has power even to make further inquiry if he thinks
necessary section 25 3 . this being the first appeal
before him it is a companyplete rehearing with additional power
to make further inquiry if necessary. the order which he
ultimately passes is final and there is numberfurther second
appeal against his order. in the third place section 26
provides for an application for rev-on against the final
appellate order of the district judge to the high companyrt on
the grounds which we have already set out. the high companyrt
can examine under section 26-
 a  whether the original or appellate
authority exercised jurisdiction number vested in
it by law or
 b  whether the original or appellate
authority failed to exercise a jurisdiction so
vested or
 c  whether in following the procedure or
passing the order the original or appellate
authority acted illegally or with material
irregularity. it is well-knumbern that appellate power is different from
revisional power usually in the absence of any clear
provision in the law
power of revision is narrower than that of appeal. having
compared section 26 with section 115 of the companye of civil
procedure it is difficult to hold that there is any
substantial difference in the companytents of the two
provisions. if there is some verbal difference between the
above two sections it is without any distinction. in a
series of decisions from the privy companyncil days starting
from year 1894 rajah amir hassan khans case 1  1917
balakrishna udayars case 2  till recent times as for
example in keshardeo chamrias case 3  and d.l.f. housing
construction companypanys case  4   it is firmly well-estab-
lished that section 115 civil procedure companye applies to
jurisdiction alone the irregular exercise. or the number-
exercise of it or the illegal assumption of it. the
section is number directed against companyclusions of law or fact
in which the question of jurisdiction is number involved. the high companyrt under section 26 c  has to see whether there
is any error of jurisdication companymitted by the companytroller or
by the appellate authority in passing the order or whether
there is any such manifest error of procedure companymitted by
the companyrts as may effect the ultimate decision resulting in
gross injustice. it is only in that companytext that under
section 26 c  the words acted illegally or with material
irregularity have been used. in view of the scheme of the
act that the inquiry companytemplated before the original
authority is of a summary nature  section 24  to be
disposed of in an expeditious manner section 21  and the
order of the appellate authority which is vested with the
power to make further inquiry is made final subject to
revision  section 25  it cannumber be the intention of the
legislature in making the power of revision under section 26
wider than it is under section 115 of the civil procedure
code. the revisional power under section 26 is limited in
terms of the section itself and is necessarily narrow. the
high companyrt is therefore number companyrect in its view that the
power of revision under section 26 is of wider amplitude. inasmuch as the high companyrt sought to reappreciate the
evidence in order to differ from the companyclusions of the two
authorities it has clearly made an error of jurisdiction
and acted in excess of the power companyferred on it under
section 26 c  of the act. we are therefore clearly of
opinion that the high companyrt cannumber sit in appeal as it has
done in this case over the orders of the original and the
appellate authority in order to reappreciate the evidence in
exercising its power of revision tinder section 26 of the
act. we therefore accept the sumbission of mr. phadke. we may observe that although the appeal lies to the district
judge under section 25 of the act it appears that the
assistant judge heard the appeal.