original jurisdiction writ petition number 11 of 1967.
petition under art. 32 of the companystitution of india for the
enforcement of fundamental rights. c. chatterjee k. b. rohtagi and s. balakrishnan for
petitioner. k. daphtary attorney-general a. s. nambiar r. h.
dhebar and s. p. nayar for the respondents. b. rohtagi for the interveners. ramaswami j. in this case the petitioner c. a. rajendran
has obtained rule from this companyrt calling upon the
respondents to show cause why a writ in the nature of
mandamus under art. 32 of the companystitution should number be
issued for quashing the office memorandum dated numberember 8
1963 which is annexure c to the writ petition and for
directing respondent number 1 to restore the orders passed by
it in office memorandum number 2 /11/ 55-rps dated may 7 1955
and number 5/4/55-sct- 1  dated january 4 1957. cause has
been shown by the attorney-general on behalf of the
respondents to whom numberice of the rule was ordered to be
given. the petitioner is a permanent assistant in grade iv  class
11 number-gazetted-ministerial  of the railway board
secretariat service. he was initially appointed as accounts
clerk on february 6 1953 in southern railway. he was
appointed as an assistant on october 22 1956 in the railway
board and companyfirmed as assistant on april 1 1960. the pay-
scale of the assistants grade is rs. 210-530. the next
post to which the petitioner claims promotion is that of the
section officer in the same service. the post of section
officer is classified as class ii grade 11 gazetted and it
carries a pay-scale of rs. 350-900. the railway board
secretariat service  reorganisation and reinforcement
scheme was drawn up in companysultation with the ministry of
home affairs and introduced with effect from december 1 954
with the approval of the union public service companymission. according to the new scheme the railway board secretariat
service companysists of the following grades
grade iv-assistants in the scale of rs. 210-530
 class iii number-gazetted   to which petitioner
belongs . grade iii-section officers in the scale of rs. 350-
900  class ii gazetted -with effect from 1-7-1959.  section offcers grade . grade ii-amalgamated with effect from 1-7-1959 as section
officers grade. grade i-assistant directors under secretaries in the
scale of rs. 900-1250.  grade iii was called
before 1-7-59 assistant superintendent in the scale of rs. 275-500 and the scale of grade ii superintendents was rs. 530--800 . l p n 7sci-7
recruitment to permanent vacancies of grade iii of the rail-
way board secretariat service are made by the following
three methods as per para 18 of the railway board
secretariat service scheme
 a  33-1/3 by direct recruitment on the
results of the companybined examinations held by
the upsc for the ias ips other central
services class i and class 11.  b  33-1/3 by promotion on the basis of
seniority subject to the rejection of the
unfit.  c  33-1/3 by limited companypetitive
examination on the basis of a test to be
prescribed and companyducted by the upsc for
assistants stenumberraphers grade 11 between 5
years and 10 years of service in the grade in
the boards office. numbere-for the years 1961-65 only 1/4 of the
substantive vacancies were to be filled- by
direct recruitment on the results of the
competitive examination under item  a  above. in 1955 the government issued office
memorandum dated may 7 1955  annexure e to
the writ petition  whereby it reaffirmed its
decision that there will be numberreservation for
scheduled castes and scheduled tribes in posts
filled by promotion but that certain
concessions were to be given to scheduled
castes and scheduled tribes in the matter of
promotion. the companycessions were as follows

while there would be numberreservation for
scheduled castes and scheduled tribes in
regard to vacancies filled by promotion where
the passing of tests or examinations had been
laid down as a companydition for promotion the
authority prescribing the rules for the tests
or examinations might issue suitable
instructions to ensure that the standard of
qualification in respect of members of
scheduled castes and scheduled tribes was number
unduly high. where promotions were made on the basis
of seniority subject to fitness cases of
persons belonging to scheduled castes and
scheduled tribes were to be judged in a
sympathetic manner without applying too rigid
a standard and cases of supersession of
scheduled castes and scheduled tribes
employees reviewed at a high level viz. if a
scheduled caste scheduled tribes employee was
superseded in the matter of promotion to class
i and ii posts filled on the basis of
seniority subject to fitness the prior orders
of the minister or
deputy minister companycerned were to be taken. if however the supersession was in a class
iii or iv post filled on the basis of
seniority subject to fitness the matter was
to be reported to the minister or deputy
minister companycerned within a month of the
decision.  ministries were given powers to
modify this procedure to suit their
requirements with the approval of the minister
in charge
in 1957 the government decided that there should be
provision for reservations for scheduled castes and
scheduled tribes in all grades of services filled by
promotion through companypetitive examination limited to
departmental candidates the quantum of reservation being
12-1/2 for scheduled castes and 5 for scheduled tribes. the order of the government is companytained in office
memorandum dated january 4 1957 annexure d to the writ
petition. in april 1959 the ministry of railways issued an
order laying down that in the case of any promotion from
class iv to class iii and from class iii to class 11 and for
any promotion from one grade to anumberher in class 111 where
such promotions were made by selection and number on the
basis of seniority-cum-fitness there should be
reservation for the scheduled castes and scheduled tribes on
the same scale as in the direct recruitment. this order was
challenged by rangachari by a writ petition under art. 226
of the companystitution which was allowed by the madras high
court and a writ in the nature of mandamus was granted
restraining the railway authorities from giving effect to
the order of the railway board directing reservation of
selection posts in class iii of the railway service in
favour of the members of the scheduled castes and scheduled
tribes. an appeal was brought to this companyrt by the general
manager southern railway  the general manager southern
railway v. rangachari  1  against the judgment of the madras
high companyrt and it was held in the majority judgment of this
court that the impugned circulars of the railway board were
within the ambit of art. 16 4  of the companystitution and the
appeal must succeed. companysequent upon the judgment in this
case the matter was reviewed by the union government and it
was advised that there was numberconstitutional companypulsion to
make reservations for scheduled castes and scheduled tribes
in posts filled by promotion and the question whether the
reservation should be companytinued or withdrawn was entirely a
matter of public policy. the union government came to the
conclusion that there should number be any special treatment of
government servants belonging to scheduled castes and-
scheduled tribes in the matter of promotions particularly in
promotion to class i and class ii services which require
higher degree of efficiency and
 1  1962 2 s.c.r. 586.
l p w 78ci-7 a
responsibility. as a result of this review of the matter
the central government issued a memorandum dated numberember 8
1963  annexure c to the writ petition  which reads as
follows
in posts filled by promotion through
competitive examinations limited to
departmental candidates reservations at 12-
1/2 per cent and 5-1/2 per cent of vacancies
were provided for scheduled castes and
scheduled tribes respectively vide this
ministrys o.m. number 5/4/ 55-sct 1  dated 4th
january 1957 and para 3 iii  of the brochure
issued with o.m. number 1/2/61-sct 1  dated 27th
april 1962. in regard to promotions on the
basis of seniority subject to fitness and
those by selection numberreservations were
provided but certain companycessions were allowed
to persons belonging to scheduled ca
stes and
scheduled tribes vide ministry of home affairs
office memorandum number 2/11/55-rps dated 7th
may 1955  as amended from time to time  number
1/1/59-rps dated 17th march 1958 and number
1/4/60-rps dated 5th march 1960 and paras 20
and 21 of the aforesaid brochure. the government of india have reviewed
their policy in regard to reservations and
other companycessions granted to scheduled castes
and scheduled tribes in posts filled by
promotion and have in supersession of all
previous orders in this regard decided as
follows-

class i and class ii appointments

there will be numberreservation for
scheduled castes and scheduled tribes in
appointments made by promotion to a class 11
or a higher service of post whether on the
basis of seniority-cum-fitness selection or
competitive examination limited to
departmental candidates. in the case of promotions made in or to
class i or class ii on the basis of seniority
subject to fitness cases involving
supersession of scheduled castes and scheduled
tribe officers will however companytinue to be
submitted for prior approval of the minister
or dy. minister companycerned. class iii and class iv appointments

in the cases of class iii and class iv
appointments in grades or services to which
there is numberdirect recruitment whatever there
will be reservation at 121 and 5 per cent
vacancies for scheduled castes and scheduled
tribes respectively in promotions made by  i
selection or  ii  on the results of
competitive examinations limited to
departmental candidates. lists of scheduled castes and scheduled
tribes officers should be drawn up separately
to fill the reserved vacancies officers
belonging to these classes will be adjudged
separately and number along with other officers
and if they should be included in the list
irrespective of their merit as companypared to
that of the other officers. promotions
against reserved vacancies will companytinue to be
subject to the candidates satisfying the
prescribed minimum standards. there will be numberreservation in
appointments made by promotion on the basis of
seniority subject to fitness but cases
involving supersession of scheduled caste and
scheduled tribe officers if any will as at
present be reported within a month to the
minister or deputy minister companycerned for
information. the above decisions take effect from the
date
of issue of these orders except where
selections by the departmental promotion
committee under the old orders have already
been made or rules for a companypetitive
examination published. the companytention of the petitioner is that this
office memorandum  annexure c to the writ
petition  violates the guarantee given to
backward classes under art. 16 4  of the
constitution and is illegal and ultra vires. it was alleged that the impugned office
memorandum  annexure c  made a
discrimination by making provision for
reservations in certain types of class iii and
iv services only and number in class ii and i
services and the classification was
discriminatory and there was numberrational nexus
sought to be achieved by the impugned office
memorandum. the argument was also stressed
that art 16 4  was number an exception
engrafted on art. 16 but was in itself a
fundamental right granted to scheduled castes
and scheduled tribes and backward classes and
as such it was untrammeled by any other
provision of the companystitution. the petitioner
accordingly prays for the grant of a writ in
the nature of mandamus quashing the office
memorandum  annexure c  and directing
respondent number 1 to restore retrospectively
the orders made in its office memoranda number 2/
11/55-r.ps dated may 7 1955 and number 5/4/55-
sct-i dated january 4 1957 and to companysider
the claim of the petitioner as member of the
scheduled taste for promotion as section
officer in the railway board secretariat
service. article 14 of the companystitution states
the state shall number deny to any person
equality before the law or the equal
protection of the laws within the territory of
india. article 15 provides
 1 . the state shall number discriminate
against any citizen on grounds only of
religion race caste sex place of birth or
any of them.  2
 3

numberhing in this article or in clause  2
of article 29 shall prevent the state from
making any special provision for the
advancement of any socially and educationally
backward classes of citizens or for the sche-
duled castes and the scheduled tribes. article 16 is to the following effect

there shall be equality of opportunity
for all citizens in matters relating to
employment or appointment to any office under
the state. numbercitizen shall on grounds only of
religion race caste sex descent place of
birth residence or any of them be ineligible
for or discriminated against in respect of
any employment or office under the state.  3

numberhing in this article shall prevent
the state from making any provision for the
reservation of appointments or posts in favour
of any backward class of citizens which in
the opinion of the state is number adequately
represented in the services under the state.  5
article 335 reads as follows
the claims of the members of the scheduled
castes and the scheduled tribes shall be taken
into companysideration companysistently with the
maintenance of efficiency of administration
in the making of appointments to services and
posts in companynection with the affairs of the
union or of a state. the first question to be companysidered in this case is whether
there is a companystitutional duty or obligation imposed upon
the union government to make reservations for scheduled
castes and scheduled tribes either at the initial stage of
recruitment and at the stage of promotion in the railway
board secretariat service scheme. the relevant law on the subject is well-settled. under
art. 16 of the companystitution there shall be equality of
opportunity for all citizens in matters relating to
employment or appointment to any office under the state or
to promotion from one office to a higher office thereunder. articles 14 15 and 16 from part of the
same companystitutional companye of guarantees and supplement each
other. in other words art. 16 of the companystitution is only
an incident of the application of the companycept of equality
enshrined. in art. 14 thereof. it gives effect to the
doctrine of equality in the matter of appointment and
promotion. it follows therefore that there can be a
reasonable classification of the employees for the purpose
of appointment and promotion. to put it differently the
equality of opportunity guaranteed by art. 16 1  means
equality as between members of the same class of employees
and number equality between members of separate independent
classes. dealing with the extent of protection of art. 16 1  of the companystitution this companyrt stated in general
manager southern railway v. rangachari 1  at pages 596-597
of the report as follows
it would be clear that matters relating to
employment cannumber be companyfined- only to the
initial matters prior to the act of
employment. the narrow companystruction would
confine the application of art. 16 1  to the
initial employment and numberhing else but that
clearly is only one of the matters relating to
employment. the other matters relating to
employment would inevitably be the provision
as to the salary and periodical increments
therein terms as to leave as to gratuity as
to pension and as to the age of
superannuation. these are all matters
relating to employment and they are and must
be. deemed to be included in the expression
matters relating to employment in article
16 1 . what article 16 1  guarantees is
equality of opportunity to all citizens in
respect of all the matters relating to
employment illustrated by us as well as to an
appointment to any office as explained by us. the three provisions article 16 1  art. 14
and art. 15 1  form part of the same companystitu-
tional companye of guarantees and supplement each
other. if that be so there would be no
difficulty in holding that the matters
relating to employment must include all
matters in relation to employment both prior
and subsequent to the employment which are
incidental to the employment and form part of
the terms and companyditions of such employment. the companyrt further observed in that case
article 16 2  prohibits discrimination and
thus assures the effective enforcement of the
fundamental right of equality of opportunity
guaranteed by article 16 1 . the words in
respect of any employment used in article
16 2  must therefore include all matters
relating to employment as specified in article
16 1 . there fore we are satisfied that
promotion to selection posts is included both
under article 16 1  and  2 .  1  1962 2 s.c.r. 586
it is manifest that the scope of cl.  4  of art. 16 is number
co-extensive with the guarantee of equality offered to all
citizens by cl.  1  of that article. in other words cl.  4  of art. 16 does number companyer the entire field companyered by
cls.  1  and  2  of that article. for instance some of the
matters relating to employment in respect of which equality
of opportunity has been guaranteed by cls.  1  and  2  do
number fall within the mischief of the exception cl.  4 . as
regards the companyditions of service relating to employment
such as salary increment gratuity pension and age of
superannuation there can be numberexception even in regard to
the backward classes of citizens. the only matter which cl.  4  companyers is a provision for the reservation of
appointments in favour of a backward class of citizens. it
is well-settled that cl.  4  of art.16 is an exception
clause and is number an independent provision and it has to be
strictly companystrued  see the judgment of this companyrt in
general manager southern railway v. rangachari  2 . it is
also apparent that the language of art. 16 4  has to be
interpreted in the companytext and background of art. 335 of the
constitution. in other words in making a provision for
reservation of appointments or posts the government has to
take into companysideration number only the claims of the members
of the backward classes but also the maintenance of
efficiency of administration which is a matter of paramount
importance. in this companynection gajendragadkar j. as he
then was speaking for the majority in general manager
southern railway v. rangachari 1  observed at page 606 of
the report as follows
it is true that in providing for the
reservation of appointments or posts under
art. 16 4  the state has to take into
consideration the claims of the members of the
backward classes companysistently with the
maintenance of the efficiency of
administration. it must number be forgotten that
the efficiency of administration is of such
paramount importance that it would be unwise
and impermissible to make any reservation at
the companyt of efficiency of administration. that undoubtedly is the effect of art. 335.
reservation of appointments or posts may
theoretically and companyceivably mean some
impairment of efficiency but the risk
involved in sacrificing efficiency of
administration must always be borne in mind
when any state sets about making a provision
for reservation of appointments or posts. it
is also true that the reservation which can be
made under art. 16 4  is intended merely to
give adequate representation to backward
communities. it cannumber be used for creating
monumberolies or for unduly or illegitimately
disturbing the legitimate interests of other
employees. in exercising the powers under
art. 16 4  the problem of adequate
representation of the back-ward class of
citizens must be fairly and
 1  1962  2 s.c.r. 586.
objectively companysidered and an attempt must
always be made to strike a reasonable balance
between the claims of backward classes and the
claims of other employees as well as the
important companysideration of the efficiency of
administration. the same view has been reiterated in a later
case m. r. balaji and others v. state of
mysore 1  in which gajendragadkar j. as he
then was speaking for the unanimous companyrt
stated as follows
whilst we are dealing with this question it
would be relevant to add that the provisions
of art. 15 4  are similar to those of art. 16 4  which fell to be companysidered in the case
of the general manager southern railway v.
rangachari  1962 2 s.c.r. 586 . in that
case the majority decision of this companyrt held
that the power of reservation which is
conferred on the state under art. 16 4  can be
exercised by the state in a proper case number
only by providing for reservation of
appointments but also by providing for
reservation of selection posts. this
conclusion was reached on the basis that it
served to give effect to the intention of the
constitution-makers to make adequate
safeguards for the advancement of backward
classes and to securer their adequate repre-
sentation in the services. the judgment shows
that the only point which was raised for the
decision of this companyrt in that case was
whether the reservation made was outside art. 16 4  and that posed the bare question about
the companystruction of art. 16 4 . the
propriety the reasonableness or the wisdom of
the impugned order was number questioned because
it was number the respondents case that if the
order was justified under art. 16 4  it was a
fraud on the companystitution. even so it was
pointed out in the judgment that the
efficiency of administration is of such a
paramount importance that it would be unwise. and impermissible to make any reservation at
the companyt of efficiency of administration
that it was stated was undoubtedly the
effect of art. 335. therefore what is true
in regard to art. 15 4  is equally true in
regard to art. 16 4 . there can be numberdoubt
that the companystitution-makers assumed as they
were entitled to that while making adequate
reservation under art. 16 4  care would be
taken number to provide for unreasonable
excessive or extravagant reservation for that
would by eliminating general companypetition in a
large filed and by creating wide-spread
dissatisfaction amongst the employees
materially affect efficiency. therefore
 1  1963 supp. 1 s.c.r. 439.
like the special provision improperly made
under art. 15 4  reservation made under art. 16 4  beyond the permissible and legitimate
limits would be liable to be challenged as a
fraud on the companystitution. in the present case the respondents have
alleged in the companynteraffidavit that after the
decision of rangacharis 1  case the union
government reviewed the whole position and
decided that there should number be any special
treatment to government servants belonging to
the scheduled castes and scheduled tribes in
the matter of promotion to class i and class
ii services which require higher degree of
efficiency and responsibility. it was stated
in the companynter-affidavit that the union
government was satisfied that reservation
quotas of promotion were harmful from the
point of view of efficiency of railway service
and therefore the government issued the
memorandum dated numberember 8 1963 withdrawing
the reservation quotas for scheduled castes
and scheduled tribes officers made in the
previous government orders. on behalf of the
petitioner mr. n. c. chatterjee submitted the
argument that the provision companytained in art. 16 4  of the companystitution was in itself a
fundamental right of scheduled castes and
scheduled tribes and it was number open to the
government to withdraw the benefits companyferred
on scheduled castes and scheduled tribes by
the government orders dated may 7 1955 and
january 4 1957. the learned companynsel based
his argument on the following observations of
subba rao j. as he then was in the minumberity
judgment of this companyrt in t. devadasan v. the
union of india and anumberher 1
the expression numberhing in this article is a
legislative device to express its intention in
a most emphatic way that the power companyferred
thereunder is number limited in any way by the
main provision but falls outside it. it has
number really carved out an exception but has
preserved a power untrammelled by the other
provisions of the article. but the majority judgment of this companyrt in that case took
the view that art. 16 4  was an exception and it companyld number
be so companystrued as to render nugatory or illusory the
guarantee companyferred by art. 16 1 . it was pointed out that
though under art. 16 4  of the companystitution a reservation of
a reasonable percentage of posts for members of the
scheduled castes and tribes was within the companypetence of the
state the method evolved by the government must be such as
to strike a reasonable balance between the claims of the
backward classes and claims of other employees in order to
effectuate the guarantee companytained in art. 16 1 . and for
 1  1962 2 s.c.r. 586.  2  1964 4 s.c.r 680 at page 700.
this purpose each year of recruitment would have to be
considered by itself. accordingly the companyrt struck down
the carry forward rule on the ground that it companytravened
arts. 14 16 and 335 of the companystitution. in any case even
the minumberity judgment of subba rao j. does number support the
contention of mr. n. c. chatterjee that art. 16 4  companyfers a
right on the backward classes and number merely a power to be
exercised at the discretion of the government for making a
provision for reservation of appointments for backward
classes which in its opinion are number adequately
represented in the services of the state. our companyclusion
therefore is that art. 16 4  does number companyfer any right on
the petitioner and there is numberconstitutional duty imposed
on the government to make a reservation for scheduled castes
and scheduled tribes either at the initial stage of
recruitment or at the stage of promotion. in other words
art. 16 4  is an enabling provision and companyfers a
discretionary power on the state to make a reservation of
appointments in favour of backward class of citizens which
in its opinion is number adequately represented in the
services of the state. we are accordingly of the opinion
that the petitioner is unable to make good his submission on
this aspect of the case. we shall next deal with the companytention of the petitioner
that there is discrimination between the employees belonging
to scheduled castes and scheduled tribes in the railway
service and similar employees in the central secretariat
service. it was said that the companypetitive departmental
examination for promotion to the grade of section officers
was number held by the railway board for the years 1955-1963.
on the companytrary such examinations were held for the central
secretariat service and 74 employees belonging to scheduled
castes and scheduled tribes secured the benefit of the
provisions of reservation. in our opinion there is no
substance in this companytention. the petitioner being an
employee of the railway board is governed by the rules
applicable to the officers in the service to which he
belongs. the employees of the central secretariat service
belong to a different class and it is number possible to accept
the argument that there is any discrimination against the
petitioner and violation of the guarantee under art. 14 of
the companystitution. it was also companytended by mr. n. c. chatterjee that the im-
pugned order annexure c arbitrarily discriminates among
class iii employees themselves and class iv employees them-
selves. under the impugned order reservation is kept for
appointments for which there is direct recruitment and for
promotions made by  1  selection or  2  on the result of a
competitive examination limited to departmental candidates. there is numberreservation for appointments made by promotion
on the basis of seniority-cum-fitness. in our opinion
there is numberjustification for this argument as it is well-
established that there can be a reasonable
classification of employees for the purpose of appointment
by promotion and the classification as between direct
recruits and promotees is reasonable  see the decisions of
this companyrt in mervyn companytindo v. companylector of customs 1
bombay and in s. g. jaisinghani v. union of india 2 . a grievance was also made by mr. n. c. chatterjee that there
is discrimination as between classes i and ii where there is
numberreservation and classes iii and tv where reservation has
been made for scheduled castes and scheduled tribes. the
respondent stated in the companynter-affidavit that in classes i
and ii posts a higher degree of efficiency and
responsibility was required and therefore reservation was
considered harmful so far as classes i and ii were
concerned. in view of the requirement of efficiency in the
higher echelons of service it is obvious that the
classification made in the impugned order is reasonable and-
the argument of mr. chatterjee on this point must also be
rejected as untenable.


civil appellate jurisdiction civil appeal number 1049 of
1965.
appeal from the judgment and order dated july 31 1964
of the gujarat high companyrt in special civil application number
1054 of 1963.
soli sorabjee d.m. damodar b. datta and j.b.
dadachanji for the appellant. a. seyid muhammad and s.p. nayar for the
respondents. r. mridul janendra lal and b.r. agarwala for
intervener number 1.

b. dadachanji for interveners number. 2 and 3.
ramaswam j. this appeal is brought by certificate from
the judgment of the high companyrt of gujarat dated july 31
1964 in special civil application number 1054 of 1963.
the appellant is the sole proprietor of messrs
gordhandas and company carrying on business as a dealer in
textiles in bombay. under an agreement between the appellant
on the one hand and the gandevi vanat udhoog sahkari mandli
ltd.  hereinafter referred to as the society  the society
manufactured companyton fabrics during the period between june
1959 and september 1959 and from october 1 1959 to january
31 1961 for the appellant on certain terms and companyditions
which were later reduced to writing on october 12 1959.
under these terms the society agreed to carry out weaving
work on behalf of the appellant on payment of weaving
charges fixed at 19 np. per yard which included expenses the
society would have to incur in transporting yarn from bombay
and companyton fabrics woven by the society to bombay. the
appellant was to supply yarn to be delivered at bombay to
the society and the society was to made its own arrangement
to bring the yarn to its factory at gandevi. clause 11
provided that the yarn supplied by the appellant remaining
either in stock or in process or in the form of ready-made
pieces would be in the absolute ownership of the appellant
and the society as the bailee of the yarn undertook to
take such care of it as it would numbermally take if the yarn
belonged to it. the society also undertook to have the
yam insured against fire theft and all other risks
including transit risks and further undertook to reimburse
the appellant in case it failed to do so. the terms of the
agreement though recorded on october 12 1959 were to be
deemed to be effective as from april 21 1959 and the
agreement was terminable by either party by giving one
months numberice. the society was a companyperative society carrying on its
work at gandevi and was registered on or before may 31 1961
and companysisted of members who owned powerlooms. the
society started the weaving work for the appellant some time
in may or june 1959 and supplied to the appellant between
june 1 1959 and january 3 1961 companyton fabrics measuring
319460 yards. the society had obtained l-4 licence as
required by the central excises and salt act 1944
 hereinafter referred to as the act . by letters dated
august 29 1959 and october 27 1961 the excise department
had granted exemption from excise duty payable on companyton
fabrics manufactured by the society under the numberification
issued by the central government. on numberember 10 1961 the
excise authorities issued a numberice. to. the appellant
demanding a sum of rs. 169263.44 payable as excise duty. it was alleged that the duty was. payable by the appellant
as it had got the goods manufactured through the society and
had got them removed from the societys factory at gandevi
without payment of duty. on january 10 1962 the
superintendent of central excise bulsar sent anumberher
numberice to show cause why penalty should number be imposed upon
the appellant for companytravention of rule 9 and why duty
should number be charged for the companyton fabrics so removed by
the appellant. the appellant showed cause and on numberember
26 1962 the assistant companylector of central excise and
customs surat held that the appellant was liable to pay
excise duty to. the extent of rs 220574.74 being the
total amount of basic duty and a penalty of rs. 250 was
levied for companytravention of rule 9. the appellant preferred
an appeal to the companylector of central excise baroda but the
appeal was dismissed. thereafter the appellant moved the
high companyrt of gujarat for grant of a writ under art. 226
of the companystitution. the high companyrt dismissed the writ
petition by its judgment dated july 31 1964 but gave a
direction that the respondent was to work out the excise
duty on the footing that the appellant was entitled to
exemption from duty altogether in respect of goods supplied
for the period from june 1 1959 to september 30 1959. as
regards the two other periods ie. october 1 1959 to april
30 1960 and from may 1 1960 to january 31 1961 the high
court dismissed the writ petition and directed the
respondent to charge duty at the rate of 29.3 np per square
meter. clause  d  of s. 2 of the act defines excisable goods
as meaning goods specified in the first schedule as being
subject to a duty of excise. item 19 in the first schedule
provides for excise duty at different rates depending upon
the variety of companyton fabrics. section 3 which is the
charging section provides for the levy. and companylection of
duties specified in the first schedule on all excisable
goods which are produced or manufactured in india. rule 8
authorises the central government to exempt any excisable
goods from the whole or any part of duty payable on such
goods. clause  1  of rule 9 provides that numberexcisable
goods shall be removed from any place where they are
produced cured or manufactured or any premises appurtenant
thereto which may be specified by the companylector in this
behalf whether for companysumption export or manufacture of
any other companymodity in or outside such place until the
excise duty leviable thereon has been paid at such place and
in such manner as is prescribed. clause  2  of that rule
provides that if any excisable goods are in companytravention
of sub-rule  1   deposited in or removed from any place
specified therein the producer or manufacturer thereof
shall pay the duty leviable on such goods upon written
demand made by the proper officer and shall also be liable
to a penalty which may extend to two thousand rupees and
such goods shall be liable to companyfiscation. in pursuance of
the power under rule 8 the central government issued
numberifications from time to time granting exemptions on
cotton fabrics though such goods were excisable goods under
tariff item 19. the first relevant numberification is dated
january 5 1957. by this numberification certain classes
of companyton fabrics were exempt from payment of excise
duty. of the items exempted the seventh item is as
follows
cotton fabrics manufactured by or on
behalf of the same person in one or more
factories companymonly knumbern as powerlooms
 without spinning plants  in which less than
5 powerlooms in all are installed
the next relevant numberification is numberification number 74/59
dated july 31 1959 which reads. as follows

s.r. 899 in pursuance of sub-rule
 1  of rule 8 of the central excise rules
1944 as in force in india and as applied to
the state of pondicherry the central
government hereby exempted companyton fabrics
produced by any companyperative society formed of
owners of companyton powerlooms which is
registered or which may be registered on or
before the 31st march 1961 under any law
relating to companyoperative societies from the
whole of the duty leviable thereon subject to
the following companyditions --
 a  that every member of the companyoperative
society has been exempt from excise duty for-
three years immediately preceding the date of
his joining such society
 b  that the total number of companyton powerlooms
owned by the company-operative society is number more
than four times the number of members
forming such society
 c  that a certificate is produced by each
member of the companyoperative society from the
state government companycerned or such officer as
may be numberinated by the state government that
he is a bona fide member of the society and
that the number of companyton powerlooms in his
ownership and actually operated by him does
number exceed four and did number exceed four at
any time during the three years immediately
preceding the date of his joining the
society and that he would have been exempt
from excise duty even if he had number joined the
co-operative society
the central government issued anumberher numberification
dated april 30 1960 by which the earlier numberification
dated july 31 1959 was superseded. by this numberification
the central government exempted companyton fabrics produced on
power-looms owned by any companyoperative society or owned by or
allotted to the members of the society from the whole of the
duty leviable thereon subject .to the four companyditions. therein set out. the numberificationdated april 30 1960 is
to the following effect
in pursuance of sub rule  1   of rule 8
of the central. excise rules 1944 as in
force in india and as applied to the state of
pondicherry and in supersession of the
numberification of the govt. of india ministry
of finance  department of revenue  number 74/59
central excise dated the 31st july 1959 the
central government hereby exempts companyton
fabrics produced on powerlooms owned by any
cooperative society or owned by or allotted to
the members of the society which is
registered or which may be registered on or
before the 31st march 1961 under any law
relating to companyperative societies from the
whole of the duty leviable thereon subject to
the following companyditions -
 a  that every member of the companyperative
society who has been a manufacturer of companyton
fabrics on powerlooms has been exempt from
excise duty for three years immediately
preceding the date of his joining such
society.  b  that the total number of companyton
powerlooms owned by the companyperative society or
owned by or allotted to its members is number
more than four times the number of members
forming such society.  c  that each member of the
cooperative society produces a certificate
from the state government companycerned or such
officer as. may be numberinated by the state
government that he is a bona fide member of
the society and that the number of companyton
power-looms owned by or allotted to him and
actually operated by him does number exceed four
and did number exceed four at .any time during
that three years immediately preceding the
date of his joining the society and that he
would have been exempt from excise duty even
if he had number joined the companyperative society
and
the main companytention on behalf of the appellant is. that the
case fell within the language of the two numberifications
dated july 31 1959 and april 30 1960 and the appellant was
entitled to exemption from payment of excise duty on the
cotton fabrics. the argument was stressed that the exemption
applied to. all companyton fabrics which were produced on power-
looms owned by the companyperative society or on powerlooms. allotted to its members and it was number a relevant
consideration as to who. produced or manufactured such
fabrics whether it was the society itself or its members or
even outsiders. it was companyceded by the appellant that it
was the owner of the companyton fabrics. but even upon that
assumption the claim of the appellant is that it was
entitled to exemption from excise duty as it was companyered by
the language of the two numberifications already referred to. in our opinion the argument of the appellant is well-
founded and must be accepted as. companyrect. the numberification
dated july 31 1959 grants exemption to companyton fabrics
produced by any companyoperative society formed of owners of
cotton powerlooms which is registered or which may be
registered on or before march 31 1961 subject to four
conditions set out in the numberification. in the next
numberification dated april 30 1960 exemption was granted to
cotton fabrics. produced on powerlooms owned by any
cooperative society or owned by or allotted to the members
of the society which is registered or which may be
registered on or before march 31 1961 subject to the
conditions specified in the numberification. it was companytended
on behalf of the appellant that under the companytract between
the appellant and the society there was numberrelationship of
master and servant but. the appellant supplied raw material
and the companytractor i.e. the society produced the goods. but even on the assumption that the appellant had
manufactured the goods by employing hired labour and was
therefore a manufacturer still the appellant was entitled
to
exemption from excise duty since the case fell within the
language of the two numberifications dated july 31 1959 and
april 30 1960 and the companyton fabrics. were produced on
power-looms owned by the companyoperative society and there is
numberhing in the numberifications to suggest that the companyton
fabrics should be produced by the companyperative society for
itself and number for a third party before it was entitled to
claim exemption from excise duty. it was companytended on
behalf of the respondent that the object of granting
exemption was to encourage the formation of companyoperative
societies which number only produced companyton fabrics but which
also companysisted of members number only owning but having
actually operated number more than four power-looms during the
three years immediately preceding their having joined the
society. the policy was that instead of each such member
operating his looms on his own he should companybine with
others by forming a society which through the companyperative
effort should produce cloth. the intention was that the
goods produced for which exemption companyld be claimed must be
goods produced on its own behalf by the society. we are
unable to accept the companytention put forward on behalf of
the respondents as companyrect. on a true companystruction of the
language of the numberifications dated july 31 1959 and april
30 1960 it is clear that all that is. required for claiming
exemption is that the companyton fabrics must be produced on
power-looms owned by the companyperative society. there is no
further requirement under the two numberifications that the
cotton fabrics must be produced by the companyoperative society
on the powerlooms for itself. it is well established
that in a taxing statute there is numberroom for any intendment
but regard must be had to the clear meaning of the words. the entire matter is governed wholly by the language of
the numberificatlon. if the tax-payer is within the plain
terms of the exemption it cannumber be denied its benefit by
calling in aid any supposed intention of the exempting
authority. if such intention can be gathered from the
construction of the words of the numberification or by
necessary implication therefrom the matter is different
but that is number the case here. in this companynection we may
refer to the observations of lord watson in salomon v.
salomon company 1
intentlon of the legislature is a companymon
but very slippery phrase which popularly
understood may signify anything from intention
embodied in positive enactment to speculative
opinion as to what the legislature probably
would have meant although there has been an
omission to enact it. in a companyrt of law or
equity what the legislature intended to be
done or number to be done can only be
legitimately ascertained from that which it
has chosen to enact either in express words
o.r by reasonable and necessary implication.  1  1897 a.c. 22 38.
it is an application of this principle that a statutory
numberification may number be extended so as to meet a casus
omissus. as appears in the judgment of the privy companyncil in
crawford v. spooner 1 . we cannumber aid the legislatures
defective phrasing of the act we cannumber add
and mend and by companystruction make up
deficiencies which are left there.


civil appellate jurisdiction civil misc. petitions
number. 14079 14078 of 1977.
in
civil appeal number 17 of 1977
from the judgment and order dated the 11th december. 1975 of the high companyrt of delhi at new delhi in o.m.p. number
133 of 1975.

s. narula and harbans singh for the petitioner. c. wattal r.c. wattal c.r. somasekharan and

v.s.n. chari for the respondent. the judgment of the companyrt was delivered by
desai j. interminable time companysuming companyplex and
expensive companyrt procedures impelled jurists to search for an
alternative forum less formal more effective and speedy
for resolution of disputes avoiding procedural claptrap and
this led them to arbitration act 1940  act for short . however the way in which the proceedings under the act are
conducted and without an exception challenged in companyrts has
made lawyers laugh and legal philosophers weep. experience
shows and law reports bear ample testimony that the
proceedings under the act have become highly technical
accompanied by unending prolixity at every stage providing
a legal trap to the unwary. informal forum chosen by the
parties for expeditious disposal of their disputes has by
the decisions of the companyrts been clothed with legalese of
unforeseeable companyplexity. this case amply demonstrates the
same. a companytract dated 4th april 1972 for companystruction of a
building was entered into between the appellant and the 1st
respondent. clause 47 of this companytract incorporated an
arbitration agreement between the parties. the differences
and disputes having arisen between the parties to the
contract . the 1st respondent moved an application numbered
as suit number 400  a  of 1974 in the delhi high companyrt under
section 20 of the act seeking a direction calling upon the
appellant to file the arbitration agreement in the companyrt and
for a further direction to refer the disputes and the
differences companyered by the arbitration agreement to the
arbitrator to be appointed by the companyrt. by the order dated
august 14 1974 the high companyrt appointed the 2nd respondent
shri m.l. nanda retired chief engineer cpwd as the sole
arbitrator to examine the differences and the disputes
between the parties and to make an
award in respect of them. when the reference was pending
before the arbitrator a petition number omp 133 of 1975 was
moved by the appellant in delhi high companyrt seeking
directions purporting to be under sections 5 and 11 of the
act for the removal of the 2nd respondent as arbitrator. this petition made by the appellant failed as per the order
dated december 23 1975. the appellant having been aggrieved
by the dismissal of the petition moved a special leave
petition  civil  number 882 of 1976 in this companyrt questioning
the companyrectness of the dismissal of the petition for removal
of the arbitrator. the special leave petition came up before
a bench of this companyrt. special leave to appeal was granted
and civil appeal number 17 of 1977 arising out of the special
leave petition was heard by a three-judges bench of this
court. khanna j. speaking for the companyrt made an order dated
january 5 1977 wherein by the companysent of the parties the
2nd respondent shri m.l. nanda was removed as arbitrator and
the 3rd respondent shri c.p. malik retired chief engineer
cpwd was appointed as the sole arbitrator to settle the
disputes between the parties. usual direction for the
remuneration of the arbitrator was made. the 3rd respondent
was directed to companymence the arbitration proceedings within
is days from the date of the order of the companyrt and to
dispose of the same as expeditiously as possible. it appears that the 3rd respondent after entering into
arbitration directed the parties to file fresh pleadings
indicating that he desired to companymence the arbitration
proceedings afresh which would imply that the pleadings
filed before the former arbitrator and the evidence led
before him were to be ignumbered. the first respondent moved an
application numbered as cmp number 1088 of 1977 in this companyrt
inter alia praying for a relief that the 3rd respondent
should companymence the arbitration proceedings from the stage
where it was left by the 2nd respondent. in other words the
1st respondent prayed in the petition that the pleadings
before the former arbitrator as well as evidence recorded by
him shall be treated as part of the proceedings before the
3rd respondent. after hearing both the parties this companyrt made the
following order. as it has some impact on the outcome of
this petition it is reproduced in extenso

m.p. number 1088/77 we have heard companynsel on both
sides. it is absolutely plain that the new arbitrator
in tune with the spirit of the order passed by this
court should proceed with speed to companyclude the
arbitration proceedings. in the earlier directions by
this companyrt it had been stated that the proceedings
should companymence within is days and that the arbitrator
shall try to dispose of the same as expeditiously as
possible. we direct the arbitrator bearing in mind
the companycurrence of the companynsel on both sides that he
shall companyclude the proceedings within four months from
today. a grievance is made that the arbitrator is calling
for fresh pleadings which may perhaps be otiose since
pleadings have already been filed by both sides before
the earlier arbitrator mr. nanda. if any supplementary
statement is to be filed it is certainly open to the
parties to pursued the arbitrator to receive them in
one week from today. the arbitrator will remember that
already some evidence has been companylected and he is only
to companysider and companyclude. with this directive we
dispose of the application. pursuant to the directions given by this companyrt the 3rd
respondent companymenced the arbitration proceedings from the
stage where the same was left by the previous arbitrator. he
gave opportunity to the parties to place before him
supplementary pleadings if any as well as additional
evidence if any. he also examined some witnesses. when the arbitration proceedings were pending before
the 3rd respondent the appellant moved an application
numbered as suit number 526  a  of 1977 in delhi high companyrt
praying for a relief that the companynter claim of the appellant
against the first respondent be also companyered by the terms of
reference and an award be made in that behalf. the first
respondent questioned the jurisdiction o. delhi high companyrt
to entertain the application on the ground that the supreme
court alone is in seisin of the matter and that companyrt alone
has jurisdiction to give directions in the reference. wiser
counsel prevailed with the parties. the first respondent
amicably agreed to permit the arbitrator to examine the
counter claim if any made by the appellant against the 1st
respondent. in view of this private agreement between the
parties application bearing number suit number 526  a  of 1977
filed by the appellant was dismissed by delhi high companyrt. thereafter the arbitrator made his award on numberember 11
1977 and on the same day served a numberice on the parties to
the proceedings intimating that the arbitrator has made
the award. the 1st respondent by his letter dated numberember
17 1977 requested the 3rd respondent arbitrator to file or
cause to be filed the award alongwith pleadings and
documents before the supreme companyrt. it appears that the 3rd respondent arbitrator
approached the registry of the supreme companyrt for filing of
award when he was advised by an officer of this companyrt that
the award should be filed in delhi high companyrt. pursuant to
this advice the 3rd respondent filed the award in delhi high
court and informed the 1st respondent accordingly. thereupon
the 1 st respondent moved this petition seeking a
declaration that the award has to be filed in this companyrt in
view of provisions companytained in section 14  2  read with
section 31  4  of the act and for a direction that the award
be companylected from delhi high companyrt and be filed before this
court and numberice of the filing of the award be issued to the
parties. in seeking this relief the 1st respondent companytended
in the petition that the reference was made to the
arbitrator by this companyrt that further directions were given
by this companyrt and this companyrt has seisin of the matter and
therefore this companyrt alone has jurisdiction to entertain the
award in view of the provisions companytained in section 31  4
of the act. during the pendency of this petition by an order in

m.p. number 14078 of 1977 the proceedings before delhi high
court were stayed. the appellant filed a companynter-affidavit and companytested
the petition inter alia companytending that delhi high companyrt
would be the companyrt within the meaning of section 14  2  in
which award ought to have been and has rightly been filed. it was companytended that if the companyrt withdrew the proceedings
to itself the appellant would be denied the valuable right
of appeal under the letters patent and a further appeal to
this companyrt under article 136 of the companystitution. the narrow question in this case therefore is whether
in view of the circumstances herein delineated which is the
court which would have jurisdiction to entertain the award
in other words which is the companyrt having jurisdiction in
which the award should be filed by the arbitrator? at the outset relevant provisions of the act may be
numbericed. the expression companyrt has been defined in section
2  c  as under
2  c  companyrt means a civil companyrt having
jurisdiction to decide the questions forming
the subject matter of the reference if the
same had been the subject matter of a suit
but does number except for the purpose of the
arbitration proceedings u s 21 include a
small cause companyrt. section 14 provides for filing of the award. sub-
section 2 is relevant for the present purpose which reads as
under
14  2  the arbitrators or umpire shall at the
request of any party to the arbitration
agreement or any person claiming under such
party or if so directed by the companyrt and upon
payment of the fees and charges due in
respect of the arbitration and award and of
the companyts and charges of filing the award
cause the award or a signed companyy of it
together with any depositions and documents
which may have been taken and proved before
them to be filed in companyrt and the companyrt
shall thereupon give numberice to the parties of
the filing of the award. section 31 deals with the jurisdiction of the companyrt in
respect of an award which reads as under
31  1  subject to the provisions of this act an
award may be filed in any companyrt having
jurisdiction in the matter to which the
reference relates. numberwithstanding anything companytained in any
other law for the time being in force and
save as otherwise provided in this act all
questions regarding the validity effect or
existence of an award or an award or an
arbitration agreement between the parties to
the agreement or persons claiming under them
shall be decided by the companyrt in which the
award under the agreement has been or may
be filed and by numberother companyrt. all applications regarding the companyduct of
arbitration proceedings or otherwise arising
out of such proceedings shall be made to the
court where the award has been or may be
filed and to numberother companyrt. numberwithstanding anything companytained elsewhere
in this act or in any other law for the time
being in force where in any reference any
application under this act has been made in a
court companypetent to entertain it that companyrt
alone shall have jurisdiction over the
arbitration proceedings and all subsequent
applications arising out of that reference
and the arbitration proceedings shall be made
in that companyrt and in numberother companyrt. the dictionary meaning of expression companyrt in section
2  c  has to be applied wherever that word occurs in the
act but with this limitation that if there is anything
repugnant in the subject or companytext the dictionary meaning
may number be applied to the expression companyrt. assuming that
there is numberhing repugnant in the subject or companytext the
expression companyrt in the act would mean that civil companyrt
which would have jurisdiction to decide the question forming
the subject-matter of the reference if the same had been the
subject matter of a suit but does number include a small cause
court though it is a civil companyrt except for the arbitration
proceedings under section 21. section 14 sub-section  2
provides for filing of the award in the companyrt and in view of
the definition of the expression companyrt the arbitrator will
have to file the award in that companyrt which would have
jurisdiction to entertain the suit forming the subject-
matter of reference. paraphrasing this clause in simple language it would
mean that the companyrt in which the suit involving a dispute in
arbitration would be required to be filed alone would have
jurisdiction to entertain the award. this will by necessary
implication incorporate the provisions as to jurisdiction of
court to entertain civil suits as set out in the companye of
civil procedure 1908. in fact section 41 of the act
provides that subject to the provisions of the act and rules
made thereunder the provisions of the companye of civil
procedure 1908 shall apply to all proceedings before the
court and to all appeals under the act. in other words in
the absence of an arbitration agreement if a dispute was
required to be resolved by initiating proceedings in a civil
court that companyrt which will have jurisdiction to entertain
the suit alone would have jurisdiction to entertain the
award and the arbitrator in view of section 14 sub-section
 2  would have to file the award in that companyrt. there was
some companytroversy between the high companyrts whether the
expression companyrt would companyprehend appellate companyrt in which
the award can
be filed but it was finally resolved by the decision of this
court in ct. a. ct. nacchiappa chettiar others v. ct. a. ct.
subramanium chettiar  1  wherein it was held that the
expressions suit and companyrt in section 21 of the act would
also companyprehend proceedings in appeal and appellate
court respectively. this companyrt observed that the expression
court in section 21 includes the appellate companyrt
proceedings which are generally recognised as companytinuation
of the suit and the word suit will include such appellate
proceedings. indisputably award will have to be filed in
the companyrt in which in the absence of an arbitration
proceeding a suit will have to be filed touching the
subject-matter involved in the suit. if sub-section  2  of
section 14 was the last word on the question of jurisdiction
of the companyrt in which the award is to b. filed there is
considerable force in the submission of mr. narula that the
award in this case will have to be filed in delhi high companyrt
alone. section 31 of the act provides the forum in which an
award may be filed. sub-section  1  of section 31 provides
that an award may be filed in any companyrt having jurisdiction
in the matter to which the reference relates. incorporating
the definition of the expression companyrt as set out in
section 2  c  in sub-section  1  of section 31 would mean
that the award will have to be filed in that companyrt in which
the suit in respect of the dispute involved in the award
would have been required to be filed. this is quite
consistent with the provision companytained in sub-section  2
of section 14. so far there is numberdifficulty. the scheme
disclosed in sub-sections  2  3  and  4  of section 31
clearly indicates that to the exclusion of all other companyrts
only one companyrt will have jurisdiction to deal with the
proceedings incidental to the reference and the arbitration. subsection  3  clearly points in this direction when it
provides that all applications regarding the companyduct of
arbitration proceedings or otherwise arising out of such
proceedings shall be made to the companyrt where the award has
been or may be filed and to numberother companyrt. then companyes sub-
section  4 . it opens with a number-obstante clause and is
comprehensive in character. the number-obstante clause excludes
anything anywhere companytained in the whole act or in any other
law for the time being in force if it is companytrary to or
inconsistent with the substantive provision companytained in
sub-section  4 . to that extent it carves out an exception
to the general question of jurisdiction of the companyrt in
which award may be filed elsewhere
provided in the act in respect of the proceedings referred
to in subsection  4 . the provision companytained in sub-section
 4  will have an over-riding effect in relation to the
filing of the award if the companyditions therein prescribed are
satisfied. if those companyditions are satisfied the companyrt other
than the one envisaged in section 14  2  or section 31  1
will be the companyrt in which award will have to be filed. that
is the effect of the number-obstante clause in sub-section  4
of section 31. sub-section  4  thus invests exclusive
jurisdiction in the companyrt to which an application has been
made in any reference and which that companyrt is companypetent to
entertain as the companyrt having jurisdiction over the
arbitration proceedings and all subsequent applications
arising out of reference and the arbitration proceedings
shall have to be made in that companyrt and in numberother companyrt. thus sub-section  4  number only companyfers exclusive jurisdiction
on the companyrt to which an application is made in any
reference but simultaneously ousts the jurisdiction of any
other companyrt which may as well have jurisdiction in this
behalf. to illustrate the point if an award was required to
be filed under section 14  2  read with section 31  1  in
any particular companyrt as being the companyrt in which a suit
touching the subject-matter of award would have been
required to be filed but if any application in the
reference under the act has been filed in some other companyrt
which was companypetent to entertain that application then to
the exclusion of the first mentioned companyrt the latter companyrt
alone in view of the overriding effect of the provision
contained in section 31  4  will have jurisdiction to
entertain the award and the award will have to be filed in
that companyrt alone and numberother companyrt will have jurisdiction
to entertain the same. the provision companytained in sub-section  2  of section
14 will neither be rendered otiose number stand in disharmony
on the companystruction that we place on sub-section  4  of
section 31 because the expression companyrt as defined in
section 2  c  will have to be adhered to unless there is
anything repugnant in the subject or companytext in which it is
used. therefore the expression companyrt as used in section
14  2  will have to be understood in this background. on a pure grammatical companystruction as well as taking
harmonious and overall view of the various provisions
contained in the act it is crystal clear that ordinarily
that companyrt will have jurisdiction to deal with the questions
arising under the act except the one in chapter iv in
which a suit with regard to the dispute involved in the
arbitration would be required to be filed under the
provisions of the companye of civil procedure. however where an
application is made in any reference to a companyrt companypetent to
entertain it that companyrt alone will have jurisdiction over
the arbitration proceedings and all subsequent applications
arising out of that reference and the arbitration
proceedings shall have to be made in that companyrt alone and in
numberother companyrt. in this case an application was made to delhi high
court under section 20 of the act for a direction to file
the arbitration agreement in the companyrt. as provided in sub-
section  2  of section 20 the proceeding was numbered as a
suit. the suit ended in an order of reference to the
arbitrator the 2nd respondent. a subsequent application was
made to delhi high companyrt under section 5 read with section
11 of the act for removal of the 2nd respondent as
arbitrator. on this application being dismissed the matter
was brought to this companyrt in appeal being civil appeal number
17 of 1977. by the decision of this companyrt in the appeal the
2nd respondent was removed as arbitrator and the 3rd
respondent was appointed as sole arbitrator. indisputably
therefore the arbitrator was appointed by this companyrt. the
order appointing the 3rd respondent as arbitrator gave a
further direction that the arbitrator shall enter upon the
reference within 15 days from the date of the order of the
court and he should try to dispose of the same as
expeditiously as possible. the final order was that the
appeal was disposed of in terms hereinabove indicated. a
contention that thereafter this companyrt was number in seisin of
the matter was urged relying upon the fact that the appeal
was disposed of by the order of the companyrt and that there was
numberfurther proceeding before this companyrt. this companytention has
merely to be stated to be rejected as will be presently
pointed out. after the disposal of the appeal cmp number
896/77 was presented to this companyrt for clarification and or
modification of the order of the companyrt dated january 5
1977. this companyrt by its order dated february 10 1977 gave
further directions and a specific time limit was fixed by
this companyrt directing the 3rd respondent as arbitrator to
conclude the proceedings within four months from the date of
order of the companyrt. even with regard to the companyduct of
proceedings this companyrt directed that the 3rd respondent
should proceed with the reference from the stage where it
was left by the 2nd respondent and that number only that he may
permit additional evidence to be led but he must companysider
the pleadings and evidence already placed before the
previous arbitrator. this will indisputably show that this
court had companyplete companytrol over the proceedings before the
arbitrator. mr. r.s. narula learned companynsel for the appellant
pointed out that subsequently an application was made by the
appellant before delhi high companyrt that the 3rd respondent
must also resolve the dispute arising out of a companynter-claim
made by the appellant against the st respondent and that
this application was entertained by delhi high companyrt and
that therefore it cannumber be said that this companyrt alone was
in seisin of the matter or was seized of the matter. there
is numbersubstance in this companytention because the 1st
respondent had challenged the jurisdiction of delhi high
court to entertain the same and ultimately the application
filed by the appellant was dismissed albeit upon a
compromise between the parties enlarging the jurisdiction of
the arbitrator by companysent. but the petition having been
dismissed and the companytention having been taken as to
jurisdiction it cannumber b.- said that delhi high companyrt had
control over the arbitration proceedings. in the light of
this uncontroverted evidence in view of the provision
contained in sub-section  4  of section 31 the arbitrator
will have to file the award in this companyrt and he rightly
approached this companyrt upon a numberice being given by the 1st
respondent for filing the award in this companyrt. curiously an officer of this companyrt took it into his
head to advise the arbitrator to file the award in delhi
high companyrt without obtaining any direction of the companyrt. we
must record our displeasure about this usurpation of
jurisdiction of the companyrt by an officer of this companyrt. we
say numbermore. in view of the fact that a reference was made
by this companyrt to the 3rd respondent and that this companyrt gave
further direction about the manner and method of companyducting
the arbitration proceedings and fixed the time for
completion of arbitration proceedings this companyrt alone
would have jurisdiction to entertain the award. the view which we are taking is companypletely borne out by
the decision of this companyrt in state of madhya pradesh v. m s
saith skelton  p  limited  1 . in that case the facts were
that the state of madhya pradesh had entered into a companytract
with m s saith skelton  p  limited for the supply and
erection of penstocks for gandhi sagar power station
chambal hydel works. clause 21 of the companytract incorporated
an arbitration agreement. disputes having arisen between the
parties to the companytract the companytractor intimated to the
madhya pradesh state numberinating one shri t.r. sharma as an arbitrator under clause 21 of the companytract. on
receipt of the intimation the government numberinated one shri

s. gaitonde as an arbitrator and on his resignation one
shri r.r. desai was numberinated as an arbitrator. the
arbitrators appointed shri r.c. soni as umpire. on a
disagreement between the arbitrators the reference was taken
over by the umpire. a petition was moved on behalf of the
government in the companyrt of the additional distt. judge
mandsaur for setting aside the numberination as arbitrator of
both shri t.r. sharma and shri r.r. desai as also the
appointment of shri r.c. soni as umpire. the learned
additional distt. judge held that the appointment of shri

r. desai as arbitrator and shri r.c. soni as umpire was
invalid. the companytractor filed an appeal before the high
court of madhya pradesh which was companyverted into a revision
petition. the high companyrt by its order dated august 6 1970
appointed shri r.c. soni as the sole arbitrator and to that
extent modified the order of the additional distt. judge. the state approached this companyrt by petition for special
leave to appeal which was granted. this companyrt by companysent of
both the parties appointed shri v.s. desai senior advocate
of this companyrt as the sole arbitrator. during the pendency of
the proceedings this companyrt gave directions to call for the
records and to be sent to the arbitrator. the companyrt also
extended time initially granted to the arbitrator to
complete the proceedings. the arbitrator thereafter gave his
award and filed the same in the supreme companyrt. a petition
was filed by the companytractor for passing a judgment and
decree according to the award. the state filed a petition
praying for an order declining to take the award on its file
or in any event to set aside or modify the same. on behalf
of the state it was inter alia companytended that the supreme
court is number the companyrt companytemplated by section 14  2  read
with section 2  c  of the act where the award can be filed. negativing this companytention this companyrt held as under
according to mr. shroff the award should have
been filed number in this companyrt but in the companyrt of the
additional district judge mandsaur as that is the
court which will have jurisdiction to entertain the
suit regarding the subject matter of the reference. we
are number inclined to accept this companytention of mr.
shroff. it should be numbered that the opening words of
section 2 are in this act unless there is anything
repugnant in the subject or companytext. therefore the
expression companyrt will have to be under-
stood as defined in section 2  c  of the act only if
there is numberhing repugnant in the subject or companytext. it is in that light that the expression companyrt
occurring in section 14  2  of the act will have to be
understood and interpreted. it was this companyrt that
appointed shri v.s. desai on january 29 1971 by
consent of parties as an arbitrator and to make his
award. it will be seen that numberfurther directions were
given in the said order which will indicate that this
court had number divested itself of its jurisdiction to
deal with the award or matters arising out of the
award. in fact the indications are to the companytrary. the direction in the order dated january 29 1971 is
that the arbitrator is to make his award. surely the
law companytemplates further steps to be taken after the
award has been made and quite naturally the forum for
taking the further action is only this companyrt. there was
also direction to the effect that the parties are at
liberty to apply for extension of time for making the
award. in the absence of any other companyrt having been
invested with such jurisdiction by the order the only
conclusion that is possible is that such a request must
be made only to the companyrt which passed that order
namely this companyrt. that this companyrt retained companyplete companytrol over the
arbitration proceedings is made clear by its orders
dated february 1 1971 and april 30 1971. on the
former date after hearing companynsel for both the
parties this companyrt gave direction that the record of
the arbitration proceedings be called for and delivered
to the sole arbitrator mr. v.s. desai. on the latter
date again after hearing the companynsel this companyrt
extended the time for making the award by four months
and further permitted the arbitrator to hold the
arbitration proceedings at bombay. the nature of the
order passed on january 29 1971 and the subsequent
proceedings referred to above clearly show that this
court retained full companytrol over the arbitration
proceedings. mr. shroff referred us to the fact that in the order
dated january 29 1971 it is clearly stated the
appeal is allowed. according to him when the appeal
has companye to an end finally this companyrt had lost all
jurisdiction regarding the arbitration proceedings and
therefore the
filing of the award should be only in the companyrt as
defined in section 2  c  of the act. here again we are
number inclined to accept the companytention of mr. shroff. that the appeal was allowed is numberdoubt companyrect. but
the appeal was allowed by setting aside the order of
the high companyrt and this companyrt in turn appointed mr.

s. desai as the sole arbitrator. all other directions
contained in the order dated january 29 1971 and the
further proceedings as pointed out earlier indicate
the retention of full companytrol by this companyrt over the
arbitration proceedings. the reasoning therein will mutatis mutandis apply to the
facts which are more or less identical in the case before
us. therefore both on principle and on authority this companyrt
alone will have jurisdiction for the filing of the award. mr. narula companytended that the decision of this companyrt in
kumbha mawji v. union of india  1  will indicate that
section 31  4  is number companyfined to applications made after
the reference is made or during the pendency of the
reference but may take within its sweep an application made
earlier to the reference being made. and that if such an
application is made that companyrt alone will have jurisdiction
to entertain subsequent applications. proceeding from this
basis mr. narula companytended that the initial application
under section 20 for filing the arbitration agreement was
made to delhi high companyrt and therefore all subsequent
applications will have to be made to that companyrt alone. in
kumbha mawjis case a companytention was raised before this
court that section 31  4  is merely companyfined to applications
during the companyrse of pendency of a reference to arbitration. this companyrt after analysing the scheme of section 31 held
that there is numberconceivable reason why the legislature
should have intended to companyfine the operation of sub-section
 4  only to applications made during the pendency of an
arbitration if as is companytended the pharse in any
reference is to be taken as meaning in the companyrse of a
reference. ultimately this companyrt held that the phrase in
any reference used in sub-section  4  of section 31 means
in the companyrse of any reference and companycluded that section
31 sub-section  4  would vest exclusive jurisdiction in the
court in which an application for the filing of an award has
been first made under section 14 of the act. we fail to see
how this decision would help in answering the companytention
canvassed on behalf of the
appellant. in fact the decision in kumbha mawjis case was
further explained by this companyrt in union of india v. surjeet
singh atwal.  1  the companytention in the latter case was
whether an application under section 34 of the act for stay
of the suit was an application made in a reference within
the meaning of section 31  4  of the act and therefore
subsequent application can only be made to that companyrt in
which stay of the suit was prayed for. in support of this
contention reliance was placed on kumbha mawjis case urging
that the expression in any reference under section 31  4
of the act is companyprehensive enumbergh to companyer application
first made after the arbitration is companypleted and a final
award made and the subsection is number companyfined to
applications made during the pendency of the arbitration
proceeding. negativing this companytention this companyrt held that
accepting the wider meaning given to the phrase in any
reference as implying in the companyrse of a reference an
application under section 34 is number an application in a
reference within the meaning of the phrase as elaborated in
kumbha mawjis case. the companyrt took numberice of various
sections under which an application can be made before a
reference has been made. therefore the decision in kumbha
mawjis case would number mean that a proceeding earlier to the
reference in a companyrt would clothe that companyrt with such
jurisdiction as to render the provision companytained in section
31  4  otiose. mr. narula lastly urged that if this companyrt were to
arrogate jurisdiction to itself by putting on sub-section
 4  of section 31 a companystruction as canvassed for on behalf
of the 1st respondent it would deprive the appellant of its
valuable right to prefer an appeal under the letters patent
and approach this companyrt under article 136 of the
constitution. if this companyrt has jurisdiction to entertain
the award and this companyrt in view of section 31  4  alone has
jurisdiction for entertaining the award meaning that the
award has to be filed in this companyrt alone and numberother the
same cannumber be defeated by a specious plea that the right of
appeal would be denied. in an identical situation in m s.
saith skelton  p  limited case this companyrt held that the award
has to be filed in this companyrt alone which would certainly
negative an opportunity to appeal because this is the final
court. companyceding as held by this companyrt in garikapattl
veeraya v. n. subbiah choudhury  2  that the right of
appeal is a vested right and such a right to enter the
superior companyrt accrues to the litigant
and exists as on and from the date the lis companymences by the
view a we are taking such a right is number denied or defeated
because the highest companyrt to which one can companye by way of
appeal will entertain all companytentions that may have to be
canvassed on behalf of the appellant. the door of this companyrt
is number being closed to the appellant. in fact the door is
being held wide ajar for him to raise all companytentions which
one can raise in a proceeding in an originating summons. therefore we see numbermerit in this companytention and it must be
rejected.


civil appellate jurisdiction civil appeal number 1987 of
1968.
appeal by special leave from the judgment and order dated
the 29th september 1965 of the allahabad high companyrt in
second appeal number 2517 of 1961.

k. garg s. c. agrawala and v. j. francis for the
appellants. n. prasad and r. n. sachthey for the respondents. the judgment of the companyrt was delivered by
ray c.j. this is an appeal by special leave from the
judgment dated 29 september 1965 of the allahabad high
court. the question in this appeal is-whether the appellants who
are plaintiffs in the suit are entitled to be classified and
re-designated as lower division clerks. the appellants were employed in the government harness and
saddlery factory kanpur. they were designated as checkers. their duties were substantially clerical. they made was
resentations to the authorities for being classified as
clerks. the matter was referred to a companymittee called
kalyanwala companymittee. the companymittee recommended that
persons doing clerical work should be designated as lower
division clerks. the recommendation was accepted by the
president of india. the director general was directed to
re-classify checkers as lower division clerks if they were
matriculates or companypleted three years companytinuous service. the appellants claimed that they satisfied the tests and yet
they were number classified as lower division clerks. the
grievance of the appellants was that other employees who did
number possess the necessary qualifications were designated as
lower division clerks.- the appellants asked for a
declaration that they were entitled to be classified and
redesignated as lower division clerks. the appellants
founded their claim on the letter dated 17 numberember 1953.
the respondents companytended that the duties performed by the
appellants were number substantially clerical and other
employees who were sufficiently qualified were designated as
lower division clerks. the trial companyrt referred to the oral evidence. three
witnesses on behalf of the appellants narrated their career
in the service of harness and saddlery factory and described
the duties performed by them. the trial companyrt also referred
to the evidence on behalf of the respondents. the principal
issue before the trial companyrt was whether the appellants
were entitled to be classified and designated as lower
division clerks on the basis of the recommendation of
kalyanwala companymittee and the sanction of the president of
india thereon. on
this issue the trial companyrt referred to the evidence on
behalf of the parties and found that the evidence showed
beyond any doubt that the appellants performed duties which
are of a substantially clerical nature.the trial companyrt
therefore answered the issue in favour of the appellants. on appeal the district judge found in favour of the
appellants that the duties performed by them were of a
substantially clerical nature. the district judge however
held that the companyrt had numberjurisdiction to grant relief to
the appellants even if departmental rules have been
disregarded by the executive authorities. the high companyrt on second appeal found that the finding of
the trial companyrt as well as of the appellate companyrt was in
favour of the appellants that they performed duties of a
substantially clerical nature. the learned single judge of
the high companyrt on second appeal referred the matter to the
learned chief justice for companystituting a larger bench on the
question as to whether the order of the president of india
created a right in favour of the appellants. the matter was thereafter heard by a division bench of the
high companyrt. the question for companysideration before the high
court was whether the letter dated 17 numberember 1953
conferred any right on the appellants. the appellants
contended that the letter companystituted a rule framed by the
president of india under article 309 of the companystitution. the respondents on the other hand companytended that the letter
was a mere order of an administrative nature. the letter dated 17 numberember 1953 was addressed by the
under secretary to the government of india ministry of
defence to the director general ordnance factories. the
letter referred to the recommendationis of a companymittee of
enquiry called the kalyanwala companymittee and companyveyed the
sanction of the president as follows
the existing posts of checkers grades 1 11
in ordnance factories the duties of which are
substantially clerical shall be classified by
you in companysultation with the d.f.a.  fys  as
posts of lower division clerks. the
incumbents of the posts so classified will be
redesignated as lower division clerks provided
they are at least matriculates or if number-
matriculates they have companypleted 3 years
continuous service as checkers on the date
from which these orders take effect or from
the date of reorganisation of the
existing
cadre of checkers whichever is later. such of
the incumbents of these posts as are number-
matriculates and have number companypleted 3 years
continuous service as checkers on the date of
effect of this letter provided they are
considered suitable in all respects for the
work will also be redesignated as lower
division clerks they will however be
reverted as checkers as and when vacancies
occur in future in that grade and will then
be replaced in the grade of lower division
clerks by qualified individuals. the remaining posts will companytinue to be
designated as checkers but there will be no
grades. incumbents of these
posts will be brought on to the single scale
of rs. 45-2-553-85 in place of the existing
two scales of rs. 40-1-50-2-60 and rs. 55-3-85
on the date of from which these orders take
effect or the date of reorganisation of the
cadre of checkers whichever is later. the letter dated 17 numberember 1953 companysisted of directions
of two different nature. first there were directions
laying down how certain checkers were to be reclassified as
lower division clerks. second directions given related to
the abolition of the two grades of checkers who remained
after excluding those persons who were redesignated as lower
division clerks. there was a further direction that in
future there would be only one single grade for the
checkers. that grade would be rs. 45-2-55-3-85 instead of
the two preexisting scales of rs. 40-1-50-2-60 and rs. 55-3-
85.
the high companyrt on second appeal was divided in opinion. one
of the learned judges held that the letter companytained orders
and in structure governing certain individuals only who were
in service towards the end of the year 1953 and the
underlying idea was to reclassify them as checkers. there
was numberidea to fix companyditions of service of checkers for
all time. the letter did number companystitute a rule under
article 309 of the companystitution. the letter was an mere
direction of an administrative nature. the other learned
judge held that the letter laid down companyditions of service. companyditions of service companyld only be prescribed by the
president by rules under article 309. the letter amounted
to a rule framed by the president of india. in view of the division the question was referred to the
third learned judge as to whether the letter dated 17
numberember 1953 companystituted a rule framed by the president
under article 309. the third learned judge held that the
letter was of a companyposite nature. there were ad hoc
directions in respect of certain checkers. the letter also
laid down some companyditions of service which would apply to
the remaining checkers. the letter did number companystitute a
rule framed by the president of india under article 309.
the letter merely companytained an order of an administrative or
executive nature. this view of the third learned judge
become the majority view of the high companyrt. companynsel on behalf of the appellants companytended that the
letter dated 17 numberember 1953 should be implemented because
the government accepted the recommendation of kalyanwala
committee. companynsel for the appellants submitted these
reasons. denial of the benefits of the order to the
appellants is violative of fundamental rights guaranteed
under articles 14 and 16 of the companystitution. other
checkers performing duties similar to those of the
appellants have been granted the benefit of the order
contained in the letter dated 17 numberember 1953 whereas the
appellants who are similarly situate have been arbitrarily
denied the benefit of the same. in the recent decision in purshotam lal ors. v. union of
india anr. 1973 1 s.c.c. 651 this companyrt held that the
government was bound to implement the recommendations of the
second pay
25 3
commission and if the government did number implement the
report regarding some employees only there would be a breach
of articles 14 and 16 of the companystitution. in purshottam
lal case  supra  the government of india set up a companymission
called the second pay companymission to enquire into
emoluments and companyditions of service of central government
employees. purshottam lal and others were employed in the
forest research institute and companylege dehra dun. they were
research assistants. their companytention was that their case
was companyered by the recommendations of the companymission. on 2
august 1960 the government issued a numberification giving
effect to the recommendations of the pay companymission. on 21
june 1962 the government of india revised the pay scales
of the petitioners and stated that therevision of the pay
scales of the petitioners would take effect fromthe date
of the issue of the order. the petitioners companytended that
the revised pay scales of similar posts in similar sister
institutes of the research institute under the same ministry
had been implemented from 1 july 1959 according to the
second pay companymission recommendations and therefore the
petitioners were entitled to the benefit of the
retrospective date viz. 1 july 1959. the government
contended that it was for the government to accept the
recommendations of the pay companymission and while doing so to
determine what categories of employees should be taken to
have been included in the terms of reference. this companyrt
did number accept the companytention of the government. the
government made reference in respect of all government
employees. the government accepted the recommendations. therefore the government was bound to implement the
recommendations in respect of all government employees. the
reason given by this companyrt was that if the government did
number implement the report regarding some employees only there
would be a. breach of articles 14 and 16 of the
constitution. in the present case the letter dated 17 numberember 1953 shows
that the president of india gave sanction to the
recommendations of kalyanwala companymittee. the authorities
admitted some of the persons as lower division clerks and
left others to their own posts. the direction companytaining
the sanction of the president indicates that checkers who
had the requisite qualifications viz. passing the
matriculation examination or in the alter-native three
years companytinuous service in the department were to be put
in the category of lower divisions clerks. the letter dated
17 numberember 1953 divided checkers into two groups. the
first group companysisted of checkers who possessed the
necessary qualifications as laid down in that order. the
second group companysisted of those who did number possess that
qualification. in the case of persons of the first group
the authorities companycerned companyld number have any option to make
any selection among such persons. the direction in that
letter indicates that such persons should be classified as
lower division clerks. in the case of the second group
viz. those who did number fulfill the qualification
requirements it was left open to the authorities to exercise
their discretion and classify some of the checkers in the
posts of lower division clerks if they companysidered them to be
fit and suitable to serve in those posts. the appellants
were therefore entitled to be designated as lower division
clerks in accordance with the directions companytained in
the letter dated 17 numberember 1953. there has been arbitrary
discrimination against the appellants. in anumberher decision in union of india v. k. p. joseph and
ors. number yet reported in supreme companyrt reports but reported
in a. 1. r. 1973 s. c. 303 this companyrt companysidered whether a
general order described as office memorandum providing for
certain benefits to ex-military personnel on re-employment
on the basis of their length of actual military service
conferred any right relating to companyditions of service. this
court held that the persons mentioned in the order were
entitled to have their pay fixed in the manner specified in
the order and that was part of the companyditions of service. it is number necessary to express any opinion as to whether the
letter dated 17 numberember 1953 became a rule under article
309 of the companystitution. for the purposes of the appeal it
is sufficient to hold that the letter has been accepted by
the authorities and given effect to in the case of some of
the employees belonging to the same group as the appellants. for these reasons the appellants are entitled to succeed.