civil appellate jurisdiction civil appeal number 1725
 nt  of 1977.
from the judgment and order dated 1st december 1976 of
the kerala high companyrt in o.p. number 1740 of 1976.

govindan nair mrs. a.k. verma s. sukumaran and

n. misra for the appellants. s. krishnamurthy iyer karunakaran nambiar and v.j. francis for the respondents. the judgment of the companyrt was delivered by
venkataramiah j. this appeal by special leave is filed
against the judgment dated december 1 1976 in the petition
bearing writ petition number o.p. 1740 of 1976 on the file of
the kerala high companyrt filed by the afore-mentioned 26
appellants and 20 others. they prayed in the writ petition
inter alia for the issue of a writ in the nature of mandamus
to the state government of kerala to give effect to the
numberification issued by the state government bearing number

o.ms. 127/73/id dated october 12 1973 under section 10 of
the kerala general sales tax act 1963  15 of 1963
 hereinafter referred to as the act  by which the state
government had retrospectively granted an exemption in
respect of the tax payable under section 5 of the said act
by the cashew manufacturers in that state on the purchase
turnumberer of cashewnuts imported from outside india through
the cashew companyporation of india for the period between
september 1 1970 and september 30 1973 after quashing the
subsequent numberification bearing number g.o.ms. 143/73/td dated
numberember 9 1973 issued under section 10 3  of the act
cancelling the above said numberification dated october 12
1973. the appellants and the other persons who had filed the
writ petition before the high companyrt are cashew processors
owning and or working cashew factories wherein nearly about
80 per cent of the raw nuts processed were being imported
during the relevant time from african companyntries. the import
of raw nuts was canalised through the cashew companyporation of
india and they were allotted to the appellants and various
other factory owners who were engaged in the business of
processing cashewnuts. it appears that there was delay in
making the assessment of tax payable by them under section 5
of the act during the periods 1970 to 1974 and the
department companymenced to make assessments in or about the
year 1974. the government in the meanwhile had issued the
numberification dated october 12 1973 granting exemption to
cashew manufacturers for the period between september 1
1970 and september 30 1973 and had later on cancelled it by
numberification dated numberember 9 1973 within about three weeks
from the date on which the exemption had been granted. it is
number necessary to refer to all the allegations made in the
writ petition for purposes of this case since the only point
urged before us relates to the right of the appellants to
secure the exemption as stated in the numberification dated
october 12 1973 by virtue of the rule of
promissory estoppel. the appellants urged two companytentions
before the high companyrt in support of their plea  i  that
the government was precluded by the rule of promissory
estoppel from claiming the purchase tax in respect of
cashewnuts imported from african companyntries and  ii  that the
exemption that had been granted on october 12 1973 companyld
number be withdrawn by the subsequent numberification issued on
numberember 9 1973. in support of first limb of their argument
the appellants depended upon the representation which was
alleged to have been made on behalf of the government by the
chief minister the industries minister and the revenue
minister at a meeting held on april 25 1971 and in support
of their second companytention they depended upon section 10 of
the act. the government companytested the case of the appellants
on both these points. the high companyrt upheld the case of the
state government and rejected the said companytentions. it
however directed the kerala sales tax appellate tribunal to
make assessments taking into account the other companytentions
of the assessees. this appeal by special leave is filed
against the judgment of the high companyrt of kerala in the said
writ petition. the allegations regarding the plea based on promissory
estoppel are found in paragraphs 10 11 of the petition
which reads thus -

when the scheme of canalisation came to be
introduced in september 1970 the members of the
cashew industry like the first petitioners were
keen that the purchases of raw cashewnuts in the
form of allotment from the said companyporation should
number be subjected to tax under the said act as was
the case under the open general licence scheme. the then chairman of the said companyporation shri

c. sarin as also its managing director shri

k. joseph assured the members of the cashew
industry that such purchases would number be exigible
to tax under the said act. in a meeting held on
the 25th april 1971 where shri z.k. joseph of the
said companyporation was also present the
representatives of the industry were assured by
the chief minister shri achuta menumber the then
industries minister shri n.e. bellaram and the
then revenue minister baby john that numbertax would
be levied under the said act on the turnumberer of
african raw nuts. subsequently for three years the respondents
did number initiate assessment proceeding against the
allottees like the first petitioner and gave the
allottees to believe that numbertax would be levied
on such purchases relying upon which the
allottees have quoted prices for exports and made
huge companymitments. if such imports were to be
regarded as taxable purchases by the respondents
the allottees like the first petitioner would number
have made companymitments with the foreign buyers. in
fact as late as 12th october 1973 a
numberification was issued by the fourth respondent
a companyy of which is hereto annexed and marked exh. a under section 10 of the said act giving effect
to such representations. the said numberification was
published in kerala gazette on 23rd october 1973
clearly stating that the exemption to such
purchases was being accorded on the ground of
public interest. without assigning reasons or
showing any change of circumstances in less than
twenty days anumberher numberification was issued on
9th numberember 1973 a companyy of which is hereto
annexed and marked exh. b withdrawing the said
exemption. in the companynter-affidavit filed on behalf of the state
government it is stated in paragraphs 18 19 thus

the averments in para 11 are denied. the
cashew companyporation of india wrote to the
government by memorandum dated 3.5.1971 that
cashew industry may be exempted from payment of
tax under the kerala general sales tax act on
their purchases of imported raw cashewnuts. the
ministry of foreign trade also addressed a
communication to the state government dated
4.3.1972 that the matter may be sympathetically
considered. the cashew manufacturers and
exporters associations also moved the government
in this behalf by memorandum dated 6.3.1972. the
government directed the board of revenue  taxes
to submit a report in the matter. the matter was
engaging the attention of the board of revenue and
the state government from some time. in
view of very heavy stakes involved in the matter
the government had to analyse the entire
situation especially with reference to the very
high amount of the revenue involved. it was
reported that the grant of exemption will involved
loss of revenue of at least one crore of rupees
per annum. after companysideration of the matter the
state government decided to reject the request of
exemption prayed for. the cashew companyporation of
india and the government of india were given a
reply companymunicating the decision of the state
government in february 1973. thereafter the
kerala state cashew development companyporation
requested the govt. to re-examine the decision as
the levy of tax would be heavy burden on the
industry. the government passed an order  ext.a
granting the exemption for the period 1.9.1970 to
30.9.1973. it was resolved then that tax should be
levied from 1.10.1973 onwards. there was
considerable criticism about the grant of
exemption especially in the companytext of the grave
and difficult financial position of the state. after mature companysideration by numberification dated
9.11.1973  ext.b  the earlier government order
dated 12.10.1973  ext.a  was cancelled. the allottees were number given to believe that
numbertax would be levied on such
purchases
in the reply affidavit filed on behlaf of the
appellants the above allegations made in the companynter-
affidavit are denied. the allegations in the appeal do number companytain any
information about who was present at the so called meeting
what representation was actually made whether any of the
appellants acted on the basis of the said representation and
how he was prejudiced thereby. numbermaterial in the form of
documents in support of that plea that they altered their
price structure relying upon the alleged representation was
also produced by the appellants. the appellants were owners
of existing factories. numbere of them is shown to have
established any new factory relying on the representation of
any of the ministers. they were carrying on the business in
their
factories already. it is number their case that they would have
closed down their factories but for the alleged
representation made to them. number it is their case that they
gave up a more advantageous project and diverted their
capital towards the cashewnut factory believing that the
government would grant exemption from payment of tax and had
suffered any loss thereby. it is companytended that the officer
who had filed the companynter-affidavit companyld number have knumbern
what transpired at the alleged meeting. the same plea is
available against the appellants too. the person who has
sworn to the affidavit on behalf of the appellants also does
number say that he was present at the meeting or that he had
any personal knumberledge about what transpired at the meeting. he does number give any material details about what actually
transpired there. in cases of this nature the evidence of
representation should be clear and unambiguous. it must be
certain to every intent. the statements that are made by
ministers at such meetings such as let us see we shall
consider the question of granting of exemption
sympathetically we shall get the matter examined you
have a good case for exemption etc. even if true cannumber
form the basis for a plea of estoppel. moreover the events
that have taken place subsequently belie the fact of any
such promise by the ministers. it is seen that the cashew
corporation of india had made a representation to the
government of india on may 7 1971 and the government of
india wrote to the state government on march 4 1972 urging
that the exemption prayed for by the cashew manufacturers
may be favourably companysidered by the government of kerala. the government of kerala however rejected the said request. then on further pressure being put upon it it issued the
numberification dated october 12 1973 and immediately
thereafter withdrew it after it encountered severe public
criticism. this companyduct on their part is number companysistent with
the appellants case that they had actually promised in the
year 1971 to exempt the cashew trade from payment of the
tax. the allegations made in the petition do number establish

that there was a definite representation by the
government to the effect that the government will number levy
the tax  ii  that the appellants in fact altered their
position by acting upon such representation and  iii  that
they had suffered some prejudice sufficient to companystitute an
estoppel. hence the whole case of promissory estoppel lacks
the necessary factual foundation. it is therefore
unnecessary to companysider the question of law
whether the plea of promissory estoppel can be raised
against a legislation which levies tax and whether an
assessee can claim exemption from a tax levied by the
legislature merely on the basis of a representation of a
minister. we shall number proceed to companysider the plea relating to
the power of the government to cancel the numberification
issued under section 10 1  of the act. during the relevant period section 10 of the act read
thus

power of government to grant exemption and
reduction in rate of tax  1  the government may
if they companysider it necessary in the public
interest by numberification in the gazette make an
exemption or reduction in rate in respect of any
tax payable under this act

on the sale or purchase of any specified goods
or class of goods at all points or at a specified
point or points in the series of sales or purchase
by successive dealers or

by any specified class of person in regard
to the whole or any part of their turnumberer. any exemption from tax or reduction in the
rate of tax numberified under sub-section  1 . -
 a  may extend to the whole state or any specified
area or areas therein
 b  may be subject to such restrictions and
conditions as may be specified in the
numberification. the government may by numberification in the
gazette cancel or vary any numberification issued
under sub-section  1 . as regards the power of government to cancel the
numberification which had been issued earlier the high companyrt
has upheld the power of the government to do so. we think
that the
high companyrt was right in taking that view. the liability to
pay sales tax arose at the point of time when the purchases
were made. the power of exemption in the instant case was
exercised through a retrospective numberification which was a
piece of subordinate legislation. it has been held by this
court that an authority which has the power to make
subordinate legislation cannumber make it with retrospective
effect unless it is so authorised by the legislature which
has companyferred that power on it. the law on the above point
is neatly summarised in income tax officer v. m.c. ponnumbersse
ors. 1970 1 s.c.r. 678 at pages 681-682 thus
number it is open to a soverign legislature to enact
laws which have retrospective operation. even when
the parliament enacts retrospective laws such laws
are - in the words of willes j. in phillips v.
eyre  40 law j. rep  n.s.  q.b. 28 at p.37  - no
doubt prima facie of questionable policy and
contrary to the general principle that legislation
by which the companyduct of mankind is to be regulated
ought when introduced for the first time to deal
with future acts and ought number to change the
character of past transactions carried on upon the
faith of the then existing law. the companyrts will
number therefore ascribe retrospectivity to new
laws affecting rights unless by express words or
necessary implication it appears that such was the
intention of the legislature. the parliament can
delegate its legislative power within the
recognised limits. where any rule or regulation is
made by the person or authority to whom such
powers have been delegated by the legislature it
may or may number be possible to make the same so as
to give retrospective operation. it will depend on
the language employed in the statutory provision
which may in express terms or by necessary
implication empower the authority companycerned to
make a rule or regulation with retrospective
effect. but where numbersuch language is to be found
it has been held by the companyrts that the person or
authority exercising subordinate legislative
functions cannumber make a rule regulation or bye-
law which can operate with retrospective effect
 see subba rao j. in dr. indramani pyarelal gupta

w.r. nathu others
 1963 s.c.r. 721  - the majority number having
expressed any different opinion on the point modi
food products limited v. companymissioner of sales tax

p.  a.i.r. 1956 all. 35  india sugar refineries
ltd. v. state of mysore  a.i.r. 1960 mys. 326  and
general s. shivdev singh anr. v. the state of
punjab others  1959 p.l.r. 514 . in the instant case on the date on which the
numberification was issued the kerala government had numbersuch
power under section 10 of the act as it stood then to issue
a numberification granting exemption with retrospective effect. such power was actually companyferred on it later on by the
kerala legislature only by way of amendment in 1980 by
kerala act 19 of 1980. number section 10 of the act reads thus

power of government to grant exemption and
reduction in rate of tax -  1  the government may
if they companysider it necessary in the public
interest by numberification in the gazette make an
exemption or reduction in rate either
prospectively or retrospectively in respect of any
tax payable under this act-

on the sale or purchase of any specified goods
or class of goods at all points or at a specified
point or points in the series of sales or
purchases by successive dealers or

by any specified class of persons in regard
to the whole or any part of the turnumberer. any exemption from tax or reduction in the
rate of tax numberified under sub-section  1  -
 a  may extend to the whole state or to any
specified area or areas therein -
 b  may be subject to such restriction and
conditions as may be specified in the
numberification. the government may by numberification in the
gazette cancel or vary any numberification issued
under sub-section  1 .  emphasis added
by the addition of the words either prospectively or
retrospectively by the aforesaid amendment the state
legislature has number companyferred the necessary power on the
state government to grant exemption with retrospective
effect. this amendment also suggests that earlier the
government had numbersuch power to grant exemption with
retrospective effect. hence the impugned numberification which granted exemption
on october 12 1973 for the earlier period between september
1 1970 and september 30 1973 was ineffective. it was also
number shown that relying upon the numberification during the
period between october 12 1973 and numberember 9 1973 the
appellants had done any act which attracted the rule of
estoppel. the authority which can issue a numberification may
cancel it also. section 10 3  of the act companyfers such power
of cancellation expressly. the state government did so and
cancelled the earlier numberification as there was a public hue
and cry that the state government had shown undue favour of
the kerala cashewnut factory owners at a time when the state
was passing through grave and difficult financial position. moreover the transactions in question related to the past
period. hence the appellants are number entitled to any relief
either on the principle of promissory estoppel or on the
basis of the earlier numberification issued under section 10 of
the act. we agree with the high companyrt that the appellants had
number made out any case. the appeal is dismissed. before companycluding we may refer to a submission made on
behalf of the appellants that by virtue of the amendment by
act 103 of 1976 to the central sales tax act 1956 by the
introduction of section 2 ab  in it they are entitled to
certain relief. we have number companysidered the effect of the
said amendment on the transactions in question.


civil appellate jurisdiction civil appeal number 2574 of
1972.
appeal from the judgment and order dated the 2nd june
1965 of the calcutta high companyrt in appeal from original
order number 287 of 1964.
naunit lal and  miss  lalita kohli for the appellant. sen m. mookherjee sardar bahadur saharya and
vishnu bahadur saharya for respondent number 1.
the judgment of the companyrt was delivered by
goswami j. this is an appeal at the instance of the
workman on certificate of the calcutta high companyrt from the
decision of the division bench reversing the earlier
judgment and order of the learned single judge in an
application under article 226 of the companystitution directed
against the award of the first industrial tribunal west
bengal made under section 33a of the industrial disputes
act. the appellant  hereinafter to be described as the
workman  was employed by m s hindustan motors limited
 hereinafter to be described as the companypany  since august 3
1949. on august 3 1956 the workman entered into an
agreement of service with the companypany wherein the first
clause reads as follows-
the employer agrees to and does hereby engage the
services of the employee for a period of 5 years
beginning with 1-6-56 and thereafter until this
agreement shall be determined by either party hereto
giving to the other 3 months numberice in writing of such
intended termination. provided that in case employer finds the
employees work satisfactory employer shall have the
option to extend the period of service by a further
term of 3 years. the workman went on two months leave to banaras for a
change some time in 1960. he requested for extension of
leave for one month on medical grounds. he actually sent an
application on august 8 1960 along with a medical
certificate praying for extension of his leave. the companypany
asked the workman to get himself examined by the companypanys
medical officer within ten days. as the workman was lying
ill at banaras he companyld number companyply with the directions of
the companypany. on september 5 1960 he sent anumberher telegram
followed by a formal application enclosing a medical
certificate for extension of his leave. on september 15
1960 the companypany sent a letter to him terminating his
services on the ground of habitual absence which is a
misconduct under the companypanys standing orders. at the time of this termination there was an industrial
dispute pending between the companypany and its workmen. since
the companypany did number ask for approval of its order from the
industrial tribunal the workman made a companyplaint to the
tribunal under section 33a of the industrial disputes act
 briefly the act . the companypany companytested the application. the tribunal made its award on september 27 1962 ordering
reinstatement of the workman with 50 of his back wages for
the period of his forced unemployment as companypensation. the
tribunal directed that the award should be given effect to
number later than one month of the publication of the award
which was on october 26 1962.
after a little over two months of the publication of
the award to be precise on february 4 1963 the companypany
intimated to the workman to rejoin his service. the workman
reported for duty the following day on february 5 1963. on
february 16 1963 the companypany invoked clause  1  of the
agreement which we have set out earlier and terminated the
services of the workman by paying three months salary in
lieu of numberice. this is the second round of litigation with which we
are companycerned in this appeal. since an industrial dispute
was pending even on this date of termination of his service
and the companypany did number apply to the tribunal for approval
of the order the workman made a companyplaint to the tribunal
as on the previous occasion under section 33a of the act. the tribunal accepted the companyplaint and held as follows-
in my opinion the companypany has really dismissed
the petitioner for a piece of companyduct which must have
appeared as misconduct in the eye of the companypany. the tribunal observed that the companypany in substance
dismissed the workman for misconduct since the workman
became odious to the companypany on account of his earlier
success before the tribunal in his application under section
33a of the act. the tribunal therefore ordered his
reinstatement with full back wages for the period of his
forced unemployment as companypensation. this time the companypany
did
number accept the award although on the earlier occasion the
company did number choose to litigate and reinstated him as
ordered by the tribunal. the companypany moved the calcutta high companyrt under article
226 of the companystitution to quash the award. the learned
single judge refused to interfere with the award holding
that the reason might have been the old reason of
dismissal the learned judge further observed that the
circumstances relied on by the tribunal are number wholly
irrelevant and the inference drawn by the tribunal cannumber be
characterised as unreasonable. the companypany appealed to the division bench of the high
court and the appeal was accepted. the division bench held
as follows-
it may be that having regard to the sequence of
events that took place in this case the termination of
service of the respondent number 1 by the letter of 16th
february 1963 may be regarded as a companyourable exercise
of the power under the companytract of employment or may
even be regarded as one of unfair labour practice or
mala fide but the discharge cannumber be said to be for
any misconduct. there is numberevidence for discharge on
any specific misconduct. the definite case of the
respondent number1 has been that it was by way of
retaliatory measure that his services were terminated. this may be true and may show that the action on the
part of the appellant companypany was mala fide. but until
it is established that there has been a companytravention
of section 33 of the act which would create
jurisdiction in the industrial tribunal to entertain an
application under section 33a or in other words
unless it is established that there has been dischrge
for misconduct the tribunal had numberjurisdiction to set
aside the order of termination in an application under
section 33a. on the application of the workman the high companyrt
granted a certificate to him under article 133 1  c  of the
constitution. that is how this matter has companye before us for
a decision. we should at the outset observe that this is number an
appeal against the award of the industrial tribunal but is
only directed against the judgment of the high companyrt under
article 226 of the companystitution. in an application under
article 226 of the companystitution the high companyrt was companycerned
only with the question of jurisdiction of the tribunal in
entertaining the application under section 33a of the act. the question of jurisdiction again was intimately companynected
with the question whether the termination of service was for
misconduct of the workmen. the learned single judge accepted
the finding of the tribunal when it held that the discharge
was numberhing but dismissal for misconduct and in that view of
the matter did number find any justification for interfering
with the award. according to the learned judge therefore
numberquestion of lack of jurisdiction of the tribunal arose to
merit interference with the award under article 226 of the
constitution. the division bench however looked at the matter from
a different viewpoint. it assumed that the action of the
management was even mala fide and so it companyld be wrongful
and in an appropriate reference under section 10 of the act
the workman might be able to get proper relief. the high
court however came to the companyclusion that since clause  1
of the agreement was invoked by the employer it was number a
case of discharge for misconduct and that being the position
the tribunal had numberjurisdiction to entertain the companyplaint
under section 33a even though the action of the companypany
might be as a result of unfair labour practice. mr. naunit lal on behalf of the workman has assailed
the companyclusion of the division bench while mr. sen submits
that the decision is legally unquestionable. the question that arises for companysideration in this
appeal relates to the applicability of the proviso to
section 33 2   b  of the act as amended in 1956. section
33 2  b  at the material time reads as follows-
33 2  during the pendency of any such
proceeding in respect of an industrial
dispute the employer may in accordance
with the standing orders applicable to a
workman companycerned in such dispute.  b  for any misconduct number companynected with
the dispute discharge or punish
whether by dismissal or otherwise that
workman
provided that numbersuch workman shall be discharged
or dismissed unless he has been paid wages for one
month and an application has been made by the employer
to the authority before which the proceeding is pending
for approval of the action taken by the employer. we may also read section 33a of the act as that is the
section under which the companyplaint was originally made by the
workman to the industrial tribunal. 33a where an employer companytravenes the provisions
of section 33 during the pendency of proceedings before
a labour companyrt tribunal or national tribunal any
employee aggrieved by such companytravention may make a
complaint in writing in the prescribed manner to such
labour companyrt tribunal or national tribunal and on
receipt of such companyplaint that labour companyrt tribunal
or national tribunal shall adjudicate upon the
complaint as if it were a dispute referred to or
pending before it in accordance with the provisions of
this act and shall submit its award to the appropriate
government and the provisions of this act shall apply
accordingly. it is clear that the foundation of jurisdiction of the
tribunal to entertain a companyplaint under section 33a is the
contravention of section 33 of the act. section 33 may be companytravened in a variety of ways. we
are companycerned in this appeal only with one type of
contravention namely that the employer did number make any
application to the tribunal for approval of the order of
termination of service of the workman. there is numberdispute
between the parties in this appeal that there was an
industrial dispute pending before the tribunal in which the
workman was companycerned and that the particular termination
had numberhing to do with that dispute. the only point on which
the parties differ is as to the nature of the order of
termination of service. the employer claims it to be a
termination simpliciter in exercise of its right under a
written companytract of service entered between the parties in
august 1956. the workman on the other hand companytends that
termination of his service was meted out as a punishment for
avenging the defeat of the employer in an earlier litigation
under section 33a at the instance of the workmen. in other
words the workman companytends that the order although
purported ex facie to be a termination under the terms of
the agreement is in truth and reality an order of dismissal
for misconduct. originally when the act was passed in 1947  act 14 of
1947  section 33 imposed a ban on the employer against
discharge dismissal or punishment of a workman during the
pendency of proceedings before the tribunal and other
specified authorities except for misconduct number companynected
with the dispute. the section underwent a vital change for
the employer when the industrial disputes  appellate
tribunal  act 1950  act 48 of 1950  was passed and section
33 was substituted and a total ban imposed against
discharge dismissal or any punishment of a workman during
the pendency of proceedings before the tribunal and other
specified authorities. the reservation of the right to the
employer to take action even in case of misconduct which
was there in the original act was withdrawn. as time
passed in view of representations from employers the
parliament became alive to the question of discipline in the
industry and reintroduced in an altered form the said right
of the employer to take action during the pendency of
proceedings before the tribunal when the act was amended by
the industrial disputes  amendment and miscellaneous
provisions  act 1956  act 36 of 1956 . we have already set
out the material provision of section 33 2   b  at the out
set which has since restored to the employer the right to
take punitive action under specified companyditions. to companyplete the picture we may numbere in passing that the
section was further amended by the industrial disputes
 amendment  act  act 36 of 1964  with effect from december
19 1964 whereby some words were inserted in sub-section
 2  of section 33 with which we are number companycerned in this
appeal. from the provisions of section 33 it is manifest that
punitive action by the employer in whatever form it may be
passed is permissible against an ordinary workman as
distinguished from a protected workman even during the
pendency of proceedings before the tribunal
provided that the employer pays one months wages and also
applies to the companycerned tribunal for approval of his
action. since the action is punitive namely dismissal or
discharge for misconduct the tribunal has to oversee the
action to guarantee that numberunfair labour practice or
victimisation has been practised thereby. if the procedure
of fair hearing has been observed the tribunal has to find
in an application under section 33 that a prima facie case
is made out for dismissal. if on the other hand there is
violation of the principles of natural justice in the
enquiry the tribunal can go into the whole question
relating to the misconduct and companye to its own companyclusion
whether the same is established. the submission of the employer is that since the
termination of the workman is in exercise of the right under
the written agreement it was number a case of discharge or
dismissal for misconduct and there was therefore no
obligation on the employer to make an application under
section 33 of the act and hence section 33 has number been
contravened and the application under section 33a is number
maintainable. the question that arises for decision in this appeal is
whether if a particular order of termination of service is
number on account of misconduct and is merely a termination
simpliciter the employer is still required to make an
application under section 33 of the act. we have numberdoubt in our mind that section 33 2  b
makes it obligatory upon the employer to make an application
to the tribunal under the proviso only when he discharges or
dismisses a workman for misconduct. it is submitted by mr. sen that misconduct companytemplated
in section 33 2  b  must be a misconduct enumerated in the
standing orders of the companypany. we are unable to accept this
submission. standing orders of a companypany only describe certain
cases of misconduct and the same cannumber be exhaustive of all
the species of misconduct which a workman may companymit. even
though a given companyduct may number companye within the specific
terms of misconduct described in the standing orders it may
still be a misconduct in the special facts of a case which
it may number be possible to companydone and for which the employer
may take appropriate action. ordinarily the standing orders
may limit the companycept but number invariably so. when therefore the tribunal has found as a fact after
taking numbere of the history and the entire circumstances of
the case that the termination was on account of misconduct
of the employee it is difficult to hold that there is any
manifest error of law companymitted by the tribunal in reaching
that companyclusion only because the misconduct as found is
number within the four companyners of the description of the
various misconducts mentioned in the companypanys standing
orders. it is number possible therefore to accept the
submission that the tribunal companymitted an error of law or of
jurisdiction in entertaining the application under section
33a. termination simpliciter or automatic termination of
service under the companyditions of service or under the
standing orders is outside the scope of section 33 of the
act. this does number mean that the employer has the last word
about the termination of service of an employee and can get
away with it by describing it to be a simple termination in
his letter of discharge addressed to the employee. it is
also number a companyrect proposition of law that in case of a
complaint under section 33a the tribunal would be debarred
from going into the question whether numberwithstanding the
form of the order in sub-stance it is an action of
dismissal for misconduct and number termination simpliciter. the possibility that in an appeal against the award of
the tribunal this companyrt may have taken a different view
about the termination does number affect the present issue. mr. naunit lal relies upon a decision of this companyrt in
the management of murugan mills limited v. industrial tribunal
madras and anumberher in support of his companytention that even
termination simpliciter is within the sweep of section 33.
that was a case where the workmans services were terminated
because he deliberately adopted go-slow and was negligent
in the discharge of his duty. the supreme companyrt in that
case observed thus
his services were therefore terminated for
dereliction of duty and go-slow in his work. this
clearly amounted to punishment for misconduct and
therefore to pass an order under cl. 17 a  of the
standing orders in such circumstances was clearly a
colourable exercise of the power to terminate the
services of a workman under the provision of the
standing orders. the supreme companyrt further observed
in these circumstances the case was clearly
covered by cl.  b  of s. 33 3  of the act as the
services of the respondent were dispensed with during
the pendency of a dispute by meeting out the punishment
of discharge to him for misconduct. the decision is therefore number an authority for the extreme
proposition advanced by mr. naunit lal. mr. naunit lal also drew our attention to two decisions
of the madras high companyrt in shyamala studios v. kannu devar

s.  and others and sri rama machinery companyporation
 private  limited madras v. murthi  n.r.  and others in
support of the above submission. although the decision of
the supreme companyrt in murugan mills case  supra  was numbericed
by the madras high companyrt it does number appear to have
correctly appreciated the ratio decidedi of that judgment. we are unable to hold that the supreme companyrt in
murugan mills case  supra  went to the extent of re-writing
section 33 by companypletely obliterating the companycept of
misconduct of a workman for which alone in a limited way the
right of action for the employer is preserved during the
span of pendency of proceedings before the tribunal in the
interest of discipline. to the extent the madras decisions
state that termination of services need number be for
misconduct of the workman in order to attract section
33 2  b  we cannumber agree. if the tribunal finds that a particular termination of
service of a workman is in truth and substance innumberuous or
in exercise of a bona fide right under the companytract section
33 2  b  will number be applicable and necessarily there will
be numbercontravention of section 33a of the act. in air india companyporation bombay v. v. a. rebellow
anr.  1  this companyrt had to deal with the validity of an award
made under section 33a although the labour companyrt in that
case had held that the workman was guilty of misconduct and
that his services were terminated for that reason. this
court did number agree with the aforesaid companyclusion and
dismissed the workmans petition under section 33a of the
act. in doing so this companyrt observed as follows-
it is numbereworthy that the ban is imposed only in
regard to action taken for misconduct whether companynected
or unconnected with the dispute. the employer is
therefore free to take action against his workmen if it
is number based on any misconduct on their part. we are therefore clearly of opinion that the single
judge is right in number interfering with the award under
article 226 of the companystitution and the division bench is
wrong in doing so. it is true that on the face of the order of termination
the companypany invoked clause  1  of the agreement and even so
it was open to the tribunal to pierce the veil of the order
and have a close look at all the circumstances and companye to a
decision whether the order was passed on account of certain
misconduct. this is a finding of fact which companyld number be
interfered with under article 226 of the companystitution unless
the companyclusion is perverse that is to say based on no
evidence whatsoever. we are however unable to say so
having regard to the facts and circumstances described by
the tribunal in its order. it is however unexceptionable that if an employer
passes an order of termination of service in exercise of his
right under a companytract or in accordance with the provision
of the standing orders and the tribunal finds that the order
is number on account of any misconduct the question of
violation of section 33 would number arise. there remains however anumberher aspect to which the
tribunal did number properly address. the workman in this case
had a companytract of employment only for 8 years at the most. the reinstatement in his
case therefore cannumber extend beyond a period of eight
years from june 1 1956 and the companytract of employment would
have automatically terminated on may 31 1964. the tribunal
awarded reinstatement on march 24 1964 when even the
employer did number bring it to its numberice that the companytract of
employment would terminate in may 1964.
mr. sen however during the companyrse of the argument
hinted at anumberher round of litigation under section 33c of
the act to companytest the claim to reinstatement ordered by the
tribunal. we cannumber be oblivious to the plight of this workman in
his unequal fight with a big companypany. he was serving the
company since 1949 for about eleven years when he was first
dismissed in 1960. he has been involved in litigation since
1960 uptill today except for a lull for eleven days on his
reinstatement after the first award. eleven years in actual
service and sixteen years in litigation is a doleful tale by
itself. we therefore feel that in the interest of industrial
peace and above all to draw a final curtain to this unhappy
litigation we would be justified in quantifying the
compensation payable to the workman in this case to a sum of
rs. 20000/- only in lieu of reinstatement with full back
wages as ordered by the tribunal which we accordingly
order. we may also observe that mr. sen fairly enumbergh had
made it clear before us in the companyrse of hearing that even
if the companypany succeeded in this companyrt it would be prepared
to pay to the workman a sum of rs. 10000/- on companypassionate
grounds. in the result the judgment of the division bench of the
high companyrt is set aside. the award of the tribunal is varied
as stated above.


original jurisdiction petitions number. 436 and 37 of 1958.
petition under art. 32 of the companystitution of india for
enforcement of fundamental rights. ganapathy iyer and k. l. hathi for the petitioners. k. paphtary solicitor general of india b. r. l.
iyengar an  p. m. sen for the respondents. 1961. march 14. the judgment of the companyrt was delivered by
kapur j.-these are three petitions under art. 32 of the
constitution challenging the imposition of sales tax on
betel leaves by the sales tax officer akola. the question
raised in all the three petitions is the same and can
conveniently be disposed of by one judgment. the petitioners in the three petitions are dealers in betel
leaves at akola number in the state of maharashtra and at the
relevant time in the state of madhya pradesh. the assistant
sales tax officer at akola assessed the petitioners under
the provisions of the c. p. berar sales tax act 1947  act
xxi of 1947  hereinafter termed the act to the payment of
gales tax as follows
----------------------------------------------------------
writ petition period amount
number
----------------------------------------------------------

p.
number 4/58 7-11-53 to 26-10-54. rs. 1882-9-0
27-10-54 to 14-11-55. rs. 1885-13-0

p.
number 36/58 27-10-54 to 26-10-55. rs. 1890-3-0

p.
number 37/58 27-10-54 to 14-11-55. rs. 3530-4-0
---------------------------------------------------------
the petitioners in w. p. number. 4 and 36 did number appeal under
s. 22 of the act but the petitioner in w. p. number 37 did
appeal under that section. as he did number deposit the amount
of tax the petition was dismissed. he then filed a petition
under art. 226 in the high companyrt of nagpur but that petition
was withdrawn and therefore numberdecision was given on the
merits of the case. in all the petitions the submission of
the petitioners is that the order demanding tax was without
authority of law inasmuch as betel leaves were number taxable
under s. 6 read with the second schedule of the act. the
imposition of the tax it is alleged. is an infringement of
the petitioners right to carry on trade
or business guaranteed under art. 19 1  g  of the company-
stitution and the prayer is for the issue of a writ of
certiorari quashing the order of the assistant sales tax
officer and for prohibition. section 6 of the act under which the exemption
is claimed provides
s.6 1  numbertax shall be payable under this
act on the sale of goods specified in the
second companyumn of schedule ii subject to the
conditions. and exceptions if any set out in
the companyresponding entry in the third companyumn
thereof

the state government may after giving
by numberification number less than one months
numberice of their intention so to do by a
numberification after the expiry of the period of
numberice mentioned in the first numberification
amend either schedule and thereupon such
schedule shall he deemed to be amended accord-
ingly. thus under the act all articles mentioned in
the schedule were exempt from sales tax and
articles number so specified were taxable. in
the schedule applicable there were originally
two items which are relevant for the purposes
of the case. they were items number. 6 and 36
item 6 vegetables-except when sold in sealed
containers. item 36 betel leaves. the schedule was amended by the c. p. berar sales tax
amendment act  act xvi of 1948  by which item number 36 was
omitted. it is companytended that in spite of this omission
they were exempt from sales tax as they are vegetables. the
intention of the legislature in regard to what is vegetables
is shown by its specifying vegetables and betel leaves as
separate items in the schedule exempting articles from sales
tax. subsequently betel leaves were removed from the
schedule which is indicative of the legislatures intention
of number exempting betel leaves from the imposition of the
tax. but it was submitted that betel leaves are vegetables
and therefore they would be exempt from sales tax under item

reliance was placed on the
dictionary meaning of the word vegetable as given in
shorter oxford dictionary where the word is defined as of
or pertaining to companyprised or companysisting of or derived or
obtained from plants or their parts. but this word must
be companystrued number in any technical sense number from the
botanical point of view but as understood in companymon
parlance. it has number been defined in the act and being a
word of every day use it must be companystrued in its popular
sense meaning that sense which people companyversant with the
subject matter with which the statute is dealing would
attribute to it. it is to be companystrued as understood in
common language caries on statute law p. 153  5th ed. . it
was so held in planters nut chocolate company limited v. the king
 1 . this interpretation was accepted by the high companyrt of
madhya pradesh in madhya pradesh pan merchants association
santra market nagpur v. the state of madhya pradesh  sales
tax department   2  where it was observed-
in our opinion the word vegetables cannumber
be given the companyprehensive meaning the term
bears in natural history and has number been
given that meaning in taxing statutes before. the term vegetables is to be understood as
commonly understood denumbering those classes of
vegetable matter which are grown in kitchen
gardens and are used for the table. in that case the word vegetables was companystrued and in our
opinion companyrectly companystrued in relation to the very
provisions of the act which are number in companytroversy before
us. in cases under the u. p. sales tax act betel leaves
have been held number to be within the expression green
vegetables brahma nand v. the state of uttar pradesh 3
firm shri krishna chaudhry v. companymissioner of sales tax  4 . in bhairondon tolaram v. the state of rajasthan  5  they
were held number to be plants and in kokil ram sons v. the
state of bihar  6  it was held that vegetables meant plants
cultivated for food and paw are number foodstuffs. in dharamdas
paul v. companymissioner of companymercial
 1   1952  1 bom. l.r. 385. 389.  3  19567 s.t.c 2o6.  5  1957 8 s.t.c. 798.  2  19567 s.t.c. 99 102.  4  1956 7 s.t.c. 742.  6  19491 s.t.c. 217
taxes also they were held number to be vegetables which
specifically meant sabzi tarkari and sak. therefore part
from the fact that the legislature by using two distinct and
different items i.e. item 6 vegetables and item number 36
betel leaves has indicated its intention decided cases
also show that the word vegetables in taxing statutes is
to be understood as in companymon parlance i.e.


criminal appellate jurisdiction criminal appeal number. 1012 of 1984.  appeals by special leave from the judgment and order
dated the 1st september 1983 of the punjab and haryana high
court in crl. appeal number 291 db of 1983 db of 1983 crl. rev. number 627 of 1983.  gopal subramanium and s.k. sabarwal for the appellant. kawaljit kochar and j.d. kain for the respondent number 1.
miss lily thomas for respondent number 2.
the judgment of the companyrt was delivered by
chinnappa reddy j. we are very unhappy about the
judgment of the high companyrt. both the respondents were
convicted by the learned first additional sessions judge of
kurukshetra under s. 302 read with s. 34 of the indian penal
code and each of them was sentenced to undergo imprisonment
for life. on appeal for very strange reasons the high
court acquitted the first respondent and companyverted the
conviction of the second respondent to one under s 304-a.i. c. and reduced the sentence to two years rigorous
imprisonment. what the high companyrt said speaks for itself. this is what the high companyrt said
however we are told by the learned companynsel for
the parties that they being closely related some
members of the village have intervened and have brought
about some sort of arrangement under which ram kumar
appellant has already made a gift of three acres of
land in favour of smt. maya devi widow of chander
shekhar as companypensation on account of the loss of life
of her husband. though this is number a matter which
can be taken numberice of by this companyrt yet it has always
been our desire to see that enmity between close
relations should be encouraged to companye to an end. since
the father of ramesh kumar  p.w. 6  had lost his life
he companyld possibly have indulged in some exaggeration to
magnify the nature of the offence. in the
circumstances we give benefit of doubt to ram kumar
appellant and acquit him. we companyvert the companyviction of
ratna appellant from one under section 302 to one under
section 304-a indian penal companye and sentence him to
undergo to years rigorous imprisonment ram kumar
appellant is on bail. his bail bond shall stand
discharged. we can only say that the judgment of the high companyrt has
left us shocked and perplexed. we are at a total loss to
understand it. the entire system of administration of
criminal justice is reduced to a mockery. if the judgment of
the high companyrt is upheld it is as if a person who can
afford to make gifts of land or money to the heirs of the
victim may get away even with a charge of murder. companyrts are to dispense justice number to dispense with
justice. and justice to be dispensed is number palm-tree
justice or idiosyncratic justice. the judgment can number stand
a seconds scrutiny.


original jurisdiction writ petition  criminals number 126
of 1982.  under article 32 of the companystitution of india
ram jethmalani miss rani . jethmalani harjinder singh
and k. k. sood for the petitioner. p. rana and r.n. poddar for the respondent. the judgment of the companyrt was delivered by
varadarajan j. on 31st march 1982 after hearing
learned companynsel for both the parties we quashed the order
of detention in this case observing that our reasons will
follow. we proceed to give the reasons. this writ petition under article 32 of the companystitution
of india is by smt. bimla dewan wife of the detenu shri dev
raj dewan
resident of house number 53 gadodia road 146/2 than singh
nagar anand parbat delhi for quashing the order of
detention dated 25.9.1981 issued by the companymissioner of
police delhi under s. 3  2  of the national security act
1980. the detenu was detained from 26. 9. 1981. the order of
detention is said to have been - approved by the respondent
lieutenant governumber delhi by order dated 1.10.1981 under
sec. 3  4  of the act. the detenu had been detained in the
central jail. tihar. new delhi. it is alleged in the petition that the detenu is a
social worker who is in active politics and had companytested
the municipal elections of the municipal companyporation of
delhi from the anand parbat companystituency in 1977 and was
defeated by a companygress-l candidate by a narrow margin of 360
votes and due to political rivalry he has been involved
from time to time in a number of false cases in most of
which he has succeeded in proving his innumberence and was
acquit ted. it is further alleged in the petition that out
of sheer political vendetta the detenu has been detained
maliciously with full knumber ledge that the alleged activities
of the detenu even if true do number fall within the companycept
of threat to public order. the arrest or prosecution of the
detenu cannumber by itself be a ground of detention it is
only the material on the basis of which the detenu is
arrested prosecuted or companyvicted that can companystitute a
ground of detention. but numbersuch material including the
blue film mentioned in item 28 of paragraph 2 of the grounds
of detention has been supplied to the detenu and it has
therefore become impossible for him to make any effective
representation against his detention. numberopportunity was
given to the detenu to make a representation to the
detaining authority. the detenu challenged his detention by
filing criminal writ petition number 126 of 1981 in the high
court of delhi on 13.10.1981. but since numberorder had been
passed in that petition though arguments were heard in
numberember 1981 this writ petition has been filed in the
supreme companyrt on 3.3.1982.
it is alleged in the grounds of detention in which 32
instances have been given that those acts of the detenu show
that he is a desperate and dangerous character who acts in a
manner which is prejudicial to maintenance of public order
that his activities are hazardous to the companymunity and he
has number stopped his violent anti-social and criminal
activities in spite of his prosecution in a number of cases
and that in these circumstances his detention under
s. 3  2  of the national security act 1980 has been
considered a essential n order to stop his criminal
activities. in the companynter-affidavit it is stated at the outset
that the high companyrt of delhi has by an order dated 4.3.1982
dismissed criminal writ petition number 126 of 1981 which was
filed for quashing the very same order of detention dated
25.9.1981 and that the present writ petition is companysequently
number maintainable and only an appeal to this companyrt against
the judgment of the high companyrt companyld be filed. it is
contended that there is numberhing on record to show that the
detenu is a social worker. the companynter-affidavit further
proceeds to state that the criminal history of the detenu as
disclosed in the grounds of detention goes to show that he
has been a serious threat to maintenance of public order and
that whenever any police officer or any other agency tried
to interfere in the matter he had assaulted obstructed or
attempted to murder him and that detention under the act is
the only way to prevent him from indulging in activities
which are prejudicial to maintenance of public order. it is
stated that companyies of all first information reports
mentioned in the grounds of detention were supplied to the
detenu and that the detaining authority has specifically
mentioned in the grounds of detention that the detenu has a
right of representation to the lieutenant governumber and the
advisory board. the respondent has prayed for dismissal of
the writ petition for the aforesaid reasons. instances number. i to 22 24 and 28 relate to criminal
cases in all of which the detenu has been found to be number
guilty and acquitted. instance number 23 relates to a case in
which the detenu has been discharged. instance number 28
relates to a blue film of naked picture for public
circulation exhibition alleged to have been recovered on
23/24.6.1979 by the police from the karnal restaurant of the
detenu. since all these instances relate to cases in which
the detenu has been found to be number guilty and acquitted
numbere of these instances can legitimately be taken into
consideration for detaining the detenu under s. 3  2  of the
national security act. mr. ram jethmalani senior advocate
who  appeared for the petitioner in this case submitted
that in the national security act there is numberprovision like

sa in companyeposa  companyservation of foreign exchange and
prevention of smuggling act  and therefore if one of the
grounds is bad the order of detention has to be quashed in
its entirety and that as the detaining authority has based
the order of detention on
grounds number. 1 to 24 and 28 also the order of detention is
unsustainable. the learned companynsel for the respondent did
number submit anything to companytrovert that submission of mr. ram
jethmalani. we are of the opinion that since the detaining
authority would naturally have been influenced by these
grounds as well for companying to the companyclusion that the detenu
requires to be detained under the provisions of the act the
entire order of detention ii unsustainable. before companysidering the other instances it is necessary
to numbere what hidayatullah c.j. has observed in arun ghosh

state of west bengal.  1  it is this
take the case of assault on girls. a guest at a
hotel may kiss or make advances to half a dozen chamber
maids. he may annumber them and also the management but he
does number cause disturbance of public order. he may even
have a fracas with the friends of one of the girls but
even then it would be a case of breach of law and order
only. take anumberher case of a man who molests women in
lonely places. as a result of his activities girls
going to companyleges and schools are in companystant danger
and fear. women going for their ordinary business are
afraid of being way-laid and assaulted. the activity of
this man in its essential quality is number different
from the act of the other man but in its potentiality
and in its effect upon the public tranquillity there is
a vast difference. the act of the man who molests the
girls in lonely places causes a disturbance in the even
tempo of living which is the first requirement of
public order. he disturbs the society and the
community. his act makes all the women apprehensive of
their honumberr and he can be said to be causing
disturbance of public order and number merely companymitting
individual actions which may be taken numbere of by the
criminal prosecution agencies. instances number. 25 to 27 and 29 to 32 relate to criminal
cases which are said to have been pending against the detenu
on the date of order of detention. we shall first companysider
instances number. 25 to 27 and 30 to 32. instances 25 and 27
relate to cases in which the detenu is alleged to have been
arrested i for the reason that whisky was being served in a
restaurant belonging to him. instances number 26 relates to the
alleged recovery of a loaded english revolver and 5 live
cartridges from the detenus kamal restaurant on 24.6.1979.
instance number 30 relates to a case in which the detenu is
said to have. -------------

air. 1970 sc. 1228.
been arrested on the companyplaint of a lady that the detenu bad
a companyspired for the murder of her husband who was murdered
while he was returning after seeing a cinema on 16.8.1981.
instance number 31 relates to a case arising out of a report
sent by a sub-inspector of police anand parbat against the
detenu alleging that smt. praveen kapoor and smt. shielawati
kapoor members of the family of deceased vinumber kapoor
apprehended danger to their lives at the hands of the
detenu. instance number 32 relates to the arrest of the detenu
on the companyplaint of smt. sheilawati kapoor that the detenu
threatened her with dire companysequences when she went to tees
hazari companyrts to see her son ashok on 10.9.1981. we are
clearly of the opinion that these instances cannumber in law
amount to any interference with the maintenance of public
order and companyld number companystitute grounds for detention under
the national security act 1980.
we number companye to instance number 29 which lates to the
arrest of the detenu on the companyplaint of one prem kumar
narang municipal companyncillor that when the companyporation staff
wanted some persons for prosecution one ram singh came to
rescue them and that later on the detenu came alongwith 70
other persons and started throwing stones etc. resulting in
damage to a building. on that companyplaint a first information
report dated 28.12.1979 under ss. 147 148 149 323 and 427

p.c. is said to have been submitted by the police. a mere
allegation in the report of the municipal companyncillor
without anything more cannumber companystitute a ground for
detention under the national security act there is no
allegation in that instance that law enforcement authorities
had any valid reason to believe the allegations made in the
complaint to be true even while the case registered on that
complaint was pending trial and posted to 29.10.1981. there
is numberallegation in that instance that the building at which
stones etc. are alleged to have been thrown is situate in a
public place and that the alleged act of the detenu and 70
other persons has caused apprehension in the minds of the
residents of the locality in regard to maintenance of public
order. we are there fore unable to hold that this instance
has any potentiality to interfere with and has effect upon
the public tranquillity and order and that it cannumber
constitute a ground for detention under the national
security act 1980.
it is necessary to mention in passing the fact that it
is admitted in the writ petition itself that criminal writ
petition number 126 of 1981 had been filed in the high companyrt of
delhi on 13.10.1981
for quashing the very same order of detention dated
25.9.1981 and that arguments in that petition had been heard
in numberember 1981 itself. in the companynter-affidavit it is
stated that the high companyrt of delhi has by an order dated
4.3.1982 dismissed that writ petition and therefore only
an appeal against that order would lie to this companyrt and
this writ petition is number maintainable. though the learned
counsel for the respondent invited our attention to certain
portions of that order dated 4.3. 1982 of a division bench
of the delhi high companyrt dismissing writ petition number 126 of
1981 it was number companytended by him that only an appeal against
that order would lie to this companyrt and that this writ
petition is number maintainable.


civil appellate jurisdiction civil appeal number. 740 to
743 of 1975.
from the judgment and order dated 30.8.1974 of the high
court of madhya pradesh in miscellaneous civil case number 352
of 1971.

b. ahuja ms. a. subhashini and k.c. dua for the
appellant. a. ramachandran vinek gambhir sanjay sareen and

k. gambhir for the respondents. the judgment of the companyrt was delivered by
venkatachaliah j. these appeals by special leave by
the companymissioner of wealth-tax bhopal arise out of the
opinion rendered by the high companyrt of madhya pradesh
bhopal in fourconsolidated wealth-tax references under
section 27 1  of the wealth-tax act 1957. they raise a
short but interesting question touching the
incidents of what is described as the quaraza-e-hasana
said to be a transaction knumbern in and peculiar to the
personal law of the muslims. the matters arise out of the proceedings companycerning
the assessment to wealth-tax of the respondent abdul
hussain mulla mohammad ali  the assessee  for the four
assessment-years 1957-58 to 1960-61.
in the original-returns for the assessment year 1957-58
relevant to the valuation date 31.3.1957 the assessee filed
a return of net wealth of rs.857910 which included a sum
of rs.400000 representing the principal value of the loan
advanced by the assessee to a certain faizullabhai
mandlawala sidhpur. both the assessee and the said
faizullabhai mandlawala were partners of a firm carrying on
business under the name and style rising sun flour oil
mills at ujjain. the borrower had employed this sum as part
of his capital in the firm. in the revised return filed by
him the assessee however sought to have the value of that
loan excluded from his wealth on the claim that this loan
was what was knumbern to muslim law as quaraza-e-hasana-a
debt of good faith and goodwill carrying with it numberlegal
obligation on the part of the debtor to repay and
correspondingly numberright on the part of the assessee to
expect much less enforce a repayment. the claim for the
number-inclusion of this asset in the wealth of the assessee
was sought to be supported by the declaration dated
26.3.1965 furnished by the debtor that the sum was received
by him without any obligation and without any rate of
interest and without any companysideration. reliance was also
placed on some extracts of the quran said to relate to this
transaction. both the wealth-tax officer and the appellate assistant
commissioner in the appeal found it difficult to accept this
claim and accordingly brought this sum of rs.400000 to
tax on the respective valuation dates. however the income-tax appellate tribunal indore
bench accepting the assessees appeals held that the loan
partook of the character of quaraza-e-hasana with its
special incidents as knumbern to muslim law that the
transaction was one of good faith and goodwill and lacked
the companycomitants of a legally enforceable claim for
repayment and that therefore the amount was number a debt due
to the assessee. the high companyrt before which the tribunal at the
instance of
the revenue stated a case and referred two questions of law
for opinion upheld the view that had companymended itself to the
tribunal and answered the questions against the revenue. the
two questions so referred were

whether on the facts and in the
circumstances of the case the tribunal was
justified in holding that the amount of rs.4
lakhs cannumber be included in the total assets
of the assessee? whether on the facts and in the
circumstances of the case the tribunal was
justified in accepting that the amount of
rs.4 lakhs was in the nature of quaraza-e-
hasana particularly when rs.121500 out of
rs.4 lakhs has been repaid? shri b.b. ahuja learned companynsel for the revenue
contended that the tribunal as well as the high companyrt fell
into a serious error in their acceptance of the hypothetical
incidents of a supposedly peculiar institution of the
personal law of the muslims respecting which numberhing
tangible by way of evidence as to the existence of such rule
or tenet of muslim law was forthcoming. learned companynsel
invited our particular attention to the following
observations of the tribunal
the learned companynsel for the assessee mr.
chitale has also stated before us that he has number
come across any judicial decision defining or
describing the exact characteristics of the
expression quaraza-e-hasana number has become
across any discussion on this matter in any of the
treaties on mohammedan law. we are therefore
satisfied that on the facts and circumstances of
this case the amount of rs.4 lakhs cannumber be
treated as a debt due to the assessee and the same
cannumber be included in the total asset of the
assessee. learned companynsel submitted that the inference drawn does number
only number flow from the premise but would clearly be
antithetical. if the companycept of quaraza-e-hasana and the
peculiar incidents attributed to it are number established the
plea that there is a debt but yet there is numberobligation to
repay becomes mutually companytradictory. in regard to the
subsidiary or supporting reasons for the acceptance by the
tribunal to hold that there was numberdebt which companyld be said
to be due and owing to the assessee the learned companynsel
invited our attention to the following reasoning of the
tribunal
faizullabhai in a declaration dated
26.3.1965 has stated that this amount was received
by him without any obligation and without any rate
of interest and without any companysideration. therefore the question that arises for
consideration is whether under this peculiar
circumstance it can be said that this sum of rs.4
lakhs which was given by the assessee to
faizullabhai prior to 1950 for which there is no
document and for which there is numberobligation to
repay can be treated as a debt due to the
assessee
learned companynsel submitted that neither the circumstance
that the loan was advanced prior to 1950 number the self-
serving declaration by the borrower number even that no
repayment had been made during the accounting years or
earlier would by themselves detract from the existence and
incidents of a debt which was otherwise admitted. learned
counsel pointed out that admittedly on 24.7.1961 a sum of
rs.121821 had been repaid by the borrower to the assessee. learned companynsel said that both the tribunal and the
high companyrt while rightly numbericing that the special
incidents of what was called quaraza-e-hasana had number been
established however by excluding the sum from the wealth
gave the benefit of this doubt as to the very existence of
this institution of quaraza-e-hasana to the assessee. referring to the reliance by the high companyrt on the
incidents hiba-ba-shart-ul-evaz learned companynsel submitted
that the reasoning of the high companyrt based on this form of a
mussalman gift was destructive of the assessees case
inasmuch as the kind of gift envisaged by hiba-ba-shart-ul
evaz expressly stipulated companytemporaneous liability for a
return. shri ramachandran learned companynsel for the assessee
sought to support the companylusion of the high companyrt also
anumberher independent ground that at all events by entering
into this transaction the parties did number intend to create a
legal obligations between them and that therefore the debt
remained a debt of honumberr. we will presently refer to the
possibilities of this companytention in the facts of this case. numberauthoritative texts number any principle or
precedent recognised in muslim law was cited before the high
court to show that a transaction of this nature and
incidents is knumbern to and recognised by the personal law of
the muslims. as numbermaterial was placed before the high
court or before us to establish the companytent and incidents
of this
idea of what is referred to quaraza-e-husana it is number
possible to say one way or the other whether companyrts can
recognise and act upon such a rule of muslim law much less
afford relief to the proponent of that rule. indeed literature on the principles of islamic banking
unlawful gain and legitimate profit in islamic law  nibil

saleh cambridge university press 1986  does number appear
though we do number want to be understood to have pronumbernced on
the subject finally to support the particular incidents of
the number-existence of the element of repayability attributed
to this kind of loans. learned author says that sharia
distinguishes between two types of loans one the ariya
the loan for use which transfers the usufruct of the
property temporarily and gratuitously while ownership of the
loaned-object remains with the lender and the second the
qard. in regard to this second type of loan the qard
the author says  at pages 35 and 36
the second type of loan recognished by sharia is
the qard which involves the loan of fungible
commodities that is goods which may be estimated
and replaced according to weight measure or
number. in this case the borrower undertakes to
return the equivalent or likes of that he has
received but without any premium on the property
which would of companyrse be companystrued as interest. the most likely object of a qard loan would be
currency or other standard means of exchage.  emphasis supplied
on the question whether the lender of qard is entitled to
derive any advantage from it the learned author refers to
the views of the different schools namely hanafia
hanbalis malikis shafi and ibadis.  see pages 41 to 43 . again the learned author refers to qard-hasan as interest
free loan. explaining its incidents the author says
qard hasan means an interest-free loan which is
the only loan permitted by sharia principles. we
have seen previously that number only can interest
number be charged on the lent capital but no
advantage whatsoever should be derived by the
lender from the loan. of companyrse each school of
law has its own interpretation of what companystitutes
advantage and that we have already seen in
detail
one may wonder how lending companyld be a
business
proposition once interest is abolished

 emphasis supplied
 see page 89
the learned author also proceeds to enumerate the
circumstances in which the islamic financial institutions
are advised to make use of qard hasan. from what is gatherable from the authors
observations-of companyrse if the companycept of qard hasan is
the same as that quaraza-e-hasana-the obligation on the
part of the debtor of the loan to repay number the right of the
creditor to repayment are excluded. the only incident
appears to be that it is interest-free. however we do number want to be understood to have
pronumbernced on this question finally as neither side has
produced number relied upon any literature of islamic law on
the point. the extracts of the quran relied upon merely
calls some loan a beatific loan which blesses the giver. the
incidents of the transactions are number found in the passages. number does the reliance by the high companyrt on the well
recognised institution in muslim law of hiba-ba-shart-ul-
iwaz advance the case of the assessee any further. in
principles of mohammadan law  mulla 16th edition page 165
this kind of gift is explained
where a gift is made with a stipulation  shart
for a return it is called hibaba-shart-ul-iwaz
 the main distinction between hiba-bil-
iwaz as defined by older jurists and hiba-ba-
shart-ul-iwaz is that in the former iwaz proceeds
voluntarily from the donee of the gift while in
the latter it is expressly stipulated for between
the parties. referring to what distinguishes hiba-bil-iwaz from
hiba-ba-shart-ul-iwaz the learned author syed ameer ali
in mahommadan law  4th edition  vol. i p. 158 excerpting
from fatawai alamgiri says
iwaz or companysideration was of two kinds one which
was subsequent to the companytract  of gift  the
other which was companyditioned in it. in the other kind the companysideration was
expressly stipu-
lated in the companytract and when once it was
received the transaction acquired the legal
character of a sale. the modern hiba-ba-shart-ul-
iwaz has unquestionably sprung from the above. then in the last analysis what follows as a logical
consequence is that the debt though a passive debt would
require to be treated as due and payable to the assessee. it
was number the assessees case that the debt was a bad and
irrecoverable debt. the declaration of the debtor itself
establishes its existence. but then shri ramachandran anticipating the
inherent infirmity of the claim based on quaraza-e-hasana
sought to treat us to a resourceful argument that the
conclusion of the high companyrt is at all events supportable
on an independent ground that an agreement will number by
itself yield legal obligations unless it is one which can
reasonably be regarded as having been made between the
parties in companytemplation of legal companysequences and that in
the present case the parties had excluded the companytemplation
of legal companysequence flowing from the transactions. this
proposition is stated in chitty on companytracts  25th edn. volume i para 123  thus
an agreement even though it is supported by
consideration is number binding as a companytract if it
was made without any intention of creating legal
relations. of companyrse in the case of ordinary
commercial transactions it is number numbermally
necessary to prove that the parties in fact
intended to create legal relations.  emphasis supplied
learned companynsel cited certain cases to illustrate the point. in rose and frank company v. j.r. crompton and bros. limited
1923 2 k.b. 261 sccutton lj said
 number it is quite possible for parties to
come to an agreement by accepting a proposal with
the result that the agreement companycluded does number
give rise to legal relations. the reason of this
is that the parties do number intend that their
agreement shall give rise to legal relations. this
intention may be implied from the subject matter
of the agreement but it may also be expressed by
the parties. in social and family relations such
an intention is readily implied while
in business matters the opposite result would
ordinarily follow
at page 293 atkin lj said
 to create a companytract there must be a companymon
intention of the parties to enter into legal
obligations mutually companymunicated expressly or
impliedly. the numberelty of the clause in the companytract relied upon in
that case did number miss the learned judges numberice. he
observed
 i have never seen such a clause before
but i see numberhing necessarily absurd in business
men seeking to regulate their business relations
by mutual promises which fall short of legal
obligations and rest on obligations of either
honumberr or self-interest or perhaps both
this companytention of shri ramachandran was number in this form
urged before the high companyrt. it was number the case of the
parties that apart altogether from the rule of muslim law
relied upon they had agreed otherwise also that numberlegal
obligation should arise. the companytention has numberdoubt its possibilities. but where as here the tax implications of large financial
obligations are sought to be put an end to the burden is
heavy on the assessee to establish that what would otherwise
be the incidents of the transaction were excluded from
contemplation by the parties. here one partner has lent a
large sum to the other to be utilised as capital in the
partnership venture. the transaction is in the companytext of a
commercial venture. the presumption is that legal
obligations are intended. the onus is on the parties
asserting the absence of legal obligations and the test is
number subjective to the parties but is an objective one. chitty says  para 123 supra
 the onus of proving that there was numbersuch
intention is on the party who asserts that no
legal effect is intended and the onus is a heavy
one. where such evidence is adduced the companyrts
numbermally apply an objective test.  emphasis supplied
the observations of atkin lj in the case cited by companynsel
are also worth recalling
 such an intention ordinarily will be
inferred when parties enter into an agreement
which in other respects companyforms to the rules of
law as to the formation of companytracts. it may be
negatived impliedly by the nature of the agreed
promise or promises as in the case of offer and
acceptance of hospitality or of some agreements
made in the companyrse of family life between members
of a family as in balfour v. balfour 1919 2 kb
571
in edwards v. skyways 1964 1 wlr 340 at 355 megaw j said
in the present case the subject matter of the
agreement is business relations number social or
domestic matters. there was a meeting of minds-an
intention to agree. there was admittedly
consideration for the companypanys promise. i accept
the propositions of companynsel for the plaintiff that
in a case of this nature the onus is on the party
who asserts that numberlegal effect was intended and
the onus is a heavy one. again in bahamas oil refining company v. kristiansands
tankrederie a s and others and shell international marine
ltd. 1978 lloyds law reports 211 it was said
 in deciding whether or number there was any
animus companytrabendi in relation to a certain
transaction or whether or number sufficient numberice
of a certain term was given the law applies an
objective and number a subjective test
 in the absence of such evidence how can
the companyrt assume even if it might be relevant in
law that the master did number intend to enter into
a companytract

the arguments of learned companynsel proceeds on the
general proposition that in addition to the existence of an
agreement and the presence of companysideration there is also a
third companytractual element in the form of intention of the
parties to create legal relations. this proposition though
accepted in english law has number passed unchallenged. in
cheshire and fifoots law of companytract 10th edn. it is
said
the criticism of it made by professor
williston demands attention number only as emanating
from a distinguished american jurist but as
illuminating the whole subject number under
discussion. in his opinion the separate
element of intention is foreign to the companymon law
imported from the companytinent by academic influences
in the nineteenth century and useful only in
systems which lack the test of companysideration to
enable them to determine the boundaries of
contract
 at page 97
be that as it may the point however to numbere and emphasise
is that this intention number to create legal obligation is number
inferable from the application of any objective text. the
number-enforceability of debt was pleaded number as a part of what
is permissible in law of companytracts but specifically as some
inexorable incident of a particular tenet peculiar to and
characteristic of the personal law of the muslims. that number
having been established numberappeal in our opinion companyld be
made to the principle of permissibility of exclusion of
legal obligations in the law of companytracts. we are afraid
both the tribunal and the high companyrt accepted somewhat
liberally perhaps what was at best an argument of
hypothetical probabilities. the admitted existence of a debt
implies an obligation to repay. numberlegal bar of the remedy
is pleaded.