1961 (SC) GLR

GUJARAT LAW REPORTER
Vol. II ] SUPREME COURT [ 1961

SUPREME COURT OF INDIA
Present:- J. L. Kapur, M. Hidayatullah and J. C. Shah, JJ.
TULASIDAS KILACHAND AND OTHERS v.
THE COMMISSIONER OF INCOME TAX, BOMBAY.*
Indian Income Tax Act, 1922, - Sec. 16(1) (c), - Third Proviso 16(3)(b)
Declaration of trust in favour of the wife made by one of the assessees - assessee
holding shares upon trust to pay income thereof to his wife for a period of
seven years from the date of Declaration or her death - trust declared to be not
revocable. - whether falls within sec. l6(l)(c) - it is transfer of assets to ‘any
person’ for the benefit of the wife within section 16(3) (b) - whether ‘love and
affection’ amounts to ‘adequate consideration’ within section 16(3)(a)(iii).
In 1951, one of the assessees made a declaration of trust in favour of his wife under
which he was to hold certain shares upon trust to pay the income thereof to his wife for a
period of seven years from the date thereof or her death (whichever may be earlier) and
which trust was not to be revocable. The assessee contended that the income received as
dividend (income) on those shares after being grossed up was not liable to be included in
his total income in view of the third proviso to section 16(1) (c)^of the Indian Income-tax
Act, The Appellate Assistant Commissioner held that the case was governed by section
16(3) (b). The Tribunal came to the conclusion that the case was covered either by section
16(3)(a)(iii) or by section 16(3)(b) and the income from the shares was liable to be in-
cluded in the income of the assessee. On a reference, the High Court held that the income
was ineludible under sec. 16 (3) (b) and not under sec. 16(l)(c). In appeal to the Supreme
Court;
HELD that by the deed of trust the settlor held the shares in trust and the
shares did not remain the property of the settlor. Section 16(1)(c) had, there-
fore, no application and the proviso was not attracted.
HELD further that there was a transfer by the assessee to himself as a trustee,
as in such a case no formal transfer or overt act was required. The words “any
person” in section 16(3)(b) are wide enough to include the husband when he
transfers his property to himself in another capacity. The change of the capac-
ity makes him answer the description “any person”.
HELD that the case fell within the provisions concerning wife and minor
child laid down in section 16(3)(b) of the Act and not within the third proviso
to sec. 16(l)(c); and transfer to the assets was to the -husband-trustee for the
benefit of the wife, and the income was therefore includible.
HELD the words “adequate consideration” in sec. 16(3)(a)(iii) denote
consideration other than ‘love and affection’, which, in the case of a wife,
may be presumed. When the law insists that there should be “adequate
consideration” and not “good consideration”, it excludes mere love and
affection.
*Decided on 3rd Jan. 1960. Civil Appeals Nos. 134 to 137 of 1959. Appeals by
Special Leave from the Judgment and Order dated the 20th September, 1957, of the
Bombay High Court in Income-Tax Reference No. 14 of 1957.
[Reproduction from GLROnLine]

© Copyright with Gujarat Law Reporter Office, Ahmedabad
2 GUJ. L. R. (S.C.) Vol. II
Chamberlain v. Inland Revenue Commissioners, (1943) 25 T. C. 317, 329., Provat

Kumar Mitier v. Commissioner of Income-tax Civil Appeal No. 366 of 1959, decided on
December 8, 1960, referred to.
Mr. R. J. Kolah, Advocate and M\s. S. N. Andley, J. B. Dadachanji, Rameshwar
Nath and P. L. Vohra, Advocates of M/s Rajinder Narain & Co., for the Appellants
(In all the appeals).
Mr. K. N. Rajagopal Sastri, Senior Advocate, (Mr. D. Gupta, Advocate with him),
for the Respondent (In all the appeals).
The following Judgment of the Court was delivered by-
HIDAYATULLAH, J. This judgment governs the disposal of Civil Appeals
Nos. 134 to 137 of 1959. They have been filed by four assessees with special
leave and arise out of similar facts and it is not necessary to refer to more
than one case to consider the point in question.
The assessment year under consideration is 1952-53 and the previous year
the Calendar year 1951 In that year Mr. Tulsidas Kilachand one of the four
appellants made a declaration of trust in favour of his wife a portion of which
may be quoted here :
“...I Tulsidas Kilachand hereby declare that I hold 244 shares of Kesar
Corporation Ltd. and 120 shares of Kilachand Devchand & Co. Ltd. upon trust
to pay the income thereof to my wife Vimla for a period of seven years from the
date hereof or her death (whichever event may be earlier) and I hereby declare
that this trust shall not be revocable.”
In the year of account a sum of Rs. 30 404 was received as dividend Income
of those shares and the assessee contended that this income after being grossed
up was not liable to be included in his total income in view of the third proviso
to sec. 16(1)(c) of the Indian Income-tax Act. The Income-tax Officer did not
accept this contention and though the assessment order is not before us we gather
from the statement of the case that the reason he gave was that the income
had accrued to or had arisen in the hands of Mr. Tulsidas Kilachand and had
been paid by him to his wife. The Income-tax Officer held that the words of
the proviso income arising to any person by virtue of a settlement of disposition
did not apply to this income.
On appeal the Appellate Assistant Commissioner held that the case was
governed by sec. 16(1)(b) and need not be considered under the third proviso
to sec. 16(1)(c) of the Act. It appears to have been conceded before him that
if the former provision applied the proviso would not save the income from
being assessed in the hands of Mr. Tulsidas Kilachand. The appeal was dismissed.
In the appeal before the Tribunal Mr. Tulsidas Kilachand again relied upon
the third proviso to sec. 16(1)(c) and contended that the case was not governed
by sec. 16(3)(b) and that the dividend income could not be included in his
assessment. The Tribunal came to the conclusion that the case was covered either
by sec. 16(3)(a)(iii) or by sec. 16(3)(b) and that the income from shares was
therefore liable to be included in the income of Mr. Tulsidas Kilachand. The
Tribunal however raised and referred the following question under sec. 66(1)
of the Act to the High Court of Bombay :

1961 TULSIDAS v. COMMISSIONER OF INCOME TAX 3
“Whether on a true construction of the deed of declaration of trust dated 5th

March 1951 the net dividend income of Rs. 30 404 on 120 shares of Kilachand
Devchand & Co. Ltd. and 244 shares of Kesar Corporation Ltd. held under trust
by the assessee for the benefit of his wife was income liable to be included in
the total income of the assessee ?”
The High Court came to the conclusion that though sec. 16(1)(c) was not
satisfied in view of the third proviso sec. 16(3)(b) was applicable to the case
and answered the question in the affirmative.
In the appeal before us the case for the Department was based both on sec.
16(3)(a)(iii) and sec. 16(3)(b) while the appellants contended that this disposition
fell within the third proviso to sec. 16(1)(c). The relevant provisions are :
16 Exemptions and exclusions in determining the total income
(1) In computing the total income of an assessee
(c) all income arising to any person by virtue of a settlement or disposition
whether revocable or not and whether effected before or after the commencement
of the Indian Income-tax (Amendment Act 1939 (VII of 1939) from assets
remaining the property of the settler or disposer shall be deemed to be income
of the settler or disposer and all income arising to any person by virtue of a
revocable transfer of assets shall be deemed to be income of the transferor:
Provided .. ... ... ... ... .. ... ...
Provided further ... ... ... ... .. ... ...
Provided further that this clause shall not apply to any income arising to any
reason by virtue of a settlement or disposition which is not revocable for a period
exceeding six years or during the lifetime of the person and from which income
the settler or disposer derives no direct or indirect benefit but that the settler shall
be liable to be assessed on the said income as and when the power to revoke
arises to him.
(2) .. ... .. .. .. ... ... . . . (omitted)
(3) In computing the total income of any individual for the purpose of
assessment there shall be included
(a) so much of the income of a wife or minor child of such individual as arises
directly or indirectly
(i) .. ... ... ... .. .. ..
(ii) ... ... ... ... .. .. ... ...
(iii) from assets transferred directly or indirectly to the wife by the husband
otherwise than for adequate consideration or in connection with an agreement
to live apart; or
(b) so much of the income of any person or association of persons as arises from
assets transferred otherwise than for adequate consideration to the person or asso-
ciation by such individual for the benefit of his wife or a minor child or both.
The object of framing sec. 16 can almost be taken from the observations
of Lord Macmillan in Chamberlain v. Inland Revenue Commissioners (1) where
he stated as follows :
“This legislation(is) designed to overtake and circumvent a growing tendency
on the part of tax payers to endeavor to avoid or reduce tax liability by means of
settlements. Stated quite generally the method consisted in the disposal by the
taxpayer of part of his property in such a way that the income should no longer
be receivable by him while at the same time he retained certain powers over or
interests in the property or its income. The legislatures counter was to declare that
the income of which the taxpayer had thus sought to disembarrass himself should
notwithstanding be treated as still his income and taxed in his hands accordingly.”
(1) (1943) 25 T. C. 317, 329.

These observations apply also to the section under consideration and the Indian
provision is enacted with the same intent and for the same purpose. Section
16 thus lays down certain exemptions and exclusions in determining the total
income of an assessee. Some of the provisions lay down the conditions for
inclusion of certain income while others law down the conditions for exclusion
of other income. We are concerned with the income accruing in case of
settlements and the conditions under which income of a wife is treated as the
income of the settler disposer or as the income of husband. We have to see
if the provisions for exclusion or inclusion apply to this case.
Section 16(1)(c) provides that income from assets remaining the property
of the settler or disposer or arising to any person by virtue of a revocable
transfer of assets shall be deemed to be the income of the transferor. What cl.
(c) means was decided by this Court in Provat Kumar Mitter v. Commissioner
of Income -Tax (2). There Provat Kumar Mitter had assigned the dividends
only and had not transferred the relevant shares It was held by this Court that
this was a case of application of one own income aid not assignment of the
source from which the income was derived which alone saved the income from
Tax subject however to provisions like sec. 16(1)(c) and sec. 16(3). The deed
in favour of the wife in that case gave only a right to the dividends and not
being a transfer of an existing property of the assessee sec. 16(1)(c) and the
third proviso were not attracted. That case thus has no application to the facts
of the present case were the disposition is differently made.
The disposition here is for a period of seven years or the life of the
settlee whichever is shorter. During that period or the life of the settlee Mr.
Tulsidas Kilachand has bound himself upon trust to pay the dividend to his
wife and not to revoke the settlement. The intention is obviously to put this
case within the third proviso to sec. 16(1)(c) because cl. (c) does not apply
to any income arising to any other person provided the disposer derives no
direct or indirect benefit even though the assets remain his property . If it
were only a question of the application of the proviso. this disposition would
be exempt. But by the deed of trust the settler holds the shares in trust; the
shares do not remain the property of the settler. Section 16(1)(c) has therefore
no application and the proviso is not attracted.
The section goes on to deal with other situations and to provide for them
specially Sub-section (3) provides specially for assets transferred to the wife or
minor child. income from assets transferred to the wife is still to be included
in the total income of the husband (a) if the assets have been transferred
directly or indirectly to the wife by the husband otherwise than for adequate
consideration [ vide sub-sec. (3)(a)(iii) or (b) so much of the income of any
person or association of persons as arise from assets transferred otherwise than
for adequate consideration to the person or association by such individual for
the benefit of his wife [vide sec. (3)(b)]
(2) Civil Appeal No. 366 of 1999 decided on December 8, 1960.

1961 TULSIDAS v. COMMISSIONER OF INCOME TAX 5
The first question is whether there can be said to be transfer of assets to

the wife or to any person for the benefit of the wife. The second question is
whether there was adequate consideration for the transfer if there was one. The
contention of the assessee is that there was no transfer of any assets at all. It
is contended that the ownership of shares involves a bundle of rights and that
they are generally speaking (a) right to vote (b) right to participate in the
distribution of assets on dissolution and (c) right to participate in the profits
e.g. dividends which might be declared It is pointed out that none of these rights
was transferred to the wife because transfer of assets connotes a creation of a
right in the assets in praesenti. It is urged that there was no transfer of assets
either to the wife or to any person for the benefit of the wife but merely a
creation of a trust in respect of the shares the dividends from which were payable
to the wife and that thus sec. 16(3)(a)(iii) or sec. 16(3)(b) was not applicable.
It is lastly contended that even if it be held that there was such a transfer it
was for adequate consideration being for love and affection which is a good
consideration.
The contention that there was no transfer at all in this case is not sound.
The shares were previously held by Mr. Tulsidas Kilachand for himself. After
the declaration of trust by him they were held by him not in his personal capacity
but as a trustee. No doubt under sec. 5 and 6 of the Indian Trusts Act if the
declarer of the trust is himself the trustee also there is no need that he must
transfer the property to himself as trustee; but the law implies that such a transfer
has been made by him and no overt act except a declaration of trust is necessary.
The capacity of the declarer of trust and his capacity as a trustee are different
and after the declaration of trust he holds the assets as a trustee. Under the
Transfer of Property Act there can be a transfer by a person to himself or himself
and another person or persons. In our opinion there was in this case a transfer
by Mr. Tulsidas Kilachand to himself as a trustee though there was no formal
transfer.
The assessee also stresses the words any person or association of persons
in sec. 16(3)(b) and contends that such a person must he other than the
husband who transfers. The word any person is wide enough to include the
husband who transfers property to himself in another capacity. The change of
capacity makes him answer the description any person. In our opinion this
deed must be regarded as involving a transfer by the husband to a trustee and
even though the husband is the same individual in his capacity as a trustee he
must be regarded as a person distinct from the transferor. In our opinion sec.
15(3)(b) covers the case.
It remains to consider whether there was adequate consideration for the transfer.
Reliance has been placed only upon love and affection. The words adequate
consideration denote consideration other than mere loveand affection which in the
case of a wife may be presumed. When the law insists that there should be adequate
consideration and not good consideration it excludes mere love and affection. They
may be good consideration tosupport a contract; but adequate consideration to

avoid tax is quite a different thing. To insist on the other meaning is really to say
that consideration must only be looked for when love and affection case to exist.
In our opinion this cease falls within the special rules concerning wife and
minor child laid down in sec. 16(3)(b) and not within third proviso to sec. 16(1)(c).
It must thus be held that there was a transfer of the assets to the husband-trustee
for the benefit of the wife. The answer given by the High Court was thus correct.
The appeals fall and are dismissed with costs. One hearing fee.
Appeals dismissed.
*
[2]
(J. L. Kapur, M. Hidayatullah and J. C. Shah, JJ.)
THE FIRST NATIONAL CITY BANK v. THE COMMISSIONER OF IN-
COME-TAX, BOMBAY CITY*
Business Profits Tax Act 1947 (Act XXI of 1947)-Meaning of the word “re-
serves” in R. 2(1) of Schedule II of the Act-Computation of the capital for the
purpose of allowing the “abatement” under the Act-Whether the expression
“Undivided Profits” used in the Balance sheets of the Banks in United States is
a part of the reserves and has to be taken into account when computing the
capital and reserves within R. 2(1) of Schedule II of the Act.
The Appellant, a non-resident Bank incorporated under the National Bank Act of the
United States of America with its head office in that country and with branches all over
the world including some branches in India, was assessed under the Business Profits Tax
Act (Act XXI of 1947) in respect of 4 chargeable accounting periods. Certain amounts were
shown as “undivided Profits” and the Appellant contended that in computing the capital
for the purpose of allowing the “abatement” under the Act, it was entitled to include what
is termed in the United States “Undivided Profits”, as they were “Reserves” under Rule
2(1) of Schedule II. The appellant produced the Treasury Rules of the United States of
America containing “Instructions for Preparation of Reports of Condition by National
Banking Associations”, and also a letter from the Deputy Controller of Currency,
Washington, showing the true nature of “Undivided Profits”. The Income-Tax Officer,
the Appellate Assistant Commissioner and the Appellate Tribunal excluded these amounts
in determining the capital of the Bank under R. 2(1) of Schedule II on the ground that they
were not a part of the reserves of the Bank. On the reference to the High Court, the High Court
held that the amount did net satisfy the test laid down by the Supreme Court in Century
Spinning & Manufacturing Co. Ltd. v. C. I. T. Bombay, as the amount was not transferred
to any specific reserve and there being no act of volition on the part of the Directors to create
a “reserve”, the amount could not be regarded as “reserve”. The appellant filed the appeal
to the Supreme Court of India by Special Leave.
HELD, that the true nature and character of a sum disputed as reserve was to be
determined with reference to the substance of the matter. There was a difference between
the system of accounting of Banking Companies in India and the United States. In
the system of accounting in the U. S. A, each year’s account is self-contained and nothing
is carried forward. If after allocating the profits to diverse acts any balance remains,
it is credited to the “Undivided Profits” which become part of the capital fund. Therefore
it cannot be said that the amount is not ‘Reserve’ within the meaning of the Rules. It
would be erroneous not to treat the amount of “undivided profits” as a part of the capital
fund, because by the instructions under sec. 5211 of the Revised Statute of the United
*Decided on 6th January, 1961, Civil Appeal No. 315 of 1958.

1961 NATIONAL CITY BANK v. COMMRS. OF INCOME-TAX 7
States and the letter of the Deputy Controller referred to above, the appellant Bank
was required to keep a certain sum of money under the head “Undivided Profits”
and it was thus an integral part of the capital structure.
HELD, the amount designated as “Undivided Profits” is a part of the reserves
and has to be taken into account when computing the capital and reserves within
R. 2(1) of Schedule II of the Act.
The Judgment of the Bombay High Court in 34 I. T. R. of 1956 reversed.
Century Spinning & Manufacturing Co. Ltd., v. C. I. T., Bombay, (1954) S. C. R. 203;
Fedelity Title and Trust Co. v. United States, 66 L. Ed. 953 referred to.
M/s. R. J. Kolah and I. N. Shroff, Advocates for the Appellant.
M/s. A. N. Kripal and D. Gupta, Advocates for the Respondent.
The following Judgment of the Court was delivered by—
KAPUR, J. This is an appeal against the judgment and order of the High
Court of Judicature at Bombay in Income-tax Reference 34 of 1956. The appellant
is a non-resident Bank incorporated under the National Bank Act of the United
States of America with its head office in that country and with branches all
over the world including some branches in India. It was assessed under the
Business Profits Act (Act XXI of 1947) hereinafter termed the “Act” in respect
of the chargeable accounting periods :
1-4-1946 to 24-12-1946 25-12-1946 to 24-12-1947,
25-12-1946 to 23-12-1948 and 24-12-1948 to 31-3-1949.
and the sole question for decision in this appeal is the meaning of the word
reserves in R. 2(1) of Schedule It of the Act and how the capital of the appellant
during the above-mentioned chargeable accounting periods has to be computed
for the purpose of allowing the abatement under the Act.
The appellant contended that in computing the amount for the purpose of
abatement it was entitled to include what is termed in the United States Undivided
Profits the contention being that this item falls within the word reserves in R.
2(1) of Schedule II of the Act which provides :
“Where the company is one to which rule 3 of Schedule I applies its capital
shall be the sum of the amounts of its paid-up share capital and of its reserves in
so far as they have not been allowed in computing the profits of the company for
the purpose of the Indian Income-tax Act 1922 (XI of 1922) diminished by the cost
to it of its investments or other property the income from which is not includible
in the profits so far as that cost exceeds any debt for money borrowed by it.”
It is not necessary to give the details of all the years; but it well be sufficient
as an illustration if we were to confine ourselves to the Undivided Profits in the
Balance Sheet as on December 31 1946 wherein the relevant entries were as follows:
Capital ... ... ... $ 77,500,000-00
Surplus ... ... ... $ 1,52,500,000-00
Undivided Profit ... ... ... $ 29,534,614-21
The Report of the Directors dated January 14 1947 was as follows :
“At the year-end Capital of the Bank remains as Dollars 77 5000 0 surplus has
increased to $. 152 500 0 by the transfer of $. 1000 from Undivided Profits. After
this transfer Undivided Profits are $. 29534614 an increase of $. 240376 from a
year ago. The Trust Company has Capital of $. 1000 surplus of $. 1000 and

Undivided Profits of $. 8 97 20 The two institutions thus show total capital funds
that is Capital Surplus and Undivided Profits of $ 287631634 or $. 46.39 per
share compared with $. 44.60 per share at end of 1945.”
According to the Balance Sheet of 1948 capital funds since 1939 had increased
from $ 169 768 thousands to $ 320 795 thousands in the year 1948 and there
had been a progressive increase both in what is called Surplus as well as Undivided
Profits the former increased from $ 62 500 thousands to $ 182 500 thousands
and the latter from $ 19 768 thousands to $ 50 795 thousands. The question
in this case is whether this large sum of money shown as Undivided Fronts
is a part of the Reserves or is equivalent to the unallocated amount carried forward
at the end of a year of account in the balance of Profit & Loss Account as
we know it. It was the sum of $ 29 534 614 and similar sums for the other
chargeable Accounting Periods which are the subject matter of controversy in
this appeal. Both the Income-tax Officer and the Appellate Assistant Commissioner
excluded these amounts in determining the capital of the Bank under R. 2(1)
of Schedule 11 on the ground that they were not a part of the reserves of the
Bank The appellant took an appeal to the Income tax Appellate Tribunal which
was dismissed on the ground that Undivided Profits meant nothing more than
the Balance of the profits and loss account and that no distinction could he
drawn merely because in the nomenclature used in the United States the amount
was shown as Undivided Profits and not balance of the profit and loss account.
At the instance of the appellant the following question of law was referred to
the High Court :
“Whether on the facts and in the circumstances of the case Undivided Profits
of $. 29 534 614 shown in the condensed statements of conditions as of December
31. 1946 can be treated as reserves and added to the capital as required by Rule
2(1) of Schedule 11 to the Business Profits tax Act for the chargeable accounting
period 25 to 24-12-1947 ?”
In its order the Tribunal said that the Treasury Rules in United States divided
capital account into four different heads Capital Reserve Surplus and the
Undivided Profits. The reserves are really reserves for liabilities including the
reserves for dividends. The general reserves as shown by the balance sheet in
India is equivalent to the Surplus. The undivided profits is equivalent to the
balance of profit & loss accounts. In the statement of the Case submitted to
the High Court the Appellate Tribunal stated that the question whether the
Undivided Profits meant the same thing as balance of the profit and loss account
was a question of fact and it did not matter what name was given to it. But
this was the very question which was referred to the High Court.
The High Court after referring to the Directors Report to the shareholders
held that the Undivided Profit of $ 29 534 614 did not constitute reserves because
no direction had been given in regard to it had never been transferred to any
reserve and had never been earmarked for any particular purpose and that the
only act of volition on the part of the Directors of the Bank was the transfer
of 10 million dollars to the Surplus. In its judgment the High Court said :

“It is true that these large amounts (of Undivided Profits) remain with the Bank
that the Bank uses them that business is carried on with the help of those funds and
that they are as much capital of the Bank as capital in the strict sense of the term.”
The High Court however held that they did not satisfy the test laid down
by the Supreme Court in Century Spinning & Manufacturing Co. Led v. C. I.
T. Bombay (1) as the amount was not transferred to any reserve and there being
no act of volition on the part of the Directors this could not be regarded as
Reserve. The correctness of this view is challenged before us.
The Directors report dated January 14 1947 shows that the surplus increased
as a result of the allocation made by the Directors by 10 million Dollars which
was taken from Undivided Profits and the Undivided Profits themselves increased
to $ 29.534614-21 which was an increase of $ 240 376 in the year 1946 and
therefore the Capital Funds of the company which included Capital Surplus and
Undivided Profits along with similar items from the Trust Company had increased
considerably which was reflected in per share increase i.e. 44.6 per share at
the end of 1945 to 46.39 per share at the end of 1946 thus showing that it
was the result of an act of the Directors that Surplus was increased and a particular
sum was left in the Undivided Profits.
It was contended that no sum could be treated as Reserves unless the Directors
recommended it to be so allocated and it was so adopted by the shareholders.
But this argument ignores the evidence placed by the appellant. Under the Treasury
Rules of the United States of America containing Instructions for Preparation
of Reports of Condition by National Banking Associations certain sums had to
be specifically allocated under sec. 5211 of the revised Statute of the United
States (Title 12 U.S C. 161). Items 25 to 28 according to these instructions
deal with Capital Account. Item 26 deals with Surplus and item 27 with Undivided
Profits and item 28 with Reserves (and retirement account for preferred stock).
The following Reserves come under item 28 :
(a) Reserve for dividends payable in common stock.
(b) Reserve for other undeclared dividends.
(c) Retirement account for preferred stock.
(d) Reserves for contingencies etc.”
Item 29 was as follows :
“Total capital accounts. This item is the sum of items 25 to 28 inclusive.”
Along with this the appellant has placed a copy of the letter from the Deputy
Controller of Currency Washington the relevant portion of which is as follows :-
“In connection with this matter we wish to assure you that your position as
stated is in complete accord with that of the Office of the Comptroller of the
Currency. In the United States the Undivided Profits as reflected in the accounting
of a bank actually represents a part of its capital funds. All of the other bank
supervisory agencies in the United States consider the Undivided Profits of a bank
as a part of its capital funds. In any calculation for the purpose of determining
the adequacy of capital in a commercial bank in the United States the supervisory
authorities include Undivided Profits as an integral part of the capital structure
as it would not be possible otherwise to make an accurate computation.
When losses occur in banks it is the usual practice in many banks to charge them
against the Undivided Profits account which by any reasoning would be
inappropriate if the account were regarded as Undistributed Profits. In commercial
banks in the United States it is not customary to maintain any account
(1) (1954) S. C. R. 203

that could be regarded specifically as Undistributed Profits in the same sense as

applied to similar accounts in the other corporations in India. The term Undivided
Profits simply follows a bank accounting nomenclature used in the United States to
designate Profits set aside after provisions for expenses and taxes dividends and
reserves for continuous future use in business of the bank and it bears a close if not
identical relationship to the Earned Surplus Account of an industrial corporation.”
Balance Sheets of three other banks of the United States relied on by the
appellant show that Capital Fund comprises three kinds of funds i. e. Capital
Surplus and Undivided Profits. The documents placed on the record show that
these three different kinds of funds put together make up what is called Capital
Fund. The creation and maintenance of the item known as Undivided Profits
is a requirement of the Treasury Rules which are made under the Statute and
therefore it cannot be said that the amount of Undivided Profits in the Balance
Sheet was not allocated as a result of either a resolution of the Directors accepted
by the shareholders or on account of the requirements of the law. The Undivided
Profits have to be employed in the manner indicated by the letter of the Deputy
Controller of Currency. They are set up for expenses taxes dividends and reserves
for continuous use in the business of the Bank and are a part of the capital
funds and an integral part of the capital structure and without it would not be
possible to make an accurate computation. The reason for the existence of this
fund as shown by that letter is that when there are losses they can be charged
against Undivided Profits which expression means profits set apart after provision
for expenses and taxes etc. for continuous use in the business of the Bank.
There is a difference between the system of accounting of Banking Companies
in India and the United States the failure to appreciate this difference has led
the Appellate Tribunal as well as the High Court to arrive at an erroneous
conclusion. In India at the end of an year of account the unallocated profit
or loss is carried forward to the account of the next year and such unallocated
amount gets merged in the account of that year. In the system of accounting
in U. S. A each years account is self-contained and nothing is carried forward.
If after allocating the profits to diverse heads mentioned above any balance
remains. it is credited to the Undivided Profits which become part of the capital
fund. If in any year as a result of the allocation there is a loss the accumulated
undivided profits of the previous years are drawn upon and if that fund is
exhausted the Banking Company draws upon the surplus. In its very nature the
Undivided Profits are accumulation of amounts of residue on hand at the end
of year of successive periods of accounting and these amounts are by the prevailing
accounting practice and the Treasury directions regarded as a part of the capital
fund of the Banking Company.
The nature of Undivided Profits was considered by the Supreme Court of
America in Fidelity Title and Trust Co. v. United States (2). In that case a suit was
brought by the Fidelity Co. to recover the tax assessed on its whole capital and
undivided profits under sec. 2 of the Spanish War Revenue Act. In the Supreme
Court it was contended by the company that the terms Capital Surplus and Undivided
Profits have a precise and definite meaning in the business of banking and that
(2) 66 L. Ed. 953.

Undivided Profits are not surplus and cannot therefore be taxed as Surplus. The
Government on the other hand contended that the undivided profits were taxable
as being a part of Capital or Surplus. The Court held that Undivided Profits
were taxable as being a part of the Capital employed Mr. Justice Brandeis is
delivering the opinion Or the Court said at p. 955 :
“The Act declares that in estimating capital surplus shall be included and that
the annual tax shall in all cases be computed on the basis of the capital and
surplus for the preceding fiscal year”... ... ... ... ... ... ... ... ... .. ... ... ... ... ... . ...
... ... .. ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ...
As it is the use or employment of capital in banking not mere possession thereof by
the banker which determines the amount of tax the fact that a portion of the capital
so used or employed is designated undivided profits is of no legal significance.”
As to what the word Reserves as used in the Business Profits Tax Act connotes
was considered by this Court in the Commissioner of Income-tax v. Century Spinning
& Manufacturing Co. Ltd. (1). it was held that the true nature and character of
a sum disputed as reserve was to be determined with reference to the substance
of the matter. The amount in dispute in that case was the profits after the deduction
of depreciation and tax which amount was carried to the Balance Sleet and was
later recommended by the Directors to be appropriated mainly to dividends and
balance to be carried forward to the next years account. Thus on the crucial date
i. e. April 1 1946 from which the Chargeable Accounting Period began the sum
is dispute had not been a declared as reserve on the other hand the Directors and
earmarked it for distribution as dividend and it remained as a mass of undistributed
profits available for distribution. At page 209 Ghulam Hassan J. said :
“The reserve may be a general reserve or a specific reserve but there must
be a clear indication to show whether it was a reserve either of the one or the
other kind. The fact that it constituted a mass of undistributed profits on the 1st
January 1946 cannot automatically make it a reserve.... ... ... ... ... ... ... ... ... ...
... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ...... ... ... ... ... ... ... ... ... ... ...
A reserve in the sense in which it is used in rule 2 can only mean profit earned
by a company and not distributed as dividend to the shareholders but kept back
by the directors for any purpose to which it may be put in future......”.
Applying this test to the disputed sum it cannot be said that the amount
is not Reserve within the meaning of the Rules. As is shown by the instructions
under sec. 5211 of the Revised Statute of the United States and the letter of
the Deputy Controller referred to above the appellant bank was required to keep
a certain sum of money under the head Undivided Profits and that is an integral
part of the capital structure. Under these circumstances it would be erroneous
not to treat the amount of undivided profits as a part of the capital fund.
In our opinion therefore the amount designated as Undivided Profits is a part
of the reserves and has to be taken into account when corn putting the capital and
reserves within R. 2(1) of Schedule II of the Act. The question which was referred
by the Tribunal should have been decided in the affirmative and in favour of the
appellant and the amount should have been added to the capital as allowed by R.
2(1) for the Chargeable Accounting Periods. In the result the appeal is allowed.
The appellant will have its costs in this Court and in the High Court.
Appeal allowed.
(1) (1954) S. C. R. 203.

SHORT NOTE
3
(Present: B. P. Slnha C. J., S. K. Das, A. K. Sarkar, N. R. Ayyangar
and J. R. Mudholkar JJ.)
BABULAL PARATE v. STATE OF MAHARASHTRA AND OTHERS*
Petition No. 90 of 1960: Decided 12th January 1961.
Constitution of India-Art. 19(1) & (2)-Criminal Procedure Code, 1898, (V
of 1898)-Section I44-Powers-To be exercised in emergency only-Order liable to
be challenged-Wide powers cannot be termed unreasonable-Legislature compe-
tent to permit authority to take anticipatory action.
The powers under section 144, Criminal Procedure Code though appear wide, it
can be exercised only in an emergency and for the purpose of preventing, obstruc-
tion, annoyance or injury to any person lawfully employed, or damage to human life,
health safety or the disturbance of public tranquility or riot or an affray. These fac-
tors condition the exercise of the power and therefore it would be wrong to regard
that power as being unlimited or untrammelled.
Since the judgment has to be of a magistrate as to whether in the particular
circumstances of a case an order, in exercise of these powers should be made or not,
it can be assumed that the powers will be exercised legitimately and honestly. The
section cannot be struck down on the ground that the magistrate may possibly abuse
his powers.
The provisions of the sec. 144 which commit the power in this regard to a
Magistrate cannot be regarded as unreasonable. Further since the propriety of the
order is open to challenge, it cannot be said that by reason of the wide amplitude of
the power which sec. 144 confers on certain magistrates it places unreasonable re-
striction on certain fundamental rights.
Anticipatory action of the kind permissible under section 144 is not impermis-
sible under Articles (2) and (3) of Article 19, Public order has to be maintained in
advance in order to ensure it, and therefore, it is competent to a legislature to pass a
law permitting an appropriate authority to take anticipatory action or place anticipa-
tory restrictions upon particular kinds of acts in an emergency for the purpose of
maintaining public order. The contention that sec. 144 substitutes suppression of
lawful activity or right for the duty of public authorities to maintain order cannot be
accepted.
Mr. R. V. S. Mani, Advocate for the petitioners.
Mr. N. S. Bindra, Senior Advocate, (Mr. K. L. Hathi and R. H. Dhebar, Advocates
with him) for the respondents.
*

1961 KESHAVLAL v. THE STATE 13
CRIMINAL APPELLATE (S. C.)

Present: K. Subba Rao and Raghubar Dayal JJ.
KESHAVLAL MOHANLAL SHAH v.
THE STATE OF BOMBAY (now Gujarat)*
Criminal Procedure Code, 1898 (V of 1898}-Sec. 197-Previous sanction of
the State Government-Whether necessary if the Magistrate commits the of-
fence while in service, but has ceased to be so when the complaint is filed against
him.
No previous sanction is necessary for a Court to take cognizance of an offence
committed by a Magistrate while acting or purporting to act in the discharge of his
official duty if he had ceased to be a Magistrate at the time the complaint is made or
police report is submitted to the Court, i. e. at the time of the taking cognizance of the
offence committed.
S. A. Venkatraman v. The State, (1958) S. C. R 1037. referred to.
Mr. B. P. Maheshwari, Advocate, for the Appellant.
M/s. Vir Sen Sawhney, R. H. Dhebar & T. M. Sen,
Advocates, for the Respondent.
The following Judgment of the Court was delivered by
RAGHUBAR DAYAL, J. This appeal by special leave is directed against
the judgment of the Bombay High Court.
The appellant was a Third Class Magistrate at Sanand in 1951. He received
Rs. 200/in cash from Amar Singh Madhav Singh as deposit for security to be
released on bail. This amount was not credited in the Criminal Deposit Rojmal
and the appellant thereby committed criminal breach of trust with respect to the
amount. The appellant was dismissed from service on April 4 1953 as a result
of a departmental enquiry. On June 9 1954 a complaint was filed on behalf of
the State against the appellant. He was convicted of the offence under sec. 409
I.P C. by the Trial Magistrate. The conviction was confirmed by the Extra Additional
Sessions Judge Ahmedabad. His revision was dismissed by the High Court.
The only point urged in this appeal is that the learned Magistrate should
not have taken cognizance of this offence without the previous sanction of the
State Government in view of the provisions of sec. 197 Cr. P. C.
It is not disputed that a Court could not have taken cognizance of this offence
against the appellant if he had been a Magistrate on June 9 1954 The appellant
was not a Magistrate on June 9 1954 when the complaint was filed. The question
then is whether the provisions of sec. 19 of the Code of Criminal Procedure
prohibit a Court from taking cognizance of an offence committed by a Magistrate
while acting or purporting to act in the discharge of his official duty even when
he is no longer a Magistrate on the date the Court takes cognizance. Sub-sec
(1) of sec. 19 Cr. P.C. reads :
*Decided 17-3-61. Criminal Appeal No. 127 of 1960, by Special Leave from the
Judgment and order dated 4-8-58 of the former High Court at Bombay in Criminal
Revision Application No. 728 of 1958.

“(1) When any person who is a Judge within the meaning of section 19 of the
Indian Penal Code or when any Magistrate or when any public servant who is not
removable from his office save by or with the sanction of a State Government or
the Central Governments is accused of any offence alleged to have been committed
by him while acting or purporting to act in the discharge of his official duty no
Court shall take cognizance of such offence except with the previous sanction
(a) in the case of a person employed in connection with the affairs of the union
of the Central Government; and
(b) in the case of a person employed in connection with the affairs of a State
of the State Government.”
There cannot be much scope for the contention that a Court is prohibited
from taking cognizance of an offence committed by a Judge while acting or
purporting to act in the discharge of his official duty only when that person
is a Judge at the time cognizance is taken as otherwise full effect will not be
given to the expression any person who is a Judge in the sub-section. Similar
expression is not used in describing a Magistrate or a public servant. But it
is clear that those two persons should also be Magistrate or a public servant
at the time cognizance is taken of an offence committed by them while acting
or purporting to act in the discharge of official duty.
In connection with public servant the expression who is not removable from
his office save by or with the sanction of a State Government or the Central
Government indicates that it is only when the public servant concerned is in
service that the question of his removal from office can arise. If the public
servant has ceased to be a public servant no such question arises. Therefore it
seems proper to construe the expression when any Magistrate in the sub-section
to mean when a person who is a magistrate.
Even it the expression be not construed in this form the section says: when
any Magistrate is accused of any offence This indicates that it is only when
the accusation is against a Magistrate that the Court will not take cognizance
of an offence committed by him while acting in the discharge of his official
duty without previous sanction. If a person is not a Magistrate at the time the
accusation is made the Court can take cognizance without previous sanction.
It has been strenuously urged on behalf of the appellate that the expression
when any Magistrate is accused of any offence refers to the stage when the
accusation is first made against the Magistrate that is to say when it is alleged
for the first time that the Magistrate has committed such an offence. There
seems to be no justification to add the word first and read this expression as
when any Magistrate is first accused of any offence. The occasion when such
an allegation is made for the first time against a Magistrate is not in
connection with the Courts taking cognizance of the offence but will always
be either when a complaint is made to a superior officer in the department or
to the police. Both these authorities are free to inquire into the accusation. It
is only when the departmental enquiry or the police investigation leads to the
conclusion that the matter is fit for going to Court that a complaint would be
made or a police report would be submitted to the proper Court for taking

1961 KESHAVLAL v. THE STATE 15
action against the Magistrate. It is at this stage that the Magistrate would be ac-
cused of the offence for the purposes of the Court and therefore it would be then
that the Court will see whether the person proceeded against is a Magistrate or not.
This view finds further support from the language of the clauses (a) and
(b). The previous sanction according to these clauses will be of the Central
Government if the Magistrate is employed in connection with the affairs of the
Union and of the State Government if he is employed in connection with the
affairs of a State. If the person is not employed. no sanction is necessary. Whether
the person is so employed or not. is to be seen shortly before the submission
of the complaint or police report to the Court. The sanction can be given by
the proper authority on a consideration of the allegations and evidence available
to establish them and therefore only after the investigation is complete. The
submission of the complaint or police report is expected to follow the grant
of sanction within a reasonable time.
A similar question arose in S. A. Venkataraman v. The State (1) in connection
with the interpretation of the provisions of sec. 6 of the Prevention of Corruption
Act 1947 (Act II of 1947). Sub-section (1) of that section reads :
“(1) No Court shall take cognizance of an offence punishable under sec. 161
or sec. 165 of the Indian Penal Code or under sub-section (2) of section 5 of
this Act alleged to have been committed by a public servant except with the
previous sanction
(a) in the case of a person who is employed in connection with the affairs
of the Union and is not removable from his office save by or with the sanction
of the Central Government of the Central Government;
(b) in the case of a person who is employed in connection with the affairs
of a State and is not removable from his office save by or with the sanction of
the State Government of the State Government;
(c) in the case of any other person of the authority competent to remove him
from his office.”
This Court said at page 1046 :
“The words in sec. 6(1) of the Act are clear enough and they must be given
effect to There is nothing in the words used in sec. 6(1) to even remotely suggest
that previous sanction was necessary before a Court could take cognizance of
the offences mentioned therein in the case of a person who had ceased to be a
public servant at the time the Court was asked to take cognizance although he
had been such a person at the time the offence was committed. A public servant
who has ceased to be a public servant is not a person removable from any office
by a competent authority.”
The same can be said with respect to the provisions of sec. 197 of the
Code of Criminal Procedure. We therefore hold that no previous sanction is
necessary for a Court to take cognizance of an offence committed by a Magistrate
while acting or purporting to act in the discharge of his official duty if he
had ceased to be a Magistrate at the time the complaint is made or police report
is submitted to the Court i. e. at the time of the taking of cognizance of the
offence committed. We accordingly dismiss the appeal.
Appeal dismissed.
(1) 1958) S. C. R. 1037.

CIVIL APPELLATE ( S. C.)

Present : J. L. Kapur and J. C. Shah JJ.
THE LOKMANYA MILLS BARSI LTD. v.
THE BARSI BOROUGH MUNICIPALITY*
Bombay Municipal Boroughs Act, 1925 (XXVII of 1925)-Sections 58(J), 73,
78(])(d)-Rule 2C framed by Municipality thereunder- Whether tax assessed on
floor area valid-’Annual letting value” explained-Rate based on floor area is
not tax based on Annual letting value-Arbitrarily fixing the letting value deprives
tax-payer of his statutory right to challenge the valuation.
That Rule 2(c) framed by the Barsi Municipality under sec. 58(J) of the
Bombay Municipal Boroughs Act is illegal and ultra vires. As the rate in
respect of buildings falling within rule 2(c) was assessed on a valuation com-
puted on the floor area of the structures, and not on the capital value nor en
the annual rent for which the buildings may reasonably be expected to let, it
v/as clearly not a tax based on the annual letting value, for “Annual letting
value” postulates rent which a hypothetical tenant may reasonably be ex-
pected to pay for the building, if let. By prescribing valuation computed on
the area of the factory building, the Municipality not only fixed arbitrarily
the annual letting value which would have no relation to the rental which a
tenant may reasonably pay, but rendered the statutory right of the tax-payer to
challenge the valuation illusory. 7,n assessment list proposed under sec. 78,
before it is authenticated and finalised, must be published and the tax-payers
given an opportunity to object to the valuation. By the assessment list in
which the -valuation is not based upon the capital value of the building or the
rental which the building may fetch, ,but on the floor area, the objection
which the tax-payers may raise is in substance restricted to the area and not to
the valuation. The vice of the rule lies in an assumed uniformity of return per
square foot which structures of different classes which are in their nature not
similar, may reasonably fetch if let out to tenants and in virtual deprivation to
the rate-payer of his statutory right to object 1o the valuation.
The Borough Municipality of Amalner v. The Pratap Spinning Weaving and
Manufacturing Co., Ltd. (2), not approved.
The Madras and Southern Mahratta Railway Co., Ltd. v.
The Bezwada Municipality (1), and Motiram Keshavdas v.
Ahmedabad Municipal Borough (3), referred to.
Mr. S.. T. Desai, Senior Advocate (M/s. Avadh Behari and B. P. Maheshwari,
Advocates, with him), for the Appellants.
Mr. A. V. Viswanatha Sastri, Senior Advocate (Mr. A. G. Ratnaparkhi, Advocate,
with him), for the Respondents.
The following Judgment of the Court was delivered by :
SHAH J. These five appeals raise a common question about the
validity of rule 2C framed by the respondent-the Municipality of Barsi
under s. 58(j) of the Bombay Municipal Boroughs Act 1925 hereinafter
called the Act. The Lokmanya Mills-hereinafter called the appellants-are
*Decided on 14-3-61. Civil Appeals Nos. 125 to 129 of 1957 from the judgment and
decree dated 7th October 1952, of the Bombay High Court, in Second Appeals Nos. 601
to 605 of 1952.
(1) I. L. R. (1945) Mad. 1. (2) I- L. R. (1952) Bom. 918. (3) 44 Bom. L. R. 280.

1961 LOKMANYA MILLS LTD. v. BARSI BOROUGH MUNL. 17
a company registered under the Indian Companies Act holding an extensive area of
land City Survey No. 2554 within the Municipal Borough on which are constructed
buildings of the factory ware-houses bungalows and other structures appurtenant to
the factory. The respondent a Borough Municipality constituted under the Act is by
sec. 73 entitled to levy a rate on lands and buildings and also a water-rate. Under the
rules framed by the Municipality house-tax and water-tax were levied on buildings
and non-agricultural lands on their annual letting value at uniform rates whether the
purpose was residential business or manufacturing.
In 1944 the Municipality resolved to enhance the assessment of lands and build-
ings within its area. After some correspondence with the Commissioner Central Divi-
sion the General Body of the Municipality resolved that the rental value for levying
rates on mills and factories within its limits be fixed at Rs. 40/for every 100 square
feet. Notices of this resolution under s. 75(b) of the Act were issued and objections to
the proposed enhancement were invited from the tax-payers and after obtaining the
approval of the Government of Bombay the new rules were made operative from
April 1 1947 The rules relevant for the purposes of these appeals are :
Rule 2A:-The assessment of house-tax on all lands buildings and non-agricul-
tural lands other than Government buildings coming under Proviso A of sec. 73 of the
Bombay Boroughs Act of 1925 at rates mentioned in the Schedule attached to these
rules.
Rule 2B :- In case Government buildings coming under Proviso A of sec. 73 of the
Bombay Boroughs Act are used beneficially the assessment of such buildings shall
be made as specified in sub-secs. 2 and 3 of sec. 74.
Rule 2C :- As regards Mills factories and buildings relating thereto the annual
letting value shall be fixed at Rs. 40/-per 100 square feet or part thereof for every floor
ground floor or cellar and the tax shall be assessed on the said annual letting value at
the ordinary rate.
Explanation :- The words buildings pertaining thereto include buildings in the
compound of the Mills such as ware-houses godowns shops of the mills etc. but does
not include residential buildings that is to say bungalows and out-houses.
Note :- Assessment shall be made at the ordinary rate on buildings which are not
taxed under rule 2C above.
The Municipality prepared an assessment list under the new scheme of taxation
in respect of factory buildings relating thereto and issued notices of demand calling
upon the appellants to pay house-tax and water-tax newly assessed thereon. The
appellants paid under protest the tax demanded and filed five suits in the Court of the
Civil Judge Junior Division of Barsi to recover the amounts levied by the Municipality
in excess of the amounts due under the old scheme. In all these suits the principal
issue raised was about the validity of rule 2C framed by the Municipality for levy of
rates on Mills Factories and other buildings relating thereto. The trial Court held that
rule 2C was valid and within the competence of the Municipality and dismissed the
suits for refund of house-tax and water-tax. The District Court at Sholapur in appeal
declared rule 2C illegal and ultra vires and by injunction restrained the Municipality
from making any claim or demand for house-tax and other taxes from the appellants
on the basis of that rule. The High Court of Judicature at Bombay set aside the decree
of the District Court disagreeing with the view that rule 2C was ultra vires.

In these appeals filed with special leave against the judgments of the High
Court the only question which falls to be determined is whether by rule 2C
the Municipality is entitled to collect tax leviable as a rate after computing the
annual letting value solely on the area of the factory and buildings related
thereto. By s. 73 the Municipality is authorised subject to any general or special
orders which the State Government may make in that behalf and to the
provisions of secs. 75 and 76 to impose for the purposes of the Act any one
or more of the classes of taxes amongst which are included a rate on buildings
or lands or both situate within the municipal borough and general water-rate
which may be imposed in the form of a rate assessed on buildings or lands
or in any other form. Section 75 prescribes the procedure preliminary to
imposing a tax. The procedure for assessing the liability to rates on lands and
buildings is prescribed by secs. 78 to 84 of the Act which provide for
preparation of the assessment list its authentication and amendment. When a rate
on building or lands or both is imposed the Chief Officer causes an assessment-
list of all buildings or lands or lands and buildings in the municipal borough
to be prepared containing inter alia the names of the owner the valuation based
on capital or annual letting value as the case may be on which the property
is assessed and the amount of tax assessed thereon. The expression Annual letting
value is defined in sec. 3(1) of the Act as meaning the annual rent for which
any building or land exclusive of furniture or machinery contained or situate
therein or thereon might reasonably be expected to let from year to year and
shall include all payments made or agreed to be made by a tenant to the owner
of the building or land on account of occupation taxes insurance or other charges
incidental to his tenancy.
By sec. 78 sub-sec. (1) cl. (d) and Explanation to sec. 75 the rate to be
levied on lands and buildings may be assessed on the valuation of the lands
and buildings based on capital or the annual letting value. By the rules in the
operation prior to April 1 1947 house-tax and water-tax were levied as rates
in respect of all lands buildings and non-agricultural lands on the annual letting
value (except Government buildings). Even under the new rules house-tax and
water-tax continued to be levied in respect of all buildings and non-agricultural
lands as rates: but the rate in respect of buildings falling within rule 2C was
assessed on a valuation computed on the floor area of the structures and not
on the capital value nor on the annual rent for which the buildings may
reasonably be expected to let. This was clearly not a tax based on the
annual letting value for Annual letting value postulates rent which a hypothetical
tenant may reasonably be expected to pay for the building if let. A rate may
be levied under the Act on valuation made on capital or on the annual letting
value. If the rate is to be levied on the basis of capital value the building to
be taxed must be valued according to some recognised method of valuation:
if the rate is to be levied on the basis of the annual letting value the
building must be valued at the annual rental which a hypothetical tenant may
pay in respect of the building. The Municipality ignored both the methods of
valuation and adopted a method not sanctioned by the Act. By prescribing

1961 LOKMANYA MILLS LTD. v. BARSI BOROUGH MUNL. 19
valuation computed on the area of the factory building the Municipality not only
fixed arbitrarily the annual letting value which bore no relation to the rental
which a tenant may reasonably pay but rendered the statutory right of the tax-
payer to challenge the valuation illusory. An assessment list prepared under sec.
78 before it is authenticated and finalised must be published and the tax-payers
must be given an opportunity to object to the valuation. By the assessment list
in which the valuation is not based upon the capital value of the building or
the rental which the building may fetch but on the floor area the objection which
the tax-payers may raise is in substance restricted to the area and not to the
valuation.
Counsel for the Municipality sought to rely upon The Madras and Southern
Mahratta Railway Co. Ltd. v. The Bezwada Municipality (1) decided by the
Judicial Committee of the Privy Council in support of the plea that the rate
based on valuation in proportion to the floor area is validly levied. By sec.
81 sub-sec. (2) of the Madras District Municipalities Act 1920 a tax for general
purposes and a water and drainage tax were to be levied at such fractions of
the annual value of lands or buildings or both as may be fixed by the Municipal
Council. By sec. 82 sub-sec. (2) of that Act the annual value of lands and buildings
was to be the gross annual rent at which they may reasonably be expected to
lei but by the proviso it was enacted that in the case of any Government or
Railway building the annual value of the premises shall be deemed to be 6%
of the total of the estimated value of the land and the estimated present cost
of erecting the building subject to certain deductions. The Municipality of
Bezwada levied property tax on a piece of vacant land belonging to the Madras
and Southern Mahratta Railway Company on the annual value computed at 6%
of its capital value. This method of taxation was challenged by the Railway
Company on the contention that all methods of valuation other than the method
prescribed by the proviso to sec. 82(2) were by necessary implication prohibited.
This contention was rejected because the generality of the substantive enactment
was left unqualified except in so far as it concerned the particular subjects to
which the proviso related. Open lands were not covered by the proviso and it
was competent to the municipality to levy the tax under sec. 82(2) on the annual
value and that value could be determined by any of the recognised methods
of arriving at the rent which a hypothetical tenant may reasonably be expected
to pay for the lands in question. This case has in our judgment no relevance
to the present case.
If the Municipality of Barsi had adopted any of the recognised methods of
valuation for assessing the annual letting value the tax would not be open to challenge
but the method adopted was not a recognised method of levying the rate.
The High Court relied upon its earlier judgment in The Borough
Municipality of Amalner v. The Pratap Spinning Weaving and Manufacturing
Co. Ltd. Amalner (2). In that case the Court negatived the challenge to the
validity of the rules similar to those impugned in these appeals. The
Amalner Municipality had by rules framed under the Bombay Municipal
Boroughs Act sought to levy a rate equal to a percentage of the annual

letting value which was computed on the floor area of mills and factories. The
court held that the method of taxation adopted by the Municipality had remained
unchallenged for a long time that the rules had been sanctioned by the Government
and they were not shown to be capricious arbitrary and unreasonable and that
the valuation of the property by reference to the floor area was not altogether
unknown to the law of rating. The High Court also observed that in assessing
the rent which a hypothetical tenant may pay several methods are open to the
Municipality and if on examining the cases of all the factory buildings within
their jurisdiction the Municipality concluded that the rent which the hypothetical
tenant may reasonably be expected to pay for those buildings fits in with the
rent which they had fixed by adopting the flat and uniform rate the principle
of fixing the annual letting value on the basis of the floor area would not be
open to challenge. It was assumed in that case that all factory buildings within
the area of the Amalner Municipality were alike in essential features and were
intended to be used for purposes which were alike and that probably the
Municipality may have been satisfied that the principle enunciated in the rule
impugned worked out on the whole as a fair basis for determining the valuation
of the building in question. In our view this approach to a rating problem arising
under the Act is not permissible. In any event there is no evidence of the record
of this case that the factories and buildings relating thereto such as ware-houses
godowns and shops of the mills situate in the compound of the mills may be
separately let at the uniform rate prescribed by the Municipality. The vice of
the rule lies in an assumed uniformity of return per square foot which structures
of different classes which are in their nature not similar may reasonably fetch
if let out to tenants and in the virtual deprivation to the rate-payer of this statutory
right to object to the valuation.
Another judgment of the Bombay High Court in Motiram Keshavdas v.
Ahmedabad Municipal Borough (3) calls for reference. It was held in Motirams
case that a water-tax imposed by the Ahmedabad Municipality as a rate not
depending upon the value of the property assessed but in lump sum was not
a rate for the purpose of sec. 73(x) of the Bombay Municipal Boroughs Act
1925 and the rule which authorised the levy of such a lump sum was ultra
vires.
These appeals must be allowed and the decree passed by the High Court
set aside and the decrees passed by the District Court of Sholapur restored with
costs in this Court and the High Court. One hearing fee.
Appeals allowed.
*

1961 MOHAMMAD HUSSAIN v. THE STATE 21
ORIGINAL JURISDICTION (S. C.)

Present: P. B. Gajendragadkar, A. K. Sarkar, K. N. Wanchoo,
K. C. Das Gupta and N. Rajagopala Ayyangar JJ.
MOHAMMAD HUSSAIN GULAM MOHAMMAD & ANOTHER v.
THE STATE OF BOMBAY & ANOTHER :
ISHWARBHA1 BECHARBHAI & OTHERS-INTERVENERS*
Bombay Agricultural Produce Markets Act, 1939 (XXII of 1939)-Sections
4, 4A,5,5A,5AA, 11, 29-Rules 53, 54, 65, 66, & 67-The Constitution of India,
1950-Article 19(l)(g}-Sections 4 to 5AA ultra vires-Does not impose
unreasonable restriction to carry on trade-Does not infringe Art. 19(l)(g)-Sec.
29-Valid as does not give uncontrolled power to the Stale Government-Sec. 11
intra vires-Fees charged not in the nature of sales-tax-Rule 53-Ultra vires sec. 11
as no maximum fee prescribed by the Government-Rule 54 valid if provision
made for refund-Rules 65, 66 & 67 ultra vires sec. 5(A) read with the
proviso to sec. 4(2}-Power of market committee to grant licences only as
regards the market and not as regards the market area-Market not properly
established under sec. 5AA-Market Committee cannot enforce any provision
of the Act, Rules or bye-laws.
Sections 4, 4A, 5, 5A and 5AA of the Bombay Agricultural Produce Mar-
kets Act are constitutional and intra vires and do not impose unreasonable
restrictions on the right to carry on trade in the agricultural produce regulated
under the Act and do not infringe the fundamental right guaranteed under Art.
19(l)(g) of the Constitution.
Section 29 of the Act does not give uncontrolled power to the State. “
Government and is, therefore, constitutional. In enacting sec. 29, the legislature
had not stripped itself of its essential powers or assigned to the administrative
authority anything but an accessory or subordinate power which was deemed
necessary to carry out the purposes and policy of the Act.
Section 11 of the Act which gives power to the Market Committee subject
to such maxima as may be prescribed to levy fees on the agricultural produce
bought and sold by licencees in the market area is intra vires and constitu-
tional. The fee charged for services rendered by the Market Committee is not
in the nature of sales tax.
Rule 53 framed under the Act is ultra vires sec. 11, there being no maxi-
mum fee prescribed by the State Government.
Rule 54 will be valid if proper provision for refund is made in the bye-
laws with respect to the produce brought into the market on which fees have
been charged but which has been taken back because it is not sold.
Rules 65, 66 and 67 are ultra vires the provisions in sec. 5A read with the
proviso to sec. 4(2) of the Act. The power of the Market Committee to grant
licences is with respect to operation in the market and not in the market area,
the latter power being in the Commissioner under the proviso to sec. 4(2) till
the market is established.
A Market can only be established by a Market Committee constituted
under sec. 5, if it is required so to do by the State Government under
sec. 5AA. As the market, in this case, has not been properly established
in law for this area under sec. 5AA, the Market Committee cannot
enforce any of the provisions of the Act or the Rules or the bye-laws
framed by it till the Market is properly established in law.
*Decided on 2nd May 1961. Petition No. 129 of 1959.

M. C. V. S. Arunachala Nadar etc. v. The State of Madras and

Others (1), The Edward Mills Co. Ltd., Beawar v. The State of Ajmer
and another (2), Applied.
Bapubhai Ralanchand Shah v, The State of Bombay (3), referred to.
Mr. R. Ganapathy Iyer, Advocate, M/s. J. B. Dadachanji, S. N. Andley, Rameshwar
Nath and P. L. Vohra, Advocates of Rajinder Narain & Co., for the petitioners.
Mr. N. S. Bindra, Senior Advocate, (Mr. R. H. Dhebar, Advocate, with him) for the
Respondents.
Mr. S. T. Desai, Senior Advocate, (M/s. Trikamlal J. Patel and I. N. Shroff,
Advocates, with him) for the Interveners.
WANCHOO, J. This petition raises a question as to the constitutionality
of the Bombay Agricultural Produce Markets Act XXII of 1939 (hereinafter
referred to as the Act) and the rules framed thereunder. The petitioners are
businessmen Of Ahmedabad. Their case is that by a notification under the Act
the whole area within a radius of 12 miles of Ahmedabad city was declared
to be a market area under sec. 4 of the Act for the purposes of the Act in
respect of certain agricultural produce from June 1 1948 At the same time a
market yard and a market proper were established for dealing in the commodities
mentioned above and simultaneously a market committee was established under
sec. 5 of the Act for the Ahmedabad market area by the name of The Agricultural
Produce Market Committee Ahmedabad. By later notifications certain other
agricultural produce was declared to be regulated under the provisions of the
Act in this market area. In 1959 a locality known as the Kalupur market in
the Telia Mill compound near the railway station Ahmedabad was declared to
be a sub-market yard for the purposes of the Act. The petitioners apparently
were carrying on business in the Kalupur market and therefore after the declaration
of that area as sub-market yard the market committee required the petitioners
to take out licences under the Act without which they were not to be allowed
to carry on business. The petitioners contend that the various provisions of the
Act and the Rules and bye-laws framed thereunder place unreasonable
restrictions on their right to carry on trade in agricultural produce and thus infringe
their fundamental right guaranteed under Art. 19(1)(g) of the Constitution. In
particular the heavy fees payable to the market committee for taking out licences
in order to trade in various markets impose a heavy burden on trade in the
regulated commodities resulting in an unreasonable restriction on the right of
the petitioners to carry on their trade. Further the declaration of the market
area and the establishment of market yard and sub-market yards has resulted
in compelling producers of agricultural commodities to carry their produce for
long distances thus imposing an unreasonable restriction on their right to carry
on trade. The petitioners thus assail the main provisions of the Act and some
of the provisions of the Rules and the bye-laws framed by the market committee
which we shall specify at their proper place later. The petitioners also contend
(1) (1959) Supp. (1) S. C. R. 92; (2) (1955) I. S. C. R. 735 ; (3) I. L. R. (1955) Bom. 870.

that the State of Bombay has never required the market committee to establish a
market as required by sec. 5AA of the Act and no market has in law been estab-
lished by the market committee and therefore the market committee has no power
to issue licences and to exercise other powers conferred under the Act on market
committees. They therefore pray that the Act and the Rules and the bye-laws framed
thereunder may be declared unconstitutional ultra vires and void In she alternative
a direction should he issued to the respondents in particular the market committee
not to enforce the provisions of the Act the Rules and the bye-laws against the
petitioners so long as a market has not been established as required under the law.
The petition has been opposed on behalf of the respondents and their
contention is that the Act the Rules and the bye-laws provide reasonable restrictions
on the fundamental right to carry on trade under Art. 19(1)(g). It is further
contended that a market has been established as required by law and therefore
the market committee in particular has the right to enforce all the provisions
of the Act the Rules and the bye-laws and to insist upon the petitioners taking
out licences as provided therein.
Before we consider the attack made on the constitutionality of the Act the
Rules and the bye-laws framed thereunder we should like to refer to the main
provisions of the Act and the scheme of regulation provided in it. The Act deals
with the regulation of purchase and sale of agricultural produce in the State of
Bombay and establishment of markets for such produce. Section 2 of the Act is
the definition section. Section 3 provides for the constitution of markets and market
committees and gives power to the Commissioner by notification to declare his
intention of regulating the purchase and sale of such agricultural produce and in
such area as may be specified in the notification; and objections and suggestions
are invited within a month of the publication of the notification. Thereafter the
Commissioner after considering the objections and suggestions if any and after
holding such inquiry as may be necessary declares the area under sec. 4(1) to be
a market area for the purposes of the Act. The consequence of the establishment
of the market area is given in sec. 4(2) which lays down that after the market area
is declared no place in the. said area shall subject to the provisions of sec. 5A be
used for the purchase or sale of and agricultural produce specified in the notification.
After the declaration of the market area the State Government is given the power
under sec. 5 to establish a market committee for every market area. Thereafter
under sec. 5AA it becomes the duty of the market committee to enforce the provisions
of the Act and also to establish a market therein no being required to do so by the
State Government providing for such facilities as the State Government may from
time to time direct in connection with the purchase and sale of the agricultural
produce with which the market committee is concerned. The Act however envisages
that there may be a time lag between the declaration of 8 market area and the
establishment of a market; therefore the proviso to sec. 4(2) lays down that pending
the establishment of a Market in a market area the Commissioner may grant a
licence to any person to use any place in the said area for the purpose of purchase
and sale of any such agricultural produce and it is the duty of the market committee
under sec. 5 also to enforce the conditions of a licence granted under sec. 4(2).Further
under sec. 5At where a market has been established the market committee is

given the power to issue licences in accordance with the Rules to traders
commission agents brokers weigh men measurers surveyors warehousemen and
other persons to operate in the market; provided that no such licence shall be
necessary in the case of a person to whom a licence has been granted under
the proviso to sec. 4(2). The effect therefore of these provisions of the Act
read with the definition section is this. A market area is first declared under
sec. 4(1). In the market area a market may be established. The Rules make
it clear that the market may consist of what are called market proper and principal
market yard and sub-market yards if any. Under sec. 4A for each market area
there shall be one principal market yard and one or more sub-market yards as
may be necessary and the Commissioner is given the power by notification to
declare any enclosure building or locality in any market area to be the principal
market yard for that area and other enclosures buildings or localities to be one
or more sub-market yards for the area. As we have already said the Act envisages
that there may be a time lag between the declaration of a market area and the
establishment of a market and that is why there is a provision for licences under
the proviso to sec. 4(2) pending the establishment of a market in a market area.
The establishment of a market. however takes place only when the State
Government requires the market committee under sec. 5AA to establish a market
in the market area. There does not seem to be any provision in the Act or
the Rules as to how the market committee shall proceed on being required to
do so by the State Government to establish a market; but reading the provisions
of sec. 4A and sec. 5AA together it appears that after the State Government
has required the market committee to establish a market it has to approach the
Commissioner with its recommendation to declare localities as the principal market
yard and the sub-market yards if any and the Commissioner makes a notification
in regard thereto and thereafter the market is established. Till however such action
is taken by the committee and the Commissioner notifies a principal market yard
and sub-market yards if any no market can in law be established; and other
provisions of the Act which come into force after the establishment of a market
cannot be enforced and the trade is till then regulated in the manner provided
in the proviso to sec. 4(2).
After the market is established the market committee gets the power to issue
licences under sec. 5A. Other provisions of the Act provide for the
constitution of market committees and the establishment of a market committee
fund and the ancillary powers of market committees with which however we
are not directly concerned in the present case. It is enough to refer to sec. 11
only in this connection which provides that the market committee may subject
to the provisions of Rules and subject to such maxima as may be prescribed
levy fees on the agricultural produce bought and sold by licensees in the market
area. This section it will be noticed applies to the purchase and sale of
agricultural produce in the market area and the power under it can be exercise
by the committee as soon as the market area is declared though no market might
have been established under sec. 5A. Till such time as the market is
established the fees prescribed under sec. 11 would be levied on the licensees
under the proviso to sec. 4(2). Then come sections creating offences for

contravention of the various provisions of the Act which it is unnecessary to

consider. Sec. 26 gives power to the State Government to frame rules for the
purposes of carrying out the provisions of the Act Sec. 27 gives power to the
market committee to frame bylaws with the previous sanction of the director
or any other officer specially empowered in this behalf by the State Government
and subject to any rules framed by the State Government under sec. 26. Finally
sec. 29 provides that the State Government may by notification in the official
gazette add to amend or cancel any of the items of agricultural produce specified
in the Schedule to the Act.
These are the main provisions of the Act and the scheme which results in
the declaration of a market area and the establishment of a market therein. The
first contention on behalf of the petitioners is that secs. 4, 4A, 5, 5A and 5AA
which provide for the declaration of a market area and the establishment of
a market are unconstitutional as they are unreasonable restrictions on the right
to carry on trade in agricultural produce. We are of opinion that there is no
force in this contention. This Court had occasion to consider a similar Act namely
the Madras Commercial Crops Markets Act XX of 1933 in M. C. V. S. Arunachala
Nadar etc. v. The State of Madras and Others (1) and the regulation with respect
to marketing of commercial crops provided in that Act was upheld. The main
provisions of the Madras Act with respect to the declaration of a market area
(called notified area in that Act) and the establishment of markets are practically
the same as under the Act. It is therefore idle for the petitioners to contend
that the main provisions contained in secs. 4, 4A, 5, 5A and 5AA of the Act
are unconstitutional. Learned Counsel for the petitioners however urges that there
is a difference between the Madras Act and the Act inasmuch as the Madras
Act dealt with commercial crops whereas the Act makes it possible to bring
every crop under its sweep. It is conceded that though it may be constitutional
to regulate the sale and purchase of commercial crops regulation of all crops
made possible under the Act would mean an unreasonable restriction on the
fundamental right enshrined in Art. 19 (1) (g). We are of opinion that there
is no force in this contention. The Madras Act which dealt with
commercial crops specified certain crops as commercial crops in the
definition section and added that the words commercial crop used in that Act
would include any other crop or product notified by the State Government in
the Fort St. George Gazette as a commercial crop for the purposes of that Act.
In view of this inclusive definition of commercial crop in the Madras Act it
was open to the State Government under that Act to include any crop within
the meaning of the words commercial crop which was regulated by that Act.
The Act had a schedule when it was originally passed in which certain crops
were included. The State Government was however given the power to add to
or amend or cancel any of the items mentioned in the Schedule by sec. 29.
It is true therefore that under the Act it is open to the State Government to
bring any crop other than those specified originally in the Schedule within its
regulatory provisions; but the fact that it is possible to bring any crop within
the regulatory provisions of the Act by amendment of the Schedule would not
necessarily make the Act an unreasonable restriction on the exercise of the

fundamental right guaranteed under Art. 19(1)(g). As we have already pointed

out, the definition of the words “commercial crop” in the Madras Act was also
wide enough to bring any crop which the State Government considered fit to
be included as a commercial crop for the purposes of that Act. There is thus
in our opinion no difference in the ambit of the Madras Act and of the Act.
Besides we see no reason why a crop which can be dealt with on a commercial
scale should not be brought under the regulatory provisions of the Act. Section
4(2A) makes it clear that the Act does not apply to the purchase or sale of
specified agricultural produce, if the producer of such produce is himself its
seller and the purchaser is a person who purchases such produce for his own
private use or if such agricultural produce is sold to such person by way of
a retail sale. Thus it is clear from this exception that the provisions of the Act
do not apply to retail sale and are confined to what may be called wholesale
trade in the crops regulated thereunder. This would suggest that the Act also
deals with commercial crops in the same way as the Madras Act, for the notion
of wholesale trade implies that the crop dealt with therein is a commercial crop.
There is thus no distinction so far as the main provisions are concerned between
the Act and the Madras Act, and for the reasons that have been elaborately
considered in Arunachala Nadar’s case (1) we are of opinion that secs. 4, 4A,
5, 5A and 5AA of the Act are constitutional and ultra vires and do not impose
unreasonable restrictions on the right to carry on trade in the agricultural produce
regulated under the Act.
The next attack is on sec. 29 of the Act, which provides that the State
Government may by notification in the official gazette, add to, amend or cancel any
of the items of agricultural produce specified in the Schedule. It is submitted that this
gives a completely unregulated power to the State Government to include any crop
within the Schedule without any guidance or control whatsoever. We are of opinion
that this contention must also fail. It is true that sec. 29 itself does not provide for any
criterion for determining which crop shall be put into the Schedule or which shall be
taken out therefrom but the guidance is in our opinion writ large in the various
provisions of the Act itself. As we have already pointed out, the scheme of the Act is
to leave out of account retail sale altogether; it deals with what may be called wholesale
trade and this in our opinion provides ample guidance to the State Government when
it comes to decide whether a particular agricultural produce should be added to, or
taken out of, the Schedule. The State Government will have to consider in each case
whether the volume of trade in the produce is of such a nature as to give rise to whole-
sale trade. If it comes to this conclusion it may add that produce to the Schedule. On
the other hand if it comes to the conclusion that the production of a particular produce
included in the Schedule has fallen and can be no longer a subject-matter of whole sale
trade, it may take out that produce from the Schedule. We may in this connection refer
to The Edward Mills Co. Ltd., Beawar v. The State of Ajmer and Another (2). In that
case sec. 27 of the Minimum Wages Act, 1948, which gave power to the
appropriate Government to add to either part of the Schedule and employment in
respect of which it is of opinion that minimum wages shall be fixed by giving
notification in a particular manner was held to be constitutional. It was observed in that
case that the legislative policy was apparent on the face of the enactment impugned

there; it was to carry out effectively the purposes of the enactment that power
had been given to the appropriate Government to decide with reference to
local conditions whether it was desirable that minimum wages should be fixed
in regard to a particular trade or industry which was not included in the list.
The same considerations in our opinion apply to sec. 29 of the Act and the
power is given to the State Government to add to, or amend, or cancel any
of the items of the agricultural produce specified in the Schedule in
accordance with the local conditions prevailing in different parts of the State
in pursuance of the legislative policy which is apparent on the face of the
Act. Therefore, in enacting sec. 29, the legislature had not stripped itself of
its essential powers or assigned to the administrative authority anything but an
accessory or subordinate power which was deemed necessary to carry out the
purpose and policy of the Act. We therefore reject the contention that sec. 29
of the Act gives uncontrolled power to the State Government and is therefore
unconstitutional.
The next attack is on sec. 11 of the Act and the rules framed in that
connection. Section 11 gives power to the market committee subject to the
provisions of the rules and subject to such maxima as may be prescribed to
levy fees on the agricultural produce bought and sold by licences in the market
area. It is said that the fee provided by sec. 11 is in the nature of sales-tax.
Now, there is no doubt that the market committee which is authorised to levy
this fee renders services to the licences, particularly when the market is
established. Under the circumstances it cannot be held that the fee charged for
services rendered by the market committee in connection with the enforcement
of the various provisions of the Act and the provisions for various facilities
in the various markets established by it, is in the nature of sales tax. It is true
that the fee is calculated on the amount of produce bought and sold but that
in our opinion is only a method of realising fees for the facilities provided
by the committee. The attack on sec. 11 must therefore fail. Besides this
however, it is also contended that rr. 53 and 54 which provide for levying of
fees under sec. 11 are ultra vires, as they do not conform to sec. 11 of the
Act. It will be noticed that sec. 11 provides for levy of fees to be fixed by
the market committee, subject to such maxima as may be prescribed by the Rules
and this fee is to be charged on the agricultural produce bought and sold. There
are thus two restrictions on the power of the market committee under sec. 11;
the first is that fee fixed must be within the maxima prescribed by the
Rules and naturally till such maxima are fixed it would not be possible for
the market committee to levy fees, and the second restriction is that fees have
to be charged not on the produce brought into but only on such produce as
is actually sold. Rule 53 provides that the market committee shall levy and
collect fees on agricultural produce brought and sold in the market area at such
rates as may be specified in the bye-laws. The Rules now here prescribed the
maxima within which the bye-laws will prescribe fees. The first attack therefore
on the Rules is that it will not be open to the market committee to prescribe
any fee under sec. 11 till the State Government prescribes the maxima by the
Rules which it has not done so far. Further there is ae attack on r. 54

which lays down that the fees on agricultural produce shall be payable as
soon as it is brought into the principal market yard or sub-market yard or market
proper or market area as may be specified in the bye- laws. The argument
is that this rule allows fees to be charged on the produce brought into the market
irrespective of whether it is actually bought and sold, and this is against sec.
11. As we read sec. 11, there is no doubt that the State Government is expected
to specify the maxima within which the market committee shall fix fees and until
such maxima is specified by the State Government in the Rules it would
not be possible for the market committee to fix any fees under sec. 11. Further,
there is no doubt that sec. 11 provides that fees shall be charged only on the
amount of produce bought and sold and not on all the produce that may have
been brought into the market but may have to be taken back as it is not sold.
The reply of the respondents so far as r. 54 is concerned is that the rule
only prescribes as a convenient method of levying fees and that various bye-
laws provide for refund in case there is no sale of the produce brought into
the market. The petitioners in their application have not specially said
that there is no provision for refund and in the circumstances all that we
need say is that r. 54 will be valid if proper provision for refund is made
in the bye-laws with respect to the produce brought into the market on which
fees have been charged but which has been taken back because it is not sold,
for then it would only be a method of levying the fee permitted under sec.
11. In the connected petition Yograg Shankersingh Parihar and Another v. The
State of Bombay and Another (57 of 1957) which was heard along with this
petition there was an attack on r. 53; but the attack was confined to the fee being
analo- gous to a sales-tax and there was no ground taken that the fee could
not be levied under r. 53 because the maxima had not been specified in the
Rules. However, it is not in dispute in this case that maximum has not
been specified in any rule and r. 53 itself leaves it open to the market
committee to prescribe such rates as may be specified in the bye-laws. We have
already said that it would not be possible for the market committee to prescribe
any fees under sec. 11 through bye-laws till the State Government prescribes
the maximum under sec. 11. As no such maximum has been prescribed in
the Rules, the contention that fees which are being charged under the bye-laws
for the purposes of sec. 11 are ultra vires of that section, must prevail.
It has been urged on behalf of the respondents that the true construction
of sec. 11 is that if maxima are prescribed by the Rules, fees will be fixed
by the market committee within the maxima; but if no maxima are fixed under
the Rules, it will still be open to the market committee to prescribe any fees
it thinks proper under its power under sec. 11. We are not prepared to accept
this interpretation of sec. 11, for it amounts to adding the words “if any” after
the word “maxima” therein. Besides, the legislature was conferring power of
taxation (using the word in its widest sense) by sec. 11 on the market committee.
While doing so, the legislature apparently intended that the committee shall not
have unlimited power to fix any fees it liked. It restricted that power
within the maxima to be prescribed by the State Government in the Rules.
Thus the power given to the committee was meant to be subject to the control

of the State Governments which would be in a position to view the situation as

a whole and decide the maxima. At the same time, some flexibility was provided
by leaving it to the committee to fix fees within the maxima. We may in this
connection refer to various municipal Acts for example where also the power of
taxation is subject to the control of the State Government though the control is
provided in a different form. Section 11 also prescribes similar control by the State
Government over this taxing power of the committee and this is obviously in the
interest of the community as a whole. The State Government cannot practically
abdicate that power as it seems to have done under 53 by leaving it to the Committee
to fix any rates it likes. We are therefore of opinion that, unless the State Government
fixes the maxima by rule it is not open to the committee to fix any fees at all and
the construction urged on behalf of the respondents is not correct.
The next attack is on rule 64 which provides that no person shall (a) enter
a principal market yard or sub-market yard in contravention of a direction
given by a servant or a member of the market committee, or (b) disobey
any of the directions of the market committee in regard to the places where
carts laden with agricultural produce may stand or loads of agricultural produce
may be exposed or in regard to the road by which or in regard to the
times at which they may proceed. Any person contravening or disobeying any
of the directions referred to in sub-rule (1) shall, on conviction be punishable
with fine. It is urged that this rule is ultra vires as it imposes an unreasonable
restriction on the right to carry on trade. We are of opinion that there is no force
in this contention because this rule is merely a method of enforcing the regulatory
provisions with respect to market yards and sub-market yards.
The next attack is on rule 65 which provides that “no person shall do business
as a trader or a general commission agent in agricultural produce in any market
area except under a licence granted by the market committee under this rule”. The
contention is that this rule goes beyond the provisions of sec. 5A which lays down
that “where a market is established under sec. 5AA, the market committee may
issue licences in accordance with the Rules to traders, commission agents..” So
far as the grant of licence to traders before the establishment of a market is concerned,
the provision is to be found in the proviso to sec. 4(2) and the power to grant licences
before the establishment of a market for trading in any market area is given to
the Commissioner and not to the market committee. The power of the market
committee to grant licences under sec. 5A arises only after a market is established
and is confined to operation in the market. Rule 65 therefore in our opinion when
it authorises the market committee to grant a licence for doing business in any market
area goes beyond the power conferred on the market committee by sec. 5A and
entrenches on the power of the Commissioner under the proviso to sec. 4(2). It
must therefore be struck down as ultra vires of the provisions in sec. 5A read with
the proviso to sec. 4(2). Rule 66 which is incidental would fall along with r. 65.
The next attack is on r. 67. It gives power to the market committee
to grant licences for doing business in the market area and prohibits
doing of business without such licences. This rule is open to the
same objection as r. 65, for the power of the market committee to grant

licences is with respect to operation in the market and not in the market area.
the latter power being in the Commissioner under the proviso to sec. 4(2) till
the market is established. It seems to us that rr. 65 and 67 as they are framed
show a confusion in the mind of the rule making authority. It would have been
enough if the Rules had been confined to grant of licences for operation in the
market, for under the law as soon as the market area is declared and a market
is established, sec. 4(2) comes into force and no place in the said area can be
used for the purchase and sale of any agricultural produce except as provided by
sec. 5A. It seems to us therefore that the intention probably was to confine the
issue of licences under rr. 65 and 67 to markets which the market committee has
the power to do where a market is established under sec. 51; but the two rules
as drafted refer to the market area and not to the market and must therefore be
held to be beyond the power granted to the market committee under sec. 5A.
The last point that is urged is that no market has been established in law
as required under sec. 5AA of the Act. We have already said while dealing
with the scheme of the Act that the scheme envisages that there may
be a time lag between the declaration of a market area under sec. 4 and the
establishment of a market under sec 5AA. We have also pointed out that
a market can only be established by a market committee constituted
under sec. 5, if it is required so to do by the State Government under
sec. 5AA. Therefore, the requirement by the State Government is a condition
precedent to the establishment of a market under sec. 5AA. No procedure
has however been prescribed either under the Act or under the Rules as to what
the market committee has to do after it has been required to establish a
market. We presume, in view of the provisions of sec. 4A which gives
power to the Commissioner to establish a mar ket yard or sub-market
yards, that the market committee after it receives a direction from the
State Government to establish a market will have to approach the
Commissioner with its recommendation and ask him to notify
the establishment of a principal market yard and sub-market yards, if
any. The contention of the petitioners is that no direction was issued by the
State Government under sec. 5AA to the market committee for the
establishment of a market and that in any case the committee took no steps
after the receipt of any such direction for the establishment of a
principal market yard and sub-market yards, if any. It appears that
the market area was declared for the first time in Ahmedabad from June
1, 1948, by notification dated April 15, 1948. This was followed by
another notification by which the State Government established a market
and a market proper under the Act as it stood before the amendment of
1954 by which the power to establish a principal market yard and sub-
market yards has now been given to the Commissioner. It seems however
that no direction was issued as required by sec. 5 of the Act as it stood
before the amendment (now sec. 5AA) requiring the market committee to establish
a market. This matter had come to the notice of the Bombay High Court
in Bapubhai Ratanchand Shah v. The State of Bombay (3). Chagla C. J. then
pointed out as follows at p. 887 :-

“Now, a very curious situation was disclosed to us by Mr. Joshi. No market

has been established under sec. 5 of the Act and therefore sec. 5A has not come
into operation. The result is this that the Market committee cannot issue licences
under sec. 5s to traders, commission agents, etc. to operate in the market.
In the absence of a market being established under sec. 5 and the absence of
licences being issued under sec. 5A, licences can only be issued by the State
Govern,neat under the proviso to sec- 4A(2). But the rules show that licences
have been issued by the Market Committee and not by the Stab Government.
It is difficult to understand bow either the Government or the Market Committee
came to the conclusion that the Market Committee was authorised to issue
licences without sec. 5 and sec. 5A being brought into force Mr. Joshi suggests
that the Market Committee acts as a delegate of the State Government and the
authority to issue licences has been delegated by the state Government It is
rather difficult to accept this contention.”
Having said this, the learned Chief Justice went on to observe that as there
was no such challenge in the petition itself, therefore whether the challenge could
be substained or not, it was not open to the petitioners before him to make that
challenge. That observation was made with respect to another market area but the
same, we understand, applies to the present case. It appears that after that observation
of the Bombay High Court, the State Government on August 11, 1955, issued
a notification (No. PMA 7055) dated August 1, 1955, directing the Agricultural
Produce Market Committee, Ahmedabad to establish a market in the market area
for which the said committee had been established. But there is nothing in the
affidavit of the respondents to show that after this direction was issued on August
11, 1955, the market committee took any steps to establish a market by making
recommendations to the Commissioner to establish a principal market yard or sub-
market yards under sec. 4A of the Act. As a matter of fact, the principal market
yard was already there from before this direction given in 1955 and has continued.
Even in the case of sub-market yard established at Kalupur in 1959 there is nothing
in the notification issued by the Commissioner on January 16, 1959. to show that
he was doing so in pursuance of the desire of the market committee and on its
recommendation. We should have thought that if the market committee had requested
the Commissioner to establish a sub- market yard and recommended Kalupur as
the place for it, the notification should have shown that the Commissioner was
acting at the desire of the market committee and on its recommendation. In any
case, even if the notification did not show this, it was the duty of the respondents,
when this question was specifically raised in para. 25 of the petition, to state when
the State Government directed the market committee to establish the market and
what steps the market committee took in that behalf after such direction. But in
para. 24 of the counter-affidavit filed on behalf of the respondents all that is
stated is that with reference to paragraph 25 of the petition. I crave leave to refer
to sec. 5A of the Act for ascertaining its contents, true meaning and legal effect.
I deny all the allegations, contentions and submissions contained in paragraph 25
of the petition as are contrary to or inconsistent with what is stated herein as if
they were specifically set out herein and traversed”. We must say that this is a
most curious way of meeting the allegations made on behalf of the petitioners that
no direction as required by sec. 5AA of the Act has been ever given to the market

committee to establish a market and no steps were ever taken by the market
committee in pursuance of such a direction to establish a market. The
notification No. PMA 7055 which was produced before us during the
course of arguments seems in the circumstances to have been an empty formality
which was observed in view of the observations of the Bombay High Court
in Bapubhai Ratanchand Shah’s case (3). It seems to us that the curious
situation which the Bombay High Court noticed as far back as March,
1955 still continues with respect of the market in this case and no proper
steps have been taken in law even after the formal direction made by notification
No. PMA 7055 in August 1955 to establish a market. It is true that in fact
the State Government before the amendment of 1954 and the Commissioner
after that amendment have established a principal market and a sub-
market yard for this market area; but there is nothing to show in the
case of the principal market yard that it was established at the instance
of the market committee on a direction given by the State Government as
required by sec. 5 of the Act as it was before the amendment of 1954
or that the sub-market yard at Kalupur which was established in 1959 was
so established at the instance of the market committee. In the circumstances
the curious situation that was noticed with respect to another market
area by Chagla C. J, is there with respect to the Ahmedabad market
area and the Ahmedabad market, with the result that the market committee
cannot issue licenses under sec. 5A of the Act and exercise such other-
powers as may be exercisable on the establishment of a market under the law.
In the result therefore the petition must be allowed and the market
committee forbidden to enforce any of the provisions of the Act, the
rules and the bye-laws with respect to the market until a market is properly
established under sec. 5AA. No other point has been urged before us.
In conclusion we hold that the challenge made by the petitioners to the
constitutionality of the main provisions of the Act and of the provisions in
rule 60 fails; but the challenge in respect of (i) the provisions in rule 53
an the ground that they are ultra vires sec. 11, there being no maximum
fee prescribed by the State Government, and (ii) the provisions in rules 65,
66 and 67 on the ground that they are ultra vires the provisions in sec.
5A read with the proviso to sec. 4(2) succeeds. As however we have held
that the market in this case has not been properly established, the market
committee cannot enforce any of the provisions of the Act or the rules
or the bye-laws framed by it and cannot issue Licences till the market is
properly established in law.
We therefore allow the petition partly and direct the respondents
not to enforce nay of the provisions of the Act, the rules and the bye-laws
against the petitioners with respect to the market till a market is properly
established in law for this area under sec. 5AA and not to levy any fees under
sec. 11 till the maximum is prescribed under the Rules. In the circumstances
we order parties to bear their own costs.
Petition partly allowed.

1961 JIVABHAI PURSHOTTAM v. CHHAGAN KARSON 33
CIVIL APPELLATE (S. C.)

Present: P. B. Gajendragadkar and K. N. Wanchoo JJ.
JIVABHAI PURSHOTTAM v. CHHAGAN KARSON AND OTHERS*
Bombay Tenancy and Agricultural Lands Act, 1948 (LXVII of 1948- Amending
Act No. XXXIII of 1952-Sec. 34(2-A)-Notice given prior to Amendment-Amending Act
putting certain restrictions on right to terminate tenancy-Notice is merely intention to
terminate-Tenancy terminated only on expiry of the date of notice-Whether Amending
Act has to be taken into consideralion-Whether notice gives any vested right to terminate
tenancy-Bombay Tenancy and Agricultural Lands (Amendment} Act, 1952 (XXXIII of
1952)-Beneficient legislation-Doubt should be resolved in favour of the tenant.
The restriction by sub-section (2-A) of sec. 34 of the Bombay Tenancy Act is on the right to
terminate the tenancy and this restriction would come into play on the day on which the tenancy
actually terminates in consequence of the notice given for terminate it. A notice under sec. 34(7) is
merely a declaration to the tenant of the intention of the landlord to terminate the tenancy, but it is
always open to the landlord not to carry out his intention. Therefore, for the application of the restriction
under sub-section (2-A) on the right of the landlord to terminate the tenancy, the crucial date is not
the date of notice but the date on which the right to terminate matures, that is, the date on which the
tenancy stand terminated.
It is only when the period of notice has expired and the tenancy has terminated that the landlord
acquires a vested right to obtain possession of the land. Therefore the Amending Act XXXIII of 1952
did not affect any vested right of the landlords till the tenancy actually stood terminated after the
expiry of the notice. Consequently, the provisions of the Amending Act which came into force before
the tenancy stood terminated by the notice will have to be taken into consideration in determin-
ing the right to landlord in the matter of the termination of the tenancy, for the Amending Act put
certain fetters on this right of termination.
That the Amending Act No. XXXIII of 1952 is a piece of benificient legislation meant for the
protection of tenants. Therefore, if there is any doubt about the meaning of sub-section (2—A) that
doubt should be resolved in favour of the tenant, for whose benefit the Amending Act was passed.
Durlabbhai Fakirbhai v. Jhaverbhai Bhikabhai (1), approved.
Jeebankrishna Chakrabarti v. Abdul Kader Chaudhuri (2), distinguished.
M/s. J. B. Dadachanji, S. N. Andley & Rameshwar Nath,
Advocates of M/s. Rajinder Narain & Co., for the Appellant.
Mr. S. P. Sinha, Senior Advocate (Mr. M. I. Khowaja, Advocate, for
Mr. A. C. Dave, Advocate, with him) for Respondent No. 1.
WANCHOO J. This appeal by special leave against the judgment of the
Bombay High Court raises a question of the interpretation of sec. 34 (2-A) of the
Bombay Tenancy and Agricultural Lands Act, No. LXVII of 1948 (hereinafter
called the Act). The brief facts necessary for present purposes are these : The
appellant is the landlord and the respondent a protected tenant. The appellant gave
notice of termination of tenancy to the respondent, on December 31, 1951, under sec.
34(l) of the Act. The notice was for, one year as required by sec. 34(i) and the
tenancy was to terminate from after March 31, 1953. The landlord therefore made an
application on April 7, 1953, under sec. 29(2) of the Act for obtaining possession
*Decided on 27th March 1961. Civil Appeal No. 153 of 1958 by special leave” from
Judgment and Order dated 9-1-56 of the Bombay High Court in S. C. A. No. 2258 of 1955.
(1) (1956) 58 Bom. L. R. 85. (2) (1953) I, L. R, 60. Cal. 1037.

of the land to the Mamlatdar. In the meantime, an amendment was made to the
Act, by the insertion of sub-sec. (2-A) to sec. 34 by the Amending Act No. XXXIII
of 1952, which, came into force on January 12, 1953. By this amendment certain
further restrictions were placed on the right of the landlord, to terminate the tenancy
of a protected tenant. The relevant part of sub-sec. (2-A) is in these terms :-
“If the landlord bona fide requires the land for any of the purposes specified
in sub-section (1) then his right to terminate the tenancy shall be subject to the
following conditions, namely
(1) The land held by the protected tenant on lease stands in the record of rights
in the name of the landlord on the first day of January, 1952, as the superior holder,.
(2) If the land held by the landlord is in area equal to the agricultural holding
or less, the landlord shall be entitled to terminate the tenancy of the protected tenant,
in respect of the entire area of such land.
(3) If the land held by the landlord is more than the agricultural holding in area,
the right of the landlord to terminate the tenancy of the protected tenant shall be
limited to an area which shall, after such termination, leave with the tenant half
the area of the land leased.
(4) The tenancy in respect of the land left with the protected tenant after
termination under this section shall not at any time be liable to be terminated on
the ground that the landlord bona fide requires the said land for any of the purposes
specified in sub-section (1).
Explanation. The agricultural holding shall mean sixteen acres of Jirayat and
or four acres of irrigated or paddy or rice land, or lands greater or less in area than
the aforesaid areas in the same proportion.
The restriction contained in sub-sec. (2-A) is in addition to the restrictions in
sub-sec. (2), which lays down that the landlord shall have no right to terminate
the tenancy of a protected tenant, if the landlord at the date on which the notice
is given or at the date on which the notice expires has been cultivating personally
other land fifty acres or more in area, provided that if the land which is being
cultivated personally is less than fifty acres, that right of the landlord to terminate
the tenancy of the protected tenant and to take possession of the land leased to him
shall be limited to such areal as will be sufficient to make the area of the land which
he has been, cultivating to the extent of fifty acres.
When therefore the landlord applied for possession of the land under sec.
29(2) of the Act, the tenant objected and claimed the benefit of the third clause
of sub-sec. (2-A) and the question that arose for determination was whether the
tenant was entitled to the protection contained in this clause. The Mamlatdar
to whom the application under sec. 29(2) was made allowed the application.
The respondent thereupon appealed but his appeal was dismissed. He then went
in revision to the Revenue Tribunal, which was rejected. The tenant then filed
an application under Art. 227 of the Constitution before the High Court and
contended that the provision of sec. 34(2-A) should have been taken into
consideration by the Revenue Courts in deciding the application of the landlord
under sec. 29(2) and that revenue courts were wrong in the view they had
taken that that sub-section did not apply to the present proceedings. The High
Court allowed the application of the tenant, relying on its previous Full-Bench
decision in Durlabbhai Fakirbhai v. Jhaverbhal Bhikabhai (1), where it was held
that as the tenancy had terminated and the right to obtain possession had

1961 JIVABHAI PURSHOTTAM v. CHHAGAN KARSON 35
accrued to the landlord after the coming into force of the Amending Act, the
amending Act applied and therefore the landlord, if he fails to satisfy the further
conditions under the Amending Act. would not be entitled to possession. It further
held that the Amending Act would apply to all proceedings where the period of
notice had expired after the Amending Act had come into force and that what the
Amending Act did was that it imposed a new limitation on the right of the landlord
to obtain possession and if the landlord failed to satisfy the court at the date when
the tenancy expired and the became entitled to possession that he was so entitled
in law as it then stood, he could not claim relief from the court. It is the correctness
of this view which is being challenged before us in the present appeal.
The contention on behalf of the appellant is that sec. 34(l) gives a right to
the landlord to terminate the tenancy by one, years notice, which was given in
this case in December 1951 before the Amending Act came into force. Therefore
the notice having been given before the Amending Act came into force, the further
limitation put on the right of the landlord by sub-sec.(2A), introduced by the
Amending Act, would not apply to notices - given before the Amending Act came
into force. The appellant further contends that the right to terminate a tenancy
having arisen when the notice was given, the law to be applied, in case of notices
given before the Amending Act came into force, would be the law existing on
the date of notice.
We are of opinion that there is no force in this contention. If we look at the
words of sub-sec. (2-A), it provides certain conditions subject to which the right
to terminate the tenancy shall be exercised. It may be that sec. 34(1) requires one
years notice in order to exercise this Tight to terminate, but sub-sec. (2-A) imposes
restrictions on the landlords right to terminate the tenancy and does not speak of
any notice at all. Therefore, when we have to look to the application of sub-sec.
(2-A) it is the date on which the tenancy terminates which determines its application.
The restriction by sub-sec. (2-A) is on the right to terminate the tenancy and this
restriction would come into play on the day on which the landlords right to terminate
the tenancy is perfected, namely, the day on which the tenancy actually terminates
in consequence of the notice given to terminate it. A notice under sec. 34(l) is
merely a declaration to the tenant of the intention of the landlord to terminate the
tenancy; but it is always open to the landlord not to carry out his intention. Therefore,
for the application of the restriction under sub-sec. (2-A) on the right of the landlord
to terminate the tenancy, the crucial date is not the date of notice but the date on
which the right to terminate matures, that is, the date on which the tenancy, stands
terminated. It is on that date that the court has to enforce the right of the landlord
arising out of the notice of termination and therefore the court has to see whether
the termination is in accordance with the restrictions imposed by sub-sec. (2-A) on
the date the right is to be enforced.
Nor are we impressed by the argument that by applying sub-sec. (2-A) to
notices issued before the Amending Act came into force we would be
taking away the vested right of the landlord. As we have already pointed out,
the notice under sec. 34(l) is merely a declaration to the tenant of the
landlords intention to, terminate the tenancy and no further proceedings,
may be taken by the landlord in consequence thereof. It is only when the

period of notice has expired and the tenancy has terminated that the landlord
acquires a vested right to obtain possession of the land. Therefore, the Amending
Act did not affect any vested right of the landlords till the tenancy actually stood
terminated after the expiry of the notice. Consequently, the provisions of the
Amending Act which came into force before the tenancy stood terminated by the
notice will have to be taken into consideration in determining the right of the
landlord in the matter of the termination of tenancy, for the Amending Act put
certain fetters on this right of termination. In the circumstances, we are of opinion
that the view taken by the High Court is correct and sub-sec. (2-A) would apply
to all cases where notices might have been given but where the tenancy had not
actually terminated before the coming into force of the Amending Act.
This view, which appears to us to be plain enough on the words of sub-sec.
(2-A), is further enforced by another consideration, even if there is any doubt
as to the meaning of sub-sec. (2-A). That consideration is that the Amending Act
is a piece of beneficient legislation meant for the protection of tenants. Therefore,
if there is any doubt about the meaning of sub-sec. (2-A) that doubt should be
resolved in favour of the tenant, for whose benefit the Amending Act, was passed.
In this view it is obvious that the legislature could not have intended that the
benefit of this beneficient measure should not be extended to tenants in whose
cases the tenancy had not yet terminated, though notices had been given, when
the further restrictions were being put on the right to terminate the tenancy.
Learned counsel for the appellant has drawn our attention in this connection
to Jeebankrishna Chakrabarti v. Abdul Kader Chaudhuri (2). In that case, the
Bengal Tenancy Act was amended and the amendment provided that a tenant
would be liable to ejectment on one years notice by the landlord. The earlier
law provided for a notice of ejectment but did not provide that the notice should
be for one year; it provided no period of notice whatsoever and it was sufficient
under it to give notice expiring with the end of an agricultural year in order
to effect ejectment, howsoever short might be the period of notice. The question
therefore arose whether the amendment applied to notices given under the old
law, and the Calcutta High Court held that it did not. The circumstances under
which that decision was given are entirely different from the circumstances of
the present case. In that case the contents of notice were challenged; while
formerly what was required was a notice without any particular period, the
amendment required a notice of one year. There was no provision in the
Amending Act making notices which were in accordance with the previous law
ineffective. In these circumstances the Calcutta High Court was right in holding
that the amendment did not affect notices already given. No such question however
arises in the present case. The period of notice is the same before and after
the amendment in the present case, and what we have to see is whether the
crucial date for the application of the new sub-section (2-A) is the date of the
notice or the date of the termination of the tenancy. We have already held
that that date must be the date of the termination of the tenancy. In the
circumstances the appeal fails and is hereby dismissed with costs.
Appeal dismissed.


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1961 (SC) GLR

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GUJARAT LAW REPORTER

Vol. II ] SUPREME COURT [ 1961

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Chamberlain v. Inland Revenue Commissioners, (1943) 25 T. C. 317, 329., Provat

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“Whether on a true construction of the deed of declaration of trust dated 5th

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The first question is whether there can be said to be transfer of assets to

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that could be regarded specifically as Undistributed Profits in the same sense as

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CRIMINAL APPELLATE (S. C.)

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CIVIL APPELLATE ( S. C.)

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ORIGINAL JURISDICTION (S. C.)

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M. C. V. S. Arunachala Nadar etc. v. The State of Madras and

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contravention of the various provisions of the Act which it is unnecessary to

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fundamental right guaranteed under Art. 19(1)(g). As we have already pointed

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of the State Governments which would be in a position to view the situation as

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“Now, a very curious situation was disclosed to us by Mr. Joshi. No market

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CIVIL APPELLATE (S. C.)

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