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1968 (1) TMI 62
Issues Involved:
1. Whether there was a completed sub-lease between the firm and the company.
2. Whether the sub-lease required registration under the Indian Registration Act.
3. Applicability of Section 53A of the Transfer of Property Act.
4. Specific performance of the contract under Section 27 of the Specific Relief Act.
Detailed Analysis:
1. Whether there was a completed sub-lease between the firm and the company:
The firm claimed possession based on an agreement of sub-lease evidenced by documents Ext. P.1, P.2, and P.3. The trial court held that these documents constituted an agreement for a sub-lease. However, the High Court found that these documents represented a completed lease or at least an agreement to lease, which required registration under the Indian Registration Act. The Supreme Court upheld the High Court's finding that the lease was for a period exceeding one year, thus requiring registration.
2. Whether the sub-lease required registration under the Indian Registration Act:
The firm argued that the lease did not require registration as it was not for a term exceeding one year or reserving a yearly rent. However, the Supreme Court found that the lease was indeed for a period exceeding one year, as the rent was to be paid for the first time for a period of fifteen months. Therefore, Section 107 of the Transfer of Property Act was applicable, and the lease required registration. Since the documents were unregistered, the lease could not be enforced.
3. Applicability of Section 53A of the Transfer of Property Act:
The firm contended that they could claim possession under Section 53A of the Transfer of Property Act. The Supreme Court clarified that Section 53A is only available as a defense to a lessee and does not confer any right to claim possession or other rights on the basis of an unregistered lease. The court cited the Privy Council's decision in Probodh Kumar Das and Others v. Dantmara Tea Company Limited & Others, affirming that Section 53A cannot be used to enforce rights under an unregistered lease.
4. Specific performance of the contract under Section 27 of the Specific Relief Act:
The firm argued that the documents constituted an agreement in writing to lease the property and sought specific performance of this contract. The Supreme Court rejected this claim for three reasons:
- The plaint did not specifically claim specific performance of the contract.
- The entire contract was not in writing, as the Managing Director initially lacked authority, and the contract was completed only after the Board of Directors' resolution.
- The firm never obtained possession of the entire property, which is a requirement under Section 27 of the Specific Relief Act. The section applies only if possession of the entire property has been taken, not just part of it.
Conclusion:
The Supreme Court dismissed the appeal, holding that the unregistered lease could not be enforced, Section 53A of the Transfer of Property Act was inapplicable for claiming rights under the unregistered lease, and the firm could not claim specific performance under Section 27 of the Specific Relief Act. Each party was directed to bear their own costs of the appeal.
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1968 (1) TMI 61
Issues Involved:
1. Jurisdiction and competence of the Regional Transport Authority (RTA) to pass the impugned order.
2. Validity of Rule 67(5) concerning quorum and its consistency with Section 44 of the Motor Vehicles Act, 1958.
3. Applicability of principles of natural justice in the context of the RTA's quasi-judicial functions.
4. The power of the High Court under Article 227 to entertain challenges to the vires of statutory rules.
Detailed Analysis:
1. Jurisdiction and Competence of the RTA:
The petitioner challenged the order of the RTA dated 27th April 1967, rejecting the renewal of his stage carriage permit and granting a fresh permit to the Gujarat State Road Transport Corporation. The primary contention was that the RTA was not properly constituted on the date of the hearing, rendering it incompetent to pass the impugned order. The petitioner argued that the tribunal's composition violated Section 44 of the Motor Vehicles Act, which mandates that the RTA must consist of a chairman with judicial experience and at least two other members. The tribunal's decision was considered coram non judice and thus a nullity.
2. Validity of Rule 67(5) Concerning Quorum:
The petitioner contended that Rule 67(5), which allowed the RTA to act with a fluctuating quorum, was ultra vires Section 44 of the Motor Vehicles Act. Section 44(2) specifies the composition of the RTA, requiring a chairman with judicial experience and a minimum of two other members. The rule of quorum under Rule 67(5) allowed decisions to be made by a smaller number of members, which the petitioner argued violated the statutory requirements and principles of natural justice. The court agreed, holding that the quorum rule was inconsistent with the Act when it came to quasi-judicial functions, as it undermined the tribunal's integrity and judicial nature.
3. Applicability of Principles of Natural Justice:
The court emphasized that a quasi-judicial tribunal must act as a whole and its members cannot be a fluctuating body. The tribunal's composition must remain constant throughout the hearing to ensure fairness and adherence to natural justice principles. The quorum rule, which allowed decisions by a smaller number of members, was deemed destructive of these principles. The court held that the rule of quorum could not apply to quasi-judicial functions of the RTA, as it would lead to decisions being made by a tribunal not properly constituted.
4. Power of the High Court under Article 227:
The court addressed the preliminary objection raised by the Corporation that the tribunal, being a creature of the statute, could not question the vires of a statutory provision. The court held that while the tribunal could not entertain challenges to the vires of the statute, it could consider whether a rule was inconsistent with the Act. The High Court, exercising its superintendence powers under Article 227, had the duty to keep the tribunal within the statutory limits and could restrain it from exercising jurisdiction in a manner inconsistent with the Act.
Conclusion:
The court quashed the impugned order of the RTA, holding that the tribunal was not properly constituted as per Section 44 of the Motor Vehicles Act. The quorum rule under Rule 67(5) was deemed inapplicable to the RTA's quasi-judicial functions. The matter was remanded to the RTA for a fresh decision in accordance with the law. The court issued a writ of certiorari and made the rule absolute with costs, directing the Corporation to pay the petitioner's costs. The stay order was extended for a fortnight from the date when certified copies were ready for delivery to the respondents.
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1968 (1) TMI 60
Issues Involved:
1. Validity of Rule 5 regarding reservation for socially and educationally backward classes.
2. Validity of Rule 8 regarding district-wise allocation of seats.
3. Procedure followed by the Selection Committee.
4. Allegations of mala fide actions in the selection process.
5. Compliance with University Act and Rules.
Detailed Analysis:
1. Validity of Rule 5 Regarding Reservation for Socially and Educationally Backward Classes:
The first challenge is to Rule 5 on the ground that it violates Article 15 of the Constitution. Article 15 forbids discrimination against any citizen on the grounds only of religion, race, caste, sex, place of birth, or any of them. At the same time, Article 15(4) permits the State to make any special provision for the advancement of any socially and educationally backward classes of citizens. The contention is that the list of socially and educationally backward classes for whom reservation is made under Rule 5 is nothing but a list of certain castes. Therefore, reservation in favor of certain castes based only on caste considerations violates Article 15(1), which prohibits discrimination on the ground of caste only.
The Court observed that if the reservation had been based only on caste and had not taken into account the social and educational backwardness of the caste in question, it would be violative of Article 15(1). However, a caste can also be a class of citizens, and if the caste as a whole is socially and educationally backward, reservation can be made in favor of such a caste under Article 15(4). The State of Madras provided a historical context showing that the list of backward classes was based on social and educational backwardness, not solely on caste. Since the petitioners did not provide evidence to the contrary, the Court concluded that the list of castes included those that were socially and educationally backward. Therefore, the challenge to Rule 5 failed.
2. Validity of Rule 8 Regarding District-wise Allocation of Seats:
The next attack is on Rule 8, which provides for district-wise distribution of seats according to the population of the district. This is attacked on the grounds that it violates Articles 14 and 15 of the Constitution. It is urged that the provision for "nativity claimed" in the form is a camouflage for discriminating on the ground of place of birth, violating Article 15(1). The Court found the provisions for nativity certificate complicated and confusing but did not find a clear violation of Article 15(1) since the district a candidate may claim does not depend on the place of birth.
The alternative argument is that district-wise distribution violates Article 14 because it denies equality before the law or equal protection of the laws. The object of selection is to secure the best possible talent for admission to medical colleges. The Court found that district-wise allocation could result in discrimination, as better-qualified candidates from one district might be rejected while less qualified candidates from another district might be admitted. The State of Madras' justifications for district-wise allocation, such as better educational facilities in Madras city and ensuring medical help in all districts, were found insufficient. Therefore, the Court struck down Rule 8 as violative of Article 14.
3. Procedure Followed by the Selection Committee:
The procedure evolved by the Selection Committee for interviews was also challenged. The Court noted that it looked odd that the members of the selection committee should sit separately, but did not decide the point finally. The Court did not find any substance in the argument that there was no objective test provided for making selections, as Rule 10(d) indicated the criteria for allotting marks. The Court was not prepared to accept that the committee did not follow the criteria indicated in Rule 10(d).
4. Allegations of Mala Fide Actions in the Selection Process:
The allegations of mala fide actions included claims that the official members of the Selection Committees contrived to get caste representation in the matter of selection and that mark-sheets were destroyed after the selection. The Court found no proof of these allegations and did not accept that the selection was done mala fide. The destruction of mark-sheets was noted as odd, but it did not lead to an inference of mala fide selection. Therefore, the ground of mala fide actions failed.
5. Compliance with University Act and Rules:
In the civil appeal, an argument was raised based on Article 21, which deals with the protection of life and personal liberty. The Court did not allow this point to be developed as it was not raised before the Division Bench of the High Court. The only point urged before the Division Bench was regarding the eligibility and qualification of candidates for admission to medical colleges under the University Act. The Court found no substance in this contention, as the rules of eligibility and qualification framed by the University were followed, and the Government was entitled to frame rules for admission to its colleges.
Conclusion:
The petitions and the civil appeal were partly allowed. Rule 8, which deals with district-wise allocation, was struck down. The selection for the current year was not disturbed, but Rule 8 will not be enforced in future selections. The petitioners/appellant were awarded costs, one set of hearing fee.
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1968 (1) TMI 59
Issues Involved:
1. Whether the terms of a special contract between an employee and employer can prevail over the standing orders of the company.
Issue-wise Detailed Analysis:
1. Conflict Between Special Contract and Standing Orders:
The primary issue addressed in this judgment is the conflict between the terms of a special contract of service and the standing orders of the company. The court was tasked with determining which would prevail in the event of such a conflict.
The appellant was terminated from his position based on a special contract, but the Labour Court found this termination unjustified as it did not comply with the standing orders. The company argued that the special contract should prevail over the standing orders.
2. Legal Framework and Interpretation:
The court examined the Industrial Employment (Standing Orders) Act, 1946, which requires employers to define employment conditions with sufficient precision and make them known to employees. The court emphasized that the standing orders are meant to be binding rules, providing a statutory framework for employment conditions.
Sections 1, 2(g), 3, 4, 6, 8, 10, 11, 12, 13, and 13A of the Act were scrutinized to underline the mandatory nature of standing orders. The court highlighted that these orders are not merely contractual but have the force of law, and any modification must follow the statutory procedure.
3. Judicial Precedents:
Several Supreme Court decisions were cited to support the binding nature of standing orders. In Guest, Keen, Williams (Private), Ltd. v. P.J. Sterling, the Supreme Court assumed that employers and employees could not escape the provisions of standing orders outside statutory provisions. Similarly, in Bagalket Cement Co. Ltd. v. B.K. Pathan and Ors., the court emphasized that the standing orders constitute statutory terms of employment.
The court also referenced the Gujarat High Court's decision in Tata Chemicals, Ltd. and Ors. v. Kailash C. Adhuaryu, which held that standing orders are binding and cannot be overridden by special contracts.
4. Statutory Nature of Standing Orders:
The court concluded that standing orders, once certified, become statutory rules governing the relationship between employers and employees. They cannot be modified or bypassed by special agreements unless done in accordance with the Act's provisions. This ensures a uniform and fair application of employment conditions, preventing arbitrary deviations.
5. Principle of Law Over Contract:
The court reiterated the principle that statutory provisions override contractual agreements. It stated that there is no freedom to contract out of statutory terms, and any contract conflicting with standing orders would be invalid under Section 23 of the Contract Act, which invalidates agreements that defeat the provisions of any law.
Conclusion:
The court concluded that the terms of a standing order would prevail over the terms of a contract that conflicts with the standing order. This ensures that the statutory framework provided by the standing orders remains intact and enforceable, promoting fairness and consistency in employment conditions.
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1968 (1) TMI 58
Issues:
1. Rejection of nomination paper by Returning Officer.
2. Interpretation of s. 36(2) of the Representation of the People Act, 1951.
3. Requirement of making and subscribing oath or affirmation under Art. 173 of the Constitution.
4. Timing of taking oath or affirmation by a candidate.
5. Legal implications of the term "on the date fixed for scrutiny."
Analysis:
The case involved an appeal under s. 116A of the Representation of the People Act, 1951, challenging the rejection of a nomination paper by the Returning Officer for the Bihar Legislative Assembly election. The key issue was whether the candidate was required to make and subscribe the oath or affirmation before the date fixed for scrutiny of nomination papers. The High Court upheld the rejection, stating that the candidate was not qualified under Art. 173 of the Constitution as he had not taken the requisite oath before scrutiny.
The interpretation of s. 36(2) of the Act was crucial in determining the timing of taking the oath or affirmation. The section allows the rejection of a nomination if the candidate is not qualified under Art. 173 on the date fixed for scrutiny. The candidate argued that he could take the oath immediately before objections were considered, but the court held that the qualification must exist from the start of the scrutiny day.
The requirement of making and subscribing the oath or affirmation under Art. 173 was a central point of contention. The form of oath specified in the Constitution indicated that it should be done after nomination. The court emphasized that none of the Act's sections mandated attaching the oath to the nomination paper, and the oath could not be taken before being nominated as a candidate.
The judgment delved into the legal implications of the term "on the date fixed for scrutiny," emphasizing that the candidate must be qualified from the beginning of the scrutiny day. Referring to legal precedents and the Conduct of Elections Rules, the court rejected the argument that the oath could be taken on the scrutiny date. The decision highlighted the importance of adhering to the legal requirements and dismissed the appeal, affirming the rejection of the nomination paper.
In conclusion, the Supreme Court dismissed the appeal, upholding the rejection of the nomination paper and emphasizing the necessity for candidates to fulfill the qualification criteria, including making and subscribing the oath or affirmation as per the Constitution, before the commencement of the scrutiny of nomination papers. The judgment clarified the timing requirements for candidates to meet the eligibility criteria under the Representation of the People Act, 1951.
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1968 (1) TMI 57
Issues Involved:
1. Seniority and promotion of Regional Transport Officers to Deputy Transport Commissioners.
2. Applicability and effect of rules under Article 309 of the Constitution.
3. Validity of promotions under the Andhra Pradesh Transport Service Rules.
4. Timing of the effectiveness of subordinate legislation.
Issue-Wise Detailed Analysis:
1. Seniority and Promotion of Regional Transport Officers to Deputy Transport Commissioners
The petitioner, along with respondents 2, 3, and 4, were Regional Transport Officers before 22nd November 1966. The petitioner was senior to respondents 2, 3, and 4 on that date. On 22nd November 1966, the second respondent was promoted as Deputy Transport Commissioner by G.O.Ms. No. 2516, and on 24th March 1967, the third respondent was promoted as Deputy Transport Commissioner by G.O.Ms. No. 532. Both promotions were on a regular basis. The promotions of respondents 2 and 3 made on a regular basis are the subject-matter of this writ petition. The petitioner contends that his seniority should have been considered for promotion over respondents 2 and 3.
2. Applicability and Effect of Rules Under Article 309 of the Constitution
The posts of Deputy Transport Commissioners were sanctioned by G.O.Ms. No. 1257, dated 3rd June 1960, and rules were made under the proviso to Article 309 of the Constitution by G.O.Ms. No. 660, dated 31st March 1961. These rules stated that appointments to the post of Deputy Transport Commissioners shall be made by promotion from among the Assistant Secretaries, State Transport Authority, or the Regional Transport Officers. Promotion was to be made on grounds of merit and ability, with seniority considered only where merit and ability were approximately equal. G.O.Ms. No. 660 was superseded by G.O.Ms. No. 1238, dated 28th June 1963, which made the Andhra Pradesh Transport Service Rules, 1958 applicable to the posts of Deputy Transport Commissioners.
3. Validity of Promotions Under the Andhra Pradesh Transport Service Rules
The promotion of the second respondent was based on the rules in force at the time, which considered merit and ability over seniority. The promotion of the third respondent on 24th March 1967 was questioned by the petitioner on the grounds that it contravened rule 34(b)(ii) of the Andhra Pradesh State and Subordinate Service Rules, which required promotions to be made according to seniority unless there was conspicuous merit and ability. The counter-affidavit by the Government stated that the third respondent was promoted on grounds of conspicuous merit and ability, but the petitioner argued that this statement was an afterthought and not considered by the authorities at the time of promotion.
4. Timing of the Effectiveness of Subordinate Legislation
The third respondent contended that the new rules came into force only on 6th April 1967, the date of publication in the Andhra Pradesh Gazette, making his promotion on 24th March 1967 valid under the old rules. The court had to determine whether rules made under Article 309 of the Constitution take effect from the date of the Government Order or from the date of publication in the Official Gazette. The court referred to various judgments, including State of Maharashtra v. Mayer Hans George and Harla v. State of Rajasthan, to conclude that subordinate legislation of a general nature takes effect on the date when it is published in the Official Gazette unless the statute provides otherwise. In this case, the Andhra Pradesh Transport Service Rules, 1967, became effective on 6th April 1967, the date of publication in the Gazette. Therefore, the promotion of the third respondent was valid under the old rules.
Conclusion
The court concluded that the promotion of the third respondent was valid as it was made under the old rules before the new rules came into effect on 6th April 1967. The writ petition was dismissed with costs.
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1968 (1) TMI 56
Issues Involved:
1. Jurisdiction of the High Court to entertain the writ petition.
2. Validity of the Cane Commissioner's order modifying the reservation of villages.
3. Impact of the impugned order on the petitioner's contracts.
4. Relevance of the Joint Sugarcane Board's decision.
Detailed Analysis:
1. Jurisdiction of the High Court to entertain the writ petition:
The primary issue addressed is whether the Allahabad High Court has jurisdiction to entertain the writ petition filed by the petitioner. The court noted that under Clause (1-A) of Article 226 of the Constitution, a High Court can issue writs to any government, authority, or person within its territorial jurisdiction if the cause of action, wholly or in part, arises within those territories. The petitioner argued that the cause of action arose in Uttar Pradesh because their factory is located there, and they received the communication of the Cane Commissioner's order at their factory. However, the court found that the impugned order was passed in Bihar, and both the person making the order and the subject matter (the 208 villages) were situated outside Uttar Pradesh. The court concluded that no part of the cause of action arose within Uttar Pradesh, thus dismissing the petition on the preliminary ground of lack of jurisdiction.
2. Validity of the Cane Commissioner's order modifying the reservation of villages:
The petitioner challenged the Cane Commissioner's order dated 14th November 1967, which modified an earlier order and reduced the number of reserved villages from 208 to 109 for the petitioner's factory. The court examined the provisions of the Sugarcane (Control) Order, 1966, particularly Clause 6(1)(a), which allows the reservation of areas for factories. The court noted that the Cane Commissioner's order was issued in exercise of delegated powers from the Central Government. The court did not find any legal infirmity in the Cane Commissioner's order, as it was within the scope of the delegated authority.
3. Impact of the impugned order on the petitioner's contracts:
The petitioner argued that the modification of the reservation order frustrated their contracts with cooperative societies for the supply of sugarcane. The court examined Clause 6 of the Sugarcane (Control) Order, 1966, which outlines the powers to regulate the distribution and movement of sugarcane. The court concluded that a reservation order under Clause 6(1)(a) does not create an obligation for sugarcane growers to supply sugarcane to a factory. Such an obligation arises only under Clause 6(1)(c) or (d), which were not invoked in this case. Therefore, the modification of the reservation order did not affect the enforceability of the petitioner's contracts.
4. Relevance of the Joint Sugarcane Board's decision:
The petitioner contended that the impugned order violated a decision of the Joint Sugarcane Board, which allegedly reserved 208 villages for the petitioner factory. The court found that the Joint Sugarcane Board was not a statutory body recognized by law. The Sugarcane (Control) Order, 1966, and other relevant laws only recognized the State Governments and Cane Commissioners as the authorities to make such orders. The court held that any informal decision of the Joint Sugarcane Board did not have the force of law and could not be enforced in a court of law. Consequently, no cause of action arose from the alleged infringement of the Joint Sugarcane Board's decision.
Conclusion:
The court dismissed the writ petition on the preliminary ground of lack of jurisdiction, as no part of the cause of action arose within the territories of Uttar Pradesh. The petitioner was ordered to pay costs to respondents nos. 1, 2, and 9, while other parties were to bear their own costs.
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1968 (1) TMI 55
Issues:
1. Conviction under paragraphs 76(c) and (e) of the Employees Provident Fund Scheme 1952.
2. Interpretation of the provisions of the Employees Provident Fund Act, 1952.
3. Claim of exemption under the Act for a period of five years.
4. Application of s. 16 of the Act to the establishments in question.
Analysis:
The appellant, the proprietor of two establishments, was convicted for failing to submit required documents under the Employees Provident Fund Scheme 1952. The complaint alleged contravention of specific provisions regarding employee returns and contributions. The appellant claimed exemption under the Act for five years and argued that the establishments formed separate units. The High Court and Magistrate rejected his defenses, leading to the appeal.
The Employees Provident Fund Act applies to establishments with 20 or more employees, as specified in the Act. The Act does not apply to certain establishments for a specified period, as outlined in s. 16. The appellant claimed exemption based on the provisions of s. 16, asserting that the establishments could not be subjected to the Act until five years had passed from the commencement of Hotel Brinda.
The appellant's argument, emphasizing the continuity of employment over the initial number reached, was deemed inadmissible. The Court emphasized the precise language of s. 16, noting that the clause covers both new and existing establishments. The purpose of the exemption period under s. 16 is to provide new establishments with a grace period, which does not apply to well-established establishments. The interpretation of the provision in conjunction with the Scheme's requirements indicates that the exemption period does not extend to established businesses. The Court upheld the decision of the High Court, dismissing the appeals.
In conclusion, the Court affirmed the conviction under the Employees Provident Fund Scheme 1952 and clarified the application of s. 16 of the Act to the establishments in question. The appellant's claim for exemption for a further five-year period was rejected based on the interpretation of the relevant provisions. The judgment underscores the distinction between new and established establishments regarding the applicability of the Act and Scheme requirements.
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1968 (1) TMI 54
Issues:
1. Whether the judgment of the High Court in the writ petition operated as res judicata in the Civil Suit filed by Nanak Singh.
2. Whether the termination of employment of Nanak Singh amounted to dismissal and if the Officer had the authority to terminate the employment.
Analysis:
1. The first issue in this case revolves around the application of res judicata. Nanak Singh filed a Civil Suit claiming relief based on two grounds - infringement of Art. 311 of the Constitution and absence of authority in the Officer who terminated his employment. The High Court, after reversing the judgment of the lower court, dismissed the petition filed by Nanak Singh, thereby rejecting both grounds. The Court held that the High Court's decision in the writ petition operated as res judicata in the Civil Suit, as the High Court's dismissal of the petition implied a rejection of both grounds raised by Nanak Singh.
2. The second issue pertains to whether the termination of Nanak Singh's employment amounted to dismissal and if the Officer had the authority to terminate the employment. The High Court provided detailed reasons to conclude that the termination did not constitute punishment. The Court also addressed the authority of the Officer who terminated the employment. Despite an obscure statement in the Court of Appeal's judgment, the Court held that the High Court's dismissal of the petition must be deemed as a negation of the authority issue as well. The Court emphasized that the decision itself, not the reasons given, operates as res judicata. The judgment highlighted that the High Court's dismissal of the petition precludes Nanak Singh from re-litigating the authority issue.
3. The Court referred to the principle of res judicata, emphasizing that any previous decision on a matter in controversy, decided after a fair opportunity for both parties to present their case, will operate as res judicata in subsequent suits. The Court clarified that the High Court's decision in the previous case operated as res judicata, as the authority issue was heard and decided by the lower court. The Court distinguished this case from precedent where disputes were not decided on their merits, emphasizing that in this instance, the authority issue was conclusively addressed by the lower court.
4. Ultimately, the Court allowed the appeal, setting aside the High Court's decree and restoring the decree of the Court of First Instance. The Union of India was directed to pay the costs of the appeal. The judgment reaffirmed that the High Court's dismissal of the petition precluded further litigation on the grounds raised by Nanak Singh, including the authority issue regarding the termination of his employment.
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1968 (1) TMI 53
Issues Involved:
1. Scope of entries 77 and 78 in List I and entry 26 in List III of the Seventh Schedule to the Constitution.
2. Validity of Section 38 of the Advocates Act, 1961.
3. Validity of Rule 7 of Order 5 of the Supreme Court Rules.
Issue-wise Detailed Analysis:
1. Scope of Entries 77 and 78 in List I and Entry 26 in List III of the Seventh Schedule to the Constitution:
The appellant contended that Section 38 of the Advocates Act was ultra vires Article 138(2) of the Constitution, arguing that the appellate jurisdiction conferred by Section 38 fell under entry 26 in List III, necessitating a special agreement between the Government of India and the State Government. The court examined the scope of entries 77 and 78 in List I and entry 26 in List III. It concluded that entries 77 and 78 in List I deal with the constitution, organization, jurisdiction, and powers of the Supreme Court and High Courts, including persons entitled to practice before them. The court held that the Advocates Act, in its pith and substance, concerns the qualifications, enrolment, right to practice, and discipline of advocates, thus falling under entries 77 and 78 of List I and not under entry 26 of List III. Therefore, the Act does not require a special agreement under Article 138(2).
2. Validity of Section 38 of the Advocates Act, 1961:
The appellant argued that Section 38 of the Advocates Act was invalid as it was enacted without a special agreement with the State Government, as required by Article 138(2) of the Constitution. The court rejected this contention, stating that the jurisdiction to hear appeals under Section 38 was already vested in the Supreme Court under Article 136, as the Bar Councils of Delhi and India are quasi-judicial tribunals. The court further clarified that Section 38 merely removed the need for obtaining special leave under Article 136, thus not constituting "further jurisdiction" within the meaning of Article 138. Consequently, Section 38 was held to be valid.
3. Validity of Rule 7 of Order 5 of the Supreme Court Rules:
The appellant contended that Rule 7 of Order 5 of the Supreme Court Rules was ultra vires Section 38 of the Advocates Act, as it impaired his right of appeal. The court noted that this contention had already been raised and rejected in a review petition filed by the appellant. The court emphasized that Rule 7 merely provides for the preliminary hearing of an appeal and enables the court to dismiss it if found unsubstantial. The rule does not curtail the right of appeal under Section 38, as the appellant is heard on all points raised. The court held that Rule 7 falls within the rule-making power of the Supreme Court under Article 145(1)(b) and does not affect the right of appeal. Therefore, the validity of Rule 7 was upheld.
Conclusion:
The court dismissed the appeal, holding that the Advocates Act falls under entries 77 and 78 of List I, making Section 38 valid without requiring a special agreement under Article 138(2). Additionally, Rule 7 of Order 5 of the Supreme Court Rules was found to be valid and within the court's rule-making powers. The appellant's contentions were rejected, and the appeal was dismissed with costs.
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1968 (1) TMI 52
Issues:
- Deductibility of professional tax under Section 150A of the Bihar and Orissa Municipal Tax Act, 1922, under the Indian Income-Tax Act, 1922.
Analysis:
1. The case involved the question of whether a sum of Rs. 125 paid by the assessee as professional tax under Section 150A of the Bihar and Orissa Municipal Tax Act, 1922, was allowable under the Indian Income-Tax Act, 1922. The assessee claimed deduction of this amount for the assessment year of 1961-62, which was disallowed by the Income-tax Officer and the Appellate Assistant Commissioner but allowed by the Income Tax Appellate Tribunal.
2. The Income Tax Appellate Tribunal accepted the contention that the tax paid to the municipality was not a personal tax on profits or gains but a tax paid under specific provisions of the Municipal Act related to the premises where the business was carried on. The Tribunal referred the question to the High Court for its opinion.
3. The provisions of the Bihar and Orissa Municipal Act, 1922, empower the Municipality to impose a tax on trades, professions, callings, and employments specified in the Fourth Schedule. Section 150A of the Municipal Act requires individuals to take out a half-yearly license for carrying on specified professions and pay the assessed tax. The provisions also include exemptions based on taxable income, valuation of business premises, and income from employment.
4. The Fourth Schedule of the Municipal Act outlines different classes and maximum half-yearly taxes based on the valuation of business premises. The tax is not directly linked to profits or gains but to the valuation of the premises where the business is conducted. The payment of this tax is considered essential for carrying on business within the municipal limits.
5. The provisions clearly indicate that the tax payment is graduated based on the valuation of business premises, and the assessee falls within a specific category under the Fourth Schedule, justifying the tax payment made.
6. Section 10 of the Indian Income-tax Act, 1922, allows for deductions of sums paid on account of land-revenue, local rates, or municipal taxes in respect of premises used for business. However, Sub-section (4) specifies that sums paid on account of any tax levied on profits or gains of a business are not deductible. In this case, the tax paid was not on profits or gains but for carrying on the business in specific premises, making it deductible.
7. The High Court held that the payment made by the assessee as professional tax under the Municipal Act was in substance a municipal tax in respect of the business premises and fell under the deduction allowed by Section 10(1) of the Income-tax Act. Therefore, the assessee was entitled to the allowance for the sum paid.
8. The Court answered the question in the affirmative, ruling in favor of the assessee and allowing the deduction of Rs. 125 paid as professional tax. The judgment highlighted the distinction between taxes on profits or gains and taxes related to the premises used for business, clarifying the deductibility under relevant provisions of the Income-tax Act.
9. The Court awarded costs to the assessee, affirming the decision of the Income Tax Appellate Tribunal to allow the deduction.
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1968 (1) TMI 51
Issues Involved:
1. Validity of the gift deed (Ex. 45) executed by the appellant.
2. Allegation of fraud and undue influence in the execution of the gift deed.
3. Applicability of the Limitation Act concerning the suit for setting aside the gift deed.
Issue-wise Detailed Analysis:
1. Validity of the Gift Deed (Ex. 45):
The appellant sought a decree for possession of properties, claiming ownership despite the gift deed executed on January 16, 1938. The properties in question included plots 91 and 92 of Lingadahalli village and plots 407/1 and 409/1 of Tadavalga village. The appellant contended that the gift deed was executed under undue influence and fraud by her husband, Shiddappa, who dominated her will. The trial court found that the gift deed was obtained by undue influence and fraud but dismissed the suit for plots 407/1 and 409/1 due to the limitation period. The High Court dismissed the suit entirely, holding that the fraud was not established for plots 91 and 92 and that the suit was barred by limitation for plots 407/1 and 409/1.
2. Allegation of Fraud and Undue Influence:
The appellant argued that her husband fraudulently included plots 91 and 92 in the gift deed without her knowledge. The trial court supported this claim, noting the appellant's illiteracy, ignorance, and her husband's dominant position. The gift deed was grossly undervalued, and there was no reason for the appellant to transfer valuable lands inherited from her father to her husband. The High Court's reliance on the attesting witness Bhimarao's testimony was questioned, as he was not a disinterested witness. The Supreme Court agreed with the trial court, concluding that the appellant never intended to convey plots 91 and 92 and that they were included in the gift deed by fraud.
3. Applicability of the Limitation Act:
a. Plots 91 and 92 of Lingadahalli Village:
The respondents argued that the suit was barred by limitation under Article 95 of the Limitation Act, which prescribes a three-year period from when the fraud becomes known. The appellant claimed she only discovered the fraud after her husband's death in 1949. The trial court found this claim credible, as the appellant lived amicably with her husband until his death and had no reason to suspect fraud. The Supreme Court held that the suit was filed within the prescribed time under Article 95, as the appellant acted promptly upon discovering the fraud.
b. Plots 407/1 and 409/1 of Tadavalga Village:
The trial court found that the appellant's husband dominated her will and obtained the gift deed through undue influence. However, the suit was dismissed under Article 91 of the Limitation Act, which prescribes a three-year period from when the facts entitling the plaintiff to have the instrument canceled are known. The appellant knew about the undue influence at the time of the gift deed's execution. The Supreme Court upheld this finding, stating that the limitation period began when the appellant discovered the true nature of the deed, not when she escaped her husband's influence.
Conclusion:
The Supreme Court allowed the appeal, granting the appellant a decree that the gift deed (Ex. 45) was not binding concerning plots 91 and 92 of Lingadahalli village. The appellant was entitled to recover possession of these plots with mesne profits. The decree of the High Court was set aside, and the decree of the Civil Judge, Senior Division, Bijapur, was restored. The suit concerning plots 407/1 and 409/1 of Tadavalga village remained barred by limitation. The appeal was allowed with costs.
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1968 (1) TMI 50
Issues Involved:
1. Applicability of Section 17 of the Madhya Bharat Abolition of Jagirs Act.
2. Jurisdiction to determine whether tanks and wells are on 'occupied land'.
3. Entitlement to compensation for tanks and wells under the Madhya Pradesh Land Revenue Code, 1959.
4. Authority of administrative bodies versus High Court's jurisdiction.
Issue-wise Detailed Analysis:
1. Applicability of Section 17 of the Madhya Bharat Abolition of Jagirs Act:
The appellants argued that the High Court erred in holding that Section 17 of the Abolition Act was applicable to the case and that the Jagir Commissioner alone had the authority to inquire into the respondent's claim under Section 5(c). The Supreme Court agreed, stating that Section 17 only pertains to disputes about jagirdari title or rights in jagir lands already resumed under Section 3. It is meant for inquiries related to compensation payable to the jagirdar and does not extend to disputes about whether certain properties fall under Section 4(1)(a) read with Section 5. The High Court was incorrect in applying Section 17 to this case.
2. Jurisdiction to Determine Whether Tanks and Wells are on 'Occupied Land':
The High Court should have determined whether the tanks and wells claimed by the respondent were on 'occupied land' as defined under Section 5(c) of the Abolition Act. The Supreme Court emphasized that if the respondent's claim was substantiated, the appellants had no authority to take possession of the tanks and wells, as they would not vest in the State Government. The High Court should have assessed this jurisdictional fact and, if necessary, issued a writ under Article 226 of the Constitution to direct the appellants to hand over possession to the respondent.
3. Entitlement to Compensation for Tanks and Wells under the Madhya Pradesh Land Revenue Code, 1959:
The respondent had applied for compensation under Section 251 of the M.P. Land Revenue Code, 1959, claiming that the tanks were built by him and his predecessor. Initially, compensation was determined but later canceled by the Sub-Divisional Officer. Subsequent appeals were dismissed on the grounds that the tanks were not situated on 'occupied land'. The High Court quashed these orders, suggesting that the Jagir Commissioner should decide the matter. However, the Supreme Court clarified that the High Court itself should decide the jurisdictional fact about the nature of the land.
4. Authority of Administrative Bodies versus High Court's Jurisdiction:
The Supreme Court reiterated that where the jurisdiction of an administrative authority depends on a preliminary finding of fact, the High Court is entitled to independently determine whether that finding is correct. This principle ensures that inferior tribunals do not usurp jurisdiction they do not possess or refuse to exercise jurisdiction they have. The High Court should have exercised its jurisdiction to review the administrative decisions regarding the tanks and wells.
Conclusion:
The Supreme Court allowed the appeal, set aside the High Court's judgment, and remanded the case for fresh consideration. The High Court was directed to decide the matter afresh, taking further evidence if necessary, to determine whether the tanks and wells were on 'occupied land' and whether the respondent was entitled to compensation. The parties were to bear their own costs up to that stage.
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1968 (1) TMI 49
Issues Involved:
1. Whether the applicants, as motion picture producers, are considered "dealers" under section 2(11) of the Bombay Sales Tax Act, 1959.
2. Whether the activity of producing motion pictures constitutes a business activity under the Act.
3. Whether the purchase of raw films by the applicants qualifies as a purchase in the course of business.
4. Whether cinematograph films produced by the applicants are considered goods and if they are saleable commodities.
Issue-wise Detailed Analysis:
1. Whether the applicants, as motion picture producers, are considered "dealers" under section 2(11) of the Bombay Sales Tax Act, 1959:
The Sales Tax Tribunal referred the question to the High Court to determine if the applicants, as motion picture producers, qualify as "dealers" under the Act. The Tribunal concluded that the applicants' activity of purchasing raw films for producing motion pictures constituted a business activity. The Tribunal observed that the definition of "dealer" does not require the person to carry on both buying and selling of goods. The High Court agreed that the applicants are engaged in a business activity but left the final determination contingent upon whether the cinematograph films are saleable commodities.
2. Whether the activity of producing motion pictures constitutes a business activity under the Act:
The applicants argued that producing motion pictures is not a business activity but rather a creation of a work of art. The Tribunal and the High Court, however, rejected this argument. The High Court noted that the production of films with the ultimate objective of earning profit qualifies as a business activity. It emphasized that the term "business" implies a continuous course of activities carried out for commercial purposes with an intention to earn profit.
3. Whether the purchase of raw films by the applicants qualifies as a purchase in the course of business:
The High Court examined whether the purchase of raw films by the applicants was in the course of business. The applicants contended that they do not sell the films they produce and, therefore, should not be considered as engaging in the business of buying raw films. The High Court referred to the Supreme Court decision in H. Abdul Bakshi and Bros., which held that a person who consumes a commodity bought by him in the course of his trade or uses it in manufacturing another commodity for sale would be regarded as a dealer. The High Court concluded that the purchase of raw films by the applicants for producing motion pictures, which are then distributed for profit, constitutes a business activity.
4. Whether cinematograph films produced by the applicants are considered goods and if they are saleable commodities:
The High Court noted that the applicants do not sell the films but enter into agreements for distribution and exhibition. The Court emphasized that the determination hinges on whether the films are saleable commodities. If the films are found to be saleable, the applicants would be considered dealers under the Act. The Court left this factual determination to the authorities, stating that the applicants would be considered dealers if the films are found to be saleable commodities.
Conclusion:
The High Court concluded that the applicants would be considered dealers under section 2(11) of the Bombay Sales Tax Act, 1959, if the cinematograph films produced by them are found to be saleable commodities. The matter was remitted to the authorities for a determination on whether the films are saleable. No order as to costs was made, and the fee of Rs. 100 was forfeited to the Government.
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1968 (1) TMI 48
Issues:
1. Competence of the Commercial Tax Officer to commence a proceeding under section 12-A of the Mysore Sales Tax Act.
2. Validity of the reassessment made by the Commercial Tax Officer based on the total power consumed by the petitioner in various business activities.
Detailed Analysis:
1. Competence of the Commercial Tax Officer:
The petitioner challenged the competence of the Commercial Tax Officer to initiate a proceeding under section 12-A of the Mysore Sales Tax Act, arguing that only assessing, appellate, or revising authorities could do so. The petitioner contended that the Commercial Tax Officer did not fall under any of these categories. However, the court did not delve into the sustainability of this argument, as it found other grounds to set aside the orders made by the Commercial Tax Officer.
2. Validity of Reassessment Based on Power Consumption:
The Commercial Tax Officer proposed a reassessment based on the total power consumed by the petitioner in his oil-mill, hulling paddy, and flour manufacturing businesses. The officer suggested that 50% of the electrical energy was used for the oil-mill, leading to a reassessment of the turnover. The petitioner disputed this, claiming that a higher percentage of energy was used for hulling operations and flour manufacturing. The court noted that while best judgment assessments involve some guesswork, they must be rational and supported by material. The Commercial Tax Officer's reassessment lacked disclosure of the basis for the estimate and failed to provide supporting material for the allocation of power consumption among the different business activities. The court emphasized that the burden of proof to establish escaped turnover lies with the tax authority, and it cannot shift entirely to the taxpayer based solely on the officer's proposal. Consequently, the court found the reassessment unsustainable due to lack of rational basis and material support.
In conclusion, the court allowed the petition, setting aside the orders made by the Commercial Tax Officer, Deputy Commissioner, and Sales Tax Appellate Tribunal in all three cases, without issuing any direction regarding costs.
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1968 (1) TMI 47
Issues:
1. Rejection of account books and turnover enhancement
2. Imposition of purchase tax on lease money for forest coupes
Analysis:
Issue 1: Rejection of account books and turnover enhancement
The case involved the rejection of the assessee's account books and the subsequent enhancement of turnover. The turnover was increased from Rs. 85,633.03 to Rs. 87,000 for one period and from Rs. 90,017.05 to Rs. 92,000 for another period. The assessing officer did not accept the account books due to discrepancies in the sales of timber and ballis. The assessing officer imposed purchase tax based on the lease money paid by the assessee for the purchase of forest coupes. The assessee challenged these decisions, leading to the reference before the court.
In addressing the first question, the court compared the facts of this case with previous cases involving similar issues between the same parties. The court noted that the enhancement of turnover was slight and primarily due to discrepancies in the sales of timber. Drawing from precedent, the court affirmed the rejection of the account books and the turnover enhancement, citing similarities with previous judgments involving the parties.
Issue 2: Imposition of purchase tax on lease money for forest coupes
Regarding the second question, the court analyzed whether the imposition of purchase tax on the lease money paid for forest coupes was justified under section 8(1) of the M.P. General Sales Tax Act. The court examined the nature of the goods sold by the assessee, particularly timber and ballis. The court concluded that the goods sold by the assessee retained their character as timber and did not transform into "other goods" through the process of felling, cutting, and conversion. The court referenced a previous judgment to support its opinion that the conversion of standing timber trees into logs or rafters did not change their fundamental character as timber, thereby rejecting the imposition of purchase tax under section 8(1) of the Act.
In conclusion, the court answered both questions in favor of upholding the rejection of account books and turnover enhancement while rejecting the imposition of purchase tax on the lease money for forest coupes. The court directed that each party bear their own costs in relation to the reference.
This detailed analysis highlights the court's reasoning and application of legal principles in addressing the issues raised in the case before the Madhya Pradesh High Court.
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1968 (1) TMI 46
Issues Involved:
1. Whether the contract dated 10th June, 1958, was a composite and divisible contract.
2. Whether the contract was an indivisible contract for work and labour.
Detailed Analysis:
Issue 1: Composite and Divisible Contract
The applicants contended that the contract was an indivisible lump sum contract for the supply and installation of two lifts. They argued that the materials furnished were only in execution of the works contract and there was no sale of any goods and materials. The Deputy Commissioner concluded that the contract was one and indivisible of lump sum value, but its essence was the transfer of property in the goods for money consideration, thus involving a sale of lifts. The Tribunal upheld this view, stating that the contract was composite and divisible, one for the sale of goods and the other for labour and service charges for installation.
The Tribunal observed that the intention of the parties, as reflected in the contract and surrounding circumstances, indicated a composite and divisible contract. The Tribunal noted that the price of the materials supplied was subject to adjustment, which suggested a sale of goods. The Tribunal also highlighted that the value of the materials was 80%, while the labour charges were 20%, indicating a sale of goods.
Issue 2: Indivisible Contract for Work and Labour
The applicants argued that the contract was for the erection and installation of lifts, not for the sale of materials. They emphasized that the contract terms and the surrounding circumstances indicated an indivisible works contract. The High Court examined the terms of the contract, noting that it was for "Otis Electric Traction Elevator Installation" and involved detailed specifications and installation requirements. The contract included provisions for maintenance and required the building contractors to do preparatory work.
The High Court found that the contract was not merely for the sale of lifts but for their erection and installation. The Court noted that the applicants were not engaged in the business of selling lifts but in manufacturing and installing them. The Court emphasized that the contract was for an all-inclusive price for the totality of materials and services, and the property in the goods was to pass only upon final payment and completion of installation. The Court concluded that the contract was indivisible and not capable of severance into separate contracts for the sale of goods and services.
Conclusion:
The High Court answered the questions as follows:
1. Question 1: The Tribunal was not justified in holding that the contract was composite and divisible. The contract was found to be indivisible.
2. Question 2: The contract was one and indivisible for work and labour.
The High Court held that the contract dated 10th June, 1958, was a composite but indivisible contract for work and labour, and no sale of goods could be spelt out of the contract. The applicants were entitled to costs and a refund of the deposit amount.
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1968 (1) TMI 45
Issues:
1. Jurisdiction of the Commissioner of Sales Tax to revise an assessment after a significant period.
2. Interpretation of the powers of revision under section 22(5) of the C.P. and Berar Sales Tax Act.
3. Validity of the notice issued by the Commissioner of Sales Tax under section 39(2) of the Madhya Pradesh General Sales Tax Act.
4. Impact of the repeal of the C.P. and Berar Sales Tax Act on the revisionary powers of the Commissioner of Sales Tax.
Analysis:
1. The applicant, a P.W.D. contractor, sought relief through a writ petition under Article 226 challenging a notice issued by the Commissioner of Sales Tax, Madhya Pradesh. The notice aimed to enhance the tax payable by the applicant for a period dating back to 1954-55. The Court found that initiating revision proceedings after a lapse of nearly ten years from the original assessment was beyond the jurisdiction of the Commissioner of Sales Tax.
2. The Court delved into the provisions of the C.P. and Berar Sales Tax Act, specifically focusing on section 22(5) and section 11A. It was established that the power of revision under section 22(5) for enhancing tax could not be exercised after the expiry of the period specified under section 11A. The Court emphasized that revisionary powers cannot be invoked for turnovers falling within the ambit of section 11A.
3. The Court scrutinized the validity of the notice issued by the Commissioner of Sales Tax under section 39(2) of the Madhya Pradesh General Sales Tax Act. It was observed that the notice, issued beyond the permissible three-year limit from the date of the order sought to be revised, was invalid due to the non-existence of the revisionary power after the specified period.
4. Furthermore, the impact of the repeal of the C.P. and Berar Sales Tax Act on the revisionary powers of the Commissioner of Sales Tax was analyzed. The Court highlighted the legal fiction introduced by the new Act, deeming the original assessment to have been made under the new Act. This legal fiction, coupled with the preservation of rights and liabilities under the repealed Act, led to the conclusion that the applicant had acquired a right not to be reassessed after the expiration of the specified period.
In conclusion, the Court allowed the application, quashed the notice issued by the Commissioner of Sales Tax, and directed the Commissioner to refrain from acting on the notice. The judgment emphasized the limitations on revisionary powers and the significance of statutory timelines in tax assessment matters.
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1968 (1) TMI 44
Issues Involved:
1. Whether the Mahabaleshwar Club qualifies as a "dealer" under section 2(11) of the Bombay Sales Tax Act, 1959.
2. Whether there was any evidence to justify the finding that the motive of the Club was earning profit.
Issue-Wise Detailed Analysis:
1. Whether the Mahabaleshwar Club qualifies as a "dealer" under section 2(11) of the Bombay Sales Tax Act, 1959.
The primary issue revolves around the interpretation of the term "dealer" as defined in section 2(11) of the Bombay Sales Tax Act, 1959. The definition includes any person who carries on the business of buying or selling goods in the State, and extends to any society, club, or other association of persons which buys goods from, or sells goods to, its members. The court analyzed whether the activities of the Mahabaleshwar Club, an unincorporated body, fall under this definition.
The court emphasized that the definition of "dealer" in section 2(11) is in three parts:
1. A person who carries on the business of buying or selling goods.
2. The inclusion of the Central or any State Government which carries on such business.
3. Any society, club, or other association of persons which buys goods from, or sells goods to, its members.
The court considered whether the activities of buying or selling must be carried out as a business for unincorporated bodies to be classified as dealers. The court concluded that the last part of the definition, which includes societies, clubs, and other associations, must be read as governed by the verb "includes." This implies that the activities must have a commercial character and be carried out by way of business to be considered as a dealer.
The court rejected the argument that unregistered clubs or associations could be considered dealers even if their transactions with members were not conducted by way of business. The court highlighted that the legislative intent was to tax transactions with a commercial character, as evidenced by the requirement for dealers to be registered under the Act and the reference to "business" in section 22.
2. Whether there was any evidence to justify the finding that the motive of the Club was earning profit.
The court examined whether the Mahabaleshwar Club's activities of supplying articles like food, refreshments, and cigarettes to its members were carried out with the object of earning profit. The court noted that the Club's primary objective was to provide recreation for its members, not to engage in the business of selling goods for profit. The Club had consistently incurred losses in its catering activities since 1944.
The court acknowledged that some clubs might keep a margin over the cost price to cover overhead charges and wastage, but this alone does not indicate a profit-making motive. The court concluded that the Mahabaleshwar Club did not supply goods to its members by way of business and, therefore, was not a dealer under section 2(11) of the Act.
Conclusion:
The court answered the referred questions as follows:
1. The Mahabaleshwar Club is not a dealer within the meaning of section 2(11) of the Bombay Sales Tax Act, 1959.
2. The object of the Club in effecting supplies to its members was not one of earning profits.
The respondent was ordered to pay the costs of the reference, fixed at Rs. 250, and the deposit of Rs. 100 made by the applicant-Club was directed to be refunded. The reference was answered accordingly.
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1968 (1) TMI 43
Issues Involved:
1. Whether the Society is a dealer in respect of the purchase and supply of ice to its members.
2. Whether the activities of supply of ice by the Society to its members amount to sales.
Issue-Wise Detailed Analysis:
1. Whether the Society is a dealer in respect of the purchase and supply of ice to its members:
The applicant-Society, registered under the Bombay Co-operative Societies Act, 1925, is a body corporate whose object is to transport fish belonging to its members. The Society maintained a fleet of transport vehicles and purchased ice to preserve fish during transport, charging its members for the ice used. The Society had a surplus from these transactions in the year 1959-60. The Society contended that it was not liable for sales tax as it did not "sell" ice to its members and did not qualify as a "dealer" under section 2(11) of the Bombay Sales Tax Act, 1959.
The Deputy Commissioner of Sales Tax and the Sales Tax Tribunal held that the Society was a "dealer" and its supply of ice amounted to a sale. The Society appealed, and the High Court examined whether the Society fell within the definition of "dealer" under section 2(11) of the Act. The Court noted that the term "dealer" includes any society, club, or association that buys or sells goods to its members.
The Court analyzed the definition of "dealer" and concluded that the substantive opening part of the definition, which refers to any "person" carrying on the business of buying or selling goods, includes both natural persons and juristic persons like the applicant-Society. The Court referenced the Supreme Court's decision in The Deputy Commercial Tax Officer v. Enfield India Ltd. Co-operative Canteen Ltd., which held that a registered society is a body corporate and thus a "person" under the Act.
The Court determined that for a society to be considered a "dealer," it must carry on the activity in question as a business. The Court applied the test laid down by the Supreme Court in The State of Gujarat v. Raipur Manufacturing Co. Ltd., which requires establishing that the activity was carried on with the intention of conducting business. The Court concluded that the applicant-Society did not carry on the business of selling ice to its members, as its primary business was transporting fish, and the supply of ice was incidental to that business.
2. Whether the activities of supply of ice by the Society to its members amount to sales:
Given the Court's conclusion on the first issue, it was unnecessary to address whether the supply of ice constituted a "sale" under section 2(28) of the Act. The Court noted that the evidence on record was insufficient to determine this question.
Conclusion:
The High Court answered the first question in the negative, holding that the applicant-Society was not a "dealer" in respect of the supply of ice to its members. Consequently, it found the second question unnecessary to answer. The respondents were ordered to pay the applicant's costs of the reference, and the amount deposited by the applicant-Society was ordered to be refunded.
Reference Answered Accordingly:
- Question No. (1): In the negative.
- Question No. (2): Unnecessary.
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