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1971 (11) TMI 177
ISSUES PRESENTED and CONSIDEREDThe Supreme Court of India considered the following core legal issues in the judgment: 1. Whether the West Bengal (Prevention of Violent Activities) Act, 1970, is unconstitutional due to its non-compliance with Article 22(7) of the Constitution, which pertains to laws made by Parliament for preventive detention beyond three months. 2. Whether the Act violates Article 19(1)(d) of the Constitution by imposing unreasonable restrictions on the right to move freely throughout India. 3. Whether the Act contravenes Article 14 of the Constitution by granting arbitrary and unguided powers to the State Executive without clear guidelines. ISSUE-WISE DETAILED ANALYSIS 1. Constitutionality of the Act under Article 22(7) Relevant legal framework and precedents: Article 22(7) of the Constitution authorizes Parliament to prescribe the circumstances and maximum period for preventive detention beyond three months and the procedure for the Advisory Board. The High Court held that the Act was not a law made by Parliament as contemplated by Article 22(7), rendering Sections 11 and 13 ultra vires. Court's interpretation and reasoning: The Court noted that Article 22(7) is permissive, allowing Parliament to make laws for detention beyond three months but not mandating it. The Court emphasized that the State Legislature has concurrent powers with Parliament to make laws concerning preventive detention under Article 246 and Entry 3 of List III, provided they do not conflict with existing Parliamentary laws. Key evidence and findings: The Court found no express constitutional provision limiting the State Legislature's power to enact laws for detention beyond three months in the absence of a Parliamentary law. Application of law to facts: The Court concluded that the State Legislature could validly enact laws for detention beyond three months with Advisory Board provisions, as the Constitution does not expressly prohibit this. Treatment of competing arguments: The respondents argued that Article 22(7) imposes a mandatory obligation on Parliament. The Court rejected this, citing precedents and the permissive nature of the Article. Conclusions: The Court held that the State Legislature is competent to enact the Act, including provisions for detention beyond three months, provided there is an Advisory Board's opinion. 2. Violation of Article 19(1)(d) Relevant legal framework and precedents: Article 19(1)(d) guarantees the right to move freely throughout India, subject to reasonable restrictions in the interest of the general public. Court's interpretation and reasoning: The Court assumed Article 19(1)(d) applied to preventive detention but found the restrictions imposed by the Act to be in the interest of the general public, given the historical context of violent activities in West Bengal. Key evidence and findings: The Court took judicial notice of the lawlessness and sabotage in West Bengal, which necessitated the Act's enactment. Application of law to facts: The Court found that the Act's restrictions aimed at preventing violent activities were justified in the interest of public safety and order. Treatment of competing arguments: The respondents argued that the Act imposed unreasonable restrictions. The Court countered that the restrictions were necessary given the state's security concerns. Conclusions: The Court upheld the Act, finding the restrictions reasonable and in the public interest. 3. Violation of Article 14 Relevant legal framework and precedents: Article 14 guarantees equality before the law and prohibits arbitrary state action. Court's interpretation and reasoning: The Court found that the Act's classification was not unreasonable and did not violate Article 14. Key evidence and findings: The Court noted the Act's provisions were aimed at specific threats to public order and state security, providing a rational basis for classification. Application of law to facts: The Court held that the Act's provisions were neither arbitrary nor unguided, as they targeted specific security concerns. Treatment of competing arguments: The respondents claimed the Act granted arbitrary powers. The Court disagreed, finding the powers necessary and appropriately guided by the Act's objectives. Conclusions: The Court concluded that the Act did not violate Article 14, as it provided sufficient guidelines for its application. SIGNIFICANT HOLDINGS The Court's significant holdings include: - The State Legislature is competent to enact laws for preventive detention beyond three months with Advisory Board provisions, even without a Parliamentary law under Article 22(7). - The restrictions imposed by the Act on the right to move freely are reasonable and in the interest of the general public, given the security situation in West Bengal. - The Act does not violate Article 14, as it contains rational classifications and guidelines for its application. Final determinations on each issue upheld the constitutionality of the West Bengal (Prevention of Violent Activities) Act, 1970, allowing the appeals and setting aside the High Court's judgment.
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1971 (11) TMI 176
Issues Involved:
1. Validity of the notification No. 3483-E & T-54/723(CH) dated August 5, 1954.
2. Conflict of assessment orders with the decision of the Supreme Court in Bhawani Cotton Mills Ltd. [1967] 3 SCR 577.
Issue-wise Detailed Analysis:
1. Validity of the Notification No. 3483-E & T-54/723(CH) dated August 5, 1954:
The primary issue in these appeals was the validity of the notification issued by the State Government on August 5, 1954, which amended entry 57 in Schedule B of the Punjab General Sales Tax Act, 1948. Originally, edible oils produced from sarson, toria, and til were exempt from sales tax. However, the notification substituted this entry to exempt only those edible oils produced by indigenous kohlus worked by animal or human agency and sold by the owners of such kohlus.
The High Court, in the case of Ganga Ram Suraj Parkash [1963] 14 S.T.C. 476, had held that this notification was invalid. The court relied on the provisions of the Act as it originally stood, the Essential Goods (Declaration and Regulation of Tax on Sale or Purchase) Act, 1952, and the unamended Article 286(3) of the Constitution to conclude that the notification was invalid.
However, the Supreme Court, in the connected case of Sansari Mal Puran Chand, had upheld the validity of the notification from September 11, 1956, following the Constitution (Sixth Amendment) Act. The Court held that the Act and the notification effectively imposed tax on sales of edible oils from September 11, 1956, and not before. Consequently, the Supreme Court in the present case also held that the view of the High Court, which declared the notification invalid, could not be sustained. The Court concluded that the notification was valid from September 11, 1956, and the assessees were liable to pay tax on all sales of edible oils effected after that date.
2. Conflict of Assessment Orders with the Decision of the Supreme Court in Bhawani Cotton Mills Ltd. [1967] 3 SCR 577:
The second issue was whether the assessment orders were in conflict with the Supreme Court's decision in Bhawani Cotton Mills Ltd. The assessees had amended their writ petitions to challenge the levy of purchase tax on oil-seeds under the Act, as it stood on April 1, 1960, arguing that such levy was opposed to the provisions of the Central Sales Tax Act, 1956.
The Supreme Court in Bhawani Cotton Mills Ltd. had held that the levy of sales tax under the Act, as it stood on April 1, 1960, in respect of declared goods, was illegal and invalid. The High Court had allowed the amendment applications but did not consider this fresh aspect in its judgment. The Supreme Court acknowledged that this contention of the assessees had to be accepted in light of the Bhawani Cotton Mills Ltd. decision. However, it was not clear from the assessment orders or the record whether and at what stage the purchase tax had been levied in respect of oil-seeds.
The State had referred to the Punjab General Sales Tax (Amendment and Validation) Act, 1967, which replaced Ordinances Nos. 1 and 12 of 1967 issued in view of the Bhawani Cotton Mills Ltd. decision. This Amendment Act introduced Section 11AA, which required the assessing authority to reconsider the orders of assessment regarding declared goods and pass fresh orders in accordance with the amended provisions of the Act.
The Supreme Court directed the assessing authority to exercise its jurisdiction under Section 11AA of the Act, as amended, and revise the orders of assessment to conform with the amended Act. If any assessment had not been completed, the fresh order of assessment would have to be made in accordance with the principles laid down by the Court in the connected appeals of State of Punjab and Ors. v. Shakti Cotton Co. [1972] 29 S.T.C. 706.
Conclusion:
The appeals were allowed in part. The judgments and orders of the High Court were modified to declare that the impugned notification was valid and effective from September 11, 1956, allowing the levy of sales tax on edible oils after that date. The appeals were dismissed concerning other aspects, subject to the directions given to the assessing authority to revise the orders of assessment in accordance with the amended Act. Each party was directed to bear its own costs in all these appeals.
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1971 (11) TMI 175
Issues Involved:
1. Legality of the withdrawal of prosecution under Section 494 of the Criminal Procedure Code.
2. Justification for the committal of the accused without recording evidence.
3. Validity of splitting charges into multiple cases.
4. Grounds for the Public Prosecutor's withdrawal from prosecution.
5. Role of the State Government in directing the Public Prosecutor to seek withdrawal.
Detailed Analysis:
1. Legality of the Withdrawal of Prosecution under Section 494 of the Criminal Procedure Code:
The central issue was whether the Public Prosecutor's withdrawal from prosecution was legally justified. Section 494 of the Criminal Procedure Code allows the Public Prosecutor to withdraw from prosecution with the consent of the court. The judgment emphasizes that the Public Prosecutor must independently decide to withdraw, and the court must ensure that such withdrawal serves the interest of justice and is not based on extraneous grounds. The court held that the reasons provided by the Public Prosecutor, such as the civil nature of the dispute, the decision in a civil suit, the expense of securing witnesses, and the delay in trial, were insufficient to justify withdrawal. The court concluded that the withdrawal was not in the interest of justice and set aside the permission granted by the trial court and confirmed by the High Court.
2. Justification for the Committal of the Accused without Recording Evidence:
The High Court had earlier dismissed a revision petition challenging the committal of the accused without recording evidence, relying on Section 207-A of the Criminal Procedure Code. This section allows a Magistrate to commit an accused to trial based on the police report without recording evidence. The judgment referenced the Supreme Court decision in Ramanarayan Mor and Anr. v. State of Maharashtra, which upheld the procedure under Section 207-A. The court found no illegality in the committal proceedings, affirming that the Magistrate acted within his powers.
3. Validity of Splitting Charges into Multiple Cases:
The Assistant Sessions Judge had split the charges into eight separate cases, which was challenged by the second respondent. The High Court, following the Supreme Court decision in Ranchhodlal v. State of Madhya Pradesh, upheld the splitting of charges. The court noted that while the charges could be consolidated, the prosecution could withdraw other charges if one trial resulted in a conviction. The judgment did not interfere with the High Court's decision on this matter.
4. Grounds for the Public Prosecutor's Withdrawal from Prosecution:
The Public Prosecutor's memo cited several grounds for withdrawal, including the civil nature of the dispute, a civil court decision, the expense of securing distant witnesses, and the delay in trial. The court found these grounds insufficient and emphasized that the withdrawal should be based on the inability to produce sufficient evidence or other substantial reasons related to the administration of justice. The court highlighted that the charges involved serious criminal offenses like cheating and forgery, which warranted a trial. The court also noted that the delay was primarily due to the respondents' revision petitions, and the expense of prosecution was not a valid reason for withdrawal.
5. Role of the State Government in Directing the Public Prosecutor to Seek Withdrawal:
The appellant contended that the Public Prosecutor's decision to withdraw was influenced by the State Government, which directed the withdrawal in the interest of public policy. The court clarified that while the Public Prosecutor could seek the government's consent, the decision to withdraw must be independently made by the Public Prosecutor. The court reiterated that the withdrawal should not be based on government policy or expediency but should serve the interest of justice. The court found that the Public Prosecutor did not exercise independent judgment and acted on the government's directive, which was improper.
Conclusion:
The Supreme Court allowed the appeal, set aside the permission for withdrawal granted by the trial court and confirmed by the High Court, and directed that the trial proceed in accordance with law. The judgment underscores the importance of the Public Prosecutor's independent decision-making and the court's role in ensuring that withdrawals from prosecution are justified and serve the interest of justice.
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1971 (11) TMI 174
Issues Involved:
1. Construction of the Compromise Decree
2. Timeliness of the Deposit
3. Legal Consequences of Court Holidays
4. Execution of the Compromise Decree
5. Nature of Consent Decrees
Issue-wise Detailed Analysis:
1. Construction of the Compromise Decree:
The appeals revolve around the interpretation of the compromise decree dated 24-6-1959. The key terms of the decree include:
- The defendant agrees to receive a lakh of rupees and other specified amounts from the plaintiff by 1-1-1960.
- The plaintiff must deposit the amount in court by the specified date.
- Failure to deposit by 1-1-1960 would result in automatic dismissal of the suit with costs.
2. Timeliness of the Deposit:
The respondent applied for a challan on 22-12-1959 and received it on 24-12-1959. Since December 31, 1959, and January 1, 1960, were holidays, the respondent deposited the amount on 2-1-1960. The core issue is whether this deposit was within the time specified in the decree. The appellant argued that the respondent should have deposited the amount earlier and must suffer the consequences of the court being closed on the last day.
3. Legal Consequences of Court Holidays:
The court considered the principle that if an act cannot be performed due to circumstances beyond one's control, such as court holidays, it may be performed on the next available day. This principle is supported by Halsbury's Laws of England and various case laws, including Fateh Khan v. Chhajju and Muhammad Jan v. Chiam Lal. The court concluded that the respondent had the liberty to deposit the amount on 1-1-1960, and the closure of the court justified the deposit on 2-1-1960.
4. Execution of the Compromise Decree:
The appellant contended that the execution court had no right to alter the terms of the decree. However, the court held that the execution court could interpret the decree in light of applicable laws. The deposit made on 2-1-1960 was deemed in compliance with the decree, considering the legal principle that parties are entitled to perform an act on the next practicable day if the court is closed on the last day.
5. Nature of Consent Decrees:
The appellant argued that a compromise decree is a contract, and failure to perform within the stipulated time should not be excused. However, the court observed that a consent decree is more than a contract. It is an order of the court and must be obeyed unless set aside. The court referred to various cases, including Morris v. Barret and Govind Waman v. Murlidhar Shrinivas, to highlight that different considerations apply to consent decrees compared to ordinary contracts.
Conclusion:
The Supreme Court upheld the High Court's decision, concluding that the deposit made by the respondent on 2-1-1960 was in substantial compliance with the terms of the compromise decree. The appeals were dismissed without any order as to costs.
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1971 (11) TMI 173
Issues Involved:
1. Legality of the detention of Prem Prakash Midha.
2. Allegations of torture against the police officers.
3. Validity of the remarks made by the High Court against the police officers.
4. Procedural propriety of the High Court's intervention.
5. Opportunity for the police officers to explain their conduct.
Detailed Analysis:
1. Legality of the Detention of Prem Prakash Midha
The appeal concerns the expunging of remarks made against the appellants in an order by the Punjab & Haryana High Court on a Habeas Corpus Petition filed for the production of Prem Prakash Midha, who was allegedly detained illegally by the Central Investigation Agency (CIA) Staff Karnal. The High Court found that Prem Prakash Midha was taken into custody on 5th May 1968 and was tortured by the respondents. His arrest was falsely documented as occurring on 10th May 1968.
2. Allegations of Torture Against the Police Officers
The High Court, after examining the statement of the detenu and the medical report, concluded that Prem Prakash Midha had been tortured. The Chief Medical Officer's examination on 11th May 1968 revealed multiple injuries on the detenu, corroborating his claims of torture. The High Court found that the affidavits sworn by the respondents did not represent the true state of affairs and that calculated falsehood had been imported in material particulars.
3. Validity of the Remarks Made by the High Court Against the Police Officers
The appellants contended that the remarks were unjustified and adversely affected their careers. However, the Supreme Court upheld the High Court's findings, stating that the remarks were based on evidence and were necessary to safeguard the freedom of the citizen. The Court emphasized that judicial pronouncements must be judicial in nature and should not depart from sobriety, moderation, and reserve.
4. Procedural Propriety of the High Court's Intervention
The High Court's intervention, including the appointment of its Reader to accompany the petitioner and search the CIA Staff office, was deemed justified given the urgency and the nature of the allegations. The Supreme Court noted that while courts can direct magistrates to conduct inquiries, in urgent cases, the High Court's direct intervention was appropriate.
5. Opportunity for the Police Officers to Explain Their Conduct
The appellants argued that they were not given an adequate opportunity to explain their conduct. The Supreme Court rejected this contention, noting that the appellants had filed detailed affidavits and had the opportunity to present their version of events. The Court found that there was sufficient evidence to support the High Court's findings, and the appellants had failed to provide a credible explanation for the discrepancies in their statements.
Conclusion
The Supreme Court dismissed the appeal, finding no grounds to expunge the remarks made by the High Court. The Court affirmed that the High Court's findings were based on evidence and were necessary to protect the constitutional rights of the detenu. The appeal was dismissed, and the remarks in the High Court's order were upheld.
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1971 (11) TMI 172
Issues Involved:
1. Partition and recovery of plaintiff's share in the property.
2. Establishment of permanent tenancy rights by defendants 1 to 3.
Issue-wise Detailed Analysis:
1. Partition and Recovery of Plaintiff's Share:
The original suit was for partition and recovery of the plaintiff's share in the property located in mohalla Rahim ganj, Lucknow. The property originally belonged to Begum Mumtaz Mahal and was subsequently transferred through various transactions. The plaintiff, Kundan Lal, sought partition and recovery of his share. The trial court passed a preliminary decree for partition, which was upheld by a single judge of the High Court. However, the Division Bench reversed this decision, leading to the current appeal.
2. Establishment of Permanent Tenancy Rights:
The main contention by defendants 1 to 3 (Haji Faqir Bux and his sons) was their claim of being permanent lessees of specific portions of the property, marked blue and red in the commissioner's plan. They argued that these portions were acquired on permanent leases for establishing and extending a tobacco factory.
Trial Court and Single Judge Findings:
The trial court and the single judge of the High Court found against the defendants on the issue of permanent tenancy rights. They disbelieved the oral evidence and found the documentary evidence insufficient to establish permanent leases.
Division Bench Findings:
The Division Bench reversed the single judge's decision, accepting the permanent tenancy claim by defendants 1 to 3. They dismissed the evidentiary value of an agreement (Exhibit 12) between Faqir Bux and the Maharaja of Balrampur, which implied that Faqir Bux did not consider himself a permanent lessee.
Supreme Court Analysis:
The Supreme Court scrutinized the documentary evidence, including:
- Deed of Gift (1874): No mention of permanent leases.
- Sale Deed (1885): Not helpful to either party.
- Mortgage Deed (1904): Listed Khuda Bux as a tenant without specifying the nature of tenancy.
- Will of Haji Khuda Bux (1906): No support for permanent leases.
- Partnership Deed (1909): Indicated the possibility of vacating the land, inconsistent with permanent tenancy.
- Agreement with Maharaja of Balrampur (1918): Explicitly stated that Faqir Bux would vacate without compensation, undermining the permanent tenancy claim.
The Court noted that the onus of proving permanent leases was on defendants 1 to 3, which they failed to do. The long occupation and uniform rent payment did not automatically imply permanent tenancy. The cumulative effect of circumstances did not support the defendants' claim.
Conclusion:
The Supreme Court concluded that the Division Bench erred in reversing the single judge's decision. The judgment and decree of the Division Bench were set aside, and the decree of the single judge was restored. The appeal was allowed with costs, reaffirming that defendants 1 to 3 failed to establish permanent tenancy rights.
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1971 (11) TMI 171
Issues Involved:
1. Validity of the extension of the Bombay Co-operative Societies Act, 1925, to Delhi.
2. The power of the Central Government to repeal the Co-operative Societies Act, 1912, in Delhi.
3. Proper authentication of the notification dated 8-1-1949.
4. Jurisdiction of the Registrar in awarding costs and interest.
Issue-wise Detailed Analysis:
1. Validity of the Extension of the Bombay Co-operative Societies Act, 1925, to Delhi:
The petitioner argued that the Central Government had no power to extend the Bombay Co-operative Societies Act, 1925 to Delhi in 1949 under section 7 of the Delhi Laws Act, 1912, because the Co-operative Societies Act, 1912 already applied to Delhi. The court held that Section 7 of the Delhi Laws Act, 1912, allowed the Central Government to extend any enactment in force in any part of British India to Delhi with such restrictions and modifications as it deemed fit. The intention of the legislature was to enable the Central Government to extend laws from the provinces to Delhi, even if an older, inadequate law on the same subject already existed there. Therefore, the contention that the Central Government could not extend the Bombay Act to Delhi if some other law already existed in Delhi on the same subject was rejected.
2. Power of the Central Government to Repeal the Co-operative Societies Act, 1912, in Delhi:
The petitioner contended that the Central Government had no power to repeal the Co-operative Societies Act, 1912, while extending the Bombay Co-operative Societies Act, 1925, to Delhi. The court clarified that the repeal of the Co-operative Societies Act, 1912, was already effected by Section 73 of the Bombay Co-operative Societies Act, 1925, in the province of Bombay long before the latter Act was extended to Delhi in 1949. The modification made to Section 73 of the Bombay Act was necessary to make it applicable to Delhi and did not constitute a new repeal by the Central Government. Even if the modification of Section 73 was considered a direct repeal, it would only render clause 12 of the notification invalid, not affecting the rest of the notification.
3. Proper Authentication of the Notification Dated 8-1-1949:
The petitioner argued that the notification was void because it was signed by a Deputy Secretary and not by the Governor General or the Chief Commissioner of Delhi. The court rejected this argument, stating that the issue of the notification was an exercise of executive power, which could be properly authenticated by a Deputy Secretary to the Government of India, as per the authorization under section 17(2) of the Government of India Act, 1935. The court emphasized that the distinction between legislative, judicial, and executive powers in the Constitution is based on the nature of the authority performing the act, not the nature of the act itself.
4. Jurisdiction of the Registrar in Awarding Costs and Interest:
The petitioner contended that the Registrar had no jurisdiction to grant costs and interest on the award. The court agreed, stating that the Registrar's jurisdiction under section 54 was restricted to the dispute referred to him, which was only regarding the principal sum. There was no claim or dispute regarding costs or interest. Therefore, the grant of costs and interest was beyond the Registrar's jurisdiction and constituted an error of law apparent on the face of the record. This part of the award was quashed, but the rest of the award was upheld.
Conclusion:
The writ petition was substantially dismissed, but the part of the award granting costs and interest to the respondent was quashed. The rest of the award was upheld, and the orders passed by the Cooperative Tribunal in appeal and revision were modified accordingly. No orders as to costs were made.
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1971 (11) TMI 170
Issues:
Validity of removal from office under Section 10(1)(e)(iv) of the Electricity (Supply) Act, 1948.
Detailed Analysis:
1. Case of Shri Baktawar Singh:
- Appointed as a member of the Punjab State Electricity Board, Patiala for five years.
- Removed from office by the Punjab Government under Section 10(1)(e)(iv) of the Act.
- Challenged the removal through a writ petition, which was accepted by the High Court.
- Allegations included trying to win support from MLAs and not discharging duties impartially.
- Minister's order for removal lacked specific reasons or findings of guilt.
- Minister's decision based on vague grounds, lacking concrete evidence.
- Removal deemed unjustified due to lack of specific charges and vague findings.
2. Case of Shri Rajinder Pal Abrol:
- Appointed as an honorary member of the Board.
- Removed by the Punjab Government under Section 10(1)(e)(iv) of the Act.
- Alleged charges related to acts and omissions before his appointment.
- Minister's removal order lacked specific charges or findings.
- Minister's order considered arbitrary and lacking justification.
- Removal order not a speaking order and arbitrary in nature.
3. General Observations:
- Section 10(1)(e)(iv) removal considered a punishment requiring adherence to natural justice principles.
- Removal orders should specify charges and provide a reasonable opportunity for defense.
- Minister's orders in both cases lacked specific reasons and failed to establish guilt.
- Lack of concrete evidence and arbitrary decision-making led to dismissal of appeals.
- Appeals failed, and costs awarded against the State Government.
In conclusion, the Supreme Court dismissed the appeals, emphasizing the importance of following natural justice principles in removal proceedings under Section 10(1)(e)(iv) of the Electricity (Supply) Act, 1948. The Court highlighted the need for specific charges, concrete evidence, and a fair opportunity for defense before imposing removal as a punitive measure. The lack of detailed reasoning and arbitrary decision-making in the Minister's orders led to the dismissal of the appeals brought by the State Government.
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1971 (11) TMI 169
The Supreme Court allowed appeal No. 840 of 1971 and dismissed No. 841 of 1971. The High Court had no jurisdiction to interfere with the order of the first appellate court regarding a suspension and enquiry in a case between a company and an employee. The order of the High Court was set aside and that of the first appellate court restored.
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1971 (11) TMI 168
Issues Involved:
1. Whether the turnover of Rs. 3,87,200 estimated as the value of the stock of mill cloth held by the Appellant on December 14, 1957, was exigible to tax.
2. Whether Sub-section (5A) introduced in Section 5 of the Mysore General Sales Tax Act, 1957, by Act No. 9 of 1964, was ultra vires the powers of the Mysore Legislature.
3. Whether the Mysore Legislature had the power to impose tax on sales of textiles retrospectively at a rate higher than that specified in Section 15 of the Central Sales Tax Act, 1956.
Detailed Analysis:
Issue 1: Turnover of Rs. 3,87,200 as Exigible to Tax
The appellant, a dealer in textiles, was assessed to sales tax on April 29, 1965, under the Mysore General Sales Tax Act, 1957, for the period from October 1, 1957, to March 31, 1958. The dispute centered on whether the turnover of Rs. 3,87,200, estimated as the value of the stock of mill cloth held on December 14, 1957, was subject to tax. The appellant contended that the turnover related to mill cloth on which additional excise duty was not payable and, therefore, should be exempt from sales tax. This contention was rejected by the assessing authority, the Deputy Commissioner of Commercial Taxes, and the Sales Tax Appellate Tribunal. The appellant's revision to the Mysore High Court and a writ petition were also dismissed by a Division Bench of the High Court.
Issue 2: Ultra Vires of Sub-section (5A) in Section 5
The appellant argued that Sub-section (5A) of Section 5, introduced by Act No. 9 of 1964, was ultra vires the powers of the Mysore Legislature. The High Court overruled this contention, stating that the tax imposed was on actual sales and not on deemed or fictitious ones. The High Court noted that the amendments to the Act, particularly the substitution of Sub-section (5A), simplified the tax imposition by stating that tax would be levied on sales or purchases related to the stock held by the dealer on December 14, 1957, and excluded the previous condition of unpaid excise duty.
Issue 3: Legislative Power to Impose Retrospective Tax
The appellant sought to raise an additional ground, arguing that on February 27, 1967, when the Mysore Act No. 9 of 1964 came into force, textiles had become declared goods. Consequently, the Mysore State Legislature was competent to levy tax on sales of textiles only subject to the restrictions and conditions laid down in Section 15 of the Central Sales Tax Act, 1956. One such restriction was that the rate of tax should not exceed two percent. The appellant contended that since the Legislature lost its power to impose a tax higher than two percent on declared goods, the retrospective imposition of tax at rates ranging from 3% to 10% was invalid. The court permitted the appellant to raise this ground and considered the relevant portion of Section 15 of the Central Sales Tax Act, which restricted the tax rate to two percent for declared goods.
The court concluded that the Mysore Legislature was competent in 1964 to impose tax on sales of textiles during the assessment period (October 1, 1957, to March 31, 1958) at a rate higher than two percent because textiles were not declared goods during that period. The power to retrospectively levy tax was upheld, and the court noted that there was no limitation on the Legislature's power to impose tax on the turnover of sales of textiles before they became declared goods on April 1, 1958.
Conclusion:
The appeals were dismissed with costs, affirming the validity of the tax imposition on the turnover of Rs. 3,87,200 and upholding the legislative power to impose retrospective tax at rates higher than those specified for declared goods.
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1971 (11) TMI 167
Issues Involved:
1. Validity of Chapter III of the Orissa Land Reforms Act, 1960 as amended by the Orissa Land Reforms Act, 1965.
2. Validity of Chapter IV of the Orissa Land Reforms Act, 1960 as amended by the Orissa Land Reforms Act, 1965.
3. Application of the second proviso to Article 31-A(1) of the Constitution regarding personal cultivation and compensation.
Issue-wise Detailed Analysis:
1. Validity of Chapter III of the Orissa Land Reforms Act, 1960 as amended by the Orissa Land Reforms Act, 1965:
The appellant contended that the High Court erred in holding Chapter III as intra vires. The Supreme Court analyzed the relevant provisions of Chapter III, which deals with the "Resumption of Land for Personal Cultivation." Section 24(1) gives the right to landlords and tenants to determine resumable and non-resumable lands. Section 25 limits the resumable land to not more than one-half of the lands in respect of each tenant, measured in standard acres. Sections 26 to 36 detail the process of selection, application, determination, compensation, and issuance of certificates regarding resumable and non-resumable lands.
The Court rejected the appellant's argument that the provisions of Chapter III are not protected by Article 31A(1) because they do not provide for the acquisition by the State or extinguishment of rights. The Court cited the precedent in Atma Ram v. State of Punjab, which held that modification of a landowner's rights through legislation falls within the protection of Article 31A(1). The Court concluded that Chapter III modifies the landlord's substantive rights and is thus protected by Article 31A(1).
2. Validity of Chapter IV of the Orissa Land Reforms Act, 1960 as amended by the Orissa Land Reforms Act, 1965:
The High Court had declared Chapter IV unconstitutional and invalid. However, the Supreme Court noted that no notification under Section 1(3) of the Principal Act had been issued to bring Chapter IV into force. The Court emphasized that courts should not address the validity of a provision that has not been enforced, as it would be an academic question. The Court referenced the Constitution's provision for advisory opinions and concluded that the High Court should not have examined the validity of Chapter IV. Consequently, the Supreme Court set aside the High Court's judgment regarding Chapter IV.
3. Application of the second proviso to Article 31-A(1) of the Constitution regarding personal cultivation and compensation:
The appellant argued that Chapter III's provisions amount to acquisition and thus require compensation at market value under the second proviso to Article 31A(1). The appellant claimed that five acres of Bhagchar land were under his personal cultivation, which should be protected by the proviso. The Court examined the definition of "personal cultivation" and similar terms in other Acts, concluding that personal cultivation implies cultivation by or on behalf of the landowner. The Court determined that Bhagchar cultivation, where the cultivator shares the crop with the owner, does not qualify as personal cultivation under the proviso. Additionally, the Court noted that no ceiling limit was applicable to the appellant under any law for the time being in force, as no notification had been issued under Section 1(3) of the Act.
Conclusion:
The Supreme Court upheld the High Court's decision that Chapter III of the Act is valid and set aside the High Court's judgment on Chapter IV. Civil Appeal No. 854 of 1968 was dismissed without costs, while the State's appeals were allowed, and the writ petitions filed by the respondents in the State appeals were dismissed, also without costs.
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1971 (11) TMI 166
Issues Involved:
1. Jurisdiction of the Election Commission under Paragraph 15 of the Election Symbols (Reservation & Allotment) Order, 1968.
2. Satisfaction of the Election Commission regarding the existence of rival sections of the Indian National Congress.
3. Nature of an election symbol and whether it constitutes property.
4. Determination of which rival section of the Indian National Congress is the recognized party for the purposes of the Symbols Order.
Issue-wise Detailed Analysis:
1. Jurisdiction of the Election Commission under Paragraph 15 of the Election Symbols (Reservation & Allotment) Order, 1968:
The Commission held that it had jurisdiction to decide the matter under Paragraph 15 of the Symbols Order. The contention that the Working Committee or the President of Congress 'O' were the only authorities to give a binding decision in the dispute was repelled. The Commission stated, "If, therefore, there are facts in the present case which show a total and entire cleavage in the Indian National Congress from top to bottom, and that the rivalry between the two groups has almost assumed the form of enmity, then relying upon a few provisions of the Constitution and the rules of the party it cannot, in my view, be validly contended that the Election Commission has no jurisdiction."
2. Satisfaction of the Election Commission regarding the existence of rival sections of the Indian National Congress:
The Commission observed that it was satisfied on the information available in its possession that there were two rival sections of the Indian National Congress, each claiming to be that Congress.
3. Nature of an election symbol and whether it constitutes property:
The Commission found that the election symbol was not property. The purpose of symbols was to ensure that illiterate voters could identify the candidate of their choice. The Commission stated, "Symbols or emblems are not a peculiar feature of the election law of India... The object is to ensure that the process of election is as genuine and fair as possible."
4. Determination of which rival section of the Indian National Congress is the recognized party for the purposes of the Symbols Order:
The Commission applied the test of majority to determine which group was the recognized party. It found that Congress 'J' had the majority out of the total number of members returned on Congress tickets to the Houses of Parliament as well as the majority out of the sum total of the members of all the Legislatures. The Commission concluded that Congress 'J' enjoyed majority in the All India Congress Committee as well as amongst the delegates of the undivided Congress. The decision was given that for the purpose of Paragraph 15 of the Symbols Order, Congress 'J' was the Congress for which the symbol "Two Bullocks with Yoke On" had been reserved.
Additional Considerations:
The Commission's decision was based on the view that in a democratic organization, the test of majority and numerical strength was a very valuable and relevant test. The Commission also considered the organizational structure and the support within the legislative and organizational wings of the Congress. The court upheld the Commission's approach, stating, "In view of the figures, it can hardly be disputed that substantial majority of the members of the Congress in both its legislative wing as well as the organizational wing supported the Congress 'J'."
Vires of Paragraph 15 of the Symbols Order:
The Madras High Court's decision, which was appealed, held that Paragraph 15 was not ultra vires. The Symbols Order made detailed provisions for the reservation, choice, and allotment of symbols and the recognition of political parties. The Commission was vested with plenary powers in the matter of allotment of symbols. The court found no substance in the contention that Paragraph 15 was ultra vires the powers of the Commission.
Conclusion:
All four appeals were dismissed without costs. The court upheld the Election Commission's decision that Congress 'J' was the recognized Indian National Congress for the purposes of the Symbols Order and entitled to the symbol "Two Bullocks with Yoke On."
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1971 (11) TMI 165
Issues Involved:
1. Whether the Federation is an industry under Section 2(j) of the Industrial Disputes Act, 1947.
2. Whether the termination of the respondent's services was illegal and unjustified.
3. Whether the punishment of discharge was disproportionate to the alleged misconduct, amounting to victimization.
Detailed Analysis:
1. Whether the Federation is an industry under Section 2(j) of the Industrial Disputes Act, 1947:
The primary contention was whether the Federation's activities qualify it as an "industry" under Section 2(j) of the Industrial Disputes Act, 1947. The Federation argued that its activities were charitable and non-commercial, thus not fitting within the definition of an industry. The court examined the activities of the Federation, which included promoting Indian business, organizing exhibitions, providing arbitration services, and publishing periodicals. These activities were found to be systematic and organized, involving the cooperation of employers and employees to produce material services. The court noted, "The Federation carries on systematic activities to assist its members and other businessmen and industrialists and even to non-members... These activities are business activities and material services." Therefore, the court concluded that the Federation is indeed an industry under Section 2(j) of the Act.
2. Whether the termination of the respondent's services was illegal and unjustified:
The respondent was terminated after issuing legal notices to the International Chamber of Commerce, which the Federation claimed was intended to bring disrepute to it. The court found that the respondent's actions were not intended to defame the Federation but were a legitimate effort to claim unpaid dues. The court stated, "The Tribunal as we have noticed earlier found that this did not amount to misconduct which finding in our view is justified on the evidence." The respondent had tendered an apology, indicating no intention to harm the Federation's reputation. The court upheld the Tribunal's finding that the termination was illegal and unjustified.
3. Whether the punishment of discharge was disproportionate to the alleged misconduct, amounting to victimization:
The court considered whether the punishment of discharge was disproportionate to the alleged misconduct. The respondent had served the Federation for 12 years without prior complaints and had only sought payment for overtime work. The court observed, "Notwithstanding this apology the punishment of discharge for a workman who has served the Federation for 12 years without any cause for complaint... was far in excess of what he deserved." The court emphasized that the absence of standing orders specifying misconduct and corresponding disciplinary actions allowed the Tribunal to assess the proportionality of the punishment. The court cited previous rulings, stating, "where the punishment is so disproportionate that no reasonable employer would ever have imposed it in like circumstance, the Tribunal may treat the imposition of such punishment as itself showing victimisation or unfair labour practice." Thus, the court agreed with the Tribunal that the punishment amounted to victimization.
Conclusion:
The court dismissed the appeal, affirming the Tribunal's findings that the Federation is an industry under Section 2(j) of the Industrial Disputes Act, 1947, the termination of the respondent's services was illegal and unjustified, and the punishment of discharge was disproportionate, amounting to victimization. The appeal was dismissed with costs.
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1971 (11) TMI 164
Issues Involved:
1. Valuation for capital gains tax.
2. Special circumstances affecting Stock Exchange prices.
3. Relevance of unpublished negotiations in market value assessment.
Detailed Analysis:
1. Valuation for Capital Gains Tax:
The primary issue revolves around the valuation for capital gains tax on April 6, 1965, of 98,604 ordinary stock units in R. W. Crabtree & Sons Ltd owned by the taxpayer. The method of valuation is set out in section 44 of the Finance Act, 1965. Subsection (1) defines "market value" as the price which assets might reasonably be expected to fetch on a sale in the open market. For securities quoted on the London Stock Exchange, subsection (3) provides a measuring rod, stating that the price should reflect quotations in the London Stock Exchange Official Daily List unless special circumstances indicate otherwise.
2. Special Circumstances Affecting Stock Exchange Prices:
The taxpayer argued that special circumstances existed on April 6, 1965, which affected the Stock Exchange prices. These circumstances included the fact that the board of R. W. Crabtree & Sons Ltd had not made public the discussions with Vickers regarding a possible cash take-over bid, which had been halted in February 1965. Evidence suggested that had this information been public, the Stock Exchange price would have been higher. The Special Commissioners agreed, finding that the Stock Exchange was "working in blinkers" and was "shut off from information vital to a realistic assessment of the true value of the stock."
3. Relevance of Unpublished Negotiations in Market Value Assessment:
The court examined whether the failure to announce the negotiations constituted a special circumstance under subsection (3). The Crown argued that the non-publication was not a special circumstance. The court noted that many factors contribute to Stock Exchange quotations, and it would be disruptive to analyze these factors for valuation purposes. The court found insufficient evidence to justify the conclusion that there were special circumstances allowing the taxpayer to escape the measuring rod of subsection (3).
Judgment Analysis by Each Judge:
Russell L. J.:
Russell L. J. emphasized that the evidence did not support the existence of special circumstances that would invalidate the Stock Exchange prices as a proper measure of market value. He stressed that the open market should not be assumed to know of negotiations that were not public. He concluded that it was unrealistic to suppose that purchasers in the open market would be aware of the negotiations, thus allowing the appeal.
Sachs L. J.:
Sachs L. J. highlighted the legislative intent behind section 44(3) of the Finance Act, 1965, which aimed to provide a simple basis for calculating capital gains tax. He pointed out that the onus of proving special circumstances lies with the party alleging their existence. He found no evidence that an announcement of the negotiations would have been normal or expected by April 6, 1965. He agreed that the matters found did not constitute special circumstances and supported allowing the appeal.
Buckley L. J.:
Buckley L. J. concurred with the other judges, emphasizing the need to carefully examine the evidence before the Special Commissioners. He noted that the evidence did not establish an entitlement for prospective purchasers on the Stock Exchange to be informed about the negotiations. He agreed with the reasoning of Russell L. J. and supported allowing the appeal.
Conclusion:
The appeal was allowed with costs in the Court of Appeal and below. The court found that the non-publication of the negotiations did not constitute special circumstances under subsection (3) of section 44 of the Finance Act, 1965. The taxpayer was granted leave to appeal by the House of Lords.
Final Order:
Appeal allowed with costs in the Court of Appeal and below. Leave to appeal refused by the Court of Appeal but granted by the House of Lords.
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1971 (11) TMI 163
Issues Involved:
1. Validity and interpretation of the notification dated December 29, 1961.
2. Application of Section 30A of the Mines and Minerals (Regulation and Development) Act, 1957.
3. Legality of the State Government's order dated October 1, 1965.
4. The rate of royalty payable by the respondent-company for the period between December 29, 1961, and December 31, 1965.
Issue-wise Detailed Analysis:
1. Validity and Interpretation of the Notification Dated December 29, 1961:
The notification directed the application of Section 9(1) of the Mines and Minerals (Regulation and Development) Act, 1957, to pre-1949 coal mining leases, subject to the modification that lessees shall pay royalty at the rate specified in the agreements between the lessees and the lessors or at 2-1/2% of the f.o.r. price, whichever is higher. The respondent-company argued that the notification should not be interpreted to mean that lessees with rates higher than 5% should continue to pay those higher rates. The State contended that the notification's language was clear and required payment at the agreed lease rates or 2-1/2%, whichever was higher. The High Court and Supreme Court found that the notification was meant to phase in the rate of 5% and not impose higher rates, thus supporting the respondent-company's interpretation.
2. Application of Section 30A of the Mines and Minerals (Regulation and Development) Act, 1957:
Section 30A was inserted to suspend the application of Sections 9(1) and 16(1) to pre-1949 coal mining leases and allowed the Central Government to apply these sections with modifications. The purpose was to avoid the sudden increase in royalty rates to 5%, which could unsettle the coal industry and affect the economy. The notification under Section 30A was intended to phase in the rate of 5%, not to impose rates higher than 5%. The Supreme Court held that any modification under Section 30A should not exceed the power conferred by the section and should not result in a rate higher than 5%.
3. Legality of the State Government's Order Dated October 1, 1965:
The State Government initially directed the recovery of royalty at 5% from July 1, 1958, but later changed its stance and ordered recovery at the rates specified in the lease from December 29, 1961. The High Court and Supreme Court found that the State Government's interpretation of the notification was incorrect and that it could not unilaterally rescind the previous order. The order of October 1, 1965, was quashed as it was inconsistent with the proper interpretation of the notification and Section 30A.
4. The Rate of Royalty Payable by the Respondent-Company for the Period Between December 29, 1961, and December 31, 1965:
The controversy centered on whether the respondent-company should pay royalty at the rates specified in the lease or at the modified rate of 5% as per the notification. The Supreme Court upheld the High Court's decision that the respondent-company was liable to pay royalty at the reduced rate of 5% from December 29, 1961, to December 31, 1965. The demand notices issued by the Collector for arrears at the lease rates were quashed.
Conclusion:
The Supreme Court dismissed the appeals, agreeing with the High Court's conclusions that the respondent-company was entitled to pay royalty at the rate of 5% as specified in the Second Schedule from December 29, 1961, and not at the higher rates provided in the original lease. The State Government's orders and demand notices were quashed, and the interpretation of Section 30A and the notification was clarified to avoid imposing higher rates than 5%.
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1971 (11) TMI 162
Issues Involved:
1. Constitutionality of the Orissa Preventive Detention Act, 1970.
2. Vagueness and irrelevance of the grounds of detention.
3. Consideration of the petitioners' representation by the State Government.
Detailed Analysis:
1. Constitutionality of the Orissa Preventive Detention Act, 1970:
The petitioners argued that the Orissa Preventive Detention Act, 1970, violated their rights under Article 19(a), (b), (c), and (d) of the Constitution. However, the Court did not address this issue as it found merit in the other grounds raised by the petitioners.
2. Vagueness and Irrelevance of the Grounds of Detention:
The petitioners contended that some of the grounds of detention were vague and irrelevant to the maintenance of public order. The Court scrutinized the grounds to ensure they were sufficient to enable the detenues to make an effective representation and were relevant to the maintenance of public order.
- Ground No. 2: Alleged that the petitioners instigated other under-trial prisoners to disobey jail rules and demand inadmissible facilities. The Court found this ground vague and irrelevant as it did not specify which jail rules were disobeyed or what inadmissible demands were made. This ground was not relevant to the maintenance of public order.
- Ground No. 3: Claimed that the petitioners demanded a separate cooking mess inside the jail, causing annoyance and disturbances. The Court found this ground irrelevant to the maintenance of public order.
- Ground No. 4: Alleged that the petitioners instigated other prisoners to help two inmates escape from jail. The Court found this ground irrelevant to the maintenance of public order.
- Ground No. 8: Stated that the petitioners quarrelled with other convicts over the issue of ration, leading to a clash. The Court found this ground irrelevant to the maintenance of public order.
- Ground No. 9: Claimed that the petitioners shouted slogans like "Naxalite Zindabad" and "Long Live Revolution," creating a sensation in the minds of the public. The Court found that shouting slogans might disturb law and order but would not create public disorder.
- Ground No. 14: Vaguely mentioned that there was talk in certain areas that the petitioners had sent intimation to their supporters to remain prepared for an armed struggle. The Court found this ground vague and insufficient for the petitioners to make an effective representation.
The Court concluded that several grounds were either vague or irrelevant, and since they influenced the authority's mind in passing the detention order, it could not be upheld.
3. Consideration of the Petitioners' Representation by the State Government:
The petitioners argued that their representation to the State Government was not considered. The Court noted that the representation was received by the Government on 17-5-1971, but there was no evidence that it had been considered. The Government's failure to consider the representation violated the principles established in Jayanarayan Sukul v. State of W.B., which require the appropriate authority to consider the representation independently and without delay.
The Court emphasized that the Government must exercise its opinion and judgment on the representation before sending the case to the Advisory Board. Since the Government did not consider the representation either when it was received or at the time of confirming the detention order, the detention became illegal.
Conclusion:
The Court declared the detention of the petitioners illegal on the grounds of vagueness and irrelevance of the detention grounds and the State Government's failure to consider the petitioners' representation. The petitioners were already directed to be released after the closure of arguments in the case.
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1971 (11) TMI 161
Issues Involved:
1. Interpretation of "current official year" in Section 82(3) of the Bombay Municipal Boroughs Act, 1925.
2. Retrospective effect of amendments in the assessment list.
3. Jurisdiction and procedural correctness in tax recovery.
Detailed Analysis:
1. Interpretation of "current official year" in Section 82(3) of the Bombay Municipal Boroughs Act, 1925:
The primary issue was the interpretation of the term "current official year" in Section 82(3) of the Bombay Municipal Boroughs Act, 1925. The court had to determine whether "current official year" referred to the year when the amendment in the assessment list was made or if it could include previous years.
The court concluded that "current official year" means the official year that is running when the amendment to the assessment list is made. The court emphasized that the expression refers only to the official year in progress at the time of the amendment. This interpretation was supported by the context and the wording of the statute, which did not include any reference to past years.
2. Retrospective effect of amendments in the assessment list:
The court addressed whether an alteration in the assessment list could have a retrospective effect, allowing the municipality to levy taxes for previous years.
The court held that the amendment to the assessment list could not have a retrospective effect for previous years. It was determined that the alteration becomes effective from the commencement of the official year in which it is made. The court reasoned that the liability to pay the enhanced tax arises only in the current official year when the amendment is made, and not for any past years. This conclusion was drawn from the language of Section 82(3), which specifies that the tax shall be levied in the proportion which the remainder of the year after such day bears to the whole year, indicating that it applies only to the current year.
3. Jurisdiction and procedural correctness in tax recovery:
The court examined whether the municipality could recover taxes with retrospective effect and whether the procedural requirements were met.
The court found that the municipality could not recover taxes with retrospective effect for the years prior to the amendment. The liability to tax arises only after the objections are heard and the assessment list is authenticated. In this case, the objections were disposed of on March 28, 1964, and the amendment was assumed to be made on the same date. Therefore, the liability to pay the enhanced tax could only arise from the official year 1964-65 onwards.
The court also addressed the procedural correctness, noting that the municipality had not issued a fresh notice for the year 1964-65, rendering the assessment for that year illegal. The court emphasized the importance of following the procedural requirements laid out in Sections 80 and 81 of the Act, which include the publication of the assessment list, inviting objections, and authenticating the list.
Conclusion:
The court resolved the issues by interpreting "current official year" as the year in progress when the amendment is made, rejecting the retrospective application of the amendment, and emphasizing the importance of procedural correctness in tax recovery. The court answered the questions framed as follows:
- Question (i) in the negative.
- Question (ii) in the affirmative.
The papers were sent back to the Division Bench for the disposal of the Revision Application.
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1971 (11) TMI 160
Issues Involved:
1. Validity of the Act under Article 19(1)(f) of the Constitution.
2. Violation of Article 14 due to failure to recognize material differences between buildings.
3. Arbitrariness of exemptions provided by Section 28 under Article 14.
Issue-wise Detailed Analysis:
1. Validity of the Act under Article 19(1)(f) of the Constitution:
The petitioners contended that the imposition of a cess on residential buildings in good condition, which would not require structural repairs for the entire period of the Act, amounted to an unreasonable restriction, thereby violating Article 19(1)(f) of the Constitution. The respondents argued that the imposition of the tax was within the power under Article 246(3) read with Entry 49 in List II of the Seventh Schedule of the Constitution and was for a public purpose, thus not constituting an unreasonable restriction. The Court examined the background in which the Act was passed, noting the acute shortage of housing and the dangerous conditions of many buildings in Bombay. The Court held that the cess was for a public purpose aimed at preventing collapses and ensuring the safety of residents, and thus did not violate Article 19(1)(f).
2. Violation of Article 14 due to failure to recognize material differences between buildings:
The petitioners argued that the Act treated unequals as equals by failing to recognize the material differences between various buildings with regard to their physical conditions, thereby violating Article 14. They contended that the tax equated buildings in dangerous and dilapidated conditions with those in good and sound condition. The respondents countered that there was an intelligible classification of buildings based on their age and type of construction, which had a rational nexus with the objects of the Act. The Court upheld the classification, stating that it was based on intelligible differentia and related to the objectives of the legislation. The Court noted that the classification of buildings into three categories was made in light of surveys and reports, and was not arbitrary or whimsical.
3. Arbitrariness of exemptions provided by Section 28 under Article 14:
The petitioners challenged the exemptions provided by Section 28 as arbitrary and without any principle, thus violating Article 14. They argued that some exemptions had no foundation in principle and were irrational. The respondents maintained that the exemptions were provided in light of the objects and scope of the Act and were in consonance with them. The Court found that the exemptions were based on reasonable classifications. For instance, buildings used for non-residential purposes, buildings occupied by owners, and buildings occupied on leave and license formed distinct classes by themselves and could not be equated with tenanted residential buildings. The Court held that the exemptions were valid and did not violate Article 14.
Conclusion:
The Supreme Court upheld the validity of the Bombay Building Repairs and Reconstruction Board Act, 1969, dismissing the petitions. The Court found that the cess imposed by the Act was for a public purpose, the classification of buildings was based on intelligible differentia with a rational nexus to the objects of the Act, and the exemptions provided were reasonable and did not violate the equal protection clause under Article 14. The petitions were dismissed without any order of costs.
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1971 (11) TMI 159
Whether warranty expenses and bonus should appropriately be included in the return and not in the exworks cost?
Whether the Commission has erred in allowing depreciation on the actual cost and not on the replacement value?
Held that:- As we agree, with the Commission that the entire cost on account of warranty in. elusive of labour charges should be borne by the manufacturers, it is wholly unnecessary for us to refer to any specific figures except that while considering the question of return the general idea relating to cost to the manufacturers would certainly be borne in mind and taken into consideration.
The Commission came to the correct conclusion that bonus is connected with profits and it cannot be included in the exworks cost.
Indeed it has not been disputed on behalf of the Government and the Attorney General quite properly and fairly accepts that some proper method should be devised for escalation or de-escalation, as the case may be. We have been suggested a number of formulae on behalf of the manufacturers as also the government but we shall indicate at a later stage what, in our opinion, is the best and the simplest method of providing for escalation and deescalation. We are satisfied, however, that a provision should be made and ought to have been made by the Commission in this behalf.
According to the principles discussed or to be discussed in the matter of fixing of a fair price the main objective is to protect the interest of the consumer while at the same time provide a reasonable margin of profit to the producer. The general approach has to be to determine the ex-works cost and then to arrive at the fair price after examining other claims of the industry and providing a reasonable return. We, therefore, find no such principle which has been demonstrated to be wrong in the report of the Commission so far as the fixation of the return is concerned.
We are, therefore satisfied that the capacity for production of Hindustan Motors should have been assessed at the figure given by the technical team, namely, 30,000 cars and 5,000 trucks per year. Import licenses, which were granted have also not been shown to have been given on the basis of the figures of production determined by the Commission. For the first half year 1970-71 the recommendation was for the grant of 11,075 cars although in the application the estimated production was stated to be 15,000 cars. It was only for the second half year 1970-71 that the import license was recommended and granted for 15,000 cars. There is no difficulty, therefore, in arriving at the figure of production of cars, namely, 30,000 cars but the departure which the Commission made in the matter of production of trucks has been seriously disputed on behalf of the Hindustan Motors. For the reasons that have been stated the correct figures would be those which were determined by the technical team of the Commission, namely, 30,000 cars and 5,000 trucks. In view of the fact that the company had not kept any regular record of data it was not possible to determine accurately the use of locally purchased and imported steel separately. In these circumstances we do not consider that the conclusion arrived at by the Commission has been shown to be demonstrably erroneous or wrong
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1971 (11) TMI 158
Issues Involved:
1. Necessity of providing a subsequent opportunity to the assessee in best judgment assessment.
2. Compliance with principles of natural justice in best judgment assessment.
3. Interpretation of Section 18 of the M.P. General Sales Tax Act and Rule 33.
Issue-wise Detailed Analysis:
1. Necessity of providing a subsequent opportunity to the assessee in best judgment assessment:
The primary issue referred for the court's opinion was whether, in making a best judgment assessment, a subsequent opportunity to show cause against the proposed best judgment estimate is required over and above the initial opportunity to show cause against the proposal to assess the dealer to the best of judgment. The Tribunal had previously held that the assessee should be given an opportunity at both stages: before deciding to resort to the best judgment assessment and before making the actual estimate. The Commissioner of Sales Tax contended that Section 18 does not necessitate two opportunities, arguing that once the decision to resort to best judgment assessment is made, further opportunity to plead against the proposed assessment is unnecessary.
2. Compliance with principles of natural justice in best judgment assessment:
The court examined several precedents to determine the necessity of providing opportunities to the assessee. The principle emphasized in the decisions discussed is that when the assessing authority is required to assess any assessee to its best judgment based on any information, comparable cases, flat average rate, or any other material on record, it is only fair and proper that such information or material should be brought to the notice of the assessee to enable him to offer any explanation in his favor. This ensures compliance with the principles of natural justice, which mandate that the assessee should not be adversely affected without being heard.
3. Interpretation of Section 18 of the M.P. General Sales Tax Act and Rule 33:
The court noted that Section 18 and Rule 33 do not compel the assessing authority to divide the process of assessment into two parts or stages. After rejecting the books of account on the grounds available under Section 18(4), the assessing authority is required to point out the discrepancy to the assessee and offer an opportunity to explain. The court clarified that it is not necessary for the assessing authority to announce its decision to resort to best judgment assessment first and then make a proposed estimate subsequently. The assessing authority must consider all available materials, apply its mind, and come to a fair conclusion after bringing the material on record to the notice of the assessee.
Conclusion:
The court concluded that in making the best judgment assessment, it is not always necessary to provide a subsequent opportunity to the assessee to show cause against the proposed best judgment estimate over and above the initial opportunity. However, if the assessment is based on any fact, information, comparable cases, or average rate, such material must be brought to the notice of the assessee to allow for an explanation. This opportunity need not be given in two stages but must adhere to the principles of natural justice to ensure the assessee is not adversely affected without being heard.
Final Judgment:
The court answered the reference by stating that a subsequent opportunity to show cause against the proposed best judgment estimate is not always necessary, provided the principles of natural justice are followed. The parties were directed to bear their own costs of the reference.
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