Input:
Appeal No. 1437 of 1971.
(Appeal by Special Leave from the Judgment and order dated 28 4 1970 of the Delhi High Court in Income Tax Refer ence No. 50/ 65) V.S. Desai, Mrs, Leila Seth and Parveen Kumar for the Appellantt.
S.T. Desai & M.N. Shroff, for the Respondent.
The Judgment of the Court was delivered by SHINGHAL, J.
This appeal by special leave is directed against the judgment of the Delhi High Court dated April 28, 1970 in a reference made by the Income tax Appellate Tribu nal (Delhi Bench A) under section (36(1) of the Income tax Act, 1922, hereinafter referred to as the Act.
in respect of the following question, "Whether on the facts and circumstances of the case the sum of Rs. 7 lakhs received from M/s Orissa Cement Ltd. was pursuant to an adventure in the nature of trade and as such tanable under the Indian Income tax Act, 1922 ?" The High Court has answered the question in the affirmative.
We shall refer to the facts giving rise to the controversy in some detail when we state them in a chronological order.
It may be mentioned, mean while, that the Dalmia Cement Ltd., hereinafter called the appellant, owned certain cement facto ries and it placed an order for the supply of four complete units of cement manufacturing machinery with M/s F.L. Smidth and Co., Copenhagen, on February 7, 1946.
to increase the production in the following factories, , 1.
Shantinagar, 2.
Dandot, 3.
Dalmianagar, 4.
Dalmiapuram.
Since the factory in Dandot fell within the territory of Pakistan on constitution with effect from August 15, 1947, the appellant transferred the machinery which was meant for the Dandot factory (hereinafter referred as the Dandot machinery), to a new company known as Orissa Cement Ltd. some time in 1950 51, and charged only the invoice price which it had paid to M/s F.L. Smidth and Co. The appellant thereafter asked for a higher price and after some negotia tions the Orissa Cement Ltd. agreed on December 4, 1951, to pay a further sum of Rs. 7 lakhs, in lieu of which 70,000 fully paid up ordinary shares of Rs. 10/ each.
were given to the appellant in that company.
The Income tax Officer treated that amount as income earned by the appellant pursu ant to an adventure in the nature of trade in 1952 53 as sessment year, and taxed it as such.
On appeal, the Assistant 4 1234SCI/76 556 Appellate Commissioner also held in his order dated Septem ber 16, 1958 that the transfer of the Dandot machinery was an adventure in the nature of trade and the payment of Rs. 7 lakhs was a revenue receipt which was rightly taxed by the Income tax Officer.
The matter went up in appeal to the Income tax Appellate Tribunal (Delhi Bench) which remanded the case to the Income tax Officer by its order dated Sep tember 13, 1960, for report on certain specific points.
On receipt of the Income tax Officer 's report, the Tribunal held that the transaction in question was "certainly an adventure in the nature of trade" and dismissed the appeal.
It however drew up a statement of the case, and that is how the aforesaid question of law was referred to the High Court under section 66(1) of the Act.
The High Court held that by the time the appellant placed the despatch order with M/s Smidth & Co., "its intention was to purchase it with an idea to resell" and that the fact that it was a single and iso lated transaction did not materially affect the case.
In reaching that conclusion the High Court took the subsequent developments into consideration, and rejected the contention that the machinery was purchased by way of an "investment".
The present appeal has been filed against that judgment of the High Court dated April 28, 1970.
Under section 10 of the Act, income tax is payable by ,m assessee under the head "Profits and gains of business, profession or vocation", inter alia, in respect of the profits and gains of any "business" carried on by him, and the controversy in this case is whether the receipt of the additional sum of Rs. 7 lakhs, over and above the cost of the Bandot machinery, could be said to arise out of any "business" of the appellant.
The term "business" has been defined as follows in clause (4) of section 2 of the Act, "(4) "business" includes any trade, commerce, or manufacureor any adventure or concern in the nature of trade, commerce or manufacture.
" The question in this case is whether the transaction was an "adveuture" in the "nature of trade" within the meaning of the definition ? Some decisions have been rendered by this Court on the point, and our attention has been invited to the decisions in Narain Swadeshi Weaving Mills vs Commis sioner of Excess Profits Tax, (1) Kishan Prasad and Co. Ltd. vs Commissioner of Income tax Punjab,(") G. Venkattaswami Naidu & Co. vs The Commissioner of Income tax,(3) Soroj Kumar Mazurndar vs The Commissioner of Income tax West Bengal Calcutta, (4) and Janki Ram Bahadur Ram vs Commissioner of Income tax, Calcutta(5).
Even so, on gener al principle can, for obvious reasons, be laid down to cover.
all cases of this kind because of their varied na ture, so that each case has to be decided on the basis of its own facts and circumstances.
It is however well settled that even a single and isolated transaction can be held to be capable of falling within the definition if it bears clear indicia of trade (vide Natgin (1) (2) (3) [1959] Supp.
(1) S.C.R. 646.
(4) (1959) Supp. (2) S.C.R. 846.
(5) ; 557 Swadeshi Weaving Mills vs Commissioner of Excess Profits, G. Venkataswami Naidu & Co. vs The Commissioner of Income tax, and Sarol Kumar Mazumdar vs The Commissioner of Income tax, West Bengal, Calcutta (supra)).
It is equally well settled that the fact that the transaction is not in the way or business of the assessee does not in any way alter the character of the transaction (vide G. Venkataswatni Naidu & Co. vs The Commissioner of Income tax, and Saroj Kumar Mazumdar vs The Commissioner of InCome tax, West Bengal, Calcutta (supra).
It would not therefore help the appel lant 's case merely to urge either of these points for the answer to the question will depend on a consideration of all the facts and circumstances.
The question under consideration is essentially a mixed question of fact and law.
It will therefore be desirable, in the first instance, to re state the relevant facts in a chronological order; As has been stated, the appellant owned some cement factories in various parts of India including the one in Dandot.
It placed an order with M/s. Smidth & Co., Copenha gen, for the supply of four complete units of machinery for the manufacture of cement, to increase the production of its factory at Dandot and three other factories.
A firm order for all the four units was placed on February 7, 1946.
It was confirmed by M/s. F.L. Smidth & Company on August 6, 1947 and the appellant was informed that the supply of the Dandot machinery would be made in various months from Febru ary 1948 to October 1948.
India was partitioned, and Paki stan came into existence on August 15, 1947.
Dandot fell in the territory of Pakistan.
The appellant, which was an Indian Company, did not however cancel the order in respect of the Dandot machinery.
On the other hand, a Director of the appellant informed the Orissa Government in his letter dated November 25, 1947 that it had "got a cement plant for which it had placed order a couple of years back", of which early delivery was expected, and that it would be willing to put it in Orissa on "suitable terms." The appellant 's General Manager held discussions with the Orissa Government on January 8, 1948 for the setting up of a cement factory in Orissa.
It was recorded in the note of the proceedings of that meeting that the appellant had ordered machinery for replacing its cement plant, the said machinery was expected to be shipped at an early date and parts of it would start arriving in March 1949.
It was further stated that the complete supply of the plant was estimated to take about six months, and if the negotiations were fruitful the first lot of cement would be produced by the beginning of 1950.
The appellant 's representative insisted that a final decision might be taken at an early date so that the machinery which had to be chipped from abroad could be diverted, depending upon the decision, to the Calcutta or Bombay port.
The appellant thereafter wrote a letter to M/s. F.L. Smidth and Co. (Bombay) Ltd. on September 9, 1948 directing that the plant meant for the Dandot works might be diverted to Oris sa.
It was specially stated in the letter as follows, "There are certain equipments in the specifications of the plants for extension No. 3 and 4, which were peculiar to the layout and design for the extension at Dandot and Shanti 558 nagar and they will not now fit in exactly in the same manner in our proposed new factories.
As such, it is essen tial that the whole specifications are carefully scrutinised and manufacture of the items which are peculiar to the lay out of Dandot and Shantinagar Works only should be kept in abeyance in order to suit the local conditions.
" The plants were expected to arrive from March 1949 onwards, but this would not have been possible without an import licence.
The appellant obtained the licence from the Gov ernment of India and intimated to M/s. F.L. Smidth and Co. in its letter dated August 2, 1948 that it had been permit ted to import in the Indian Dominion the two plants meant for Dandot and Shantinagar.
The suppliers were accordingly requested to intimate the dates upto which extension was required for the import of the machinery.
A formal agree ment was made between the appellant and the Orissa Govern ment on December 23, 1948.
The Dandot machinery arrived in due course.
It was delivered by the appellant to Orissa Cement Ltd. and its actual cost was debited to it.
Quite some time thereafter, on April 7, 1970, a Director of the appellant wrote a letter to the Industries Minister of the Orissa Government that the machinery supplied to the orissa Cement Ltd. should be revalued and the appellant allowed a higher price than the invoice price due to a rise in the cost of the cement .plant at the time of supply as compared with the price at the time when it was originally ordered by the appellant.
The name of one F.B. Mogensen was suggested for the revaluation of the machinery.
This was agreed to by the State Government on June 4, 1950.
Mogensen reported that the Orissa Cement Ltd, had benefited to the extent of almost Rs. 21 lakhs in the bargain.
The Orissa Government passed a resolution dated December 4, 1951 allowing a fur ther sum of Rs. 7 lakhs to the appellant and, in lieu of cash payment, allotted 70,000 fully paid up ordinary shares of Rs. 10/ each of the Orissa Cement Ltd. to the appellant.
The above facts clearly establish that, (i) Even though the appellant initially placed an order on February 7, 1948 for the purchase of the Dandot Machinery for improving the production in the Dandot factory, and the supply was not to commence until February.
1948, it did not make any effort to cancel that order even after Dandot was included in the territory of Pakistan with effect from August 15, 1947.
(ii) On the other hand, in pursuance of an enquiry by the Government of Orissa whether the appellant would be interested in putting up a cement plant in the State, one of the appellant 's Directors informed the State Government on November 25, 1947 that it had got a cement plant for which it had placed an Order a couple of years ago and that it could be put up in Orissa on suitable terms.
The appellant 's General Manager in fact met the State Government authorities in January, 1948 where it was reiterated 559 that the machinery ordered by the appellant was expected to start arriving in March 1949 and could be diverted to Calcutta and that if the appellant 's negotiations with the State Government were suc cessful, the first lot of cement could be supplied by the beginning of 1950.
(iii) The negotiations with the Orissa Govern ment proved successful and the appellant wrote a letter to M/s. F.L. Smidth and Co. on August 2, 1948 informing it that it had obtained the permis sion of the Government of India to import the Dandot machinery in India.
The appellant also informed the suppliers on September 9, 1948 that it should divert the Dandot machinery to Orissa and supply the same according to the revised specifica tions to suit the local conditions.
(iv) A formal agreement was executed by the appellant and the Orissa Government on December 23, 1948 for the setting up of a cement factory in Orissa.
(v) The Dandot machinery arrived and was sup plied by the appellant to the Orissa factory against cost price, which was debited to the Orissa Cement Company.
It would thus appear that, long before the Dandot machinery was due, the appellant knew that it could not be used in Dandot.
It has been found that after the partition of the country the appellant could have cancelled the order for the import of the machinery but it did not do so and decided to import it with a view to supplying it to Orissa on suitable terms.
It therefore resold it to the Orissa factory in accordance with the terms and conditions of its negotiations with the State Government.
The intention of resale was therefore there almost from the beginning, and was really the dominant intention in importing the machinery after the partition of the country.
It is also quite clear that the appellant was not inclined to make it a gratuitous sale, but agreed to it only when it was able to secure a suitable agreement with the State Government for the setting up of a factory in Orissa.
It was in fact.
the appellant 's own case that the price of the Dandot machinery had gone up substan tially.
Even so, the appellant did not care to utilise it for any of its own plants, but sold it to Orissa Cement Ltd. The appellant therefore did not only have the dominant intention of selling the Dandot machinery to its own advan tage but, in doing so, it acted with the set purpose of taking an advantage of its position as the owner of the imported machinery of which the price had on the appellant 's own showing, gone up much higher.
It was therefore a real transaction by way of an adventure in the nature of trade and was as such a business transaction within the meaning of section 2(4)of the Act.
It does not matter if the appel lant did not earn a profit immediately on delivering the machinery, and sold it without any profit in the first instance, for there can be no denying the fact that even if the appellant had not earned any profit whatsoever at the time of the sale or even thereafter, the transaction in the facts and circumstances of the case, would nonetheIess have been adventure in the 560 "nature of trade" and no other.) We are fortified in this view by the decisions in Narain Swadeshi Weaving Mills vs Commissioner Excess Profits Tax (supra) and G. Venkataswami Naidu and Co. vs The Commissioner of Income tax (supra).
It is true that the question of asking for payment in excess of the cost price was raised by the appellant some time later, but its subsequent course of conduct in bringing about a substantial profit is a clear pointer to the real intention behind the sale.
It was for that reason that the appellant 's Director addressed a letter to the Minister of Inustries of the Orissa Government on April 7, 1950 stating that the Dandot machinery should be revalued and the appel lant allowed a higher price due to the rise in its price at the time of the supply.
The entire correspondence in that respect has not been placed on record by the appellant, but it appears that the appellant was able to secure a further sum of Rs. 7 lakhs, under an agreement dated December 4, 1951 in lieu of which it was able to secure 70,000 fully paid up shares of Rs. 10/ .
The appellant succeeded in doing so merely because it was able to substantiate its claim for a higher price, or profit, on the sole ground that it was entitled to it because of the increase in the price at the time of the sale.
There is therefore nothing wrong in the view which has prevailed with the High Court that it was an adventure in the nature of trade.
It has been argued by Mr. V.S. Desai, for the appellant that as it was a single and isolated transaction of purchase and sale,, the onus of proving that it was a transaction in the nature of trade lay on the department.
This is a correct proposition of law and, .as would appear from what has been stated above, we have examined the controversy on the assumption that the burden of proving that the transac tion was an adventure in the nature of trade lay on the department.
The ancillary argument of Mr. V.S. Desai that a question like the present has to be examined with reference to the indicia or characteristics of the trade, is also quite correct, but counsel has not been able to contend, in the face of the facts and circumstances mentioned above, which indicia or characteristics could be said to be lacking to take it out of the category of an adventure in the nature of trade.
All that Mr. V.S. Desai has pointed out is that there was no intention to make a profit when the Dandot machinery was sold to the Orissa Cement Ltd., and it has been urged that would be sufficient to take it out of the category of an adventure in the nature of trade.
Reference in this connection has been made to the decisions in Kishan Prasad & Co. Ltd. vs Commissioner of Income tax, Punjab (supra), G. Venkataswami Naidu and Co. vs The Commissioner of Income tax (supra), Saroj Kumar Mazurndar vs The Commissioner of In come tax, West Bengal, Calcutta (supra), and Ajax Products Ltd. vs Commissioner of Income tax, Madras(1).
We have given our reasons for the contrary view that the transaction would be an adventure in the nature of trade even if the question of profit was left out of consideration, and that the appellant in fact acted with the set purpose of resell ing the (1) 561 Dandot machinery to its advantage and not by way of a favour or a gratuitous act.
We have also shown how the appellant ultimately claimed and succeeded in securing a higher price merely on the ground that there was an appreciable increase in the price after the purchase of the Dandot machinery.
Lastly, it has been argued by Mr. V.S. Desai that in purchasing the machinery the appellant made a capital in vestment so that it was merely a capital asset.
This argu ment is also futile for, as has been shown, the appellant made the purchase with the dominant intention of reselling the machinery to advantage and made the resale only when it was able to enter into an agreement with the Orissa Govern ment lot the setting of a cement factory in that state on terms and conditions which were suitable from its point of view.
It may also be stated that even in its own profit and loss account and balance sheet, the appellant treated the sale price as a revenue receipt and not as a capital invest ment.
It was therefore an after thought to Claim that the initial purchase was by way of an investment and was a capital asset.
The facts of Kishan Prasad and Co. Ltd. vs The Commis sioner of Income tax, Punjab (supra), Saroj Kumar Mazumdar vs The Commissioner of Income tax, West Bengal, Calcutta (supra) and Janki Ram Bahadur Ram vs Commissioner of Income tax, Calcutta (supra) referred to by Mr. V.S. Desai were different.
In the case of Kishan Prasad and Co. Ltd. (supra) there was agreement to give the managing agency to the assessee on the erection of the mill because it had subscribed to shares worth Rs. 2 lakhs.
The mill was not erected and the assessees sold the shares.
There was there fore justification for holding that the purchase of the shares was an investment to acquire the managing agency and was not an adventure in the nature of trade.
In Saroj Kumar Mazumdar 's case (supra) there was a single transaction of sale of rights for the purchase of land measuring 3/4 acres by the assessee who was an Engineer by profession.
His construction activities declined and that was why he sold his rights in the land for Rs. 74,000 odd in excess of the amount paid by him.
The Incometax department however failed to prove that the assessees dominant intention was to embark on a venture in the nature of trade as distin guished from capital investment.
That was also therefore a different case.
In the case of Janki Ram Bahadur Ram (supra) the assessee was a dealer in iron scrap and hard ware.
He agreed to purchase all rights of a company in a jute pressing factory, but sold it at a profit.
It was held that as the property purchased by the assessee was not such that an inference that a venture in the nature of trade must have been intended could be raised, the profit was not liable to tax.
It was held that a person purchasing a jute press might intend to start his own business or he might let it out on favourable terms.
The property was in fact let out by the earlier owner before the date of sate.
That was also therefore quite a different case and cannot avail the appellant.
In the remaining case of Ajax Products Ltd. (supra) it was held that on the facts the assessee company having acquired the sick mill to open new line of business, the purchase was, really in the nature of an investment and the purchase and sale did not amount to an adventure in the nature of trade.
That was therefore also quite a different case.
562 It would thus appear that in spite of the fact that the appellant withheld some of the correspondence bearing on the controversy, the Department has succeeded in proving that the transaction of sale in question was an adventure in the nature of trade and fail within the definition of "business" in clause (4) of section 2 of the Act.
The High Court has rightly answered the question in the affirmative, and as we find no merit in this appeal, it is dismissed with costs.
M.R. Appeal dismissed.

Output:
In 1946, the appellant ordered cement manufacturing machinery from a in Denmark, for its factory in Dandot, but long before the machinery was due, the Country was parti tioned and Dandot went to Pakistan.
Instead of cancelling his order, the appellant imported the machinery.
It was found that the appellant did so with the intention of sell ing it at a profit, to the Orissa State.
At the time of the sale, the appellant charged only the invoice price initially paid by it, but later, obtained a profit.
The Income Tax Officer treated the profit as income earned pursuant to an adventure in the nature of trade, and taxed it as such.
The appellant 's appeals were rejected by the Appellate Taxation Authorities.
The matter was then referred to the High Court section 66 (1 ) of the income Tax Act, but was dismissed.
The appellant contended that making a profit was not its intention at the time of sale, and that being a single and isolated transaction of purchase and sale, it was not an adventure in the nature of trade within the meaning of section 2(4) of the Act, and that the onus of proving anything to the contrary, lay upon the Department.
Dismissing the appeal, the Court HELD: (i) It is well settled that even a single and isolated transaction can be held to be capable of failing within the definition of "business" if it bears clear indi cia of trade.
The fact that the transaction is not in the way of business of the assessee does not in any way alter the character of the transaction.
[556H, 557A] Narain Swadeshi Weaving Mills vs Commissioner of Excess Profits Tax (251` I.T.R 765), G. Venkataswami Naidu .
& Co. vs The Commissioner of Income Tax [1959] Supp.
(1) S.C.R. 646, Sarol Kumar Mazumdar vs The Commissioner of Income Tax, West Bengal, Calcutta [1959] Supp.
(2) S.C.R. 846 followed.
(2) It is a correct proposition of law that as it was a single and isolated transaction of purchase and sale, the onus of proving that it was a transaction in the nature of trade lay on the department [560 D E] (3) The appellant had the dominant intention of selling the Dandot machinery to its own advantage, and acted with the set purpose of taking an advantage of its position as the owner of the imported machinery Even if the appellant had not earned any profit whatsoever at the time of the sale or very soon thereafter, the transaction, in the facts and circumstances of this case, would nonetheless have been an adventure in the "nature of trade", and a business transac tion within the meaning of Section 2(4) of the Act.
[560H, 561B, 562A B] Narain Swadeshi Weaving Mills vs Commissioner of Excess Profits Tax (Supra).
and G. Venkataswami Naidu & Co. vs The Commissioner of Income Tax (Supra) followed.
Kishan prasad & Co. Ltd. vs Commissioner of Income Tax, Punjab Saroj Kumar Mazumdar vs The Commis sioner of Income Tax.
West Bengal, Calcutta (Supra).
janki Ram Bahadur Ram vs Commissioner of Income Tax., Calcutta ; and Ajax products Ltd. vs Commissioner of IncomeTax, Madras distinguished.


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Civil Appeal No. 2295 of 1968.
From the Judgment and order dated 3 2 1967 of the Madhya Pradesh High Court in Misc.
Petition No. 26 of 1966.
Harbans Singh for the Appellant.
Raghunath Singh and Manojswarup for Respondent No.1.
S.K. Gambhir for Respondents 3 5 and 7.
U. P. Lalit,B.P.Muheshwari and Suresh Sethi for Respondent No. 6.
The Judgment of the Court was delivered by UNTWALTA, J.
In this appeal by certificate granted by the Madhya Pradesh High Court the question of law which Lalls for our determination is whether conferral of Bhumiswalnli rights on Shri Khushi Lal respondent No. 1 in respect of the lands in question in accordance with Section 190 of the Madhya Pradesh Land Revenue Code, 1959, hereinafter referred to as the M.P. Code of 1959, by the Revenue Authorities is correct and sustainable.
Maulana Shamsuddin, the sole appellant in this appeal, was a Muafidar in the erstwhile State of Bhopal of the disputed lands in accordance with the Bhopal State Land Revenue Act, 1932 (for brevity, the Bhopal Act of 1932) .
The first respondent claimed to be a Shikmi of the appellant in respect of the lands in question.
His case was that the appellant was the occupant of the lands within the meaning of the Bhopal Act of 1932.
On the coming into force of the M.P. Code of 1959.
the appellant became a Bhumiswami under clause (c) of section 158 and the respondent became an occupancy tenant under section 185 (1)(i)(iv)(b).Thus he became entitled to conferment of Bhumiswami rights under Section 490.
He applied before the Tahsildar, Huzur, respondent No. 5 for mutation of his name as a Bhumiswami in the Revenue records.
The Tahsildar by his order dated the 24th June, 1963 directed Khushi Lal to deposit compensation equivalent to 15 times of the land revenue on the payment of which his name was to be recorded as a Bhumiswami of the holdings.
It appears his name was so recorded on the deposit of the compensation money.
The appellant filed an appeal before the Sub Divisional officers Huzur, respondent No. 4 from the order of the Tahsildar.
His appeal was dismissed by the Sub Divisional officer on the 12th of December, 1963.
The appellant failed before the Additional Commissioner, Bhopal, respondent No. 3 on the dismissal of his second appeal on the 25th August 1996.
He went in revision before the Board of Revenue, (respondent No. 2 ) .
The revision was allowed on the 6th of July, 1965.
The 584 Board held that the appellant was not an occupant within the meaning of Section 2(15) of the Bhopal Act of 1932 and consequently the first respondent was not a Shikmi under the said Act.
He did not become an occupancy tenant under the M.P. Code of 1959 and, therefore, conferral of Bhumiswami rights on him was erroneous in law.
The first respondent filed a Writ Petition in the High Court and succeeded there.
The High Court held that the Board was not right in its view of the law.
The appellant was an occupant and the respondent No. 1 was a sub tenant (Shikmi) under the Bhopal Act of 1932.
Conscquently he became an occupancy tenant entitled to conferment of Bhumiswami rights under the M.P. Code of 1959.
The appellant has preferred this appeal in this Court to challenge the decision of the High Court and for restoration of the order of the Board of Revenue.
Mr. Harbans Singh, appearing for the appellant, Advanced a very fair and able argument to advocate his cause.
He could now and did not dispute that if the appellant was an occupant, the first respondent was a Shikmi under the Bhopal Act of l932 and if that be so then the order of the High Court is unassailable.
But he vehemently contended that the appellant was not an occupant.
Learned counsel for the respondents controverted his argument.
Prima facie the argument, as presented, for the appellant appeared to have substance and force but on a close scrutiny we had no difficulty in rejecting it.
Section 2 of the Bhopal Act of 1932 is the definition section and as usual at the outset it uses the phrase "in this Act, unless there is nothing repugnant in the subject or context,".
Sub section (5) defines "Alienated land" to mean "land in respect of which, pursuant to a grant made by His Highness the Ruler, Government has, in whole or in part, assigned or relinquished its right to receive land revenue, and includes such village waste and forest as are mentioned in the sanad of the grant " Thereafter the sub section says: "If the land revenue is assigned the person to whom such assignment is made is called a "Jagirdar".
If the land revenue is relinquished the person in whose favour such relinquishment is made is called "Muafidar";".
Subsection ( l S) provides: " "occupant" means a person who holds land direct from the Government or would do so but for the right of collecting land revenue having been assigned or relinquished.
" It would thus be seen that if pursuant to the grant made by His Highness the Ruler of Bhopal, Government 's right to receive land revenue was assigned to the grantee then he was called a Jagirdar and 585 it was relinquished then the person in whose favour such relinquishment was made was called Muafidar.
Under the first part of the definition of "occupant" given in sub section (IS) a person who holds land direct from Government would be an occupant and being not a person in whose favour the right to receive land revenue has either been assigned or relinquished will be required to pay to the Government land revenue or rent.
We are using both the words revenue ' and 'rent ' on the assumption that such an occupant being neither a Jagirdar nor a Muafidar would be required to pay some money to the Government for being in occupation of the land.
Under the second part of the definition a Jagirdar or a Muafidar would also be holding land direct from Government but because the right of collecting land revenue has either been assigned or relinquished, strictly speaking, he does not hold land direct from the Government in the sense of paying any land revenue or rent to it because the Government has parted with the right to collect land revenue from him.
We are of the opinion, in agreement with the High Court, that on a careful analysis of the definition of the term "occupant" in section 2(15), it is legitimate to conclude that even a Jagirdar or a Muafidar is an occupant.
He holds land under the Government; on the resumption of the Jagir or the Muafirights by the Government the land reverts back to it.
Payment of land revenue or rent for holding land under the Government was not a sine qua non for making the holder of the land an occupant.
"Rent" is defined in sub section (19) of Section 2 of the Bhopal Act of 1932 to mean "whatever is payable to an occupant in money, kind or service by a shikmi for the right to use land.
" This would show that strictly speaking a person holding the land direct from the Government within the meaning of the first part of the definition in sub section (IS) is not to pay any money to the Government in the shape of rent but what he will be required to pay would be the land revenue.
But a Jagirdar or a Muafidar holding the land under the Government is not required to pay any land revenue.
sub section (21) defines "Shikmi" to mean "a person who holds land from an occupant and is, or but for a contract, would be liable to pay rent for such land to that occupant, but does not include a mortgagee or a person holding land directly from Government.
" Respondent No. 1 was inducted upon the land by the appellant in the year 1958.
Since then he had been cultivating the land.
He could not but be a Shikmi within the meaning of sub section (21 ) .
Mr. Harbans Singh was not right in saying that he was a mere cultivator and was cultivating the land not as a sub tenant or a Shikmi but must be doing so under some special arrangement of cultivating the land as a servant of the appellant or the like.
There is no warrant for such a contention.
586 Section 46 of the Bhopal Act of 1932 runs thus .
"(l) All land to whatever purpose applied and wherever situate, is liable to the payment of revenue to the Government, except such land as has been wholly exempted from such liability by a special grant on His Highness the Ruler or by a contract with the Government, or under the provisions of any law or rule for the time being in force.
(2) Such revenue is called "Land Revenue"; and that term includes moneys payable to the Government for land, notwithstanding that such moneys may be described as premium, rent, quit rent, or in any other manner in any enactment, rule, contract or deed." This section lends support to the view which we have expressed above that a person holding land directly under the Government and not being a Jagirdar or a Muafidar will be liable to pay land revenue to the Government in whatever name the payment of money may be described such as premium, rent, quit rent etc.
The High Court in its judgment has adverted to some sections contained in Chapter VI of the Bhopal Act of 1932.
Section 51 provided for disposal of unoccupied land.
Sub section (1) of section 52 says that a person acquiring the right to occupy land under section 51 will be called an occupant of such land and under sub section (2) all persons who, prior to the commencement of this Act, had been entered in settlement records as responsible for the payment of land revenue to the Government, or who, but for a special arrangement, would have been to responsible, would be deemed to be occupants within the meaning of Section 52.
In our opinion this special arrangement mentioned in sub section (2) cannot be squarely equated with the assignment or relinquishment of the right to receive land revenue envisaged by the Bhopal Act of 1932.
We do not feel inclined to agree with the High Court that the appellant became occupant under section 52(2) of the Bhopal Act of 1932 because he was a person who was entered into settlementt records prior to the coming into force of that Act.
Firstly it is not clear whether the facts so stated in the judgment of the High Court are (quite correct, and, secondly, it is admitted on all hands that the appellant was a Muafidar and, therefore, in our opinion he was an occupant within the meaning of Section 2(15).
Section 54 provided that the rights of an occupant, meaning thereby the occupant as mentioned.
in Section 52, were to be permanent, transferable and heritable.
Ordinarily and generally the rights of a Jagirdar 587 or a Muafidar being occupants within the meaning of Section 2(15) A read with Section 167 were neither transferable nor heritable and in that sense the rights were not permanent.
In our opinion, therefore, the type of occupant who is dealt with in Chapter VI of the Bhopal Act of 1932 is not the type of occupant having the same kind of incidence as defincd in Section 2(15).
As we have already indicated it is a well established principle of law that a particular term defined in the definition section is subject to anything repugnant in the contact of the other provisions of the Statute.
The provisions of Chapter VI being at variance with the definition clause cannot make the occupant described in that Chapter the same occupant as defined in Section 2(15).
Our attention was drawn by the learned counsel for the appellant to Section 167 of the Bhopal Act of 1932 dealing With the restriction ill the rights of the Jagirdars and Muafidar to transfer such rights or create encumbrances on them.
According to the said Section no Jagirdar or Muafidar could "transfer his rights as Jagirdar or muafidar, or, except for such period as he is in possession of his jagir or muafi create an encumbrance on the income thereof." But inducting a person as Shikmi on the land was not prohibited under Section 167.
On the other hand, Section 194 provide(l that all occupant could make a lease of his holding and under certain circumstances it could n(lt be for a term of more than 12 years.
It was then argued that the right of a Muafidar being in the nature of a life grant was valid only for the Life time of the Muafidar.
So the Muafidar could not induct a person as Shikmi who ultimately could become an occupancy tenant entitled to conferment of Bhumisavami rights later on.
This argument has to be staled merely to be rejected.
It may well be that the right of a Shikmi would not have lasted beyond the duration of the right of the Muafidar.
But then, his rights were enlarged by operation or the welfare legislation enacted by the State Legislature for the benefit of the cultivators of the soil in the year 1959.
Section 185(1)(iv)(b) of the M.P. Code of 1959 says: "(1) Every person who at the coming into force of this Code holds (iv) in the Bhopal region (b) any land as a shikmi from an occupant as defined in the Bhopal State Land Revenue Act, 1932 (IV of 1932): 588 shall be called an occupancy tenant and shall have all the rights and be subject to all the liabilities conferred or imposed upon an occupancy tenant by or under this Code.
" As held by us above the appellant was an occupant as defined in the Bhopal Act of 1932 and thus under clause (c) of Section 158 on the coming into force of the Code he became a Bhumiswami.
But his Bhumiswami rights were liable to be conferred, under certain conditions, on the occupancy tenant under Section 190.
As a matter of fact in accordance with the said provision the Bhumiswami rights were conferred on respondent No. 1 on payment of compensation being in the amount of 15 times of the land revenue for payment to the appellant.
Our attention was drawn to a recital of facts in the Statement of the case of some of the respondents that the appellant had withdrawn the said amount of compensation.
But we are not resting our judgment on that ground as in our opinion, whether he has withdrawn the amount of compensation or not, he cannot challenge the conferment of his Bhumiswami rights on respondent No. l. which have been validly and legally conferred.
We may now briefly deal with a few more short submissions of the appellant.
In section 185(1)(iv)(a) of the M.P. Code of 1959 it is provided that if a person who at the time of coming into force of tba said Code was holding any land as a sub tenant as defined in the Bhopal State Sub tenants Protection Act, 1952 shall also be called an occupancy tenant.
A copy of this Act could not be made available for our perusal.
But what we get from the order of the Board of Revenue is that a Sub tenant as defined in the Bhopal Act of 1952 means a person who holds a parcel of khud kasta land from a Jagirdar.
Along with this our attention was also drawn to the Bhopal State Sub Tenants (of occupants) Protection Act.
In this Act, section 2(b) runs thus: "The expression "occupant" shall have the same meaning as in the Bhopal State Land Revenue Act, 1932 (IV of 1932) and, for the purposes of this Act, it should also include a muafidar, as defined in Bhopal State Land Revenue Act, 1932 (IV of 1932)".
In other sections of the said Act protection against ejectment was given to the Shikmis.
The argument was that protection to the sub tenants of Jagirdars was given in the Bhopal Act of 1952 and protection to such persons was given in case of sub tenants of Muafidar under the Bhopal Act of 1954 by including Muafidar in the expression 'occupant ' occurring in the said Act.
Counsel, therefore, submitted that if the 589 term 'occupant ' in the Bhopal Act of 1932 had included a Muafidar then there was no necessity of expressly and separately including a Muafidar in the definition of the said expression.
in the Act of 1954.
In our opinion this argument has no substance.
It may be by way of abundant precaution or for putting the matter beyond any shadow of doubt that the expression 'occupant ' was defined in a comprehensive manner in the Bhopal Act of 1954.
Section 3 of the said Act shows that even a Muafidar could sub let a land to a person and induct hi as a Shikmi prior to the coming into force of this Act.
Such a Shikmi got the protection against ejectment by operation of law engrafted in the Bhopal Act of 1954.
After the passing of this Act? he no longer could be said to be a Shikmi only during the life time of the Muafidar but was so even beyond it.
The counsel for the appellant called our attention to a decision of this Court in Begum Suriya Rashid and others vs Stale of Andhra Pradesh(l).
In this case it was held that the muafi grants to the predecessor in interest of the appellants before the Supreme Court were not hereditary or perpetual and the appellants could not claim title as Muafidars even though some contradictory arabic expressions had keen used in the document of grant.
This decision does not advance the case of the appellant any further.
For the reasons stated above, we dismiss this appeal but make no order as to costs.
M.R. Appeal dismissed.

Output:
The appellant was a Muafidar of the disputed land, in the erstwhile Bhopal State, while the first respondent cultivated the said lands as his tenant.
When the M. P. L. R. Code, 1959, came into force, the first respondent claimed that the appellant, as the occupant of the lands within the meaning of S.2 (15) of the Bhopal State Revenue Act, 1932, had become a Bhumiswami u/s 158(C) of the Code of l959, while he himself had become an occupancy tenant u/s 185(1)(iv)(b) and as such, was entitled to conferment of Bhumiswami rights u/s 190 of the same Code.
He ' applied to the Tahsildar, Huzur, for mutation of his name as a Bhumiswarni in the Revenue records.
and was directed to deposit compensation equivalent to 15 times of the land revenue.
Thereafter his name was recorded as a Bhumiswami of the holdings, on the deposit of the compensation money.
The Muafidar appellant 's appeal to the sub Divisional officer, against the Tahsildar 's order, and a second appeal to the additional Commissioner.
were dismissed, but the Board of Revenue allowed his revision application holding that he was not an occupant within the meaning of section 2(15) of the Bop Act of ]932.
and that consequently the first respondent was neither a Chime, nor did he become an occupancy tenant under the M.P. Code of 1959, and therefore conferment of Bhumiswami rights on him was erroneous in law.
, The first respondent filed a writ petition against the Revenue Board 's order, which was allowed by the High Court.
Dismissing the appeal by certificate, the Court ^ HELD: 1.
Under section 2(15) of the Bhopal State Land Revenue Act 1932, a person who holds and direct under the Government would be an ` 'occupant", in whatever name the payment of money may be described such as premium, rent, quit rent etc.
On a careful analysis of the definition, it is legitimate to conclude that a Jagirdar or Muafidar is an occupant.
He holds lands under the Government.
On the resumption of the Jagir or the Muafi rights by the Government, the land reverts back to it.
Payment of land revenue or rent for holding land under the Government was not a sine qua non for making the holder of the land an revenue.
[585 A D, 586 D] Begum Suriya Rashid and Ors.
vs State of Madhya Pradesh [19691] 1 SCR 869 held inapplicable.
The rights of Shikmis were enlarged by operation of tile Madhya Pradesh Land Revenue Code.
Under section 185(l)(iv)(b) a Shikmi became an occupancy tenant, while u/s 190, as an occupancy tenant, he became entitled, under certain conditions, to conferment of Bhumiswami rights of the occupant of he holdings.
A B] 583


Input:
o. 1574 of 1971.
Appeal by special leave from the judgment and order dated July 6/7, 1971 of the Bombay High Court in Special Civil Application No. 619 of 1971.
section V. Gupte and P. N. Tiwari, for the appellants.
K. section Chawla, section N. Mishra and section section Jauhar, for the respondents.
The Judgment of the Court was delivered by Mitter, J.
This is an appeal by special leave from a judgment and order of the Bombay High Court in a Special Civil Application from a decision.
of the Court of Small Causes Bombay in exercise of its revisionary jurisdiction.
The revisional court had reversed the decision of the trial court and remanded the matter for disposal ,of the issues other than issues 2 to 8 tried as preliminary issues and decided in favour of the plaintiffs before the Court of Small Causes.
The facts are as follows.
Respondent No. 1 was the owner of a flat on the second floor of Block No. 8 'Shyam Niwas ', Warden Road, I Bombay.
She was a member of a Co operative Housing Society and had acquired the flat from the said society.
In 1959 she had put the appellant Sabharwal Brothers in possession of the flat for a period of 11 months on payment of Rs. 510/ per month.
There was an agreement in writing which purported to show that the possession was to be on leave and licence basis.
This agreement was signed by a partner of Sabharwal Brothers who also became member of the said Co operative Society.
There were repeated renewels of the said agreement until 25th October, 1962 when the first respondent asked the appellants to vacate possession on the ground that she required the flat for her personal occupation.
As this was not complied with, she filed a statement of claim before the Registrar of Co operative Societies on the ground that there was 55 a dispute within the meaning of section 91(1) of the Maharashtra Co operative Societies Act (Thereinafter referred to as the 'Act ') which required adjudication There was a challenge to the jurisdiction of the nominee of the Registrar to whom it was referred by the appellants.
The proceedings before the nominee went on for some time on July 3, the nominee made an award to the effect the, appellants were occupying the flat on leave and licence basis.
Anticipating the award the appellants filed a suit in the Court of Small Causes Bombay stating that they were in occupation of the flat as tenants and as such entitled to protection under the Bombay Rent Act, 1947 and the first respondent had no right to evict them.
In her written statement the defendant denied that the plaintiffs were tenants contending, inter alia, that the plaintiffs were occupying the flat only on leave and licence basis etc.; that the dispute between the parties had been referred to the Registrar of Co operative Societies for disposal and finally that the Court of Small Causes had no jurisdiction to entertain and try a suit involving such a dispute.
The Small Causes Court framed no less than twelve issues of which issues 2 to 8 related to the maintainability of the suit and the jurisdiction of the court in view of the provisions of section 91 (1) (d) of the Act.
The Small Causes Court held that the suit was maintainable and answered the other preliminary issues in favour of the plaintiff.
The matter was taken in revision to a Bench of the said Small Causes Court.
The Bench took a different view holding that the Registrar 's nominee did have jurisdiction to try the dispute between the parties and remanded the proceedings to the trial court for disposal of the suit after deciding on issue as to res judicata by reason of the award of the nominee.
The High Court dismissed the Special Civil Application of the plaintiffs holding that the revisional court of the Small Causes was justified in coming to the conclusion that it was not open to the plaintiffs to contend that the Registrar or his nominee had no jurisdiction to entertain the dispute on the two grounds on which it was challenged.
Before us the main points urged on behalf of the appellants were: first, whether there was any dispute between the parties touching the business of the Co operative Society which could be decided by the Registrar or referred by him to a nominee for disposal; and, secondly whether the suit filed in the Small Causes Court was maintainable having regard to the nature of the relief sought.
The central question, therefore,.is, whether the dispute between the parties is capable of reference under the Act.
The relevant portion of section 91 (1 ) (b) of the Act runs as follows (1) Notwithstanding anything contained in any other law for the time being in force, any dispute touch 56 ing the constitution . management or business of a society shall be referred by any of the parties to the dispute. if both the parties thereto are one or other of the following: (a). . . . . . . . . (b) a member, past member or a person claiming through a member etc. " section 91(3) provides : "Save as otherwise provided under subsection (3) of section 93, no court shall have jurisdiction to entertain any suit or other proceedings in respect of any dispute referred to in sub section (1).
We may also note the relevant portion of section 163 (1) which provides: I ) Save as expressly provided in this Act, no civil or revenue court shall have any jurisdiction in respect of (a) (b) any dispute required to be referred to the Registrar, or his nominee (c) Before the Court of Small Causes reference was made to bye law No. 2 of the Society to show that the objects of the society were inter alia to carry on the trade of buying,selling, hiring and letting land in accordance with the co operative principles and under Regulation No. 5 in form 'A ' printed at the end of the bye laws "No tenant shall assign, underlet, vacate or part with the possession of the tenement or any part thereof without the consent in writing of the society.
" The Bench of the Court of Small Causes referred to the above provisions and observed that the bye laws of the society constituted an agreement between the members of the society and a breach thereof would affect the defaulting member 's right of membership of the society and consequently a dispute relating to the letting of the flat was a dispute which touched the business of the society.
57 (Mitter, J.) The High Court referred to section 91 of the Co operative Socities Act.
and section 28 of the Bombay Rent Act and observed: "There is a competition between two authorities, a court and the Registrar 's nominee, both exercising exclusive jurisdiction in respect of matters coming within their jurisdiction." and concluded that on general principles of law it would not be proper to allow the same question to be agitated again under a different guise.
It also observed that the decision taken by the Assistant Registrar and the nominee could have been decided by an appeal and as no appeal had been filed the provisions of law must have their effect with the result that the decision of the dispute by the nominee of the Registrar had become final.
With all respect to the High Court, it seems to us that there was a fundamental error in the above approach.
No doubt it was the business of the society to let out premises and a member had no unqualified right to let out his flat or tenement to another by virtue of the bye laws and a breach of the bye laws could affect the defaulting member 's right to membership.
But we are not able to see how letting by a member to another member would touch the business of the society which included inter alia the trade of buying, selling, hiring and letting land in accordance with co ope rative principles.
The letting of flat by respondent No. 1 was a transact ion of the same nature as the society itself was empowered to enter into but such letting by itself did not concern the business of the society in the matter of its letting ' out flats.
Nothing was brought to our notice to show that such a letting would affect the business of the society once it had sold the flat to the respondent No. 1.
The position might have been different if the latter had himself been a tenant of the flat under the society.
"To touch" means "to come in contact with" and it does not appear that there is a point of contact between a letting by the respondent No. 1 and the business of the society when the society was not itself the landlord of the flat.
Reference was made at the Bar to Deccan Merchants Co opera tive Bank Ltd. vs M/s Dalichand Jugraj Jain and others(, ').
The facts there were very different from those of the instant case.
(1) [1969] 1 S.C.R. 887.
5 LI208 Sup C I/72 58 But the Court had to consider the question of competing jurisdiction under the Bombay Rent Act and the Act and it is pertinent to note the observations at p.902"that the two acts can be harmonised best by holding that in matters covered by the Rent Act, its provisions, rather than the provisions of the Act, should apply." In the result we allow the appeal, set aside the judgement and order of the High Court And of the Bench of the Court of Small Causes.
The matter is now to go back to the Court of Small Causes for disposal according to law.
The appellants will have the costs incurred in this Court.
Appeal allowed.

Output:
The respondent was the owner of the flat on the second floor of a Building in Bombay.
She was a member of a Co operative Housing Society and had acquired the flat from that society.
In 1959 she had put the appellant in possession of the flat for a period of 11 months on payment of Rs. 5101 per month.
According to the written agreement the possession was given on leave and licence basis.
The government was signed by one of the partners of the appellant firm who also became members of the said Co operative Society.
The agreement was renewed until 25th October, 1962 when the first respondent asked the appellants to vacate possession on the ground that she required the flat for personal occupation.
As this was not complied with she filed a statement of claim before the Registrar of Co operativc Societies on the ground that there was a dispute within the meaning of section 91(1) of the Maharashtra Co operative Societies Act.
The Registrar referred the case to a nominee whose jurisdiction was challenged by the appellants.
Nevertheless the proceedings before the nominee went on for some time and on July 3, 1964 the nominee made an award to the effect that the appellants were occupying the flat on leave and licencee basis.
The appellants, anticipating the award, filed a suit in the Court of Small Causes Bombay stating that they were in occupation of the flat as tenants and as such entitled to protection under the Bombay Rent Act, 1947.
The Small Causes Court held that the suit was maintainable and answered the other preliminary issues in favour of the plaintiff.
In revision the bench of the Small Causes Court held that the Registrar 's nominee did have jurisdiction to try the dispute between the parties and remanded the proceedings to the trial court for disposal of the suit after deciding an issue as to res judicata by reason of the award of the nominee.
The High Court up held the order of the bench.
In this Court the questions that fell for consideration were (1) Whether there was any dispute between the parties touching the business of the co operative society which could be decided by the Registrar or referred by him to a nominee for disposal and (2) Whether the suit filed in them Small Causes Court was maintainable having regard to the nature of the relief sought.
Allowing the appeal HELD : (i) No doubt it was a business of the society to let out premises and a member had no unqualified right to let out his flat or tenement to another by virtue of the bye laws and a breach of the byelaws could affect the defaulting member 's right to membership.
But HELD : (i) No doubt it was a business of the society to let Out touch the business of the society which included inter alia the trade of buying, selling, hiring and letting land in accordance with cooperative principles.
The letting of flat by respondent No. 1 was a transaction of 54 the same nature as the society it if was empowered to enter into but such letting out itself did not concern the business of the society in the matter of its letting out flats.
There was nothing to show that such letting would effect the business of the society once it had sold the flat to the respondent No. 1.
The position might have been different if the latter had himself been a tenant of the flat under, the society.
"To touch" means "to corn in contact with" and it did not appear that there was a point of contact between a letting by the respondent No. 1 and the business of the society when the society was not itself the land lord of the flat.
[57D G] (ii) As observed by this Court in an earlier case the Bombay Rent Act and the Maharashtra Cooperative Societies Act can be harmonised best by holding that in matters covered by the Rent Act, its provisions rather than the provisions of the Co operative Societies Act, should apply.
[58A] Deccan Merchants Co operative Bank Ltd. vs M/s, Dalkhand Jugraj Jain and others, [1969] 1 S.C.R., 887, distinguished.