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Appeal No. 76 of 1959.
Appeal from the judgment and decree dated November 16, 1951, of the Madras High Court in Second Appeal No. 1656 of 1947.
T. V. R. Tatachari, for the appellants.
K. N. Rajagopal Sastri and T. Satyanarayana, for the respondent No. 1., 1961.
September 22.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J.
This is an appeal by a certificate granted by the High Court of Madras against its judgment and decree in Second Appeal 741 Suit No. 27 of 1939 filed by respondent 1 Gollapalli Ramalingamurthi against respondent 2 Immani Venkanna and his four sons appellants 1 to 4.
The appellants and respondent 2 are members of an undivided Hindu family.
The case for respondent 1 was that he had purchased the properties described ' in the Schedule attached to his plaint on April 1, 1936 in a sale held by the Official Receiver in the insolvency of respondent 2.
A registered sale deed was accordingly issued in favour of respondent 1 (exhibit P. 4) on September 21, 1936.
In pursuance of the said sale respondent 1 obtained possession and enjoyment of such properties after partitioning them with Rayudu, the brother of respondent 2.
In October, 1938, however, the appellants and respondent 2 trespassed on the said properties and so respondent 1 had to file the present suit claiming a declaration of his title in regard to the said properties, and asking for their possession and for past and future mesne profits.
That in brief is the nature of the suit from which the present appeal arises.
The claim thus made by respondents 1 was resisted by respondent 2 and the appellants on several grounds.
It was urged by respondent 2 that the transfer in favour of respondent 1 was benami and that respondent 1 was not the real owner of the properties.
In support of this case respondent 2 gave, what according to him, was the antecedent history of the sale in favour of respondent 1.
He alleged that he had sustained heavy losses in business conducted by him with the result that he was indebted to the extent of Rs. 25,000.
Apprehending that the suit properties would be lost to the family at the instance of his creditors he and his junior mother in law Kanthamani Seshamma approached respondent 1 's father in law Suryaprakasa Sastrulu for advice and on his advice respondent 2 executed a collusive and nominal mortgage deed for Rs. 1,000 (exhibit P. 9) in favour of respondent 1 on June 16, 1933.
Similarly, on the same advice a similar nominal transfer deed was executed in favour of respondent 1 on August 6, 1939, (exhibit P. 12) after the properties covered by the said document had been released from an earlier non possessory mortgage (exhibit P. II) which had been executed on July 21, 1930.
Thus, according to respondent 2 the documents executed in favour of respondent 1 were nominal and collusive and were not supported by any consideration.
Respondent 2 further alleged that the execution of the said collusive documents between him and respondent 1 came to the knowledge of some of his creditors and that led to an insolvency petition against respondent 2 by one of his creditors in 1.P. No. 91 of 1933.
This petition was filed in the Court of the Subordinate Judge at Ellore on September 15, 1933, against respondent 2.
In these insolvency proceedings respondent 2 was adjudicated insolvent and the Official Receiver, appointed to take charge of respondent 2 's properties, brought the said properties to sale subject to the aforesaid nominal mortgages in favour of respondent 1.
Kanthamani Seshamma purchased the said properties with her own money but benami in the name of respondent 1 on condition that respondent 1 would reconvey the said properties to the family of respondent 2 whenever called upon to do so.
The allegation of respondent 1 that he had obtained possession of the properties was denied, and it was urged that respondent 1 had no title to the properties and was entitled to no relief in the suit filed by him.
That is the substance of the pleas raised by respondent 2 and the appellants joined respondent 2 in making the same pleas by their separate written statement.
At the trial three issues were tried as preliminary issues; they were issues 5, 8 and 9.
Issues 8, and 9 were in regard to the court fees payable on the claim made in the plaint and regarding the pecuniary jurisdiction of the Court.
The Court found that it had jurisdiction to try the suit and it valued the subject matter of the suit at Rs. 2,411 7 2 on which additional court fees was paid by respondent 1.
Issue 5 was as to whether the sale in favour of respondent 1 bound the shares of the appellants in the family properties.
The learned trial judge answered this issue in favour of the appellants purporting to follow the Full Bench decision of the Madras High Court in Ramasastrulu vs Balakrishna Rao (1).
According to the said decision the right of respondent 2 as the father of the appellants and manager of the undivided Hindu family to sell the shares of his sons for purposes binding on the family did not vest in the Official Receiver on his insolvency, and so the sale effected by the Official Receiver in favour of respondent 1 did not, and could not, in law bind the shares of the appellants in the properties conveyed.
After these findings were recorded respondent 1 applied for the amendment of his plaint and the said amendment was allowed.
By this amendment respondent 1 alleged that the suit properties were the self acquired properties of respondent 2 and so the appellants had no interest therein.
On this alternative plea it was urged by respondent 1 that the properties sold by the Official Receiver to respondent 1 conveyed the entire properties which belonged to respondent 2 alone.
In addition to this alternative claim made by an amendment respondent 1 also made an alternative prayer that he should be either given possession of the whole of the properties or 1/5th of the properties according as the properties are found to be separate properties of respondent 2 or are held to be properties of the undivided family consisting of respondent 2 and the appellants.
These alternative grounds taken by respondent 1 by virtue of the amendment were traversed by respondent 2 and the appellants in their additional written statements.(1) I.L.R. 744
When the suit went to trial on the amended pleadings several issues were framed by the learned trial judge.
In addition to the issues arising on the pleadings the learned trial judge framed suo motu one more issue 1(a), whether respondent 1 was the benamidar of the appellants, and if yes whether the appellants could be allowed to plead the same as a defence in the suit.
The learned trial judge found that the suit properties were the joint family properties of respondent 2 and the appellants.
Alternatively he held that even if they were originally the self acquired properties of respondent 2 they had been blended with the family properties and thus became the properties of the undivided family.
He found that the shares of the appellants in the said properties did not vest in the Official Receiver and so were not conveyed to respondent 1.
He came to the conclusion that the purchase by respondent 1 from the Official Receiver was only a benami transaction for the benefit of the appellants and that respondent 1 had not obtained possession of the properties at any time.
According to the learned trial judge the sale in favour of respondent 1 was fraudulent and was brought into existence to defraud the creditors of respondent 2; and this fraud had been carried out and the creditors of respondent 2 had been defrauded.
Since the fraud had been carried out, the learned judge held respondent 2 and the appellants could not be allowed to plead the same as a defence in the suit.
As a result of this finding the learned judge passed a preliminary decree in favour of respondent 1 for 1/5th share in items 1 to 4 and 8 to 10 of the properties described in the Schedule attached to the plaint.
In regard to items 5 to 7 on which the dwelling house of the family was constructed the learned judge held that respondent 1 was entitled to monetary compensation.
Consistently with the preliminary decree thus passed as to the share of respondent 1 the learned judge 745 also directed that future mesne profits should be determined under O. 20, r. 12(c) of the Code of Civil Procedure.
Against this decree respondent 1 preferred an appeal, No. 288 of 1943, in the Court of the Subordinate Judge,, West Godavari at Ellore.
In this appeal he claimed that a decree should be passed in his favour in respect of the whole of the properties sold to him by the Official Receiver.
The appellants filed cross objections and urged that the learned trial judge was in the error in framing issue 1 (a) suo motu and challenged his conclusion on it.
The appellate Court agreed with the conclusions of the trial judge and so dismissed both the appeal and the cross objections.
Against this appellate decree respondent I filed a Second Appeal, No. 1656 of 1947, and the appellants filed cross objections.
This appeal came on for hearing before Mr. Justice Raghava Rao and it was urged before him that since the Provincial Insolvency (Amendment) Act No. 25 of 1948 which introduced section 28A had come into operation in the meanwhile retrospectively the decision of the Courts below that the Official Receiver could not in law have sold the appellant 's shares in the family properties could not longer be sustained.
This contention was raised by respondent 1.
It was met by the appellants by their counter contention that issue 1(a) had been sprung upon them as a surprise; it had been framed by the trial court after it had heard arguments on both sides and that the appellants had no opportunity to show that in fact the fraud contemplated by the parties had not been effectively carried out.
They alleged that if the fraud had not been carried out the principle of estoppel invoked against them could not come into play.
This contention raised by the appellants was accepted by the High.
Court which called for a finding by the trial co art on issue 1(a), after giving both the parties an opportunity to adduce evidence on the 746 question about the completion or otherwise of the fraud connected with the benami purchase.
After remand the trial court took evidence and made a finding that respondent 2 bad successfully played fraud on his creditors by getting the properties purchased by respondent 1 benami for his sons at the sale held by the Official Receiver.
In due course this finding was submitted by the trial court to the High Court.
Thereupon the appellants filed objections to the said finding.
After this finding was received the second appeal was again placed for bearing by Mr. Justice Ragghava Rao.
At the second hearing the appellants raised the point the amending Act by which section 28A was inserted in the Provincial Insolvency Act was ultra vires.
The learned judge overruled the objections made by the appellants against the finding submitted by the trail court on the issue remanded to it and accepted that finding; but in view of the fact that the vires of the amending Act was challenged he thought it exp edient that the second appeal should be heared by a Bench of two judges.
That is how the second appeal came before a division Bench of the Madras High Court for final disposal.
In its final judgment the High Court has observed that the argument that Act 25 of 1948 was ultra vires was not pressed before the High Court, that certain other grounds were sought to be raised by the appellants but they were not allowed to be raised; so that in the result the main argument urged before the High Court was whether having regard to the fact that the fraud contemplated by respondent 2 and respondent 1 had been effectively carried out it was open to the appellants to plead that fraud against respondent 1 in respect of his claim for possession of the suit properties in the present suit.
The High Court considered the conflicting decisions on this point and adhered to the view which has prevailed in the said High Court 747 since the decision in Vodiana Kamayya vs Gudisa. Mamayya (1) and held that the appellants and respondent 2 were estopped from setting up the fraud against respondent 1 in his present suit.
In the result respondent 1 's claim in respect of the whole of the properties conveyed to him by the Official Receiver has been decreed.
It is against this decree that the appellants have come to this Court with a certificate granted by the High Court and the principal point which has been argued before us on their behalf by Mr. Tatachari is that the High Court was in error in coming to the conclusion that in a case where both the transferor and the transferee ' were equal in fraud and where the fraud contemplated has been carried out it is not, open to the appellants to plead that fraud in defence against the claim made by respondent 1 to obtain possession of the properties conveyed to him benami by the Official Receive Mr. Tatachari contends that where the parties are equally guilty estoppel cannot be pleaded against the appellants and the estate must be allowed to remain where it rests.
The point thus raised lies within a narrow compass and the material facts which give rise to it are no longer in dispute.
The transaction in favour of respondent 1 is the result of a fraudulent plan to which both he and respondent 2 agreed.
In was effected with the mutual consent of the vendore and the vendee to defraud the creditors of the vendor.
That being so the transfer is not supported by any consideration and the transferee agreed to act as the benamindar until the transferor required him to reconvey the properties to his sons.
The object intended to be achieved and the fraud initially contemplated by both the parties have been achieved and the creditors of respondent 2 have been defrauded.
Possession of the properties, however, remained with respondent 2 and his sons the appellants; and in the present 748 section respondent 1 seeks to obtain possession of the properties on the ground that a deed of conveyance has been passed in his favour by the Official Receiver.
Thus both the parties are confederates in the fraud and are equally guilty.
Respondent 2 and the appellants seek to resist respondent 1 's claim to recover possession of the properties conveyed to claim on the ground that the conveyance is void having been effected for a fraudulent purpose which has been carried out.
They urge that it has not been supported by any consideration and no title has passed in favour of the transferee.
Respondent 1 sheets this challenge to his title by pleading that respondent 2 who participated in the fraud cannot be allowed to plead his own fraud in support of his refusal to part with the possession of the properties, and he urges that there is a conveyance duly executed in his favour on which the Court must act without permitting respondent 2 to challenge its validity.
The High Court his upheld the plea of respondent 1 and has not allowed either respondent for the appellants to plead the fraud in support of their defence.
Is this decision right? That is the question which falls to be decided in the present appeal.
Reported decisions bearing on this question show that consideration of this problem often gives rise to what may be described as a battle of legal maxims.
The appellants emphasised that the doctrine which is preeminently applicable to the present case is ex dolo malo non oritur action or ex turpi causa non oritur actio.
In other words, they contended that the right of action cannot arise out of fraud or out of transgression of law; and according to them it is necessary in such a case that possession should rest where it lies in pari delicto potior est conditio possidenties; where each party is equally in fraud the law favors him who is actually in possession, or where both parties are equally guilty the estate will lie where it falls.
On the other hand, respondent 1 argues that the proper maxim to apply is nemo allegans suam turpitudinum audiendumest, 749 whoever has first to plead turpitudinum should fail; that party fails who first has to allege fraud in which he participated.
In other words, the principle invoked by respondent 1 is that a man cannot plead his own fraud.
In deciding the question as to which maxim should govern the present case it is necessary to recall what Lord Wright, M. ' R. observed about these maxims in Berg vs Sadler and Moore (1).
Referring to the maxim ex turpi causa non oritur actio Lord Wright observed that "this maxim, though veiled in the dignity of learned language, is a statement of a principle of great importance; but like most maxims it is much too vague and much too general to admit of application without a careful consideration of the circumstances and of the various definite rules which have been laid down by the authorities".
Therefore, in deciding the question raised in the present appeal it would be necessary for us to consider carefully the true scope and effect of the maxims pressed into service by the rival parties and to enquire which of the maxims would be relevant and applicable in the circumstances of the case.
It is common ground that the approach of the Court in determining the present dispute must be conditioned solely by considerations of public policy.
Which principle would be more conducive to, and more consistent with, public interest, that is the crux of the matter.
To put it differently having regard to the fact that both the parties before the Court are confederates in the fraud, which approach would be less injurious to public interest.
Whichever approach is adopted one party would succeed and the other would fail, and so it is necessary to enquire as to which party 's success would be less injurious to public interest.
Out of the two confederates in fraud respondent 1 wants a decree to be passed in his favour and that means he wants the active assistance of the Court in reaching the properties possession of (1) , 162. 750 which has been withheld from him by respondent 2 and ' the appellants.
if the defense raised by the appellants is shut out respondent 1 would be entitled to a decree because there is an ostensible deed of conveyance which purports to convey title to him in respect of the properties in question; but, in the circumstances ', passing a decree in favour of respondent 1 would be actively assisting respon dent 1 to give effect to the fraud to which he was a party and in that sense the Court would be allowed to be used as an instrument of fraud and that is clearly and patently inconsistent with public interest.
On the other hand, if the Court decides to allow the plea of ' fraud to be raised the Court would be in a position to hold an enquiry on the point and determine whether it is a case of mutual fraud and whether the fraud intended by both the parties has been effectively carried out.
If it is found that both the parties are equally guilty and that the fraud intended by them has been carried out 'the position would be that the party raising the defence is not asking the Court 's assistance in any active manner; all that the defence suggests is that a confederate in fraud should not be permitted to obtain a decree from the Court because the document of title on which the claim is based really conveys no title at all It is true that as a result of permitting respondent 2 and the ' appellants to prove their plea they would incidentally be assisted in retaining their possession; but this assistance is of a purely passive character and all that the Court is doing in effect is that on the facts proved it proposes to allow possession to rest where it lies.
It appears to us that this latter course is less injurious to public interest than the former.
There can be no question of estoppel in such a case for the obvious reason that the fraud in question was agreed by both the parties and both parties have assisted 'each other ' in carrying out the fraud.
When it is said that a person cannot 751 plead his own fraud it really means that a person cannot be permitted to go to a Court of Law to seek for its assistance and yet base his claim for the Court 's assistanceon the ground of his fraud.
In this connection it would be relevant to remember that respondent 1 can be said to be guilty of a double fraud; first he joined respondent 2 in his fraudulent scheme and participated in the commission of fraud the object of which was to defeat the creditors of respondent 2, and then he committed another fraud in suppressing from the Court the fraudulent character of the transfer when he made out the claim for the recovery of the properties conveyed to him.
The conveyance in his favour is not supported by any consideration and is the result of fraud; as such it conveys no titile to him.
Yet, if the plea of fraud is not allowed to be raised in defence the Court would in substance be giving effect to a document which is void ab initio.
Therefore, we are inclined to hold that the paramount consideration of public interest requires that the plea of fraud should be allowed to be raised ' and tried, and if it is upheld the estate should be allowed to remain where it rests.
The adoption of this course, we think, is less injurious to public interest than the alternative course of giving effect to a fraudulent transfer.
This question has been the subject matter of judicial decisions in most of our High Courts; and it appears that the consensus of judicial opinion with the exception of the Madras High Court is in favour of the view which we have taken.
In Bombay the principle that in dealing with a contest between two participants in fraud possession should be allowed to remain where it rests appears to have been consistently accepted until Chief Justice Sir Lawrence Jenkins struck a note of dissent in Sidlingappa Bin Ganeshappa vs Hirwa Bin Tukasa (1).
Thereafter the correctness of (1) (1907) 1.L. R. 752 this judgment was sometimes doubted in the subsequent decisions of the said High Court [Vide : Lakshman Balvant Khisti V. Vasudev Mohoniraj Pande(1)] and finally the Full Bench of the said High Court reversed the said decision of Sir Lawrence Jenkins in Guddappa Chikkappa Kurbar vs Balaji Ramji Dange (2).
Since then the decision of the Full Bench has been consistently followed in the Bombay High Court.
The same view has been accepted by the Calcutta, Allahabad, Nagpur and Patna High Courts [Vida : Preomath Koer vs Kazi Mahomed Shazid(3).Emperor vs Abdul Sheikh(4), Vilayat Husain vs Misran (5), Nawab Singh vs Daljit Singh (6), Qader Baksh vs Hakim (7), Bishwanath g/o Karunashanker Shukla vs Surat Singh alias Chhuttu Singh s/o Bhabhut Singh (s), and J. C. Field Electric Supply vs K. Agarwala (9) (Case of illegal contract)].
In Madras the earlier decisions of the High Court appear to have, taken the same view [Vide: Venkataramana vs Viramma (10), Yaramati Krishnayya vs Chundru Papayya (11) and Raghavalu Chetty vs Adinarayana Chetty (12)].
In the case of Vodiana Kamayya vs Gudisa Mamayya (13), however, a Division Bench of the Madras High Court upheld the view that a person who has conveyed property benami to another for the purpose of effecting a fraud on his creditors cannot, where the fraud has been effected, set up the benami character of the transaction by way of defence in a suit by the transferee for possession under the conveyance.
Since then this view has prevailed in the Madras High Court [vide : Keppula Kotayyar Naidu vs Chitrapu Mahalak8hmamma (14) and Muthu K. R. A. R. P. L. Arunarhalam Chettiar vs Bangaswamy Chettiar (1.5)].
In our opinion (1) (2) I. L. R (3) (1903 4) 8 C. W. M. 620.(4) A. I. R. (5) All. 396.(6) (1936) 1.L. R. 58 All. 842.(7) (1932) 1.L. R. 13 Lab.(8) A.I. R. 3.(9)(1951) 1.R. 30 Pat.(10) (1887) 1.L. R.10 Mad.(11) (1 897) 1.L. R. (12) (1 909) 1.L. R. (13) (14) Mad.(15) Mad.753 the view taken by these subsequent decisions of the Madras High Court does not represent the true and correct approach to the question.
In this connection we may incidentally refer to the observations made by the Privy Council in T. P. Petherpermal Chetty vs R. Muntandi Servai.
In that case the Privy Council has no doubt dealing with the question on the basis that the purpose of the fraudulent conveyance had been defeated and so different principles naturally came into play.
While discussing the problem in its broad aspect, however, Lord Atkinson, who delivered the judgment of the Board, cited with approval the observations made in Mayne 's Hindu Law which clearly support the view that we have taken.
Says Mayne: 1 'The, fact that A has assumed the name of B in order to cheat X can be no reason whatever why a Court should assist or permit B to cheat A.
But if A requires the help of the Court to get the estate back into his own possession, or to get the title into his own name, it may be very material to consider whether A has actually cheated X or not.
If he has done so by means of his alias, then it has ceased to be a mere mask and has become a, reality.
It may be very proper for a Court to say that it will not allow him to resume the individuality which he has once cast off in order to defraud others.
If, however, he has not defrauded any one there can be no reason why the Court should punish his intention by giving his estate away to B, whose roguery is.
even more complicated than his own This appears to be the principle of the English decisions.
But where the fraudulent or illegal purpose has actually been effected by means of the colorable grant then the maxim applies In pari delicto potior est conditio possidentis.
The Court will help neither party and let the estate lie where it falls (2)".
Lord Atkinson has observed that this statement of the law is correct and in that sense (1) (1908) L. R. 35 1.A. 98.(2)Mayne 's Hindu Law, 7th Ed,p.595 para 446(35 I.A.p 102) 751 the view that we have taken may be said to be consistent with the opinion expressed by the Privy Council by approving the statement of the law made by Mayne.
In support of the contrary view reliance is usually placed on an early English decision in Doe, Dem.Roberts against Roberts, Widow (1).
In that case it was held that "ro man can be allowed to allege his own fraud to avoid his own deed; and, therefore, where a deed of conveyance of an estate from one brother to another was executed, to give the latter a colorable qualification to kill game.
The document was as against the parties to it valid and so sufficient to support an ejectment for the premises".
In dealing with the question raised Bayley, J. observed "by the production of the deed, the plaintiff established a prima facie title; and we cannot allow the defendent to be heard in a Court of Justice to say that his own deed is to be avoided by his own fraud;" and Holroyd, J., added that " 'a deed may be avoided on the ground of fraud, but then the objection must come from a person neither party nor privy to it, for no man can allege his own fraud in order to invalidate his own deed".
This decision has, however, been commented on by Taylor in his "Law of Evidence".
According to Taylor "it seems now clearly settled that a party is not estopped by his deed from avoiding it by proving that it was executed for a fraudulent, illegal or immoral purpose (2)".
The learned Author then refers to the case of Roberts (1) and adds "in the subsequent case of Prole vs Wiggins (3) Sir Nicholas Tindal observed that this decision rested on the fact that the defence set up was inconsistent 'with the deed".
Taylor then adds that ",the case, however, can scarcely be supported by this circumstance, for in an action of ejectment by the grantee of an annuity to recover premises.
(1) (2) Taylor 's "Law of Evidence", Vol.I, 11th Ed.p. 97, paragraph 93.(3) 35; ; 43 R. R. 621.755 on which it was secured, the grantor was allowed to show that the premises were of less value than the annuity, and consequently, that the deed required enrollment, although he had expressly covenanted in the deed that the premises were of greater value. . .
According to the learned author "the better opinion seems to be that where both parties to an indenture either know, or have the means of knowing, that it was executed for an immoral purpose, or in contravention of a statute, or of public policy, neither of them will be estopped from proving those facts which render the instrument void ab initio; for although a party will thus in certain cases be enabled to take advantage of his own wrong, yet this evil is of a trifling nature in comparison with the flagrant evasion of the law that would result from the adoption of an opposite rule" (P. 98).
Indeed, according to Taylor, although illegality is not pleaded by the defendant nor sought to be relied upon by him by way of defence, yet the Court itself, upon the illegality appearing upon the evidence, will take notice of it, and will dismiss the action Ex turpi causa non oritur actio.
No polluted hand shall touch the pure fountain of Justice" (P. 93).
To the same effect is the opinion of Story:(1) "In general, where parties are concerned in illegal agreements or other transactions, whether they are mala prohibita or mala in se, Courts of Equity following the rule of law as to participators hi a common crime will not interpose to grant any relief, acting upon the known maxim In pari delicto potior est conditio defendentis et posidentis The old cases often gave relief, both at law and inequity, where the party would otherwise derive an advantage from his inequity.
But the modern doctrine has adopted a more severely just and probably politic and moral rule, which is to leave the parties where it finds them giving no relief and no countenance to claims of this sort" '.
(1) Story ' s Equity Jurisprudence, Vol.I. section 421; English edition by Randell, 1920, section 298.756
In judicial decisions where this question has been considered a passage from the judgment of Lord Mansfield, C. J., in Holman vs Johnson (1) is often quoted.
If we may say so with respect the said passage very succinctly and eloquently brings out the true principles which should govern the decision of such cases.
Said Lord Mansfield, C. J., "the objection that a contract is immoral or illegal as between plaintiff and defendant sounds at all times very ill in the mouth of the defendant.
It is not for his sake, however, that the objection is ever allowed; but it is founded in general principles of policy which the defendant has the advantage of, contrary to the real justice, as between him and the plaintiff, by accident, if I may say so.
The principle of public policy is this ex dolo malo non oritur actio.
No Court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act.
If, from the plaintiff 's own stating or otherwise the cause of action appears to arise ex turpi causa or the transgression of a positive law of this country, there the court says he has no right to be assisted.
It is upon that ground the Court goes; not for the sake of the defendant, but because they will not lend their aid to such a plaintiff".
On behalf of the respondents it was urged that the principles on which the appellants rely are applicable to contracts and not to conveyances.
A conveyance, it is argued, rests on a different basis from a contract, and so the English decisions cannot be pressed into service by the appellants.
We are not impressed by this argument.
Even if respondent 1 has based his case on a conveyance the position still remains that as a result of the facts proved by respondent 2 and the appellants the conveyance is void ab initio.
It is a document fraudulently executed and as such it conveys no title to the transferee at all.
That being so we do not think that in giving effect to the considerations of (1) (1775) 1 Cowrer 341.757 public interest or policy it makes any difference that the deed on which the present suit is brought is one of conveyance.
It is then contended that in deciding the point raised by the appellants we must look to the provisions of section 84 of the and nothing else.
The is a comprehensive code and it is only in cases failing under section 84 that it would be permissible to the Court to apply the equitable principles or to invoke considerations of public policy as the appellants purport to do.
Section 84 provides that where the owner of property transfers it to another for an illegal purpose and such purpose is not carried into execution, or the transferor is not as guilty as the transferee, or the effect of permitting the transferee to retain the property might be to defeat the provisions of any law, the transferee must hold the property for the benefit of the transferor.
We do not see how this section is material or can give any assistance in the decision of the point before us.
In the present case the transferee is not in possession of the properties and the present case is not one of the three categories of cases contemplated by the section.
If the argument assumes that the only cases where equitable principles can be invoked are cases falling under section 84 and section 84 is exhaustive in that sense, we have no difficulty in rejecting the said argument.
Since the present case is entirely outside section 84 it inevitably falls to be considered on considerations of general policy, and as we have already held, judged in the light of such considerations it must be held that the public interest would be less injuriously affected if the property is allowed to remain where it lies.
Therefore, we must hold that the High Court was in error in not giving effect to the finding recorded by the trial court that the fraud mutually agreed upon and contemplated by respondents 1 and 2 had been effectively carried out and that in the 758 carrying out of the fraud both the parties were equally guilty.
The appeal must, therefore, be allowed and the suit instituted by respondent 1 must be dismissed.
In the circumstances of this case we direct that the parties should bear their own costs, throughout.
Appeal allowed.

Output:
The conveyance in suit was the result of a collusive plan between respondent 1 and respondent 2 to defraud the latter 's creditors.
The agreement was that respondent 1 was to act as the benamidar for respondent 2 and his sons, the appellants.
The fraud succeeded and the creditors of respondent 2 were in fact defrauded.
Thereafter respondent 1 brought the present suit for declaration of title and recovery of possession against respondent 2 and the appellants on the basis or the conveyance.
The latter resisted the suit on the ground that the conveyance was fraudulent, unsupported by consideration and passed no title.
The High Court in second appeal held that the appellants and respondent 2 were estopped from pleading fraud in the suit and decreed the same.
The question was whether the view taken by the High Court was correct and the ostensible owner was entitled to a decree.
Held, that there could be no question of estoppel in a case where both the parties were guilty of fraud.
740 Where in a case, such as the present, one of the confederates in fraud seeks a, decree on a conveyance that resulted from such faud and the other takes plea 'of fraud in defence, the matter has to be decided on considerations of public policy.
Since one of the parties must succeed in any event, the proper approach for the Court to adopt would be the one that was less injurious to public interest, namely, to allow the plea of fraud to be raised in defence and, if upheld, allow the properties to remain where they were, than to decree a suit based on a fraudulent claim.
It could make no difference in such a case if the suit was based on a deed of conveyance and not a contract.
Vodiana Kamayya vs Oudisa Kamayya, (1917) 32 M.J.J. 484, Kepula Kotayyar Naidu vs Chitrapur Mahalakshmama, Mad. 646 and Mutho K.B.A.R.P.L. Arunachalam Chettiar vs Rangaswamy Chettiar, Mad. 289, disapproved.
Berg vs Sadler and Moore, , T. P. Petherperumal Chetty vs B. Muniandi Servai, (1908) L.R. 35 I.A. 98 and Holman vs Johnson, (1775) 1 Cowper, 34 1, referred to.
Deo, Dem.
Roberts against Roberts, Widow, (1819) 106 E. R. 401, considered.
Case law reviewed.
Section 84 of the is not exhaustive in its provisions and since the present case falls outside of that section, it has to be decided on considerations of general policy.


Input:
Civil Appeal No. 291 of 1956.
Appeal from the judgment and order dated November 25, 1955, of the Circuit Bench of the Punjab High Court at Delhi, in Civil Writ Application No. 189 D of 1955.
280 Jai Gopal Sethi, J. B. Dadachanji, section N. Andley, Rameshwar Nath and P. L. Vohra, for the appellant.
R. H. Dhebar and T. M. Sen, for respondent No. 1.
G. section Pathak, V. P. Nayar and Janardan Sharma, for respondent No. 3. 1959.
May 13.
The Judgment of the Court was delivered by WANCHOO J.
This appeal comes before us on a certificate granted by the Punjab High Court under, article 133 (1) (a) and (c) of the Constitution.
The appellant is the manager, Hotel Imperial, New Delhi (here in after called the hotel) while the respondents are the Chief Commissioner, Delhi, the Additional Industrial Tribunal, Delhi , and the Hotel Workers ' Union, Katra Shahanshahi , Chandni Chowk, Delhi.
The main contesting respondent is respondent No. 3 (here inafter called the union).
A dispute arose between the hotel and its workmen in October 1955.
It was referred to an Industrial Tribunal on October 12, 1955, by the Chief Commissioner of Delhi.
The portion of the order of reference, relevant for our purposes, is in these terms Whereas from a report submitted by the Director of Industries and Labour, Delhi under section 12 (4) of the as amended, it appears that an industrial dispute exists between the management of the Hotel Imperial, New Delhi and its workmen as represented by the Hotel Workers ' Union, Katra Shahanshahi, Chandni Chowk, Delhi; AND whereas on a consideration of the said report the Chief Commissioner, Delhi, is satisfied that the said dispute should be referred to a tribunal Then follows the order referring the dispute to the Additional Industrial Tribunal, Delhi including the terms of reference.
Soon after the hotel filed a writ application in the Punjab High Court challenging the order of reference on a variety of grounds.
The writ application was heard by the High Court and dismissed on November 25, 1955.
The hotel then applied for leave to appeal to this Court, which was granted on 281 January 13, 1956.
The hotel obtained stay of the proceedings before the Additional Industrial Tribunal from this Court on February 27, 1956.
That is how this dispute which would have been otherwise decided long ago is still in its initial stage.
The main contention on behalf of the hotel is that the reference is incompetent and two grounds have been urged in support of it; namely, (1) the union could not be made a party to the reference under the , (hereinafter called the Act); and (2) the reference was vague, as it did not indicate how many of the 480 workers of thirty different categories working in the hotel were involved in the dispute.
We are of opinion that there is no force in these grounds of attack.
An " industrial dispute " for our purposes has been defined in section 2 (k) of the Act as meaning " any dispute or difference between employers and workmen. . which is connected with the employment or non employment or the terms of employment or with the conditions of labour, of any person." 'Section 10 (1) of the Act gives power to the appropriate government where it is of opinion that an industrial dispute exists or is apprehended to refer the dispute to a tribunal for adjudication.
It cannot be denied on the facts of this case that there was a dispute between the hotel and its workmen and it went to this length that the hotel decided to dismiss a large number of workmen on October 7, 1955.
It is also undoubted that the dispute was With respect to the terms of employment Qr conditions of labour of the workmen.
The Chief Commissioner would therefore have power under section 10 (1) of the Act to make a reference of the dispute to a tribunal for adjudication.
The attack of the hotel is on the form in which the reference was made and the contention is that the reference in this form is incompetent.
We have already set out the relevant part of the order of reference giving the form in which it was made.
The two parties to the dispute are clearly indicated, namely, (1) the employer which is the management of the hotel and (2) the workmen employed in the hotel.
The objection, however, is that the words "as represented 36 282 by the Hotel Workers ' Union, Katra Shahanshahi, Chandni Chowk, Delhi " which appear in the order of reference make it incompetent, inasmuch as the union could not be made a party to the reference.
We are of opinion that this objection is a mere technicality, which does not affect the competence of the order of reference.
The fact remains that the dispute which was referred for adjudication was between the employer, namely the management of the hotel, and its employees, which were mentioned as its workmen.
The addition of the words "as represented by the Hotel Workers ' Union, Katra Shahanshahi, Chandni Chowk, Delhi " was merely for the sake of convenience so that the tribunal may know to whom it should give notice when proceeding to deal with the reference.
That however did not preclude the workmen, if they wanted to be represented by any other union, to apply to the tribunal for such representation or even to apply for being made parties individually.
Section 36 of the Act provides that a workman who is party to a dispute shall be entitled to be represented in any proceeding under the Act by (a) an officer of a trade union of which he is a member, or (b) an officer of a federation of trade unions to which the trade union of which he is a member is affiliated; or (c) where the workmen is not a member of any trade union, by an officer of any trade union connected with, or by any other workman employed in, the industry in which the workman is employed.
The fact therefore that in the order of reference the quoted words were added for the sake of convenience as to where the notice to the workmen should be sent would not in our opinion make the reference incompetent.
The objection further is that even if the workman is entitled to be represented by an officer of a trade union of which he is a member, the reference in this case does not mention any officer of the trade union, but mentions the union itself.
This in our opinion is a technicality upon technicality, for the union not being a living person can only be served through some officer, such as its president or secretary and it is that officer who will really represent the workmen before the tribunal, We are therefore of 283 opinion that the reference which is otherwise valid does not become incompetent simply because it is mentioned therein that the workmen will be represented by such and such union in the dispute.
We may in this connection point out that the large 'majority of references under the Act which we have come across are usually in this form and the reason for it is obvious, namely, the convenience of informing the tribunal to whom it should send a notice on behalf of the workmen, whose number is generally very large.
We therefore reject the contention that the reference is bad simply because in the order of reference the words " as represented by the Hotel Workers ' Union, Katra Shahanshahi, Chandni Chowk, Delhi " have been added.
Equally, we see no force in the other ground of ,attack, namely, that the reference is bad because it does not specify how many of the 480 workmen of thirty different categories were involved in the dispute.
It is in our opinion unnecessary for the purposes of section 10 where the dispute is of a general nature relating to the terms of employment or conditions of labour of a body of workmen, to mention the names of particular workmen who might have been responsible for the dispute.
It is only where a dispute refers to the dismissal etc., of particular workmen as represented by the union that it may be desirable to mention the names of the workmen concerned.
In this case, the dispute was also about workmen to whom notice of dismissal had been given and in that connection the names of the workmen concerned were mentioned in the order of reference.
We may in this connection refer to State of Madras vs C. P. Sarathy (1), where a similar attack on the competence of a reference was made on the ground of vagueness.
I In that case the reference was in these terms: " WHEREAS an industrial dispute has arisen between the workers and managements of the cinema talkies in the Madras City in respect of certain matters; (1) [1953] S.C. R 334. 284 " AND WHEREAS in the opinion of His Excellency the Governor of Madras, it is necessary to refer the said industrial dispute for adjudication; Thereafter followed the order of reference, which did not even contain the terms of reference.
The order however indicated that " the Industrial Tribunal may, in its discretion, settle the issues in the light of a preliminary enquiry which it may hold for the purpose and thereafter adjudicate on the said industrial dispute." The Commissioner of Labour was requested to send copies of the order to the managements of cinema talkies concerned.
It was held there that " the reference to the Tribunal under section 10 (1) of the , cannot be held to be invalid merely because it did not specify the disputes or the parties between whom the disputes arose ".
It was further held that " the Government must, of course, have sufficient knowledge of the nature of the dispute to be satisfied that it is an industrial dispute within the meaning of the Act, as, for instance, that it relates to retrenchment or reinstatement.
But, beyond this no obligation can be held to lie on the Government to ascertain particulars of the disputes before making a reference under section 10(1) or to specify them in the order.
" The present reference as compared to the reference in that case cannot be called vague at all.
Here the parties to the dispute are clearly specified, namely, (1) the management of the hotel, and (ii) its workmen.
The nature of the dispute is also specified in, the terms of reference.
It was in our opinion entirely unnecessary to 'mention in the order of reference as to who were the workmen who were responsible for the dispute.
We are therefore of opinion that this attack on the ground of vagueness also fails.
There is no force in this appeal and it is hereby dismissed with costs to respondent No. 3.
In view of the fact that more than three years have passed since the reference was made, we trust that the Additional Industrial Tribunal will now dispose of the matter as expeditiously as it can.
Appeal dismissed.

Output:
An industrial dispute between the hotel and its workmen was referred to an Industrial Tribunal.
The attack of the hotel was on the form of the order of reference, the main contention being that the reference was incompetent on the grounds that the Union could not be made a party to the reference under the Industrial Disputes Act, and that the reference was vague, as it did not indicate how many of the workers of different categories working in the hotel were involved in the dispute.
Held, that the order of reference was perfectly competent when the parties to it and the nature of the dispute were clearly specified.
The reference which was otherwise valid does not become incompetent simply because it was mentioned therein that the workmen will be represented by such and such Union in the dispute.
The addition of the name of the Union was merely for the sake of convenience so that the Tribunal may know to whom it should give notice when proceeding to deal with the reference ; that does not preclude the workmen from being represented by another Union or even being made parties individually.
It is unnecessary for the purpose of section 10 of the Act where the dispute was of a general nature relating to the terms of employment or condition of labour of a body of workmen to mention the names of particular workmen who might have been responsible for the dispute.
It was only where a dispute refers to the dismissal etc., of particular workmen as represented by the Union that it would be desirable to mention the names of the workmen concerned.
State of Madras vs C. P. Sarathy, , referred to.


Input:
ition (Civil) No. 11704 of 1985 etc.
(Under Article 32 of the Constitution of India).
R.P. Gupta for the Petitioners.
V.C. Mahajan, Ms. A. Subhashini, B.K. Prasad, C. Ramesh and Hemant Sharma for the Respondents.
The Judgment of the Court was delivered by RANGANATHAN, J.
These two writ petitions were filed as 452 early as 1985 but they are still at the admission stage.
However notices have been issued to the respondents and we have heard counsel on both sides.
As both the writ petitions relate to the same subject matter, it will be convenient to dispose of them by a common order and we proceed to do so.
The controversy in these writ petitions is as to the proper principle for determination of seniority in the Transportation (Traffic) Department of the Indian Railways.
Though the petitioners in Writ Petition No. 11704 of 1985 belong to the Central Railways, the principle to be deter mined will have application over all nine Railways in the country and is being agitated in Writ Petition No. 12802 of 1985 by the All India Train Controller 's Association.
The officials with whom we are concerned in these writ petitions occupy Group C (Class III) posts in the above department.
The question of their inter se seniority has become material for their promotion to Group B (Class II) posts which really form the lowest rung of the management cadre.
75% of the vacancies arising in Group B (Class II) posts in each de partment are filled in by promotion on selection from among Group C (Class III) employees of the department on the basis of seniority cum merit.
The difficulty in determination of the inter se seniority arises because there are different streams of eligible Group C (Class III) employees, occupying posts with different scales of pay, who have to be consid ered for selection to Group B posts.
As only those employees from the different streams can be considered as fail within the zone of consideration as per seniority and as the zone of consideration is determined with reference to the number of vacancies in Group B for which the selection is held at any point of time, the position of an employee in the com bined seniority list of all the streams assumes great impor tance.
We are concerned with the selections for appointment to three Group B posts in the Operating Branch of the Traffic and Transportation Department.
These are: Assistant Operat ing Superintendent, Assistant Traffic Superintendent and Station Superintendent.
The four Group C streams which have the avenue of promotion to the above group B posts are: (1) The Control Stream, which consists of the Chief Controller, the Deputy Chief Controller and the Section Controller; (2) The Traffic Stream, which comprises of the Station Master, the Yard Master, Traffic Inspector and Signaller; (3) The Ministerial Stream, consisting of office staff and (4) The Running Stream, consisting of Guards.
We are here concerned only with the question of inter se seniority between the employees in the Control 453 Stream and those in the Traffic Stream.
As mentioned earlier, there are several grades and scales of pay prevailing in each of these streams.
It will be helpful to tabulate them here for convenient reference: Control Stream Post Scale of Pay Pre 1931 I Pay II Pay III Pay Commission Commission Commission Chief Controller360 500 450 575 450 575 8501040/1200 Deputy Chief 400 500 300 400 370 475 700 900 Controller Section Con troller Grade I 300 350 260 350 335 425 ) ) 470 750 Grade II 200 300 200 300 270 380 ) Traffic Stream Post Scale of Pay Pre 1931 I Pay II Pay III Pay Commission Commission Commission Station Supdt./120 165/) Jn.
S.M./CYM/80 160/) 300 400 450 575 700 900 TI (Higher) 200 300 ) Stn.
Master (Higher) Dy.
Supdt.
80 160 300 400 370 475 550 750 /YM/TI (Lower) SM (Lower) 60 65 80 170 130 225 330 560 Grade and others 80 120 100 185 205 330 425 640 150 225 200 300 250 380 455 700 260 350 335 425 550 750 The zone of consideration of the employees for promotion is fixed in the order of the combined seniority of the employees from the 454 different streams.
In each of the streams, seniority depends on the grade.
Normally, employees working in a higher grade on a regular basis are senior to those working in the lower grade.
To illustrate, the highest Group C grade was Rs.450 575 followed by the grades Rs.370475, Rs.335 485, Rs.335 425 and so on.
(We are referring here to the old pay scales which have since been revised).
The employees working in the grade Rs.450 575 were therefore placed on the top followed by those in the grades of Rs.370 475, Rs.335 485 and Rs.335 425.
This principle for determination of inter se seniority worked very well till 31.12.72 as the higher scales of pay in both the streams was the same.
According to the department, it became difficult to follow this principle when, consequent on the acceptation and implementation of the recommendations of the Third Pay Commission with effect from 1.1.
1973, higher or lower scales of pay came to be fixed in respect of certain posts which were having the same scale of pay upto 31.12.1972.
For example, the scale of pay of Rs.450 575 held by Station Masters and Traffic Inspectors in the Traffic Stream upto 31.12.72 was upgraded to the scale Rs.700 900 with effect from 1.1.73.
On the other hand, in the case of Chief Controllers of the Control Stream, the same scale of Rs.450 575 was replaced by a scale of Rs.840 1040/1200.
Similarly, in the case of Station Masters and Inspectors in the grade of Rs.370 475 in the Traffic Stream, the replacement was by the scale of RS.550 750 while in the case of Deputy Chief Controllers on the scale Rs.370 475, the replacement scale was Rs.700 900.
Thus the Control Stream gained an upper hand in the matter of seniority and, consequently, of promotions.
In an attempt to restore some balance and parity between the employees of the different streams, the Railway Board issued certain instructions on 26th October, 1976.
As per these instructions, the inter se seniority of the staff working in the grade of Rs.700 900 and the grades,above it in the different streams was to be based on the total length of service rendered by an employee in all the grades.
This did not satisfy all sections of the staff and difficulties were also experienced in applying the instructions.
For example, a Deputy Chief Controller, who had been in the grade of Rs.370 475 upto 31.12.72 and was placed on Rs.700 900 from 1.1.73, gained an advantage over his collegues in the other stream viz. the Station Masters and Traffic In spectors.
The matter was therefore reconsidered and modified instructions were issued on 11.7.77.
According to these instructions, for purposes of drawing out the combined seniority of Group C employees from different streams, the services rendered in the top most scale in one stream would be considered equivalent to the service rendered in the 455 top most scale in the other streams, even though the top most scale in the two streams might be different.
This rule also produced anomalies.
For example, if in one stream, the top most scale was Rs.700 900, in another Rs.550 750 and in yet another Rs.840 1040, the length of service rendered in all these grades by the employees was stated to be the basis to determine the combined seniority.
Thus an employee having ten years of service in the top most scale of Rs.550 750 in one stream would rank senior to another having slightly less than ten years of service in the top most scale of Rs.700 900 in another stream.
The Department, therefore, issued revised instructions in August '78/ February '79.
As per these instructions, where the top most scale prior to 1.1.1973 has been replaced by two different scales after 1.1.73, one higher and the other lower, service rendered in the lower scale will be notionally stepped up as if the service had been rendered in the higher scale.
For example, the grade of Rs.450 575 was replaced by Rs.8401040 for the Controllers and Rs.700 900 for Station Masters and Traffic Inspectors.
While drawing up the combined seniority, the service ren dered in the grade of Rs.700 900 by the Station Masters and Traffic Inspectors was to be treated as service rendered in the grade Rs.840 1040.
Similarly, the pre revised grade of Rs.370 475 had given rise to two scales, namely, Rs.700 900 and Rs.550 750, and, in that case, the service rendered in the grade Rs.550 750 was notionally treated as rendered in grade Rs.700 900 for drawing up the combined seniority.
This principle did not work well either.
It seems the circulars of 11.7.77 and August '78 were quashed by the Bombay High Court in W.P. No. 55 of 1980 by its order dated 14.12.83.
In the meantime, detailed consideration of the issues was undertaken in consultation with the federations of organised labour and it was finally decided that the combined seniori ty for purposes of Group B selection should be determined on the basis of the total length of service rendered by employ ees in any or in all the grades commencing from Rs.700 900 and above and these instructions were issued on 5.3.83.
In January 1984.
further instructions were issued which, while maintaining the principles laid down on 5.3.83, provided protection to senior employees, who got superseded in a stream for promotion to the higher nongazetted grade in that stream.
For example, if an employee in grade of Rs.700 900 supersedes one of his seniors in promotion to the grade of Rs.840 1040 within the stream, he would control the seniori ty of the employee whom he had superseded.
Such a superseded employee would be put to hardship when the combined seniori ty is drawn up along with employees from the other streams for purposes of selection to Group B.
In order to avoid the situation of a senior employee being subjected to such disability, instructions were issued on 6.1.
1984 that 456 an employee who supersedes his senior will be credited with the service of the senior whom he had superseded.
Aggrieved by these experiments which, according to them, only resulted in chaos and confusion, 45 employees of the Control Stream filed WP 11704/85 when, on the issue of a list published by the administration on the basis of these instructions on 15.6.85, they found themselves excluded from the panel of staff to be taken into consideration for promotion to Group B. They prayed that the circular of 6. 1.84 and the follow up action culminating in the Selection List be also set aside.
The petitioners are also aggrieved by a different set of steps initiated by the Railway Board.
A further discrimina tion against the control stream, it is alleged, has resulted from two circulars issued by the Board, one on 29.7.83 and the other on 26.12.83.
These circulars envisaged, what the petitioners call, "mass upgradations" and what the circulars call a "restructuring of the cadres".
The earlier of the two circulars applied to the traffic stream.
In so far as is relevant for our present purposes, the "upgradation" was on the following lines: Name of Existing Revised Revised Percentage Rema post scale Designation Scale of posts marks Yard Masters 455/700 Dy.
Chief 700 900 20% /Asst.
Yard Yard Masters Masters Yard Masters 550 750 Chief Yard 840 1040 10% of Masters post in scale of 700 900 Station 455 750 Station 700 900 10% Master Supdt.
Station 350 750 Station 840 1040 10% of Supdt./ Supdt.
posts in Station scale of Master Rs.700 900 2 Separate 700 900 43.5% This we Cadre of (10% of told, has Station these 'll not been 457 Masters/ carry scale given Asstt.
of Rs.840 effect Station 1040 to.
Superin tendants The circular stated that this restructuring will be with reference to the sanctioned strength as on 1.8.83.
The staff, who will be placed in the revised grade in terms of these orders will be eligible to draw pay on the higher grades from 1.8.83 with benefit of proforma promotion from 1.8.82.
It was made clear that the benefit of proforma fixation will be admissible only to the staff who are placed in the vacancies arising directly as a result of these restructuring orders.
The date of proforma fixation has later been shifted, from 1.8.82 to 1.8.83 by a circular dated 13.7.
The second circular, dated 20.12.1983 pertained to the control stream.
The restructuring was on the basis of the cadre strength as on 1.1.84 and the revision of scales was also to be effective from 1.1.84.
The pattern of restruc ture, in so far as it is relevant for our present purposes, is set out thus in the schedule: Existing Grade & Posts Existing Revised percentage percentage (i) 470 750 Not laid 15 (Section Controllers) down (ii) 700 900 " 58 ] (Dy.
Chief Controllers) ] ] ] ] (iii) 340 1040 " 23 ] 85 (Chief Controller ] Gr. II) ] ] ] (iv) 840 1200 " 4 ] (Chief Controller Gr.
II) 458 It was made clear that the cadre has been restructured keeping in view additional duties, responsibilities and heavier workload in some of the charges and that the revised grades were to be given to employees eligible therefore on such considerations in their existing positions.
Reference must be made to two more circumstances before we deal with the contentions urged before us.
The first is that the circular of 6.1.84 referred to above which, accord ing to the counsel for the petitioner introduced the princi ple of "chance seniority" was quashed by the Central Admin istrative Tribunal by its order dated 5.2.1988.
A copy of this order has not been made available to us.
Secondly, consequent on the said decision of the Tribunal, the Railway Board issued certain instructions on 22.12.88 which reads thus: "Consequent upon the judgment given by the Central Adminis trative Tribunal in connection with the above, matter has been reviewed in consultation with the representatives of the recognised organised federations and it has been decided in partial modification of the orders contained in Railway Board 's letters . . dated 28.5.83 and 6.11.84 that the integrated seniority of group C employees for promotion to group B posts should be determined on the basis of con solidated length of non fortuitous service rendered in the grade of Rs.700 900/2000 3200 and above ignoring promotions to the grade of Rs.840 1040/23753500 . " It may be mentioned that the petitioners were fully satisfied with the circular of 5.3.83 which according to them, gave effect to rule 321 of the Indian Railway Estab lishment Manual.
According to them, this equilibrium was unjustifiably disturbed by the circulars issued subsequent ly.
The principal grievance urged before us by learned counsel for the petitioner was that, as a result of the restructuring orders read with the order reckoning all persons working in salary grades of Rs.700 900 and above as one group for determining seniority, the control stream staff has been adversely affected to a considerable extent.
He points out that persons in the Traffic Stream who entered the supervisory grade of Rs.470 750 were placed in the grade of Rs.700 900 much later than the dates when those in the control stream entered the corresponding scale of Rs.455 700 will gain seniority over the latter.
He asks us to compare for this purpose the positions of officers in the control stream with seniority positions Nos. 90 to 190 with those occupying seniority positions Nos.
61 to 208 in the traffic 459 stream.
He contends that the staff employed in the control stream lose both monetarily as well as in terms of seniority by being placed in the scale of Rs.700 900 only w.e.f. 1.1.84 as compared to those of the traffic stream who re ceive such promotions and pay scales w.e.f. 1.8.83.
Leaving aside the question of monetary benefits for the time being, the submissions are: (i) that seniority should be determined on the total length of service as envisaged in rules 202 and 321 of the Indian Railways ' Establishment Manual, which read thus: "202 For selection to class II posts or Civil Engg.
Trans portation (power) and Mechanical Branch, Transportation (traffic) and Commercial, Signal and Telecommunication, Electric and Stores Department.
(i) Only permanent staff will be eligible (ii) all staff in grade Rs.335 425 and above provided they have rendered a minimum of 3 years non fortuitous service after reaching the stage of Rs.335 either in those grades or in a lower grade.
321 Relative Seniority of employees in an intermediate grade belonging to different seniority units appearing for a selection/non selection post in higher grade. 'When a post (selection as well as non selection) is filled by considering staff of different seniority units, the total length of continuous service in the same or equivalent grade held by the employee shall be determining factor for assign ing inter seniority irrespective of the date of confirmation of an employee with lesser length of continuous service as compared to another unconfirmed employees with longer length of continuous service.
This is subject to the proviso that only non fortuitous service should be taken in account for this purpose." (ii) that if all the grades in the eligible groups are to be clubbed together, the seniority should be reckoned as and from the date of entry into the lowest of the grades in Group 'C ' (class III) viz. Rs.470 750/455 700; 460 (iii) that even if the mass upgradations are to be upheld on principle, they must be directed to be made effective from the same date (whether it be 1.8.83 or 1.1.84) in respect of both the streams and should not be on different dates.
(iv) that the whole object and purpose of these circulars is to obliterate the effect of the recommendations of the Third (and even the Fourth) Pay Commissions, after assessing the duties and responsibilities of the staff in both streams, that the staff on the control stream deserve higher scales although these recommendations have been duly accepted and implemented by the Government.
According to the learned counsel, the traffic stream has a huge strength and a powerful union and, pressurised by their numbers, the Railway Board is attempting to take away, indirectly, the benefits given to the control stream by the Pay Commission 's recommendations and that too at a point of time when a fresh Pay Commission was in the process of being constituted.
Counsel also alleged that the All India Con trollers ' Association (which has filed writ petition No. 12802 on similar lines) has not been consulted at any stage and these circulars are being issued at the behest of the unions of the traffic staff and despite the representations and protests of the comparatively weaker union of the con trol staff.
On the other hand, Sri V.C. Mahajan, learned counsel for the Union of India, submitted that the petitioners have not placed any data before the Court to make out a case of discrimination.
He submits that after the Writ Petitions were filed in 1985 the Department has issued a circular dated 27.12.88 and a combined seniority list in March 1989.
The petitioners have not taken any steps to amend the Writ Petition to challenge this circular or this list or to show in what respect and to what extent the rights of the peti tioners have been prejudiced by the restructuring orders.
Turning to the "restructuring" circulars, counsel points out that in this case the Government has been hard put to evolve an equitable formula for fair promotional chances to the two sets of people in question.
Various attempts had been made earlier but they were not successful.
Finally the present formula has been evolved after consulting all the concerned unions.
It is not correct, he says, to say that the deci sions have been taken without consulting the representatives of the Controlling Stream.
It is submitted that, having regard to the few posts at the top of the scale, the Traffic Stream had been complaining of inadequate promotional oppor tunities.
The 461 Government has tried to solve the problem as best as it could and counsel refers to the following basic features behind the restructuring: (i) The date of entry into grades Rs.700 900 above will be taken as the starting point to reckon seniority.
This is the effect of the circular of 22.22.88 the validity of which has not been challenged in the petition.
(ii) Considering the large strength of employees in the Traffic Stream, viz. 4430, about 10% of the posts have been upgraded which will mean that about 443 persons will be in the above grades.
So far as the Control Stream is concerned, the percentage of posts in the above zone has been increased to about 35% of the 270 posts available with the result that about 211 people will be in the above grades.
As a result of the mass upgradation, a large percentage of people in the Control Stream immediately derive monetary benefits.
They have accepted these benefits and have been occupying the upgraded position since 1984 onwards.
(iii) The date of the upgradation in both the streams cannot be the same for the result of it would be that all the upgraded personnel will have seniority reckonable from the same date.
This being the position, their seniority will have to be based on the length of their services in the immediately lower scales or reckoned as from the date of their entry into the lowest of the Group C grades and this would, have revived the same problem which the Government was trying to solve.
That is why the Government fixed dif ferent dates for the two streams separated only by a short span of five months and this was neither unreasonable nor discriminatory.
Counsel submits that the Government was trying to forge out a solution that will be fair 'to both the streams and that the attempt of the petitioners to accept the upgrada tions of the scales in their stream but objecting to the other part regarding date of fixation should not be allowed to succeed.
He submits that if the petitioners were prepared to accept the same percentage of upgradation as the Traffic Stream persOnnel and give up the extra benefits received, the Government could reconsider the whole question afresh.
After hearing both counsel, we have reached the conclu sion that the materials before us are totally inadequate to come to any conclusion on the true impact of the circulars, In fact, to start with, we were 462 of the view that, in a matter like this, the proper remedy of the petitioners is to approach the Central Administrative Tribunal which has been set up for that very purpose.
But since counsel for the petitioners pleaded that the writ petitions have been pending here since 1985 and it would not be fair to the petitioners to sent them now to pursue that remedy, we heard the petitioners and the opposite parties at some length but, as will emerge from the above discussion, the exact position and impact of the circulars is very nebulous.
As pointed out by Sri Mahajan, the Department is trying to cope with the problem of giving fair promotional opportunities to two different streams which become eligible for promotion to Group B posts.
Since the counsel for the petitioner has stated that he has no quarrel with the circu lars of 5.3.83 and 22.12.88 and since the circular of 6.1.84 already stands quashed by the Central Administrative Tribu nal, the only grievance of the petitioners that survives is against the upgradation circulars.
Apart from the merits, there are three difficulties in considering the plea of the petitioners that the part of the two circulars fixing dif ferent dates of upgradation should alone be set aside: (a) The plea of the petitioners, if accepted, will affect a large number of persons in the traffic stream and even result in a number of reversions in all the Railways.
Though the petitioners have made some persons in the traffic stream working in the Central Railway parties, neither the persons likely to be affected in other parts of the country nor their union have been made parties.
(b) As discussed above, the circular of 20.12.83.
confers substantial benefits on members of the control stream.
A large number of them have been able to secure an upgradation to the scale of Rs.700 900 which, otherwise, may not have come to them for sometime, and they may or may not all be affected adversely by the date of upgradation.
It is also pointed out that upgradation in the traffic stream are subject to selection on the basis of a written test and viva voce, while the upgradations in the control stream are automatic based on seniority cum suitability.
It is, there fore, not clear even whether the All India Controller 's Union is speaking in one voice for all its members either for or against the circular of 20.12.83.
(c) As pointed out by Sri Mahajan, the Department has issued a seniority list in pursuance of its circular.
No attempt has been made to substantiate the grievances of the peti tioners by pointed factual references to that list.
463 Coming to the merits again, the inequity is not appar ant.
Having to deal with two different streams, differently placed, the Government has to find out an equitable solution and it has been groping towards it.
One method would perhaps have been to have fixed quotas for promotion from each of the streams but that is not necessarily the only method.
An alternative method is being attempted here and the princi ple that grades of Rs.700 900 and above should be considered together being conceded the Department is trying to give some weightage by granting upgradation to each stream based on its total strength in order to balance the promotional chances in both the streams.
It is possible that some indi vidual cases may be affected but no answer to the question whether any class discrimination has resuited can be given unless fuller details are available and the practical impact of the latest position is placed before us.
If a good number of persons in the control stream are benefitted monetarily despite the disadvantage to a few, in the matter of promo tion, it may be a question how far the Association of the Controllers will be able to make out a case of class dis crimination.
Even if we assume that the entire control stream would be adversely affected, the question will still remain whether the basis of differentiation is justified in the circumstances or amounts to arbitrary discrimination.
We express no opinion on these questions at this stage.
We would only say that, in the absence of adequate material before us, we are unable to reach any conclusion on the plea of discrimination.
We, therefore, dismiss the writ petition but we will leave it to the petitioners, if so advised, to move the Central Administrative Tribunal, with fuller facts and in the light of the latest developments, for appropriate relief after impleading all affected parties or their repre sentatives so that the entire picture may emerge and a just conclusion arrived at.
Y. Lal Petition dis missed.

Output:
These writ petitions have been fried by Group 'C ' (class III) employees of the Railways working in its Transportation (Traffic) Department.
The said Department has different streams e.g. 'Control Stream ' and 'Traffic Stream ' and the employees working therein have different scales of pay.
For purposes of their promotion to Group B posts, it was neces sary to fix their inter se seniority, as only those employ ees from the different streams could be considered for promotion as would fall within the zone of consideration as per seniority list.
As the zone of consideration is deter mined with reference to the number of vacancies in Group B for which selection is held, at any point of time, the position of the employee in the combined seniority list of all the streams is important.
The zone of consideration of the employees for promotion Is fixed in the order of the combined seniority of the employees from the different streams.
The Department prior to the implementation of the recommendations of the Third Pay Commission fixed the inter se seniority of the employees of Group C employees on the basis of the grade i.e. employees working In a higher grade on a regular basis were treated senior to those working in the lower grade and the said principle worked well until the enforcement of the recommendations of the Third Pay Commis sion w.e.f.
1.1.1973, when higher or lower scales of pay came to be fixed in respect of certain posts which were having the same scale of pay upto 31.12.1972.
This presented difficulty in fixing the inter se seniority of the employees and the Railway Board in order to resolve the difficulty issued circulars from time to time indicating how their seniority should be fixed but for some reason or the other, the dissatisfaction amongst the employees in the matter of seniority continued.
Being aggrieved by the experiments which according to the petitioners only resulted in chaos and confusion, employees of the Control Stream have flied the writ petition on the Issue of a combined seniority list published by the administration on the basis 451 of instructions on 15.6.85, as they found themselves exclud ed from the panel of staff to be taken into consideration for promotion to Group B. They pray that the circular dt. 6.1.84 and the follow up action taken culminating in the Selection List be set aside.
The petitioner challenge the validity of two circulars issued by the Board, one on 29.7.83 and the other on 26.1.2.1983, restructuring the cadres as discriminatory as according to them they envisage 'mass upgradation ' to their detriment.
The question for determination is whether the principle adopted on the strength of these circulars for fixing the inter se seniori ty of these employees is proper.
Dismissing the writ petitions with liberty to the Peti tioners to move the Central Administrative Tribunal, if so advised with fuller facts, this Court, HELD: The inequity is not apparent.
Having to deal with two different streams, differently placed, the Government has to find out an equitable solution and it has been grop ing towards it.
One method would perhaps have been to have fixed quotas for promotion from each of the streams but that is not necessarily the only method.
An alternative method is being attempted here and the principle that grades of Rs.700 900 and above should be considered together being conceded the Department is trying to give some weightage by granting upgradation to each stream based on its total strength in order to balance the promotional chances in both the streams.
It is possible that some individual cases may be affected but no answer to the question whether any class discrimination has resulted can be given unless fuller details are available and the practical impact of the latest position is placed before the Court.
[463A C]