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Appeal No. 882 of 1975.
(Appeal by Special Leave from the Judgment and Order dated 13 12 1974 of the Madras High Court in Writ Appeal No. 101/73).
Gobind Das, and Girish Chandra, for the Appellant.
V.M. Tarkunde, K. Rajendra Chaudhury, Mrs. Veena Khan na, S.L. Setia & Miss Manek Tarkunde, for the Respondent.
The Judgment of the Court was delivered by SARKARIA, J.
This appeal by special leave.
directed against a judgment dated December 13, [974, of the High Court of Madras, arises out of these facts: Respondent Rabia Bai, is a citizen of India.
She has her residence at Grange Yercund.
Salem District.
She came to know in 1949 that premises No. 20, Godown Street, G.T. Madras (known as Gani Market) was for sale.
Consequent ly, by a sale deed, dated April 29, 1949, she purchased this property from one Abdul Gani Jan Mohd. who had left for Pakistan in 1947, soon after the partition of the Indian sub continent.
Abdul Gani came to Madras in April 1949 and executed the sale deed in her favour for a consideration of Rs. 2,40,000/ out of which Rs. 1,50,000/ was paid immediately in the form of bank drafts.
Thereafter, the sale deed was duly engrossed and sent to.
Karachi for execu tion by the vendor.
who duly executed it and sent it back.
It was presented at the Collector 's Office, Madras and was duly stamped on June 27, 1949.
After obtaining the clear ance certificate from the Income tax Department.
the Regis trar registered it on August 11, 1949.
Rs. 30.000/ , the balance of the consideration was paid before the Registering Officer to Mr. M. H, Gani who held a power of attorney from the vendor.
On June 13, 1949.
Ordinance XII of 1949 was promulgated.
The Ordinance was extended to.
Madras on August 23, Ordi nance XII of 1940 was repealed by Ordinance 27 of 1949, which in turn was replaced by the Administration of the Evacuee Property Act, 1950 258 (Central Act 31 of 1950) (hereinafter referred to as the Act).
The Act had retrospective operation with effect from August 14, 1947.
Section 40 of the Act [corresponding to section 25(2) of Ord. 121, provided that no transfer made after the 14th day of August, 1947 but before the 7th day of May, 1954 by any person of any property belonging to trim which may subsequently be declared to be evacuee property, would be valid unless the transfer was confirmed by the Custodian.
General of Evacuee Property.
On December 19, 1949, the vendee Rabia Bai, applied for confirmation of the sale transaction in her favour.
The application was resisted by some tenants on several grounds.
On January 11, 1951, the Assistant Custodian Evacuee Proper ty, Madras City, declared the property in question as evacuee property under section 7( 1 ) of the Act.
The Assistant Custodian considered Rabia Bai 's applica tion for confirmation of the sale in the light of the decla ration already made by him, that the vendor being an evacu ee, the property was evacuee property.
He referred to the relevant features of the transaction and came to the conclu sion that he would not be justified in confirming it.
In reaching this conclusion, he relied on the provisions of section 40(4)(c) of the Act.
In his opinion, the feverish hurry disclosed that in making the sale, the vendor was not moti vated by good faith.
Accordingly on July 31, 1951, he made an order refusing to confirm the transaction.
Rabia Bai went in appeal against the order of the Assistant Custodian to the Custodian.
The Custodian found that the sale transac tion was supported by valuable consideration.
Even so, he proceeded to examine the question as to whether it could be said to have been entered into in good faith.
Relying On a letter written by the vendor to one Mohideen on July 4, 1949 wherein he had stated that "if the matter is delayed there would be many sort of new difficulties as you know the government are passing new rules every day", the Custodian took the view that the vendor 's intention was to dispose of and convert his properties in India into cash and to take them away to Pakistan as quickly as possible so as to evade the restrictions of the evacuee law which he apprehended could be extended to Madras any day.
On this reasoning, the Custodian came to the conclusion that the transaction had been entered into otherwise than in good faith, and so it could not be confirmed under section 40(4)(a) of the Act.
This appellate order was pronounced by the Custodian on February 4, 1953.
Rabia Bai then moved the Custodian General in revision, who dismissed the same.
Against that order Of the Custodi an General, Rabia Bai came in appeal by special leave to this Court.
While that appeal was pending, Rabia Bai on August 27, 1954, made an application under Rule 22 of the Administra tion of Evacuee Property (Central Rules) 1950 (for short the Rules) for registration of her claim for the return of the sale consideration of Rs. 2,40,000/The claim was registered by the Assistant Custodian On October 1, 1954.
Thereafter, the Act was amended by Act 91 of 1956.
By a notification, dated February 20, 1957, the aforesaid Rule 22 was deleted.
259 Rabia Bai 's aforesaid appeal (Civil Appeal No. 22 of 1956) was dismissed by this Court on January 12, 1961.
That judgment is reported as Rabia Bai vs Custodian General of Evacuee Property(1).
Rabia Bai repeatedly petitioned for the return of the sale consideration of Rs. 2,40,000/ to her but without success.
She petitioned to the Prime Minister on May 16, 1966.
Thereupon, she was informed by a letter, dated August 1, 1966, by the Deputy Custodian, Evacuee Property, Bombay, that no third party claim against the immoveable property is payable by his office as Rule 22 of the Administration of Evacuee Property (Central) Rules has since been deleted as a result of the amendment of section 10(m) by Act 91 of 1956.
By an order, dated August 18, 1966, Government of India directed that all the 'surplus balance ' of the evacuee pool lying in the personal deposit account of the Custodian be transferred to the Dy.
Accountant General, New Delhi to form part of the compensation pool under section 14(1) (b) of the Displaced Persons Compensation and Rehabilitation Act of 1954.
In 1968, Rabia Bai filed a writ petition in the High Court for return of the sale consideration.
The writ peti tion was withdrawn on July 11, 1968.
Thereafter on August 3, 1968, she made a petition under section 10(2) (m) and (n) of the Act read with Rule 22 before the Custodian.
This peti tion was rejected by the Custodian under an order, dated November 2, 1968, mainly on the ground that the properties of the evacuee were acquired by the Central Government under section 12 of the Displaced Persons (C. & R.) Act, 1954 and the sale proceeds of the said properties have been credited to the compensation pool.
There is at present, no amount in the hands of the Custodian from which the petitioner 's claims would be paid".
In his view the words "out of funds in his possession" in section 10(2) (n) of the Act show that it would be attracted only where funds are lying with the Custodian.
To impugn this order, dated November 2, 1968, of the Custodian, Rabia Bai filed writ petition No. 1259 of 1971 in the High Court.
The petition came up for hearing before a learned single Judge (Ramaprasada Rao J.) who took the view that having regard to the scheme of the Rehabilita tion Act and the policy reflected therein and the transfer of the cash balances with the Custodian to the compensation pool, it was not open tO the writ petitioner to assail transfer funds or any orders passed in that behalf and therefore she was not entitled to a writ of certiorari sought for, much less a writ of mandamus.
On this ground, he dismissed the writ petition.
With regard to the petitioner 's claim for return of the sale price, it was held that she still continues to be entitled to get the money from and out of the funds that may subsequently come into the hands of the Custodian.
It was added that "the petitioner as at present, should only be satisfied with her entitlement to claim and await the collection of funds or accumulation of funds with the Custodian in future".
(1) ; 260 Aggrieved by that order, Rabia Bai appealed under C1.
15 of the Letters Patent to a Bench of the High Court.
The Bench held that since it was not denied or refuted by the respondents (Custodian, Evacuee Property, Bombay, Regional Settlement Commissioner and Union of India) that payment of Rs. 2,40,000/ was made by Rabia Bai to the evacuee in pursuance of the infructuous sale, "the payment is also not vitiated in any manner as the sale was refused confirmation, not because of want of bona fides in the transferee, but on account of want of bona fides in the transferor.
The re spondents are, therefore under a statutory obligation to refund to the appellant the sale price paid by her".
With regard to the argument that she could not be paid because the fund with the Custodian had been transferred in compliance with the orders of the Government of India to the compensation pool formed trader section 14(1)(b) of the Rehabili tation Act, it was held that the Custodian was competent to transfer only surplus fund left with him, in excess of what was required by him for meeting the outstanding claims registered under r. 22.
The Appellate Bench spelled out this conclusion from a construction of the words "such cash balances" occurring in section 14(1)(b), and the expression "surplus fund" used in the Central Government order asking the Custodian to transfer funds to the account of the Deputy Accountant General as part of the compensation pool.
In this view, the .Bench allowed the appeal and by a writ of certiorari quashed the impugned orders and notifications.
It was further directed that a writ of mandamus shall issue requiring the 1st respondent (Resp.
Custodian) to refund the sum of Rs. 2,40,000/to Rabia Bai.
The third Respondent, Union of India was further directed to place at the dis posal of the Custodian the said sum for the purpose of the refund.
It was specified that the direction regarding the refund and payment shall be complied with within three months.
Hence this appeal by the Custodian and the other re spondents before the High Court.
Let us now have a look at the relevant statutory provi sions.
The material part of section 10, as it stood before the amendment effected by Act 91 of 1956, read as follows: "10(1) Subject to the provisions of any rules that may be made in this behalf, the Custodian may take such measures as he considers necessary or expedient for the purposes of securing, administer ing, preserving and managing any evacuee property and generally for the purpose of enabling him satisfactorily to discharge any of the duties imposed on him by or under this Act and may, for any such purpose as aforesaid, do all acts and incur all expenses necessary or incidental thereto.
(2) Without prejudice to the generality of the provision contained in sub section (1), the Custo dian may, for any of the purposes aforesaid, (a) to (1) . 261 (m) incur any expenditure, including the payment of taxes, duties, cesses, and rates to Government or to any local authority (or of any amount due to an employee of the evacuee or of any debt by the evacuee to any person).
(n) pay to the evacuee or to any member of his family or to any other person as in the opinion of the Custodian is entitled thereto, any sums of money out of the funds in his possession. " That part of clause (m), winch is shown within the brackets was deleted by Act 91 of 1956 with effect from October 22, 1956.
Section 40 reads as under: "40.
(1) No transfer made after the 14th of August, 1947, but before the 7th day of May, 1954, by or on behalf of any person in any manner whatso ever of any property belonging to him shall be effective so as to confer any rights or remedies in respect of the transfer on the parties thereto or any person claiming under them or either of them, if, at any time after the transfer, the transferor becomes an evacuee within the meaning of section 2 or the property of the transferor is declared or notified to be evacuee property within the meaning of this Act, unless the transfer is confirmed by the Custodian in accordance with the provisions of this Act.
(2) * * * (3) An application under sub section (1) for the confirmation of any transfer may be made by the transferor or the transferee or any person claiming under or lawfully authorised by either of them to the Custodian within two months from the date of the transfer or within two months from the date of the declaration or notification referred to in sub section (1) whichever is later, and the provi sions of section 5 of the Indian Limitation Act, 1908 shall apply to any such application.
(4) Where an application under sub section (1) has been made to the Custodian for confirma tion, he shall hold an inquiry in respect thereof in the prescribed manner and may reject the appli cation if he is of opinion that (a) the transaction has not been entered into in good faith or for valuable consideration; or (b) the transaction is prohibited under any law for the time being in force; or (c) the transaction ought not to be confirmed for any other reason.
262 In this connection, Rule 22 may also be seen.
The material part of this rule ran as under: "Claim by third parties : (1 ) Any person claiming the right to re ceive any payment from any evacuee or from the property of such evacuee, whether in repayment of any loan advanced or otherwise may present a peti tion to the Custodian for registration of his claim . Explanation.
An application under this sub rule shall be in respect of a claim for refund of money paid as consideration for the transfer by an evacuee of any property, where such transfer is not confirmed by the Custodian under section 10 of the Act.
(2) (a) * * (i) to (iV) * * (b) Where such claim is of the nature re ferred to in the Explanation to sub rule (1) and the Custodian holds that the transfer of the property 'in respect of which the claim is made was a bona fide transaction, the Custodian may register the claim or such part thereof as has not been satisfied: Provided that in the case of a claim of the nature referred to in the Explanation to sub rule (1), the claim shah be registered only for that amount of money which is proved to have been paid as consideration for the transfer of the property.
2A. * .
(3) The mere registration of a claim shall not entitle the claimant to payment and the Custo dian may for reasons to be recorded refuse payment .
It may be noted that Rabia Bai had made an application under tiffs rule for the registration of her claim to the refund of the sale consideration.
Indeed, it was under this rule that her claim for Rs. 2,40,000/ was registered.
From a plain reading of Rule 22, it is clear that before a claim for refund of money paid as consideration for the transfer by an evacuee of any property is registered by the Custodian, he should be satisfied: (a) that such transfer has not been confirmed under section 40 of the Act; (b) that such transfer is a bona fide transaction; (c) that the amount for which the claim is being registered is proved to have been paid as consideration for the transfer of the property.
In the instant case, the validity of the Assistant Custodian 's order dated October 1, 1954, registering the claim of Rabia Bai appears to be unassailable because all the three conditions aforesaid to give 263 authenticity to the registration of her claim were satis fied.
The sale was not confirmed by the Custodian, but he found that the whole of the price had actually been paid by the claimant as under: "That by 29.4.1949, Rabia Bai had paid a sum of Rs. 1,50,000/ to the evacuee, and by 30.5.1949, she had paid Rs. 2,10,000/ to the evacuee, and a further sum of Rs. 30,000/ was paid to the evacuee 's agent on the date of registration of the document i.e. 11.8.1949 before the Sub Registrar.
" He further found that so far as the vendee was concerned, she had purchased the property in good faith for very valuable consideration and there was no mala fides on her part.
It was on these findings that he registered her claim under Rule 22 for Rs. 2,40,000/ against "Gani Market" No. 20.
Godown Street, G.T. Madras." Mr. S.N. Prasad, appearing for the appellants contends that the order of the Assistant Custodian registering Rabia Bai 's claim for Rs. 2,40,000/ was a nullity because the transaction was not a bonafide one there being lack of good faith both on the, part of the vendor and the vendee.
In any case, proceeds the argument, a sale which is not con firmed under section 40(4) (a) owing to the absence of good faith either in the vendor or the vendee, cannot be deemed to be a bona fide transaction for the purpose of registration of a claim made by the vendee, under Rule 22.
Reference in this connection has been made to the observations of this Court, in the judgment in the earlier appeal of Rabia Bai arising out of the Custodian 's order refusing to confirm the sale under section 40(4)(a) of the Act to the effect, that the vendor had not entered into the transaction in "good faith".
The contention is misconceived and cannot be accept ed.
Under section 40(4)(a) of the Act, one of the grounds on which the Custodian is bound to reject an application for confirmation of a transfer, is that if in his opinion, the transaction has not been entered into in good faith.
This clause came up for interpretation before this Court in the earlier appeal, Rabai Bai vs Custodian General (supra).
It was held that the expression "good faith" in section 40(4)(a) when construed in the context of section 40(1) means "that if a transaction is affected by absence of good faith either in the vendor or the vendee its confirmation may properly be rejected under section 40(4)(a); in other words, good faith is required both in the vendor and vendee".
With reference to the facts of the case, it was further observed: "Therefore the fact that the appellant paid valuable consideration for the transaction and is not shown to have acted otherwise than in good faith in entering into the transaction would not justify her claim for confirmation of the said transac tion if it is shown that the vendor had not acted in good faith in entering into the said transaction.
The fact that consideration was paid by the appellant and that she was acting in good faith may perhaps be relevant in determining the character of her conduct in regard to the transaction, but it would not be relevant or material in determining the character or the conduct of the vendor in relation to the transfer.
This position is not seriously disputed before us.
" 264 It is clear that in order to qualify for confirmation under section 40(4) (a) on the ground of good faith, a sale has to pass a much more stringent test than the one required to hold it "a bona fide transaction" for the purposes of Rule 22(e) (b).
While under section 40(4) (a) lack of good faith either in the transferor or the transferee would be suffi cient to disqualify the transfer for confirmation, the posi tion under Rule 22 is different.
Under Rule 22, it is the character of the conduct of the claimant which primarily determines the character of the transaction.
Therefore, if the Vendee claimant in purchasing the property acted in good faith, for the purposes of Rule 22, the sale would be a bona fide transaction, notwithstanding the fact that there was lack of good faith on the part of the vendor.
Again, the acid test of the vendor 's bona fides under this Rule would be, whether he had purchased the property for adequate valuable consideration ? In the instant case, the Assistant Custodian found that this test was amply satisfied.
This finding of fact was not and indeed could not be challenged before the High Court.
It is therefore too late in the day to urge that Rabia Bai 's claim was not duly registered in accordance with Rule 22.
Further question that falls to be considered is: What was the consequence of this registration ? According to Mr. Prasad, the registration was an admin istrative act required to be done merely for a statistical purpose.
Our attention has been invited to sub rule (3) of the Rule, which provided that "merely registration of a claim shall not entitle the claimant to payment . " While it is true that mere registration of a claim under this Rule does not ipso facto confer a right to payment, it is not correct to say that the only purpose served by such registration is statistical and nothing else.
As has been discussed already, before registering a claim the Custodian is required to determine objectively that the transaction is bona fide, the claimant having entered into it in good faith on payment of adequate valuable consideration.
The determination of this preliminary fact which is an essential pre requisite of registration is a judicial function en joined on the Custodian by the statutory provision.
Registration of claim of a vendee under this Rule, there fore, amounts to a preliminary adjudication as to the genu ineness of the claim.
and its eligibility for discharge under the relevant substantive provisions of the Act.
The next question to be considered is the effect of the deletion of r. 22 by notification dated February 20, 1957, and the omission by Act 91 of 1956 of the words "or of any amounts due to any employee of the evacuee or of any debt due by the evacuee to any person" from section 10(2)(m) of the Act.
It is contended by Mr. Prasad that since registration under the deleted Rule 22 did not confer a vested right on the claimant, the claim does not survive for consideration under section 10 (2) of the Act.
Clause (m) of section 10(2), accord ing to Counsel, would not cover the case because of deletion caused by the amending Act 91 of 1956.
Clause (n) of s.10(2), it is maintained, also 265 will be of no avail because firstly, as a result of the deletion of r. 22, the Custodian is no longer under any legal obligation to meet the claim, and secondly, the Custo dian has no funds with him for payment of the claim as those funds have since been transferred to the Compensation Pool formed under section 14 of the Displaced Persons Compensation and Rehabilitation Act 1954 (for short, the Rehabilitation Act).
It is contended that every penny in the Custodian 's account once transferred to the Compensation Pool, can be utilised only (a) to compensate displaced persons and (b) to compen sate the evacuee according to Indo Pak Agreement (s.15), and that no part of the Compensation Pool is available to satis fy the claims of third parties who are neither displaced persons, nor evacuees.
So far as the first contention relating to the effect of deletion of r. 22 and the amendment of s.10(2) is concerned, the same is no longer res integra.
In Raja Bhanupratap Singh vs Custodian,(1) a similar argument was advanced.
Shah J. (as he then was) speaking for the Court, negatived the argument, thus: "We are, however, unable to agree that be cause of the amendment made in s.10(2)(m) and the deletion of Rule 22 the power which is vested in the Custodian under s.10(2) (n) must be held re stricted.
Sub section (1) of section 10 sets out the powers of the Custodian generally, and the diverse clauses in sub section
(2) illustrate the specific purposes for which the powers may be exercised, and there is no reason to think that the clauses in sub section
(2) are mutually exclusive.
If power to pay the debts was derived both under cls.
(m) and (n) as it appears it was, deletion of the provision which authorised the Custodian to pay debts due by the evacuee to any person from el.
(m) and Rule 22 setting up the machinery for registration of debts did not, in our judgment, affect the power which is conferred by cl.(n) by sub s.(2) and also by section 10(1).
In our judgment, the power to administer is not merely a power to manage on behalf of the evacuee so as to authorise the Custodian merely to recover and collect the assets of the evacuee but to discharge his obligations as well.
" From the above enunciation, it is clear that the substantive provision which empowers the Custodian to recover and pre serve the assets of the evacuee and to discharge his obliga tions as well is in section 10(1).
The diverse clauses of subs section (2) are not mutually exclusive, and illustrate the various purposes which are included in the general power to adminis ter the properties of the evacuee conferred on the Custodi an by sub s.(1) of s.10.
Clause (n),of s.10(2) specifical ly authorises the Custodian to pay to "any other person as in, the opinion of the Custodian is .entitled thereto any sums of money out of the funds in his possession.
" As was explained in Bhanupratap Singh 's case (supra), the use of the expression "in the opinion of the Custodian" was not intended to invest the Custodian with arbitrary authority.
(1) ; 266 In forming his opinion, he was bound to act judicially.
in the instant case, the Custodian had, in accordance with the machinery provided in r. 22 for effectuating the exercise of the power conferred by section 10(2)(n), formed an opinion about Rabia Bais claim being genuine.
In the exercise of that power the only thing that remained to be done by the Custodian was to ascertain whether there were adequate "funds in his possession" to meet Rabia Bai 's claim which was a genuine liability of the evacuee.
The words "out of the funds in his possession" in cl.(n) of section 10(2) have reference only to the funds relatable to the particular evacuee against whom or against whose property, the claim for refund is made by a claimant.
in the case before us, it is pointed out, the property in question was fetching huge rental income.
The property was acquired under section 12 of the Rehabilitation Act by the Government on February 24, 1961.
It was thereafter sold by the Government on January 18, 1962 for Rs. 3,10,100/ , that is, for a consideration substantially in excess of Rabia Bai 's claim.
The sale proceeds were credited to the Compensation Pool.
At the material time, therefore, it could not be said that the Custodian was not possessed of sufficient funds to meet the claim of Rabia Bai.
Section 14 of the Rehabilitation Act, which came into force on October 9, 1954 conceives the constitution of a Compensation Pool.
It provides that such Pool shall consist of: (a) all evacuee property acquired under s.12, including the sale proceeds of any such property and all profits and income accruing from such property; (b) such cash balances lying with the Custodian as may, by order of the Central Government, be transferred to the compensation pool; (c) such contributions, in any form whatsoever, as may be made to the compensation pool by the Central Government or any State Government; (d) such other assets as may be prescribed.
Sub section
(2) further provides that the Compensation Pool shall vest in the Central Government free from all encum brances and shall be utilised in accordance with the provi sions of the Act and the rules made thereunder.
The controversy is about the true import of the expres sion "cash balances lying with the Custodian" used in cl.
(b) of sub section
(1) of section 14.
According to Mr. Prasad "such cash balances" will cover all funds in their entirety lying in the deposit account of the Custodian which may be transferred by an order of the Central Government to the Compensation Pool.
In our opinion, the expression "such cash balances" used in section 14(1)(b) cannot be interpreted so as to cover total cash deposits.
267 with the Custodian.
The use of the word "balances" is significant.
The connotation of the term "balances" is well known.
According to Websters ' Dictionary, it means "the difference, if any, between the debit and credit side of an account.
" It is the result of a comparative reckoning.
The expression "cash balances" in clause (b) therefore, has to be construed as the excess of credits over debits.
The word "balances" appears to have been advisedly used in preference to "deposits" because the intention was that only that much amount in deposit with the Custodian should be transferred to the Compensation Pool which would be in excess of the amounts required for meeting the due claims against the evacuees or their properties.
It is thus clear that what can be directed to be transferred to the Compensa tion Pool by the Government under section 14(1)(b) is the "cash balances" and not the total cash deposits with the Custodi an.
The above being the legal position, it is to be seen as to what was actually directed to be transferred to the Compensation Pool.
The first order of such transfer made by the Central Government is dated March 19, 1956.
It purports to have been issued under s.14(1)(b) of the Reha bilitation Act.
Thereby the Government directed that a sum of Rs. 10 crores out of the balances centralised under the Head "S Deposits and advances Part II Deposits not bearing interest (C)other Deposits of the Custodians of Evacuee Property" be , 'transferred to the Compensation Pool.
The second order is dated February 26, 1957 whereby the sum of Rupees one crore was directed to be transferred out of the Custodian 's cash balances to the Compensation Pool.
The last order is dated August 18, 1966, whereby it was directed that all the surplus balances in the deposit account of the Custodians be transferred to the Compensation Pool.
The use of the word "surplus" in this Government order is sig nificant.
It puts the matter beyond doubt that only those balances which were surplus or in excess over what was required to meet the liabilities of the evacuees or the registered verified claims against the evacuees or their properties, were to be transferred to the Compensation Pool.
It was the duty of the Custodian therefore to keep back with him so much of the funds in his deposit as were neces sary to meet the verified claims against evacuees or their properties.
a course on his part would have been perfectly legal and also in conformity with the final direc tions issued for transfer of "surplus balances" by the Central Government.
Only the 'cash balances ' which were validly transferred could legally form part of the Compensa tion Pool.
On this point we agree with the High Court that the Custodian had neither ' the power nor the, authority to transfer the entirety of funds to the Compensation Pool.
Even if it is considered for the sake of argument that the last order of the Government was a direction to transfer the entirety of funds including those relating to the property of the evacuee, Abdul Ghani Jan Muhammad, without keeping back what was required for paying the registered claims of Rabia Bai, then the same would be contrary to the intendment of cl.(b) of section I4(1) to the extent of Rabia Bai 's claim.
268 We are of opinion that in the peculiar circumstances of the case, the Appellate Bench of the High Court was right in directing the Custodian to refund a sum of Rs. 2,40,000/ to the respondent, Rabia Bai, in 'payment of her claim and in further directing the Central Government to place at the disposal of the Custodian, appellant herein, the said sum for the purpose of refund.
The time for refund is further extended by 3 months from today, if the same has not already been done.
Accordingly, we dismiss this appeal.
The appel lant shall pay the costs of the respondents in this Court.
P.B.R. Appeal dismissed.

Output:
Section 40(1) of provides that no transfer of any property belong ing to an evacuee, which may subsequently be declared to be evacuee property, shall be effective unless the transfer was confirmed by the Custodian.
Sub section (4)(a) provides that where an application had been made to the Custodian for confirmation, he may reject the application if he is of opinion that the transaction had not been entered into in good faith or for valuable consideration.
In 1949 the respondent purchased house property from an evacuee and paid the consideration.
She made an application under section 40 to the Assistant Custodian for confirmation of the sale.
The application was rejected by him on the ground of want of good faith on the part of the vendor in entering into the transaction.
Her appeal to the Custodian and revision to the Custodian General were dismissed.
In the meantime, under r. 22, of the Administration of Evacuee Property (Central Rules) 1950, the respondent registered her claim for the return of the sale consideration to her.
Thereafter r. 22 was deleted.
She was informed by the Deputy Custodian that no third party claim against immovable property was payable since r. 22 was deleted.
In 1966 the Government transferred to Compensation Pool the 'surplus balance ' of the evacuee pool lying in the personal deposit account of the Custodian.
The respondent later made a petition to the Custodian, which was rejected mainly on the ground that the sale proceeds had been credited to the compensation pool, that there was no amount in the bands of the Custodian from which her claim could be paid and ' that the words "out of funds in his possession" occurring in section 10(2)(n) of the Act showed that the clause would be attract ed only where funds were lying with the Custodian.
The High Court held that payment made by the respondent to the evacuee in pursuance of the infructuous sale, was not vitiated in any manner as the sale was refused confirmation, not because of want of bona fides in the transferee, but on account of want of bona fides in the transferor, and as such the Custodian was under a statutory obligation to refund the sale price paid by her and that the Custodian was competent to transfer only surplus fund left with him, in excess of what was required by him for meeting the outstanding claims registered under r. 22.
In appeal to this Court it was contended that (i) the order of the Assistant custodian registering the claim was a nullity because since the sale was not confirmed under section 40(4)(a) it could not be deemed to be a bona fide transac tion for the purposes of registration of claim under r. 22; (i;) registration .
was an administrative act required to be done for statistical purposes; and (iii) as a result of the deletion of r. 22 the Custodian was no longer under an obligation to meet the claim and no part of the compensa tion pool was available to satisfy the claims of third parties who were neither displaced persons nor evacuees.
Dismissing the appeal, HELD: (1 ) The High Court was right in directing the Custodian is refund the sale price to the respondent in payment of her claim and in further directing 256 the Central Government to place at the disposal of the Custodian the said sum for the purpose of refund.
[268 A B] (1)(a) Under r. 22, before a claim for refund.
of money paid as consideration for the transfer by an evacuee of any property is registered by the Custodian, he should be satis fied: (i) that such transfer has not been confirmed under section 40 of the Act, (ii) that such transfer is a bona fide trans action; (iii) that the amount for which the claim is being registered is proved to have been paid as consideration for the transfer of the property.
[262 G] In the instant case, the validity of the, Assistant Custodian 's order registering the respondent 's claim is unassailable because all the three conditions aforesaid to give authenticity to the registration of her claim were satisfied.
The sale was not confirmed by the Custodian but he found that the whole of the price had actually been paid by the claimant.
[263 A] (b) In order to qualify for confirmation under section 40(4)(a) on the ground of good faith, a sale has to pass a much more stringent test than the one required to hold it "a bona fide transaction" for the purposes of r. 22.
While under section 40(4)(a), lack of good faith either in the trans feror or the transferee would be sufficient to disqualify the transfer for confirmation, the position under r. 22 is different.
Under r. 22 it is the character of the conduct of the claimant which primarily determines the character of the transaction.
Therefore, if the vendee claimant in purchasing the property acted in good faith, for the pur poses of r. 22, the sale would be a bona fide transaction, notwithstanding the fact that there was lack of good faith on the part of the vendor.
Again, the test of the vendee 'section bona fides under this Rule would be, whether he had pur chased the property for adequate valuable consideration.
[264 A B] Rabia Bai vs Custodian General of Evacuee Property ; followed.
In the instant case, the Assistant Custodian found that this test was amply satisfied.
This finding of fact was not challenged before the High Court.
It is therefore too late in the day to urge that the respondent 's claim was not duly registered in accordance with r. 22.
[264 C] (2) Registration of claim of a vendee under r. 22 amounts to a, preliminary adjudication as to the genuineness of the claim and its eligibility for discharge under the relevant substantive provisions of the Act.
While mere registration of a claim under this rule does not ipso facto confer a right to payment, it is not correct to say that the only purpose served by such, registration is statistical and nothing else.
Before registering a claim the Custodian is required to determine objectively that the transaction is bona fide the claimant having entered into it in good faith on payment of adequate valuable consideration.
The determi nation of this preliminary fact, which is an essential pre requisite of registration, is a judicial function enjoined on the Custodian by the statutory provision.
[264 E F] (3)(a) The words "out of the funds in his possession" in section 10(2)(n) have reference only to the funds relatable to the particular evacuee against whom or against whose proper ty, the claim for refund was made by a claimant.
The use of the expression 'in the opinion of the Custodian ' in section 10(2)(m) was not intended to invest the Custodian with arbitrary authority.
In forming his opinion, he was bound to act judicially.
[266 A B] Raja Bhanupratap Singh vs Custodian ; fol lowed.
In the instant case, the Custodian had formed an opinion about the respondents claim being genuine.
In the exercise of that power the only thing that remained to be done by the Custodian was to ascertain whether there were adequate 'funds in his possession ' to meet the respondent 's claim.
The property was ' sold by the Government for a consideration which had been far in excess of her claim, and the sale proceeds were credited to the compensation pool.
It could not be said that at the material time the Custodian was not in .
possession of sufficient funds to meet the respondent 's claim.
[266 B] (b) The expression 'such cash balances ' used in section 14(1)(b) of the Rehabilitation Act cannot be interpreted to cover total cash deposits with the Custodian.
257 The expression has to be construed as the excess of credits over debits.
The word 'balances ' had been advisedly used in preference to 'deposits ' because the intention was that only that much amount in deposit with the Custodian should be transferred to the Compensation Pool which would be in excess of the amounts required for meeting the due claims against the evacuees or their properties.
What can be di rected to be transferred to the Compensation pool by the Government under section 14(1)(b) is the 'cash balances ' and not the total cash deposits with the Custodian [267 A B] (c) The Custodian bad neither the power nor the authori ty to transfer the entirety of funds to the Compensation Pool.
The word 'surplus, ' used in the Government order puts the matter beyond doubt that only those balances which were surplus or in excess over what was required to meet the liabilities of the evacuees, were to be transferred to the Compensation Pool.
It was the duty of the Custodian, there fore.
to keep back with him so much of the funds in his deposit as were necessary to.
meet the verified claims against evacuees or their properties.
Such a course would have been perfectly legal and also in conformity with the final directions issued for transfer of 'surplus balances ' by the Central Government.
Only the 'cash balances ' which were validly transferred could legally form part of the Compensation Pool.
[267 E G]


Input:
Civil Appeal No. 1533 of 1980.
From the Judgment and Order dated the 20th February, 1980 of the High Court of Delhi at New Delhi in S.A.O. 149 of 1979.
S.K. Mehta for the Appellant.
Yogeshwar Prasad, Ravinder Bana and Mrs. Rani Chhabra for the Respondent.
The Judgment of the Court was delivered by 672 FAZAL ALI, J.
This appeal by special leave is directed against a judgment dated February 20, 1980 of the Delhi High Court decreeing the landlord 's suit for ejectment of the tenant.
The facts giving rise to the present litigation are summarised in the judgments of the Rent Controller and the High Court and need not be repeated.
Shorn of details, the position seems to be that Baldev Singh took the premises on rent on May 12, 1961 at a monthly rental of Rs. 95/ .
At the time when the tenancy started, the tenant was living in the tenanted house with his father, mother, two sisters and a brother.
The tenant himself was at that time a bachelor but seems to have married subsequently.
One of his sisters was married in this very house.
As it happened, in 1971 the tenant went to Canada followed by his wife and children.
It is alleged that after having gone to Canada, the husband alongwith his wife took up some employment there.
Admittedly.
the tenant did not return to India after 1971.
While leaving for Canada the tenant had left his mother and brother in the house who were regularly paying rent to the landlord.
There is some controversy as to whether or not the mother and brother, who were left behind, were being supported by the tenant or were living on their own earnings or by the income of the property left by the tenant in India.
Such a controversy however, is of no consequence in deciding the question of law which arises for consideration in this case.
On September 27, 1972 the landlord filed an application for ejectment of the tenant on the ground of bona fide requirement and non residence of the tenant under clauses (d) and (e) of sub section (1) of section 14 of the Delhi Rent Control Act, 1958 (hereinafter referred to as the 'Act ').
The fundamental plea taken by the landlord was that with the exit of the tenant from the house it became vacant and his mother and brother who were left behind could not be treated as members of the family.
Hence, in the eye of law the tenanted premises must be deemed to have fallen vacant.
The suit was resisted by the mother, brother and sister of the tenant who averred that even if the tenant alongwith his wife and children had shifted to Canada, the non applicants were continuing to live in the tenanted premises and as they had been paying rent 673 to the landlord regularly, who had been accepting the same, no question of the tenancy becoming vacant arose.
Thus, the entire case hinges on the interpretation of the word 'family ' as also clauses (d) and (e) of section 141(1) of the Act.
So far as clause (e) is concerned, both the courts below found as a fact that the landlord was not able to prove his bona fide necessity.
Therefore, as far as ground (e) is concerned, the same no longer survives in view of the findings of fact recorded by the courts below.
The only question that remains to be considered is whether the landlord can bring his case for eviction within the ambit of clause (d) of section 14(1) which may be extracted thus: "14 (1) Notwithstanding anything to the contrary contained in any other law or contract, no order or decree for the recovery of possession of any premises shall be made by any court or Controller in favour of the landlord against a tenant: Provided that the Controller may, on an application made to him in the prescribed manner, make an order for the recovery of possession of the premises on one or more of the following grounds only, namely: XX XX XX (d) that the premises were let for use as a residence and neither the tenant nor any member of his family has been residing therein for a period of six months immediately before the date of the filing of the application for the recovery of possession thereof; A close analysis of this provision would reveal that before the landlord can succeed, he must prove three essential ingredients (1) that the premises were let out for use as a residence, (2) that the tenant after having taken the premises has ceased to reside, and (3) that apart from the tenant no member of his family also has been residing for a period of six months immediately before the date of the filing of the application for ejectment.
674 It is manifest that unless the aforesaid conditions are satisfied the landlord cannot succeed in getting a decree for ejectment.
In the instant case, while it is the admitted case of the parties that the tenant had shifted to Canada alongwith his wife and children, yet he had left his mother, brother and sister in the house, hence the second essential condition of clause (d) continues to apply with full force.
The learned counsel for the appellant, however, submitted that the mother, brother and sister were undoubtedly living with the tenant and so long as they continued to reside in the tenanted premises, there could be no question of the premises falling vacant.
To this, the counsel for the landlord countered that neither the mother, nor the brother nor the sister could in law be treated as members of the family of the tenant after he had himself shifted to a country outside India.
Even though while he was living in Delhi, he was in Government service.
Thus, it was argued that in the eye of law, the so called family members would lose their status as members of the family of the tenant and would be pure trespassers or licensees or squatters.
While the suit of the landlord was dismissed by the Rent Controller, the Rent Control Tribunal allowed the appeal and directed eviction of the family members of the tenant under clause (d) of section 14(1) of the Act.
The family members of the tenant then went up in appeal to the High Court which also affirmed the findings of the Tribunal and upheld the order of eviction passed by it.
The High Court was also of the view that after the exit of the main tenant from India to Canada, neither the mother, nor the brother, nor the sister could be legally termed as a member of the family of the tenant.
We have heard counsel for the parties and given our anxious consideration to all aspects of the matter and we feel that the High Court has taken a palpably wrong view of the law in regard to the interpretation of the term 'member of the family ' as used in clause (d) of section 14(1) of the Act.
In coming to its decision, the High Court seems to have completely overlooked the dominant purpose and the main object of the Act which affords several intrinsic and extrinsic evidence to show that the non applicants were undoubtedly members of the family residing in the house and the migration of the main tenant to Canada would make no difference.
The word 'family ' has been defined in various legal dictionaries and several 675 authorities of various courts and no court has ever held that mother or a brother or a sister who is living with the older member of the family would not constitute a family of the said member.
Surely, it cannot be said by any stretch of imagination that when the tenant was living with his own mother in the house and after he migrated to Canada, he had severed all his connections with his mother so that she became an absolute stranger to the family.
Such an interpretation is against our national heritage and, as we shall show, could never have been contemplated by the Act which has manifested its intention by virtue of a later amendment.
Coming now to (the definitions, we find that in Words and Phrases (permanent Edition volume 16) at pp.
303 311 the word 'family ' has been defined thus: "The father, the mother, and the children ordinarily constitute a "family".
"The word "family" embraces more than a husband and wife and includes children." "A "family" constitutes all who live in one house under one head." "Father and mother of two illegitimate children, and children themselves, all living together under one roof, constituted a "family." (pp.
303 304) "The word "family" in statute authorizing use of income for support of ward and "family" is not restricted to those individuals to whom ward owes a legal duty of support, but is an expression of great flexibility and is liberally construed, and includes brothers and sisters in poor financial circumstances for whom the insane ward, if competent, would make provision." (p. 311) "The general or ordinarily accepted meaning of the word "family", as used in Compensation Act, means a group, comprising immediate kindred, consisting of the parents and their children, whether actually living together or not." (p. 343) (Emphasis ours) 676 Similarly, in Webster 's Third New International Dictionary, the word 'family ' is defined thus: "Family household including not only the servants but also the head of the household and all persons in it related to him by blood or marriage. a group of persons of common ancestry." (p. 821) (Emphasis supplied) In Chambers Twentieth Century Dictionary (New Edition 1972), the word 'Family ' has been defined thus: "family the household, or all those who live in one house (as parents, children, servants): parents and their children)" In Concise Oxford Dictionary (Sixth Edition), the same definition appears to have been given of the word 'family ' which may be extracted thus: "family Members of a household, parents, children, servants, etc.
set of parents and children, or of relations, living together or not; persons children.
All descendants of common ancestor.
" A conspectus of the connotation of the term 'family ' which emerges from a reference to the aforesaid dictionaries clearly shows that the word 'family ' has to be given not a restricted but a wider meaning so as to include not only the head of the family but all members or descendants from the common ancestors who are actually living with the same head.
More particularly, in our country, blood relations do not evaporate merely because a member of the family the father, the brother or the son leaves his household and goes out for some time.
Furthermore, in our opinion, the legislature has advisedly used the term that any member of the family residing therein for a period of six months immediately before the date of the filing of the action would be treated as a tenant.
The stress is not so much on the actual presence of the tenant as on the fact that the members of the family actually live and reside in the tenanted premises.
In fact, it seems to us that clause (d) of section 14(1) of the Act is a special concession given to the landlord to obtain possession only where the tenanted premises have 677 been completely vacated by the tenant if he ceased to exercise any control over the property either through himself or through his blood relations.
In fact, a controversy arose as to what would happen to the members of the family of the tenant if while residing in the premises he dies and in order to resolve this anomaly the legislature immediately stepped in to amend certain provisions of the Act and defined the actual connotation of the term 'members of the family '.
By virtue of Act 18 of 1976 the definition of "Tenant" was inserted so as to include various categories of persons.
Sub clause (iii) of clause (i) of section 2 of the Act actually mentions the persons who could be regarded as tenant even if main tenant dies.
This sub clause may be extracted thus: "(1) "tenant" means any person by whom or on whose account or behalf the rent of any premises is, or, but for a special contract, would be, payable and includes (i) a sub tenant; (ii) any person continuing in possession after the termination of his tenancy; and (iii) in the event of the death of the person continuing in possession after the termination of his tenancy, subject to the order of succession and conditions specified, respectively, in Explanation I and Explanation II to this clause such of the aforesaid person 's (a) spouse, (b) son or daughter or, where there are both son and daughter, both of them, (c) parents, (d) daughter in law, being the widow of his predeceased son, as had been ordinarily living in the premises with such person as a member or members of his family up to the date of his death, but does not include, . ." It would appear that parents were expressly included in sub clause (iii).
It has also been provided that apart from the heirs 678 specified in clauses (a) to (d) (extracted above), even those persons who had been ordinarily living in the premises with the tenant would be treated as members of the family.
The statement of objects and reasons for this amendment may be extracted thus: "There has been a persistent demand for amendments to the Delhi Rent Control Act, 1958 with a view to conferring a right of tenancy on certain heirs/successors of a deceased statutory tenant so that they may be protected from eviction by landlords and also for simplifying the procedure for eviction of tenants in case the landlord requires the premises bona fide for his personal occupation.
Further, Government decided on the 9th September, 1975 that a person who owns his own house in his place of work should vacate the Government accommodation allotted to him before the 31st December, 1975.
Government considered that in the circumstances, the Act required to be amended urgently.
" If this was the intention of the legislature then clause (d) of section 14(1) of the Act could not be interpreted in a manner so as to defeat the very object of the Act.
It is well settled that a beneficial provision must be meaningfully construed so as to advance the object of the Act, and curing any lacuna or defect appearing in the same.
There are abundant authorities to show that the term "Family" must always be liberally and broadly construed so as to include near relations of the head of the family.
In Hira Lal & Ors.
vs Banarsi Dass(1) even the learned Judge who decided that case had observed at page 472 that the term "members of the family" on the facts and circumstances of the case should not be given a narrow construction.
In Gobind Dass & Ors.
vs Kuldip Singh(2) a Division Bench of Delhi High Court consisting of H.R. Khanna, C.J. (as he then was) and Prakash Narain, J. while recognising the necessity of giving a wide interpretation to the word "family" observed as follows: "I hold that in the section now under consideration the word "family" includes brothers and sisters of the deceased 679 living with her at the time of her death.
I think that that meaning is required by the ordinary acceptation of the word in this connection and that the legislature had used the word "family" to introduce a flexible and wide term." In Mrs. G. V. Shukla vs Shri Prabhu Ram Sukhram Dass Ojha(1) Mahajan, J. (as he then was) observed as follows: "Therefore, it must be held that the word 'family ' is capable of wider interpretation, but that interpretation must have relation to the existing facts and circumstances proved on the record in each case.
" Even as far back as 1930, Wright, J. in Price vs Gould & Ors (2) (a King 's Bench decision) had clearly held that the word "family" included brothers and sisters and in this connection observed as follows: "I find as a fact that the brothers and sisters were residing with the deceased at the time of her death.
It has been laid down that the primary meaning of the word "family" is children, but that primary meaning is clearly susceptible of wider interpretation, because the cases decide that the exact scope of the word must depend on the context and the other provisions of the will or deed in view of the surrounding circumstances." . . "Thus, in Snow vs Teed (1870, 23 L.T. Rep. 303; L. Rep. it was held that the word "family" could be extended beyond not merely children but even beyond the statutory next of kin." In view, however, of the very clear and plain language of clause (d) of section 14(1) of the Act itself, we do not want to burden this judgment by multiplying authorities.
On a point of fact, we might mention that the Rent Controller had given a clear finding that the mother, younger brother (Davinder Kumar Bangia) and sister (Vijay Lakshmi) were undoubtedly residing in the disputed premises alongwith the main 680 tenant and continued to reside there even on the date when the action for ejectment was brought.
In these circumstances, we are satisfied that the view taken by the High Court is legally erroneous and cannot be supported.
The landlord has miserably failed to prove the essential ingredients of clause (d) of section 14(1) of the Act so as to entitle him to evict the members of the family of the main tenant.
We therefore, allow this appeal, set aside the judgment and order of the High Court and dismiss the plaintiff 's action for ejectment and restore the judgment of the Rent Controller.
In the peculiar circumstances of the case, there will be no order as to cost.
H.L.C. Appeal allowed.

Output:
A landlord is entitled to recover possession of the premises let for residential purpose under section 14(1)(d) of the Delhi Rent Control Act, 1958, if he can show that neither the tenant nor any member of his family has been residing therein for a period of six months immediately before the date of the filing of the application.
The appellant took the house in question on lease in May, 1961 and lived there with his parents, sisters and a brother.
He went to Canada in 1971, leaving behind in the house, his mother and brother, who continued to pay the rent.
The landlord filed an application for ejectment of tenant under section 14(1)(d) of the Delhi Rent Control Act in September 1972 contending that with the migration of the tenant to Canada, his mother and brother could not be treated as members of the appellant 's family.
The application was dismissed by the Rent Controller who found that the mother, brother and sister of the appellant were undoubtedly residing in the disputed premises along with the appellant and continued to reside there even on the date when the action for ejectment was brought.
The landlord 's appeal against the order of the Rent Controller was allowed by the Rent Control Tribunal which ordered eviction of the family members of the appellant from the tenanted house.
The appeal of the family members against the order of eviction was dismissed by the High Court on the ground that after the exit of the main tenant to Canada, neither the mother nor the brother or the sister could be legally termed as a member of the family of the appellant.
Allowing the appeal, 671 ^ HELD: 1.
(a) The Act affords intrinsic evidence to show that the non applicants were undoubtedly members of the family residing in the house and the migration of the main tenant to Canada would make no difference.
[674 H] (b) The term 'family ' has to be given not a restricted but a wider meaning.
There are abundant authorities to show that the term 'family ' should always be liberally and broadly construed so as to include near relations of the head of the family.
A beneficial provision must be meaningfully construed so as to advance the object of the Act.
E] Price vs Gould and Ors., [1930] Vol.
143 Law Times 333; G.V. Shukla vs Shri Prabhu Ram Sukhram Dass Ojha, [1963] P.I.R. (Vol.
LXV) 256; Govind Dass and Ors.
vs Kuldip Singh, A.I.R. 1971 Delhi 151 and Hira Lal and Ors.
vs Banarsi Dass, [1979] 1 R.L.R. 466 referred to.
(c) The Act has manifested its intention by virtue of a later amendment.
The definition of 'tenant ' inserted in section 2(1) of the Act by the Amending Act 18 of 1976 expressly included 'parents ' in sub clause (iii) thereof and also indicated that apart from the heirs of the tenant specified therein, even those persons who had been ordinarily living in the premises with the tenant would be treated as members of the family.
[675 B; 677 H; 678 A] 2.
(a) The legislature has advisedly provided that any member of the family residing therein for a period of six months immediately before the date of the filing of the action would be treated as a tenant.
The stress is not so much on the actual presence of the tenant as on the fact that the members of the family actually live and reside in the tenanted premises.
Clause (d) of section 14(1) of the Act is a special concession given to the landlord to obtain possession only where the tenanted premises have been completely vacated by the tenant.
[676 G H; 677 A] (b) The landlord had failed to prove the essential ingredients of clause (d) of section 14(1) of the Act so as to entitle him to evict the members of the family of the main tenant.
It could not be said that when the appellant migrated to Canada, he had severed all his connections with his mother so that she became an absolute stranger to the family.
Such an interpretation is against our national heritage and could never have been contemplated by the Act.
[680 B; 675 B]


Input:
Civil Appeal No. 927 of 1976.
Appeal by Special Leave from the Judgment and order dated 5 3 76 of the Kerala High Court in O.P. No 2469/74.
V. M. Tarkunde, Frank Anthony, R. Satish and E. C. Agrawala for the appellant.
K. T. Harindernath and K. R. Nambiar for Respondents 1 3.
A. section Nambiar, Mrs. Pushpa Nambiar and Miss M. Poduval for Respondent No. 4.
611 Frank Anthony, R. Satish, and E. C. Agarwala for the Intervener Fr. Powathil.
The Judgment of the Court was delivered by UNTWALIA, J.
This is an appeal by special leave from the judgment of the Kerala High Court dismissing the appellant 's writ application for quashing the order dated June S, 1973 of the Regional Deputy Director of Public Instruction, Trivandrum and the order dated May 2, 1974 of the District Education officer issued pursuant to the order aforesaid of the Regional Deputy Director.
The constitutional question involved in this appeal is about the vires of Rule 12(iii) of Chapter VI of the Kerala Education Rules, 1959, hereinafter called the Rules.
The question is whether the said rule is violative of Article 30(1) of the Constitution.
In the year 1947 Dr. A. G. Pereira, a retired Medical officer, opened a High School at Kaniyapuram mainly for the, benefit of the students of the Christian community.
The sanction of the then Government of Travancore for opening the School was accorded to him by letter dated 21st February, 1947, Ext.
Subsequently the School was transferred to the Trivandrum Roman Catholic Diocese.
For the last more than 25 years the School was administered by this Diocese.
The appellant is the corporate Manager of the Schools belonging to the Roman Catholic Diocese of Trivandrum.
It is not in dispute that as a matter of fact only boy students were admitted ill the School till the end of academic year 1971 72.
In the year following the management built a separate building in the School compound to provide accommodation for girl students.
The Manager applied to the Regional Deputy Director for permission to admit girl students in the School, although according to his case, it was strictly not necessary to do so in law.
By letter dated June 5, 1973 Ext.
P 2 the Regional Deputy Director refused to give sanction for admission of the girl students.
The main ground of refusal of the sanction contained in the said letter is that St. Vincent 's High School, Kaniyapuram the School in question, was not opened as a mixed School, that is to say, for imparting education both to boys and girls and that "the School had been running purely as a boys ' School for the last more than 25 years.
where is also facility for the education of the girls of the locality in the near girls ' School situated within a radius of one mile.
" As mentioned in the letter, the Manager of Muslim High School, Kaniyapuram, which was a girl 's School said lo be situated within a radius of one mile from the School in question seems to have objected to the grant of permission for admission of girl students in the St. Vincent 's High School.
The girls ' School was 612 established by the Muslims and was also a minority institution within the meaning of Article 30 of the Constitution.
The appellant filed a revision before the State Government from the order of the Regional Deputy Director and pending revision many girl students were admit ted in the School.
The District Education officer wrote the letter dated 2 5 1974, Ext.
P 4 to the authorities of the St. Vincent 's High School that since the admission of girl pupils had been prohibited by the Regional Deputy Director no girl should be admitted in the School.
The appellant, thereupon, challenged the orders of the educational authorities by filing a Writ Petition in the High Court.
In the judgment under appeal the High Court has said that.
although girls School has been defined in Rule 6 of Chapter II of the Rules, a boys ' School is not defined either in The Kerala Education Act, 1958, hereinafter to be referred to as the Act, or in the Rules, since only boys were, admitted in the School for a long time the self imposed restriction by the management made it a boy 's School.
The authorities of the School could be prevented from admitting the girls in the School under Rule 12(iii) of Chapter VI of the Rules, even though a separate building has been constructed for them in the same compound.
In the opinion of the High Court, to quote its language: "The basis of the rule seems to be that it will be better for the girls to get instruction in girls ' schools as far as possible; and if there is a girls ' school why the parents of the minority community should insist on admission of the girls in boys ' school is ununderstandable.
By the time the child reaches the secondary school stage it would have grown up a little.
At that age to keep them under proper guidance and discipline the rule is made that they should as far as possible be given education in girls ' Schools only.
This is only in the nature of a regulation for discipline and morality.
It does not interfere with the power of administration of an educational institution by a minority community.
" There is no dispute that the School was an existing School within the meaning of Section 2(3) of the Act.
Thus within the permissible limits without violating the protection given to a minority institution under Article 30 of the Constitution, the Act and the Rules came to govern this School also.
As already stated, there is no definition of a boys ' School either in the Act or the Rules.
But in Rule 6 of Chapter II it has been provided "Schools where ad 613 mission to some or all of the Standards is restricted to girls shall be known as Girls ' Schools.
" Rule 12 in Chapter VI reads as follows: "Admission of Boys into Girls ' Schools: (i) All Primary Schools (Lower and Upper) shall be deemed to be mixed Schools and admission thereto shall be open to boys and girls alike.
But under special circumstances the Director may exempt particular institutions from this rule so that admission thereto might be restricted to boys or girls and in the absence of such special circumstances the Director may withdraw such exemption.
(ii) Admission to Secondary Schools which are specifically recognised as Girls ' Schools shall be restricted to girls only, but the Director may issue a general permission to boys below the age of twelve to be admitted to classes not higher than Standard VII in particular Girls ' Schools provided there are no Boys ' Schools in the locality.
But such boys on completing the age of twelve shall not be allowed to continue in such schools beyond the school year in which they complete the age of twelve.
(iii) Girls may be admitted into Secondary Schools for boys in areas and in towns where there are no Girls ' Schools and in such cases adequate arrangements should be made for the necessary convenience.
The admissions will be subject to general permission of the Director in particular Boys ' Schools which will be specified by him.
" The language of clause (i) indicates that in all Primary Schools admission shall be open to boys and girls alike and such Schools shall be deemed to be mixed Schools.
But it is open to the Director to exempt a particular institution from this Rule meaning thereby that if the School authorities so want, they may run the school for the admission of the boys or the girls only.
Similarly clause (ii) of Rule 12 suggests that admission to Secondary Schools which are specifically recognised as Girls ' Schools shall be restricted to girls only, but with the permission of the Director boys below the age of twelve may be admitted.
The purport of impugned clause (iii), however, is to enable the Director to permit the admission of girls into Secondary Schools for boys in areas and towns where there are 614 no girls ' Schools.
In other words if there are other girls ' Schools permission may be refused for admission of the girls in a School which has been run for imparting education to boys only.
The ambit and content of Article 30 of the Constitution has been the subject matter of consideration and pronouncement by this Court in several decisions starting from In Re The Kerala Education Bill, 1957(1) and ending with 9 Judges ' Bench decision of this Court in The Ahmedabad St. Xaviers College Society & anr.
vs State of Gujarat & anr.(2) In State of Kerala, etc.
vs Very Rev. Mother Provincial, etc.
,(3) Hidayatullah, C.J., speaking for the Court has said at page 740: "There is, however, an exception to this and it is that the standards of education are not a part of management as such.
These standards concern the body politic and are dictated by considerations of the advancement of the country and its people.
Therefore, if universities establish syllabi for examinations they must be followed, subject however to special subjects which the institutions may seek to teach, and to a certain extent the State may also regulate the conditions of employment of teachers and the health and hygiene of students.
Such regulations do not bear directly upon management as such although they may indirectly affect it.
Yet the right of the State to regulate education, educational standards and allied matters cannot be denied.
The minority institutions cannot be allowed to fall below the standards of excellence expected to educational institutions, or under the guise of exclusive right of management, to decline to follow the general pattern.
While the management must be left to them, they may be compelled to keep in step with others.
These propositions have been firmly established in the State of Bombay vs Bombay Education Society (1955) 1 S.C.R., 568; The State of Madras vs S.C. Dorairajan, ; ; In re the Kerala Education Bill 1957 (1959) S.C.R. 995; Sidharajbhai vs State of Gujarat (1963) 3 S.C.R. 837; Katra Education Society vs State of U.P. & Ors. (1966) 3 S.C.R., 328; Gujarat University, Ahmedabad vs Krishna Ranganath Mudholkar and ors. (1963) Suppl.
1 S.C.R. 112 and Rev. Father W. Proost & ors.
vs State of Bihar ; In the last case it was said that the (1) [1959] section C. R. 995 (2) ; (3) [!971] I section C. R. 734.
615 right need not be enlarged nor whittled down.
The Constitution speaks of administration and that must fairly be left to the minority institutions and no more.
" In the case of St. Xaviers College, Ahmedabad (supra) the majority decision, although by separate judgments, has converged to the view that the right conferred on the religious and linguistic minorities to administer educational institutions of their choice is not an absolute right.
This right is not free from regulation.
Just as regulatory measures are necessary for maintaining the educational character and content of minority institutions, similarly regulatory measures are necessary for ensuring orderly, efficient and sound administration of the School in the matter of maintaining discipline, health, morality and morality and so forth.
Even the two learned Judges differing from the majority on some of the aspects of the matter under consideration before this Court in St. Xaviers College case did not depart from this fundamental principle.
The difference was mainly in the application of the principle in relation to some of the provisions of the impugned Statute.
As summed up by Das C.J., in the Kerala Education Bill case (supra), the right to administer an educational institution of their choice by a minority cannot mean a right to maladminister.
Of course in the application of the salient principles mentioned above opinions have differed from case to case and may differ.
Let us examine the constitutionality of Rule 12(iii) contained in Chapter VI of the Rules and the validity of the impugned orders contained in Exts.
P 2 and P 4.
The dominant object of the said Rule does not seem to be for the sake of discipline or morality.
Any apprehension of deterioration in the moral standards of students if co education is permitted in Secondary Schools does not seem to be the main basis of this Rule, although it may be a secondary one.
The very fact that girls can be admitted into a boys school situated at a place where there are no girls ' school in the town or the area leads to this conclusion.
It is to be remembered that no category of a school as a boys ' school is specified in the Act or the Rules.
Nor was our attention drawn to any provision enabling the educational authorities to force the school authorities to admit girls in a school where they don 't want to admit them.
The self imposed restriction by the management in vogue for a number of years restricting the admission for boys only, per se, is wholly insufficient to cast a legal ban on them not to admit girls.
The ban provided in Rule 12(iii) as already adverted to is of a very limited character and for a limited purpose.
Permission was granted to Dr. Pereira for opening the school in 1947 616 as a High School.
No restriction in terms was imposed for not admitting any girl students.
If the successor school authorities wanted to depart from the self imposed restriction, they could only be prevented from doing so on valid, legal and reasonable grounds and not otherwise.
As is apparent from the impugned order dated 5 6 1973 of the Regional Deputy Director of Public Instruction as also from the passage of the High Court judgment which we have extracted above the permission sought for by the appellant for admission of girls in the St. Vincent 's School was refused not on the ground of any apprehended deterioration of morality or discipline but mainly; or perhaps, wholly in the interest of the existing Muslim girls ' school, respondent No. 4, in the locality.
The basis of the Rule, as remarked by the High Court, seems to be "that it will be better for the girls to get instructions in girls ' schools as far as possible.
" If that be so, then clearly the Rule violates the freedom guaranteed to the minority to administer the school of its choice.
But, as already stated, in our opinion this is not the dominant object of the rule.
The Christian community in the locality, for various reasons which are not necessary to be alluded to here, wanted the girls also to receive their education in this school and specially of their community.
They did not think it in their interest to send them to the Muslim girls ' school which is an educational institution run by the other minority community.
In that view of the matter the Rule in question in its wide amplitude sanctioning the withholding of permission for admission or girl students in the boy 's minority school is violative of Article 30.
If so widely interpreted it crosses the barrier of regulatory measures and comes in the region of interference with the administration of the institution, a right which is guaranteed to the minority under Article 30.
The Rule, therefore, must be interpreted narrowly and is held to be inapplicable to a minority educational institution in a situation of the kind with which we are concerned in this case.
We do not think it necessary or advisable to strike down the Rule as a whole but do restrict its operation and make it inapplicable to a minority educational institution in a situation like the one which arose in this case.
It follows, therefore, that the impugned orders dated 5 6 1973 and 2 S 1974 passed by the Regional Deputy Director and the District Education officer respectively are bad and invalid and must be quashed.
In the result, we allow this appeal and set aside the judgment and order of the High Court and grant the relief to the appellant to the extent and in the manner indicated above.
In the circumstances, we make no order as to costs.
P.H.P. Appeal allowed .

Output:
The appellant opened a High School mainly for the benefit of the students of the Christian community in the year 1947.
The necessary sanction was accorded by the Govt.
Of Travancore.
Only boys were admitted in the school till the end of the academic year 1971 72.
In the subsequent year, the management constructed building in the school compound to provide accommodation for girl students.
The Manager applied to the Regional Deputy Director for permission to admit girl students in the school.
The regional Deputy Director refused to give sanction for admission of the girl students.
The main ground of refusal was that the school was not opened as a mixed school and that the school had been running purely as a boy 's school for 25 years.
Another reason given was that there was facility for the education of the girls of the locality in a near by girls school which was established by the Muslims and was also a minority institution.
An appeal filed before the educational authority failed.
Under rule 12(i) of Kerala Education Rules, 1954 all primary schools are deemed to be mixed schools and the admission thereto shall be open to boys and girls alike.
Under the special circumstances the Director may exempt particular institutions so that admission thereto might be restricted to boys or girls.
Rule 12(ii) provides that admission to schools which are specifically recognised as girls ' schools shall be restricted to girls.
However, the Director has power to empower boys below 12 years up to 7th standard to be admitted.
Rule 12(iii) provides that the girls may be admitted in schools for boys if in the town there are no girls ' schools.
The appellant filed a writ petition in the High Court challenging the order of the educational authorities.
The High Court came lo the conclusion that since only boys were admitted in the school for a Long time the self imposed restriction by the management made it a boys ' school and that the authorities have powers under rule 12(iii) to prevent the school from admitting the girls.
The High Court held that the basis of the rules was that as far as possible girls should be given education in girls ' schools only and that it was in the nature of regulation for discipline.
Allowing the appeal the Court, 610 ^ HELD: (1) The ambit and content of article 30 of the Constitution has been the subject matter of consideration and pronouncement by this Court in several decisions.
[614 A] In Re The Kerala Education Bill 1957, [1959] SCR 995; The Ahemdabad St. Xaviers College Society & Anr.
vs State of Gujarat & Anr. ; referred to.
The right conferred on the religious and linguistic minorities to administer educational institutions of their choice is not an absolute right.
The right is not free from regulation.
Just as regulatory measures are necessary for maintaining the educational character and content of minority institutions, similarly regulatory measures are necessary for ensuring orderly, efficient and sound administration of the school in the matter of maintaining discipline, health, morality and so on and so forth.
[615 A C] (2) The dominant object of rule 12 is not for the sake of discipline or morality.
Any appreciation of the deterioration in the moral standard of Students, if co education is permitted in secondary schools, does not seem to be the main basis of the rule, although it may be a secondary one.
[615 E F] (3) The self imposed restriction by the management in vogue for a number of years restricting the administration for boys only is wholly insufficient to cast a legal ban on them not to admit girls.
While granting the permission for opening the school no restriction was imposed for not admitting any girl student.
If the successor school authorities wanted to depart from the self imposed restriction, they could only be presented from doing so on valid, legal and reasonable grounds and not other vise.
The permission in the present case was refused in the interest of the existing Muslim Girls ' School.
If the basis of the rule is that girls should get instructions in girls ' school then the rule violates the freedom guaranteed to the minorities to administer the school of its choice.
However, that is not the dominant object of the rule.
The Christian community in the locality wanted the girls to receive their education in their school.
If rule 12 widely interpreted has empowered the government to prohibit a minority school from admitting girl students for the benefit of another girls ' school, it crosses the barrier of regulatory measures and comes in the region of interference with the administration of the institution, a right which is guaranteed to the minority under article 30.
The rule, therefore, must be interpreted narrowly and should be held not applicable to minority educational institution in a situation like the present one.
The Court.
therefore, quashed the order of the Educational authorities.
[615 G H, 616 A F]


Input:
Appeal No. 225 of 1965.
Appeal by special leave from the judgment and order dated September 6, 1962 of the Madhya Pradesh High Court in Misc.
Civil Case No. 108 of 1958.
I.N. Shroff, for the appellant.
S.T. Desai, section N. Andley, Rameshwar Nath, P. L. Vohra, and Mahinder Narain, for the respondent.
225 The Judgment of the Court was dilevered by Sikri, J.
This appeal by special leave is directed against the judgment of the High Court of Madhya Pradesh in a reference made to it under section 46 of the Gwalior War Profits Tax Ordinance, Samvat 2001 hereinafter called the Ordinance.
Three questions were referred to the High Court by the War Profits Tax Commissioner, but we are only concerned with question No. 1, which reads as follows: "Whether the dividend income of Rs. 11,09,332/received from the Binod Mills was chargeable under the War Profits Tax?" When the reference was first heard by the High Court three contentions were raised by M/s Binodram Balchand of Ujjain, respondents before us, hereinafter referred to as the assessees.
They were: "(1) The assessees did not deal in shares and their holdings in the Binod Mills Limited were purely in the nature of investments, having no connections with their business as defined in Section 2(5) read with Rule 1 of Schedule 1, of the Gwalior War Profits Tax Ordinance.
The business of the secretaries, treasurers and agents of the Binod Mills Limited, which was carried on by them did not require any holding of the shares of the company and was not dependent on their investment in the said company.
(2)The dividend income accrued or arose from the profits of the Binod Mills Limited, and as the Ordinance applied to the business carried on by this company, the dividends were excluded under the explanation to Rule 3(1) of Schedule 1.
(3)The dividend income should be considered as income of the full accounting period, i.e., from Diwali of 1943 to Diwali of 1944 and should be apportioned on that basis".
The High Court by its judgment dated April 19, 1957, accepted the first contention of the assessees and accordingly answered the question in their favour.
It did not deal with contentions Nos. 2 and 3.
The Commissioner appealed to this Court and this Court by its judgment dated December 20, 1961, set aside the judgment of the High Court and answered the first contention in relation to question No. I against the assessees and remanded the case to the High Court for the consideration of the other two contentions with reference to that question.
The High Court on remand accepted the second contention of the assessees and answered question No. 1, set out above, in favour of the assessees.
The Commissioner having obtained special leave, the appeal is now before us for disposal.
226 A few facts may be given in order to appreciate the point that has. been argued before us.
The assessees were, at the relevant time, the Managing Agents of the Binod Mills Ltd., Ujjain, which was a private limited company carrying on the business of manufacturing and selling textile goods in 1944.
The Ruler of the Gwalior State promulgated the Gwalior War Profits Tax Ordinance, Samvat 2001, for the purpose of imposing tax on excess profits arising out of certain businesses.
The Ordinance came into force on July 1, 1944, and applied originally to the counting period falling within the period commencing on July 1, 1944, and ending on June 30, 1945.
By virtue of a notification the period was extended to June 30, 1946.
The assessees carried on the Managing Agency business during the aforesaid period in Gwalior State and being liable to be assessed to war profits submitted a return for the period commencing from July 1, 1944, to October 16, 1944.
It appears that Rs. 11,09,332/ was received by the assessees on July 5, 1944, on account of dividend on shares of the Binod Mills for the year 1943.
The assessees inter alia contended before the War Profits Tax Officer that this sum was not liable to be charged.
The War Profits Tax Officer, however, by order dated July 9, 1951, in.; clouded this sum of Rs. 11,09,132/ in the taxable income and his view was upheld in appeal by the Appellate Assistant Commissioner and the Commissioner.
As stated above, the Commissioner, at the instance of the assessees, referred three questions, including the one with which we are concerned, to the High Court.
It appears that before the High Court the learned counsel for the Commissioner did not seriously dispute the contention of the assessees that the dividend income which the assessees had received was exempted by the Explanation to r. 3 of Schedule 1 of the Ordinance.
The rule as it existed originally was as follows: "3(1) Income received from investments shall be included in the profits of a business liable to the War Profits Tax, unless it is proved to satisfaction of the War Profits Tax Officer that the investments have no connec tion whatever with the business.
(2)In the case of business which consists wholly or mainly in the dealing in or handling of investments, income received from investments shall be deemed to be profits of that business, and in the case of a business, a specific part only of which consists in dealing in investments, the income received from investments held for the purposes of that part of the business shall be deemed to be profits of that part of the business".
227 By section 2 of the Gwalior War Profits Tax (Amendment) Ordi nance, Samvat 2002 hereinafter referred to as, Ordinance 2002, r. 3 of the First Schedule to the Ordinance was amended as follows: "In rule 3(2) of the First Schedule to Ordinance the following shall be added, namely: Explanation "The income from investments to be included in the profits of the business under the provisions of this rule shall be computed exclusive of all income received by way of dividends or distribution of profits from a company carrying on a business to the whole of which the Section of the Ordinance imposing the War Profits Tax applies", This Ordinance was promulgated on February 28, 1946.
Another Ordinance called the Gwalior War Profits Tax (Amendment) Ordinance, Samvat 2004 hereinafter referred to as Ordinance 2004 was promulgated on September 6, 1947.
This Ordinance amended the Explanation to sub rule (2) of rule 3 of Schedule 1 as follows "In the explanation of sub rule (2) of Rule 3 of Schedule 1 of the Gwalior War Profits Tax Ordinance, Samvat 2001 a comma is added after the words "from a company carrying on a business" and before the words "to the whole of which" and shall be always deemed to be there from the date from which the said Ordinance came into force".
The High Court felt no difficulty in holding that the expla nation applied, and that on its plain terms the dividend income which the assessees received from the profits of Binod Mills Ltd. was not liable to be included in the taxable income.
The High Court observed: "The language of the explanation is very plain, and it means that if income is received by way of dividends or profits from a company carrying on a business, to the whole of which the section of the Ordinance imposing the War Profits Tax applies, then the income has to be excluded in the assessment to War Profits Tax of the assessee receiving that income.
The object of the explanation is clearly to avoid double taxation.
Here it is not disputed that the dividend income which the assessee received was from the profits of the Binod Mills Limited and the Mills were subject to the burden of the War Profits Tax under the Ordinance.
That being so, the explanation in terms applies to the case, and the assessee is entitled to claim that the dividend income of Rs. 11,09,332/ received from Binod Mills could not 228 be included in the computation of its profits for the purposes of War Profits Tax and was consequently not chargeable under the War Profits Tax Ordinance.
Learned Advocate General appearing for the State did not dispute this position".
Mr. Shroff, the learned counsel for the Commissioner, contends, first, that the explanation was not in existence at the relevant time, and, therefore, cannot be taken into consideration; secondly, that the explanation is an explanation to r. 3(2) and not to r. 3(1) and, therefore, cannot be used to explain r. 3(1).
Mr. Shroff complains that the High Court was wrong in thinking that the explanation formed part of Ordinance 2001, as it was originally promulgated.
The High Court seems to have been under this impression because in the order refusing leave to appeal to this Court the High Court observed: "There was no omission at all on our part to consider the question whether the explanation was prospective or not.
Indeed, this question was never raised by the learned Advocate General, appearing for the Department and it was rightly not raised as the Explanation was not added subsequent to the promulgation of the Ordinance and the very basis of the assessment of the income of the assessee was that rule 3 of Schedule 1 of the Ordinance together with the Explanation applied to the income received by the assessee during the period from 1st July 1944 to 16th October 1944".
It seems that Ordinance 2002 and Ordinance 2004 were not placed before the High Court and for this reason it assumed that the explanation was not added subsequent to the promulgation of the Ordinance.
But even if it was added subsequently, in our opinion, the explanation applies to the computation of the profits of the chargeable accounting period July 1, 1944 to October 16, 1944.
If we read Ordinance 2002 and Ordinance 2004 together the legislative intention to make the explanation retrospective becomes clear.
Apart from Ordinance 2004, it would have been very arguable that the explanation inserted by Ordinance 2002 was retrospective because it dealt with the computation of profits and would apply to all computation of profits made by the Taxing authorities after February 28, 1946.
But we need not go into this question because Ordinance 2004 expressly assumes that the explanation was in existence from the date when the Ordinance came into force and no other meaning can be given to section 2 of Ordinance 2004 because by deeming that the comma shall be deemed to be there from the date from which the Ordinance came into force it expressly assumes that the explanation was also in force from that date.
Accordingly we are not inclined to 229 accept the first contention of Mr. Shroff and we must hold that the explanation applies to the computation of profits of the chargeable accounting period July 1, 1944 to October 16, 1944.
Regarding the second contention, Mr. Shroff says that Ordi nance 2002 expressly provides that the explanation shall be added in r. 3(2) of the First Schedule to the Ordinance.
He further says that this explanation is referred in Ordinance 2004 as "explanation of sub rule (2) of rule 3 of Schedule 1".
There is no doubt that Ordinance 2002 did purport to add this explanation to r. 3(2) but it seems to us that if we look at the language of the explanation it was meant to be an explanation not only to r. 3(2) but to r. 3(1) also.
First, the words "the income from investments to be included in the profits of the business under the provisions of this rule" are comprehensive and include income from investments both under r. 3(1) and r. 3(2).
Secondly, there is no reason why any distinction should have been made between investments mentioned in r. 3(1) and investments mentioned in r. 3(2).
Rule 3(1) is general and deals with all investments from profits of all businesses and would include investments mentioned in r. 3(2).
Rule 3(2) deals with investments of a certain business, i.e., business which consists wholly or mainly in the dealing in or holding of investments.
We have not been able to appreciate why, if Mr. Shroff is right, was it necessary to distinguish between income from investments mentioned in r. 3(1) and income from investments mentioned in r. 3(2).
At any rate, the language of the explanation is quite clear and it seems to us that by the words "in rule 3(2) of the First Schedule to the Ordinance, the following shall be added" what was really meant was to add the explanation below r. 3(2).
In the result we agree with the High Court that the answer to the question referred should be in the negative.
The appeal accordingly fails and is dismissed with costs.
Appeal dismissed.

Output:
The assessee was the managing agent of a Textile Mill in Uj jain.
In 1944, the Gwalior State promulgated the Gwalior War Profits Tax Ordinance.
In 1946, by the Gwalior War Profits Tax (Amendment) Ordinance, an Explanation was added after r. 3(2) of the First Schedule to the Ordinance of 1944.
In 1947, another Amendment Or dinance was promulgated whereby a comma was inserted in the Explanation.
In July 1944.
the assesses received about Rs. 11 lacs as dividend on its shares in the Textile Mill.
The War Profits Tax Officer included the amount in the assessee 's taxable income, and the order was upheld by the Appellate Assistant Commissioner and the Commissioner.
On the question: whether the dividend income was chargeable to war profits tax, the High Court held, on a reference, that the Explanation applied and that under the Explanation the dividend income was not liable to be included in the assessee 's taxable income.
In appeal to this Court, it was contended that the Explanation was not applicable, because, (i) it was not retrospective; and (ii) it was only an Explanation to r. 3(2) and not to r. 3(1) which was the rule applicable to the assessee.
HELD:The Explanation applies to the computation of the pro fits of the chargeable accounting period, because: (i) the Ordinance of 1947 expressly assumes that the Explanation was in existence from the date when the War Profits Tax Ordinance came into force in 1944; and (ii) on the language of the Explanation it was meant to be an Explanation not only to r. 3(2) but also to r. 3(1).
By the words "in r. 3(2) the following shall be added", in the amending Ordinance of 1946, all that was meant was that the Explanation should be added below r. 3(2).
[228 H 229 E]