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Civil Appeal No. 1507 of 1969 Appeal from the Judgment and order dated the 12th March, 1968 of the Punjab and Haryana High Court in Civil Writ No. 1376 of 1967.
WITH Civil Appeal Nos.
1202 20 of 1970 919 From the Judgment and Order dated the 23rd day of July, 1967 of the Punjab and Haryana High Court in Civil Writ Petition Nos.
2934 & 2955 of 1968 and L.P.A. Nos.
597 599/68, Civil Writ Nos.
242 45/69, 423, 471, 477, 783 785, 787 89 & 792 of 1969.
AND Civil Appeals Nos.
1564 67 of 1970 Appeals from the Judgment and Order dated the 20th November, 1969 of the Punjab and Haryana High Court in L.P.A. Nos.
57 59 69.
AND Civil Appeals Nos.
743 94 of 1974.
From the Judgment and Order dated the 23rd July, 1969 of the Punjab and Haryana High Court in Civil Writ Nos. 343, 334, 353, 354, 365, 379, 381, 384, 385, 421, 422, 424, 456 481, 493, 518, 519, 520, 529 of 1969, 2933, 2948, 2949, 2956, 2975 78, 3021, 3111, 3188 of 68, 254, 264, 307, 308, 715, 706, 674, 662, 661, 604, 596, 588, 554, 737, 786, 791, 798, 828, 836, 945, 839 of 1969.
R.N. Poddar for the Appellants in CA.
I.S. Goel and R.N. Poddar for the Appellants in CA.
1202 20.
M.S. Gujral and R.N. Poddar for the Appellants in CA.
743 794/74.
K.G. Bhagat, Additional Soliciter General and R.N. Poddar for the Appellants in CAs.
1564 67/70.
T.S. Munjral and H.K. Puri for Respondent in CA.
P.R. Mridul, V.S. Desai, section Rangarajan in CAs.
1204 to and in CA.
743, 762 & 770.
T.S. Munjral, K.C. Dua and Poonam Malhotra for the Respondents in CAs 1204 06, 1564 67, 743, 762, 764, 765 770.
R.C. Bhatia and P.C. Kapoor for Respondents in CAs.
1202 03, 1207 20, 744 761, 768, 766 769 & 771 794.
920 The Judgment of the Court was delivered by CHANDRACHUD, CJ.
These appeals have a long history.
Liquor vends were put to auction by the Excise Department of the Government of Haryana whereupon, the highest bidders were given the necessary licences to sell liquor.
Some of the licensees committed default in the payment of amounts due from them under the terms of the auction.
Thereupon, the vends were reauctioned except for three vends which, though published for reauction, were given by private negotiations.
The original licensees, who were called upon to pay the difference between the amount which they were liable to pay and the amount realised by resale of the vends, filed writ petitions in the High Court of Punjab and Haryana contending that the State Government had no power to demand the various amounts which they had allegedly defaulted in paying.
The High Court accepted that contention, holding that the State Government had no authority to demand the amounts for failure to pay which, the vends were put to resale.
As a necessary consequence of that finding, the fresh grants made by reauction or private treaty were held invalid.
The result of this was that the writ petitioners stood relieved of their obligation to make good the shortfall.
This is the broad history of these appeals.
We will take up Civil Appeal No. 1507 of 1969 for consideration first.
The facts of that case and the events lending to the present proceedings are mentioned in a judgment of this Court reported in State of Haryana vs Jage Ram(1).
In this case, an auction was held on March 27, 1967 for the grant of a retail vend known as Biswan Meel, Sonepat, for the year 1967 68.
The respondents Jage Ram and others offered the highest bid in that auction.
Under Condition 14 (iii) of the auction, respondents became liable to pay an amount calculated at the rate of Rs. 17.60 per litre, which came to Rs. 10,92,960.00.
They paid a security deposit for the due performance of the terms of the auction but they committed default in payment of instalments which fell due on April 10 and April 25, 1967.
On May 17, 1967 the Excise authorities cancelled the licence of the respondents and informed them that the vend will be resold on May 23, 1967 at the risk of the respondents.
In pursuance of the order dated May, 17, the Biswan Meel vend was reauctioned on May 23, the highest bid offered being in the sum of Rs. 2,46,000.00.
On July 11, respondents were called upon by a notice to pay a sum of 921 Rs. 7, 41,577.40, being the difference between the amount which they were liable to pay under the terms of the original auction and the amount fetched in the reauction.
Thereupon, respondents filed a writ petition in the High Court challenging the legality of that notice.
The High Court allowed the writ petition, quashed the order cancelling the respondents ' licence as also the notice calling upon them to make good the shortfall of seven lakh rupees and odd.
The High Court gave to the State of Punjab a certificate to appeal to this Court.
The appeal came up for hearing before a three Judge Bench which by its aforesaid Judgment dated April 21, 1980 held that the writ jurisdiction of the High Court under Article 226 cannot be used for avoiding contractual obligations.
On merits, it was held by this Court following a Constitution Bench decision in Har Shanker vs The Deputy Excise and Taxation Commissioner,(1) that since rights in regard to the manufacture and sale of intoxicants are vested in the State, it is open to the State to part with these rights, which are in the nature of a privilege, for consideration.
The Court further held that the amounts which the State Government had charged to the respondents were neither in the nature of a tax nor in the nature of an excise duty but were in the nature of a price which the State Government was entitled to charge as consideration for parting with its privilege in favour of the licensees.
After setting aside the judgment of the High Court and upholding the demand made by the State Government upon the respondents, the question naturally arose whether the respondents could be held liable for the shortfall between the bid offered by them and the amount realised in the reauction.
It was urged by the respondents that the reauction which was held on May 23, 1967 was not in accordance with the relevant Rules and therefore, they could not be called upon to pay the difference between the amount which they were originally liable to pay and the amount which was fetched in the reauction of the vend.
To be more specific, it was contended on behalf of the respondents that no notice of the intended resale was given as required by Rule 36 (3) of the Punjab Liquor Licence Rules, 1956, that no notice was published or affixed at any conspicous public place notifying the proposed resale, nor indeed was the resale announced by the beat of drums.
According to the respondents, one 922 Lal Chand went to the office of the Excise and Taxation Officer, Rohtak, and managed to have his bid accepted in the resale of the vend.
Respondents further urged that through the resale of the vend was to be effective for a period of about 10 months out of the 12 months for which the vend was originally auctioned, there was a large shortfall of over Rs. 7 lakhs on account of the fact that due publicity was not given to the resale.
By the aforesaid judgment dated April 21, 1980 this Court remanded the matter to the High Court and called for its findings on two questions: (1) Whether it was necessary according to the Rules which were in force at the relevant time to give publicity to the reauction, and (2) if so, whether such publicity was in fact given to the reauction.
The High Court has transmitted its findings to this Court, which are against the respondents.
The High Court has held by its order dated September 29, 1980 that the Rules relied upon by the respondents by which publicity is required to be given to the resale are directory and not mandatory and that these rules were substantially complied with.
These findings are assailed by the respondents who, by reason of the findings of the High Court, are virtually in the position of appellants now.
The finding of the High Court that the rules were substantially complied with is based on an affidavit filed by Shri N.S. Bedi, Deputy Excise and Taxation Commissioner, Sonepat, in which he has stated that 'all possible steps were taken in connection with the publicity done for the reauction of the vend '.
The affidavit says that telegrams were issued on May 19, 1967 by the Excise and Taxation Officer, Rohtak to the Excise and Taxation Officers of Hissar, Karnal, Gurgaon, Mohindergarh, Ambala and Jind informing them that the reauction will be held on May 23, 1967 at 10.00 a.m. and asking them to give due publicity to the reauction.
The affidavit further says that letters were also written on May 20, 1967 to the 'important licensees of the State ' informing them of the date and time of the reauction and requesting them to attend it.
The affidavit asserts that 40 bids were recorded in the reauction and the 40th bid, being the highest, was accepted.
It seems to us impossible to accept the findings of the High Court.
We will not enter into the controversy whether the rules 923 governing reauction of vends, of which respondents allege breach, are directory or mandatory in character.
Even assuming for the purpose of argument that they are directory, we are unable to hold that they have been substantially complied with.
Rule 36 (24) of the Punjab Liquor Licence Rules, 1956 as amended by the Notification dated March 31, 1967 says that when a licence is cancelled, it may be resold by public auction or by private contract in accordance with the procedure laid down in the other clauses of Rule 36.
Clause (3) of Rule 36 runs thus : "36(3) The Collector will give timely notice of the date and place of the auction: (a) the condition to which the auction will be subject; (b) the number and situation of the shops to be licensed for the sale of (country liquor); (c) the prices, if any, fixed for the retail vend of country spirit or; (d) the occasions, if any, on which the shops will be closed; and (e) any other information which may be of use to intending bidders." No notice as required by this sub rule was given to the public at all.
Neither the time nor the date of the reauction, nor the location or description of the vend which was to be put to reauction, nor the conditions of the reauction were ever published by the Excise authorities prior to the reauction.
What was done by the concerned authorities was to send telegrams to Excise Officers of five districts with a request that they should give publicity to the reauction.
The officers of those five districts seem to have sat cool over those telegrams because there is no evidence showing that they took any steps for publishing the reauction.
A curious feature of this case is that the Excise authorities claim to have sent letters to five private licensees informing them that the reauction was fixed for the 23rd of May 1967 at 10.00 a.m.
These letters are at Annexure R 8 and are dated May 20, 1967.
20th May fell on a Saturday and the reauction was fixed for 23rd May which was the following Tuesday.
924 In the normal course, these letters would have been received by the addressees on Monday, that is, a day or less prior to the date of the reauction which was to be held the next morning at 10 O 'clock.
In these circumstances, it is difficult to hold that any publicity as such was given to the reauction.
When a rule requires 'publicity ' to be given to an auction sale, what is necessarily implied is that due steps must be taken to give sufficiently advance intimation of the intended sale and its material terms to the members of the public or, at least, to that section of the public which normally engages in the kind of business which is the subject matter of the auction sale.
Even the five special invitees would have found it difficult to come prepared to take part in resale which was held on 23rd May.
They were not invited to a wedding feast.
They were invited to attend the resale of a liquor vend and it is well known that a certain amount has to be paid by the successful bidder on the fall of the hammer.
We are also unable to appreciate that the Excise authorities of the Government of Haryana should have picked and chosen some five particular persons as recipients of the notice of reauction.
How their names transpired and what is their particular status, respectability and standing in the liquor trade, are matters on which no light is thrown.
There is no material before us on which to doubt the integrity of the authorities who were connected with the reauction.
But their conduct must be above suspicion.
The bid sheet shows that only six persons offered bids in the reauction and none of the five invitees was amongst those six.
It appears that a small, closely knit group participted in the reauction, successfully keeping out others who might have of offered adequate bids in the reauction, were they to have notice thereof.
Indeed, the amount which was fetched in the reauction itself furnishes prima facie evidence that all was not well with the reauction.
The respondents had given their original bid in the sum of Rs. 10,92,960.00 which covered a period of one year from April 1, 1967 to March 31, 1968.
The reauction was held on May 23, 1967 for a licence which was to be effective for the little over 10 months.
It is surprising that the reauction should have fetched a bid of as small an amount as Rs. 2,46,000.
Since the reauction was not held in accordance with the rules, either in their letter or in their spirit, and since, especially, due publicity was not given to the reauction, it is impossible to uphold reauction and mulet the respondents in the resultant shortfall.
We 925 are of the opinion that rule 36(3) of the Rules was not even substantially complied with.
It is reasonable to assume that since due publicity was not given to the reauction, adequate bids were not received, resulting in prejudice to the respondents.
Accordingly, we set aside the finding of the High Court that the relevant rules governing reauction of vends were complied with substantially.
Since the reauction did not conform to the rules and the respondents were prejudice thereby, they cannot be held liable to make good the difference between the amount which was payable by them and the amount which was fetched at the reauction.
The result is that the appeal filed by the State of Haryana is dismissed, though for different reasons, and the respondents absolved from their liability to pay the amount which is demanded of them by the notice dated May 7, 1967 issued by the Collector and Deputy Excise and Taxation Commissioner, Haryana.
That disposes of Civil Appeal No. 1507 of 1969.
We will now take up for consideration two other groups of appeals, viz, Civil Appeals 1202 to 1220 of 1970 and Civil Appeals 743 to 794 of 1974.
No question of reauction arises in these groups of appeals except in Civil Appeals Nos.
1204, 1205 and 1206 of 1970.
We shall deal with those three appeals separately a little later.
The question which arises in the remaining appeals in these two groups, as regards the power of the State Government to charge the particular amount to the licensees is concluded by the judgments of this Court in Har Shunkar vs The Deputy Excise and Taxation Commissioner, State of Haryana vs Jage Ram (supra) and State of Punjab vs Ajudhia Nath(1).
It was held in those decisions that the State Government has the power to charge the particular amounts to the licensees.
The judgments of the High Court denying to the State Government that power must therefore be set aside and to that extent the appeals filed by the State of Haryana allowed.
The appeals which now remain for consideration are Civil Appeals 1204 to 1206 of 1970 and Civil Appeals 1564 to 1567 of 1970.
In these cases also, as in all other cases which are being disposed of by this judgment, the power of the State Government to 926 levy the particular charge must be upheld in view of the aforesaid three judgments.
The judgment of the High Court in these cases shall therefore have to be set aside to the extent to which the High Court had denied that power to the State Government.
But the further question which arises in these appeals is whether the respondents can be called upon to pay the difference between the amounts which they were liable to pay under the terms of the original auction in their favour and the amounts which were fetched in the resale of the vends.
The facts of these groups of cases are even more peculiar than the facts of Civil Appeal No. 1507 of 1969 with which we have dealt at the outset of this judgment.
In these cases, it was originally intended to reauction the vends in respect of which the respondents had committed default and some publicity, not due or adequate by any standard, was given to the reauction.
The reauctions commenced as scheduled but the Excise authorities changed their mind in midstream and decided, without any rhyme or reason, to withdraw the reauctions and to grant fresh licences by private negotiations on the spot.
We agree fully with the very careful judgment of Justice Bal Raj Tuli that due publicity was not given to the reauction.
It is stated in the affidavit filed on behalf of the State Government in the High Court that, directions were given to the Excise and Taxation Officer, Gurgaon by a circular letter that he should give wide publicity to the reauction due to be held on July 24, 1968.
The circular letter was not placed on the record, nor was the High Court a apprised as to how the Excise and Taxation Officers of the Governments of Haryana and Punjab gave publicity in their respective districts to the proposed reauctions.
It is significant that the respondents wrote letters to the Excise and Taxation Officer, Gurgaon on July 20, 1968 complaining that due publicity was not being given to the reauctions and that the Rules required such publicity to be given.
In spite of this, no steps were taken to comply with the requirement of the rules, even though the cost of publicity would have been required to be borne by the respondents themselves.
It was urged that Hindi handbills were distributed in Delhi advertising the auction.
Even those handbills do not contain the requisite information which is required to be published under rule 36(3).
Tuli, J. was therefore right in not treating the handbills as constituting due publicity to the reauctions.
927 If the reauctions cannot be upheld since due publicity was not given to them, the grant of licences by private negotiations during the course of reauctions would also have to be set aside.
Assuming that there were valid reasons for revoking the decision to hold the reauctions, like the paucity of adequate bids at the reauctions, the reauctions should have been postponed and due publicity given to the decision to grant licences by private negotiations.
By rule 36(24), power has been conferred to resell vend by public auction or by private contract.
But this latter power has to be exercised with great care and circumspection.
Public auction has to be the normal mode of selling public property.
It is open to public gaze and eschews many temptations to which private contracts are subject.
It is only when at public auction is not feasible or has failed to attract bidders after due publicity, that a private contract can be negotiated for disposing of public property or rights in such property.
Not only is no reason forthcoming why the intention to hold a public auction was abandoned after the auction had commenced but the proceedings were not adjourned even for a few days in order to publicise the intention to resell the vends by private contract.
The Excise authorities could not have abruptly decided to jettison the original intention of holding a public auction and grant licences by private negotiations on the spur of the moment, that very day and at that very hour.
The decision smacks of arbitrariness, is unfair and unreasonable, and cannot be allowed to stand.
For these reasons, respondents in Civil Appeals 1204 to 1206 of 1970 and Civil Appeals 1564 to 1567 of 1970, are not liable to pay the difference between the amounts which they were liable to pay under the original auctions and the amounts which they were liable to pay under the original auctions and the amounts which were fetched by the re grant of licences by private contracts.
The aforesaid discussion will show that the appeals filed by the State of Haryana succeed to the extent that the State Government has the power to levy the charge which it demanded of the respondents.
The finding of the High Court that the State Government has no such power is incorrect and must be set aside.
The findings called for by us from the High Court on the question whether due publicity was given to the reauctions are set aside.
We hold that due and adequate publicity was not given to the reauctions.
We also hold that the regrant of licences by private negotiations is not in conformity with the Rules and must be struck down in the circumstances of the case.
As a result of the infirmities from which the reauctions and the re grant of licences by private 928 contract suffer, respondents in whose cases fresh licences were granted either in reauctions or by private contract will not be liable to make good the shortfall.
The reauctions were necessitated on account of the default committed by the respondents, but the reason of the shortfall is the laxity and arbitrariness with which the resale of the vends was held or fresh licences granted by private contract.
There will be no order as to costs in any of these appeals.
Order accordingly.
H.L.C. Dismissing the appeals in which liquor vends was resold and allowing And appeals in which liquor vends was not resold.

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The respondents in this batch of appeals had obtained licences to sell liquor by offering highest bids at auctions held far sale of liquor vends.
On their failure to make payments due under the terms of auction, the State Government resold the liquor vends in some cases, either by re auction or by private negotiations and called upon the respondents to pay the difference between the amount which they were liable to pay and the amount realised by the resale of the vends.
In other cases, the respondents were called upon to pay the amounts due under the terms of the original auction.
The respondents filed writ petitions contesting the State Government 's power to demand the various amounts which they had defaulted in paying and the High Court allowed the petitions.
In appeals filed by the State Government, this Court held that since the rights in regard to manufacture and sale of intoxicants were vested in the State as a privilege, it was open to the State to part with those rights for consideration, and remanded the matter to the High Court calling for its findings on whether in cases in which the liquor vends had been resold by re auction it was necessary to give publicity to the same; and, if so whether such publicity had in fact been given.
The High Court found that r. 36(3) of the Punjab Liquor Licence Rules, 1956, which was applicable in these cases, required publicity to be given to an auction sale and this rule had been substantially complied with in all cases in which re auction had been held.
Dismissing the appeals in which liquor vends had been resold either by re auction or by private negotiations and allowing the appeals in which liquor vends had not been resold.
^ HELD: 1.
When a rule requires 'publicity ' to be given to an auction sale, what is necessarily implied is that due steps must be taken to give sufficiently advance intimation of the intended sale and its material terms to the members of the public or, at least, to that section of the public which normally engage in the kind of business which is the subject matter of the auction sale.
[924 B] In the instant case, no notice as required by r. 36(3) was given to the public at all.
Neither the time nor the date of the re auction, nor the location 918 or description of the vend which was to be put to re auction, nor the conditions of the re auction were ever published by the Excise authorities prior to the re auction.
What was done by the concerned authorities was to send telegrams to Excise officers of five districts with a request that they should give publicity to the re auction and those officers did not take any steps to publicise the re auction.
Since the re auctions were not held in accordance with the rules, and since, especially, due publicity was not given to the re auctions, the respondents cannot be held liable to make good the difference between the amount which was payable by them and the amount which was fetched at the re auction.
[923 F H, 924 A] 2.
By r; 36(24) power has been conferred to re sell a vend by public auction or by private contract.
But this latter power has to be exercised with great care and circumspection.
Public auction has to be the normal mode of selling public property.
It is open to public gaze and eschews many temptations to which private contracts are subject.
It is only when a public auction is not feasible or has failed to attract bidders after due publicity, that a private contract can be negotiated for disposing of public property or rights in such property.
[27 B C] In cases in which re auctions though commenced as scheduled were withdrawn and licences were granted by private negotiations on the spot even if there were valid reasons were for revoking the decision to hold the re auctions, the re auctions should have been postponed and due publicity given to the decision to grant licences by private negotiations.
The Excise authorities could not have abruptly decided to jettison the original intention of holding a public auction and grant licence by private negotiations on the spur of the moment.
The decision smacks of arbitrariness, is unfair and unreasonable and cannot be allowed to stand.
[926 C D] 3.
The question whether the State has the power to charge the particular amounts to the licensees of liquor vends is concluded by judgments of this Court affirming such a power in the State Government.
Judgments of the High Court to the contrary in all those cases in which no question of re auction of liquor vends arises must therefore be set aside and to that extent the appeals filed by the State have to be allowed.
[925 F G] Har Shankar vs Deputy Excise and Taxation Commissioner, ; ; State of Haryana vs Jage Ram, ; ; & State of Punjab vs Ajudhia Nath, ; ; referred to.


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Appeal No. 613 of 1965.
Appeal from the judgment and decree dated March 25, 1960 of the Mysore High Court in Regular Appeal No. 155 of 1953.
V. Krishnamurthy and R. Gopdlakrishnan, for the appellant.
H. R. Gokhale, B. Subbiah and R. Thiagaraian, for, respondents Nos. 2 and 4.
The Judgment of the Court was delivered by Ramaswami, J.
The plaintiff G. Narayana Raju filed O.S. 34 of 1951 52 in the Court of District Judge, Mysore for partition and separate possession of suit properties mentioned in the various schedules of the plaint.
The first defendant is the brother 465 of the plaintiff.
The second defendant is the widow of Muniswami Raju, the eldest brother of the plaintiff.
The third defendant is the legal representative of the plaintiffs mother.
She is now the, appellant having been brought on record as the legal representative of the deceased plaintiff.
The case of the original plaintiff was that he, the first defendant and Muniswami Raju (husband of the second defendant) were the sons of one Gopala Raju and were all members of the joint family Gopalaraju died in May 1931 and after his death the plaintiff and his brothers continued to be members of the joint family.
The joint status of the, family was severed by the issue of a registered notice by the first defendant to the plaintiff in July 1951.
An ancestral house in Nazar bad belonging to the family was acquired by the City IuprovementTrust Board in or about the year 1909.
Out of the compensation paid for that house and supplemented by the earnings of the members of the joint family, the house item No. I of Schedule 'A ' to the plaint was purchased by Gopalaraju in or about the year 1910.
Subsequently item No. 2 of Schedule 'A ' was also purchased by Gopalaraju from the income of item No. I supple mented by the earnings of the members of the family.
All the other items of properties mentioned in Schedule 'A ' and other Schedules attached to the plaint were acquired out of the income from items 1 and 2 of Schedule 'A ', It was further alleged that the business known as "Ambika Stores" was also the joint family business and all the properties mentioned in the Schedules except items I and 2 of Schedule 'A ' were acquired out of the income of the members of the family including the income from the business of Ambika Stores.
The plaintiff accordingly claimed that he and the first defendant would each be entitled to get 5/14ths share and the second and third defendants would each be entitled to get 2/14ths.
share.
In the alternative the plaintiff pleaded that if for any reason the Court held that the properties stand in the name of Muniswami Raju and were not acquired with the aidof the joint familv nucleus, he and the second defendant were entitled to equal shares as co owners of the joint family business.
The suit was mainly contested by the second defendant who asserted that the properties mentioned in all the Schedules of the plaint were self acquisitions of Miiniswami Raju and constituted his separate properties.
It was alleged that Muniswami Raju was the only carniiig member of the family at the time of the acquisition of items 1 and 2 of Schedule operties and the plaintiff and the first defendant were emploved,in petty jobs in Wesley Press.
Muniswami Raju later on employed the plaintiff in his shop as a salaried servant and the latter had no proprietary right in the business of Ambika Stores.
After consideration of the oral and documentary evidence the District Judge held that the plaintiff, first defendant and Muniswami Raju were not divided and that the only property which was divisible was item No. I of Schedule 466 'A ' and there was not sufficient ancestral nucleus for acquisition of the other properties and that all properties except item No. 1 of Schedule 'A were the self acquisitions of Muniswami Raju, that Muniswami I Raju never blended his properties with that of the joint family that the plaintiff was only an employee under Muniswami Raju and therefore he was not entitled to the alternativ ' relief claimed by him.
Accordingly, the District Judge granted a preliminary decree holding that the plaintiff was entitled to 2/7ths share in item No. I of Schedule 'A '.
The plaintiff took the matter in appeal to the Mysore High Court.
By its judgment dated March 25, 1960 the High Court affirmed the decree of the trial court with the modification that besides item No. I of Schedule 'A ' item No. 2 also should be hold to be joint family property and the plaintiff was entitled to partition of his share in this item also.
The High Court cancelled the I direction of the District Judge that the plaintiff should account for the moneys and properties of Muniswami Raju in his hands before he is given possession of his share.
This appeal is brought by certificate on behalf of the plaintiff from the judgment of the Mysore High Court dated March 25, 1960 in R.A. No. 155 of 1953.
The first question to be considered in this appeal is whether the business of Ambika Stores was really the business of the joint family and whether the plaintiff was entitled.
to a partition of his share in the assets of that business.
: It was contended on behalf of the appellant that the business of Ambika Stores grew out of a nucleus of the joint family funds of at least by the efforts of the members of the joint family include the appellant.
The contention of the appellant has been negatived by both the lower courts and there is a concurrent finding that the Ambika Stores was the separate business of Muniswami Raju and it was neither the joint family business nor treated as joint family business, It is wellestablished that there is no presumption under Hindu law that a business standing in the name of any member of the joint family is a joint family business even if that member is the manager, of the joint family.
Unless, it could be shown that the business in the hands of the coparcener grew up with the assistance of the joint family property or joint family funds or that the earnings of the business were blended with the joint family estate, the business remains free and separate.
The question therefore whether the business was begun or carried on with the assistance of joint family property or joint family funds or as a family business is a question of fact. (See the decisions of the Judicial Committee in Bhwu Mal vs Jagannath (1) and in Pearey Lal vs Nanak Chand (1) and of this Court in Chattahatha Karayalar vs Ramachandra (1) A.T.R (2) A.T.R. 467 lyer) (1).
In the present, case there is a concurrent finding of both the lower courts that the business of Ambika Stores was a separate, business of Muniswami Raju and it, was neither a joint family business nor treated as joint family business.
The concurrent finding of the lower courts on this issue is upon a finding of fact and following the usual practice of this Court, it is not now open to further scrutiny by this Court under article 133 of the Constitution.
It was, however, contended on behalf of the appellant that the finding of the lower.
courts is vitiated in, law because of the circumstance that they have not taken into account three important documents, exhibit D, exhibit E and exhibit DDD.
We are unable to accept this argument as correct.
It is manifest on a perusal of the judgment of the High Court that all the documents have been examined, regarding the issue whether the business of Ambika Stores was a joint family business or whether it was p. separate, business of Muni swami Raju.
As regards exhibit D, the High ,Court has, after examining the evidence adduced, remarked that the, mere fact that item No. 2 of Schedule 'A was given as a security by Muniswami Raju did not result in any detriment to the joint family property and, it cannot therefore be held that the business of Ambika Stores grew out of the joint family funds or with the aid of the joint family funds.
On behalf of the appellant reliance was placed on the recitals in exhibit E, a deed of mortgage dated July 26, 1928 executed by Gopalaraju, Muniswamiraju and the appellant in favour of the Mysore Bank.
The property that had been mortgaged under this document is item No. 2 of Schedule 'A '.
The recital is that the borrowing from the Bank was for the business and trade of the executants and for the benefit and use of their family.
There is also a recital in an earlier portion of the document that the business, was being carried on for the benefit of the family, but it is not quite clear as to whether this related to the business carried on by Narayana Raju or whether it was intended to relate to some business carried on by all the three executants.
It is possible that the appellant had other business of his own carried on on his own.
account at that time and it cannot be, assumed that the borrowing under exhibit E must have been for the purpose of Ambika Stores.
It should be noticed that Muniswarni Raju has been described in the document as the proprietor of Ambika Stores which description is.
not consistent with the contention of the appellant that the business, was a joint family business.
The High Court has, in this connection, referred to exhibit I an application dated February 14, 1929, by the appellant to the City Co operative Bank, Mysore wherein, the appellant has said that he was getting a decent earning by doing; out of door commercial business with Ambika Stores.
There is also the, recital in exhibit I that Muniswami Raju was the proprietor of Ambika Stores.
Having regard to this recital in I it is not (1) ; 468 unlikely that the appellant had some business of his own at the material time and it cannot be assumed that borrowing under exhibit E, was for the purpose of Ambika Stores business only.
The High Court has also dealt with the effect of exhibit DDD, mortgage deed produced on behalf of the appellant.
It is true that in this document the appellant and Muniswami Raju have been described as proprietors of Ambika Stores.
The finding of the High Court is that this recital was made in the document for the purposes of borrowing from the Bank.
Reference was made in this context to a letter dated May 5, written by Muniswami Raju as proprietor of Ambika Stores to the Bank of Mysore.
In ' this letter, he has requested the Bank to take note of the fact that he has authorised the appellant to accept drafts, and sign letters etc.
on behalf of the firm ' There is another Letter, exhibit 76, dated April 14, 1934 written by Muniswami Raju to the Bank of Mysore wherein Muniswami Raju has been described as the proprietor of Ambika Stores and there is an intimation to the Bank, that the appellant Narayana Raju was authorised to sign for the firm.
In the context and background of these circumstances it is evident that though both the appellant and Muniswami Raju were described as proprietors of Ambika Stores the description was only for the purpose of borrowing money from the Bank, as contended for by the respondents.
In this connection the High Court has also taken into account exhibit 7 5 (b), a letter written by Muniswami Raju.
In this letter Muniswami Raju has described himself as the proprietor of Ambika Stores and has instructed the Bank that he has cancelled the authority given to the appellant to operate one his Current Account with the Bank.
It is therefore not possible for us to accept the contention of the appellant that the finding of the High Court that the business of Ambika Stores was the exclusive business of Muniswami Raju is vitiated in law.
On the other hand, it was contended on behalf of the respon dents that the finding of the High Court is supported by proper evidence.
The business of Ambika Stores was started by Muniswamiraju as the proprietor thereof at a time when Muniswamiraju himself was comparatively well off as a result of his partnership with Krishnaswamy Chetty & Co. In the year 1925 the partnership of Krishnaswamy Chetty & Co. was dissolved by a document exhibit D.
The entire business with 'all the assets ad liabilities was taken over by Muniswami Raju while the widow and son of Krishnaswamy Chetty were given a house estimated by the appellant himself at Rs. 3,000/ and furniture worth Rs. 400/ .
Muniswami Raju changed the name of the 'shop after taking it over into Ambika Stores and continued the business as is apparent from Exs.
XVIII, XXVI and XXVI(A).
There is also evidence that at the time when Ambika Stores was started other members of the family we 're not in a financial position to make any contribution to pur 469 such a business.
The appellant joined Wesley Press in 1912 on a salary of Rs. 8 or Rs. 9 p.m. and he was drawing Rs. 27 p.m. in 1927 when he resigned from the Press.
The first defendant joined Wesle Press in 1910 on a salary of Rs. 10 p.m. and he was continuing to work there till the institution of the present suit. 'Me income of the property item No. 2 of ' Schedule 'A ' was Rs. 15 p.m. and the income from pounding rice for which there is no satisfactory evidence was also negligible.
Therefore, the earnings of the members of the family other than Muniswami Raju were hardly sufficiently to maintain the family at the time when the business of Ambika Stores was started.
The High Court has found that the family did not have sufficient nucleus and that Muniswami Raju was not a partner of Krishnaswamy Chetty & Co. on behalf of the family but that he was a partner in his own right.
The High Court has observed that there is no evidence to show that the family supplied the money or that the family had enough means or that Muniswami Raju was representing the family when he started the business of Ambika Stores.
As we have already said, the finding of the High Court and of the District Judge is a concurrent finding on a question of fact and Counsel on behalf of the appellant has been unable to make good his argument that the finding is vitiated in law on any account.
We pass on to consider the alternative argument put forward on behalf of the appellant, namely, that even if the business of Ambika Stores was started as, a separate business of Muniswami Raju, it became converted at a subsequent stage into joint family business.
It was argued on behalf of the appellant that the business of Ambika Stores was thrown by Muniswami Raju into the common stock with the intention of abandoning all separate claims to it and therefore the business of Ambika Stores lost its character of a separate property and was impressed with the character of joint family property.
It is a well established doctrine of Hindu law that property which was originally self acquired may become joint property if it has been voluntarily thrown by the coparcener into the joint stock with the intention of abandoning all separate claims upon it.
The doctrine has been repeatedly recognized by the Judicial Committee [See Hurpurshad vs Shea Dayal(1) and Lal Bahadur vs 'Kanhaiya Lal( ).
But the question whether the coparcener has done so or not is entirely a question of fact to be decided in the light of all the circumstances of the case.
It must be established that there was a clear intention on the part of the copareener to waive his separate rights and such an intention will not be inferred merely from acts which may have been done, from kindness or affection [See the decision in Lata Muddun Gopat vs Khikhinda Koer (3).
For instance, in Naina Piltal vs Daiyanai (1) 3 I.A. 259.
(2) 34 I. A. 65.
(3) 18 I. A. 9.
470 Ammal, (1) where in a series of documents, self acouired property was described and dealt with as ancestral joint family it was held by the Madras High Court that the mere dealing with self acquisitions as joint family property was not sufficient but an intention of the coparcener must be shown to waive his claims with full knowledge of his right to it as his separate property.
The important point to keep in mind, is that the separate property of a Hindu coparcener ceases to be his separate property and acquires the characteristics of his joint family or ancestral property, not by mere act of physical mixing with his joint family or ancestral property, but by his own volition and intention, by his waiving or surrendering his special right it as separate prop".
A man 's intention can be discovered only from his words or from his acts I and conduct.
When his inention with regard to his separate property is not expressed in words, we must seek for it in his acts and conduct.
But it is the intention that we must seek in every case, I the acts and conduct being no more than evidence of the intention.
In the present case, the High Court has examined the evidence adduced by the parties and has reached the conclusion that there was no intention on the part of Muniswami Raju to throw the separate business of Ambika Stores into the common stock, nor was it his intention to treat it as a joint family business.
Counsel on behalf of the appellant referred to the recital, in exhibit E describing the properties being those of the executants and that the borrowings was for trade and benefit of the family and it was argued that there was a clear intention on the part of.
Muniswaini Raju to treat the business as joint family business.
We have already referred to this document and indicated that the recitals were probably made for the purpose of securing a loan and cannot be construed as consent on the part of the members of the joint family to treat the business as the joint family business.
Further, there is ample evidence to show that in all succeeding years before his death Muniswami Raju had always described himself and conducted himself as the sole proprietor of Ambika Stores, Such an attitude on the part of Muniswami Raju was not consistent with any intention on his part either to abandon his exclusive right to the business or to allow the business ' to be treated as joint family business.
Exhibits XXXV to XLVI are all documents executed by third parties in favour of Muniswami Raju in which Muniswami Raju has been described as the proprietor of Ambika Stores.
Exhibits III, XXIII, XXIV, 51, 52, 56, 58, ZZ, AAA series and BBB are all communications addressed by institutions like Banks etc., in which Muniswwni Raju has been described as the proprietor of Ambika Stores.
It may be stated that the appellant himself has admitted in his evidence that he was not drawing any moneys from the business of Ambika Stores and that whenever he wanted any_money, he would ask Muniswami Raju and obtain (1) A.I.R. 1936 Mad .177. 471 from him.
If really the appellant had considered himself to be I co owner equally with Muniswami Raju, such conduct on his part is not explicable.
it was urged on behalf of the appellant that there was no documentary evidence to show that the appellant was being paid any salary 'Muniswami Raju, and that prior to Muniswami Raju 's death, it was the appellant who was in the entire management of Ambike stores when Muniswami Raju was ill and after the death of Muniswami Raju also it was the appellant who had been in management.
Al, the books of account and other documents pertaining to the business of Ambika Stores had been admittedly entrusted to the appellant.
But it is not explained on behalf of the appellant as to why the documents were not produced on his behalf to disprove the Case of the respondents that he was a salaried servant.
It is therefore not unreasonable to draw an inference from the conduct of the appellant that the Account Books, if produced in court, would not have supported his case.
We accordingly reject the argument of the appellant that the business of Ambika Stores became converted into joint family business at any subsequent stage by the conduct of Muniswami Raju in throwing the business into the common stock or in blending the earnings of the business with the joint family income.
it was finally contended on behalf of the appellant that, in any event, the appellant became a co owner of the business along with Muniswami Raju by reason of contribution of his own labour towards the development of the business.
In our opinion, there is no substance in this argument.
It is evident that the appellant gave up his job in Wesley Press and joined Ambika Stores about 9 or 10 months after it was started by Muniswami Raju.
The appellant does not state in his evidence that he was a co owner when he joined Ambika Stores.
On the other hand, in exhibit 68 which is an application dated March 20, 1928 by the appellant to the City Co operative Bank, the appellant has described himself as a clerk in Ambika Stores and Muniswami Raju has been described as his proprietor.
There is no satisfactory evidence on behalf of the appellant to show as to when and under which circumstances his status of a clerk changed to that of a co owner.
In another application, exhibit I which is of the year 1929 the appellant has described Muniswami Raju as the Proprietor of Ambika Stores and he has described himself as doing out door commercial business with Ambika Stores.
Again, in exhibit C which is a loan application made in 1932 by both the brothers, Muniswami Raju has been described as the proprietor of Ambika Stores while the appellant has been described as a General Merchant of Mysore.
Reference was made on behalf of the appellant to recitals in exhibit DDD, a mortgage deed dated June 20, 1934 in which Muniswami Raju and the appellant have been described as proprietors of Ambika Stores.
We have already dealt with this, document and for the reasons already mentioned we hold that the description of the 472 executants was only given for the purpose of borrowing from the Bank and it had not the legal effect of making the appellant .
co owner of the partnership business.
There is no evidence of any assertion by the appellant during Muniswami Raju 's life time of his being a co owner of the partnership business, nor is there any evidence of recognition by Muniswami Raju of any such right of the appellant.
On the other hand, there is sufficient evidence to show that whatever the appellant did in connection with the business was only done with the Authority conferd by Muniswami Raju.
In our opinion the High Court has rightly rejected the claim of the appellant that he was a co owner of the partnership business.
For the reason expressed we hold that this appeal has no merit and it must be dismissed with costs.
R.K.P.S. Appeal dismissed.

Output:
There is no presumption under Hindu law that a business standing in the name of any member of the joint family is a joint family business even if that member is the manager of the joint family.
Unless it could be shown that the business in the hands of the coparcener grew up with the assistance of the joint family property or joint family funds or that the earnings of the business were blended with the joint family estate, the business remains free and separate.
[466 F H] Bhuru Mal vs Jagannath, A.I.R. 1943 P.C. 40, Pearey Lai vs Nanak Chand, A.I.R. 1948 P.C. 108, Chattanatha Karayalar vs Ramachandra Iyer; , , referred to.
The separate property of a Hindu coparcener ceases to be his separate property and acquires the characteristics of his joint family or ancestral property, not by mere act of physical mixing with his joint family or ancestral property but by his own volition and intention, by his waiving or surrendering his special right in it as separate property.
Mere recitals in deeds dealing with self acquisitions as ancestral joint family property is not by itself sufficient; but it must be established that there was a clear intention on the part of the coparcener to waive his separate property.[470 B c] Hurpurshad vs Sheo Dyal, 3 I.A. 219.
Lal Bahadur vs Kanhaiya Lai, 34.
I.A. 65, Lola Muddun Gopal vs Khikhinda Koeri 18 I.A. 9, Naina Pilla vs Daiyanai Ammal, A.I.R. 1936 Mad.
177, referred to.
where there is a concurrent finding of both the lower courts that the business is a separate business and it is neither a joint family business nor treated as joint family business, it is not open to further scrutiny by this Court under article 133 of the, Constitution.
[467 A B]


Input:
iminal Appeal No. 49 of 1967.
Appeal from the judgment and order dated August 14, 1964 of the Bombay High Court, Nagpur Bench in Misc.
Civil Application No. 13 of 1963.
Mohan Behari Lal, for the appellants.
V.K. Sanghi and Ganpat Rai, for respondents Nos. 1 and 2.
The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought by certificate from the judgment of the Bombay High Court Nagpur Bench dated August 14, 1964 by which the appellants were convicted for contempt of Court of Civil Judge, Junior Division, Nagpur and sentenced to pay a fine of Rs. 200/ each.
By the same judgment respondent No. 3, Sri Ram Nath Vig was also convicted for contempt and sentenced to pay a fine of Rs. 100/ .
It appears that a hire purchase agreement was entered into between the appellants and respondent No. 1 on or about August 12, 1959.
Under that agreement a motor truck was made available to respondent No. 1 for doing transport business.
The hire purchase agreement contained an arbitration clause for settlement of disputes arising between the parties.
It appears that subsequently disputes did arise between the parties and a reference was made to an arbitrator to settle the disputes.
Resportdent No. 3, Sri Ram Nath Vig who is a practicing lawyer in Delhi was the person named as arbitrator in the arbitration agreement itself and the dispute was submitted to him on or about June 25, 1962 at the instance of the appellants.
Thereafter the arbitrator gave notice of the reference and invited statements of the parties.
He fixed the hearing of the arbitration matter before him on July 17, 1962.
The case of respondent No. 1 is that he did not receive notice of this date from the arbitrator and 4Sup.
C.I./69 10 670 therefore he did not appear on the date fixed.
The arbitrator adjourned the hearing of the reference to another date, namely, August 29, 1962.
The contention of respondent No. 1 is that he was not given intimation of this date also but this point is controverted by the respondents.
Respondents nos.
1 and 2 filed a Civil Suit in the Court of Civil Judge, Senior Division, Nagpur on August 30, 1962.
In this suit they claimed a declaration that the hire purchase agreement was brought about by fraud and was not binding on them on various grounds.
The suit was registered and the court ordered summons to be issued to the two appellants.
Meanwhile, the arbitrator postponed the hearing of the reference to September 15, 1962 and it is alleged that he issued fresh notices to the parties on September 1, 1962.
The hearing was again adjourned to October 23, 1962 and it is said that resportdent No. 3 made an award on October 24, 1962.
It has been found by the High Court that on October 18, 1962 a notice was issued by respondent No. 1 to the appellants and the arbitrator with 'a copy of the plaint.
This notice was received by the appellants on October 22, 1962.
In spite of this notice, evidence was recorded by the arbitrator on October 23, 1962 and he made the award on the next day directing respondent No. 1 to pay Rs. 20,400/ .
The allegation of the arbitrator is that he received the notice sent on October 18, 1962 on the next day of the award i.e., on October 25, 1962.
It appears that in the civil suit filed by respondents 1 and 2 which was registered as Civil Suit No. 657 of 1962 on the file of the Civil Judge, Junior Division, the first date of hearing was fixed, on October 15, 1962.
On that date the appellants filed an application under section 34 of the Arbitration Act for staying the proceedings before the court.
No progress was made in the suit which was adjourned to November 6, 1962 and again to November 28, 1962 at the instance of the appellants.
Finally on November 28, 1962 the arbitrator informed respondent No. 1 that he had made the award.
On these facts respondents 1 and 2 filed an application under section 3 of the Contempt of Court 's Act for action being taken ,against the two appellants, respondent No. 3 and one more person.
According to respondents 1 and 2 the appellants and respondent No. 3 had committed contempt of court in proceeding with the arbitration reference in spite of notice under section 35 of the Arbitration Act being given and in spite of the knowledge of the suit which was filed by respondents 1 and 2.
The application was contested by the 'appellants as well as the arbitrator.
The case of the appellants was that the suit itself was not sustainable and they were unaware that participation in the arbitration proceedings after receipt of notice was precluded by law and that they honestly and bona fide believed that they were not expected to take any action after the receipt of the notice without direction from the arbitrator.
It was for the arbitrator to take a decision in the matter and 'if the arbitrator decided to pro 671 ceed with the arbitration, they only obeyed the orders of the arbitrator and therefore had not committed any contempt.
The defence of respondent No. 3 was that in completing the arbitration and giving his award he was only performing his duty.
He denied that it was necessary for him to await the result of the stay application alleged to have been made by respondent No. 1 in the Nagpur Court as he was of the view that the subject matter in the Nagput Court was not the whole subject matter under arbitration, Respondent No. 3 denied that he had any bias or that he conducted the arbitration proceedings in order to defeat the object of the suit and to place an impediment in the conduct of the suit.
The High Court rejected the contention of the appellants and of respondent No. 3 and held that the action of the appellants in participating in the arbitration proceedings and the conduct of respondent No. 3 constituted contempt of court as the conduct of respondent No. 3 and of the appellants had a tendency to bring into contempt the proceedings before the Civil Court.
It is necessary at this stage to set out the relevant provisions of the Arbitration Act (X of 1940).
Sections 32, 33, 34 and 35 are to the following effect: "32.
Notwithstanding any law for the time being in force, no suit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award, nor shall any arbitration agreement or award be set aside, amended, modified or in any way affected otherwise than as provided in this Act." "33.
Any party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the Court and the Court shall decide the question on affidavits: Provided that where the Court deems it just and expedient, it may set down the application for hearing on other evidence, also, and it may pass such orders for discovery and particulars as it may do in a suit." "34.
Where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are 672 pending to stay the proceedings, and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, such authority may make an order staying the proceeding." "35.
(1 ) No reference nor award shall be rendered invalid by reason only of commencement of legal proceedings upon the subject matter of the reference, but when legal proceedings upon the whole of the subjectmatter of the reference have been commenced between 'all the parties to the reference and a notice thereof has been given to the arbitrators or umpire all further proceedings, in a pending reference shall, unless a stay of proceedings is granted under section 34, be invalid.
(2) In this section the expression 'parties to the reference ' includes any persons claiming under any of the parties and litigating under the same title.
" In our opinion, the High Court was in error in holding that in the circumstances of this case the appellants and respondent No. 3 were guilty of contempt of court.
It is not disputed that there was an arbitration clause in the agreement between the appellants and respondent No. 1 and in terms of the arbitration clause respondents 1 and 2 had a fight to refer the dispute to the arbitrator.
It is also not disputed that a reference to the arbitrator was made by respondents 1 and 2 long before the institution of the civil suit.
It is also apparent that in view of the admitted existence of the hire purchase agreement containing an arbitration clause the remedy of respondent No. 1 was to move the Civil Court under section 33 of the Arbitration Act challenging the existence or validity of the ,arbitration agreement and to have its effect determined.
It was contended on behalf of the appellants that a separate suit was barred under section 32 of the Arbitration Act.
We do not wish to express any opinion on this point in the present case.
Even on the assumption that the suit filed by respondents nos.
1 and 2 in the Nagpur Court is competent, the question arises whether the arbitrator was bound to stay the proceedings beforehim after he got notice from respondents 1 and 2 of 'the institution of the civil suit.
Section 35 of the Arbitration Act does not expressly prohibit the arbitrator from continuing the hearing of the reference but the only effect of section 35 is that "all further proceedings in a pending reference shall, unless a stay of proceedings is granted under section 34, be invalid".
For this consequence to follow, however, two important and distinct conditions must be satisfied, namely, (1) that such legal proceedings must be upon 673 the whole and not merely part of the subject matter of the reference, and (2) that a notice of such a legal proceeding must be given to the arbitrator.
We do not wish to express any opinion as to whether these conditions were satisfied in this case.
But even on the assumption that these conditions were satisfied the only effect is that the further proceedings before the arbitrator after the receipt of the notice are rendered invalid and there is no prohibition under section 35 requiring the arbitrator not to carry on the arbitration proceedings after the receipt of the notice.
It is well established that an 'authority holding an inquiry in good faith in exercise of the powers vested in it by a statute is not guilty of contempt of court, merely because a parallel inquiry is imminent or pending before a court To constitute the offence of contempt of court, there must be involved some 'act done or writing published calculated to bring a court or a judge of the court into contempt or to lower his authority ' or 'something calculated to obstruct or interfere with the due course of justice or the lawful process of the court (See Reg.
vs Gray(1) and Arthur Reginald Perera vs The King(2).
In Tukaram Gaokar vs S.N. Shukla(3), it was held by this Court that the initiation and continuance of proceedings for imposition of penalty on the appellant for his alleged complicity in the smuggling of gold under section 112(b) of the Sea did not amount to contempt of court though his trial in a criminal court for offences under section 135(b) of that Act and other similar offences was imminent 'and identical issues would arise in the proceedings before the customs authorities and in the trial before the criminal court.
In Rizwan ul Hasan vs The State of Uttar Pradesh(4) this Court stated: "As observed by Rankin, C.J. in Anantalal Singha vs Abred Henry Watson [(1931) at 895], the jurisdiction in contempt is not to be invoked unless there is real prejudice which can be regarded as a substantial interference with the due course of justice and that the purpose of the court 's action is a practical purpose and it is reasonably dear on the authorities that the court will not exercise its jurisdiction upon a mere question of propriety." It follows therefore that even if the action of the appellants and respondent No. 1 in this case is assumed to be improper it will not justify the finding that they were guilty of contempt of court when their action was in no way calculated to obstruct the course of justice or to prejudice the trial of the Civil suit.
(1) [1900] 20.B. 36.
(2) (3) ; (4) ; ,588, 674 For these reasons we hold that this ,appeal should be allowed and the judgment of ' the High Court of Bombay, Nagpur Bench dated August 14, 1964 should be set aside and the conviction and sentences imposed on the appellants should be quashed.
The arbitrator, respondent No. 3 has not flied an appeal but in view of our finding with regard to the appellants it is necessary that the conviction of respondent No. 3 and the sentence imposed upon him should also be quashed.
The fines, if already paid by respontdent No. 3 and the ,appellants should be refunded.

Output:
A hire purchase agreement was entered into between the appellants and respondent No. 1 Under that agreement a motor transport truck was made available to respondent No. 1 for doing transport business.
The agreement contained an arbitration clause for settlement of disputes When disputes arose reference was made to an arbitrator.
Respondent No. 3 a praetising lawyer was named as the arbitrator.
During the pendency of the arbitration proceedings respondents Nos. 1 and 2 filed a civil suit in which they claimed a declaration that the hire purchase agreement was brought about by fraud and was not binding on them on various grounds.
The suit was registered and the court ordered summons to be issued to the two appellants.
A notice was also issued by respondent No. 1 to the appellants and the arbitrator with a copy of the plaint.
When the arbitrator made an award after recording the evidence of the appellants respondents Nos. 1 and 2 filed an application under section 3 of the Contempt of Courts Act on the allegation on that the appellants and respondent No. 3 had committed contempt of court in proceeding with the arbitration reference in spite of the notice under section 35 of the Arbitration Act being given and in spite of the knowledge of the suit which was filed by respondents 1 and 2.
The application was contested by the appellants as well as the arbitrator.
The appellants contended that in obeying the orders of the arbitrator to produce evidence they did not commit any contempt.
Respondent No. 3 denied that he conducted the arbitration proceedings in order to defeat the object of the suit.
The High Court found the appellants and respondent No. 3 guilty of contempt of court on the view that their conduct had a tendency to bring into contempt the proceedings before the Civil Court.
In appeal to this Court by certificate, HELD: The High Court was in error in holding that in the circumstances of the case the appellants and respondent No. 3 were guilty of contempt of court.
Section 35 of the Arbitration Act does not expressly prohibit the arbitrator from continuing the hearing of the reference.
Its only effect is that "all further proceedings in a pending reference shall, unless a stay of proceedings is granted under section 34, be invalid".
For this consequence to follow, however.
two important and distinct conditions must be satisfied, namely, (1) that such legal proceedings must be upon the whole and not merely part of the subject matter of the reference and (2) that a notice of such legal proceeding must be given to the arbitrator.
Even on the assumption that these conditions were satisfied the only effect is that the further proceedings before the arbitrator after the receipt of the notice are rendered invalid and there is no prohibition under section 35 requiring the arbitrator not to carry on the arbitration proceedings after the receipt of the notice.
[672 G 673 B] 669 It is well established that an authority holding an enquiry in good faith in exercise of the powers vested in it by a statute is not guilty of contempt of court, merely because a parallel enquiry is imminent or pending before a court.
To constitute the offence of contempt of court there must be involved some 'act done or writing published calculated to bring a court or a judge of the court into contempt or to lower his authority ' or 'something calculated to obstruct or interfere with the due course of justice or the lawful process of the court '.
[673 C] Reg.
vs Gray , Arthur Reginald Perera vs The King, , Tukaram Gaokar vs S.N. Shukla, ; and Rizwan ul Hasan vs State of Uttar Pradesh, ; , 588, applied.
It followed therefore that even if the action of the appellants and respondent No. 1 in the present case was assumed to be improper it would not justify the finding that they were guilty of contempt of court when their action was in no way calculated to obstruct the course of justice or to prejudice the trial of the civil suit.


Input:
he notification dated February 8 , 1984 issued by the State Government under section 52 ( 1) of the Act became effective the moment it was published in the Official Gazette as thereupon the notified land became vested in the State Government free from all encumbrances.
It was not necessary for the respondents to plead the service of notice on them by the Special Officer , Town Planning Department , Jaipur under section 52 (2) for the grant of an appropriate writ , direction or order under article 226 of the Constitution for quashing the notification issued under section 52 (1).
If the respondents felt aggrieved by the acquisition of their lands at Jaipur and wanted to challenge the validity of the impugned notification issued by the State Government of Rajasthan under section 52 (1) , by a petition under article 226 , the remedy of the respondents to file such a petition lay before the Rajasthan High Court Jaipur Bench , where the cause of action wholly or in part arose.
[605F H; 606A] & CIVIL APPELLATE JURISDICTION: Civil Appeal NO.
2085 Of 1985.
From the Judgment and Order dated 13.3.1984 of the Calcutta High Court in C. P. NO.
5972 (W) of 1984.
K Parasaran , Attn.
and Badridas Sharma for the Appellants.
G.L. Sanghi , Praveen Kumar and Ashok Mathur for the Respondents.
The Judgment of the Court was delivered by SEN. , J.
The issue involved in this appeal by special leave is: Whether the service of notice under sub section
(2) of section 52 of the Rajasthan Urban Improvement Act , 1959 ( 'Act ' for short) served on the respondents at their registered office at 18 B , Brabourne Road , Calcutta by the Special Officer , Town Planning Department , Jaipur was an integral part of the cause of action and was sufficient to invest the Calcutta High Court with jurisdiction to entertain a petition under article 226 of the Constitution challenging the validity of a notification dated February 8 , 1984 issued by the State Government of Rajasthan under S 5 (21) of the Act for the acquisi 601 tion of certain lands belonging to them required by the Urban Improvement Trust , Jaipur for a public purpose, namely, for implementation of a development scheme viz. Civil Lines Extension Scheme.
It is somewhat strange that a learned Single Judge of the Calcutta High Court (R.N.Pyne, J.) should have by his order dated March 13, 1984 entertained a petition under article 226 of the Constitution filed by the respondents , issued a rule nisi thereon requiring the reasons as to why a writ in the nature of mandamus should not be issued directing the appellants herein, the State of Rajasthan, the Jaipur Development Authority, Jaipur and the Land Acquisition Officer, Jaipur to forbear from giving effect to the impugned notification dated February 8, 1984 and passed an ad interim exparte prohibitory order restraining them from taking any steps requiring the respondents under sub section
(5) of 52 of the Act to surrender or deliver possession of the lands acquired forthwith or upon their failure to do so to take immediate steps under sub section
(6) thereof to secure such possession.
We are distressed to find that the learned Single Judge despite a long line of decisions of this Court starting from Siliguri Municipality vs Amalendu Das (1) deprecating the practice prevalent in the High Court of passing such interlocutory orders for the mere asking , should have passed the impugned orders in the manner that he did.
It seems that the pronouncements of this Court have had little exact on the learned Single Judge.
The learned Attorney General appearing for the State of Rajasthan takes serious exception to the authority and jurisdictionof the learned Single Judge to have entertained the writ petition filed by the respondents and issued the rule nisi and to have made the ad interim exparteprohibitory order which virtually has brought the entire acquisition proceedings pending at Jaipur in the State of Rajasthan to a standstill.
He contends that the petition filed by the respondents purporting to be under article 226 of the Constitution in the Calcutta High Court and the rule nisi thereon and the ad interim exparte prohibitory order secured by them on the basis of such petition from the learned Single Judge on March 13, 1984 when there was total lack of inherent jurisdiction on the part of (1) ; , 602 the Calcutta High Court to entertain such petition , constitutes a flagrant abuse of the process of the Court.
There is , in our opinion considerable force in this submission.
The facts of the case are as follows: Messrs Swaika Properties Pvt.
Limited, Calcutta owned Khasra No. 383 area 14 bighas 16 biswas situate in village Madrampura on the outskirts of Jaipur city.
On June 25, 1975 the Special Officer , Town Planning Department, Jaipur issued a notice under section 52 (2) of the Act at the instance of the Improvement Trust, Jaipur stating that it was proposed by the State Government to acquire the said land admeasuring more or less 44,770 square yards under section 52 (1) of the Act for a public purpose, namely, for the implementation of a development scheme at public expense viz. the Civil Lines Extension Scheme, The said notice was duly served on the respondents and they in compliance therewith appeared before the Special Officer, Town Planning Department, Jaipur and filed their reply dated September 8, 1975.
In the reply, the respondents while denying the existence of a public purpose for acquisition of the lands under section 52(1) of the Act asserted that they needed the said land to start new businesses in the State of Rajasthan and for that purpose to utilize the notified land for establishment of a branch office and for construction of residential houses for their Director and other Senior Executives.
The Special Officer adjourned the case from time to time and issued several notices to the respondents for personal hearing under section 52 (3) of the Act.
The respondents through their representative appeared at each of these hearings and sought adjournment on one pretext or another.
Significantly although the respondents participated in the proceedings before the Special Officer, they did not raise any objection as to the power and authority of the State Government of Rajasthan to acquire the notified land under section 52 (1) of the Act or the legality and propriety of the notice issued by the Special Officer under s , 52 (2) or his jurisdiction to proceed with the inquiry under section 52 (3).
Nor did the respondents place any material before the Special Officer to show that they really needed the notified land for the purpose of expansion of their business activities to the State of Rajasthan.
It is pertinent to observe that the respondents had been shifting their stand before the Special Officer.
As already stated , they had in their reply dated September 8, 1975 alleged that they genuinely required the land for starting new businesses in the State , to open a branch office at Jaipur and 603 to construct residential quarters for their Director and other Senior Executives , but at a later stage they alleged that they wanted to construct a Three Star Hotel on the said land.
Eventually , the Special Officer by his order April 9 , 1976 held that the alleged need of the respondents was just a pretence and he was satisfied on the material on record that the land was really not needed by them bona fide and their real object was just to get the land released from acquisition on one ground or the other.
with these observations he rejected the prayer of the respondents for release of the land and recommended that the entire land be acquired by the State Government under section 52(1) of the Act for the Urban Improvement Trust , Jaipur , and forwarded the papers to the Secretary to the State Government , Town Planning Department , Rajasthan for issue of the requisite notification under section 52 (l) of the Act.
It appears from the material on record that the respondents having failed in their effort to get the land released from acquisition then took up the matter with the State Government.
They made an application to the State Government on February 10 , 1977 seeking exemption of the notified land under section 20 of the Urban Land (Ceiling & Regulation) Act , 1976 stating that they required the land for construction of a Three Star Hotel.
The State Government in the Urban Development & Housing Department by letter dated April 4 , 1977 informed the respondents that there was no possibility of an exemption being granted under section 20 of the Act in their favour allowing them to retain vacant land in excess of 6,000 square yards for the construction of a Three Star Hotel.
The State Government stated that the remaining land was required by the Urban Improvement Trust , Jaipur for development of house sites and for construction of two 'Ministers ' bungalows in Civil lines and therefore the proceedings for acquisition of the notified land would not be withdrawn.
The State Government required the respondents to submit detailed proposals in respect of 6,000 square yards of land for their proposed Three Star Hotel showing commitments made, financial resources etc.
through the Director of Tourism, Rajasthan, Jaipur and were intimated that they would be entitled to retain the said land on payment of the prescribed fee for converting the land use from agriculture to hotel business.
Apparently, the respondents were not serious in undertaking the 604 new venture of starting a Three Star Hotel on an area of 6,000 square yards as their real object was to get the notified land released from acquisition.
The February 21, 1979, there was a meeting at the Secretariat in the Urban Development & Housing Department between officers of that Department and those of the Urban Improvement Trust, Jaipur.
It was clarified on behalf of the Improvement Trust that the notified land in its entirety was needed for implementation of the development scheme of the Trust.
The Improvement Trust accordingly by its letter dated March 5, 1979 requested the State Government that necessary orders be passed for acquisition of Khasra No. 383 in village Madrampura admeasuring 14 bighas 16 biswas and a notification to that effect issued under section 52(1) of the Act.
It was pointed out that a public notice under section 55(2) of the Act as regards the notified land had already been issued by the Special Officer , Town Planning Department , Jaipur dated June 25 , 1975 , and the necessary procedure as laid down in sub S.(3) thereof followed.
As a result of this , the State Government issued the impugned notification dated February 8 , 1984 under section 52(1) Or the Act and the notified land vested in the State Government free from all encumbrances.
The State Government in their special leave petition have explained that the notification under section 52(1) of the Act could not be issued till February 8 , 1984 because the Government were primarily thinking of making the land available for construction of residential houses before making provisions for construction of a Three Star or Five Star Hotel but nothing came out of the said proposal as there was no response from the respondents.
Upon these facts , we are satisfied that the cause of action neither wholly nor in part arose within the territorial limits of the Calcutta High Court and therefore the learned Single Judge had no jurisdiction to issue a rule nisi on the petition filed by the respondents under article 226 of the Constitution or to make the ad interim exparte prohibitory order restraining the appellants from taking any steps to take possession of the land acquired.
Under sub section
(5) of section 52 of the Act the appellants were entitled to require the respondent to surrender or deliver possession of the lands acquired forthwith and upon their failure to do so , take 605 immediate steps to secure such possession under sub section
(6) thereof.
The expression 'cause of action ' is tersely defined in Mulla 's Code of Civil Procedure: "The 'cause of action ' means every fact which , if traversed , it would be necessary for the plaintiff t y prove in order to support his right to a judgment of the Court.
" In other words , it is a bundle of facts which taken with the law applicable to them gives the plaintiff a right to relief against the defendant.
The mere service of notice under section 52(2) of the Act on the respondents at their registered of ice at 18 B , Brabourne Road , Calcutta i.e. within the territorial limits of the State of West Bengal , could not give rise to a cause of action within that territory unless the service of such notice was an integral part of the cause of action.
The entire cause of action culminating in the acquisition of the land under section 52(1) of the Act arose within the State of Rajasthan i.e. within the territorial jurisdiction of the Rajasthan High Court at the Jaipur Bench.
The answer to the question whether service of notice is an integral part of the cause of action within the meaning of article 226(2) of the Constitution must depend upon the nature of the impugned order giving rise to a cause of action.
The notification dated February 8 , 1984 issued by the State Government under section 52(1) of the Act became effective the moment it was published in the official Gazette as thereupon the notified land became vested in the State Government free from all encumbrances.
It was not necessary for the respondents to plead the service of notice on them by the Special Officer , Town Planning Department , Jaipur under section 52(2) for the grant of an appropriate writ , direction or order under article 226 of the Constitution for quashing the notification issued by the State Government under section 52(1) of the Act.
If the respondents felt aggrieved by the acquisition of their lands situate at Jaipur and wanted to challenge the validity of the notification issued by the State Government of Rajasthan under section 52(1) of the Act by a petition under article 226 of the Constitution , the remedy of the respondents of the grant of such relief had to 606 be sought by filing such a petition before the Rajasthan High Court , Jaipur Bench , where the cause of action wholly or in part arose.
It is to be deeply regretted that despite a series of decisions of this Court deprecating the practice prevalent in the High Court of passing such interlocutory orders for the mere asking , the learned Single Judge should have passed the impugned ad interim exparte prohibitory order the effect of which , as the learned Attoreny General rightly complains , was virtually to bring to a standstill a development scheme of the Urban Improvement Trust , Jaipur viz. Civil Lines Extension Scheme , irrespective of the fact whether or not the High Court had any territorial jurisdiction to entertain a petition under article 226 of the Constitution.
Such arbitrary exercise of power by the High Court at the public expense reacts against the development and prosperity of the country and is clearly detrimental to the national interest.
Quite recently , Chinnappa Reddy , J. speaking for the Court in Assistant Collector of Central Excise , West Bengal vs Dunlop India Limited and Ors.(1) administered strong admonition deprecating the practice of the High Court of granting ad interim exparte orders which practically have the effect of the grant of the main relief in the petition under article 226 of the Constitution irrespective of the fact whether the High Court had any territorial jurisdiction to entertain such a petition or whether the petition under article 226 was intended and meant to circumvent the alternative remedy provided by law or filed solely for the purpose of obtaining interim orders and thereafter delaying and protracting the proceedings by one device or the other particularly in matters relating to public revenue or implementation of various measures and schemes undertaken by the Government or the local authorities for general public benefit.
Although the powers of the High Courts under article 226 of the Constitution are far and wide and the Judges must ever be vigilant to protect the citizen against arbitrary executive action , nonetheless , the Judges have a constructive role and therefore there is always the need to use such extensive powers with due circumspection.
There has to be in the larger public interest an clement of self ordained restraint.
We hope (1) [19851 1 S.C.C. 260. 607 and trust that the High Court will determine the extent of its territorial jurisdiction before making such interlocutory orders.
In the result , the appeal succeeds and is allowed with costs.
The impugned orders passed by the learned Single Judge of the Calcutta High Court dated March 13 , 1984 issuing a rule nisi on the petition filed by the respondents under article 226 of the Constitution and the ad interim exparte prohibitory order made by him are set aside and the proceedings before the Calcutta High Court are quashed.
We quantify the costs at Rs. 5,000.
N.V.K. Appeal allowed.

Output:
The Special Officer , Town Planning Department , Jaipur issued a notice under section 52 (2) of the Rajasthan Urban Improvement Act , 1959 at the instance Or the Improvement Trust to the respondent company which owned extensive land on the outskirts of Jaipur City stating that it was proposed by the State Government to acquire the said land under 9. 52 (1) for a public purpose , the implementation of a developing scheme at public expense viz. the Civil Lines Extension Scheme , and the said notice was duly served on the respondents at their registered office at 18B , Brabourne Road , Calcutta.
In compliance therewith , the respondents appeared before the Special Officer and while denying the existence of a public purpose for acquisition of the said land under section 52 (1) of the Act , asserted that they needed the land to start new business in the State of Rajasthan viz. for establishment of a branch office , construction of residential houses for their Director and Senior Executives etc.
The Special Officer on being satisfied from the material on record that the alleged need of the respondents was not bona fide and that the land was required by the Improvement Trust for a public purpose viz. the Civil Lines Extension Scheme , recom 599 mended that the entire land be acquired under section 52 (1) of the Act.
Having failed in their effort to get the land released from acquisition , the respondents made an application to the State Government under section 20 of the Urban Land (Ceiling purview of that Act alleging that the land was needed for constructing a three star hotel , but it appears that they were not serious in undertaking any such venture.
While the matter was under the consideration of the State Government , the Improvement Trust represented that the notified land in entirety was needed for the aforesaid development scheme and accordingly the State Government issued the impugned notification.
The respondent company approached the Calcutta High Court by a writ petition.
A Single Judge entertained the petition under article 226 , issued a rule nisi to the appellants to show cause why a writ of mandamus should not be issued , and also passed an ex parte ad interim prohibitory order restraining them from taking any step to require the respondents to surrender or deliver possession of the lands acquired.
Allowing the Appeal , ^ HELD: 1. 1.
Normally , the High Court should not , as a rule , in proceedings under article 226 of the Constitution grant any ad interim prohibitory order staying the implementation of any development scheme framed by the Government or by the local authorities , save under very exceptional circumstances and particularly without notice to the Government or such authority.
The Court deprecated the tendency on the part of the High Court in spite of a long line of decisions of this Court starting from Siliguri Municipality vs Amalendu Das , ; to grant interlocutory orders for the mere asking.
[60IB E] 1.
2 Although the powers of the High Courts under Art 226 are far and wide and the Judges must ever be vigilant to protect the citizen against arbitrary Executive action , nevertheless , the Judges have a constructive role to play and therefore there is always the need to use such extensive powers with due circumspection There has to be in the larger public interest an element of self ordained restraint.
The effect of the impugned ad interim prohibitory order made by the learned Single judge virtually brought to 3 standstill a development scheme framed by the Improvement Trust in another State.
Such arbitrary exercise of power by the High Court , at the public expense , reacts against the development and prosperity of the country and is clearly detrimental to the national interest.
[606G H]; C D] G 2. 1.
The question whether service of notice is or is not an integral part of the cause of action within Art 226 (2) of the Constitution must depend upon the nature of the impugned order giving rise to a 'cause of action '.
'Cause of action ' is a bundle of facts which taken with the law applicable to them gives the petitioner a right to relief against the respondent.
[60SE , B C] 600 2 .2
There was complete lack of jurisdiction on the part of the Calcutta High Court to have entertained the writ petition.
The service of notice under section 52 (2) of the Act was not an integral part of the cause of action within the meaning of article 226 (2) of the Constitution and therefore the High Court had no jurisdiction to entertain the writ petition or issue an ad interim prohibitory order.
[601H 602A , 605D]