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ivil Appeal No. 2458 and S.L.P. No. 9019 of 1980 From the Judgment and Order dated 7.12.
1979 of the Allahabad High Court in Civil Misc.
Writ Petition No. 3174 of 1975 R.N. Trivedi, Additional Advocate General, Gopal Subramaniam and Ms. Shobha Dikshit for the Appellants.
F.S Nariman, Raja Ram Agarwal, Yogeshwar Prasad, Mrs. Rani Chhabra and Ms. Suman Bagga for the respondent.
The Judgment of the Court was delivered by DESAI, J.
Respondent Raja Ram Jaiswal moved Civil Miscellaneous Writ Petition No. 3174 of 1975 under article 226 of the Constitution in the High Court of Judicature at Allahadad questioning the validity of the Notification dated February 6, 1975 issued under Sec.
4(1) of the Land Acquistion Act ( 'Act ' for short) as also a notice dated March 6, 1975 served upon him pursuant to the afore mentioned notification.
The impugned notification was published in the U.P. Government Gazette dated February 15, 1975.
By this impugned notification, land bearing Plot No. 62 approximately admeasuring 8265 sq.
was sought to be acquired as being needed for a public purposse namely for extension of Hindi Sangrahalaya of the Hindi Sahitya Sammelan Prayag.
A substances of this notification was published in the locality where the land sought to be acquired is situate.
On March 22, 1975, a corrigendum dated March 13, 1975 was published by which the impugned notification dated February 15, 1975 was to stand corrected Plot No. 26 instead of 62 and the area sought to be acquired to be read as 2865 sq.
1000 instead of 8265 sq.
After the publication of the corrigendum the petitioner sought amendment of the petition which was granted.
Validity of the amended notification was challenged on diverse grounds.
However, at the hearing of the petition, the challenge was confined to the following four grounds as summarised in the judgment of the High Court.
They may be extracted: "1.
Notification dated 6.2.75 issued under Sec.
4 of the Land Acquisition Act is invalid in as much as it had been issued without first complying with the provisions of rule 4 of the Land Acquisition (Companies) Rules, 1963.
Acquisition proceedings are mala fide.
Notice under section 4(1) of the Act was served upon the petitioner on 6th March, 1975 when only two days time was left for filing objections under Section 5 A of the Land Acquisition Act.
This rendered the proceedings illegal.
The notification under Section 4(1) did not relate to plot No. 26 belonging to the petitioner.
Proceedings to acquire the said plot are therefore without jurisdiction.
" After the petition was amended two additional grounds of challenge were pressed on behalf of the respondent.
They are: "1.
The notification dated 13th March, 1975 is invalid for the very same reason for which the notification dated 6th February, 1973 is claimed to be invalid.
The Land Acquisition proceedings are invalid inasmuch as the notification dated 13th March, 1975 was neither published nor was its substance notified in the locality, as also because no notice thereof had been served upon the petitioner.
" Negativing all the challenges except the one that as there was failure to cause public notice of the substance of notification under Sec.
4(1) to be published at convenient place in the locality on 1001 this short ground, the impugned notification was quashed.
Hence this appeal by the Collector, Allahabad and the Land Acquisition Officer by special leave.
Respondent who was the original petitioner but is respondent in the appeal filed by the Collector will be referred to as the petitioner in this judgment.
Petitioner field Special Leave Petition No. 9019 of 1980 against the same judgment contending that the High Court committed an error in rejecting the challenge to the validity of the impugned notification on the ground of legal mala fides as also on the ground of non compliance with Rule 4 of the Land Acquisition (Companies) Rules, 1963.
As both these matters arise out of the same judgment, they were heard together and are being disposed of by a common judgment.
It may be mentioned that connected Civil Appeal No. 2437 of 1981 was to be taken up for hearing after the hearing concluded in D the present appeal and therefore, the judgment in this matter was postponed because the observations in one were likely to have some impact on the disposal on merits of the contentions in the cognate appeal.
Though very much delayed by circumstances beyond our control, few days back the hearing in the cognate appeal is over and therefore, both the appeals can now be disposed of though by separate judgments.
A brief resume of the facts leading to the writ petition field in the High Court would be quite instructive in this case.
The Hindi Sahitya Sammelan ( 'Sammelan ' for short) for whose benefit the land was sought to be acquired was initially formed as a voluntary organisation in 1910 and on January 8, 1914 it was registered as a society under the Societies Registration Act retaining the same name.
Some where in 1950 difference arose between the members of the society and the attempt to alter the constitution of the society, ultimately led to litigation.
U.P. Legislature enacted an Act styled as U.P. Hindi Sahitya Sammelan Act No. 36 of 1956 under which a statutory body was created under the name of Hindi Sahitya Sammelan.
The statutory body was to take over the management and properties of the society.
The Act was however struck down as unconstitutional in Damyanti Naranga vs Union of India & Ors.(l) The pre existing Sammelan which was a registered society (1) ; 1002 continued to function as such.
It is for the benefit of the Sammelan that the land involved in the dispute was sought to be acquired.
According to the Sammelan, it is in need of land for building 'Sangrahalaya ' which was roughly translated as museum cum library cum reading room.
At the instance of the Sammelan, Allahabad Municipal Board agreed to hand over the land and building in which a municipal school was located, situated at Kamta Prasad Kakkar Road adjacent to the Central office and Press of the Sammelan, on certain conditions.
The Sammelan needed the land, as it was then declared, to establish a museum.
The land with the school building thereon was transferred to the Sammelan in 1953.
It may be mentioned that even till today the area of land admeasuring 7315 sq.
in possession of the Sammelan is Lying vacant and for the quarter of a century, museum has not come up.
This aspect is mentioned in some detail as it has an impact on the contention canvassed in these appeals.
Petitioner Jaiswal along with the members of his family purchased land bearing plot No. 26 with a building thereon admeasuring 2978 sq.
situated at K. P. Kakkar Road in March 1970.
The petitioner wanted to build a sound proof air conditioned cinema theatre on the plot No. 26 purchased by him.
The plan for the proposed theatre was sanctioned both by the District Magistrate and the local municipality in December 1970.
It may be recalled here that the judgment of this Court holding Hindi Sahitya Sammelan Act unconstitutional was rendered on February 23, 1971.
The Sammelan was wholly opposed to the construction of a theatre near its campus as in its view a theatre and a research cum study centre can go ill together.
Therefore, when the petitioner applied for a certificate of approval under Rule 3 read with rule 7(2) of the U.P. Cinematograph Rules 1951 for construction of a cinema theatre, authorities of the Sammelan raised a storm of protest, sometimes peaceful occasionally likely to turn violent impelling authorities to impose restrictive orders under Sec. 144, Code of Criminal Procedure.
Sammelan also submitted a long memorandum setting out its objections with a view to persuading the authorities not to grant a certificate of approval for construction of a cinema II (1) ; 1003 building.
Overrullng the objections the District Magistrate, the Licencing Authority under the U.P. Cinemas (Regulation) Act, 1955 granted the requisite certificate of approval under Rule 3 which would in law imply that having regard to the provisions of the 1955 Act and 1951 Rules, there was no legal impediment to constructing a cinema theatre on plot No. 26.
Thereupon, Secretary of the Sammelan addressed a letter to the Chief Minister of State of U.P. complaining against the grant of the permission by the District Magistrate and requesting the Chief Minister to cancel the permission.
Ultimately, having failed to thwart the grant of certificate of approval.
the Sammelan wrote a letter on October 13, 1971 for acquiring land bearing Plot No. 26.
It may be recalled that the certificate of approval for constructing a cinema building was granted by the District Magistrate on March 24, 1972.
The Sammelan addressed various letters to various authorities including the then Prime Minister of India requesting them to cancel the certificate of approval granted to the petitioner.
Ultimately on January 31, 1974, a notification under Sec.
4(1) of the Land Acquisition Act, 1894 was issued stating therein that the land bearing plot No.
`26 admeasuring approx.
2865 sq.
was needed for a public purpose namely for extension of Hindi Sangrahalaya of Hindi Sahitya Sammelan Prayag '.
This notification was published in the U.P. Government Gazette on February 9, 1974.A notice under Sec.
4(1) bearing the same date was served upon the petitioner as also the same was published in the locality.
The petitioner challenged the validity of this notification on diverse grounds in Writ Petition No. 1932174 and as a measure of interim relief, the High Court stayed further proceeding that may be taken to acquire the land.
In the meantime by notification dated February 6, 1975, the earlier notification under Sec.
4(1) dated January 31, 1974 was cancelled and a fresh notification was issued to acquire 'land bearing plot No. 62 admeasuring 8265 sq.
yds for the earlier mentioned public purpose '.
Consequently, the writ petition in which the validity of the earlier notification was questioned was disposed of as infructuous.
The second notification dated February 6, 1975 was published in the U.P. Gazette on February 15, 1975.A notice dated March 6, 1975 under Sec.
5A of the Land Acquisition Act was served upon the petitioner inviting him to file his objection, if there be any, against the proposed acquisition.
The petitioner filed detailed objections on March 8, 1975 inter alia contending that the acquisition is for a 1004 company and the pre requisite for acquisition for a company having not been carried out, the acquisition is bad in law.
It was also contended that the petitioner is not the owner of plot No. 62 admeasuring 8265 sq.
Promptly on March 13, 1975, a corrigendum was issued and published in the Gazette on March 22, 1975 correcting the notification dated February 6, 1975 to read that instead of plot No. 62, plot No. 26 be read and instead of area 8265 sq.
2865 sq.
be read.
In between the issue of the notification and the corrigendum, the petitioner filed Writ Petition 3174/75 questioning the validity Or the notification dated February 6, 1975.
The High Court struck down the notification as invalid and during the pendancy of the writ petition in the High Court, further continuance e of the acquisition proceedings were stayed.
If the petitioner questioned the validity of the notification on ground of mala fides, he ought to have joined Sammelan as respondent.
Having failed to implead a proper party, he behaved curiously in opposing the application of the Sammelan for being impleaded as a party.
The High Court was in error in rejecting the application.
Therefore, when the Sammelan moved an application for intervention under Order XX rule 3 of the Supreme Court Rules, 1966, we granted the same and Mr. S.N. Kacker learned counsel appeared for the Sammelan at the hearing of these appeals and addressed his oral arguments and submitted written submissions.
The High Court struck down the notification holding that in order to be a valid notification under Sec.
4(1), it has to be published or notified for general information in the Official Gazette and for purposes of Sec.
SA of the Act, it would be taken to have been published on the date of such publication in the Official Gazette, and the second part of Sec.
4(1) requires the publication of the substance of the notification in the locality ' This having not been complied with, the notification was bad and invalid.
The correctness of this view is questioned on behalf of the appellants.
After scruitinising the evidence placed on record, the High Court has recorded a finding that the substance of the notification was not published in the locality either after 15th February, 1975 when the notification dated February 6, 1975 was first published in the Official Gazette or after March 22, 1975 when the corrigendum was 1005 published in the Official Gazette and thus the requirement of the second part of Sec.
4(1) has not been complied with.
The finding that there was no such publication as herein indicated was not seriously questioned and in fact could not be questioned.
A few facts will affirmatively establish it.
The first notification dated January 31, 1974 was published in the official Gazette dated February 9, 1974 and in respect of which a notice was published in the locality in March, 1974.A copy of the notice was served on the petitioner on March 6, 1974.
This notification bore the number 78 VIII LAQ and it was in respect of plot No. 26 admeasuring 2865 sq.
This notification was cancelled and superseded by another notification No. 552 VIII LAQ dated February 6, 1975, which was published in the Official Gazette dated February 15, 1975.
This latter notification clearly recites that the earlier notification dated February 9, 1974 is thereby cancelled.
In the latter notification dated Feb. 6, 19751 the land proposed to be acquired was shown to be plot No. 65 admeasuring 8265 sq.
Admittedly notice of the substance of this notification was not published in the locality.
The petitioner had nothing to do with land bearing plot No. 62 admeasuring 8265 sq.
As the previous notification was cancelled, he had nothing to worry about the second notification which has no relevance to the plot belonging to him.
The corrigendum dated March 13, 1975 was issued and published in the Official Gazette dated March 22, 1975 correcting the plot number and the area and the corrected entry was to be in reference to plot No. 26 and area to be acquired was to be 2865 sq.
Admittedly, there was no notice of publication of the substance of the notification dated February 15, 1975 nor of the corrigendum dated March 22, 1975 in the lacality.
The High Court was therefore, right in holding that in respect of the later notification and corrigendum, no notice was published in the locality and latter part of Sec.
4(1) was not complied with.
4(1) in its application to the State of U.P. read as under: "4(1): Whenever it appears to the appropriate Government or Collector that land in any locality is needed or is likely to be needed for any public purpose, a notification to that effect shall be published in the Official Gazette, and the Collector shall cause public notice of the substance of 1006 such notification to be given at convenient places in the said locality.
" By Land Acquisition (U.P. Amendment And Validation) Act Vlll of 1974, the section was amended to read as under: "4(1): Whether it appears to the appropriate Government and the Collector that land in any locality is needed or is likely to be needed for any public purpose, a notification to that effect shall be published in the Official Gazette, and except in the case of any land to which by virtue of a direction of the State Government under Sub section (4) of Sec. 17, the provisions of Sec.
5 A shall not apply, the Collector shall cause public notice of the substance of such notification to be given at convenient places in the said locality.
" Though this amendment of 1974 is subsequent to the impugned notification, yet some reference was made to it to buttress the sub mission that the only purpose of a notification under Sec.
4(1) and the public notice in the locality is to make functionally effective the provisions of Sec.
5A so that the persons interested in the land sought to be acquired can canvass his objections against the proposed acquisition.
We shall presently deal with it.
Mr. S.N. Kacker for the intervener and Mr. Dikshit for the State of U.P. urged that ordinarily courts do not interfere at the ,.
stage of Sec.
4 notification because it merely constitutes a proposal which will be meticulously examined after the objections are filed under Sec.
5A by the person interested in the land wherein all aspects of the matter can be threadbare gone into and examined.
Broadly stated, one cannot take serious exception to this submission.
However, as a notification under Sec. 4 (1) initiates the proceedings for acquisition of land aud uses the expression 'shall ' the mandate of the legislature becomes clear and therefore, the infirmities therein cannot be wholly overlooked on the specious plea that the courts do not interdict at the stage of a mere proposal.
bare perusal of Sec. 4 (1) clearly shows that in order to comply with the statutory requirements therein set out, a notification 1007 stating therein the land which is needed or is likely to be needed for a public purpose ' has to be published in the official Gazette.
The second part of the sub section provides that 'the Collector has to cause public notice of the substance of such notification to be given at convenient places in the locality in which the land proposed to be acquired is situated.
Both the conditions are held by a catena of decisions to be mandatory Whether the second condition is mandatory or directory is no more res integra.
In Khub Chand and Ors.
vs State of Rajasthan and Ors.(1), Subba Rao, CJ speaking for the court observed that 'the statutory intention is, therefore, clear, namely, that the giving of public notice is mandatory.
If so, the notification issued under section 4 without complying with the said mandatory direction would be void and the land acquisition proceedings taken pursuant thereto would be equally void. ' While reaching this conclusion, the Court distinguished the decision in Babu Barkya Thakur vs The State of Bombay(2) wherein it was held that 'any defect in the notification under Sec. 4 is not fatal to the validity of the proceedings, particularly when the acquisition is for a company and the purpose has to be investigated under section 5A or section 40 necessarily after the issue of the notification under section 4 of the Act '.
The Court pointed out that the defect with which the notification in Bahu Barkya Thakur 's case sufferred was of a formal nature and did not go to the root of the matter.
However, the decision is not an authority for the proposition that if a public notice of the notification was not given as prescribed by section 4, it can be ignored.
The pertinent observation of the court is that such an approach would constitute rewriting The section.
The court also referred to Smt.
Somavanti and Ors.
vs The State of Punjab & Ors.(3) and quoted with approval the statement therein made that a valid notification under sub section
(I) of Sec. 4 is a condition precedent t ) the making of a declaration under sub section
(1) of Sec. 6.
This view has been consistently followed and was approved in State of Mysore vs Abdul Razak Sahib(4), wherein it was observed that in the case of a notification under Sec. 4 of the Land Acquisition Act, the law has prescribed that in addition to the publication of the notification in the Official Gazette, the Collector must also give publicity of the substance of the notification in the concerned locality.
Unless both these conditions are satisfied, section 4 (1) ; at 125.
(2) (3) (4) ; 1008 of the Land Acquisition Act cannot be said to have been complied with.
The publication of a notice in the locality is a mandatory requirement.
Mr. Kacker however, drew our attention to a few more observations in the judgment wherein it was said that there is an important purpose behind publication of the substance of the notification in the locality because in the absence of such publication, the interested persons may not be able to file their objections challenging the proposed acquisition and they will be denied an opportunity afforded by section 5A which confers a very valuable right.
Relying on this observation Mr. Kacker urged that if the underlying purpose behind publication of a notice in the locality is to give an opportunity to the person interested in the land to object to the acquisition, where in a case the purpose is achieved as in this case the petitioner having filed his objections, the failure to publish the substance of the notification in the locality need not be treated fatal and cannot invalidate the proceedings.
The submission as presented is very persuasive and but for binding precedents, we would have accorded considerable attention to it.
But we would not whittle down a mandate of legislation recognised by a long line of decisions solely depending upon the facts of a given case.
Further the submission is predicated upon an assumption that the sole purpose behind publication of substance of notification in locality is to make requirements of Sec.
5A functionally effective.
The assumption as would be pointed out is not well founded.
In fact, the court in the last mentioned case went so far as approving the decision of the Mysore High Court in Gangadharaih vs State of Mysore & Ors.(l) wherein it was ruled that 'when a notification under section 4 (1) is published in the official Gazette and it is accompanied by or immediately followed by the public notice, that a person interested in the property pro posed to be acquired can be regarded to have had notice of the proposed acquisition. ' This is a mandatory requirement for legal compliance with requirements of Sec. 4 (1).
In Narendra Bahadur Singh and Anr.
vs State of U.P. & Ors(2) this Court reiterated that a publication of the notice in the locality as required by the second part of section 4 (1) is mandatory and unless that notice is given in accordance with the provisions contained therein, the entire acquisition proceedings are vitiated.
Repelling the contention, that (1) (2) ; 1009 the only purpose behind publication of a notice in the locality is to give opportunity to the person interested in the land to prefer objections under Sec.
5A which confers a valuable right, it was held that even though in the facts of that case, the inquiry under section 5A was dispensed with by a direction under Sec.
17 (4) of the Act, the failure to comply with the second condition in Sec. 4 (1) is fatal.
It was pertinently observed that provisions of Sec.
4(1) cannot be held to be mandatory in one situation and directory in another and therefore, it cannot be said that the only purpose behind making the publication of notice in the locality mandatory is to give an opportunity to the persons interested in the land to file objections under Sec.
Of course, what other object it seeks to subserve has been left unsaid.
But the answer is not far to seek.
At least we have no doubt that the only visible and demonstralle purpose behind publication of the substance of the notification under Sec. 4 (1) in the locality where the land proposed to be acquired is situated, is to give the persons interested in the land due opportunity to submit their considered objections against the proposed notification.
Incidentally, it may be pointed out that after the 1974 amendment, Sec. 4 (1) on its true interpretation may unmistakably indicate that where the enquiry under Sec.
5A is not dispensed with by resorting to Sec. 17 (4), compliance with the second part of Sec. 4 would be mandatory.
We however do not propose to go into this aspect because the amendment is subsequent to the notification.
Mr. Kacker however on behalf of the interveners while conceding that there cannot be a valid acquisition unless a notification is published in the Official Gazette and a substance of the notification is published in the locality, urged that publication in locality need not necessarily follow the publication of the notification in the Official Gazette but it may even precede the same because what is of importance is the decision to acquire, the notification and publication of the notice are mere formal expressions of the decision of the Govt.
to start acquisition proceedings.
Proceeding along it was said that the second requirement of Sec.
4 (1) v z. publication of the notice in the locality is only to make effective the provisions of Sec.
5A and that such minor defect cannot invalidate notification under Sec. 4.
To substantiate this submission, reliance was placed upon the decisions in Babu Barkya Thakur 's case, State of Madhya 1010 Pradesh & Ors.
vs Vishnu Prasad Sharma & Ors.(l) and Narendra Bahadur Singh 's case.
All these decisions do not bear out or substantiate the submission of Mr. Kacker for the reasons already mentioned.
Assuming that a notification in the Official Gazette is a formal expression of the decision of the Government, the decision of the Government is hardly relevant, unless it takes the concrete shape and form by publication in the Official Gazette.
Where a decision of the Government to be effective and valid has to be notified in the Government Gazette, the decision itself does not become effective unless a notification in the Official Gazette follows.
In Mahendra Lal Jaini vs The State of Uttar Pradesh & Ors.(2) it was held that a notification under Sec.
4A of the is required to be published in the Gazette and unless it is so published, it is of no effect.
Logically, the same view must be adopted for a notification under Sec. 4.
Therefore assuming that a notification is a formal expression of a decision of the Government to acquire land, unless the decision is notified in the Government Gazette by an appropriate notification, the proceedings for acquisition cannot be said to have been initiated and the decision would remain a paper decision.
Sec. 4 (1) further requires that 'the Collector shall cause public notice of the substance of such notification to be given at convenient places in the said locality. ' The expression 'such notification. ' in the latter part of Sec. 4 (1) and sequence of events therein enumerated would clearly spell out that first the Government should reach a decision to acquire land, then publish a notification under Sec.4 (1) and simultaneously or within a reasonable time from the date of the publication of the notification cause a notice to be published containing substance of such notification meaning thereby that notification which is published.
Obviously, therefore, there cannot be a publication in the locality prior to the issuance of the notification.
The submission of Mr. Kacker does not commend to us.
In this context, it was next contended that at any rate the petitioner has not suffered any prejudice by the failure of the Government to publish a notice in the locality because the petitioner has filed detailed objections against the proposed acquisition.
If the (1) (2) [1963] Supp, 1 S.C.R. 912.
1011 only purpose behind publishing the notice in the locality was to give an opportunity to the persons interested in the laid to file their objections, the submission would have merited consideration, but the same has been expressly negatived and therefore, it is futile to examine the same.
To be brutally frank if this was the only ground for invalidating the notification, in the backdrop of facts we would have our serious reservations in upholding the decision, though as the law stands, the High Court was perfectly justified in reaching this conclusion.
Our reservations have nothing to do with the perfectly legal view taken by the High Court.
They stem from the facts of this case and our understanding of the purpose behind publication of notice as set out by us earlier.
In such a situation, we would have developed the concept of prejudice and the absence of it resulting in negativing the contention.
But there are other formidable challenges to the validity of the impugned notification, which of course have not found favour with the High Court but we are inclined to take a different view of the matter.
Therefore we let the decision of the High Court on this point stand.
Turning to the petition for special leave filed by the petitioner, we grant special leave to appeal and proceed to examine the two challenges to the validity of the notification under Sec.
4(1) which have been negatived by the High Court.
The petitioner questioned the validity of the notification inter alia on the ground that the acquisition was malafide and that the acquisition being for a Company, it would be invalid for failure to comply with the provisions of rule 4 of the Land Acquisition (Companies) Rules, 1963.
The High Court negatived both the challanges.
Mr. Nariman, learned counsel for the petitioner invited us to examine them.
The relevant averments on the question of mala fides as set out in the writ petition filed in the High Court may be briefly summarised.
As the objections by the Sammelan for not granting a certificate of approval for constructing a cinema building on Plot No. 26 were not accepted by the Licensing authority and a certificate of approval was subsequently granted to the petitioner, the Sammelan in order to achieve the same object, namely, not to permit a theatre to be constructed at the place, moved the authorities for acquiring the land.
It is averred that the genesis of the proceeding for acquisition is not in the need of the Sammelan but its failure to stop the cinema theatre coming up and thus the purported need is non 1012 existent and the initiation of the acquisition proceedings was mala fide.
Its sole purpose is to deprive the petitioner of the cinema business which he would legally carry on.
Frankly, the averments are not very specific, clear, precise and to the point.
But the comulative effect of the allegations is that Sammelan being actuated by the ulterior motive to thwart the petitioners ' project to construct a cinema building resorted to the dubious method of seeking acquisition of the land even though it had no need present or in near future of the land in question.
Obviously, if such be the allegation, the Sammelan ought to have been impleaded as a party to the writ petition Not only the Sammelan was not impleaded as the party, but when the Sammelan moved an application for intervention or for being joined as a party, the petitioner was ill advised to object to the same and unfortunately the objection prevailed with the High Court.
We are unable to appreciate both the objections and the view taken by the High Court.
Therefore, when Nariman pressed his petition for special leave to appeal against the rejection of the challenge on the afore mentioned two grounds, we made it abundantly clear that we would be least interested in examining the challenge founded on the ground of mala fides in the absence of the Sammelan.
The Sammelan had moved a petition for intervention which, it must be stated in fairness to Mr. Nariman, was not objected in this Court and we made it abundantly clear that the request for being impleaded as a party in the High Court ought not to have been objected.
Accordingly, the petition for intervention was granted and the Sammelan was given an opportunity to file its affidavit as well as any material that it chooses to place on record.
According to the rules, the interveners are not entitled to address oral submissions to the court but in the background of the facts of this case, we gave full opportunity to Mr. Kacker to address oral submissions.
It is in the backdrop of these facts that we propose to examine the challenge founded on the ground of mala fides.
A few facts will have to be recapitulated.
After the petitioner purchased the Plot No. 26 and submitted an application on July 6, 1971 to the licensing authority for grant of a certificate of approval as envisaged by rule 3 read with rule 7 of U.P. Cinematograph Rules, 1951 ( '1951 Rules ' for short) for constructing a cinema building on Plot No. 26, the Sammelan promptly objected to the grant of certificate of approval on the ground that existence of a cinema theatre within the vicinity of the campus of the institute of culture learning 1013 and research like the Sammelan would be destructive of the environment and the atmosphere of the institute, and existence of a cinema theatre at such a place would be an incongruity.
May be, it might be the honest and genuine belief of the office bearers of the Sammelan that an institute of learning and research cannot co exist with a cinema theatre in its vicinity, and that the latter may pollute the educational and cultural environment The District Magistrate as the licensing authority after corresponding with the State authorities granted the certificate of approval on February 24, 1974.
On October 13, 1971, the Sammelan sent a communication addressed to the Chief Minister of U.P. in which it was stated that a cinema building should not be permitted to be constructed in the vicinity of the campus of the Sammelan.
The letter also refers to an earlier application addressed to the Chief Minister requesting him to intervene so that the proposed cinema house may not be permitted to be constructed near the campus of the Sammelan, because it is likely to cause nuisance and interfere with the activities and the academic environment of the Sammelan.
Further request was made in the letter that administrative sanction may be granted for acquisition of land on which the cinema building is proposed to be constructed offering that the Sammelan is ready to pay whatever compensation that may have to be paid for acquisition of the land and the building thereon.
The Ditrict Magistrate by his letter dated November 8, 1971 addressed to the Pradhan Mantri of the Sammelan pointed out that the Revenue Board had directed that no institution should be given land more than that required for its purpose and that where the land is to be acquired by a body, such a body itself must make an attempt to directly purchase the land.
Then comes a sentence which may be extracted: "It is also evident by your above referred letter that you stood in need of acquiring land because the owner of the land wants to construct a cinema house over it and the institution does not want that a cinema should be constructed over the same.
It is clear by the above circumstances that the land is not so much required by the institution as for the construction of the cinema house.
Therefore, I would request you to consider the matter and if your aim is that the cinema house is not constructed you may resort to other means." (underlining ours) 1014 In the meantime on December 16, 1971, Joint Secretary to the Government of U.P. wrote to the District Magistrate enquiring as to 'whether in granting the certificate of approval, Rule 7 (2) of the 1951 Rules was violated; What is the sphere of the activities of the Sammelan; does it undertake teaching or other such activities by virtue of which it may be placed in the category of Educational Institutions; if for some other reasons, construction of cinema house on proposed site is against public interest, seek Government 's approval in this respect specifying the reasons thereon; obtain written objections from the Sammelan; if required take Government 's approval making recommendations; and intimate whether cinema building will be sound proof. ' On March 24, 1972, the District Magistrate as the licensing authority sent a detailed reply inter.
alia stating that the Sammelan is not an educational institution nor a residential institution and it has no regular programme of class teaching and it cannot be styled as an educational institution within the meaning of the expression in rule 7.
He also opined that having regard to all relevant factors and other circumstances construction of a cinema building on the proposed site is not against the public interest.
He also opined that the approved plans of the building show an air conditioned sound proof cinema theatre which would enhance the beautification of the locality and would enrich the coffers of the State.
It was lastly pointed out that the distance between the proposed cinema building and the campus of the Sammelan was about 95 feet as crow fly measure.
He concluded by saying that having regard to all the circumstances, he was of the opinion that public interest in no way would be damaged if the permission is granted for construction of the cinema house in question on the proposed site, and that he was proceeding to grant permission to the applicant which is being forwarded to the Government.
After the receipt of the permission, the old existing building on Plot No. 26 was demolished by the petitioner and construction of a modern cinema theatre fully air conditioned and sound proof was commenced On August 7, 1983, the Sammelan moved a formal application requesting for initiating acquisition proceedings of land included in Plot No. 26 as it was needed by the Sammelan for the purpose of extension of Hindi Sangrahalya (Museum '.
Skipping over some of the intermediate steps including a request to the then 1015 Prime Minister to intervene and thwart the cinema project, when the first notification under Sec. 4 (1) was published, the purpose for which the land was to be acquired was shown to be 'extension of Hindi Sangrahalya at Hindi Sahitya Sammelan Prayag '.
Way back on July 22, 1949, the Sammelan with a view to establishing a museum in connection with a Hindi University approached the Allahabad Municipal Board to transfer a middle school building along with the Gymnacia attached to it.
The Municipal Board unanimously sanctioned the proposal to handover the building of the school with appurtenant land situated at Kanta Prasad Kakkar Road (that is the road on which the irritating cinema theatre has come up) to the Sammelan subject to the condition that the Sammelan would construct a school building at South Malaka at a cost of Rs. 30,000.
The Sammelan accepted the condition and complied with it.
The Government accorded sanction to the proposal on September 9, 1953 and since then the school building with the land over which it is standing and the Gymnacia were transferred to the Sammelan.
It is an admitted position that an area of 7315 sq.
Of land in the Sammelan campus is lying vacant, open and unutilised till today, that is for thirty two years.
This will have a direct impact on the alleged need of the Sammelan of the land propsed to be acquired.
At the time of taking over the school building, the Sammelan had contemplated putting up a museum.
That again is the purpose for which the land involved in this appeal is sought to be acquired at the instance of the Sammelan.
When this rather disturbing position emerged on analysis and evaluation of uncontroverted facts, it was suggested that the Sammelan wanted to construct a building for Natyashala and Rangmanch for which plans have not been prepared.
All these inconvenient facts found reflection in the order sheet of the Collector dated September 3, 1973 in which it is stated that "since the authorities of the Sammelan have capacity to approach the highest authority of the democratic Government as is evident from the letters received from their office, the office is not capable to offer any comments whatever might be the proposal whether it is according to the rules or against the rules or the same should be allowed to remain as it is etc.
" Later on the Sammelan stated that after the land is acquired, it would be utilised for implementation of some new schemes.
Thus though the Sammelan indisputably had and has open land in its possession from 1953 till 1973, it did not construct the museum for which it had obtained land from the 1016 Allahabad Municipal Board.
That apart it again moved the Government for acquiring the land of the petitioner under the pretext that it is needed for constructing a museum.
When the facts counter indicated the purported need, it came out with a suggestion that it proposed to construct Natyashala and Rangmanch.
One may in passing, a bit humourously note that Natyashala is a place where dramatic performances are staged and Rangmanch is a place where dances are performed.
The Sammelan would put up with them.
That would show that such performances would not be destructive of educational and cultural environment of the campus of the Sammelan but a modern air conditioned sound proof cinema building would.
We leave this without comment.
But as these proposals failed to carry conviction, its latest stand is that let the land come, they would devise schemes for its proper utilisation as and when the land is made available.
This demonstrates the hollowness of the alleged need and removes the veil thereby disclosing the real purpose for acquiring the land.
Mr. Kacker urged that quitting the quibbling so far resorted to, the Court may examine a forthright submisson that the Sammelan 's interest in getting the land acquired is not merely to construct Sangrahalya but it is equally if not more interested in not having a cinema theatre at the place where it is being constructed.
Shorn of embellishment, the Sammelan would not tolerate the theatre and therefore when it failed to thwart the grant of certificate of approval and cinema theatre came up, it took the second step to achieve the first mentioned object viz. seek acquisition of land to satisfy an imaginary or non existent need.
The challenge on the ground of legal mala fides to the validity of the notification under Sec. 4 (1), a preliminary step in the process of acquisition has to be examined, evaluated and answered in the backdrop of these facts.
It can be stated without fear of contradiction that need of the land for Sangrahalya is a figment of imagination conjured up to provide an ostensible purpose for acquisition.
There is enough land roughly admeasuring 7315 sq.
Lying vacant and unutilised with the Sammelan for over a quarter of a century.
The Sangrahalya has not come up though this was the land which was taken from the Municipal Board for the avowed object of putting up a Sangrahalya.
The Sammelan moved on to Rangamanch and Natyashala and then ultimately adopted a position that when the land is made available, 1017 schemes will be devised for its proper use.
Could it be said with confidence that the Sammelan was ever interested in acquiring the land for effectuating any of its objects.
It has neither the plans nor the wherewithals nor any specific object for which it needs land and it is unable to use over years the land already available at its disposal.
Therefore, Mr. Kacker took bold and to some extent an imaginative stand.
He said that in seeking acquisition of the land, the Sammelan is actuated by a desire not to have the cinema theatre in its vicinity or if it has come into existence, to do away with the same.
When these facts stare into the face, can it be said with confidence that the Government or the Collector in whom the power to acquire land is vested, exercised the power for the purpose for which it is vested or are they guilty of legal mala fides.
The High Court disposed of the contention by an over simplification of this tangled web of facts without making the least attempt at unearthing the real motives of the Sammelan The tell tale facts disclose motives and unravel hidden objects The High Court by passed them by simply observing that there is nothing on record to indicate that the Collector or the State Government are inclined to act against the petitioner for any improper motives.
The High Court unfortunately missed the real contention of legal mala fides, as also an important piece of evidence that the Collector on whom the statute confers power to initiate proceeding for acquisition himself was satisfied that Sammellan sought acquisition not because it requires the land but it wants to stop or do away with the cinema theatre.
This becomes evident from the letter of the District Magistrate dated November 8, 1971.
It is well settled that where power is conferred to achieve a certain purpose, the power can be exercised only for achieving that purpose.
Sec. 4 (1) confers power on the Government and the Collector to acquire land needed for a public purpose.
The power to acquire land is to be exercised for carrying out a public purpose.
If the authorities of the Sammelan cannot tolerate the existence of a cinema theatre in its vicinity, can it be said that such a purpose would be a public purpose ? May be the authority of the Sammelan may honestly believe that the existence of a cinema theatre may have the pernicious tendency to vitiate the equcational and cultural environment of the institution and therefore, it would like to wish 1018 away a cinema theatre in its vicinity.
That hardly constitutes public purpose.
We have already said about its proclaimed need of land for putting up Sangrahalya.
It is an easy escape route whenever Sammelan wants to take over some piece of land.
Therefore, it can be fairly concluded that the Sammelan was actuated by extraneous and irrelevant considerations in seeking acquisition of the land the statutory authority having known this fact yet proceeded to exercise statutory power and initiated the process of acquisition.
Does this constitute legal mala fides Where power is conferred to achieve a purpose it has been repeatedly reiterated that the power must be exercised reasonably and in good faith to effectuate the purpose.
And in this context 'in good faith ' means 'for legitimate reasons '.
Where power is exercised for extraneous or irrelevant considerations or reasons, it is unquestionably a colourableq exercise of power or fraud on power and the exercise of power is vitiated.
If the power to acquire land is to be exercised, it must be exercised bona fide for the statutory purpose and for none other.
If it is exercised for an extraneous, irrelevant or non germane consideration, the acquiring authority can be charged with legal mala fides In such a situation there is no question of any personal ill will or motive.
In Municipal Council of Sydney vs Compbell(1) it was observed that irrelevant considerations on which power to acquire land is exercised, would vitiate compulsory purchase orders or scheme depending on them.
In State of Punjab vs Gurdial Singh & Ors (2) acquisition of land for constructing a grain market was challenged on the ground of legal malafides Upholding the challenge this Court speaking through Krishna Iyer, J. explained the concept of legal malafides in his hitherto inimitable language, diction and style and observed as under: "Pithily put, bad faith which invalidates the exercise of power sometimes called colourable exercise or fraud on power and oftentimes overlaps motives, passions and satisfactions is the attainment of ends beyond the sanctioned purposes of power by simulation or pretension of gaining a legitimate goal.
If the use of the power is for the fulfilment of a legimate object the actuation or cataly (1) at 375.
(2) ; 1019 sation by malice is not legicidal.
The action is bad where the true object is to reach an end different from the one for which the power is entrusted, goaded by extraneous considerations, good or bad, but irrelevant to the entrustment.
When the custdian of power is influenced in its exercise by considerations outside those for promotion of which the power is vested the court calls it a colourable exercise and is undeceived by illusion.
In a broad, blurred sense, Benjamin Disraeli was not off the mark even in Law when he stated: "I repeat that all power is a trust that we are accountable for its exercise that, from the people, and for the people.
all springs, and all must exist." After analysing the factual matrix, it was concluded that the land was not needed for a Mandi which was the ostensible purpose for which the land was sought to be acquired but in truth and reality, the Mandi need was hijacked to reach the private destination of depriving an enemy of his land through back seat driving of the statutory engine.
The notification was declared invalid on the ground that it suffers from legal mala fides.
The case before us is much stronger, far more disturbing and unparalelled in influencing official decision by sheer weight of personal clout.
The District Magistrate was chagrined to swallow the bitter pill that he was forced to acquire land even though he was personally convinced there was no need but a pretence Therefore, disagreeing with the High Court, we are of the opinion that the power to acquire land was exercised for an extraneous and irrelevent purpose and it was colourable exercise of power, namely, to satisfy the chagrin and anguish of the Sammelan at the coming up of a cinema theatre in the vicinity of its campus, which it vowed to destroy.
Therefore, the impugned notification has to be declared illegal and invalid for this additional ground.
The validity of the impugned notification was also challenged on the ground that even though the acquisition is for the Sammelan, a company, the notification was issued without first complying with the provisions of rule 4 of the Land Acquisition (Companies) Rules, 1963.
The High Court has negatived this challenge.
We must frankly confess that the contention canvassed by Mr. Nariman in this behalf would necessitate an indepth examination of the contention.
However, we consider it unnecessary in this case to undertake this exer 1020 cise because the judgment of the High Court is being upheld for the additional reason that the acquisition in this case was mala fide.
Therefore, we do not propose to examine the contention under this head.
For the reasons which appealed to the High Court and for the additional reasons herein stated, the appeal preferred by the Collector and the District Magistrate and another fails and is dismissed while the appeal on the grant of special leave to the petitioner is hereby partly allowed to the extent herein indicated.
Substantially, the Civil Appeal No. 2458 of 1975 fails and is dismissed with no orders as to costs.
S.R. Appeal dismissed and Petition allowed.

Output:
Raja Ram Jaiswal along with the members of his family purchased land bearing plot No. 26 with a building thereon admeasuring 2978 sq.
situated at K.P. Kakkar Road in March 1971.
The plan for a sound proof air condition ed cinema theatre on the said plot submitted by him was sanctioned both by the District Magistrate and the local municipality in December, 1970 and thereafter he applied for a certificate of approval under Rule 3 read with Rule 7 (2) of the U.P. Cinematograph Rules.
1951 for construction of a Cinema theatre.
The Hindi Sahitya Sammelan which was initially formed as a voluntary organisation in 1910 and registered as a society under the Societies Registration Act on January 8, 1914 retaining the same name had earlier acquired and taken possession from the Allahabad Municipal Board land admeasuring 7315 sq.
and in which a municipal school was located for purpose of building "Sangrahalaya" or a museum cum library cum reading room.
However no museum has come up and the land lies vacant.
This Sammelan raised objections to the grant of a permit for the constructions of the cinema theatre as in its view a theatre and a research cum study center can go ill together.
Overruling the objections, the District Magistrate, the Licensing Authority under the U.P. Cinema (Regulation) Act, 1955 granted the requisite certificate of approval, on March 24, 1972, under Rule 3 which would in law imply that having regard to the provisions of the 1955 Act, and 1951 Rules, there was no legal impediment to the construction of a cinema theatre on plot No. 26.
Having failed to thwart the grant of certificate of approval, the Sammelan wrote a letter on October 13, 996 1971 for acquiring land bearing plot No. 26 admeasuring approximately 2865 sq.
On the ground that it was needed for a public purpose namely for extension of Hindi Sangrahalaya of Hindi Sahitya Sammelan Prayag.
This Notification was published in the U.P. Government Gazette on February 9, 1974.A notice under section 4 (1) bearing the same date was served upon the petitioner as also the same was published in the locality.
The petitioner challenged the validity of the notification on diverse grounds in Writ Petition No. 1932/74 and obtained interim stay of taking over possession.
In the meantime, by Notification dated February 6, 1975, the earlier Notification dated January 31, 1974 was cancelled and a fresh Notification was issued to acquire "land bearing No. 62 admeasuring 8265 sq yds." and published in the U.P. Gazette on February lc. 1975.
Consequently Writ Petition No. 1932174 was got dismissed as infructuous.
A notice dated March 6. 1975 under section 5 of the Land Acquisition Act was served upon the petitioner inviting him to file his objections, if any.
The petitioner filed detailed objections on March 8, 1975 inter alia contending that the acquisition is for a company and the pre requisite for acquisition for a company having not been carried out, the acquisition is had in law.
It was also contended that the petitioner is not the Owner of plot No. '2 admeasuring 8265 sq.
yds Promptly on March 13, 1975, a corringendum was issued and published in the Gazette on March 22, 1975 correcting the notification dated February 6, 1975 to read that instead of plot No. 62 Plot No. 26 be read and instead of area 8265 sq.
yds., 2865 sq.
be read.
The substance of Gazette the notifications dated 15.2.1975 March 22, 1975 were not published in the locality as required under section 4 (1).
Tn between the issue of the notification and the corrigendum, the petitioner filed Writ Petition 3174175 questioning the validity Or the notification dated February 6, 1975 and duly amending the grounds after issue of the corrigendum.
The High Court negatived the challenges namely, (a) that the Notification was bad for non compliance first with the provisions or the Land Acquisition ((Companies)) Rules, 1953; and (b) that the acquisition proceedings are malafide but quashed the impugned notification on the ground of failure to cause public notice of the substance of Notification under section 4 (1) to be published is the locality.
Hence the State appeal (CA No. 2458/80) by special leave and the Special Leave Petition No. 9019/80 by Raja Ram.
Dismissing the State appeal and allowing in part the Special Leave Petition.
the Court.
^ HELD: 1.
When the validity of a Notification is questioned on the ground of malafides, proper parties affected by such an allegation must be impleaded in the petition.
In this case, Sammelan 's application for intervention under Order XX Rule 3 of the Supreme Court Rules 1966 must be granted though the Sammelan has not moved this Court against the High Court 's order rejecting the application for impleading.
[1004D E] 2.1 It is true that ordinarily courts do not interfere at the stage of Sec.
4 notification because it merely constitutes a proposal which will be meticulously examined after the objections arc filed under Section SA by tho person interested 997 in the land wherein all aspects of the matter can be threadbare gone into and examined.
However, as a notification under section 4 (I) initiates the proceedings for acquisition of land and uses the expression 'shall ' the mandate of the legislature bcomes clear and therefore, the infirmities therein cannot be wholly overlooked on the specious plea that the courts do not interdict at the stage of a more proposal.
11006 G] 2.2 A bare perusal of section 4 (1) clearly shows that in order to comply with the statutory requirements therein set out, a notification stating 'therein the land which is needed or is likely to be needed for a public purpose has to be published in the official Gazette.
The second part of the sub section provides that 'the Collector has to cause public notice of the substance of 'such notification to be given at convenient places in the locality in which the land proposed to be acquired is situated.
Both the conditions are mandatory.
Unless both these conditions are satisfied, section 4 of the Land Acquisition Act cannot be said to have been complied with.
Nor can Court whittle down a mandate of legislation recognised by a long line of decisions solely depending upon the facts of a given case; as is herer Further after the 1974 (U.P. Amendment and Validation Act VIII of 1974), Section 4 (1) on its true interpretation may unmistakably indicate that where the enquiry under Section 5 A is not dispensed with by resorting to Sec.
17 (4), compliance with the second part of Section 4 would be mandatory.
[1006H, 1007A D, 1009D E] Khub Chand and Ors.
vs State of Rajasthan and Ors.
, [1967] I SCR 120 at 125; Babu Barkya Thakur vs The State of Bombay, [1961] I SCR 128: Smt.
Somavanti and Ors.
vs The Sf are of Punjab & Ors., ; State of Mysore vs Abdul Razak Sahib, [1973] I SCR 856 referred to.
Gangadharaih vs State of Mysore &: Ors., (1961) Mys.
L.J. 883 approved.
2.3 It is not correct assume that the sole purpose behind publication of substance of Notification in locality, as required secondly in section 4 (1) of the Land Acquisition Act is to make requirement of section 5 A 'functionally effective.
[1009G] Where a decision of the Government to be effective and valid has to be notified in the Government Gazette, the decision itself does not become effective unless a notification in the Official Gazette follows.
Therefore, assuming that a notification is a formal expression of a decision of the Government to acquire land, unless the decision is notified in the Government Gazette by an appropriate notification, the proceedings for acquisition cannot be said to have been initiated and the decision would remain a paper decision, Section 4 (1) further requires that 'the Collector shall cause public notice of the substance of such notification to be given at convenient places in the said locality ' The expression 'such notification ' in the latter part of Section 4(1) and sequence of events therein enumerated would clearly spell out that first the Government should reach a decision to acquire land, then publish a notification under section 4 (1) and simultaneously or within a reasonable time from the date of the publication of the notification cause a notice to be published containing substance of such notification meaning thereby that notification which is pub 998 lished.
Obviously, therefore, there cannot he a publication in the locality prior to the issuance of the notification.
[1010B G] Babu Barkya Thakur vs The State of Bombay, [1961] I SCR 128; Narendra Bahadur Singh and Anr.
vs State of U.P. & Ors, ; ; State of Madhya Pradesh & Ors.
vs Vishnu Prasad Sharma & Ors, ; held in applicable.
Mahendra Lal Jaini vs The State of Uttar Pradesh & Ors, [1963] Supp.
I SCR 912 relied on.
3.1 Where power is conferred to achieve a purpose the power must be exercise reasonably and in good faith to effectuate the purpose.
And in this context 'in good faith ' means for legitimate reasons.
Where it is exercised for extraneous or irrelevant consideration or reasons, it is unquestionably a colourable exercise of power or fraud on power and the exercise of power is vitiated.
If the power to acquire land is to be exercised, it must be exercised bona fide for the statutory purpose and for none other.
If it is exercised for an extraneous, irrelevant or non germane consideration, the acquiring authority can be charged with legal malafides.
In such a situation there is no question of any personal ill will or motive [1018C E] Municipal Council of Sydney vs Compbell, [1925] A.C. 338 at 375 quoted with approval.
State of Punjab vs Gurdial Singh & Ors, [1980] I SCR 1071 explained and followed.
3.2 Where power is conferred to achieve a certain purpose, the power can be exercised only for achieving that purpose.
Section 4(1) confers power on the Government and .
the Collector to acquire land Deeded for a public purpose.
The power to acquire land is (o be exercised for carrying out a public purpose.
If the authorities of the Sammelan cannot tolerate the existence of a cinema theatre in its vicinity it cannot he said that such a purpose would be a public purpose.
The authority of the Sammelan may honestly believe that the existence of a cinema theatre may have the pernicious tendency to vitiate the educational and cultural environment of the institution and therefore.
it would like to wish away a cinema theatre in its vicinity.
That hardly constitutes public purpose.
The proclaimed need of land for putting up Sangrahalya is an easy escape route whenever Sammelan wants to take over some piece of land.
Need of the land for Sangrahalya is a figment of imagination consured up to provide an ostensible purpose for acquisition.
There is enough land roughly admeasuring 7315 sq.
Lying vacant and unutilised with the Sammelan for over a quarter of a century.
The Sangrahalya has not come up though this was the land which was taken from the Municipal Board for the avowed object of putting up a Sangrahalya.
The Sammelan moved on to Rangamanch and Natyashala and then ultimately adopted a position that when the land is made available, scheme will be devised for its proper use.
The Sammelan was ever interested in acquiring the land for effectuating any of its objects.
It was neither the plans nor the wherewithal nor any specific object 999 for which it needs land and it is unable to use over years the land already available at its disposal.
Therefore, the Sammelan was actuated by extraneous and irrelevant considerations in seeking acquisition of the land and the statutory authority having, 'known this fact yet proceeded to exercise statutory pwoer and initiated the process of acquisition.
[1017F H, 1018A B] 3.3 The power to acquire land was a exercised for an extraneous and irrelevant purpose and it was colourable exercise of power, namely, to satisfy the chagrin and anguish of the Sammelan at the coming up of a cinema theatre in the vicinity of its campus, which vowed to destroy.
There fore, the consideration dated 6 2.1975 is illegal and invalid.
[1019E F]


Input:
vil Appeals Nos. 700 to 703 of 1965.
Appeals by special leave from the judgment and order dated March 27, 1964 of the Allahabad High Court in Civil Misc.
Writs Nos. 3302, 3381, and 3382 of 1963.
Sukumar Mitra, S.K. Aiyar, R.H. Dhebar and B.D. Sharma, for the ,appellant (in all the appeals).
M.C. Chagla, S.C. Manchanda, P.N. Pachauri, P.N. Duda and D.N. Mukherjee, for respondent No. 1 (in C.A. No. 700 of 1965).
S.C. Manchanda, P.N. Pachauri, P.N. Duda and D.N. Mukherjee for respondent No. 1 ' (in C.A. No. 701 of 1965).
S.C. Manchanda, P.N. Pachauri, S.M. Jain and B.P. Maheshwari, for respondent No. 1 (in C.As.
702 and 703 of 1965).
The Judgment of the Court was delivered by Shah, J.
M/s. Seth Brothers run a flour mill in the name and style of "Imperial Flour Mills".
From April 1, 1953 to March 1956 the business was carried on by M/s. Seth Brothers, of which the partners were Baikunth Nath and Vishwa Nath.
Between March 1956 and March 31, 1957, the business was carried on by Baikunth Nath, Vishwa Nath, Dr. Manmohan Nath, Mrs. Rama Rahi and Mrs. Sushila Devi.
On April 7, 1957 Mrs. Prem Lata was admitted as a partner.
The partners were engaged in carrying on other businesses in the names of Seth Brothers (Private) Ltd., Nath Brothers (Private) Ltd., and Meerut Cold Storage and General Mills.
The owners of the business were, year after year, assessed to income tax in respect of the income arising in the course of the business.
On March 14, 1963 the Income tax Officer, Meerut issued a notice under section 148 of the Income tax Act, 1961, intimating M/s. Seth Brothers that there was reason to believe that their income chargeable to tax had escaped assessment and it was proposed to reassess this income for the assessment year 1954 55.
In response to the notice Baikunth Nath and Vishwa Nath flied a return under protest.
In the meantime information was received by the Income tax Commissioner, U.P., that M/s. Seth Brothers were maintaining "duplicate records" and were evading assessment of their true income and that it was necessary to seize the records which may be found at "Shanti Niketan," Meerut in which M/s. Seth Brothers carried on the business of Imperial Flour Mills and other business.
The Commissioner of Income tax, U.P., on May 29, 1963 drew up a memorandum that on a report of the Income tax Officer, D Ward,, Meerut requesting for 604 authorisation under section 132 of the Income tax Act, 1961, to.
enter and search the premises of M/s. Seth Brothers, he was satisfied about the need for the issue of the authorisation.
The Commissioner also issued an order in Form 45 prescribed under Rule 112 of the Income tax Rules, 1962, authorising two Income tax Officers R. R. Agarwal and R. Kapoor to enter the premises known as "Shanti Niketan", at Meerut and to search for and seize such books and documents as may be considered relevant or useful for the purpose of the proceeding of reassessment, and to place identification marks thereon and to convey them to the Income tax Office.
On the. 7 and 8 of June, 1963 the premises described in the order were searched and account books and certain documents found therein were seized and were carried to the Income tax Office.
M/s. Seth Brothers then moved a petition in the High Court of Allahabad, for an order quashing the proceedings of the Income tax authorities.
Petitions were also filed by Nath Brothers (Private) Ltd., Seth Brothers (Private) Ltd. and Seth Brothers, Meerut for the same relief.
By these petitions they claimed writs of certiorari quashing the letters authorising search of the premises at Shanti Niketan, and writs of mandamus directing the Income tax Officer to return all the books, papers and articles seized during the search and for writs of prohibition restraining the Income tax Department from using any information gathered as a result of the search.
It was submitted by the petitioners that K.L. Ananda, Income tax Officer and Satya Prakash an "ex employee" of M/s. Seth Brothers had given false information to the Deputy Director of Inspection with a view to blackmail the partners of M/s. Seth Brothers, and that the order of search was made by the Commissioner of Income tax at the direction of the Deputy Director of Inspection, that the action of the Income tax Officer in searching the premises and in seizing the books of account was malicious and that in any event section 132 of the Income tax Act, 1961, and the rules framed thereunder, were violative of the fundamental freedoms guaranteed by articles 14, 19(1)(f) & (g) and 31 of the Constitution.
Affidavits were filed on behalf of M/s. Seth Brothers.
It was affirmed that "the so called duplicate records" seized by the Income tax Officer were copies of the books of account and that action had been taken by the Commissioner of Income tax, not on his own initiative but at the behest of the Directorate of Inspection.
In reply to the contentions raised by the assessees several affidavits sworn by Officers of the Income tax Department were filed.
The Commissioner of Income tax stated in his affidavit that before issuing letters of authorisation and the warrant of search he was satisfied that it was necessary to take action 605 under section 132 of the Indian Income tax Act, 1961, and that the letters of authorisation were not issued at the direction of the Directorate of Inspection.
The Income tax Officers stated that in consequence of the search a large number of "duplicate account books and records" maintained by M/s. Seth Brothers were recovered, that the search was carried out according to law and in the presence of two of the partners of the firm and their advocates, that all the documents seized were relevant for the purpose of reassessment, that there was close connection between the different business activities of the partners of M/s. Seth Brothers and that all the documents which were seized were in relation to those activities.
The Deputy Director of Inspection in his affidavit stated that he did not give any direction to the Commissioner to issue authorization for search and seizure.
The High Court of Allahabad held on a consideration of the averments made in the affidavits filed on l behalf of M/s Seth Brothers and the revenue that "there was reason to believe" that instructions were issued by the Directorate of Inspection for a general raid and seizure of all account books and papers which may be found at the premises of the firm; that some out of the documents seized by the Income tax Officers were irrelevant for the purpose of any proceeding under the Act: that besides the documents belonging to M/s Seth Brothers the Income tax Officers seized documents relating to the transactions of the allied concerns; that marks of identification were not placed on certain documents at the time they were seized; that the documents seized were detained by the Income tax Officer for more than two months; and that the police force employed during the raid was excessive.
The High Court concluded: "It is true that there was no iII will between the . (partners of Seth Brothers) on one side and respondent Nos. 1, 3 and 4 (Commissioners of Income tax, U.P. & Punjab and Income tax Officer, Special Investigation Circle A, Meerut) on the other side.
But the extent of the seizure was far beyond the limits of section 132 of the Act.
The action was mala fide in the sense that, there was abuse of power conferred on Income tax Officers by section 132 of the Act.
The act being main fide, the proceedings .should be quashed by this Court by issuing a writ of mandamus.
" The Income tax Officer, S.I. Circle has appealed to this Court with special leave.
Section 132 as originally enacted by Act 43 of 1961 was substituted by a modified provision by the Finance Act of 1964 which in its turn was replaced by section 1 of the Income tax (Amendment) Act, 1965.
By section 8 of that Act it was provided, inter alia, 606 that any search of a building or place by an .
Income tax Officer purported to have been made in pursuance of sub section
(1) of section 132 of the principal Act shall be deemed to have been made in accordance with the provisions of that sub section as amended by the Act of 1965 as if those provisions were in force on the day the search was made .
The relevant part of section 132 as substituted by the Income tax (Amendment) Act, 1965 may, there.fore, be set out: "132.
Search and seizure. (1) Where the Director of Inspection or the Commissioner, in consequence of information in his possession, has reason to believe that (a) any person to whom a summons under sub section (1) of section 37 of the Indian Income tax Act,1922 (XI of 1922), or under sub seCtion (1) of section 131 of this Act, or a notice under sub section (4) of ' section 22 of the Indian Income tax Act, 1922,or under sub section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice, or (b) any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books of account or other documents.
which will be useful for, or relevant to.
, any proceeding under the Indian Income tax Act, 1922 (XI of 1922), or under this Act, or (c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been disclosed for the purposes of the Indian Income tax Act, 1922 (XI of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property), he may authorise any Deputy Director of Inspection, Inspecting Assistant Commissioner, Assistant Director of Inspection or Income tax Officer (hereinafter referred to as the authorised officer) to (i) enter and search any building or place where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept; 607 (ii) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (i) where the keys thereof are not available; (iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search; (iv) place marks of identification on any books of account or other documents or make ' or cause to be made extracts or copies therefrom; (v) make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing.
(2) The authorised officer may requisition the services of any police officer or of any officer of the Central Government or of both, to assist him for all or any of the purposes specified in sub section (1) and it shall be the duty of every such officer to comply with such requisition.
(3) The authorised officer may, where it is not practicable to seize any such books of account, other document, money, bullion, jewellery or other valuable article or thing, serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it except with the previous permission of such officer and such officer may take such steps as may be necessary for ensuring compliance with this sub section.
. . . . . . (8) The books of account or other documents seized under sub section (l ) shall not be retained by the authorised officer for a period exceeding one hundred and eighty days from the date of the seizure unless the reasons for retaining the same are recorded by him in writing and the approval of the Commissioner for such retention is obtained: Provided (13) The provisions of the Code of Criminal Procedure, 1898 (V of 1898), relating to searches and seizures shall apply, so far as may be, to searches and seizure under sub section (1).
" 608 The Central Board of Direct Taxes has, in exercise of the power conferred by section 295(1) of the Act, framed r. 112 prescribing the procedure to be followed by the Commissioner and the authorised officers.
The Commissioner or the Director of Inspection may after recording reasons order a search of premises, if he has reason to believe that one or more of the conditions in section 132(1) exist.
The order is in the form of an authorization in favour of a subordinate departmental officer authorising him to enter and search any building or place specified in the order, and to exercise the powers and perform the functions mentioned in section 132 (1 ).
The Officer so authorised may enter any building or place and make a search where.
he has reason to believe that any books of account or other documents which in his opinion will be useful for, or relevant to any proceeding under the Act, may be found.
The Officer making a search may seize any books of account or other documents and place marks of identification on any such books of account or other documents or make or cause to be made extracts or copies therefrom and may make an inventory of any articles or things found in the course of any search which in his opinion will be useful for, or relevant to.
any proceeding under the Act, and remove them to the Income tax Office or prohibit the person in possession from removing them.
He may also examine on oath any person in possession of or control of any books of account or documents or assets.
The section does not confer any arbitrary authority upon the Revenue Officer.
The Commissioner or the Director of Inspection must have, in consequence of information, reason to believe that the statutory conditions for the exercise of the power to order search exist.
He must record reasons for the belief and he must issue an authorization in favour of a designated officer to search the premises and exercise the powers set Out therein.
The condition for entry into and making search of any building or place is the reason to believe that any books of account or other documents which will be useful for, or relevant to, any proceeding under the.
Act may be found. ' If the Officer has reason to believe that any books of account or other documents would be useful for, 0r relevant to, any proceedings under the Act, he is authorised by law to seize those books of account or other documents, and to.
place marks of identification therein, to make extracts or copies therefrom and also to make a note or an inventory of any articles or other things found in the course of the search.
Since by the exercise of the power a serious invasion is made upon the rights, privacy and freedom of the tax payer, the power must be exercised strictly in accordance with the law and only for the purposes for which the law authorizes it to.
be exercised.
If the action of the Officer issuing the authorization, or of the designated 609 Officer is challenged the Officer concerned must satisfy the Court about the regularity of his action.
If the action is maliciously taken or power under the section is exercised for a collateral purpose, it is liable to be struck down by the Court.
If the conditions for exercise of the power are ' not satisfied the proceeding is liable to be quashed.
But where power is exercised bona fide, and in furtherance of the statutory duties of the tax officers any error of judgment on the part of the Officers will not vitiate the exercise of the power.
Where the Commissioner entertains the requisite belief and for reasons recorded by him authorises a designated Officer to enter and search premises for books of account and documents relevant to or useful for any proceeding under the Act, the Court in a petition by an aggrieved person cannot be asked to substitute its own opinion whether an order authorising search should have been issued.
Again, any irregularity in the course of entry, search and seizure committed by the Officer acting in pursuance of the authorisation will not be sufficient to vitiate the action taken, provided the Officer has in executing the authorisation acted bona fide.
The Act and the Rules do not require that the warrant of authorisation should specify the particulars of documents and books of account: a general authorisation to search for and seize documents and books of account relevant to.
or useful for any proceeding complies with the requirements of the Act and the Rules.
It is for the Officer making the search to exercise his judgment and seize or not to seize any documents or books of account.
An error committed by the Officer in seizing documents which may ultimately be ' found not to be useful for or relevant to the proceeding under the Act will not by itself vitiate the search, nor will it entitle the aggrieved person to an omnibus order releasing all documents seized.
The aggrieved party may undoubtedly move a competent Court for an order releasing the documents seized.
In such a proceeding the Officer who has made the search will be called upon to prove how the documents seized are likely to be useful for or relevant to a proceeding under the Act.
If he is unable to do so, the Court may order that those documents be released.
But the circumstance that a large number of documents have been seized is not a ground for holding that all documents seized are irrelevant or the action of the Officer is mala fide.
By the express terms of the Act and the Rules the Income tax Officer may obtain the assistance of a police officer.
By sub section
(13) of section 132 the provisions of the Code of Criminal Procedure, 1898, relating to searches apply so far as may be, to searches under section 132.
Thereby it is only intended that the officer concerned shall issue the necessary warrant, keep present respectable persons of the locality to witness the search, and generally carry out the search 610 in the manner provided by the Code of Criminal Procedure.
But sub s.(2) of section, 132 does not imply that the limitations prescribed by section 165 of the Code of Criminal Procedure are also incorporated therein.
In Income tax Officer, A Ward, Agra & Others vs Firm Madan Mohan Demma Mal and Another(1), it was observed that the issue of a search warrant by the Commissioner is not a judicial or a quasi judicial act and even if the Commissioner is enjoined to issue a warrant only when in fact there is information in his possession in consequence of which he may form the necessary belief, the matter is not thereby subject to scrutiny by the Court.
Section 132 of the Income tax Act does not require specific mention by description of each particular document which has to be discovered on search: it is for the Officer who is conducting the search to decide whether a particular document found on search is relevant for the purpose or not.
That statement of the law, in our judgment, accurately states the true effect of section 132.
The mere fact that it may ultimately be found that some document seized was not directly relevant to any proceeding under the Act or that another officer with more information at his disposal may have come to a different conclusion will not be a ground for setting aside the order and the proceeding for search and seizure.
The authorisation issued by the Commissioner was, in the view of the High Court, open to challenge on the ground that the Commissioner did not apply his mind to the existence of circumstances which justified the exercise of the power to issue authorisation.
The action of the Income tax Officers who.
searched the premises was quashed on the ground that they seized some documents which were irrelevant to the process of reassessment.
In our judgment, in reaching their conclusion that the Commissioner acted at the behest of the Director of Inspection, the High Court ignored important evidence on the record.
It was averred in the petition of M/s Seth Brothers that "(56) It appears that the Deputy Director of Inspection at the instigation of Shri K.L. Nanda and Sri Satya Prakash, without making any enquiries or having any material, 'ordered a raid for search and seizure of all ,the account books and papers, which could be found.
(57) That, according to such directions of the Directorate, the Commissioner of Income tax, U.P. Lucknow, was made to issue authorisations under section 132 of the Act of 1961 in favour of opposite Parties Nos. 3 and 4 to search out the (1) 611 premisses of Shanti Nikethan ',Civil Lines, Meerut, premises of 'Shanti Niketan 'and to seize the account 'books, documents and papers, which could be recovered therefrom.
. . . . . .
The High Court observed that even though a number of affidavits were ' filed by the Income tax authorities, no reference to paragraph 56 of the writ petition was made and the "only affidavit filed by Shri A.L.Jha, Commissioner of Income tax was vague in the extreme".
The allegation in paragraphs 56 & 57 of the writ petition made no definite allegation.
that the Commissioner of Income tax acted at the behest of the Deputy Director of Inspection and not on his own satisfaction reached in consequence of information in his possession.
In the verification clause Baikunth Nath stated that the contents of paragraph 57 were true on information received from Deputy Director of Inspection (Investigation), Income tax, Central Revenue Buildings, New Delhi.
but said nothing about the contents of paragraph 56.
The 'affidavits filed on behalf of the Income tax Department specifically denied the allegations made in paragraphs 56 & 57.
R. R. Agarwal (one of the Income tax Officers authorised to conduct the search) in his affidavit affirmed that the letter of authorisation was issued to him by the Commissioner of Income tax, U.P. Lucknow, after the Commissioner had been satisfied on the report submitted by the deponent.
The Commissioner of Income tax, Mr. A.L. Jha, by his affidavit denied that letters of authorisation were issued under the directions of the Deputy Director of Inspection or anybody connected with Directorate.
He also stated that in respect of the case of M/s. Seth Brothers some information was brought to him by the Directorate and that information corroborated the report made to him by Mr. R.R. Agarwal and that after taking into consideration all those materials he was satisfied that a search of the premises of M/s. Seth Brothers "was called for" and that he issued the impugned letters of authorisation.
Mr. R.V. Ramaswamy, Deputy Director of Inspection (Investigation) in paragraph 6 of his affidavit denied that the raid or search of the premises of M/s. Seth Brothers was ordered by him.
The affidavit of R. Kapur, Income tax Officer, Special Investigation Circle, who was authorised by the Commissioner of Income tax to make the search is also relevant.
Mr. Kapur averred that some information was received by Mr. R.R. Agarwal from which it appeared that the firm of M/s. Seth Brothers and its partners were "evading tax by maintaining duplicate sets of accounts" and by suppressing relevant documents and papers 612 from the Department; that Mr. R.R. Agarwal made a written request to the Commissioner of Income tax for letters of authorisation in order to carry out the search of the assessee 's premises and in pursuance thereof on May 29, 1963 the Commissioner of Income tax issued three authorisation letters, two in favour of Mr. R.R. Agarwal and one in favour of the deponent authorising them to, carry out the search in accordance with the terms of the 'authorisation letters.
In this state of the record we are unable to agree with the High Court that the letters of authorisation were issued by the Commissioner of Income tax at the direction of the Director of Inspection (Investigation).
The attention of the Court was presumably not invited to the relevant paragraphs of the 'affidavits of the Officers concerned.
It is true that a large number of documents were seized from the premises of M/s. Seth Brothers but that has by itself no direct beating on the question whether the Income tax Officer acted mala fide.
If the Income tax Officer in making 'a search had reason to believe that any books of account or other documents useful for, or relevant to, any proceeding under the Act may be found, he may make a search for and seize those 'books of account 'and other, documents.
Some books, maps of the cold storage, assessment returns, and doctor 's prescriptions were seized by the Income tax Officer.
It appears, however, from the inventory that a large number of documents which related to the business of the assessees and their allied concerns were also seized.
It would be impossible merely from the circumstance that some of the documents may be shown to have no clear or direct relevance to any proceeding under the Act that the entire search and seizure was made not in bona fide discharge of official duty but for a collateral purpose.
The suggestion that the books of 'account and other documents which could be taken possession of should only be those which directly related to the business carried on in the name of M/s. Seth Brothers has, in our judgment, no substance.
The books of account and other documents in respect of other businesses carried on by the partners of the firm of the assessees would certainly be relevant because they would tend to show interrelation between the dealings 'and supply materials having a bearing on the case of evasion of income tax by the firm.
We are unable to hold that because the Income tax Officers made a search for and seized the books .of account and documents in relation to business carried on in the names of other firms and companies, the search and seizure were illegal.
It is also said that marks of identification were not placed on several documents.
Assuming that this allegation is true, in the absence of anything to show that the documents were ' either re 613 placed or tampered with, that irregularity will not bY itself supply a ground for holding that the search was mala fide.
A delay of two months in issuing a notice calling for explanation is also not a ground for holding that the action was taken for a collateral purpose.
It is not disputed that 'assistance of the, police may be obtained in the course of a search.
The High Court has, however, found that the police force employed was excessive.
But we are unable to hold that on the evidence, in keeping police officers present at the time of the search in the house of influential businessmen to ensure the protection of the officers and the record, "excessive force was used.
" We accordingly see no good grounds to accept the finding recorded by the High Court that the manner in which the search and seizure were conducted "left no room for doubt that the Income tax Officer did not apply his mind and formed no opinion regarding the relevancy or usefulness of the account books and documents for any proceedings under the Income tax Act." The High Court accepted that the correctness of the opinion actually formed by the Income tax Officer .was no.t open to scrutiny, in a writ petition, but in their view no opinion was in fact formed by the Officer and the search and seizure of documents and books of account must on that account be held as made in excess of the powers conferred upon the Income tax Officer and mala fide.
For these observations we find no warrant.
The Income tax Officers concerned have sworn by their affidavits that they did in fact form the requisite opinion under section 132 of the Act and the other evidence and the circumstances do not justify us in discarding that assertion.
These proceedings were brought before the High Court by way of a writ petition under article 226 of the Constitution before any investigation was made by the Income tax Officers pursuant to the action taken by them.
In appropriate eases a writ petition may lie challenging the validity of the action on the ground of absence of power or on a plea that proceedings were taken maliciously or for a collateral purpose.
But normally the High Court in such a ease does not proceed to determine merely on affidavits important issues of fact especially where serious allegations of improper conduct are made against public servants.
The Income tax Officers who conducted the search asserted that they acted in good faith in discharge of official duties and not for any collateral purpose.
The Commissioner of Income tax also denied that he acted at the direction of the Deputy Director of Inspection and that case was supported by the Deputy Director of Inspection.
If the ,learned Judges of the High Court were of the view that the question was one in respect of which an investigation 614 should be made in a petition for the issue of a writ, they should have directed evidence to be taken viva voce.
The High Court could not, on the assertions by the partners of the firm which were denied by the Income tax Officer, infer that the premises of M/s. Seth Brothers were searched and documents were seized for a collateral purpose, merely from the fact that many documents were seized or that on some of the documents seized marks of identification were not put or that the documents belonging to the "sister concerns" of the "Imperial Flour Mills" were seized.
In our view the decision of the High Court that the action of the Commissioner of Income tax, U.P., and the Income tax Officers who purported to act in pursuance of the letters of authorisation was mala fide, cannot be accepted as correct.
Counsel for M/s. Seth Brothers contended that opportunity may be given to the assessees to lead evidence viva voce to prove that the revenue officers acted for a collateral purpose.
We do not entertain this request since we propose to remand the case to the High Court to decide questions which have not been decided.
The applicants, if so advised, may move the High Court for leave to lead evidence.
It is for the High Court to decide whether at this stage after nearly six years leave to examine witnesses should be granted.
The order passed by the High Court is set aside and the proceeding is remanded to the High Court.
The High Court will deal with and dispose of the proceeding according to law.
We may observe that counsel for the Income tax Officer did not invite us to decide the question of the vires of section 132 of the Income tax Act on which the High Court has expressed no opinion.
M/s. Seth Brothers and the other petitioners in the High Court will pay the costs of these appeals in this Court.
There will be one hearing fee.
Costs in the High Court will be costs in the petition.
V.P.S. Appeals allowed and case remanded.

Output:
Under section 132 of the Income tax Act, 1961, the Commissioner of Income tax or the Director of Inspection may, after recording reasons, order the search of premises if he has reason to believe that one or more of the conditions in section 132(1) exist.
The officer authorised may enter any place and make a search where he has reason to believe that books or documents relevant to any proceeding under the Act may be ,found.
He may seize any books or documents and place marks of identification on them, and may remove them to the income tax office.
By the express terms of the Act and the Income tax Rules, the officer designated to make the search may obtain the assistance of the police.
The Income tax Officer issued notice to the respondent firm that its income chargeable to tax had escaped assessment and that it was proposed to reassess the income.
He also gave information to the Commissioner of Income tax that the respondent was maintaining duplicate records for evading assessment of the true income and requested the Commissioner for authorisation under section 132 to enter and search the premises where the respondent was carrying on business.
The Commissioner recorded his reasons and issued an order in the prescribed form authorising two Income tax Officers to enter the premises, to search for and seize such books and documents as may be considered relevant or useful for the purpose of reassessment, and to place identification marks thereon and to convey them to the income tax office.
The premises were accordingly searched and the account books and certain documents found therein were seized and carried to the income tax office.
Petitions were filed in the High Court for writs of certiorari for quashing the proceedings of the Income tax authorities, and consequential reliefs.
The High Court granted the writs on the grounds: (1) that the order of search was made by the Commissioner at the direction of the Directorate of Inspection and without satisfying himself about the existence of circumstances justifying search; (2) that besides the documents belonging to the respondent the Income tax Officers seized documents relating to the transactions of their allied concern which documents were irrelevant to the process of reassessment of the respondent; (3) that marks of identification were not placed on certain documents at the time they were seized; (4) that the documents seized were detained by the Income tax Officer for more than two months; and (5) that the police force employed during the raid was excessive.
In appeal to this Court, HELD: (1) The Commissioner stated in his counter affidavit that before issuing the authorisation he was satisfied that it was necessary to take action under section 132 and that the authorisation was not issued at the 602 direction of the Directorate of Inspection.
The Deputy Director of Inspection also stated in his affidavit that he never gave any direction to the Commissioner to issue authorisation for search and seizure.
Therefore, in reaching the conclusion that the Commissioner acted at the behest of the Director of Inspection, the High Court was in error, because, having held that the correctness of the opinion formed by the income tax authorities was not open to scrutiny in a writ petition the High Court acted on mere affidavits and accepted the assertions of the respondents which were specifically denied by the Revenue authorities.
[612 B C; 613 D; 614 A B] (2) Since the power conferred, though not arbitrary, is a serious invasion upon the rights and privacy of the tax payer, the power must be strictly exercised in accordance with law and only for the purposes for which the law authorises it to be exercised.
If the action of the officer issuing the authorisation or of the officer designated to make the search is challenged, they must satisfy the court about the regularity of the action taken.
If the action is maliciously taken or for a collateral purpose it is liable to be struck down.
But where the power is exercised bona fide and in furtherance of the statutory duties of the Revenue Officers any error of judgment on the part of the officers will not vitiate the exercise of the power.
The Act and the Rules do not require that the authorization should specify the particulars of documents and books of account; a general authorisation to search for and to seize documents and books of account relevant to or useful for the proceeding under the Act complies with the requirements of the Act and the Rules.
It is for the officer making the search to exercise his judgment and seize or not to seize any documents or books of account.
An error committed by the officer in seizing documents which may ultimately be found not to be useful for or relevant to the proceeding will not by itself vitiate the search, nor will it entitle the aggrieved person to an omnibus order releasing all documents seized.
[608 G H; 609 A F] In the present ease, therefore, merely because a large number of documents, some of which related to the concerns allied to the respondent firm, were seized, it could not lead to the inference that the search and seizure were for a collateral purpose.
On the contrary, the books of account and the documents in respect of other businesses carried on by the partners of the respondent firm through the allied firms would be relevant, because, they would show inter relation between the dealings and supply materials having a bearing on the case of evasion of income tax by the respondents.
Therefore, the search and seizure were not illegal or mala fide.
[609 G; 612 F ]H Income tax Officer, A ward, Agra vs Firm Madan Mohan, , approved.
(3) Assuming that marks of identification were not placed On some documents, it was a mere irregularity and, unless the documents were shown to be tampered with, would not make the search and seizure mala fide.
[612 H] (4) A delay of two months in issuing a notice calling for explanation is also not a ground for holding that the action was taken for a collateral purpose.
[613 A B] (5) Keeping police officers present at the time of search in the house of influential businessmen to ensure the protection of the officers and the record, would not be a case of excessive use of force.
[613 B C]