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ption that the profits would be diminished or greatly reduced ' it could not be held that there was any infringement of article 19(1)(g).
[57 A D] (iii) Under Act XVI of 1952 as amended by Act X of 1958 the Government could grant exemption from payment of tax, by means of a notification, in respect of any motor vehicle running in a particular area, and such an exemption was given to the operators in the Telengana region 53 for the reason that before the extension of the Act XVI of 1952 to this area no tax similar to the ,one levied under that Act was payable in that area and that this exemption was granted under a different enactment.
Therefore, the challenge Under article 14 could not succeed.
[58 A C] No question of discrimination arose when taxes were being imposed under two different sets of laws in different States or geographical areas The laws in Madras and Andhra Pradesh were different and persons having primary permits from Madras were naturally governed by the laws operating in that State.
[58] & CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 69, 112 and 113 of 1968.
Appeal from the judgment and order dated October 25, 1962 of the Andhra Pradesh High Court in Writ Petitions Nos.
1307, 1305 and 1353 of 1961.
K. Srinivasamurthy and Naunit Lal, for the appellants (in all the appeals).
P. Ram Reddy and P. Parmeshwara Rao, for the respondent No. 1 (in all the appeals).
The Judgment of the Court was delivered by Grover, J.
These appeals by certificate from a judgment of the Andhra Pradesh High Court which disposed of several petitions under article 226 of the Constitution including the petitions filed by the appellants involve the question of the constitutionality of the Andhra Pradesh Motor Vehicles (Taxation of Passengers and Goods Amendment and Validation) Act, 1961, Andhra Pradesh Act XXXIV of 19 61.
The appellants hold permits either for stage carriage or for public.
carriers issued under the .
They ply these vehicles on different routes in the State as also on some of the inter State routes.
They were subject to tax levied under the Madras Motor Vehicle Taxation Act, 1931.
1952 the Madras Motor Vehicles (Taxation of Passengers and Goods) Act, 1952 (Act XVI of 1952) was enacted by which every operator had to pay Rs. 12.50 per seat per quarter or 37 naye paise per seat per mile over and above the tax payable under the Madras Motor Vehicles Taxation Act, 1931.
Under that Act the operators were paying tax of Rs. 30 per seat per quarter.
The validity of Act 16 of 1952 was challenged before the Madras High Court.
In Mathurai Pillai vs The State of Madras(1) its validity was upheld except as to.
the proviso to section 3 of the Act.
After the formation of Andhra Pradesh State the Governor promulgated an Ordinance amending Madras Act 16 of 1952 in the light of the (1) (1954) I.M.L.J. 110.
54 above judgment.
The provisions contained in the Ordinance were subsequently reenacted as President 's Act 11 of 1954.
The operators, therefore, paid taxes imposed under Act 16 of 1952 as amended in the State of Andhra Pradesh.
By means of Act 21 of 1959 the legislature of Andhra Pradesh amended Act 16 of 1952.
Section 3 of Act 16 of 1952 as amended read as follows: "In cl.
(a) of sub rule (i) of rule 1 in the schedule to the Principal Act, for the words 37 np.
per seat per year per mile the words Rs. 1.48 np.
per seat per year per mile and for the words Rs. 12.50 np.
per seat per quarter the word Rs. 50/ per seat, per quarter shall be substituted and cl.
(b) of the said Sub rule for the words Rs. 22.50 np.
per month the words Rs. 45/ per month shall be substituted." The validity of the Amending Act 21 of 1959 was challenged by means of writ petitions before the High Court.
A Division Bench.
struck down the impugned provisions as unconstitutional and ultra vires on the ground that since that Act imposed a restriction on the operators ' freedom of trade and commerce under article 301 of the Constitution the previous sanction of the President was necessary under the proviso to article 304(b) and because that had not been obtained the Act was legally inoperative: Venson Transport vs The State of Andhra Pradesh(1).
Subsequently Act 34 of 1961 was enacted after the sanction of the President was obtained to the Bill under the proviso to article 304(b).
It validated two acts, namely, Act 21 of 1959 and Act 22 of 1959 and also amended Act 16 of 1952 and substituted sub section
(3) of section 3 of that Act by a new sub section.
It further validated the realisation of the tax paid or payable and the fee paid or payable and other action taken under Act 21 of 1959 and Act 22 of 1959.
It empowered the Government to levy additional tax at the rate of Rs. 50/ per seat per quarter from May 8, 1959 to January 16, 1961.
Thereafter from January 17, 1961 to November 3, 1961 the rate was fixed at Rs. 12.50 per seat per quarter.
After the commencement of the Validating Act 34 of 1961 the rate was to be Rs. 37.50 per seat per quarter.
This was to be operative till April 1, 1962 when the Act would cease to have any effect.
The validity and constitutionality of Validating Act 34 of 1961 were challenged by means of various petitions under article 226 of the Constitution.
It was sought to be contended before the High Court that the impugned legislation was not regulatory in character.
The sole object was to augment the revenues of the State.
This brought the statute within the mischief of article (1) [1961] I. An.
W.R. 351.
55 301 of the Constitution.
The High Court was of the view that the question whether the statute was regulatory or compensatory was relevant in the context of Part XIII of the Constitution only in the event of non compliance with the proviso to article 304(b) of the Constitution.
As the previous sanction of the President had been obtained in terms of the proviso such points could no longer be canvassed.
The challenge on the ground of article 14 before the High Court also failed.
An argument was addressed that the impugned Act was repugnant to article 19(1)(g) of the Constitution.
The reasonableness of the restriction within the meaning of article 304(b) also came up for consideration.
The High Court, in the light of the facts and figures placed before it, held that the increase in surcharge of the fares and freights contemplated by the impugned Act did not constitute an impediment to the trade of the transporters and that the restriction in the shape of additional imposts was not unreasonable.
It is unnecessary to refer to the other points agitated before and decided by the High Court.
Counsel for the, appellant has urged the following points before us: (1) The impugned Act imposed a tax for augmenting the revenues of the State.
It was neither regulatory nor compensatory in nature and it fell directly within the mischief of article 301 of the Constitution.
(2) Even though there had been compliance with the proviso to article 304(b) in the matter of obtaining the requisite sanction it was open to the court to go into the question of reasonableness both with reference to the aforesaid provision and article 19(1)(g) read with clause (6) of that Article.
The court was equally entitled to determine whether the imposition was in the public interest.
(3) The impugned Act violated article 14 of the Constitution and was discriminatory inasmuch as (a) it had not been made applicable to the Telengana area although it was applicable to the Andhra area and (b) the vehicles on inter State routes on 'permits granted by other States had not been subjected to tax.
In order to decide these points the principles which have been settled by this Court with regard to article 301 and article 304(b) may be noticed.
According to the majority view in Automobile Transport (Rajasthan Ltd. vs The State of Rajasthan & Others(1) if a tax is compensatory in character it cannot be said to fall within the mischief of article 301.
Subba Rao J., (as he then was) (1) [1963] 1 S.C.R. 491.
56 who concurred in the majority decision but delivered a separate judgment preferred to rest his view on the regulatory nature of such taxing statute as would escape the mischief of article 301.
In Khyerbari Tea Co. Ltd. & Anr.
vs The State of Assam(1) the difference between the view expressed in the Automobile Transport (Rajasthan) case(2) and an earlier decision in Atiabari Tea Co. Ltd. vs The State of Assam & Others(3) with regard to the scope and effect of the provisions of article 304(b) was noticed .
It was observed that according to the majority view expressed in Atiabari Tea Co. case(3) if the Act is passed under article 304(b) and its validity is impeached the State may seek to justify the Act on the ground that the restrictions imposed by it are reasonable and in public interest and in doing so it may rely on the fact that the taxes levied by the impugned Act are compensatory in character.
On the other hand, according to the majority decision in the Automobile Transport (Rajasthan)(2) case compensatory taxation would be outside article 301 and cannot fall under article 304(b).
since it was not urged that the tax was of a compensatory nature in Khyerbari Tea Co. Ltd.(1) case this Court proceeded to examine whether the restrictions imposed by the statute impugned in that case were reasonable and in public interest within the meaning of article 304(b).
The effect of compliance with the provisions of the proviso to article 304(b) by obtaining the previous sanction of the President to the Bill was also considered and it has been laid down that notwithstanding the sanction the question of the restrictions.
being reasonable and in public interest is op.en to examination by the court.
The Act can be held to.
be valid only if it is shown that the restrictions imposed by it are reasonable and in public interest.
It has not been contended on behalf of the State that the impugned Validating Act imposes a tax which is by way of a regulatory or compensatory measure.
It has, therefore, to be seen whether the restrictions imposed are reasonable and in public interest within the meaning of article 304(b).
Before the High Court an attempt was made on behalf of the appellants to show that by raising the rate of tax the burden had been increased to such an extent that the business of the appellants had been virtually annihilated.
According to some of the affidavits filed on behalf of the writ petitioners, profits derived in recent years did not exceed an average of Rs. 2,000/ per stage carriage even without the additional burden which had been imposed and the transporters would suffer heavy losses if the tax as increased by the impugned legislation were to be realized.
The High Court referred to the computation of the income by the Income tax department of some (1) [1964] 5 S.C.R.975.
(2) (3) ; 57 of the transporters in whose assessments the income in regard to each bus had been calculated at a figure of Rs. 7,000/ annually, which showed that the profits were much higher than Rs 2,000/ .
It was not disputed before the High Court that the transporters had been permitted to enhance the fares.
If the fares could be enhanced it was obvious that the burden would not fail on the transporters.
It was urged that owing to competition from the railways and from operators whose vehicles had been registered in the Madras State and who could charge lower rates the appellants were not in a position to collect extra fares which they had been permitted to do.
This argument also cannot hold and was rightly repelled by the High Court on the ground that if the operators were not prepared to charge higher rates as a matter of policy or for the purpose of business competition that could not impinge on the reasonableness of the restriction.
Apart from a faint attempt to repeat some of the arguments which were addressed before the High Court on this point nothing new has been brought to our notice which would justify the view that the tax which has been imposed exceeds the limits of permissible reasonableness.
As regards public interest we are unable to find nor has any attempt been made to satisfy us that the provisions of the impugned Validating Act with regard to imposition of tax are not in public interest.
This is sufficient to dispose of the challenge under article 19(1)(g), as well.
We may in this connection refer briefly to the conclusion of the High Court which was reached on a consideration of the affidavits filed before it.
It has been found that there is no material which would warrant the conclusion that the increase in the surcharge of the fares and freight contemplated by the impugned Validating Act would constitute an impediment to the trade.
The utmost that could be said was that it would result in the diminution of profits.
Even on the assumption that the profits would be diminished or greatly reduced it cannot be held that there is any infringement of article 19(1)(g).
Coming to the attack on the ground of violation of article reference may be made to the background relating to taxation of passengers and goods carried in motor vehicles in the State prior to the formation of Andhra Pradesh.
It appears that there was no law in the erstwhile Hyderabad State imposing any tax on passengers and goods.
After the merger of Telengana and Andhra areas the laws in operation in the Telengana region continued to remain in force by virtue of the provisions of section 119 of the States Reorganization Act, 1956.
By Act X of 1958 the State of Andhra Pradesh amended Act XVI of 1952 inter alia extending that to the Telengana area.
This Act (Act X of 1958) also amended the Principal Act by adding section 19 according to which the 1 sup.
CI/70 5 Government could grant an exemption by means of a notification in respect of any motor vehicle running in a particular area.
On November 4, 1961 a notification was issued exempting passengers, luggage and goods carried in stage carriages from payment of tax under the aforesaid Act within the Telengana area.
There can be no manner of doubt that this exemption was given to the operators in the Telengana region for the reason that before the extension of the parent Act to this area no tax similar to the one levied under the parent Act was payable in that area and that this exemption was granted under a different enactment.
It is apparent that for these reasons the challenge under article 14 cannot succeed.
The same is the position with regard to the tax payable by the appellants and that which the transporters having permits for inter State routes have to pay.
As has been pointed out in the affidavits filed on behalf of the State the laws in the two States, Madras and Andhra Pradesh are different and persons having primary permits from Madras are naturally governed by the laws operating in that State.
No question of discrimination can arise when taxes are being imposed under two different sets of laws in different States or geographical areas.
The appeals, therefore, fail and are dismissed with costs.
One hearing fee.
R.K.P.S. Appeals dismissed.

Output:
The appellants, motor transport operators, challenged the increase in surcharge of the fares and freights imposed by the Andhra Pradesh Motor Vehicles (Taxation of Passengers and Goods) Amendment and Validation Act, 1961.
They urged: (i) the Act was neither regulatory nor compensatory in nature and, it fell directly within the mischief of article 301 of the Constitution; (ii) the imposts exceeded the limits of permissible reasonableness, were not in the public interest and, therefore, violated articles 304(b) and 19(1)(g); and (iii) the Act violated article 14 (a) inasmuch as it had not been made applicable to the Telegana area although it was applicable to the Andhra area and (b) the vehicles on inter State routes on permits granted by other States had not been subjected to tax.
HELD: (i) It was not the contention of the State that the impugned Act imposed a tax by way 'of a regulatory or compensatory measure.
Therefore, it had to be been whether the restrictions imposed were reasonable and in the public interest within the meaning of article 304(b); these questions were open to examination by the court notwithstanding the fact that the sanction of the President was obtained in compliance with the Article.
[55 E F] Mathurai Pillay vs State of Madras, , Automobile Transport (Rajasthan) Ltd. vs State of Rajasthan vs State of Assam. ; and Atiabari Tea Co. Ltd. vs State of Assam, ; , referred to.
(ii) There was no material which would justify the view that the tax which had been imposed exceeded the limit of permissible reasonableness or was not in the public interest.
The argument that by raising the rate of tax the burden had been increased to such an extent that the business of the appellants had been virtually annihilated had no substance.
The operators had been permitted to enhance the freights and if the freights could be enhanced, obviously, the burden would not fall on them.
If the operators were not prepared to charge higher rates as a matter of policy or for the purpose of business competition that could not impinge on the reasonableness of the restrictions.
This disposed of the challenge under article


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Criminal Appeal No. 453 of 1989.
From the Judgment and Order dated 8.1.1988 of the Kerala High Court in Crl.
A. No. 382 of 1986.
G. Ramaswamy, Ashok K. Sen, G. Viswanatha Iyer and R. Satish for the Appellant.
V.C. Mahajan, A. Subba Rao, P. Parmeshwaran and Mrs. Sushma Suri for the Respondent.
The Judgment of the Court was delivered by REDDY, J.
The Gold (Control) Act ws enacted in the year 1968 with the object of control of the production, supply, use and possession of and business in gold ornaments and articles of gold in the interest of economic and financial interests of the community.
Section 27 of the Act lays down that no person shall commence, or carry on, business as a dealer unless he holds a valid licence issued under the provisions of the Act and the said licence should be in the prescribed form.
Section 27(7)(b) lays down that a licensed dealer shall not carry on the business as such dealer in any premises other than the premises specified in his licence.
Section 4(h) defines 'dealer ' as one who carries on the business of making, preparing, polishing, buying, selling, supplying, processing or converting gold, whether for cash or for deferred payment or for commission, remuneration or other consideration.
795 The appellant before us was one such licensed dealer having a shop in a building, which is four storeyed, bearing Municipal No. 25/ A/1479 on the Municipal Road, Trichur (Kerala).
The showroom where the actual day to day business is conducted is in the ground floor.
On 23.9.81 Superintend ent of Central Excise, examined as P.W. 1, raided the shop of the appellant and conducted a search.
Books of accounts maintained by the appellant were verified and it was found that there was a stock of 1372 pieces of gold ornaments.
The search party found 169 pieces of new gold ornaments in the third floor of the building weighing 667.850 grams kept in a card board box.
They were seized.
On further investigation conducted by the officer it was also revealed that the appellant 's brother, his business associate, had purchased some items of jewellery from another dealer and had also kept the same in the said licensed premises.
A complaint was preferred against the appellant alleging that he has unac counted jewellery and that he was carrying on the business in the third floor which is not a licensed premises.
The trial court flamed charges under Section 27(7)(b) read with Section 85(1)(a) and Section 55(3) of The Gold (Control) Act and necessary evidence was adduced.
Failure to maintain the necessary accounts as a dealer is punishable under Section 55(3) and carrying on business in a premises other than the premises specified in the licence is punisha ble under Section 27(7)(b).
The appellant inter alia took the plea that he is carrying on the business of gold only in the ground floor and the items therein have been accounted for including the items that were found in the third floor.
He also took the plea that he sold these items to a customer and separated them and kept them in the third floor for the purpose of delivering the same to the purchaser and that the third floor also formed part of the licensed premises.
The trial court on an appreciation of the evidence, acquitted the accused holding that the prosecution has failed to prove that the accused had unaccounted jewellery and that he was carrying on business in an unlicensed prem ises.
An appeal against acquittal was filed in the High Court of Kerala and the learned Judge confirmed the finding of the trial court in respect of charge under Section 55(b).
He, however, held that the third floor does not form part of the licensed premises.
Therefore an offence punishable under Section 27(7)(b) is proved and accordingly convicted and sentenced the appellant to three months ' simple imprisonment and to pay a fine of Rs.5,000 in default to suffer a further period of two months.
Questioning the same, the present appeal by way of special leave has been filed.
796 The learned counsel for the appellant submits that the High Court has misconstrued the provisions of Section 27(7)(b) and at any rate in the instant case the High Court erred in interfering in an appeal against acquittal.
It is also submitted that even if the prosecution case is to be accepted in this context what at the most can be said is that two views are possible and in such an event the inter ference in an order of acquittal is uncalled for.
It is not in dispute that the appellant obtained a licence for carrying on the business.
In the licence that was granted in the year 1975 and which was also renewed in the subsequent years upto 1977, the address of the premises is mentioed as No. 25/A/1479.
The Inspector in his cross examination admitted that the entire building bears only one municipal number and the licence was given for conducting the business in that building.
The prosecution has not led any other evidence to show that the third floor does not form part of the licensed premises.
That apart admittedly on each storey there is only a small room and the entire build ing is bearing only one municipal number and that is the premises beating that number which is mentioned in the licence.
The question is whether the mere fact that the showroom is in the ground floor does necessarily lead to an inference that the gold ornaments which are accounted for cannot be stored in any other room in that building? Section 27 reads as under: "27(1) Save as otherwise provided in this Act, no person shall commence, or carry on, business as a dealer unless he holds a valid licence issued in this behalf by the Adminis trator.
(2) A licence issued under this section (a) shall be in such form as may be prescribed.
(b) shall be valid for such period as may be specified therein.
(c) may be renewed, from time to time, and (d) shall be subject to such conditions and restrictions as may be prescribed.
797 (7)(a) The Administrator shall specify, in each licence granted to a dealer, the premises in which such dealer shall carry on business and no other person shall carry on busi ness as a dealer in the said premises.
(b) A licensed dealer shah not carry on business as such dealer in any premises other than the premises specified in his licence.
The above principal question has to be examined in the light of this provision and see whether the appellant was carrying on business in any premises other than the premises specified in the licence.
As already mentioned, the entire building is given one municipal number and there is no other evidence in support of the prosecution case that the third floor of the building does not form part of the licensed premises.
In any event under the facts and circumstances of the case one can at the most go the extent of saying that two views are possible.
In Bhagwati and Others vs The State of Uttar Pradesh, it is held: "Thus if the finding reached by the trial Judge can not be said to be unreasonable, the appellate Court should not disturb it even if it were possible to reach a different conclusion on the basis of the material on the record.
This has been held to be so because the trial Judge has the advantage of seeing and hearing the witnesses and the ini tial presumption of innocence in favour of the accused is not weakened by his acquittal.
The appellate Court therefore should be slow ' in disturbing the finding of fact of the trial Court, and if two views are reasonably possible of the evidence on the record, it is not expected to interfere simply because it feels that it would have taken a different view if the case had been tried by it.
" We are convinced that the view taken by the trial court is quite reasonable.
Therefore, viewed from any angle, we are firmly of the view that there were no grounds for the High Court to interfere with the findings of the trial court acquitting the accused.
The counsel for the State, however, pointed out that the High Court has observed at one place in the judgment that the counsel for the accused has not raised any contention that the room in the third floor also formed part of the licensed premises.
Except making this 798 bare observation, the High Court has not considered the plea taken by the accused and the finding of the trial court in this regard.
In the same paragraph, the learned Judge has, however, mentioned that the accused raised a contention in the trial court that the room in the third floor also formed part of the licensed premises and this plea found favour with the trial court.
That apart the case of the accused has throughout been that room in the third floor formed part of the licensed premises.
Therefore this observation of the appellate court that the counsel did not contend that the third floor formed part of the licensed premises does not appear to be correct.
At any rate, there is no such admis sion by the accused and nor can it be said that there was such a concession by the counsel for the accused.
For all the aforesaid reasons, the conviction and sentence awarded by the High Court are set aside.
Accordingly the appeal is allowed.
T.N.A. Appeal al lowed.

Output:
The appellant, a licensed dealer, was charged under Section 55(3) of the Gold (Control) Act, 1968 for failure to maintain the necessary accounts and under section 27(7)(b) for carrying on business in the unlicensed premises on the ground that while the show room of the licensed premises was on the ground floor and appellant had kept the gold orna ments in the third floor of the building.
The Trim Court acquitted the appellant and the Appellate Court confirmed the finding under section 55(3) but convict ed him under section 27(7)(b) holding that the third floor does not form part of the licensed premises.
In this appeal it was contended on behalf of the appel lant that (i) the High Court misocnstrued the provisions of section 27(7)(b); (ii) two views being possible of the evidence on the record the interference with the order of acquittal by the Appellate Court was uncalled for.
Setting aside the conviction and allowing the appeal, this Court, HELD: 1.
In the instant case the entire building hears only one municipal number and the licence was given for conducting the business in that building.
There is no other evidence in support of the prosecution case that the third floor of the building does not form part of the licensed premises.
[796C; 797C] 794 2.
If the finding reached by the trial judge cannot be said to be unreasonable, the Appellate Court should not disturb it even if it were possible to reach a different conclusion on the basis of the material on the record.
The Appellate Court therefore should be slow in disturbing the finding of fact of the Trial Court, and if two views are reasonably possible of the evidence on the record, it is not expected to interfere simply because it feels that it would have taken a different view ff the case had been tried by it.
[797E F] Bhagwati and Ors.
vs State of Uttar Pradesh, , followed.
The view taken by the trial court is quite reasonable and there were no grounds for the High Court to interfere with the findings of the trial court acquitting the accused.
[797G]


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Appeal No. 328 of 1959.
Appeal by special leave from the judgment and order dated 23rd February, 1956, of the Bombay High Court in Income tax Reference No. 34 of 1955.
K. N. Rajagopala Ayyangar and D. Gupta, for the appellant.
Rameshwar Nath, section N. Andley, J. B. Dadachanji and P. L. Vohra, for the respondent.
December 1.
The Judgment of the Court was delivered by HIDAYATULLAH, J.
The Commissioner of Incometax has filed this appeal, with special leave, against the judgment and order of the High Court of Bombay, by which the High Court answered two questions referred to it in favour of the respondents, Messrs. Dwarkadas Khetan & Co., Bombay.
These questions were: "(1) Whether the instrument of partnership dated 27 3 1946 created a deed of partnership? (2).
If the answer to question No. 1 is in the affirmative, whether the fact that on 1 1 1946 there was no firm in existence would be fatal to the application for registration of the firm under Section 26A of the Indian Income tax Act or whether the firm could be registered with effect from 26 3 1946 if it is held that the firm was genuine?" Prior to January 1, 1945, there was a firm called Dwarkadas Khetan & Co. On that date, the firm ceased to exist, because the other partners had previously withdrawn, and it came to be the sole proprietary concern of Dwarkadas Khetan.
On February 12, 1946, Dwarkadas Khetan obtained the selling agency of Seksaria Cotton Mills, Ltd. On March 27, 1946, he entered into a partnership, with three others 823 by an instrument of partnership executed that day.
Those three others were Viswanath Purumul, Govindram Khetan and Kantilal Kasherdeo.
Dwarkadas Khetan 's share in the partnership was 7 annas in the rupee, while the remaining 9 annas ' share was divided equally among the three others.
Though Kantilal Kasherdeo was a minor, he was admitted as a full partner and not merely to the benefits of the partner ship, as required by section 30 of the Indian Partnership Act.
To the instrument of partnership, Kantilal Kasherdeo was also a signatory, though immediately after his signature there was the signature of one Kasherdeo Rungta, the natural guardian of the minor.
In the instrument, Kantilal Kasherdeo was described as a full partner entitled not only to a share in the profits but also liable to bear all the losses including loss of capital.
It was also provided that all the four partners were to attend to the business, and if consent was needed, all the partners including the minor had to give their consent in writing.
The minor was also entitled to manage the affairs of the firm, including inspection of the account books, and was given the right to vote, if a decision on votes had to be taken.
In short, no distinction was made between the adult partners and the minor, and to all intents and purposes, the minor was a full partner, even though under the partnership law he could only be admitted to the benefits of the partnership and not as a partner.
The deed of partnership was produced before the Registrar of Firms showing the names of the four partner,%.
The Registrar of Firms granted a registration certificate, and in the certificate, Kantilal Kasherdeo was shown as a full partner and not as one entitled merely to the benefits of the,, partnership.
Banks were also informed about the four partners, and.
it does not appear that to them intimation was sent that one of the named partners was a minor.
Though the partnership came into existence on March 27, 1946, the firm was stated to have started retrospectively from January 1, 1946.
It may be pointed out that the firm has the calendar year as its account year, and the matter before us refers to the account year, 1946 corresponding to the assessment year, 1947 48. 824 For purposes of that year, registration of the firm was sought under section 26A of the Indian Income tax Act.
The Income tax Officer refused to accord registration on the ground that a minor had been admitted as a partner contrary to law, and that the deed could not, therefore, be registered.
The appeal to the Appellate Assistant Commissioner also failed, the Commissioner holding that registration could only be of a legal or valid document and not of a document which was invalid in law.
An appeal was then taken to the Tribunal, and it was contended that the document must be construed as showing only that the minor was admitted not as a full partner but to the benefits of the partnership.
The Accountant Member hold that the order of the Appellate Assistant Commissioner was correct, giving two reasons.
The first was that the construction sought to be placed upon the document was not open, and the second, that since retrospective operation was given to the firm even though no firm existed from January 1, 1946, registration could not be granted.
The Judicial Member differed from the Accountant Member, holding, as was contended, that the document must be construed as showing merely that the minor had been admitted to the benefits of the partnership.
The appeal was then placed before the President, who agreed with the conclusion of the Accountant Member, with the result that the refusal to register the firm under section 26A by the authorities was upheld.
Two questions were then posed for the decision of the High Court.
The High Court differed from the Tribunal, and answered both the questions in favour of the assessee.
In so far as the second question is concerned, the matter is now settled by the decision of this Court in B. C. Mitter & Sons vs Commissioner of Income tax (1).
But, in our opinion, the decision of the High Court on the first question was not correct, and the correct answer does not leave the second quest ion open at all.
There is a distinct cleavage of opinion among the High Courts on this point.
The Bombay, Madras and (1) 825 Patna High Courts have held that where a minor is admitted as a full partner by adult partners, the document can be registered after interpreting it to mean that the minor has been admitted to the benefits of partnership and not as a full partner.
The Calcutta, Allahabad and Punjab High Courts have taken a contrary view.
The Bombay case is the one which is under appeal, and the Patna High Court followed that decision and the two earlier decisions of the Madras High Court.
The Madras High Court decisions are of the same Divisional Bench, and were pronounced on the same day.
The leading case in support of the respondents is the Madras decision reported in Jakka Devayya and Sons vs Commissioner of Income tax (1), and that case alone needs to be considered, because all the reasons on which the cases on this side have proceeded are given there.
In that case, there were three partners, one of whom was a minor.
They formed a Hindu undivided family; later, a deed of partnership was executed in which the minor was represented by his father in law.
It was held that the fact that the minor was included as a partner did not make the partnership as between the two adult partners invalid, and that the minor must be deemed to have been admitted to the benefits of the partnership by the two adults.
The learned Judges referred to the provision of section 2 (6 B) of the Income tax Act, where it is provided: " "Partner" includes any person who being a minor has been admitted to the benefits of partnership;", and observed that in view of this definition and the fact that a minor could be admitted to the benefits of partnership under section 30, the document was not invalid, but must be read as giving to the minor the rights laid down by the Partnership Act.
They also observed that too rigid a construction need not be put upon the deed, and referred to Lindley on Partnership, 11th Edn., p. 87 and A. Khorasany vs C. Acha and Others (2).
The other cases which we need not examine are Vincent and Others vs Commissioner of (1) (2) Ran.
826 Income tax and Sahai Brothers vs Commissioner of Income tax On the other hand, there is a decision of the Calcutta High Court reported in Hoosen Kassam Dada vs Commissioner of Income tax, Bengal (3), in which Costello and Panckridge, JJ. have held that under section 26A of the Income tax Act and the Rules, the Income tax Officer is only.
empowered to register a partnership which is specified in the instrument of partnership and of which registration is asked for.
The learned Judges, therefore, hold that it is not open to the Department to 'register partnership different from that which is formed by the instrument.
In Hardutt Ray Gajadhar Ram vs Commissioner of Income tax(4) Malik, C. J. and Seth, J. hold that where a minor is admitted as a full partner with equal rights and obligations with adults, the deed is invalid.
It is pointed out that the English law on the subject is different.
In that case, however, there was one other ground for invalidating the deed, because the minor had been adopted into another family and his natural father who had signed as his guardian in the deed could not do so, as he had ceased to be the natural guardian.
The decision, however, supports the case of the Commissioner.
In Banka Mal Lajja Ram & Co. vs Commissioner of Income tax (5), it is held that a minor cannot be a partner, and that the partnership which admits a minor as full partner cannot be registered.
It is true that in that case the High Court did not consider the question whether the partnership should have. been taken to be a valid partnership consisting of the adult partners, because no such question was referred.
The decision, however, is against a claim for registration of such a document.
In our opinion, the Calcutta vie ' is preferable to the view taken by the Madras High Court.
The error in the Madras view is in using the definition to show that a deed including a minor as a competent partner (1)[1952] (3)[1937] (2)[1950] (4)[1950] (5)[1953] 827 is valid.
What the definition does is to apply to a minor admitted to the benefits of partnership all the 2 provisions of the Income tax Act applicable to partners.
The definition cannot be read to mean that in every case where a minor has, contrary to law, been admitted as a full partner, the deed is to be regarded as valid, because, under the law, a minor can be admitted to the benefits of partnership.
The Rules which have been framed under section 26A quite clearly show that a minor who is admitted to the benefits of partnership need not sign the application for registration.
The law requires all partners to sign the application, and if the definition were to be carried to the extreme, even a minor who is admitted to the benefits of partnership would be competent to sign such an application.
The definition is designed to confer equal benefits upon the minor by treating him as a partner; but it does not render a minor a competent and full partner.
For that purpose, the law of Partnership must be considered, apart from the definition in the Income tax Act.
Section 30 of the Indian Partnership Act clearly lays down that a minor cannot become a partner, though with the consent of the adult partners, he may be admitted to the benefits of partnership.
Any document which goes beyond this section cannot be regarded as valid for the purpose of registration.
Registration can only be granted of a document between persons who are parties to it and on the covenants set out in it.
If the Income tax Authorities register the partnership as between the adults only contrary to the terms of the document, in substance a new contract is made out.
It is not open to the Income tax authorities to register a document which is different from the one actually executed and asked to be registered.
In our opinion, the Madras view cannot be accepted.
The judgment under appeal has followed the Madras view, and, in our opinion, it falls into the same error in which the Madras High Court had fallen earlier.
The answer to the first question should, therefore, have been in favour ;of the Department.
The answer given by the High Court is vacated, and 828 the question will now be answered in the negative.
As already stated, there is no need to answer the second question, which does not arise.
The appeal is allowed with costs here and in the High Court.
Appeal allowed.

Output:
One of the persons who entered into a partnership was a minor and in the instrument of partnership he was described as a full partner with equal rights and obligations with the other adult partners.
The deed of partnership which was signed by the minor was produced before th e Registrar of Firms f or registration and he granted a certificate showing the minor as a full partner and not as one entitled merely to the benefits of the partnership.
The Income tax Officer, however, refused to register the firm under section 26A of the Indian Income tax Act and his decision was upheld by the Income tax Authorities and the Income tax Appellate Tribunal.
The High Court differed from the Tribunal and held that the firm should be registered.
On appeal by the Commissioner of Income tax, Held, that the Rules framed under section 26A quite clearly show that a minor who is admitted to the benefits of partnership need not sign the application for registration.
The law requires all partners to sign the application, and if the definition were to be carried to the extreme, even a minor who is admitted to the benefits of partnership would be competent to sign such an application.
The definition is designed to confer equal benefits upon the minor by treating him as a partner; but it does not render a minor a competent and full partner.
For that purpose, the law of Partnership must be considered, apart from the definition in the Income tax Act.
Section 30 of the Indian Partnershi Act clearly lays down that a minor. cannot become a partner, I tough with the consent of the adult. .partners, he may be admitted to the benefits of partnership.
. .Any document which goes beyond this section cannot be regarded as valid for the purpose of registration.
Registration can only be granted of a document between persons who are parties to it and on the covenants set out in it.
If the Income tax Authorities register the:partnership as between the adults only contrary to the terms of the document, in substance a new contract is made out.
It is tot open to the Incometax Authorities to register a document which is different from the one actually executed and asked to be registered.
Hoosen Kassam Dada vs Commissioner of Income tax, Bengal, [1937]5 I.T.R. 182, Hardutt Ray Gajadhar Ram vs Commissioner of 104 822 Income tax, , Banka Mal Lajja Ram and Co. vs Commissioner of Income tax, , approved.
Jakka Devayya and Sons vs Commissioner of Income tax, [1952) , disapproved.


Input:
Appeal No. 656 of 1966.
Appeal by special leave.
from the judgment and order dated June 29/30, 1964 of the Gujarat High Court in Special Civil Application No. 589 of 1961.
A. K. Sen and N. H. Hingorani, for the appellant.
R. Gopalakrishnan, for respondent No. 3.
The Judgment of the Court was delivered by Bhargava, J.
R. section Ambwaney, respondent No. 3, was employed by the Sindhu Resettlement Corporation Ltd., the appellant.
as an Accounts Clerk at Gandhidham on 13th December, 1950 in the pay scale of Rs. 150 10 250 on a salary of Rs. 200 plus 20 per cent as site allowance.
This site allowance was discontinued in March, 1952.
In the year 1953, the Government of India decided to develop Kandla as a port and a subsidiary company was formed by the appellant under the name of Makenzies Heinrich Bulzer (India) Ltd. in which one of the principal shareholders was the appellant.
This Company later came to be known as Sindhu Hotchief (India) Ltd. For convenience, both Makenzies Heinrich, Bulzer (India) Ltd., and Sindhu Hotchief (India) Ltd. shall hereinafter be referred to as "Sindhu Hotchief".
This subsidiary Company, Sindhu Hotchief, wanted some trained employees and; amongst others the services of respondent No. 3 were placed at its disposal by the appellant.
The case of respondent No., 3 was that he was told orally by the officers of the appellant on 2nd September, 1953 that he was to work in the subsidiary company.
Respondent No. 3 was appointed in Sindhu Hotchief by its order dated 5th September,,1953 on a salary of Rs. 240 p.m. as an Accounts Clerk on the conditions of service laid down in that order.
It appears that, just about this time, the father of respondent No. 3 died and he was granted leave by the appellant for the period from 2nd September to 17th September, 1953.
With effect from 18th September 1953, his services were placed at the ' disposal of Sindhu Hotchief and an order to that effect was issued in writing on behalf of the appellant on 24th September, 1953.
Respondent No. 3 worked with Sindhu Hotchief up to 20th February, 1958 'when his ' services were terminated after payment.
of retrenchment compensation and all other dues payable to him.
On 21st February, 1958, respondent No. 3 went to the office of the, appellant, reported himself for duty and requested that he might, 517 be given posting orders in, the appellant.
Corporation.
The appellant informed respondent NO. 3 of I its inability, to re employ him on the ground that the post, which he had been occupying in 1953 had been permanently filed up.
Thereupon, respondent No. 3 demanded retrenchment compensation ', from the appellant also.
This was also refused.
His case was taken up by Mazdoor Mahajan Sangh, Gandhidham, Kutch, ' respondent No.2.
The Secretary of respondent No. 2 also, wrote a letter to the, management of the appellant, asking for payment of retrenchment com pensation to respondent No. 3 on the ground that the appellant had refused to take him back in its employment.
It seems that, thereafter, there were some conciliation proceedings and, subsequently, on the report of the Conciliation Officer, the Government of the State of Gujarat, by its notification dated 15th November, 1960, referred the dispute to the, Industrial Tribunal,, Gujarat, for adjudication.
The matter referred for adjudication was described in the notification as follows: "Demand No. 1 Shri R. section Ambwaney should be reinstated in the service of M/s. Sindhu Resettlement Corporation Ltd., and he should be paid his wages from 21st February, 1958.
" The Triunal, after hearing the parties, gave its Award on 10th August, 1961, directing reinstatement of respondent No. 3 and payment of back wages from 21st February, 1958.
The appellant challenged this award before the High Court of Gujarat by a petition under Articles 226 and 227 of the Constitution, but the petition was dismissed.
Consequently, the appellant has come up to this Court in this appeal by special leave.
In this appeal, three points have been urged on behalf of the appellant to challenge the orders of the Industrial Tribunal and the High Court.
The points are : (1) that respondent No. 3, having been given permanent appointment in Sindhu Hotchief and having obtained retrenchment compensation from that Company, could not claim that he was still holding a post in the appellant Corporation and could not, therefore, claim reinstatement, (2) that the dispute that was raised by respondent No. 3 as well as respondent No. 2 with the management of the appellant was confined to compensation for retrenchment and did not relate to the validity of the retrenchment or reinstatement, so that the Government of Gujarat had no jurisdiction to refer the dispute to the Industrial Tribunal which it did , and (3) that, in any case.
since the validity of the retrench of respondent No. 3 by the appellant was not 518 challenged, the, Tribunal committed a manifest error in directing reinstatement instead of awarding retrenchment compensation.
After hearing learned counsel for parties, we have come to the conclusion that the first two grounds urged on behalf of the appellant must be 'accepted, while the third does not arise.
The lease put forward on behalf of the respondents before ,the Industrial Tribunal was that respondent No. 3 was a permanent employee of the appellant and, when he joined the service of Sindhu Hotchief in the year 1953, he only went there on deputation or transfer, so that he continued to hold a lien on his permanent post in the appellant Corporation.
Two facts, no doubt, support this plea.
One is that Sindhu Hotchief was only a Subsidiary Company of the appellant, and the other is that, in its order dated 24th September, 1953, the appellant merely stated that, with effect from the 18th September, 1953, the services of res pondent No. 3 were placed at the disposal of Sindhu Hotchief.
No specific ;order was passed terminating his services in the appellant Corporation Though this circumstance would raise a presumption that respondent No. 3 did not cease to be an employee 0 the appellant when this order was issued on 24th September 1953, this presumption is rebutted by two circumstances.
The first is that respondent No. 3 was appointed in Sindhu Hotchief under the order dated 5th September, 1953, which laid down that in that Company he would be on a probation for a period of three months in the first instance.
The probationary period may have to be further extended by any period upto three months.
The confirmation of his appointment would be considered at the end of his probationary period and would depend on the efficiency and utility of his services to the Company.
Thereafter, respondent No. 3 continued to serve in that Company until 20th February, 1958, i.e. for a, period of about 4 1/2 yars.
Clearly, he must have been confirmed in his appointment in that company.
Once he was confirmed in Sindhu Hotchief, he could obviously not continue to be an employee of the appellant corporation simultaneously.
The High Court did not attach any value to this order of appointment dated 5th September, 1953, issued by Sindhu Hotchief, on the ground that no evidence was tendered before the Tribunal to show that this order was actually served on respondent No. 3.
In proceeding on this basis, the High Court clearly fell into an error, because, in this case, when the adjudication of the industrial dispute was, taken up by the Tribunal, all the parties contented themselves with filing documentary evidence and no oral evidence was given by any party.
At no stage was it challenged that the documents filed could not be taken into account until proved formally in the manner 'required to be proved in a regular civil proceeding in accordance with the provisions of the Indian Evidence Act.
This order of Sindhu Hotchief dated 5th September, was addressed to respondent No. 3 himself and, when there 519 was no challenge on behalf of respondent No. 3 that he did not receive this order, there was no justification for the High Court to hold that this.
,order had not been served on him.
In proceedings before the Industrial Tribunal, strict proof of documents in accordance with the provisions of the Indian Evidence Act is not required.
Parties having agreed to base their case on the documents filed, this order issued to respondent No. 3 could not be ignored on the ground that no oral evidence had been tendered to prove that respondent No. 3 actually received it.
It was in accordance with the conditions of service laid down in, this order that respondent No. 3 was appointed in Sindhu Hotchief and, by joining service there and continuing in that service for 4 1/2 years, respondent No. 3 clearly agreed to work in that Company on these conditions.
As we have indicated earlier, one of the conditions was that he would be confirmed at the end of the: probationary period and, once he was confirmed, he would become a permanent employee of Sindhu Hotchief and would cease to be the employee of the appellant.
Thus,.
though respondent No. 3 did not cease to be an employee of the appellant when his services were first placed at the disposal of Sindhu Hotchief by the appellant witheffect from 18th September, 1953, he ceased to be an employee of the appellant later when he was confirmed in Sindhu Hotchief.
The other circumstance that bears out this conclusion is that, at the time of termination of the employment of respondent No. 3 in Sindhu Hotchief, he was given retrenchment compensation which he accepted.
In case he had continued to be in the service of the appellant.
he would not have been entitled to retrenchment compensation from Sindhu Hotchief and, even if Sindhu Hotchief had any legal liability to contribute towards his retrenchment compensation which might have become ultimately payable to him on his retrenchment from the appellant Corpn., that amount would have been paid by Sindhu Hotchief to the appellant and not to respondent No. 3 himself.
It appears that respondent No. 3 very well knew that he had become a permanent employee of Sindhu Hotchief and, consequently, on retrenchment, he accepted the compensation but, thereafter, he seems to have decided to assert his claim to continuance of employment under the appellant.
This claim.
was also, however, very halfhearted.
No doubt, at the first stage on 21st February, 1958, he demanded reinstatement in the appellant Corpn., but very soon thereafter, when that request was refused, he demanded retrenchment compensation and one month 's salary in lieu of notice.
This demand was put forward by him in his letter dated 7th March, 1958, wherein he stated that, if the appellant refused to recognise Sindhu Hotchief as a sister concern and did not take him back in its Organisation, where he had a genuine claim of service, the appellant should please pay off his legal claims in respect of retrenchment compensation and one month 's pay in lieu of notice.
This position taken up by respondent No. 3 himself thus shows that he was aware that his services under the appellant Corpn.
had already 520 come to an end.
Learned counsel appearing for the respondents urged that we should not hold that services of respondent No. 3 in teh appellant Corpn.
had come to an end when he was absorbed in Sindhu Hotchief, because no retrenchment compensation was given to respondent No. 3 by the appellant Corporation at the stage, when his services ended in that Corporation.
The submission ignores the, circumstances that, when respondent No.3 went to Sindhu Hotchief, be did so willingly.
There was no compulsion on him to,.
go, to that Company.
His terms of service with the appellant did not entitle The appellant to transfer his services to the Subsidiary Company and the mere office order placing his services at the disposal of Sindhu Hotchief could not have been made effective unless respondent No. 3 also voluntarily agreed to take service in Sindhu Hotchief.
At no stage was it asserted on behalf of respondent No. 3 that he did not go voluntarily or with his consent to Sindhu Hotchief.
In case he took the service in Sindhu Hotchief and accepted permanent appointment there willingly, it cannot be held that his services were retrenched by the appellant Corporation.
He was not entitled to any retrenchment compensation when he left the service of the appellant willingly.
The nonpayment of retrenchment compensation by the appellant at that stage does not, therefore, indicate that the services of respondent No. 3 with the appellant had not come to an end.
On the facts of this case, it is clear that the Tribunal committed an error in drawing the legal inference that respondent No. 3 continued to be in the service of the appellant Corporation even after he had received permanent appointment in Sindhu Hotchief.
On a correct inference, it is clear that the services of respondent No. 3 under the appellant Corporation had come to an end and, when he was retrenched by Sindhu Hotchief, he could not claim reinstatement in the appellant Corporation.
In this connection, Mr. Gopalakrishnan, learned counsel for the respondents, relied on some remarks of the House of Lords in Nokes vs Doncaster Amalgamated Collieries Ltd.(1), where it was held: "Counsel for the appellant argued that a contractual right to personal service was a personal right of the employer and was incapable of being transferred by him to anyone else, and that a duty to serve a specific master could not be part of the property or rights of that master capable of becoming, by transfer, a duty to serve some ,one else.
It is, of course indisputable that (apart from statutory provision to the contrary) the benefit of a contract entered into by A to render personal service to X cannot be transferred by X to Y without A 's consent, which is the same thing as saying that, in order to produce the desired result, the old contract between A and X would r have to be terminated by notice or by mutual consent and a. new contract of service entered into by agreement between A and Y." (1) 521 This principle laid down by teh House of Lords is not applicable to the facts of teh case before us,because we have already held that respondent No.3 joined the service of Sindhu Hotchief villingly and with his consent, and it was not a case where he was transferred to Sindhuy Hotchief by the appellant without his consent.
This case does not help ,the respondents.
The second ground urged on behalf of the appellant is that in this case No. dispute relating relating to reinstatement was ' actually raised either by respondent No. 2 or respondent No. 3 before.
the reference was made to the Industrial Tribunal by the Government of Gujarat and,.
consequently.
that reference itself was , without jurisdiction.
When Mr. A. K. Sen, counsel for the.
appellant, raised this ground, it Was urged by" Mt. Gopalakrishnan on behalf of the respondents that this ground was being taken for the first time in this Court and had not been raised at any earlier stage, so that it should not be allowed to be taken in this Court.
It, however,appears that the question of jurisdiction of the State Government to refer the demand for reinstatement for adjudication to the Tribunal was specifically urged in the High Court and the High Court actually dealt with it in its judgment, dismissing the petition filed on behalf of the appellant.
The High Court clearly mentions that the counsel for the appellant contended that the Industrial Tribunal had no jurisdiction as the question referred to it and which it was called upon to adjudicate relating to reinstatement of respondent No. 3 in the service of the Corporation would not fall within the scope of item 3 in the Second Schedule to the .
It was further urged that, since the third respondent was neither discharged nor dismissed by the appellant, the question of relief of reinstatement would not arise under that item and, there being no item under which the demand would fall, the State Government had no jurisdiction to refer such a demand for adjudication to the Tribunal.
These points urged before the High Court would cover the ground now urged by Mr. Sen before us.
It is true that the form in which it was urged before the High Court was slightly different.
There, the point raised was that a demand for reinstatement, when there had been retrenchment only and no discharge or dismissal, could not be held to constitute an industrial dispute.
On the facts of the case as they appeared from the material before the Tribunal, it is now urged that, in fact, the demand, which was being pressed with the management by both the respondents, was in respect of retrenchment compensation and not reinstatement.
The demand for reinstatement seems to have been given up, because the respondents realised that the services of respondent No. 3 had not been terminated by discharge or dismissal, but by retrenchment only, and that retrenchment not being.
the result of any unfair labour practice or victimization, respondent No. 3 could only claim retrenchment compensation.
In the evidence given before the Tribunal, there were included two letters written by the two respondents containing the demand for retrenchment compensation.
522 We have already referred to one of these letters which was sen on 7th March, 1958 by respondent.
No. 3 to the Administrative Officer of the.
appellant.
The other letter was sent on 10th July 1959 by the General Secretary of respondent No. 2 in which again it was stated that Sindhu Hotchief had paid retrenchment dues to respondent No. 3 in respect of the services he had rendered in than Company, but the appellant Corporation was responsible for his retrenchment dues for the service which had been rendered by respondent No. 3 in the, appellant Corpn.
, The prayer was that, as the appellant had refused him re employment, arrangement should be made to pay his retrenchment dues according to section 25F of the .
Thus, both the respondents, in their claims put forward before the management of the appellant, requested for payment of retrenchment compensation and did not raise any dispute for reinstatement.
Since no such dispute about reinstatement was raised by either of the respondents before the management of the appellant, it is clear that the State Government was not competent to refer a, question of rein statement as 'an industrial dispute for adjudication by the Tribunal.
The dispute that the State Government could have referred competently was the dispute relating to payment of retrenchment compensation by the appellant to respondent No. 3 which had been refused.
No doubt, the order of the State Government making the reference mentions that the Government had considered the report submitted by the Conciliation Officer under sub section (4) of section 12 of the , in respect of the dispute between the,appellant and workmen employed under it over the demand mentioned in the Schedule appended to that order; and, in the Schedule, the Government mentioned that the dispute was that of reinstatement of respondent No. 3 in the service of the appellant and payment of his wages from 21st February, 1958.
It was urged, by Mr. Gopalakrishnan on behalf of the respondents that this Court cannot examine whether the Government, in forming its opinion that an industrial dispute exists, came to its view correctly or incorrectly on the material before it.
This proposition is, no doubt, correct; but the aspect that is being examined is entirely different.
It may be that the Conciliation Officer reported to the Government that an industrial dispute did exist relating to the reinstatement of respondent No. 3 and payment of wages to him from 21st February, 1958, but when the dispute came up for adjudication before the Tribunal, the evidence produced clearly showed that no such dispute had ever been raised by either respondent with the management of the appellant.
If no dispute at all was raised by the respondents with the management, any request sent by them to the Government would only be a demand by them and not an industrial dispute between them and their employer.
An industrial dispute, as defined, must be a dispute between employers and employers, employers and workmen, and workmen and workmen.
A mere demand to a Government, without a dispute being raised by the workmen with 523 their employer cannot become an industrial dispute Consequently, the material before the Tribunal clearly showed that no such industrial dispute, as was purported to be referred by the State Government to the Tribunal, had ever existed between the appellant Corpn.
and the respondents and the State Government in making a reference, obviously committed an error in basing its opinion 'on material which was not relevant to the formation of opinion.
The Government had to come to an opinion that an industrial dispute did exist and that opinion could only be formed on the basis that there was a dispute between the appellant and the respondents relating to reinstatement.
Such material could not possibly exist when, as early as March and July, 1958, respondent No. 3 and respondent No. 2 respectively had confined their demands to the management to retrenchment compensation only and did not make any demand for reinstatement.
On these facts, it is clear that the reference made by the Government was not competent.
The only reference that the Government could have made had to be related to payment of retrenchment compensation which was the only subject matter of dispute between the appellant and the respondents.
So far as the third ground is concerned, it loses force and (toes not arise in view of our decision relating to the first ground.
We have already held, when dealing with the first ground, that the appellant had neither dismissed respondent No. 3, nor had it discharged him from service.
There was no question of wrongful dismissal or discharge by the appellant.
It was not even a case of retrenchment.
because respondent No. 3 had willingly gone to join the service under Sindhu Hotchief.
He obviously joined the service in Sindhu Hotchief because of the financial advantages that were to accrue to him.
In September, 1953, he was drawing a salary of Rs. 200 P.m. in the scale of Rs. 150 10 250 while serving the appellant.
The site allowance of 20 per cent, which he had been receiving earlier, had been discontinued from March, 1952 and he was not getting it at the time when he went to join Sindhu Hotchief, where he was given a start of Rs. 240 in the grade of Rs. 200 20 400.
Consequently, in addition to the immediate rise in salary of Rs. 40 P.m., he had the advantage of working in the higher grade, in which, within two years, he exceeded the maximum of the scale in which he had been working with the appellant.
He served Sindhu Hotchief for a period of ' about 4 1/2 years and became confirmed there in accordance with the terms and conditions which were offered to him by Sindhu Hotchief.
In these circumstances, the respondents cannot ' urge that the services of respondent No. 3 were retrenched by the appellant, either when he went and joined Sindhu Hotchief, or when he wanted to get back to his post with the appellant.
His appointment in the service of the appellant having terminated, no question could arise of retrenching him at the stage when he wanted to come back after serving Sindhu Hotchief.
His services, 524 were in fact retrenched by his employer Sindhu hotchief and from that Company he received retrenchment compensation.
The third ground, therefore, needs consideration The appeal succeeds and is allowed.
The award of the Tri bunal is quashed.
In the circumstances of this case there will be no order as to costs,, Y.P. Appeal allowed.

Output:
The services of respondent No. 3 a permanent employee of appellant corporation, were placed at the disposal of appellant 's subsidiary company.
The subsidiary company by an order appointed respondent No. 3.
on probation and stated that he would be confirmed after the end of probation period.
After respondent No. 3 had worked with the subsidiary company for more than the probationary period, his services were terminated and he was paid retrenchment compensation.
Respondent No. 3 asserted continuance of his employment under the appellant, which was declined, There upon he demanded retrenchment compensation from the appellant also, which, too, was refused.
The matter was referred for adjudication by the State Government, and the Tribunal directed reinstatement of respondent No. 3 with back wages.
In appeal to this Court,the appellant Corporation contended that (i) respondent No. 3 having been given permanent appointment in the subsidiary company, and having obtained retrenchment compensation from that company, could not claim that he was still holding a post in the appellant corporation and could not, therefore, claim reinstatement; and (ii) the dispute that was raised was confined to compensation.for retrenchment and did not relate to the validity of the retrenchment or reinstatement, so that the State Government had no jurisdiction to refer the dispute to the Industrial Tribunal.
HELD: (i) Respondent No. 3 could not claim reinstatement in the appellant corporation.
Though he did not cease to be an employee of the appellant when his services were first placed at the disposal of the subsidiary company by the appellant, he ceased to be an employee of the appellant later when he was confirmed in the subsidiary company.
He also accepted the retrenchment compensation at the time of termination of the employment in the subsidiary company.
In case he had continued to be in the service of the appellant, he would.
not have been entitled to retrenchment compensation from the subsidiary company and, even if the subsidiary company had any legal liability to contribute towards his retrenchment compen sation which might have become ultimately payable to him on his retrenchment from the appellant corporation, that amount would have been paid by the subsidiary company to the appellant and not to respondent No. 3 himself.
Further he was not entitled to any retrenchment compensation when he left the service of the appellant willingly for there was no compulsion on him to go to the subsidiary company.
[519C F] Nokes vs Doncaster Amalagamated Collieries Ltd., [1940] A.C. 1014 held inapplicable.
(ii) The respondents.
in their claims Put forward before the management of the appellant requested for payment of retrenchment compensation and did not raise any dispute for reinstatement.
516 Since no such dispute about reinstatement was raised by the respondents before the management of the appellant, the State Government was not competent to refer a question of reinstatement as an industrial dispute for adjudication by the Tribunal .
The dispute that the State Government could have referred competently was the dispute relating to payment of retrenchment compensation by the appellant to respondent No. 3 which had been refused.
A mere "demand to a Government without a dispute being raised by the workmen, with their employee cannot become an industrial dispute.
[522H 523D].