Input:
Civil Appeal No. 911 of 1978.
Appeal by Special Leave from the Judgment and order dated 12 12 1977 of the Allahabad High Court (Lucknow Bench) in Writ Petition No. 1283 of 1976 R.K.Garg, V. J. Francis, Madan Mohan and D.K Garg for the Appellant.
G. N. Dikshit and O.P. Rana for Respondents Nos. 1 and 2.
84 section N Andley, B. P. Maheshwari and Sures Sethi for Respondents 3 and 5.
Yogeshwar Prasad, Mrs. Rani Chhabra and Miss Meera Bali, for Respondent No. 4.
P. C. Bhartari and R. P. Kathuria for the Intervener (B. section Yadav and Ors.) The Judgment of the Court was delivered by SARKARIA,J.
This appeal by special leave is directed against a judgment dated December 12, 1977 of the High Court of Allahabad.
The appellant herein, Shri B. L. Goel, is a District and Sessions Judge and as such a Member of U.P. Higher Judicial Service.
The sanctioned permanent strength of the Higher Judicial Service was 82.
It comprised (i) 37 posts of District and Sessions Judges and (ii) 45 Civil and Sessions Judges, including five posts of leave reserve.
The service includes substantive posts as well as temporary posts.
The appointments to the posts of Civil and Sessions Judges are made from two sources: (a) By promotion from the members of the U.P. Civil Service (Judicial Branch); and (b) By direct recruitment after consultation with the Court (vide Rule 5).
Under Rules 13 and 17 of the U.P. Higher.
Judicial Service 1953 (hereinafter referred to as the 1953 Rules) waiting lists were to be prepared of the persons found fit for promotion or appointment to the higher service.
Rule 19 provided that the Governor shall, on receipt from the Court of the waiting lists prepared under Rules 13 and 17, make appointment to the service on the occurrence of substantive vacancies.
Para 2 of Rule 19 provide d that the Governor could make appointments in temporary or officiating vacancies of the persons who were eligible for appointment by promotion and whose names were borne on the waiting list on force prepared under Rule 13.
Rule 21 fixed the period of probation for direct recruits at two years.
Rule 22 provided that the probation could be extended for a specific period.
On satisfactory completion of his period of probation, a direct recruit was entitled to be confirmed.
No period of probation was fixed in the case of promotees.
Rule 20, which is being impugned, originally, ran as follows: "20. Seniority.
Subject to the provisions of rule 31, seniority in each of the two classes of posts in the Services shall be determined by the date of confirmation in that class of post; 85 Provided that if in any class of the post, two or more persons are confirmed on the same date, their seniority will be determined according to the order in which their confirmation has been notified; Provided further that in the case of direct recruits, their inter se seniority will be fixed in the same order in which their names appear in the list prepared by the Selection Committee under rule 17.
" Rule 23 dealt with confirmation.
It provided: "23.
Confirmation. (1) A probationer shall be confirm ed in his appointment at the end of his period of probation or at the end of the extended period of probation, if the Governor, after consultation with the Court, is satisfied that he is fit for confirmation.
(2) All confirmations under this rule shall be notified in the the official Gazette.
" D The appellant was appointed to the U.P. Civil Service (Judicial Branch) on September 13, 1948 on the basis of a competitive examination held by the U.P. Public Service Commission.
He was posted as Civil Judge in the same service in January 1955.
He was appointed by promotion as an officiating Civil and Sessions Judge in U.P. Higher Judicial Service in July 1 960.
Respondents 3, 4 and 5 are direct recruits.
They were appointed on probation on Civil and Sessions Judges and joined the service on May 31, 1966, May 27, 1966 and June 1, 1966, respectively.
The constitutional validity of the 1953 Rules providing for appointment to U.P. Higher Judicial Service first came up for consideration before this Court in 1966, in Chandra Mohan v state of U.P.(1) wherein it was held that the 1953 Rules providing for recruitment of District Judges particularly rules 5, 8, 13, 17 and 19 of the U.P. Higher Judicial Service Rules 1953, were invalid as they contravened the mandate of Article 233(1), and that consequently, the appointments of persons appointed under those Rules including the appellant and respondents 3, 4 and S to the U.P Higher Judicial Service were unconstitutional and invalid.
The appointments of persons appointed under the 1953 Rules, including the appellant and respondents 3, 4 and S were, however.
validated by the Constitution (Twentieth Amendment) Act, 1964, which inserted Article 233A in the Constitution.
(l) A.T.R. 86 By a notification dated March 31, 1969 the Governor confirmed respondents 3, 4 and 5 as Civil and Sessions Judges with effect from May 31, 1966.
May 27, 1966 and June 1, 1966, respectively.
Again by a Notification dated May 31, 1969 they were confirmed with effect form the same dates.
These Notifications were superseded by Notification dated July 19, 1974.
The dates of confirmation of the respondents, however, remained unchanged.
This notification was cancelled by Government notification dated August 26, 1974.
The Government by its order (G.O. No. 870/7 AI 503) dated June 19, 1971, created by conversion of the existing temporary posts,22 permanent posts of Civil & Sessions Judges with effect from June 1,1969, for absorbing the promoted officers, who had been continuously officiating as Civil & Sessions Judges for more than three years.
Subsequently, by its G.O. 2693/VII A Niaya/503/70.
the Government in partial modification of its G.O., dated June 19, 1971, directed that the creation of 22 permanent posts of Civil & Sessions Judges shall have effect from April 1, 1966.
This Notification shows that all these posts/courts continuously existed on temporary basis from different dates ranging between July 22, 1949 to August 8.1962.
Consequent upon the creation of 22 permanent posts with effect from April 1. 1966, the Governor on March 19, ]975 issued a Notification in supersession of the earlier ones.
Although all the 22 permanent posts created with effect from April 1,1966 according to the Government Notification were meant for absorption of promotees only three of those posts were given to the three direct recruits, respondents 3, 4 and S (S/Shri R. C. Bajpai, Rikheshwari Prasad and Behari Ji Das) who were shown as confirmed with effect from May 31, 1968, May 27, 1968 and June 1, 1968, respectively, the dates on which they completed their two years ' probation.
Against 12 of those posts, 12 promotees were confirmed as District and Sessions Judges with effect from April 1, 1966.
The appellant was not one of those 12 promotees who were so confirmed although he had been continuously officiating as Civil and Sessions Judge since July 1960 and the direct recruits/Respondents 3, 4 and 5 were appointed to that cadre about six years later.
The appellant was however shown, along with others as confirmed with effect from January 1, 1969.
The appellant was appointed as officiating District and Sessions Judge under Government Notification dated January 9, 1974 with the rider that the seniority would be determined later on.
This Notification was cancelled by Notification dated July 17, 1974 whereby the 87 appellant was confirmed on the post of District and Sessions Judge with effect from February 1, 1973.
Respondent 3, 4 and 5 were appointed as District and Sessions Judges, and confirmed as such by a Government Notification dated January 9, 1974.
These Notifications were cancelled and replaced by fresh Notifications from time to time.
The last Notification Issued by the State Government confirming the appellant and respondents 3, 4 and 5 as District and Sessions Judges is of March 19, 1975.
Under this Notification, the appellant was confirmed with effect from February 1,1973 while respondents 3, 4 and 5 were confirmed with effect from July 16, 1972, August 8, 1972 and August 25, 1975, respectively.
On July 22, 1977, the High Court in exercise of its powers under Article 235 of the Constitution, issued a Notification confirming certain officers as District and Sessions Judges in order of seniority from the dates and in the vacancies shown against their names.
the appellant was shown at Serial No. 38 and respondents 3, 4 and 5 at Serial] Nos. 30, 31 and 32, respectively.
While the appellant 's date of confirmation was mentioned as May 18, 1973, respondents 3, 4 and 5 were shown as confirmed with effect from August 25.
The appellant challenged the validity of all the Notifications issued by the State Government relating to his confirmation as also of respondents 3, 4 and 5 on the post of Civil and Sessions Judge as well as on the post of District and Sessions Judge by a writ petition under Article 226 on these grounds: (1) That these orders were discriminatory and therefore, violative of Articles 14 and 16 of the Constitution; and (2) that the Governor had no power to confirm Civil and Session Judges and District Judges, as the same power being a part of 'control ' vested exclusively in the High Court under Article 235, (3) The appellant, also, (by amending his writ petition) impugned the validity of Notification No. 670 dated July 22, 1977 issued by the High Court during the pendency of the writ petition, (4) It was also contended on the authority of this Court in section B. Patwardhan vs State of Maharashtra(1) that the rule requiring determination of the seniority to be governed by the date of confirmation is Unconstitutional as it made seniority dependent upon the fortuitous circumstances of confirmation, and where a cadre consists of both permanent and temporary employees, the date of confirmation cannot be an intelligible criterion for determining seniority as between direct recruits and promotees.
The High Court has however, taken the view that Patwardhan 's (supra) is not attracted to the facts of the instant case because in the case of U.P. Higher Judicial Service, the matter stands concluded (1) ; , 88 by the decision of this Court in Chandra Mohan 's case(l), wherein it was held that it is open to the competent authority to determine the seniority in accordance with rule 20 sans the second proviso, supplemented by any other valid principles or rules.
After an elaborate discussion, the High Court concluded: "The Notification dated 17th July 1974 and Notification dated 19th March, 1975 issued by the Governor confirming the petitioner and the opposite parties 3, 4 and 5, are invalid and ultra vires inasmuch as the power to confirm on the post of District Judge vests in the High Court and not in the Governor.
The Notification of the High Court, dated 22nd July 1977, however, meets the situation and fills up the lacuna to a certain extent.
This Notification has been issued by the High Court in exercise of its powers under Article 235 of the Constitution.
The said Notification of the High Court also mentions the respective dates from which they stood confirmed.
These dates are not founded on proper criteria and it appears that they were not properly fixed.
Hence, that part of the said Notification of the High Court cannot be sustained.
Their dates of confirmation shall have to be redetermined by the High Court.
" In the result, the High Court partly allowed the writ petition and quashed the aforesaid Notifications dated July 17, 1974 and July 22, 1977 so far as they relate to the dates of confirmation of the petitioner and the opposite parties 3, 4 and 5.
A direction was given to the High Court in its administrative side, to redetermine the dates of their confirmation as District & Sessions Judges and their inter se seniority "in accordance with rule 20 sans the second proviso of the U.P. Higher Judicial Service Rules, 1953, supplemented by any other valid principles or rules".
The main contentions raised by Shri R. K. Garg, appearing on be half of the appellant, are (1) Rules 20 and 23 of the 1953 Rules, which make determination of seniority wholly dependent upon the fortuitous circumstance of confirmation offend Articles 14 and 15 of the Constitution.
(It is submitted that earlier in Civil Appeal 1703 of 1969 decided on April 19, 1976, he was obliged to give up the plea because fundamental rights were then under suspension and the broader protection of Article 14 was not available to him).
Reliance has been placed on Patwardhan 's case (ibid).
(2) (a) In the impugned Notifications, dates of confirmations have been fixed arbitrarily in a manner which unduly favours the direct recruits (respondents 3, 4 and 5) and singles out the appellant pro (I) A.I.R. 1976 S.C. 1482.
89 motee for unfavourable treatment, notwithstanding the fact that he was Promoted as Civil and Sessions Judge about 6 years prior to the recruitment of Respondents 3, 4 and 5 to the same cadre, and had also been promoted to the senior grade of the Service as District and Sessions Judge, one year prior to the promotion of these respondents to that grade.
The High Court has not properly construed the observation in this Court 's decision dated April 19, 1976 in C.A. 1703 of 1969, to the effect, that the seniority was to be determined "in accordance with rule 20 sans the second proviso of the U.P. Higher Judicial Service Rules, 1953, supplemented by any other valid principles or rules,".
In that observation the indication was clear that the confirmations were not to be arbitrarily made but in accordance with valid and fair criteria which would ensure that its consequences did not offend Articles 14 and 16.
One of these criteria would be the length of continuous service in the cadre of the Higher Judicial Service.
Indeed, new Rules of 1975 adopt this as the governing criteria for fixation of inter se seniority in the service.
According to Mr. Garg, this criterion, based as it was on a principle of fairplay, could be validly imported into the truncated Rule 20 of 1953 Rules, in accordance with the broad observation of this Court in its decision in C.A. 1703 of 1969.
(b) In any case, the Government had while creating 22 permanent posts with effect from April, 1966, (by conversion of the existing temporary posts held by promotees into permanent ones) as per Notifications (G.O. No. 870/7 AI 503 and G.C).
No. 2093/VII A Niaya/ 503/70) declared it as a matter of policy that all these posts are being created for permanent absorption of promotes who have been continuously working against temporary posts in an officiating capacity for more than three years.
Respondents 3, 4 and S had not even been appointed (on probation) to the service on April 1, 1966.
They entered the service on May 31, 1966, May 21, 1966 and June 1, 1966; while on April 1. 1966, or even on the date of respondents ' entry into service, the appellant had put in about six years ' continuous service as officiating Civil and Sessions Judge.
Thus, both as a matter of declared policy and fair principle, the appellant could not be denied confirmation with effect from April 1, 1966, against one of those 22 posts, and none of the respondents could be confirmed against any of those 22 posts which had been made permanent for the purpose of absorbing promotes who had put in officiating service for a period of more than three years.
Stress has been laid on the fact that apart ll from greater length of service, the appellant has an excellent, unblemished record of service.
In the circumstances, therefore, the confir 7 817 SCI/78 90 mation of the appellant with effect from a date later than those assigned to Respondents 3, 4 and 5 is unfair, arbitrary, and discriminatory.
As against this, Shri Andley, Learned Counsel for Respondents 3, 4 and 5 submits that the Respondents should be deemed to have been appointed to the service in 1964, when they were selected for appointment to the service. by the Select Committee of the High Court and were recommended for appointment to the Government.
The Respondents, it is submitted, would have been appointed to the Service and joined it in 1964, but for the fact that Chander Mohan etc.
in the writ proceeding obtained an interim order from the Court, restraining the Government from giving effect to their appointments, and it was only on the vacation of that "stay" order in 1966, the respondents could join duty, which they did in May and June 1966.
The delay in joining the service being not due to any fault on the part of the Respondents, for the purpose of confirmation and determination of seniority, it would be but fair to take the date of their appointment as the date on which they were selected by the Selection Committee in 1964 for recruitment to the Service.
If no stay order issued by the Court had intervened, the Respondents would have been entitled to be confirmed on completion of their two years ' probation in 1966, Long before a substantive vacancy could become available to the appellant.
It is pointed out while these direct recruits were, as usual, appointed against substantive vacancies, on probation, the appellant and other promotes like him were appointed against temporary posts on officiating basis only, and they (promotees) could claim confirmation only when substantive vacancies/posts became available to them.
It is further argued that the intendment of Rule 8 of the 1953 Rules was that 25 per cent of the vacancies in U.P. Higher Judicial Service should be filled by direct recruitment, and this, according to the learned Counsel implies that confirmation of direct recruits and promotes at any given time should also be made in the ratio of 1: 3 by rotation.
It is urged that when the matter is considered from this angle, the en bloc confirmation of 12 promotes with effect from April l, 1966 followed by the confirmation of the three direct recruits (respondents 3, 4 and 5) with effect from May 30, 1968, May 27, 1968 and June 1968, was neither improper, nor arbitrary.
Learned Counsel further maintains that equities are wholly on the side of respondents 3, 4 and S who are not younger than the appellant, and this should also be taken into account as a factor in their favour.
The last but luke warm contention of Shri Andley is that it is not clearly borne out by the record that the 22 temporary posts, converted 91 into permanent ones with effect from April 1, 1966, were created for the purpose of absorbing the promotees only.
We do not think it necessary to decide the question with regard to the constitutional validity of Rules 20 and 23, because this appeal can be disposed of on the second ground urged by Shri Garg.
Before dealing with that contention, it is necessary to have a clear picture of its factual premises.
There is no dispute that the appellant was promoted as officiating Civil and Sessions Judge in July 1960, while Respondents 3, 4 and 5 joined the service as Civil and Sessions Judges on probation, about six years later in May/June, 1966.
We are unable to accept Shri Andley 's argument that the date of the Respondents ' C entry into service should be assumed as the date in 1964, when the Selection Committee selected them for appointment.
There is no warrant for importing such a fiction.
The stark fact remains that respondents 3, 4 and S joined the service in May/June 1966.
It is further an uncontroverted fact that the appellant was promoted to the senior grade as officiating District and Sessions Judge about one year prior to the respondents ' promotion to that grade.
It is further clear from the record (vide Paragraph 6 (g) of the affidavit of Shri Radhika Raman, Under Secretary to the Government of Uttar Pradesh: Annexure IV A to the Rejoinder Affidavit of Respondents 3 and 5 filed in the High Court as also the copies of the Notifications filed by the appellant in this Court) that the State Government created (by conversion of the existing temporary posts/courts) 22 permanent posts/ courts of Civil and Sessions Judges, under G.O. Nos.
870/7 1 503, dated 19 6 1971 with effect from 1 1 69.
Later on, by another Government order No. 2693/VII/A Nyay 503/70, dated 3 3 1973, in modification of the earlier notification, the creation of the aforesaid 22 permanent posts was given effect from 1 4 1966.
By the impugned Government Notification of March 19, 1975, against 12 of those 22 posts, twelve promoted officers shown at Serial Nos.
24 to 35 were confirmed with effect from 1 4 1966.
Against the next 3 of those 22 posts, respondents 3, 4 and 5 were confirmed with effect from 31 5 68, 27 5 68 and 1 6 68.
Against the remaining seven promoted officers including the appellant, were confirmed with effect from January 1, 1969.
The first proviso to Rule 8 of 1953 Rules which provided for a quota of 25% for direct recruitment and 75% for promotion, was specifically declared void by this Court in Chandra Mohan 's case decided in 1966.
That void Rule, being non existent, was not available for the purposes of confirmation etc.
92 After considering the entire material on record and hearing the Counsel for the parties, including Shri Dikshit appearing for the State, we are unable to appreciate, why the appellant like 12 other promoted officers, was not confirmed with effect from April 1, 1966, when he was continuously working as officiating Civil and Sessions Judge from July, 1960.
In the case of promoted officers, the main criteria to be considered for their confirmation are: (i) Availability of a substantive vacancy/post.
(ii) Suitability for the post.
Here, in the case of the appellant, a substantive post was available to him with effect from April 1, 1966, when respondents 3, 4 and S had not even been appointed, on probation or otherwise, to the service.
By that date, April 1, 1966, he had put in service as officiating Civil and Sessions Judge for a period of 5 years and 9 months approximately.
There is nothing on record to suggest that by or on April 1, 1966, he was not found suitable for confirmation.
Why was he, then, not accorded the same treatment in the matter of fixing the date of his confirmation as had been meted out to twelve promoted officers who were confirmed with effect from April 1, 1966 Shri Dikshit has not been able to satisfy us that in not allocating 1 4 66 to the appellant as the date of his confirmation, the Government were acting according to any intelligible differentia or reasonable principle.
Nor is any a principle justifying a differential treatment to the appellant in the matter of fixing the date of his confirmation, discernible from the impugned Notification dated March 19, 1975, itself.
We are therefore, of opinion that this Government Notification dated March 19, 1975 cannot, as it stands, be sustained and needs reconsideration .
The same comments apply mutatis mutandis to the impugned Notification, dated July 22, 1977, issued by the High Court.
Moreover, once it is found that the Notification dated March 19, 1975 cannot be sustained, the foundation for fixing dates of confirmation and determining relative seniority of District and Sessions Judges will also crumble.
Accordingly we allow this appeal, set aside the impugned Notifications dated March 19, 1975 and July 22, 1977 in so far as they fix the dates of confirmation of the appellant vis a vis Respondents 3, 4 93 and 5, both in the junior and senior grade of the U.P. Higher Judicial Service.
The High Court shall consider the matter afresh and refix and readjust, in the exercise of its powers under Article 235 of the Constitution, the dates of the confirmation of the appellant and the said respondents, at first, in the grade of Civil and Sessions Judges, and then in the grade of District and Sessions Judges, in accordance with law.
There will be no order as to costs in this Court.
P.B.R. Appeal allowed.

Output:
Under the U.P. Higher Judicial Service Rules, 1953 appointments to the posts of Civil and Sessions Judges were made by promotion from the members of the U.P. Civil Service (Judicial Branch) and by direct rccruitment.
Rule 20 of the Rules dealing with seniority provided that seniority in each of the two classes of posts shall be determined by the date of confirmation in that class of post.
Rule 23 provided that a probationer shall be confirmed in his appointment at the end of his period of probation if the Governor was satisfied that he was fit for confirmation.
The appellant who was appointed as a Civil Judge in 1955, was promoted as officiating Civil and Sessions Judge in July, 1960.
Respondents 3 to 5 who were direct recruits to the post of Civil and Sessions Judges joined service In May/June, 1966.
For the purpose of absorbing the promoted officers the Government converted 22 temporary posts into permanent posts of Civil and Sessions Judges with effect from April 1, 1966.
Three out of those posts were given to the three respondents, who were direct recruits, and they were confirmed in the posts with effect from May/June, 1968.
In twelve other posts, twelve promotees were confirmed with effect from April 1, 1966, but the appellant was not so confirmed though he had been continuously officiating as a Civil and Sessions Judge since July, 1960.
He was confirmed as Civil and Sessions Judge with effect from January 1, 1969.
He was eventually confirmed in the post of District and Sessions Judge with effect from February 1, 1973.
The three respondents were later appointed as District and Sessions Judges.
By a Notification dated March 19, 1975, they were confirmed in those posts with effect from July/August, 1972.
The Notification dated July 22, 1977 issued by the High Court, showed the three respondents at serial Nos. 31 and 32 of the list and the appellant at No.38 and the dates of confirmation were shown as August 25, 1972 in respect of three respondents and March 18, 1973 in respect of the appellant.
The High Court allowed the appellant 's writ petition and quashed the Notifications dated March 19, 1975 and July 22, 1971 insofar as they related to the dates of confirmation of the appellant and the respondents.
The High Court on the administrative side was directed to redetermine the dates of their confirmation as District and Sessions Judges and their inter se seniority in accordance with Rule 20. 83 In appeal it was, inter alia, contended on behalf of the appellant that the 22 permanent posts having been created with effect from 1 4 1966 for permanent absorption of promotees who had been officiating prior to that date four a period of more than three years, (Respondents 3 to S who were not even in service on that date, could not be absorbed against any of those vacancies, and the appellant who had put in nearly six years of service in the Cadre on the date when the three respondents were appointed, could not be denied confirmation with effect from April 1, 1966; that apart from greater length of service, the appellant has an excellant, unblemished record of service; and in the circumstances, the confirmation of the appellant with effect from date later than those assigned to Respondents 3, 4 and S is unfair, arbitrary and discriminatory.
Allowing the appeal, ^ HELD: The main criteria to be considered for confirmation of officers officiating in the Higher Judicial Service of the State are: (i) Availability of a substantive vacancy/post.
(ii) Suitability for the post.
[92C] Here, a substantive post of Civil and Sessions Judge was available to the appellant from April 1, 1966, when Respondents 3, 4 and 5 had not even been appointed to the service in any capacity.
By April 1, 1966, the appellant had put in service as officiating Civil and Sessions Judge for a period exceeding 5 years and 9 months.
There is nothing on record to suggest that by or on April 1, 1966, he was not suitable for confirmation as Civil and Sessions Judge, or later, as District and Sessions Judge when a post in that grade became available to him.
In the circumstances, the impugned Notification dated March 19, 1975 issued by the Government, inasmuch as it did not accord to the appellant the same treatment which had been meted out to twelve other promoted officers who were confirmed with effect from April 1, 1966, is not based on any intelligible.
differentia or reasonable principle, and as such, cannot be sustained.
The same comments apply mutatis mutandis to the impugned Notification, dated July 22, 1977, issued by the High Court.
Once it is found that the Notification dated March 19, 1975 cannot be sustained, The foundation for fixing the dates of confirmation and determining relative seniority of District and Sessions Judges will also crumble.
[92D G] The entire matter therefore, requires reconsideration by the High Court in the exercise of its powers under Article 235 of the Constitution.


Input:
on (c) No. 857/87 etc.
(Under Article 32 of the Constitution of India).
Altaf Ahmed, Addl.
SolicitorGeneral, M.L. Verma, G.L. Sanghi.
K. Labiri, Sarva Miner, Narain, section Bhattacharya, Vivek Gambhir, S.K. Gambhir, Vijay Hansaria, P. Pameswaran, P.K.Jain, Rajiv Dutta, M.N. Shroff, Ms. A.Subhashini, Ms. PratibhaJain, L.K. Gupta, M.A. Firoz, Naresh K. Sharma, A.K. Goel, Ashok K. Mahajan, Ms. 54 Sushma Suri and Kailash Vasdev for the appearing parties.
The judgment of the Court was delivered by B.P. JEEVAN REDDY, J.
The petitioners in this batch of writ petitions question in the validity of the levy and collection of cess under section 3 of the Vegetable Oils Cess Act, 1983 for the period commencing 1st March, 1986 and ending with 31st March, 1987.
Parliament enacted in the year 1983 the National Oilseeds and Vegetable Oils Development Board Act, 1983 (being Act 29 of 1983) hereinafter referred to as the Board Act.
The Act was intended to provide for the development, under the control of the Union, of the oilseeds Industry and the Vegetable Oils Industry and for matters connected therewith.
The Act contemplated establishment and constitution of a board called the National Oilseeds and Vegetable Oils Development Board.
The functions of the Board were specified in section 9.
In short the duty of the Board was to promote the development, by such measures as it thought fit, subject to the control of the Central Government, the Oilseeds Industry and the Vegetable Oils Industry.
Section 12 provided for constitution of Oilseeds and Vegetable Oils Development Fund.
The fund was to be applied for promoting the purposes of the Act.
Simultaneously with the Board Act was enacted the Vegetable Oils Cess Act, 1983 (being Act 30 of 1983), hereinafter referred to as the Cess Act.
The purpose of this Act is stated in sub section (1) of section 3.
It is to levy and collect "by way of cess, for the purposes of the National Oilseeds and Vegetable Oils Development Board Act, 1983, a duty of excise on vegetable Oils produced in any m ill in India at such rate not exceeding Rs.5 per quintal on vegetable oil, as the Central Government may, from time to time, specify by notification in the Official Gazette".
Sub section (2) of Section 3 clarified that the duty of excise levied under sub section (1) section 3 shall be in addition to the duty of excise leviable on vegetable oils under the or any other law for the time being in force.
Sub section (3) stated that the duty of excise levied on section 3 (1) shall be payable by the occupier of the mill in which the vegetable oil is produced.
Sub section (.4) provided that the provisions of the 55 Central Excise Act and the Rules made thereunder including those relating to refunds and exemptions from duty, "shall so far as may be, apply in relation to the levy and collection of the said duty of excise as they apply in relation to the levy and collection of the duty of excise on vegetable oils under that Act".
Section 4 provided that the proceeds ,of the duty of excise levied under section 3 (1) shall first be credited to the Consolidated Fund of India.
Subject to appropriation made by law by the Parliament, the Central Government could pay to the Board from time to time such amounts from out of the said collections as it thought fit for being utilised for the purposes of the Board.
Section 7 amended certain provisions of the .
It is thus clear that the cess, which is called a duty of excise, levied under section 3 of the cess Act was intended to serve the purposes of the Board Act.
The said cess was accordingly levied and collected on and from 1983.
The Cess Act was, however, repealed by section 12 of the Cotton, Copra and Vegetable Oils Cess (Abolition) Act, 1987 (being Act 4 of 1987), hereinafter referred to as the Repeal Act.
Chapter IV of the Repeal Act provides for the repeal inter alia of the Vegetable Oil Cess Act, 1983.
Section 12 is the repealing section.
Chapter V, containing only one section namely section 13, is relevant for purposes.
Chapter V carries the heading "COLLECTION OF ARREARS OF DUTIES OF EXCISE",.
Section 13 reads as follows: "13.
Collection and payment of arrears of duties of excise Notwithstanding anything contained in the amendments made to the (15 of 1966) or the repeal of the Copra Cess Act, 1979 (4 of 1979) or the Vegetable Oils Cess Act, 1983 (30 of 1983) , by this Act, any duty of excise, levied under any of the said Acts immediately before the commencement of this Act, but has not been collected before such commencement, shall be liable to be collected after such commencement in accordance with the provisions of the said Acts for being paid into the Consolidated Fund of India as if this Act had not been enacted," The Statement of Objects and Reasons appended to the Bill,.
56 (which became the Repeal Act) stated inter alia that the abolition of the said cess was with a view to reduce the number of cesses and multiplicity of taxes.
The petitioners do not dispute the validity of the levy of the said cess/duty of excise till the 28th February, 1986.
Their submission is confined, as stated hereinbefore, to the period commencing on.
March 1, 1986 and ending with March 31, 1987.
As noticed here in before, the Cess Act was repealed on and with effect from March 31, 1987 by section 12 of the Repeal Act.
Section 13 of the Repeal Act expressly provides notwithstanding the said repeal, the duty of excise levied under the said Act immediately before the commencement of the Repeal Act, but which has not been collected before such commencement, shall be liable to be collected even after the repeal, in accordance with the Cess Act, as if the said Cess Act has not been repealed.
In the face of this provision, it would appear that the petitioners ' dispute as to their liability to pay the said cess for the period March 1, 1986 to March 31, 1987 is of little avail.
The petitioners, however, rely upon certain circumstances/grounds in support of their contention which we may now deal with.
The petitioners are manufacturers of vegetable oil, which was subject to the cess/duty of excise under section 3 of the Cess Act.
They rely upon the following circumstances and ground in supports of their plea: (1) In his Budget Speech delivered on 28.2.1986, presenting the Budget 1986 87, the Union Minister of Finance stated: "the long term Fiscal Policy recognises that cesses levied as excise duties contribute to the multiplicity of taxes.
As an endeavour to reduce the number of the cesses it has been decided to dispense with the cess on cotton, copra and vegetable oils.
The Ministry of Agriculture will take appropriate action in the matter.
The loss to the exchequer on this account will be Rs.5.90 crores.
" The Budget proposals also specify the loss of revenue on account of the decision to dispense with the cess on vegetable oils among others.
This, Speech made on the floor of the Lok Sabha speaks of a decision already taken by the Government and is enforceable and effective from the said date.
57 (2) In pursuance of the said decision of the Government of India, the Directorate of Vanaspati, Vegetable Oils and Fats addressed the letter dated August 11, 1986 to the Commissioner (Tax Research) Department of Revenue,.
New Delhi asking him to issue instructions to all concerned indicating that the cess on vegetable oils has been dispensed with and as such the cess shall not be collected.
It was further directed that the cess collected, if any, since April 1, 1986 shall be refunded.
A copy of this letter was sent to the President, Central Organisation for Oil Industries and Trade, Bombay.
Counsel for the petitioners Shri M.L. Verma and G.L. Sanghi urged the following contentions: (a) The Budget Speech of the Finance Minister delivered on the floor of the Lok Sabha constitutes a enforceable and effective decision upon which the petitioners were entitled to act.
The said decision was exemplified and implemented by way of a communication from the Directorate of Vanaspati, Vegetable Oils and Fats referred to above.
In view of the said communication, the petitioners did not pass on the burden of the said cess to their purchasers on and from March 1, 1986.
It is not open to the Government to go back upon the said decision and demand cess for the period subsequent to March 1, 1986.
(b) By virtue of sub section (4) of section 3 of the Cess Act, Rule 8 of the Central Excise Rules is attracted among other provisions of the Central Excise Act and Rules.
Rule 8 empowers the Central Government to grant exemption on any excisable goods from the whole or any part of duty leviable on such goods.
Sub rule (1) of Rule 8 empowers the Central Government to grant exemption while Sub rule (2) em powers the Central Board of Excise and Customs to grant exemption.
Inasmuch as section 3 (4) of the Cess Act applies the provisions of the Central Excise Act and the Rules subject to the rider "so far as may be", the provisions in Rule 8 should be read with the necessary modification.
In other words, while sub rule (1) of rule 8 must be read as empowering the Central Government to grant exemption, sub rule (2) must be read as conferring a similar power upon the Central Government and/or the Directorate of Vanaspati, Vegetable Oils and Fats.
Unlike sub rule (1), sub rule (2) does not require the order of exemption to be published in the Official Gazette nor does it require that such 58 exemption should be through a notification.
The budget proposals of the Finance Minister and the letter of the Directorate of the Vanaspati and Vegetable Oils aforesaid are relatable to sub rule (2) or Rule 8 of Central Excise Rule read with sub section (4) of section 3 of the Cess Act.
Reading them together it must be held that the Government and the Directorate have exempted the vegetable oils from the levy under section (1) of section 3.
We find it difficult to agree.
It is not brought to our notice that the budget proposals contained in the Finance Minister 's speech were accepted by the Parliament.
The cess having been imposed by a Parliamentary enactment could be rendered inoperative only by a Parliamentary enactment.
Such repealing enactment came only in the year 1987 with effect from April 1, 1987.
Not only that.
The repealing Act expressly provided in section 13 that the cess due before the date of said repeal.
but not collected, shall be collected according to law as if the Cess Act is not repealed.
This provision amounts to a positive affirmation of the intention of the Parliament to keep the said imposi tion alive and effective till the date of the repeal of the Cess Act.
In the face of the said statutory provisions, no rights can be founded nor can the levy of the cess be said to have been dispensed with by virtue of the alleged decision referred to in the Finance Minister 's speech or on account of the letter dated August 11, 1986.
The Finance Minister 's speech is not law.
The Parliament may or may not accept his proposal.
Indeed, in this case, it did not accept the said proposal immediately but only a year later.
It is only from the date of the repeal that the said levy becomes inoperative.
Now coming to the argument based upon Rule 8 of the Central Excise Rules read with section 3(4) of the Cess Act, we find it totally unacceptable.
No notification has been issued under rule 8 (1) by the Central Government much less was any such notification published in the Gazette.
No special order has also been made by the Central Board of Excise and Customs in this behalf under rule 8 (2).
The cess imposed under section 3 (1) of the Cess Act, it may be remembered, is a duty or Excise as stated in section 3 itself.
Therefore, the Central Board of Excise and Customs was perhaps competent to grant exemption even in the case of said cess though we do not wish to express any definite opinion on this question since it was not debated at the Bar.
Suffice it to say that the Central Government cannot again be brought 59 in under sub rule (2) of rule 8 in the place of Central Board nor can the Directorate of Vanaspati and Vegetable Oils be equated to Central Board of Excise and Customs.
The words "so far as may be" occurring in section 3 (4) of the Cess Act can not be stretched to that extent.
Above all it is extremely doubtful whether the power of exemption conferred by rule 8 can be carried to the extent of nullifying the very Act itself.
It would be difficult to agree that by virtue of the power of exemption, the very levy created by section 3(1) can be dispensed with.
Doing so would amount to nullifying the Cess Act itself.
Nothing remains thereafter to be done under the Cess Act.
Even the language of rule 8 does not warrant such extensive power.
Rule 8 contemplates merely exempting of certain excisable goods from the whole or any part of the duty leviable on such goods.
The principle of the decision of this Court in Kesavananda Bharti Sripadagalvaru and others vs State of Kerala and another A.I.R. 1973 S.C. 1461 applies here perfectly.
It was held therein that the power of amendment conferred by Article 368 cannot extend to scrapping of the Constitution or to altering the basic structure of the constitution.
Applying the principle of the decision, it must he held that the power of exemption cannot be utilised for, nor can it extend to, the scrapping of the very Act itself.
To repeat, the power of exemption cannot be utilised to dispense with the very levy created under section 3 of the Cess Act or for that matter under section 3 of the Central Excise Act.
Mr. Sanghi submitted that the Board contemplated under the Board Act never did actually start functioning and, therefore, the levy of cess is impermissible.
It is difficult to agree with this contention either.
As the Preamble to the Cess Act indicates, the levy of the said cess was not for the purpose of the Board but for the purpose of the development of the Oilseeds Industry and Vegetable Oils Industry.
The Board was merely a medium in that effort.
It must be noticed that the cess was to be credited to the Consolidated Fund of India, out of which requisite sums of money to be utilised for the purpose of the Board Act.
In any event there is nothing to show that the Board did not become operational except the bare assertion to that effect.
A vague allegation cannot merit any credence.
In Writ Petition 963 of 1987 Mr. Sanghi raised an additional contention that the goods concerned therein cannot be called "Veg 60 eatable Oil" within the meaning of section 3 (1) of the Cess Act and, therefore, the levy of the cess thereon is incompetent.
We cannot, however, allow this contention to be raised in a petition under Article 32 of the Constitution.
It is open to the petitioner to raise the said contention before the appropriate authority at the appropriate stage.
For the above reasons the writ petitions fail and are dismissed but in the circumstances without costs.
N. V. K. Petitons dismissed.

Output:
Parliament enacted In 1983 the National Oilseeds and Vegetable Oils Development Board Act, 1983 to provide for the development, under the control of the Union, of the Oilseeds Industry and the Vegetable Oils Industry and for matters connected therewith.
The Act contemplated the establishment of a board called the National Oilseeds and Vegetable Oils Development Board, and the Constitution of Oilseeds and Vegetable Oils Development Fund for promoting the purposes of the Act.
The Vegetable Oils Cess Act, 1983, was, simultaneously enacted to levy and collect by way of cess, for the purpose of the National Oilseeds and Vegetable Oils Development Board Act,1983, a duty of excise on vegetable oils produced in any mill in India at such rate not exceeding Rs. 5 per quintal on vegetable oil.
This Cess Act was, however, repealed by Section 12 of the Cotton, ' Copra and Vegetable Oils Cess (Abolition) Act, 1987.
Chapter 5 of the ' said Act carried the heading 'Collection and Payment of Arrears of Duties and Excise '.
The petitioners who were manufacturers of vegetable oil, which was subject to the cess/duty of excise under Section 3 of the Cess Act, in their writ petitions to this Court questioned the validity of the levy and collection of cess for the period commencing on, 1st March, 1986 and ending with 31st March.
It was contended that (1) In his Budget Speech delivered on 28.2.1986 while presenting the Budget 52 1986 87, the Union Finance Minister had stated that as an endeavour to reduce the number of cesses it had been decided to dispense with the cession cotton, copra and vegetable oils and that this statement was exemplified and implemented by way of a communication from the Directorate of Vanaspati.
It is not open to the Government to go back upon the said decision and demand cess for the period subsequent to March 1, 1986, and (2) By virtue of Sub section (4) of Section 3 of the Cess Act, Rule 8 of the Central Excise Rules is attracted among other provisions of the Central Excise Act and Rules.
Reading the budget proposals of the Finance Minister and the letter of the Directorate of Vanaspati together it must be held that vegetable oils have been exempted from the levy under Section 3 (1).
Dismissing the Writ Petitions, this Court, HELD: 1 (a) The cess having been imposed by a Parliamentary enactment could he rendered inoperative only, by a parliamentary enactment.
Such repealing enactment came only in the year 1987 with effect from April 1, 1987.
(58 C) (b) The repealing Act expressly provided in Section 13 that the cess due before the date of said repeal, but not collected, shall be collected according to law", as if the Cess Act is not repealed.
This provision amounts to a positive affirmation of the intention of the parliament to keep the said imposition alive and effective till the date of the repeal of the Cess Act.
(58 1).
) (c) In the face of the aforesaid statutory provisions, no rights can he founded nor can the levy of the cess be said to have been dispensed with by virtue of the alleged decision referred to in the Finance Minister 's speech or on account of the letter dated August 11., 1986.
(58 E) (d) The Finance Minister 's speech is not law.
The Parliament may or may not accept his proposal.
Indeed, in this case, it did not accept the said proposal immediately but only a %ear later.
It is only from the date of the repeal that the said levy becomes inoperative.
2 (a) The cess imposed under section 3 (1) of the Cess Act.
is a duty of Excise as stated in Section 3 Itself.
Therefore, the Central Board of Excise and Customs was perhaps competent to grant exemption even in the case of said cess though no definite opinion on this question need be expressed since it was not debated.
Suffice It to say that the Central Government cannot again be brought in under sub rule (2) of rule 8 in the place of the Central Board nor can the Directorate of Vanaspati and Vegetable Oils be equated to the Central Board of excise and customs.
(58 H, 59 A) (b) The words "so far as may bell occurring In section 3 (4) of the Cess Act cannot be stretched to that extent.
Above all It Is extremely doubtful whether the power of exemption conferred by rule 8 can be carried to the extent of nullifying the very Act itself.
It would be difficult to Wee that by virtue of the power of exemption, the very levy created by Section 3 (1) can be dispensed with.
Doing so would amount to nullifying the Cess Act Itself.
Nothing remains thereafter to be done under the cess Act.
Even the language of Rule 8 does not warrant such extensive power; Rule 8 contemplates merely exempting of certain excisable goods from the whole or any part of the duty leviable on such goods.
(59 B) 3.
The power of exemption cannot be utilised to dispense with the very levy created under Section 3 of the Cess Act or for that matter under Section 3 of the Central Excise Act.
(59 E) Kesavananda Bharti Sripadagalvaru and others vs State of kerala and another A.I.R. 1973 S.C. 1461, (62 G) relied on.


Input:
: Criminal Appeal No 385 of 1988.
D From the Judgment and order dated 14.8.1987 of the Guwahati High Court in Criminal Revision No. 303 of 1986.
R. Ramachandran for the Appellant.
B. Datta, Additional Solicitor General, Kitty Kumar Marylar and Ms. A. Subhashini for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
Special leave granted.
The appeal is disposed of by the order passed herein.
On 20th of November, 1976, the appellant was posted in the State of Arunachal Pradesh as an Executive Engineer (Elect).
An accident took place in the jeep which was alleged to have been driven by the appellant.
The accident took place within the Bomdila Police Station in Arunachal Pradesh.
In the said accident one of the occupants, J.K. Jain, Assistant Engineer (Elect) died and another section Karim, driver sustained grievous injuries.
According to the police the accident is attributable to rash and negligent driving of the appellant.
As per the case file, Shri R.B. Singh, Sub Inspector submitted a report to the Deputy Commissioner, Bomdila on 22nd November, 1976, who H 480 according to the learned Magistrate took cognizance of the offence under section 32(c) of Regulation I of 1945 and the police registered the case.
The learned Magistrate held that cognizance was taken on 22nd November, 1976.
This finding, however, was not sustained by the High Court.
The police is alleged to have registered the case and took up investigations and submitted the chargesheet in September, 1977 which, however, appears to have been placed before the Deputy Commissioner on 31st March, 1986, and it was on that date that the cognizance of the offence was taken, according to the High Court.
The learned Magistrate in his order stated that the reason why report could not be placed before the Court promptly merited detailed probing, which showed that cognizance was taken on 22nd November, 1976 by the competent authority but the court proceedings thereof commenced on 31st March, 1986.
The appellant was chargesheeted under section 279 read with section 304A/338 of the Indian Penal Code.
According to the appellant cognizance was only taken on 31st March, 1986.
The first question, therefore, in this case is: when was the cognizance taken.
By the order of the learned Magistrate, the appellant was directed to appear on the next date of hearing, that is on 8th September, 1986.
The order was passed on 14th July, 1986.
Challenging the said order, the appellant moved the High Court of Gauhati under section 482 of the Code of Criminal Procedure read with Article 227 of the Constitution for quashing the charges framed by the Magistrate 1st Class, Bomdila.
The High Court in its judgment and order dated 14th August, 1987 held that the investigation started on 22nd November, 1976 on the registration of the case under sections 279, 304A and 338 of the I.P.C. and the investigation was completed on 8th September, 1977 and cognizance was taken on 31st March, 1986 when the Deputy Commissioner passed the following order: "Records perused.
Issue summons to the accused to appear at Kameng on 9th May, 1986.
" Therefore, the first question that arises is, when was the cognizance taken, on 22nd November, 1976 or 31st March, 1986.
The High Court held that cognizance was taken on 31st March, 1986.
The offence under section 279 is punishable with imprisonment for a term not exceeding 6 months, or with fine, or with both.
Offence under section 304A is punishable with imprisonment for a term not exceeding 2 years, or with fine, or with both.
Offence under section 338 is punishable with imprisonment for a term not exceeding 2 years.
Or with fine or with both.
In the aforesaid view of the matter, the period of limitation for taking cognizance of the offences would be three years.
Section 468 of the Code of Criminal Procedure provides as follows: 481 "468.
Bar to taking cognizance after lapse of the period of limitation: (1) Except as otherwise provided elsewhere in this Code, no Court shall take cognizance of an offence of the category specified in sub section (2), after the expiry of the period of limitation.
(2) The period of limitation shall be (a) six months, if the offences is punishable with fine only, (b) one year, if the offence is punishable with imprisonment for a term not exceeding one year; (c) three years, if the offence is punishable with imprisonment for a term exceeding one year but not exceeding three years.
" There is, however, a provision for extension of the period of limitation in certain cases where on the facts and circumstances of the case, the delay has been properly explained or it is necessary in the interest of justice to do so.
This is provided in section 473 of the Criminal Procedure Code in the following terms: "473 Extention of period of limitation in certain cases Notwithstanding anything contained in the foregoing provisions of this Chapter, any Court may take cognizance of an offence after the expiry of the period of limitation, if it is satisfied on the facts and in the circumstances of the case that the delay has been properly explained or that it is necessary so to do in the interest of justice.
" It was contended before us that the first question that arises in this appeal is: when the cognizance of the offence was taken in this case.
This Court in Tula Ram and others vs Kishore Singh, ; explained the meaning of the words "taking cognizance" and held that it means judicial application of mind of the magistrate to the facts mentioned in the complaint with a view to taking further action.
In this connection reference may also be made to the observations of this Court in Bhagwant Singh vs Commissioner of Police and another; , It was held by this Court as follows: 482 "Now, when the report forwarded by the officer in charge of a police station to the Magistrate under sub section (2)(i) of section 173 comes up for consideration by the Magistrate, one of two different situations may arise.
The report may conclude that an offence appears to have been committed by a particular person or persons and in such a case, the Magistrate may do one of three things:(1) he may accept the report and take cognizance of the offence and issue process or (2) he may disagree with the report and drop the proceeding or (3) he may direct further investigation under sub section (3) of section 156 and require the police to make a further report.
The report may on the other hand state that, in the opinion of the police, no offence appears to have been committed and where such a report has been made, the Magistrate again has an option to adopt one of three courses; (1) he may accept the report and drop the proceeding or (2) he may disagree with the report and taking the view that there is sufficient ground for proceeding further, take cognizance of the offence and issue process or (3) he may direct further investigation to be made by the police under sub section (3) of section l56.
. . . . . . . .
But if the Magistrate decides that there is no sufficient ground for proceeding further and drops the proceeding or takes the view that though there is sufficient ground for proceeding against some, there is no sufficient ground for proceeding against others mentioned in the First Information Report, the informant would certainly be prejudiced because the First Information Report lodged by him would have failed of its purpose, wholly or in part.
. . . . .
There can, therefore, be no doubt that when, on a consideration of the report made by the officer in charge of a police station under sub section (2)(i) of section 173, the Magistrate is not inclined to take cognizance of the offence and issue process, the informant must by given an opportunity of being heard so that he can make his submissions to persuade the Magistrate to take cognizance of the offence and issue process.
" The High Court was of the view that really cognizance in this case was taken on 31st March, 1986.
The High Court has set out the facts on which it is relied.
The said finding of the High Court has not 483 been challenged.
The appellant in this case before this Court has proceeded on that basis.
Shri B. Datta, Additional Solicitor General contended that cognizance was taken as early as in September, 1977.
It was contended before us on behalf of the appellant as it was said before the High Court that if the cognizance was taken in 1986, then it was clearly beyond the time.
If the principles of the Code of Criminal Procedure applied, the laking of cognizance of the offence was barred by section 468 of the Code of Criminal Procedure.
It was submitted before the High Court of Gauhati and reiterated before us that the provisions of the Code of Criminal Procedure do not apply to the State of Arunachal Pradesh.
In this connection reliance was placed on section 32 of the Assam Frontier (Administration of Justice) Regulation, 1945.
Section 32 of the Regulation provides that the High Court, the Deputy Commissioner and the Assistant Commissioner shall be guided in regard to procedure by the principles of the Code of Criminal Procedure so far as these are applicable to the circumstances of the District and consistent with the provisions of the Regultion.
There are exceptions to section 32.
Those exceptions are irrelevant for the present purpose.
The High Court held, and in our opinion rightly, that section 32 of the said Regulation should be guided by the spirit of the Code and it will be proper to throw out a complaint if there was inordinate or undue delay, which was not explained.
Indeed, this Court in State of Punjab vs Sarwan Singh, [1981] 3 S.C.R. 349 observed at page 351 of the report that the object of the Criminal Procedure Code in putting a bar of limitation on prosecutions was clearly to prevent the parties from filing cases after a long time, as a result of which material evidence may disappear and also to prevent abuse of the process of the court by filing vexatious and belated prosecutions long after the date of the offence.
This Court reiterated that the object which the statutes seek to subserve is clearly in consonance with the concept of fairness of trial as enshrined in Article 21 of the Constitution.
Shri Raju Ramachandran submitted that the exercise of the power under section 473 of the Criminal Procedure Code extending the period of limitation by condoning the delay in launching the prosecution, should precede the taking of cognizance of the offence.
Reliance was placed on the Bench decision of the Madras High Court in Kathamuthu vs Balammal, It was held by the Punjab and Haryana High Court in the case of Ghansham Dass vs Sham Sundar Lal, that cognizance taken by the Magistrate without deciding the point in limitation was beyond his jurisdiction.
In this connection, reliance may be placed to the decision of this Court in Surinder Mohan Vikal vs Ascharaj Lal Chopra, [1978] 484 2 S.C.C. 403 where at page 407 of the report, while dealing with the provisions of section 468 of the Code of Criminal Procedure, this Court observed that it is hardly necessary to say that statutes of limitation have legislative policy behind them.
For instance, they shut out belated and dormant claims in order to save the accused from unnecessary harassment.
They also save the accused from the risk of having to face trial at a time when his evidence might have been lost because of the delay on the part of the prosecutor.
As has been stated, a bar to the taking of cognizance has been prescribed under section 468 of the Code of Criminal Procedure and there is no reason why the appellant should not be entitled to it in the facts and circumstances of this case.
Our attention was also drawn to the case of Vijay Kumar Agarwalla vs State of Assam, , where the Court held that taking of cognizance without condoning delay was bad and without jurisdiction.
The High Court in the instant judgment under appeal held that this aspect of the matter was not considered by the Magistrate and the High Court quashed the charges against the appellant and remitted the case to the Magistrate for considering the case afresh.
In the instant case, the broad facts that emerge are that the alleged offence took place in November, 1976, and until the High Court 's order in August, 1987 no investigation had taken place.
The offence is of rash and negligent driving.
It is, as such, neither a grave and heinous offence nor an offence against the community as such, though all criminal offences are crimes against society.
It is not necessary in the facts and circumstances of the case to decide, whether cognizance was properly taken.
It is also not necessary to decide whether the extension of period of limitation under section 473 must precede or taking of the cognizance of the offence.
It 1:: is also not necessary to decide whether cognizance in this case was taken on 8th September, 1977 as held by the learned Magistrate or on 31st March, 1986 as held by the High Court.
Having regard to the nature of offence there is enormous delay in proceeding with the criminal prosecution by the respondent 91/2 years for a trial for rash and negligent driving, is too long a time.
Quick justice is a sine qua non of Article 21 of the Constitution.
Keeping a person in suspended animation for 91/2 years without any cause at all and none was indicated before the learned Magistrate or before the High Court or before us, cannot be with the spirit of the procedure established by law.
In that view of the matter, it is just and fair and in accordance with equity to direct that the trial or prosecution of the appellant to proceed no further.
We do so accordingly.
485 In the aforesaid view of the matter, we are of the opinion that the A proceedings cannot be proceeded any further.
We allow the appeal, set aside the order of the High Court of Gauhati.
dated 14th August, 1987 and quash the proceedings against the appellant.
The proceedings against the appellant are hereby quashed.
G.N. Appeal allowed.

Output:
The appellant was driving a jeep which met with an accident and one of the occupants died and another sustained grievous injuries.
According to the Police, the accident was attributable to rash and negligent driving of the appellant.
He was charge sheeted under section 279 IPC read with sections 304 A/338 IPC and a report was submitted to the Deputy Commissioner on 22nd November 1976.
The Magistrate held that cognizance was taken on 22nd November, 1976 itself.
The appellant moved the High Court under section 482 Cr.
P.C. read with article 227 of the Constitution.
The High Court held that the investigations started on 22nd November, 1976 on the registration of the case and were completed on 8th September, 1977, and cognizance was taken on 31st March, 1986 when the Deputy Commissioner passed an order for issuing summons to the appellant.
The High Court quashed the charges against the appellant and remitted the case to the Magistrate for considering it afresh.
This appeal by special leave is against the High Court Judgment.
It was contended before this Court that since cognizance was taken in 1986, it was barred by section 468 Cr.
On behalf of the Respondent it was contended that the provisions of Cr.
P.C. do not apply to the State of Arunachal Pradesh.
478 Allowing the appeal, this Court, ^ HELD: 1.1 Section 473 Cr.
P.C. provides that any Court may take cognizance of an offence after the expiry of the period of limitation, if it is satisfied on the facts and in the circumstances of the case that the delay has been properly explained or that it is necessary to do so in the interest of justice.
Taking cognizance means judicial application of mind of the Magistrate to the facts mentioned in the complaint with a view to taking further action.
[484E H] Tula Ram and others vs Kishore Singh, ; , referred to.
1.2 As regards the contention that Cr.
P.C. is not applicable to the State of Arunachal Pradesh, the High Court rightly held that section 32 of the Assam Frontier (Administration of Justice) Regulations, 1945, on which reliance was placed, should be guided by the spirit of the Code and it will be proper to throw out a complaint if there was inordinate or undue delay, which was not explained.
[483D E] State of Punjab vs Sarwan Singh, [1981] 3 SCR 349, referred to.
1.3 Statutes of limitation have legislative policy behind them.
They shut out belated and dormant claims in order to save the accused from unnecessary harassment.
They also save the accused from the risk of having to face trial at a time when his evidence might have been lost because of the delay on the part of the prosecution.
A bar has been prescribed under section 468 Cr.
P.C. and there is no reason why the appellant should not be entitled to it in the facts and circumstances of this case.
[484A C] Surinder Mohan Vikal vs Ascharaj Lal Chopra, ; , relied on.
Kathamuthu vs Balammal, ; Ghansham Dass vs Sham Sunder Lal, and Vijay Kumar Agarwalla vs State of Assam, , referred to.
In the instant case, the broad facts that emerge are that the alleged offence took place in November, 1976, and until the High Court 's order in August, 1987 no investigation had taken place.
The offence is of rash and negligent driving.
It is, as such, neither a grave and heinous offence nor an offence against the community as such, 479 though all criminal offences are crimes against society.
It is not necessary in the facts and circumstances of the case to decide, whether cognizance was properly taken, whether the extension of period of limitation under section 473 must precede taking of the cognizance of the offence, and whether cognizance in this case was taken on 8th September, 1977 as held by the learned Magistrate or on 31st March, 1986 as held by the High Court.
Having regard to the nature of offence there is enormous delay in proceeding with the criminal prosecution by the respondent 91/2 years for a trial for rash and negligent driving is too long a time.
Quick justice is a sine qua non of Article 21 of the Constitution.
Keeping a person in suspended animation for 91/2 years without any case at all cannot be with the spirit of the procedure established by law.
[484D G] C [This Court set aside the order of the High Court and quashed the proceedings against the appellant.] [485A B]


Input:
Appeal No. 265 of 1972.
From the Judgment and Order dated the 24th August, 1971 of the Kerala High Court in I.T.R.No.
25 of 1969.
G.B. Pai, K.J. John for M/s Dadabhanji & Co., for the Appel lant.
B.B. ,Ahuja and R.N. Sachthey for Respondent.
The Judgment of the Court was delivered by GUPTA, J.
The question for decision in this case is whether the money contributed by the assessee, public limit ed company, for the construction of a new road in the area where its factory is located to improve transport facilities is capital expenditure or revenue expenditure.
The assess ment year in question is 1964~65, the relevant accounting period being the financial year ended March 31, 1964.
The assessee company is engaged in the manufacture of chemicals; it had been receiving and despatching materials required for and produced in its factory through lorries.
The assessee along with three, 716 other public undertaking approached the Government of Kerala for laying a new road from kalamasseri to Udyogamanndal; this area where the assessee 's factory is situate was not at the material tune served by pucca roads.
It was agreed that the Government of Kerala would bear the cost of the acquisition of the land and 25 per cent of the cost of construction.
The total cost to be shared by the four companies was Rs. 1,04,550/ and the assessee 's share came to Rs. 26,100/ .
The assessee company sought to deduct this amount from its total income c/aiming this as revenue expenditure for the year in question.
The Income tax Officer disallowed the claim holding that the assessee 's contribution was capital expenditure.
The Appellate As sistant Commissioner took the same view.
The Appellate Tribunal, mainly relying on the decision of the Calcutta High Court in Commissioner of Income tax vs Hindustan Motors Limited,(1) held that the assessee was entitled to deduct the amount as revenue expenditure.
At the instance of the Commissioner of Income tax, Kerala, Ernakulam, the Tribunal referred the following question to the High Court of Kerala under section 256(1) of the Income Tax Act,1961: "Whether, on the facts and in the circum stances of the case, the Appellate Tribunal was legally justified in allowing the expendi ture of Rs. 26,100/ being the respondent 's contribution to government for constructing a road as a permissible deduction under section 37(1) 0f the Income Tax Act, 1961." The High Court held that the assessee in this case ob tained an advantage of an enduring nature by the construc tion of the road and, therefore, the amount contributed was capital expenditure.
The High Court accordingly answered the question in negative and against the assessee.
In this appeal, brought on a certificate under section 261 of the Income Tax Act, 1961, the assessee challenges the correct ness of the answer given by the High Court to the question.
The authorities both in this country and in England have pointed out the difficulties in formulating precise rules for distinguishing capital expenditure from revenue expendi ture.
The line of demarcation has been found to be very thin.
Certain broad tests have however been laid down, and of them the test suggested by viscount Cave, L. C., in Atherton vs British Insulated and Helsby Cables Limited(2) appears to have been largely accepted in this country.
This Court in Assam Bengal Cement Company Limited vs Commis sioner of Income tax, West Begnal(3); Sitalpur Sugar Works Limited vs Commissioner of Income tax, Bihar and Orissa( ') and a number of other decisions has adopted the test as laid down in Atherton 's case: to refer again to these often quoted lines from Viscount Cave 's Judgment "when an expendi ture is made, . . with a view to bringing into existence an asset or an advantage for the enduring benefit of a (1) (2) (1925) 10 Tax Cases 155.
(3) (4) 717 trade, I think that there is very good reason (in the ab sence of special circumstances leading to an opposite con clusion) for treating such an expenditure as properly at tributable not to revenue but to capital".
Referring to Atherton 's case and certain other authorities on the dis tinction between capital expenditure and revenue expenditure and the tests to be applied, this Court in Assam Bengal Cement Company Limited vs Commissioner of Income tax(1) observed: "If the expenditure is made for acquiring or bringing into existence an asset or advantage for the enduring benefit of the business it is properly attributable to capital and is of the nature of capital expenditure.
If on the other hand it is made not for the purpose of bringing into existence any such asset or advantage but for running the business or working it with a view to produce the profits it is a revenue expenditure.
If any such asset or advantage for the enduring benefit of the business is thus acquired or brought into existence it would be immaterial whether the source of the payment was the capital of the income of the concern or whether tire payment was made once and for all or was made periodically.
The aim and object of the expenditure would determine the character of the expenditure whether it is a capital ex penditure or a revenue expenditure.
The source or the manner of the payment would then be of no consequence.
It is only in those cases where this test is of no avail that one may go to the test of fixed or circulating capital and consider whether the expenditure incurred was part of the fixed capital of the business or part of its circulating capital.
If it was part of the fixed capital of the business it would be of the nature of capital expenditure and if it was part of its circu lating capital it would be of the nature of revenue expenditure.
" In the case before us, the High Court applied viscount Cave 's test and found that the expenditure made by the assessee brought into existence an advantage for the endur ing benefit of the assessee 's trade and accordingly held that this was capital expenditure.
Each case turns on its own facts.
It is not disputed here that the correct test has been applied.
Did the money spent by the assessee on construction of the new road secure for it an enduring benefit, or was it necessary for running its business? On the facts of the case the position seems to be clear enough not to merit an elaborate consideration, that by having the new road constructed for the improvement of transport facilities, the assessee acquired an enduring advantage for its business. The High Court rightly pointed out that the decision of the Calcutta High Court in Commis sioner of Income tax vs Hindustan Motors Ltd.(2) on which the appellate tribunal relied, is clearly distinguishable on facts; that was a case where the expenditure incurred was for repair of an existing road which is different from the case where a new road is laid out for the purpose of the assessee 's (1) (2) (1968)68 I.T.R. 301.
718 business.
Mr. Pai, learned counsel for the appellant, has relied on the decision of this CoUrt in Lakshmiji Sugar Mills Company Private Limited vs Commissioner of Income tax, New Delhi(1), to contend that even the expenditure on the construction of roads could be revenue expenditure and not expenditure of a capital nature.
In Lakshmiji Sugar Mills case the assessee was a private limited company carrying on the business of manufacture and sale of sugar.
Under the provisions of the U.P. Sugarcane Regulation of Supply and Purchase Act, 1953, the assessee company was obliged to contribute certain amounts for the development of roads which were originally the property of the government and remained so even after the improvement had been made.
Apart from the fact that in this case the expenditure incurred was under a statutory compulsion, there was no finding that the roads were newly made.
On the facts of that case this Court was satisfied that the development of the roads was meant for facilitating the carrying on of the assessee 's business.
Lakshmiji Sugar Mills(1) case is quite different on facts from the one before us and must be con fined to the peculiar facts of that case.
On the facts of the instant case, we have no doubt that the expenditure incurred by the assessee was of a capital nature.
The appeal accordingly fails and is dismissed but in the circumstances of the case without any order as to costs.

Output:
The appellant assessee is a public limited company who spent Rs.26,100/ for the construction of a new road for improving transport facilities in the area where its factory is located and sought to deduct this amount from its total income claiming this as revenue expenditure for the year.
The claim was disallowed by the Income tax Officer and the Appellate Assistant Commissioner.
The Appellate Tribunal held that the amount could be deducted as revenue expendi ture but at the instance of the respondent referred the matter to the High Court under section 256(1) of the Income Tax Act, 1961, where it was decided against the appellant.
Dismissing the appeal, the Court, HELD: The line of demarcation between capital expendi ture and revenue expenditure has been found to be very thin.
According to the test suggested in Atherton 's case by Vis count Cave, L.C. by having the new road constructed for the improvement of transport facilities, the assessee acquired an enduring advantage for its business.
The expenditure incurred was, therefore of a capital nature.
F II & 718 D] Atherton vs British Insulated and Helsby Cables Ltd. [1925] 10 Tax Cases 155: Assam Bengal Cement Co. Ltd. vs Commissioner of Income Tax, West Bengal and Sitalpur Sugar Works Ltd. vs Commissioner of Income Tax.
Bihar and Orissa , applied.
Commissioner of Income tax vs Hindustan Motors Ltd. and Lakshmiji Sugar Mills Co. (P) Ltd. vs Commissioner of Income tax, New Delhi , distinguished.


Input:
Appeal No. 674 of 1965.
Ml 7 Sup.
C. I/66 761 762 Appeal by special leave from the judgment and order dated March 14, 1962 of the Madras High Court in T. C. No. 209 of 1959.
B. Sen and R. N. Sachthey, for the appellant.
A. K. Sen, and R. Ganapathy Iyer, for the respondent.
The respondent is a public limited company incorporated under the Indian Companies, Act, 1913 in the year 1939 and was carrying on the business of manufacture of absorbent cotton wool.
In March 1955, the Board of Directors resolved to establish a new spinning unit under the name of Sudarsanan Spinning Mills for which a licence was obtained from the Government of India under the Industries (Development and Regulation) Act, 1951 in August 1955.
The respondent placed orders for purchase of necessary spinning machinery and plant in the months of January and February, 1956.
The construction of factory buildings was taken in hand in March, 1956, and these constructions were completed by December, 1957.
The erection of the spinning machinery and the plant in the buildings was completed in several stages commencing from June, 1957.
A licence from the Inspector of Factories for working the factory was obtained in June, 1958.
The statement of the case further mentioned that the time given to complete the project was extended by the Government up to 17th March, 1959.
The respondent was assessed to wealth tax for the assessment year 1957 58, and in that year the respondent claimed that, in computing the wealth on the valuation date which was 30th September, 1956, an amount of Rs. 1,43,727 should be deducted as being the amount laid out in setting up this new unit.
The Wealth Tax Officer disallowed the claim on the ground that the unit was set up prior to the date on which the Wealth Tax Act (hereinafter referred to as "the Act") came into force, i.e., 1st April 1957.
On the same basis, the Appellate Assistant Commissioner and the Income tax Appellate Tribunal upheld that order.
Thereupon, at the request of the respondent, the following question of law was referred for opinion of the High Court of Madras: "Whether the aforesaid asset of Rs. 1,43,727 is exempt under section 5(1)(xxi) read with the second proviso thereunder of the Wealth tax Act?" The High Court answered the question in favour of the respondent, and consequently, this appeal has been brought up to this Court by the Commissioner of Wealth Tax, Madras, by special leave.
The question that fell for determination depended on the interpretation of section 5(1)(xxi) of the Act read with the second proviso to that clause which are reproduced below: 763 .lm15 "5(1)(xxi) that portion of the net wealth of a company established with the object of carrying on an industrial undertaking in India within the meaning of the Explanation to clause (d) of section 45, as is employed by it in a new and separate unit set up after the commencement of this Act by way of substantial expansion of its undertaking: Provided that (a) (b) Provided further that this exemption shall apply to any such company only for a period of five successive assessment years commencing with the assessment year next following the date on which the company commences operations for the establishment of such unit.
" It has been urged before us by learned counsel for the Commissioner that the main provision of clause (xxi) should be interpreted in conjunction with the second proviso so as to give a harmonious construction to both parts of the provision with which we are concerned.
Relying on this principle, he urged that we should hold that a new and separate unit is set up only when the company commences operations for the establishment of such unit.
He relied on the principle stated by Maxwell in his book 'On Inter pretation of Statutes ' 11th Edn.
at P. 155 that there is no rule that the first or enacting part is to be construed without reference to the proviso.
"The proper course is to apply the broad general rule of construction, which is that a section or enactment must be construed as a whole, each portion throwing light, if need be, on the rest." "The true principle undoubtedly is that the sound interpretation and meaning of the statute, on a view of the enacting clause, saving clause, and proviso, taken and construed together is to prevail.
" The view taken by the High Court was challenged on the ground that the High Court had interpreted the principal clause without giving full effect to the language of the proviso.
The High Court held that unless a factory is erected and the plants and machinery installed therein, it cannot be said to have been set up.
The resolution of the Board of Directors, the orders placed for purchasing machinery, licence obtained from the Government for constructing the machinery, are merely initial stages towards setting up, however necessary and essential they may be to further the achievement of the end.
It is not, however, the actual functioning of the factory or its going into production that can alone be called setting up of the factory.
The setting up is perhaps a stage anterior to the commencement of the factory.
Thereafter, 764 the High Court referred to a decision of the Bombay High Court in Western India Vegetable Products, Limited vs Commissioner of Income tax, Bombay City,( ') and on its basis, concluded that the proper meaning to be assigned to the expression "set up" in section 5(1)(xxi) would be "ready to commence business.
" We are unable to agree with the learned counsel for the Commissioner that in arriving at this view, the High Court committed any error.
A unit cannot be said to have been set up unless it is ready to discharge the function for which it is being set up.
It is only when the unit has been put into such a shape that it can start functioning as a business or a manufacturing Organisation that it can be said that the unit has been set up.
The expression used in the proviso, under which the period for which the exemption is available is to be deter mined, is not the same as used in the principal clause.
In the proviso, the period of five successive years of exemption has to commence with the assessment year next following the date on which the company commences operations for the establishment of the unit.
Operations for the establishment of a unit, from the very nature of that expression, can only signify steps that have to be taken to establish the unit.
The word "set up" in the principal clause, in our opinion, is equivalent to the word "established", but operations for establishment cannot be equated with the establishment of the unit itself or its setting up.
The applicability of the proviso has, therefore, to be decided by finding out when the company commenced operations for establishment of the unit, which operations must be antecedent to the actual date on which the company is held to have been set up for purposes of the principal clause.
This is also the meaning that the Bombay High Court derived in the case of Western India Vegetable Products Ltd.(,) where that Court was concerned with the interpretation of the expression "set up" as used in section 2(l1) of the Income tax Act.
That Court held: "It seems to us that the expression 'settling up ' means, as is defined in the Oxford English Dictionary, 'to place on foot" or 'to establish ', and is contradistinction to 'commence. ' The distinction is this that when a business is established and is ready to commence business, then it can be said of that business that it is set up.
But before it is ready to commence business it is not set tip.
" This view was expressed when that Court was considering the difference between the meaning of the expression "setting up a business" and " commencing of a business.
" In the case before us, the proviso does not even refer to commencement of the unit.
The criterion for determining the period of exemption is based on the commencement of the operations for the establishment of the unit.
These operations for establishment of the unit cannot be simultaneous with the setting up of the unit, as urged on behalf of the Commis sioner, but must precede the actual setting up of the unit.
In fact, (1)26 I.T.R 15 1. 765 it is the operations for establishment of a unit which ultimately culminate in the setting up of the unit.
On this interpretation, it is clear that in this case, the claim put forward by the respondent for exemption has been rightly held to be allowable by the High Court.
In the statement of the case and in its appellate judgment, the Tribunal did not specifically record any finding as to the date when the unit was ready to go into business and to start production.
In the appellate order, it was mentioned that according to the respondent, the unit was set up only when the Inspector of Factories issued a licence to the respondent for working the factory, which was in June, 1958.
In the, statement of the case, the facts recited show that the construction of the factory buildings was completed by December, 1957 and the erection of the spinning machinery and plant was completed in several stages commencing from June, 1957.
On these facts, the High Court, and we consider rightly, proceeded on the basis that the unit was completed and became ready to go into business only after 1st April, 1957, when the Act had already come into force.
Consequently, the condition laid down in the principal clause of section 5(1)(xxi) was satisfied, and the company became entitled to exemption in respect of the value of the assets used up in setting up this unit.
Learned counsel for the Commissioner, however, challenged the right of the respondent to claim this exemption on another ground, viz., that the exemption was claimed in respect of money laid out in a period which was not covered by the period envisaged in the second proviso.
It was urged that if it be held that the unit was set up after the Act had come into force on the 1 st April, 1957, it must also be held that the operations for the establishment of the unit had been commenced by the company almost simultaneously with the unit having been set up, and that date would, therefore, be a date subsequent to the assessment year 1957 58 in which year the exemption was claimed.
This is a question which we do not think can be legitimately raised on behalf of the Commissioner at this stage.
The only contention before the Tribunal on behalf of the Commissioner was that the operations for the establishment of the unit had been commenced by the respondent before the Act came into force, and that it should be held that the unit was also set ;up at the same time when those operations were commenced.
There was no contention at any stage that the operations for the establishment of the unit were commenced at a subsequent stage.
In fact, it was only for the purpose of urging that the principal clause was not applicable to the case of the respondent that the position was taken up on behalf of the Commissioner that the operations for establishment of the unit had been commenced before 1st April, 1957, and the unit must be held to have been set up at the same time 766 when those operations were commenced.
That submission, as we have indicated above, has no force.
In any case, the judgments passed by all the Wealth tax Authorities show that it was at no stage in dispute that the operations for establishment of the unit had been commenced by the respondent prior to 1 st April, 1957.
Para 5 of the statement of the case mentions that the the wealth tax officer disallowed the claim on the ground that unit was set up prior to 1st April, 1957.
The Appellate Assistant Commissioner also in his judgment said: "In this view of the matter, the appellant set up the undertaking even prior to 1st April, 1957 as operations were carried out prior to that date for the establishment of the undertaking.
The operations consisted of the seeking of permission from the Government to install the unit, and placing of orders with manufacturers of machinery and advancing of moneys towards the purchase of machinery.
" The Tribunal also disallowed the claim on the basis that the respondent commenced operations for setting up the unit earlier than 1st April, 1957.
It does not appear to be necessary for us to express any opinion as to the particular stage at which it can be said that a company commences operations for the establishment of a unit.
In the present case, the Tribunal proceeded on the basis that, whatever be the exact date of commencement of the operations for establishment of this unit by the respondent, it was certainly before 1st April, 1957; and we consider that that fact, by itself, is sufficient to entitle the respondent to claim the exemption.
The Commissioner cannot, at this stage, be allowed to raise a new question and ask this Court to decide that the date of commencement of the operations for establishment of the unit by the respondent was different from that accepted by the Tribunal.
That question was not raised and dealt with by the Tribunal.
It is not even a question that might have been raised before the Tribunal and the Tribunal might have failed to deal with, nor is it a question which may not have been raised before the Tribunal and, yet, was dealt with by it.
On the principle laid down by this Court in Commissioner of Income tax, Bombay vs Scindia Steam Navigation Co., Ltd.,( ') such a question could not be canvassed before the High Court and cannot be allowed to be raised in this Court.
The question referred to the High Court had to be answered on the basis that the respondent did commence operations for establishing this unit before 1st April, 1957; and the further finding of fact recorded by the Tribunal is that a sum of Rs. 1,43,727/ had been invested in setting up the unit by 30th September, 1956, which was the valuation date for the assessment year 1957 58.
The very first assessment year after the commencement of the operations for establishment of the unit was this assessment year 1957 58, In the Wealth Tax Act, assessment (1) ; I.T.R. 589.
767 year has been defined to mean the year for which tax is chargeable under section 3 of that Act.
Since the Act came into force on the 1st April, 1957, the financial year 1957 58 was the first assessment year for which tax became chargeable, and consequently, for purposes of the second proviso to section 5(1)(xxi), the assessment year following the commencement of operations for establishment of the unit in the case of any company which commenced the operations any time before the 1st April, 1957, will be the assessment year 1957 58.
Prior to the year 1957 58, there was no assessment year as defined under the Act, and consequently, the first assessment year for which exemption could be claimed was this assessment year 1957 58.
The respondent which had commenced operations for establishment of its new unit prior to 1st April, 1957, was rightly allowed exemption in respect of the amount that had been invested by it upto the relevant valuation date.
The answer returned by the High Court was, therefore, correct.
The appeal fails and is Appeal dismissed.
dismissed with costs.

Output:
The respondent Company was assessed to wealth tax for the assessment year 1957 58 and the respondent claimed deduction of an amount laid out for setting up a new unit.
The licence for setting up the new unit was granted in 1955; the construction of the factory building was completed by December 1957; the erection of the machinery and plant was completed in several stages commencing from June 1957; the licence for working the factory was obtained in June 1958; and time given to complete the project also was extended by Government up to March 17, 1959.
The Wealth Tax Officer disallowed the claim on the ground that the unit was, set up prior to the date on which the Wealth Tax Act came into force, ie., April 1, 1957.
This order was upheld in appeals.
But in reference, the High Court answered the question in favour of the assessee, for, it proceeded on the basis that the unit was completed and became ready to go into business after the Act had come into force.
HELD : The assessee was entitled to the claim as it satisfied the condition laid down in cl.
(xxi) of section 5(1) of the Act.
The criterion for determining the period of exemption is based on the commencement of the operations for establishment of the unit.
These operations for establishment of the unit cannot be simultaneous with the setting up of the unit, but must precede the actual setting up of the unit.
[1764 G H] The word "set up" in clause (xxi) of section 5(1) of the Act, is equivalent to the word "established" but operations for establishment cannot be equated with the establishment of the unit itself or its setting up.
The applicability of the, proviso has, therefore, to be decided by finding out when the company commenced operations for establishment of the unit, which operations must be antecedent to the actual date on which the company is held to have been set up for purposes of the principal clause.[1764 D E] Western India Vegetable Products, Limited vs Commissioner of Income tax, Bombay City, referred to.
In the present case, the Tribunal proceeded on the basis that whatever be the exact date of commencement of the operations for establishment of Ibis unit,, it was certainly before April 1, 1957 and that fact by itself is sufficient to entitle the assessee to claim the exemption.
The Commissioner cannot be allowed to raise a new question and ask this Court to decide that the date of commencement of the operation for establishment of the unit by the respondent was different from that accepted by the Tribunal.
That question was not raised and dealt with by the Tribunal, [766 E] Commissioner of Income tax, Bombay vs Scindia Steam Navigation Co., Ltd., ; relied on.