Input:
Appeal No. 435 of 1961.
Appeal from the order dated September 7, 1959, of the High Court of Mysore at Bangalore, in Income tax Referred case No. 2 of 1955.
C. K. Daphtary, Solicitor General of India, N. D. Karkhanis, R. H. Dhebar, and P. D. Menon, for the appellant A.V. Viswanatha Sastri and K. B. Chaudhuri, for the respondent.
May 3.
The Judgment of the Court was delivered by HIDAYATULLAH, J.
This appeal by the Commissioner of Income tax, Mysore, on a certificate granted under a. 66A of the Indian Income tax Act, is directed against a judgment of the High Court of Mysore dated September 7, 1959, by which the 979 following question referred by the Income tax Appellate Tribunal, Madras Bench, was answered in favour of the respondent : "Whether there are materials for the tribunal to hold that the sum of Rs. 2,87,422/aforesaid represents a loss of capital." Originally two question were referred, but with the second question we are not now concerned.
The respondent is a limited liability Company called the Mysore Sugar Co. Ltd., in which a very large percentage of shares is owned by the Government of Mysore.
We shall refer to the respondent as the assessee Company.
The asseesee Company purchases sugarcane from the sugarcane,growers, and crashes them in its factory to prepare sugar.
As a part of its business operations, it enters into agreement with the sugarcane growers, who are known locally as "Oppigddars" and advances them sugarcane seedlings, fertilisers and also cash.
The Oppigedars enter into a written agreement called the "Oppige", by which they agree to sell sugarcane exclusively to the assessee Company at current market rates and to have the advances adjusted towards the price of sugarcane, agreeing to pay interest in the meantime.
For this purpose, an account of each Oppigeddar is opened.
by the assessee Company.
A crop of sugarcane takes about 18 months to nature, and these agreements take place at the harvest season each year, in preparation for the next crop.
In the year 1948 49 due to drought, the assessee Company could not work its sugar mills and the Oppigedars could not grow or deliver the sugarcane.
The advances made in 1948 49 thus remained unrecovered, because they could only be recovered by the supply of sugarcane to the assessee Company.
The Mysore Government realising the hardship appointed 980 a Committee to investigate the matter and to make a report and recommendations.
This report was made by the Committee on July 27, 1950, and the whole of the report has been printed in the record of this case.
The Oppige bond is not printed, perhaps because it was in Kaunada, but the substance of the terms is given by the Committee and the above description fairly represents its nature.
The Com mittee recommended that the assessee Company should ex gratia forego some of its dues, and in the year of account*ending June 30, 1952, the Company waived its rights in respect of Rs. 2,87,422/The Company claimed this is a deduction under sections 10 (3) (xi) and 10 (2) (xv) of the Indian Incometax Act.
The Income tax Officer declined to make the deduction, because, in his opinion this was neither a trade debt nor even a bad debt but an ex gratia payment almost like a gift.
An appeal to the Appellate Assistant Commissioner also failed.
Before the Income tax Appellate Tribunal, Madras.
Bench, these two arguments were again raised, but were rejected, the Tribunal holding that the payments were not with an eye to any commercial profit and could not thus be said to have been made out of commercial expediency, so as to attract section 10 (2) (xv) of the Act.
The Tribunal also held that these were not bad debts, because they were " 'advances, pure and simple, not arising out of sales" and did not contribute to the profits of the business.
From the order of reference, it appears that the Appellate Tribunal was also of the opinion that these advances were made to ensure a steady supply of quality sugarcane, and that the loss, if any, must be taken to represent a capital loss and not a trading loss.
The Appellate Tribunal, however, referred the question for the opinion of the High Court, and the High Court held that the expenditure was not in the nature of a capital expenditure, and was 981 deductible as a revenue expenditure.
It relied upon a passage from Sempath Ayyangar 's Book on the Indian Income tax Law and on the decision of this Court in Badridas Daga vs Commissioner of Incometax (1.), to hold that this amount was deductible in computing the profits of the business for the year in question under a. 10 (1) of the Income tax Act.
The case has been argued before us both under section 10 (1) and section 10 (2) (xv), though it appears that the case of the assessee Company ' has changed from a. 10 (1) to section 10 (2) .(xi) and section 10 (2) (xv) from time to time.
The question, as propounded, seems to refer sections 10 (2) (xv) and 10(1) and not to section 10 (2) (xi), We, however, do not wish to emphasise the nature of the question posed, because, in our opinion, the central point to decide is whether the money which was given up, represented a loss of capital, or must be treated as a revenue expenditure.
The tax under the head "Business" is payable under is.
10 of the Income tax Act.
That section provides by sub section
(1) that the tax shall be payable by an assessee under the head "Profits and gains of business, etc." in respect of the profits or gains of any business, etc.
carried on by him.
Under sub section
(2), these profits or gains are computed after making certain allowances.
Clause (xi) allows deduction of bad and doubtful business debts.
It provides that when the assessee 's accounts in respect of any part of his business are not kept on the cash basis, such sum, in respect of bad and doubtful debts, due to the assessee in respect of that part of his business is deductible but not exceeding the amount actually written off as irrecoverable in the books of the assessee.
Clause (1) ; 982 (xv) allows any expenditure not included in cls.
(1) to (xiv), which ;is not in the nature of capital expenditure or personal expenses of the assessee, to be deducted, if laid out or expended wholly and exclusively for the purpose of such business, etc.
The clauses expressly provide what can be deducted; but the general scheme of the section is that profits or gains must be calculated after deducting outgoings reasonably attributable as business expenditure but so as not to deduct any portion of an expenditure of a capital nature.
If an expenditure comes within any of the enumerated classes of allowances, the case can be considered under the appropriate class; but there may be an expenditure which, though not exactly covered by any of the enumerated classes, may have to be considered in finding out the true assessable profits or gains.
This was laid down by the Privy Council in Commissioner of Income tax vs Chitnavis (1) and has been accepted by this Court.
In other words, section 10 (2) does not deal exhaustively with the deductions, which must be made to arrive at the true profits and gains.
To find out whether an expenditure is on the capital account or on revenue, one must consider the expenditure in relation to the business.
Since all payments reduce capital in the ultimate analysis, one is apt I to consider a loss as amounting to a loss of capital.
But this is not true of all losses, because losses in the running of the business cannot be said to be of capital.
The Questions to consider in this connection are: for that was the money laid out? Was it to acquire an asset of an enduring nature for the benefit of the business, or was it an outgoing in the doing of the business? If money be lost in the first circumstance, it is a loss of capital, but if lost in the second circumstance, it is a revenue loss.
In the first, it bears the (1) (1932) L.R. 59 I.A. 290.
983 character of an investment, but in the second, to use a commonly understood phrase, it bears the character of current expenses.
This distinction is admirably brought out in some English cases, which were cited at the Bar.
We shall refer 'Only to three of them.
In English Crown Spelter Co. Ltd vs Baker 0), the English Crown Spelter Co. carried on the business of zinc smelting for which it required large quantities of 'blende '.
To get supplies of blende, a new Company called the) Welsh Crown Spelter 'Company was formed, which received assistance from the English Company in the shape of advances on loan.
Later, the English Company was required to write off pound 38,000 odd.
The question arose whether the advance could besaid to an investment of capital, because if theywere, the English Company would have no right to deduct the amount.
If on the other hand, it was money employed for the business it could be deducted.
Bray, J. who considered these questions, observed: "If this were an ordinary business transaction of a contrary by which the Welsh Company were to deliver certain trend, it may be at prices to be settled hereafter, and that this was really nothing more than an advance on account of the price of that blend, there "would be a great deal to be said in favour of the Appellants It is impossible to look upon this as an ordinary business transaction of an advance against goods to be delivered I can come to no other conclusion but that this was an investment of capital in the Welsh Company and was not an ordinary trade transaction of an advance against goods. . " (1) 984 The second case, Charles Marsdon & Sons.
Ltd vs The Commissioners of Inland Revenue (1), is under the Excess Profits Duty in England, and the question arose in the following circumstances: an English Company carried on the business of paper making.
To arrange for supplies of wood pulp, it entered into an agreement with a Canadian Company for supply of 3000 tons per year between 1917 1927.
The English Company made an advance of E. 30,000 against future deliveries to be recouped at the rate of E. I per ton delivered.
The Canadian Company was to pay interest in the meantime.
Later, the importation of wood pulp was stopped, and the Canadian Company (appropriately called the Ha Ha Company) neither delivered the pulp nor returned the money.
Bowlatt, J. held this to be a capital expenditure not admi ssible as a deduction.
He was of opinion that the payment was not an advance payment for goods, observing that no one pays for goods ten years in advance, and that it was a venture to establish a source and money was adventured as capital.
The last case, to which we need refer to illustrate the distinction made in such cases is Reid 's Brewery Co. Ltd vs Nale (2).
The Brewery Company there carried on, in addition to the business of a brewery, a business of bankers and money lenders making loans and advances to their customers.
This helped the customers in pushing sales of the product of the Brewery Company.
Certain sums had to be written off, and the amount was held to be deductible.
Pollock, B, said: "of course, if it be capital invested, then it comes within the express provision of the Income Tax Act, that no deduction is to be X X made on that account" (1) (1919) T. T.C. 217.
(2) 985 but held that: " . .no person who is 'acquainted with the habits of business ,loan doubt that this is not Capital invested.
What it is, is this.
It is capital used by the Appellants but used only in the sense that all money which is laid out by persons who are traders, whether it be in the purchase of goods be they traders along, whether it be in the purchase of raw material be they manufacturers. or in the case of money lenders, be they pawnbrokers or money lenders, whether it be money lent in the course of their trade, it is used and it comes out of capital, but it is not an investment in the ordinary sense of the word.
" It was thus held to be a use of money in the course of the Company 's business, and not an investment of capital at all.
These cases illustrate the distinction between an expenditure by way of investment and an expenditure in the course of business, which we have described as current expenditure.
The first may truly be regarded as on the capital side but not the second.
Applying this test to this simple case, it is quite obvious which it is.
The amount was an advanced against price of one crop.
The Oppigedars were to get the assistance not as an investment by the assessee company in its agriculture, but only as an advance payment of price.
The amount, so far as the assessee Company was concerned., represented the current expenditure towards the purchase of sugarcane, and it makes .DO difference that the sugarcane thus purchased was grown by the Oppigedars with the seedlings, fertiliser and money taken on account from the assessee Company.
In so far as the assessee Company was concerned, it was doing no more than making a forward arrangement for the next 986 year 's crop and paying an amount in advance out of the price, so that the growing of the crop may not suffer due to want of funds in the hands of the growers.
There was hardly any, element of investment which contemplates more than payment of advance price.
The resulting loss to the assessee Company was just as much a loss on the revenue side as would have been, if it had paid for the ready crop which was not delivered.
In our judgment, the decision of the High Court is right.
The appeal fails, and is dismissed with costs.
Appeal dismissed.

Output:
The assesses Company used to purchase sugarcane from the sugarcane growers to prepare sugar in its factory, in which a very large percentage of shares was owned by the Government of Mysore.
As a part of its business operation it entered into written agreements with the sugarcane growers and advanced them seedlings, fertilizers, and also cash.
The cane growers entered into these agreements known as "oppige" by which they agreed to sell sugarcane exclusively to the assessee company at current market rates and to have the 977 advances adjusted towards the price.
An account of each "Oppigedar" was opened by the company.
These agreements were entered into for each crop.
In the year 1948 49 due to drought, the assessee company could not work its mills and the "oppigedar" could not grow or deliver the sugarcane and thus the advances made in the year remainded unrecovered.
The Mysore Government realising the hardship appointed a committee to investigate the matter and make a report.
The Committee recommended that the assessee company should ex gratia forgo some of its dues, and in the year of account ending June 30, 1952, the company waived its rights in respect of Rs. 2,87,422/ .
The Company claimed this as a deduction under section 10 (2) (xi) and section 10 (2) (xv) 'but the Income Tax Officer declined to make the deduction and the appeal before the Appellate Assistant Commissioner also failed.
The Tribunal was also of the opinion that these advances were made to ensure to steady supply of quality surgarcane and the loss, if any, must be taken to represent a capital loss and not a trading loss but the tribunal referred the.
question thereby arising for the decision of the High Court.
The High Court relying upon a decision of this Court in Badridas Daga vs Commissioner of Income tax held, that the expenditure was not in the nature of a capital expenditure, but was a revenue expenditure and that this amount was deductible in computing.
the profits of the business for the year in question under section 10 (1) of the Income tax Act.
The central point for decision in the present case, was whether the money which was given up, represented a loss of capital or must be treated as a revenue, expenditure.
Held, that section 10 (2) does not deal exhaustively with the deductions which must be made to arrive at the true profits and gains.
It mentions certain deductions in cls.
(i) to (xiv) and if an expenditure comes within any of the emunerated classes of allowance the case has to be considered under the appropriate class.
Clause (xv) is a general clause which allows an expenditure to be deducted, if laid out or expended wholly and exclusively for the purpose of such business, which is not in the nature of capital expenditure or personal expenses of the assessee.
But the general scheme of the section is that profits or gains must be calculated after deducting outgoings reasonably attributable as business expenditure but not so as to deduct any part of a capital expenditure.
To find out whether an.
expenditure is on the capital account or on revenue, one must consider the expenditure in 978 relation to the business.
The questions to consider in this connection are for what was the money laid out ? Was it to acquire an asset of an enduring nature for the benefit of the business, or was it an outgoing in the doing of business ? If money be lost in the first circumstance it, is a loss of capital, but it lost in the second circumstance, it is a revenue loss.
In the first, it bears the character of an investment, but in the second, it bears the character of current expenses.
English Crown Spelter Co. Ltd. vs Baker, , Charles Marsden & Sons Ltd. vs The Commissioners of Inland Revenue, and Raid 's Brewery Co. Ltd. vs Nale, , applied.
Badridas Daga vs Commissioner of Income tax (1959) section C. R. 690 and Commissioner of Income tax vs Chitnavis, (1932) L. R : 59 I. A. 290, referred to.
Held, in this case, there was hardly any element of investment which contemplate more than payment of advance price.
The resulting loss to the assessee company was just as much a loss on the revenue side as would have been, if it had paid for the ready crop which was not delivered,


Input:
Criminal Appeal No. 48 of 1983.
From the Judgment and Order dated 14.5.1981 of the Orissa High Court in Crl.
R. No. 22 of 1981.
V.J. Francis for the Appellant.
F.S. Nariman, Anil B. Divan, L.R. Singh, R.K. Mehta, G.S. Chatterjee and Vinoo Bhagat for the Respondents.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
I agree that this appeal has to be dismissed.
I am of the view that the decision in The State of Bihar vs Ram Naresh Pandey, interpret ing section 494 of the Code of Criminal Procedure, 1898 and the decision in R.K. Jain etc.
vs State through Special Police Establishment and Others, interpret ing section 321 of the Code of Criminal Procedure, 1973 do not call for any reconsideration.
I am in full agreement with the views expressed in these decisions.
I am satisfied that the Public Prosecutor had applied his mind to the case before applying for withdrawal and the Chief Judicial Magis trate has not committed any error in giving his consent to such withdrawal.
The appeal is, therefore, dismissed.
KHALID, J. I have just received (at 7.40 p.m. on 19th December, 1986) a draft Judgment by Oza, J. in the above case.
I agree with the conclusion that the appeal has to be dismissed, but not, with respect, with the reasoning con tained in the Judgment.
Since the case is listed for Judg ment on 20th December, 1986, I do not have time to write a detailed Judgment.
The question to be decided in this appeal is the scope of Section 32 1 of Criminal Procedure Code, and I do not agree with the following observation of Oza, J. since there is no question of setting aside of the order passed by the learned Additional Special Judge, Bhubaneswar; " .
But in the present case, there is no point in setting aside the withdrawal and sending the case back to the learned Special Judge because after considering the entire material on record in detail we are of the view that there is 684 no material at all on the basis of which it could be said that there is a prima facie case against respondent No. 1 and the charges against respondent No. 1 appear to be ground less and respondent No. 1 would, therefore, in any event be entitled to be discharged under Section 239 . " A cursory glance at Section 32 1 will satisfy anyone that consent can given for withdrawal from the prosecution of a case, not only when the charge is not framed, but even after the charge is framed and at any time before the Judgment.
This appeal along with Criminal Appeal Nx.
49 of 1983 were directed to be posted before a Constitution Bench to consider the scope of Section 32 1, Criminal Procedure Code.
That being so, I do not think it proper to abandon that pursuit and take refuge under Section 239 of Criminal Proce dure Code.
In a separate Judgment to be pronounced by me in Crimi nal Appeal No.241 of 1983, I have outlined the scope of Section 321 of Criminal Procedure Code.
What is to be decid ed in this case is whether the order passed by the Magis trate under Section 321, Criminal Procedure Code, is proper or not.
We are not called upon to consider the propriety of the charge framed and then examine the evidence and see whether the accused should be discharged or the charge framed should be upheld.
I adopt the reasons given by me in Criminal Appeal No. 241 of 1983, relying upon the decisions reported in of Bihar vs Ram Naresh Pandey) and in ; Jain vs State) and uphold the order of withdrawal passed by the Additional Special Judge, Bhubanes war, and upheld by the High Court in revision, and dismiss the appeal.
OZA, J.
The present appeal by special leave is directed against the judgment and order of the High Court of Orissa dated 14th May 1981 in Criminal Revision No. 22 of 1981 arising out of an order dated 20th December, 1980 of the Additional Special Judge, Bhubaneswar allowing an applica tion filed by the Special Public Prosecutor praying for withdrawal from prosecution in Case No. 13 of 1979 against respondent No. 1.
By the impugned judgment the Hon 'ble High Court dismissed the revision petition filed by the appellant and confirmed the order passed by the learned Additional Special Judge permitting withdrawal of the case by the Special Public Prosecutor.
The Vigilance 685 Department of the State submitted a charge sheet against respondent No. 1 on the allegation that she had no assets prior to her election as a member of the Rajya Sabha in the year 1962.
Subsequently she was re elected and became a Union Deputy Minister from January 1966 to June 1970 and a Union State Minister from June 1970 to June 1972.
She became the Chief Minister of Orissa from 15.6.72 to 28.2.73 and again from 6.3.74 to 26.12.76.
Even before becoming the Chief Minister of Orissa she had no assets save and except a thatched roof house at Pithapur, Cuttack and a bank balance of Rs. 18,000.
It was alleged that during her incumbency as Chief Minister, the bank balance increased as well as her other assets swelled up and it was alleged that in 1977 her net assets were to the tune of Rs.7,54,735,85 p. which were disproportionate to her known sources of income.
In 1977 the respondent No. 1 left the Congress Party and joined the Congress for Democracy.
In the parliamentary elections in 1977, the Congress was defeated and Janata Party came to power and also in the Assembly elections which followed, the Congress lost and the Janata Party came to power in the State.
It appears that although the Congress for Democracy which respondent No. 1 had joined, merged with the Janata Party, still many leaders of the Janata Party had a grudge against her as during her regime as Chief Minister when emergency was clamped, a number of leaders who were prominent in the Janata Party were put behind bars and ultimately for having assets disproportionate to her known sources of income, a prosecution was launched against her under Section 5(1)(d) read with Sec.
5(2) of the Prevention of Corruption Act.
One of the allegations on the basis of which the charge sheet was filed was that on 15.7.74, respondent No. 1 passed an order in favour of M/s Ferro Alloys Corporation.
This order was, passed by her in her official capacity and it is alleged that because of this order M/s Ferro Alloys made a huge profit of about Rs.4 crores and on 3.10.75 and 7.10.75 cheques in the aggregate sum of Rs.48,000 were given by M/s Ferro Alloys Corporation to Dharitri a newspaper for an advertisement which was ' published in the 'newspaper.
It was therefore alleged that respondent No. 1 obtained Rs.48,000 from M/s Ferro Alloys Corporation.
The second allegation against respondent No. 1 was that on 14.6.76 the Prime Minister requested respondent No. 1 to indicate the approximate value of her recently completed house at Bhubaneswar and no reply to this query is found on the record of the Prime Minister.
686 The construction of the house started in September 1974 and ended on 29th February, 1976.
The investment in the con struction of the house is said to be Rs.3,32,000 and odd whereas according to respondent No. 1 she had spent an amount of Rs.2,68,000 and the difference of Rs.64,000 ac cording to the allegation of the prosecution was the amount acquired by respondent No. 1 by illegal and corrupt means as Chief Minister.
It was alleged that the whole sum of Rs.3,27,614 is surreptitious and not disclosed in income tax return for the financial years 1974 75 and 1975 76.
It is also alleged that Navjat Printers which is owned by Samajba di Society received a sum of Rs.3,94,540 between 6.3.74 and 29.2.76 in respect of orders placed by U.P.C.C.
The allega tion is that U.P.C.C. between 6.3.74 and 29.2.76, paid only Rs.60,964 and as regards the balance of Rs.3,33,576 it must have been acquired by respondent No. 1 herself and paid to Navjat Printers.
It was alleged that Shri Natchiketa Satpathy, son of respondent No. 1 purchased a flat at Kailash Apartments, New Delhi and for this purpose respondent No. 1 paid Rs.50,000 to her son in three instalments.
Similarly it was alleged that on 15.3.75 respondent No. 1 paid Rs. 15,000 to her other son Tathagat Satpahty and managed to get invested a sum of Rs.33,000 in different names fictitiously in M/s Rosambi Private Limited.
An amount of Rs. 15,000 is said to have been a payment by cheque.
It was alleged that in the house of her husband, cash was contained in two bags which was to the tune of Rs.5 1,766.
One of the bags there had a visiting card of the First Secretary of the USSR Embassy.
This cash was discov ered after respondent No. 1 ceased to be Chief Minister.
The search was made on 8th July 1977 when respondent No. 1 had already ceased to be Chief Minister nearly nine months before that date.
It was alleged that the cash must be deemed to have been of the ownership of respondent No. 1 and that it must have been acquired by her during the period when she was the Chief Minister.
It appears that when charge sheet was filed against respondent No. 1, the Income Tax Department also issued notice for re opening of her assessments and examined the whole matter afresh and during the period that this case has been pending here, final orders have been passed by the Income Tax Department which explain in detail all the items of assets which according to the prosecution were dispropor tionate to the legitimate means of respondent No. 1.
This matter came up before us along with another case from Bihar where we heard arguments at length on the question of with drawal from the prosecution 687 and its legal implications, but so far as the present case is concerned, in view of the facts as they emerge, we do not find it necessary to go into all these questions.
The alle gations can be broadly classified into three heads: The first head relates to payments made to Dharitri and Navjat Printers or Samajbadi Society.
These are clearly distinct institutions which could not be said to belong to respondent No. 1.
It is not disputed that Dharitri is a newspaper which receives advertisements and payment for advertisement made to Dharitri could not possibly be co related to respondent No. 1 or regarded as receipt of re spondent No.1.
There is nothing at all to show that the payment received by Dharitri for advertisement (which in fact was published in Dharitri) had anything to do with respondent No. 1.
The second head of allegations relates to valuation of assets and the construction of the house and the third category to the monies received by the U.P.C.C. which are alleged to have been paid by respondent No. 1.
Lastly there are similar items of monies paid to the sons and found in the possession of her husband.
So far as these allegations are concerned, it may be pointed out that it was on the basis of these allegations that the Income Tax Department re opened the assessments after giving notice and conducted detailed enquiries and ultimately passed a final order accepting her returns as correct and rejecting the allega tions that she had suppressed any income from undisclosed sources.
It is also significant that the application for with drawal was made by the Special Public Prosecutor in 1980 when respondent No. 1 had nothing to do with the party in power, as after the elections held in 1980, Congress I came back to power in Orissa and J.B. Patnaik became the Chief Minister.
Respondent No. 1 contested the Assembly election as a candidate of Congress (Urs) Party and was elected, defeating her Congress I opponent Shri Profulla Bhanja and she was a member of Congress (Urs) (Opposition) during that period.
This is to our mind a strong circumstance which indicates that the application for withdrawal was made in furtherance of public justice and distinguished the case of respondent No. 1 from that of Dr. Jagannath Misra in the Bihar case which is being disposed of by another judgment today.
The Income Tax Officer examined in detail each one of the items of assets said to have been unaccounted and sup pressed and the order passed by the Income Tax Officer which has been placed on record 688 clearly explains all the items as also entries pertaining to the house construction and other assets and shows that there is nothing to indicate the respondent No. 1 was possessed of assets disproportionate to his means.
The application moved by the Special Public Prosecutor for withdrawal from the prosecution was therefore clearly bonafide and in further ance of public justice and it was clearly a false and vexa tious criminal prosecution which had been launched against respondent No. 1 which was sought to be halted.
The learned Special Judge also on these facts took the view that no useful purpose would be served by continuance of the prose cution and he accordingly permitted the withdrawal.
The High Court too maintained the order of the learned Special Judge.
We agree that in the light of the facts on record and the order passed by the Income Tax Officer which explains all the items of assets alleged to be unaccounted and sup pressed, the charges against respondent No. 1 appear to be groundless.
It is true that ordinarily when the exercise of considering the material on record for the purpose of deter mining whether there is sufficient material to sustain the prosecution can be performed by the Court under Section 239 of the Code of Criminal Procedure 1973 the Court should not allow the prosecution to be withdrawn under Section 321 as held by us in the Judgment in Dr. Jagannath Misra 's case, which has been delivered today.
But in the present case there is no point in setting aside the withdrawal and send ing the case back to the learned Special Judge because after considering the entire material on record in detail we are of the view that there is no material at all on the basis of which it could be said that there is a prima facie case against respondent No. 1 and the charges against respondent No. 1 appear to be groundless and respondent No. 1 would therefore in any event be entitled to be discharged under Section 239.
We do not therefore think it necessary or expedient to interfere with the order made by the learned Special Judge and confirmed by the High Court.
The appeal will therefore stand dismissed.
NATARAJAN, J.
In the withdrawal petition filed on 15.11.80 and the supplementary withdrawal petition filed on 16.12.80 the Special Public Prosecutor (Vig.) C.D., Cuttack has set out the factors which have prevailed with him to seek the consent on the Court to withdraw the prosecution launched in V.C.R. Case No. 33 of 1977 against the accused therein, viz. Smt.
Nandini Satpathy & Anr.
The Additional Chief Judicial Magistrate has passed a detailed and considered order on 20.12.80 wherein he has fully discussed the 689 matter and thereafter given consent to the withdrawal of the prosecution.
The conclusion of the learned Magistrate is contained in para 12 which reads as follows: "Taking the facts and circumstances of the case into consideration.
I am of the view that the ends of public justice be met if the consent be given for withdrawal of the case.
" The order of the learned Magistrate has been critically assessed by a learned Judge of the Orissa High Court in Crl.
Rev. No. 21 and 22 of 1981 filed before the High Court.
The learned Judge upheld the order of the Magistrate 'and has summed up the High Court 's view as under: "The observations of the Supreme Court (in R.K. Jain vs State AIR 1980 Supreme Court 1510 1980 Volume 3 SCR 982) would not justify entertaining this application when a Public Prosecutor in his application had indicated that the evidence already collected did not support the prosecution there was no prospect of a conviction and the appropriate authority in the broad ends of justice need not contin ue.
" Section 321 makes it clear that an application for withdrawal of a case can be made by a Public Prosecutor or Assistant Public Prosecutor who is incharge of the case concerned, at any time before the judgment is pronounced.
In other words, it means that the application for withdrawal of prosecution may be made at any time ranging between the court taking congnizance of the case till such time the court actually pronounced judgment.
Consequently, it follows that even where reliable evidence has been adduced to prove the charges, the Public Prosecutor can seek the consent of the Court to withdraw the prosecution.
The Section does not, therefore, lay down that an application for withdrawal of the prosecution should necessarily be made at the earliest stages of the case or only if the evidence is of a weak and infirm nature.
In his application a Special Public Prosecutor had set out the reasons which justified his filing an application under Section 32 1 of the Code to seek the consent of the Court for the withdrawal of the prosecution.
The learned Magistrate has considered the matter judicially in the light of the decision of this Court in R.K. Jain vs State, ; which has followed the earlier decision in State of 690 Bihar vs Ram Naresh Pandey, The order of the learned Magistrate has been approved and affirmed by the High Court.
There are no materials in the appeal to persuade me to hold that the order passed by the Additional Chief Judicial Magistrate or the High Court suffers from any error of law, patent or latent.
In that view the appeal has to be dis missed.
A.P.J. Appeal dismissed.

Output:
Prosecution was launched against Respondent No. 1 under s.5(1)(d) read with s.5(2) of the Prevention of Corruption Act, 1947 for having assets disproportionate to her known sources of income.
The Special Public Prosecutor filed application for withdrawal of the prosecution against Respondent No. 1.
The Additional Special Judge allowed the application.
The High Court dismissed the revision petition and confirmed the order permitting withdrawal of the case.
Dismissing the Appeal to this Court, HELD: Per Venkataramiah, J. The Public Prosecutor had applied his mind to the case before applying for withdrawal and the Chief Judicial Magis trate has not committed any error in giving his consent to such withdrawal.
[683D E] The State of Bihar vs Ram Naresh Pandey, [1957] S.C.R. 279 and R.K. Jain etc.
vs State through Special Police Establishment and others; , , Relied upon.
Per Khalid, J. 1.
What is to be decided in this case is whether the order passed by the Magistrate under s.32I, Criminal Proce dure Code, is proper or not.
The Court is not called upon to consider the propriety of the charge framed and then examine the evidence and see whether the accused should be dis charged or the charge framed should be upheld.
[684D E] 2.
Consent can be given for withdrawal from the prosecution of a 681 case, not only when the charge is not framed, but even after the charge is framed and at any time before the judgment.
[684B C] The State of Bihar vs Ram Naresh Pandey, [3957] SCR 279 and R.K. Jain etc.
vs State through Special Police Establishment and others; , , Relied upon.
Per Oza, J. I. Ordinarily when the exercise of considering the material on record for the purpose of determining whether there is sufficient material to sustain the prosecution can be performed by the Court under s.239 of the Code of Crimi nal Procedure 1973, the Court should not allow the prosecu tion to be withdrawn under s.321.
[688C E] 2.
In the present case, there is no point in setting aside the withdrawal and sending the case hack to the Spe cial Judge because there is no material at all to show that there is a prima facie case and the charges appear to be groundless.
Respondent No. 1 would, therefore, be entitled to be discharged under s.239.
It is, therefore, not neces sary or expedient to interfere with the order made by the Special Judge and confirmed by the High Court.
[688E F] 3.
When the charge sheet was filed, the Income Tax Department re opened the assessment, examined the whole matter afresh and passed final orders during the pendency of the case in this Court explaining all the items of assets said to have been unaccounted and suppressed as also entries pertaining to the house construction and other assets, which show that there is nothing to indicate that Respondent No. 1 was possessed of assets disproportionate to her means.
[688A B] 4.
The application moved by the Special Public Prosecutor for withdrawal from the prosecution was, therefore, clearly bona fide and ' in furtherance of public justice and it was clearly a false and vexatious criminal prosecution launched against respondent No. 1.
The Special Judge also on these facts took the view that no useful purpose would be served by continuance of the prosecution and accordingly permitted the withdrawal which was upheld by the High Court in revi sion.
[688B] 5.
The first allegation relates to payments made to Dharitri and Navjat Printers.
Dharitri is a newspaper which receives advertisements.
There is nothing to show that the payment received by Dharitri for advertisement had anything to do with respondent No.1.
[687.B C] 682 6.
The second allegation relates to valuation of assets and the construction of the house and the third relates to the monies received by the U.P.C.C. which are alleged to have been paid by respondent No. 1.
Lastly there are similar items of monies paid to the sons and found in the possession of her husband.
It was on the basis of these allegations that the Income Tax Department re opened the assessments, conducted detailed enquiries and ultimately passed a final order accepting her returns as correct and rejecting the allegations that she had suppressed any income from undis closed sources.
[687C E] 7.
The application for withdrawal was made by the Spe cial Public Prosecutor in 1980 when respondent No.1 had nothing to do with the party in power as she was in opposi tion party after the elections held in 1980.
This is a strong circumstance which indicates that the application for withdrawal was made in furtherance of public justice.
[687E G] 8.
In the fight of the facts an record and the order passed by the Income Tax Officer explaining all the items of assets alleged to be unaccounted and suppressed, the charges against respondent No. 1 appear to he groundless.
[688C] Per Natarajan, J. 1.
Section 321 makes it clear that an application for withdrawal of a case can he made by a Public Prosecutor or Assistant Public Prosecutor who is incharge of the case concerned, at any time before the judgment is pronounced.
The application for withdrawal of prosecution may he made at any time ranging between the Court taking cognizance of the case till such time the Court actually pronounces judgment.
Even where reliable evidence has been adduced to prove the charges, the Public Prosecutor can seek the consent of the Court to withdraw the prosecution.
The section does not, therefore, lay down that an application for withdrawal of the prosecution should necessarily he made at the earliest stages of the case or only if the evidence is of a weak and infirm nature.
[689E G] 2.
The Special Public Prosecutor had set out the reasons which justified filing of an application under s.321 of the Code for the withdrawal of the prosecution, and the Magis trate has considered the matter judicially, before giving his consent.
[689G H] The State of Bihar vs Ram Naresh Pandey [1157] SCR 279 and R.K. Jain etc.
vs State through Special Police Estab lishment and others; , , relied upon.


Input:
Civil Appeal No. 301 of 1984.
From the Judgment and order dated 1.2.1983 of the Punjab and Haryana High Court in Letters Patent Appeal No. 1410 of 1982.
P.D. Sharrna for the Appellant.
623 Parmod Dayal for the Respondents.
The Judgment of the Court was delivered by DUTT, J.
This appeal by special leave is directed against the judgment of the Division Bench of the High Court of Punjab & Haryana whereby the High Court dismissed in limine the letters patent appeal preferred by the appellant against the judgment of a learned Single Judge of the High Court dismissing the writ petition of the appellant relating to his seniority.
The appellant was appointed an Assistant Engineer II with effect from June 10, 1963 in the Punjab State Electricity Board on probation for two years which ended on June 10, 1965.
After the bifurcation of the Punjab State Electricity Board, the service of the appellant was allocated to the Haryana State Electricity Board, hereinafter referred to as 'the Board '.
As a result of a disciplinary proceeding held against the appellant, on April 15, 1968.
a minor penalty for the stoppage of one increment without any future effect was imposed on the appellant by the Board.
After the expiry of one year, the appellant was, however, given the increment.
Although the probationary period of the appellant was completed on June 10, 1965, he was not confirmed within a reasonable time thereafter.
There is also no material to show that his period of probation was extended.
In the meantime, some substantive posts of Assistant Engineers, Class II, fell vacant and by an order dated March 30, 1970 of the Secretary to the Board, the appellant and the respondents Nos. 2 to 19 were confirmed as Assistant Engineers, Class II.
It has been specifically stated in the said order that the officers mentioned therein, that is, the appellant and the respondents Nos. 2 to 19, had satisfactorily completed the probationary period of two years.
It, however, appears from the said order that respondents Nos.2 to 14 were confirmed in the posts of Assistant Engineers, Class II, with effect from April 1, 1969, while the appellant was confirmed in that post with effect from December 1, 1969.
Consequently, the appellant 's name was placed last of all the confirmed officers.
In the seniority list also, the name of the appellant was placed against serial No. 63, that is, below the names of the respondents Nos. 2 to 19, although the seniority list appears to have been prepared on the basis of the respective dates of appointments of the officers.
As the appellant was appointed on June 10, 1963, his name should have been placed below the name of Pawan Kumar Aggarwal (Serial No. 45) respondent No. 3 624 appointed on June 7, 1963 and above the name of Sudesh Kumar Tuli (Serial No. 46) respondent No. 2 appointed on June 21, 1963, but his name was placed below that of Ved Prakash Lalit (Serial No. 62), who was appointed on April 7, 1964.
In other words, the names of the respondents Nos. 2 and 4 to 19, who are all juniors to the appellant, were placed above the name of the appellant in the seniority list without any reason whatsoever.
Being aggrieved by the impugned order of the Board dated March 30, 1970 and also the seniority list wherein the appellant 's name has been placed below the names of his juniors, namely, respondents Nos. 2 and 4 to 19, the appellant filed a writ petition before a Single Judge of the Punjab & Haryana High Court.
As stated already, the learned Single Judge dismissed the writ petition, and the letters patent appeal preferred by the appellant against.
the order of the learned Single Judge was also dismissed.
Hence this appeal.
It may be stated here that respondent No. 4, S.P. Nlidha, is since dead.
The only point that is involved in this appeal is whether the Board was justified in confirming the appointment of the appellant in the post of Assistant Engineer, Class II, with effect from December 1, 1969 and placing him below his juniors, namely respondents Nos. 2 and 4 to 19, in the seniority list.
As has been noticed already, there is no material to show why the appellant was confirmed in the post with effect from December 1, 1969, when he had completed his probationary period of two years satisfactorily.
It is submitted on behalf of the Board that as the minor penalty was imposed on the appellant by way of stoppage of his increment for one year, he was confirmed with effect from December 1, 1969 and placed below the respondents Nos. 2 and 4 to 19 in the seniority list.
We are unable to accept the above contention.
The penalty was imposed on April 15, 1968 and, as a result of which, he was deprived of the monetary benefit of one increment for one year only.
The penalty by way of stoppage of one increment for one year was without any future effect.
In other words, the appellant 's increment for one year was stopped and such stoppage of increment will have no effect whatsoever on his seniority.
Accordingly, the Board acted illegally and most arbitrarily in placing the juniors of the appellant above him in the seniority list and/or confirming the appellant in the post with effect from December 1, 1969, that is, long after the date of confirmation of the said respondents Nos. 2 to 19.
The question of seniority has nothing to do with the penalty that was imposed upon the appellant.
It 625 is apparent that for the same act of misconduct, the appellant has been punished twice, that is, first, by the stoppage of one increment for one year and, second, by placing him below his juniors in the seniority list.
The appellant should have been confirmed on June 10, 1965 on which date he had completed two years of his probationary period.
As has been stated already, the probationary period was not extended.
The Board has not laid down any guideline for confirmation.
There is no rule showing when an officer of the Board will be confirmed.
While there is some necessity for appointing a person in government service on probation for a particular period, there may not be any need for confirmation of that officer after the completion of the probationary period.
If during the period of probation a government servant is found to be unsuitable, his services may be terminated.
On the other hand, if he is found to be suitable, he would be allowed to continue in service.
The archaic rule of confirmation, still in force, gives a scope to the executive authorities to act arbitrarily or malafide giving rise to unnecessary litigations.
It is high time that the Government and other authorities should think over the matter and relieve the government servants of becoming victims of arbitrary actions.
In this connection we may refer to the decision in the case of S.B. Patwardhan & others vs State of Maharashtra & Ors.
[ ; where Chandrachud, C.J. speaking for the Court observed as follows: "Confirmation is one of the inglorious uncertainties of government service depending neither on efficiency of the incumbent nor on the availability of substantive vacancies.
A glaring instance widely known in a part of our country is of a distinguished member of the judiciary who was confirmed as a District Judge years after he was confirmed as a Judge of the High Court.
It is on the record of these writ petitions that officiating Deputy Engineers were not confirmed even though substantive vacancies were available in which they could have been confirmed.
It shows that confirmation does not have to conform to any set rules and whether an employee should be confirmed or not depends on the sweet will and pleasure of the Government.
In the instant case, although the Board found that the appellant had satisfactorily completed his period of probation, yet he was placed below his juniors in the seniority list without any rhyme or reason.
There is no explanation why the confirmation of the appellant was deferred till December 1, 1969.
It is, however, submitted on behalf of 626 the Board that after some substantive posts had fallen vacant on April 1, 1969, the question of confirmation of the appellant and the respondents Nos.
2 to 19 was taken into consideration.
This submission is not supported by any material on record inasmuch as there is nothing to show when these posts had fallen vacant.
It is difficult to accept that all these posts had fallen vacant on the same day, that is, on April 1, 1969.
We have, therefore, no hesitation in holding that the vacancies had occurred before that day, but the Board did not care to take up the question of confirmation for reasons best known to it.
That facts stated hereinabove, disclose that the Board had acted arbitrarily at its sweet will and without any justification whatsoever in making the appellant junior to the respondents Nos. 2 and 4 to 19, who are admittedly juniors in service to the appellant.
For the reasons aforesaid, the judgment of the learned Single Judge and that of the Division Bench of the High Court and the impugned seniority list are set aside.
We direct that a fresh seniority list shall be prepared by placing the appellant immediately below Pawan Kumar Aggarwal and above Sudesh Kumar Tuli within six weeks from date and maintain the seniority of the appellant, as directed, in the post to which the appellant has been promoted in the meantime .
The appeal is allowed with costs quantified at Rs.5,000 G.N. Appeal allowed.

Output:
The appellant was appointed an Assistant Engineer on June 10, 1963 in the Punjab State Electricity Board on probation for two years which ended on June 10, 1965.
On bifurcation of Punjab Electricity Board, the service of the appellant was allocated to Haryana State Electricity Board.
As a result of a disciplinary proceeding held against him in 1968, a minor penalty of stoppage of one increment without any future effect was imposed on the appellant.
After expiry of one year, the appellant was, however, given the increment.
By virtue of an order dated March 30, 1970, the appellant and respondents 2 to 19 were confirmed as Assistant Engineers, class II on satisfactorily completing the probation period of two years.
Though the others were confirmed with effect from April 1, 1969, the appellant was confirmed with effect from December 1, 1969.
Consequently, the appellant 's name was placed last of all the confirmed officers.
The appellant challenged the said order by way of a writ petition before the High Court which dismissed the petition.
This appeal by special leave is against the judgment of the High Court.
G Allowing the appeal, ^ HELD: 1.
The penalty by way of stoppage of one increment for one year was without any future effect.
In other words, the appellant 's increment for one year was stopped and such stoppage of increment will H 622 have no effect whatsoever on his seniority.
Accordingly, the Electricity Board acted illegally and most arbitrarily in placing the juniors of the appellant above him in the seniority list and/or confirming the appellant in the post with effect from December 1, 1969 instead of April 1, 1969.
The question of seniority has nothing to do with the penalty that was imposed upon the appellant.
It is apparent that for the same act of misconduct, the appellant has been punished twice, that is, first, by the stoppage of one increment for one year and, second, by placing him below his juniors in the seniority list.
[624G H; 625A] 2.
There is no explanation why the confirmation of the appellant was deferred till December 1, 1969.
The explanation that after some substantive posts had fallen vacant on April 1, 1969, the question of confirmation was taken into consideration is not supported by.
any material on record inasmuch as there is nothing to show when these posts had fallen vacant.
It is difficult to accept that all these posts had fallen vacant on the same day, that is, on April 1, 1969.
Though the vacancies had occurred before that day, the Board did not care to take up the question of confirmation for reasons best known to it.
While there is some necessity for appointing a person in government service on probation for a particular period, there may not be any need for confirmation of that officer after the completion of the probationary period.
The archaic rule of confirmation, still in force, gives a scope to the executive authorities to act arbitrarily or malafide giving rise to unnecessary litigations.
It is high time that the Government and other authorities should think over the matter and relieve the government servants of becoming victims of arbitrary actions.
[625H; 626B; 625C; D] S.B. Patwardhan & others vs State of Maharashtra & others; , , referred to.
[Setting aside the High Court judgment and the seniority list, this Court directed that a fresh seniority list be prepared within six months on the basis of this judgment and maintain the appellant 's seniority in the post to which he has been promoted in the meantime.] [626D]


Input:
Civil Appeal No. 211 of 1956.
Appeal from the judgment and order dated July 19, 1955, of the Bombay High Court in Special Civil application No. 976 of 1955.
A. V. Viswanatha Sastri, section N. Andley, Rameshwar Nath and P. L. Vohra, for the appellant.
M. C. Setalvad, Attorney General for India, C. K. Daphtary, Solicitor General of India and B. Sen, for respondent No. 1.
Vithlbhai B. Patel and I. N. Shroff, for respondent No. 2.
368 1961, December 21.
The Judgment of Sinha C. J., Sarkar, Das Gupta and Mudholkar JJ., was delivered by Sarkar J. Ayyangar J., delivered a separate judgment.
SARKAR J.
The appellant is a City Municipality within the meaning of the Bombay District Municipal Act, 1901 and is governed by that Act.
It had by a resolution duly passed by it, made a rule under section 60 of the Act selecting for the purpose of an octroi tax of /4/ annas per Bengali maund, milk brought within its octroi limits for consumption, use or sale therein.
On November 29, 1954, the Government of Bombay had given its sanction to the rule under section 61 of the Act.
The appellant Municipality thereafter published the rule and the sanction as required by section 62 of the Act and the tax was accordingly imposed with effect from January 1, 1955.
On April 4, 1955, the Government of Bombay passed an order directing that the octroi tax shall not be leviable by the appellant Municipality.
This order has given rise to the present proceedings.
The appellant Municipality filed a petition in the High Court at Bombay under article 226 of the Constitution challenging the validity of the order.
This petition was dismissed by the High Court.
The appellant Municipality has now come up to this Court in appeal against the decision of the High Court.
The questions that arise in this case will be stated after a few of the sections of the Act have been referred to.
Chapter VII of the Act deals with municipal taxation.
We shall be concerned principally with sections 59, 60, 61 and 62 which are all contained in this chapter and deal with imposition of taxes by Municipalities.
It will be necessary also to consider section 46.
Section 46 gives power to a Municipality to make rules for various purposes as specified in 369 the several clauses contained in it.
Under cl.
(i) of this section a Municipality has power to make rules for the purpose of "prescribing, subject to the provisions of Chapter VII, the taxes to be levied".
Section 59 is the section on which the decision of this case will really turn and we, therefore, think it right to set out that portion of it which is relevant for our purpose.
section 59.
(1) Subject to any general or special orders the State Government may make in this behalf, any Municipality (a) after observing the preliminary procedure required by section 60 and (b) with the sanction of the State Government in the case of City Municipalities . . . and subject to such modifications or conditions as under section 61 the State Government. . . in according such sanction, deems fit, may impose, for the purposes of this Act, any of the following taxes, that is to say, . . . . . . . . (iv) an octroi on animals or goods, or both, brought within the octroi limits for consumption, use or sale therein; Section 60 lays down the procedure to be observed by a Municipality preliminary to imposing a tax.
It requires that first a resolution shall be passed at a meeting to the Municipality selecting the tax and making rules for the proposes of cl.
(i) of section 46 prescribing the tax.
Thereafter the resolution has to be published with a notice in a specified form inviting the inhabitants of the Municipal 370 area to submit within a month their objections, if any, to the tax.
After the objections have come in, they are to be considered by a committee of the Municipality and unless on the report of the committee the Municipality decides to abandon the tax, it has to submit the objections with its opinion thereon, any modifications it desires to make and the rules prescribing the tax to the State Government.
Section 61 provides that on receipt of the rules and the other things mentioned in section 60 from the Municipality, the Government may refuse to sanction the rules, or return them to the Municipality for further consideration or sanctioned them with or without modifications or subject to conditions prescribed.
Section 62 lays down that the rules as sanctioned by the Government shall be published by the Municipality and the tax shall, from the date which shall be specified in the notice publishing the rules, be imposed accordingly.
It is not in controversy that in the present case the procedure prescribed in the sections mentioned above had been complied with.
The Government 's contention is that the order made by it was competent as it was order which was authorised by section 59, subject to which only a tax could be imposed by a Municipality.
The appellant Municipality does not dispute that it can impose a tax only under section 59 but it contents that the general or special orders mentioned in the section subject to which it has the power to impose tax, are orders which were in existence before the rule prescribing the tax was framed and once a rule has been framed by it and the Government has accorded its sanction to that rule, the Government has no power to control the imposition of tax under it by any order made under section 59.
The question so raised is one of the construction of section 59.
But for such construction we have to refer also to the other sections earlier mentioned.
371 In our opinion, the Government 's contention is well founded.
The Municipality 's power to tax arises only under section 59.
Under that section, it has been given the power of impose a tax after following the procedure prescribed but subject always to the general or special orders of the Government.
The appellant Municipality can succeed in this appeal only if the word "impose" in section 59 means the acquisition of the power to tax by following the procedure laid down in sections 60 to 62.
Its appeal must otherwise fail.
It seems to us that the word "impose" in section 59 has not the meaning for which the appellant Municipality contends.
It would have been noticed that under section 59 a Municipality may impose a tax only after it has framed a rule under section 60 prescribing the tax to be levied and the Government has given its sanction to that rule under section 61.
It is this imposition which is made by section 59 "subject to any general or special orders which the State Government may make in this behalf".
Therefore, it is the imposition after the making of the rule authorising the tax, that is subject to the Government 's orders and not the making of the rule itself which authorises the tax itself.
It is plain from section 59 that the control over a Municipality 's power to tax imposed by the requirement of the Government 's sanction of the rule prescribing the tax in contained in section 61, is not the same thing as the control contemplated by the general or special orders mentioned in section 59, for both are mentioned in section 59.
If it were not so, it would have been unnecessary to provide for the general or special orders controlling the imposition of the tax in section 59.
This is the first reason why we think that the appellant Municipality 's contention is untenable.
The imposition contemplated by section 59 is clearly not the passing of the resolutions under 372 section 60 selecting the tax and making the rule prescribing the tax to be levied in terms of section 46(i), for section 59(1)(a) expressly makes the imposition something happening after section 60 has been complied with.
This seems to us to be another reason for not accepting the appellant Municipality 's contention.
The third reason is to be found in section 62.
As we have earlier stated, it provides that the tax shall be imposed from the date mentioned in the notice publishing the sanctioned rule.
The choice of this date lies with the Municipality and not with the Government.
The power to levy the tax is acquired by a Municipality when the rule prescribing the tax made by it is sanctioned by the Government.
The Municipality at its own choice thereafter fixes a date from which it will collect the tax.
Therefore, the word "impose" in section 62 does not refer to the acquisition of power to levy a tax by making the rule but to the actual levy of the tax under the power so acquired.
It is of some significance to note that in section 46(i) the words used are "make. rules. prescribing. .the taxes to be levied".
What we wish to point out is that in connection with the making of the rules the Act uses the word "levied" in section 46 (i) and in connection with an actual impost, and word "imposed" in section 62.
We, therefore, think that it would be legitimate to construe the word "impose" in section 59 in the sense in which it has clearly been used in a connected provision, that is, section 62.
Hence, in our view, "impose" in section 59 means the actual levy of the tax after authority to levy it has been acquired by rules duly made and sanctioned, and it is such imposition that is made subject to the general or special orders of the Government.
Therefore, the Government can at any time by any such order prohibit the imposition of the tax.
373 Mr. Sastri for the appellant said that the general or special orders in section 59 refer to orders that can be made under section 73, but the present order had admittedly not been made under that section.
Section 73 does not empower an order prohibiting the imposition of a tax altogether as the order in the present case does.
It only gives power to suspend the levy of the tax authorised till the objections to the tax which the Government required to be removed, had been removed.
Because section 73 gives a power to suspend the tax, it is, in our opinion, no argument that the general or special orders in section 59 must be understood as confined to such orders.
Section 73 cannot help in interpreting the words "general or special orders" in section 59.
A third objection to the validity of the order was that it was discriminatory.
It was said that no other Municipality had been prohibited from collecting a similar tax which it had power under its rules to collect.
Apart from the very interesting question raised by the learned Attorney General that the Municipality being a local authority, was a state, and was not therefore entitled to the benefit of article 14, as to which we think it unnecessary to express any opinion we are on the facts satisfied that there is no discrimination.
The Government has now, it is not disputed, prohibited all Municipalities from levying any octroi tax on milk.
Furthermore, it has not been shown to us that all Municipalities stand on the same footing with regard to milk.
The last objection was that the order had been mala fide made.
This grievance is completely without foundation.
The Government had earlier requested the appellant Municipality to drop the tax on the ground, among others, that milk was really being purchased for the Government and that the Government was not liable to be 374 taxed by a Municipality.
It may be that this ground was not justified on the facts, but as to this we do not come to any finding.
It is clear to us that even if this stand taken by the Government was not tenable, that is no reason for thinking that the order was made mala fide.
It was said that the Government had made this order to benefit respondent No. 2, a co operative union, dealing in milk.
This is a bare allegation and is not supported by facts.
In any event, since similar orders have now been made in respect of all Municipalities within the State, no question of mala fide can possibly arise.
We think that the challenge to the order dated April 4, 1955 is without any foundation.
In our view, the order was perfectly legitimate and must be upheld.
We accordingly dismiss the appeal with costs.
AYYANGAR J. I have had the advantage of perusing the judgment just delivered and I agree with order passed.
The relevant facts and the statutory provisions which bear on the points arising in the appeal have all been set out by Sarkar J. and do not require to be repeated.
There is no dispute that the levy of the duty by the municipality as and from January 1, 1955 was lawful because the requirements of sections 59 62 were satisfied when the levy was made.
No general or special order of the State Government stood in the way of the municipality making the particular levy and the sanction of the State Government under section 59 (1) (b) had been accorded to it, and the relevant rules had conformed to the procedural and other requirements of these sections.
The power of the municipality in the matter of the levy of the tax is, however, not absolute but it made subject, apart from other provisions to which I 375 shall advert, to such general and special orders as the State Government might pass by virtue of the opening words of section 59 of the Act.
The argument strenuously pressed by Mr. Visvanatha Sastri was this: The Government had no doubt, a power to prescribe and control by general or special orders the right of a municipality to impose a tax.
These general or special orders would again, no doubt, be subject to modification from time to time to suit the changing needs of particular areas, or of particular interests which would be affected by the tax levy, but the exercise of the power of modification or this power too prescribe conditions and restrictions is exhausted when a municipality does, by conforming to the orders then in force, impose a levy which has come into force under section 62.
I am unable to agree with this construction of the opening words of section 59 (1).
On its language there is nothing to warrant the doctrine that it gets exhausted by reason of a municipality imposing a tax in conformity with an order as it stood at a particular date.
The limitation suggested must therefore, be deduced as a necessary implication either from the fasciculus of sections ending with section 62 leading to the imposition of a levy, or from other provisions of the Act.
The other provision of the Act to which learned Counsel referred was section 73 which reads: "If it shall at any time appear to the Provincial Government, on complaint made or otherwise, that any tax, leviable by a Municipality, is unfair in its incidence, or that the levy thereof, or of any part thereof, is obnoxious to the interest of the general public, it may require the said Municipality, within such period as it shall fix in this behalf, to take measures for removing any objection which appears to it to exist to the said tax, 376 and if, within the period so fixed, such requirement shall not be carried into effect to the satisfaction of the Provincial Government, it may, by notification in the official Gazette, suspend the levy of such tax, or of such part thereof, until such time as the objection there to shall be removed.
The Provincial Government may at any time, by a like notification, rescind any such suspension.
" It is obvious that this section is of limited operation and confined to the subject it actually deals with.
It posts the continued exaction of the impost, but points to the removal of anomalies and hardships in the details of the levy or of its administration.
The existence of this provision would manifestly not suffice to negative the right of the Government to forbid the continued imposition of the tax altogether such as has been done in the present case.
Section 73 cannot therefore be construed as negativing by implication the right claimed by the state Government under section 59, for it refers to and comprehends a totally different subject matter.
Coming now to the construction of sections 59 62 as themselves supporting theory of the exhaustion of the power, the submission was this.
"The general or special orders" could only restrict the power of a municipality "to impose a tax".
On the scheme of provisions contained in sections 59 62 a tax was "imposed" only once, though when imposed and in operation the levy and collection of such a tax might be periodic and throughout the life of the imposition.
Hence there was no scope for the exercise of the State Government to make "any special order" in relation to a tax after it has once been "imposed" because the power to prescribe conditions or restrictions by general or special order is with reference to the "imposition" of the tax.
I feel unable to accept this construction.
The whole foundation 377 of the argument is based on a denial of the premise that a power to impose tax is a continuing power.
In my judgment the "imposition" of a tax is a continuing power in the sense that so long as it is in force, it points to the existence of and derives vitality from the power of the authority to impose it.
When the municipality levies the tax in the sense of quantifying it with reference to an ascertained person and thereby creating a statutory debt payable by the tax payer, it is in reality exercising the power to "impose" the tax, for it is the continued existence of the imposition that furnishes the legal basis for the levy when made.
When the power to impose is withdrawn the imposition falls to the ground.
That is the ratio of saving provisions which enable taxes to be levied and collected not withstanding the deprivation of the right to impose taxes for the future.
In this view it is clear that there is no exhaustion of the State power under the opening words of section 59 (1).
In arriving at this construction I have also taken into consideration the scheme of the Act and the wide powers conferred on the State Government in the matter of control and supervision over the municipalities powers designed to ensure, that, subject of course to express statutory provision, municipal administration is coordinated to secure the vital interest of the general public.
In this connection reference may be made to section 74 of the Act which reads: "Whenever it appears to the Provincial Government that the balance of the municipal fund of any Municipality is insufficient for meeting the expenditure incurred under section 175 or for the performance of any duties in respect of which they shall have been declared under section 178 to have committed default, the Provincial Government may be notification require the Municipality to impose 378 within the Municipal district, any such tax specified in the notification as may be imposed under section 59 if no such tax is at the time imposed therein, or to enhance any existing tax in such manner or to such extent as the Provincial Government considers fit, and the Municipality shall forthwith proceed to impose or enhance in accordance with the requisition such tax under the provisions of this Chapter as if a resolution of the Municipality had been passed for the purpose under section 60: Provided that: (a) the Provincial Government shall take into consideration any objection which the Municipality or any inhabitant of the Municipal district may make against the imposition or enhancement of such tax, (b) it shall not be lawful for the Municipality to abandon or modify or to abolish such tax when imposed, and (c) the Provision Government may at any time cancel or modify any requisition made by it under this section, and the levy of tax or the enhancement, except as to arrears theretofore accrued due.
shall thereupon cease or be modified accordingly.
" Government are thus empowered both to direct the municipality to impose tax when Government consider the same necessary in the interest of municipal finance and administration as also to direct the municipality to desist from continuing the imposition when the necessity ceases.
In cases where a tax is imposed by the municipality by virtue of the provisions in sections 59 62, the municipality 379 itself could revoke the tax if the rules so provide, for section 47 of the Act enacts: (1) Subject to the requirements of clause (a) of the proviso to section 46 every Municipality may, except as otherwise provided in clause (b) of the proviso to section 74, at any time for any sufficient reason, suspend, reduce or abolish any existing tax by suspending, altering or rescinding any rule describing such tax under the provisions of clause (1) and of the first clause of the proviso to section 46.
(2) The provisions of Chapter VII relating to the imposition of taxes shall, so far as may be, apply to the suspension, reduction or abolition of any tax and to the suspension, alteration or rescission of any rule prescribing a tax.
" But for the opening words of section 59(1) there is no specific provision in the Act to enable Government to intervene in cases where the continued levy of a tax is contrary to public interest.
I do not consider that any such gap was intended and in my judgement the opening words in section 59(1) are both apt and sufficient to clothe Government with power to direct by 'special order ' a municipality to desist from 'imposing ' a tax when satisfied that public interest so requires.
The points raised regarding discrimination and mala fides are without substance and for the reasons stated by Sarkar J. I would reject them.
The appeal therefore fails and has to be dismissed with costs.
The Writ Petition which raises the same points as the appeal will also stand dismissed but without any order as to costs.
Appeal dismissed.

Output:
After following the procedure prescribed by the Bombay District Municipal Act, 1901, and after obtaining the requisite sanction of the Government the appellant imposed an octroi tax on milk brought within its limits for consumption, use or sale therein.
Shortly afterwards the Government passed an 367 order directing that the octroi tax shall not be leviable by the appellant.
The appellant contented that the Government had no power to control the imposition of the tax once it had been properly imposed.
^ Held, that the Government was competent under section 59 of the Act to pass the order.
Section 59 provided that subject to any general or special orders which the State Government may make, a Municipality may "impose" the tax after following the procedure laid down and after obtaining the sanction of the Government.
The word "impose" in section 59 meant the actual levy of the tax after authority to levy it had been acquired by rules duly made and sanctioned and this imposition was subject to the general or special orders of the Government.
The general and special orders under section 59 could not be confined to orders under section 73 which gave the Government power to suspend the tax in certain cases.
Held, further, that the order of the Government was not discriminatory.
Subsequently the Government had prohibited all municipalities from levying octroi tax on milk.
For the same reason no question of mala fides could arise.
Per Ayyangar, J. Imposition of tax was a continuing power deriving vitality from the power of the authority to impose it.
The power of the Government to issue special or general order under section 59 was therefore not exhausted after "imposition" of the tax.
There were provisions in sections 47, 73 and 74 for other contingencies but except for the opening words of section 59 there was no provision to enable Government to intervene in cases where the continued levy was against public interest.
The opening words of section 59 clothed the Government with power to direct a municipality to desist from imposing a tax.


Input:
ivil Appeal No. 1273 of 1979.
From the Judgment and Order dated 10.11.1978 of the Gujarat High Court in L.P.A. No. 206 of 1978.
T.U. Mehta, G.A. Shah, Mrs. H. Wahi, M.N. Shroff and K.M.M. Khan for the Appellant.
S.N. Kacker, Anil Kumar Gupta, Brij Bhushan Sharma and N.P. Mahindra for Respondent No. 1.
1093 V.C. Mahajan, C. Ramesh and Miss A. Subhashini for Respondent No.2.
The following Order of the Court was delivered: This appeal by Special leave is against the appellate order of the Division Bench of the Gujarat High Court.
Respondent No. 1 was appointed to the Indian Police Service on 4.7. 1969 and has been discharged by the impugned order dated 9.4.1974.
After he was appointed by the Union of India he was allotted to the State cadre of Gujarat and the order of discharge has been made on the basis of steps taken by the State of Gujarat.
The order of discharge was assailed by filing a writ petition under Article 226 of the Constitu tion.
The Single Judge annulled the order.
To the Writ petition both the Union of India and the State of Gujarat were party respondents.
Against the Single Judge 's decision, two appeals were preferred to the Division Bench.
The Divi sion Bench for reasons mostly different from what had been recorded by the learned Single Judge, came to the same conclusion.
Before this Court, there is only one appeal by the State of Gujarat and the Union of India has been joined as a respondent.
Initially a preliminary objection had been raised regarding the maintainability of the appeal in the absence of any appeal by the Union of India but Mr. Kacker appearing for respondent No. 1 has given up the same.
It is, therefore, not necessary to go into that question.
The order of discharge read as follows: "Under clause (bb) of Rule 12 of the Indian Police Service (Probation) Rules, 1954, the President hereby discharges Shri A.C. Bhargav, a person appointed to the Indian Police Serv ice, on probation, on the results of the I.A.S. etc.
Examination held in 1968, and ,allocated to the service cadre of Gujarat from the said service with effect from the date on which this order is served on the said Shri A.C. Bhargav.
" Reference to Rule 12(bb), it was contended on behalf of the respondent, brought into the otherwise innocuous order stigma in sufficient measure warranting a proceeding of the nature contemplated under Article 311(2) of the Constitu tion.
It is unnecessary for us to go into that question as in our opinion the view expressed by the High Court is 1094 quite sound.
We may refer to the Constitution Bench decision of this Court reported in the case of State of Orissa and Anr.
vs Ram Narayan Das, ; wherein this Court considered the order of discharge of a police officer on probation and held that in the case of a probationer obser vation like 'unsatisfactory work and conduct ' would not amount to stigma.
The other aspect which has been convassed before us at length is as to whether the respondent should have been treated as a confirmed officer of the cadre at the time the order of discharge was made.
Admittedly, the order of dis charge is about five years after the appointment.
Rule 3(1) of the Indian Police Service (Probation) Rules, 1954, provides that every person recruited to the service in accordance with Indian Police Service (Appoint ment by Competitive Examination) Regulations, 1955, . shall be appointed to the service on probation for a period of two years.
At the relevant time, sub rule (3) of the said Rules provided that the Central Government may, if it so thinks fit in any case or class of cases extend the period of probation.
Admittedly, in this case there was no order of extention.
It has been contended that no order of extension is necessary to be made as the process of confirmation is not automatic and even if the two year period as provided in Rule 3(1) has expired confirmation would not ipso facto follow and a special order has to be made.
Reliance has been placed on a series of decisions of this Court which have held that an order of confirmation has to be made and confirmation would not follow automatically.
The position here, however, is somewhat different.
While the Probation Rules prescribed an initial period of two years of probation it did not provide any optimum period of probation.
Administrative instructions were issued by the Ministry of Home Affairs, Government of India, on 16th March, 1973, indicating the guidelines to be followed in the matter.
The relevant portion thereof may be extract ed: ". . (ii) It is not desirable that a member of the service should be kept on probation for years as happens occasionally at present.
Save for exceptional reasons, the period of proba 1095 tion should not, therefore, be extended by more than one year and no member of the serv ice should, by convertion, be kept on proba tion for more than double the normal period i.e. four years.
Accordingly, a probationer, who does not complete the probationers ' final examination within a period of four years, should ordinarily be discharged from the service.
" It is not disputed that the circular of the Home Minis try was with reference to the Indian Police Service (Proba tion) Rules.
We have not been shown that these instructions run counter to the rules.
It is well settled that within the limits of executive powers under the Constitutional scheme, it is open to the appropriate Government to issue instruc tions to cover the gap where there be any vacuum or lacuna.
Since instructions do not run counter to the rules in exist ence, the validity of the instructions cannot be disputed.
Reliance has been placed in the courts below on the consti tution Bench Judgment of this Court, and which reported in [ 2968] 1 SCR 111 (Sant Ram Sharma vs State of Rajasthan and anr.) where Ramaswami J. speaking for the Court stated thus: " . .
We are unable to accept this argu ment as correct.
It is true that there is no specific provision in the Rules laying down the principle of promotion of junior or senior grade officers to selection grade posts.
But that does not mean that till statu tory rules are framed in this behalf the Government cannot issue administrative in structions regarding the principles to be followed in promotions of the officers con cerned to selection grade posts.
It is true that Government cannot amend or supersede statutory rules by administrative instruc tions, but if the rules are silent on any particular point Government can fill up the gaps and supplement the rules and issue in structions not inconsistent with the rules already framed.
We are of the view that the rules read with instructions create a situation as arose for consideration by this Court in the case of State of Punjab vs Dharam Singh, [1968] 3 SCR 1.
The Constitution Bench of this Court in that case inter preted the Punjab Educational Service (Provincialised Cadre) Class III Rules and found that there was a maximum limit of three years beyond which the period of probation could not be extended.
When an officer appointed initially on proba tion was found to be continuing in service beyond three years without a written order of confirmation, this Court held that it tantamounts to confirmation.
In view of what we have stated above we are in argee 1096 ment with the High Court about the combined effect of the rules and instructions.
We hold that the respondent stood confirmed in the cadre on the relevant date when he was discharged.
For a confirmed officer in the cadre, the Proba tion Rules did not apply and therefore, proceedings in accordance with law, were necessary to terminate service.
That exactly was the ratio of the decision in Moti Ram Deka etc.
vs General Manager, N.E.F. Railways, Maligaon, Pandu etc.
; , On the analysis indicated above, the net result, therefore, is that the respondent No. 1 had become a confirmed officer of the Gujarat I.P.S. cadre and under rule 12(bb) of the Probation Rules his services could not be brought to an end by the impugned order of discharge.
The appeal fails and is dismissed.
There will be no order as to costs.
N.P.V. Appeal dis missed.

Output:
The first respondent was appointed to the Indian Police Service on 4.7.1969 and allotted to the Gujarat State Cadre.
He was on probation and there was no order of extention of probation.
He was discharged by the impugned order dated 9.4.74.
The order of discharge was assailed by the first re spondent.
A Single Judge of the High Court annulled the order.
Two appeals were preferred by the Union of India and the State to the Division Bench which came to the same conclusion, though for different reasons.
The State filed an appeal before this Court, which was resisted by the respondent, contending that reference to Rule 12(bb) of the Indian Police Service (Probation) Rules, 1954 brought into the otherwise innocuous order stigma in sufficient measure warranting a proceeding of the nature contemplated under Article 311(2) of the Constitution of India and that the respondent should have been treated as a confirmed officer of the cadre at the time the order of discharge was made.
On behalf of the State it was contended that no order of extension of probation was necessary to be made as the process of confirmation was not automatic and even if the two year period as provided in Rule 3(1) of the Probation Rules had expired, confirmation would not ipso facto follow and a special order had to be made.
Dismissing the appeal, this Court, 1092 HELD: 1.
The first respondent having become a confirmed officer of the Gujarat IPS cadre, under Rule 12(bb) of the Indian Police Service Rules, 1954 his services could not be brought to an end by an order of discharge since the said Rules had no application for officer confirmed in the cadre.
Proceedings in accordance with law were, therefore, neces sary to terminate his service.
[1096A C] 2.1 While the Probation Rules prescribed an initial period of two years of probation they did not provide any optimum period of probation.
Administrative instructions issued by the Government of India on 16th March, 1973 indi cating the guidelines to be followed in the matter laid down that, save for exceptional reasons, the period of probation should not be extended by more than one year and no member of the service should, by convention, be kept on probation for more than double the normal period i.e. 4 years.
[1094F G; 1095A B] 2.2 Within the limits of executive powers under the Constitutional scheme it is open to the apropriate Govern ment to issue instructions to cover the gap where there be any vacuum or lacuna.
Since instructions do not run counter to the rules in existence, the validity of the instructions cannot be disputed.
[1095C] In the instant case, there was no order of extension and the order of discharge is about five years after the ap pointment.
The respondent, therefore, stood confirmed in the cadre on the relevant date when he was discharged.
[1096A] Sant Ram Sharma vs State of Rajasthan and Anr., ; ; State of Punjab vs Dharam Singh, ; and Moti Ram Deka etc.
vs General Manager, N.E.F. Railways, Maligaon, Pandu etc.
; , , referred to.