Input:
Civil Appeal No. 1537 of 1970.
Appeal by special leave from the judgment and order dated the 10/30th June, 1969 of the Bombay High Court, Nagpur Bench, Nagpur in Appeal No. 90 of 1962.
1178 U. R. Lalit and A. G. Ratnaparkhi, for the Appellant.
section section Khanduja for the Respondent.
The respondent filed a suit in the Court of the Second Joint Civil Judge, Amrawati alleging that the house situated near Saraf Bazar in Amrawati had been purchased by her in 1950 for Rs. 4,000 and thereafter improvements had been affected by her to the property.
Being in need of money, she entered into an agreement with the appellant for a loan of Rs. 2,000 and it was decided that simultaneously she should execute a nominal document of sale and a rent note.
These documents were executed on January 7, 1953.
She alleged that the documents were never intended to be acted upon, and that the rent paid by her represented in fact interest at 18% on the loan.
She continued in possession of the house property throughout and, it is said, carried on repairs from time to time.
It was stated that the appellant was attempting to enforce the document as a sale deed by filing suits in the Court of Small Causes for recovery of rent.
As two suits had resulted in decrees, she considered it necessary to file the present suit for a declaration that she was, and continued to be, owner of the house property.
In defence, the appellant maintained that the sale deed represented a genuine, transaction, and ownership of the house property had passed to the appellant.
It was pleaded that the decrees passed by the Court of Small Causes operated as res judicata barring the respondent from pleading that the sale deed was merely a nominal transaction.
Reliance was also placed on section 92 of the Indian Evidence Act.
The trial court held that the sale deed was never intended to be acted upon and decreed the suit.
The appellant appealed to the District Court, Amravati, but the learned District Judge did not accept the case that a sale had taken place.
He held, however, that the transaction between the parties constituted a mortgage.
He modified the trial court decree to conform to that finding.
The High Court of Bombay, in second appeal, did not agree with the finding of the lower appellate court that the transaction was a mortgage and affirmed the findings of the trial court that the sale deed and rent note were sham documents, that the decrees of the 1179 Court of Small Causes did not operate as res judicata and that section 92 of the Indian Evidence Act did not prevent the respondent from establishing the true nature of the transaction.
Accordingly, the High Court set aside the decree of the lower appellate court and resorted that of the trial court.
When this appeal was heard by us, it appeared that the parties may settle the dispute by negotiated compromise.
It seems, however, that no compromise has been possible.
Accordingly, we proceed to dispose of the appeal on its merits.
Two points have been raised before us.
The appellant urges that the Small Causes Court decrees, in view of the general principles of res judicata, precluded the trial of the question whether the sale transaction was a genuine transaction.
The other point concerns the operation of section 92 of the Evidence Act.
The successive suits were filed by the appellant against the respondent in the Court of Small Causes for recovery of arrears of rent.
In each suit the appellant contended that she was owner of the property and the respondent was her tenant.
The tenancy was alleged on the basis of the document dated January 7, 1953 which on its terms purported to be a sale deed by the respondent in favour of the appellant.
The respondent resisted the suits.
The court decreed the suits on the finding that the document was a sale deed, and therefore the respondent was not the owner of the property but merely a tenant of the appellant.
The question is whether this finding operates as res judicata in the instant suit.
The High Court repelled the plea of res judicata on the ground that section 11 of the Code of Civil Procedure governed the case, and that as a Court of Small Causes is not competent to try a suit for a declaration of title to immovable property, the court which passed the decrees relied on by the appellant was not competent to try the present suit and therefore an imperative condition of section 11 was not satisfied.
It is contended before us on behalf of the appellant that the High Court erred in applying the statutory provisions of section 11 of the Code, and should have invoked instead the general principles of res judicata.
On that, it is submitted, all that was necessary to find was whether the Court of Small Causes was competent to try the two earlier suits and decide the issues arising therein.
We have been referred to Gulabchand Chhotalal Parikh v, State of Bombay where 1180 this Court has taken the view that the provisions of section 11 of the Code are not exhaustive with respect to an earlier decision operating as res judicata between the same parties on the same matter in controversy in a subsequent regular suit, and that on the general principles of res judicata, any previous decision on a matter in controversy, decided after full contest or after affording fair opportunity to the parties to prove their case by a Court competent to decide it, will operate as res judicata in a subsequent regular suit.
It is not necessary, it was said, "that the Court deciding the matter formerly be competent to decide the subsequent suit or that the former proceeding and the subsequent suit have the same subject matter".
The observations were made in considering the question whether decisions on matters in controversy in writ petitions under Article 32 or Article 226 of the Constitution could operate as res judicata in subsequent regular suits on the same matters in controversy between the same parties.
A number of other cases have been cited on behalf of the appellant in support of the plea of res judicata.
We have considered them and we do not think that they help the appellant.
In Muhammad Abdul Ghafur Khan vs Gokul Prasad and others the Allahabad High Court limited itself to observing that a Court of Small Causes possessed a discretion on whether to return the plaint under section 23, Provincial Small Cause Courts Act on a finding that the relief claimed depended on proof of title.
The same High Court in Madan Kishor and Another vs Mahabir Prasad and others merely observed that it was for the Court of Small Causes to decide under section 23 of the Provincial Small Cause Courts Act whether a question of title was involved in the suit and on finding so it was open to it to return the plaint.
That was also the view expressed by it in Ram Dayal Sonar vs Sukh Mangat Kalwat.
So also in Ganga Prasad vs Nandu Ram, the Patna High Court said that the Court of Small Causes had power under section 23 to return the plaint where it was of opinion that the question of title raised was so intricate that it should not be decided summarily.
To the same effect was the view expressed by the Lahore High Court in Ganesh Das vs Feroze Din. 1181 In Puttangowda Mallangowda Patil vs Nikanth Kalo Deshpande, the Bombay High Court declared that a Court of Small Causes could render a finding on an issue as to title to immovable property but only in a suit which did not ask for that relief and merely for payment of a sum of money.
Our attention was drawn to Asgarali Roshanalli and another vs Kayumalli Ibrahimji, but we find nothing there of assistance to the appellant.
Reliance was placed on the decision of the Allahabad High Court in Lala Jageshwar vs Shyam Behari Lal.
There a learned Single Judge took the view that as a Court of Small Causes is a Court of exclusive jurisdiction the restrictive conditions imposed by s 11 of the Code of Civil Procedure requiring "two fold competency" of the Court whose decision is to operate as res judicata cannot be invoked.
It was sufficient, he observed, that the decision had been rendered by a court of competent jurisdiction and it was not necessary that that court should also be competent to decide the subsequent suit.
The judgment was brought in appeal to this Court but while disposing of the appeal, Shyam Behari Lal vs Lala Jageshwar Prasad, this Court declined to decide whether a Court of Small Causes could be regarded as a Court of exclusive jurisdiction.
We find, however, that the view taken by the High Court in Lala Jageshwar Prasad (supra) was expressly overruled by a Full Bench of the High Court in Manzurul Haq and another vs Hakim Mohsin Ali and it was laid down that a Court of Small Causes could be described as a court of "preferential jurisdiction" but not as court of "exclusive jurisdiction".
It was also held by the Full Bench that a decision rendered by a Court of Small Causes in a suit for arrears of rent would not operate as res judicata in a subsequent suit filed in the Court of the Munsif for recovery of arrears of rent for a different period and for ejectment.
That the principle of res judicata could not be availed of where a decision given by a Court of Small Causes was relied on in a subsequent regular civil suit was the view also taken by the Punjab High Court in Pateshwar Parshad Singh vs A. section Gilani.
It seems to us that when a finding as to title to immovable property is rendered by a Court of Small Causes res judicata cannot 1182 be pleaded as a bar in a subsequent regular civil suit for the determination or enforcement of any right or interest in immovable property.
In order to operate as res judicata the finding must be one disposing of a matter directly and substantially in issue in the former suit and the issue should have been heard and finally decided by the court trying such suit.
A matter which is collaterally or incidentally in issue for the purposes of deciding the matter which is directly in issue in the case cannot be made the basis of a plea of res judicata.
It has long been held that a question of title in a Small Cause suit can be regarded as incidental only to the substantial issue in the suit and cannot operate as res judicata in a subsequent suit in which the question of title is directly raised.
Poholi Mullick vs Fukeer Chunder Patnaik, Chet Ram and others vs Ganga, Anwar Ali vs Nur Ul Haq and Another, Khandu valad Keru vs Tatia valad Vithoba.
See also Mohd. Yusuf and another vs Abdul Wahid and S.A.A. Annamallai Chettiar vs Molaiyan and others.
Our attention has been drawn to Explanation VIII to section 11 in the Code of Civil Procedure recently inserted by the Code of Civil Procedure (Amendment) Act, 1976.
Section 97(3) of the Amendment Act declares that the new provision applies to pending suits, proceedings, appeals and applications.
In our opinion the Explanation can be of no assistance, because it operates only where an issue has been heard and finally decided in the earlier suit.
Accordingly, we hold that the finding rendered by the Court of Small Causes in the two suits filed by the appellant that the document executed by the respondent is a sale deed cannot operate as res judicata in the present suit.
The next contention on behalf of the appellant is that sub s.(1) of section 92 of the Evidence Act bars the respondent from contending that there was no sale and, it is submitted, the respondent should not have been permitted to lead parole evidence in support of the contention.
Section 91 of the Evidence Act provides that when the terms of contract, or of a grant, or of any other disposition of property, have been reduced to the form of a document, and in all cases in which any matter is required by law to be reduced to the form of a document, no evidence shall be given in proof of the 1183 terms of such contract, grant or other disposition of property, or of such matter, except the document itself.
Sub section
(1) of section 92 declares that when the terms of any contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document, have been proved according to the last section, no evidence of any oral agreement or statement shall be admitted, as between the parties to any such instrument or their representatives in interest, for the purpose of contradicting, varying, adding to, or subtracting from, its terms And the first proviso to section 92 says that any fact may be proved which would invalidate any document, or which would entitle any person to any decree or order relating thereto; such as fraud, intimidation, illegality, want of due execution, want of capacity in any contradicting party, want or failure of consideration, or mistake in fact or law.
It is clear to us that the bar imposed by sub section
(1) of section 92 applies only when a party seeks to rely upon the document embodying the terms of the transaction.
In that event, the law declares that the nature and intent of the transaction must be gathered from the terms of the document itself and no evidence of any oral agreement or statement can be admitted as between the parties to such document for the purpose of contradicting or modifying its terms.
The sub section is not attracted when the case of a party is that the transaction recorded in the document was never intended to be acted upon at all between the parties and that the document is a sham.
Such a question arises when the party asserts that there was a different transaction altogether and what is recorded in the document was intended to be of no consequence whatever.
For that purpose oral evidence is admissible to show that the document executed was never intended to operate as an agreement but that some other agreement altogether not recorded in the document, was entered into between the parties.
Tyagaraja Mudaliyar and another vs Vedathanni.
The Trial Court was right in permitting the respondent to lead parole evidence in support of her plea that the sale deed dated January 7, 1953 was a sham document and never intended to be acted upon.
It is not disputed that if the parole evidence is admissible, the finding of the court below in favour of the respondent must be accepted.
The second contention on behalf of the appellant must also fail.
In the result, the appeal is dismissed with costs.
S.R. Appeal dismissed.

Output:
Being in need of money, respondent entered into an agreement with the appellant for a loan of Rs. 2,000 and it was decided that simultaneously she should execute a nominal document of sale and rent note, of her house situated near Sarafa Bazar in Amravati.
These documents were executed on January 7, 1953.
The respondent continued in the possession of the house property throughout and carried on repairs from time to time.
Since the appellant was attempting to enforce the document as a sale deed by filing suits in the Court of Small Causes for recovery of rent and the said suits had resulted in a decree, the respondent filed a suit for declaration that she was and continued to be owner of the house property.
The documents executed on January 7, 1953, it was said, were never intended to be acted upon.
In defence, the appellant maintained that the sale deed represented a genuine transaction, and ownership of the house property had passed to her.
It was further pleaded that the decrees passed by the Court of Small Causes operated as res judicata barring the respondent from pleading that the sale deed was merely a nominal transaction.
Reliance was also placed on section 92 of the Indian Evidence Act.
Dismissing the appeal by special leave, the Court ^ HELD: 1:1.
When a finding as to title to immovable property is rendered by a Court of Small Causes res judicata cannot be pleaded as a bar in a subsequent regular civil suit for the determination or enforcement of any right or interest in immovable property.
In order to operate as res judicata the finding must be one disposing of a matter directly and substantially in issue in the former suit and the issue should have been heard and finally decided by the court trying such suit.
A matter which is collaterally or incidentally in issue for the purpose of deciding the matter which is directly in issue in the case cannot be made the basis of a plea of res judicata.
A question of title in a Small Cause suit can be regarded as incidental only to the substantial issue in the suit and cannot operate as res judicata in a subsequent suit in which the question of title is directly raised.
[H81 G 1182A C] 1177 1:2.
Explanation VIII to section 11 of the Code of Civil Procedure operates only where an issue has been heard and finally decided in the earlier suit.
[1182 D E] 1:3.
In the instant case, the finding rendered by the Court of Small Causes in the two suits filed by the appellant that the document executed by the respondent is a sale deed cannot operate as res judicata.
[1182 E] Poholi Mullick vs Fukeer Chunder Patnaik, (1874) 22 Suth W.R. 349; Chet Ram and Others vs Ganga, 1886 Allahabad Weekly Notes; Anwar Ali vs Nur Ul Haq and Another, ; Khandu Valad Keru vs Tatia valad Vithoba, (1871) 8 Bombay H.C.R.A.C. 23(24) (DB); Mohd. Yusuf and another vs Abul Wahid, A.I.R. 1948 All.
296 and S.A.A. Annamalai Chettiar vs Molaiyan and others, A.I.R. 1970 Mad. 396, approved.
Muhammad Abdul Ghafur Khan vs Gokul Prasad and others, A.I.R. 1914 All.
527; Gulabchand Chhotalal Parikh vs State of Bombay, ; Madan Kishor and Another vs Mahabir Prasad and others, A.I.R. 1929 All. 816; Ram Dayal Sonar vs Sukh Mangal Kalwar, A.I.R. 1937 All. 676; Ganga Prasad vs Nandu Ram, A.I.R. 1916 Patna 75; Ganesh Das vs Feroze Din, A.I.R. 1934 Lahore 355, Puttangowda Mallangowda Patil vs Nikanth Kalo Deshpande, XV Bombay Law Reporter 773; Asgarali Roshanalli and another vs Kayumalli Ibrahimji, A.I.R. 1956 Bombay 236: Lala Jageshwar Prasad vs Shyam Behari Lal, A.I.R. 1967 All. 125; Shyam Behari Lal vs Lala Jogeshwar Prasad, ; Manzural Haq and another vs Hakim Mohsin Ali, A.I.R. 1970 All. 604; Pateshwari Parshad Singh vs A. section Gilani, A.I.R. 1959 Punjab 420, referred to and dissented from.
The bar imposed by sub section (1) of section 92 applies only when a party seeks to rely upon the document embodying the terms of the transaction.
In that event, the law declares that the nature and intent of the transaction must be gathered from the terms of the document itself and no evidence of any oral agreement or statement can be admitted as between the parties to such document for the purpose of contradicting or modifying its terms.
The sub section is not attracted when the case of a party is that the transaction recorded in the document was never intended to be acted upon at all between the parties and that the document is a sham.
Such a question arises when the party asserts that there was a different transaction altogether and what is recorded in the document was intended to be of no consequence whatever.
For that purpose oral evidence is admissible to show that the document executed was never intended to operate as an agreement but that some other agreement altogether, not recorded in the document, was entered into between the parties.
[1183 C F] Tyagaraja Mudaliyar and another vs Vedathanni, A.I.R. 1936 Privy Council 70, followed.


Input:
Civil Appeal 1277 of 1968.
(Appeal by special leave from the order No. 2674 of 1967 of the Ministry of Finance, Government of India) Hardev Singh, Ishwar Chand Jain and R. section Sodhi; for the Appellant.
section N. Prasad and section P. Nayar, for respondents.
The Judgment of the Court was delivered by BHAGWATI, J.
This appeal by special leave raises a short question as to what is the correct amount of import duty chargeable on pot motors when imported separately from Rayon Spinning frames: do they fall within Item 72(3) or Item 73(21) of the First Schedule to the Indian Customs Tariff? The facts giving rise to the appeal are few and may be briefly stated as follows: Some time in 1956 a licence for setting up a plant for manufacture of Rayon was granted to one Kesoram Industries & Cotton Mills Ltd. under the Industries Development and Regulation Act, 1951.
Since the machinery and equipment required for setting up the plant were not available in India, Kesoram Industries and Cotton Mills Ltd. applied for an import licence and on the basis of this application, import licence was granted to them for importing "complete continuous filament Rayon plant with spares and accessories" of the CIF value of Rs. 5.50 crores from general currency area excluding South Africa.
491 It appears that Kesoram Industries & Cotton Mills Ltd. imported, on the strength of this import licence, Rayon Spinning frames, excluding pot motors, from Japan, but so far as pot motors were concerned, they authorised the appellants to import from Germany 4000 of these motors for initial installation of the Spinning frames.
Pursuant to the authority so given, the appellants placed orders for 4000 pot motors with manufacturers in Germany and imported the same in seven different consignments under the Import licence of Kesoram Industries & Cotton Mills Ltd. These seven consignments arrived at Calcutta port between September and December 1961.
The appellants claimed before the Customs authorities at the time of assessment of import duty on these seven consignments that pot motors imported by them fall within Item 72(3) of the First Schedule to the Indian Customs Tariff and were chargeable to import duty under that item at the rate of 15 percent of their accepted value.
This claim was accepted by the Customs authorities and these seven consignments were allowed to be cleared on payment of import duty under Item 72(3).
However, within a short time thereafter, the Assistant Collector of Customs issued seven separate notices of demand in respect of these seven consignments claiming that customs duty at the rate of 15 per cent had been short levied, because pot motors were assessable at the rate of 20 per cent and requiring the appellants to pay up the difference within 15 days from the date of demand under section 39 of the .
The appellants sent representations against these notices pointing out that and we are quoting here from the representation dated 8th December, 1961 which is: "These pot motors are vital component part of the Rayon Spinning machines already imported and are not in excess of the quantity required for the first installation of the said plant.
The pot motors are required for 24 Spinning frames having 2 sides each.
On each side of these frames, 66 motors are connected.
Hence total initial requirement of pot motors for running 24 frames is 3168.
In view of general experience with this type of plant approximately 25% additional motors are required for trial runs and commissioning 4000 Nos.
Of not motors should, there fore, be supplied for first installation of the Rayon plant.
These pot motors are of very high speed and are specially designed for use in spinning frames for manufacturing rayon thread.
They run at 7700 RPM and are designed for a rated voltage of 130 V. at 130 cycles per second for use in circuits of less than 10 amps.
As such, these motors can in no circumstances be used for any other purpose excepting as stated above.
The accessories of these motors are specially designed to suit particular size of spinning pots as well as spinning chambers.
The smooth running of these motors is achieved after a great research by using flexible elastic and hollow shaft, special rubber bushings for support as well as specially designed bearings, to take care of severe stresses, 492 which are normally encountered by these motors during operation.
Hence, it is inevitable that any deviation in the design of the above component parts would mean defeating the purpose for which these motors are meant.
In view of the above, these motors cannot be classified other than an integral part of the Rayon Spinning plant.
We, therefore, claimed as assessment of duty under proviso 72(3) at the time of clearing.
" The appellants did not receive any reply from the Assistant Collector in regard to these representations for a period of about three years and hence they thought that their representations had been accepted and the demand for differential duty had been dropped.
This, however, turned out to be a vain hope, for seven communications dated 19th January, 1965 were received by the appellants from the Assistant Collector stating that the demand for differential duty in respect of each of the seven consignments was confirmed and would be enforced in due course if the differential duty was not paid by the appellants.
Each of those seven communications contained an intimation that "an appeal against this decision lies to the Appellate Collector within three months hereof".
The appellants, however, did not prefer an appeal to the Collector and instead tried to persuade the Assistant Collector to change his opinion by pointing out the relevant facts.
It appears that in the meantime the Assistant Collector recovered the aggregate amount of the differential duty from the deposit account of the appellants.
The appellants once again made a representation to the Assistant Collector and requested him to refund the amount of differential duty collected by him but the representation did not meet with any favourable response from the Assistant Collector.
The appellants ultimately filed a representation to the Collector on 15th July, 1965 setting out their case in regard to the assessment of customs duty and pointing out that the original assessment of customs duty made under Item 72(3) was correct and that the differential duty had been wrongly recovered from them.
This representation was treated by the Collector as a revision application against the orders of the Assistant Collector and on this application, the Collector made an order which was conveyed to the appellants by the Assistant Collector by his letter dated 23rd December, 1965.
The Assistant Collector pointed out that the Collector had: " examined the merits of the case in question and it is his consideration that the duty was correctly chargeable because the Spinning Machinery excluding the pot motors were being imported under one contract from Japan and the pot motors were being imported under another contract from Germany.
Separate importation under a separate contract from a separate country would not justify treatment of the two consignments as one article, when the goods are not specified 493 in the Tariff as one article.
Therefore, he does not see any reason to revise the Assistant Collector 's order concerning the demands.
" The appellants thereupon preferred a revision application to the Government of India, but by a short and pithy order dated 23rd September, 1967, the Government of India rejected the revision application stating that they had carefully considered the revision application B but saw no reason to interfere with the order passed by the Collector.
This led to the filing of the present appeal against the order of the Government of India with special leave obtained from this Court.
Though the appellants, initially, when the hearing of the appeal commenced, raised two or three contentions against the validity of the order of the Government of India confirming the demand for differential duty, they ultimately pressed only one contention and that related to the category in which the pot motors imported by the appellants fell.
The Assistant Collector originally assessed these pot motors to customs duty at the rate of 15 per cent of their accepted value under Item 72(3), but later, demanded differential duty from the appellants on the footing that these pot motors were really assessable at the rate of 20 per cent of their accepted value under Item 73(21) D. and this demand was confirmed by the Collector in revision and on further revision, by the Government of India.
The appellant disputed the correctness of these orders and contended that the original assessment made by the Assistant Collector was proper and the demand for differential duty was unjustified, because the correct item under which those pot motors were assessable was Item 72(3), and not Item 73(21).
Item 72(3), as it stood at the material time, was in the following terms: "72(3) Component parts of machinery as defined in Item Nos. 72, 72 ( 1 ) and 72 (2) and not otherwise specified, essential for the working of the machine or apparatus and have been given for that purpose some special shape or quality which would not be essential for their use for any other purpose but excluding small tools like twist drills and reamers, dies and taps, gear cutters and hacksaw blades: provided that articles which do not satisfy this condition shall also be deemed to be component parts of the machine to which they belong if they are essential to its operation and are imported with it in such quantities as may appear to the Collector of Customs to.
be reasonable.", while Item 73(21) comprised "Electric motors, all sorts, and parts thereof.
" The competition was between these two Items and the question is which of them covered pot motors imported by the appellant.
Now, pot motors imported by the appellants were clearly component parts of Rayon Spinning machines and this was not and indeed could not be disputed on behalf of the respondents.
Since Rayon Spinning machines were admittedly textile machinery as defined in Item 72(1), these pot motors were covered by the opening part of 494 Item 72(3), namely, "component parts of machinery as defined in Item Nos.
72 ( 1 ) ".
Moreover, these pot motors were clearly and indubitably essential for the working of the Rayon Spinning machines and, as pointed out by the appellants in their representation dated 8th December, 1961, they were "specially designed for use in spinning frames for manufacturing rayon thread" and for the purpose, they were given special shape and quality which was not only not essential for their use for any other purpose but actually rendered them incapable of being used for any other purpose.
This position, as pointed out by the appellants in their representation dated 8th December, 1961, was not disputed either by the Assistant Collector in his communication dated 19th January, 1965 or by the Collector in his order dated 23rd December, 1965 rejecting the representation of the appellants and the Government of India also did not controvert this position in its order dated 23rd September, 1967.
If the Assistant Collector or the Collector or the Government of India did not accept the facts set out in the representation of the appellants dated 8th December, 1961, we should have expected a clear statement to that effect in the orders of these authorities.
The Assistant Collector maintained sphinx like silence and preferred not to give any reasons for confirming the demand for differential duty.
The Collector was a little less reticent.
He briefly gave a reason for confirming the orders of the Assistant Collector, but that reason had nothing to do with the nature, quality or condition of the pot motors.
What it said was this, namely, that the pot motors were imported under a separate contract from Germany while the Spinning machinery excluding pot motors were imported from Japan and that did not "justify the treatment of two consignments as one article.
" The Government of India also did not articulate its reasons while rejecting the revision application of the appellants, but since it confirmed the order of the Collector, we may presume that the same reason which prevailed with the Collector appealed to the Government of India.
It will, therefore, be seen that at no stage was the factual position in regard to The pot motors, as set out in the representation of the appellants dated 8th December, 1971, disputed by the Assistant Collector of Customs or the Collector or the Government of India.
The pot motors, therefore, clearly fell within the description given in Item 72(3), The respondents, however, leaned heavily on the words "not otherwise specified" in item 72(3) and contended that even if the pot motors were component parts of Rayon Spinning machines, they were not covered by Item 72(3), since they were otherwise specified in item 73(21).
The argument of the respondents was that if any component parts of machinery were specifically dealt with in any other item, they would go out of Item 72(3) and since pot motors were electric motors within Item 73(21), they were not covered by Item 72(3).
This argument is clearly unsustainable.
It seeks to read the words "not otherwise specified" as qualifying "component parts" but that is plainly incorrect as a matter of both grammar and language.
Structurally, the conjunction 'and ' joins the two clauses "as defined in Item Nos. 72, 72(1) and 72(2)" and "not otherwise specified" and since the former qualifies 'machinery ', the latter also must be read as 495 doing the same duty.
What Item 72(3) contemplates are component parts of that machinery which is defined in Item Nos. 72, 72(1) and 72(2) and which is `not otherwise specified.
The words 'not otherwise specified ' do not qualify "component parts": they qualify machinery '.
Otherwise, the conjunction 'and ' would have no meaning.
In fact, the sentence would become ungrammatical if the words "not otherwise specified" were read to govern "component parts".
This construction also receives support from the description of the component parts which follows the words 'not otherwise specified '.
This description starts with the word `namely ', which shows that it is intended to be a complete description of the component parts covered by this item and that would not contextually fit in with "component parts not otherwise specified".
There can be no doubt that on a plain grammatical construction, the words "not otherwise specified" qualify "machinery" and not "component parts" and, there fore, the pot motors imported by the appellants, which satisfied the other requirements of Item 72(3) could not be held to fall outside that Item, because they were otherwise specified in Item 73(21).
Item 72(3) is a specific Item which covers these pot motors as against Item 73(21)which is a general item and hence it must be held that these pot motors were assessable under Item 72(3) and not under Item 73(21).
The original assessment of these pot motors made by the Assistant Collector was, in the circumstances, correct and the subsequent, demand of differential duty made by the Assistant Collector and confirmed by the Collector in revision and by the Government of India on further revision, was unjustified.
The orders made by the Assistant Collector, the Collector and the Government of India confirming the demand for differential duty would, therefore, have to be quashed and set aside and the amount of differential duty recovered from the appellants pursuant to these orders would have to be refunded to the appellants.
Before we part with this appeal, we must express our regret at the manner in which the Assistant Collector, the Collector and the Government of India disposed of the proceedings before them.
It is incontrovertible that the proceedings before the Assistant Collector arising from the notices demanding differential duty were quasi judicial proceedings and so also were the proceedings in revision before the Collector and the Government of India.
Indeed, this was not disputed by the learned counsel appearing on behalf of the respondents.
It is now settled law that where an authority makes an order in exercise of a quasi judicial function it must record its reasons in support of the order it makes.
Every quasi judicial order must be supported by reasons.
That has been laid down by a long line of decisions of this Court ending with N. M. Desai vs The Testeels Ltd. & Anr.
( ') But, unfortunately, the Assistant Collector did not choose to give any reasons in support of the order made by him con firming the demand for differential duty.
This was in plain disregard of the requirement of law.
The Collector in revision did give some sort of reason but it was hardly satisfactory.
He did not deal in his order with the arguments advanced by the appellants in their representa (1) C. A.245 of 1970 decided on 17th December.
496 tion dated 8th December, 1961 which were repeated in the subsequent representation dated 4th June, 1965.
It is not suggested that the Collector should have made an elaborate order discussing the arguments of the appellants in the manner of a court of law.
But the order of the Collector could have been a little more explicit and articulate so as to lend assurance that the case of the appellants has been properly considered by him.
If courts of law are to be replaced by administrative authorities and tribunals, as indeed, in some kinds of cases, with the proliferation of Administrative law, they may have to be so replaced, it is essential that administrative authorities and tribunals should accord fair and proper hearing to the persons sought to be affected by their orders and give sufficiently clear and explicit reasons in support of the orders made by them.
Then alone administrative authorities and tribunals exercising quasi judicial function will be able to justify their existence and carry credibility with the people by inspiring confidence in the adjudicatory process.
The rule requiring reasons to be given in support of an order is, like the principle of audi alteram partem, a basic principle of natural justice which must inform every quasi judicial process and this rule must be observed in its proper spirit and mere pretence of compliance with it would not satisfy the requirement of law.
The Government of India also failed to give any reasons in support or its order rejecting the revision application.
But we may presume that in rejecting the revision application, it adopted the same reason which prevailed with the Collector.
The reason given by the Collector was, as already pointed out, hardly satisfactory and it would, therefore, have been better if the Government of India had given proper and adequate reasons dealing with the arguments advanced on behalf of the appellants while rejecting the revision application.
We hope and trust that in future the Customs authorities will be more careful in adjudicating upon the proceedings which come before them and pass properly reasoned orders, so that those who are affected by such orders are assured that their case has received proper consideration at the hands of the Customs authorities and the validity of the adjudication made by the Customs authorities can also be satisfactorily tested in a superior tribunal or court.
In fact, it would be desirable that in cases arising under Customs and Excise laws an independent quasi judicial tribunal, like the Income tax Appellate Tribunal or the Foreign Exchange Regulation Appellate Board, is set up which would finally dispose of appeals and revision applications under these laws instead of leaving the determination of such appeals and revision applications to the Government of India.
An independent quasi judicial tribunal would definitely inspire greater confidence in the public mind.
We accordingly allow the appeal, set aside the orders passed by the Assistant Collector, the Collector and the Government of India demanding differential duty from the appellants and direct the Government of India to refund to the appellants the amount of differential duty recovered from the appellants in respect of the seven consignments of 4000 pot motors imported by them.
The respondent will pay the costs of the appeal to the appellant.
P.B.R. Appeal allowed.

Output:
Under item 72(3) of the First Schedule to the Indian Customs Tariff, component parts of machinery as defined in item nos.
72, 72(1) and 72(2) aand not otherwise specified are chargeable to customs duty.
Item 73(21) comprises of "electric motors, all sorts, and parts thereof".
On the strength of a licence for importing "complete continuous filament Rayon Plant with spares and accessories" certain spinning frames excluding pot motors were imported from Japan but not motors were imported from Germany by the appellants.
The customs authorities accepted the claim of the appellants that the consignment of pot motors fell within item 72(3) and charged import duty accordingly.
Sometime later, the Assistant Collector of Customs, claiming that customs duty on pot motors was short levied as they fell within item 73(21) called upon the appellants to pay the difference, against which the appellants made a representation to the Assistant Collector.
But the Assistant Collector held against the appellants without giving any reasons.
The appellants thereafter filed a representation to the Collector but he held that since the spinning frames and the pot motors were imported under separate contracts from separate countries the two consignments could not be treated as one article and hence rejected the representation.
The appellants thereupon applied to the Government of India in revision but the revision application was also rejected.
Allowing the appeal to this Court.
^ HELD: (1) (i) Item 72(3) is a specific item covering pot motors as against item 73(21) which is a general item.
Pot motors were, therefore, assessable under the former and not under the latter.
The original assessment of the Assistant Collector was correct and the subsequent demand of differential duty which was confirmed by the Collector and the Government of India was unjustified (ii) Pot motors fell within the description given in item 72(3).
They were specially designed for use in spinning machines for manufacturing rayon thread.
and they were indubitably essential for the working of the rayon spinning machines and were incapable of being used for any other purpose.
They were, therefore, clearly component parts of the rayon spinning machines.
[495 D, 494A] (2 ) The argument of the respondents that if any component parts of machinery were specifically dealt with in any other item, they would go out of item 72(3) and since pot motors were electric motors within item 72(21) they were not covered by item 72(3) was clearly unsustainable.
As a matter of both grammar and language the words "not otherwise specified" cannot be read as qualifying "component parts".
They qualify "machinery".
Otherwise the conjunction "and" would have no meaning.
The sentence would become ungrammatical if the words "not otherwise specified" were read to govern "component parts".
The description of the component parts which follows the words "not otherwise specified" starts with the words "namely" which shows that it is intended to be a complete description of the component parts covered 490 by this item and that would also not actually fit in with component parts "not otherwise specified".
Therefore, pot motors could not be held to fall outside that item because they were otherwise specified in item 73(21).
[494H] (3)(a) Where an authority makes an order in exercise of a quasi judicial function it must record its reasons in support of the order it makes.
Every quasi judicial order must be supported by reasons.
[495G] M. M. Desai vs The Testeels Ltd. & Anr.
CA 245 of 1976, decided on 17th Dec. 1975, referred to.
(b) If courts of law were to be replaced by administrative authorities and tribunals and with the proliferation of administrative law, they may have to be so replaced, it is essential that administrative authorities and tribunals should accord fair and proper hearing to the persons sought to be affected by their orders and give sufficiently clear and explicit reasons in support of the orders made by them.
The rule requiring reasons to be given in support of an order is like the principal of audi alteram partem, a basic principle of natural justice which must inform every quasi judicial process and this rule must be observed in its proper spirit and mere pretence of compliance with it would not satisfy the requirement of law.
[496B D] In the instant case the Assistant Collector did not give any reasons in support of his order which was in plain disregard of the requirement of law.
The reason given by the Collector was hardly satisfactory.
His order could have been a little more explicit and articulate so as to lend assurance that the case had been properly considered by him.
The Government of India too failed to give any reasons in support of its order rejecting the revision application.
[496 H] [The Court expressed the view that it would be desirable that in cases arising under customs and excise laws an independent quasi judicial tribunal is set up which would finally dispose of the appeals and revision applications under these laws instead of leaving the determination of such appeals to the Government of India.
An independent quasi judicial tribunal would inspire greater confidence in the public mind.] [496F]


Input:
Civil Appeal No. 1695 of 1968.
Appeal by Special Leave from the Judgment and Order dated 4/5 9 67 of the Mysore High Court in W.P. No. 1416/65.
V.P. Raman, Addl.
, S.K. Mehta and Girish Chandra for the Appellant.
H.R. Datar and N. Nettar, for the Respondent.
The Judgment of the Court was delivered by SHINGHAL, J.
This appeal by special leave is directed against the judgment of the High Court of Mysore dated September 4/5, 1967.
The High Court was moved by the State of Mysore under article 226 of the Constitution for quashing the demand notice dated July 21, 843 1962 issued by the Inspector of Central Excise for the payment of Rs. 2,465.91 as excise duty on the products despatched by the State 's Implements Factory.
The demand was made with reference to the newly inserted item 26AA in the First Schedule to the , hereinafter referred to as the Act.
That item was added to the Schedule by the Finance Act of 1962, and it was claimed by the Central Excise Department that, on the date of the amendment, the State Government was in possession of some stock of iron and steel products, namely, flats, squares and rods in its factory, which had been obtained from their manufacturers when they were not excisable arti cles.
The precise claim of the Excise authorities was that the duty became payable on those articles by virtue of the newly inserted item 26AA because the aforesaid stock of iron and steel products was used for the manufacture of agricul tural implements like 'mamties, pickaxes, 'sledge hammers, shovels and ploughs.
The Assistant Collector of Central .Excise explained in his letter dated June 19, 1962, that the agricultural implements which were manufactured in the State 's Implements Factory fell within the purview of item 26AA as they were forged or extruded during the process of manufacturing the agricultural implements.
It was con tended that the demand was justified because the aforesaid iron and 'steel products, out of which the agricultural implements were manufactured, had not borne any excise duty at all.
An appeal was preferred to the Collector of Central Excise against the demand, but without success.
A revision was taken to the Central Government under the provisions of the Act, but it was also dismissed.
That was why the State Government applied to the High Court for quashing the demand and for setting aside the appellate order of the Collector and the revisional order of the Central Government.
The Central Government traversed the claim of the State Government on the ground that as the rods and bars, which were held in stock by the State 's Implements Factory, were "pre excise stock", and as they were put to further process by forging them into shovels, spades and other agricultural implements, they became liable to duty .
until the "pre excise stock" held by the factory on April 24, 1962, was utilised and converted into forged implements and was cleared from the factory.
It was also urged that the peti tion was not maintainable in the High Court as it raised a dispute between the Government of India and the State Gov ernment within the meaning of article 131 of the Constitu tion.
The High Court rejected both the contentions of the Central Government and quashed the impugned demand notice and the appellate and the revisional orders.
That is why the Union of India has preferred the present appeal.
It is not in controversy that the claim for the levy of excise duty was based on sub sections (1) and (1A) of sec tion 3 of the Act which read as follows, "3(1) There shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced 4 1338SCI/76 844 or manufactured in India and a duty on salt manufactured in, or imported by land into, any part of India as, and at the rates, set forth in the First Schedule.
(1A) The provisions of sub section (i) shall apply in respect of all excisable goods other than salt which are produced or manufactured in India by, or on behalf of, Government, as they apply in respect of good 's which are not produced or manufactured by Government.
" It is therefore quite clear, and is not in dispute before us, that the claim for the levy of excise duty in question could be justified only if it could be shown that excisa ble goods (other than salt) were produced or manufactured in the Implements Factory of the State Government.
It was however admitted in the counter affidavit of the Senior Superintendent of Central Excise as follows, "In the case of the petitioner, since the rods and bars held in stock by the Imple ments.
Factory were pre excise stock and since those rods and bars were put to further proc ess by forging the same into shovels, spades and other agriCultural implements etc.
, they became liable to duty and therefore, duty was demanded on such forged articles during the period that is till such quantities of the bars and rods as were in stock with the facto ry on 24 4 62 were utilised and converted into forged implements and cleared from the facto ry.
" This makes it quite clear that the rods and bars in question were not "produced or manufactured" in the State Govern ment 's implements Factory.
They could not therefore be subjected to the levy of excise duty.
It is true that the rods and bars were utilised for the manufacture of agricul tural implements like shovels and spades; but those agricul tural implements were not of the description specified in item 26AA of the First Schedule with reference to section 3 of the Act.
It is admitted by Mr. Raman that agricultural implements were not included in the First Schedule to the Act and were not excisable articles.
This appears to be so because they are the basic tools of trade by which a vast majority of the citizens of the country earn their livelihood.
There could therefore be no question of levying any excise duty on shovels and spades or other agricultural instruments 'manu factured by the Implements Factory of the State Government and, as has been shown, the rods and bars which formed the pre excise stock of the factory had not been manufactured by the Implements Factory.
Section 3 of the Act could not therefore be invoked to levy excise duty merely on the ground that the "pre excise stock" of rods and bars was utilised for the purpose of manufacturing agricultural instruments.
There is therefore nothing wrong with the view which has prevailed with the High Court in this respect.
845 Mr. Raman tried to argue that the High Court erred in not applying article 131 of the Constitution to the contro versy even though the writ petition was barred thereunder as it fell exclusively within the jurisdiction of this Court under article 131 of the Constitution as a dispute between the Government of India and the State of Mysore.
The argu ment is however futile because there is nothing on the record to show that there was any such dispute between the Central and the State Governments.
As the High Court has pointed out, the Union of India was made a party to the writ petition merely because it had dismissed the revision appli cation of the State Government.
There is thus no merit in this appeal anti it is dismissed with costs.
M.R. Appeal dis missed.

Output:
The respondent State of Mysore runs an implements Factory.
The first schedule to the , was amended whereby item No. 26AA was inserted by Finance Act, 1962.
On the date when the said amendment came into force the respondent had in his stock, certain iron rods and bars.
After ,the amendment, however, the rods and bars were put through a further manufacturing process and were converted into shovels, spades and other agricultural implements which were not covered by schedule 1.
The Central Excise Inspector issued a demand notice in respect of the said rods and the bars on the ground that they were excisable.
The respondent contended that no excise duty was payable on the said articles because when the amendment came into force, they were already in the stock of the respondent and that they were not manufactured after the amendment came into force.
The contention of the respondent was negatived by the authorities under the Act.
The Writ Petition filed by the respondent under Article 226, was allowed.
Dismissing the appeal by Special Leave, HELD: 1.
Under Section 3 of the Act the excise duty is payable on articles produced or manufactured.
It was admit ted in the counter affidavit of the appellant that the rods and bars were not produced or manufactured in the implements factory of the respondent.
The goods which were made out of the rods and bars were admittedly not excisable goods.
The appeal was dismissed as the goods were not liable to excise duty.
[844 E H] 2.
The contention that the High Court could not have decided the matter in view of the provisions of Article 131 of the Constitution was negatived on the ground that there was nothing on regard to show that there was any dispute between the Central and the State Governments.
The Union of India was made a party merely because it had dismissed the revision application of the State Government.
[845 A B]


Input:
Civil Appeal Nos.
145 146/ 1972.
(Appeals by Special Leave from the Judgment and Order dated 9 12 1970 of the Mysore High Court in Writ Petitions Nos.
2042 and 2065/70).
Narayan Nettar, for the appellant.
R.M. Mehta, for the respondent.
The Judgment of the Court was delivered by KHANNA, J.
These two appeals by special leave are against the common judgment of the Mysore High Court whereby the High Court in two petitions under article 226 of the Constitution of India quashed two orders made by the Deputy Commissioner of Commercial Taxes appellant under section 21 of the Mysore Sales Tax Act, 1957 (hereinafter referred to as the Act).
The respondent is an excise contractor.
He was as sessed under the Act for the assessment years 1959 60 and 1960 61 as per orders dated March 21, 1963 made by the Commercial Tax Officer Raichur.
Under those orders the taxable turnover of the respondent for the two years in question was determined after deducting the shop rent and the tree tax.
For the assessment year 1959 60, a sum of Rs. 2,10,542 was deducted and the net taxable turnover was determined to be Rs. 25,989.
For the year 1960 61 a sum of Rs. 3,98,350 was deducted and the net taxable turnover was determined to be Rs. 26,657.
The Commercial Tax Officer initiated proceedings under section 12A of the Act in respect of the aforesaid years because he was of the view that some items of turnover had escaped assessment.
As per orders dated June 8, 1966 he made assessment by including in the turnover of the respond ent certain amounts which had escaped assessment under the original assessment orders dated March 21, 1963.
The deduc tion in respect of shop rent and tree tax was, however, allowed to the respondent in orders dated June 8, 1966 as it had been allowed in initial orders dated March 21, 1963.
On June 28, 1967 the appellant, i.e., the Deputy Commis sioner of Commercial Taxes, made two orders revising the orders dated June 8, 1966.
In the said orders the appel lant disallowed the deduction which had been allowed to the respondent in respect of the shop rent.
The appellant in those orders referred to the decision of this Court in Shinde Brother etc.
vs Deputy Commissioner Raichur(1) and held that the amount of shop rent being not excise duty should not be deducted in computing the turnover of the respondent for the two years in question.
The taxable turn over of the respondent for the two years in question was accordingly enhanced.
(1) 595 The respondent made two applications for rectification of the orders of the appellant dated June 28, 1967.
It was urged on behalf of the respondent that the revision of assessments was barred by limitation under section 21(3) of the Act and as such there was a mistake apparent on the record.
The appellant rejected those applications.
The respondent then preferred two appeals to the Sales Tax Appellate Tribunal.
The Tribunal too rejected those ap peals on the ground that they were not maintainable.
The respondent thereafter filed two petitions in the High Court under article 226 for the issuance of writs in the nature of certiorari for quashing the orders dated June 28, 1967.
The High Court, as already mentioned, allowed both the peti tions and quashed orders dated June 28, 1967.
In the opinion of the High Court, orders dated June 28, 1967 made by the appellant were without jurisdiction since they had been made beyond the period of four years from the date of the assessment orders dated March 21, 1963.
Mr. Narayan Nettar, learned counsel for the appellant has contended in appeal before us that the period of four years mentioned in section 21 (3) of the Act should be computed from the orders dated June 8, 1966 made under section 12A of the Act and not from the initial orders of assessment dated March 21, 1963.
The above stand has been controverted by Mr. Mehta, who argued the case amicus curiae as no one appeared on behalf of the respondent.
After giving the matter our consideration, we are of the view that the contention advanced on behalf of the appel lant is well founded.
Before, however, dealing with the matter, we consider it appropriate to reproduce the relevant provisions of the Act.
Section 12A of the Act relates to assessement of escaped turnover.
Sub section (1) of that section at the relevant time read as under: "(1) Where for any reason the whole or any part of the turnover of a dealer has escaped assessment to tax or licence fee or has been assessed at a lower rate than the rate at which it is assessable, the assessing authority may, subject to the provisions of sub section (2), at any time within a period of five years from the expiry of the year to which the tax or licence fee relates, assess to the best of its judgment, the tax or li cence fee payable on the turnover referred to after issuing a notice to the dealer and after making such enquiry as it considers necessary.
" Section 21 of the Act deals, inter alia, with revisional powers of the Deputy Commis sioner.
Sub section (2) and (3) of that section read as under: "(2) The Deputy Commissioner may of his own motion call for and examine the record of any order passed or proceeding recorded under the provisions of this Act by a Commercial Tax Officer subordinate to him and against which no appeal has been preferred to him under section 20, for the purpose of satisfying himself as to the legality or propriety of such order or as to the regularity of such proceeding and pass such order with respect thereto as he thinks fit.
4 112SCI/76 596 (3) In relation to an order of assessment passed under this Act, the power under sub sections (1) and (2) shall be exercisable only within a period of four years from the date on which the order was passed.
" The short question which arises for determination in these appeals is that in the event of an order having been made under section 12A of the Act, what is the starting point for computing the period of four years, mentioned in section 21 (3), for the exercise of the powers under section 21(2).
Is it the initial assessment order or is it the order made under section 12A ? In the context of the present case, the question to be answered is as to whether the period of four years is to be calculated from March 21, 1963 when the initial assessment orders were made, or from June 8, 1966 when the orders under section 12A of the Act were made.
So far as this question is concerned, we are of the opinion that the period of four years should be calcu lated from June 8, 1966, i.e., the date on which orders under section 12A of the Act were made.
The reason for that is that once an assessment is reopened, the initial order for assessment ceases to be operative.
The effect of reopening the assessment is to vacate or set aside the initial order for assessment and to substitute in its place the order made on reassessment.
The initial order for reassessment cannot be said to survive, even partially, although the justification for reassessment arises because of turnover escaping assessment in a limited field or only with respect to a part of the matter covered by the initial assessment order.
The result of reopening the assessment is that a fresh order for reassessment would have to be made including for those matters in respect of which there is no allegation of the turnover escaping assessment.
As it is we find that in the present case the assessment orders made under section 12A were comprehensive orders and were not confined merely to matters which had escaped assessment earlier.
In the circumstances, the only orders which could be the subject matter of revision by the appellant were the orders made under section 12A of the Act and not the initial assessment orders.
In the case of V. Jagannathan Rao & ors.
vs Commission er of Income tax and Exrcess Profits Tax, Andhra Pradesh (1) this Court dealt with section 34 of the Indian Income tax Act, 1922 which relates to reassessment in the case of income escaping assessment.
It was held by this Court that once assessment is reopened the previous under assessment is set aside and the whole proceedings star afresh.
Ramaswami J. speaking for the Court observed: "Section 34 in terms states that once the Income tax Officer decides to reopen the assessment he could do so within the period prescribed by serving on the person liable to pay tax a notice containing all or any of the requirements which may be included in a notice under section 22(2) and may proceed to assess or reassess such income, profits or gains.
It is, therefore, manifest that once assess ment is (1) ITR 373.
597 reopened by issuing a notice under sub section (2) of section 22 the previous under assess ment is set aside and the whole assessment proceedings start afresh.
When once valid proceedings are started under section 34(1)(b) the Incometax Officer had not only the juris diction but it was his duty to levy tax on the entire income that had escaped assessment during that year.
" In the case of Commissioner of Sales Tax, Madhya Pradesh vs H.M. Esufali H.M. Abdulali(1) this Court dealt with reassessment made under section 19 of the Madhya Pradesh General Sales Tax Act, 1958.
It was held that when reas sessment is made, the former assessment is completely reo pened and in its place fresh assessment is made.
Hegde J. speaking for the Court observed: "What is true of the assessment must also be true of reassessment because reas sessment is nothing but a fresh assessment.
When reassessment is made under section 19, the former assessment is completely reopened and in its place fresh assessment is made.
While reassessing a dealer, the assessing authority does not merely assess him on the escaped turnover but it assesses him on his total estimated turnover.
While making assessment under section 119, if the assessing authority has no power to make best judgment assessment, all that the assessee need do to escape reassessment is to refuse to file a return or refuse to produce his account books.
If contention taken on behalf of the assessee is correct, the assessee can escape his li ability to be reassessed by adopting an obstructive attitude.
It is difficult to conceive that such could be the position in law." In International Cotton Corpn.
(P) Ltd. vs Commercial Tax Officer, HubIi & Ors.
(2) this Court held that once can assessment order had been rectified and it was sought to make a further rectification of that order, the period of limitation for making such further rectification would commence not from the date of the original assessment order but from the date of the earlier rectification order.
Alagi riswami J. speaking for the Court in this context observed: "The other attack that the rectification order is beyond the point of time provided in Rule 38 of the Mysore Sales Tax Rules is also without substance.
What was sought to be rectified was the assessment order rectified as a consequence of this Court 's decision in Yaddalam 's case.
After such rectification the original assessment order was no longer in force and that was not the order sought to be rectified.
It is admitted that all the rectification orders would be within time calculated from the original rectification order.
Rule 38 itself speaks of 'any order ' and there is no doubt that the rectified order is also 'any order ' which can be rectified under Rule 38." ; I.T.R. 271.
(2) [1975] 2 S.C.R. 345.
598 Although the above case related to an order which had been subsequently rectified, the principle laid down therein would, in our opinion, be also applicable in cases where reassessment is made on the ground that certain amounts of turnover had escaped assessment.
Before we conclude, we may observe that according to section 33B of the Indian Income tax Act, 1922 the Commis sioner cannot revise an order of reassessment made under the provisions of section 34 of the Act.
Likewise, sub section (2) of section 263 of the Incometax Act, 1961 expressly prohibits the revision by the Commissioner of Income tax of an order of reassessment made under section 147 of Act.
No such prohibition in the provisions of the Act with that Act.
Nosuch prohibition brought to our notice.
which we are concerned has, however, been brought to our notice.
We would, therefore, accept the appeals, set aside the judgment of the High Court and dismiss the petitions under article 226 filed by the respondent.
Looking to all the facts, we leave the parties to bear their own costs in this Court as well as in the High Court.

Output:
In respect of the assessment years 1959 60 and 1960 61, fresh assessments were made under section 12A of the Mysore General Sales Tax Act 1957 by the , Commercial Tax Offi cer.
By his order dated June 8, 1966, certain amounts which had escaped assessment under the original assessment orders dated March 21, 1963 were included in the turnover of the respondent, but the deductions in respect of shop rent and tree tax were, however, allowed as in the initial orders.
The appellant, in exercise of the powers under section 21(2) of the Act, by his orders dated June 28, 1967 revised the orders dated June 8, 1966 disallowing the deductions in respect of the shop rent, following the decision of this Court in Shinde Brother etc.
vs Deputy Commissioner Raichur Two rectification applications and the two appeals therefrom on the ground that the revisions of assessment were barred by limitation under section 21(3) of the Act and, as such, there was a mistake apparent on the record were rejected as not maintainable.
However, the writ petitions filed were allowed by the High Court holding that the orders dated June 28, 1967 were without jurisdic tion since they had been made beyond the period of four years from the date of the initial assessment orders dated March 21, 1963.
On appeals by special leave to this Court, HELD: The contention advanced on behalf of the appel lants that the period of four years mentioned in section 21(3) of the Act should be computed from the orders dated June 8, 1966 made under S 12A of the Act and not from the ini tial orders of assessment dated March 21, 1963 is well founded.
[595 C D] Once an assessment is reopened the initial order for as sessment ceases to be operative.
The effect of reopening the assessment is to vacate or set aside the initial order for assessment and to substitute in its place the order made on reassessment.
The initial order for reassessment cannot be said to survive even partially although the justification for dessessment arises because of turnover escaping assess ment in a limited field or only with respect to a part of the matter covered by the initial assessment order.
The result of reopening the assessment is that a fresh order for reassessment would have to be made including for those matters in respect of which there is no allegation of the turnover escaping assessment.
[596 D E] In the present case the assessment orders made under section 12A were comprehensive orders and were not confined merely to matters which had escaped assessment earlier and the only orders which could be the subject matter of revision by the appellant were the orders made under section 12A of the Act and not the initial assessment orders.
[596 E F] J. Jaganmohan Rao & Ors.
vs Commissioner of Income tax and Excess Profits Tax, Andhra Pradesh [1970] 1 S.C.R. 726=75 ITR 373; Commissioner of Sales Tax, Madhya Pradesh vs
H.M. Esufali H.M. Abdulali ITR 271, followed.
International Cotton Corporation (P) Ltd. vs Commercial Tax Officer, HubIi & Ors.
[1975] 2 S.C.R. 345, applied.


Input:
63 and 64 of 1957.
Petitions under Article 71(1) of the Constitution of India for clarification of doubts in connection with the election of the President.
R. V. section Mani and I. R. V. Sastri, for the petitioner in Petition No. 63 of 1957.
R. Patnaik, for the petitioner in Petition No. 64 of 1957.
M. C. Setalvad Attorney General for India, G. N. Joshi, Porus A. Mehta and R. H. Dhebar, for the respondents (Caveators) in both the petitions.
May 3.
The Judgment of the Court was delivered by DAS C. J.
The petitioners in the above petitions have moved this Court to exercise the jurisdiction and power vested in it by and under article 71(1) of the Constitution of India and to inquire into and decide what has been described as a "grave doubt" in connection with the election of the President of India and to direct the Election Commission not to proceed with the polling in connection with the said election which has been fixed for May 6, 1957, but to hold the same after duly completing all the elections to the Lok Sabha and the Legislatures in all the States of the Indian Union including the Union territory.
The first main petition was presented on April 26, 1957, and the second on April 29, 1957.
Along with each of the said petitions has been filed a Civil Miscellaneous Petition asking for a stay of the polling for the Presidential election fixed 1083 for May 6, 1957.
In the first main petition the Returning Officer has not been made a party, but in the second petition he has been impleaded as a respondent.
The learned Attorney General has appeared on behalf of the Election Commission and has waived the service of notice.
We can, therefore, dispose of all the petitions before us.
There is no dispute as to the material facts which may shortly be stated as follows: After the general elections in all the States and Union territories of India, except in the Union territory of Himachal Pradesh, which is to return four members to the Lok Sabha and in two constituencies in the State of Punjab, the old Lok Sabha was dissolved on April 4, 1957 and the New Lok Sabha was constituted on April 5, 1957, under section 73 of the Representation of the People Act (XLIII of 1951).
As required by section 4 of the Presidential and Vice Presidential Election Act, 1952 (XXXI of 1952), the Election Commission issued a notification in the official Gazette appointing April 16, 1957, as the last date for making nominations, April 17, 1957, as the date for the scrutiny of the nominations, April 20, 1957, as the last date for the withdrawal of candidatures, May 6, 1957, as the polling date and May 10, 1957, as the date for the counting of the votes and the declaration of the result.
The term of office of the present President is due to expire on the mid night of May 12, 1957.
The reason for fixing the above time schedule obviously was that the Presidential election should be completed before the term of office of the present President expired.
After the notification constituting the new Lok Sabha was published in the Press on April 7, 1957, the petitioner in the first petition applied to the Election Commission for the supply of the nomination papers, which he eventually received at Nagpur in the afternoon of April 10, 1957.
This left a period of five days for the filing of the nomination paper before the Returning Officer at New Delhi.
The petitioner submits that the time was too short and he was prevented from filing his nomination paper due to want of time.
He 1084 has filed the petition as a citizen of India and as an "intending candidate" for the Presidential election.
The petitioner in the second petition is a member of the Hindu Mahasabha and is contenting the election to the Lok Sabha as an independent candidate from Kangra Parliamentary constituency in the State of Punjab.
He filed his nomination paper on January 28, 1957, as originally the polling was scheduled to commence in that constituency on February 24, 1957.
The polling, however, has since been postponed and fixed for June 2, 1957.
He has filed the petition as a citizen of India and as a prospective member of Lok Sabha and contends that if the Presidential election is held on May 6, 1957, he will be deprived of his right to vote for the election of the President of the Union.
He has also complained of discrimination offending against article 14 of the Constitution.
Under article 56 of the Constitution the President holds office for a term of five years from the date on which he enters upon his office.
The present incumbent of the high office entered upon his office on May 12, 1952, and, as already stated, his term is due to expire on the mid night of May 12, 1957.
Article 62(1) peremptorily requires that the election to fill the vacancy caused by the expiration of the term of office of the President shall be completed before the expiration of the term.
It is necessary to bear in mind this clear mandatory provision of the Constitution.
For ascertaining how such election of President is to be held, we have to go back to article 54, which runs thus: " 54.
The President shall be elected by the members of an electoral college consisting of (a) the elected members of both Houses of Parliament ; and (b) the elected members of the Legislative Assemblies of the States.
" On one side it is said that the electoral college is to consist of those members falling under clauses (a) and (b), who are elected at the crucial date, that is to say, the date when the election is to take place.
Suppose, it is said, that the term of the President 's office expires during the currency of the life of Parliament; as it 1085 may well do in cases contemplated by article 62(2) and suppose there are vacancies in Parliament or in the Legislature of one or more States, surely the election of the President required by article 62(1) to be held before the expiry of the term of the outgoing President cannot be held up until the vacancies are filled up. ' On the other hand it is contended that the electoral college must be constituted after the elections in all States and Union territories are completed and should consist of all the elected members falling within both the categories.
Inasmuch as elections have not taken place at all in Himachal Pradesh and in two constituencies of the State of Punjab, the electoral college cannot be constituted until after those members are also elected.
It is pointed out that though on the present occasion only four members of Himachal Pradesh and only two members in the State of Punjab have not been elected, nevertheless, if the objection of the petitioners is not now heeded any party in power may in future arrange for the election of its own nominee as President by postponing the elections in several States, where it may not expect to get a majority of seats.
It is said that on March 28, 1957 some members of the then Lok Sabha had raised a question as to the danger and impropriety of holding the election of the President before the completion of the elections throughout the territory of India.
Both the petitioners share the same view and contend that a " grave doubt " has arisen in connection with the election of the President and that such a doubt must, under article 71, be inquired into and decided by this Court.
The extreme contention put forward on behalf of the petitioners is that it does not matter whether the doubt is well founded or not or whether it is good, bad or indifferent; this Court is bound to inquire into and decide the same as soon as a doubt arises and a citizen brings it before this Court for resolution thereof.
For the purpose of this case it is not necessary for us to express any opinion on the merits of the respective contentions for these petitions may well be disposed of on a narrower preliminary ground.
1086 Article 71 (1) Undoubtedly confers jurisdiction and power on this Court to inquire into and decide " all doubts and disputes arising out of or in connection with the election of President or Vice President " and this Court will have to inquire into and decide the same.
But the question is whether there is anything in the Constitution indicating the time at which and the manner in which such doubts and disputes have to be inquired into and decided.
Under article 324 the superintendence, direction and control of the prepa ration of the electoral rolls for, and the conduct of, all election,% to Parliament and to the Legislature of every State and of elections to the office of President and Vice President held under this Constitution, including the appointment of election tribunals for the decision of doubts and disputes arising out of or in connection with elections to Parliament and the Legislatures of States shall be vested in the Election Commission.
It will be noticed that identical words are used, namely, " doubts and disputes arising out of or in connection with elections " which are also to be found in article 71 (1).
By article 327, Parliament was authorised to make provision with respect to all matters " relating to or in connection with elections " to Parliament or to the Legislatures of the States.
article 329 provides, amongst other things, that notwithstanding anything in this Constitution no election to either House of Parliament or either House of Legislature of a State shall be called in question except by an election Petition presented to such authority and in such manner as may be provided for by or under any law made by the proper legislature.
In exercise of powers thus conferred on it, Parliament enacted the Representation of the People Act, 1951, providing how elections are to be held and how and on what grounds such elections may be called in question.
It also set up a special forum called Election Tribunal for the decision of " doubts and disputes arising out of or in connection with such elections.
" In N.P. Ponnuswami vs Returning Officer, Namakkal Constituency (1) the Returning Officer for that constituency had rejected, the (1) ; 1087 nomination paper of the appellant.
Thereupon the appellant applied to the High Court of Madras under article 226 of the Constitution for a writ of certiorari to quash the order of the Returning Officer rejecting his nomination paper and to direct the Returning Officer to include his name in the list of valid nominations to be published.
The High Court of Madras dismissed the petition and the appellant brought an appeal to this Court.
The Full Court held that in view of the provisions of article 329 (b) of the Constitution and section 80 of the Representation of the People Act, 1951, the High Court had no jurisdiction to interfere with the order of the Returning Officer.
The main controversy in the appeal centered round the words "no election shall be called in question except by an election petition " occurring in article 329 (b).
The most important question for determination by this Court was the meaning to be given to the word " election " in article 329 (b).
This Court said at page 226: "That word has by long usage in connection with the process of selection of proper representatives in democratic institutions, acquired both a wide and a narrow meaning.
In the narrow sense, it is used to mean the final selection of a candidate which may embrace the result of the poll when there is polling or a particular candidate being returned unopposed when there is no poll.
In the wide sense, the word is used to connote the entire process culminating in a candidate being declared elected.
" After referring to the cases of Srinivasalu vs Kuppuswami (1) and Sat Narain vs Hanuman Prasad (2 ) and a passage in Halsbury 's Laws of England, 2nd edition, Volume 12, page 237, this Court took the view that the word "election " could be and had been properly used with respect to the entire process which consisted of several stages and embraced many steps some of which might have an important bearing on the result of the process and, therefore, held that in view of the provisions of article 329 (b) of the Constitution and section 80 of the Representation of the People Act, 1951, the High Court had no jurisdiction to interfere with the (1) A.I.R. (1928) Mad. 253, 255.
(2) A.I.R. (1945) Lah.
1088 order of the Returning Officer under article 226.
The only way such an order could be called in question was as laid down in article 329 (b) of the Constitution and section 80 of the Representation of the People Act, 1951, and this could be done only by an election petition presented before the Election Tribunal after the entire process of election culminating in a candidate being declared elected had been gone through.
On such election petition being filed the Election Tribunal would be properly bound to inquire into and decide "all doubts and disputes arising out of or in connection with the election " irrespective of the stage in the entire election process to which the " doubts and disputes relate".
We now approach the construction of article 71 in the light of the decision of this Court.
As already indicated article 71(1) confers jurisdiction and power on this Court to inquire into and decide id all doubts and disputes arising out of or in connection with the election of a President or Vice President".
The question is: Is there in this Article or in any other part of the Constitution or anywhere else any indication as to the time when such inquiry is to be held ? In the first place, article 71 postulates an " election of the President or Vice President " and provides for inquiry into doubts and disputes arising out of or in connection with such an election.
What is the meaning to be given to the word " election " as used in this Article? If we give to the word ,election" occurring in article 71(1) the same wide meaning as comprising the entire election process culminating in a candidate being declared elected, then clearly the inquiry is to be made after such completed election, i.e., after a candidate is declared to be elected as President or Vice President as the case may be.
We see no reason why this accepted meaning should not be given to the critical word.
In the second place, under cl. 3 of article 71, subject to the provisions of this Constitution, Parliament may by law regulate any matter " relating to or connected with the election " of a President or Vice President.
The words here also are similar to those used in article 327 and are equally wide enough to cover matters relating to or 1089 connected with any stage of the entire election process.
In exercise of powers conferred on it by article 71(3), Parliament has enacted the Presidential and Vice Presidential Election Act, 1952 (XXXI of 1952) to regulate certain matters relating to or connected with elections to the office of President and Vice President of India.
A glance through the provisions of this Act will indicate that in the view of Parliament the time for the exercise of jurisdiction by this Court to inquire into and decide doubts and disputes arising out of or in connection with the Presidential election is after the entire election process is completed.
Under section 14 of this Act, which corresponds to section 80 of the Representation of the People Act, 1951, no election, meaning the election of the President or Vice President, shall be called in question except by an election petition presented to this Court in accordance with the provisions of Part III of that Act and of the rules made by this Court under article 145.
Section 18, which lays down the grounds for declaring the election of a returned candidate to be void, runs as follows: 18.
Grounds for declaring the election of a returned candidate to be void: If the Supreme Court is of opinion (a) that the offence of bribery or undue influence at the election has been committed by the returned candidate or by any person with the connivance of the returned candidate; or (b) that the result of the election has been materially affected (i) by reason that the offence of bribery or undue influence at the election has been committed by any person who is neither the returned candidate nor a person acting with his connivance; or (ii)by the improper reception or refusal of a vote, or (iii)by the non compliance with the provisions of the Constitution or of this Act or of any rules or, orders made under this Act; or (c) that the nomination of any candidate has been wrongly rejected or the nomination of the successful candidate or of any other candidate who has 140 1090 not withdrawn his candidature has been wrongly accepted; the Supreme Court shall declare the election of the returned candidate to be void.
(2) For the purposes of this section, the offences of bribery and undue influence at an election have the same meaning as in Chapter IX A of the Indian Penal Code (Act XLV of 1860).
It is quite clear from the language of the section that any improper reception or refusal of a vote, or any non compliance with the provisions of the Constitution or of the Act or of any rules or orders made under the Act or the improper acceptance or rejection of a nomination paper may be made a ground for challenging the election.
This means that all doubts and disputes relating to any stage of the entire election process is to be canvassed by an election petition presented to this Court after the election in its wide sense is concluded.
The above stated interpretation appears to us to be in consonance with the other provisions of the Constitution and with good sense.
If doubt or dispute arising out of or in connection with the election of a President or Vice President can be brought before this Court before the whole election process is concluded then conceivably the entire election may be held up till after the expiry of the five years ' term which will involve a no compliance with the mandatory provisions of article 62.
The well recognised principle of election law, Indian and English, is that elections should not be held up and that the person aggrieved should not be permitted to ventilate his individual interest in derogation of the general interest of the people, which requires that elections should be gone through according to the time schedule.
It is, therefore, in consonance both with the provisions of article 62 and with good sense to hold that the word "election" used in article 71 means the entire process of election.
That is what Parliament understood to be the meaning of article,, 71 as is apparent from the Presidential and Vice Presidential Election Act, 1952.
Again this Court has framed rules under article 145 to regulate the 1091 procedure and a perusal of those rules will also indicate that " all doubts and disputes arising out of or in connection with the election of a President or Vice President " should be brought before the court after the result of the entire election is declared, that is to say, after a candidate is declared to be elected to the office of President or Vice President.
It is pointed out that if the petitioners are compelled to wait until after the entire election process is concluded and then to file election petitions, they will have to show that the result of the election has been materially affected as required by section 18 of the Presidential and Vice Presidential Election Act, 1952.
It is contended that there is no reason why this extra, burden or hardship, which is not in terms imposed by article 71, should be placed upon the petitioners.
It is not necessary for the purposes of disposing of these petitions to express any opinion as to the validity or otherwise of this requirement of section 18 and we do not do so.
But the plea of alleged hardship brought about by section 18 cannot alter the true meaning and import of article 71.
In our judgment article 71 postulates an election and the word "election " occurring in article 71 means the entire election process culminating in a candidate being declared elected and doubts and disputes arising out of or in connection with any of the stages of such completed election have to be inquired into and decided by this Court which, in point of time, must necessarily be after the completion of the entire process compendiously called the election.
Learned counsel appearing for the petitioner in the second petition raised an additional point that the Election Commission by fixing the election on May 6, 1957, has arbitrarily deprived the members representing territorial constituencies like Kangra and Himachal Pradesh of their right to exercise and enjoy other privileges of membership of Parliament.
This argument was raised half heartedly at the fag end of his argument in reply and was not seriously pressed.
In any event he did not advance any cogent argument showing how the petitioner had been deprived of the equal protection of the law.
Elections have to be held in numerous 1092 constituencies and different dates have to be fixed for holding the actual elections in different constituencies according to the various exigencies relating to the particular localities in which the constituencies are situate.
No good ground has been established for holding that there has been any discrimination such as is prohibited by article 14 of the Constitution.
In so far as the alleged discrimination, if any, in breach of the equal protection clause of the Constitution may be said to be calculated to raise any doubt in connection with the election of the President it will, at best, be a noncompliance with the provisions of the Constitution which may or may not, after the conclusion of the entire election, be made a ground, under section 18 of the Presidential and Vice Presidential Election Act, 1952, for calling the election in question as to which we need formulate no final opinion at this stage.
We express no opinion on the merits of any of the controversies between the parties, but, for the foregoing reasons, we hold that the present petitions are premature and cannot be entertained at this stage.
We, therefore, dismiss the petitions Nos. 63 and 64 of 1957.
Civil Miscellaneous Petitions Nos.
563 and 564 of 1957 will also stand dismissed.
Petitions dismissed.

Output:
The petitioners entertained grave doubts as to the propriety of holding the Presidential election before the general elections had been completed throughout the entire territory of India and, by applications filed under article 71(1) of the Constitution as citizens of India, invoked the jurisdiction and power of the Supreme Court thereunder to inquire into such doubts and sought for an order restraining the Election Commission from taking the poll in connection with the election of the President, fixed for May 6, 1957, till the general elections in the Union territory of Himachal Pradesh and in two Lok Sabha Constituencies of the State of Punjab, which were still to be held, had been completed.
The expiry of the term of office of the then President which caused the Presidential election was to come about on the mid night of May 12, 1957.
One of the petitioners alleged that he was a candidate for the Presidential election and the time intervening between the date when he received his nomination paper and the date fixed for the filing of it was too short to enable him to file it within time and the case of the other was that he was a prospective candidate for election to the Lok Sabha from one of the Punjab Constituencies, where election was yet to be held, and would be prevented from exercising his right to vote for the election of the President.
Held, that the present petitions were premature and must be dismissed. ^ The jurisdiction and power conferred on the Supreme Court by article 71(1) of the Constitution to inquire into and decide doubts and disputes arising out of and in connection with the election of the President can be exercised only after a particular candidate has been declared elected and on an election petition filed under section 14 of the Presidential and Vice Presidential Election Act of 1952.
The word 'election ' in article 71 of the Constitution is used in the wider sense to denote the entire process of election culminating 139 1082 in a candidate being declared elected and doubts and disputes arising out of and in connection with such election must include all doubts and disputes relating to any particular stage of it.
N. P. Ponnuswamy vs Returning Officer, Namakkal Constituency, ; , referred to.
It is a well recognised principle of the law of election that an election cannot be held up to facilitate the ventilation of individual grievances in derogation of the interest of the people in general and article 62 Of the Constitution, which requires that the election of President must be completed within the time fixed by it and has been conceived in such interest, is mandatory in character,