FOCO THEORY or FOCOISM, FOCALISM, FOQUISMO

A strategy for revolution associated with Ernesto “Che” Guevara, and formalized by Che and the radical French writer Régis Debray.

According to this theory it is not necessary to wait until conditions are right to launch either an insurrection or else a people’s war (depending on the nature of the country). Instead, at least in oppressed Third World countries, a dedicated band of revolutionaries can launch very small-scale, roving semi-guerrilla warfare at any time, which will supposedly serve as a focus (Spanish: foco) and inspiration for the rapid growth of more general guerrilla warfare and/or at some relatively early time a general uprising capable of seizing political power. The theory is that these paramilitary roving bands can themselves create the necessary conditions for revolution through their vanguard actions and moral example.

Unlike genuine people’s war, the foco theory is based on the assumption that a band of heroes can create a revolution, and that the mere existence of the foco makes it a vanguard without any necessity to merge deeply with the masses, forge close ties with them, participate seriously in their own struggles, and actually lead the masses in their own struggles. Foco theory, or focoism, is therefore a strongly elitist theory of revolution.
The origin of the foco theory lies in an idealist generalization of the experiences of Che and Fidel Castro in the Cuban Revolution. However, given the stategy followed by Castro, the success of that revolution was pretty much a lucky accident. This was at the time when there was already mass disgruntlement on the verge of boiling over against the Batista dictatorship. In other words, while the foco theory says it is not necessary for conditions to be particularly ripe for revolution, in Cuba itself they actually were. This circumstance also led to tremendous demoralization and ineffectiveness in Batista’s army, which almost totally fell apart after Castro’s small guerrilla force of a few hundred men took over a similarly small Cuban Army garrison of 250 men near the city of Santa Clara in December 1958 (the Battle of Yaguajay).

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Meaning of “When the Decree becomes enforceable”

Online Law Library

Article 136 of the Limitation Act 1963 being the governing statutory provision, prescribes a period of twelve years when the decree or order becomes enforceable. The word enforce in common acceptation means and implies compel observance of (vide Concise Oxford Dictionary) and in Black’s Law Dictionary ‘enforce’ has been attributed a meaning to give force or effect to compel obedience to’ and ‘enforcement has been defined as ‘the act or process of compelling compliance with a law, mandate or command’. In ordinary parlance ‘enforce’ means and implies ‘compel observance of’. Corpus Juris Secundum attributes the following for the word ‘enforce’:

“ENFORCE. In general, to cause to be executed or performed, to cause to take effect, or to compel obedience to, as to enforce laws or rules; to control; to execute with vigour; to put in execution; to put in force; also to exact, or to obtain authoritatively. The word is used in a multiplicity of ways and is given many shades of meaning and applicability, but it does not necessarily imply actual force or coercion. As applied to process, the term implies execution and embraces all the legal means of collecting a judgment, including proceedings supplemental to execution.

The past tense or past participle “enforced” has been said to have the same primary meaning as “compelled”.

The language used by the legislature in Article 136 it read in its proper perspective to wit: when the decree or order becomes enforceable must have been to clear up any confusion that might have arisen by reason of the user of the expression ‘the date of the decree or order which was used in the earlier Act. The intention of the legislature stands clearly exposed by the language used therein viz., to permit twelve year certain period from the date of the decree or order. It is in this context that a decision of the Calcutta High Court in the case of Biswapati Dey Vs. Kennsington Stores and Others, wherein the learned Single Judge in no uncertain terms expressed his opinion that there cannot be any ambiguity in the language used in the third column and the words used therein to wit: ‘when the decree or order becomes enforceable’ should be read in their literal sense. We do feel it expedient to lend our concurrence to such an observation of the learned Single Judge of the Calcutta High Court. The requirement of the Limitation Act in the matter of enforcement of a decree is the date of which the decree becomes enforceable or capable of being enforced- what is required is to assess the legislative intent and if the intent appears to be otherwise clear and unambiguous, question attributing a different meaning other than the literal meaning of the words used would not arise. It is in this context, we also do feel it inclined to record our concurrence to the observations of the full Bench of the Bombay High Court in Subhash Ganpatrao Buty and Another Vs. Maroti and Others, . Full Bench in the decision observed:

“… it is the duty of the Court to interpret the language actually employed and to determine the intention of the legislature from such language and since there is no ambiguity about the language actually employed, neither the recommendation of the Law Commission nor the aims and object as set out in the Statement of Objects and reasons can be brought in aid or can be allowed to influence the natural and grammatical meaning of the Explanation as enacted by the Parliament.”

Article 136 of the Act of 1963 prescribes as noticed above, a twelve years period certain and what is relevant for Article 136 is, as to when the decree became enforceable and not when the decree became executable. The decision of the Calcutta High Court in Biswapati’s case (supra) has dealt with the issue very succinctly and laid down that the word ‘enforceable’ should be read in its literal sense. In the contextual facts, the final decree upon acceptable of the report of the Commissioner was passed on 20.11.1970, while it is true that notice to furnish stamp paper was issued on 28.2.1972 and the time granted was up to 17.3.1972 but that by itself will not take it out of the purview of Article 136 as regards the enforceability of the decree. Furnishing of stamped paper was an act entirely within the domain and control of the appellant and any delay in the matter of furnishing of the same cannot possibly be said to be putting a stop to the period of limitation being run – no one can take advantage of his own wrong: As a matter of fact, in the contextual facts no stamp paper was filed until 26.3.1984 – Does that mean and imply that the period of limitation as prescribed under Article 136 stands extended for a period of twelve years from 16th March, 1984? the answer if it be stated to be in the affirmative, would lead to an utter absurdity and a mockery of the provisions of the statute. Suspension of the period of limitation by reason of one’s own failure cannot but be said to be a fallacious argument, though however suspension can be had when the decree is a conditional one in the sense that some extraneous events have to happen on the fulfilment of which alone it could be enforced – furnishing of stamped paper was entirely in the domain and power of the decree-holder and there was nothing to prevent him formatting in terms therewith and thus it cannot but be said that the decree was capable of being enforced on and from 20th November, 1970 and the twelve years period ought to be counted therefrom. It is more or less in identical situation, this Court even five-decades ago in the case of Yeswant Deorao Deshmukh Vs. Walchand Ramchand Kothari, has stated:

“..The decree was not a conditional one in the sense that some extraneous event was to happen on the fulfilment of which alone it could be executed. The payment of court fees on the amount found due was entirely in the power of the decree-holder and there was nothing to prevent him from paying it then and there; it was a decree capable of execution from the very date it was passed.

 Supreme Court in West Bengal Essential Commodities Supply Corporation Vs. Swadesh Agro Farming and Storage Pvt. Ltd. and Another, had the occasion to consider the question of limitation under Article 136 of the Limitation Act of 1963 and upon consideration of the decision in the case of Yeswant Deorao (supra) held that under the scheme of the Limitation Act, execution applications like plaints have to be presented in court within the time prescribed by the Limitation Act. A decree-holder, this court wen ton to record does not have the benefit of exclusion of the time taken for obtaining even the certified copy of the decree like the appellant who prefers an appeal, much less can he claim to deduct time taken by the court in drawing up and signing the decree. In fine, this Court observed that if the time is reckoned not from the date of the decree but from the date when it is prepared, it would amount to doing violence to the provision of the Limitation Act as well as of Order 20 and Order 21 Rule 11 C.P.C. which is clearly impermissible.

The observation thus in W.B. Essential Commodities Supply Corpn. (supra) lends concurrence to the view expressed above pertaining to the question of enforceability of the decree as laid down in Article 136 of the Limitation Act.

Incidentally, in paragraph 12 of the judgment in W.B. Essential Commodities Supply Corpn (supra), this Court listed out three several situations in which a decree may not be enforceable on the date and in last of the situation this Court observed:

“Thirdly, in a suit for partition of immovable properties after passing of preliminary decree when, in final decree proceedings, an order is passed by the court declaring the right of the parties in the suit properties, it is not executable till final decree is engrossed on non-judicial stamp paper supplied by the parties within the time specified by the court and the same is signed by the Judge an sealed. it is in this context that the observation of this Court in Shankar Balwant Lokhande (dead) by L.Rs. Vs. Chandrakant Shankar Lokhande and Another, have to be understood. These observations do not apply to a money decree and, there, the appellant can derive no benefit from them.”

 The third situation, as referred above, has been taken note of by reason of the decision of this Court in the case of Shankar Balwant Lokhande (dead) by L.Rs. Vs. Chandrakant Shankar Lokhande and Another, wherein Ramaswamy, J. speaking for the Bench came to a conclusion that:

“…After final decree is passed and a direction is issued to pay stamped papers for engrossing final decree thereon and the same is duly engrossed on stamped paper(s), it becomes executable or becomes an instrument duly stamped. Thus, condition precedent is to draw up a final decree and then to engross it on stamped paper(s) of required value. These two acts together constitute final decree crystallizing the rights of the parties in terms of the preliminary decree. Till then, there is no executable decree as envisaged in Order 20, rule 18 (2), attracting residuary Article 182 of the old Limitation Act.”

In this context, a further reference can be had from Mulla’s Civil Procedure Code. As regards Section 48 the following is said in Mulla’s C.P. Code:

“This Section has been repealed by Section 28 of the Limitation Act, 36 of 1963. In its place a new provision, Article 136, has been introduced which prescribes “for the execution of any decree (other than a decree granting a mandatory injunction) or order of any civil court” a period of twelve years “where the decree or order becomes enforceable or where the decree or any subsequent order directs any payment of money or the delivery of any property to be made at a certain date or at recurrent periods, when default in making the payment or delivery in respect of which execution takes place:

Provided that an application for the enforcement or execution of a decree granting a perpetual injunction shall not be subject to any period of limitation.”

The period of twelve years prescribed by Section 48 is retained under Article 136 and is now the only period of limitation. It is therefore no longer necessary to keep the execution alive by successive applications within three years for complying with the original Article 182.”

 Significantly, the contextual facts itself in Lokhande’s case (supra) has prompted this Court to pass the order as it has (noticed above) and as would appear from the recording in the order to wit: “Therefore, executing court cannot receive the preliminary decree unless final decree is passed as envisaged under Order 20 Rule 18 (2).”

In that view of the matter, reliance on the decision of Lokhande’s case (supra) by Mr. Mani appearing for the appellants herein cannot thus but be said to be totally misplaced more so by reason of the fact that the issue pertaining to furnishing of stamp paper and subsequent engrossment of the final decree thereon did not fall for consideration neither the observations contained in the judgment could be said to be germane to the issue involved therein. The factual score as noticed in paragraph 10 of the Report Shankar Balwant Lokhande (dead) by L.Rs. Vs. Chandrakant Shankar Lokhande and Another, makes the situation clear enough to indicate that the Court was not called upon to adjudicate the issue as raised presently. The observations thus cannot, with due deference to the learned Judge, but be termed to be an obiter dictum.

 It is in this context that we rather feel it inclined to record the observation of Russel L.J. in Rakhit v. Carty L.R. (1990) 2 Q.B. 315 wherein at page 326/327 of the report it has been observed:

“Miss Foggin has now submitted to this court that the decision in Kent’s case was indeed per incuriam in that she submits that the judgment of Ormrod L.J. with which Dunn L.J. and Sir Sebag Shaw agreed, made no reference to section 67(3), that if the Court of Appeal had been referred to that subsection and had regard to its terms, the decision would plainly have been different and that consequently this court should not follow Kent’s case. I have already expressed my own views as to the proper construction of section 44(1) and the impact of section 67(3).

In Rickards v. Rickards [1990] Fam. 194 Lord Donaldson of Lymington M.R. said:

“The importance of the rule of stare decisis in relation to the Court of Appeal’s own decisions can hardly be overstated. We now sometimes sit in eight divisions and in the absence of such a rule, the law would quickly become wholly uncertain. However the rule is not without exceptions, albeit very limited. These exceptions were considered in Young v. Bristol Aeroplane Co. Ltd. [1944] K.B. 718: Morelle Ltd. v. Wakeling [1955] 2 Q.B. 379 and more recently, in Williams v. Fawcett [1986] Q.B. 604, relevant extracts from the two earlier decisions being set out at pp. 615-616 of the report. These decisions show that this court is justified in refusing to follow one of its own previous decisions not only where that decision is given in ignorance or forgetfulness of some inconsistent statutory provision or some authority binding upon it, but also, in rare and exceptional cases, if it is satisfied that the decision involved a manifest slip or error. In previous cases the judges of this court have always refrained from defining this exceptional category and I have no intention of departing from that approach save to echo the words of Lord Greene M.R. in Young’s case, p. 729, and Sir Raymond Evershed M.R. in Morelle’s case p. 406, and to say that they will be of the rarest occurrence.

In my judgment, the effect of allowing this appeal will produce no injustice to the plaintiff for the Rent Act 1977 provided him and his advisers with ample opportunity to protect his interests by the simple process of inspecting the public register of rents before letting the flat to the defendant. A fresh application for registration or a fair rent could then have been made enabling that fair rent to be recoverable from the commencement of the defendant’s tenancy.

For my part, I am satisfied that this court erred in Kent v. Millmead Properties Ltd. 44 P & C.R. 353 and that following the observations of Lord Donaldson of M.R. in Rickards’ case, this court is justified in declining to follow Kent’s case.

As a matter of fact, a three Judge Bench of this Court in the case of Municipal Committee, Amritsar Vs. Hazara Singh, has been pleased to record that on facts, no two cases could be similar and the decision of the court which were essentially on question of facts could not be relied upon as precedent, for decision of the other cases. Presently the fact situation in the decision of Lokhande (supra) and the matter under consideration are completely different, as such the decision in Lokhande cannot by any stretch be termed to be a binding precedent. In Amar Nath Om Prakash and Others Vs. State of Punjab and Others, , a three Judges Bench of this Court in no uncertain terms stated:

“We consider it proper to say, as we have already said in other cases, that judgments of courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for Judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes: their words are not to be interpreted as statutes. In London Graving Dock Co. Ltd. v. Horton : 1951 AC 737, Lord MacDermott observed:

The matter cannot, of course, be settled merely by treating the ipsissima verba of Wills. J., as though they were part of an Act of Parliament and applying the rules of interpretation appropriate thereto. This is not to detract from the great weight to be given to the language actually used by the most distinguished Judge.

In Home Office v. Dorset Yacht Co. Ltd. (1970) 2 All ER 294 Lord Reid said:

Lord Atkin’s speech (Donoghue v. Stevension 1932 All ER Rep 1…is not to be treated as if it was a statutory definition. It will require qualification in new circumstances.

Megarry, J. in (1971) 1 WLR 1062 observed:

One must not, of course, construe even a reserved judgment of even Russel, L.J. as if it were an Act of Parliament.

And, in Herrington v. British Railways Board (1972) 2 WLR 537, Lord Morris said:

There is always peril in treating the words of a speech or a judgment as though they were words in a legislative enactment and it is to be remembered that judicial utterances are made in the setting of the facts of a particular case.”

 Further in Municipal Corporation of Delhi Vs. Gurnam Kaur, , this Court in paragraph 11 of the report observed,

“11. Pronouncements of law, which are not part of the ratio decidendi are classed as obiter dicta and are not authoritative. With all respect to the learned Judge who passed the order in Jamna Das case (Writ Petition Nos. 981-82 of 1984) and to the learned Judge who agreed with him, we cannot concede that this Court is bound to follow it. It was delivered without argument, without reference to the relevant provisions of the Act conferring express power on the Municipal Corporation to direct removal of encroachments from any public place like pavements or public streets, and without any citation of authority. Accordingly, we do not propose to uphold the decision of the High Court because, it seems to us that it is wrong in principle and cannot be justified by the terms of the relevant provisions. A decision should be treated as given per incuriam when it is given in ignorance of the terms of a statute or of a rule having the force of a statute. So far as the order shows, no argument was addressed to the court on the question whether or not any direction could properly be made compelling the Municipal Corporation to construct a stall at the pitching site of a pavement squatter. Professor P.J. Fitzgerald, editor of the Salmond on Jurisprudence, 12th Edn. Explains the concept of sub silentio at p. 153 in these words:

A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or present to its mind. The court may consciously decide in favour of one party because of point A, which it considers and pronounces upon. It may be shown, however, that logically the court should not have decided in favour of the particular party unless it also decided point B in his favour but point B was not argued or considered by the court. In such circumstances, although the case had a specific outcome, the decision is not an authority on point B. Point B said to pass sub silentio.”

 In one of its latest judgment however this Court in Dr. Vijay Laxmi Sadho Vs. Jagdish, , though apparently sounded a contra note but the safeguards introduced therein does not however create any problem for a decision in the matter under consideration. Anand, C.J. while deprecating the characterisation of earlier judgment as ‘per incuriam’ on ground of dissent observed:

“that a Bench of coordinate jurisdiction ought not to record its disagreement with another Bench on a question of law and it would be rather appropriate to refer the matter to a larger Bench for resolution of the issue”.

Anand, C.J. however has been extremely careful and cautious enough to record “it is appropriate that the matter be referred to a larger Bench for resolution of the issue rather than to leave two conflicting judgments to operate creating confusion” (emphasis supplied).

 In the contextual facts, the question of there being a conflicting judgment as indicated hereinbefore or creation of any confusion does not and cannot arise by reason of the fact that the observations in Lokhande (supra) was on the peculiar set of facts under the Limitation Act of 1908 – no Commissioner’s report was available, neither any final decree passed, as such the issue before the court was completely different having regard to the factual state of the matter.

The decision has thus no manner of application in the contextual facts neither the decision of this Court in W.B. Essential Commodities supply Corpn. (supra) be of any assistance since there was no exposition of law but a mere expression of a possibility only, as such at best be termed to be an expression of opinion incidentally. The latter decision thus also does not render any assistance to the submission of Mr. Mani rather lends credence to the observations of this Court as noticed hereinbefore.

Incidentally, the Calcutta High Court in one of its very old decision in the case of Kishori Mohan Pal Vs. Provash Chandra Mondal and Others, while interpreting Article 182 under the Limitation Act of 1908 has been rather categorical in recording that the date of the decree under the Article is the day on which the judgment is pronounced and limitation begins to run from that day although no formal decree can be drawn up in the partition suit until paper bearing a proper stamp under Article 45 of the Stamp Act is supplied to the Court. Richardson, J. with his usual felicity of expression stated as below:

“In this Court the learned Vakil for the respondents has said all that could be said for his clients. He has in particular called out attention to the fact that, although the decree is dated the 25th March 1914, it is expressed to be “passed in terms of the Commissioner’s report, dated the 27th June 1914 which and the map filed along with it do form parts of the decree.” The 25th March 1914 is, nevertheless, the correct date of the decree because that is the day on which the judgment was pronounced (Order 20, rule 7, Civ. Pro Code). The report of the Commissioner appointed to make the partition had already been received, the report was adopted by the judgment subject to certain variations and in connection with those variations, certain directions of a ministerial character were given to the Commissioner which the Commissioner had merely to obey. The order sheet shows that the Commissioner submitted a report on the 27th June 1914. That report has not been placed before us. But I have no doubt that it did no more than state that the Commissioner had done what he was directed to do by the judgment of the 25th March 1914. That judgment was the final judgment in the suit and it was so regarded by the Subordinate Judge who delivered it. The decree is in accordance therewith. The directions in the judgment were sufficient to indicate how the decree should be framed and there was no need of any further judgment.

The delay in signing the decree was due not to any fault of the Court or to any cause beyond the control of the parties but solely to the delay of the parties in supplying the requisite stamped paper. Any party desiring to have the decree executed might have furnished the stamped paper at any time leaving the expense of providing it to be adjusted by the Court in connection with the costs of the execution.

The circumstances disclose no ground for saying that limitation did not run from the date of the decree as provided by article 182 of the Limitation Act, and if authority be needed, reference may be made to Golam Gaffar Mandal v. Golijan Bibi 1898 (25) Cal. 109 and Bhajan Behari Shah v. Girish Chandra Shaha 17 C.W.N. 959.

I may add that much time and labour would be saved if the court would resist such attempts as the present to go behind the plain words of a positive enactment.”

 Though several other old and very old decisions were cited but in view of the pronouncement lately by this Court and as discussed herein before, we are not inclined to deal with the same in extenso, save however recording that contra view recorded earlier by different High Courts cannot be termed to be good law any longer.

The decision in Lokhande’s case (supra) cannot but be said to be on the special facts situation and is thus in any event clearly distinguishable.

Be it noted that the legislature cannot be sub-servant to any personal whim or caprice. In any event, furnishing of engrossed stamp paper for the drawing up of the decree cannot but be ascribed to be a ministerial act, which cannot possibly put under suspension a legislative mandate. Since no conditions are attached to the decree and the same has been passed declaring the shares of the parties finally, the Court is not required to deal with the matter any further – what has to be done – has been done. This test thus should be – Has the court left out something for being adjudicated at a later point of time or is the decree contingent upon the happening of an event – i.e. to say the Court by its own order postpones the enforceability of the order – In the event of there being no postponement by a specific order of Court, there being a suspension of the decree being unenforceable would not arise. As a matter of fact, the very definition of decree in Section 2(2) of the C.P. Code lends credence to the observations as above since the term is meant to be ‘conclusive determination of the rights of the parties’.


Cases Referred

Dr. Vijay Laxmi Sadho Vs. Jagdish, (2001) 1 JT 382 : (2001) 1 SCALE 63 : (2001) 2 SCC 247 : (2001) 1 SCR 95
Shankar Balwant Lokhande (dead) by L.Rs. Vs. Chandrakant Shankar Lokhande and Another, AIR 1995 SC 1211 : (1995) 3 JT 186 : (1992) 2 LLJ 18 : (1995) 2 SCALE 318 : (1995) 3 SCC 413 : (1995) 2 SCR 776 : (1992) 1 SLJ 7 : (1995) 1 UJ 707
Yeswant Deorao Deshmukh Vs. Walchand Ramchand Kothari, AIR 1951 SC 16 : (1950) 1 SCR 852 : (1950) SCR 852 Supp
Kishori Mohan Pal Vs. Provash Chandra Mondal and Others, AIR 1924 Cal 351 : 72 Ind. Cas. 646
Municipal Committee, Amritsar Vs. Hazara Singh, AIR 1975 SC 1087 : (1975) 1 SCC 794 : (1975) 3 SCR 914 : (1975) 7 UJ 366
Biswapati Dey Vs. Kennsington Stores and Others, AIR 1972 Cal 172 : (1975) 1 ILR (Cal) 266
Amar Nath Om Prakash and Others Vs. State of Punjab and Others, AIR 1985 SC 218 : (1984) 2 SCALE 769 : (1985) 1 SCC 345 : (1985) 2 SCR 72 : (1986) 62 STC 130
Municipal Corporation of Delhi Vs. Gurnam Kaur, AIR 1989 SC 38 : (1988) 4 JT 11 : (1988) 2 SCALE 1155 : (1989) 1 SCC 101 : (1988) 2 SCR 929 Supp : (1988) 2 UJ 713
West Bengal Essential Commodities Supply Corporation Vs. Swadesh Agro Farming and Storage Pvt. Ltd. and Another, AIR 1999 SC 3421 : (1999) 6 JT 599 : (1999) 123 PLR 618 : (1999) 5 SCALE 504 : (1999) 8 SCC 315 : (1999) 2 SCR 399 Supp : (2000) 1 UJ 107 : (1999) AIRSCW 3401 : (1999) 7 Supreme 629
Subhash Ganpatrao Buty and Another Vs. Maroti and Others, AIR 1975 Bom 244 : (1975) 77 BOMLR 517 : (1975) MhLj 244
Bholanath Karmakar and Others Vs. Madanmohan Karmakar and Others, AIR 1988 Cal 1 : (1988) 1 CALLT 1 : 92 CWN 428
Smt. Kotipalli Mahalakshmamma Vs. Kotipalli Ganeswara Rao and Others, AIR 1960 AP 54

What is a substantial question of law- SC explained

SUPREME COURT OF INDIA JUDGMENTS

What is a substantial question of law would certainly depend upon facts and circumstances of every case and if a question of law had been settled by the highest court of the country that question however important and difficult it may have been regarded in the past and however large may be its effect on any of the parties, would not be regarded as substantial question of law. In Raghunath Prasad v. Deputy Commissioner of Partabgarh [1927] 54 LA. 126 the Judicial Committee observed that a question of law to be considered a “substantial question of law” need not be one of general importance and it could be a substantial question “as between the parties”.

SUPREME COURT OF INDIA

FULL BENCH

( Before : M. N. Venkatachaliah, J; J. S. Verma, J; D. N. Ojha, J )

PANJAK BHARGAVA AND ANOTHER — Appellant

Vs.

MOHINDER NATH AND ANOTHER — Respondent

Civil Appeal No. 6000 of 1990

Decided on : 11-12-1990

Delhi Rent Control Act, 1958 – Section 21, Section 39

Cases Referred

Joginder Kumar Butan Vs. R.P. Oberoi, AIR 1987 SC 1996 : (1987) 3 JT 298 : (1987) 2 SCALE 273 : (1987) 4 SCC 20 : (1987) 3 SCR 937 : (1987) 2 UJ 432
Inder Mohan Lal Vs. Ramesh Khanna, AIR 1987 SC 1986 : (1987) 3 JT 246 : (1987) 2 SCALE 196 : (1987) 4 SCC 1 : (1987) 3 SCR 765 : (1987) 2 UJ 705
Union of India (UOI) Vs. Chaman Lal Loona, AIR 1957 SC 652 : (1957) 1 SCR 1039
Smt. Yamuna Maloo Vs. Anand Swarup, AIR 1990 SC 1725 : (1990) 1 JT 497 : (1990) 1 SCALE 384 : (1990) 3 SCC 30 : (1990) 1 SCR 715 : (1990) 2 UJ 83
Subhash Kumar Lata Vs. R.C. Chhiba and Another, AIR 1989 SC 458 : (1988) 4 JT 65 : (1988) 2 SCALE 790 : (1988) 4 SCC 709 : (1988) 3 SCR 241 Supp
J.R. Vohra Vs. India Export House Pvt. Ltd. and Another, AIR 1985 SC 475 : (1985) 1 SCALE 219 : (1985) 1 SCC 712 : (1985) 2 SCR 899 : (1985) 17 UJ 721
Shiv Chander Kapoor Vs. Amar Bose, AIR 1990 SC 325 : (1989) 2 SCALE 1168 : (1990) 1 SCC 234 : (1989) 2 SCR 299 Supp
S.B. Noronah Vs. Prem Kumari Khanna, AIR 1980 SC 193 : (1980) 1 SCC 52 : (1980) 1 SCR 281 : (1979) 11 UJ 756
Smt. Dhanwanti Vs. D.D. Gupta, AIR 1986 SC 1184 : (1986) 1 SCALE 1109 : (1986) 3 SCC 1 : (1986) 3 SCR 18 : (1986) 2 UJ 92

ORDER

M.N. Venkatachaliah, J.—The appellant-landlords seek special leave to appeal to this Court from the Judgment dated 29.11.1989 of the High Court of Delhi in SAO No. 384 of 1987 allowing Respondent-tenants’ appeal and setting-aside the Appellate Order dated 17.10.1987 of the Rent Control Tribunal, Delhi which had confirmed the order of the Rent Controller dated 16.2.1987, granting possession of premises No. 19/20, New Rohtak Road, to the appellants upon the expiration of a limited-tenancy u/s 21 of the Delhi Rent Control Act, 1958, [Act].

2. The effect of the High Court’s judgment was invalidation of the permission for the limited-tenancy and refusal of appellants’ prayer for possession. The High Court held that the initial grant of permission by the Rent Controller u/s 21 for a limited-tenancy for five years from 6.4.1978 was itself marred by a fraudulent suppression of material facts; that the permission, in effect, was merely a ex-post facto sanction of a subsisting tenancy which had earlier come into existence on 5.3.1978 and that, therefore, the appellants were not entitled to the benefit of Section 21. The High Court relied upon a pronouncement of this Court in Subhash Kumar Lata Vs. R.C. Chhiba and Another, to support its view that the nullity of the order u/s 21 obtained by fraud could be urged in defence against execution.

3. We have heard Sri Rajinder Sachhar, learned Senior Counsel for the appellants and Sri Avadh Bihari Rohtagi, learned Senior Counsel for the respondent-tenants. Special Leave is granted.

The necessary and material facts, briefly stated, are these: Appellants and the respondents by their joint application to the Rent Controller sought for and obtained permission for a limited-tenancy for five years u/s 21. Respondents not having surrendered possession upon the expiry of the said period of five years, the appellants commenced proceedings for re-delivery. Respondents resisted the proceedings raising several contentions. They urged that the appellants were not the owners of the premises at all; that the permission u/s 21 was vitiated by fraud resulting from a suppression by the appellants of the material fact that at the relevant time the premises was not available for letting at all; that respondents had been inducted into possession as tenant from 5.3.1978 itself and therefore, one of the basic jurisdictional requirements for the grant of permission u/s 21 was absent and that, at all events, a fresh contractual tenancy had been created with effect from 6.4.1983 immediately upon the expiry of the five years term of the limited-tenancy.

4. The Rent Controller by his order dated 16.2.1987 rejected all these contentions and made an order granting possession. The respondents’ appeal before the Rent Control Tribunal was unsuccessful. In the second appeal u/s 39 of the Act by the respondents, the High Court held that even prior to the limited-tenancy, the respondents had been inducted into possession as tenants; that the subsequent permission for the limited-tenancy was a mere pretence and the result of a fraud on the statute and, therefore, a nullity. Relying on Subhash Kumar Lata’s case, the High Court held that such a nullity could be pleaded in and against execution as well. The High Court, accordingly, allowed the second appeal and, in reversal of the orders of the authorities below, dismissed appellants’ claim for possession. The correctness of this view is assailed in this appeal.

It must, however, be stated that Sri Rohtagi while supporting the judgment of the High Court did not – and rightly in our opinion – lay store by the other defences urged by the respondents as to the alleged fresh-tenancy or as to the disputed ownership of the property. Sri Rohtagi, however, sought to maintain that there having been an earlier subsisting tenancy as found by the High Court, the purported creation of a limited-tenancy thereafter was a nullity such as could collaterally be urged against execution.

5. The contentions of Sri Rajinder Sachhar in support of the appeal could be formulated thus:

(i) that both the Rent Controller and the Appellate Tribunal having concurrently held that respondents’ occupation of the premises from 5.3.1978 to 5.4.1978, even if true, did not constitute a tenancy in that the other requisite indicium of tenancy, namely, the stipulation of a consideration was absent and that the latter finding being a pure question of fact, the High Court, in exercise of its jurisdiction u/s 39 which permitted an appeal only on a substantial question of law, could not reappreciate evidence and upset the finality of that finding of fact;

(ii) that, at all events, even if the limited-tenancy u/s 21 was obtained despite the subsistence of a tenancy created earlier, the Respondents were bound to assail the validity of the limited-tenancy during its subsistence and not as a collateral plea in the course of execution, as held in J.R. Vohra Vs. India Export House Pvt. Ltd. and Another, Inder Mohan Lal Vs. Ramesh Khanna, Joginder Kumar Butan Vs. R.P. Oberoi, ; Shiv Chander Kapoor Vs. Amar Bose, and Smt. Yamuna Maloo Vs. Anand Swarup,

6. On the first contention, Sri Sachhar said that the High Court approached the matter as if in general appellate jurisdiction which clearly was not the scope and amplitude of an appeal u/s 39 of the Act. It was urged that the finding of the Tribunal that even though respondents were shown to be in occupation, however, no inference of a lease was permissible as one of the essential twin requirements, namely, the stipulation of rent had not been established was essentially one of fact and that the High Court was in error in assuming jurisdiction to reverse that finding of fact. Sir Sachhar said that even if the question whether, upon its proper construction, the receipt Exhibit DW-1/3 was susceptible of an inference that the transaction envisaged by it was one of lease could be said to be a question of law, by no standards it could be held to be a substantial question of law within the meaning and for purposes of Section 39 of the Act.

7.The first limb of the argument that no question of law at all arose can not be accepted. The receipt dated 5.3.1978 on which Respondents relied contained a recital that a cheque for Rs. 18,000 mentioned in it was given as rent for the premises for the period of 12 months w.e.f. 5th March, 1978. The Rent Controller and the Tribunal, quite errorneously, proceeded to hold that the mere fact that the cheque had been shown to have been returned had the effect of taking away the consideration for the lease. These authorities mistook the non-payment of rent in point of fact as equivalent to absence of consideration in point of law. This was clearly erroneous. A stipulation for payment of rent was by itself sufficient to bring about a contract of tenancy where, of course, the other element of exclusivity of possession was shown. The High Court held that a consideration promised is as valid as one paid, and that, therefore, the circumstance that the cheque was returned would not detract from the legal consequence of the stipulation to pay rent implicit in Exhibit DW 1/3. The High Court construed the receipt and found that a lease was intended. The construction of a document which is the foundation of the rights of parties raises a question of law. An inference from facts admitted or found is a question of law if such an inference is to be drawn on the application of proper principles of law to the facts. Such determination is a mixed question of fact and law. We cannot accept Sri Sachhar’s submission that the High Court treaded on the forbidden ground of facts.But Sri Sachar’s other submission is that in any case this was not a ‘substantial’ question of law’. We might as well examine this.

8. What is a substantial question of law would certainly depend upon facts and circumstances of every case and if a question of law had been settled by the highest court of the country that question however important and difficult it may have been regarded in the past and however large may be its effect on any of the parties, would not be regarded as substantial question of law. In Raghunath Prasad v. Deputy Commissioner of Partabgarh [1927] 54 LA. 126 the Judicial Committee observed that a question of law to be considered a “substantial question of law” need not be one of general importance and it could be a substantial question “as between the parties”. This Court had occasion to consider the views expressed on the point by the High Courts of Bombay, Nagpur and Madras in Kaikhushroo Pirojsha Ghaira v. C.P. Syndicate Ltd. [1948] 1. Bom. L.R. 744; Dinkarrao v. Rattansey, ILR (1949) Nag. 224 and Rimmalapudi Subba Rao v. Noony Veeraju ILR 1952 Mad. 264 respectively placing differing emphasis on what was a “substantial” question of law between the parties. It was held by this Court that while the view taken by the Bombay High Court was too narrow, the one taken by the Nagpur High Court was too broadly stated. Approving the view taken by the Madras High Court it was observed:

…The proper test for determining whether a question of law raised in the case is substantial would, in our opinion, be whether it is of general public importance or whether it directly and substantially affects the rights of the parties and if so whether it is either an open question in the sense that it is not finally settled by this Court or by the Privy Council or by the Federal Court, or is not free from difficulty or calls for discussion of alternative views. If the question is settled by the highest Court or the general principles to be applied in determining the question are well settled and there is a mere question of applying those principles or that the plea raised is palpably absurd the question would not be a substantial question of law.

(emphasis supplied)

(See: Sir Chunilal V. Mehta and Sons Ltd. v. The Century Spinning and Manufacturing Co. Ltd. [1962] Su. 3 SCR 549.

9. Thus tested, could the question involved in the second appeal before the High Court be said to be a substantial question of law? The proposition emanated from the following discussion of the High Court:

A lease, as defined by Section 105 of the Transfer of Property Act, is a transfer of a right to enjoy property in consideration of a price paid or promised. If it can be shown in a given case that the transfer of the right to enjoy the property was made a consideration for a price promised and not actually paid, even then it will amount to a lease. It is manifest from the receipt of OW-1/3 that the cheque for Rs. 18,000 mentioned in it represented the ‘rent’ for the premises for the period of 12 months with effect from 5th of March, 1978. The question whether the rent was actually ‘paid’ is a no consequence for the determination of the question whether a tenancy was created with effect from the date mentioned in the receipt. Likewise, the fact that the cheque for Rs. 18,000 was never encashed and was returned is immaterial for this purpose …

It is trite proposition that mere reciprocal promises are sufficient in law to sustain the formation of a contract. Pointing out the distinction between contracts of “executed” consideration and of “executory” consideration this Court, referring to and excerpting from Chitty on Contracts, said:

It is necessary to appreciate clearly the distinction between the two classes of contracts where the consideration is either executed or executory. “An executed consideration consists of an act for a promise. It is the act which forms the consideration…

In an executed consideration the liability is outstanding on one side only; it is a present as opposed to a future consideration.”

In an executory consideration the liability is outstanding on both sides. It is, in fact, a promise for a promise; one promise is bought by the other.

If the contract has been fully and completely performed on both sides, no question of any further rights and liabilities under the contract is likely to arise. If, however, the contract is one in which the consideration is executed on one side, there will be a right no one side and an outstanding liability on the other. If the consideration is executory on both sides, there will be outstanding rights and liabilities on both sides.

(emphasis supplied)

[See: Union of India (UOI) Vs. Chaman Lal Loona,

The proposition hat reciprocal promises are sufficient to bring about the formation of a contract is well settled, and indeed elementary. But, the High Court does not appear to have been invited to examine the question whether this proposition in its application to the case assumed a substantial character as between the parties. The appeal did involve a question of law. That question directly and substantially affected the rights of the parties. It is possible to assume that the High Court considered the question as a substantial one between the parties. We do not think that it would be appropriate to fault the judgment on this ground, though the point might well have been an eminently arguable one if it had been raised before the High Court. In any event in the view we take of the second contention this point loses its materiality.

10. But Shri Sachhar’s submission on the second contention is not without force. It is urged by him that even if there was an earlier tenancy and permission u/s 21 was sought and obtained suppressing that fact or where permission is procured by fraud the remedy of the tenants is to bring-up a challenge to the limited tenancy as soon as the tenants discover these facts – and Sri Sachhar says that in this case they knew it even at the time permission was sought – and not to wait till the landlord makes his application for recovery of possession. Sri Sachhar submitted that the essential conditions for the exercise of jurisdiction u/s 21 as indicated in S.B. Noronah Vs. Prem Kumari Khanna, are first, that the landlord did not require the demised premises “for a particular period” only and secondly, that the letting must be made for residential purposes. Sri Sachhar submitted while Subhash Kumar Lata’s case to the extent it holds that Section 21 was not intended to grant “post-facto” sanction of a subsisting tenancy and a permission obtained by suppressing material-facts which enables the landlord to straight-away recover possession would be invalid accords with the earlier Rulings, however, to the extent it expands the remedies and enables a defence based on such infirmity even after the period of the limited tenancy has expired and in resistence to the execution would clearly be irreconcilable with the view taken in J.R. Vohra Vs. India Export House Pvt. Ltd. and Another, ; Joginder Kumar Butan Vs. R.P. Oberoi, Shiv Chander Kapoor Vs. Amar Bose, and Smt. Yamuna Maloo Vs. Anand Swarup, some of which are pronouncements of larger benches than the one that decided Subhash Kumar Lata’s case. Shri Sachar submitted that the learned Judge who spoke for the bench in Subhash Kumar Lata’s case had himself in Joginder Kumar Butan Vs. R.P. Oberoi, reiterated the rule in Vohra’s case and said:

…It was observed by this Court in J.R. Vohra v. India Export House, that the remedy available to a tenant in a case where there was only a ritualistic observance of the procedure while granting permission for the creation of a limited tenancy or where such permission was procured by fraud practised by the landlord or was a result of collusion between the strong and the weak, would be for the tenant approaching the Rent Controller during the currency of the limited tenancy itself for adjudication of his pleas as soon as he discovers facts and circumstances that tend to vitiate ab initio the initial grant of permission and not to wait till the landlord makes his application for recovery of the premises, after the expiry of the period fixed u/s 21.

[See p. 29]
(emphasis supplied)

Sri Sachhar submitted that where permission for a limited-tenancy u/s 21 was obtained either by suppressing the fact that the landlord did not at all require the premises for his own use or that the letting was not for residential purposes or any other material circumstance which if the Rent Controller had knowledge of would have persuaded him to decline to exercise jurisdiction, the infirmities were all of the same nature and in all such cases, it cannot be predicated that there was a lack of inherent jurisdiction so as to entitle the tenant to treat and ignore the permission as non-est.

11. Shri Rohtagi, however, urged that Section 21 to the extent it runs counter and forms an exception to the general scheme of the statute, its operation was required to be restricted severely to the express conditions and limitations contained in that section and that wherever permission for a limited-tenancy was sought and obtained suppressing any jurisdictional fact such as that the prospective limited tenant was already in occupation as a regular tenant, the transaction amounted to a fraud on the statute, rendering the permission void ab-initio. Shri Rohtagi submitted that Subhash Kumar Lata’s case recognised this species of nullity and illustrated the availability of a collateral attack as a remedy. The case, says counsel, stood on a different footing; where there was fraud on the statute the consequent nullity could be set-up wherever and whenever the order was sought to be given effect to.

12. We have considered these rival contentions. What Sri Rohtagi in substance says is that the jurisdiction of the Rent Controller to grant permission is conditional and that if the conditions upon which alone permission can be granted are not fulfilled, permission cannot be granted in invitum and that consequently the landlord cannot recover possession. Learned counsel says that parties cannot give the Rent Controller a jurisdiction which the legislature indicates he shall not have. Sri Rohtagi relied upon S.B. Noronah Vs. Prem Kumari Khanna,

13. It is true that in Nahronah’s case a challenge to the validity of the limited-tenancy was permitted even after the period of limited lease. But later cases have substantially denuded this position. In Vohra’s case, this Court laid down that a tenant who assails the permission u/s 21 on the ground that it was procured by fraud – a ground not dissimilar to the one urged in the present case – must approach the Rent Controller during the currency of the limited-tenancy for an adjudication of his pleas as soon as he discovers facts and circumstances which, according to him, vitiate the permission. It was held that whether it was a “mindless order” or one procured by fraud practised by the landlord or was the result of a collusion between landlord and tenant there was no justification for the tenant to wait till the landlord made his application for recovery of possession but there was every reason why the tenant should have made an immediate approach to the Rent Controller to have his pleas adjudicated as soon as facts and circumstances giving rise to such pleas came to his knowledge.

The reason why this requirement was built-in working the rights and obligations u/s 21 was the need to re-concile and harmonise certain competing claims that arise in administering the scheme of Section 21. This Court, referring to those competing claims observed:

What then is the remedy available to the tenant in a case where there was in fact a mere ritualistic observance of the procedure while granting permission for the creation of a limited tenancy or where such permission was procured by fraud practised by the landlord or was a result of collusion between the strong and the weak? Must the tenant in such cases be unceremoniously evicted without his plea being inquired into? The answer is obviously in the negative. At the same time must he be permitted to protract the delivery of possession of the leased premises to the landlord on a false plea of fraud or collusion or that there was a mechanical grant of permission and thus defeat the very object of the special procedure provided for the benefit of the landlord in Section 21? The answer must again be in the negative…

[see. p. 911]

The manner in which the Court harmonised and reconciled these competing and conflicting claims and interests was by insisting upon the tenant to approach the Rent Controller for adjudication of his pleas as soon as he discovered that the initial grant of permission stood vitiated. This was evolved as a part of policy of law for the reconciliation of divergent and competing claims. It was held:

…In our view these two competing claims must be harmonised…by insisting upon his approaching the Rent Controller during the currency of the limited tenancy for adjudication of his pleas no sooner he discovers facts and circumstances that tend to vitiate ab initio the initial grant of permission. Either it is a mechanical grant of permission or it is procured by fraud practised by the landlord or it is the result of collusion between two unequals but in each case there is no reason for the tenant to wait till the landlord makes his application for recovery of possession after the expiry of the fixed period u/s 21 but there is every reason why the tenant should make an immediate approach to the Rent Controller to have his pleas adjudicated by him as soon as facts and circumstances giving rise to such pleas come to his knowledge or are discovered by him with due diligence…

[see p. 911 &912]

This has been reiterated in the cases of Shiv Chander Kapoor and Yamuna Maloo.

14. It is difficult to reconcile the observations in Subhash Kumar Lata’s case with the pronouncements in other earlier and later cases. In view of the pronouncements of this Court as to the limitations on the permissible challenge to the exercise of jurisdiction u/s 21, any appeal to the remedy based on concept of nullity and collateral attack is inappropriate. Suffice it to say that in a collateral challenge the exercise is not the invalidation of a decision, but only to ascertain whether the decision “exists” in law at all and to rely upon incidents and effect of its “non-existence”. The authority of decided cases is to the effect that the permission granted must be presumed to be valid till set aside. Doctrine of collateral challenge will not apply to a decision which is valid ex-hypothesi and which has some presumptive existence, validity and effect in law. Such a decision can be invalidated by the right person in right proceedings brought at the right time. It is only a nullity stemming from lack of inherent jurisdiction or a proceeding that wears the brand of invalidity of its forehead that might afford a defence even against enforcement. Shri Sachhar is right in his contention that such a collateral challenge may not be available where there is no lack of inherent jurisdiction but what is disputed is only the existence or non-existence of facts which though collateral to the merits do require investigation into and adjudication upon their existence or non-existence on the basis of evidence. If the parties before the Rent Controller have admitted that the fact or the event which gives the Controller jurisdiction is in existence and there was no reason for the Controller to doubt the bona fides of that admission as to a fact or event, the Controller is under no obligation to make further enquiries on his own as to that factual state. The test of jurisdiction over the subject matter is whether the court or Tribunal can decide the case at all and not whether the court has authority to issue a particular kind of order in the course of deciding the case.

A learned author says:

A court is said to have jurisdiction of the subject matter of a particular controversy if the court has authority to hear and decide causes of a class to which the particular controversy belongs. In defining jurisdiction of the subject matter in these terms, the courts have emphasised that the jurisdiction of a court depends upon its right to decide the case and not upon the merits of its decision.

(See: Hugh B. Cox, “The Void Order and the Duty to Obey”, (1948) 16 U. Chi, L. Rev. 86.

15. The expressions ‘void’, ‘voidable’, ‘nullity’, as observed by the Lord Chancellor in London & Clyde side Estates Ltd. v. Aberdeen D.C. [1980] 1 WLR 182, may be misleading in so far as they are “supposed to present a court with the necessity of fitting a particular case into one or other of mutually exclusive and starkly contrasted compartments, compartments which in some cases (e.g. ‘void’ and ‘voidable’) are borrowed from the language of contract or status, and are not easily fitted to the requirements of administrative law.” Some observations of the Lord Chancellor are again worth re-calling:

… In this appeal we are in the field of the rapidly developing jurisprudence of administrative law, and we are considering the effect of non-compliance by a statutory authority with the statutory requirements affecting the discharge of one of its functions…

When Parliament lays down a statutory requirement for the exercise of legal authority it expects its authority to be obeyed down to the minutest detail. But what the courts have to decide in a particular case is the legal consequence of non-compliance on the rights of the subject viewed in the light of a concrete state of facts and a continuing chain of events. It may be that what the courts are faced with is not so much a stark choice of alternatives but a spectrum of possibilities in which one compartment or description fades gradually into another. At one end of this spectrum there may be cases in which a fundamental obligation may have been so outrageously and flagrantly ignored or defied that the subject may safely ignore what has been done and treat it as having no legal consequences upon himself. In such a case if the defaulting authority seeks to rely on its action it may be that the subject is entitled to use the defect in procedure simply as a shield or defence without having taken any positive action of his own…. But in a very great number of cases it may be in a majority of them, it may be necessary for a subject, in order to safeguard himself, to go to the court for declaration of his rights…

(emphasis supplied)

The contention of Shri Rohtagi as to this particular remedy being available to a tenant in such circumstances is, in the ultimate analysis, not as sound as it might at first sight appear. The expression ‘fraud on the statute’ is merely a figurative description of a colourable transaction to evade the provisions of a statute and does not, for purposes of choice of the remedy, distinguish itself from the consequences of fraud as vitiating the permission u/s 21 referred to in Vohra’s case.

16. Indeed, in Smt. Dhanwanti Vs. D.D. Gupta, it was held that permission u/s 21 for letting out the premises to the same tenant for limited periods more than once successively would not by itself and without more vitiate the subsequent grants. In one sense, the successive grants of permission would share the characteristics of post-facto grant.

17. In the circumstances and for the foregoing reasons, this appeal is allowed, the judgment of the High Court dated 29.11.1989 in SAO No. 384 of 1987 set aside and the order of the Rent Control Tribunal dated 17.10.1987 affirming the order of the Rent Controller dated 16.2.1987 restored

Parties are left to bear and pay their own costs in this appeal.


(1991) AIR(SC) 1233 : (1991) 1 CurLJ(CCR) 200 : (1991) 43 DLT 384 : (1990) 4 JT 628 : (1991) MPACJ 243 : (1991) RajdhaniLR 1 : (1991) 1 RCR(Rent) 96 : (1990) 2 SCALE 1251 : (1991) 1 SCC 556 : (1990) Sup3 SCR 508

What is a judicial decision

To define the words “Judicial” and “quasi-judicial” in the case of Cooper vs. Wilson, (1935) 2 K.B. 309 at p. 340:(166 L.J. K.B. 728). The relevant quotation reads thus:

“A true judicial decision presupposes an existing dispute between two or more parties, and then lavolves four requisites:(1) The presentation (not necessarily orally) of their case by the parties to the dispute (2) if the dispute between them is a question of fact the ascertainment of the last by means of evidence adduced by the parties to the dispute and often with the assistance of argument by or on behalf of the parties on the evidence ; (3) if the dispute between them is a question of law, the submission of legal argument by the parties, and (4) a decision which disposes of the whole matter by a finding upon the facts in dispute and application of the law of the land to the fest so found, including where required a ruling upon any disputed question of law. A quasi-judicial decision equally presuppose an existing dispute between two or more parties and invloves (1) and (2), but does not necessarily involve (3) and never involves (4) The place of (4) is in fact taken by administrative sanction, the character of which is determined by the Minister’s free choice.”

Judicial  a quasi-judicial

The other fundamental test which distinguishes a judicial from a quasi-judicial or administrative body is that the former decides controversies according to law, while the latter is not bound strictly to follow the law for its decision. The investigation of facts on evidence adduced by the parties may be a common feature in both judicial and quasi-judicial tribunals, but the difference between the two lies in the fact that in a judicial proceeding the Judge has got to apply to the facts found, the law of the land which is fixed and uniform. The quasi judicial tribunal on the other hand gives its decision on the difference between the parties not in accordance with fixed rules of law but on principles of administrative policy or convenience or what appears to be just and proper in the circumstances of a particular case. In other words, the process employed by an administrative tribunal in coming to its decision is not what is known as ‘judicial process’. See Ribson’s Justice and Administrative Law, p. 74. Sir Maurice Gwyer in his deposition before the Committee on Minister’s Powers appointed by the English Parliament in 1929 stated that “a clear distinction is to be drown between judicial and quasi-judicial powers.” The ‘judicial power’ was defined by the witness as a power to decide a question of legal right in a dispute between parties involving either a finding of fact or the application of a fixed rule or principle of law or involving both. “The quasi-judicial power.” he defined as meaning “the power of giving decisions on questions of difference of an administrative and not justiciable character which cannot be determined by reference to any fixed law or principle of law but are matters of administrative discretion and judgment. “ Vide Committees of Minister’s Powers, Minutes of Evd., Vol. II pages 15-16 and also Robson’s Justice and Administrative Law, p. 319. In Cooper vs. Wilson, (1937) 2 K. B. 309:(106 L. J. K. B. 728), Scott L. J. quoted with approval and adopted as the basis of his judgment the following passage for the report of the above committee:

“A true judicial decision presupposes an existing dispute between two or more parties, and then involves four requisites:(1) The presentation (not necessarily orally) of their case by the parties to the dispute; (2) if the dispute between them is a question of fact, the ascertainment of the fact by means of evidence adduced by the parties to the dispute and often with the assistance of argument by or on behalf of the parties on the evidence; (3) if the dispute between them is a question of law, the submission of legal argument by the parties; and (4) a decision which disposes of the whole matter by a finding upon the facts in dispute and an application of the law of the land to the facts so found including where required a ruling upon any disputed question of law. A quasi-judicial decision equally presupposes an existing dispute between two or more parties and involves (1) and (2) but does not necessarily involve (3) and never involves. (4). The place of (4) is in fact taken by administrative action, the character of which is determined by the Minister’s free choice.”

Business meaning of

The word “business” has been defined by the Act in S. 2 (5) of the Indian Income-tax Act, 1922 as follows:

“Business” includes any trade, commerce or manufacture or any adventure in the nature of trade, commerce or manufactures or any profession or vacation ….”

 It means any continued activity of a person which yields profits and which is in the nature of trade, commerce or manufactures. It may even be any adventure in the nature of trade, commerce or manufacture. A proviso was added to this definition in the year 1940 in these terms:

‘Provided further that all businesses to which this Act appiles carried on by the same person shall be treated as one business for the purposes of this Act.”

The effect of the proviso is that if a man is carrying on a number of activities whether of the same or of the different natures, all these various businesses are treated as one. The same person, if engaged in the manufacture of hardware, oils, textiles, motor tyres, bicycles and owning mills for his diverse activities in different places and also trading in merchandise and doing contract business is deemed to carry on a single business. All the businesses that he carries on are lumped together and treated as one business for the purpose of levying the tax and calculating the profits. The proviso has made an amalgam of all the businesses of one individual and it is in view of this amalgam that proviso 3 of S. 5 has to be considered. It seems to me that what has been amalgamated by the definition has again been made separate by the proviso to S. 5 If a number of businesses carried on by a person are situate in different places, than the effect of the proviso is to again treat them as separate business under the description of the phrase “part of a business.” In other words, if a man is carrying on manufacture in textiles in Bombay, a shop at Mysore, has a distillery in Allahabad and has an oil mill in Gwalior, then for the purpose of S. 5 all these four trades are part of the business within the meaning of proviso 3 to S. 5, one part situtate in one place and another part situate at another place and if any of these parts produce profits at the place of the business, that place being in an Indian State, than proviso 3 would have application. I think that the affect of the language of proviso 2 of S. 5 is to give colour to proviso 3 as being complementary to it and providing for converse case to those arising under this proviso concerning non-residents. Illustratively it may be said that proviso 2 would cover the case if the manufacturing business of the respondent was situate in Bombay and his sales exclusively were made at Raichur provided he was a non-resident. In that event excess profits duty would be chargeable on a part of the profits attributable to the part of the business in Bombay, or in other words, to those business operations that were being carried on in Bombay. The converse case where the manufacturing operations are being carried on in Raichur by a resident in India and the sales are made exclusively in Bombay is apparently covered by proviso 3 because a part of the business being situate in Raichur profits attributable to that part of the business out of the total sale proceeds could only be said to accrue at the place of manufacture.

The word ‘entertain’ meant not ‘receive’ or ‘accept’ but proceed to consider on merits’ or ‘adjudicate upon’.

The word ‘entertain’ is explained by a Divisional Bench of the Allahabad High Court as denoting the point of time at which an application to set aside the sale is heard by the court. The expression ‘entertain’, it is stated, does not mean the same thing as the filing of the application or admission of the application by the court. A similar view was again taken in Dhoom Chand Jain Vs. Chaman Lal Gupta and Another, , in which the learned Chief Justice Desai and Mr. Justice Dwivedi gave the same meaning to the expression ‘entertain’. It is observed by Dwivedi J. that the word ‘entertain’ in its application bears the meaning ‘admitting to consideration’. and therefore when the court cannot refuse to take an application which is backed by deposit or security, it cannot refuse judicially to consider it. In a single bench decision of the same court reported in Bawan Ram & Anr. v. Kuni Beharilal AIR 1961 All. 42, one of us (Bhargava, J.) had to consider the same rule. There the deposit had not been made within the period of limitation and the question had arisen whether the court could entertain the application or not. It was decided that the application could not be entertained because proviso (b) debarred the court from entertaining an objection unless the requirement of depositing the amount or furnishing security was complied with within the time prescribed. In that case of the word ‘entertain’ is not interpreted but it is held that the court cannot proceed to consider the application in the absence of deposit made within the time allowed by law. This case turned on the fact that the deposit was made out of time. In yet another case of the Allahabad High Court reported in Haji Rahim Bux & Sons and Ors. v. Firm Samiullah & Sons AIR 1963 All. 326, a division bench consisting of Chief Justice Desai and Mr. Justice S. D. Singh interpreted the words of O. 21, r. 90, by saying that the word ‘entertain’ meant not ‘receive’ or ‘accept’ but proceed to consider on merits’ or ‘adjudicate upon’.[(1968) AIR(SC) 488  LAKSHMI RATTAN ENGINEERING WORKS LTD.  Vs. ASSTT. COMMR. SALES TAX, KANPUR AND ANOTHER ]Continue Reading

What is the meaning of “Office”

The meaning to the word office’ given in the Statesman (P) Ltd. vs. H. R. Deb, AIR 1968 SC 1495. In the Statesman case, AIR 1968 SC 1495 this Court approved of the observations of Lord Wright in Macmillan vs. Guest, 1942 AC 561 to the following effect:

“The word “office” is of indefinite content. Its various meanings cover four columns of the New English Dictionary, but I take as the most relevant for purpose of this case the following:

“A position or place to which certain duties are attached, especially one of a more or less public character.”

It seems to us that in the context Justice Rowlatt’s definition in (1922) 8 Tax Cas 231 is the appropriate meaning to be applied to word ‘office’ in Article 191 of the Constitution.

Justice Rowlat observed at page No. 235:-

“Now it is argued, and to my mind argued most forcibly, that that shows that what those who use the language of the Act of 1842 meant, when they spoke of an office or an employment, was an office or employment which was a subsisting, permanent, substantive position, which had an existence independent from the person who filled it, which went on and was filled in succession by successive holders; and if you merely had a man who was engaged on whatever terms, to do duties which were assigned to him, his employment to do those duties did not create an office to which those duties were attached. He merely was employed to do certain things and that is an end of it; and if there was no office or employment existing in the case as a thing, the so-called office or employment was merely an aggregate of the activities of the particular man for the time being. And I think myself that that is sound. I am not going to decide that, because I think I ought not to in the state of the authorities, but my own view is that the people in 1842 who used this language meant by an office a substantive thing that existed apart from the holder.”

This definition was approved by Lord Atkinson at page 246.

29. This language was accepted as generally sufficient by Lord Atkin and Lord Writ in Mcmillan vs. Guest (H. M. Inspector of Taxes), (1943) 24 Tax Cas 190 Lord Atkin observed at page No. 201:-

“There is no statutory definition of “office”. Without adopting the sentence as a complete definition, one may treat the following expression of Rowlatt, J. in Great Western Rly. Co. vs. Bater, (1920) 3 KB 266 at page No. 274, adopted by Lord Atkinson in that case, (1922) 2 AC 1 at page No. 15, as a generally sufficient statement of the meaning of the word:

“an office or employment which was a subsisting, permanent, substantive position, which had an existence independent of the person who filled it, which went on and was filled in succession by successive holders.” Lord Wright at page No. 202 observed:

“The word “office” is of indefinite content; its various meanings cover four columns of the New English Dictionary, but I take as the most relevant for purposes of this case the following:

“A position or place to which certain “duties are attached, especially one of a more or less public character.” This, I think, roughly corresponds with such approaches to a definition as have been attempted in the authorities, in particular (1922) 2 AC 1, ……. …….. where the legal construction of these words, which had been in Schedule E since 1803 (43 Geo. III, c. 122, Section 175), was discussed.” 30. In Civil Appeal No. 1832 of 1967, D/- 15-10-1968 (SC) Mitter, J. speaking for this Court, quoted with approval the definition of Lord Wright. In our view there is no essential difference between the definitions given by Lord Wright and Lord Atkin. The Court of Appeal in the case of Mitchell vs. Ross, (1960) 2 All ER 218 at pages 225-226 thought that both the noble and learned Lords had accepted the language employed by Rowlatt, J. as generally sufficient. In Mahadeo’s case, Civil Appeal no. 1832 of 1967, D/- 15-10-1968 (SC) (supra) this Court was dealing with a panel of lawyers maintained by the Railway Administration and the lawyer were expected to watch cases. Clause (13) of the terms in that case read as follows:-

“You will be expected to watch cases coming up for hearing against this Railway in the various courts at UJB and give timely intimation of the same to this office. If no instructions regarding any particular case are received by you, you will be expected to appear in the court and obtain an adjournment to save the ex parte proceedings against this Railway in the Court. You will be paid ` 5 for every such adjournment if you are not entrusted with the conduct of the suit later on.”

31. That case in no way militates against the view which we have taken in this case. That case is more like the case of a standing counsel disqualified by the House of Commons. It is stated in Rogers on Elections, Vol. II, at page 10:-

“However in the Cambridge case (121 Journ. 220), in 1866, the return of Mr. Forsyth was avoided on the ground that he held a new office of profit under the Crown, within the 24th Section. In the scheme submitted to and approved by Her Majesty in Council was inserted the office of standing counsel with a certain yearly payment (in the scheme called “salary”) affixed to it, which Mr. Forsyth received, in addition to the usual fees of counsel. The Committee avoided the return …..”

Meaning of ‘Granted Land’

in K.T. Huchegowda v. Dy. Commissioner [(1994) 3 SCC 536], Supreme  Court held:

“8. On a plain reading, granted land will mean, any land granted by the Government to a person, who is a member of the Scheduled Castes or Scheduled Tribes which includes land allotted to such persons. Grant may be of different types; it may be by absolute transfer of the interest of the State Government to the person concerned; it may be only by transfer of the possession of the land, by way of allotment, without conveying the title over such land of the State Government. If by grant, the transferee has acquired absolute title to the land in question from the State Government, then subject to protection provided by the different provisions of the Act, he will be subject to the same period of limitation as is prescribed for other citizens by the provisions of the Limitation Act, in respect of extinguishment of title over land by adverse possession. On the other hand, if the land has been allotted by way of grant and the title remains with the State Government, then to extinguish the title that has remained of the State Government by adverse possession, by a transferee on the basis of an alienation made in his favour by an allottee, the period of limitation shall be 30 years. Incidentally, it may be mentioned that some of the States in order to protect the members of the Scheduled Tribes from being dispossessed from the lands which belong to them and of which they are absolute owners, for purpose of extinguishment of their title by adverse possession, have prescribed special period of limitation, saying that it shall be 30 years. In Bihar, vide Regulation No. 1 of 1969, in Article 65 of the Limitation Act, it has been prescribed that it would be 30 years in respect of immovable property belonging to a member of the Scheduled Tribes as specified in Part III to the Schedule to the Constitution (Scheduled Tribes) Order, 1950.

What is Goodwill

In Ramnik Vallabhdas Madhvani and others Versus Taraben Pravinlal Madhvani[AIR 2004 SC 1084 : (2003) 5 Suppl. SCR 230 : (2004) 1 SCC 497 ]

“goodwill”, as Lord Machaghten described ‘a thing very easy to describe, very difficult to define’, in Inland Revenue Commissioner vs. Muller and Co. (1901) AC 223).

67. The term ‘goodwill’ signifies the value of the business in the hands of a successor, so far as increased by the continuity of the undertaking being preserved in the shape of the right to use the old name and otherwise. It is something more than a mere chance of probability of old customers maintaining their connection, though this is a material part of the practical fruits. ‘goodwill’ may be the whole advantage belonging to the firm, its reputation as also connection thereof. It, thus, means that every affirmative advantage as contrasted with negative advantage that has been acquired in carrying on the business whether connected with the premises of business or its name or style everything connected with or carrying the benefit of the business.

68. In Halsbury’s Laws of England (Fourth Edition) volume 35 at page 114, the law is stated in the following terms :

“201. goodwill generally; right to use name; sale to a partner. The goodwill of the business carried on by a partnership forms part of the assets to be realised on distribution. If the goodwill is not sold, each part er may use the name of the firm, if by doing so he does not hold out the other partners as still being partners with him. If a partner agrees to retire and his partners buy his share but do not take any express assignment of the goodwill, they are not entitled to continue the use of his name as part of the firm name, and where a business is carried on under the name, solely or with any addition, of an outgoing partner who is till living and not bankrupt, a purchaser of the business including the goodwill is not entitled to use the name of the outgoing partner in such a way as to suggest that he is still connected with the business, unless the right to use the firm name is expressly assigned. On dissolution, a partner may advertise that he is no longer connected with a periodical that the firm publishes.

Where the goodwill becomes on dissolution the property of one of the partners (either by purchase in the ordinary way or pursuant to a provision in the articles), the outgoing partner or partners may not carry on a similar business in the name of the old firm, and may not solicit old customers”

69. The goodwill is generally considered to be an asset of the partnership. In the aformentioned volume of Halsbury’s Laws of England at page 116, it is further stated :

“204. When goodwill is to be treated as an asset. Although, generally, the goodwill should be included where, under the partnership articles, a general account and valuation is to be taken on the death of a partner, the value of the goodwill should not, in the absence of contrary agreement, be included in the firm’s periodical balance sheets; and, therefore, where the value of the share of a deceased partner is, by agreement, governed by the balance sheet, his estate is not entitled to treat the goodwill as an asset.

Where a surviving partner sells the partnership business, the estate of his deceased partner is entitled to a share of the purchase money representing the value, if any, of the goodwill; but, having regard to the rights of the surviving partners to carry on a similar business, this value may be infinitesimal.

It is unlawful for a medical practitioner whose name is entered on any list of medical practitioners undertaking to provide general medical services under the national health service to sell any part of the goodwill of his medical practice”

70. The goodwill has been claimed for the firm’s continuous business since 1954. The court has proceeded to calculate the amount of goodwill on the basis of the profits derived by the firm for the last five years on an average. It is not contended that such a method is unknown in commercial field. Whenever a firm is dissolved the value of the goodwill has to be worked out and divided between the partners.

  1. Income Tax Act, 1961—Section 45—goodwill is not asset and cannot be taxed under Capital gains.
  2. the Court will not award to the legal representatives of the deceased partner a share in the goodwill in the absence of an express stipulation to the contrary. The goodwill of a firm is an asset. In interpreting the deed of partnership, the Court will insist upon some indication that the right to a share in the assets is, by virtue of the agreement, that the surviving partners are entitled to carry on the business on the death of the partner, to be extinguished. In the absence of a provision expressly made of clearly implied, the normal rule that the share of a partner in the assets devolves upon his legal representatives will apply to the goodwill as well as to other assets.[Partnership Act, 1932—Sections 14, 42 and 46, 55(1 ) Khushal Khemgar Shah and others Versus Mrs. Khorshed Banu Dadiba Boatwalla and another [AIR 1970 SC 1147 : (1970) 3 SCR 689 : (1969) 1 SCC 415]

 

Nemo dat quod non habet means “no one gives what he doesn’t have”

Nemo plus iuris ad alium transferre potest quam ipse habet” rule, which means “one cannot transfer more rights than he has”

Supreme Court of India in The Morvi Mercantile Bank Ltd. And … vs Union Of India, Through The [ 1965 AIR 1954 ]

 

To the general rule expressed by the Maxim nemo dat quod non habet (no one can convey a better title than what he had), to facilitate mercantile transactions. the Indian Law has grafted some exceptions, in favour of bonafide pledgees by transfer of documents of title from persons. whether owners of goods who do not possess the full bundle of rights of ownership at the time the pledges are made, or their mercantile agents. To confer a right to effect a valid pledge by transfer of document of title relating to goods on persons with defects in their title to the goods. and on mercantile agents, and to deny it to the full owners thereof, is to introduce an incongruity into the Act. On the other hand, the real intention of the legislature will be carried out if the said right is conceded to the Full owner of goods and extended by construction to persons with defects in their title to the goods or to mercantile agents. A pledge being a bailment of goods under s. 172 of the Contract Act, the pledgee, as a bailee. will have the same remedies as the owner of the goods would have against a third person for deprivation of
the said goods or injury to them under s. 180 of the Act.

Indian  Contract  Act (9 of 1872), s.  178, Transfer  of Indian  Contract  Act (9 of 1872), s.  178, Transfer  ofProperty  Act (4 of 1882). ss. 4 and 137 and Indian Sale  of goods  Act (3 of 1930), ss. 30 and 53


Compare

Uniform Commercial Code (UCC) USA

Courts of equity[USA]

Sale of Goods Act 1979[UK]