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What is the summary of this judgment?
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The question of secondary packing was examined by this Court in Bombay Tyres International 's case (supra). There, this Court observed that for the purpose of determining the 'value ', broadly speaking both old section 4(a) and the new section 4(1)(a)speak of the price for sale in the course of whole sale trade of an article for delivery at the time and place of removal, namely, the factory gate. Where the price con templated under the old section 4(a) or under new section 4(1)(a) is not ascertainable, the price is determined under the old section 4(b) or the new section 4(1)(b). Now, the price of an article is related to its value (using this 486 term in a general sense) and into that value have poured several components, including those which have enriched its value and given to the article its marketability in the trade. Therefore, the expenses incurred on account of the several factors which have contributed to its value upto the date of sale, which apparently would be the date of deliv ery, are liable to be included. Consequently, where the sale is effected at the factory gate, expenses incurred by the assessee upto the date of delivery on account of storage charges, outward handling charges, interest on inventories (stocks carried by the manufacturer after clearance), charges for other services after delivery to the buyer, namely, after sales service and marketing and selling organ isation expenses including advertisement expenses marketing and selling organisation expenses and after sales service promote the marketability of the article and enter into its value in the trade.
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The Respondent assessee used to manufacture talcum powder and face powder and were clearing the same on payment of excise duty. The assessee claimed deduction of cost of packing for transportation in respect of small packings of powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was first approved by the Department but later the Department having noticed that the small packs were first packed in dozen, and thereafter packed in second ary packings for easy transportation to the wholesale deal er, disallowed the claim of deduction. The Assistant Collector in view of this Court 's decision in postmanufacturing expenses cases took the view that the amount claimed by the Respondent was not deductible and accordingly issued a show cause notice to the Respondent raising a demand on the respondent to pay the differential duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 P. for the period from 2.12.85 to 31.5.1986. The Asstt Collector by his order dated 27.2.87 disallowed the Respondent 's claim for exclusion of the cost of packing for transportation and thus rejected the claim. The Respondent preferred an appeal to the Collector of Customs but did not succeed and thus appealed to the Cus toms, Excise and (;old (Control) Tribunal. The Respondent relied on the decision of this Court in Union of India vs Godfrey Philips India Ltd.;, and contended that in view of the decision of this Court, the cost of third stage packing, the outer cartons, intended for transport could be included in the assessable value only if packing was necessary for the sale of goods in the wholesale market. The Tribunal however relying on the decision of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; held that the Cost of outer or bigger cartons in which the smaller cartons containing powder tins are 480 packed is not includible in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade. Being aggrieved by that decision the Revenue came up in appeal to this Court under Section 35L(b) of the Act. Allowing the appeal and remanding the case to the Tribu nal with directions, this Court, HELD: (Per Sabyasachi Mukharji, J. ) What is to be included in the value has to be determined in terms of Section 4(4)(d)(i) of the Act. [485F] The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is one in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. [490B C] In the present case, it has been factually found by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen. The same are then put in the master carton for purpose of delivery to wholesale dealers. [490C D] The correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the value. How much packing is necessary to make the goods marketable is a question of fact to be determined by application of the correct approach. Packing which is pri marily done or mainly done for protecting the goods, and not for making the goods marketable should not be included. [491H; 492A] The Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller 481 cartons are packed. The question is not whether these goods could be so sold but the question is whether these goods are so sold usually and as such used to become marketable in such manner. [492B C] (Per section Ranganathan, J.) Section 4(4)(d)(i) of the Act lays down that where goods are delivered by the factory gate in a packed condition, the cost of the packing should be included in the assessable value. The clause makes no distinction between primary and secondary packing or further subsequent packing. [492G] There is therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the assessable value, one should go by the conduct of the parties and the nature of the packing in which the goods generally are not, can be placed in the wholesale market. [493H; 494A] M/s. Hindustan Polymers vs The Collector of Central Excise, case, referred to.
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What is the summary of this judgment?
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Where the sale in the course of whole sale trade is effected by the assessee through its sales organisation at a place or places outside the factory gate, the expenses incurred by the assessee upto the date of delivery under the aforesaid heads cannot, on the same grounds, be deducted. This Court further observed that the new section 4(4)(d)(i) of the Act has made express provision for including the cost of packing in the determination of 'va lue ' for the purpose of excise duty. The packing, of which the cost is included, is the packing in which the goods are wrapped, contained or wound when the goods are delivered at the time of removal, (emphasis supplied). Therefore, the cost which is incurred for making the goods available in the wholesale market and in which the goods are generally avail able in such market, would be the 'value ' which is includi ble under section 4(4)(d)(i) of the Act. There is no dispute that the cost of primary packing, that is to say, the packing in which the article is contained and in which it is made marketable for the ordinary consumer, must be regarded as failing within section 4(4)(d)(i) of the Act. There is often, as in this case, secondary packing which consists of larger cartons in which a standard number of primary cartons (in the sense mentioned earlier) are packed.
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The Respondent assessee used to manufacture talcum powder and face powder and were clearing the same on payment of excise duty. The assessee claimed deduction of cost of packing for transportation in respect of small packings of powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was first approved by the Department but later the Department having noticed that the small packs were first packed in dozen, and thereafter packed in second ary packings for easy transportation to the wholesale deal er, disallowed the claim of deduction. The Assistant Collector in view of this Court 's decision in postmanufacturing expenses cases took the view that the amount claimed by the Respondent was not deductible and accordingly issued a show cause notice to the Respondent raising a demand on the respondent to pay the differential duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 P. for the period from 2.12.85 to 31.5.1986. The Asstt Collector by his order dated 27.2.87 disallowed the Respondent 's claim for exclusion of the cost of packing for transportation and thus rejected the claim. The Respondent preferred an appeal to the Collector of Customs but did not succeed and thus appealed to the Cus toms, Excise and (;old (Control) Tribunal. The Respondent relied on the decision of this Court in Union of India vs Godfrey Philips India Ltd.;, and contended that in view of the decision of this Court, the cost of third stage packing, the outer cartons, intended for transport could be included in the assessable value only if packing was necessary for the sale of goods in the wholesale market. The Tribunal however relying on the decision of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; held that the Cost of outer or bigger cartons in which the smaller cartons containing powder tins are 480 packed is not includible in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade. Being aggrieved by that decision the Revenue came up in appeal to this Court under Section 35L(b) of the Act. Allowing the appeal and remanding the case to the Tribu nal with directions, this Court, HELD: (Per Sabyasachi Mukharji, J. ) What is to be included in the value has to be determined in terms of Section 4(4)(d)(i) of the Act. [485F] The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is one in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. [490B C] In the present case, it has been factually found by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen. The same are then put in the master carton for purpose of delivery to wholesale dealers. [490C D] The correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the value. How much packing is necessary to make the goods marketable is a question of fact to be determined by application of the correct approach. Packing which is pri marily done or mainly done for protecting the goods, and not for making the goods marketable should not be included. [491H; 492A] The Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller 481 cartons are packed. The question is not whether these goods could be so sold but the question is whether these goods are so sold usually and as such used to become marketable in such manner. [492B C] (Per section Ranganathan, J.) Section 4(4)(d)(i) of the Act lays down that where goods are delivered by the factory gate in a packed condition, the cost of the packing should be included in the assessable value. The clause makes no distinction between primary and secondary packing or further subsequent packing. [492G] There is therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the assessable value, one should go by the conduct of the parties and the nature of the packing in which the goods generally are not, can be placed in the wholesale market. [493H; 494A] M/s. Hindustan Polymers vs The Collector of Central Excise, case, referred to.
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What is the summary of this judgment?
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The large cartons may be packed into even larger cartons for facilitating the easier transport of the goods by the wholesale dealer. The question with which this Court was concerned in that case was: is all the packing, no matter to what degree, in which the wholesale dealer takes delivery of the goods to be considered for including the cost thereof in the 'value '? Or does the law require a line to be drawn somewhere? This Court observed that one must remember that while packing is necessary to make the excisable article, marketable, the statutory provision calls for strict construction because the levy is sought to be extended beyond the manufactured article itself. Therefore, this Court observed that the 487 degree of secondary packing which is necessary for putting the excisable article in the condition in which it is gener ally sold in the wholesale market at the factory gate is the degree of packing whose cost can be included in the 'value ' of the article for the purpose of the excise duty. To that extent, this Court observed, the cost of secondary packing cannot be deducted from the wholesale cash price of the exciseable article at the factory gate.
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The Respondent assessee used to manufacture talcum powder and face powder and were clearing the same on payment of excise duty. The assessee claimed deduction of cost of packing for transportation in respect of small packings of powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was first approved by the Department but later the Department having noticed that the small packs were first packed in dozen, and thereafter packed in second ary packings for easy transportation to the wholesale deal er, disallowed the claim of deduction. The Assistant Collector in view of this Court 's decision in postmanufacturing expenses cases took the view that the amount claimed by the Respondent was not deductible and accordingly issued a show cause notice to the Respondent raising a demand on the respondent to pay the differential duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 P. for the period from 2.12.85 to 31.5.1986. The Asstt Collector by his order dated 27.2.87 disallowed the Respondent 's claim for exclusion of the cost of packing for transportation and thus rejected the claim. The Respondent preferred an appeal to the Collector of Customs but did not succeed and thus appealed to the Cus toms, Excise and (;old (Control) Tribunal. The Respondent relied on the decision of this Court in Union of India vs Godfrey Philips India Ltd.;, and contended that in view of the decision of this Court, the cost of third stage packing, the outer cartons, intended for transport could be included in the assessable value only if packing was necessary for the sale of goods in the wholesale market. The Tribunal however relying on the decision of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; held that the Cost of outer or bigger cartons in which the smaller cartons containing powder tins are 480 packed is not includible in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade. Being aggrieved by that decision the Revenue came up in appeal to this Court under Section 35L(b) of the Act. Allowing the appeal and remanding the case to the Tribu nal with directions, this Court, HELD: (Per Sabyasachi Mukharji, J. ) What is to be included in the value has to be determined in terms of Section 4(4)(d)(i) of the Act. [485F] The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is one in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. [490B C] In the present case, it has been factually found by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen. The same are then put in the master carton for purpose of delivery to wholesale dealers. [490C D] The correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the value. How much packing is necessary to make the goods marketable is a question of fact to be determined by application of the correct approach. Packing which is pri marily done or mainly done for protecting the goods, and not for making the goods marketable should not be included. [491H; 492A] The Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller 481 cartons are packed. The question is not whether these goods could be so sold but the question is whether these goods are so sold usually and as such used to become marketable in such manner. [492B C] (Per section Ranganathan, J.) Section 4(4)(d)(i) of the Act lays down that where goods are delivered by the factory gate in a packed condition, the cost of the packing should be included in the assessable value. The clause makes no distinction between primary and secondary packing or further subsequent packing. [492G] There is therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the assessable value, one should go by the conduct of the parties and the nature of the packing in which the goods generally are not, can be placed in the wholesale market. [493H; 494A] M/s. Hindustan Polymers vs The Collector of Central Excise, case, referred to.
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What is the summary of this judgment?
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It was further held therein that if any special secondary packing is provided by the assessee at the instance of a wholesale buyer which is not generally provided as a normal feature of the wholesale trade, the cost of the such packing shall be deducted from the wholesale cash price. Therefore, it is clear by virtue of that decision that the cost of 'packing which is neces sary to make the exciseable article marketable, that is to say, in which it is generally sold in the wholesale market at the factory gate ', is to be included. Therefore, accord ing to the said decision and by virtue of the terms of the section, the cost of that much of secondary packing, which is necessary only to put the exciseable good in condition in which it is generally sold in wholesale market is the degree of packing which cost can be included and not beyond that. In the application of this principle, about which there is no dispute, there has been some divergence of the empha sis put on by what criterion that cost should be determined. This question came up for consideration in Union of India vs Godfrey Philips India Ltd., [1985] Supp. 3 SCR 123.
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The Respondent assessee used to manufacture talcum powder and face powder and were clearing the same on payment of excise duty. The assessee claimed deduction of cost of packing for transportation in respect of small packings of powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was first approved by the Department but later the Department having noticed that the small packs were first packed in dozen, and thereafter packed in second ary packings for easy transportation to the wholesale deal er, disallowed the claim of deduction. The Assistant Collector in view of this Court 's decision in postmanufacturing expenses cases took the view that the amount claimed by the Respondent was not deductible and accordingly issued a show cause notice to the Respondent raising a demand on the respondent to pay the differential duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 P. for the period from 2.12.85 to 31.5.1986. The Asstt Collector by his order dated 27.2.87 disallowed the Respondent 's claim for exclusion of the cost of packing for transportation and thus rejected the claim. The Respondent preferred an appeal to the Collector of Customs but did not succeed and thus appealed to the Cus toms, Excise and (;old (Control) Tribunal. The Respondent relied on the decision of this Court in Union of India vs Godfrey Philips India Ltd.;, and contended that in view of the decision of this Court, the cost of third stage packing, the outer cartons, intended for transport could be included in the assessable value only if packing was necessary for the sale of goods in the wholesale market. The Tribunal however relying on the decision of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; held that the Cost of outer or bigger cartons in which the smaller cartons containing powder tins are 480 packed is not includible in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade. Being aggrieved by that decision the Revenue came up in appeal to this Court under Section 35L(b) of the Act. Allowing the appeal and remanding the case to the Tribu nal with directions, this Court, HELD: (Per Sabyasachi Mukharji, J. ) What is to be included in the value has to be determined in terms of Section 4(4)(d)(i) of the Act. [485F] The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is one in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. [490B C] In the present case, it has been factually found by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen. The same are then put in the master carton for purpose of delivery to wholesale dealers. [490C D] The correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the value. How much packing is necessary to make the goods marketable is a question of fact to be determined by application of the correct approach. Packing which is pri marily done or mainly done for protecting the goods, and not for making the goods marketable should not be included. [491H; 492A] The Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller 481 cartons are packed. The question is not whether these goods could be so sold but the question is whether these goods are so sold usually and as such used to become marketable in such manner. [492B C] (Per section Ranganathan, J.) Section 4(4)(d)(i) of the Act lays down that where goods are delivered by the factory gate in a packed condition, the cost of the packing should be included in the assessable value. The clause makes no distinction between primary and secondary packing or further subsequent packing. [492G] There is therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the assessable value, one should go by the conduct of the parties and the nature of the packing in which the goods generally are not, can be placed in the wholesale market. [493H; 494A] M/s. Hindustan Polymers vs The Collector of Central Excise, case, referred to.
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What is the summary of this judgment?
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There, Chief Justice Bhagwati observed that whenever a question arises whether the cost of any particular kind of secondary packing is liable to be included in the value of the arti cle, ' the question to be asked is does the packed condition in which the article is generally sold in the wholesale market at the factory gate include such secondary packing? The learned Chief Justice observed that if it does, it would be liable to be included in the value of the article for the purpose of excise duty. It, therefore, followed that if the packed condition in which the cigarettes manufactured by the respondents were generally sold in that case in the whole sale market at the factory gate included packing in corru gated fibre board containers, the cost of such corrugated fibre board containers was liable to be included in the value of the cigarettes for the purpose of excise duty. The learned Chief Justice further observed that the condition for applicability of the inclusive definition of "value" in section 4(4)(d)(i) of the act is that the goods are delivered at the time of removal "in a packed condition" and where this condition is satisfied, the "value" of the goods would include "the cost of such packing" and "such packing" must obviously mean the packing in which the goods are when they are 488 delivered at the time of removal. Therefore, according to the learned Chief Justice, the question to be asked is what is the packed condition in which the goods are when deliv ered at the time of removal? Whatever is the packing of the goods at the time when they are delivered at the time of removal, the cost of such packing would be liable to be included in the 'value ' of the goods.
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The Respondent assessee used to manufacture talcum powder and face powder and were clearing the same on payment of excise duty. The assessee claimed deduction of cost of packing for transportation in respect of small packings of powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was first approved by the Department but later the Department having noticed that the small packs were first packed in dozen, and thereafter packed in second ary packings for easy transportation to the wholesale deal er, disallowed the claim of deduction. The Assistant Collector in view of this Court 's decision in postmanufacturing expenses cases took the view that the amount claimed by the Respondent was not deductible and accordingly issued a show cause notice to the Respondent raising a demand on the respondent to pay the differential duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 P. for the period from 2.12.85 to 31.5.1986. The Asstt Collector by his order dated 27.2.87 disallowed the Respondent 's claim for exclusion of the cost of packing for transportation and thus rejected the claim. The Respondent preferred an appeal to the Collector of Customs but did not succeed and thus appealed to the Cus toms, Excise and (;old (Control) Tribunal. The Respondent relied on the decision of this Court in Union of India vs Godfrey Philips India Ltd.;, and contended that in view of the decision of this Court, the cost of third stage packing, the outer cartons, intended for transport could be included in the assessable value only if packing was necessary for the sale of goods in the wholesale market. The Tribunal however relying on the decision of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; held that the Cost of outer or bigger cartons in which the smaller cartons containing powder tins are 480 packed is not includible in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade. Being aggrieved by that decision the Revenue came up in appeal to this Court under Section 35L(b) of the Act. Allowing the appeal and remanding the case to the Tribu nal with directions, this Court, HELD: (Per Sabyasachi Mukharji, J. ) What is to be included in the value has to be determined in terms of Section 4(4)(d)(i) of the Act. [485F] The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is one in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. [490B C] In the present case, it has been factually found by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen. The same are then put in the master carton for purpose of delivery to wholesale dealers. [490C D] The correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the value. How much packing is necessary to make the goods marketable is a question of fact to be determined by application of the correct approach. Packing which is pri marily done or mainly done for protecting the goods, and not for making the goods marketable should not be included. [491H; 492A] The Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller 481 cartons are packed. The question is not whether these goods could be so sold but the question is whether these goods are so sold usually and as such used to become marketable in such manner. [492B C] (Per section Ranganathan, J.) Section 4(4)(d)(i) of the Act lays down that where goods are delivered by the factory gate in a packed condition, the cost of the packing should be included in the assessable value. The clause makes no distinction between primary and secondary packing or further subsequent packing. [492G] There is therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the assessable value, one should go by the conduct of the parties and the nature of the packing in which the goods generally are not, can be placed in the wholesale market. [493H; 494A] M/s. Hindustan Polymers vs The Collector of Central Excise, case, referred to.
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What is the summary of this judgment?
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The Explanation to section 4(4)(d)(i) of the Act provides an exclusive definition of the term "packing" and it includes not only outer packing but also what may be called inner packing. The question that the Chief Justice posed was not for what purpose a particu lar kind of packing was done. The test was whether a partic ular kind of packing was done in order to put the goods in the condition in which these were generally sold in the wholesale market at the factory gate and if these were generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includi ble in the value of the goods for assessment to excise duty. Pathak, J. (as the learned Chief Justice was then) and Sen, J. gave separate judgments in the aforesaid case. Setting out the passage from the Bombay Tyres International 's case (supra), which is referred to hereinbefore, Pathak, J. posed the question: is the packing necessary for putting the cigarettes in the condition in which they are generally sold in the wholesale market at the factory gate?
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The Respondent assessee used to manufacture talcum powder and face powder and were clearing the same on payment of excise duty. The assessee claimed deduction of cost of packing for transportation in respect of small packings of powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was first approved by the Department but later the Department having noticed that the small packs were first packed in dozen, and thereafter packed in second ary packings for easy transportation to the wholesale deal er, disallowed the claim of deduction. The Assistant Collector in view of this Court 's decision in postmanufacturing expenses cases took the view that the amount claimed by the Respondent was not deductible and accordingly issued a show cause notice to the Respondent raising a demand on the respondent to pay the differential duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 P. for the period from 2.12.85 to 31.5.1986. The Asstt Collector by his order dated 27.2.87 disallowed the Respondent 's claim for exclusion of the cost of packing for transportation and thus rejected the claim. The Respondent preferred an appeal to the Collector of Customs but did not succeed and thus appealed to the Cus toms, Excise and (;old (Control) Tribunal. The Respondent relied on the decision of this Court in Union of India vs Godfrey Philips India Ltd.;, and contended that in view of the decision of this Court, the cost of third stage packing, the outer cartons, intended for transport could be included in the assessable value only if packing was necessary for the sale of goods in the wholesale market. The Tribunal however relying on the decision of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; held that the Cost of outer or bigger cartons in which the smaller cartons containing powder tins are 480 packed is not includible in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade. Being aggrieved by that decision the Revenue came up in appeal to this Court under Section 35L(b) of the Act. Allowing the appeal and remanding the case to the Tribu nal with directions, this Court, HELD: (Per Sabyasachi Mukharji, J. ) What is to be included in the value has to be determined in terms of Section 4(4)(d)(i) of the Act. [485F] The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is one in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. [490B C] In the present case, it has been factually found by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen. The same are then put in the master carton for purpose of delivery to wholesale dealers. [490C D] The correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the value. How much packing is necessary to make the goods marketable is a question of fact to be determined by application of the correct approach. Packing which is pri marily done or mainly done for protecting the goods, and not for making the goods marketable should not be included. [491H; 492A] The Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller 481 cartons are packed. The question is not whether these goods could be so sold but the question is whether these goods are so sold usually and as such used to become marketable in such manner. [492B C] (Per section Ranganathan, J.) Section 4(4)(d)(i) of the Act lays down that where goods are delivered by the factory gate in a packed condition, the cost of the packing should be included in the assessable value. The clause makes no distinction between primary and secondary packing or further subsequent packing. [492G] There is therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the assessable value, one should go by the conduct of the parties and the nature of the packing in which the goods generally are not, can be placed in the wholesale market. [493H; 494A] M/s. Hindustan Polymers vs The Collector of Central Excise, case, referred to.
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What is the summary of this judgment?
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And answering that question, Pathak, J. held it is not. It is true that there is a divergence between the views of Bhagwati C J, Pathak, J and Sen, J. But in my opinion, there is a unanimi ty in the test that is to be applied, that is to say, that much of the cost would be included only which is necessary for putting the article in the condition in which it is generally sold in the wholesale market. The principle behind this is in order for manufacture to be taxable, article must become goods. In order to become goods, these must come to the market or be capable of coming to the market as definite and identifiable goods. So whatever expenses are necessary for making that possible, that much of the cost would be included in the "value".
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The Respondent assessee used to manufacture talcum powder and face powder and were clearing the same on payment of excise duty. The assessee claimed deduction of cost of packing for transportation in respect of small packings of powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was first approved by the Department but later the Department having noticed that the small packs were first packed in dozen, and thereafter packed in second ary packings for easy transportation to the wholesale deal er, disallowed the claim of deduction. The Assistant Collector in view of this Court 's decision in postmanufacturing expenses cases took the view that the amount claimed by the Respondent was not deductible and accordingly issued a show cause notice to the Respondent raising a demand on the respondent to pay the differential duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 P. for the period from 2.12.85 to 31.5.1986. The Asstt Collector by his order dated 27.2.87 disallowed the Respondent 's claim for exclusion of the cost of packing for transportation and thus rejected the claim. The Respondent preferred an appeal to the Collector of Customs but did not succeed and thus appealed to the Cus toms, Excise and (;old (Control) Tribunal. The Respondent relied on the decision of this Court in Union of India vs Godfrey Philips India Ltd.;, and contended that in view of the decision of this Court, the cost of third stage packing, the outer cartons, intended for transport could be included in the assessable value only if packing was necessary for the sale of goods in the wholesale market. The Tribunal however relying on the decision of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; held that the Cost of outer or bigger cartons in which the smaller cartons containing powder tins are 480 packed is not includible in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade. Being aggrieved by that decision the Revenue came up in appeal to this Court under Section 35L(b) of the Act. Allowing the appeal and remanding the case to the Tribu nal with directions, this Court, HELD: (Per Sabyasachi Mukharji, J. ) What is to be included in the value has to be determined in terms of Section 4(4)(d)(i) of the Act. [485F] The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is one in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. [490B C] In the present case, it has been factually found by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen. The same are then put in the master carton for purpose of delivery to wholesale dealers. [490C D] The correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the value. How much packing is necessary to make the goods marketable is a question of fact to be determined by application of the correct approach. Packing which is pri marily done or mainly done for protecting the goods, and not for making the goods marketable should not be included. [491H; 492A] The Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller 481 cartons are packed. The question is not whether these goods could be so sold but the question is whether these goods are so sold usually and as such used to become marketable in such manner. [492B C] (Per section Ranganathan, J.) Section 4(4)(d)(i) of the Act lays down that where goods are delivered by the factory gate in a packed condition, the cost of the packing should be included in the assessable value. The clause makes no distinction between primary and secondary packing or further subsequent packing. [492G] There is therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the assessable value, one should go by the conduct of the parties and the nature of the packing in which the goods generally are not, can be placed in the wholesale market. [493H; 494A] M/s. Hindustan Polymers vs The Collector of Central Excise, case, referred to.
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What is the summary of this judgment?
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But what is subsequent to that, that is to say, any cost merely facilitating transport or merely ensuring security in transit are costs which are post manufacture, i.e. after articles have become goods as a result of manufacture and are capable of becoming manufac tured and thereafter dealt with. This, in my opinion, is the true test and read in that light, I do not find that there is really any divergence of opinion between Bhagwati, C J, Pathak, J. and Sen, J. of course, there is divergence of emphasis in the approach in which the question has to be looked into. This aspect of the matter was also dealt with by this Court in M/s Hindustan Polymers vs The Collector of Central Excise, Appeals Nos. 4339 41 of 1986) judgment in 489 which was delivered on 23rd August, 1989, where one of us (Sabyasachi Mukharji, J) after analysing these several cases of this Court observed that: "In order, therefore, to be manufacture, there must be activity which brings transformation to the article in such a manner that different and distinct article comes into being which is known as such in the market. If in order to be able to put it in the market, a certain amount of packing or user of containers or wrappers or putting them either in drums or containers, are required, then the value or the cost of such wrapper or container or drum must be included in the assessable value and if the price at which the goods are sold does not include that value then it must be so included by the very force of the terms of the section."
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The Respondent assessee used to manufacture talcum powder and face powder and were clearing the same on payment of excise duty. The assessee claimed deduction of cost of packing for transportation in respect of small packings of powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was first approved by the Department but later the Department having noticed that the small packs were first packed in dozen, and thereafter packed in second ary packings for easy transportation to the wholesale deal er, disallowed the claim of deduction. The Assistant Collector in view of this Court 's decision in postmanufacturing expenses cases took the view that the amount claimed by the Respondent was not deductible and accordingly issued a show cause notice to the Respondent raising a demand on the respondent to pay the differential duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 P. for the period from 2.12.85 to 31.5.1986. The Asstt Collector by his order dated 27.2.87 disallowed the Respondent 's claim for exclusion of the cost of packing for transportation and thus rejected the claim. The Respondent preferred an appeal to the Collector of Customs but did not succeed and thus appealed to the Cus toms, Excise and (;old (Control) Tribunal. The Respondent relied on the decision of this Court in Union of India vs Godfrey Philips India Ltd.;, and contended that in view of the decision of this Court, the cost of third stage packing, the outer cartons, intended for transport could be included in the assessable value only if packing was necessary for the sale of goods in the wholesale market. The Tribunal however relying on the decision of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; held that the Cost of outer or bigger cartons in which the smaller cartons containing powder tins are 480 packed is not includible in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade. Being aggrieved by that decision the Revenue came up in appeal to this Court under Section 35L(b) of the Act. Allowing the appeal and remanding the case to the Tribu nal with directions, this Court, HELD: (Per Sabyasachi Mukharji, J. ) What is to be included in the value has to be determined in terms of Section 4(4)(d)(i) of the Act. [485F] The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is one in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. [490B C] In the present case, it has been factually found by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen. The same are then put in the master carton for purpose of delivery to wholesale dealers. [490C D] The correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the value. How much packing is necessary to make the goods marketable is a question of fact to be determined by application of the correct approach. Packing which is pri marily done or mainly done for protecting the goods, and not for making the goods marketable should not be included. [491H; 492A] The Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller 481 cartons are packed. The question is not whether these goods could be so sold but the question is whether these goods are so sold usually and as such used to become marketable in such manner. [492B C] (Per section Ranganathan, J.) Section 4(4)(d)(i) of the Act lays down that where goods are delivered by the factory gate in a packed condition, the cost of the packing should be included in the assessable value. The clause makes no distinction between primary and secondary packing or further subsequent packing. [492G] There is therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the assessable value, one should go by the conduct of the parties and the nature of the packing in which the goods generally are not, can be placed in the wholesale market. [493H; 494A] M/s. Hindustan Polymers vs The Collector of Central Excise, case, referred to.
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What is the summary of this judgment?
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Therefore, in all cases, according to that decision, the question must be examined whether packing, and if so, what packing is necessary to make the article marketable as such or could these goods be sold without the containers, drums or packing? This Court in that case took into account the fact that 90% of the goods were delivered in tankers belong ing to the assessee and only 10% of the goods were in packed condition at the time of removal. This was taken as an indicia of in what condition of packing the goods are sold. As mentioned hereinbefore, that principle has been clearly laid down in the Bombay Tyres International 's case (supra) in the sense that only that degree of secondary packing which is necessary for putting the assessable article in the condition in which it is generally sold in the wholesale market should be included in the 'value ' of the article. The majority judgment in Godfrey Philips ' case (supra) also clarified this position. It is true that Pathak, J. and Sen, J. made it clear that secondary packing does for the purpose of "facilitating transport and smooth transit of the goods to be delivered to the buyer in the wholesale trade would not be included in the value".
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The Respondent assessee used to manufacture talcum powder and face powder and were clearing the same on payment of excise duty. The assessee claimed deduction of cost of packing for transportation in respect of small packings of powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was first approved by the Department but later the Department having noticed that the small packs were first packed in dozen, and thereafter packed in second ary packings for easy transportation to the wholesale deal er, disallowed the claim of deduction. The Assistant Collector in view of this Court 's decision in postmanufacturing expenses cases took the view that the amount claimed by the Respondent was not deductible and accordingly issued a show cause notice to the Respondent raising a demand on the respondent to pay the differential duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 P. for the period from 2.12.85 to 31.5.1986. The Asstt Collector by his order dated 27.2.87 disallowed the Respondent 's claim for exclusion of the cost of packing for transportation and thus rejected the claim. The Respondent preferred an appeal to the Collector of Customs but did not succeed and thus appealed to the Cus toms, Excise and (;old (Control) Tribunal. The Respondent relied on the decision of this Court in Union of India vs Godfrey Philips India Ltd.;, and contended that in view of the decision of this Court, the cost of third stage packing, the outer cartons, intended for transport could be included in the assessable value only if packing was necessary for the sale of goods in the wholesale market. The Tribunal however relying on the decision of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; held that the Cost of outer or bigger cartons in which the smaller cartons containing powder tins are 480 packed is not includible in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade. Being aggrieved by that decision the Revenue came up in appeal to this Court under Section 35L(b) of the Act. Allowing the appeal and remanding the case to the Tribu nal with directions, this Court, HELD: (Per Sabyasachi Mukharji, J. ) What is to be included in the value has to be determined in terms of Section 4(4)(d)(i) of the Act. [485F] The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is one in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. [490B C] In the present case, it has been factually found by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen. The same are then put in the master carton for purpose of delivery to wholesale dealers. [490C D] The correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the value. How much packing is necessary to make the goods marketable is a question of fact to be determined by application of the correct approach. Packing which is pri marily done or mainly done for protecting the goods, and not for making the goods marketable should not be included. [491H; 492A] The Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller 481 cartons are packed. The question is not whether these goods could be so sold but the question is whether these goods are so sold usually and as such used to become marketable in such manner. [492B C] (Per section Ranganathan, J.) Section 4(4)(d)(i) of the Act lays down that where goods are delivered by the factory gate in a packed condition, the cost of the packing should be included in the assessable value. The clause makes no distinction between primary and secondary packing or further subsequent packing. [492G] There is therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the assessable value, one should go by the conduct of the parties and the nature of the packing in which the goods generally are not, can be placed in the wholesale market. [493H; 494A] M/s. Hindustan Polymers vs The Collector of Central Excise, case, referred to.
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What is the summary of this judgment?
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Chief Justice Bhagwati held in the said case that the fibre board containers in which the cigarettes were packed fell within the definition of 'packing ' in the Explanation to section 4(4)(d)(i) and if these formed part of the packing in which the goods were packed when delivered at the time of removal, then such cost of corrugated fibre board containers would be liable to be included in the value of cigarettes. But Chief Justice emphasised that the test to determine whether the cost of any particular kind of secondary packing is liable to be included in the value of the article is whether a particular kind of packing is done in order to put the goods in the condition in which they 490 are generally sold in the wholesale market at the factory gate. In my opinion, the views expressed by the majority of the Judges in Godfrey Philips ' case (supra) were in conso nance with the view of the this Court in the Bombay Tyres International 's case (supra). The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is done in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. In the present case, it has been factually found as indicated hereinbefore, by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen. The same are then put in the master carton for purpose of delivery to wholesale dealers.
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The Respondent assessee used to manufacture talcum powder and face powder and were clearing the same on payment of excise duty. The assessee claimed deduction of cost of packing for transportation in respect of small packings of powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was first approved by the Department but later the Department having noticed that the small packs were first packed in dozen, and thereafter packed in second ary packings for easy transportation to the wholesale deal er, disallowed the claim of deduction. The Assistant Collector in view of this Court 's decision in postmanufacturing expenses cases took the view that the amount claimed by the Respondent was not deductible and accordingly issued a show cause notice to the Respondent raising a demand on the respondent to pay the differential duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 P. for the period from 2.12.85 to 31.5.1986. The Asstt Collector by his order dated 27.2.87 disallowed the Respondent 's claim for exclusion of the cost of packing for transportation and thus rejected the claim. The Respondent preferred an appeal to the Collector of Customs but did not succeed and thus appealed to the Cus toms, Excise and (;old (Control) Tribunal. The Respondent relied on the decision of this Court in Union of India vs Godfrey Philips India Ltd.;, and contended that in view of the decision of this Court, the cost of third stage packing, the outer cartons, intended for transport could be included in the assessable value only if packing was necessary for the sale of goods in the wholesale market. The Tribunal however relying on the decision of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; held that the Cost of outer or bigger cartons in which the smaller cartons containing powder tins are 480 packed is not includible in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade. Being aggrieved by that decision the Revenue came up in appeal to this Court under Section 35L(b) of the Act. Allowing the appeal and remanding the case to the Tribu nal with directions, this Court, HELD: (Per Sabyasachi Mukharji, J. ) What is to be included in the value has to be determined in terms of Section 4(4)(d)(i) of the Act. [485F] The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is one in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. [490B C] In the present case, it has been factually found by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen. The same are then put in the master carton for purpose of delivery to wholesale dealers. [490C D] The correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the value. How much packing is necessary to make the goods marketable is a question of fact to be determined by application of the correct approach. Packing which is pri marily done or mainly done for protecting the goods, and not for making the goods marketable should not be included. [491H; 492A] The Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller 481 cartons are packed. The question is not whether these goods could be so sold but the question is whether these goods are so sold usually and as such used to become marketable in such manner. [492B C] (Per section Ranganathan, J.) Section 4(4)(d)(i) of the Act lays down that where goods are delivered by the factory gate in a packed condition, the cost of the packing should be included in the assessable value. The clause makes no distinction between primary and secondary packing or further subsequent packing. [492G] There is therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the assessable value, one should go by the conduct of the parties and the nature of the packing in which the goods generally are not, can be placed in the wholesale market. [493H; 494A] M/s. Hindustan Polymers vs The Collector of Central Excise, case, referred to.
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What is the summary of this judgment?
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But in Godfrey Philips ' case (supra), the corrugated fibre board containers were employed for the purpose of avoiding damage or injury during transit. On the other hand, in this case, it was found that there was no damage or injury to the tins or plastic containers employed as a primary packing even if the goods are transported without the outer packing. The second point is that cigarettes are sold in cartons of 200 cigarettes each, even in wholesale trade. That is not the case in the appellants ' wholesale trade herein where the goods are sold by number of dozens and in some cases by numbers of tins or other packings which are primary packing. Therefore, it cannot be said that the outer cartons are employed only for the purpose of avoiding damage or injury to the goods during transit. But it may be indicative of the fact that the goods are so sold.
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The Respondent assessee used to manufacture talcum powder and face powder and were clearing the same on payment of excise duty. The assessee claimed deduction of cost of packing for transportation in respect of small packings of powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was first approved by the Department but later the Department having noticed that the small packs were first packed in dozen, and thereafter packed in second ary packings for easy transportation to the wholesale deal er, disallowed the claim of deduction. The Assistant Collector in view of this Court 's decision in postmanufacturing expenses cases took the view that the amount claimed by the Respondent was not deductible and accordingly issued a show cause notice to the Respondent raising a demand on the respondent to pay the differential duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 P. for the period from 2.12.85 to 31.5.1986. The Asstt Collector by his order dated 27.2.87 disallowed the Respondent 's claim for exclusion of the cost of packing for transportation and thus rejected the claim. The Respondent preferred an appeal to the Collector of Customs but did not succeed and thus appealed to the Cus toms, Excise and (;old (Control) Tribunal. The Respondent relied on the decision of this Court in Union of India vs Godfrey Philips India Ltd.;, and contended that in view of the decision of this Court, the cost of third stage packing, the outer cartons, intended for transport could be included in the assessable value only if packing was necessary for the sale of goods in the wholesale market. The Tribunal however relying on the decision of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; held that the Cost of outer or bigger cartons in which the smaller cartons containing powder tins are 480 packed is not includible in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade. Being aggrieved by that decision the Revenue came up in appeal to this Court under Section 35L(b) of the Act. Allowing the appeal and remanding the case to the Tribu nal with directions, this Court, HELD: (Per Sabyasachi Mukharji, J. ) What is to be included in the value has to be determined in terms of Section 4(4)(d)(i) of the Act. [485F] The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is one in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. [490B C] In the present case, it has been factually found by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen. The same are then put in the master carton for purpose of delivery to wholesale dealers. [490C D] The correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the value. How much packing is necessary to make the goods marketable is a question of fact to be determined by application of the correct approach. Packing which is pri marily done or mainly done for protecting the goods, and not for making the goods marketable should not be included. [491H; 492A] The Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller 481 cartons are packed. The question is not whether these goods could be so sold but the question is whether these goods are so sold usually and as such used to become marketable in such manner. [492B C] (Per section Ranganathan, J.) Section 4(4)(d)(i) of the Act lays down that where goods are delivered by the factory gate in a packed condition, the cost of the packing should be included in the assessable value. The clause makes no distinction between primary and secondary packing or further subsequent packing. [492G] There is therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the assessable value, one should go by the conduct of the parties and the nature of the packing in which the goods generally are not, can be placed in the wholesale market. [493H; 494A] M/s. Hindustan Polymers vs The Collector of Central Excise, case, referred to.
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What is the summary of this judgment?
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It may be mentioned in this connection that our atten tion was drawn to the unanimous order of three Judge Bench presided over by the Chief Justice Bhagwati of this Court in Civil Appeals Nos. 642 45 of 1982 in Geep Industrial Syndi cate Ltd. vs The Union of India & Ors. There, the question that arose for determination was whether the cost of second ary packing in wooden boxes was liable to be added in deter mination of the value of batteries and torches for the purpose of excise duty. The torches and batteries manufac tured by the appellants were first packed in polythene boxes and then these polythene boxes were placed in cardboard cartons. There were certain varieties of batteries which were packed directly in cardboard cartons. There was 491 no doubt that packing in polythene bags and cardboard car tons was includible in the determination of the value of batteries and torches for the purpose of levy of excise duty.
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The Respondent assessee used to manufacture talcum powder and face powder and were clearing the same on payment of excise duty. The assessee claimed deduction of cost of packing for transportation in respect of small packings of powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was first approved by the Department but later the Department having noticed that the small packs were first packed in dozen, and thereafter packed in second ary packings for easy transportation to the wholesale deal er, disallowed the claim of deduction. The Assistant Collector in view of this Court 's decision in postmanufacturing expenses cases took the view that the amount claimed by the Respondent was not deductible and accordingly issued a show cause notice to the Respondent raising a demand on the respondent to pay the differential duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 P. for the period from 2.12.85 to 31.5.1986. The Asstt Collector by his order dated 27.2.87 disallowed the Respondent 's claim for exclusion of the cost of packing for transportation and thus rejected the claim. The Respondent preferred an appeal to the Collector of Customs but did not succeed and thus appealed to the Cus toms, Excise and (;old (Control) Tribunal. The Respondent relied on the decision of this Court in Union of India vs Godfrey Philips India Ltd.;, and contended that in view of the decision of this Court, the cost of third stage packing, the outer cartons, intended for transport could be included in the assessable value only if packing was necessary for the sale of goods in the wholesale market. The Tribunal however relying on the decision of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; held that the Cost of outer or bigger cartons in which the smaller cartons containing powder tins are 480 packed is not includible in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade. Being aggrieved by that decision the Revenue came up in appeal to this Court under Section 35L(b) of the Act. Allowing the appeal and remanding the case to the Tribu nal with directions, this Court, HELD: (Per Sabyasachi Mukharji, J. ) What is to be included in the value has to be determined in terms of Section 4(4)(d)(i) of the Act. [485F] The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is one in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. [490B C] In the present case, it has been factually found by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen. The same are then put in the master carton for purpose of delivery to wholesale dealers. [490C D] The correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the value. How much packing is necessary to make the goods marketable is a question of fact to be determined by application of the correct approach. Packing which is pri marily done or mainly done for protecting the goods, and not for making the goods marketable should not be included. [491H; 492A] The Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller 481 cartons are packed. The question is not whether these goods could be so sold but the question is whether these goods are so sold usually and as such used to become marketable in such manner. [492B C] (Per section Ranganathan, J.) Section 4(4)(d)(i) of the Act lays down that where goods are delivered by the factory gate in a packed condition, the cost of the packing should be included in the assessable value. The clause makes no distinction between primary and secondary packing or further subsequent packing. [492G] There is therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the assessable value, one should go by the conduct of the parties and the nature of the packing in which the goods generally are not, can be placed in the wholesale market. [493H; 494A] M/s. Hindustan Polymers vs The Collector of Central Excise, case, referred to.
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What is the summary of this judgment?
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The question was whether the wooden boxes in which the cardboard cartons were placed at the time of delivery at the factory gate was to be includible in the value. There was some dispute between the parties whether the cardboard cartons were packed in wooden boxes in all cases. It was stated that when they were delivered in the course of the wholesale trade at the factory gate, they were not packed in wooden boxes as a matter of course but they were packed in wooden boxes only in those cases where delivery was taken by wholesale dealers outside the city of Allahabad in that case. This Court found that it was not necessary to deter mine the disputed question of fact. It was held that even if the cardboard cartons were packed in wooden boxes in all cases, it was clear that the cost of such secondary packing in wooden boxes was not includible in determination of the value of batteries and torches. This Court agreed with the Godfrey Philips 's case (supra) that corrugated fibreboard containers were used as secondary packing only in order to ensure cartons or outers against injury or damage during transport and that it was not necessary for putting the cigarettes in the corrugated fibreboard containers for their sale in the wholesale market at the factory gate and the cost of such secondary packing was therefore not liable to be included in determination of the value of the cigarettes for the purpose of excise duty.
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The Respondent assessee used to manufacture talcum powder and face powder and were clearing the same on payment of excise duty. The assessee claimed deduction of cost of packing for transportation in respect of small packings of powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was first approved by the Department but later the Department having noticed that the small packs were first packed in dozen, and thereafter packed in second ary packings for easy transportation to the wholesale deal er, disallowed the claim of deduction. The Assistant Collector in view of this Court 's decision in postmanufacturing expenses cases took the view that the amount claimed by the Respondent was not deductible and accordingly issued a show cause notice to the Respondent raising a demand on the respondent to pay the differential duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 P. for the period from 2.12.85 to 31.5.1986. The Asstt Collector by his order dated 27.2.87 disallowed the Respondent 's claim for exclusion of the cost of packing for transportation and thus rejected the claim. The Respondent preferred an appeal to the Collector of Customs but did not succeed and thus appealed to the Cus toms, Excise and (;old (Control) Tribunal. The Respondent relied on the decision of this Court in Union of India vs Godfrey Philips India Ltd.;, and contended that in view of the decision of this Court, the cost of third stage packing, the outer cartons, intended for transport could be included in the assessable value only if packing was necessary for the sale of goods in the wholesale market. The Tribunal however relying on the decision of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; held that the Cost of outer or bigger cartons in which the smaller cartons containing powder tins are 480 packed is not includible in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade. Being aggrieved by that decision the Revenue came up in appeal to this Court under Section 35L(b) of the Act. Allowing the appeal and remanding the case to the Tribu nal with directions, this Court, HELD: (Per Sabyasachi Mukharji, J. ) What is to be included in the value has to be determined in terms of Section 4(4)(d)(i) of the Act. [485F] The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is one in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. [490B C] In the present case, it has been factually found by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen. The same are then put in the master carton for purpose of delivery to wholesale dealers. [490C D] The correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the value. How much packing is necessary to make the goods marketable is a question of fact to be determined by application of the correct approach. Packing which is pri marily done or mainly done for protecting the goods, and not for making the goods marketable should not be included. [491H; 492A] The Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller 481 cartons are packed. The question is not whether these goods could be so sold but the question is whether these goods are so sold usually and as such used to become marketable in such manner. [492B C] (Per section Ranganathan, J.) Section 4(4)(d)(i) of the Act lays down that where goods are delivered by the factory gate in a packed condition, the cost of the packing should be included in the assessable value. The clause makes no distinction between primary and secondary packing or further subsequent packing. [492G] There is therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the assessable value, one should go by the conduct of the parties and the nature of the packing in which the goods generally are not, can be placed in the wholesale market. [493H; 494A] M/s. Hindustan Polymers vs The Collector of Central Excise, case, referred to.
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What is the summary of this judgment?
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The Tribunal in the instant case observed as under: "We observe that in the facts of the present case, the rationale of the judgment of the Hon 'ble Supreme Court above is squarely ap plicable. We hold following with respect to the ratio of the decision above that the cost of the outer or bigger carton in which the small cartons containing the powder tins are packed, is not includable in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade. The outer carton have to be held to be for the purpose of transport of the goods and are not required for the sale of the goods at the factory gate." (emphasis supplied). In my opinion, the correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the 492 value. How much packing is necessary to make the goods marketable is a question of fact to be determined by appli cation of the correct approach.
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The Respondent assessee used to manufacture talcum powder and face powder and were clearing the same on payment of excise duty. The assessee claimed deduction of cost of packing for transportation in respect of small packings of powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was first approved by the Department but later the Department having noticed that the small packs were first packed in dozen, and thereafter packed in second ary packings for easy transportation to the wholesale deal er, disallowed the claim of deduction. The Assistant Collector in view of this Court 's decision in postmanufacturing expenses cases took the view that the amount claimed by the Respondent was not deductible and accordingly issued a show cause notice to the Respondent raising a demand on the respondent to pay the differential duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 P. for the period from 2.12.85 to 31.5.1986. The Asstt Collector by his order dated 27.2.87 disallowed the Respondent 's claim for exclusion of the cost of packing for transportation and thus rejected the claim. The Respondent preferred an appeal to the Collector of Customs but did not succeed and thus appealed to the Cus toms, Excise and (;old (Control) Tribunal. The Respondent relied on the decision of this Court in Union of India vs Godfrey Philips India Ltd.;, and contended that in view of the decision of this Court, the cost of third stage packing, the outer cartons, intended for transport could be included in the assessable value only if packing was necessary for the sale of goods in the wholesale market. The Tribunal however relying on the decision of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; held that the Cost of outer or bigger cartons in which the smaller cartons containing powder tins are 480 packed is not includible in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade. Being aggrieved by that decision the Revenue came up in appeal to this Court under Section 35L(b) of the Act. Allowing the appeal and remanding the case to the Tribu nal with directions, this Court, HELD: (Per Sabyasachi Mukharji, J. ) What is to be included in the value has to be determined in terms of Section 4(4)(d)(i) of the Act. [485F] The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is one in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. [490B C] In the present case, it has been factually found by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen. The same are then put in the master carton for purpose of delivery to wholesale dealers. [490C D] The correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the value. How much packing is necessary to make the goods marketable is a question of fact to be determined by application of the correct approach. Packing which is pri marily done or mainly done for protecting the goods, and not for making the goods marketable should not be included. [491H; 492A] The Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller 481 cartons are packed. The question is not whether these goods could be so sold but the question is whether these goods are so sold usually and as such used to become marketable in such manner. [492B C] (Per section Ranganathan, J.) Section 4(4)(d)(i) of the Act lays down that where goods are delivered by the factory gate in a packed condition, the cost of the packing should be included in the assessable value. The clause makes no distinction between primary and secondary packing or further subsequent packing. [492G] There is therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the assessable value, one should go by the conduct of the parties and the nature of the packing in which the goods generally are not, can be placed in the wholesale market. [493H; 494A] M/s. Hindustan Polymers vs The Collector of Central Excise, case, referred to.
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What is the summary of this judgment?
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Packing, which is primarily done or mainly done for protecting the goods, and not for making the goods marketable should not be included. In the instant case, therefore, could the powder be sold in smaller cartons at the wholesale market? The fact that these were usually sold in the wholesale market would be a good pointer for this question. Having considered the order of the Tribu nal, which I have set out hereinbefore, I am of the opinion that the Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller cartons are packed. The question is not whether these goods could be so sold, but the question is whether these goods are so sold usually and as such used to become marketable in such man ner. In my opinion, there has been a misdirection by the Tribunal on this aspect of the matter.
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The Respondent assessee used to manufacture talcum powder and face powder and were clearing the same on payment of excise duty. The assessee claimed deduction of cost of packing for transportation in respect of small packings of powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was first approved by the Department but later the Department having noticed that the small packs were first packed in dozen, and thereafter packed in second ary packings for easy transportation to the wholesale deal er, disallowed the claim of deduction. The Assistant Collector in view of this Court 's decision in postmanufacturing expenses cases took the view that the amount claimed by the Respondent was not deductible and accordingly issued a show cause notice to the Respondent raising a demand on the respondent to pay the differential duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 P. for the period from 2.12.85 to 31.5.1986. The Asstt Collector by his order dated 27.2.87 disallowed the Respondent 's claim for exclusion of the cost of packing for transportation and thus rejected the claim. The Respondent preferred an appeal to the Collector of Customs but did not succeed and thus appealed to the Cus toms, Excise and (;old (Control) Tribunal. The Respondent relied on the decision of this Court in Union of India vs Godfrey Philips India Ltd.;, and contended that in view of the decision of this Court, the cost of third stage packing, the outer cartons, intended for transport could be included in the assessable value only if packing was necessary for the sale of goods in the wholesale market. The Tribunal however relying on the decision of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; held that the Cost of outer or bigger cartons in which the smaller cartons containing powder tins are 480 packed is not includible in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade. Being aggrieved by that decision the Revenue came up in appeal to this Court under Section 35L(b) of the Act. Allowing the appeal and remanding the case to the Tribu nal with directions, this Court, HELD: (Per Sabyasachi Mukharji, J. ) What is to be included in the value has to be determined in terms of Section 4(4)(d)(i) of the Act. [485F] The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is one in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. [490B C] In the present case, it has been factually found by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen. The same are then put in the master carton for purpose of delivery to wholesale dealers. [490C D] The correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the value. How much packing is necessary to make the goods marketable is a question of fact to be determined by application of the correct approach. Packing which is pri marily done or mainly done for protecting the goods, and not for making the goods marketable should not be included. [491H; 492A] The Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller 481 cartons are packed. The question is not whether these goods could be so sold but the question is whether these goods are so sold usually and as such used to become marketable in such manner. [492B C] (Per section Ranganathan, J.) Section 4(4)(d)(i) of the Act lays down that where goods are delivered by the factory gate in a packed condition, the cost of the packing should be included in the assessable value. The clause makes no distinction between primary and secondary packing or further subsequent packing. [492G] There is therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the assessable value, one should go by the conduct of the parties and the nature of the packing in which the goods generally are not, can be placed in the wholesale market. [493H; 494A] M/s. Hindustan Polymers vs The Collector of Central Excise, case, referred to.
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What is the summary of this judgment?
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If the above be the true test, then the judgment and the order of the Tribunal must be set aside and the appeal must be allowed and the matter remanded back to the Tribunal to determine afresh this question from the stand point indicated above. I accordingly allow the appeal, set aside the judgment and order of the Tribunal and remand the matter back to the Tribunal to decide it in accordance with the aforesaid directions. In the facts and the circumstances of the case, there will be no orders as to costs. RANGANATHAN, J. I agree. But, as it has been contended by Sri Soli Sorabjee that the Tribunal 's conclusion in this case has to be upheld straightaway in view of the decision of this Court in Godfrey Philips, [1985] Suppl. 3 S.C.R.
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The Respondent assessee used to manufacture talcum powder and face powder and were clearing the same on payment of excise duty. The assessee claimed deduction of cost of packing for transportation in respect of small packings of powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was first approved by the Department but later the Department having noticed that the small packs were first packed in dozen, and thereafter packed in second ary packings for easy transportation to the wholesale deal er, disallowed the claim of deduction. The Assistant Collector in view of this Court 's decision in postmanufacturing expenses cases took the view that the amount claimed by the Respondent was not deductible and accordingly issued a show cause notice to the Respondent raising a demand on the respondent to pay the differential duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 P. for the period from 2.12.85 to 31.5.1986. The Asstt Collector by his order dated 27.2.87 disallowed the Respondent 's claim for exclusion of the cost of packing for transportation and thus rejected the claim. The Respondent preferred an appeal to the Collector of Customs but did not succeed and thus appealed to the Cus toms, Excise and (;old (Control) Tribunal. The Respondent relied on the decision of this Court in Union of India vs Godfrey Philips India Ltd.;, and contended that in view of the decision of this Court, the cost of third stage packing, the outer cartons, intended for transport could be included in the assessable value only if packing was necessary for the sale of goods in the wholesale market. The Tribunal however relying on the decision of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; held that the Cost of outer or bigger cartons in which the smaller cartons containing powder tins are 480 packed is not includible in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade. Being aggrieved by that decision the Revenue came up in appeal to this Court under Section 35L(b) of the Act. Allowing the appeal and remanding the case to the Tribu nal with directions, this Court, HELD: (Per Sabyasachi Mukharji, J. ) What is to be included in the value has to be determined in terms of Section 4(4)(d)(i) of the Act. [485F] The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is one in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. [490B C] In the present case, it has been factually found by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen. The same are then put in the master carton for purpose of delivery to wholesale dealers. [490C D] The correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the value. How much packing is necessary to make the goods marketable is a question of fact to be determined by application of the correct approach. Packing which is pri marily done or mainly done for protecting the goods, and not for making the goods marketable should not be included. [491H; 492A] The Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller 481 cartons are packed. The question is not whether these goods could be so sold but the question is whether these goods are so sold usually and as such used to become marketable in such manner. [492B C] (Per section Ranganathan, J.) Section 4(4)(d)(i) of the Act lays down that where goods are delivered by the factory gate in a packed condition, the cost of the packing should be included in the assessable value. The clause makes no distinction between primary and secondary packing or further subsequent packing. [492G] There is therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the assessable value, one should go by the conduct of the parties and the nature of the packing in which the goods generally are not, can be placed in the wholesale market. [493H; 494A] M/s. Hindustan Polymers vs The Collector of Central Excise, case, referred to.
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What is the summary of this judgment?
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123 and Geep, (C.A. Nos. 642 45 of 1982, I should like to add a few words. section 4(4)(d)(i) of the Act lays down that where goods are delivered at the factory gate in a packed condition, the cost of the packing should be included in the assessable value. The clause makes no distinction between primary packing and secondary or further subsequent packing. Howev er, a restriction was read into the wide language of the clause by this Court in the Bombay Tyre International case;, Posing the question whether the cost of all packing, no matter to what degree, in which the whole sale dealer takes delivery of the goods, should be included in determining the assessable value or a line should be drawn somewhere, the Court indicated that while the 493 cost of primary packing was indisputably includible, the position would be different in regard to secondary packing.
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The Respondent assessee used to manufacture talcum powder and face powder and were clearing the same on payment of excise duty. The assessee claimed deduction of cost of packing for transportation in respect of small packings of powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was first approved by the Department but later the Department having noticed that the small packs were first packed in dozen, and thereafter packed in second ary packings for easy transportation to the wholesale deal er, disallowed the claim of deduction. The Assistant Collector in view of this Court 's decision in postmanufacturing expenses cases took the view that the amount claimed by the Respondent was not deductible and accordingly issued a show cause notice to the Respondent raising a demand on the respondent to pay the differential duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 P. for the period from 2.12.85 to 31.5.1986. The Asstt Collector by his order dated 27.2.87 disallowed the Respondent 's claim for exclusion of the cost of packing for transportation and thus rejected the claim. The Respondent preferred an appeal to the Collector of Customs but did not succeed and thus appealed to the Cus toms, Excise and (;old (Control) Tribunal. The Respondent relied on the decision of this Court in Union of India vs Godfrey Philips India Ltd.;, and contended that in view of the decision of this Court, the cost of third stage packing, the outer cartons, intended for transport could be included in the assessable value only if packing was necessary for the sale of goods in the wholesale market. The Tribunal however relying on the decision of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; held that the Cost of outer or bigger cartons in which the smaller cartons containing powder tins are 480 packed is not includible in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade. Being aggrieved by that decision the Revenue came up in appeal to this Court under Section 35L(b) of the Act. Allowing the appeal and remanding the case to the Tribu nal with directions, this Court, HELD: (Per Sabyasachi Mukharji, J. ) What is to be included in the value has to be determined in terms of Section 4(4)(d)(i) of the Act. [485F] The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is one in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. [490B C] In the present case, it has been factually found by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen. The same are then put in the master carton for purpose of delivery to wholesale dealers. [490C D] The correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the value. How much packing is necessary to make the goods marketable is a question of fact to be determined by application of the correct approach. Packing which is pri marily done or mainly done for protecting the goods, and not for making the goods marketable should not be included. [491H; 492A] The Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller 481 cartons are packed. The question is not whether these goods could be so sold but the question is whether these goods are so sold usually and as such used to become marketable in such manner. [492B C] (Per section Ranganathan, J.) Section 4(4)(d)(i) of the Act lays down that where goods are delivered by the factory gate in a packed condition, the cost of the packing should be included in the assessable value. The clause makes no distinction between primary and secondary packing or further subsequent packing. [492G] There is therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the assessable value, one should go by the conduct of the parties and the nature of the packing in which the goods generally are not, can be placed in the wholesale market. [493H; 494A] M/s. Hindustan Polymers vs The Collector of Central Excise, case, referred to.
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What is the summary of this judgment?
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The Court observed that "the degree of secondary packing which is necessary for putting the excisable article in the condition in which it is generally sold in the wholesale market at the factory gate, is the degree of packing whose cost can be included in the value of the article for the purpose of the excise levy. "If any special secondary pack ing is provided by the assessee", the Court observed, "at the instance of a wholesale buyer which is not generally provided as a normal feature of the wholesale trade, the cost of such packing shall be deducted from the wholesale cash price." The exclusion indicated by these words is very limited and clearly does not extend to the cost of any packing in which the goods are generally sold by the manu facturer in the wholesale market. However, the reference in Bombay Tyres, (supra) to secondary packing "which is necessary" led to a further refinement in Godfrey Philips and Geep. In these cases, the conclusion of the Court was that the cost of packing of the goods in "corrugated fibre containers" and "wooden boxes" respectively was not includible in arriving at the assessa ble value. Had the matter been free from authority, one might have been inclined to agree with the reasoning of Bhagwati, C.J., that the condition of packing in which the goods are usually placed in the wholesale market would be conclusive of the issue and that, the condition in which the goods are generally placed in the wholesale market notwith standing, a theoretical enquiry by the excise authorities into the purpose of such packing or as to whether such packing was "necessary" or not would be totally uncalled for.
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The Respondent assessee used to manufacture talcum powder and face powder and were clearing the same on payment of excise duty. The assessee claimed deduction of cost of packing for transportation in respect of small packings of powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was first approved by the Department but later the Department having noticed that the small packs were first packed in dozen, and thereafter packed in second ary packings for easy transportation to the wholesale deal er, disallowed the claim of deduction. The Assistant Collector in view of this Court 's decision in postmanufacturing expenses cases took the view that the amount claimed by the Respondent was not deductible and accordingly issued a show cause notice to the Respondent raising a demand on the respondent to pay the differential duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 P. for the period from 2.12.85 to 31.5.1986. The Asstt Collector by his order dated 27.2.87 disallowed the Respondent 's claim for exclusion of the cost of packing for transportation and thus rejected the claim. The Respondent preferred an appeal to the Collector of Customs but did not succeed and thus appealed to the Cus toms, Excise and (;old (Control) Tribunal. The Respondent relied on the decision of this Court in Union of India vs Godfrey Philips India Ltd.;, and contended that in view of the decision of this Court, the cost of third stage packing, the outer cartons, intended for transport could be included in the assessable value only if packing was necessary for the sale of goods in the wholesale market. The Tribunal however relying on the decision of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; held that the Cost of outer or bigger cartons in which the smaller cartons containing powder tins are 480 packed is not includible in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade. Being aggrieved by that decision the Revenue came up in appeal to this Court under Section 35L(b) of the Act. Allowing the appeal and remanding the case to the Tribu nal with directions, this Court, HELD: (Per Sabyasachi Mukharji, J. ) What is to be included in the value has to be determined in terms of Section 4(4)(d)(i) of the Act. [485F] The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is one in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. [490B C] In the present case, it has been factually found by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen. The same are then put in the master carton for purpose of delivery to wholesale dealers. [490C D] The correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the value. How much packing is necessary to make the goods marketable is a question of fact to be determined by application of the correct approach. Packing which is pri marily done or mainly done for protecting the goods, and not for making the goods marketable should not be included. [491H; 492A] The Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller 481 cartons are packed. The question is not whether these goods could be so sold but the question is whether these goods are so sold usually and as such used to become marketable in such manner. [492B C] (Per section Ranganathan, J.) Section 4(4)(d)(i) of the Act lays down that where goods are delivered by the factory gate in a packed condition, the cost of the packing should be included in the assessable value. The clause makes no distinction between primary and secondary packing or further subsequent packing. [492G] There is therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the assessable value, one should go by the conduct of the parties and the nature of the packing in which the goods generally are not, can be placed in the wholesale market. [493H; 494A] M/s. Hindustan Polymers vs The Collector of Central Excise, case, referred to.
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What is the summary of this judgment?
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Indeed, this was the test applied by one of us (Muk harji, J.) in Hindustan Polymers for holding that the cost of drums for packing fusel oil was not includible in the assessable value because the goods viz. fusel oil was gener ally sold in the wholesale market in the raw state, without any packing whatever, leaving it to the wholesale consumer to draw it from the manufacturer 's tanks into his trucks, containers or drums. It will be appreciated that if this position were not to be accepted and an enquiry were to be made as to whether. such general packing is "necessary" or not, such an investigation might operate both ways. For example, on that basis, it could be argued, in the Hindustan Polymers case, that though the goods were actually sold wholesale in a free condition, a container is "necessary" from a theoretical stand point to place the fluid goods on the market and that, therefore, the cost of the drums would have to be included in the assessable value.
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The Respondent assessee used to manufacture talcum powder and face powder and were clearing the same on payment of excise duty. The assessee claimed deduction of cost of packing for transportation in respect of small packings of powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was first approved by the Department but later the Department having noticed that the small packs were first packed in dozen, and thereafter packed in second ary packings for easy transportation to the wholesale deal er, disallowed the claim of deduction. The Assistant Collector in view of this Court 's decision in postmanufacturing expenses cases took the view that the amount claimed by the Respondent was not deductible and accordingly issued a show cause notice to the Respondent raising a demand on the respondent to pay the differential duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 P. for the period from 2.12.85 to 31.5.1986. The Asstt Collector by his order dated 27.2.87 disallowed the Respondent 's claim for exclusion of the cost of packing for transportation and thus rejected the claim. The Respondent preferred an appeal to the Collector of Customs but did not succeed and thus appealed to the Cus toms, Excise and (;old (Control) Tribunal. The Respondent relied on the decision of this Court in Union of India vs Godfrey Philips India Ltd.;, and contended that in view of the decision of this Court, the cost of third stage packing, the outer cartons, intended for transport could be included in the assessable value only if packing was necessary for the sale of goods in the wholesale market. The Tribunal however relying on the decision of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; held that the Cost of outer or bigger cartons in which the smaller cartons containing powder tins are 480 packed is not includible in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade. Being aggrieved by that decision the Revenue came up in appeal to this Court under Section 35L(b) of the Act. Allowing the appeal and remanding the case to the Tribu nal with directions, this Court, HELD: (Per Sabyasachi Mukharji, J. ) What is to be included in the value has to be determined in terms of Section 4(4)(d)(i) of the Act. [485F] The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is one in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. [490B C] In the present case, it has been factually found by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen. The same are then put in the master carton for purpose of delivery to wholesale dealers. [490C D] The correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the value. How much packing is necessary to make the goods marketable is a question of fact to be determined by application of the correct approach. Packing which is pri marily done or mainly done for protecting the goods, and not for making the goods marketable should not be included. [491H; 492A] The Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller 481 cartons are packed. The question is not whether these goods could be so sold but the question is whether these goods are so sold usually and as such used to become marketable in such manner. [492B C] (Per section Ranganathan, J.) Section 4(4)(d)(i) of the Act lays down that where goods are delivered by the factory gate in a packed condition, the cost of the packing should be included in the assessable value. The clause makes no distinction between primary and secondary packing or further subsequent packing. [492G] There is therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the assessable value, one should go by the conduct of the parties and the nature of the packing in which the goods generally are not, can be placed in the wholesale market. [493H; 494A] M/s. Hindustan Polymers vs The Collector of Central Excise, case, referred to.
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What is the summary of this judgment?
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But this was not the view taken by this Court. There is, therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the 494 assessable value, one should go by the conduct of the par ties and the nature of the packing in which the goods gener ally are not, can be placed in the wholesale market. It is, however, urged for the respondent that such an enquiry has been held necessary by Godfrey Philips. But, as pointed out by my learned brother, even the majority deci sion in that case does not go to the length suggested on behalf of the appellant and justify an investigation as to the state of packing in which the goods could be placed in the market. That would only be an exercise in theoretical speculation. On that basis, for instance, in the present case, it could be said, for the same reasons as have been given by the Tribunal, that the goods could be collected from the factory even in units of tin containers, leaving it free to the purchasers to make their own arrangements to pack them in cardboard cartons to convey them to their place of business.
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The Respondent assessee used to manufacture talcum powder and face powder and were clearing the same on payment of excise duty. The assessee claimed deduction of cost of packing for transportation in respect of small packings of powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was first approved by the Department but later the Department having noticed that the small packs were first packed in dozen, and thereafter packed in second ary packings for easy transportation to the wholesale deal er, disallowed the claim of deduction. The Assistant Collector in view of this Court 's decision in postmanufacturing expenses cases took the view that the amount claimed by the Respondent was not deductible and accordingly issued a show cause notice to the Respondent raising a demand on the respondent to pay the differential duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 P. for the period from 2.12.85 to 31.5.1986. The Asstt Collector by his order dated 27.2.87 disallowed the Respondent 's claim for exclusion of the cost of packing for transportation and thus rejected the claim. The Respondent preferred an appeal to the Collector of Customs but did not succeed and thus appealed to the Cus toms, Excise and (;old (Control) Tribunal. The Respondent relied on the decision of this Court in Union of India vs Godfrey Philips India Ltd.;, and contended that in view of the decision of this Court, the cost of third stage packing, the outer cartons, intended for transport could be included in the assessable value only if packing was necessary for the sale of goods in the wholesale market. The Tribunal however relying on the decision of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; held that the Cost of outer or bigger cartons in which the smaller cartons containing powder tins are 480 packed is not includible in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade. Being aggrieved by that decision the Revenue came up in appeal to this Court under Section 35L(b) of the Act. Allowing the appeal and remanding the case to the Tribu nal with directions, this Court, HELD: (Per Sabyasachi Mukharji, J. ) What is to be included in the value has to be determined in terms of Section 4(4)(d)(i) of the Act. [485F] The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is one in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. [490B C] In the present case, it has been factually found by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen. The same are then put in the master carton for purpose of delivery to wholesale dealers. [490C D] The correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the value. How much packing is necessary to make the goods marketable is a question of fact to be determined by application of the correct approach. Packing which is pri marily done or mainly done for protecting the goods, and not for making the goods marketable should not be included. [491H; 492A] The Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller 481 cartons are packed. The question is not whether these goods could be so sold but the question is whether these goods are so sold usually and as such used to become marketable in such manner. [492B C] (Per section Ranganathan, J.) Section 4(4)(d)(i) of the Act lays down that where goods are delivered by the factory gate in a packed condition, the cost of the packing should be included in the assessable value. The clause makes no distinction between primary and secondary packing or further subsequent packing. [492G] There is therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the assessable value, one should go by the conduct of the parties and the nature of the packing in which the goods generally are not, can be placed in the wholesale market. [493H; 494A] M/s. Hindustan Polymers vs The Collector of Central Excise, case, referred to.
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What is the summary of this judgment?
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This would render even the cost of the first outer packing of cardboard containers irrelevant in the determination of the assessable value. That was not the contention even of the respondents and indeed, if carried to its logical conclusion, would render the cost of all pack ing, other than primary packing, excludible from the assess able value. It seems to me, therefore, that what is to be really seen is this: What is the condition of packing con sidered by the manufacturers, having regard to the nature of the business, the type of goods concerned, the unit of sale in the wholesale market and other relevant considerations, to be generally necessary for placing the goods for sale in the wholesale market at the factory gate. In Godfrey Philips and Geep, this Court was concerned with a special type of packing which seemed intended more to protect the packed goods against injury or damage rather than to enable it being placed on the market. Indeed, in Godfrey Philips, this was a factual position that had been accepted by the depart mental authorities earlier for a period of a little over six years which they later wanted to go back upon. Can the same be said of the goods and the packing with which we are concerned here is a question to be decided on the facts, as the appellate controller did and not as a proposition of law settled by, or the automatic consequence of the decision in, the Godfrey Philips case, as seems to have been done by the Tribunal and as is being argued for the respondents.
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The Respondent assessee used to manufacture talcum powder and face powder and were clearing the same on payment of excise duty. The assessee claimed deduction of cost of packing for transportation in respect of small packings of powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was first approved by the Department but later the Department having noticed that the small packs were first packed in dozen, and thereafter packed in second ary packings for easy transportation to the wholesale deal er, disallowed the claim of deduction. The Assistant Collector in view of this Court 's decision in postmanufacturing expenses cases took the view that the amount claimed by the Respondent was not deductible and accordingly issued a show cause notice to the Respondent raising a demand on the respondent to pay the differential duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 P. for the period from 2.12.85 to 31.5.1986. The Asstt Collector by his order dated 27.2.87 disallowed the Respondent 's claim for exclusion of the cost of packing for transportation and thus rejected the claim. The Respondent preferred an appeal to the Collector of Customs but did not succeed and thus appealed to the Cus toms, Excise and (;old (Control) Tribunal. The Respondent relied on the decision of this Court in Union of India vs Godfrey Philips India Ltd.;, and contended that in view of the decision of this Court, the cost of third stage packing, the outer cartons, intended for transport could be included in the assessable value only if packing was necessary for the sale of goods in the wholesale market. The Tribunal however relying on the decision of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; held that the Cost of outer or bigger cartons in which the smaller cartons containing powder tins are 480 packed is not includible in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade. Being aggrieved by that decision the Revenue came up in appeal to this Court under Section 35L(b) of the Act. Allowing the appeal and remanding the case to the Tribu nal with directions, this Court, HELD: (Per Sabyasachi Mukharji, J. ) What is to be included in the value has to be determined in terms of Section 4(4)(d)(i) of the Act. [485F] The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is one in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. [490B C] In the present case, it has been factually found by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen. The same are then put in the master carton for purpose of delivery to wholesale dealers. [490C D] The correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the value. How much packing is necessary to make the goods marketable is a question of fact to be determined by application of the correct approach. Packing which is pri marily done or mainly done for protecting the goods, and not for making the goods marketable should not be included. [491H; 492A] The Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller 481 cartons are packed. The question is not whether these goods could be so sold but the question is whether these goods are so sold usually and as such used to become marketable in such manner. [492B C] (Per section Ranganathan, J.) Section 4(4)(d)(i) of the Act lays down that where goods are delivered by the factory gate in a packed condition, the cost of the packing should be included in the assessable value. The clause makes no distinction between primary and secondary packing or further subsequent packing. [492G] There is therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the assessable value, one should go by the conduct of the parties and the nature of the packing in which the goods generally are not, can be placed in the wholesale market. [493H; 494A] M/s. Hindustan Polymers vs The Collector of Central Excise, case, referred to.
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What is the summary of this judgment?
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I would, therefore, agree that the matter should be remanded to be reconsidered in the light of our observations. Y. Lal Appeals allowed.
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The Respondent assessee used to manufacture talcum powder and face powder and were clearing the same on payment of excise duty. The assessee claimed deduction of cost of packing for transportation in respect of small packings of powder ranging from 0.27 paise to 0.76 paise per dozen packings and the same was first approved by the Department but later the Department having noticed that the small packs were first packed in dozen, and thereafter packed in second ary packings for easy transportation to the wholesale deal er, disallowed the claim of deduction. The Assistant Collector in view of this Court 's decision in postmanufacturing expenses cases took the view that the amount claimed by the Respondent was not deductible and accordingly issued a show cause notice to the Respondent raising a demand on the respondent to pay the differential duty on the cost of secondary packings which was stated to be Rs.3,46,151.92 P. for the period from 2.12.85 to 31.5.1986. The Asstt Collector by his order dated 27.2.87 disallowed the Respondent 's claim for exclusion of the cost of packing for transportation and thus rejected the claim. The Respondent preferred an appeal to the Collector of Customs but did not succeed and thus appealed to the Cus toms, Excise and (;old (Control) Tribunal. The Respondent relied on the decision of this Court in Union of India vs Godfrey Philips India Ltd.;, and contended that in view of the decision of this Court, the cost of third stage packing, the outer cartons, intended for transport could be included in the assessable value only if packing was necessary for the sale of goods in the wholesale market. The Tribunal however relying on the decision of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; held that the Cost of outer or bigger cartons in which the smaller cartons containing powder tins are 480 packed is not includible in the assessable value as the delivery of the goods can be taken in smaller cartons at the factory gate by a buyer in the course of wholesale trade. Being aggrieved by that decision the Revenue came up in appeal to this Court under Section 35L(b) of the Act. Allowing the appeal and remanding the case to the Tribu nal with directions, this Court, HELD: (Per Sabyasachi Mukharji, J. ) What is to be included in the value has to be determined in terms of Section 4(4)(d)(i) of the Act. [485F] The question is not for what purpose a particular kind of packing is done but the test is whether a particular packing is one in order to put the goods in the condition in which they are generally sold in the wholesale market at the factory gate and if they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty. [490B C] In the present case, it has been factually found by the Collector that the talcum powder and face powder are packed either in metal containers or in plastic containers, and thereafter they are put in dozen packing also of cardboard packings, which are inner cartons, and contain one dozen. The same are then put in the master carton for purpose of delivery to wholesale dealers. [490C D] The correct position seems to be that the cost of that much of packings, be they primary or secondary, which are required to make the articles marketable would be includible in the value. How much packing is necessary to make the goods marketable is a question of fact to be determined by application of the correct approach. Packing which is pri marily done or mainly done for protecting the goods, and not for making the goods marketable should not be included. [491H; 492A] The Tribunal was in error in approaching the problem before it by looking at the question whether the goods packed in the smaller cartons could be sold in a wholesale market in the course of wholesale trade at the factory gate without the outer cartons in which the smaller 481 cartons are packed. The question is not whether these goods could be so sold but the question is whether these goods are so sold usually and as such used to become marketable in such manner. [492B C] (Per section Ranganathan, J.) Section 4(4)(d)(i) of the Act lays down that where goods are delivered by the factory gate in a packed condition, the cost of the packing should be included in the assessable value. The clause makes no distinction between primary and secondary packing or further subsequent packing. [492G] There is therefore, much to be said for the view that, in judging the condition of packing whose cost is to be included in the assessable value, one should go by the conduct of the parties and the nature of the packing in which the goods generally are not, can be placed in the wholesale market. [493H; 494A] M/s. Hindustan Polymers vs The Collector of Central Excise, case, referred to.
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What is the summary of this judgment?
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Civil Appeal No. 322 of 1970. From the Judgment and Decree dated 25 3 1969 of the Madras High Court in Appeal No. 1195 of 1970. U.R. Lalit, P.H.
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If the certificate granted by the Court under sub clauses (a) and (c) of clause (1) of Article 133 of the Constitution, as it then stood, did not conform to legal requirements in as much as it did not specify the substantial question of law which, according to High Court, required determination and no reasons in respect of issuance of the certificate appeared therein, the certificate could be revoked. [948 H] Sohan Lal Naraindas vs Laxmidas Raghunath Gadit ; Sardar Bahadur section Indra Singh Trust vs Commissioner of Income Tax, Bengal ; followed. In such a situation if it could be made out that a substantial question of law really required determination, this Court could treat the appeal as one by special leave after condoning the delay. In the instant case no such question is involved at all and, therefore, special leave cannot be granted. [949 B C]
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What is the summary of this judgment?
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Parekh and Miss Manik Tarkunde for the Appellant. The Judgment of the Court was delivered by KOSHAL J. A preliminary objection has been raised by Mr. Rangam to the effect that the certificate granted by the court under sub clauses (a) and (c) of clause (1) of Article 133 of the Constitution of India, as it then stood, does not conform to legal requirements in as much as (a) it does not specify the substantial question of law which the High Court states require determination; and (b) no reasons in support of the issuance of the certificate appear therein. 949 The preliminary objection is well founded in view of the decisions of this Court in Sohan Lal Naraindas vs Laxmidas Raghunath Gadit and in Sardar Bahadur section Indra Singh Trust vs Commissioner of Income Tax, Bengal. Faced with this situation Mr. Lalit wanted us to treat the appeal as one by special leave and prayed that such leave be granted now after condoning the delay. That would have been certainly a reasonable course to follow if it was made out that a substantial question of law really requires determination.
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If the certificate granted by the Court under sub clauses (a) and (c) of clause (1) of Article 133 of the Constitution, as it then stood, did not conform to legal requirements in as much as it did not specify the substantial question of law which, according to High Court, required determination and no reasons in respect of issuance of the certificate appeared therein, the certificate could be revoked. [948 H] Sohan Lal Naraindas vs Laxmidas Raghunath Gadit ; Sardar Bahadur section Indra Singh Trust vs Commissioner of Income Tax, Bengal ; followed. In such a situation if it could be made out that a substantial question of law really required determination, this Court could treat the appeal as one by special leave after condoning the delay. In the instant case no such question is involved at all and, therefore, special leave cannot be granted. [949 B C]
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What is the summary of this judgment?
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We have gone through the impugned judgment and find that no such question is involved at all. We, therefore, refuse special leave, revoke the certificate granted by the High Court and dismiss the appeal but with no order as to costs. P.B.R. Appeal dismissed.
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If the certificate granted by the Court under sub clauses (a) and (c) of clause (1) of Article 133 of the Constitution, as it then stood, did not conform to legal requirements in as much as it did not specify the substantial question of law which, according to High Court, required determination and no reasons in respect of issuance of the certificate appeared therein, the certificate could be revoked. [948 H] Sohan Lal Naraindas vs Laxmidas Raghunath Gadit ; Sardar Bahadur section Indra Singh Trust vs Commissioner of Income Tax, Bengal ; followed. In such a situation if it could be made out that a substantial question of law really required determination, this Court could treat the appeal as one by special leave after condoning the delay. In the instant case no such question is involved at all and, therefore, special leave cannot be granted. [949 B C]
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What is the summary of this judgment?
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Civil, Appeal No. 2272 of 1966, Appeal from the judgment and order dated January 6, 1966 of Calcutta High Court in Income tax Reference No. 211 of 1961. section Mitra, A. section Nambiar, R. N. Sachthey and B. D. Sharma, for the appellant. M. C. Chagla and P. K. Chatterjee, for the respondents 309 The Judgment of the Court was delivered by Hegde, J. This is, an appeal by certificate, granted by the High Court of Calcutta under section 66A(2) of the Indian Income Tax Act, 1922 (to be hereinafter referred to as the Act) against the decision of that Court in a reference under section 66 (1) of that Act. The two questions of law referred to the High Court by the tribunal are : (1) Whether section 16(3) of the Act was ultra vires the Central Legislature and (2) Whether on the facts and in the circumstances of the case, the income arising to the three minor sons of the assessee by virtue of their admission to the benefits of the partnership of Messrs. Ajitmal Kanhaiyalal was rightly included in the total income of the assessee under section 16 (3) (a) (iv) of the Act.
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The assessee was a partner in a firm. On the last day of the accounting year of the firm, namely, 1st July 1954 he retired from the firm and gifted 'to each of his four sons Rs. 75,000. The firm was reconstituted and the first son, who was a major, became a partner in the firm. The other sons who were minors, became entitled to the benefits of the partnership because, they invested in the firm the amounts received by them as gifts from their father. In the assessment year 1956 57 the Income tax Officer held that the income arising to the minors by virtue of their admission to the benefits of the partnership, came within the purview of section 16(3) (a) (iv) of the Income tax Act, 1922, and included that income in the total income of the assessee. The order was confirmed by the Appellate Assistant Commissioner and the Tribunal, but the High Court on a reference, held in favour of the assessee. In appeal to this Court, HELD : The section creates an artificial income and must be construed strictly, that is. before an income can be held to come within the ambit of section 16(3) it must be proved to have arisen directly or indirectly from a transfer of assets made by the assessee in favour of the minor children. The connection between the transfer and the income must be proximate. It must arise as a result of the transfer and not in some manner connected with it. [310 H; 311 A E] In the present case, the income of the minors arose as a result of their admission to the benefits, of partnershiip and there is no proximate nexus between the transfer and the income. [310 G] C.I.T., Gujarat vs Keshavlal Lallubhai Patel, followed.
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What is the summary of this judgment?
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The assessee at whose instance those question were referred did not press for an answer in respect of question No. 1. Therefore that question was not dealt with by the High Court. Hence we need not go into that question. The High Court answered the second question in favour of the assessee. The facts necessary for the purpose of deciding the point in dispute as set out in the statement of the case submitted by the tribunal are as follows : The assessee Shri Ajitmal Parekh was a partner of the firma M/s.
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The assessee was a partner in a firm. On the last day of the accounting year of the firm, namely, 1st July 1954 he retired from the firm and gifted 'to each of his four sons Rs. 75,000. The firm was reconstituted and the first son, who was a major, became a partner in the firm. The other sons who were minors, became entitled to the benefits of the partnership because, they invested in the firm the amounts received by them as gifts from their father. In the assessment year 1956 57 the Income tax Officer held that the income arising to the minors by virtue of their admission to the benefits of the partnership, came within the purview of section 16(3) (a) (iv) of the Income tax Act, 1922, and included that income in the total income of the assessee. The order was confirmed by the Appellate Assistant Commissioner and the Tribunal, but the High Court on a reference, held in favour of the assessee. In appeal to this Court, HELD : The section creates an artificial income and must be construed strictly, that is. before an income can be held to come within the ambit of section 16(3) it must be proved to have arisen directly or indirectly from a transfer of assets made by the assessee in favour of the minor children. The connection between the transfer and the income must be proximate. It must arise as a result of the transfer and not in some manner connected with it. [310 H; 311 A E] In the present case, the income of the minors arose as a result of their admission to the benefits, of partnershiip and there is no proximate nexus between the transfer and the income. [310 G] C.I.T., Gujarat vs Keshavlal Lallubhai Patel, followed.
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What is the summary of this judgment?
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Ajitmal Kanhaiyalal having annas share therein. He continued to be a partner of that firm till July 1, 1954 which was the last date of the accounting year of the firm, relevant for the, assessment year 1955 56. On July 1, 1954, the assessee retired from the firm. Thereafter he gifted to each of his four sons Rs., 75,000/. Out of his four sons, three were minors at that time. There was a reconstitution of the firm with effect from July 2, 19.54 as evidenced by the partnership deed dated July 5, 1954.
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The assessee was a partner in a firm. On the last day of the accounting year of the firm, namely, 1st July 1954 he retired from the firm and gifted 'to each of his four sons Rs. 75,000. The firm was reconstituted and the first son, who was a major, became a partner in the firm. The other sons who were minors, became entitled to the benefits of the partnership because, they invested in the firm the amounts received by them as gifts from their father. In the assessment year 1956 57 the Income tax Officer held that the income arising to the minors by virtue of their admission to the benefits of the partnership, came within the purview of section 16(3) (a) (iv) of the Income tax Act, 1922, and included that income in the total income of the assessee. The order was confirmed by the Appellate Assistant Commissioner and the Tribunal, but the High Court on a reference, held in favour of the assessee. In appeal to this Court, HELD : The section creates an artificial income and must be construed strictly, that is. before an income can be held to come within the ambit of section 16(3) it must be proved to have arisen directly or indirectly from a transfer of assets made by the assessee in favour of the minor children. The connection between the transfer and the income must be proximate. It must arise as a result of the transfer and not in some manner connected with it. [310 H; 311 A E] In the present case, the income of the minors arose as a result of their admission to the benefits, of partnershiip and there is no proximate nexus between the transfer and the income. [310 G] C.I.T., Gujarat vs Keshavlal Lallubhai Patel, followed.
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What is the summary of this judgment?
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The major son of the assessee became a partner of the reconstituted firm and his minor sons were admitted to the benefits of that partnership in the reconstituted firm. The major son had 2 annas share. His three minor brothers were admitted to the benefits of the partnership, each one of them having 2 annas share. In the assessment year 1956 57, the Income tax Officer held that the income arising to the minors by virtue of their admission to the benefits of the partnership came within the purview of section 16(3) (a) (iv) of the Act. He included that income in the total income of the assessee for that year. In appeal the Appellate Assistant Commissioner substantially upheld the order of assessment made by the Income tax Officer but he held that the 2Supe Cl/7C 6 310 minors were entitled to only 1 9 pies share in the firm.
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The assessee was a partner in a firm. On the last day of the accounting year of the firm, namely, 1st July 1954 he retired from the firm and gifted 'to each of his four sons Rs. 75,000. The firm was reconstituted and the first son, who was a major, became a partner in the firm. The other sons who were minors, became entitled to the benefits of the partnership because, they invested in the firm the amounts received by them as gifts from their father. In the assessment year 1956 57 the Income tax Officer held that the income arising to the minors by virtue of their admission to the benefits of the partnership, came within the purview of section 16(3) (a) (iv) of the Income tax Act, 1922, and included that income in the total income of the assessee. The order was confirmed by the Appellate Assistant Commissioner and the Tribunal, but the High Court on a reference, held in favour of the assessee. In appeal to this Court, HELD : The section creates an artificial income and must be construed strictly, that is. before an income can be held to come within the ambit of section 16(3) it must be proved to have arisen directly or indirectly from a transfer of assets made by the assessee in favour of the minor children. The connection between the transfer and the income must be proximate. It must arise as a result of the transfer and not in some manner connected with it. [310 H; 311 A E] In the present case, the income of the minors arose as a result of their admission to the benefits, of partnershiip and there is no proximate nexus between the transfer and the income. [310 G] C.I.T., Gujarat vs Keshavlal Lallubhai Patel, followed.
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What is the summary of this judgment?
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The assessee took up the matter in appeal to the Income tax Appellate 'Tribunal. The tribunal upheld the decision of the Appellate Assistant Commissioner. On the facts found by the tribunal, the High Court came to the conclusion that answer to question No. 2 should be in the negative and in favour of the assessee. The tribunal found that the capital invested by the minors in the firm came from the gift made in their favour by their father, the assessee. That finding was not open to question before the High Court nor did the High Court depart from that finding.
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The assessee was a partner in a firm. On the last day of the accounting year of the firm, namely, 1st July 1954 he retired from the firm and gifted 'to each of his four sons Rs. 75,000. The firm was reconstituted and the first son, who was a major, became a partner in the firm. The other sons who were minors, became entitled to the benefits of the partnership because, they invested in the firm the amounts received by them as gifts from their father. In the assessment year 1956 57 the Income tax Officer held that the income arising to the minors by virtue of their admission to the benefits of the partnership, came within the purview of section 16(3) (a) (iv) of the Income tax Act, 1922, and included that income in the total income of the assessee. The order was confirmed by the Appellate Assistant Commissioner and the Tribunal, but the High Court on a reference, held in favour of the assessee. In appeal to this Court, HELD : The section creates an artificial income and must be construed strictly, that is. before an income can be held to come within the ambit of section 16(3) it must be proved to have arisen directly or indirectly from a transfer of assets made by the assessee in favour of the minor children. The connection between the transfer and the income must be proximate. It must arise as a result of the transfer and not in some manner connected with it. [310 H; 311 A E] In the present case, the income of the minors arose as a result of their admission to the benefits, of partnershiip and there is no proximate nexus between the transfer and the income. [310 G] C.I.T., Gujarat vs Keshavlal Lallubhai Patel, followed.
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What is the summary of this judgment?
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But on an interpretation of section 16(3) (a) (iv) the High Court opined that the answer to the question must be in favour of the assessee. Section 16(3) (a) (iv) reads "In computing the total income of any individual for the purpose of assessment, there shall be included (a) so much of the income of a wife or minor child of such individual as arises directly or indirectly. (iv) from assets transferred directly or indirectly to the minor child, not being a married daughter by such individual otherwise than for adequate consideration. " Before any income of a minor child can be brought within the scope of section 16(3) (iv), it must be established that the said income arose directly or indirectly from assets transferred directly or indirectly by its father. There is no dispute that the assessee had transferred to each of his minor sons, a sum of Rs. 75,000,/.
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The assessee was a partner in a firm. On the last day of the accounting year of the firm, namely, 1st July 1954 he retired from the firm and gifted 'to each of his four sons Rs. 75,000. The firm was reconstituted and the first son, who was a major, became a partner in the firm. The other sons who were minors, became entitled to the benefits of the partnership because, they invested in the firm the amounts received by them as gifts from their father. In the assessment year 1956 57 the Income tax Officer held that the income arising to the minors by virtue of their admission to the benefits of the partnership, came within the purview of section 16(3) (a) (iv) of the Income tax Act, 1922, and included that income in the total income of the assessee. The order was confirmed by the Appellate Assistant Commissioner and the Tribunal, but the High Court on a reference, held in favour of the assessee. In appeal to this Court, HELD : The section creates an artificial income and must be construed strictly, that is. before an income can be held to come within the ambit of section 16(3) it must be proved to have arisen directly or indirectly from a transfer of assets made by the assessee in favour of the minor children. The connection between the transfer and the income must be proximate. It must arise as a result of the transfer and not in some manner connected with it. [310 H; 311 A E] In the present case, the income of the minors arose as a result of their admission to the benefits, of partnershiip and there is no proximate nexus between the transfer and the income. [310 G] C.I.T., Gujarat vs Keshavlal Lallubhai Patel, followed.
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What is the summary of this judgment?
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It may also be that the amount contributed by those minors as their share in the firm came from those amounts. But the question still remains whether it can be said that the income with which we are concerned in this case arises directly or indirectly from the assets transferred by the assessee to those minors. The connection between the gifts mentioned earlier and the income in question is a remote one. The income of the minors arose as a result of their admission to the benefits of the partnership. It is true that they were admitted to the benefits of the partnership because of he contribution made by them. But there is no nexus between the transfer of the assets and the income in question.
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The assessee was a partner in a firm. On the last day of the accounting year of the firm, namely, 1st July 1954 he retired from the firm and gifted 'to each of his four sons Rs. 75,000. The firm was reconstituted and the first son, who was a major, became a partner in the firm. The other sons who were minors, became entitled to the benefits of the partnership because, they invested in the firm the amounts received by them as gifts from their father. In the assessment year 1956 57 the Income tax Officer held that the income arising to the minors by virtue of their admission to the benefits of the partnership, came within the purview of section 16(3) (a) (iv) of the Income tax Act, 1922, and included that income in the total income of the assessee. The order was confirmed by the Appellate Assistant Commissioner and the Tribunal, but the High Court on a reference, held in favour of the assessee. In appeal to this Court, HELD : The section creates an artificial income and must be construed strictly, that is. before an income can be held to come within the ambit of section 16(3) it must be proved to have arisen directly or indirectly from a transfer of assets made by the assessee in favour of the minor children. The connection between the transfer and the income must be proximate. It must arise as a result of the transfer and not in some manner connected with it. [310 H; 311 A E] In the present case, the income of the minors arose as a result of their admission to the benefits, of partnershiip and there is no proximate nexus between the transfer and the income. [310 G] C.I.T., Gujarat vs Keshavlal Lallubhai Patel, followed.
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What is the summary of this judgment?
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it cannot be said that that income arose directly or indirectly from the transfer of the assets referred to earlier. Section 16(3) of the Act created an artificial income. That section must receive strict construction as observed by this Court in Commissioner of Income Tax, Gujarat vs Keshavlal Lallubhai Patel(1). In our (1) 311 judgment before an income can be held to come within the ambit of section 16(3), it must be proved to have arisen directly or indirectly from a transfer of assets made by the assessee in favour of his wife or minor children. The connection between the transfer of assets and the income must be proximate. The income in question must arise as a result of the transfer and not in some manner connected with it.
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The assessee was a partner in a firm. On the last day of the accounting year of the firm, namely, 1st July 1954 he retired from the firm and gifted 'to each of his four sons Rs. 75,000. The firm was reconstituted and the first son, who was a major, became a partner in the firm. The other sons who were minors, became entitled to the benefits of the partnership because, they invested in the firm the amounts received by them as gifts from their father. In the assessment year 1956 57 the Income tax Officer held that the income arising to the minors by virtue of their admission to the benefits of the partnership, came within the purview of section 16(3) (a) (iv) of the Income tax Act, 1922, and included that income in the total income of the assessee. The order was confirmed by the Appellate Assistant Commissioner and the Tribunal, but the High Court on a reference, held in favour of the assessee. In appeal to this Court, HELD : The section creates an artificial income and must be construed strictly, that is. before an income can be held to come within the ambit of section 16(3) it must be proved to have arisen directly or indirectly from a transfer of assets made by the assessee in favour of the minor children. The connection between the transfer and the income must be proximate. It must arise as a result of the transfer and not in some manner connected with it. [310 H; 311 A E] In the present case, the income of the minors arose as a result of their admission to the benefits, of partnershiip and there is no proximate nexus between the transfer and the income. [310 G] C.I.T., Gujarat vs Keshavlal Lallubhai Patel, followed.
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What is the summary of this judgment?
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Appeal No. 4 of 1950. Appeal from the High Court of Judicature of Calcutta (Sir Trevor Harries C.J. and Mukherjea J.) from a judgment and decree dated May 30, 1948, in Appeal No. 21 of 1947 confirming with modifications the decree of a single Judge of the same High Court (Ormond J.)
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The defendant had obtained certain premises on lease under a deed which contained a covenant by the lessee "not to assign the demised premises or any part thereof without first obtaining the written consent of the lessor, such consent, however, not to be unreasonably withheld in the ease of respectable or responsible person ". After some offers and counter offers the plaintiff finally made an offer to purchase the defendant 's leasehold interest on certain terms one of which was that "the consent of the landlord will be obtained by you before the completion of the sale "; and the offer was unconditionally accepted by the defendant. The defendant subsequently refused to assign on the ground that the lessor had withheld his consent, and the plaintiff sued for specific performance of the agree ment: Held, (i) that the agreement was not, for its coming into being, conditional or contingent on the obtaining of the lessor 's consent, the obligation to obtain the lessor 's consent being only a term of the agreement which the defend ant had to fulfil; (ii) the words "such consent, however, not to be unreasonably withheld in the case of a respectable or responsible person" in the leasedeed did not amount to a separate or independent covenant by the lessor that he would not refuse consent except on reasonable grounds in the case of a respectable or responsible person, but only limited or qualified the leesee 's covenant not to assign with. out the lessor 's consent, by relieving him from the burden of the covenant if the lessor withheld his consent unreasonably in the case of proposed assignment to a respectable or respon sible person ; (iii) that, as the plaintiff was admittedly a respectable and responsible person and on the facts of the case the lessor 's refusal to give consent was unreasonable, the defendant could validly assign the lease without such consent; (iv) that the court could come to a decision on this matter even though the lessor was not a party to the suit and the decision might not bind him; (v) that the defendant could not under these circumstances plead the absence of the lessor 's consent as relieving him from the obligation to perform his part of the agreement if the plaintiff insisted on his carrying out the agreement even though the lessor had not given his consent; and the plain tiff was therefore entitled to a decree for specifie per formance of the agreement.
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What is the summary of this judgment?
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dated January 24, 1947, in suit No. 1031 of 1945. 108 842 N.C.Catterjee (Samarendra Nath Mukherje, with him) for the appellant. P.L. Banerjee (Upendra Chandra Mullick, with him) for the respondent. 1950.
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The defendant had obtained certain premises on lease under a deed which contained a covenant by the lessee "not to assign the demised premises or any part thereof without first obtaining the written consent of the lessor, such consent, however, not to be unreasonably withheld in the ease of respectable or responsible person ". After some offers and counter offers the plaintiff finally made an offer to purchase the defendant 's leasehold interest on certain terms one of which was that "the consent of the landlord will be obtained by you before the completion of the sale "; and the offer was unconditionally accepted by the defendant. The defendant subsequently refused to assign on the ground that the lessor had withheld his consent, and the plaintiff sued for specific performance of the agree ment: Held, (i) that the agreement was not, for its coming into being, conditional or contingent on the obtaining of the lessor 's consent, the obligation to obtain the lessor 's consent being only a term of the agreement which the defend ant had to fulfil; (ii) the words "such consent, however, not to be unreasonably withheld in the case of a respectable or responsible person" in the leasedeed did not amount to a separate or independent covenant by the lessor that he would not refuse consent except on reasonable grounds in the case of a respectable or responsible person, but only limited or qualified the leesee 's covenant not to assign with. out the lessor 's consent, by relieving him from the burden of the covenant if the lessor withheld his consent unreasonably in the case of proposed assignment to a respectable or respon sible person ; (iii) that, as the plaintiff was admittedly a respectable and responsible person and on the facts of the case the lessor 's refusal to give consent was unreasonable, the defendant could validly assign the lease without such consent; (iv) that the court could come to a decision on this matter even though the lessor was not a party to the suit and the decision might not bind him; (v) that the defendant could not under these circumstances plead the absence of the lessor 's consent as relieving him from the obligation to perform his part of the agreement if the plaintiff insisted on his carrying out the agreement even though the lessor had not given his consent; and the plain tiff was therefore entitled to a decree for specifie per formance of the agreement.
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What is the summary of this judgment?
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December 1. The Judgment of the Court was deliv ered by DAS J. This is an appeal by the defendant in a suit for specific performance against the judgment and decree of the High Court of Judicature at Fort William in Bengal (Sir Trevor Hatties C.J. and Mukherjea J.) dated May 30, 1948, dismissing his appeal and confirming, with certain modifica tions, the judgment and decree for specific performance passed by Ormond J. on January 24, 1947. There is no sub stantial dispute as to the facts leading up to tim suit out of which the present appeal has arisen and they may shortly be stated: Maharaja Sris Chandra Nandy of Cossimbazar is the owner of premises No.
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The defendant had obtained certain premises on lease under a deed which contained a covenant by the lessee "not to assign the demised premises or any part thereof without first obtaining the written consent of the lessor, such consent, however, not to be unreasonably withheld in the ease of respectable or responsible person ". After some offers and counter offers the plaintiff finally made an offer to purchase the defendant 's leasehold interest on certain terms one of which was that "the consent of the landlord will be obtained by you before the completion of the sale "; and the offer was unconditionally accepted by the defendant. The defendant subsequently refused to assign on the ground that the lessor had withheld his consent, and the plaintiff sued for specific performance of the agree ment: Held, (i) that the agreement was not, for its coming into being, conditional or contingent on the obtaining of the lessor 's consent, the obligation to obtain the lessor 's consent being only a term of the agreement which the defend ant had to fulfil; (ii) the words "such consent, however, not to be unreasonably withheld in the case of a respectable or responsible person" in the leasedeed did not amount to a separate or independent covenant by the lessor that he would not refuse consent except on reasonable grounds in the case of a respectable or responsible person, but only limited or qualified the leesee 's covenant not to assign with. out the lessor 's consent, by relieving him from the burden of the covenant if the lessor withheld his consent unreasonably in the case of proposed assignment to a respectable or respon sible person ; (iii) that, as the plaintiff was admittedly a respectable and responsible person and on the facts of the case the lessor 's refusal to give consent was unreasonable, the defendant could validly assign the lease without such consent; (iv) that the court could come to a decision on this matter even though the lessor was not a party to the suit and the decision might not bind him; (v) that the defendant could not under these circumstances plead the absence of the lessor 's consent as relieving him from the obligation to perform his part of the agreement if the plaintiff insisted on his carrying out the agreement even though the lessor had not given his consent; and the plain tiff was therefore entitled to a decree for specifie per formance of the agreement.
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What is the summary of this judgment?
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374 Upper Chitpur Road in the town of Cal cutta (hereinafter referred to as the "said premises"). By an Indenture of lease made on April 27, 1931, the Maharaja as manager of the Cossimbazar Raj Wards Estate which was then under the management of the Court of Wards demised tim said premises to one Madan Gopal Daga for a term of 51 years commencing from May 1, 1931, at and for the monthly rent of Rs. 1,083 5 3 and upon terms and conditions contained there in. By sub clause (6) of clause 2 of the said Indenture the lessee covenanted, amongst other things, "not to assign the demised premises or any part thereof without first obtaining the written consent of the lessor, such consent, however, not to be unreasonably withheld in the case of respectable or responsible person.. " There was the usual proviso for re entry for non payment of rent for three months or for breach of any of the lessee 's covenants, without prejudice to the lessor 's right of action for such breach. On March 25, 1943, Madan Gopal Daga, with the written consent of the lessor, assigned the unexpired resi due of the lease to the defendant who 843 was accepted as the lessee by the lessor. By an agreement said to have been arrived at by correspondence exchanged between the plaintiff and the defendant and their respective solicitors between January 27, 1945, and February 2, 1945, the defendant is alleged to have agreed to assign the said lease to the plaintiff for the unexpired residue of the term with effect from February 1, 1945, at and for the price of Rs.
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The defendant had obtained certain premises on lease under a deed which contained a covenant by the lessee "not to assign the demised premises or any part thereof without first obtaining the written consent of the lessor, such consent, however, not to be unreasonably withheld in the ease of respectable or responsible person ". After some offers and counter offers the plaintiff finally made an offer to purchase the defendant 's leasehold interest on certain terms one of which was that "the consent of the landlord will be obtained by you before the completion of the sale "; and the offer was unconditionally accepted by the defendant. The defendant subsequently refused to assign on the ground that the lessor had withheld his consent, and the plaintiff sued for specific performance of the agree ment: Held, (i) that the agreement was not, for its coming into being, conditional or contingent on the obtaining of the lessor 's consent, the obligation to obtain the lessor 's consent being only a term of the agreement which the defend ant had to fulfil; (ii) the words "such consent, however, not to be unreasonably withheld in the case of a respectable or responsible person" in the leasedeed did not amount to a separate or independent covenant by the lessor that he would not refuse consent except on reasonable grounds in the case of a respectable or responsible person, but only limited or qualified the leesee 's covenant not to assign with. out the lessor 's consent, by relieving him from the burden of the covenant if the lessor withheld his consent unreasonably in the case of proposed assignment to a respectable or respon sible person ; (iii) that, as the plaintiff was admittedly a respectable and responsible person and on the facts of the case the lessor 's refusal to give consent was unreasonable, the defendant could validly assign the lease without such consent; (iv) that the court could come to a decision on this matter even though the lessor was not a party to the suit and the decision might not bind him; (v) that the defendant could not under these circumstances plead the absence of the lessor 's consent as relieving him from the obligation to perform his part of the agreement if the plaintiff insisted on his carrying out the agreement even though the lessor had not given his consent; and the plain tiff was therefore entitled to a decree for specifie per formance of the agreement.
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What is the summary of this judgment?
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1,80,000 and upon terms and conditions contained in the correspondence to which reference will be made in greater detail hereafter. On February 21, 1945, the defendant wrote a letter to the lessor intimating that he had agreed to assign his interest in the lease to the plaintiff and re questing the lessor to give his consent in writing to such assignment. On March 5, 1945, the lessor replied that the question of his giving consent to the transfer of the lease could not be entertained as he had already determined the lease and that in the circumstances the whole initiative was in the hands of the defendant. This letter clearly indicated that the lease had been determined for non payment of rents and it obviously implied that it was for the defendant to get the lease revived by paying up the arrears of rent so that the question of giving consent to an assignment of the lease might be considered by the lessor. On March 8, 1945, the defendant by his solicitors ' letter informed the plain tiff 's solicitors that the defendant had approached the lessor but had failed to secure his consent and that, as no valid transfer could be made without such consent and the agreement for sale was subject to such consent being ob tained, the defendant was reluctantly compelled to cancel the agreement. The plaintiff by his solicitors ' letter of March 10, 1945, maintained that the agreement was not sub ject to the alleged condition and that the defendant was not entitled to cancel the agreement.
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The defendant had obtained certain premises on lease under a deed which contained a covenant by the lessee "not to assign the demised premises or any part thereof without first obtaining the written consent of the lessor, such consent, however, not to be unreasonably withheld in the ease of respectable or responsible person ". After some offers and counter offers the plaintiff finally made an offer to purchase the defendant 's leasehold interest on certain terms one of which was that "the consent of the landlord will be obtained by you before the completion of the sale "; and the offer was unconditionally accepted by the defendant. The defendant subsequently refused to assign on the ground that the lessor had withheld his consent, and the plaintiff sued for specific performance of the agree ment: Held, (i) that the agreement was not, for its coming into being, conditional or contingent on the obtaining of the lessor 's consent, the obligation to obtain the lessor 's consent being only a term of the agreement which the defend ant had to fulfil; (ii) the words "such consent, however, not to be unreasonably withheld in the case of a respectable or responsible person" in the leasedeed did not amount to a separate or independent covenant by the lessor that he would not refuse consent except on reasonable grounds in the case of a respectable or responsible person, but only limited or qualified the leesee 's covenant not to assign with. out the lessor 's consent, by relieving him from the burden of the covenant if the lessor withheld his consent unreasonably in the case of proposed assignment to a respectable or respon sible person ; (iii) that, as the plaintiff was admittedly a respectable and responsible person and on the facts of the case the lessor 's refusal to give consent was unreasonable, the defendant could validly assign the lease without such consent; (iv) that the court could come to a decision on this matter even though the lessor was not a party to the suit and the decision might not bind him; (v) that the defendant could not under these circumstances plead the absence of the lessor 's consent as relieving him from the obligation to perform his part of the agreement if the plaintiff insisted on his carrying out the agreement even though the lessor had not given his consent; and the plain tiff was therefore entitled to a decree for specifie per formance of the agreement.
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What is the summary of this judgment?
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It was pointed out that under the terms of the lease the lessor could not refuse his consent to the transfer of the lease to a respectable or responsible person which the plaintiff undoubtedly was. It is not necessary to refer to the further correspondence that followed in which each 844 party maintained his own contention. On March 17, 1945, the lessor filed a suit (being suit No. 425 of 1945) in the High Court against the defendant for the recovery of the demised premises on the ground that the lease had been determined. It was during the pendency of that suit that on July 4, 1945, the suit for specific performance of the agreement to assign the lease out of which the present appeal has arisen was filed by the plaintiff against the defendant. On July 13, 1945, the lessor 's suit for ejectment was settled by the defendant consenting to a decree for Rs.
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The defendant had obtained certain premises on lease under a deed which contained a covenant by the lessee "not to assign the demised premises or any part thereof without first obtaining the written consent of the lessor, such consent, however, not to be unreasonably withheld in the ease of respectable or responsible person ". After some offers and counter offers the plaintiff finally made an offer to purchase the defendant 's leasehold interest on certain terms one of which was that "the consent of the landlord will be obtained by you before the completion of the sale "; and the offer was unconditionally accepted by the defendant. The defendant subsequently refused to assign on the ground that the lessor had withheld his consent, and the plaintiff sued for specific performance of the agree ment: Held, (i) that the agreement was not, for its coming into being, conditional or contingent on the obtaining of the lessor 's consent, the obligation to obtain the lessor 's consent being only a term of the agreement which the defend ant had to fulfil; (ii) the words "such consent, however, not to be unreasonably withheld in the case of a respectable or responsible person" in the leasedeed did not amount to a separate or independent covenant by the lessor that he would not refuse consent except on reasonable grounds in the case of a respectable or responsible person, but only limited or qualified the leesee 's covenant not to assign with. out the lessor 's consent, by relieving him from the burden of the covenant if the lessor withheld his consent unreasonably in the case of proposed assignment to a respectable or respon sible person ; (iii) that, as the plaintiff was admittedly a respectable and responsible person and on the facts of the case the lessor 's refusal to give consent was unreasonable, the defendant could validly assign the lease without such consent; (iv) that the court could come to a decision on this matter even though the lessor was not a party to the suit and the decision might not bind him; (v) that the defendant could not under these circumstances plead the absence of the lessor 's consent as relieving him from the obligation to perform his part of the agreement if the plaintiff insisted on his carrying out the agreement even though the lessor had not given his consent; and the plain tiff was therefore entitled to a decree for specifie per formance of the agreement.
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What is the summary of this judgment?
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59,213 11 0 for arrears of rent which was paid up. There is no dispute that the forfeiture of the lease for non payment of rent was waived and the lease was accordingly revived. Shortly after the settlement of the ejectment suit the defendant on August 6, 1945, applied to the lessor for his consent to the assignment of the lease and on the same day the lessor in reply declined to give his consent without assigning any reason whatever. The suit for specific per formance came up for disposal before Ormond J. in November 1946 when it was heard in part and was adjourned. It was eventually further heard in January 1947 and finally dis posed of on January 23, 1947, when Ormond J. passed a decree against the defendant for specific performance of the agree ment. The decree provided that in the event of the defend ant being unable within a fortnight from the date of the decree to obtain the written consent of the lessor the assignment should be made without such consent.
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The defendant had obtained certain premises on lease under a deed which contained a covenant by the lessee "not to assign the demised premises or any part thereof without first obtaining the written consent of the lessor, such consent, however, not to be unreasonably withheld in the ease of respectable or responsible person ". After some offers and counter offers the plaintiff finally made an offer to purchase the defendant 's leasehold interest on certain terms one of which was that "the consent of the landlord will be obtained by you before the completion of the sale "; and the offer was unconditionally accepted by the defendant. The defendant subsequently refused to assign on the ground that the lessor had withheld his consent, and the plaintiff sued for specific performance of the agree ment: Held, (i) that the agreement was not, for its coming into being, conditional or contingent on the obtaining of the lessor 's consent, the obligation to obtain the lessor 's consent being only a term of the agreement which the defend ant had to fulfil; (ii) the words "such consent, however, not to be unreasonably withheld in the case of a respectable or responsible person" in the leasedeed did not amount to a separate or independent covenant by the lessor that he would not refuse consent except on reasonable grounds in the case of a respectable or responsible person, but only limited or qualified the leesee 's covenant not to assign with. out the lessor 's consent, by relieving him from the burden of the covenant if the lessor withheld his consent unreasonably in the case of proposed assignment to a respectable or respon sible person ; (iii) that, as the plaintiff was admittedly a respectable and responsible person and on the facts of the case the lessor 's refusal to give consent was unreasonable, the defendant could validly assign the lease without such consent; (iv) that the court could come to a decision on this matter even though the lessor was not a party to the suit and the decision might not bind him; (v) that the defendant could not under these circumstances plead the absence of the lessor 's consent as relieving him from the obligation to perform his part of the agreement if the plaintiff insisted on his carrying out the agreement even though the lessor had not given his consent; and the plain tiff was therefore entitled to a decree for specifie per formance of the agreement.
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What is the summary of this judgment?
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The defend ant appealed. After two days ' hearing, "in order to clear up the matter" the appeal Court "gave the plaintiff an opportu nity to examine the Maharaja as a witness in this case so that all relevant facts might be brought out and placed before the Court for the purpose of enabling it to come to a proper decision on this point. " The appeal was accordingly adjourned and the lessor was examined on commission and his evidence was filed in the proceedings. After further hear ing the appeal Court dismissed the defendant 's appeal and confirmed the decree for specific performance of the agree ment 845 without the need for obtaining the consent of the lessor prior to the execution of the deed of assignment in favour of the plaintiff. This decree was subsequently amended by inserting therein a provision enabling the plaintiff to set off from the purchase price the amount of rent payable as and from February 1, 1945, until the date of conveyance less all outgoings and interest on the purchase price at four per cent. per annum from that date to the date of the convey ance.
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The defendant had obtained certain premises on lease under a deed which contained a covenant by the lessee "not to assign the demised premises or any part thereof without first obtaining the written consent of the lessor, such consent, however, not to be unreasonably withheld in the ease of respectable or responsible person ". After some offers and counter offers the plaintiff finally made an offer to purchase the defendant 's leasehold interest on certain terms one of which was that "the consent of the landlord will be obtained by you before the completion of the sale "; and the offer was unconditionally accepted by the defendant. The defendant subsequently refused to assign on the ground that the lessor had withheld his consent, and the plaintiff sued for specific performance of the agree ment: Held, (i) that the agreement was not, for its coming into being, conditional or contingent on the obtaining of the lessor 's consent, the obligation to obtain the lessor 's consent being only a term of the agreement which the defend ant had to fulfil; (ii) the words "such consent, however, not to be unreasonably withheld in the case of a respectable or responsible person" in the leasedeed did not amount to a separate or independent covenant by the lessor that he would not refuse consent except on reasonable grounds in the case of a respectable or responsible person, but only limited or qualified the leesee 's covenant not to assign with. out the lessor 's consent, by relieving him from the burden of the covenant if the lessor withheld his consent unreasonably in the case of proposed assignment to a respectable or respon sible person ; (iii) that, as the plaintiff was admittedly a respectable and responsible person and on the facts of the case the lessor 's refusal to give consent was unreasonable, the defendant could validly assign the lease without such consent; (iv) that the court could come to a decision on this matter even though the lessor was not a party to the suit and the decision might not bind him; (v) that the defendant could not under these circumstances plead the absence of the lessor 's consent as relieving him from the obligation to perform his part of the agreement if the plaintiff insisted on his carrying out the agreement even though the lessor had not given his consent; and the plain tiff was therefore entitled to a decree for specifie per formance of the agreement.
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What is the summary of this judgment?
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The defendant has now come up before us in appeal from this judgment and decree of the appeal Court. The first point urged by learned counsel appearing in support of this appeal is that, being subject to the consent of the lessor, the agreement was contingent on the defendant obtaining such consent and as the defendant could not secure the lessor 's consent no effective agreement came into being which could be ordered to be specifically performed. The determination of this question must depend on a correct analysis and ascertainment of the meaning and import of the correspondence by which the agreement is said to have been arrived at. It was on January 9.7, 1945, that the plaintiff offered to purchase the defendant 's leasehold interest in the said premises upon terms and conditions set forth in the plaintiff 's letter of that date. Clauses 3 and 4 of those terms were as follows: "(3). The lease will be transferred in my favour as from the 1st February, 1945, and I shall be entitled to recover rents from the tenants as from that date and shall pay the rent to the superior landlord and municipal taxes from that date.
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The defendant had obtained certain premises on lease under a deed which contained a covenant by the lessee "not to assign the demised premises or any part thereof without first obtaining the written consent of the lessor, such consent, however, not to be unreasonably withheld in the ease of respectable or responsible person ". After some offers and counter offers the plaintiff finally made an offer to purchase the defendant 's leasehold interest on certain terms one of which was that "the consent of the landlord will be obtained by you before the completion of the sale "; and the offer was unconditionally accepted by the defendant. The defendant subsequently refused to assign on the ground that the lessor had withheld his consent, and the plaintiff sued for specific performance of the agree ment: Held, (i) that the agreement was not, for its coming into being, conditional or contingent on the obtaining of the lessor 's consent, the obligation to obtain the lessor 's consent being only a term of the agreement which the defend ant had to fulfil; (ii) the words "such consent, however, not to be unreasonably withheld in the case of a respectable or responsible person" in the leasedeed did not amount to a separate or independent covenant by the lessor that he would not refuse consent except on reasonable grounds in the case of a respectable or responsible person, but only limited or qualified the leesee 's covenant not to assign with. out the lessor 's consent, by relieving him from the burden of the covenant if the lessor withheld his consent unreasonably in the case of proposed assignment to a respectable or respon sible person ; (iii) that, as the plaintiff was admittedly a respectable and responsible person and on the facts of the case the lessor 's refusal to give consent was unreasonable, the defendant could validly assign the lease without such consent; (iv) that the court could come to a decision on this matter even though the lessor was not a party to the suit and the decision might not bind him; (v) that the defendant could not under these circumstances plead the absence of the lessor 's consent as relieving him from the obligation to perform his part of the agreement if the plaintiff insisted on his carrying out the agreement even though the lessor had not given his consent; and the plain tiff was therefore entitled to a decree for specifie per formance of the agreement.
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What is the summary of this judgment?
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You shall have to obtain the necessary consent for the transfer of the lease in favour of myself or my nominees from the said Maharaja of Cossimbazar before the execution of the transfer of lease in my favour. ' ' The defendant replied to the plaintiff 's above letter on January 28, 1945. By this reply the defendant expressed his willingness to transfer the lease to the plaintiff on terms contained therein. Clauses 3 and 4 of this letter were as follows: 846 "(3) If your final acceptance as stated above is re ceived within 30th January current and if I am able to obtain the consent of Maharaja Cossimbazar for transfer of the leasehold interest wi. thin the first week of February, 1945, I agree to your para 3. (4) Your para 4 is agreed to but the name or names of the persons to be mentioned in the sale deed for whom per mission is to be taken from Maharaja Cossimbazar should be clearly stated with their respective addresses. "
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The defendant had obtained certain premises on lease under a deed which contained a covenant by the lessee "not to assign the demised premises or any part thereof without first obtaining the written consent of the lessor, such consent, however, not to be unreasonably withheld in the ease of respectable or responsible person ". After some offers and counter offers the plaintiff finally made an offer to purchase the defendant 's leasehold interest on certain terms one of which was that "the consent of the landlord will be obtained by you before the completion of the sale "; and the offer was unconditionally accepted by the defendant. The defendant subsequently refused to assign on the ground that the lessor had withheld his consent, and the plaintiff sued for specific performance of the agree ment: Held, (i) that the agreement was not, for its coming into being, conditional or contingent on the obtaining of the lessor 's consent, the obligation to obtain the lessor 's consent being only a term of the agreement which the defend ant had to fulfil; (ii) the words "such consent, however, not to be unreasonably withheld in the case of a respectable or responsible person" in the leasedeed did not amount to a separate or independent covenant by the lessor that he would not refuse consent except on reasonable grounds in the case of a respectable or responsible person, but only limited or qualified the leesee 's covenant not to assign with. out the lessor 's consent, by relieving him from the burden of the covenant if the lessor withheld his consent unreasonably in the case of proposed assignment to a respectable or respon sible person ; (iii) that, as the plaintiff was admittedly a respectable and responsible person and on the facts of the case the lessor 's refusal to give consent was unreasonable, the defendant could validly assign the lease without such consent; (iv) that the court could come to a decision on this matter even though the lessor was not a party to the suit and the decision might not bind him; (v) that the defendant could not under these circumstances plead the absence of the lessor 's consent as relieving him from the obligation to perform his part of the agreement if the plaintiff insisted on his carrying out the agreement even though the lessor had not given his consent; and the plain tiff was therefore entitled to a decree for specifie per formance of the agreement.
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What is the summary of this judgment?
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It is quite clear that no agreement was concluded by these two letters for the defendant 's letter was not an unconditional acceptance of the plaintiff 's offer but amounted in law to only a counter offer. By clause 3 the defendant offered to transfer the lease to the plaintiff as from February 1, 1945, so as to entitle the plaintiff to realize the rents from that date and to be liable to pay the rent to the lessor also from that date on two conditions, namely, that the plaintiff 's acceptance was received within January 30, 1945, and the defendant was able to obtain the lessor 's consent within the first week of February, 1945. This clause did not make the offer itself contingent on the obtaining of the lessor 's consent but made one of the terms of the offer, namely, that the lease would be transferred as from February 1, 1945, conditional on the obtaining of the lessor 's consent within the first week of February, 1945. Likewise, subject to the name of the assignee being clearly stated the defendant by clause 4 offered to obtain the lessor 's consent to the assignment of the lease. Clause 4 of the defendant 's letter was not so expressed as to make the defendant 's offer contingent on his obtaining the les sor 's consent. On the contrary, clause 4 constituted one of the terms of the offer which, on the offer being accepted, would become binding on the defendant as one of the terms of the agreement.
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The defendant had obtained certain premises on lease under a deed which contained a covenant by the lessee "not to assign the demised premises or any part thereof without first obtaining the written consent of the lessor, such consent, however, not to be unreasonably withheld in the ease of respectable or responsible person ". After some offers and counter offers the plaintiff finally made an offer to purchase the defendant 's leasehold interest on certain terms one of which was that "the consent of the landlord will be obtained by you before the completion of the sale "; and the offer was unconditionally accepted by the defendant. The defendant subsequently refused to assign on the ground that the lessor had withheld his consent, and the plaintiff sued for specific performance of the agree ment: Held, (i) that the agreement was not, for its coming into being, conditional or contingent on the obtaining of the lessor 's consent, the obligation to obtain the lessor 's consent being only a term of the agreement which the defend ant had to fulfil; (ii) the words "such consent, however, not to be unreasonably withheld in the case of a respectable or responsible person" in the leasedeed did not amount to a separate or independent covenant by the lessor that he would not refuse consent except on reasonable grounds in the case of a respectable or responsible person, but only limited or qualified the leesee 's covenant not to assign with. out the lessor 's consent, by relieving him from the burden of the covenant if the lessor withheld his consent unreasonably in the case of proposed assignment to a respectable or respon sible person ; (iii) that, as the plaintiff was admittedly a respectable and responsible person and on the facts of the case the lessor 's refusal to give consent was unreasonable, the defendant could validly assign the lease without such consent; (iv) that the court could come to a decision on this matter even though the lessor was not a party to the suit and the decision might not bind him; (v) that the defendant could not under these circumstances plead the absence of the lessor 's consent as relieving him from the obligation to perform his part of the agreement if the plaintiff insisted on his carrying out the agreement even though the lessor had not given his consent; and the plain tiff was therefore entitled to a decree for specifie per formance of the agreement.
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What is the summary of this judgment?
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The plaintiff, however, does not appear to have accepted the defendant 's counter offer but on January 29, 1945, through his solicitors made a fresh offer to purchase the defendant 's leasehold interest at Rs. 1,80,000 on the following terms: 847 "(a) That the earnest money will be Rs. 5,000 (Rupees five thousand) instead of Rs. 30,000. (b) Our client will have the conveyance in his own favour. The consent of the landlord will be obtained by you before the completion of sale.
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The defendant had obtained certain premises on lease under a deed which contained a covenant by the lessee "not to assign the demised premises or any part thereof without first obtaining the written consent of the lessor, such consent, however, not to be unreasonably withheld in the ease of respectable or responsible person ". After some offers and counter offers the plaintiff finally made an offer to purchase the defendant 's leasehold interest on certain terms one of which was that "the consent of the landlord will be obtained by you before the completion of the sale "; and the offer was unconditionally accepted by the defendant. The defendant subsequently refused to assign on the ground that the lessor had withheld his consent, and the plaintiff sued for specific performance of the agree ment: Held, (i) that the agreement was not, for its coming into being, conditional or contingent on the obtaining of the lessor 's consent, the obligation to obtain the lessor 's consent being only a term of the agreement which the defend ant had to fulfil; (ii) the words "such consent, however, not to be unreasonably withheld in the case of a respectable or responsible person" in the leasedeed did not amount to a separate or independent covenant by the lessor that he would not refuse consent except on reasonable grounds in the case of a respectable or responsible person, but only limited or qualified the leesee 's covenant not to assign with. out the lessor 's consent, by relieving him from the burden of the covenant if the lessor withheld his consent unreasonably in the case of proposed assignment to a respectable or respon sible person ; (iii) that, as the plaintiff was admittedly a respectable and responsible person and on the facts of the case the lessor 's refusal to give consent was unreasonable, the defendant could validly assign the lease without such consent; (iv) that the court could come to a decision on this matter even though the lessor was not a party to the suit and the decision might not bind him; (v) that the defendant could not under these circumstances plead the absence of the lessor 's consent as relieving him from the obligation to perform his part of the agreement if the plaintiff insisted on his carrying out the agreement even though the lessor had not given his consent; and the plain tiff was therefore entitled to a decree for specifie per formance of the agreement.
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What is the summary of this judgment?
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(c) That your client will complete the conveyance within a month after the receipt by us of all the original title deeds with you. (d) That the transfer of the property in favour of our client will take effect on and from the 1st February, 1945, irrespective of the date of the conveyance, he being enti tled to all the rents, issues and profits and being liable for all the liabilities in respect thereof since the said date. (e) That our client will not be liable to pay your Solici tor 's Bill of cost in respect of the sale. " Again, it will be noticed that by clause (b) the offer was not made contingent on the obtaining of the lessor 's consent but the plaintiff insisted on the defendant 's obtaining such consent as a substantive term of his offer so that if the offer by being accepted ripened into an agree ment the defendant would be bound to obtain the lessor 's consent as a term of such agreement. The defendant by his solicitors ' letter dated February 1, 1945, purported to accept the plaintiff 's last offer with a slight reservation, namely, "As regards clause (d) of your said letter, it is dis tinctly understood that the same should be given effect to only in case the conveyance is completed in terms of clause (c) of your said letter. " On February 2, 1945, the plaintiff by his solicitors ' letter of that date unconditionally accepted this reserva tion and so a concluded agreement was arrived at between the parties.
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The defendant had obtained certain premises on lease under a deed which contained a covenant by the lessee "not to assign the demised premises or any part thereof without first obtaining the written consent of the lessor, such consent, however, not to be unreasonably withheld in the ease of respectable or responsible person ". After some offers and counter offers the plaintiff finally made an offer to purchase the defendant 's leasehold interest on certain terms one of which was that "the consent of the landlord will be obtained by you before the completion of the sale "; and the offer was unconditionally accepted by the defendant. The defendant subsequently refused to assign on the ground that the lessor had withheld his consent, and the plaintiff sued for specific performance of the agree ment: Held, (i) that the agreement was not, for its coming into being, conditional or contingent on the obtaining of the lessor 's consent, the obligation to obtain the lessor 's consent being only a term of the agreement which the defend ant had to fulfil; (ii) the words "such consent, however, not to be unreasonably withheld in the case of a respectable or responsible person" in the leasedeed did not amount to a separate or independent covenant by the lessor that he would not refuse consent except on reasonable grounds in the case of a respectable or responsible person, but only limited or qualified the leesee 's covenant not to assign with. out the lessor 's consent, by relieving him from the burden of the covenant if the lessor withheld his consent unreasonably in the case of proposed assignment to a respectable or respon sible person ; (iii) that, as the plaintiff was admittedly a respectable and responsible person and on the facts of the case the lessor 's refusal to give consent was unreasonable, the defendant could validly assign the lease without such consent; (iv) that the court could come to a decision on this matter even though the lessor was not a party to the suit and the decision might not bind him; (v) that the defendant could not under these circumstances plead the absence of the lessor 's consent as relieving him from the obligation to perform his part of the agreement if the plaintiff insisted on his carrying out the agreement even though the lessor had not given his consent; and the plain tiff was therefore entitled to a decree for specifie per formance of the agreement.
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What is the summary of this judgment?
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This agreement was not, for its coming into being, contingent or conditional on the obtaining of the lessor 's consent. The obligation to obtain the lessor 's consent was cast upon the defendant as a term of the agreement. In our judgment the Court below was right in holding that the agreement 848 itself was not contingent as contended for by the appellant. The contentions next advanced by learned counsel for the appellant relate to the lessee 's covenant contained in sub clause (6) of clause 2 of the lease to which reference has already been made. The legal incidents of such a covenant are now well established by judicial decisions referred to in the judgment of the High Court and it is not necessary to refer to them in detail. Suffice it to say, that the words "such consent, however, not to be unreasonably withheld in the case of respectable or responsible person" contained in the covenant do not amount to a separate or independent covenant by the lessor that he would not refuse consent except upon reasonable grounds in the case of respectable or responsible person, but that those words limit or qualify the lessee 's covenant not to assign the demised premises without the consent in writing of the lessor.
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The defendant had obtained certain premises on lease under a deed which contained a covenant by the lessee "not to assign the demised premises or any part thereof without first obtaining the written consent of the lessor, such consent, however, not to be unreasonably withheld in the ease of respectable or responsible person ". After some offers and counter offers the plaintiff finally made an offer to purchase the defendant 's leasehold interest on certain terms one of which was that "the consent of the landlord will be obtained by you before the completion of the sale "; and the offer was unconditionally accepted by the defendant. The defendant subsequently refused to assign on the ground that the lessor had withheld his consent, and the plaintiff sued for specific performance of the agree ment: Held, (i) that the agreement was not, for its coming into being, conditional or contingent on the obtaining of the lessor 's consent, the obligation to obtain the lessor 's consent being only a term of the agreement which the defend ant had to fulfil; (ii) the words "such consent, however, not to be unreasonably withheld in the case of a respectable or responsible person" in the leasedeed did not amount to a separate or independent covenant by the lessor that he would not refuse consent except on reasonable grounds in the case of a respectable or responsible person, but only limited or qualified the leesee 's covenant not to assign with. out the lessor 's consent, by relieving him from the burden of the covenant if the lessor withheld his consent unreasonably in the case of proposed assignment to a respectable or respon sible person ; (iii) that, as the plaintiff was admittedly a respectable and responsible person and on the facts of the case the lessor 's refusal to give consent was unreasonable, the defendant could validly assign the lease without such consent; (iv) that the court could come to a decision on this matter even though the lessor was not a party to the suit and the decision might not bind him; (v) that the defendant could not under these circumstances plead the absence of the lessor 's consent as relieving him from the obligation to perform his part of the agreement if the plaintiff insisted on his carrying out the agreement even though the lessor had not given his consent; and the plain tiff was therefore entitled to a decree for specifie per formance of the agreement.
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What is the summary of this judgment?
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In other words, those words have the effect of relieving the lessee from the burden of this covenant if the lessor withholds his consent unreasonably in case of proposed assignment to a respectable or responsible person. In this view of the matter, the plaintiff contended that he being a respectable and responsible person the lessor had unreasonably withheld his consent to the proposed assignment to him and had consequently relieved the defendant from the burden of his covenant so that the defendant could legally and validly assign the lease to him without such consent of the lessor. The first objection taken by the appellant to this contention of the plaintiff is that in his plaint the plain tiff insisted on the defendant obtaining the lessor 's consent and that he should not have been permitted to make this new case at the hearing. Both the trial Court and the appeal Court held that there was, strictly speaking, no element of surprise, particularly because the plaintiff relied upon facts admitted and proved by the defendant himself and that it was open to him to take this point. We may also add that this point was in a manner indicated in the plaint 849 itself for in paragraph 11 thereof it was pleaded that the plaintiff was a responsible and respectable person and that if consent to assign in his favour was withdrawn such with drawal would be unreasonable and would not be valid and binding. In view of such pleading we are unable to say that the point raised by the plaintiff at the trial was an en tirely new point or that the defendant was taken by sur prise.
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The defendant had obtained certain premises on lease under a deed which contained a covenant by the lessee "not to assign the demised premises or any part thereof without first obtaining the written consent of the lessor, such consent, however, not to be unreasonably withheld in the ease of respectable or responsible person ". After some offers and counter offers the plaintiff finally made an offer to purchase the defendant 's leasehold interest on certain terms one of which was that "the consent of the landlord will be obtained by you before the completion of the sale "; and the offer was unconditionally accepted by the defendant. The defendant subsequently refused to assign on the ground that the lessor had withheld his consent, and the plaintiff sued for specific performance of the agree ment: Held, (i) that the agreement was not, for its coming into being, conditional or contingent on the obtaining of the lessor 's consent, the obligation to obtain the lessor 's consent being only a term of the agreement which the defend ant had to fulfil; (ii) the words "such consent, however, not to be unreasonably withheld in the case of a respectable or responsible person" in the leasedeed did not amount to a separate or independent covenant by the lessor that he would not refuse consent except on reasonable grounds in the case of a respectable or responsible person, but only limited or qualified the leesee 's covenant not to assign with. out the lessor 's consent, by relieving him from the burden of the covenant if the lessor withheld his consent unreasonably in the case of proposed assignment to a respectable or respon sible person ; (iii) that, as the plaintiff was admittedly a respectable and responsible person and on the facts of the case the lessor 's refusal to give consent was unreasonable, the defendant could validly assign the lease without such consent; (iv) that the court could come to a decision on this matter even though the lessor was not a party to the suit and the decision might not bind him; (v) that the defendant could not under these circumstances plead the absence of the lessor 's consent as relieving him from the obligation to perform his part of the agreement if the plaintiff insisted on his carrying out the agreement even though the lessor had not given his consent; and the plain tiff was therefore entitled to a decree for specifie per formance of the agreement.
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What is the summary of this judgment?
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The next objection of the appellant was that this point should not have been allowed to be raised and no evidence should have been permitted to be adduced on this point in the absence of the lessor as a party to the suit. We do not think that there is any force in this objection. The Court had to decide whether it was a case where relief by way of specific performance should be given. The Court could not force the defendant to apply to the lessor for his consent nor could the Court force the lessor to give his consent and, if the matter only depended on the consent, the Court would not have ordinarily, in those circumstances, directed the agreement for assignment to be specifically enforced. The Court, therefore, had also to consider, for the purposes of this case, as to whether the circumstances were such as would indicate that the defendant had been relieved of the burden of his covenant by reason of the lessor having unrea sonably withheld his consent. It is true that a decision on that question in this suit would not be binding on the lessor, but nevertheless the Court had to come to a decision on that question for the purposes of this suit as between the parties thereto in order to award the relief of specific performance to the plaintiff.
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The defendant had obtained certain premises on lease under a deed which contained a covenant by the lessee "not to assign the demised premises or any part thereof without first obtaining the written consent of the lessor, such consent, however, not to be unreasonably withheld in the ease of respectable or responsible person ". After some offers and counter offers the plaintiff finally made an offer to purchase the defendant 's leasehold interest on certain terms one of which was that "the consent of the landlord will be obtained by you before the completion of the sale "; and the offer was unconditionally accepted by the defendant. The defendant subsequently refused to assign on the ground that the lessor had withheld his consent, and the plaintiff sued for specific performance of the agree ment: Held, (i) that the agreement was not, for its coming into being, conditional or contingent on the obtaining of the lessor 's consent, the obligation to obtain the lessor 's consent being only a term of the agreement which the defend ant had to fulfil; (ii) the words "such consent, however, not to be unreasonably withheld in the case of a respectable or responsible person" in the leasedeed did not amount to a separate or independent covenant by the lessor that he would not refuse consent except on reasonable grounds in the case of a respectable or responsible person, but only limited or qualified the leesee 's covenant not to assign with. out the lessor 's consent, by relieving him from the burden of the covenant if the lessor withheld his consent unreasonably in the case of proposed assignment to a respectable or respon sible person ; (iii) that, as the plaintiff was admittedly a respectable and responsible person and on the facts of the case the lessor 's refusal to give consent was unreasonable, the defendant could validly assign the lease without such consent; (iv) that the court could come to a decision on this matter even though the lessor was not a party to the suit and the decision might not bind him; (v) that the defendant could not under these circumstances plead the absence of the lessor 's consent as relieving him from the obligation to perform his part of the agreement if the plaintiff insisted on his carrying out the agreement even though the lessor had not given his consent; and the plain tiff was therefore entitled to a decree for specifie per formance of the agreement.
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What is the summary of this judgment?
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The third objection of the appellant is that the appeal Court should not have allowed the plaintiff to adduce fur ther evidence. It will be recalled that the appeal Court directed the evidence of the Maharaja of Cossimbazar to be taken during the hearing of the appeal. The judgment of the appeal Court clearly indicates that it was the appeal Court that "required" the evidence "in order to clear up the matter" and 109 850 "for the purpose of enabling it to come to a proper decision on this point ". The matter, therefore, is fully covered by Order XLI, rule 27 of the Code of Civil Procedure and no objection can be taken to the course adopted by the appeal Court on that ground. We do not think there is any reason to interfere in the exercise of the Court 's discretion. The fourth objection is that the High Court was wrong in holding that the term in the agreement that the defendant must obtain the consent of the lessor before executing the assignment to the plaintiff was a term for the benefit of the plaintiff only.
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The defendant had obtained certain premises on lease under a deed which contained a covenant by the lessee "not to assign the demised premises or any part thereof without first obtaining the written consent of the lessor, such consent, however, not to be unreasonably withheld in the ease of respectable or responsible person ". After some offers and counter offers the plaintiff finally made an offer to purchase the defendant 's leasehold interest on certain terms one of which was that "the consent of the landlord will be obtained by you before the completion of the sale "; and the offer was unconditionally accepted by the defendant. The defendant subsequently refused to assign on the ground that the lessor had withheld his consent, and the plaintiff sued for specific performance of the agree ment: Held, (i) that the agreement was not, for its coming into being, conditional or contingent on the obtaining of the lessor 's consent, the obligation to obtain the lessor 's consent being only a term of the agreement which the defend ant had to fulfil; (ii) the words "such consent, however, not to be unreasonably withheld in the case of a respectable or responsible person" in the leasedeed did not amount to a separate or independent covenant by the lessor that he would not refuse consent except on reasonable grounds in the case of a respectable or responsible person, but only limited or qualified the leesee 's covenant not to assign with. out the lessor 's consent, by relieving him from the burden of the covenant if the lessor withheld his consent unreasonably in the case of proposed assignment to a respectable or respon sible person ; (iii) that, as the plaintiff was admittedly a respectable and responsible person and on the facts of the case the lessor 's refusal to give consent was unreasonable, the defendant could validly assign the lease without such consent; (iv) that the court could come to a decision on this matter even though the lessor was not a party to the suit and the decision might not bind him; (v) that the defendant could not under these circumstances plead the absence of the lessor 's consent as relieving him from the obligation to perform his part of the agreement if the plaintiff insisted on his carrying out the agreement even though the lessor had not given his consent; and the plain tiff was therefore entitled to a decree for specifie per formance of the agreement.
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What is the summary of this judgment?
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It will be recalled that that was a term which was introduced by the plaintiff in his offer that eventually ripened into an agreement. The term was not expressed in a manner indicating that it was inserted in the agreement for the protection of the defendant. In other words, the objection that the consent of the lessor had not been obtained was one which could be availed of by the plaintiff who could rescind the contract and claim damages for the breach thereof. We cannot see how, in view of the language used in the correspondence, the defendant could plead the absence of the lessor 's consent as relieving him from the obligation of performing his part of the agreement if the plaintiff waived the objection and insisted on his carrying out the agreement. The absence of consent may amount to a defect in the title of the defendant, but which the plaintiff was willing to accept. Finally it is said that by directing the specific per formance of the agreement the Court has exposed the defend ant to the risk of an action for damages for breach of covenant.
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The defendant had obtained certain premises on lease under a deed which contained a covenant by the lessee "not to assign the demised premises or any part thereof without first obtaining the written consent of the lessor, such consent, however, not to be unreasonably withheld in the ease of respectable or responsible person ". After some offers and counter offers the plaintiff finally made an offer to purchase the defendant 's leasehold interest on certain terms one of which was that "the consent of the landlord will be obtained by you before the completion of the sale "; and the offer was unconditionally accepted by the defendant. The defendant subsequently refused to assign on the ground that the lessor had withheld his consent, and the plaintiff sued for specific performance of the agree ment: Held, (i) that the agreement was not, for its coming into being, conditional or contingent on the obtaining of the lessor 's consent, the obligation to obtain the lessor 's consent being only a term of the agreement which the defend ant had to fulfil; (ii) the words "such consent, however, not to be unreasonably withheld in the case of a respectable or responsible person" in the leasedeed did not amount to a separate or independent covenant by the lessor that he would not refuse consent except on reasonable grounds in the case of a respectable or responsible person, but only limited or qualified the leesee 's covenant not to assign with. out the lessor 's consent, by relieving him from the burden of the covenant if the lessor withheld his consent unreasonably in the case of proposed assignment to a respectable or respon sible person ; (iii) that, as the plaintiff was admittedly a respectable and responsible person and on the facts of the case the lessor 's refusal to give consent was unreasonable, the defendant could validly assign the lease without such consent; (iv) that the court could come to a decision on this matter even though the lessor was not a party to the suit and the decision might not bind him; (v) that the defendant could not under these circumstances plead the absence of the lessor 's consent as relieving him from the obligation to perform his part of the agreement if the plaintiff insisted on his carrying out the agreement even though the lessor had not given his consent; and the plain tiff was therefore entitled to a decree for specifie per formance of the agreement.
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What is the summary of this judgment?
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If the assignment of the lease by the defendant to the plaintiff without the lessor 's consent amounted to a breach of covenant, the lessor could forfeit the lease and sue for possession. Such a course would affect only the plaintiff but not the defendant, for he had already parted with the lease for valuable consideration. It is said that the lessor could sue the defendant for damages for breach of that 851 covenant and the Court should not, by decreeing specific performance, have put the defendant in that perilous posi tion, There appear to us to be two answers to this argu ment, namely, (1) that the defendant should have, by proper language, made his obligation to transfer dependent or conditional upon his being able to obtain the lessor 's consent which he did not do and (2) that the plaintiff being a respectable and responsible person of means, the measure of damages could only be a problematic conjecture. Indeed, it may have been precisely for this very consideration that the defendant had unconditionally agreed to obtain the consent of the lessor and to assign his interest in the lease. That the plaintiff was a respectable and responsible person cannot, on the evidence before the Court, be denied or disputed and, indeed, learned counsel for the appellant did not so contend. We find ourselves in agreement with the High Court that in the circumstances and on the evidence on record the lessor had unreasonably withheld his consent so as to enable the defendant to assign the lease without such consent.
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The defendant had obtained certain premises on lease under a deed which contained a covenant by the lessee "not to assign the demised premises or any part thereof without first obtaining the written consent of the lessor, such consent, however, not to be unreasonably withheld in the ease of respectable or responsible person ". After some offers and counter offers the plaintiff finally made an offer to purchase the defendant 's leasehold interest on certain terms one of which was that "the consent of the landlord will be obtained by you before the completion of the sale "; and the offer was unconditionally accepted by the defendant. The defendant subsequently refused to assign on the ground that the lessor had withheld his consent, and the plaintiff sued for specific performance of the agree ment: Held, (i) that the agreement was not, for its coming into being, conditional or contingent on the obtaining of the lessor 's consent, the obligation to obtain the lessor 's consent being only a term of the agreement which the defend ant had to fulfil; (ii) the words "such consent, however, not to be unreasonably withheld in the case of a respectable or responsible person" in the leasedeed did not amount to a separate or independent covenant by the lessor that he would not refuse consent except on reasonable grounds in the case of a respectable or responsible person, but only limited or qualified the leesee 's covenant not to assign with. out the lessor 's consent, by relieving him from the burden of the covenant if the lessor withheld his consent unreasonably in the case of proposed assignment to a respectable or respon sible person ; (iii) that, as the plaintiff was admittedly a respectable and responsible person and on the facts of the case the lessor 's refusal to give consent was unreasonable, the defendant could validly assign the lease without such consent; (iv) that the court could come to a decision on this matter even though the lessor was not a party to the suit and the decision might not bind him; (v) that the defendant could not under these circumstances plead the absence of the lessor 's consent as relieving him from the obligation to perform his part of the agreement if the plaintiff insisted on his carrying out the agreement even though the lessor had not given his consent; and the plain tiff was therefore entitled to a decree for specifie per formance of the agreement.
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What is the summary of this judgment?
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In the circumstances, we are satisfied that both the trial Court and the appeal Court exercised their discre tion properly and no ground has been made out for our inter fering with the judgment of the High Court. The appeal is accordingly dismissed. The appellant to pay the costs of this appeal. Appeal dismissed.
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The defendant had obtained certain premises on lease under a deed which contained a covenant by the lessee "not to assign the demised premises or any part thereof without first obtaining the written consent of the lessor, such consent, however, not to be unreasonably withheld in the ease of respectable or responsible person ". After some offers and counter offers the plaintiff finally made an offer to purchase the defendant 's leasehold interest on certain terms one of which was that "the consent of the landlord will be obtained by you before the completion of the sale "; and the offer was unconditionally accepted by the defendant. The defendant subsequently refused to assign on the ground that the lessor had withheld his consent, and the plaintiff sued for specific performance of the agree ment: Held, (i) that the agreement was not, for its coming into being, conditional or contingent on the obtaining of the lessor 's consent, the obligation to obtain the lessor 's consent being only a term of the agreement which the defend ant had to fulfil; (ii) the words "such consent, however, not to be unreasonably withheld in the case of a respectable or responsible person" in the leasedeed did not amount to a separate or independent covenant by the lessor that he would not refuse consent except on reasonable grounds in the case of a respectable or responsible person, but only limited or qualified the leesee 's covenant not to assign with. out the lessor 's consent, by relieving him from the burden of the covenant if the lessor withheld his consent unreasonably in the case of proposed assignment to a respectable or respon sible person ; (iii) that, as the plaintiff was admittedly a respectable and responsible person and on the facts of the case the lessor 's refusal to give consent was unreasonable, the defendant could validly assign the lease without such consent; (iv) that the court could come to a decision on this matter even though the lessor was not a party to the suit and the decision might not bind him; (v) that the defendant could not under these circumstances plead the absence of the lessor 's consent as relieving him from the obligation to perform his part of the agreement if the plaintiff insisted on his carrying out the agreement even though the lessor had not given his consent; and the plain tiff was therefore entitled to a decree for specifie per formance of the agreement.
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What is the summary of this judgment?
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Appeal No. 1353 of 1975. (Appeal by Special Leave from the Judgment and Order dated 1 11 1974 of the Bombay High Court in Appeal No. 493 of 1966 from original Decree.) F.S. Nariman, B.R.
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The appellant, a statutory body framed the scales of rates of demurrage of goods under section 43 (a) of the Bombay 'Port Trust Act 1879 which was sanctioned by the Central Government. Later on the Central Government in its D.O. letter dated 7th September 1952 addressed to the appel lant expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control. It also expressed its hope that the appellant would recon sider its decision and fall in line with the practice of the Calcutta and Madras Ports. The Port considered this letter and after taking into consideration the several circum stances suggested that demurrage may be levied on a graded scale and the Central Government did not take any further action. In fact, the appellant has prescribed reduced demurrage levy from the expiry of the free days. In respect of the three consignments of Chinese news print imported by the respondent for home consumption in India, the appellant claimed demurrage for the period from March 25, 1957 and as the amount was not paid the goods were sold in public auction. The respondent thereafter filed a suit for recovery of a sum of Rs. 24,950/ and interest thereon from the appellant being the aggregate loss sus tained by it. The appellant denied that liability and pleaded that it was, in law, entitled to collect the demur rage levied on the respondent and as it failed to pay the demurrage, the appellant was entitled to sell the goods by auction. The City Civil Court, Bombay decreed the suit with interest at 6 per cent per annum from the date of the suit till judgment and thereafter at 4 per cent per annum and costs of the suit. The appeal preferred by the appellant to the High Court failed and the decree stood confirmed. The decretal amount deposited in the High Court during the pendency of the appeal was withdrawn by the respondent. Allowing the appeal by Special leave the Court, HELD: (1) The High Court was in error in holding that the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demur rage under section 43(a) could never be imposed as long as the goods were detained for the purpose of the operation of the Import Trade Control regulations. [350 E] (2) The D.O. letter addressed by the Government of India should not be construed as a direction calling upon the Board to modify any portion of the scale framed by the Port Trust. The language of the D.O. would indicate that the Government wanted the Port Trust to consider the Govern ment 's proposal and nothing further. The Port Trust consid ered the proposal and made its report. Section 43B(1A) has no application to this case. [346 F H] (3) It is no doubt true that before clearance is given by the Import. Trade Control Authorities and the Customs Authorities, the goods cannot be cleared by the importer. Neither can the Port Trust deliver the goods without the consent of the Import Trade Control Authorities. Taking into account the hardship caused to the importer because of the delay certain concessions in demurrage rates are per mitted. As the scales of rates are permitted by virtue of the statutory 344 powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B, the rates have the force of law and cannot be questioned. Taking into account the hardship to the importers certain concession has been given but the legality of the rate which are being levied according to law cannot also be questioned. [347 C D; E F] Trustees of the Port of Madras vs M/s Aminchand Pyarelal & Ors. [1976]. SCR 721. followed. (4) Even though the delay in clearing the goods was not due to the negligence of the importer for which he should be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law, the validity of which cannot be questioned, In the instant case the claim of the appellant cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is respon sible. [349 G H] Aktieselskabet Reidar vs Arcos, Limited [1927] 1 K.B. 352;Budgett & Co. vs Bippington & Co. [1891] 1 Q.B.p. 35 and Compania Crystal De Vapores of Panama vs Herman & Mohatta (India) Ltd., quoted with approval. (5) Section 43, 43A and 43B of the Bombay Port Trust Act 1891 which make reference to "free days" are intended only to omit Sundays, other holidays or on which the assessment of customs duty cannot be taken up and would not include the entire period during which the Import Trade Control formali ties have not been completed. [350 C D] (6) Under the powers vested in the Board, it is its statutory duty to collect the rates, to have a lien on the goods and seize and detain the goods until such rates are fully paid. The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged or when the goods are not removed from its premises within the limited time. [347 A B]
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What is the summary of this judgment?
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Zaiawala, B.S. Bisaria, J.B. Dadac hanji, O.C. Mathut, K.J. John and Shri Narain, for the appellants. P.H. Parekh and Miss Manju Jetely, for the respondent.
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The appellant, a statutory body framed the scales of rates of demurrage of goods under section 43 (a) of the Bombay 'Port Trust Act 1879 which was sanctioned by the Central Government. Later on the Central Government in its D.O. letter dated 7th September 1952 addressed to the appel lant expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control. It also expressed its hope that the appellant would recon sider its decision and fall in line with the practice of the Calcutta and Madras Ports. The Port considered this letter and after taking into consideration the several circum stances suggested that demurrage may be levied on a graded scale and the Central Government did not take any further action. In fact, the appellant has prescribed reduced demurrage levy from the expiry of the free days. In respect of the three consignments of Chinese news print imported by the respondent for home consumption in India, the appellant claimed demurrage for the period from March 25, 1957 and as the amount was not paid the goods were sold in public auction. The respondent thereafter filed a suit for recovery of a sum of Rs. 24,950/ and interest thereon from the appellant being the aggregate loss sus tained by it. The appellant denied that liability and pleaded that it was, in law, entitled to collect the demur rage levied on the respondent and as it failed to pay the demurrage, the appellant was entitled to sell the goods by auction. The City Civil Court, Bombay decreed the suit with interest at 6 per cent per annum from the date of the suit till judgment and thereafter at 4 per cent per annum and costs of the suit. The appeal preferred by the appellant to the High Court failed and the decree stood confirmed. The decretal amount deposited in the High Court during the pendency of the appeal was withdrawn by the respondent. Allowing the appeal by Special leave the Court, HELD: (1) The High Court was in error in holding that the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demur rage under section 43(a) could never be imposed as long as the goods were detained for the purpose of the operation of the Import Trade Control regulations. [350 E] (2) The D.O. letter addressed by the Government of India should not be construed as a direction calling upon the Board to modify any portion of the scale framed by the Port Trust. The language of the D.O. would indicate that the Government wanted the Port Trust to consider the Govern ment 's proposal and nothing further. The Port Trust consid ered the proposal and made its report. Section 43B(1A) has no application to this case. [346 F H] (3) It is no doubt true that before clearance is given by the Import. Trade Control Authorities and the Customs Authorities, the goods cannot be cleared by the importer. Neither can the Port Trust deliver the goods without the consent of the Import Trade Control Authorities. Taking into account the hardship caused to the importer because of the delay certain concessions in demurrage rates are per mitted. As the scales of rates are permitted by virtue of the statutory 344 powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B, the rates have the force of law and cannot be questioned. Taking into account the hardship to the importers certain concession has been given but the legality of the rate which are being levied according to law cannot also be questioned. [347 C D; E F] Trustees of the Port of Madras vs M/s Aminchand Pyarelal & Ors. [1976]. SCR 721. followed. (4) Even though the delay in clearing the goods was not due to the negligence of the importer for which he should be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law, the validity of which cannot be questioned, In the instant case the claim of the appellant cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is respon sible. [349 G H] Aktieselskabet Reidar vs Arcos, Limited [1927] 1 K.B. 352;Budgett & Co. vs Bippington & Co. [1891] 1 Q.B.p. 35 and Compania Crystal De Vapores of Panama vs Herman & Mohatta (India) Ltd., quoted with approval. (5) Section 43, 43A and 43B of the Bombay Port Trust Act 1891 which make reference to "free days" are intended only to omit Sundays, other holidays or on which the assessment of customs duty cannot be taken up and would not include the entire period during which the Import Trade Control formali ties have not been completed. [350 C D] (6) Under the powers vested in the Board, it is its statutory duty to collect the rates, to have a lien on the goods and seize and detain the goods until such rates are fully paid. The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged or when the goods are not removed from its premises within the limited time. [347 A B]
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What is the summary of this judgment?
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The Judgment of the Court was delivered by KAILASAM, J. This appeal by special leave is preferred by the Board of Trustees of the Port of Bombay against the judgment of the Bench of the Bombay High Court in first appeal confirming the decree passed by the City Civil Court and dismissing the appeal with costs. The respondents, Indian Goods Supplying Co., a partnership firm in Bombay, filed suit No. 3304 of 1959 in the Bombay City Civil Court at Bombay praying for a decree against the Trustees of the Port of Bombay in the sum of Rs. 24,950 with interest. Three consignments of Chinese newsprint were imported by the respondents for home consumption in India.
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The appellant, a statutory body framed the scales of rates of demurrage of goods under section 43 (a) of the Bombay 'Port Trust Act 1879 which was sanctioned by the Central Government. Later on the Central Government in its D.O. letter dated 7th September 1952 addressed to the appel lant expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control. It also expressed its hope that the appellant would recon sider its decision and fall in line with the practice of the Calcutta and Madras Ports. The Port considered this letter and after taking into consideration the several circum stances suggested that demurrage may be levied on a graded scale and the Central Government did not take any further action. In fact, the appellant has prescribed reduced demurrage levy from the expiry of the free days. In respect of the three consignments of Chinese news print imported by the respondent for home consumption in India, the appellant claimed demurrage for the period from March 25, 1957 and as the amount was not paid the goods were sold in public auction. The respondent thereafter filed a suit for recovery of a sum of Rs. 24,950/ and interest thereon from the appellant being the aggregate loss sus tained by it. The appellant denied that liability and pleaded that it was, in law, entitled to collect the demur rage levied on the respondent and as it failed to pay the demurrage, the appellant was entitled to sell the goods by auction. The City Civil Court, Bombay decreed the suit with interest at 6 per cent per annum from the date of the suit till judgment and thereafter at 4 per cent per annum and costs of the suit. The appeal preferred by the appellant to the High Court failed and the decree stood confirmed. The decretal amount deposited in the High Court during the pendency of the appeal was withdrawn by the respondent. Allowing the appeal by Special leave the Court, HELD: (1) The High Court was in error in holding that the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demur rage under section 43(a) could never be imposed as long as the goods were detained for the purpose of the operation of the Import Trade Control regulations. [350 E] (2) The D.O. letter addressed by the Government of India should not be construed as a direction calling upon the Board to modify any portion of the scale framed by the Port Trust. The language of the D.O. would indicate that the Government wanted the Port Trust to consider the Govern ment 's proposal and nothing further. The Port Trust consid ered the proposal and made its report. Section 43B(1A) has no application to this case. [346 F H] (3) It is no doubt true that before clearance is given by the Import. Trade Control Authorities and the Customs Authorities, the goods cannot be cleared by the importer. Neither can the Port Trust deliver the goods without the consent of the Import Trade Control Authorities. Taking into account the hardship caused to the importer because of the delay certain concessions in demurrage rates are per mitted. As the scales of rates are permitted by virtue of the statutory 344 powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B, the rates have the force of law and cannot be questioned. Taking into account the hardship to the importers certain concession has been given but the legality of the rate which are being levied according to law cannot also be questioned. [347 C D; E F] Trustees of the Port of Madras vs M/s Aminchand Pyarelal & Ors. [1976]. SCR 721. followed. (4) Even though the delay in clearing the goods was not due to the negligence of the importer for which he should be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law, the validity of which cannot be questioned, In the instant case the claim of the appellant cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is respon sible. [349 G H] Aktieselskabet Reidar vs Arcos, Limited [1927] 1 K.B. 352;Budgett & Co. vs Bippington & Co. [1891] 1 Q.B.p. 35 and Compania Crystal De Vapores of Panama vs Herman & Mohatta (India) Ltd., quoted with approval. (5) Section 43, 43A and 43B of the Bombay Port Trust Act 1891 which make reference to "free days" are intended only to omit Sundays, other holidays or on which the assessment of customs duty cannot be taken up and would not include the entire period during which the Import Trade Control formali ties have not been completed. [350 C D] (6) Under the powers vested in the Board, it is its statutory duty to collect the rates, to have a lien on the goods and seize and detain the goods until such rates are fully paid. The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged or when the goods are not removed from its premises within the limited time. [347 A B]
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What is the summary of this judgment?
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The first 2 consignments arrived on February 16, 1957. Suffice it to say that the clearance of the two consignments as well as the third consignment 345 was considerably delayed and the Port Trust claimed demur rage for the period from March 25, 1957. The respondents disputed the right of the Port Trust to charge any demurrage for the period during which the goods were detained by the Customs authorities for analytical test. as well as for the Import Trade Control formalities. It is common ground that so far as the period for analytical test certified by the Customs authorities is concerned the Port Trust cannot charge demurrage. But so far as the period during which the goods were detained for the Import Trade Control formalities by the Customs authorities the Port Trust claimed demurrage.
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The appellant, a statutory body framed the scales of rates of demurrage of goods under section 43 (a) of the Bombay 'Port Trust Act 1879 which was sanctioned by the Central Government. Later on the Central Government in its D.O. letter dated 7th September 1952 addressed to the appel lant expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control. It also expressed its hope that the appellant would recon sider its decision and fall in line with the practice of the Calcutta and Madras Ports. The Port considered this letter and after taking into consideration the several circum stances suggested that demurrage may be levied on a graded scale and the Central Government did not take any further action. In fact, the appellant has prescribed reduced demurrage levy from the expiry of the free days. In respect of the three consignments of Chinese news print imported by the respondent for home consumption in India, the appellant claimed demurrage for the period from March 25, 1957 and as the amount was not paid the goods were sold in public auction. The respondent thereafter filed a suit for recovery of a sum of Rs. 24,950/ and interest thereon from the appellant being the aggregate loss sus tained by it. The appellant denied that liability and pleaded that it was, in law, entitled to collect the demur rage levied on the respondent and as it failed to pay the demurrage, the appellant was entitled to sell the goods by auction. The City Civil Court, Bombay decreed the suit with interest at 6 per cent per annum from the date of the suit till judgment and thereafter at 4 per cent per annum and costs of the suit. The appeal preferred by the appellant to the High Court failed and the decree stood confirmed. The decretal amount deposited in the High Court during the pendency of the appeal was withdrawn by the respondent. Allowing the appeal by Special leave the Court, HELD: (1) The High Court was in error in holding that the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demur rage under section 43(a) could never be imposed as long as the goods were detained for the purpose of the operation of the Import Trade Control regulations. [350 E] (2) The D.O. letter addressed by the Government of India should not be construed as a direction calling upon the Board to modify any portion of the scale framed by the Port Trust. The language of the D.O. would indicate that the Government wanted the Port Trust to consider the Govern ment 's proposal and nothing further. The Port Trust consid ered the proposal and made its report. Section 43B(1A) has no application to this case. [346 F H] (3) It is no doubt true that before clearance is given by the Import. Trade Control Authorities and the Customs Authorities, the goods cannot be cleared by the importer. Neither can the Port Trust deliver the goods without the consent of the Import Trade Control Authorities. Taking into account the hardship caused to the importer because of the delay certain concessions in demurrage rates are per mitted. As the scales of rates are permitted by virtue of the statutory 344 powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B, the rates have the force of law and cannot be questioned. Taking into account the hardship to the importers certain concession has been given but the legality of the rate which are being levied according to law cannot also be questioned. [347 C D; E F] Trustees of the Port of Madras vs M/s Aminchand Pyarelal & Ors. [1976]. SCR 721. followed. (4) Even though the delay in clearing the goods was not due to the negligence of the importer for which he should be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law, the validity of which cannot be questioned, In the instant case the claim of the appellant cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is respon sible. [349 G H] Aktieselskabet Reidar vs Arcos, Limited [1927] 1 K.B. 352;Budgett & Co. vs Bippington & Co. [1891] 1 Q.B.p. 35 and Compania Crystal De Vapores of Panama vs Herman & Mohatta (India) Ltd., quoted with approval. (5) Section 43, 43A and 43B of the Bombay Port Trust Act 1891 which make reference to "free days" are intended only to omit Sundays, other holidays or on which the assessment of customs duty cannot be taken up and would not include the entire period during which the Import Trade Control formali ties have not been completed. [350 C D] (6) Under the powers vested in the Board, it is its statutory duty to collect the rates, to have a lien on the goods and seize and detain the goods until such rates are fully paid. The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged or when the goods are not removed from its premises within the limited time. [347 A B]
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What is the summary of this judgment?
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Due to protracted correspondence between the parties the goods were not cleared and ultimately the suit was filed by the respondents for recovery of a sum of Rs. 24,950 and interest thereon from the Port Trust being the aggregate loss sustained by them. The appellants denied that liabili ty and pleaded that the Port Trust. was in law entitled to ' collect the demurrage levied on the respondents and that as they failed to pay the demurrage the Port Trust was entitled to sell the goods by public auction. The City Civil Court, Bombay, decreed the suit for a sum of Rs. 24,950 with interest at the rate of 6 per cent per annum from the date of the suit till judgment and there after at 4 per cent per annum and costs of the suit.
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The appellant, a statutory body framed the scales of rates of demurrage of goods under section 43 (a) of the Bombay 'Port Trust Act 1879 which was sanctioned by the Central Government. Later on the Central Government in its D.O. letter dated 7th September 1952 addressed to the appel lant expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control. It also expressed its hope that the appellant would recon sider its decision and fall in line with the practice of the Calcutta and Madras Ports. The Port considered this letter and after taking into consideration the several circum stances suggested that demurrage may be levied on a graded scale and the Central Government did not take any further action. In fact, the appellant has prescribed reduced demurrage levy from the expiry of the free days. In respect of the three consignments of Chinese news print imported by the respondent for home consumption in India, the appellant claimed demurrage for the period from March 25, 1957 and as the amount was not paid the goods were sold in public auction. The respondent thereafter filed a suit for recovery of a sum of Rs. 24,950/ and interest thereon from the appellant being the aggregate loss sus tained by it. The appellant denied that liability and pleaded that it was, in law, entitled to collect the demur rage levied on the respondent and as it failed to pay the demurrage, the appellant was entitled to sell the goods by auction. The City Civil Court, Bombay decreed the suit with interest at 6 per cent per annum from the date of the suit till judgment and thereafter at 4 per cent per annum and costs of the suit. The appeal preferred by the appellant to the High Court failed and the decree stood confirmed. The decretal amount deposited in the High Court during the pendency of the appeal was withdrawn by the respondent. Allowing the appeal by Special leave the Court, HELD: (1) The High Court was in error in holding that the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demur rage under section 43(a) could never be imposed as long as the goods were detained for the purpose of the operation of the Import Trade Control regulations. [350 E] (2) The D.O. letter addressed by the Government of India should not be construed as a direction calling upon the Board to modify any portion of the scale framed by the Port Trust. The language of the D.O. would indicate that the Government wanted the Port Trust to consider the Govern ment 's proposal and nothing further. The Port Trust consid ered the proposal and made its report. Section 43B(1A) has no application to this case. [346 F H] (3) It is no doubt true that before clearance is given by the Import. Trade Control Authorities and the Customs Authorities, the goods cannot be cleared by the importer. Neither can the Port Trust deliver the goods without the consent of the Import Trade Control Authorities. Taking into account the hardship caused to the importer because of the delay certain concessions in demurrage rates are per mitted. As the scales of rates are permitted by virtue of the statutory 344 powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B, the rates have the force of law and cannot be questioned. Taking into account the hardship to the importers certain concession has been given but the legality of the rate which are being levied according to law cannot also be questioned. [347 C D; E F] Trustees of the Port of Madras vs M/s Aminchand Pyarelal & Ors. [1976]. SCR 721. followed. (4) Even though the delay in clearing the goods was not due to the negligence of the importer for which he should be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law, the validity of which cannot be questioned, In the instant case the claim of the appellant cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is respon sible. [349 G H] Aktieselskabet Reidar vs Arcos, Limited [1927] 1 K.B. 352;Budgett & Co. vs Bippington & Co. [1891] 1 Q.B.p. 35 and Compania Crystal De Vapores of Panama vs Herman & Mohatta (India) Ltd., quoted with approval. (5) Section 43, 43A and 43B of the Bombay Port Trust Act 1891 which make reference to "free days" are intended only to omit Sundays, other holidays or on which the assessment of customs duty cannot be taken up and would not include the entire period during which the Import Trade Control formali ties have not been completed. [350 C D] (6) Under the powers vested in the Board, it is its statutory duty to collect the rates, to have a lien on the goods and seize and detain the goods until such rates are fully paid. The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged or when the goods are not removed from its premises within the limited time. [347 A B]
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What is the summary of this judgment?
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The appellants preferred an appeal to a Division Bench of the Bombay High Court which dismissed the appeal and confirmed the decree passed by the City Civil Court. When the appeal was pending before the High Court the appellants deposited the decretal amount in court which was withdrawn by the respondents. Mr. Nariman, counsel for the Port Trust, stated that the Port Trust does not want to ask for the repayment of the money and that he will confine himself to the question of the correctness of the decision of the Bombay High Court holding that the Port Trust is not entitled to collect demurrage in the circumstances of this case. It is therefore sufficient for the purposes of the appeal to confine ourselves to determining the question of law which has been raised before the High Court and decided by it. The question that was raised before the High Court was whether the claim of demurrage by the Port Trust for the period during which the goods were detained with the Port Trust in respect of Import Trade Control formalities is maintainable. The High Court held that the importer of the goods cannot be held responsible for any delay not at tributed to his own default and that the importer whose goods are detained by the Customs Department is entitled to claim the clearance of goods without demurrage during the period for which the Customs Department has detained them.
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The appellant, a statutory body framed the scales of rates of demurrage of goods under section 43 (a) of the Bombay 'Port Trust Act 1879 which was sanctioned by the Central Government. Later on the Central Government in its D.O. letter dated 7th September 1952 addressed to the appel lant expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control. It also expressed its hope that the appellant would recon sider its decision and fall in line with the practice of the Calcutta and Madras Ports. The Port considered this letter and after taking into consideration the several circum stances suggested that demurrage may be levied on a graded scale and the Central Government did not take any further action. In fact, the appellant has prescribed reduced demurrage levy from the expiry of the free days. In respect of the three consignments of Chinese news print imported by the respondent for home consumption in India, the appellant claimed demurrage for the period from March 25, 1957 and as the amount was not paid the goods were sold in public auction. The respondent thereafter filed a suit for recovery of a sum of Rs. 24,950/ and interest thereon from the appellant being the aggregate loss sus tained by it. The appellant denied that liability and pleaded that it was, in law, entitled to collect the demur rage levied on the respondent and as it failed to pay the demurrage, the appellant was entitled to sell the goods by auction. The City Civil Court, Bombay decreed the suit with interest at 6 per cent per annum from the date of the suit till judgment and thereafter at 4 per cent per annum and costs of the suit. The appeal preferred by the appellant to the High Court failed and the decree stood confirmed. The decretal amount deposited in the High Court during the pendency of the appeal was withdrawn by the respondent. Allowing the appeal by Special leave the Court, HELD: (1) The High Court was in error in holding that the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demur rage under section 43(a) could never be imposed as long as the goods were detained for the purpose of the operation of the Import Trade Control regulations. [350 E] (2) The D.O. letter addressed by the Government of India should not be construed as a direction calling upon the Board to modify any portion of the scale framed by the Port Trust. The language of the D.O. would indicate that the Government wanted the Port Trust to consider the Govern ment 's proposal and nothing further. The Port Trust consid ered the proposal and made its report. Section 43B(1A) has no application to this case. [346 F H] (3) It is no doubt true that before clearance is given by the Import. Trade Control Authorities and the Customs Authorities, the goods cannot be cleared by the importer. Neither can the Port Trust deliver the goods without the consent of the Import Trade Control Authorities. Taking into account the hardship caused to the importer because of the delay certain concessions in demurrage rates are per mitted. As the scales of rates are permitted by virtue of the statutory 344 powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B, the rates have the force of law and cannot be questioned. Taking into account the hardship to the importers certain concession has been given but the legality of the rate which are being levied according to law cannot also be questioned. [347 C D; E F] Trustees of the Port of Madras vs M/s Aminchand Pyarelal & Ors. [1976]. SCR 721. followed. (4) Even though the delay in clearing the goods was not due to the negligence of the importer for which he should be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law, the validity of which cannot be questioned, In the instant case the claim of the appellant cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is respon sible. [349 G H] Aktieselskabet Reidar vs Arcos, Limited [1927] 1 K.B. 352;Budgett & Co. vs Bippington & Co. [1891] 1 Q.B.p. 35 and Compania Crystal De Vapores of Panama vs Herman & Mohatta (India) Ltd., quoted with approval. (5) Section 43, 43A and 43B of the Bombay Port Trust Act 1891 which make reference to "free days" are intended only to omit Sundays, other holidays or on which the assessment of customs duty cannot be taken up and would not include the entire period during which the Import Trade Control formali ties have not been completed. [350 C D] (6) Under the powers vested in the Board, it is its statutory duty to collect the rates, to have a lien on the goods and seize and detain the goods until such rates are fully paid. The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged or when the goods are not removed from its premises within the limited time. [347 A B]
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What is the summary of this judgment?
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The appellants, the Board of Trustees of the Port of Bombay, is a statutory body constituted by the Bombay Port Trust Act, Act 6 of 1879, and is a body corporate. Chapter VI of the Act relates to Revenue and Expenditure and pro vides for levy of rates. Section 346 43 empowers the Board to frame a scale of tolls, dues, rents, rates and charges to be levied for each or any of the matters enumerated in clauses (a) to (d). Sub section (a) enables framing of scale of rates relating to the landing, shipping, wharfage, cranage, storage or demurrage of goods. We are concerned with the framing of the scale of rates for demurrage of goods. Section 43B(1) requires that every scale framed by the Board shah be submitted to the Central Government for sanction and, when so sanctioned and pub lished in the Bombay Government Gazette, shall have the force of law; and subject to the like sanction and publica tion, may from time to time be amended or added to by the Board.
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The appellant, a statutory body framed the scales of rates of demurrage of goods under section 43 (a) of the Bombay 'Port Trust Act 1879 which was sanctioned by the Central Government. Later on the Central Government in its D.O. letter dated 7th September 1952 addressed to the appel lant expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control. It also expressed its hope that the appellant would recon sider its decision and fall in line with the practice of the Calcutta and Madras Ports. The Port considered this letter and after taking into consideration the several circum stances suggested that demurrage may be levied on a graded scale and the Central Government did not take any further action. In fact, the appellant has prescribed reduced demurrage levy from the expiry of the free days. In respect of the three consignments of Chinese news print imported by the respondent for home consumption in India, the appellant claimed demurrage for the period from March 25, 1957 and as the amount was not paid the goods were sold in public auction. The respondent thereafter filed a suit for recovery of a sum of Rs. 24,950/ and interest thereon from the appellant being the aggregate loss sus tained by it. The appellant denied that liability and pleaded that it was, in law, entitled to collect the demur rage levied on the respondent and as it failed to pay the demurrage, the appellant was entitled to sell the goods by auction. The City Civil Court, Bombay decreed the suit with interest at 6 per cent per annum from the date of the suit till judgment and thereafter at 4 per cent per annum and costs of the suit. The appeal preferred by the appellant to the High Court failed and the decree stood confirmed. The decretal amount deposited in the High Court during the pendency of the appeal was withdrawn by the respondent. Allowing the appeal by Special leave the Court, HELD: (1) The High Court was in error in holding that the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demur rage under section 43(a) could never be imposed as long as the goods were detained for the purpose of the operation of the Import Trade Control regulations. [350 E] (2) The D.O. letter addressed by the Government of India should not be construed as a direction calling upon the Board to modify any portion of the scale framed by the Port Trust. The language of the D.O. would indicate that the Government wanted the Port Trust to consider the Govern ment 's proposal and nothing further. The Port Trust consid ered the proposal and made its report. Section 43B(1A) has no application to this case. [346 F H] (3) It is no doubt true that before clearance is given by the Import. Trade Control Authorities and the Customs Authorities, the goods cannot be cleared by the importer. Neither can the Port Trust deliver the goods without the consent of the Import Trade Control Authorities. Taking into account the hardship caused to the importer because of the delay certain concessions in demurrage rates are per mitted. As the scales of rates are permitted by virtue of the statutory 344 powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B, the rates have the force of law and cannot be questioned. Taking into account the hardship to the importers certain concession has been given but the legality of the rate which are being levied according to law cannot also be questioned. [347 C D; E F] Trustees of the Port of Madras vs M/s Aminchand Pyarelal & Ors. [1976]. SCR 721. followed. (4) Even though the delay in clearing the goods was not due to the negligence of the importer for which he should be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law, the validity of which cannot be questioned, In the instant case the claim of the appellant cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is respon sible. [349 G H] Aktieselskabet Reidar vs Arcos, Limited [1927] 1 K.B. 352;Budgett & Co. vs Bippington & Co. [1891] 1 Q.B.p. 35 and Compania Crystal De Vapores of Panama vs Herman & Mohatta (India) Ltd., quoted with approval. (5) Section 43, 43A and 43B of the Bombay Port Trust Act 1891 which make reference to "free days" are intended only to omit Sundays, other holidays or on which the assessment of customs duty cannot be taken up and would not include the entire period during which the Import Trade Control formali ties have not been completed. [350 C D] (6) Under the powers vested in the Board, it is its statutory duty to collect the rates, to have a lien on the goods and seize and detain the goods until such rates are fully paid. The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged or when the goods are not removed from its premises within the limited time. [347 A B]
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What is the summary of this judgment?
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It is admitted that the Board framed a scale of rights for demurrage of goods and the scale so framed by the Board was submitted to the Central Government and was sanc tioned by the Central Government and published by the Bombay Government in the Gazette as required. The result is that under section 43B(1 ) the scales so framed by the Board and approved by the Central Government shall have the force of law. The learned counsel for the appellants as the Port Trust in this appeal have given up its claims to refund of the money taken by the respondents. In view of this the counsel for the respondents confined his arguments to supporting the view taken by the High Court regarding the question of law. He submitted that the Central Government had taken action under section 43B (IA) and had called upon the Board to modify the operation of such scales and therefore the Board was bound to modify the scales accordingly. This conten tion is based on a D.O.
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The appellant, a statutory body framed the scales of rates of demurrage of goods under section 43 (a) of the Bombay 'Port Trust Act 1879 which was sanctioned by the Central Government. Later on the Central Government in its D.O. letter dated 7th September 1952 addressed to the appel lant expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control. It also expressed its hope that the appellant would recon sider its decision and fall in line with the practice of the Calcutta and Madras Ports. The Port considered this letter and after taking into consideration the several circum stances suggested that demurrage may be levied on a graded scale and the Central Government did not take any further action. In fact, the appellant has prescribed reduced demurrage levy from the expiry of the free days. In respect of the three consignments of Chinese news print imported by the respondent for home consumption in India, the appellant claimed demurrage for the period from March 25, 1957 and as the amount was not paid the goods were sold in public auction. The respondent thereafter filed a suit for recovery of a sum of Rs. 24,950/ and interest thereon from the appellant being the aggregate loss sus tained by it. The appellant denied that liability and pleaded that it was, in law, entitled to collect the demur rage levied on the respondent and as it failed to pay the demurrage, the appellant was entitled to sell the goods by auction. The City Civil Court, Bombay decreed the suit with interest at 6 per cent per annum from the date of the suit till judgment and thereafter at 4 per cent per annum and costs of the suit. The appeal preferred by the appellant to the High Court failed and the decree stood confirmed. The decretal amount deposited in the High Court during the pendency of the appeal was withdrawn by the respondent. Allowing the appeal by Special leave the Court, HELD: (1) The High Court was in error in holding that the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demur rage under section 43(a) could never be imposed as long as the goods were detained for the purpose of the operation of the Import Trade Control regulations. [350 E] (2) The D.O. letter addressed by the Government of India should not be construed as a direction calling upon the Board to modify any portion of the scale framed by the Port Trust. The language of the D.O. would indicate that the Government wanted the Port Trust to consider the Govern ment 's proposal and nothing further. The Port Trust consid ered the proposal and made its report. Section 43B(1A) has no application to this case. [346 F H] (3) It is no doubt true that before clearance is given by the Import. Trade Control Authorities and the Customs Authorities, the goods cannot be cleared by the importer. Neither can the Port Trust deliver the goods without the consent of the Import Trade Control Authorities. Taking into account the hardship caused to the importer because of the delay certain concessions in demurrage rates are per mitted. As the scales of rates are permitted by virtue of the statutory 344 powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B, the rates have the force of law and cannot be questioned. Taking into account the hardship to the importers certain concession has been given but the legality of the rate which are being levied according to law cannot also be questioned. [347 C D; E F] Trustees of the Port of Madras vs M/s Aminchand Pyarelal & Ors. [1976]. SCR 721. followed. (4) Even though the delay in clearing the goods was not due to the negligence of the importer for which he should be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law, the validity of which cannot be questioned, In the instant case the claim of the appellant cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is respon sible. [349 G H] Aktieselskabet Reidar vs Arcos, Limited [1927] 1 K.B. 352;Budgett & Co. vs Bippington & Co. [1891] 1 Q.B.p. 35 and Compania Crystal De Vapores of Panama vs Herman & Mohatta (India) Ltd., quoted with approval. (5) Section 43, 43A and 43B of the Bombay Port Trust Act 1891 which make reference to "free days" are intended only to omit Sundays, other holidays or on which the assessment of customs duty cannot be taken up and would not include the entire period during which the Import Trade Control formali ties have not been completed. [350 C D] (6) Under the powers vested in the Board, it is its statutory duty to collect the rates, to have a lien on the goods and seize and detain the goods until such rates are fully paid. The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged or when the goods are not removed from its premises within the limited time. [347 A B]
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What is the summary of this judgment?
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letter dated 7th September, 1952 addressed by the Government of India to the Port Trust which is typed at page 350 of the Supplement Paper Book No. 2. In the D.O. letter the Government expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control. The letter concluded by expressing an earnest hope that the Bombay Port Trust will reconsider their decision and fall in line with the practice of the Calcutta and Madras Ports. It concluded by stating "We shall be grateful if you will kindly place the matter before the Trustees for their favourable consideration and intimate to us the result. "
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The appellant, a statutory body framed the scales of rates of demurrage of goods under section 43 (a) of the Bombay 'Port Trust Act 1879 which was sanctioned by the Central Government. Later on the Central Government in its D.O. letter dated 7th September 1952 addressed to the appel lant expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control. It also expressed its hope that the appellant would recon sider its decision and fall in line with the practice of the Calcutta and Madras Ports. The Port considered this letter and after taking into consideration the several circum stances suggested that demurrage may be levied on a graded scale and the Central Government did not take any further action. In fact, the appellant has prescribed reduced demurrage levy from the expiry of the free days. In respect of the three consignments of Chinese news print imported by the respondent for home consumption in India, the appellant claimed demurrage for the period from March 25, 1957 and as the amount was not paid the goods were sold in public auction. The respondent thereafter filed a suit for recovery of a sum of Rs. 24,950/ and interest thereon from the appellant being the aggregate loss sus tained by it. The appellant denied that liability and pleaded that it was, in law, entitled to collect the demur rage levied on the respondent and as it failed to pay the demurrage, the appellant was entitled to sell the goods by auction. The City Civil Court, Bombay decreed the suit with interest at 6 per cent per annum from the date of the suit till judgment and thereafter at 4 per cent per annum and costs of the suit. The appeal preferred by the appellant to the High Court failed and the decree stood confirmed. The decretal amount deposited in the High Court during the pendency of the appeal was withdrawn by the respondent. Allowing the appeal by Special leave the Court, HELD: (1) The High Court was in error in holding that the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demur rage under section 43(a) could never be imposed as long as the goods were detained for the purpose of the operation of the Import Trade Control regulations. [350 E] (2) The D.O. letter addressed by the Government of India should not be construed as a direction calling upon the Board to modify any portion of the scale framed by the Port Trust. The language of the D.O. would indicate that the Government wanted the Port Trust to consider the Govern ment 's proposal and nothing further. The Port Trust consid ered the proposal and made its report. Section 43B(1A) has no application to this case. [346 F H] (3) It is no doubt true that before clearance is given by the Import. Trade Control Authorities and the Customs Authorities, the goods cannot be cleared by the importer. Neither can the Port Trust deliver the goods without the consent of the Import Trade Control Authorities. Taking into account the hardship caused to the importer because of the delay certain concessions in demurrage rates are per mitted. As the scales of rates are permitted by virtue of the statutory 344 powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B, the rates have the force of law and cannot be questioned. Taking into account the hardship to the importers certain concession has been given but the legality of the rate which are being levied according to law cannot also be questioned. [347 C D; E F] Trustees of the Port of Madras vs M/s Aminchand Pyarelal & Ors. [1976]. SCR 721. followed. (4) Even though the delay in clearing the goods was not due to the negligence of the importer for which he should be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law, the validity of which cannot be questioned, In the instant case the claim of the appellant cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is respon sible. [349 G H] Aktieselskabet Reidar vs Arcos, Limited [1927] 1 K.B. 352;Budgett & Co. vs Bippington & Co. [1891] 1 Q.B.p. 35 and Compania Crystal De Vapores of Panama vs Herman & Mohatta (India) Ltd., quoted with approval. (5) Section 43, 43A and 43B of the Bombay Port Trust Act 1891 which make reference to "free days" are intended only to omit Sundays, other holidays or on which the assessment of customs duty cannot be taken up and would not include the entire period during which the Import Trade Control formali ties have not been completed. [350 C D] (6) Under the powers vested in the Board, it is its statutory duty to collect the rates, to have a lien on the goods and seize and detain the goods until such rates are fully paid. The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged or when the goods are not removed from its premises within the limited time. [347 A B]
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What is the summary of this judgment?
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The Board considered this letter and after taking into consideration the several circumstances, suggested that demurrage may be levied on a graded scale. The Government of India was informed of the Resolution of the Board and no further action was taken by the Government. The D.O. letter addressed by the Government of India cannot be considered as a direction by the Central Government calling upon the Board to modify any portion of the scale framed by the Port Trust. The language of the D.O. would indicate that the Government wanted the Port Trust to consider the Government 's proposal and nothing further.
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The appellant, a statutory body framed the scales of rates of demurrage of goods under section 43 (a) of the Bombay 'Port Trust Act 1879 which was sanctioned by the Central Government. Later on the Central Government in its D.O. letter dated 7th September 1952 addressed to the appel lant expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control. It also expressed its hope that the appellant would recon sider its decision and fall in line with the practice of the Calcutta and Madras Ports. The Port considered this letter and after taking into consideration the several circum stances suggested that demurrage may be levied on a graded scale and the Central Government did not take any further action. In fact, the appellant has prescribed reduced demurrage levy from the expiry of the free days. In respect of the three consignments of Chinese news print imported by the respondent for home consumption in India, the appellant claimed demurrage for the period from March 25, 1957 and as the amount was not paid the goods were sold in public auction. The respondent thereafter filed a suit for recovery of a sum of Rs. 24,950/ and interest thereon from the appellant being the aggregate loss sus tained by it. The appellant denied that liability and pleaded that it was, in law, entitled to collect the demur rage levied on the respondent and as it failed to pay the demurrage, the appellant was entitled to sell the goods by auction. The City Civil Court, Bombay decreed the suit with interest at 6 per cent per annum from the date of the suit till judgment and thereafter at 4 per cent per annum and costs of the suit. The appeal preferred by the appellant to the High Court failed and the decree stood confirmed. The decretal amount deposited in the High Court during the pendency of the appeal was withdrawn by the respondent. Allowing the appeal by Special leave the Court, HELD: (1) The High Court was in error in holding that the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demur rage under section 43(a) could never be imposed as long as the goods were detained for the purpose of the operation of the Import Trade Control regulations. [350 E] (2) The D.O. letter addressed by the Government of India should not be construed as a direction calling upon the Board to modify any portion of the scale framed by the Port Trust. The language of the D.O. would indicate that the Government wanted the Port Trust to consider the Govern ment 's proposal and nothing further. The Port Trust consid ered the proposal and made its report. Section 43B(1A) has no application to this case. [346 F H] (3) It is no doubt true that before clearance is given by the Import. Trade Control Authorities and the Customs Authorities, the goods cannot be cleared by the importer. Neither can the Port Trust deliver the goods without the consent of the Import Trade Control Authorities. Taking into account the hardship caused to the importer because of the delay certain concessions in demurrage rates are per mitted. As the scales of rates are permitted by virtue of the statutory 344 powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B, the rates have the force of law and cannot be questioned. Taking into account the hardship to the importers certain concession has been given but the legality of the rate which are being levied according to law cannot also be questioned. [347 C D; E F] Trustees of the Port of Madras vs M/s Aminchand Pyarelal & Ors. [1976]. SCR 721. followed. (4) Even though the delay in clearing the goods was not due to the negligence of the importer for which he should be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law, the validity of which cannot be questioned, In the instant case the claim of the appellant cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is respon sible. [349 G H] Aktieselskabet Reidar vs Arcos, Limited [1927] 1 K.B. 352;Budgett & Co. vs Bippington & Co. [1891] 1 Q.B.p. 35 and Compania Crystal De Vapores of Panama vs Herman & Mohatta (India) Ltd., quoted with approval. (5) Section 43, 43A and 43B of the Bombay Port Trust Act 1891 which make reference to "free days" are intended only to omit Sundays, other holidays or on which the assessment of customs duty cannot be taken up and would not include the entire period during which the Import Trade Control formali ties have not been completed. [350 C D] (6) Under the powers vested in the Board, it is its statutory duty to collect the rates, to have a lien on the goods and seize and detain the goods until such rates are fully paid. The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged or when the goods are not removed from its premises within the limited time. [347 A B]
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What is the summary of this judgment?
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The Port Trust considered the proposal and made its report. We are unable to accept the plea of the learned counsel for the respondents that the D.O. letter should be construed as a direction calling upon the Board to modify the portion of the scale framed by the Board. Section 43B(1A) has there fore no application to this case. 347 Chapter VII of the Port Trust Act enumerates the powers and functions of the Board. It is the duty of the Board to recover the rates to have a lien on the goods and seize and detain the goods until such rates are fully paid.
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The appellant, a statutory body framed the scales of rates of demurrage of goods under section 43 (a) of the Bombay 'Port Trust Act 1879 which was sanctioned by the Central Government. Later on the Central Government in its D.O. letter dated 7th September 1952 addressed to the appel lant expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control. It also expressed its hope that the appellant would recon sider its decision and fall in line with the practice of the Calcutta and Madras Ports. The Port considered this letter and after taking into consideration the several circum stances suggested that demurrage may be levied on a graded scale and the Central Government did not take any further action. In fact, the appellant has prescribed reduced demurrage levy from the expiry of the free days. In respect of the three consignments of Chinese news print imported by the respondent for home consumption in India, the appellant claimed demurrage for the period from March 25, 1957 and as the amount was not paid the goods were sold in public auction. The respondent thereafter filed a suit for recovery of a sum of Rs. 24,950/ and interest thereon from the appellant being the aggregate loss sus tained by it. The appellant denied that liability and pleaded that it was, in law, entitled to collect the demur rage levied on the respondent and as it failed to pay the demurrage, the appellant was entitled to sell the goods by auction. The City Civil Court, Bombay decreed the suit with interest at 6 per cent per annum from the date of the suit till judgment and thereafter at 4 per cent per annum and costs of the suit. The appeal preferred by the appellant to the High Court failed and the decree stood confirmed. The decretal amount deposited in the High Court during the pendency of the appeal was withdrawn by the respondent. Allowing the appeal by Special leave the Court, HELD: (1) The High Court was in error in holding that the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demur rage under section 43(a) could never be imposed as long as the goods were detained for the purpose of the operation of the Import Trade Control regulations. [350 E] (2) The D.O. letter addressed by the Government of India should not be construed as a direction calling upon the Board to modify any portion of the scale framed by the Port Trust. The language of the D.O. would indicate that the Government wanted the Port Trust to consider the Govern ment 's proposal and nothing further. The Port Trust consid ered the proposal and made its report. Section 43B(1A) has no application to this case. [346 F H] (3) It is no doubt true that before clearance is given by the Import. Trade Control Authorities and the Customs Authorities, the goods cannot be cleared by the importer. Neither can the Port Trust deliver the goods without the consent of the Import Trade Control Authorities. Taking into account the hardship caused to the importer because of the delay certain concessions in demurrage rates are per mitted. As the scales of rates are permitted by virtue of the statutory 344 powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B, the rates have the force of law and cannot be questioned. Taking into account the hardship to the importers certain concession has been given but the legality of the rate which are being levied according to law cannot also be questioned. [347 C D; E F] Trustees of the Port of Madras vs M/s Aminchand Pyarelal & Ors. [1976]. SCR 721. followed. (4) Even though the delay in clearing the goods was not due to the negligence of the importer for which he should be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law, the validity of which cannot be questioned, In the instant case the claim of the appellant cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is respon sible. [349 G H] Aktieselskabet Reidar vs Arcos, Limited [1927] 1 K.B. 352;Budgett & Co. vs Bippington & Co. [1891] 1 Q.B.p. 35 and Compania Crystal De Vapores of Panama vs Herman & Mohatta (India) Ltd., quoted with approval. (5) Section 43, 43A and 43B of the Bombay Port Trust Act 1891 which make reference to "free days" are intended only to omit Sundays, other holidays or on which the assessment of customs duty cannot be taken up and would not include the entire period during which the Import Trade Control formali ties have not been completed. [350 C D] (6) Under the powers vested in the Board, it is its statutory duty to collect the rates, to have a lien on the goods and seize and detain the goods until such rates are fully paid. The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged or when the goods are not removed from its premises within the limited time. [347 A B]
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What is the summary of this judgment?
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The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged. It can also dispose of goods not removed from the premises of the Board within the time limited. Section 65 also provides the mode of application of proceeds of the sale. Under section 66 the Board is entitled to distrain for non payment rates. The Port clearance shall not be granted till the rates are paid. It is thus a statutory duty of the Board to collect the rates prescribed.
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The appellant, a statutory body framed the scales of rates of demurrage of goods under section 43 (a) of the Bombay 'Port Trust Act 1879 which was sanctioned by the Central Government. Later on the Central Government in its D.O. letter dated 7th September 1952 addressed to the appel lant expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control. It also expressed its hope that the appellant would recon sider its decision and fall in line with the practice of the Calcutta and Madras Ports. The Port considered this letter and after taking into consideration the several circum stances suggested that demurrage may be levied on a graded scale and the Central Government did not take any further action. In fact, the appellant has prescribed reduced demurrage levy from the expiry of the free days. In respect of the three consignments of Chinese news print imported by the respondent for home consumption in India, the appellant claimed demurrage for the period from March 25, 1957 and as the amount was not paid the goods were sold in public auction. The respondent thereafter filed a suit for recovery of a sum of Rs. 24,950/ and interest thereon from the appellant being the aggregate loss sus tained by it. The appellant denied that liability and pleaded that it was, in law, entitled to collect the demur rage levied on the respondent and as it failed to pay the demurrage, the appellant was entitled to sell the goods by auction. The City Civil Court, Bombay decreed the suit with interest at 6 per cent per annum from the date of the suit till judgment and thereafter at 4 per cent per annum and costs of the suit. The appeal preferred by the appellant to the High Court failed and the decree stood confirmed. The decretal amount deposited in the High Court during the pendency of the appeal was withdrawn by the respondent. Allowing the appeal by Special leave the Court, HELD: (1) The High Court was in error in holding that the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demur rage under section 43(a) could never be imposed as long as the goods were detained for the purpose of the operation of the Import Trade Control regulations. [350 E] (2) The D.O. letter addressed by the Government of India should not be construed as a direction calling upon the Board to modify any portion of the scale framed by the Port Trust. The language of the D.O. would indicate that the Government wanted the Port Trust to consider the Govern ment 's proposal and nothing further. The Port Trust consid ered the proposal and made its report. Section 43B(1A) has no application to this case. [346 F H] (3) It is no doubt true that before clearance is given by the Import. Trade Control Authorities and the Customs Authorities, the goods cannot be cleared by the importer. Neither can the Port Trust deliver the goods without the consent of the Import Trade Control Authorities. Taking into account the hardship caused to the importer because of the delay certain concessions in demurrage rates are per mitted. As the scales of rates are permitted by virtue of the statutory 344 powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B, the rates have the force of law and cannot be questioned. Taking into account the hardship to the importers certain concession has been given but the legality of the rate which are being levied according to law cannot also be questioned. [347 C D; E F] Trustees of the Port of Madras vs M/s Aminchand Pyarelal & Ors. [1976]. SCR 721. followed. (4) Even though the delay in clearing the goods was not due to the negligence of the importer for which he should be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law, the validity of which cannot be questioned, In the instant case the claim of the appellant cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is respon sible. [349 G H] Aktieselskabet Reidar vs Arcos, Limited [1927] 1 K.B. 352;Budgett & Co. vs Bippington & Co. [1891] 1 Q.B.p. 35 and Compania Crystal De Vapores of Panama vs Herman & Mohatta (India) Ltd., quoted with approval. (5) Section 43, 43A and 43B of the Bombay Port Trust Act 1891 which make reference to "free days" are intended only to omit Sundays, other holidays or on which the assessment of customs duty cannot be taken up and would not include the entire period during which the Import Trade Control formali ties have not been completed. [350 C D] (6) Under the powers vested in the Board, it is its statutory duty to collect the rates, to have a lien on the goods and seize and detain the goods until such rates are fully paid. The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged or when the goods are not removed from its premises within the limited time. [347 A B]
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What is the summary of this judgment?
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The contention put forward on behalf of the respondents is that they are in no way responsible for the delay in clearing the goods as the goods had been detained under the Import Trade Control Regulations. It is no doubt true that before clearance is given by the Import Trade Control authorities and the Customs Department the goods cannot be cleared by the respondents. Neither can the Port Trust deliver the goods without the consent of the Import Trade Control authorities. Taking into account the hardship caused to the importer because of the delay certain conces sions in demurrage rates are permitted. The Port Trust has prescribed the reduced demurrage levy which is 1/6th of the normal rate from the date of expiry of the free days upto the 60th day, 1/3rd of the normal rate after the expiry of the 60th day, upto the 90th day, half the normal rate after the expiry of the 90th day upto the 120th day, 2/3rd of the normal rate after the expiry of the 120th day upto the 150th day and at the full rate after the expiry of the 150th day. As the scale of rates are framed by virtue of the statutory powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B the rates have the force of law and cannot be questioned.
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The appellant, a statutory body framed the scales of rates of demurrage of goods under section 43 (a) of the Bombay 'Port Trust Act 1879 which was sanctioned by the Central Government. Later on the Central Government in its D.O. letter dated 7th September 1952 addressed to the appel lant expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control. It also expressed its hope that the appellant would recon sider its decision and fall in line with the practice of the Calcutta and Madras Ports. The Port considered this letter and after taking into consideration the several circum stances suggested that demurrage may be levied on a graded scale and the Central Government did not take any further action. In fact, the appellant has prescribed reduced demurrage levy from the expiry of the free days. In respect of the three consignments of Chinese news print imported by the respondent for home consumption in India, the appellant claimed demurrage for the period from March 25, 1957 and as the amount was not paid the goods were sold in public auction. The respondent thereafter filed a suit for recovery of a sum of Rs. 24,950/ and interest thereon from the appellant being the aggregate loss sus tained by it. The appellant denied that liability and pleaded that it was, in law, entitled to collect the demur rage levied on the respondent and as it failed to pay the demurrage, the appellant was entitled to sell the goods by auction. The City Civil Court, Bombay decreed the suit with interest at 6 per cent per annum from the date of the suit till judgment and thereafter at 4 per cent per annum and costs of the suit. The appeal preferred by the appellant to the High Court failed and the decree stood confirmed. The decretal amount deposited in the High Court during the pendency of the appeal was withdrawn by the respondent. Allowing the appeal by Special leave the Court, HELD: (1) The High Court was in error in holding that the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demur rage under section 43(a) could never be imposed as long as the goods were detained for the purpose of the operation of the Import Trade Control regulations. [350 E] (2) The D.O. letter addressed by the Government of India should not be construed as a direction calling upon the Board to modify any portion of the scale framed by the Port Trust. The language of the D.O. would indicate that the Government wanted the Port Trust to consider the Govern ment 's proposal and nothing further. The Port Trust consid ered the proposal and made its report. Section 43B(1A) has no application to this case. [346 F H] (3) It is no doubt true that before clearance is given by the Import. Trade Control Authorities and the Customs Authorities, the goods cannot be cleared by the importer. Neither can the Port Trust deliver the goods without the consent of the Import Trade Control Authorities. Taking into account the hardship caused to the importer because of the delay certain concessions in demurrage rates are per mitted. As the scales of rates are permitted by virtue of the statutory 344 powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B, the rates have the force of law and cannot be questioned. Taking into account the hardship to the importers certain concession has been given but the legality of the rate which are being levied according to law cannot also be questioned. [347 C D; E F] Trustees of the Port of Madras vs M/s Aminchand Pyarelal & Ors. [1976]. SCR 721. followed. (4) Even though the delay in clearing the goods was not due to the negligence of the importer for which he should be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law, the validity of which cannot be questioned, In the instant case the claim of the appellant cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is respon sible. [349 G H] Aktieselskabet Reidar vs Arcos, Limited [1927] 1 K.B. 352;Budgett & Co. vs Bippington & Co. [1891] 1 Q.B.p. 35 and Compania Crystal De Vapores of Panama vs Herman & Mohatta (India) Ltd., quoted with approval. (5) Section 43, 43A and 43B of the Bombay Port Trust Act 1891 which make reference to "free days" are intended only to omit Sundays, other holidays or on which the assessment of customs duty cannot be taken up and would not include the entire period during which the Import Trade Control formali ties have not been completed. [350 C D] (6) Under the powers vested in the Board, it is its statutory duty to collect the rates, to have a lien on the goods and seize and detain the goods until such rates are fully paid. The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged or when the goods are not removed from its premises within the limited time. [347 A B]
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What is the summary of this judgment?
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Taking into account the hardship to the import ers certain concession has been given but the legality of the rates which are being levied according to law cannot be questioned. This view was taken by this Court in a recent decision reported in Trustees the Port of Madras vs M/s. Aminchand Pyarelal & Ors. (1) Where it had t6 consider the validity of the scale of rates fixed by the Madras Port Trust. In a suit by the Port Trust against the importer and the Union of India and the Customs authorities to recov er the balance of demurrage amounting to about rupees three lakhs the question arose whether the scale of charges in the Port Trust Regulations under the heading "Demurrage" was void and ultra vires for the reason that it was unrea sonable and not within the authority of the Port Trust. The relevant provisions of the Bombay Port Trust Act with which we are concerned are in pari materia with the provisions of the Madras Act which fell for consideration by the Supreme Court.
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The appellant, a statutory body framed the scales of rates of demurrage of goods under section 43 (a) of the Bombay 'Port Trust Act 1879 which was sanctioned by the Central Government. Later on the Central Government in its D.O. letter dated 7th September 1952 addressed to the appel lant expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control. It also expressed its hope that the appellant would recon sider its decision and fall in line with the practice of the Calcutta and Madras Ports. The Port considered this letter and after taking into consideration the several circum stances suggested that demurrage may be levied on a graded scale and the Central Government did not take any further action. In fact, the appellant has prescribed reduced demurrage levy from the expiry of the free days. In respect of the three consignments of Chinese news print imported by the respondent for home consumption in India, the appellant claimed demurrage for the period from March 25, 1957 and as the amount was not paid the goods were sold in public auction. The respondent thereafter filed a suit for recovery of a sum of Rs. 24,950/ and interest thereon from the appellant being the aggregate loss sus tained by it. The appellant denied that liability and pleaded that it was, in law, entitled to collect the demur rage levied on the respondent and as it failed to pay the demurrage, the appellant was entitled to sell the goods by auction. The City Civil Court, Bombay decreed the suit with interest at 6 per cent per annum from the date of the suit till judgment and thereafter at 4 per cent per annum and costs of the suit. The appeal preferred by the appellant to the High Court failed and the decree stood confirmed. The decretal amount deposited in the High Court during the pendency of the appeal was withdrawn by the respondent. Allowing the appeal by Special leave the Court, HELD: (1) The High Court was in error in holding that the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demur rage under section 43(a) could never be imposed as long as the goods were detained for the purpose of the operation of the Import Trade Control regulations. [350 E] (2) The D.O. letter addressed by the Government of India should not be construed as a direction calling upon the Board to modify any portion of the scale framed by the Port Trust. The language of the D.O. would indicate that the Government wanted the Port Trust to consider the Govern ment 's proposal and nothing further. The Port Trust consid ered the proposal and made its report. Section 43B(1A) has no application to this case. [346 F H] (3) It is no doubt true that before clearance is given by the Import. Trade Control Authorities and the Customs Authorities, the goods cannot be cleared by the importer. Neither can the Port Trust deliver the goods without the consent of the Import Trade Control Authorities. Taking into account the hardship caused to the importer because of the delay certain concessions in demurrage rates are per mitted. As the scales of rates are permitted by virtue of the statutory 344 powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B, the rates have the force of law and cannot be questioned. Taking into account the hardship to the importers certain concession has been given but the legality of the rate which are being levied according to law cannot also be questioned. [347 C D; E F] Trustees of the Port of Madras vs M/s Aminchand Pyarelal & Ors. [1976]. SCR 721. followed. (4) Even though the delay in clearing the goods was not due to the negligence of the importer for which he should be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law, the validity of which cannot be questioned, In the instant case the claim of the appellant cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is respon sible. [349 G H] Aktieselskabet Reidar vs Arcos, Limited [1927] 1 K.B. 352;Budgett & Co. vs Bippington & Co. [1891] 1 Q.B.p. 35 and Compania Crystal De Vapores of Panama vs Herman & Mohatta (India) Ltd., quoted with approval. (5) Section 43, 43A and 43B of the Bombay Port Trust Act 1891 which make reference to "free days" are intended only to omit Sundays, other holidays or on which the assessment of customs duty cannot be taken up and would not include the entire period during which the Import Trade Control formali ties have not been completed. [350 C D] (6) Under the powers vested in the Board, it is its statutory duty to collect the rates, to have a lien on the goods and seize and detain the goods until such rates are fully paid. The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged or when the goods are not removed from its premises within the limited time. [347 A B]
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What is the summary of this judgment?
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The Supreme Court held that the scale of rates and statement of conditions flamed by the Madras Port Trust under sections 42, 43 and 43A are not by laws (1) ; 348 and the sections confer authority on the Board to frame a scale of rates at which and a statement or conditions under which any of the services specified therein shall be per formed. It observed "The Board 's power to frame a scale of rates and statement of conditions is not a regulatory power to order that something must be done or something may not be done. The rates and conditions govern the basis on which the Board performs the services mentioned in sections 42, 43 and 43 A. Those who desire to avail of the services of the Board are liable to pay for those services at prescribed rates and to perform the conditions framed in that behalf by the Board. " The Court rejected the view of the High Court that demurrage being a charge for wilful failure to remove the goods within the free period can ' be levied only if the failure to remove the goods is due to the fault or negli gence of the importer or his agent. It also did not agree with the view taken by the High Court that the authority given to the Board to frame the scale of rates can be exer cised only for the purpose of levying charges where the importer was not prevented by any lawful authority from clearing the goods from the transit area and he had default ed or was negligent in clearing the goods.
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The appellant, a statutory body framed the scales of rates of demurrage of goods under section 43 (a) of the Bombay 'Port Trust Act 1879 which was sanctioned by the Central Government. Later on the Central Government in its D.O. letter dated 7th September 1952 addressed to the appel lant expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control. It also expressed its hope that the appellant would recon sider its decision and fall in line with the practice of the Calcutta and Madras Ports. The Port considered this letter and after taking into consideration the several circum stances suggested that demurrage may be levied on a graded scale and the Central Government did not take any further action. In fact, the appellant has prescribed reduced demurrage levy from the expiry of the free days. In respect of the three consignments of Chinese news print imported by the respondent for home consumption in India, the appellant claimed demurrage for the period from March 25, 1957 and as the amount was not paid the goods were sold in public auction. The respondent thereafter filed a suit for recovery of a sum of Rs. 24,950/ and interest thereon from the appellant being the aggregate loss sus tained by it. The appellant denied that liability and pleaded that it was, in law, entitled to collect the demur rage levied on the respondent and as it failed to pay the demurrage, the appellant was entitled to sell the goods by auction. The City Civil Court, Bombay decreed the suit with interest at 6 per cent per annum from the date of the suit till judgment and thereafter at 4 per cent per annum and costs of the suit. The appeal preferred by the appellant to the High Court failed and the decree stood confirmed. The decretal amount deposited in the High Court during the pendency of the appeal was withdrawn by the respondent. Allowing the appeal by Special leave the Court, HELD: (1) The High Court was in error in holding that the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demur rage under section 43(a) could never be imposed as long as the goods were detained for the purpose of the operation of the Import Trade Control regulations. [350 E] (2) The D.O. letter addressed by the Government of India should not be construed as a direction calling upon the Board to modify any portion of the scale framed by the Port Trust. The language of the D.O. would indicate that the Government wanted the Port Trust to consider the Govern ment 's proposal and nothing further. The Port Trust consid ered the proposal and made its report. Section 43B(1A) has no application to this case. [346 F H] (3) It is no doubt true that before clearance is given by the Import. Trade Control Authorities and the Customs Authorities, the goods cannot be cleared by the importer. Neither can the Port Trust deliver the goods without the consent of the Import Trade Control Authorities. Taking into account the hardship caused to the importer because of the delay certain concessions in demurrage rates are per mitted. As the scales of rates are permitted by virtue of the statutory 344 powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B, the rates have the force of law and cannot be questioned. Taking into account the hardship to the importers certain concession has been given but the legality of the rate which are being levied according to law cannot also be questioned. [347 C D; E F] Trustees of the Port of Madras vs M/s Aminchand Pyarelal & Ors. [1976]. SCR 721. followed. (4) Even though the delay in clearing the goods was not due to the negligence of the importer for which he should be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law, the validity of which cannot be questioned, In the instant case the claim of the appellant cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is respon sible. [349 G H] Aktieselskabet Reidar vs Arcos, Limited [1927] 1 K.B. 352;Budgett & Co. vs Bippington & Co. [1891] 1 Q.B.p. 35 and Compania Crystal De Vapores of Panama vs Herman & Mohatta (India) Ltd., quoted with approval. (5) Section 43, 43A and 43B of the Bombay Port Trust Act 1891 which make reference to "free days" are intended only to omit Sundays, other holidays or on which the assessment of customs duty cannot be taken up and would not include the entire period during which the Import Trade Control formali ties have not been completed. [350 C D] (6) Under the powers vested in the Board, it is its statutory duty to collect the rates, to have a lien on the goods and seize and detain the goods until such rates are fully paid. The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged or when the goods are not removed from its premises within the limited time. [347 A B]
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What is the summary of this judgment?
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Justice Chandra chud, who spoke for the Court, observed in his judgment at page 736 supra that the statute had not placed any limita tion on the power of the Board to fix rates and as the Board had the power to frame a scale of rates at which and the statement of conditions under which any of the services specified in the section shall be performed and as the Board has fixed the scale of rates it was difficult to see in what manner or respect the Board has exceeded its power under section 42. The Court proceeded to observe in rejecting the view of the High Court that the Board cannot fix rates of demurrage when the failure to remove was not due to some fault or negligence of the importer, that there is no such fetter on the Board 's powers to fix the rates. This deci sion of the Supreme Court is on all fours with the facts of the present case and concludes the question. Mr. Nariman, counsel for the appellants cited three deci sions of the English Courts in support of his contention that even on the basis of a contract the right of the Port Trust to recover demurrage cannot be denied unless the person claiming the demurrage is responsible for the delay. In Aktieselskabet Reidar vs Arcos, Limited (1), Lord Justice Atkin in answering the question whether if the chatterer has failed to complete the loading of the ship within the lay days, and the ship during the demurrage days becomes, without the default of the shipowner, unable to carry as much cargo as she would have carried if loaded within the lay days, but receives from the charterer a full cargo for her diminished capacity, the loss falls upon the charterer in addition to the demurrage, expressed his opin ion that the decision should be for the shipowner. It was held that "The result of the authorities appears to be that in a contract fixing a number of lay days and providing for days at demurrage thereafter, the charterer enters into a binding obligation to load a complete cargo within the lay days subject to any default by the shipowner or to the operation (1) 349 of any exceptions, matters which do not arise in this case.
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The appellant, a statutory body framed the scales of rates of demurrage of goods under section 43 (a) of the Bombay 'Port Trust Act 1879 which was sanctioned by the Central Government. Later on the Central Government in its D.O. letter dated 7th September 1952 addressed to the appel lant expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control. It also expressed its hope that the appellant would recon sider its decision and fall in line with the practice of the Calcutta and Madras Ports. The Port considered this letter and after taking into consideration the several circum stances suggested that demurrage may be levied on a graded scale and the Central Government did not take any further action. In fact, the appellant has prescribed reduced demurrage levy from the expiry of the free days. In respect of the three consignments of Chinese news print imported by the respondent for home consumption in India, the appellant claimed demurrage for the period from March 25, 1957 and as the amount was not paid the goods were sold in public auction. The respondent thereafter filed a suit for recovery of a sum of Rs. 24,950/ and interest thereon from the appellant being the aggregate loss sus tained by it. The appellant denied that liability and pleaded that it was, in law, entitled to collect the demur rage levied on the respondent and as it failed to pay the demurrage, the appellant was entitled to sell the goods by auction. The City Civil Court, Bombay decreed the suit with interest at 6 per cent per annum from the date of the suit till judgment and thereafter at 4 per cent per annum and costs of the suit. The appeal preferred by the appellant to the High Court failed and the decree stood confirmed. The decretal amount deposited in the High Court during the pendency of the appeal was withdrawn by the respondent. Allowing the appeal by Special leave the Court, HELD: (1) The High Court was in error in holding that the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demur rage under section 43(a) could never be imposed as long as the goods were detained for the purpose of the operation of the Import Trade Control regulations. [350 E] (2) The D.O. letter addressed by the Government of India should not be construed as a direction calling upon the Board to modify any portion of the scale framed by the Port Trust. The language of the D.O. would indicate that the Government wanted the Port Trust to consider the Govern ment 's proposal and nothing further. The Port Trust consid ered the proposal and made its report. Section 43B(1A) has no application to this case. [346 F H] (3) It is no doubt true that before clearance is given by the Import. Trade Control Authorities and the Customs Authorities, the goods cannot be cleared by the importer. Neither can the Port Trust deliver the goods without the consent of the Import Trade Control Authorities. Taking into account the hardship caused to the importer because of the delay certain concessions in demurrage rates are per mitted. As the scales of rates are permitted by virtue of the statutory 344 powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B, the rates have the force of law and cannot be questioned. Taking into account the hardship to the importers certain concession has been given but the legality of the rate which are being levied according to law cannot also be questioned. [347 C D; E F] Trustees of the Port of Madras vs M/s Aminchand Pyarelal & Ors. [1976]. SCR 721. followed. (4) Even though the delay in clearing the goods was not due to the negligence of the importer for which he should be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law, the validity of which cannot be questioned, In the instant case the claim of the appellant cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is respon sible. [349 G H] Aktieselskabet Reidar vs Arcos, Limited [1927] 1 K.B. 352;Budgett & Co. vs Bippington & Co. [1891] 1 Q.B.p. 35 and Compania Crystal De Vapores of Panama vs Herman & Mohatta (India) Ltd., quoted with approval. (5) Section 43, 43A and 43B of the Bombay Port Trust Act 1891 which make reference to "free days" are intended only to omit Sundays, other holidays or on which the assessment of customs duty cannot be taken up and would not include the entire period during which the Import Trade Control formali ties have not been completed. [350 C D] (6) Under the powers vested in the Board, it is its statutory duty to collect the rates, to have a lien on the goods and seize and detain the goods until such rates are fully paid. The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged or when the goods are not removed from its premises within the limited time. [347 A B]
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What is the summary of this judgment?
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If however, for reasons other than the shipown er 's default, the chatterer becomes unable to do that which he contracted to do namely, put a full and complete cargo on board during the fixed laydays, the breach is never repaired, the damages are not completely mitigated, and the shipowner may recover the loss that he has incurred in addition to his liquidated demurrage or his unliquidated damages for detention. " Thus it appears clear that claim of demurrage cannot be resisted unless where the detention was due to the shipowner 's default. In the present case the Port Trust 's claim for demurrage cannot be denied unless it is proved that the delay was due to the Port Trust itself. In Budgett & Co. vs Binnington & Co., (1) a clause in the charterparty fixed the number of lay days for unloading and allowed other days for demurrage. During the lay days a strike took place both among the labourers employed on behalf of the ship and those employed by the consignees, with the result that the unloading ceased, and could not be resumed till some days after the expiration of the lay days. The Court of Appeal held that as the number of lay days was fixed the consignees were liable to pay demurrage, notwith standing the inability of the shipowners, owing to the strike, to do their part in the unloading.
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The appellant, a statutory body framed the scales of rates of demurrage of goods under section 43 (a) of the Bombay 'Port Trust Act 1879 which was sanctioned by the Central Government. Later on the Central Government in its D.O. letter dated 7th September 1952 addressed to the appel lant expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control. It also expressed its hope that the appellant would recon sider its decision and fall in line with the practice of the Calcutta and Madras Ports. The Port considered this letter and after taking into consideration the several circum stances suggested that demurrage may be levied on a graded scale and the Central Government did not take any further action. In fact, the appellant has prescribed reduced demurrage levy from the expiry of the free days. In respect of the three consignments of Chinese news print imported by the respondent for home consumption in India, the appellant claimed demurrage for the period from March 25, 1957 and as the amount was not paid the goods were sold in public auction. The respondent thereafter filed a suit for recovery of a sum of Rs. 24,950/ and interest thereon from the appellant being the aggregate loss sus tained by it. The appellant denied that liability and pleaded that it was, in law, entitled to collect the demur rage levied on the respondent and as it failed to pay the demurrage, the appellant was entitled to sell the goods by auction. The City Civil Court, Bombay decreed the suit with interest at 6 per cent per annum from the date of the suit till judgment and thereafter at 4 per cent per annum and costs of the suit. The appeal preferred by the appellant to the High Court failed and the decree stood confirmed. The decretal amount deposited in the High Court during the pendency of the appeal was withdrawn by the respondent. Allowing the appeal by Special leave the Court, HELD: (1) The High Court was in error in holding that the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demur rage under section 43(a) could never be imposed as long as the goods were detained for the purpose of the operation of the Import Trade Control regulations. [350 E] (2) The D.O. letter addressed by the Government of India should not be construed as a direction calling upon the Board to modify any portion of the scale framed by the Port Trust. The language of the D.O. would indicate that the Government wanted the Port Trust to consider the Govern ment 's proposal and nothing further. The Port Trust consid ered the proposal and made its report. Section 43B(1A) has no application to this case. [346 F H] (3) It is no doubt true that before clearance is given by the Import. Trade Control Authorities and the Customs Authorities, the goods cannot be cleared by the importer. Neither can the Port Trust deliver the goods without the consent of the Import Trade Control Authorities. Taking into account the hardship caused to the importer because of the delay certain concessions in demurrage rates are per mitted. As the scales of rates are permitted by virtue of the statutory 344 powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B, the rates have the force of law and cannot be questioned. Taking into account the hardship to the importers certain concession has been given but the legality of the rate which are being levied according to law cannot also be questioned. [347 C D; E F] Trustees of the Port of Madras vs M/s Aminchand Pyarelal & Ors. [1976]. SCR 721. followed. (4) Even though the delay in clearing the goods was not due to the negligence of the importer for which he should be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law, the validity of which cannot be questioned, In the instant case the claim of the appellant cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is respon sible. [349 G H] Aktieselskabet Reidar vs Arcos, Limited [1927] 1 K.B. 352;Budgett & Co. vs Bippington & Co. [1891] 1 Q.B.p. 35 and Compania Crystal De Vapores of Panama vs Herman & Mohatta (India) Ltd., quoted with approval. (5) Section 43, 43A and 43B of the Bombay Port Trust Act 1891 which make reference to "free days" are intended only to omit Sundays, other holidays or on which the assessment of customs duty cannot be taken up and would not include the entire period during which the Import Trade Control formali ties have not been completed. [350 C D] (6) Under the powers vested in the Board, it is its statutory duty to collect the rates, to have a lien on the goods and seize and detain the goods until such rates are fully paid. The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged or when the goods are not removed from its premises within the limited time. [347 A B]
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What is the summary of this judgment?
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The test that was laid down by Lord Esher Master of the Rolls, was. Has the shipowner failed in his duty through any default of his own or of persons for whom he is responsible ? As the non delivery was occasioned by something which the shipowner could not foresee or by the act of persons over whom he had any control it was held that he was not liable. In Compania Crystal De Vapores of Panama vs Herman & Mohatta (India) Ltd., (2) Justice Devlin quoted with approv al the law laid down by Lord Esher in Budgert Co. vs Bin nington & Co. (supra) which is in the following terms : "If the shipowner by any act of his has prevented the discharge, then, `though the freighter 's contract is broken, he is ex cused ', he was referring to a case in which the shinowner 's act preventing the discharge was in breach of his obligation to give the charterer all facilities for the discharge. But here the act of the shipowner which de layed the discharge was not a breach of any obligation of his. " The position therefore is that even though the delay in clearing the goods was not due to the negligence of the importer for which he could be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law the validity of which cannot be questioned.
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The appellant, a statutory body framed the scales of rates of demurrage of goods under section 43 (a) of the Bombay 'Port Trust Act 1879 which was sanctioned by the Central Government. Later on the Central Government in its D.O. letter dated 7th September 1952 addressed to the appel lant expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control. It also expressed its hope that the appellant would recon sider its decision and fall in line with the practice of the Calcutta and Madras Ports. The Port considered this letter and after taking into consideration the several circum stances suggested that demurrage may be levied on a graded scale and the Central Government did not take any further action. In fact, the appellant has prescribed reduced demurrage levy from the expiry of the free days. In respect of the three consignments of Chinese news print imported by the respondent for home consumption in India, the appellant claimed demurrage for the period from March 25, 1957 and as the amount was not paid the goods were sold in public auction. The respondent thereafter filed a suit for recovery of a sum of Rs. 24,950/ and interest thereon from the appellant being the aggregate loss sus tained by it. The appellant denied that liability and pleaded that it was, in law, entitled to collect the demur rage levied on the respondent and as it failed to pay the demurrage, the appellant was entitled to sell the goods by auction. The City Civil Court, Bombay decreed the suit with interest at 6 per cent per annum from the date of the suit till judgment and thereafter at 4 per cent per annum and costs of the suit. The appeal preferred by the appellant to the High Court failed and the decree stood confirmed. The decretal amount deposited in the High Court during the pendency of the appeal was withdrawn by the respondent. Allowing the appeal by Special leave the Court, HELD: (1) The High Court was in error in holding that the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demur rage under section 43(a) could never be imposed as long as the goods were detained for the purpose of the operation of the Import Trade Control regulations. [350 E] (2) The D.O. letter addressed by the Government of India should not be construed as a direction calling upon the Board to modify any portion of the scale framed by the Port Trust. The language of the D.O. would indicate that the Government wanted the Port Trust to consider the Govern ment 's proposal and nothing further. The Port Trust consid ered the proposal and made its report. Section 43B(1A) has no application to this case. [346 F H] (3) It is no doubt true that before clearance is given by the Import. Trade Control Authorities and the Customs Authorities, the goods cannot be cleared by the importer. Neither can the Port Trust deliver the goods without the consent of the Import Trade Control Authorities. Taking into account the hardship caused to the importer because of the delay certain concessions in demurrage rates are per mitted. As the scales of rates are permitted by virtue of the statutory 344 powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B, the rates have the force of law and cannot be questioned. Taking into account the hardship to the importers certain concession has been given but the legality of the rate which are being levied according to law cannot also be questioned. [347 C D; E F] Trustees of the Port of Madras vs M/s Aminchand Pyarelal & Ors. [1976]. SCR 721. followed. (4) Even though the delay in clearing the goods was not due to the negligence of the importer for which he should be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law, the validity of which cannot be questioned, In the instant case the claim of the appellant cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is respon sible. [349 G H] Aktieselskabet Reidar vs Arcos, Limited [1927] 1 K.B. 352;Budgett & Co. vs Bippington & Co. [1891] 1 Q.B.p. 35 and Compania Crystal De Vapores of Panama vs Herman & Mohatta (India) Ltd., quoted with approval. (5) Section 43, 43A and 43B of the Bombay Port Trust Act 1891 which make reference to "free days" are intended only to omit Sundays, other holidays or on which the assessment of customs duty cannot be taken up and would not include the entire period during which the Import Trade Control formali ties have not been completed. [350 C D] (6) Under the powers vested in the Board, it is its statutory duty to collect the rates, to have a lien on the goods and seize and detain the goods until such rates are fully paid. The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged or when the goods are not removed from its premises within the limited time. [347 A B]
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What is the summary of this judgment?
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The claim cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is responsible. (1) [1891] 1 Q.B.p. 35. (2) [2953] 2 ALl. E.R. 508.
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The appellant, a statutory body framed the scales of rates of demurrage of goods under section 43 (a) of the Bombay 'Port Trust Act 1879 which was sanctioned by the Central Government. Later on the Central Government in its D.O. letter dated 7th September 1952 addressed to the appel lant expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control. It also expressed its hope that the appellant would recon sider its decision and fall in line with the practice of the Calcutta and Madras Ports. The Port considered this letter and after taking into consideration the several circum stances suggested that demurrage may be levied on a graded scale and the Central Government did not take any further action. In fact, the appellant has prescribed reduced demurrage levy from the expiry of the free days. In respect of the three consignments of Chinese news print imported by the respondent for home consumption in India, the appellant claimed demurrage for the period from March 25, 1957 and as the amount was not paid the goods were sold in public auction. The respondent thereafter filed a suit for recovery of a sum of Rs. 24,950/ and interest thereon from the appellant being the aggregate loss sus tained by it. The appellant denied that liability and pleaded that it was, in law, entitled to collect the demur rage levied on the respondent and as it failed to pay the demurrage, the appellant was entitled to sell the goods by auction. The City Civil Court, Bombay decreed the suit with interest at 6 per cent per annum from the date of the suit till judgment and thereafter at 4 per cent per annum and costs of the suit. The appeal preferred by the appellant to the High Court failed and the decree stood confirmed. The decretal amount deposited in the High Court during the pendency of the appeal was withdrawn by the respondent. Allowing the appeal by Special leave the Court, HELD: (1) The High Court was in error in holding that the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demur rage under section 43(a) could never be imposed as long as the goods were detained for the purpose of the operation of the Import Trade Control regulations. [350 E] (2) The D.O. letter addressed by the Government of India should not be construed as a direction calling upon the Board to modify any portion of the scale framed by the Port Trust. The language of the D.O. would indicate that the Government wanted the Port Trust to consider the Govern ment 's proposal and nothing further. The Port Trust consid ered the proposal and made its report. Section 43B(1A) has no application to this case. [346 F H] (3) It is no doubt true that before clearance is given by the Import. Trade Control Authorities and the Customs Authorities, the goods cannot be cleared by the importer. Neither can the Port Trust deliver the goods without the consent of the Import Trade Control Authorities. Taking into account the hardship caused to the importer because of the delay certain concessions in demurrage rates are per mitted. As the scales of rates are permitted by virtue of the statutory 344 powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B, the rates have the force of law and cannot be questioned. Taking into account the hardship to the importers certain concession has been given but the legality of the rate which are being levied according to law cannot also be questioned. [347 C D; E F] Trustees of the Port of Madras vs M/s Aminchand Pyarelal & Ors. [1976]. SCR 721. followed. (4) Even though the delay in clearing the goods was not due to the negligence of the importer for which he should be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law, the validity of which cannot be questioned, In the instant case the claim of the appellant cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is respon sible. [349 G H] Aktieselskabet Reidar vs Arcos, Limited [1927] 1 K.B. 352;Budgett & Co. vs Bippington & Co. [1891] 1 Q.B.p. 35 and Compania Crystal De Vapores of Panama vs Herman & Mohatta (India) Ltd., quoted with approval. (5) Section 43, 43A and 43B of the Bombay Port Trust Act 1891 which make reference to "free days" are intended only to omit Sundays, other holidays or on which the assessment of customs duty cannot be taken up and would not include the entire period during which the Import Trade Control formali ties have not been completed. [350 C D] (6) Under the powers vested in the Board, it is its statutory duty to collect the rates, to have a lien on the goods and seize and detain the goods until such rates are fully paid. The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged or when the goods are not removed from its premises within the limited time. [347 A B]
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What is the summary of this judgment?
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350 One other contention which was raised before the High Court but was not dealt with by it may be referred to. It was submitted on behalf of the respondents that the defini tion of the words "free days" would not include the period of holidays or part of a holiday or Sunday in computing the number of free days during which the Customs Duty may not be assessed or received and therefore the period of detention of the goods during the operation of Import Trade Control formalities must be considered as free days. In the scale of rates charged at the docks framed by the Bombay Port Trust under sections 43. 43A and 43B of the Bombay Port Trust Act, 1879, in Section III reference is made to free days. Under the heading "Free Days" it is provided that all goods will be allowed storage in Docks free of rent for 5 days. It is further provided that in computing the number of free days Sundays and holidays referred to in by law 118 as well as any other days on which Customs Duty may not be assessed or received, will be omitted in the case of all goods liable to duty under section 20 of the Sea Customs Act.
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The appellant, a statutory body framed the scales of rates of demurrage of goods under section 43 (a) of the Bombay 'Port Trust Act 1879 which was sanctioned by the Central Government. Later on the Central Government in its D.O. letter dated 7th September 1952 addressed to the appel lant expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control. It also expressed its hope that the appellant would recon sider its decision and fall in line with the practice of the Calcutta and Madras Ports. The Port considered this letter and after taking into consideration the several circum stances suggested that demurrage may be levied on a graded scale and the Central Government did not take any further action. In fact, the appellant has prescribed reduced demurrage levy from the expiry of the free days. In respect of the three consignments of Chinese news print imported by the respondent for home consumption in India, the appellant claimed demurrage for the period from March 25, 1957 and as the amount was not paid the goods were sold in public auction. The respondent thereafter filed a suit for recovery of a sum of Rs. 24,950/ and interest thereon from the appellant being the aggregate loss sus tained by it. The appellant denied that liability and pleaded that it was, in law, entitled to collect the demur rage levied on the respondent and as it failed to pay the demurrage, the appellant was entitled to sell the goods by auction. The City Civil Court, Bombay decreed the suit with interest at 6 per cent per annum from the date of the suit till judgment and thereafter at 4 per cent per annum and costs of the suit. The appeal preferred by the appellant to the High Court failed and the decree stood confirmed. The decretal amount deposited in the High Court during the pendency of the appeal was withdrawn by the respondent. Allowing the appeal by Special leave the Court, HELD: (1) The High Court was in error in holding that the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demur rage under section 43(a) could never be imposed as long as the goods were detained for the purpose of the operation of the Import Trade Control regulations. [350 E] (2) The D.O. letter addressed by the Government of India should not be construed as a direction calling upon the Board to modify any portion of the scale framed by the Port Trust. The language of the D.O. would indicate that the Government wanted the Port Trust to consider the Govern ment 's proposal and nothing further. The Port Trust consid ered the proposal and made its report. Section 43B(1A) has no application to this case. [346 F H] (3) It is no doubt true that before clearance is given by the Import. Trade Control Authorities and the Customs Authorities, the goods cannot be cleared by the importer. Neither can the Port Trust deliver the goods without the consent of the Import Trade Control Authorities. Taking into account the hardship caused to the importer because of the delay certain concessions in demurrage rates are per mitted. As the scales of rates are permitted by virtue of the statutory 344 powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B, the rates have the force of law and cannot be questioned. Taking into account the hardship to the importers certain concession has been given but the legality of the rate which are being levied according to law cannot also be questioned. [347 C D; E F] Trustees of the Port of Madras vs M/s Aminchand Pyarelal & Ors. [1976]. SCR 721. followed. (4) Even though the delay in clearing the goods was not due to the negligence of the importer for which he should be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law, the validity of which cannot be questioned, In the instant case the claim of the appellant cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is respon sible. [349 G H] Aktieselskabet Reidar vs Arcos, Limited [1927] 1 K.B. 352;Budgett & Co. vs Bippington & Co. [1891] 1 Q.B.p. 35 and Compania Crystal De Vapores of Panama vs Herman & Mohatta (India) Ltd., quoted with approval. (5) Section 43, 43A and 43B of the Bombay Port Trust Act 1891 which make reference to "free days" are intended only to omit Sundays, other holidays or on which the assessment of customs duty cannot be taken up and would not include the entire period during which the Import Trade Control formali ties have not been completed. [350 C D] (6) Under the powers vested in the Board, it is its statutory duty to collect the rates, to have a lien on the goods and seize and detain the goods until such rates are fully paid. The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged or when the goods are not removed from its premises within the limited time. [347 A B]
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What is the summary of this judgment?
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The submission was that not only Sunday and holidays should be omitted but also other days on which Customs Duty may not be assessed or received will have to be omitted and this should be understood as days during which the Import Trade Control formalities could not be completed. This contention cannot be accepted as these Rules are in tended only to omit Sundays, other holidays and days on which the assessment of Customs Duty cannot be taken up and would not include the entire period during which the Import Trade Control formalities have not been completed. The High Court was therefore in error in holding that the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demurrage under section 43A could never be imposed as long as the goods were detained for the purpose of the operation of the Import Trade Control Regulations. In the result the appeal is allowed but due to the concession made by the learned counsel for the Port Trust there will be no order directing the refund of the money that had already been deposited by the Port Trust and withdrawn by the respond ents. The appellant also does not press his counter claim. There will be no order as to costs in this appeal.
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The appellant, a statutory body framed the scales of rates of demurrage of goods under section 43 (a) of the Bombay 'Port Trust Act 1879 which was sanctioned by the Central Government. Later on the Central Government in its D.O. letter dated 7th September 1952 addressed to the appel lant expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control. It also expressed its hope that the appellant would recon sider its decision and fall in line with the practice of the Calcutta and Madras Ports. The Port considered this letter and after taking into consideration the several circum stances suggested that demurrage may be levied on a graded scale and the Central Government did not take any further action. In fact, the appellant has prescribed reduced demurrage levy from the expiry of the free days. In respect of the three consignments of Chinese news print imported by the respondent for home consumption in India, the appellant claimed demurrage for the period from March 25, 1957 and as the amount was not paid the goods were sold in public auction. The respondent thereafter filed a suit for recovery of a sum of Rs. 24,950/ and interest thereon from the appellant being the aggregate loss sus tained by it. The appellant denied that liability and pleaded that it was, in law, entitled to collect the demur rage levied on the respondent and as it failed to pay the demurrage, the appellant was entitled to sell the goods by auction. The City Civil Court, Bombay decreed the suit with interest at 6 per cent per annum from the date of the suit till judgment and thereafter at 4 per cent per annum and costs of the suit. The appeal preferred by the appellant to the High Court failed and the decree stood confirmed. The decretal amount deposited in the High Court during the pendency of the appeal was withdrawn by the respondent. Allowing the appeal by Special leave the Court, HELD: (1) The High Court was in error in holding that the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demur rage under section 43(a) could never be imposed as long as the goods were detained for the purpose of the operation of the Import Trade Control regulations. [350 E] (2) The D.O. letter addressed by the Government of India should not be construed as a direction calling upon the Board to modify any portion of the scale framed by the Port Trust. The language of the D.O. would indicate that the Government wanted the Port Trust to consider the Govern ment 's proposal and nothing further. The Port Trust consid ered the proposal and made its report. Section 43B(1A) has no application to this case. [346 F H] (3) It is no doubt true that before clearance is given by the Import. Trade Control Authorities and the Customs Authorities, the goods cannot be cleared by the importer. Neither can the Port Trust deliver the goods without the consent of the Import Trade Control Authorities. Taking into account the hardship caused to the importer because of the delay certain concessions in demurrage rates are per mitted. As the scales of rates are permitted by virtue of the statutory 344 powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B, the rates have the force of law and cannot be questioned. Taking into account the hardship to the importers certain concession has been given but the legality of the rate which are being levied according to law cannot also be questioned. [347 C D; E F] Trustees of the Port of Madras vs M/s Aminchand Pyarelal & Ors. [1976]. SCR 721. followed. (4) Even though the delay in clearing the goods was not due to the negligence of the importer for which he should be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law, the validity of which cannot be questioned, In the instant case the claim of the appellant cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is respon sible. [349 G H] Aktieselskabet Reidar vs Arcos, Limited [1927] 1 K.B. 352;Budgett & Co. vs Bippington & Co. [1891] 1 Q.B.p. 35 and Compania Crystal De Vapores of Panama vs Herman & Mohatta (India) Ltd., quoted with approval. (5) Section 43, 43A and 43B of the Bombay Port Trust Act 1891 which make reference to "free days" are intended only to omit Sundays, other holidays or on which the assessment of customs duty cannot be taken up and would not include the entire period during which the Import Trade Control formali ties have not been completed. [350 C D] (6) Under the powers vested in the Board, it is its statutory duty to collect the rates, to have a lien on the goods and seize and detain the goods until such rates are fully paid. The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged or when the goods are not removed from its premises within the limited time. [347 A B]
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What is the summary of this judgment?
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N: Criminal. Appeal No. 330 of 1980. From the judgement and Order dated 3.4.1980 of the Madras High Court in Crl. Appeal No. 360 of 1974.
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The appellant, (first accused), a former Inspector of Industries, alongwith an Inspector of Industries, (second accused), was prosecuted under section 120 B read with section 420 IPC, sections 5(1) (b) and 5(2) of the Prevention of Corruption Act, 1947 on the ground that both the accused entered into a criminal conspiracy and acting in concert, the first accused obtained the Small Scale Industries Registration Certificate for additional lines of manufacture, Essentiality Certificate and Import Licences on false representations while the second accused enabled him to obtain the same by his false recommendations. The Trial Court acquitted both of them on all the charges. The State filed an appeal before the High Court which on re appreciation of evidence held that the prosecution has established conspiracy beyond doubt and that only one conclusion was possible on the evidence that the accused are guilty of all the charges. Accordingly it set aside the acquittal and convicted both the accused on all the counts and sentenced the appellant to imprisonment for two years under section 120 B, and for two years under section 420 IPC. In appeal to this Court it was contended on behalf of the 250 appellant accused that: (i) the High Court erred in reversing the judgment of acquittal passed by the High Court; and (ii) the benefit of probation under section 360 of the Code of Criminal Procedure should be extended to the appellant. Disposing the appeal, this Court, HELD: The High Court was right in coming to the conclusion that the guilt against the appellant was established beyond doubt. Accordingly, the conviction and the sentence awarded by the High Court is upheld. [251 G 253 B] The occurrence relates to the period between February, 1967 and February, 1969. The Trial Court acquitted the appellant while High Court reversed the acquittal and convicted them. This Court granted bail to the appellant in 1980. Since then the appellant has several achievements to his credit in the industrial field. Therefore, this is a fit case where benefit of probation under section 360 of the Code of Criminal Procedure, 1973 should be extended to the appellant. [253 C E]
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What is the summary of this judgment?
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Hardev Singh and Ms. Madhu Moolchandani for the Appellants. V.C. Mahajan, B. Parthasarthi and Ms. A. Subhashini for the Respondents. The Judgment of the Court was delivered by KULDIP SINGH, J. The appellant N.M. Parthasarathy is the sole proprietor of a firm called "Elector technik". He was formerly working as Inspector of Industries.
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The appellant, (first accused), a former Inspector of Industries, alongwith an Inspector of Industries, (second accused), was prosecuted under section 120 B read with section 420 IPC, sections 5(1) (b) and 5(2) of the Prevention of Corruption Act, 1947 on the ground that both the accused entered into a criminal conspiracy and acting in concert, the first accused obtained the Small Scale Industries Registration Certificate for additional lines of manufacture, Essentiality Certificate and Import Licences on false representations while the second accused enabled him to obtain the same by his false recommendations. The Trial Court acquitted both of them on all the charges. The State filed an appeal before the High Court which on re appreciation of evidence held that the prosecution has established conspiracy beyond doubt and that only one conclusion was possible on the evidence that the accused are guilty of all the charges. Accordingly it set aside the acquittal and convicted both the accused on all the counts and sentenced the appellant to imprisonment for two years under section 120 B, and for two years under section 420 IPC. In appeal to this Court it was contended on behalf of the 250 appellant accused that: (i) the High Court erred in reversing the judgment of acquittal passed by the High Court; and (ii) the benefit of probation under section 360 of the Code of Criminal Procedure should be extended to the appellant. Disposing the appeal, this Court, HELD: The High Court was right in coming to the conclusion that the guilt against the appellant was established beyond doubt. Accordingly, the conviction and the sentence awarded by the High Court is upheld. [251 G 253 B] The occurrence relates to the period between February, 1967 and February, 1969. The Trial Court acquitted the appellant while High Court reversed the acquittal and convicted them. This Court granted bail to the appellant in 1980. Since then the appellant has several achievements to his credit in the industrial field. Therefore, this is a fit case where benefit of probation under section 360 of the Code of Criminal Procedure, 1973 should be extended to the appellant. [253 C E]
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What is the summary of this judgment?
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He along with an Inspector of Industries, was prosecuted on the allegations that between February, 1967 and February, 1969 they entered into a criminal conspiracy to obtain Small Scale Industries Registration Certificate for additional lines of manufacture, Essentiality Certificate and import licences on false representations made to the Director of Industries, Assistant Director of Industries, Joint Chief Controller of Imports/Exports and the Iron and Steel Controller. The first 251 charge framed against both of them was for an offence of conspiracy punishable under section 120 B read with section 420 IPC and section 5(1) (b) read with section 5(2) of the Prevention of Corruption Act, 1947. Charges 2, 4 and 6 framed against him were for offence of cheating punishable under section 420 IPC. Charges 3, 5 and 7 were framed against the second accused for abetment of cheating punishable under section 420 read with section 109 IPC. The 8th charge was also against the second accused under section 5 (1) (b) read with section 5 (2) of the Prevention of Corruption Act, 1947. The trial court acquitted both of them on all the charges.
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The appellant, (first accused), a former Inspector of Industries, alongwith an Inspector of Industries, (second accused), was prosecuted under section 120 B read with section 420 IPC, sections 5(1) (b) and 5(2) of the Prevention of Corruption Act, 1947 on the ground that both the accused entered into a criminal conspiracy and acting in concert, the first accused obtained the Small Scale Industries Registration Certificate for additional lines of manufacture, Essentiality Certificate and Import Licences on false representations while the second accused enabled him to obtain the same by his false recommendations. The Trial Court acquitted both of them on all the charges. The State filed an appeal before the High Court which on re appreciation of evidence held that the prosecution has established conspiracy beyond doubt and that only one conclusion was possible on the evidence that the accused are guilty of all the charges. Accordingly it set aside the acquittal and convicted both the accused on all the counts and sentenced the appellant to imprisonment for two years under section 120 B, and for two years under section 420 IPC. In appeal to this Court it was contended on behalf of the 250 appellant accused that: (i) the High Court erred in reversing the judgment of acquittal passed by the High Court; and (ii) the benefit of probation under section 360 of the Code of Criminal Procedure should be extended to the appellant. Disposing the appeal, this Court, HELD: The High Court was right in coming to the conclusion that the guilt against the appellant was established beyond doubt. Accordingly, the conviction and the sentence awarded by the High Court is upheld. [251 G 253 B] The occurrence relates to the period between February, 1967 and February, 1969. The Trial Court acquitted the appellant while High Court reversed the acquittal and convicted them. This Court granted bail to the appellant in 1980. Since then the appellant has several achievements to his credit in the industrial field. Therefore, this is a fit case where benefit of probation under section 360 of the Code of Criminal Procedure, 1973 should be extended to the appellant. [253 C E]
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What is the summary of this judgment?
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The State went in appeal against the judgment of acquittal and the High Court on re appreciation of evidence set side the acquittal and convicted both of them on all the counts. The appellant was sentenced to undergo rigorous imprisonment for two years under Section 120 B IPC and rigorous imprisonment for two years for each of the three counts of cheating under section 420 IPC. The sentences were to run concurrently. We have heard Mr. Hardev Singh, learned counsel for the appellant and Mr. V.C. Mahajan, Senior Advocate for the respondents. Mr. Hardev Singh has taken us through the judgment of the trial court and that of the High Court.
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The appellant, (first accused), a former Inspector of Industries, alongwith an Inspector of Industries, (second accused), was prosecuted under section 120 B read with section 420 IPC, sections 5(1) (b) and 5(2) of the Prevention of Corruption Act, 1947 on the ground that both the accused entered into a criminal conspiracy and acting in concert, the first accused obtained the Small Scale Industries Registration Certificate for additional lines of manufacture, Essentiality Certificate and Import Licences on false representations while the second accused enabled him to obtain the same by his false recommendations. The Trial Court acquitted both of them on all the charges. The State filed an appeal before the High Court which on re appreciation of evidence held that the prosecution has established conspiracy beyond doubt and that only one conclusion was possible on the evidence that the accused are guilty of all the charges. Accordingly it set aside the acquittal and convicted both the accused on all the counts and sentenced the appellant to imprisonment for two years under section 120 B, and for two years under section 420 IPC. In appeal to this Court it was contended on behalf of the 250 appellant accused that: (i) the High Court erred in reversing the judgment of acquittal passed by the High Court; and (ii) the benefit of probation under section 360 of the Code of Criminal Procedure should be extended to the appellant. Disposing the appeal, this Court, HELD: The High Court was right in coming to the conclusion that the guilt against the appellant was established beyond doubt. Accordingly, the conviction and the sentence awarded by the High Court is upheld. [251 G 253 B] The occurrence relates to the period between February, 1967 and February, 1969. The Trial Court acquitted the appellant while High Court reversed the acquittal and convicted them. This Court granted bail to the appellant in 1980. Since then the appellant has several achievements to his credit in the industrial field. Therefore, this is a fit case where benefit of probation under section 360 of the Code of Criminal Procedure, 1973 should be extended to the appellant. [253 C E]
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What is the summary of this judgment?
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Mr. Hardev Singh has primarily argued that the High Court has grossly erred in reversing the judgment of acquittal rendered by the trial court. According to him even if two views were possible the High Court was not justified in taking a different view than the trial court and reversing the acquittal. This precise argument was raised before the High Court on behalf of the appellant. The High Court rejected the same as under: "In the circumstances, I am of the opinion that this is not a case where, on the evidence available on record, two conclusions are possible and therefore this Court could not interfere with the acquittal of the accused by the learned Special Judge. I am of the opinion that only one conclusion is possible on the evidence on record and that it is that the accused are guilty of all the charges framed against them and that interference with the acquittal of the accused by the learned Special Judge is called for in this case. " We are of the view that the High Court was justified in reaching the above conclusion.
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The appellant, (first accused), a former Inspector of Industries, alongwith an Inspector of Industries, (second accused), was prosecuted under section 120 B read with section 420 IPC, sections 5(1) (b) and 5(2) of the Prevention of Corruption Act, 1947 on the ground that both the accused entered into a criminal conspiracy and acting in concert, the first accused obtained the Small Scale Industries Registration Certificate for additional lines of manufacture, Essentiality Certificate and Import Licences on false representations while the second accused enabled him to obtain the same by his false recommendations. The Trial Court acquitted both of them on all the charges. The State filed an appeal before the High Court which on re appreciation of evidence held that the prosecution has established conspiracy beyond doubt and that only one conclusion was possible on the evidence that the accused are guilty of all the charges. Accordingly it set aside the acquittal and convicted both the accused on all the counts and sentenced the appellant to imprisonment for two years under section 120 B, and for two years under section 420 IPC. In appeal to this Court it was contended on behalf of the 250 appellant accused that: (i) the High Court erred in reversing the judgment of acquittal passed by the High Court; and (ii) the benefit of probation under section 360 of the Code of Criminal Procedure should be extended to the appellant. Disposing the appeal, this Court, HELD: The High Court was right in coming to the conclusion that the guilt against the appellant was established beyond doubt. Accordingly, the conviction and the sentence awarded by the High Court is upheld. [251 G 253 B] The occurrence relates to the period between February, 1967 and February, 1969. The Trial Court acquitted the appellant while High Court reversed the acquittal and convicted them. This Court granted bail to the appellant in 1980. Since then the appellant has several achievements to his credit in the industrial field. Therefore, this is a fit case where benefit of probation under section 360 of the Code of Criminal Procedure, 1973 should be extended to the appellant. [253 C E]
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What is the summary of this judgment?
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The High Court examined the evidence on the record in detail and rightly came to the conclusion that the guilt against the appellant was established beyond reasonable doubt. The High Court on re appreciation of the evidence, independently reached the following findings: 252 "Thus it is established by Exhibit D 36 as well as the evidence of P.Ws 3 and 6 that the first accused had only a single phase domestic supply of electricity at his premises in Katpadi Extension even in August, 1969, that he could not have used that supply of electricity validly for any non domestic purposes and that it would not have been possible to produce any industrial machinery with that single phase power. " "The evidence of P.W.s 6, 13, 15 and 19 shows that the machinery found in the premises of Electro technic during their inspections were worth only about Rs. 9,200 or Rs. 10,000 and not of the value of Rs. 94,000 as represented by the first accused in the list submitted by him along with his application, Exhibit P 18."
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The appellant, (first accused), a former Inspector of Industries, alongwith an Inspector of Industries, (second accused), was prosecuted under section 120 B read with section 420 IPC, sections 5(1) (b) and 5(2) of the Prevention of Corruption Act, 1947 on the ground that both the accused entered into a criminal conspiracy and acting in concert, the first accused obtained the Small Scale Industries Registration Certificate for additional lines of manufacture, Essentiality Certificate and Import Licences on false representations while the second accused enabled him to obtain the same by his false recommendations. The Trial Court acquitted both of them on all the charges. The State filed an appeal before the High Court which on re appreciation of evidence held that the prosecution has established conspiracy beyond doubt and that only one conclusion was possible on the evidence that the accused are guilty of all the charges. Accordingly it set aside the acquittal and convicted both the accused on all the counts and sentenced the appellant to imprisonment for two years under section 120 B, and for two years under section 420 IPC. In appeal to this Court it was contended on behalf of the 250 appellant accused that: (i) the High Court erred in reversing the judgment of acquittal passed by the High Court; and (ii) the benefit of probation under section 360 of the Code of Criminal Procedure should be extended to the appellant. Disposing the appeal, this Court, HELD: The High Court was right in coming to the conclusion that the guilt against the appellant was established beyond doubt. Accordingly, the conviction and the sentence awarded by the High Court is upheld. [251 G 253 B] The occurrence relates to the period between February, 1967 and February, 1969. The Trial Court acquitted the appellant while High Court reversed the acquittal and convicted them. This Court granted bail to the appellant in 1980. Since then the appellant has several achievements to his credit in the industrial field. Therefore, this is a fit case where benefit of probation under section 360 of the Code of Criminal Procedure, 1973 should be extended to the appellant. [253 C E]
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What is the summary of this judgment?
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"It has already been found that with the 230 Volts domestic supply he could not have produced any of the new end products. The additional machinery required for producing these new end products had not been installed in the first accused 's factory. It is hardly likely that all the alleged additional machinery could have been installed in the factory whose dimensions are only 18 feet by 12 feet." "It is made clear by the evidence that the second accused had made false statements in Exhibit P 96 about the alleged installation of the additional items of machinery in the first accused 's factory. For the reasons stated above I find that the prosecution has proved charges 2 and 3 satisfactorily, beyond all reasonable doubt." "The first accused has succeeded in obtaining the Essentiality Certificate, Exhibit P.5, by making these false representations and the 2nd accused has induced P.W.5 to recommend in Exhibit P.24 the issue of the Essentiality Certificate and P.W.12 to issue the Essentiality Certificate and Exhibit P 14 by making the false representations Exhibit P 22 and P 23, as in Exhibit P 19, which have been found to be false in the earlier part of his judgment.
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The appellant, (first accused), a former Inspector of Industries, alongwith an Inspector of Industries, (second accused), was prosecuted under section 120 B read with section 420 IPC, sections 5(1) (b) and 5(2) of the Prevention of Corruption Act, 1947 on the ground that both the accused entered into a criminal conspiracy and acting in concert, the first accused obtained the Small Scale Industries Registration Certificate for additional lines of manufacture, Essentiality Certificate and Import Licences on false representations while the second accused enabled him to obtain the same by his false recommendations. The Trial Court acquitted both of them on all the charges. The State filed an appeal before the High Court which on re appreciation of evidence held that the prosecution has established conspiracy beyond doubt and that only one conclusion was possible on the evidence that the accused are guilty of all the charges. Accordingly it set aside the acquittal and convicted both the accused on all the counts and sentenced the appellant to imprisonment for two years under section 120 B, and for two years under section 420 IPC. In appeal to this Court it was contended on behalf of the 250 appellant accused that: (i) the High Court erred in reversing the judgment of acquittal passed by the High Court; and (ii) the benefit of probation under section 360 of the Code of Criminal Procedure should be extended to the appellant. Disposing the appeal, this Court, HELD: The High Court was right in coming to the conclusion that the guilt against the appellant was established beyond doubt. Accordingly, the conviction and the sentence awarded by the High Court is upheld. [251 G 253 B] The occurrence relates to the period between February, 1967 and February, 1969. The Trial Court acquitted the appellant while High Court reversed the acquittal and convicted them. This Court granted bail to the appellant in 1980. Since then the appellant has several achievements to his credit in the industrial field. Therefore, this is a fit case where benefit of probation under section 360 of the Code of Criminal Procedure, 1973 should be extended to the appellant. [253 C E]
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What is the summary of this judgment?
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Therefore, I find that the prosecution has proved these two charges 4 and 5 against the accused satisfactorily and beyond all reasonable doubt." "In the present case both the accused have acted in concert in the first accused obtaining the S.S.I. registration certificate, Exhibit P 20 as amended by Exhibit P 21, the Essentiality Certificate, Exhibit P 5 and the import licenses, Exhibits P 6 and P 7, and the second accused enabling him to obtain the 253 same by his recommendations, Exhibits P 19, P 22 and P 23 which contain false particulars. This would show that both the accused have acted in concert for committing these offences and that they would not have done so if there had been no conspiracy. In these circumstances I find that the prosecution has established the charge of conspiracy framed against both the accused satisfactorily and beyond reasonable doubt. " We agree with the above quoted reasoning and the conclusions reached by the High Court.
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The appellant, (first accused), a former Inspector of Industries, alongwith an Inspector of Industries, (second accused), was prosecuted under section 120 B read with section 420 IPC, sections 5(1) (b) and 5(2) of the Prevention of Corruption Act, 1947 on the ground that both the accused entered into a criminal conspiracy and acting in concert, the first accused obtained the Small Scale Industries Registration Certificate for additional lines of manufacture, Essentiality Certificate and Import Licences on false representations while the second accused enabled him to obtain the same by his false recommendations. The Trial Court acquitted both of them on all the charges. The State filed an appeal before the High Court which on re appreciation of evidence held that the prosecution has established conspiracy beyond doubt and that only one conclusion was possible on the evidence that the accused are guilty of all the charges. Accordingly it set aside the acquittal and convicted both the accused on all the counts and sentenced the appellant to imprisonment for two years under section 120 B, and for two years under section 420 IPC. In appeal to this Court it was contended on behalf of the 250 appellant accused that: (i) the High Court erred in reversing the judgment of acquittal passed by the High Court; and (ii) the benefit of probation under section 360 of the Code of Criminal Procedure should be extended to the appellant. Disposing the appeal, this Court, HELD: The High Court was right in coming to the conclusion that the guilt against the appellant was established beyond doubt. Accordingly, the conviction and the sentence awarded by the High Court is upheld. [251 G 253 B] The occurrence relates to the period between February, 1967 and February, 1969. The Trial Court acquitted the appellant while High Court reversed the acquittal and convicted them. This Court granted bail to the appellant in 1980. Since then the appellant has several achievements to his credit in the industrial field. Therefore, this is a fit case where benefit of probation under section 360 of the Code of Criminal Procedure, 1973 should be extended to the appellant. [253 C E]
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What is the summary of this judgment?
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We, therefore, uphold the conviction and sentence awarded by the High Court. While upholding the judgment of the High Court, we are inclined to agree with the learned counsel for the appellant that this is fit case where benefit of section 360, Criminal Procedure Code be extended to the appellant. The occurrence in this case relates to the period between February, 1967 and February, 1969. The Special Judge, Madras by his judgment dated July 23, 1973 acquitted the appellant. The High Court on April 3, 1980 reversed the trial court and convicted the appellant. This Court granted bail to the appellant on April 29, 1980.
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The appellant, (first accused), a former Inspector of Industries, alongwith an Inspector of Industries, (second accused), was prosecuted under section 120 B read with section 420 IPC, sections 5(1) (b) and 5(2) of the Prevention of Corruption Act, 1947 on the ground that both the accused entered into a criminal conspiracy and acting in concert, the first accused obtained the Small Scale Industries Registration Certificate for additional lines of manufacture, Essentiality Certificate and Import Licences on false representations while the second accused enabled him to obtain the same by his false recommendations. The Trial Court acquitted both of them on all the charges. The State filed an appeal before the High Court which on re appreciation of evidence held that the prosecution has established conspiracy beyond doubt and that only one conclusion was possible on the evidence that the accused are guilty of all the charges. Accordingly it set aside the acquittal and convicted both the accused on all the counts and sentenced the appellant to imprisonment for two years under section 120 B, and for two years under section 420 IPC. In appeal to this Court it was contended on behalf of the 250 appellant accused that: (i) the High Court erred in reversing the judgment of acquittal passed by the High Court; and (ii) the benefit of probation under section 360 of the Code of Criminal Procedure should be extended to the appellant. Disposing the appeal, this Court, HELD: The High Court was right in coming to the conclusion that the guilt against the appellant was established beyond doubt. Accordingly, the conviction and the sentence awarded by the High Court is upheld. [251 G 253 B] The occurrence relates to the period between February, 1967 and February, 1969. The Trial Court acquitted the appellant while High Court reversed the acquittal and convicted them. This Court granted bail to the appellant in 1980. Since then the appellant has several achievements to his credit in the industrial field. Therefore, this is a fit case where benefit of probation under section 360 of the Code of Criminal Procedure, 1973 should be extended to the appellant. [253 C E]
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What is the summary of this judgment?
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Mr. Hardev Singh has placed before us documents showing several achievements of the appellant in the industrial field since then. The appellant 's industry has manufactured the largest Hot Air Kiln in India for Ministry of Railways, largest Degreasing plant for Nuclear Fuel Complex, Sintering Furnace for anti tank missiles and various other items for the Ministry of Defence and other Departments of the Government of India. The appellant claims that he has set up 100 per cent export unit with Rs. 75 crores export per annum. For all these reasons we are of the view that it is expedient that the appellant be released on probation. We, therefore, direct that he be released on his entering into a bond to the satisfaction of the Special Court, Madras.
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The appellant, (first accused), a former Inspector of Industries, alongwith an Inspector of Industries, (second accused), was prosecuted under section 120 B read with section 420 IPC, sections 5(1) (b) and 5(2) of the Prevention of Corruption Act, 1947 on the ground that both the accused entered into a criminal conspiracy and acting in concert, the first accused obtained the Small Scale Industries Registration Certificate for additional lines of manufacture, Essentiality Certificate and Import Licences on false representations while the second accused enabled him to obtain the same by his false recommendations. The Trial Court acquitted both of them on all the charges. The State filed an appeal before the High Court which on re appreciation of evidence held that the prosecution has established conspiracy beyond doubt and that only one conclusion was possible on the evidence that the accused are guilty of all the charges. Accordingly it set aside the acquittal and convicted both the accused on all the counts and sentenced the appellant to imprisonment for two years under section 120 B, and for two years under section 420 IPC. In appeal to this Court it was contended on behalf of the 250 appellant accused that: (i) the High Court erred in reversing the judgment of acquittal passed by the High Court; and (ii) the benefit of probation under section 360 of the Code of Criminal Procedure should be extended to the appellant. Disposing the appeal, this Court, HELD: The High Court was right in coming to the conclusion that the guilt against the appellant was established beyond doubt. Accordingly, the conviction and the sentence awarded by the High Court is upheld. [251 G 253 B] The occurrence relates to the period between February, 1967 and February, 1969. The Trial Court acquitted the appellant while High Court reversed the acquittal and convicted them. This Court granted bail to the appellant in 1980. Since then the appellant has several achievements to his credit in the industrial field. Therefore, this is a fit case where benefit of probation under section 360 of the Code of Criminal Procedure, 1973 should be extended to the appellant. [253 C E]
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What is the summary of this judgment?
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The Special Court shall pass an order in terms of Section 360, Criminal Procedure Code, 1973 to its satisfaction. A copy of this order be sent to the Special Court, Madras immediately. The appellant is directed to appear before the Special Court, Madras within two months from today to enable the Special Court, Madras to pass an order as directed by us. In the event of appellant 's failure to present himself before the Special Court as directed he shall undergo the original sentence awarded by the High Court. The appeal is disposed of in the above terms. T.N.A Appeal disposed of.
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The appellant, (first accused), a former Inspector of Industries, alongwith an Inspector of Industries, (second accused), was prosecuted under section 120 B read with section 420 IPC, sections 5(1) (b) and 5(2) of the Prevention of Corruption Act, 1947 on the ground that both the accused entered into a criminal conspiracy and acting in concert, the first accused obtained the Small Scale Industries Registration Certificate for additional lines of manufacture, Essentiality Certificate and Import Licences on false representations while the second accused enabled him to obtain the same by his false recommendations. The Trial Court acquitted both of them on all the charges. The State filed an appeal before the High Court which on re appreciation of evidence held that the prosecution has established conspiracy beyond doubt and that only one conclusion was possible on the evidence that the accused are guilty of all the charges. Accordingly it set aside the acquittal and convicted both the accused on all the counts and sentenced the appellant to imprisonment for two years under section 120 B, and for two years under section 420 IPC. In appeal to this Court it was contended on behalf of the 250 appellant accused that: (i) the High Court erred in reversing the judgment of acquittal passed by the High Court; and (ii) the benefit of probation under section 360 of the Code of Criminal Procedure should be extended to the appellant. Disposing the appeal, this Court, HELD: The High Court was right in coming to the conclusion that the guilt against the appellant was established beyond doubt. Accordingly, the conviction and the sentence awarded by the High Court is upheld. [251 G 253 B] The occurrence relates to the period between February, 1967 and February, 1969. The Trial Court acquitted the appellant while High Court reversed the acquittal and convicted them. This Court granted bail to the appellant in 1980. Since then the appellant has several achievements to his credit in the industrial field. Therefore, this is a fit case where benefit of probation under section 360 of the Code of Criminal Procedure, 1973 should be extended to the appellant. [253 C E]
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