JUDGMENT
D.A. Desai, J.
1. This appeal by judge’s summons is preferred by the Sales Tax Officer, Petlad, against the decision of the official liquidator of RAjratna Naranbhai Mills CO. LTd. (in liquidation), hereinafter referred to as the company, dated 29th August 1972, rejecting a part of the claim in the amount of Rs. 28,80,1.77 being the amount of penalty included in the whole claim of Rs. 70,945.60 as the debt inadmissible for payment by the official liquidator in winding up, and refusing to grant priority in payment as envisaged by section 530(1)(a) of the Companies Act, 1956. The applicant has prayed that the court should give a direction directing the liquidator to grant priority in payment of Rs. 1,064.44 as sales tax due and payable under the BOmbay Sales TAx Act and Rs. 11,216.50 being sales tax due and payable under the Central Sales TAx Act and the balance of the claim admitted by the liquidator plus the claim rejected by the liquidator as ordinary debt ranking pari pasu with other unsecured creditors including the penalty amount which has been levied for the period subsequent to the date of the order of winding up.
2. Company was ordered to be would up by an order made on 26th June, 1967. The liquidator after obtaining directions of the court invited the creditors of the company to prove their debts or claims and simultaneously to establish any title they may have to priority under section 530. Pursuant to this invitation to prove the debts, the Sales Tax Officer, Petlad, submitted as many as five affidavits, the last being the most comprehensive filed on 21st August, 1971, claiming an aggregate amount of Rs. 70,945.60 as the amount of sales tax plus penalty payable by the company and claimed priority for the whole or any portion of the amount claimed by the petitioner and admitted claim to the tune of Rs. 42,143.63 payable as debt pari passu with other ensured creditors of the company. Hence, the Sales Tax Officer has taken this judge’s summons preferring an appeal under rule 164 of the Companies (Court) Rules, 1959.
3. At the hearing of this submissions, learned Advocate-General, who appeared of the petitioner, urged that out of the admitted claim in the amount of Rs. 41,143.83, the liquidator was in error in not granting priority in payment of debt of Rs 22,280.96 consisting of Rs. 11,064.46 being sales tax payable by the company for the period from April 1, 1957 , to December 31, 1965, under the Bombay Sales tax Act, and balance of Rs. 11,216.50 being the amount of sales tax payable under the Central Sales tAx Act for the period d from July 1, 1957, to December 31, 1965, because the assessment order was made in respect of the aforementioned claim within a period of 12 months next before the relevant date and the notice of demand which made the tax payable was also issued within a period of 12 months next before the relevant date. It was urged that apart from any other consideration the petitioner is entitled t a priority in payment for the amount of Rs. 22,280.96 as the claim was of sales tax which was due on the relevant date and which became due and payable within 12 months next before the relevant date. It was conceded that balance of the admitted claim in the amount of Rs. 19,862.87 being the amount of sales tax due and payable under the Bombay Sales Tax Act for the period from January 1, 1966, to June 26, 1967, would not be entitled to priority in payment. It was also conceded that the claim for an amount of Rs. 195.42 has been rightly rejected. To correctly appreciate the facts, break-up of the claim herein made by set out in a tabulated form.
CLAIM UNDER THE BOMBAY SALES TAX ACT, Period of Notice for Date on Date of Amount of Amount of Amount due assessment assessment assessment issue of tax determ- tax paid as per served on order is demand ined as per with the demand passed notice. assessment return notice orders. Rs. Rs. Rs. 1-4-57 to 27-4-62 16-12-66 17-12-66 7,735.96 3,906.31 2,829.75 31-12-57 1-1-58 to 27-4-62 16-12-66 17-12-66 6,65.03 3,781.21 2,117.43 31-12-58 1-1-60 to 20-1-64 31-1-67 31-1-67 23,178.44 22,197.63 1,029.89 31-12-60 1-1-61 to 20-1-64 31-1-67 1-2-67 25,204.43 24,266.08 1,137.36 31-12-61 rectification 29-8-67 2-9-67 100.00 100.00 1-1-62 to 20-1-64 31-1-67 1-2-67 21,178.53 20,992.52 367.92 31-12-62 1-1-63 to 20-1-64 31-1-67 1-2-67 30,079.50 29,370.79 741.83 31-12-63 1-1-64 to 13-6-66 31-1-67 1-2-67 34,405.95 33,226.19 1,258.83 31-12-64 1-1-65 to 13-6-66 31-1-67 12-2-67 20,944.67 20,464.22 481.45 CLAIM UNDER THE CENTRAL SALES TAX ACT 1-1-57 TO 27-4-62 16-12-66 17-12-66 8,196.03 5,957.82 2,238.45 31-12-57 1-1-58 TO 27-4-62 16-12-66 17-12-66 3,858.99 1,685.82 2,173.17 31-12-58 1-1-59 TO 27-4-62 16-12-66 17-12-66 2,028.21 894.36 1,133.85 31-12-59 1-1-60 TO 20-1-64 31-1-676 1-2-67 2,274.23 1,489.30 238.97 31-12-60 1-1-62 TO 20-1-64 31-1-676 1-2-67 2,309.05 940.22 1,454.83 31-12-62 1-1-63 TO 20-1-64 31-1-676 1-2-67 10,733.48 6,638.07 3,895.41 31-12-63 1-1-65 TO 13-6-66 31-1-67 1-2-67 1,119.50 1,027.40 92.10 31-12-65 As per rectification order 10.28 ---------- 81.82 4. It would appear that from the claim admitted as payable by the liquidatro to the extent of Rs. 42,143.83 priority in payment is claimed for the amount of Rs. 22,280.96 on the submission that the claim represents the claim for tax payable to the State Government as it was due on the relevant date and had become due and payable within 12 months next before the relevant date, and, therefore, it was entitled to a priority in payment as envisaged by section 530(1)(a) of the Companies Act. 5. Section 530(1)(a) reads as under : "530. Preferential payments.- (1) In a winding up, there shall be paid in priority to all debts- (a) all revenues, taxes, cases and rates due from the company to the Central or a State Govt. or to a local authority at the relevant date as defined in clause (c) of sub-section (8), and having become due and payable within the twelve months next before the date."
Clause (c) of sub-section (8) of section 530 defines “the relevant date” to mean in the case of a company ordered to be wound up compulsorily, the date of the appointment (or first appointment) of a provisional liquidator, or if no such appointment was made, the date of winding up order, unless in either case the company had commenced to be would up voluntarily before the date. Therefore, the relevant date for the purpose of the present inquiry would be the date on which winding up order was made, namely, 26th June, 1967. In order to claim priority by invoking clause (g) of sub-section (1) of section 530, it must be shown that revenues, taxes, ceases and rates due from the company to the STate Govt. were due at the relevant date and had become due and payable within 12 months next before that date. The word “due” had been used twice over in the clause. In fact the clause is divided into two parts : (i) the amount in respect of which priority is claimed must be due from the company at the relevant date ; and (ii) it must have become due and payable within the 12 months next before that date. This word “due” implies or conveys different meanings in the juxtaposition in which it is used in two parts of the same clause. Ordinarily, when the same word is used in two parts of the same clause or for that matter of the same section, legislature may intend to use it to convey the same meaning unless of course the context in which it is used contra-indicates the same. Subject, however, to this well known cannon of construction, the safest rule is to put a liberal construction on the language used in the statute, unless of course such construction leads to absurdity. As observed by Lord Warrington in Parrell v. Fordree [1932] A.C. 676 (H.L.), at page 682, the safer and more correct course of detailing with a question no. construction is to take the words themselves and arrive, if possible, at their meaning without, in the first instance, reference to cases, because this rule of construction is based on the well- known principle that the legislature has meant what they have actually expressed, because the object of all interpretations is to discover the intention of the legislature. Intention, however, must be deduced from the language used. Therefore, where the language is plain and admits of but one meaning, the task of interpretation can hardly be said to arise.
6. Looking to the language used in the sub-clause uninfluenced and uninhibited by decision and giving the language therein used its literal meaning, it appears that the word “due” in the first part of the clause could only mean “outstanding at the relevant date”. If the debt for the payment of which priority is claimed was not outstanding at the relevant date, there is not question of claiming priority in payment of that amount. Therefore, when it is aid that the amount in respect of which priority is claimed must be due at the relevant date, the only meaning one can give to it is that it must be outstanding at the relevant date. This meaning of the word “due” in the first part of the clause is reinforced by keeping in view the purpose of the winding up provisions of the Companies Act. As observed by me in Rajratna Naranbhai Mills Co. LTd. v. New Quality Bobbin Works [1973[ 43 Comp. Cas. 131 (Guj.), at page 137, the object of the winding up proceedings in respect of a company is to collect all the assets, properties and chooses-in-action belonging to a company under liquidation and to distribute them to various persons having claim against the company keeping in view priorities fixed by various provisions of the Companies Act. Ordinarily, a liquidator after collecting all the assets, properties and claim in favour of the company would first pay up any secured creditor if he has not chosen to remain outside the winding-up and then a preferential creditor and thereafter unsecured creditors and the balance amongst the contributories. In order to prevent a scramble for the assets of an insolvent company, the liquidator has to set in and take possession of and protect and assets of the company so that the object of the winding- up provisions of the companies act, to put all unsecured creditors upon an equality and to pay them pari passu is fully carried out. Further, section 530 finds its place in Chapter V of Part VII of the Companies Act under the heading “Proof and ranking of claims.” After the liquidataor has realised all the assets of the company it is incumbent upon him to invite the creditors to prove their debts. Rule 147 of the Companies (Court) Rules, 1959, provides that the liquidator has to fix the date on or before which all the creditors of the company are to prove their debts or claims and to establish any title they may have to priority under section 530. Obviously, proof will be offered and can be accepted in respect of the debt outstanding on the date of winding-up. If it was not outstanding on the date of winding-up, the liquidator cannot entertain proof of such debt because nothing was outstanding on the date on which he steps in and acquires jurisdiction to distribute the assets of the company according to the provisions contained in the winding up chapter of the Companies Act. Not only this, rule 156 enables the creditors to claim interest up to the date on which winding-up order is made and rule 179 provides in certain circumstances payment of interest subsequent to the date of winding-up. Obviously, therefore, looking to the juxtaposition in which section 530 is placed in the scheme of Chapter V of Part VII of the Companies Act, and looking to the purpose for which sub-clause (a) in enacted, the word “due” in the first part of the clause must mean “outstanding at the relevant date”.
7. Now, merely because any particular debt in respect of any relevant tax, less or rate due to the Central or State Govt. or to the local authority is outstanding at the relevant date, that by itself is not sufficient to clothe it with priority in payment thereof in the distribution of the assets of the company. The plain language of the clause exhibits legislative intention that priority in payment is not to be accorded to all revenues, taxes, cease and rather payable to the Central Government or State Government or local authority and outstanding on the relevant date. If such a construction were to be put on the clause, the latter part of the clause would be rendered nugatory. Some meaning must be assigned to the latter part of the clause. Latter part of the clause reads “having become due and payable within the twelve months next before the date”. In the filed of tax laws, it is well-known phenomenon that tax becomes due at certain time and becomes payable at some other point of time. It may become due and payable simultaneously. It may as well as become due at one time and payable at some other point of time. Upon a true construction of sub-clause (a) priority can be claimed in respect of that amount which must fall within one of the nomenclatures set out in the sub-clauses and which must be outstanding at the relevant date and the amount became due, meaning thereby that the incident occurred which made the amount due and it became also payable within 12 months next before the relevant date. “Having become due and payable” would literally mean that process or event of bringing liability into existence occurred and fastened the liability for its being discharged. Both the events must occur within 12 months next before the relevant date. “Having become due” indicates the tense used which would indicate the process of becoming due. At first bluish one feels that the legislature was guilty of tautology in saying that debt must be due and payable because debt is either payable in prescient or in future, if a date for payment is fixed and debt due is necessarily payable. But, no deeper examination of the sub clause, the legislative intent becomes quite manifest. The amount may be outstanding and payable by the company at the relevant date but that amount may be outstanding for a long time prior to the relevant date, or, for a period proceeding 12 month next before the relevant date. Such amount would undoubtedly be due from the company at the relevant date. In respect of such amount the first part of the clause would necessarily be satisfied but before priority could be claimed and granted, it will have to be found out whether that debt which was outstanding at the relevant date became due, meaning thereby that the event which brought debt into existence occurred within 12 months and also it became payable, meaning thereby its payment could have been enforced against the company within 12 months. There specific conditions are prescribed in sub-clause (a) and all three must co-exist and be satisfied in respect of any particular debt for which priority is claimed before priority in payment can be accorded to it. These three conditions are :
(i) debt of the kind mentioned in clause (a) must be outstanding on the relevant date ;
(ii) the debt must have become due, in the sense, it must have been incurred at any time within 12 months next before the relevant date ; and
(iii) the debt must have become payable at any time within 12 months next before the relevant date.
8. Analyzing the section, these three conditions emerge and all the three must be satisfied and the debt must be in respect of revenue, taxes, ceases and rates and must be due to the Central or State Govt. or a local authority.
9. Now, apparently confusion may be created when it is said that debt is due and payable because the debt which is due may presumably be payable and the debt which is payable must necessarily be due. But this confession can be cleared by recollecting that a debt may come into existence and its payment may be postponed. Ordinarily, a debt as soon as it is incurred, unless payment is postponed, may also be payable. But when one turns to a debt in respect of tax, the difference between debt due and debt payable becomes immediately discernible. A debt in respect of a tax may become due at one time and payable at a different time in future. It is quite well-known that tax becomes due at one point of time, but when it becomes due it dies not necessarily become payable and it may become payable at a future date. All the three stages can be well comprehended in respect of a debt which is nothing but arrears of tax. The dictum debit in presenti solvendum in future clearly brings out the distinction of a debt becoming due, meaning thereby coming to existence at one time and becoming payable in future. Dot is sometimes defined as a sum of money which is now payable or may become payable in the future by reason of a present obligation. Therefore, it is quite conceivable that a debt may become due at one point of time and may become payable at some other point of time and since then it may be outstanding. A Division Bench of this High Court in Commissioner of Wealth-tax v. Raipur Mfg. Co. Ltd. [1964] 52 I.T.R. 482, 502 ; 4 G.L.R. 741 (Guj.), while examining the meaning of the expression “debt owed” in the definition of “net wealth” in section 2(m) of the Wealth-tax Act, 1957, observed as under :
“…..it seems to be abundantly clear that in order to constitute a debt it is not pre-requisite that there must be an ascertained sum of money legally recoverable in present. It is sufficient if there is a pursuant obligation to pay a sum of money, whether the amount thereof is ascertained or not and whether the amount is presently payable or payable at a future date. It must not be a contingent obligation.”
10. This view was confirmed in Kesoram Industries and Cotton Mills Ltd. v. Commissioner of Wealth-tax [1966] 59 I T R767 ; [1966] 2 S C R 688 (S.C.), wherein the Supreme Court observed as under :
“The said decisions also accept the legal position that a liability depending upon a contingency is not a debt in presenti or in future till the contingency happened. But if there is a debt the fact that the amount is to be ascertained does not make it any the less a debt if the liability is certain and what remains is only the quantification of the amount.”
11. Learned Advocate-General urged that while constructing the expression “having become due and payable” it would be improper to rely on the ratio of the case because the court in that case was concerned with the expression “debts owed” as it finds its place in the definition of “net wealth” in section 2(m) of the Wealth-tax Act, 1957. In fact, in a very elaborate judgment, the Division Bench examined what constitutes “debt” and whether the meaning undergoes change because of the context in which that word is used in the definition of the expression “net wealth”. The context, however, did not affect the intrinsic meaning of the word “debt” as used in the definition of the expression “net wealth” and as used in clause (a) of sub-section (1) of section 530 of the Companies Act.
12. Priority is claimed for payment of the amount which admittedly is to be paid as and by way of sales tax payable by the company. It is admitted that the amount was outstanding on the relevant date. The real controversy centers round the question whether the amount in respect of which priority is claimed had become due and payable within 12 months next before the relevant date. The information set out in tabulated form in the earlier part of this judgment would show that the amount in respect of the sales tax payable under the Bombay Sales Tax Act is for the period commencing from 1st April, 1957, and ending with 31st DEcember 1965. So also the amount claimed as tax payable under the Central Sales Tax Act is payable for the period commencing from 1st July, 1957 and ending with 31st December, 1965. If the period for which tax is claimed is very simple, because the entire period was beyond the period of 12 months next before the relevant dates, the relevant date being 26th June, 1967. The contention is that the sales tax becomes due and payable only when the amount of tax is assessed in an assessment proceeding and demand notice is served in respect of the tax so assessed. If that contention were to prevail, obviously the assessment order rand issue of demand notice pursuant to the assessment order are within 12 months next before the relevant date and the claim for priority would be amply justified. But it was contended by Mr. Ashok L. Shah, learned advocate, who appeared for the official liquidator that even if the tax in respect of which priority is claimed became payable on the assessment order being made and demand notice being issued, it did not become due within 12 months next before the relevant date,but it became due as and when the taxing event occurred and that was much prior to the period prescribed in the clause (a) for claiming priority.
13. The question that clearly falls to be determined is as to when the sales tax becomes due and payable. Sales Tax is a tax on the sale of goods as clearly mentioned in the preamble of the Bombay Sales Tax Act, 1953, as well as the Bombay Sales Tax Act, 1959. At any rate, it cannot be considered as tax on the goods itself but it is a tax on the sale of goods. It has to be ascertained as to when sales tax which is a tax on sale of goods becomes due and when it becomes payable. In respect of the sales tax it is agreed that three independent situations can be envisaged. They are :
(i) when a return is submitted by the assessee, computing therein tax payable as per the return and the amount is paid and challan is submitted along with the return ;
(ii) when a return is submitted and tax is computed as per the return, but the amount of tax so computed is not paid; and
(iii) when the assessee submits the return and simultaneously computes the tax as per the return and pays the same along with the return, but at the time of assessment by the authority concerned, more tax than what is computed and paid by the assessee is found due and payable by the assessee and, pursuant to the assessment, a demand notice is issued.
14. Learned Advocate-General claimed priority in respect of the tax which becomes payable under the third category and did not argue that as and when tax is made payable, priority ought to be granted. Therefore, in this case I am concerned with the third situation in which the case of the petitioner falls and priority is claimed by him.
15. At this stage, it is necessary to refers to the relevant charging sections of the Bombay Sales Tax Act, 1953, the BOmbay Sales Tax Act, 1959, and Central Sales Tax Act. Section 5 of the Bombay Sales TAx Act, 19543, provides for the incidence of tax and it says that every dealer whose turnover either of all sales or of all purchase made during the relevant year has exceeded or exceeds the limits prescribed therein shall be liable to pay the tax under the Act on his turnover of sales and his turnover of purchases made on or after the appointed day. Section 6 provides for liability of the dealer to pay tax as therein provided and section 6(1)(ia) provides that the dealer who is liable to pay tax under the Act shall pay sales tax or purchase tax under the Act, on his sales or purchases in accordance with the provision of section 7A. SEction 8 provides for levy of sales tax on the turnover of sales of goods as specified in column 1 so Schedule B at the rate, if any, specified against them in column 2 of the said Schedule, subject to other provisions of the Act. Then comes section 16 which provides for the manner of payment and recovery of tax. A duty is cast on every registered dealer to furnish return at the intervals and in the manner prescribed in the rules. Sub-section (4) of section 16 provides that if the tax is not paid by any dealer within the prescribed time, the dealer shall pay, by way of penalty in addition to the amount of tax, a sum therein provided. Chapter III of the Bombay Sales Tax Rules, 1954, provides for submission of quarterly returns and further enjoins a duty upon the registered dealer to attach one copy of the receipt challan in respect of the tax due according to such return and penalty, if any, payable under sub-section (4) of section 16. Reading sub-section (4) of section 16 along with the rule 4, it becomes crystal clear that penalty at the rate prescribed in sub-section (4) of section 16 has to be paid along with the tax payable as per the return for the period during which there is delay in submitting the return and payment of the tax as per the return. It would thus appear that sales tax is levied on the sale of goods. Taxing event is the sale of goods. The liability to pay sales tax is cast on the registered dealer. He is required to submit the quarterly return of his turnover. And along with the quarterly return of his turnover he has to submit a challan showing payment of tax computed on the return submitted by him. And if there is delay in submission of the return and payment of tax as per the return he must add to the tax payable by him the amount of penalty computed as per the provisions contained in sub-section (4) of section 16. This provision is very important to find out as to when tax becomes due. A tax becomes due when the taxing event occurs. Taxing event in the case of sales taxis sale of goods. The person liable to pay tax is the registered dealer and method of payment is quarterly submission of return showing turnover and payment of tax as per the return. Penalty is payable when tax which has become due is not paid. One cannot levy penalty for non-payment of tax or non-payment of tax within prescribed period unless the tax has before and due payable. The charging section in the BOmbay Sales Tax Act, 1953, clearly shows that the tax is levied on sale of specified rates and it is payable every three months when a duty is cas ton the registered dealer to submit his return. The duty is ascertainable because the moment the registered dealer on whom duty is cast to submit the return and pay tax as per the return fails to submit the return and pay tax within the prescribed time, he incurs liability to tape penalty. The fact that he has to pay penalty merely because of his failure to submit return and pay tax in time indicates that the tax had already become due and payable by him as per his own computation and he failed to pay within the stipulated time which entailed liability to pay penalty.
16. It was, however, urged that tax which was found payable by the assessee at the time of assessment become due when the assessment proceeding is over and tax is assessed and demand notice is served. The contentions that, though undoubtedly duty is cast on the assessee to compute tax as per his return and pay it, yet when assessment proceedings are conducted and conclude and assessment order is made, the tax really becomes payable. It is quite possible that if no assessment a larger amount is found due by way of tax then the one computed by the assessee and paid by him along with his return that additional tax found payable on assessment may become payable on the assessment order being made and consequent demand notice being served upon the assessee. Does it, however, mean that the tax also become due at the time when the assessment order is made ? I think not. Ultimately, when assessment proceedings are completed what is examined by the competent authority is the return submitted by the assessee and evidence furnished by him and the proof tendered by him in support of his return which, when not accepted, may entail a higher liability for tax. But such assessment is always in relation to the period for which assessment is being made. Even the assessment proceedings relate to assessment of tax on tax in events that occurred during a certain period. To illustrate, suppose the assessee submitted quarterly return for the period from January 1, 1957, to December 31, 1957, and paid tax as computed by him, at the time of filing his returns. Now, the authority may commence assessment proceedings for the period January 1, 1957, to December 31, 1957, somewhere in 1960, and reject certain proof tendered by the assessee whereby he adds to the turnover and assess the tax payable by the assessee and after giving credit for the amount already paid serves demand notice or the balance. Can it be said that tax became due when assessment is made, or it has already become due during the relevant period for which assessment is being made and become payable when assessment order is made ? The scheme of the Sales Tax Act does not leave an assessee option not to pay tax till assessment proceeding is completed and assessment order is made. In fact, the scheme entails a liability on the assessee himself first to compute the tax while submitting his return and pay the same. His failure to pay tax as per his computation, or his failure to submit return within the stilted time, and to pay tax at the time of submitting return would entail liability to payment of penalty which again has to be computed by him and paid along with the tax. It is the provision which shows the incidence of tax. Therefore, in the scheme of the SAles Tax Act taxing event appears to be sale of goods. Mode of payment its that it is deferred till quarterly return is submitted correct return and pay tax computed as per his correct statement. If the assumption is justified assessment is merely a formality because nothing becomes payable at the time of assessment as the assessee had submitted return and paid tax computed as per the return. Assuming that the return submitted by the assessee is not accepted by the authority and the authority while making assessment makes demand of the tax in higher amount than what the assessee computed and paid while submitting the return, certainly the difference between what is paid and what is payable would become payable when the assessment order is made. But that amount becomes payable as sales tax in respect of the sales that took place during the accounting year while submitting the return if a correct return was submitted. The tax was due during that very period. Therefore, apart from anything else, merely at present looking at the scheme of the Bombay Sales Tax Act, 1953, the sales tax become due even in respect of that amount which is found to be payable in assessment when the sales took place, meaning thereby when taxing event under the sales tax act occurred. The scheme of the Bombay Sales TAx Act, 1953, , and the scheme of the Central Sales TAx Act, 1956, as far as submitting of return and payment of tax is concerned is in pari material and the same conclusion holds good in respect of them also.
17. If the scheme of the Sales Tax Act and especially the charging sections and the sections casting liability on the person liable to pay tax and the mode, manner and method of payment of tax is correctly understood by me, there is no escape from the conclusion that tax became due even in the third class of cases as envisaged by the learned Advocate-General when the taxing event occurred.
18. Liability to pay income tax arises in a different manner but as it is another taxing statute, reference was made to the provisions of the Income- tax Act, 1922, in support of the submission that tax becomes due and payable only when it is assessed and a demand notice pursuant to the assessment is served upon the assessee. I am not inclined to examine the provisions of the Income-tax Act, 1922, or, for that matter, the Income-tax Act, 1961, to find out as to when income-tax becomes due, save saying that income-tax becomes due at the end of the accounting year. By the very nature of income-tax, every piece of income, whenever earned, does not entail liability to pay tax such as every sale by the registered dealer may entail liability to pay sales tax. In the case of income-tax when a certain quantum of income is reached within the accounting year, then at the end of the accounting year, having regard to certain income which is taxable, liability to pay tax arises. Payment of advance income-tax stands on a different footing. In the case of payment of advance income-tax, as the statute authorities the competent authority to ask for payment of advance income-tax, notice to the assessee to pay the same makes advance tax due and payable from the date on which taxis demanded. But in the case of ordinary income-tax as understood in contradistinction to advance income-tax, there is consensus of judicial opinion that it becomes due at the close of the accounting year and becomes payable when assessment is made. I would refer to some of the authorities bearing on the subject when I examine the authorities relied on by either side in this case, but at this stage it is sufficient to say that the analogy about income-tax becoming payable on the assessment order being made and demand being served will not assist in determining as to when sales tax becomes due in the situation as envisaged in this case.
19. I would now refer to some of the authorities relied upon on either side. In Kesoram Industries’s case [1966] 59 ITR 767 ; [1966] 2 S.C.R. 688 (S.C.), it has been in terms held that income tax becomes due at the latest on the last date of the accounting year. After examining various provisions of the Income-tax Act, as also the decisions of the Bombay, Gujrat (Commissioner of Wealth-tax v. Raipur Mfg. Co. [1964] 52 I.T.R. 482; 4 G.L.R. 741 (Guj.)) and the Kerala High Courts, the Supreme Court agreed with the conclusion arrived at by the Division Bench of this High Court and in terms held that a debt is a present obligation to pay an income-tax is a present liability though it becomes payable after it is quantified in accordance with ascertainable data and there is a prefect debt at any rate on the last date of the accounting year and not a contingent liability. This observation would negative the contention not the learned Advocate- General that incometax only becomes due when assessment is made and the quantified liability comes into existence and demand notice is served. On the contrary, the view taken by me gets some support from the judgment of th Divisions Bench of the High Court consisting of Bhagwati C. J. and T. U. Mehta J. in Jivanlal Maganlal Patel v. Mangaldas Joshi [1971] 27 S.T.C> 419 (Guj.), at page 425. The Division Bench in that case was concerned with the examination of the scheme of sections 19(4) and 34 of the Bombay Sales Tax Act, 1959. Expression which came up for construction before the Division Bench was “tax due” in section 34 and the liability of the transferee to pay tax which became due before transfer of a business. Contention before the Division Bench was that the tax does not become due unless quantified. Negativing the contention it was held that even if the amount of sales tax is not quantified as a result of a pending assessment, liability to pay tax is considered as tax due by sub-section (4) of section 19 of the Act. The reasoning of the Division Bench proceeds on the basis that tax becomes due as soon as a taxing event occurs, and in order to decide whether a certain tax is due or not, it is immaterial whether by the assessment order it is quantified or nt. In this connect it is advantageous to refer to Recols (India) Ltd. In re [1953] 23 COmp. Cas. 380, 381 ; 4 S.T.C. 271 ; [1954] I.L.R. 2 Cal. 378 [S.B.]. It is necessary to examine in some detail this judgment because both the sides have relied upon it ; the learned ADvocate-General relied on the judgment of Chakravarti C. J. and Mr. Shah, for the official liquidator, relied upon the judgment of Sinha J. though reference to the Special Bench has been answered back by unanimous decision. The matter came up before a Special Bench consisting of three judges of the Calcutta High Court upon a reference made by a single judge of that High Court which was in the following words :
“Whether sales tax is to be treated as a preferential debt within the meaning of section 230 of the Indian Companies Act (which is in pari material with section 530(1)(a) of the Companies Act, 1956) ? From which date-from the date of demand or the date when the sale price is received, or any other date ?”
20. The answer of the Bench was that the amount of sales tax which became due and payable on the date of service of notice of demand was entitled to preferential payment. The learned Advocate-General relied upon the answer to the reference given by the Special Bench and urged that the sales tax always becomes due and payable when assessment order is made and demand notice is issued. Mr. A. L. Shah, on the other hand, contended that the Special Bench has not further examined the question whether both the conditions must co-exist before priority in payment is granted. Chakravarti C. J. in his judgment referred to the Privy Council decision in Doorga Prosad v. Secretary of State [1945] 13 I.T.R. 285 (P.C.), wherein it was held that the tax was due when a demand was made under sections 29 and 45 of the Income-tax Act and that it then became a debt due to the Crown. Having relied upon this observation Chakravaarti C. J. noted that the Judicial Committee was not considering the point of time at which income- tax became due and payable and made the observation referred to above in connection with a different point. Having said this, reliance was placed on the observations just hereinabove quoted by me by observing that it was not conceded that so far as income-tax was concerned, the proposition was not correct. Thereafter, the judgment of Chakravarti C J. proceeds on the basis that the dictum laid down in Doorga Prasad’s case [1945] 13 I.T.R. 285 (P.C.), holds good evening the case of sales tax and accordingly held that sales tax in respect of which priority was claimed became due only when notice of demand was served which was within 12 months next before the relevant date. I have already pointed out above that there is noteworthy and understandable difference between the sales tax becoming due and income-tax becoming due because taxing event in the case of these two taxes is different. Therefore, the analogy of the income-tax, except for the purpose of saying that it may become due at one date and payable at a future date, cannot be further relied upon. In this connection, Sinha J. has, in his concurring judgment, examined the question as to when sales tax becomes due and when it becomes payable under Bengal Finance (Sales Tax) Act, 1941. This question was examined by Sinha J. in order to find out as to when sales tax became due in that case and when it became payable so as to be entitled to payment in priority. After examining the effect of the charging sections and sections levying tax, and the sections providing for the mode, manner and method of payment of tax, it was observed [1953] 23 Comp. Cas. 381, 396 ; 4 S.T.C. 271 ; [1954] I.L.R. 2 Cal. 378 [S.B.] :
” The cumulative effect of section 4,5 and 6 of the Act is that the tax becomes due as soon as the gross turnover within the taxable period exceeds the taxable quantum. It is true that the dealer is entitled to certain deductions under section 5 and exemptions under section 6, but all that is taken into account is arriving at the ‘taxable turnover’ . Such an adjustment must have to be calculated and in all probability is calculated by the dealer just before drawing up the return. But that process cannot hold up the tax being due. ”
21. This view of Sinha J. lends assurance to the view I have already taken that tax becomes due when the taxing event occurs. It may further become payable when the return is submitted as initially tax is to be paid according to the return ; where the whole or part of the return is not accepted then tax becomes payable when assessment taken place. But even if tax becomes payable at some future date, it is none-the-less tax which was due for the period for which return is submitted or in respect of sales which took place or the period for which assessment is being made. However, Sinha, J., with great respect, after examining the case from this angle fell into an error by not examining the question whether both the conditions in the latter part of the clause (a) of section 530(1) must co-exist and be satisfied before priority in payment can be claimed and concurred in the order passed by Chakravarti C.J. Therefore , with respect , it is not possible to accept the answers given by the Special Bench to the question posed before it though part of the reasoning is quite convincing and must be looked upon with respect.
22. Reliance was also placed on the decision in In the matter of Bihar Bolts and Rivets and Engineering Works (in Liquidation) (2) [1959] 29 Comp. Cas 482; 10 S.T.C.. K. Sahai J., after referring to Recols (India) case (1) [1953] 23 Comp. Cas 381, 396; 4 S.T.C. , relied upon the construction placed upon the expression ” having become due and payable” by Sinha J. and held that section 530(1) (a) does not require that claim must become due as well as payable within a period of 12 months . But before reaching this conclusion, it was observed as under :
” But a dealer can always be certain of what sales tax he has to pay as soon as he effects the sale. At the time when a dealer prepares his return , he only adds up the sales effected by him during the period in question. The assessment is a process whereby a prescribed authority similarly adds up the amounts . I do not, therefore , think that the liability to pay sales tax arises either at the preparation of the return or the passing of the assessment order .”
23. It was thus held that sales tax becomes due as soon as sale taken place which is a taxing event. This part of the judgment lends support to the view taken by me. The observation in the latter part whether the amount in respect of which priority is claimed must be both due and payable within 12 months next before the relevant date (sic) , neither side relied upon this judgment and I must confess with great respect that it is not possible to accept the conclusions recorded on this point. Next case referred to was Joint Official Liquidators of Peerdhan Juharmal Bank Ltd. v. Commissioner of Income-tax (1) [1954] 24 comps. Cas 41 ; 25 I.T.R. 140; A.T.R. 1954 Mad. 858. Now, this case would lend no assistance in deciding the question raised before me because the question raised before a Division Bench of the Madras High Court in that case payable. The liability to pay advance income-tax stands on a different footing and the assessee becomes liable to pay advance income-tax on a notice served upon him and, therefore , advance income-tax becomes due any sales tax stands on a different footing and this case would not lend any assistance in deciding the question raised in this matter. In Income-tax Officer v. Official Liquidator (2) [1957] 37 Comps. Cas. 114 ; 63 I.T.R.810 (Mys.). claim for priority in payment of income-tax was negatived. In fact the case has been disposed of on its own facts. But, Mr. Shah drew my attention to this case in support of his submission that the observation of the Patna High Court in In the matter of Bihar Bolts and Engineering Works (3) [1959] 29 Comps. Cas. 482 ; 10 S.T.C. 578 A.I.R. 1959 Pat. 537. on the question whether the amount should become due as well as payable within 12 months was not approved and was in fact questioned. But, as the case has been disposed of on its own facts, I need not examine it further. In sales Tax Officer v. Official Liquidator (4) [1968] 38 Comps. Cas. 430 (All.) the Allahabad High Court rejected the claim for priority in respect of sales tax dues observing that section 530(1)(a) not only requires that the tax should have become due within the relevant period but that it should have also become payable within that period . Both these conditions must, therefore, co-exist before priority mentioned therein can be claimed . Curious part of its is that in reaching this conclusion it was observed that the view taken of its is taken in reaching this conclusion it was observed that the view taken by the court gets support from the decision in Recols (India) Ltd (5) [1953] 23 Comps. Cas. 380 380 ; 4 S.T.C. 271 ; [1954] I.L.R. 2 Cal 278 [S.B.] . But unfortunately there in no obsesrvation to that effect in Recols (India) Ltd. (1) [1953] 23 Comps. Cas 380; 4 S.T.C. [1954] I.L.r. 2 Cal 378 (S.B.) However, the view I am taking gets some support from the decision of the Allahabad High Court , in that it has in terms been held that the tax should become due and payable within a period of 12 months next before the relevant date and both these conditions must co-exist before priority could be claims.
24. Having examined the question both on principle as well as on authority, there is no escape from the conclusion that before priority in payment of any amount could be claimed under section 350(1) (a) , it must be shown that the amount claimed was outstanding as debt on the relevant date and that it must have become due, meaning thereby that the liability to pay arose at any time within 12 months next before the relevant date as well as it must have become payable within that period. Unless all these conditions are satisfied priority envisaged by that section cannot be claimed in respect of the sales tax. I have come to the conclusion that tax becomes due when taxing event occurs and not when assessment order is made. To make it abundantly clear even in a case where quarterly returns of sales tax are submitted and tax computed don each return is paid and he, at the time of assessment , something more is found due by rejecting proration of the return submitted by the assessee, or for any paid with the return is assessed and balance becomes payable and in respect of which notice of demand is issued , yet that tax becomes due at the time when the taxing event occurred, namely , sales were effected though it might have become payable when the assessment is made.
25. If the conclusion herein recorded is correct , then the claim for priority has been rightly negatived by the liquidator because even though amount for which priority is claimed was the amounts of tax arrears that become payable at the time of making assessment order after giving credit much prior to 12 months next before the relevant date and even if it has become payable on the assessment order being made and demand notice being issued, as both the conditions did not co-exist and are not satisfied, claim for priority has been rightly negatived by the official liquidator and there is not reason to interfere with the order.
26. Next contention of the learned Advocate-General was that he official liquidator was not error in rejecting the claim for penalty in its entirety. It is true that the liquidator has rejected the entire claim of penalty. Now, penalty is also levied for the period preceding the relevant date. The amount of penalty levied till the relevant date under the Bombay Sales Tax Act, excluding the amount not pressed by the learned Advocate-General, comes to Rs. 612093. The amount of penalty till the relevant date levied under the Central Sales Tax Act comes to Rs. 6120.42 . The total of the penalty up to the relevant date comes to Rs. 1,225.35 . This has been rejected by the official liquidator . Mr. Shah appearing for the official liquidator conceded that the liquidator is willing to admit the claim of Rs. 1,225.35 as ordinary claim and that was quite satisfactory to the learned Advocate-General. Therefore, to that extent the order of the liquidator will have to be varied.
27. The petitioner also claims penalty for the period subsequent to the relevant date and requests the court to admit it as an ordinary claim to rank pair pass with other unsecured creditors. It may be mentioned that no priority is claims in respect of the penalty subsequent to the relevant date. The question is whether any penalty for non-payment of tax due would be payable in respect of an insolvent company for the period subsequent to the relevant date.
28. The learned Advocate-General urged that penalty is noting but a tax incidental to and a part of the process of assessment of tax and collection. On the other hand , Mr. Shah, for the official liquidator, contended that penalty under the Sales Tax Act partakes the character of interest for late payment , meaning thereby for withholding the amount from the Government which ought to have been paid by a certain date and in respect of which interest akin to damages may be payable. The question will have to be examined from two different angles , firstly, whether failure to pay ordinary debt, in other words, unsecured debt, soon after the relevant date, would entail any consequence ? If failure to pay unsecured debt would not entail any consequence for its non-payment , then penalty being nothing more than consequence of the failure to pay in time, it would not be admissible as a claim in winding -up. It is, therefore, necessary to examine what is the effect of winding -up order in respect of an insolvent company on the right of unsecured creditors to claim payment of debt which has become due and payable. Section 528, on which reliance was placed by the learned Advocate- General , reads as under :
” 528. Debts of all descriptions to be admitted to proof :- In every winding -up (subject , in the case of insolvent companies, to the application in accordance with the provisions of this Act or the law of insolvency) , all debts payable on a contigency, land all claims against the company, present of future , certain or contingent, ascertained or sounding only in damages, shall be admissible to proof against the company , a just estimate being made , so far as possible, of the value of such debts or claims as may be subject to any contingency , or may sound only in damages , or for some others reason may not bear a certain value.”
29. Section 528 provides as to what debts should be admitted to proof in winding- up in respect of a company other than an insolvent company. Section 529 specifically provides for application of insolvency rules in winding up of insolvent companies. Section 529 reads us under :
” 529 Application of insolvency rules in winding up of insolvent companies – (1) In the winding up of an insolvent company, the same rules shall prevail and be observed with regard to-
(a) debts provable;
(b) the valuation of annuities and future and contingent liabilities; and
(c) the respective rights of secured and unsecured creditors ;
as are in force for the time being under the law of insolvency with respect to the estates of persons adjudge insolvent.”
30. It would, therefore, be necessary to refer to the rules which prevail with regard to respective rights of secured and unsecured creditors as are in force for the time being under the law of insolvency with respect to the estates in persons adjudged insolvent. Section 45 of the Provincial Insolvency Act provides that a creditor may prove the debt not payable when the debtor is adjudged insolvent as if it were payable presently, and he is entitled to receive dividends equally with other creditors, deduction therefrom only a rebate of interest at the rate of six per cent. per annum computed form the declaration of a dividend to the time when the debt would have become payable according to the terms on which it was contracted. Section 46 deals with mutual dealings and set-off. Section 47 deals with the positions of secured creditors . Section 48 provides for payment of interest. In short, it provides payment of interest in certain circumstances only up to the date of adjudication . There are parallel provision in the Presidency Towns Insolvency Act.
31. On a conspectus of these sections, the theory in bankruptcy is to stop all things as the date of the bankruptcy and to divide the wreck of the man’s property as it stood at that date (vide In Re Savin (1) [1872] L.R. 7 Ch. App. 760 764. ) It should be so in the case of an insolvent company also because on winding -up order being made, right of the creditors and liabilities of the company are crystallized as on that date. There is no question of the company incurring any further liability for any inaction on its part, because the liquidate on the winding-up order being made steps in and proceeds to collect the assets of the company and distributes the same in accordance with the principles set out in the winding-up provisions of the Companies Act. There is, therefore , no question of any further liability being incurred merely on account of non-payment of a liability of a debt which was outstanding on the relevant date. Now , if penalty amount under the Sales Tax Act is nothing but a liability imposed on account of non- payment of tax, it would mean that continuous recurring liability to pay penalty must come to an end on the date on which winding-up order is made. Any other construction would put tax liability in a preferred position compared to other liability of the company and except where preference is shown by law itself , there is no reason to grant any other preference in favour of tax liability.
32. It was , however , contended that penalty is nothing but tax itself under a different nomenclature and liability to pay tax cannot come to an end if it otherwise accrues merely because winding-up order is made. Reference was made to K.V. Adinarayana Setty v. Commercial TAx Officer, Kolar Circle, Kolar (1) [1963] 14 S.T.C. 587 (Mys.) . The matter came up before a Division Bench of the Mysore High Court by way of criminal revision petition against the order made by the Magistrate who had ordered issue of warrant for attachment of movable of the respondent for recovering sales tax in arrears. Section 1393) (b) of Mysore Sales Tax Act , 1956, enabled the Commissioner Tax Officer to collect tax as distinct form penalty due under the Central Sales Tax ACt by approaching a Magistrate. It was, however, contended that respondent would not be legally liable to pay any amounts claimed as penalty under section 13(2) of the Mysore Act, because even if any person makes default in payment of the tax under the Central Sales Tax Act, he is not under any liability to pay penalty under section 13 (2) of the Mysore Act. It is in this background that the observation was made that penalty levied under section 32 is something which is incidental to and part of the process of payment and collection of tax. In Commissioner of Income-tax v. Bhikaji Dadabhai & Co. (2) [1961] 42 I.T.R. 123; [1961] 3 S.C.R. 923; A.I.R. 1961 S.C. 1265, the Supreme Court, while examining the provisions of the Hyderabad Income-tax Act, which was kept alive by the Finance Act, 1950 , observed that penalty is regarded as an additional tax imposed upon a person in view of this dishonest or contumacious conduct. Thought under the Hyderabad Income-tax , distinct provisions are made for recovery of tax dues and penalty, that does not alter the true character of penalty imposed . Imposition of penalty is a necessary concomitant or incident of the process of assessment, levy and collection of tax. In State of U.P. v. Dyer Making Breweries Ltd 93) [1973] 31 S.T.C. 588 S.C the Supreme Court observed that levy of penalty is one form of levying tax. If the Sales Tax Officer was competent to levy sales tax on the assessee in respect of assessment for certain years, he was equally competent to levy penalty on the assessee in respect it was urged that levy of penalty was one form of levying tax or levying penalty is incidental to and part of the process of payment and collection of tax. As against this , Mr. Shah referred to M. A. Abdul Rahim and Mohd. Ibrabim & Co. v. Deputy Commercial Tax Officer (4) [1965] 16 S.T.C. 290 (Mad.) . In that case section 24(3) of the Mysore General Sales Tax Act, 1959 , came up for consideration. This section authorised levy of penalty if the tax due or installment thereof is not paid by the deals within the time specified, penalty to be levied at the rate precribed therein. Tax was being assessed under the Mysore General Sales Tax Act, 1939, in that case but penalty was being levied under section 24 (3) of the Mysore General Sales tax Act , 1959. Claim for penalty was negatived as it was not leviable under the 1939 Act. Argument was that levy of amount as penalty was a process of recovery of amount due. That argument was negatived. The question raised could have been answered by observing that though the 1939 Act did not provide for levy of such penalty, yet it was, in passing , observed that penalty in such circumstances is nothing but by way of interest on arrears of sales tax. Penalty in every case may not partake the character of interest on tax which is not paid. Full Bench of the Andhar Pradesh High Court in State of Andhar Pradesh v. Godavarthi Kasiviswandham (1) [1970] 25 S.T.C. 1 (A.P. ) (F.B.) , observed that penalty under the Sales Tax Act is clearly separate and distinct from the tax and the usual proceedings taken for the assessment of the tax are not sufficient for the levy of penalty also, because penalty is not merely incidental to assessment proceedings. It was , however, observed that the word “tax” as used in the Act does not include penalty. The two are treated therein as distinct and separate.
33. What exactly is th nature of penalty in a given case may spend upon the provisions of the statue under which it is levied . It may partake the character of interest in the case of delayed payment of tax. It may be punitive in character, in order to punish the dishonesties or contumacy of the dealer. A very broad proposition that penalty under a taxing statute always partaken the character of interest cannot be accepted. It the penalty in a given case partaken the character of interest, then rules of bankruptcy which will be applicable to the winding-up of an insolvent company would not permit payment of interest in the guise of penalty for a period subsequent to the relevant date. Theory in bankruptcy to stop all things at the date of bakruptcy applies in whatever guise interest is claimed (vide In re Savin (2) [1872] L.R. 7 Ch. App. 760 . Further , the court of the bankruptcy is a court of equity and would have regard to the substance of the transaction. Rule 179 of the Companies (Court) Rules on this point lends assurance to the view taken by me that while interest up to the date of winding-up is admissible, interest beyond the relevant date could be given only in certain circumstances.
34. Assuming that penalty does not partake the character of interest, but is punitive in character , can the official liquidator be punished for his failure to pay tax due soon after the relevant date. The official liquidator incurred for the particular consumer. The entire operation and levying of charges in strictly controlled by the rules and provisions of statutes and one of the provided for in the agreement between the parties. It was not possible to agree with the learned single judge that too much sanctity should not be attached to such an the learned single judge that too much sanctity should not be attached to such an agreement between unequally placed parties or that once electric supply was disconnected or supply of power was discontinued , the agreement came to an end.
SAILA BALA ROY V. DARJEELING MUNICIPALITY [1936] A.I.R. 1936 265 WATKINS MAYOR AND CO. V. JULLUNDUR ELECTRIC SUPPLY CO. [1955] A.I.R. 1955 Punj. 133 MAHARASHTRA STATE ELECTRICITY BOARD V. MADHUSUDANDASS AND BROTHERS [1966] A.T.R. 1966 Bom. 160 and NATESA CHETTIAR v. MADRAS STATE ELECTRICITY BOARD [1969] 1 M.L.J. 69 (Mad) followed.
35. Under section 529 of the Companies Act , in the winding up of an insolvent company, the same rules shall prevail and be observed with regard to the debts provable as are in force for the time being under the law of insolvency with respect to the estates of persons adjudged involved . It was common ground that the company in this case was in insolvent circumstances. From the date of the winding up order of June 26, 1967 , till March 31, 1968 , that is till the termination of the agreement of 1962, the company was under a liability to the termination of the agreement of 1962, the company was under a liability to pay the minimum charges. Reading the provisions of section 34 of the Provincial Insolvency Act, which is applicable to this case and the provisions of section 528 and 529 of the companies Act, it was clear that he liability of the company to pay the minimum charges was a debt that the liability of the company to pay the minimum charges was a debt provable in winding up again this insolvent company and, therefore, the official liquidator was bound to admit this claim as a debt provable in the course of winding up.
36. Held also, that delayed payment charges partake of all the characteristics of interest on the outstanding amount due by the consumer to the Board. Interest form the date of winding up cannot be allowed under ordinary circumstances until all the claims are paid in full. As the company was in insolvent circumstances the delayed payment charges of Rs. 1,999 for the period commencing form June 26, 1967, could not be allowed to be levied by the Board.
O.J. Appeals No. 1 of 1973 from Company Application No. 76 of 1972 in Company petition No. 21 of 1966.
J.M. Thakore (Advocate-General ) with P.S. Shah (Addl. Government Pleader ) for the appellant.
A.L. Shah for the respondent.
JUDGMENT
Divan, J.
37. This appeal under section 483 of the Companies Act, 1956, has been filed against the order of our learned brother , D.A. ;Desai J., in Company Application No. 76 of 1972 in Company Petition No. 21 of 1966 The company under liquidation is Rajratna Naranbhai Mills and it is common ground between the parties before us that this company is in insovlent circumstances. The company had entered into an agreement on January 8,1962, with the Gujarat Electricity Board for the purpose of getting bulk supply of electricity for the purpose of its mills at Petal in Kaira District. It appears that some time prior to 1966, the company fell in arrears of payment of its dues to the Gujarat Electricity Board (hereinafter referred to as ” the Board’) and the Board wrote a letter dated September 27/28 , 1966, pointed out to the company that the arrears of bills had accumulated and the Board informed the company that the supply of electricity to the company would be disconnected. On September 28, or 29, 1966, the supply of electricity was disconnected and thus discontinued. On November 1, 1966, a winding-up petition was presented in this court and that is Company Petition No. 21, of 1966 . Actual order for winding-up was passed by the court on June 26, 1967. Between the date when the winding-up was presented and the date when the order for winding-up was passed, on December 31, 1966, the company wrote a letter treating the discontinued of the supply as summary termination by the Board of the agreement dated January 8, 1962. By this letter the company purported to treat this discontinuance of the supply as summary termination under clause 12 of the agreement and the company was contending that the Board was not entitled to claim any minimum charges after such discontinuance of supply. After the company was orders to be wound up, the official liquidator of this company wrote a letter on August 24, 1967, and by the letter the official liquidator maintained that by the letter dated December 31, k1966, the company had terminated the agreement with the Board for the supply of electric power and he also disclaimed the liability to pay the bill thereafter . The official liquidator contended in this letter that the bill after June 30, 1967, were not payable as in the ordinary course the agreement came to an end on March 31, 1967. The Board , however , insisted that the company was liable to pay and after the winding-up order the official liquidator was liable to pay minimum charges for the period from September 29, 1966, to March 31, 1968. The official liquidator disallowed the claim of the Board for the minimum charges and other amounts which the Boards was claiming for the period between July 1, 1967, to March 31, 1968. This amount which was disallowed consisted of two items : (1) Rs. 38,295 for minimum charges, and (2) Rs. 1,999 by way of delayed payment charges. The Board’s claim for Rs. 1,33,308 was allowed except for a small amount of Rs. 200 and odd and there is no dispute between the Board and the official liquidator regarding that item of Rs. 1,33,308 which was for arrears of bills and minimum charges for the period from september 1, 1964, to June 30, 1967 . The official liquidator having disallowed the claim of the Board for the amount of Rs. 40,294 for the period July, 1, 1967 , to March 31, 1968 , the matter was taken by way of a company application to the learned judge under rule 164 of the Companies (Court) Rules, 1959 , by taking out a judge’s summons challenging the order of the official liquidator. The judg’s summons , that is , Company Application No. 76 of 1972, came up for hearing before our learned brother , D.A. Desai J., and our learned brother rejected the summons with costs and this present appeal has been filed against the judgment of our learned brother . The main bone of contention between the Board on the one hand and the company as represented by the official liquidator on the other is as to whether the Board was entitled to get minimum charges for keeping the power connections at the company’s premises even though the supply of electrical energy was discontinued after September 29, 1966. l Our learned brother held that it was incomprehensible that even after the supply was discontinued , the Board continued to demand the minimum charges and charges for the charges for the delayed payment of minimum charges. Our learned brother further held that once the supply was disconnection, there might be a right to get reconnection either under the agreement or under the but unless reconnection was granted, by a unilateral act of the Board to disconnection supply, the agreement, between the parties came to an end and the further observed that too much sanctity should not be attached to such agreement between unequally placed parties , namely, the Gujarat Electricity Board and a consumer like the company. Our learned brother held that if the Board exercised this power to disconnect supply when the consumer was in arrears , it was inconceivable that the consumer should go on paying minimum charges seven though the Board was unable to show that it has to maintain some installations and had to incurs expenditure in the maintenance of the installations which would justify the claim of minimum charges. It was on this reasoning that our learned brother dismissed the judge’s summons with costs.
38. In order to appreciate the rival contentions between the parties, it is necessary to refer to some to the provisions of the Indian Electricity Act, 1910, and the Electricity (Supply) Act, 1948. Section 18A to 27 of the Indian Electricity Act, 1910 (hereinafter referred to as ” the 1910 Act”), provide for supply of energy. Under section 22 the license to whom license has been granted under the Act of 1910 is under an obligation to supply energies to every person within the area of supply but the proviso to section 22 is material. l It is in these terms :-
” Provided that no person shall be entitled to demand , or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will given him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration,”
39. Under section 23 provision is made for charges for emerges to be made without undue preference to any person. Under sub-section (3), in the absence of an agreement to the contrary , a licensee may charge for energy so supplied, or by the electrical quantity contained in the supply, or by such other method as may be approved by the State Government. Under sub- section (4), it has been provided that any charges made by a licensee under clause (c) of sub-section (3) may be based upon, and vary in accordance with, any one or more of the following considerations, namely, the consumer’s load favor, or the power factor of his load , or his total consumption of energy during any stated period, or the house at which the supply of energy is required . Under section 24 of the Act the licensee is empowered to discontinue supply to a consumer neglecting to pay charges and under sub-section (1) of section 24, where any person neglects , due from him to a licensee in respect of the supply of energy to him, the licensee may, after giving not less than seven clear days’ notice in writing to such person and without prejudice to his right to recover such charge or other sum by suit , court off the supply and for that purpose cut or disconnect any electric supply line or other works, being the property of the licensee, through which energy may be supplied, and may discontinue the supply until such charge or other sum, together with any expenses incurred by him in cutting off and reconnecting the supply, are paid, but no longer. Thus, it is clear that the right of the licensee to discontinue electric by him in cutting off and reconnecting the supply, are paid, but no longer, Thus, it is clear that the right of the licensee to discontinue electric supply comes into existence when the consumer neglects to pay the charges to the licensee and as soon as the arrears and the expenses incurred by the licensee in cutting off and reconnecting the supply are paid, the licensee is bound to resume the supply and start supplying the electrical energy tot he consumer once again. That obligation of the licensee has to be borne in mind in the context of the dispute before us. The Schedule to the 1910 Act sets our provisions which are deemed to be incorporated with, and to form part of, every license granted under Part II of the 1910 Act. Under clause VI it is open to the owner or occupier of any premises to make a requisition requiring the licensee to supply energy for such premise , and the licensee shall, within one month from doing so by cyclones floods, storms or others occurrences beyond his control, continue to supply, energy in accordance with the requistion. Under sub- clauses (1) and (2) of clause X, provision is made for the methods of charging by the licensee for the electricity supplied by him to the consumer. Under sub- section (2), before commencing to supply energy through any distributing main, the licensee shall give notice, by public advertisement , of the method by which he proposes to charge for energy so supplied, and where the licensee has given such notice, he shall not be entitled to change that method of charging without giving not less than one moth’s notice in writing of such change to the State government and to every consumer of energy who is supplied by him from such distributing main. Once the method has been so notified, any consumer who objects to that method may, by not less than one month’s notice in writing, require the licensee to charge him at the licensee’s option, , either by the actual amount of energy supplied to him or by the electrical quantity contained in the supply, and , thereafter , the licensee shall not , except with the consent of the consumer, charge him by another method.
40. Under the Electricity (Supply) Act, 1948 (hereinafter referred to as ” the 1948 Act”), by virtue of the province of section 96 and section 70(2), the Gujarat Electricity Board is a licensee for the purposes of the 1910 Act. Section 46 of the 1948 Act provides for the Grid Tariff. Sub-section (1) of section 46 provides that a tariff to be known as the Grid Tariff shall, in accordance with any regulations made in this behalf, be fixed from time to time by the Board in respect of each area for which a scheme is in force, and tariffs fixed under this section may, it the Board thinks fit, differ for different areas. k Under sub-section (3) the Grid Tariff shall be so framed as to include as part of the charge and show separately a fixed kilowatt charges component and a running charges component provided that if in respect of any area the electricity to be sold by the Board is wholly or substantially derived from hydro-electric sources, the running charges component may be omitted . Under sub-section (4) it is permissible to fix the kilowatt charges component in the Grid Tariff in such manner as to vary with the magnitude of maximum demand and under sub-section (6) the Grid Tariff may contain provisions for a minimum charge related to a past or prospective demand of a licensee on the Board. Thus, it is obvious that it is competent tot he Board to fix its tariff in such a manner as to make provisions for a minimum charge so long as the agreement between the Board and the consumer continues and over and above such minimum charge to make provisions for actual energy consumed by the consumer during the billing period. The agreement dated January 8, 1962, in terms provide that even if the power supply is discontinued, the minimum charges shall be contained to be paid the Board even during the period of such discontinuance . Clause 11 of the agreement is as follows :
41. Court can interfere by invoking the revisional jurisdiction under sub-section (1) of section 439 of the Code. It is the conflict between the judgment of the two Single Benches, which is to be resolved by this Bench. Apart from the disposal of the review petition of merits, the following is the question which arises on the preliminary objection raised on behalf of the respondents :
“Can a High Court interfere under sub-section (1) of section 439 of the Code of Criminal Procedure when remedy by way of appeal under the sub section (2) of the section 11 of the Probation of Offenders Act against an order passed under section 3 of that Act has not been availed of ?”
42. Reliance for the stand that exercise of revisional power under sub-section (1) of the section 439 of the Code is a bar has been placed upon sub section (5) of section 439 of the Code. That provision reads as follows :
“Where under this Code an appeal lies and no appeal is brought, no proceedings by way of revision shall be entertained at the instance of the party who could have appealed.”
43. In order that a revision may be barred by virtue of sub-section (5) of section 439 of the Code, the following two conditions must be satisfied :-
(i) the appeal must be one, which lies under the Code ;
(ii) the revision must be filed by the party at whose instance, the appeal is competent.
Undeniably,the appeal to be filed under sub-section (2) of section 11of the Probation of Offenders Act is an appeal under that Act and not an appeal under the Code. The remedy by way of revision petition available to an aggrieved party will, by virtue of sub-section (5) of the section 439 of the Code, not be barred, even if appeal under the Code is competent but the party who has invoked the revisional jurisdiction of the High Court has no locus stands to be an appellant in such an appeal. The scrutiny of sub-section (5) of section 439 of the Code admits of no doubt that a party who has no right to maintain an appeal under the Code cannot be debarred from having his grievance redressed under sub-sectioN 91) of the section 439 of the Code. A fortiori, where a party invoking the revisional jurisdiction of the High Court is different from the one who has locus stand as an appellant under the Code, his revision would be entertainable. In these two types of cases, sub-section (5) of section 439 will not be a bar. In other words, that provision only restrict an d curtails the power of interference by the High Court under sub-section (1) of section 439 of the Code. The provision does not render non est the revisional jurisdiction of the HIgh Court in cases in which appeal lies. Appeals which are competent outside the provision of the Code are not at all touched by sub-section (5) of section 439 of the Code and do not fall within its clutches. In an appeal is competent under a special law, the bar created by sub-section (5) of section 439 cannot adversely affect the revisional remedy by an aggrieved party, who has not filed that appeal. The language of sub-section (5) of section 439 of the Code only bars the entertainability of a revision petition at the instance of a party who could be an appellant. It follows as a corollary that suo motu interference by the High Court is not barred as suo motu interference by the High Court necessarily implies that the interference is not at the instance of any particular party. Thus, revisional jurisdiction of the high court for suo motu interference in spite of the provision of sub-section (5) of section 439 of the Code has not been disturbed and has been kept intact.
44. It is clear from the above interpretation of sub-section (5) of section 439 of the Code that that provision is a bar against the maintainability of a revision petition only if appeal lies under the Code and revision petition has been filed by a party who is competent to maintain the appeal. Unquestionably, no appeal lies under the Code against an order passed under section 3 of section 11 of Probation of Offenders Act, under which the impugned order, sought to be revised, was passed in the present case. Against such an order, appeal is competence only under sub seciton (2) of section 11 of thAt Act. That provision reads as follows :
“Notwithstanding anything contained in the Code (Code of Criminal Procedure), where an order under section 3 or section 4 is made by any court trying the offenders (other than a High Court), an appeal shall lie to the court, to which appeals ordinarily lie from the sentences of the former court.”
45. It is thus obvious from the language of sub-section (2) of section 11 of the Probation of Offenders Act that, in the present case, an appeal is competent thereunder . There is no restriction as to the party who can maintain an appeal under section 11. Appeal under that provision will be competent by a complainant, by an accused person or by the State depending upon the nature of grievance which springs up the cause of action for the party aggrieved. This proviso does not lay down any limitation or restriction as to who has the locus stand to be an appellant. Any one aggrieved of an order passed either under section 3 or section 4 of the Probation of Offenders Act has locus stand to maintain an appeal and to be an appellant.
46. There is specific proviso in sub-section (2) of section 11 of the Probation of Offenders Act under which an appeal b the Registrar is maintainable. It is admittedly the case of the parties that no appeal has been filed under that provision by the Retistrar. It will be relevant to mention here that there is no period of limitation prescribed for an appeal from the date an order is made either under section 3 or under section 4 of the Probation of Offenders Act. Appeal would lie without any technical restriction as to any period of limitation apart from an inordinate delay and latches on the part of an aggrieved appellant being taken into consideration for entertainability of the appeal.
47. THe next point that arise on the above construction of the provisions of sub section (5) of section 439 of the Code vis-a-vis sub section (2) of section 11 of the PRobation of Offenders Act is as to whether revisional power exercisable as remedy in general can be exercised under sub-section (1) of section 439 of the Code, when specific provision of appeal under sub-sick-out n(2) of section n11 of the special law of the Probation of Offenders Act has not been availed of. While arguing about this point, Shri Nanda, appearing on behalf of the respondents, has laid stress upon the applicability of the legal maxim, specialia exclusion general bus implying that the general power of revision conferred by virtue of sub=- section (1) of section 439 of the Code stands excluded by the provision of appeal in sub-section (2) of section 11 of the special law of Probation of Offenders Act. The provision of sub-section (1) of section 439 of the Code dealing with the revisional power of the High Court is in no way contradictory of or inconsistent with the power of appeal conferred by verity of sub section (2) of section 11 of the Probation of Offenders Act. Sub-section (1) of section 439 of the Code is in edition to and apart from the provision of sub-section (2) of section 11 of the Probation of Offenders Act. Although, a party aggrieved by a order either under section 3 or under section 4 of the Probation of Offenders act can file an appeal under sub-section (5) of section 439 of the Code to debar him from invoking the revisional jurisdiction of the High Court under sub-section n(1) of section 439 of the Code, the residuary and general remedy by way of revision will be available to him. In the absence of debarring provision like that of sub-section (5) of section 439 of ht Code, there his no prohibition against the entertainability of a revision petition. The language of sub-sections (1) of section 11 of the Probation of Offenders Act reinforces the view as to revision petition being not barred although remedy by way of appeal under sub-section (2) of section 11 of the Probation of Offenders act has not been availed of. Sub-section (1) of the section 11 of that Act is as follows :
“Now withstanding anything contained in the Code (Code of Criminal Procedure) or an other law, an order under this Act may be made by any court empowered to try and sentence the offender to imprisonment and also by the High Court or any other court when the case comes before it on appeal or in revision.”
48. The second part of the above provision goes a long way to suggest that apart from or in spite of the provision of sub-section (2) of section 11 of the Probation of OFfenders Act, a High Court can make an order under the provision of of that Act notwithstanding any provision either in the Code or in any other encashment and such an order may be made by the High Court when a case comes up before it either on appeal or in revision. Thus, when a case comes up in the High Court on the revisional side under sub-section (1) of section 439 of the Code, the High Court will be competent to pass an order either under section 3 or under section 4 of the Probation of Offenders Act. Even if a remedy by way of appeal has not been availed of by an aggrieved party, the High Court may in revision exercise powers conferred on a court of appeal under section 423 of the Code either in cases which have been reported under sub-section (1) of section 438 of the Code or in cases which otherwise come to the knowledge of the High Court. When a case is reported under sub-section (1) of section 438 of the Code to the High Court or when the High Court of its own comes to know of a case without the aggrieved party having filed any appeal which could be maintained by it and finds that grave injustice has been done to the party who could file a revision petition, the High Court will not connive at the illegality responsible for such an injustice. The underlying object of sub-section (1) of section 439 of the Code will be defeated if the High Court felt hesitant to interfere with an order of illegality and avoided to render justice to the party aggrieved by it. I have thus no doubt that in spite of there being a provisional of appeal in sub-section (2) of section 11 of the Probation no. Offenders Act and there being no bar against the entertainability of a revision petition, if appeal is not filed, revision will nonetheless lie. I come to the conclusion that, in this case, the High Court can interfere on the revisional side under sub-section (1) OF section 439 of the Code of Criminal Procedure.
49. Instead of there being filed an appeal under sub section (2) of section 11 of the Probation of Offenders Act, there was filed a revision petition in the court of session under section 435 of ht Code and that revision petition has been forwarded for disposal to the High Court under sub- section (1) of section 438 of the Code. Thus, the party aggrieved, namely, the Retistrar, has sought remedy by way of revision instead of seeking it by way of appeal. He has sought remedy all the same. The objection that appeal should have been filed and not the revision is merely one of from and a technical one too. The court has, by virtue of the provision of satiation 561A of th Code of Criminal Procedure, ample inherent power to pass an order as may be necessary to secure the ends of justice by treating the revision petition as an appeal. This well-recognized practice and power of conversion of one the of remedy into that of another, which inheres in a High Court, shows that such formal and technical objections do not stand in the way of the High Court to interfere if the ends of justice call for interference.
50. The construction of the above referred to relevant statutory provision shows that the High Court can interfere under sub-section (1) of section 439 of the Code of Criminal Procedure now withstanding the fact that an appeal lay under sub-section (2) of section 11 of the Probation of Offenders Act and none was filed..
51. Now, I refer, in chronological order, to the case law cited at the bar for the proposition as to when remedy by way of appeal competent under a special or local law has not been availed of, is revision under sub-sec tion (1) of the section 439 of the Code entertainable ? The earliest case which has been cited is Maya Das v. Municipal Committee, Chiniot A I R 1927 Lah. 161. In that case, an order was passed under sustain 81 of the Punjab Municipal Act by a Magistrate directing for issue of warrants of attachment of property of a defaulter lessee. An appeal lay form the order of the Magistrate to the Deputy Commissioner under section 84 of the Municipal Act. No appeal was filed. Resort was had to the provision of sub-section (5) of section 439 of the Code of Criminal Procedure by filling a revision petition in the High Court. On objection being taken that sub- section (5) of section 439 of the Code of CRiminal Procedure was a bar against the maintainability of the revision petition, it was observed as under :
“The learned Government pleaded raised a preliminary point to the effect that no revision lay in view of the provision of section 439(5), Criminal Procedure Code, because under section 84 of the Punjab Municipal Act, 3 of 1911, an appeal against the assessment or levy of any tax under the act lay to the Deputy Commissioner or to such other officer as might be expowered by the local Govt. in that behalf. THis is obviously an untenable position. In the first instance, it has been only enacted in section 439(5), Criminal Procedure Code, that when under that Code an appeal lay and an appeal was brought, no proceedings by way of revision should be entertained at the instance of the party who could have appealed. NOw, in the present case, no appeal lay under the provisions or the Criminal Procedure Code. Again, the framing out of the toll or the rent due to the Municipal Committee is not a tax. I overrule this contention.”
52. The next case relied on is Mst. Bashiran v. State A.I.R. 1957 Raj. 348. According to the facts of this case, a person visiting India on passport over-styled in the country. Rule 3 of the Passport Rules, 1950, prohibits a person proceeding form any place outside India from entering or attempting to enter India by water, land or air without a valid passport. Thus, a person entering India with a valid passport cannot be said to have contraverned the provision no. rule 3 of these rules. There was no penal provision under which a person with a valid passport overstating in the country after the expiry of the period of visas issued on the basis of that passport would be punished. The person overstating was, however, convicted under rule 6 of those rules. That person did not appeal against his conviction under rule 6 for overstating after the expiry of the period of visas. A revision petition was filed with the sessions judge impugning the validity of the order of conviction. The sessions judge referred the case to the HIgh Court. A preliminary objection was taken that no revision petition under sub-section (1) of section 439 of the Code would lie inasmuch as remedy by way of appeal against the conviction under rule 6 of the rules had not been availed of. It was held that in spite of the fact that the petitioner had not filed any appeal, yet the High Court, by virtue of sub-section (1) of section 439 of the Code, could interfere with the illegal order of conviction recorded against him and set aside the same.
53. Reliance was placed on behalf of the company and directors on State v. K Lachman Murty A.I.R. 1958 Orissa 204, decided by a Single Bench. It was held in that case that where in police cases ending in acquittal by the trying Magistrate, the State omits to file a regular appeal under section 417 of the Codes of Criminal Procedure, it cannot move the High Court through the sessions judge to reverse the order of acquittal in exercise of its revisional jurisdiction under sub-section (1) of satiation 439 of the Code as sub-section (5) of section 439 of the Code would operate as a bar against the High Court’s interference in revision. That case is obviously distinguishable and no advantage can be derived therefrom to take away the jurisdiction of the High Court in the present case when appeal to be filed in the latter is not one under the Code but under sub-section (2) of section 11 of the Probation of Offenders Act. In that case, the appeal against the judgment of acquittal recorded by the trial court at the instance of the State was maintainable in the High Court under section 417 of the Code of Criminal Procedure and not under any provision of appeal under local or special law alined under to the Code.
54. The case of an accused person who had been convicted under section 506, Indian Penal Code, and from whose conviction an appeal filed in the court of session had been transferred by the High Court to its own file came up for consideration before the Supreme Court in Romesh Chandra v. State A.I.R. 1960 S.C. 154, 160. The appeal was dismissed by the HIgh Court but the sentence awarded by the trial Magistrate under section 506, Indian Penal Code, was enhanced. The question that arose was whether the High Court had committed any illegality in dismissing the appeal simultaneously with the enhancement of sentence. While considering that question their Lordships observed as follows :
“We have held that the High Court committed no illegality. Nothing said in this judgment should be taken as commending or encouraging a departure from the usual practice which, we understand, is that when an appeal is pending before an inferior court, the HIgh Court exercises, if necessary, its powers of revisio after the appeal has been disposed of. There may, however, be exceptional cases where the ends of justice require that the appeal itself be heard by the High Court and in such a case it is open to the High Court to exercise its powers of revisio under section 439, Criminal Procedure Code, of enhancing the sentence after having heard and dismissed the appeal. The present case was an exceptional case of that nature and we do not think that the procedure adopted by the High Court was in any way illegal or prejudicial to the appellant.”
55. The above observations of their Lordships of the Supreme Court show that the High Court has,by virtue of section 439 of the Code, power to interfere in exceptional cases where the ends of justice require that the appeal itself be held by the HIgh Court and that tin such cases it is open to the High Court to exercise its powers under section 439 of the Code for enhancement of sentence after the appeal has been disposed of. In that case, the appeal transferred to the High Court had been filed by the convict while the revision petition had been filed by the State for enhancement of the sentence. The party filing the appeal was different from the party who filed the revisio petition in the High Court. In such a case, sub-section (5) of section 439 of the Code could not be a bar and, therefore, a revision petition could be entertained and the High Court could exercise powers for enhancement of sentence under sub-section (1) of section 439 of the Code.
56. A Division Bench of this court in Kishan Singh Munsha Singh v. State A. I. R. 1963 Punj. 170 held that even if a party has not availed of remedy by way of appeal under section 417 of the Codes of Criminal Procedure from a judgment of acquittal, the High Court can under sub-section (1) of section 439* of the Code suo motu interfere with that judgment, if the judgment is found to be perverse or contrary to the evidence of the record and amounts to travesty of justice. This judgment shows that the High Court can suo motu interfere, if a judgment of acquittal is perverse or results in miscarriage of justice, even if the State aggrieved of the judgment of acquittal has not moved the high court by appeal under section 417 of the Code of Criminal Procedure.
57. On behalf of the respondents reliance has been placed on Arakhita Behra v. Bhikari Behera I.L.R. [1968] Cut. 223. In that case, an order of release with admonition was passed under section 3 of the Probation of Offenders act by the trial Magistrate for offenders under sections 147 and 427, Indian Pinal Code. No appeal was preferred under sub-section (2) of section 11 of that Act. Instead, the High Court was moved under section 439 of the Code of Criminal Procedure for the order passed under section 3 of the said act being set aside. On a preliminary objection raised on behalf of the respondents, it was held that the petitioner having not availed himself of the remedy of appeal from the order made under section 3 of the Probation of Offenders Act, revision petition, by virtue of sub- section (5) of section 439 of the Code, was not maintainable. Except bare reference to sub-section (5) of the section 439 of the Code as to its being a bar for the maintainability of the revision, the language of that sub- section vis-a-vis sub section (1) of the section 439 of the Code has not been considered, if I may say so with respect, by the learned single judge. As held above, sub-section (5) of section 439 of the Code is only a bar against against the maintainability of a revision petition when remedy by way of appeal entertainable under the Code has not been availed of. In this case, the remedy by way of appeal to be sought was one under sub-section (2) of section 11 of the Probation of Offenders Act and not under the Code and consequently sub-section (5) of section 439 of the Code could not be bar. I respectfully dissent from the view taken by the learned single judge in holding that when remedy of appeal under sub-section (2) of section 11 of the Probation of Offenders act has not been availed of, revisio petition under sub-section (1) of section 439 of the Code would not be maintainable.
58. Lastly , the respondents relied on State v. Raghbir Singh (1) [1971] 73 P.L.R. 771 ( Punj) . In that case, Raghbir Singh, respondent, was convicted by a Judicial Magistrate under section 9 of the Opium Act. He was given benefit of section 4 of the Probation of Offenders Act and directed to be released on furnishing a personal bond in the sum of Rs. 5,000 to keep peace and be of good behavior for a period of one year. The State did not file any appeal under sub-section (2) of section 11 of the Probation of Offenders Act but preferred a revision petition under section 435 of the Code in the Court in the court of session. The Additional Sessions Judges, to whom the case was entrusted for disposal, made a report, to the High Court under sub- section (1) of section 438 of the Code with the recommendation that the respondent be awarded sentence of rigorous imprisonment for six months. A preliminary objection was taken to the competency of the revisions on the ground that remedy by way of appeal under sub-section (2) of section 11 of the Probation of Offenders Act having not been availed of, the revision was not competent . The provisions of sub-section (5) of section 439 of the Code was relied on as a bar to the maintainability of the revision petition . The learned single judge, while dismissing the revision petition , observed as follows :
” The petitioner, State, which had a statutory right and remedy by way of appeal had not exercised the same. On general principles and also on the specific provisions of section 439 (5) a party , who has a right of appeal cannot be allowed to have resort to revisions proceedings. I am hence disinclined to interfere at the instance of the State in the present case and would consequently decline the reference.”
59. Reliance for that decision , inter alia, was placed on the above referred to Cuttack judgment in Arakhita Behera v. Bhikari Beherea (1) I.L.R. [1968] Cut. 223. about the correctness of which I am in disagreement . The scope of sub- section (5) of section 439 of the Code in relation to the right of appeals under sub-section (2) of section 11 of the Probation of Offenders Act has not been considered. Sub-section (5) of section 439 of the Code bars only these revisions of cases in which appeals are maintainable under the Code and that too subject to the limitations precribed therein as already indicated by me while construing that sub-section. Sub-section (1) of section 439 of the Code when an appeal is maintainable under a special or local Act and the aggrieved party did not resort to that remedy. I respectfully differ from the view taken by the learned single judge and hold that even if remedy by way of appeal under sub-section (2) of section 11 of the Probation of Offenders Act has not been availed of, sub-section (5) of section 439 will not operate as a bar against the invoking of revisional jurisdiction of the High court under sub-section (1) of section 439 of the Code.
60. On behalf of the respondents , there has also been reliance on the judgment of Koshal J. in State of Haryana v. Ramji Lal Devi Sahai (2) [1972] Cr. L.J. 796 (Punj.) In that case, the accused committed offence under sub-section (1) of section 61 of the Punjab Excise Act, 1914. The Chief Judicial Magistrate, Narnaul, who tried the case did not impose punishment envisaged under the said provision of the Excise Act. Instead , he resorted to the provision of section 4 of the Probation of offenders Act and released him thereunder on probation of good conduct. On behalf of the State of Haryana , there was filed a revision petition under sub-section (1) of section 435 of the Code in the Court of session. The Additional Sessions Judge, to whom the case was transferred for disposal , reported the case to the High Court under sub-section (1) of section 438 of the Code with the recommendation that the case was not a fit one for the applicability of section 4 of the Probation of Offenders Act and that the accused should have been convicted under the provisions of sub-section (1) of section 61 of the Excise Act. An objection was taken before Koshal J. that there being maintainable an appeal on behalf of the State under sub-section (2) of section 11 of the Probation of Offenders Act, remedy by way of revision under sub-section (1) of section 439 of the Code was barred . While dealing with the objection , he observed as under :
” The petition must fail on the short ground that an appeal against the impugned order lay under section 11 of the Probation of Offenders Act 1958, to the sessions judge and that not having availed of that remedy, the State cannot be allowed to ask for the discretionary relief, which this court may be able to grant under section 439 of the Code of Criminal Procedure. It is accordingly dismissed.”
61. It is a very brief judgment. In the body of the judgment, there is no reference to the provisions of sub-section (5) of section 439 of the Code as to whether a revision petition forwarded by the Additional Sessions Judge under sub-section (1) section 438 and to be considered for disposal under sub-section (1) of section 439 of the Code was barred when an appeal lay not under the Code but under the provision of sub-section (2) of section 11 of the Probation of Offenders Act falling outside the Code. In that brief judgment, there is neither reference to the provisions of sub-section (5) of section 439 of the Code nor any discussion about the scope of that provisions and the effect of that provisions upon sub-section (1) of section 439, when the the appeal under sub-section (2) of section 11 of the Probation of Offenders aCt is not an appeal maintainable under the Code but outside the Code. The ratio of that case is counter to the view I have taken about the scope of the provisions of sub-section (5) of section 439 of the Code in relation to the remedy of revisions petition under sub-section (1) of section 439 of the Code of the Code when an appeal lies under sub-section (2) of section 11 of the Probation of offenders aCt and the same has not been filed. I respectfully dissent from the ratio disdained of that case as it does not lay down the law correctly.
62. The judgment in State v. Raghbir Singh (1) [1971] 73 P.L.R. 771 (Punj.) was considered in an unreported case, Criminal Revision No. 181-R of 1970 entitled as B.L. Sahni, Assistant Collector, Central Excise v. Parkash Chand Jain decided on November 4, 1971, by Dhillon J. In that case, the respondents were convicted for offence under section 135 (b) (ii) of the Customers ACt, 1962, and rules 126 of the Defense of India Rules. Considering that the convicts were first offenders, the recovered gold and ornamented had been confiscation and the fact that the respondents had paid penalty of Rs. 4.000 and faced protracted adjudication proceedings in the customs department, the trial Magistrate instead of imposing sentence of imprisonment and/or fine directed under section 4 of the Probation of Offenders Act that they should be released on probation of good conduct for a period of one year. The petitioner , the complainant before the trial Magistrate, filed revisions petition under sub-section 4 of the Probation of Offenders Act that they should be released on probation of good conduct for a period of one year. The petition under sub-section (1) of section 435 of the Code of Criminal Procedure in the court of session. As prayed, the case was recommended to the High Court for imposition of sentence of imprisonment instead of the order of release on probation made under section 4 of the Probation of Offenders ACt. A preliminary objection was raised was raised before . Dhillon J., before whom the case came up for final hearing , that no appeal having been filed under sub-section (2) of section 11 of the Probation of Offenders aCt from he order made by the trial Magistrate under section 4 of that Act, the High Court could not interfere in exercise of revisions jurisdiction . In support of that objection , reliance was place on the judgment given in State v. Raghbir Singh (1) [1971] 73 P.L.R. 771 (Punj) . In reply, it was behalf of the petitioner that the view taken by the learned single judge in State v. Raghbir Singh (1) [1971] 73 P.L.r. 771 (Punj.) was not correct as sub-section (5) of section 439 of the Code operated as a bar against the invoking of revisional jurisdiction of the High Court only if appeal by an aggrieved party maintaining the revision petition was maintainable under the Code and not under a special law and had not been filed. It was observed that sub-section (5) of section 439 of the Code did not debar in that case the filing of the revision petition. Support for that view was sought from Maya Das v. Municipal Committee, Chiniot (2) A.I.R. 1927 Lah. 161 . It is the conflict between these two judgments , one holding that he revision petition was not entertainable when remedy by way of appeal under sub-section (2) of section 11 of the Probation of Offenders Act had not been availed of while the other taking the view that such are revision petition was entertainable, which necessitated the reference.
63. In the light of the view I have taken about the scope and effect of sub- section (5) of section 439 of the Code, a revisions petition is entertainable under sub-section (1) of section 439 of the Code , even if appeals under sub- section 92) of section 11 of the Probation of Offenders Act has not be filed . The view taken by the learned single judge in State v. Raghbir Singh (1) [1971] 73 P.L.R. 771 (Punj.) does not appear to be correct . It is held that the High Court can interfere under sub-section (1) of section 439 of the Code with the order of a trial Magistrate passed under section 3 or section 4 of the Probation of Offenders aCt, even if remedy by ways of appeals under sub-section (2) of section 11 of the Probation of Offenders Act has not been availed of. The preliminary objection raised on behalf of the respondents is overruled.
64. Now I come to the merits of the case. The only question which survives for consideration is whether there is warrant for the order passed under section 3 of the Probation of Offenders Act for release of the directions after administering them admonitions. They trial of the respondents was a summary trial. At the trial, the respondents confessed their guilt for offence under section 220 of the Act for having not forwarded three copies of the balance-sheet within 30 days of the date on which the balance-sheet with the Registrar. By letters dated September 12, 1967, and November 24, 1967, issued by the Registrar to the respondents , extensions were granted but the respondents failed to filed two copies of the balance-sheet. By virtue of these extensions, they were to file the copies by December 31, 1967. Another extension was granted till January 30, 1968. Even then they defaulted in filed the copies of the balance -sheet. On February 8, 1968 , there was issued notice communications to the respondents that if they did not file the copies of the balance-sheet within the period of notice they would be proceeded against for prosecution for offence under section 220 of the Act. k Even that notice failed to persuade them to discharge their duty under sub- section (1) of section 220 of the Act to file prosecution was filed by he Registrar on March 30, 1968. During the pendancy of the complaint , the respondents filed three copies of the balance-sheet with the Registrar on August 19, 1968. It was thereafter that on September 12, 1968, they pleaded guilty to the charge. Thus, there is not escape from the conclusion that the respondents have knowingly and wilfully committed default in filing the copies of the balance-sheet with the Registrar from January 30, 1968 , to August 19, 1968. In the written statement filed on their behalf, they have offered an explanation saying that some time in January, 1967, there was committed the murder of Shri S.L. Chaturvedi , managing director of the company and that the account books of the company remained in the custody of the police and in court for a pretty long time. In that explanation, unsupported by affdiavit as it is, there is no mention as to the particular date on which books were taken in possession by the police and later on came to the custody of the court. In the absence of specific relevant particulars , it is very difficult to come to the conclusion whether the respondents were not in possession of the books after the murder had been committed . In any case , they could inspect the accounts books while they were in the possession of the police or in custody of the court and there could be no difficulty in filing the balance-sheet, if for the purpose of filing of balance-sheet reference of those books at that time was necessary. It has been further stated in the written statement that inspection was allowed by the High Court after May, 1968 and the books were inspected and the balance-sheet was prepared and filed. Against , it is vagules stated that books were inspected after May, 1968, No particular dates are mentioned as to to whom the application was made and the books were inspected. Similarly , no date on which the balances-sheet was prepared nor the date on which it was audited has been chose to be mentioned.
65. sub-section (1) of section 220 of the Act provides that after the balance- sheet and the profit and loss account have been laid before a company at the annual general meeting, there shall be filed with the Registrar within thirty days from the date on which the balance-sheet and the profit and loss account were so laid three copies of the balance-sheet and the profit and loss account. Filing of copies of the balance-sheet with the Registrar on the part of the company is imperative and that too has to be done within the said period of thirty days. The Registrar showed them indulgence of extension of time but the failure to file the copies of the balance-sheet in spite of extensions given continued from December 31, 1967, to January 30, 1968, and then thereafter in spite of the notice served and the complaint filed till August 19, 1968. Thus, the company and the directors have knowingly and wilfully failed to file the copies of the balance-sheet which they were under obligation to do as enjoined upon them by sub-section (1) of section 220 of the Act. The underlying object of section 220 of the Act is to protect the interest of the general public, and particularly to safeguard those of the shareholders and creditors of the company by making it obligatory upon the company and its directors tors apart form the general public to know how the affairs of the company are being carried on and what exactly the assets and liabilities of the company are and how the company is faring in the business, which is being carried on by it. This, underlying object of public policy will be defeated , if default has been committed by the company and its directors in filing the copies of the balance-sheet in spite of repeated extensions granted to them. It is on account of that reason that deliberate and willful default has been held to be penal under sub-section (3) of section 220 of the Act . The offence committed could not be held to be merely a technical offence. Instead of there being imposed the penalty of fine as provided in sub-section (3) of section 220 read in conjunction with section 162 of the Act, there has been administered admonition to the directors. k It is not a fit case for giving the benefit of section 3 of the Probation of Offenders Act to the directors of the company. Taking into consideration the fact that during the pendancy of the complaint, the directors filed the copies of the balance-sheet with the Registrar after 6 months and 19 days after their defaulty of fine of Rs. 50 per day is not called for. Ends of justice would be met it fine of Rs. 10 per day is imposed upon them for the period of default committed by them.
66. In the result, the reference made by the Additional Sessions Judge is allowed and fine of Rs.10 per day for the period from January 31, 1968 to August, 19, 1968 , is imposed upon the respondents.