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It is from these circumstances that the relationship between the Government of Uttar Pradesh and Tahvildars has to be ascertained. Ratio
Whether in a given case the relationship of master and servant exists is a question of fact, which must be determined on a consideration of all material and relevant circumstances having a bearing on that question. Ratio
In general selection by the employer, coupled with payment by him of remuneration or wages, the right to control the method of work, and a power 95 to suspend or remove from employment are indicative of the relation of master and servant. Ratio
But co existence of all these indicia is not predicated in every case to make the relation one of master and servant. Ratio
In special classes of employment, a contract of service may exist, even in the absence of one or more of these indicia. Ratio
But ordinarily the right of an employer to control the method of doing the work, and the power of superintendence and control may be treated as strongly indicative of the relation of master and servant, for that relation imports the power not only to direct the doing of some work, but also the power to direct the manne...
If the employer has the power, prima facie, the relation is that of master and servant. Ratio
The work of the Government Treasurers has to be conducted according to the Rules and Regulations framed by the Government, and directions issued from time to time. Ratio
The Government Treasurer holds a post in a public employment and he is assisted by Tahvildars in the performance of his duties. Ratio
The Tahvildar acts not on behalf of the Treasurer in performing his duties, but on behalf of the State. Ratio
Undoubtedly the Treasurer undertakes responsibility for the loss which may be occasioned by the Tahvildar, but solely on that account it cannot be held that the Tahvildar is merely an appointee of the Treasurer and is not a servant of the State. Ratio
The selection of Tahvildar though made by the Treasurer is controlled by the Collector; the Tahvildar is remunerated by the State, method of his work is controlled by the State, and the State exercises the power to suspend, dismiss and reinstate him. Ratio
In Shivanandan Sharma vs The Punjab National Bank Ltd.(1) it was held that a head cashier in one of the branches of the Punjab National Bank Ltd., who was appointed by the Treasurer in charge of the Cash Department under an agreement with the Bank, was an employee of the Bank. Ratio
In the view of the Court, the direction and control of the cashier and of the ministerial staff in charge of the Cash Department the Bank being entirely vested in the Bank, the cashier must be deemed to be an employee of the Bank. Ratio
Sinha J., observed at p. 1442: "If a master employs a servant and authorizes him to employ a number of persons to do a particular job and to guarantee their fidelity and efficiency for a cash consideration, the employees thus appointed by the servant would be equally with the employer, servants of the master." Similarl...
" In M/s Piyare Lal Adishwar Lal vs The Commissioner of Income tax, Delhi(1) it was held that the Treasurer appointed by the Bank who was to carry out the duties as directed by the Bank was a servant of the Bank, and not an independent contractor. PRE
The Government Treasurer is a civil servant of the State holding a specific post, and he is authorised by the terms of his, employment to employ Tahvildars to assist him in discharging his duties. Ratio
Payment of remuneration to the Tahvildars is for services rendered in the "cashier department of the District treasury" of the State. Ratio
The Tahvildars receive their remuneration directly from the State, and are subject to the control of the District Officers in the matter of transfer, removal and disciplinary action. Ratio
Employment of Tahvildars being for the purpose of carrying out the work of the State, even though a degree of control is exercised by the Government Treasurer and the appointment is in the first instance made by the Treasurer subject to the approval of the District Officers, it must be held that the Tahvildar is entitl...
The order removing Singh from service was made at the instance of the Collector, and did not conform to the requirements of article 311(2) of the Constitution and was on that: account invalid. Ratio
We therefore agree with the High Court, that the impugned order must be declared invalid. RPC
The appeal fails and is dismissed with costs. RPC
Appeal dismissed. RPC
Appeals Nos. 934935 of 1963. FAC
Appeals from the judgment and orders dated August 12, 1960, and April 30, 1960, of the Madhya Pradesh High Court in Civil Suit No. 1 of 1958 and Misc.Petition No. 101 of 1958 respectively. FAC
C.K. Daphtary, Attorney General, R. Ganapathy Iyer and R. H. Dhebar, for the appellants (in both the appeals). FAC
M.C. Setalvad, K. A. Chitale, M. K. Nambyar. FAC
Rameshwar Nath and section N. Andley, for the respondents (in both the appeals). FAC
April 28, 1964. FAC
The judgment of the Court was delivered by WANCHOO, J. FAC
These two appeals on certificates granted by the Madhya Pradesh High Court raise common questions of law and will be dealt with together. FAC
The respondent the Gwalior Rayon Silk Manufacturing (Weaving) Company Limited (hereinafter referred to as the company) is registered under the Indian Companies Act. FAC
It is necessary to set out how the company came to be established in order to understand the case put forward by the company. FAC
In October 1946 Messrs. Birla Brothers Limited, Gwalior, wrote to the Government of Gwalior that they intended to establish at some suitable place in Gwalior a kind of industrial centre in which they intended to set up certain industries provided certain facilities were granted to them by the Government of Gwalior. FAC
The facilities for which they made the request were (i) free adequate land at a suitable site; (ii) free processing water if obtainable from a river and at a specially concessional rate if obtainable from a dam; and (iii) exemption from any form of taxation on income for a period of fifteen years from the date of the s...
On this letter being received, the matter was processed in the Secretariat of the former State of Gwalior. FAC
The Secretariat noting shows that the decision to establish industries in Gwalior was largely to be influenced by the decision of the Gwalior Government as to the facilities asked for. FAC
The Secretariat also noted that no positive scheme regarding the proposed industrial centre had been submitted but that only tentative proposals were made to ascertain if the State was willing to grant the concessions asked for. FAC
It was pointed out that the main question that required consideration was with respect to exemption from any form of taxation on income for a period of fifteen years. FAC
It was also pointed out that no income tax was leviable 895 in that State at that time and that exemption from incometax for period of fifteen years would lead to the establishment of the industries which thereafter would yield income in the shape of taxes to the State. FAC
It was therefore proposed by the Secretariat that the concessions asked for might be granted. FAC
Later, however, the period of exemption from taxation on income was reduced from fifteen to twelve years and it was recommended that this might be granted in order to attract the establishment of industries in the State. FAC
The matter was eventually put up before the Ruler on January 18, 1947, and he passed the following order: "The Guzarish of the Minister for Industries, Commerce and Communications dated 15 11 1946 is sanctioned. FAC
Exemption from any form of taxation on the income for a period of 12 years from the date of starting of the factories is granted. FAC
The other two concessions he has asked for should be given and attempt should be made to establish and start these factories as early as possible. FAC
" The substance 'of this order was communicated to Messrs. Birla Brothers Limited and eventually an agreement was entered into on April 7, 1947 between the Government of Gwalior and Messrs. Birla Brothers Limited, which stated that in accordance with the orders of the Ruler dated January 18, 1947, it was hereby agreed ...
These facilities, privileges, concessions and benefits in the agreement were three, namely (1)provision for sufficient and adequate land or lands absolutely free of any cost, revenue or cess whatsoever, for the construction and erection of factory etc.for starting the industries mentioned in the agreement; (2)making of...
896 In consequence of this agreement, the company was a started and actual production began sometime in June 1949 so far as the weaving section for manufacturing cloth from artificial silk yarn was concerned. FAC
It may be added that the staple fibre section of the company started actual working on or about February 18, 1954. FAC
That is how the company came to be established and started working in what was the former Gwalior State in pursuance of the agreement of April 7, 1949. FAC
Before however the company actually started working even the weaving section for manufacturing cloth from artificial silk yarn, certain constitutional changes took place in India to which it is now necessary to refer. FAC
On August 15, 1947, India became a Dominion and the process of mergers which eventually resulted in the emergence of the Republic ,of India and its Constitution on January 26, 1950, began. FAC
In that process, the Rulers of Gwalior, Indore and certain other States in what was known as Central India, entered into a covenant for the formation of the United State of Gwalior, Indore and Malwa (also known as Madhya Bharat) in April 1948. FAC
Article VI of that covenant provided that the Ruler ,of each covenanting State shall, as soon as may be practicable, and in any event not later than the first day of July 1948, make over the administration of his State to the Raj Pramukh, and thereupon (1) all rights, authority and jurisdiction belonging to the Ruler, ...
Clause (2) of this Article also provided that where in pursuance of any agreement of merger, the administration of any other State was made over to the Raj Pramukh, the provisions of cl.(1) would apply to such State as they applied in relation to a covenanting State. FAC
On July 19, 1948, the State of Madhya Bharat acceded to the Dominion of India. FAC
On November 24, 1949, the Raj Pramukh of Madhya Bharat issued a proclamation accepting the provisions of the Constitution of India to be framed for the State of Madhya Bharat also. FAC
On January 26, 1950, the Constitution of India came into force and the United State ,of Gwalior, Indore, Malwa became the Part B State of Madhya Bharat. FAC
Meanwhile on December 13, 1948, the United State of Gwalior, Indore, Malwa (Madhya Bharat) Regulation of 897 Government Act, No. I of 1948 was passed. FAC
Section 4 of that Act provided that "when the administration of any covenanting State has been taken over by the Raj Pramukh or when any State has merged in the United State as aforesaid, all laws, Ordinances, Acts, Rules, Regulations etc., having the force of Law in the said State shall continue to remain in force unt...
The company contended that by virtue of this Act read with article VI of the covenant, the liabilities of the covenanting States devolved on the United State of Gwalior, Indore, Malwa (Madhva Bharat). FAC
Further it was contended that under cl.(b) of article 295(l), when the Constitution came into force all rights, liabilities and obligations of the Government of any Indian State corresponding to a State specified in Part B of the First Schedule, became the rights, liabilities and obligations of the Government of India,...
This was subject to any agreement entered into in that behalf by the Government of India with the Government of the State concerned. FAC
It was therefore contended on behalf of the company that the obligation incurred by the Ruler of Gwalior by virtue of the agreement of April 7, 1947 became the obligation of the Government of India under cl(b) of article 295(1) on January 26, 1950. FAC
On April 1, 1950, the Indian Income tax Act was extended to the Part B State of Madhya Bharat. FAC
From the same date the Finance Act (No. XXV of 1950) also became applicable to the Part B State of Madhya Bharat by which incometax became chargeable as provided therein on any income accruing or arising in Madhya Bharat, which by then had become part of India. FAC
Further section 13 to the Finance Act, 1950 provided that "if immediately before the 1st day of April, 1950, there is in force in any Part B State other than Jammu and Kashmir or in Manipur, Tripura or Vindhya Pradesh or in the merged territory of Cooch Behar any law relating to income tax or super tax or tax on profit...
The effect of this provision was to repeal all laws relating to income tax in its broadest sense prevailing in those parts 'of India to which the Indian Income tax Act was extended from April 1, 1950. FAC
In the meantime, however, agreements were entered into by the Government of India with Part B States in accordance with the recommendation of the Indian States Finances En quiry Committee, 1948 49 (hereinafter referred to as the Enquiry Committee '. FAC
The agreement with the State of Madhya Bharat provided that the recommendations of the said Com mittee contained in Part 1 of its report read with Chapters 1, 11, III of Part 11 of its report insofar as they apply to the State of Madhya Bharat together with the recommendations contained in Chapter IX of Part 11 of its ...
Further in order to overcome difficulties which might arise on the application of the Indian Income tax Act, 1922 to Part B States and other areas which became merged with India, section 60 A was introduced in the Income tax Act in the following terms: "Power to make exemption etc., in relation to merged territories or...
" In pursuance of this power, the Central Government issued the Part B States (Taxation Concessions) Order, 1950 (here inafter referred to as the Concessions Order), which fixed reduced rates of income tax and super tax for Part B States. FAC
Clause 16 of that Order is material for our purpose and was in these terms: "Concession to industrial undertakings (1) Where any industrial undertaking situated in any State claims that it has been granted any exemption from or concession in respect of income tax or super tax by the Ruler of an Indian State and was enj...
Status (ie.whether public or private company", firm, individual or Hindu undivided family). FAC
Nature of the business. FAC
Date of commencement of the business. FAC
Nature of the concession granted. FAC
Period for which concessions granted. FAC
Unexpired period of the concessions after the appointed day. FAC
(2) Every such application shall be accompanied by the orders in original of the Indian State granting the concession together with a certified copy of the order. FAC
(3) The Commissioner shall after obtaining such other information as he may require, forward the application to the Central Government which, having regard to all the circumstances of the case, may grant such relief, if any, as it thinks appropriate. FAC
" In December 1950, the company applied under cl. 16 of the Concessions Orders for concessions regarding income tax and super tax. FAC
In November 1951, the company was informed that the Government of India had decided to exempt it from income tax and super tax for the assessment years 1950 51 to 1954 55 in respect of the weaving section. FAC
The company wanted exemption for the full period of twelve years as pro vided in the agreement of 1947, but was asked to apply later and eventually the Central Government granted exemption to the weaving section for another five years from 1955 56 to 1959 60. FAC
The company 's request for exemption of the staple fibre section which began working in April 1954 was rejected by the Government of India. FAC
In the meantime assessment proceedings had been initiated by the Income tax Officer, A Ward, Gwalior against the company and assessment orders were passed in March 1955, March 1956 and March 1957 with reference to the weaving section for the assessment years 1950 51, 1951 52 and 1952 53. FAC
The company appealed to the Assistant Appellate Commisssioner against these orders. FAC
As the contention of the company was that it was entitled to exemption in accordance with the agreement of April 7, 1947 consequent on the order of the Ruler of Gwalior dated January 18, 1947, it filed a suit on November 23, 1956 against the Union of India for a declaration that under the order dated January 18, 1947 a...
This suit was transferred in 1958 to the High Court on the application of the company under article 228 of the Constitution. FAC
While this suit was pending the company filed a petition under article 226 of the Constitution on September 11, 1957 in which also it claimed that by virtue of the order of the Ruler of Gwalior dated January 18, 1947 and the agreement following thereon, it was entitled to exemption from incometax and super tax for a pe...
The High Court of Madhya Pradesh accepted the petition of the company and a direction was issued restraining the Union of India and its officers from making any assessment under the Income tax Act and levying or collecting income tax or super tax in contravention of the exemption given by the agreement dated April 7. 1...
Further the proceedings taken by the income tax authorities in contravention of the said exemption were quashed. FAC
In view of this decision on the writ petition, the High Court decreed the suit in the same terms. FAC
The High Court however gave certificates to the Union of India and its officers to appeal to this Court; and that is how there are two appeals before us. Ratio
one against the decree passed in the suit and the other against order in the writ petition, though as we have said already, the points involved in the two appeals are exactly the same. Ratio
Three main contentions were raised on behalf of the company in the High Court. FAC
In the first place it was urged that the order dated January 18, 1947 was a special law. FAC
It was continued by the State of Madhya Bharat by Act No. 1 of 1948 and it continued after the Constitution came into force by virtue of article 372. FAC
It was not repealed either by the extension of the Income tax Act to the State of Madhya Bharat from April 1, 1950 or by section 13 of the Finance Act, 1950, which applied to the State of Madhya Bharat from the same date. FAC