1974 (11) TMI 1

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....s established and, of them, the first two, namely, rules 3(a) and 3(b), are as follows : " (a) To promote and protect the trade, commerce and industries of India, and in particular, the trade, commerce and industries connected with sugar. (b) To encourage friendly feeling and good relations amongst the sugar mills in general and the members in particular and also between producers of sugar and cane-growers, distributors of sugar and others dealing with sugar mills and connected with sugar industry. " It was claimed on behalf of the association that the business it carried on was in the nature of property held under trust or other legal obligation to apply the income for charitable purposes within the meaning of clause (i), sub-section (3) of section 4 of the Indian Income-tax Act, 1922 ; the last paragraph of sub-section (3) defines " charitable purposes " as including relief of the poor, education, medical relief and advancement of any other object of general public utility. The claim for exemption appears to have been based on the objects mentioned in rules 3(a) and 3(b) and on the first part of clause (a) of rule 4. Clauses (a) and (b) of rule 4 regulate the application....

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....ion amongst the community to which the parties interested belong in deciding whether an object is of general public utility. Referring to this principle the High Court observed that " section 4(3)(i) is of wider ampltude than what is known as religious or charitable purposes in English law and a purpose of general public utility has to be ascertained with reference to conceptions prevailing in our country ". We are afraid we do not see how this principle has relevance on the question under consideration in the present case because no conflict arises here between the English and the Indian conceptions of charitable purpose. In All India Spinners' Association's case, the Privy Council found that the primary object of the spinners' association was the relief of the poor which was a charitable purpose, that the objects of the said association included the advancement of other purposes of general public utility, and held that as such the income of the spinners' association was exempt under section 4(3)(i). Their Lordships further observed that an object of general public utility " would exclude the object of private gain, such as an undertaking for commercial profit though all the same ....

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....ts. In the case before us the High Court held that clauses (a) and (b) of rule 3 of the rules of the association, quoted above, set out the primary objects of the association which were objects of general public utility, and the other objects appearing from the remaining clauses of rule 3 were only ancillary. Relying further on a part of rule 4(a), which we have reproduced above, providing that no part of the income and property of the association was to be paid or transferred by way of dividend or bonus or otherwise by way of profit to the members of the association, the High Court came to the conclusion that the association was under a legal obligation to hold the income it derived from the business of export of sugar for charitable purposes. The exemption under section 4(3)(i) can be claimed if the income is held wholly for religious or charitable purposes ; this requirement is satisfied as held in the Andhra Chamber of Commerce case, if the primary purpose is religious or charitable and the other purposes, not by themselves religious or charitable, are ancillary and serve to achieve the main purpose. Assuming clauses (a) and (b) of rule 3 disclosed objects of general public ....

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....f rule 64 appeared to be inconsistent with the primary objects, it should be treated as void and of no consequence. Undoubtedly, rule 4(a) and rule 64 are repugnant to each other. But the rule of construction of deeds and wills on which Dr. Pal relied, that in case of repugnancy the first words in a deed and the last words in a will shall prevail, is not applicable to the rules and regulations of a registered trade union in order to find out its real object. We have no right to assume some of the stated objects of the association as primary to declare others in apparent conflict with them as of no effect. Rules 3, 4 and 64, all framed by the association as a trade union, co-exist. We have no right to re-write the rules of a registered trade union by deleting any of them. We also find it difficult to accept that only clauses (a) and (b) of rule 3 represent the primary objects of the association and the other rules are all ancillary and incidental. The association is a trade union. Section 2(h) of the Trade Unions Act, 1926, defines trade union as meaning " any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workmen....