TaxTMI 
TaxTMI 
1958 (11) TMI 1
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....horised the Central Government to constitute an Income-tax Investigation Commission (hereinafter called the Commission) and imposed on it the following duties: " (a) to investigate and report to the Central Government on all matters relating to taxation on income, with particular reference to the extent to which the existing law relating to, and procedure for, the assessment and collection of such taxation is adequate to prevent the evasion thereof ; (b) to investigate in accordance with the provisions of this Act any case or points in a case referred to it under section 5 and make a report thereon (including such interim report as the Commission may think fit) to the Central Government in respect of all or any of the assessments made in relation to the case before the date of its report or interim report, as the case may be. " We may skip over section 4 which dealt with the composition of the Commission. Section 5, which is of importance, was as follows : " 5.(1) The Central Government may at any time before the 30th day of June, 1948, refer to the Commission for investigation and report any case or points in a case in which the Central Government has prima facie reasons f....
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....h more drastic and harsh than the powers to be exercised and the procedure to be followed by the Income-tax authorities acting under the provisions of the Indian Income-tax Act, 1922. The relevant portions of section 8 ran as follows : " 8.(1) Save as otherwise provided in this Act, the materials brought on record shall be considered by all the three members of the Commission sitting together and the report of the Commission shall be in accordance with the opinion of the majority. (2) After considering the report, the Central Government shall by order in writing direct that such proceedings as it thinks fit under the Indian Income-tax Act, 1922 (XI of 1922), the Excess Profits Tax Act, 1940 (XV of 1940), or any other law, shall be taken against the person to whose case the report relates in respect of the income of any period commencing after the 31st day of December, 1938 ; and, upon such a direction being given, such proceedings may be taken and completed under the appropriate law notwithstanding the restrictions contained in section 34 of the Indian Income-tax Act, 1922 (XI of 1922), or section 15 of the Excess Profits Tax Act, 1940 (XV of 1940), or any other law and notwith....
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....his order. It appears that the total wealth statement of the assessee was filed on November 10, 1948, and was forwarded to the authorised official. It also appears that from January 8, 1949, to October 14, 1949, the authorised official was engaged in the collection of assessment records of the assessee from the territorial income-tax offices and of materials from the Civil Supplies Directorate regarding the assessee. In the meantime by section 33 of Act 67 of 1949 the following section was inserted in the Act as section 8A : " 8A. Settlement of cases under investigation.---(1) Where any person concerned in any case referred to or pending before the Commission for investigation applies to the Commission at any time during such investigation to have the case or any part thereof settled in so far as it relates to him, the Commission shall, if it is of opinion that the terms of the settlement contained in the application may be approved, refer the matter to the Central Government, and if the Central Government accepts the terms of such settlement, the Commission shall have the terms thereof recorded and thereupon the investigation, in so far as it relates to matters covered by such s....
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....y was given. On September 30, 1950, the assessee supplied certain statements of his firm. The entry in the order-sheet against the date October 31, 1950, shows that the assessee asked for further extension of time. There appears to be a hiatus of about 3 years and evidently nothing was done until June 9, 1953, when the authorised official fixed the hearing of the case on June 15, 1953. The authorised official submitted his interim report to the Commission on June 9, 1953. The assessee was examined on October 9, 10, and 13, 1953, and the authorised official submitted his final report on October 9, 1953. On January 30, 1954, notice was issued to the assessee to appear before the Commission on February 15, 1954. Presumably to get ready for the hearing the assessee, on February 5, 1954, asked for inspection of certain assessment orders concerning his case, for the return of his lease deed filed by him and a copy of the statement of one L. Kalidas and for production of certain documents before the Commission. The hearing, which had been fixed for February 15, 1954, was adjourned till March 4, 1954. Witness Kalidas was examined on March 4, 1954. On March 29, 1954, the assessee asked for ....
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....ation Act, it was alleged to have been discovered by the Commission that Suraj Mall Mohta and Co. had made large profits which they had not disclosed and had thus evaded taxation. A report to that effect having been made on August 28, 1953, by the Commission to the Central Government under section 5(4) of the Investigation Act the Central Government on September 9, 1953, referred the case against Suraj Mall Mohta and Co. to the Commission under the provisions of section 5(4). On September 15, 1953, the Commission notified Suraj Mall Mohta and Co. that their cases had been referred for investigation and called upon them to furnish certain materials, details of which were set out in annexure to the petition. On April 12, 1954, Suraj Mall Mohta and Co. filed a petition under article 32 of the Constitution asking for an appropriate writ restraining the Commission from taking any action on the ground that the provisions of the Investigation Act had become void being descriminatory in character. By that judgment this court held that both section 34 of the Indian Income-tax Act, 1922, as it then stood, and sub-section (4) of section 5 of the Investigation Act dealt with persons who had si....
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.... same field as section 5(1) of the Investigation Act, and, therefore, section 5(1) had become void and unenforceable as the procedure applied to persons dealt with thereunder became discriminatory in character. It should be noted that in none of those petitions disposed of by that judgment had any assessment been made under the Investigation Act and this court only prohibited further proceedings before the Commission under the Investigation Act. The assessee appellant now before us who had entered into a settlement under section 8A of the Investigation Act and had been assessed in accordance with the terms of the settlement continued to pay the tax by monthly instalments of Rs. 5,000 as before. Finally on December 20, 1955, came the decision of this court in M.Ct. Muthiah v. Commissioner of Income-tax. In that case the Central Government had under section 5(1) of the Investigation Act referred the case to the Commission. The Commission after holding an enquiry recorded its findings and held that an aggregate sum of Rs. 10,07,322-4-3 represented the undisclosed income during the period under investigation. The Commission having submitted its report to the Central Government, the l....
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....sessee made an application to the Income-tax Commissioner. After pointing out that between July 5, 1954, and December 27, 1957, the petitioner had paid in all Rs. 1,28,000 towards the discharge of his liability under the settlement and referring to the decisions of this court in Suraj Mall Mohta's case and Muthiah's case the assessee submitted that the settlement under section 8A of the Investigation Act had no force and did not bind the petitioner and that the settlement had been made under the pressure of the situation and in view of the coercive machinery of the Investigation Act and that from either point of view the settlement was not binding. His contention was that when section 5(1) of the Investigation Act had been held unconstitutional the settlement under section 8A could not be enforced, for the foundation of the proceedings under section 8A was the reference under section 5(1) and the foundation having crumbled down the superstructure must fall with it. Under the circumstances the assessee submitted that the attached properties be released and the amount already recovered under the settlement be refunded. On January 29, 1958, the Income-tax Commissioner sent the followi....
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.... none of the said decisions has held that section 5(1) is wholly void and inoperative. He says that section 5(1) only authorises the Central Government to refer certain cases to the Commission. Upon such a reference two lines of procedure are clearly indicated by the Investigation Act, namely, (1) that an investigation may be held in invitum following the procedure prescribed and exercising the powers conferred by the Investigation Act and (2) that a settlement may be made under section 8A. If the first procedure is followed and an assessment is made under section 8(2) such assessment will undoubtedly be invalid as has been held in Muthiah's case, but if on a case being referred the settlement procedure is followed then the consequential order of assessment under section 8A cannot be questioned. We are unable to accept this line of argument as permissible in view of the provisions of the Investigation Act. It will be recalled that when the case of the assessee was referred to the Commission under section 5(1) on July 22, 1948, there was no provision for settlement in the Act at all. Therefore, that reference, when it was made, consigned the assessee to the only procedure of investi....
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....se in entertaining a proposal for settlement the Commission exercised its jurisdiction of investigation under section 5, followed, the procedure prescribed by section 7 and exercised all its powers under section 6. As already stated the language of section 8A itself shows that a settlement can be proposed only during such investigation. In our judgment, therefore, the contention of the learned Attorney-General that the Investigation Act prescribed two procedures is not well-founded. Learned Attorney-General then points out that the Investigation Act was a pre-Constitution Act and that before the commencement of the Constitution when there was no such thing as a fundamental right, its provisions could not be questioned however discriminatory the procedure may have been. He urges that after the commencement of the Constitution the assessee had not been subjected to the coercive procedure laid down by the Investigation Act, but voluntarily proposed a settlement which was accepted by the Central Government on the recommendation of the Commission. In that situation he was in the same position as Qasim Razvi had been in and the observations to be found in the judgment of Mukherjea, J.,....
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....ate enacts a law which is within the exclusive competence of the Union, it would be a nullity. That would also be the position when a limitation is imposed on the legislative power in the interests of the public, as, for instance, the provisions in Chapter XIII of the Constitution relating to inter-State trade and commerce. But when the law is within the competence of the Legislature and the unconstitutionality arises by reason of its repugnancy to provisions enacted for the benefit of individuals, it is not a nullity but is merely unenforceable. Such an unconstitutionality can be waived and in that case the law becomes enforceable. In America this principle is well settled. (Vide Cooley on Constitutional Limitations, Volume I, pages 368 to 371; Willis on Constitutional Law at pages 524, 531, 542 and 558 : Rottschaefer on Constitutional Law at pages 28 and 29-30). " After referring to three decisions of the American Supreme Court which are also now relied on by the learned Attorney-General, the learned Judge concluded as follows : " The position must be the same under our Constitution when a law contravenes a prescription intended for the benefit of individuals. The rights guar....
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....r alia, articles 15(1), 20, 21, makes the proposition quite plain. A citizen cannot get discrimination by telling the State 'You can discriminate', or get convicted by waiving the protection given under articles 20 and 21. " On that occasion one of us preferred not to express any opinion on this subject and said at page 670 : " In coming to the conclusion that I have, I have in a large measure found myself in agreement with the views of Venkatarama Aiyar, J., on that part of the case. I, however, desire to guard myself against being understood to agree with the rest of the observations to be found in his judgment, particularly those relating to waiver of unconstitutionality, the fundamental rights being a mere check on legislative power or the effect of the declaration under article 13(1) being 'relatively void'. On those topics I prefer to express no opinion on this occasion. " It will, however, be noticed that the observations of the learned Judges made in that case did not relate to the waiver of a breach of the fundamental right under article 14. The fundamental right, the breach whereof is complained of by the assessee, is founded on article 14 of the Constitution. The....
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.... of article 12, "the State" which is, by article 14, forbidden to discriminate between persons includes the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India. Article 14, therefore, is an injunction to both the legislative as well as the executive organs of the State and the other subordinate authorities. As regards the legislative organ of the State, the fundamental right is further consolidated and protected by the provisions of article 13. Clause (1) of that article provides that all laws in force in the territories of India immediately before the commencement of the Constitution, in so far as they are inconsistent with the provisions of Part III, shall, to the extent of the inconsistency, be void. Likewise clause (2) of this article prohibits the State from making any law which takes away or abridges the rights conferred by the same Part and follows it up by saying that any law made in contravention of this clause shall, to the extent of the contravention, be void. It will be observed that, so far as this article is conce....
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....e as a matter of public policy with a view to implement its object of ensuring the equality of status and opportunity which every welfare State, such as India, is by her Constitution expected to do and no person can, by any act or conduct, relieve the State of the solemn obligation imposed on it by the Constitution. Whatever breach of other fundamental right a person or a citizen may or may not waive, he cannot certainly give up or waive a breach of the fundamental right that is indirectly conferred on him by this constitutional mandate directed to the State. The learned Attorney-General has relied on various passages in text books written by well-known and eminent writers, e.g., Cooley, Willoughby, Willis and Rottschaefer and on eight American decisions. In considering the statements of law made by American writers and judges the following observations of Patanjali Sastri, C.J., in State of Travancore-Cochin v. Bombay Co. Ltd. should constantly be borne in mind : " These clauses are widely different in language, scope and purpose, and a varying body of doctrines and tests have grown around them interpreting, extending or restricting, from time to time, their operation and appl....
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....tter any further. It is impossible to treat any of those decisions as representing the considered opinion of this court on the question of waiver of a breach of the fundamental right under article 14 of the Constitution. Reference was also made by the learned Attorney-General to the decision of a single Judge of the Allahabad High Court in Subedar v. State where it was held that article 20(3) conferred merely a privilege and that such privilege could always be waived. It was overlooked that if a person voluntarily answered any question then there was no breach of his fundamental right at all, for the fundamental right is that a person shall not be compelled to incriminate himself. That case, therefore, is not a case of waiver at all. The case of Pakhar Singh v. The State is also, for the same reason, not a case of waiver. Re. (2) : The answer to this question depends upon facts which have not been properly investigated. The appeal is against the order of the Income-tax authorities which order makes no reference to the plea of waiver. Further the filing of the statements of case having been dispensed with, we have not had the benefit of the statement of facts on which this plea is....
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....ection was taken by either of the parties before us to the issue of waiver being decided on such materials and the question was argued at considerable length before us. The arguments moreover extended to the whole field of fundamental rights and were not confined to article 14 only. We, therefore, see no reason why we should refrain from pronouncing our opinion on that question. The preamble to our Constitution, article 13 and the language in which the fundamental rights have been enacted lead to one conclusion and one conclusion only that whatever be the position in America, no distinction can be drawn here, as has been attempted in the United States of America, between the fundamental rights which may be said to have been enacted for the benefit of the individual and those enacted in public interest or on grounds of public policy. Ours is a nascent democracy and situated as we are, socially, economically, educationally and politically, it is the sacred duty of the Supreme Court to safeguard the fundamental rights which have been for the first time enacted in Part III of our Constitution. The limitations on those rights have been enacted in the Constitution itself, e.g., in arti....
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.... those of the European States formed after the War. Experience, however, has not shown them to be of any great practical value. Abstract declarations are useless unless there exist the will and means to make them effective. " The framers of our Constitution however followed the American view represented by the famous words of Jefferson in preference to that expressed by the Simon Commission : " The inconveniences of the declaration are, that it may cramp government in its useful exertions. But the evil of this is short-lived, moderate and reparable. The inconveniences of the want of a declaration are permanent, afflictive and irreparable. They are in constant progression from bad to worse. The executive in our governments is not the sole, it is scarcely the principal object of my jealousy. The tyranny of the legislatures is the most formidable dread ..................................." (Vide Basu's Commentary on the Constitution of India, Vol. I, p. 74). and incorporated the fundamental rights in Part III of our Constitution. The object sought to be achieved was as the preamble to the Constitution states "to secure to all its citizens : JUSTICE, social economic and political;....
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....ights conferred by this Part and the obligation thus imposed on the State enured for the benefit of all citizens of Bharat alike in respect of all the fundamental rights enacted in Part III of the Constitution. No distinction was made in terms between the fundamental rights said to have been enacted for the benefit of the individual and those enacted in the public interest or on grounds of public policy. The question then arises whether a breach of the obligation thus imposed on the State can be waived by a citizen. To borrow the words of My Lord the Chief Justice "In the face of such unequivocal admonition administered by the Constitution, which is the supreme law of the land, is it open to the State to disobey the constitutional mandate merely because a citizen told the State that it may do so ? If the Constitution asks the State as to why the State did not carry out its behest, will it be any answer for the State to make that 'True, you directed me not to take away or abridge the rights conferred by this Part, but this citizen said that I could do so, for he had no objection to my doing so.' I do not think the State will be in any better position than the position in which Ada....
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...., our Constitution was enacted to secure to all citizens, JUSTICE, LIBERTY, EQUALITY and FRATERNITY and laid emphasis on the welfare state and contained more detailed provisions, defining the rights and also laying down restrictions thereupon in the interests of the general welfare etc. As observed by Willis in his Constitutional Law at p. 477: " The conflict between man and the state is as old as human history. For this reason some compromise must be struck between private liberty and public authority. There is some need of protecting personal liberty against governmental power and also some need of limiting personal liberty by governmental power. The ideal situation is a matter of balancing one against the other, or adjusting conflicting interests. In the United States Constitution an attempt has been made to strike a proper balance between personal liberty and social control through express limitations written into the Constitution and interpreted by the Supreme Court by implied limitations created by the Supreme Court, and by the development of the governmental powers of regulation, taxation, and eminent domain by the Supreme Court. " whereas our Constitution has expressl....
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....ination or analogy of the decisions of the Supreme Court of the United States of America. The only manner in which that can be done is by appropriate amendment of the Constitution and in no other manner whatever. There is no difficulty whatever in working out this position and to my mind the difficulties pointed out are more imaginary than real. If a citizen wanted to assert his fundamental right under the circumstances envisaged for instance in the judgment of my brother S. K. Das, J., and made an application for a writ under article 32 or article 226 of the Constitution he would be promptly confronted with the argument that the court should in the exercise of its discretion refuse him the relief prayed for. The remedy is purely discretionary and no court in those circumstances would exercise its discretion in his favour (Vide Dewan Bahadur Seth Gopal Das Mohta v. Union of India, Baburao Narayan Sanas v. Union of India and Laxmanappa Hanumantappa Jamkhandi v. Union of India). Even then he might merely obtain a relief declaring the legislation ultra vires the Constitution and the court would not grant him any consequential relief. For that relief he would have to approach the reg....
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....d that two questions of far-reaching importance fall for consideration in this appeal. One is the validity of a settlement made under section 8A of the Taxation on Income (Investigation Commission) Act, 1947 (30 of 1947), hereinafter referred to as the Act, after the coming into force of the Constitution on January 26, 1950, and the second is if a fundamental right guaranteed by the Constitution can be said to have been waived by the appellant in the circumstances of this case. The appellant before us is Basheshar Nath, whom we shall hereafter call the assessee. As we have already stated, the Commissioner of Income-tax, Delhi, is the first respondent. The second respondent is the Union of India. We also allowed the Model Knitting Industries, a limited liability company with its registered office in Calcutta, to intervene in the appeal, on the ground that the intervening company has a case pending in the High Court of Calcutta where the same questions are in issue. We have also heard the intervener in support of the appeal. On behalf of the appellant it has been contended that the Commissioner of Income-tax, Delhi, is a tribunal within the meaning of article 136 of the Constitut....
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....n 6(3) of the Act. From January 8, 1949, to October 14, 1949, the authorized official was engaged in the collection of assessment records of the assessee from the Income-tax authorities and of materials from the Civil Supplies Directorate. On July 5, 1949, the total wealth statement was received back from the assessee and the order-sheet shows that May 26, 1950, (that is, after the coming into force of the Constitution) the authorised official issued a notice to the assessee fixing the hearing for June 10, 1950. The assessee then asked for time, and it appears that for a period of about three years till June, 1953, nothing was done. Thereafter, the authorised official held a preliminary investigation and computed initially that the undisclosed income of the assessee for the period in question was Rs. 12,07,000 ; on further scrutiny and examination of accounts and after hearing the assessee's explanation, the authorised official reduced the amount in his final report, submitted sometime towards the end of 1953, to Rs. 9,56,345. The Investigation Commission considered the report of the authorised official, heard the assessee, and came to the conclusion that the total amount to be ass....
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....ion of the said certificate his properties situated in Dharamsala and Hissar were attached. On December 27, 1957, the assessee filed a petition to the Income-tax Commissioner, Delhi, in which after stating the relevant facts, the assessee claimed that, after the decision in Muthiah's case, the settlement made under section 8A of the Act had no force and was not binding on him : the assessee then prayed that the attached properties should be released from attachment and the amounts recovered under the terms of settlement refunded to him. On January 29, 1958, the Commissioner of Income-tax sent the following reply : " With reference to your petition dated 27th December, 1957, regarding the settlement arrived at under section 8A(2) of the Taxation on Income (Investigation Commission) Act, 1947, I am to inform you that the settlement is valid and binding on you. 2. You are, therefore, requested to make good the arrears of instalments which you have not paid recently by 5th February, 1958, and also to continue making the payments in accordance with the instalments scheme agreed to, failing which the recovery proceedings will be vigorously pursued through the usual recovery channels.....
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....constitutionally invalid. It is necessary to read at this stage the relevant provisions of the Act in so far as they bear upon the problems before us. We have said that the Act came into force on May 1, 1947. This was before the coming into force of the Constitution of India, and no question of the violation of any fundamental rights guaranteed by the Constitution arose on that date. Section 3 of the Act empowers the Central Government (now Union Government) to constitute a Commission to be called the Income-tax Investigation Commission, whose duties shall be (to quote the words of the section)---- " (a) to investigate and report to the Central Government on all matters relating to taxation on income, with particular reference to the extent to which the existing law relating to, and procedure for, the assessment and collection of such taxation is adequate to prevent the evasion thereof; (b) to investigate in accordance with the provisions of this Act any case or point in a case referred to it under section 5 and make a report thereon (including such interim reports as the Commission may think fit) to the Central Government in respect of all or any of the assessments made in r....
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....ted was "1st day of September, 1948." Section 6 states the powers of the Commission, and they may be summarised thus: (a) the Commission has power to require any person or banking or other company to give information on relevant points ; (b) it has power to administer oaths and all the powers of a civil court to take evidence, enforce the attendance of witnesses etc, ; (c) it has power to impound and retain a document in its custody; (d) it has power to ask an authorised official to examine accounts and interrogate any person; (e) it has power to give directions to an authorised official; (f) it has power to close the investigation and make a best of judgment assessment in respect of a person who refuses or fails to attend in person, to give evidence or produce documents etc.; and (g) it has power of seizure, search etc. in certain specified circumstances. Sections 6A and 6B deal with the power of the Commission to tender immunity from prosecution and to withdraw such tender. Section 7 states the procedure to be followed by the Commission, sub-sections (2), (4) and (6) whereof need only be referred to here: " 7.(2) In making an investigation under clause (b) of se....
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....omes section 8A which must be quoted in full: " 8A.(1) Where any person concerned in any case referred to or pending before the Commission for investigation applies to the Commission at any time during such investigation to have the case or any part thereof settled in so far as it relates to him, the Commission shall, if it is of opinion that the terms of the settlement contained in the application may be approved, refer the matter to the Central Government, and if the Central Government accepts the terms of such settlement, the Commission shall have the terms thereof recorded and thereupon the investigation, in so far as it relates to matters covered by such settlement, shall be deemed to be closed. (2) For the purpose of enforcing the terms of any settlement arrived at in pursuance of sub-section (1), the Central Government may direct that such proceedings as may be appropriate under the Indian Income-tax Act, 1922 (XI of 1922), the Excess Profits Tax Act, 1940 (XV of 1940), or any other law may be taken against the person to whom the settlement relates, and, in particular, the provisions of the second proviso to clause (a) of sub-section (5) of section 23, section 24B, the p....
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....3 of 1954), which operated on the same field as section 5(1) of the Act, the provisions of section 5(1) became void and unenforceable as being discriminatory in character. It was further held that when an Act was valid in its entirety before the date of the Constitution, that part of the proceedings regulated by the special procedure and taken during the pre-Constitution period could not be questioned however discriminatory it might have been, but the discriminatory procedure could not be continued after the coming into force of the Constitution. In that case (Meenakshi Mills' case), the Investigation Commission had not even commenced the proceedings though a period of seven years had elapsed and the investigation was pending when the writ petitions were filed. In those circumstances it was held that the proceedings before the Investigation Commission which had become discriminatory could no longer be continued. Then came the decision in M. Ct. Muthiah v. Commissioner of Income-tax. The facts relevant to that decision were that the Investigation Commission held an enquiry into three cases and submitted a report on August 26, 1952, finding a particular sum to be the undisclosed inco....
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....er under the Indian Income-tax Act with reference to persons who fell within the same class or category, viz., that of the substantial evaders of income-tax. After the 8th September, 1948, therefore, some persons who fell within the class of substantial evaders of income-tax were dealt with under the drastic and summary procedure prescribed under Act XXX of 1947, while other persons who fell within the same class of substantial evaders of income-tax could be dealt with under the procedure prescribed in the Indian Income-tax Act after service of notice upon them under the amended section 34(1) of the Act. Different persons, though falling under the same class or category of substantial evaders of income-tax would, therefore, be subject to different procedures, one a summary and drastic procedure and the other a normal procedure which gave to the assessees various rights which were denied to those who were specially treated under the procedure prescribed in Act XXX of 1947. The legislative competence being there, these provisions, though discriminatory, could not have been challenged before the advent of the Constitution. When, however, the Constitution came into force on the 26th ....
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....nd 7, which we have read earlier, was more drastic than the procedure prescribed in sections 37 and 38 of the Indian Income-tax Act. It was stated therein that though in the first stages of investigation there was some similarity between the two procedures, the overall picture was not the same. The learned Attorney-General has not seriously contested the correctness of this position, but has argued that what we are concerned with in the present case is not the mere possibility of a differential treatment but what actually was done by the Commission in the case of the present assessee after January 26, 1950. He has submitted that the assessee was not subjected to any differential treatment in fact, and has invoked to his aid the ratio of our decision in Syed Qasim Razvi v. State of Hyderabad, where the majority judgment laid down the following tests: in a case where part of the trial cannot be challenged as bad, it is incumbent on the court to consider first, whether the discriminatory provisions of the law can be separated from the rest and even without them a fair measure of equality in the matter of procedure can be secured, and secondly, whether the procedure actually followed....
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....ovisions. " It is, we think, unnecessary to go into the controversy which arises out of the two views expressed above. For the present case, it is sufficient to say that (1) the discriminatory provisions are an integral part of the procedure prescribed under the Act which cannot be separated from the rest; and (2) we are satisfied that the report which led to the settlement was made by the Investigation Commission in pursuance of and as a direct result of the discriminatory procedure which it followed. Indeed, the Investigation Commission followed the only procedure of investigation prescribed under the Act, which was a drastic and summary procedure, and if that procedure became void on the coming into force of the Constitution, the jurisdiction of the Investigation Commission practically came to an end (see Lachmandas's case). It is necessary to explain here why we cannot accept the contention of the learned Attorney-General that there are two procedures or two jurisdictions under the Act. What in substance is the effect of the provisions of the Act, in so far as they relate to the Commission's duty under section 3(b) ? The Commission receives a reference under section 5(1). I....
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.... question, that of waiver of a fundamental right, which is as important as it is complex. It is a question on which unfortunately we have not been able to achieve unanimity. It is beset with this initial difficulty that the present appeal is not from a judgment or order rendered after the trial of properly framed issues ; it is from an order which merely rejected the prayer of the assessee that his properties attached in execution of the recovery certificate should be released and the amounts paid under the terms of the settlement refunded. The question of waiver was neither raised, nor tried; and the necessary facts were not ascertained or determined by the revenue authority concerned. Unfortunately, the filing of a statement of their case by the parties was also dispensed with, the result whereof has been that the question of waiver has been urged for the first time in the course of arguments here. We have, however, heard full arguments on it, and I proceed to consider it on such materials as have been placed before us. It is necessary to make one point clear. The respondents have raised the plea of waiver, and the onus lies heavily on them to establish the essential requirements....
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....d. " On the basis of these statements, the learned Attorney-General has argued that there is no foundation for the suggestion made on behalf of the assessee that the application for settlement was made "under the pressure of circumstances and in view of the coercive machinery of the Act." He has submitted that the necessary facts on which the plea of waiver is founded have been established, and he has relied on three cases decided by this court, where according to him the effect of the decisions was to accept such a plea in circumstances very similar: Dewan Bahadur Seth Gopal Das Mohta v. Union of India ; Baburao Narayanrao Sanas v. Union of India; and Laxmanappa Hanumantappa Jamkhandi v. Union of India. On behalf of the assessee, it is contended on the contrary that the necessary facts to found a plea of waiver are totally absent in the present case, and none of the aforesaid three decisions which were all pronounced on the same day proceed on a plea of waiver. Two of the three decisions referred to above relate to a settlement made under section 8A and the third to an order made under section 8(2) of the Act. All the three decisions were pronounced on applications made under ....
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....ision given only a month earlier (see Behram Khurshed Pesikaka v. State of Bombay) the same learned Chief Justice expressed himself strongly, though tentatively, against introducing in our Constitution the doctrine of waiver as enunciated by some American Judges in construing the American Constitution, without a fuller discussion of the matter. The report of Gopal Das Mohta's case does not contain any reference to the doctrine of waiver, and it is obvious that no fuller discussion of the doctrine took place in that case. It is not, therefore, reasonable to hold that the effect of Gopal Das Mohta's case is to uphold the doctrine of waiver. Babu Rao's case merely followed Gopal Das Mohta and gave no separate reasons. Laxmanappa Jamkhandi's case dealt with an order under section 8(2) of the Act and said at page 757 : " From the facts stated above it is plain that the proceedings taken under the impugned Act XXX of 1947 concluded so far as the Investigation Commission is concerned in September, 1952, more than two years before this petition was presented in this court. The assessment orders under the Income-tax Act itself were made against the petitioner in November, 1953. In these c....
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....ssee made an application for settlement, can it be said that it is a voluntary or intentional relinquishment of a known right ? I venture to think not. It has been said that "waiver" is a troublesome term in the law. The generally accepted connotation is that to constitute "waiver", there must be an intentional relinquishment of a known right or the voluntary relinquishment or abandonment of a known existing legal right, or conduct such as warrants an inference of the relinquishment of a known right or privilege. Waiver differs from estoppel in the sense that it is contractual and is an agreement to release or not to assert a right ; estoppel is a rule of evidence. (See Dawson's Bank Limited v. Nippion Menkwa Kabushiki Kaisha). What is the known legal right which the assessee intentionally relinquished or agreed to release in 1953-1954 ? He did not know then that any part of the Act was invalid, and I doubt if in the circumstances of this case, a plea of "waiver" can be founded on the maxim of "ignorance of law is no excuse". I do not think that the maxim "ignorance of law is no excuse" can be carried to the extent of saying that every person must be presumed to know that a piece o....
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....I greatly regret to have to say that I have come to a conclusion different from theirs with regard to this question, and as they have thought fit to express their views on it I proceed now to explain why I have come to a conclusion different from those of my learned brethren on this question. This question was mooted, though not fully answered, in Behram Khurshed Pesikaka's case. Venkatarama Aiyar, J., expressed his views at pages 638 to 643 of the report. Mahajan, C.J., with whom Mukherjea, Vivian Bose and Ghulam Hasan, JJ., concurred, expressed his views at pages 651 to 655 of the report, and my Lord the Chief Justice as Das, J. reserved his opinion on the question. The view which Venkatarama Aiyar, J., expressed was this: if the constitutional provision which has been infringed affects the competence of the Legislature which passed the law, the law is a nullity, as for example, when a State enacts a law which is within the exclusive competence of the Union; when, however a law is within the competence of the Legislature which passed it and the unconstitutionality arises by reason of its repugnancy to provisions enacted for the benefit of individuals, it is not a nullity, but i....
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....ing an opinion on this question we are not for the moment convinced that this theory has any relevancy in construing the fundamental rights conferred by Part III of our Constitution. We think that the rights described as fundamental rights are a necessary consequence of the declaration in the preamble that the people of India have solemnly resolved to constitute India into a sovereign democratic republic and to secure to all its citizen justice, social, economic and political; liberty of thought, expression, belief, faith and worship; equality of status and of opportunity. These fundamental rights have not been put in the Constitution merely for individual benefit, though ultimately they come into operation in considering individual rights. They have been put there as a matter of public policy and the doctrine of waiver can have no application to provisions of law which have been enacted as a matter of constitutional policy. " It would appear that the two main reasons which Mahajan, C.J., gave in support of the views expressed by him were these. Firstly, he held that the effect of article 13 of the Constitution was to prohibit the State from making any laws which came into confli....
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.... the inconsistent law or having wiped it out altogether from the statute book. Such law existed for all past transactions and for enforcement of rights and liabilities accrued before the date of the Constitution, as was held in Keshavan Madhava Menon's case. The law continued in force, even after the commencement of the Constitution, with respect to persons who were not citizens and could not claim the fundamental right. In short, article 13(1) had the effect of nullifying or rendering the existing law which had become inconsistent with article 19(1)(g) read with clause (6) as it then stood ineffectual, nugatory and devoid of any legal force or binding effect only with respect to the exercise of the fundamental right on and after the date of the commencement of the Constitution ......... All laws, existing or future, which are inconsistent with the provisions of Part III of our Constitution are, by the express provision of article 13, rendered void 'to the extent of such inconsistency'. Such laws were not dead for all purposes. " The aforesaid view expressed in Bhikaji Narain's case was accepted in many later decisions including the decision in Muthia's case. The same distinction....
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....ts citizens: Justice, social, provide for the common defence, promote economic and political; Liberty of thought, the general welfare, and secure the bless- expression, belief, faith and worship; ings of liberty to ourselves and our posteri- Equality of status and of opportunity ; and ty do ordain and establish this Constitution to promote among them all Fraternity for the United States of America. " assuring the dignity of the individual and the unity of the nation; in our Constituent Assembly this twenty-sixth day of November, 1949, do hereby adopt, enact and give to ourselves this Constitution." Undoubtedly, there is difference in phraseology and emphasis: more than a century and half had passed between the two Constitutions; many world events of far-reaching social and economic consequences had taken place in the meantime, and men's ideas had undergone radical changes. It may be that the dominant purposes, as shown by the preamble, of the American Constitution were : (a) to form a more perfect Union ; (b) to establish justice ; (c) to insure domestic tranquillity ; (d) to promote general welfare ; and (e) to secure the blessings of liberty. In our Constitu....
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....apacity until the expiration of two months next after a notice in writing has been given etc. There is undoubtedly a reason of public policy behind this provision, but it is open to the party for whose benefit the provision has been made to waive notice and indeed the party may be estopped by his conduct from pleading the want of notice. As the Privy Council pointed out in Al. Ar. Villavar Chettiar v. Government of the Province of Madras, there is no inconsistency between the propositions that the provisions of a section are mandatory and must be enforced by the court and that they may be waived by the authority for whose benefit they are provided. The question then is---is there anything in the statute which militates against the application of the doctrine of waiver to such right, subject to the safeguards and precautions necessary for the application of the doctrine, provided the right is for the benefit of individuals ? I am conscious that rights which the Constitution itself characterises as fundamental must be treated as such and it will be wrong to whittle them down. But are we whittling down fundamental rights when we say that the question of waiver of fundamental rights ....
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....for any particular individual, they cannot be waived, even though they do not find place in Part III of the Constitution. Therefore, the crucial question is not whether the rights or restrictions occur in one part or other of the Constitution. The crucial question is the nature of the right given : is it for the benefit of individuals or is it for the general public ? That, in my opinion, is the true test. I may here state that the source of the right---contractual or statutory---is not the determining factor. The doctrine of waiver is grounded on the principle that a right, statutory or otherwise, which is for the benefit of an individual can be waived by him. I am aware that a right which is for the benefit of the general public must in its actual operation relate to particular individuals, in the same way as a right for the benefit of individuals will in its actual operation arise in connection with individual A or individual B. The test is not whether in its operation it relates to an individual. The test is---for whose benefit the right has been primarily granted, for the benefit of the general public or for individuals ? Let me now apply this test to some of the provisions ....
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....alid ? Having derived all the benefit from the permit granted to him, is it open to him to say that the very Act under which a permit was granted to him is not valid in law ? Such and other startling results will follow if we decide in the abstract, by a general negative, that a fundamental right can never be waived. Take article 32, which is a right to a constitutional remedy, namely, the right to move the Supreme Court by appropriate proceedings for the enforcement of the rights conferred by Part III. It is now well settled by several decisions of this court that the right under article 32 is itself a fundamental right. Suppose a person exercises that right and initiates appropriate proceedings for enforcement of a fundamental right. Later he thinks better of it and withdraws his application. Still later he changes his mind. Can he then say that he could not waive his right under article 32 and the order passed on his application for withdrawal had no legal validity? We may take still another example. Under article 30(1) of the Constitution, all minorities, whether based on religion or language, have the right to establish and administer educational institutions of their choice. ....
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....that protection in a given instance may not thereafter raise the issue that his constitutional rights have been infringed in that instance, since whatever injury he may incur is due to his own act rather than to the enforcement of an unconstitutional measure against him ........ A person who would otherwise be entitled to raise a constitutional issue is sometimes denied that right because he is estopped to do so. The factor usually present in these cases is conduct inconsistent with the present assertion of that right, or conduct of such character that it would be unjust to others to permit him to avoid liability on constitutional grounds. A person may not question the constitutionality of the very provision on which he bases the right claimed to be infringed thereby, nor of a provision that is an integral part in its establishment or definition. The acceptance of a benefit under one provision of an Act does not ordinarily preclude a person from asserting the invalidity of another and severable provision thereof, but there are exceptions to this rule. The promoters of a public improvement have been denied the right to contest the validity of the rule apportioning its cost over th....
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....t of an agreement freely entered into by the parties. I appreciate that waiver is not to be lightheartedly applied, and I agree that it must be applied with the fullest rigour of all necessary safeguards and cautions. What I seriously object to is a statement in the abstract and in absolute terms that in no circumstances can a right given by any of the provisions in Part III of the Constitution be waived. Another point taken is that the provisions in Part III embody what are called "natural rights" and such rights have been retained by the people and can never be interfered with. I am unable to acquiesce in this. The expression "natural rights" is in itself somewhat vague. Sometimes, rights have been divided into "natural rights" and "civil rights", and "natural rights" have been stated to be those which are necessarily inherent or innate and which come from the very elementary laws of nature whereas civil rights are those which arise from the needs of civil as distinguished from barbaric communities. I am unable, however, to agree that any such distinction is apparent from the provisions in Part III of our Constitution : all the rights referred to therein appear to be created by t....
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....t III of the Constitution itself that the doctrine of "natural rights" had played no part in the formulation of the provisions therein. Take articles 33, 34 and 35 which give Parliament power to modify the rights conferred by Part III. If they were natural rights, the Constitution could not have given power to Parliament to modify them. Therefore, I am of the view that the doctrine of "natural rights" affords nothing but a foundation of shifting sand for building up a thesis that the doctrine of waiver does not apply to the rights guaranteed in Part III of our Constitution. The true position as I conceive it is this : where a right or privilege guaranteed by the Constitution rests in the individual and is primarily intended for his benefit and does not infringe on the right of others, it can be waived provided such waiver is not forbidden by law and does not contravene public policy or public morals. In the case before us, I have held that there is no foundation on facts to sustain the plea of waiver. Therefore, I would allow the appeal with costs. The order of the Commissioner of Income-tax, Delhi, dated January 29, 1958, must be set aside and all proceedings now pending for i....
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....crimination. The Fifth Amendment of the Constitution of the United States prescribes that no person shall be deprived of life, liberty or property without due process of law ; nor shall private property be taken for public use without just compensation. The Fourteenth Amendment of the Constitution introduces the rule of due process as a protection against the State action. The said amendments are intended as a protection to citizens against the action of the Union and the States. Though the rights so declared are general and wide in their terms, the Supreme Court of America, by a long course of judicial interpretation, having regard to the social conditions in that country, has given content to those rights and imposed limitations thereon in an attempt to reconcile individual rights with social good, by evolving counter-balancing doctrines of police power, eminent domain, and such others. During the course of the evolution of the law, attempts were made to apply the doctrine of waiver to the provisions of the Constitution of America. American courts applied the doctrine with great caution and in applying the same, laid down definite principles. The said principles were culled out....
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....d the waiver of the right or privilege is not forbidden by law, and does not contravene public policy, and the principle is recognized that everyone has a right to waive, and agree to waive, the advantage of a law or rule made solely for the benefit and protection of the individual in his private capacity, if it can be dispensed with and relinquished without infringing on any public right and without detriment to the community at large ...... As a general rule, rights relating to procedure and remedy are subject to waiver, but if a right is so fundamental in its nature as to be regarded by the state as vitally integrated in immemorially established processes of the administration of justice, it cannot be waived by anyone. The cases cited at the Bar illustrate the aforesaid principles. The doctrine was applied to the obligations under a contract in Pierce v. Somerset Railway ; to deprivation of property without due process of law in Pierce Oil Corporation v. Phoenix Refining Company and Shepard v. Barron to trial by jury in Patton v. United States and Adams v. United States ; and to self-incrimination in United States v. Murdock. It is true, as the learned counsel for the appell....
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....l ; liberty of thought, expression, belief, faith and worship; equality of status and of opportunity ; and to promote among them all fraternity assuring the dignity of the individual and the unity of the nation. One of the things the Constitution did to achieve the object is to incorporate the fundamental rights in the Constitution. They are divided into seven categories : (i) right to equality (articles 14 to 18) ; (ii) right to freedom (articles 19 to 22); (iii) right against exploitation (articles 23 and 24); (iv) right to freedom of religion (articles 25 to 28) ; (v) cultural and educational rights (articles 29 and 30) ; (vi) right to property (articles 31, 31A and 31B) ; and (vii) right to constitutional remedies (articles 32 to 35). Patanjali Sastri, J., as he then was, pointed out, in Gopalan v. State of Madras, that fundamental rights contained in Part III of the Constitution are really rights that are still reserved to the people after the delegation of rights by the people to the institutions of Government both at the Centre and in the States created by the Constitution. Article 13 reads: " (1) All laws in force in the territory of India immediately before the commencem....
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....scrutinized the articles in Part III of the Constitution of India, and they do not, in my view, disclose any such anomaly or create unnecessary hardship to the people for whose benefit the rights are created. Article 14 embodies the famous principle of equality before the law and equal protection of the laws, and articles 15 to 18 and article 29(2) relate to particular applications of the rule. The principle underlying these articles is the mainspring of our democratic form of government and it guarantees to its citizens equal protection in respect of both substantive and procedural laws. If the doctrine of waiver is engrafted to the said fundamental principles, it will mean that a citizen can agree to be discriminated. When one realizes the unequal positions occupied by the State and the private citizen, particularly in India where illiteracy is rampant, it is easy to visualize that in a conflict between the State and a citizen, the latter may, by fear of force or hope of preferment, give up his right. It is said that in such a case coercion or influence can be established in a court of law, but in practice it will be well nigh impossible to do so. The same reasoning will apply to....
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....ause (f) of clause (1), there cannot be any occasion when a citizen would be worse off than when he had no fundamental rights under the article. The preservation of the rights under article 19 without any further engrafting of any limitations than those already imposed under the Constitution, is certainly in the interest of the public; for the rights are essential for the development of human personality in its diverse aspects. Some comment is made in regard to the right covered by clause (3) of article 20, and it is asked that if a person has no liberty to waive the protection under that clause, he could not give evidence even if he wanted to give it in his own interest. This argument ignores the content of the right under clause (3) of article 20. The fundamental right of a person is only that he should not be compelled to be a witness against himself. It would not prevent him from giving evidence voluntarily. Under article 21, no person shall be deprived of his life or personal liberty except according to procedure established by law and article 22 gives protection against arrest and detention in certain cases. I do not think that any situation can be conceived when a person cou....
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.... to law. Thirdly, other remedies may be open to the State---on that I am not expressing any opinion---to recover compensation or damages for the improvements bona fide made or the loss incurred, having regard to the circumstances of a particular case. These considerations, in my view, are of no relevance in considering the question of waiver in the context of fundamental rights. By express provisions of the Constitution, the State is prohibited from making any law which takes away or abridges the rights conferred by Part III of the Constitution. The State is not, therefore, expected to enforce any right contrary to the constitutional prohibition on the ground that the party waived his fundamental right. If this prohibition is borne in mind, no occasion can arise when the State would be prejudiced. The prejudice, if any, to the State would be caused not by the non-application of the doctrine of waiver but by its own action contrary to the constitutional prohibition imposed on it. It is then said that if the doctrine of waiver is to be excluded, a person can apply to the Supreme Court under article 32 of the Constitution for the relief provided therein, withdraw the petition, get t....
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.... under that licence and if that law offends his fundamental right and therefore void, he continues to run the business without licence, as no licence is required under a valid law. The aforesaid illustration does not, therefore, give rise to any anomaly and even if it does, it does not affect the legal position. I have considered the various provisions relating to the fundamental rights with a view to discover if there is any justification for the comment that without the aid of the doctrine of waiver a citizen, in certain circumstances, would be in a worse position than that he would be if he exercised his right. I have shown that there is none. Nor is there any basis for the suggestion that the State would irreparably suffer under certain contingencies ; for, any resulting hardship would be its own making and could be avoided if it acted in accordance with law. A large majority of our people are economically poor, educationally backward and politically not yet conscious of their rights. Individually or even collectively, they cannot be pitted against the State organizations and institutions, nor can they meet them on equal terms. In such circumstances, it is the duty of this ....
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....em. They represent but two aspects of want of legislative power. The legislative power of Parliament and the State Legislatures as conferred by articles 245 and 246 of the Constitution stands curtailed by the fundamental rights chapter of the Constitution. " This decision in clear and unambiguous terms lays down that there cannot be any distinction on principle between constitutional incompetency and constitutional limitation. In either case, the Act is void, though in the latter case, the pre-constitutional rights and liabilities arising under the statute are saved. This court again dealt with the meaning of the word "void" in Bhikaji Narain Dhakras v. State of Madhya Pradesh. There the question was whether an Act which was declared void on the ground of inconsistency with the Constitution, can be revived by any subsequent amendment to the Constitution removing the inconsistency. This court answered the question in the affirmative. Das, Acting C.J., observed at page 598 thus: " As explained in Keshavan Madhava Menon's case, the law became void not in toto or for all purposes or for all times or for all persons but only 'to the extent of such inconsistency', that is to say, to ....
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....III of 1947. If the Commissioner had no jurisdiction, the appellants could not by waiving their right confer jurisdiction on him. The scope of the doctrine of waiver was considered by this court in Behram Khurshed's case. There a person was prosecuted for an offence under section 66(b) of the Bombay Prohibition Act and he was sentenced to one month's rigorous imprisonment. One of the questions raised there was whether section 13(b) of the Bombay Prohibition Act, having been declared to be void under article 13(1) of the Constitution in so far as it affected the consumption or use of liquid medicinal or toilet preparation containing alcohol, the prosecution was maintainable for infringement of that section. The court held that in India once the law has been struck down as unconstitutional by the Supreme Court, no notice can be taken of it by any court, because, after it is declared as unconstitutional, it is no longer law and is null and void. Even so, it was contended that the accused had waived his fundamental right and, therefore, he could not sustain his defence. Mahajan, C.J., delivering the judgment of the majority, repelled this contention with the following observations at....