The Judgment of the Court was delivered by

Chakravartti, C.J:— This is an application for leave to appeal to the Supreme Court from a judgment and order of a Division Bench of this Court, dated the 10th of September, 1953, rendered and made upon a reference under section 21 of the Excess Profits Tax Act, read with section 66A (2) of the Indian Income-tax Act.

2. The case has had a history. It appears that assessments of the respondent Insurance Company to Excess Profits Tax for three chargeable accounting periods, namely, those ending on the 31st of December, 1939, 31st of December, 1940, and 31st of December, 1941, were taken up at one and the same time and in respect of all the three assessments, a common question of law was raised. That question was whether in computing the average amount of capital, the sums standing to the credit of the Fire Insurance Fund, Marine Insurance Fund, Motor and Accident Insurance Fund and Reserves for Exceptional Losses, could be properly deducted under Rule 2, Schedule II, read with the explanatory sub-paragraph attached to the Rule in the Excess Profits Tax Act, 1940. The principal contention of the assesses company appears to have been that reserves for unexpired risks could not be held to be “accruing liabilities” within the meaning of the explanatory paragraph, whereas the Taxing authorities contended that they were such liabilities, although the amounts might not have become payable. The Tribunal accepted the latter view and held that the amounts in question were liable to be deducted in computing the average amount of capital employed in the business during the relevant chargeable accounting periods.

3. Three applications were thereafter made to the Tribunal for a reference to this Court of the question of law. The Tribunal allowed the application in respect of the chargeable accounting period ending on the 31st of December, 1939, but rejected the two other applications on the ground that they were barred by limitation. Thereupon, the respondent company moved this Court and obtained a Rule under section 66(2) of the Act which was ultimately made absolute and the Tribunal was directed to make a reference in respect of the remaining two years as well. In pursuance of the order made by this Court, a further reference was made by the Tribunal, but it did so happen that before that reference came up for hearing, the reference previously made with respect to the chargeable accounting period ending on the 31st of December, 1939, had already been heard and decided in favour of the respondent-company. The second reference came up before a Bench, constituted as the present Bench, on the 4th May, 1951, when directions were given to place the case before the then Chief Justice in order that he might consider whether it would not be desirable to have the present reference also heard by the same learned Judges as had heard the previous reference. We gave that direction for the reason that in case we differed from the other Bench, we would have to make a reference to a Full Bench and if the Full Bench also took a view different from that taken in the first reference, a somewhat anomalous position would result in that in respect of the same question of law, this Court would be speaking in two voices. Pursuant to the direction given by us, the present reference also was placed before the same learned Judges, namely, Mr Justice Das and Mr. Justice Mookerjee and was heard by them. Mookerjee, J., who had delivered the judgment of the Court on the previous occasion, did so in the present case as well and all that he said on the merits of the question was as follows:—

“This subsequent reference has now been heard. After hearing the further arguments, we are not Satisfied that the answers given on the previous occasion need any modification.”

4. It will, therefore, be seen that their Lordships considered the matter to be completely covered by their previous decision and did not find it necessary to add any further reasons or consider specially any further arguments that might have been advanced before them For the reasons in support of the view taken by their Lordships, one has therefore, to refer to the judgment, dated the 22nd February, 1949, given on the first reference.

5. The Commissioner of Excess Profits Tax, West Bengal, has now made the present application for leave to appeal to the Supreme Court from the judgment and order, dated the 10th September, 1953, passed on the second reference It has been contended that the question involved is one of general importance and should be finally settled by an authoritative decision of the highest Court of the country.

6. Mr Khaitan, who appears on behalf of the respondent-company, concedes that, on its merits, the question involved in the reference is such as makes the present case a fit case for further consideration by the Supreme Court. The rival contentions of the assessee and the Taxing authorities depend, as the learned Judge has pointed out, upon divergent interpretations of Rule 2, Schedule 2 to the Excess Profits Tax Act and I am not surprised that Mr. Khaitan made the concession he did. He, however, urged some special grounds before us for which he thought that no leave could be granted by this Court or at least no leave ought to be granted.

7. The first ground taken by Mr Khaitan was an interesting one. He pointed out that the application had been framed as an application under Article 135 of the Constitution, read with section 66A(2) of the Indian Income-tax Act and contended that Article 135 did not cover an appeal to the Supreme Court arising out of an, income-tax proceeding. It was pointed out that in order that Article 135 might be attracted, it was necessary that the matter should be one in relation to which the Federal Court had an appellate jurisdiction immediately before the commencement of the Constitution under any existing law. The Jurisdiction of the Federal Court immediately before the commencement of the Constitution is to be found in Act I of 1948 and Mr. Khaitan contended that such jurisdiction was, by the express terms of both the preamble of the Act and the definition of appealable judgments contained in section 2(d), limited to judgments in civil cases. Civil cases, it was next contended could not comprise proceedings in Income-tax matters and consequently, it could not be said that the jurisdiction exercised by the Privy Council in respect of appeals in Income-tax matters had been transferred to and bestowed on the Federal Court by Act I of 1948 If that jurisdiction had not been conferred on the Federal Court by the Act of 1948, that Court had no jurisdiction to hear Income-tax appeals immediately before the commencement of the Constitution and accordingly, appeals in Income-tax matters would be outside the ambit of Article 135. The submission to which that argument led necessarily was that this Court had no right to grant leave to the petitioner under the supposed authority of Article 135, read with section 66A(2) of the Income-tax Act and that the petitioner, if he wanted to have a hearing from the Supreme Court, could only do so by obtaining special leave from that Court under Article 136.

8. The point appears to be covered by a decision of the Madras High Court in the case of P.A Raju Chettiar and Brothers v. Commissioner of Income-tax, Madras, (1) [(1949) 17 I.T.R 353]. The decision was given before the Constitution, but that circumstance is immaterial, since the scope of Article 135 in relation to the present case depends, op Mr. Khaitan's argument, upon the true scope of Act I of 1948 which was what was considered and decided in the Madras case.

9. I would however like to examine the position for myself, because, with great respect, it appears to me that the learned Judges of the Madras High Court proceeded on too broad a ground. With regard to the argument that Act I of 1948 was limited to civil cases, they observed that a judgment given on a reference under the Income-tax Act was passed in a civil case, “because the category of civil cases excludes only criminal cases from the application of the enactment”. That indeed would be true if besides civil and criminal cases, no other type of case was conceivable, but it can by no means be said of “cases” that a classification of them into civil and criminal leaves none of them uncovered. The Constitution, for example, refers in Article 132 to three kinds of proceedings namely, civil, criminal of other proceeding, and it would follow that so far at least as the language of the Constitution is concerned, the mere fact that a case is not a criminal case, would not necessarily make it a civil case. Nor is there any special definition of “civil case” in Act I of 1948, excluding only criminal cases. Again, the terms “quasi-civil” and “quasi-criminal” are familiar in legal language. There are, however, enough indications in Act I of 1948 itself which seem to me to establish beyond reasonable doubt that the expression “civil case” was not used in the Act in the strict sense of cases governed by the Civil Procedure Code, but was used in a sense, large enough to comprise proceedings in Income-tax matters.

10. The Act gives a right of appeal to the Supreme Court from a “judgment to which this Act applies”. That expression is defined in section 2(d) as “any judgment, decree or final order of a High Court in a civil case from which a direct appeal could have been brought to His Majesty in Council, either with or without special leave, if this Act had not been passed”. This definition carries with it the qualification that the case in which the judgment, decree or final order was passed should be a civil case. On the meaning of the expression “civil case” the definition throws no light. When, however, one proceeds to the next section, one begins to see what the Act really intends. That section provides for the actual enlargement of the jurisdiction of the Federal Court and says that, as from the appointed day, an appeal shall lie to the Federal Court from any judgment to which the Act applies “without the special leave of the Federal Court, ii an appeal could have been brought to His Majesty in Council without special leave under the provisions of the Code of Civil Procedure, 1908, or of any other law in force immediately before the appointed day”. It will thus be seen that although by the definition of the expression “judgment to which this Act applies”, the limitation that the judgment must be a judgment in a civil case is imported into section 3 as well, what the meaning of “civil case” is, is indicated by the provision that such cases are those in which an appeal could have been preferred to the Privy Council without special leave under the provisions of the Code of Civil Procedure or of any other law. It is quite obvious that the Act is contemplating not merely appeals provided for and permitted by the Code of Civil Procedure, but also appeals permitted by other laws. Since the common requirement of all cases in which an appeal shall lie to the Federal Court is that the judgment appealed from must be a judgment in a civil case and since section 3 provides that the cases contemplated are those in which an appeal could have been preferred to the Privy Council without special leave under the Code of Civil Procedure and other laws, it appears to me to be perfectly plain that cases in which an appeal could have been preferred under such laws as the In* come-tax Act or the Land Acquisition Act are also contemplated. The matter is carried a point further and made even clearer by the provisions of section 6. By that section, all laws which were applicable to appeals to the Privy Council before the appointed Jay, i.e, the 1st day of February, 1948, and related to direct appeals, are made applicable to appeals to the Federal Court, as if, in them, for “His Majesty in Council” “Federal Court” had been substituted. It is said in the section that those laws, so adapted, shall have effect in relation to any appeal from a judgment to which the Act applies. The laws with which the section is concerned are described as “the provisions of the Code of Civil Procedure, 1908, or of any other law in force immediately before the appointed day”, relating to direct appeals in civil cases to His Majesty in Council. From the language I have just read, it will be abundantly clear that the Act is contemplating appeals in civil cases, pro-Tided for not only by the Code of Civil Procedure, but also by other laws in force immediately before the appointed day. The expression “civil cases” is not thus, in the contemplation of the Act, limited to cases governed by the Code of Civil Procedure in respect of appeals to the Privy Council, but extends to cases in which appeals to that tribunal were provided for by other laws. It appears to me that in view of these provisions of the Act, it cannot be said that its scope is limited only to appeals preferred or preferable to the Privy Council under the provisions of the Civil Procedure Code and that appeals under other laws, such as the Income-tax Act, are excluded. There can be no question that the Income-tax Act was among the “other laws” which provided for direct appeals to the Privy Council before the appointed day. The conclusion therefore follows that the jurisdiction to hear such appeals came to the Federal Court under Act I of 1948 and has now been conferred on the Supreme Court by Article 135 of the Constitution.

11. I have dealt with Mr. Khaitan's argument as he presented it, but I have to point out that the argument, which was founded solely on Act I of 1948, did not take note of a subsequent enactment contained in Constituent Assembly Act No. V of 1949. By that Act, the jurisdiction of the Privy Council was abolished, except as regards certain pending appeals and petitions which are not here material, and there was a corresponding conferment of jurisdiction on the Federal Court. Section 5 of the Act provided that “as from the appointed day, the Federal Court shall, in addition to the jurisdiction conferred by the Government of India Act, 1936, and the Federal Court (Enlargement of Jurisdiction) Act, 1947 (I of 1948), have the same jurisdiction to entertain and dispose of Indian appeals and petitions as his Majesty in Council has, whether by virtue of His Majesty's prerogative or otherwise”. There were certain exceptions to the provision, but those related only to appeals and petitions in which the hearing before the Privy Council had already been concluded or which had been included in the list of business for the next sittings of the Board. The “appointed day” for the purposes of the Act was the 10th day of October, 1949. It will be seen that the provision made by the Act of 1949 was perfectly general and free of any limitation as regards the class of cases in respect of which jurisdiction was being conferred on the Federal Court. The jurisdiction to hear income-tax appeals which the Privy Council undoubtedly had before the 10th October, 1949, thus came to the Federal Court on and from that date as an exclusive jurisdiction, whether such appeals were appeals in civil cases or not; and since that jurisdiction was never taken away from the Federal Court before it was replaced by the Supreme Court, it had jurisdiction in regard to income-tax appeals immediately before the commencement of the Constitution, as required by Article 135.

12. The first ground urged by Mr Khaitan must accordingly fail.

13. The second point taken by Mr. Khaitan was that if he was right in contending that Article 135 did not apply, the only other Article under which the petitioner could ask for leave was Article 133(1), but the first two sub-clauses of that Article were excluded by the fact that the subject matter of the appeal, namely, the tax liability, would be of a value less than Rs. 20,000. Proceeding to consider sub-clause (c) of Article 133(1), Mr. Khaitan submitted that that sub-clause undoubtedly gave a discretion to the Court, but the discretion should not be exercised in the present case in favour of the petitioner in view of his past conduct. It appears to me that since Article 135 applies to the case and the petitioner is entitled to ask, for leave under that Article read with section 66A(2) of Income-tax Act, the second argument of Mr. Khaitan does not call for consideration. I may, however, add that Article 133 cannot possibly have any application to an appeal in an income-tax matter and therefore no argument founded on that Article, whether in favour of or against an appeal, is relevant. Nor is it logical to turn to Article 133 after it is found that Article 135 does not apply to a particular case. The order in which the provisions of the Constitution are arranged is that Articles 133 and 134 provide for civil and criminal cases respectively and then Article 135 makes further provision for a certain class of cases to which Articles 133 and 134 do not apply.

14. Mr. Khaitan contended in the last place that in any event, we had to decide that the case was a fit case for a further appeal to the Supreme Court and we could not or should not so decide, because the petitioner had not availed himself of the opportunity of preferring an appeal from the judgment in the first reference and had caused a double consideration of the same point at two stages by raising an unfounded objection on the ground of limitation which had ultimately failed. I am unable to hold that the fact that the Commissioner of Excess Profits Tax raised a plea before the Tribunal that the second and the third applications were time-barred and that the plea succeeded there, disentitles him from asking for leave to the Supreme Court, for the reason that a consequence of the view urged by him and accepted by the Tribunal has been to cause a delay in the hearing of the present reference. There is nothing to show that the point was taken deliberately and with the knowledge that it was unsubstantial or that there was any particular reason for causing a delay in the hearing of the second reference, since the same point would be considered at the hearing of the first.

15. I do not think that the third consideration urged by Mr. Khaitan ought to weigh with us at all in considering the petitioner's application. On the merits of the question involved in the proposed appeal, Mr. Khaitan very fairly conceded that it was one of sufficient importance and therefore it is not necessary for us to give our reasons for agreeing with him.

16. For the reasons given above, this application is allowed and leave to the Supreme Court from the judgment and order, dated the 10th September, 1953, is granted.

17. The necessary certificate under Article 135, read with section 66A(2) of the Income-tax Act, will now be drawn up.

18. Costs of the application will be costs in the appeal.

S.R Das Gupta, J.:— I agree.

Solicitors: S.K Mondal for the Petitioner; A.C Sen for the Respondent.

A.K.D.G