Surajmull Nagarmull And Others v. The Commissioner Of Income Tax .

The Judgment of the Court was delivered by

P.B Mukharji, J.:— We are unanimous on this Special Bench that the Rule must be discharged.

2. Search of a citizen's home and seizure of his books and documents without a warrant from any Court or Magistrate are, on this application, challenged as unconstitutional and illegal. Many sleeping lions, if not passions, are roused and the old forgotten war cries of the 18th Century legal battle of Entick v. Carrington (1765) 19 State Tr 1029, came roaring through the corridors of history to face the jaded jurisprudence of the 20th Century to find it unresponsive. Prized freedoms, newly won then, have now after two centuries, become too old to defend themselves. This Reference to the Special Bench under Article 226 of the Constitution of India read with the Original Side Rules for Special Bench (Chapter V, Rules 2 and 3 of the Original Side Rules) raises (1) the question of constitutional validity of section 37(2) of the Income-tax Act and (2) the question of the statutory legality of the steps taken under the same section of the same Act. This application challenges the constitutional validity of the statutory powers of search and seizure under section 37(2) of the Income-tax Act.

3. section 37(2) of the Income-tax Act deals with the powers of the Income-tax Authorities to enter and search any building or Place and to seize books of account and other documents. It will be necessary to set out the section whose constitutional validity has been challenged. Before doing so the facts may be briefly stated.

4. The search relates to premises Nos. 57, 6111 and 63/1. Harrison Road and also premises No. 212, Cornwallis Street and 8.A, Beniatolla Lane. The I search continued from 4th July, 1956. Certain books and papers were seized. It is against this search and seizure that the present application is directed. It is said that search and seizure were illegal and unconstitutional.

5. The search was conducted both by the Customs as well as by the Income-tax authorities but it is the action of the Income-tax authorities which is under challenge in this application.

6. The petitioners in this case are Messrs Soorajmull Nagarmull. A short statement of the facts leading to the present search and seizure will be relevant for the determination of this Present application. In 1946–1947 under the Taxation on Income (Investigation Commission) Act, the Income-tax cases of the petitioner firm and its partners were referred to the Income-tax Investigation Commission under section 5(1) of the said Act. It included what is known as ‘Soorajmull Nagarmull’ group of companies. After elaborate Proceedings a settlement was arrived at in the year 1951 between the Union of India and the firm of Soorajmull Nagarmull and its partners. The said settlement expressly made reference to concealed income and provided that—

“In case any other item of concealed income not covered by this settlement or by the report of the Commission made in connection therewith or by the report of the Authorised Official comes to light in future, the Commission shall be free to report on the same and the Department shall be free to bring the same under assessment either upon such report or by proceedings taken under the ordinary Income-tax Law.”

7. Thereafter on the 27th January, 1955, notices were issued under Section 34(1)(A) of the Indian Income-tax Act on Messrs, Soorajmull Nargarmull and its partners. These proceedings are pending relating to the assessment of Soorajmull Nagarmull and its partners under the Income-tax Act.

8. As the attack is upon section 37(2) of the Income-tax Act both under the Constitution and on its statutory interpretation it will be desirable to set out in extenso this particular section at this stage. section 37(2) of the Income-tax Act Provides as follows:—

“Subject to any rules made in this behalf, any Income-tax Officer specially authorised by the Commissioner in this behalf, may—

(i) enter and search any building or place where he has reason to believe that any books of account or other documents which in his opinion will be useful for, or relevant to, any proceeding under this Act may be found and examine them, if found;

(ii) seize any such books of account or other documents or place marks of identification thereon or make extracts or copies therefrom;

(iii) make a note or any inventory of any other article or thing found in the course of any search under this section which in his opinion will be useful for, or relevant to, any proceeding under this Act:

and the provisions of the Code of Criminal Procedure. 1898 (V of 1898) relating to searches shall apply so far as may be to searches under this section.”

9. This authority to enter search and seize stems from the Commissioner of Income-tax and the Income-tax Officer executes it. The Commissioner has to ‘specially authorise’ the Income-tax Officer to do it. This is clear from the section. In this case the authorisation reads as follows:—

Office of the Commissioner of Income-tax

(Central Calcutta)

4. Hastings Street, Calcutta.

Authorisation under Section 37(2) of the Indian Income-tax Act.

Whereas on information received by you, you have reason to believe and I am satisfied on your report that books of account and other documents which in your opinion will be useful for or relevant to the Income-tax cases of the assessees noted in tile margin (here in ()) (Soorajmull and Nagarmull and their partners) under the Indian Income-tax Act may be found at premises No. 63, Harrison Road, Calcutta, and compound, offices and outhouses or other places in connection with the said premises. This is to specially authorise you.

Shri K. Raha,

Income-tax Officer,

Central Circle — X. Calcutta,

(i) to enter and search the said building or place being Premises No. 63. Harrison Road, Calcutta aid the compound, offices, outhouses or other places connected therewith where you have reason to believe that any books of account or other documents which in your opinion will be useful for or relevant to any proceeding in respect of the assessee noted in the margin (herein ()) under the Indian Income-tax Act may be found and to examine them if found;

(ii) to seize any such books of account and other documents and place marks of identification thereon and make extracts and copies therefrom;

(iii) to make a note or any inventory of any other articles or things found in the course of the search aforesaid which in your opinion will be useful for, or relevant to any proceeding under the Indian Income-tax Act in respect of the assessees noted in the margin (here in ()).

Dated this 4th day of July, 1956.”

10. Similar authorisation letters, (1) one in respect of group of companies under Soorajmull Nagarmull in respect of ‘57 and 61, Harrison Road also 9.A, Beniatolla Lane, or the building joined with 61, Harrison Road by means of overbridge, spanning the lane between 61, Harrison Road and the said building joined by means of overbridge, and the compound, offices and outhouses or other places in connection with the said premises' in favour of Shri D.G Pradhan, Income-tax Officer, dated the same 4th day of July, 1956, and (2) the other in respect of another group of companies of Soorajmull Nagarmull in respect of premises Nos. 57, 61 and 63, Harrison Road and 9.A, Beniatolla Lane, and another (3) in favour of the Income-tax Officer, Shri N. Subba Rao, dated the 5th day of July, 1956 in exactly the similar terms as above.

11. section 37(2) of the Income-tax Act was introduced by the Finance Act, 1956 with effect from 1st April, 1956.

12. The first point of attack is made on the ground that there was no authorisation in respect of premises No. 63/1, Harrison Road, and therefore it is challenged that the whole search and seizure were illegal. It is true that there is no authorisation to search and seize books from 63/1, Harrison Road named as such. But the answer to this argument is the language of the authorisation letters and the feet of inter-connection with the premises concerned although the specific municipal number of this particular premises is not mentioned in the authorisation letters. The language used in the authorisation letters is “or other places in connection with the said premises”. This to my mind, means that other places connected with the premises mentioned will be included within the authorisation. Particular places could be identified not merely by municipal number but also by any other reasonable expression to identify or indicate reasonably the place intended. After all premises are not always numbered and such numbers are not available, for instance, in the districts or in the rural areas. Secondly, the fact is established beyond doubt that premises No. 83/1, Harrison Road is not at all a separate and independent building apart from the premises No. 61, Harrison Road, but that premises No. 63/1. Harrison Road forms a single building with No. 61, Harrison Road not visibly divided or partitioned and access can be obtained from one place to the other from within and without having to go on the public road for this purpose. This is clear not only from paragraph 13 of the affidavit of the Income-tax Officer, Kiranmoy Raha, but is also admitted in paragraph 16 of the affidavit of Deokinandan, one of the partners of the firm Soorajmull Nagarmull, where Deokinandan says “it is true that access can be obtained from one premises to the other from within but that does not make the two premises one. As a matter of fact access can be obtained in each of the premises Nos. 61, 63/1 and 8.A, Beniatolla lane from one premises to the other without having to go on to the public road for this purpose”. If this is so whether the premises are one or two is a matter of inference and fact. A premises may be separately marked by the municipality or the Corporation but the difference in municipal numbers may not in fact make them two premises. For these reasons, I do not think that the challenge on the ground of the identity of 63/1, Harrison Road can succeed in this case. The facts establish clearly here that it is one premises not merely by (1) physical fact but also by (2) same title and ownership and (3) similar use. I need only add that in fact it is not admitted at all that any books or documents were seized from 63/1, Harrison Road. The principle that a valid description of the premises by a number of locality is not fatal if the description nevertheless is sufficient to identify the premises named in the warrant is well-recognised in a number of decisions, such as, reported in Emperor v. Krishna Dalvi, 6 Bom LR 52, Emperor v. Abasbhai, reported in AIR 1926 Bom 195, Emperor v. Jhunni, 2 Cri LJ 243 and P.R Subbier v. Emperor, reported in AIR 1935 Mad 98.

13. Now the objections on the ground of non-compliance with the provisions of section 37(2) of the Income-tax Act may be disposed of shortly before I discuss the argument advanced challenging the constitutional validity of section 37(2) of the Income-tax Act.

14. The first argument is that the seizure and search in this case are in violation of the statute itself on the ground that the power to seize and search does not arise until Rules under the Act have been made under section 59 of the Income-tax Act. This argument is based on the opening words of section 37(2) of the Income-tax Act, namely, “subject to any Rules made in this behalf”. Mr. H.N Sanyal, learned Additional Solicitor General for the applicants, contends with very great ability and force that this extensive power of search and seizure was given to the Income-tax Officer by Parliament only on condition that power would be exercisable only after the Rules had been made by the Central Government under section 59 of the Act. He contends that an unregulated power of search and seizure unguided by the Rules was not the intention of Parliament and that is why the words used were ‘subject to any rules made in this behalf’. No Rules for search and seizure had been made when this particular search and seizure took place between the 4th July and the 7th July, 1956. The Rules have been framed since then. The search and seizure Rules were framed subsequently by Notification No. S.R.O 1953 dated the 6th June, 1957 and called “The Income Tax (Search of Premises and Seizure of Documents) Rules, 1957”. In other words, the argument in short is this that this power to search and seize springs from the Rules and not from the Section.

15. In aid of this argument Mr. Sanyal has referred us to two sections such as, sections 58D and 58J(3) which use the words “subject to any Rules which the Central Government (or the Central Board of Revenue) may make in this behalf” in order to show that the words ‘may make’ indicated future making of the Rules and not the previous making of the Rules as a condition precedent to the exercise of the power. He has also relied on the decision of the Supreme Court for this purpose in Narendra Kumar v. Union of India, AIR 1960 SC 430.

16. There are many reasons why it is difficult to accept this argument that the existence of Rules is a condition precedent to the exercise of the power of search and seizure under section 37(2) of the Income-tax Act. The first reason is that the words are not ‘subject to Rules made’ but ‘subject to any Rules made’. Then if only one rule is made regulating say only the hours of search, that would justify the exercise of the whole power of search and seizure which may still remain objectionable according to Mr. Sanyal independently of the regulated hours of search. That seems to indicate that search and seizure would be regulated by Rules, if any, are made in that behalf but not that the power itself will remain suspended unless such Rules are made. To make the Rules a condition precedent to the exercise of tile power to search and seize will lead also to anomalous result because Rules may be changed from time to time. The situation will be odd indeed for instance if some Rules were made when search and seizure were ordered but while they were pending these Rules were replaced or suspended. What is the effect then on pending search and seizure? Secondly, the words ‘any Rules made in that behalf’ mean not merely made already but also those to be made in future. The language in this respect may be contrasted with the language in section 10(7) of the Income-tax Act which uses the words “in accordance with the Rules contained in the Schedule to this Act”. It is on this ground that the Supreme Court decision in AIR 1960 SC 430 may be distinguished because the words there were “except and in accordance with” (see pages 432 and 438 of the said Report AIR 1960 SC 430). The words ‘subject to any Rules made’ are not unusual words in statutes and if the intention was to prevent exercise of the power of search and seizure before making of any rules, Parliament could have used suitable words like “except and in accordance with Rules” or of similar nature as used in Narendra's case. To accept Mr. Sanyal's attractive argument will be to convert Section 37(2) of the Act into a piece of conditional legislation which according to its well-known features, it is not. The only reasonable and proper interpretation appears to be that the power contained in the section is to be regulated by such Rules as are either already made or may be made in future. But they cannot be construed as a condition precedent to the exercise of the power itself. The Rules are regulatory of the power but their existence is not a pre-condition for the operation of the power under statute. For these reasons I hold that I cannot interpret Section 37(2) to mean that the power conferred thereby remains suspended until Rules are made and becomes operative when such Rules are current.

17. The next attack on the search and seizure under the statute is that the letter of authorisation quoted above does not satisfy the requirements of the statute. It is said that the use of such words by the Commissioner of Income Tax as “you have reason to believe”, “I am satisfied on your report” and “books of account and other documents which in your opinion will be useful for or relevant to” do not satisfy the conditions laid down in this statute. Under this objection it is contended that by section 37(2) of the Income-tax Act and specially under sub-clause (i) thereof, the Commissioner himself must apply his mind and say that he himself has reason to believe and that in his opinion the books or documents are useful or relevant. In other words the words “he has reason to believe” and the words “which in his opinion will be useful for or relevant to” in section 37(2)(i) referred by the pronouns “he” and “his” to the Commissioner and not to the Income-tax Officer. Therefore it is contended that the words “you have reason to believe” meaning thereby the Income-tax Officer and the words “your opinion” meaning thereby the Income-tax Officer's opinion in the authorisation letter do not satisfy the statute.

18. I am unable to accept this contention. Grammatically and on a plain reading of section 37(2)(i) it appears that the words ‘he’ and ‘his’ can only mean the Income-tax Officer and not the Commissioner. Even apart from the grammatical and plain meaning of the section, which should govern the meaning unless it is otherwise ambiguous, which I hold it is not, it also appears to me that in the context it can only mean the reason of the Income-tax Officer and the opinion of the Income-tax Officer and not that of the Commissioner. In fact, at that stage where an assessment is being made and evidence is being collected or investigated, it is not the Commissioner but the Income-tax Officer who is doing it Section 37(2) authorises the Income-tax Officer to enter, search and seize. The Commissioner does not himself do it. It is therefore consistent with reason and good sense that in authorising the Income-tax Officer to enter search and seize, it is the opinion of the Income-tax Officer and his reason to believe are made the determining factors because it is then the Income-tax Officer who is conducting the assessment proceeding and collecting and investigating evidence. At that stage the Commissioner could hardly have seen the records of the proceedings of assessment and the books of account to form his own opinion. Section 37(2) provides only this check that the Commissioner himself authorises the Income-tax Officer to enter, search and seize. That does not mean that he has to assume the responsibility of proper reason to believe and form an opinion. At the same time, this authorisation by the Commissioner under section 37(2) is not a mere mechanical act or a rubber stamp consent to the request of the Income-tax Officer, but is prima facie check by the Commissioner. At that prima facie stage naturally the Commissioner has to see whether the Income-tax Officer himself has reason to believe and whether he himself has formed an opinion that the books of account or documents are relevant to or useful for the purpose of assessment proceeding under the Act which the Income-tax Officer is conducting. That test is met in the letter of authorisation in this case. The Commissioner himself says ‘I am satisfied’. It is true he says that he is so satisfied on the Income-tax Officer's report that the Income-tax Officer has reason to believe and that the Income-tax Officer has formed an opinion. But that is just what it should be. It is the Income-tax Officer's reason and the Income-tax Officer's opinion which must first be there and then if upon that, the Commissioner says that he is satisfied, then I think the requirements and conditions of section 37(2) are fulfilled. I hold they are wholly satisfied in the authorisation letters issued in this case. It was not necessary, in my view, for the Commissioner of Income-tax in such circumstances and on the facts here to make any affidavit on the point because his letter of authorisation signed by him plainly says “I am satisfied”. That is enough. Affidavit by him could not have improved matters.

19. This conclusion is not affected by reference to subsequent Rules for search and seizure. First because these Rules do not apply in the present case as the search and seizure took place when there were no Rules and the Rules came into force subsequently in 1957 and secondly because even the words the Commissioner is ‘led to believe’ in the form appended to these Rules as Warrant of Authorisation point to the same conclusion. Further Rule 2 of these subsequent Rules requiring the Commissioner to record reasons and to issue a written order is also satisfied in the present authorisation letter.

20. The last attack on the authorisation letter is that the “report” of the Income-tax Officer, mentioned in the authorisation letter has not been disclosed. I do not think that any law or any statutory provision requires that it should be disclosed or that non-disclosure of the report will make the authorisation itself bad. All that section 37(2) of the Income-tax Act requires is that the Commissioner has to authorise the Income-tax Officer. What report and what information led him to issue the authorisation letters are not required to be disclosed to the assessee. Indeed disclosure of such report might embarrass, prejudice and even frustrate future steps and progress for the discovery of other documents.

21. I therefore hold that the authorisation does not infringe or violate the requirements of section 37(2) of the Income-tax Act.

22. I now come to the argument challenging the constitutional validity of section 37(2) of the Income-tax Act. It is challenged on a number of grounds. In the first place, it is said that it violates Article 14 of the Constitution. In the second place, it is alleged that it violates Article 19 of the Constitution, specially clauses (f) and (g) thereof. In deciding these constitutional problems, I shall purposely refrain from making any attempt to summarise the constitutional law on the points. For in my view, a judicial decision, as a general rule, should avoid the temptation of making a summary, first because, all summaries including even the perfect ones, if there be any, if they are intended as a summaries, must suffer for what they leave out and in law nothing really can be left out as irrelevant for all purposes, and if they do not leave out anything then they no longer remain summaries. Secondly, constitutional principles are always live, far-reaching and, necessarily complex and are always bound to suffer by any over-simplified attempt to put them into any straight jacket of so-called formulae of neat seductive rules and categories.

23. I shall take up first the challenge under Article 14 of the Constitution. It is argued that this power of search and seizure without a warrant is an extensive, power and not to be easily assumed; then it is said that this extensive power to search and seize without warrant under the Income-tax Act can be used indiscriminately against any assessee and there is no classification reasonable or otherwise to guide the policy of the statute in respect of such search and seizure. For this purpose a comparison is drawn between the different sub-sections of section 37 of the Income-tax Act. Under sub-section (i) such powers to enforce discovery and inspection, attendance of witnesses, production of books and documents and issue of commissions as are vested in a Court under the Civil Procedure Code when trying a suit, are granted to the Income-tax authorities, such as, the Income-tax Officer, Appellate Assistant Commissioner, Commissioner and Appellate Tribunal. Sub-section (2) gives the Income-tax Officer, subject to the authority of the Commissioner to search and seize but does not specify when and in what cases. In other words, the argument is that without even taking resort to ordinary process of discovery, inspection and production of books of account and other documents the Income-tax Officer may under section 37(2) indiscriminately use the extensive power of search and seizure. This argument in short rests on two broad propositions, (1) it is a drastic power which is arbitrary, uncanalised and at the mercy of an executive officer, and (2) that there is no policy or guide in this statute to indicate as a basis of reasonable classification what particular classes of assessees will be singled out to be victims of such search and seizure.

24. In support of this argument the learned Additional Solicitor General for the applicant has relied on the trilogy of decisions of the Supreme Court under Sections 5(4) and 5(1), Taxation on Income (Investigation Commission) Act, 1947, namely, Surai Mall Mohta and Co. v. Visvanatha Sastri, 1955-1 SCR 448 : (AIR 1954 SC 545); Meenakshi Mills-Ltd. v. Visvanatha Sastri, 1955-1 SCR 787 : ((S) AIR 1955 SC 13) and Muthiah v. Commissioner of Income-tax, Madras 1955-2 SCR 1247 : ((S) AIR 1956 SC 269).

25. In Suraj Mall Mohta's case, 1955-1 SCR 448 : (AIR 1954 SC 545) section 5(4) of the Taxation on Income (Investigation Commission) Act was held to be discriminatory legislation offending against the provisions of Article 14 oft the Constitution and was, therefore, declared void and unenforceable. There Mahajan, C.J expressed the view that it was not possible to hold that all persons who evaded payment of income-tax and did not truly disclose all particulars or material facts necessary for their assessment and against whom the report was made under section 5(4) of the impugned Act by themselves formed a class distinct from those who evaded payment of Income-tax and came within the ambit of the ordinary section 34 of the Indian Income-tax Act. They were both evaders whether under section 34 of the Income-tax Act or under section 5(4) of the impugned Act and therefore such classification as evaders with no other distinctiveness was irrational. Vide the observations of Mahajan, C.J in 1955-1 SCR 448 at p. 461 : (AIR 1954 SC 545 at p. 552). In the Meenakshi case, 1955-1 SCR 787 : ((S) AIR 1955 SC 13) the Supreme Court dealt with the problem after the amendment of the Income-tax Act by the Amending Act XXXIII of 1954. It was again held by the Supreme Court by Mahajan, C.J that after coming into force of the Indian Income-tax Amendment Act, 1954 which operated on the same field as section 5(1) of the Taxation on Income (Investigation Commission) Act, 1947 and therefore, assuming the provisions of section 5(1) of the latter Act were based on a rational classification, such provisions had become void and unenforceable as being discriminatory under Article 14 of the Constitution. The result of Meenakshi case, 1955-1 SCR 787 : ((S) AIR 1955 SC 13) is that section 5(1) of the Taxation on Income (Investigation Commission) Act was declared ultra vires under Article 14 of the Constitution. In Muthiah's case, 1955-2 SCR 1247 : ((S) AIR 1956 SC 269) the Supreme Court again held that section 5(1) of the Taxation on Income (Investigation Commission) Act, 1947 was ultra vires the Constitution as it was discriminatory and violative of the fundamental right guaranteed by Article 14 of the Constitution by reason of the two amendments which were made in section 34 of the Indian Income-tax Act, one in 1948 by the enactment of the Income-tax and Business Profit Tax (Amendment) Act (Act XLVIII of 1948) and the other in 1954 by the enactment of the Indian Income-tax Amendment Act (Act XXXIII of 1954). Bhagawati, J. delivering the judgment of the Supreme Court in Muthiah's case 1955-2 SCR 1247; at p. 1255 : ((S) AIR 1956 SC 269 at p. 273) distinguished the Supreme Court decision in Thangal Runju Musaliar v. Venkatachalam Potti, 1955-2 SCR 1196 : ((S) AIR 1956 SC 246) by observing:—

“If the provisions of section 34(1) of the Indian Income-tax Act as it stood unamepded by Act XLVIII of 1948 (which corresponded with the provision of section 47 of the Travancore Act XXIII of 1121) had been the only provisions to be considered we would have reached the same conclusion as we did in Musaliar v. Potti. The position however in the present is materially affected by reason of the two amendments which were made in section 34 of the Indian Income-tax Act.”

26. This makes it necessary to notice the decision of 1955-2 SCR 1196 : ((S) AIR 1956 SC 246). There the impugned Act successfully met the challenge of Article 14 of the Constitution. The Supreme Court held in that case that section 5(1) of the Travancore Taxation on Income (Investigation Commission) Act of 1124 had to be read in juxta-position with section 47 of the Travancore Income-tax Act, 1121 and when so read was not discriminatory and did not violate fundamental right guaranteed under Article 14 of the Constitution. The importance of this decision lies in the fact that Bhagawati, J. at pages-1229–1230 of that report (SCR): (at p. 262 of AIR) observed:

“The principles underlying Article 14 of the Constitution are well-settled. The only difficulty which arises is in regard to the application of those principles to the facts of a particular case and the Court has to consider the terms of the impugned legislation having regard to the background and the surrounding circumstances so far as it may be necessary to do so in order to arrive at a conclusion whether it infringes the fundamental right in question.”

27. This observation makes it necessary for us to examine the terms of the impugned legislation, which is section 37(2) of the Income-tax Act in this case, and the “background and the surrounding circumstances” of such legislation. Mr. Daphtary, the learned Solicitor General has ably and forcefully contended that the Court can travel far and wide to examine the background and the surrounding circumstances. To do so, he has endeavoured to show that the Court has taken notice of such “background and surrounding circumstances”, (1) by affidavit and (2) by judicial notice as in Kedarnath Bajoria v. State of West Bengal, 1954 SCR 30 : (AIR 1953 SC 404) and (3) also from various other sources such as were considered in Hamdard Dawakhana v. Union of India, AIR 1960 SC 554 at pp. 559–60 : 1960-2 SCR 671 and Kathi Ranning Rawat v. State of Saurashtra, 1952 SCR 435 : (AIR 1952 SC 123). He therefore contends and quotes to explain the background and the surrounding circumstances of this-impugned section 37(2) of the Income-tax Act by (1) the report of the Income-tax Investigation Commission dated the 10th January, 1948 paragraphs 286 (page 131) and 295 emphasising the plea for power to search and seize as showing the urgent need and the birth struggles of section 37(2) of the Income-tax Act, (2) Budget Speech of 1956–1957 at pages 40–41 in Parliament reported also in 29th Volume of the Income-tax Report, (3) the Report of the Taxation Enquiry Commission 1953–1954, 2nd Volume page 201 and (4) finally the-provisions of the Finance Act, 1956 introducing section 37(2) of the Income-tax Act by section 20 thereof stating that it would come into effect from 1st May, 1956. In exploring the background and surruunding circumstances, Mr. Daphtary contends also that the fact has to be noticed that the present assessee's case was before the Income-tax Investigation Commission and was settled before such Commission proving thereby large scale evasion by the assessee. The preamble to the statute of the Taxation on Income (Investigation Commission) Act (Act XXX) 1947 mentions ‘evasion’ and refers to “the extent to which the existing law and procedure for assessment and recovery of such taxation is adequate to prevent the evasion thereof”. In fact the history of Section 37(2) of the Act shows that the new power to search and seize was the answer to stop the widespread evasion of taxes which had become notorious.

28. Before determining this challenge under Article 14 of the Constitution a few words on that Article will be necessary. It is no doubt well-settled today by a series of decisions which need not be recounted here, that the principles underlying that Article are sufficiently explored and laid bare. In fact, the Supreme Court said in Musaliar's case 1955-2 SCR 1196 : ((S) AIR 1956 SC 246) already quoted and in subsequent decisions, State of Jammu and Kashmir v. Ganga Singh, AIR 1960 SC 356 and Kondala Rao v. Andhra Pradesh State Road Transport Corporation, AIR 1961 SC 82 that the principles of Article 14 of the Constitution have been clearly and exhaustively laid down. While its principles are exhaustively explored, Article 14 is far from an extinct volcano and its unsuspected potentialities are liable to burst out in future constitutional battles. One argument that was raised before us is, if the same test or doctrine of reasonableness as applicable in Article 19 can be extended to Article 14 of the Constitution. In other words, the interesting point is whether the Courts in testing an impugned legislation under Article 14 of the Constitution as satisfying the test of reasonable classification applies the same standards of reasonableness as in the case of testing such legislation under Article 19 of the Constitution as satisfying the test of reasonable restriction. The Supreme Court in a series of decisions on Article 14, whose landmarks are Budhan Choudhury v. State of Bihar, 1955 SCR 1045 : ((S) AIR 1955 SC 191) and Ram Krishna Dalmia v. Mr. Justice S.R Tendolkar*, AIR 1958 SC 538, has definitely laid down that in determining the validity or otherwise of a statute the court has to examine whether such classification is or can be reasonably regarded as based on some intelligible differentia which distinguishes such persons or things grouped from those left out of the group and whether such differentia has a reasonable relation to the objects sought to be achieved by the statute. In the State of West Bengal v. Anwarali Sarkar, 1952 SCR 284 : (AIR 1952 SC 75) two classic tests were put forward (1) that the classification must be founded on an intelligible differentia which distinguishes those that were grouped together from others and (2) that the differentia must have a rational relation to the objects sought to be achieved by the Act. In other words, the differentia and the objects are distinct and there must be a nexus between them.

29. The question now raised here is whether the test that under Article 14 of the Constitution there must be a rational relation between the differentia and the objects sought to be achieved is introducing a kind of similar standard applicable to reasonable restriction contemplated in Article 19 of the Constitution. On a broad comparison between Article 14 and Article 19 of the Constitution and the specific language used in both these Articles, it is plain that no question of reasonableness arises on the language of Article 14 as distinguished from the specific words of reasonable restriction in the different subclauses of Article 19. In considering however if a statute is hit by Article 14 of the Constitution the Court considers its policy only in the limited sense of reasonable classification and nexus. Legislative policy in no other sense is under constitutional review by the Courts under Article 14. In considering if a statute is hit by Article 19 the Court will consider only the reasonableness of the restriction. Legislative policy only in the limited sense whether the restriction imposed by statute is reasonable in the public interest comes under constitutional review by the Courts under Article 19. The reasonableness in either Article has different frames of reference. For Article 14, reasonableness of classification and nexus is enough to save the statute whereas reasonableness of the actual restriction imposed on the fundamental right under Article 19 in the light of public interest, is all that is required. I am therefore not inclined to accept the charge that the Courts in India have unconsciously evolved the same yardstick of reasonableness, although calling it by different names, of reasonable restriction in Article 19 and reasonable classification and nexus in Article 14. A legislation may pass the test of reasonable classification and nexus under Article 14 and yet fail under Article 19 on the ground of unreasonable restriction. To attempt to equate a common standard of reasonableness both for Article 14 and Article 19 will be really to introduce in the Indian Constitution the entire doctrine of “due process” of the American law which the Supreme Court has repeatedly said does not apply to the Indian Constitution.

30. No invariable mechanical or rigid formula by which reasonable classification and nexus are to be judged under Article 14 of the Constitution can be invented. In Anwarali's case 1952 SCR 284 : (AIR 1952 SC 75) ‘speedier trial’ was not regarded as sufficient policy of classification, but in 1954 SCR 30 : (AIR 1953 SC 404), those very words with the addition ‘more effective punishment’ were regarded as sufficient policy. In the first case the statute failed and in the other the statute survived. Similarly in Musaliar case, 1955-2 SCR 1196 at pages 1238–39 : ((S) AIR 1956 SC 246 at p. 266) “substantial evaders” were held to be a class, rational enough and although the word ‘substantial’ was a vague expression, it passed the test against “the background and the surrounding circumstances”. In Kangshari Haidar v. State of West Bengal, AIR 1960 SC 457, Gajendragadkar, J. delivering the majority judgment upheld the validity of the impugned provisions contained in section 2(b) and proviso to section 4(a) of the West Bengal Tribunals of Criminal Jurisdiction Act 14 of 1952 under Article 14 of the Constitution even though the preamble to the Act referred to the ‘speedy trial’ of the offences.

31. These illustrations make it clear that the words ‘speedy trial’ are not by themselves magic tests by which it could be invariably said that speedy trial is never a sufficient policy of classification but they have to be taken in the context of the particular legislation, special facts and mischiefs intended to be remedied. Gajendragadkar, J. at page 459 in AIR 1960 SC 457 makes this point essentially clear by the following observation:—

“Thus the enunciation of the principles which flows from the fundamental rights enshrined in Article 14 now presents no difficulty; it is however in the application of the said principles that difficulties often arise. In applying the said principles to the different sets of facts presented by different cases emphasis may shift and the approach may not always be identical; but it is inevitable that final decision about the vires of any impugned provision must depend upon the decision which the court reaches having regard to the facts and circumstances of each case, the general scheme of the impugned Act and the nature and effect of the provisions the vires of which are under examination.”

32. This is a wholesome caution warning the courts not to adopt an inflexible formula in this respect. The principle of the test remains the same. But it is necessarily ambulatory in its reflections in each case and no dogmatic emphasis or any doctrinaire approach is possible.

33. It will therefore be wrong in this context to say that application of section 37(2) of the Income-tax Act to the class of evaders as such, is too vague a classification to meet the challenge of Article 14 in the context of this case. Shorn of all constitutional romanticism, search and seizure of books, papers and documents are only required for evaders who are evading tax and evading to procuss relevant books, documents and papers in that connection. The apparent strength of Mr. Sanyal's argument was drawn from the fact that the discretion in sections 37(1), and 37(2) may be used discriminatorily and therefore, it is offensive against under Article 14 of, the Constitution. Section 37(1) of the Act refers to, the powers of the Civil Court to compel production of documents and witnesses as an ordinary process of trial and gives those powers to the specified tax authorities. section 37(2) of the Income-tax Act giving the more extensive power of search and seizure in that context, sequence and juxtaposition can only be construed as meaning the power that is to be exercised where it is apprehended that powers in the section 37(1) are not likely to yield the result. That does not mean that first the powers under section 37(1) must be exhausted and then powers under section 37(2) are to be used for that might make search or seizure wholly ineffective. It means only this that if the taxing authorities mentioned in section 37 are, of the opinion and has reason to believe that search and seizure are necessary then only that power is to be used. No doubt it is true that section 37(2) does not expressly say that when the taxing authorities are of that opinion and reason that they should exercise the power to search and seize but that is left to their discretion and in exercising that discretion their act will be judged by the Courts in that light and whims of taxing authorities will certainly not be considered by Courts as due discretion. Whimsical acts will not amount to exercise of discretion and will not be bona fide and will be struck down as such but that does not make the statute unconstitutional. It has been laid down that such discretion or choice to refer to one or other procedure or authority is itself not discriminatory or violative of Article 14 of the Constitution. The Supreme Court decision in Niemla Textile Finishing Mill Ltd. v. The Second Punjab Tribunal, (S) AIR 1957 SC 329 is an answer to Mr. Sanyal's argument on this point. Bhagawati, J. in that case observed at pages 334–35 as follows:—

“It follows from this survey of the relevant provisions of the Act that the different authorities which are constituted under the Act are set up with different ends in view and are invested with any powers and duties necessary for the achievement of the purposes for which they are set up. The appropriate Government is invested with discretion to choose one or the other of the authorities for the purpose of investigation and settlement of industrial disputes and whether it sets up one authority or the other for the achievement of the desired ends depends upon its appraisement of the situation as it obtains in a particular industry or establishment.”

34. Then again Bhagawati, J. goes on to observe at page 335:

“It is not necessary that all these steps should be taken seriatim one after the other. Whether one or the other of the steps should be taken by the appropriate Government must depend upon the exigencies of the situation.”

35. Again Bhagawati, J. observed at pages 335–36:—

“What step would be taken by the appropriate Government in the matter of industrial dispute must therefore be determined upon the surrounding circumstances and the discretion vested in the appropriate Government for setting up one or the other of the authorities for the purpose of investigation and settlement of industrial disputes must be exercised by it having regard to the exigencies of the situation and the objects to be achieved. No hard and fast Rules can be laid down as to the setting up of one or the other of the authorities for the purpose of bringing out the desired end which is the settlement of industrial disputes and promotion of Indus trial peace and it is hardly legitimate to say that such discretion as is vested in the appropriate Government will be exercised with an evil eye and an unequal hand.”

36. These observations are of signal importance in this case. The discretion that is vested in the taxing authorities to use powers either under sub-section (1) or under sub-section (2) of section 37 of the Income-tax Act, therefore cannot be said to be a violation of the equal protection of laws or equality of laws guaranteed by Article 14 of the Constitution.

37. Finally on this point the Supreme Court decision in Pannalal Binraj v. Union of India, 1957 SCR 233 : ((S) AIR 1957 SC 397) and Bidi Supply Co. v. Union of India, 1956 SCR 267 : ((S) AIR 1956 SC 479) must be noticed. In Pannalal Binjraj case, 1957 SCR 233 : ((S) AIR 1957 SC 397) Section 5(7-A) of the Indian Income-tax Act, was held to be constitutionally valid under Articles 14 and 19(1)(g) of the Constitution. Pannalal Binjraj's case, 1957 SCR 233 : ((S) AIR 1957 SC 397) meets many of the arguments which are put forward before us here. The challenge on the ground of constitutional validity of the impugned section of the Income-tax Act was successfully met not only by reference to the preamble of this very Income-tax Act which only mentioned “an Act to” consolidate and amend the law relating to Income-tax and supertax” and the purpose of this Income-tax Act but also with reference to the preamble of the first Indian Income-tax Act of 1886 (Act 2 of 1886). See the observations of Bhagawati, J. at page 255 of the Supreme Court Reports: (at p. 407 of AIR). It was then held that the right conferred on the assessee by section 64(1) and (2) of the Income-tax Act of 1922 was not an absolute right and must be subject to the primary object of the Act itself, namely, the assessment and collection of Income-tax; and where the exigencies of tax collection so required, the Commissioner of Income-tax or the Central Board of Revenue had the power under Section 5(7-A) of the Act to transfer his case to some other officer outside the area where he resided or carried on business and that any difference in his situation created thereby as compared to that of others similarly situated would be no more than a minor deviation from the general standard and would not amount to denial of equality before the law. At page 257 of the same Report (SCR): (at p. 408 of AIR) Bhagawati, J. observed:

“It may also be remembered that this power is vested not in minor officials but in top-ranking authorities like the Commissioner of Income-tax and the Central Board of Revenue who act on the information supplied to them by the Income-tax Officers concerned. This power is discretionary and not necessarily discriminatory and abuse of power cannot be easily assumed where the discretion is vested in such high officials, (vide Matajog Dobey v. H. C. Bhari , 1955-2 SCR 925 at p. 932 : ((S) AIR 1956 SC 44 at p. 48)). There is moreover a presumption that the public officials will discharge their duties honestly and in accordance with the rule of law”.

38. It was therefore finally held by the Supreme Court in Pannalal Binjraj's case 1957 SCR 233 : ((S) AIR 1957 SC 397) that a discretionary power vested in the authorities to override the statutory right of the assessee must be distinguished from the discretion that has to be exercised in respect of fundamental right guaranteed by the Constitution and the two tests to judge where it was discriminatory would be (1) whether it admitted all the possibilities of real and substantial discrimination and (2) whether it impugned on the fundamental right guaranteed by the Constitution and so judged, the discretion vested in the authorities by Section 5(7-A) of the Act was not at all discriminatory nor did the section impose any unreasonable restriction on the fundamental right to carry on trade or business. The decision therefore saved the impugned section of the Income-tax Act there from the attacks both under Article 14 as well as under Article 19 of the Constitution.

39. It will be recalled that Pannalal Binjraj's case 1957 SCR 233 : ((S) AIR 1957 SC 397) was really an aftermath of the decision of the Supreme Court in 1956 SCR 267 : ((S) AIR 1950 SC 479), where the majority judgment at p. 276 (of SCR): (at p. 484 of AIR) delivered by Das, C.J observed that it was not necessary for the purpose of this case to decide whether the constitutional validity of sub-section (7A) of section 5 could be supported on the principle of reasonable classification laid down by this court or whether the Act laid down any principle for guiding or regulating the exercise of discretion by the Commissioner or Board of Revenue or whether the sub-section conferred an unguided and arbitrary power on those authorities to pick and choose individual assessee and place that assessee at a disadvantage in comparison with other assessees because it was enough for the purpose of this case to say that the omnibus order made in this case was not contemplated or sanctioned by sub-section (7A) and that, therefore the petitioner was still entitled to the benefit of the provisions of sub-sections (1) and (2) of section 64. Bose, J. delivering the dissentient judgment in Bidi Supply case 1956 SCR 267 : ((S) AIR 1956 SC 479) held Section 5(7-A) of the Indian Income-tax Act ultra vires Article 14 of the Constitution and so also section 64(5)(b) in so far as it made the order under section 5 (7A) inviolate.

40. The attempt to distinguish Pannalal Binjraj's case 1957 SCR 233 : ((S) AIR 1957 SC 397) from the present case on the ground of distinction between fundamental and statutory rights cannot in my opinion succeed not only because it is debatable under our Constitution whether it is a fundamental right to be protected against search and seizure as under the American Constitution, and which I shall presently discuss in the light of the Supreme Court authority on the point, but also because the principle laid down in Pannalal Binjraj's case, 1957 SCR 233 : ((S) AIR 1957 SC 397) particularly by Bhagawati, J. at pages 255–56 (of SCR): (at pp. 407–408 of AIR) of the report clearly shows the hierarchy and the scheme of the Income-tax Act which contains its own protection against any charge of inequality under Clause 14 of the Constitution. For the answer to the argument made there that the power vested with the Commissioner of Income-tax or the Central Board of Revenue was a naked and arbitrary power unguided and uncontrolled by any Rules, see the observations of Bhagawati, J. at page 254 (of SCR): (at p. 407 of AIR).

41. The other arguments under Article 14 of the Constitution proceeded on the ground of arbitrary character of the statutory provisions for search and seizure in section 37(2) of the Income-tax Act. The challenge on the ground of unreasonable restriction is also made under Article 19(1)(f) and (g) of the Constitution. In short the argument is what is arbitrary is also necessarily unreasonable. I shall discuss this question of arbitrariness and unreasonableness while dealing with the applicant's attack under Article 19 of the Constitution.

42. This line of argument may be summarised briefly with a view to confine the discussion on the points raised. The act of search and seizure under section 37(2) of the Income-tax Act is challenged as unreasonable restriction within the meaning of Article 19(1)(t) and (g) of the Constitution, (1) first because it leaves the matter of much drastic power to the satisfaction only of an executive officer, (2) secondly because no provision for giving a hearing or representation to the aggrieved party is made by the statute either before or after the search and seizure nor does it give even a right of appeal, and (3) thirdly because no provision is made in the statute for the return of the documents and books seized.

43. The broad answer to this line of argument may be given at the outset before discussing the details and the case law on the point. The statutory provision for search and seizure is not, prima facie on the language of the impugned Section 37(2) of the Act, an arbitrary, naked and unregulated power. This power is circumscribed and regulated by a number of express conditions each, one of which is important. The first condition is that this power is subject to Rules that may be made under this section. Secondly, this power can only be exercised upon special authorisation by the Commissioner himself, who is the highest executive officer of the Income-tax Department. Thirdly, the Income-tax Officer has to state his opinion that the documents are useful for or relevant to any proceeding under the Act. Fourthly, the provision of the Code of Criminal Procedure relating to searches shall apply so far as it may to searches under section 37(2) of the Income-tax Act. Therefore, the broad allegation that the statutory provision for search and seizure under section 37(2) of the Income-tax Act is an absolute, naked, arbitrary and unregulated power cannot succeed. Whether these regulatory conditions are enough, which is a totally different question, I shall presently discuss. I cannot however help adding that the constitutional enthusiasm for challenging naked powers stimulated the normally sedate Solicitor-General to make the unconventional argument that sufficient clothes and nakedness were not absolute but purely relative concepts determined by the fashions of the place and occasion. What is enough on the seabeach, says he, is not enough for Chowringhee, or Connaught Circus or Malabar Hills. If by this analogy, he was doing no more than restating in the garb of constitutional theory, Carlyle's philosophy of clothes in Sartor Resartus, few will dispute his admirable proposition, but if he suggests thereby that all assessees necessarily must stand and shiver on the sea beach of taxation before the naked powers of the Commissioner of Income-tax blowing full blast on the sparsely clothed victim with the wind not tempered to the regularly and annually shorn lamb, then many will join issue with him. It is not necessary to go to that length because S. 37(2) as I have said is not naked power but guided by conditions and limitations, reasonable and suited to the occasion.

44. I now come to deal with the case law on the point. It is contended on behalf of the assessee that authorisation by a high executive officer is not enough to save this section because in Virendra v. State of Punjab, 1938 SCR 308 : ((S) AIR 1957 SC 896), even the satisfaction of the State Government was not considered by the Supreme Court as sufficient when there was the absence of two safeguards, namely, (1) no time limit, and (2) no representation to the State Government. See the observations at p. 327 of the report (SCR): (at page 903 of AIR). References were also made to the Supreme Court decision in (1) AIR 1960 SC 554 : 1960-2 SCR 671, (2) Tika Ramji v. State of U.P, 1956 SCR 393 at pp. 446–47 : ((S) AIR 1956 SC 676 at p. 711) and also (3) Raghubir Singh v. Court of Wards, Ajmer, 1953 SCR 1049 at pp. 1052–55 : (AIR 1953 SC 373 at pp. 374–75 of AIR), where subjective determination of the executive officer and the Chief Commissioner's discretion were held not to save the statute. In the last reference the Sugarcane Commissioner's powers were challenged and the Supreme Court held that the right of appeal to the State Government was a sufficient safeguard at p. 447 of the report (SCR): (at p. 711* of AIR). Reference was also made to Dwarka Prasad v. State of Uttar Pradesh 1954 SCR 803 at pp. 311–3 : (AIR 1954 SC 224 at pp. 227–228) and the State of Rajasthan v. Nath Mai, 1954 SCR 982 at p. 987 : (AIR 1954 SC 307 at p. 308).

45. Now right of appeal or representation is in my view not an invariable and indispensable test in every case. It is less the test of unreasonableness when the order complained, is, itself, passed by the highest executive officer such as, the Commissioner of Income-tax. As laid down in Arunachala Nadar v. State of Madras, AIR 1959 SC 300, by the Supreme Court it is necessary to emphasise that there can be no abstract and rigid formula or standard by which to judge what is reasonable restriction and this must be judged in accordance with the facts of each case and in the light of the particular statute concerned keeping in view its object and purpose. The authority on which I rely to answer the assessee is, again 1957 SCR 233 : ((S) AIR 1957 SC 397) and the observations of Bhagawati, J. at page 257 (of SCR): (at p. 408 of AIR), about power vested in top-ranking officials, which I have already quoted elsewhere in this judgment on another point. Again at page 261 (of SCR): (at p. 410 of AIR), Bhagawati, J. in defending the constitutional validity of Section 5(7-A) of the Income-tax Act against the charge of naked, arbitrary and uncontrolled power observed as follows:

“The power is guided and controlled by the purpose which is to be achieved by the Act itself viz., the charge of income-tax, the assessment and collection thereof, and is to be exercised for the more convenient and efficient collection of the tax.”

46. On the strength of the above observations and other observations at page 252 (of SCR): (at p. 406 of AIR) of Bhagawati, J. in Pannalal Binjraj's case, 1957 SCR 233 : ((S) AIR 1957 SC 397), it can in my view be successfully contended that if Section 5(7-A) of the Income-tax Act relating to transfer of cases is good in Pannalal Binjraj's case, 1957 SCR 233 : ((S) AIR 1957 SC 397), with discretion vested in high, official and the exigency of tax collection as a guide, then S. 37(2) with express limitations and qualifications of the very same Income-tax Act, such as, I have stated above, must be held to be good. In one of the more recent decisions of the Supreme Court on this point in Diwan Sugar and General Mills (Private) Ltd. v. Union of India, AIR 1959 SC 626, Wanchoo, J. dealing with the Essential Commodities Act, 1955 and Sugar Control Order, 1955 and with similar argument there advanced that the factories were being compelled to sell below the cost of production and the price fixed by the Central Government was arbitrary and there was no safeguard against the abuse of power, observed at page 632 in dealing with right of appeal and/or representation:

“So far as Central Government exercises its power in the manner provided by the Act and the Order, and this is what it appears to have been done, it cannot be said any further safeguard is necessary in the form of appeal or otherwise. The safeguards are to be found in clause 5 itself, namely, that the Central Government must give consideration to the relevant factors mentioned therein before fixing the price, and thus those factors are a check on the power of the Central Government if it is ever minded to abuse the power. We are therefore of opinion that the impugned notification is not an unreasonable restriction on tile petitioner's right to carry on trade under Article 19(1)(g).”

47. These observations show, that even where the allegation was that a price fixed was so arbitrary as to be below the cost of production which might involve loss of entire business and shutting: down of factory and thus affect the fundamental right of carrying on business, the statute so doing could not be challenged as unreasonable under Article 19 despite the absence of right of appeal or representation in the statute, if the Act itself contained sufficient safeguards. It is all the more so here under section 37(2) of the Income-tax Act where express safeguards are engrafted in the Act itself and whereby the nature of the problem involved no right of appeal or representation before seizure no investigation can he given for that will frustrate the very object of such search and seizure and will make them nugatory. Here the safeguards are (1) the special authorisation by the Commissioner who is the highest executive authority subject to the Central Board of Revenue, (2) the Income-tax Officer's opinion and reasons that the documents concerned are relevant to or useful for the purpose of the assessment, (3) the provisions of the Criminal Procedure Code relating to searches shall be applied to such income-tax searches and (4) subject to any Rules made in this behalf. On this point; reference may also be made to the observation of the Supreme Court in AIR 1960 SC 554 at p. 559 and of the Special Bench decision of this Court in Paschim Banga Malbahi Cycle Mazdoor Union v. Commr. of Police, Calcutta, reported in 65 Cal WN 213 at p. 232 : (AIR 1961 Cal 125 at p. 135).

48. I, therefore, hold that even without right of representation or right of appeal, section 37(2) of the Income-tax Act is saved from the charge of constitutional invalidity on the ground of unreasonable restriction within the meaning of Article 19(1)(f) of the Constitution.

49. But then it may not be even a case where there is no right of representation or appeal. The scheme of the Income-tax Act for this purpose in this respect is relevant as was also thought in Pannalal Binjraj's case, 1957 SCR 233 : ((S) AIR 1957 SC 397), by the Supreme Court. I shall therefore make reference to some of the sections of the Income-tax Act to support a possible right of representation even though such right is not expressly conferred by Section 37(2) of the Income-lax Act. Section 5(7)(ii) of the Act in describing the Income-tax authorities lays down that:

“For the purposes of this Act, Income-tax. Officer shall be subordinate to the Director of Inspection, the Commissioner of Income-tax and the Inspecting Assistant Commissioner of Income-tax within whose jurisdiction they perform their functions.”

50. Therefore, the administrative sub-ordination of the Income-tax Officer to the Commissioner of Income-tax will always enable a party, aggrieved by the actual search and seizure by the Income-tax Officer concerned, to represent to the higher administrative officer, the Commissioner of Income-tax. It is contended as against this view that here the authority to search is of the Commissioner himself and therefore, there can be no right of representation to the Commissioner again. That argument is unsound from two points of view. First, this argument fails to take note of the fact that the representation is not at all against the Commissioner's own authorisation, but against the actual search and seizure made of certain specific books and documents by the Income-tax Officer. Secondly, even if representation is intended against the order of authorisation, that act itself being an administrative act can be reviewed by the officer himself. Again Section 5(7-B) of the Income-tax Act authorises the Commissioner to “issue such instructions as he thinks fit for the guidance of any Income-tax Officer subordinate to him in the matter of any assessment”. Therefore the power of the Commissioner to issue instructions even after he has issued a letter of authority to search and seize remains. Again under Section 5(8) of the Income-tax Act all officers and persons employed in the execution of the Act shall observe and follow the orders, instructions and directions of the Central Board of Revenue. Therefore, an aggrieved party has even the Central Board of Revenue as a final resort for orders, instructions and directions in respect of any search and seizure by which the party feels himself aggrieved. Again under Section 21 of the General Clauses Act, an order can always be reviewed by the person who makes it. It may be recalled here that under S. 37(2) the search and seizure have to be made only in connection with “any proceeding under Act”. In other words, there must be some assessment proceeding under this Act or some proceeding under the Act and the actual seizure will therefore naturally be an order by the Income-tax Officer himself seizing the books and documents and therefore will be an order in the course of a proceeding under the Act. That being so, the provisions of Section 33-A of the Income-tax Act can be attracted against the Income-tax Officer's order of seizure. This section deals with the power of revision by the Commissioner himself. The relevant portion of S. 33-A for the purposes of this judgment is quoted below:

“Section 33-A(1) — The Commissioner may of his own motion call for the record in proceeding under the Act in which an order has been passed by authority subordinate to him and may make such enquiry or cause such enquiry to be made, and subject to the provisions of this Act, may pass such order thereon not being an order prejudicial to the assessee as he thinks fit.”

51. There are certain provisos which follow with which we are not concerned. Therefore it follows from S. 33-A(1) that if an aggrieved party has really a genuine grievance he can always ask the Commissioner to move under S. 33-A for revision of the Income-tax Officer's order seizing the books and documents.

52. section 37(2) of the Income-tax Act again makes it expressly clear that “the provision of the Code of Criminal Procedure, 1898 relating to searches shall apply as far it may be to searches under this section”. This at once brings us to the consideration of Sections 96 to 103 of the Cr PC, and particularly to the “general provisions relating to searches” contained in sections 101, 102 and 103 of the Cr PC. Section 103 makes it obligatory that such search must be in the presence of two or more respectable inhabitants of the locality in which the place to be searched is situated and that such search shall be made in their presence and list of all things seized in the course of such search shall be prepared by the officer and signed by such witnesses. That means that the order of seizure must be in writing and signed by witnesses. Therefore, the Income-tax Officer's seizure must always be evidenced by a search list signed by witnesses and will be an “order” in “a proceeding under the Income-tax Act”. Such publicity and attestation by independent witnesses are also in my view a safeguard against arbitrary conduct of the officer concerned.

53. In order to get out of the rigour of the decision in Diwan Sugar Mill's case, AIR 1959 S.C 626, the learned Additional Solicitor General relied on the decision of 1954 S.C.R 982 : (AIR 1954 SC 307) where the last portion of clause 25 of the Rajasthan Foodgrains Control Order, 1949 providing for requisition and disposal of stocks at the rate fixed for the purpose of Government procurement was held by the Supreme Court to violate Article 19(1)(f). But that case proceeded on the basis also of Article 31(2) of the Constitution and is to be distinguished on the ground that it contained no limitations, guides or qualifications such as, were to be found in Diwan Sugar Mills' case, AIR 1959 SC 626 and as are present in section 37(2) of the Income-tax Act.

54. The question of reasonableness or reasonable restriction is a relative question. In saving section 25(1)(c) of the Bihar Mica Act from the challenge under Article 19(1)(f) and (g) of the Constitution the Supreme Court in Mineral Development Ltd. v. State of Bihar, AIR 1960 S.C 468 expounded the whole law on the subject at page 470 by quoting the following classical observation by Patanjah Sastri, C.J in the State of Madras v. V.J Row, 1952 SCR 597 at 607 : (AIR 1952 SC 196 at p. 200):

“It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned and no abstract standard, or general pattern of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restriction imposed, the extent and legitimacy of the evils sought to be remedied thereby, the disproportion of the imposition, the prevailing condition at the time, should all enter into the judicial verdict.”

55. Taking therefore an overall view of the various considerations, leading to this statutory amendment by the introduction of section 37(2) of the Income-tax Act against the background of large scale evasion of taxes and the need for preventing such evasion and for providing power of searching and seizing documents and books of account for the purposes of assessment, as exemplified from the report of the Income-tax Investigation Commission dated the 10th January, 1948, the Budget Speech of 1956–1957, the Taxation Enquiry Commission's Report 1953–1954 (Second Volume), to which reference has already been made before and the circumstance that there was evasion in fact in this case which led to the applicant's case being considered by the Income-tax Investigation Commission where a settlement was reached regarding such evasion, I have come to the conclusion that section 37(2) of the Income-tax Act is neither constitutionally unreasonable nor arbitrary even though the power is drastic. It follows from this origin and context that the power is to be used where the normal procedure under section 37(1) of the Income-tax Act will not achieve the object of production of documents and the books of account because that is the very reason why S. 37(2) was introduced. I am therefore satisfied that this impugned section 37(2) of the Income-tax Act passes the test of reasonable restriction under Article 19(1)(f) and (g) of the Constitution as well as the test of classification under Article 14 of the Constitution in the light of the preamble to the older Income-tax Act as referred to in Pannalal Binjraj's case, 1957 SCR 233 : (S) AIR 1957 SC 397), and for the exigency of tax collection to be used and applied when the normal procedure under section 37(1) fails or is apprehended to fail as in the case of admitted evasion, to produce the books and documents.

56. The more fundamental question raised by the learned Solicitor General is that search and seizure cannot at all come under fundamental right as enshrined in Article 19 of the Constitution. He relied in support of his argument on the decision of the Supreme Court in M.P Sharma v. Satish Chandra, 1954 S.C.R 1077 : (AIR 1954 SC 300). This decision is an authority on two points, namely (1) whether a compelled production of incriminating document by a person against whom a First Information Report has been made is testimonial compulsion within the meaning of Article 20(3) of the Constitution and (2) whether protection against search and seizure can at all be claimed as a fundamental right under Article 19 of the Constitution. The first question we are told by both the learned Solicitor General and the Additional Solicitor General is under review by a Full Bench of the Supreme Court, but the second point settled by Shaima's decision, 1954 SCR 1077 : (AIR 1954 SC 300) is not under review by the Supreme Court. At page 1096–1097 (of SCR): (at p. 306 of AIR), Jagannadhadas, J. in 1954 S.C.R 1077 : (AIR 1954 SC 300) observed as follows:—

“A power of search and seizure is in any system of jurisprudence an overriding power of the State for the protection of social security and that power is necessarily regulated by law. When the Constitution makers have thought fit not to subject such regulation to constitutional limitations by recognition of a fundamental right to privacy analogous to the American Fourth Amendment, we have no justification to import it, into a totally different fundamental right by some process of strained construction.”

57. The American Fourth Amendment in the American Constitution expressly provides:—

“The right of the people to be secure in their persons, houses, papers and effects against unreasonable searches and seizures, shall not be violated, and no warrant shall issue, but upon probable cause, supported by oath or affirmation and particularly describing the place to be searched, and the persons or things to be seized.”

58. The reasons for the decision of the Supreme Court for coming to this conclusion were based not only on the distinction between the American and the Indian Constitutions but also upon the principle stated by Jagannadhadas, J. at pages 1081–1082 (of SCR): (at p. 302 of AIR) where the learned Judge observed:—

“But a search by itself is not a restriction on the right to hold and enjoy property. No doubt a seizure and carrying away is a restriction of the possession and enjoyment of the property seized. This however is only temporary and for the limited purpose of investigation. A search and seizure is, therefore only a temporary interference with the right to hold the premises searched and the articles seized. Statutory regulation in this behalf is necessary and reasonable restriction cannot per se be considered to be unconstitutional. The damage any caused by such temporary interference if found to be in excess of legal authority is a matter for redress in other proceedings. We are unable to see how any question of violation of Article 19(1)(f) is involved in this case in respect of warrants in question which purport to be under the first alternative of section 96(1) of the Cr PC.”

59. This decision and this particular observation of the Supreme Court in M.P Sharma's case, 1954 S.C.R 1077 : (AIR 1954 SC 300) bind us. That represents the law as it now stands relating to search and seizure. It is not open, therefore, for argument that search and seizure infringed the fundamental rights under Article 19(1)(f) and (g) of the Constitution. The inspiring history of the rightful prejudice against search and seizure as a violation of individual's personal liberty and property, sanctified by a long line of highest judicial decisions beginning with (1765) 19 State Tr 1029 speaking eloquently against exploratory crusade and fishing expedition against person's property by the fiat of executive interference without even a warrant from a Court or a Magistrate, has unfortunately become meaningless in the present Indian context. An Indian's home is not a cased but remains a mud hut which must shudder and rated in the present dispensation at the slightest breeze blowing from the Commissioners of Income-tax and the breeze need not have even a warrant of a Court or a Magistrate to warm it. Although the main ground given in the Supreme Court decision in M.P Sharma's case was the absence of the American Fourth Amendment provisions in our Indian Constitution, yet an attempt was made before us to argue that this absence is explained by the fact that the structure in, and exceptions, under Article 19 of the Indian Constitution are logically different and the framers of the Indian Constitution did not think it any more necessary to include the American Fourth Amendment because they thought that it was otherwise provided for under the doctrine of reasonable restriction in respect of property and business under Article 19 of the Indian Constitution. But as I said, this argument was no longer available after the clear decision in M.P Sharma's case, 1954 SCR 1077 : (AIR 1954 SC 300). I am, therefore, bound to hold on this authority of the Supreme Court that this search and seizure under section 37(2) of the Income-tax Act cannot be said to infringe any fundamental right under Article 19 of the Constitution.

60. The argument that absence of any provision for the return of the documents in section 37(2) of the Income-tax Act makes it an unreasonable restriction does not also appear to be sound. It is argued that as the statute makes no provision for the return of documents, the taxing authorities, once they seize the books and documents, they can retain them for ever and indefinitely. I am not impressed by this sinister possibility. section 37(2) of the Income-tax Act makes it clear that this search or seizure is stamped with the purpose of “any proceeding under this Act” expressly mentioned in section 37(2)(1). Therefore, it is reasonable to infer and it is proper to interpret that the right to search and seize books of account and documents only exists so long as there is “a proceeding” under the Income-tax Act. Therefore, it must follow when the proceeding is over the books and documents can no longer be retained and seized but must be returned. As I have already indicated from an analysis of the different sections of the Income-tax Act and from tile fact that the actual seizure must be by an order of the Income-tax Officer, an application for return of the books and documents seized can always be made by the assessee or aggrieved party when the proceeding under the Act is over either to the Income-tax Officer or to the Commissioner. Similarly even under section 37(1) of the Income-tax Act where production of books and other documents can be compelled, no express provision is made for their return but that power must be understood as only enduring till the pendency of the proceeding under the Act. In fact, the Civil Procedure Code particularly makes no provision for return of the documents produced under subpoena but that does not make it an unreasonable restriction within the meaning of Article 19 of the Constitution. In this respect section 517 of the Cr PC and Rules 243 and 251 of the Criminal Rules and Orders are also relevant. I am satisfied from the provisions of the Income-tax Act, which I have elsewhere analysed, that once the proceeding under the Act is over, the taxing authorities have no further power to seize or retain the books and documents and must return them.

61. For these reasons I hold that the challenge to the present search and seizure of documents and papers fails (1) under Article 14 of the Constitution; (2) under Article 19(1)(f) and (g) of the Constitution and (3) also on the statutory interpretation of section 37(2) of the Income-tax Act. The petition is dismissed and I discharge the Rule and vacate the interim orders. There will be no order as to costs.

62. Let the Status quo be maintained for four weeks from today.

63. Let the order be drawn up expeditiously.

Sinha, J.:— The petitioner No. 1 is the firm of Surajmull Nagarmull. The petitioners Nos. 2 to 7 and 9, are partners of the said firm. The petitioner No. 8 is the widow of one K.D Jalan, a partner of the firm since deceased. This application is in respect of action taken by the Income-Tax Authorities under the provisions of Section 37(2) of the Indian Income-tax Act, 1922 (hereinafter referred to as the “Act”). The relevant part of that provision has been set out in the judgment of Mukharji.

64. Sub-section (1) of section 37 grants to the Income-tax Officer etc., the same powers as are vested in a Court under the Code of Civil Procedure, 1908 (V of 1908) when trying a suit, for the purposes of ordering discovery and inspection, and enforcing the attendance of witnesses and examining them on oath, compelling the production of books of account and other documents and issuing commissions. Sub-section (3) deals with the power of impounding books and documents. Sub-section (4) lays down that all proceedings under section 37 will be deemed to be judicial proceedings within the meaning of sections 193 and 228 and for the purposes of section 196 of the Indian Penal Code.

65. On the 4th July, 1956 the Commissioner of Income-tax, the respondent No. 1, issued an authorisation, in favour of the respondent No. 2 under the provisions of section 37(2) of the said Act. The relevant part thereof has been set out in the judgment of Mukharji, J.

66. On the same date, at about 3 P.M the respondent No. 2 accompanied by other officers entered the premises No. 61, Harrison Road for the purpose of carrying out search and seizure. I may mention here that simultaneously, a search was conducted by the Customs Authorities but we are not concerned with that in the present application. Before I proceed further, it is necessary to mention the topography of the Harrison Road houses mentioned above. Premises Nos. 61 and 63/1, Harrison Road, really form part of the same building, although it has been partitioned so as to form two separate municipal premises. Access to both premises can be had from a common entrance. Premises No. 63, Harrison Road is a triangular shaped plot of open land, containing C.I sheds used as motor garages. It may be observed that the letter of authority mentioned above, related to premises Nos. 57 and 61 Harrison Road or other places connected therewith. It appears that upon being shown the above authorisation, certain objections were raised and at about 4-30 P.M a similar letter of authority issued by the respondent No. 1 was produced, relating to premises No. 63, Harrison Road or other places connected therewith. The premises No. 63/1, Harrison Road, is a three-storeyed house in which, it is stated, that the petitioner No. 5 and his family reside. No authorisation was ever issued, expressly mentioning this premises. It is stated in the petition that on the strength of the authorisation above-mentioned, premises No. 61, as well as premises No. 63/1, Harrison Road were searched and books, documents and papers were seized, and after making an inventory thereof, some of them were removed. On the 7th July, 1956 a certain proposal was made on behalf of the petitioner and accepted by the Income-tax authorities. The said agreement is in writing, and a copy thereof is Ex. ‘G’ to the petition. I consider this document to be of some importance and set it out below:

The Income-tax Officer,

(Central) Cirole-1, VI, VII & X.

In course of the search that you have been carrying out at our premises at No. 63, Harrison Road, Calcutta and our other adjoining premises, we find that you require several books of accounts, documents, letters etc., in addition to those which you have already seized and for which you have already prepared regular inventories copies of which have been supplied to us. The Search is going on for the last three days and the papers and documents etc., still to be listed are so numerous and voluminous that it may (take?) a couple of days more if complete inventories are to be taken of the papers and documents that still remain to be listed. We have been completely exhausted by the search and are unable to sit with you any longer to complete the onerous task of listing the papers and documents.

2. We, therefore, request you to please put all the papers and documents, that have not yet been listed in steel trunks which will be sealed jointly by us as well as by you. You may remove these trunks to our office. We undertake to attend your office on the 17th of July, 1956 at 12 noon and at such other time on such other dates as the preparation of the list may require, when the seals will be opened in far presence and inventories of documents and papers prepared. We are agreeable that in case we fail to attend on the date or dates specified above you will be at liberty to break open the seals and prepare the necessary inventories and send to us copies thereof in due course and we agree to accept such inventories as correct and complete in all respects.

The above suggestion has been made by me, Shri D.N Jalan, on behalf of myself and Messrs Soorajmull Nagarmull and by me Shri J.P Gupta on behalf of all the partners of Messrs Soorajmull Nagarmull.

All the documents and papers ets., have been placed in 14 (fourteen) Steel Trunks and one gunny bag and sealed jointly with our seal and your seal.

Sd. J.P Gupta.

The above suggestion has been made by Shri D.N Jalan and Shri J.P Gupta the latter claiming to act for all the partners of Messrs Soorajmull Nagarmull and has been accepted by us.

I.T.O, Central Circle I………

I.T.O, Central Circle VI………

I.T.O, Central Circle VIII……”

67. Pursuant to the above agreement, books, documents and papers, together with shares, debentures and title deeds which were seized, but of which no inventory was made, were put into 14 steel trunks and one gunny bag, sealed on behalf of the parties, and were carried away by the In-come-tax Authorities. It will be observed that in the letter set out above, reference has been made to “premises at No. 63, Harrison Road, Calcutta and our other adjoining premises”. Thereafter, the petitioners made this application and a rule was issued by me on the 8th July, 1956 upon the respondents to show cause why a writ in the nature of mandamus should not be issued, commanding them to return the documents, papers and books mentioned in the petition and seized from premises Nos. 61 and 63/1, Harrison Road, Calcutta, in respect of some of which an inventory had been made, and some of which have been kept in sealed trunks and gunny bags, and to forbear from opening the said boxes etc., and from taking any further steps in the matter. On the 20th July, 1956 it was ordered by me that without prejudice to the contentions of the parties, an inventory would be made of all the goods, and they should all be put back into sealed boxes, pending further orders. This has now been done. The matter thereafter came up for hearing before me on 20th January, 1958 and after the hearing had progressed to a certain extent, I felt that it was necessary to make an order under Rules 2 and 3 of Chapter V of the Original Side Rules, referring the matter to the learned Chief Justice to constitute a larger Bench. Such a Bench has now been constituted and the matter has been heard by us.

68. Mr. H.N Sanyal, the Additional Solicitor-General who argued the matter with great ability on behalf of the petitioners, has taken the following points:

(1) That the provisions of sub-section (2) of section 37 of the said Act are violative of Article 19(1)(f) and (g) of the Constitution because:—

(i) Power has been given to executive authority which is naked, arbitrary and uncanalised, dependent upon the subjective satisfaction of such an authority, without any rules and regulations to guide him in the exercise of it;

(ii) No provision is made for making a representation, objecting to the arbitrary exercise of the said powers by an executive authority. There is also no provision for making any application in revision or appeal;

(iii) There is no provision for the return of documents etc., which may be retained for an indefinite period;

(iv) That it applies, not only to assessees but also to outsiders, whose books and documents etc., may be searched for and seized and retained for an unspecified time, without even the right to object to the same, or to ask for their return.

(v) That the drastic procedure imposed thereto constitutes an unreasonable restriction on the fundamental rights of the petitioner and other citizens of India under Article 19(1)(f) and (g) of the Constitution.

(2) That the provisions are violative of Article 14 of the Constitution, being discriminatory, because:—

(i) The provisions of sub-sections (1) and (2) are intended to achieve the same purpose, but the provisions of sub-section (2) are immensely more drastic and burdensome than that of sub-section (1). Yet, there is no indication as to the circumstances under which the one or the other should be applied, upon the same class of persons who were similarly situated. There is, therefore, a denial of equality before the law or the equal protection of the laws.

(3) Assuming that the provisions of sub-section (2) of section 37 are intra vires, the particular authorisation issued in this case by the Commissioner, the respondent No. 1, and the action taken thereon, should be struck down because:—

(i) The provisions of sub-section (2) of section 37 are “subject to any rules made in this behalf”. At the relevant time, no rules had been made. Regard being had to the expression used, it must be held that the provisions of this sub-section can only come into operation after rules have been framed.

(ii) Under the provision of sub-section (2) the Commissioner is not a rubber stamping authority, but must himself come to the opinion that the entry, search and seizure will be useful for, or relevant to, any proceeding under the Act, and that they may be found in specified places to which the authorisation relates. From this point of view, the letters of authority issued in this case by the Commissioner are defective and not in conformity with the law.

(iii) That in any event, the Commissioner never exercised his mind but acted like a rubber-stamping authority in issuing the authorisations. This statement has been made in the petition but has not been denied by the Commissioner himself and therefore, stands admitted.

(iv) There was no authorisation at all in respect of premises No. 3/1, Harrison Road, although the said premises was entered into and books, documents etc., were searched for seized and taken away.

(v) That only books of account and other documents, which are considered useful for or relevant to any proceeding under the Act may be seized, whereas in this case books, documents and other articles or things have been seized and taken away which do not come under such a category.

69. Before I proceed to consider these points, I must mention that in exercise of the power conferred by sub-section (1) of section 59 of the said Act, the Central Board of Revenue has made rules for the purpose of sub-section (2) of section 37, called the ‘Income-tax (Search, of Premises and Seizure of Documents) Rules, 1957’ by notification No. SRO 1953 dated 6th June, 1957. Rule 2 lays down that the Commissioner of Income-tax may, for reasons recorded, issue a written order under his own signature and bearing his seal, specially authorising an Income-tax Officer, subordinate to him to enter any building or place specified therein where he has reason to believe that books of account and other documents which in his opinion will be useful for or relevant to any proceeding under the said Act may be found. The form of the warrant of authorisation has been prescribed. The following part thereof is relevant:—

“Whereas information has been laid before me and on the consideration thereof I have been led to believe that certain books of account and/or documents which are or may be relevant to or useful for proceedings under the above Act in the case (name of the assessee with G.I.R No. ……) have been kept and are to be found at (specific numbers of the building or place).

This is to authorise and require you (name of the Income-tax Officer)……….”

70. It will be necessary to clear the ground by deciding point No. 3(i) first. If sub-section (2) never came into operation until rules were framed in this behalf, then indeed, it is unnecessary to proceed further, because the two authorisations were made and tile search and seizure effected, at a point of time when no rules had been framed, and consequently, the entire operation would be contrary to law. It will be observed that the expression used is “subject to any rules made in this behalf”. This should be contrasted with the expression used in section 10(7) which lays down that the profits and gains of any business of insurance and the tax payable thereunder shall be computed — “in accordance with the law contained in the schedule to this Act”. In section 58(i)(3) the expression used is “subject to such rules as the Central Board of Revenue may make in this behalf”. There must be some difference between these expressions. Where the expression used is “In accordance with the rules” there is no difficulty. In such a case, the rules must come first, otherwise there cannot be anything, “in accordance” with it. But where the expression is “subject to rules”, I do not see why the rules must necessarily come first. The particular provision may itself lay down the law, which may be supplemented or modified by statutory rules framed in that behalf. Where, of course, it is found that the existing provisions in a statute cannot possibly be given effect to, without the framing of rules, that is a different matter. If however, it is possible to give effect to the provisions as they stand, them I do not see the justification in holding that the provision does not come into force until rules are framed simply because it has been made “subject to any rules made in this behalf”. In my opinion, it is possible to give effect to the provisions of law contained in sub-section (2) of Sec. 37, even without rules. Consequently, this argument fails. Our attention has been drawn to Section 41 of the Arbitration Act, 1940 which lays down that “subject to the provisions of this Act and of Rules made thereunder,” the provisions of the Code of Civil Procedure should apply to all proceedings before the Court etc. It has never been argued that the Code did not apply until rules were framed.

71. I now come to the ground No. 1 namely, as to whether the provisions of S. 37(2) are violative of certain fundamental rights granted to the petitioners. The first point to be considered is as to whether there is at all any fundamental right involved in such a case. Let us take the question of the fundamental rights guaranteed under Article 19(1)(f) and (g) of the Constitution. Before I deal with the question, it will be necessary to visualise the circumstances involved. The assessee may be-carrying on a business of his choice, the power to do so being guaranteed to him under the provisions of Article 19(1)(g). For that purpose, it is essential for him to possess books of account, documents and other papers, without which he can scarcely carry on his business. So far as the ownership of these articles is concerned, it is guaranteed to him under Article 19(1)(f). The particular provision which we are considering, grants power to the Income-tax authorities to enter a house, not only belonging to or occupied by the assessee, but of any person to make searches therein, and seize books of account and documents. These books of account and documents may be taken away and kept for an unspecified time. In this background, the question arises as to whether such action affects, or is capable of affecting, the fundamental rights of a citizen under the provisions of Article 19(1)(f) and (g). The respondents seek to provide an answer to this question by citing the judgment of Jagannadhadas, J. in AIR 1954 SC 300. The facts of that case were as follows: An investigation was ordered into the affairs of Messrs Dalmia Jain Airways. A First Information Report was recorded on 19-11-1953, and on the basis thereof an application was made to the District Magistrate, Delhi, under Section 96 of the Cr PC, for the issue of warrants for the search of documents etc., simultaneously at 34 places. Searches were made and a voluminous amount of records were seized. Thereupon, an application was made under Article 32 of the Constitution to the Supreme Court for quashing the search warrants and for return of the documents. Jagannadhadas, J. said as follows:

“So far as the contention based on Article 19(1)(f) is concerned we are unable to see that the petitioner has any arguable case. Article 19(1)(f) declares the right of all citizens to acquire, hold or dispose of property subject to the operation of any existing or future law in so far as it imposes reasonable restriction on the exercise of any of the rights conferred thereby in the interests of the general public. It is urged that the searches and seizure as effected in this case were unreasonable and constitute a serious restriction on the right of the various petitioners, inasmuch as their buildings were invaded, their documents taken away and their business and reputation affected by these large-scale and allegedly arbitrary searches and that a law, (Section 96(1) of the Cr PC) which authorises such searches violates the constitutional guarantee and is invalid.

But, a search by itself is not a restriction on the right to hold and enjoy property under Article 19(1)(f). No doubt a seizure and carrying away is a restriction of the possession and enjoyment of the property seized. This, however, is only temporary and for the limited purpose of investigation. A search and seizure is, therefore, only a temporary interference with the right to hold the premises searched and the articles seized. Statutory regulation in this behalf is a necessary and reasonable restriction and cannot ‘per se’ be considered to be unconstitutional. The damage, if any, caused by such temporary interference if found to be in excess of legal authority is a matter for redress in other proceedings. We are unable to see how any question of violation of Article 19(1)(f) is involved in this case in respect of the warrants in question which purport to be under the first alternative of Section 96(1) of the Cr PC.”

72. He learned Judge pointed out that in America, protection against search and seizure is afforded by the 4th and 5th Amendments of the American Constitution, and that there are no corresponding provisions in our Constitution. If the matter stood there, then we would be compelled to hold that not only search, but seizure, under the circumstances mentioned above, does not involve the fundamental rights guaranteed by Article 19(1)(f) and (g), which conclusion would, by itself, be somewhat remarkable. I am glad to say, however, that the matter was subsequently considered by a larger Bench of the Supreme Court in Bengal Immunity Co. Ltd. v. State of West Bengal, (S) AIR 1955 SC 661. Das, C.J said as follows (page 668 para 5):

“In the impugned Act there were various provisions laying down conditions which the dealers must comply with or submit to, namely, to give only a few instances, compulsory registration of dealers (S. 10), filing of returns (S. 12), attendance and production of evidence in support of the return (S. 13), production, inspection and seizure of books of account or documents and search of premises (S. 17).

Section 26 prescribes penalties for contravention of the provisions of the Act. These and other like provisions in the Act undoubtedly constitute restrictions on the fundamental right to carry on business which is guaranteed to every citizen of India by Article 19(1)(g) of the Constitution. If, as contended, the Act is ‘ultra vires’ the Constitution and consequently void these onerous conditions can never be justified as reasonable restrictions within the meaning of cl. (6) of that Article……”’

73. It is, therefore, clear, that the search and seizure of books of account and documents, might constitute a violation of fundamental rights under Article 19(1)(g) of the Constitution. On the same reasoning they might constitute a violation of the rights guaranteed by Article 19(1)(f). That being the law, it has to be considered as to whether the provisions of the impugned sub-section (2) of S. 37 impose unreasonable restrictions and, therefore, are not protected by clauses (5) and (6) of Article 19 of the Constitution. The law on the subject as laid down by the Supreme Court may be summarised as follows:

1. The phrase ‘reasonable restriction’ connotes that the limitation imposed on a person in enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public. The word ‘reasonable’ implies intelligent care and deliberation, that is, the choice of a course which reason dictates. Legislation which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between the freedom guaranteed under Article 19(1)(g) and the social control permitted by cl. (6) of Article 19, it must be held to be wanting in that quality.

74. Clause (6) in the concluding para particularises certain instances of the restrictions that were in the mind of the Constitution-makers and which have the quality of reasonableness. They afford a guide to the interpretation of the clause and illustrate the extent and nature of the restriction which according to the statute could be imposed on the freedom guaranteed in sub-clause (g) (Per Mahajan, J., in Chintaman Rao v. State of M.P, AIR 1951 SC 118).

2. It is not possible to formulate an effective test which would enable us to pronounce any particular restriction to be reasonable or unreasonable per se. All the attendant circumstances must be taken into consideration and one cannot dissociate the actual contents of the restrictions from the manner of their imposition or the mode of putting them into practice. The question of reasonableness of the restrictions imposed by a law may arise as much from the substantive part of the law as from its procedural portion. (Per Mukherjea, J., in Dr. N.B Khare (Dr.) v. State Of Delhi, AIR 1950 SC 211).

3. The test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract standard or general pattern of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict. In evaluating such elusive factors and forming their own conception of what is reasonable, in all the circumstances of a given case, it is inevitable that the social philosophy and the scale of values of the judges participating in the decision should play an important part (Per Sastri, C.J, in AIR 1952 SC 196).

4. When a law deprives a person of possession of his property for an indefinite period of time merely on the subjective determination of an executive officer, such a law can on no construction of the word ‘reasonable’ be described as coming within that expression because it completely negatives a fundamental right by making its enjoyment dependent on the mere pleasure and discretion of the executive, the citizens affected having no right to have recourse for establishing the contrary in a civil court. (Per Mukherjea, J. in AIR 1953 SC 873).

5. Where a licensing authority has been given absolute power to grant or refuse to grant, renew or refuse to renew, suspend, revoke, cancel or modify any license under the U.P Coal Control Order, 1953, and where the power could be exercised by any person to whom the State Coal Controller may choose to delegate the same and where no rules have been framed and no directions given to regulate or guide the discretion of the licensing officer and practically commits to the unrestrained will of a single individual, the power to grant, withhold or cancel licenses in any way he chooses and where there was nothing in the order which could ensure the proper execution of the power or operate as a check upon injustice that might result from improper execution of the same, and where there was no higher authority prescribed who could examine the propriety of these reasons for making the order and revise or review the decision of the subordinate officer it was violative of Article 19(1)(g) of the Constitution and, therefore, invalid. (Per Mukherjea, J., in AIR 1954 SC 224).

6. Where the wordings of a statute left it entirely to the Government to requisition stocks of grains at any rate fixed by it and to dispose of such stocks at any rate in its discretion, it obviously vested an unrestrained authority to requisition stocks at an arbitrary price. In other words, it would be open to the Government to requisition the stocks at a price lower than the ceiling price thus causing loss to the persons whose stocks are freezed and at the same time the Government was free to sell the same stock at a higher price and make a profit. It is a typical case which illustrates how the business of a grain dealer can be paralysed. Such a law is invalid, as violative of inter alia Article 19(1)(g) of the Constitution. (Per Ghulam Hasan J., in AIR 1954 SC 307).

7. The policy underlying the Cotton Textiles (Control of Movement) Order, 1948 which was an order framed in exercise of power granted by the Essential Supplies (Temporary Powers) Act, 1946 was to regulate the transport of cotton textiles in a manner that would ensure an even distribution of the commodity in the country and make it available at a fair price to all. This did not deprive a citizen of the right to dispose of or transport cotton textile purchased by him. It required him to take a permit to enable him to transport the same. The requirement of a permit in this regard could not be regarded as an unreasonable restriction on the citizen's right under sub-clauses (f) and (g) of Article 19(1). The grant or refusal to grant a permit by the Textile Commissioner is governed by the policy underlying, the order and it was to be exercised in such a way as to effectuate the policy. The conferment of such a discretion to the Textile Commissioner cannot, therefore, be called unregulated and arbitrary and is not invalid on that ground. If there was any abuse of power, there was ample power in the Courts to undo the mischief. (Per Mahajan, C.J in Hari Shankar Bagla v. State of Madhya Pradesh, AIR 1954 SC 465.)

8. There is a broad distinction between a discretion which is to be exercised with regard to a fundamental right guaranteed by the Constitution and some other right which is given by the statute. If the statute deals with a right which is not fundamental in character, the statute can take it away, but a fundamental right a statute cannot take away. (Per Bhagwati, J., in (S) AIR 1957 SC 397).

9. Section 5(7-A) of the Income-tax Act confers powers upon the Commissioner of Income-tax or the Central Board of Revenue to transfer any case from one Income-tax Officer to another at any stage of the proceedings. It was upheld on the ground that it was a power guided and controlled by the purpose which was to be achieved by the Act itself viz., the charge of income-tax, the assessment and collection thereof. It was to be administered by high officials. If there was any abuse of power it could be remedied by appropriate action, (Pannalal Binjraj (S) AIR 1957 SC 397, ibid).

10. The wide powers given to the State-Government under Sec, 2 of the Punjab Special Powers (Press) Act, 1956 (Act No. 38 of 1956) were upheld on the ground that quick executive decision and swift effective action was the essence of the powers, and the exercise of it must, therefore, be left to the subjective satisfaction of the Government charged with the duty of maintenance of law and order. Section 3, however, was struck down because there was no time limit laid down for its operation and no provision was made for any representation. (Per Das C.J in (1958) SCR 308 : ((S) AIR 1957 SC 896)).

11. Where power was given to the Central Government to fix the price at which sugar might be sold it was held that as long as the Central Government exercised this power in the manner provided by the Act and the order, namely the Sugar (Control) Order 1955 it could not be said that an appeal from the decision of the Central Government should have been provided. (Pep Wanchoo, J., in AIR 1959 SC 626).

12. When the constitutionality of an enactment is challenged on the ground of violation of any of the Articles in Part III of the Constitution the ascertainment of its true nature and character becomes necessary i.e, its subject-matter, the area in which it is intended to operate, the purport and intent have to be determined. In order to do so, it is legitimate to take into consideration all the factors such as history of the legislation purposes thereof, the surrounding circumstances and conditions, the mischief which it is intended to suppress the remedy for the disease which the legislature resolves to cure, and the true reason for the remedy. (The Court took into consideration — (i) a resolution by the Council of States (ii) report of (the Drugs Enquiry Committee known as the Chopra Committee, and the report of the Bhatia Committee (iii) suggestion of the Indian Medical Association (iv) several English Acts and (v) Publication of a number of Treatises on the subject concerned. (Per Kapur, J., in AIR 1960 SC 554).

75. The procedure to be followed would, therefore, be as follows: First of all, we will have to find out whether the provisions of sub-section (2) of section 37 of the Act, deal with fundamental rights. In this case, it is urged that the provisions of Article 19(1)(f) and (g) and Article 14 apply, and have been infringed. With regard to Article 19(1)(f) and (g) we will have to see whether there are any provisions which restrict these fundamental rights guaranteed by the Constitution, namely, the right to own property & the right to carry on business. If there are restrictions, the next thing to be considered is as to whether these restrictions can be said to be reasonable restrictions, in the interests of the general public, so as to be saved by cls. (5) and (6) of Article 19. If power has been given to executive authority to impose such restrictions, it has to be considered as to whether such power is regulated and canalised, or whether it is naked and arbitrary. For this purpose, we will first have to see whether the impugned provisions themselves, contain indications limiting or guiding the exercise of such power. If there are such provisions, we have to decide as to whether, in view of such guidance, the restrictions imposed are reasonable or not. If, however, there are no such indications contained therein, it will have to be seen whether the power granted to executive authority may be said to be controlled by the policy underlying the impugned statute, the nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied, the disproportion of the imposition and the prevailing conditions at the time.

76. I have already mentioned above, that the provisions of sub-sec. (2) of Sec. 37 confer upon executive authority the power of search and seizure, and these two constitute an invasion of the fundamental rights of the citizen guaranteed under Article 19(1)(f) and (g). The infringement of Article 14 will be dealt with later. That being so, we have next to find out whether the impugned provision contains any rule, regulation or indication guiding the exercise of powers vested in executive authority. It must at once be admitted that the powers granted upon executive authority in the impugned sub-section are wide and drastic. The learned Solicitor-General argued however that sub-sec. (2) of Sec. 37, itself contains restrictions on the exercise of executive power and they are as follows:

1. The Income-tax Officer can only act if he is specially authorised by the Commissioner, who is one of the highest authorities constituted under the Act.

2. The Income-tax Officer cannot act under this provision, in all cases, but only where he has reason to believe that any books of account and other documents, which in his opinion will be useful for, or relevant to, any proceeding under the Act, may be found in any building or place. The books of account and other documents are not, any books of account and documents, but only such as will be useful for, or relevant to, any proceeding under the Act and, consequently the Income-tax Officer must exercise his mind and with his knowledge of income-tax affairs come to the conclusion that such relevant books of account and documents exist and may be found in any particular building or place.

3. The Code of Criminal Procedure, 1898 (V of 1898) relating to searches applies so far as may be, to searches made under this provision.

4. The provision is subject to any rules made in this behalf, and such rules by themselves would: regulate and guide the exercise of power. In this particular case, of course, we must proceed on the footing that such rules did not exist at the relevant time.

77. The question is as to whether the internal limitations contained in the impugned provision of law can be said to make the restriction imposed, a reasonable restriction. It must at once be said that the limitations or guidance contained in the impugned provision are not by themselves exhaustive. In my opinion, however, the limitation and safeguards contained therein are substantial. Firstly, the Income-tax Officer cannot search for and seize any and every book of account or document, but only such of them as, in his opinion, will be useful for, or relevant to, any proceeding, under the Act. A controversy has arisen on the question as to the meaning of the expression “where he has reason to believe”. Does it refer to the’ Income-tax Officer or to the Commissioner? In my opinion, upon a plain reading of the sub-section it appears that the word “he” must refer to the Income-tax Officer. The only doubt thrown on the subject is by the rules that have been subsequently framed. As I have stated above, the rules have prescribed the form of the warrant of authorisation, and it is clear that the Commissioner of Income-tax must also share in the belief. In my opinion, there is, in reality, no inconsistency. The first belief must be formed by the Income-tax Officer. If he has reason to believe of the existence of the facts stated above, then he is to get an authorisation by the Commissioner. The Commissioner, in such a case, cannot be a mere rubber-stamping authority. The facts would have to be placed before him so that he may form an opinion himself. In view of the authorities mentioned above, the fact that the matter has to go through a very highly placed official, constitutes a reasonable safeguard. The search and seizure cannot be conducted in an arbitrary manner, because it has been laid down that they must be conducted according to the Code of Criminal Procedure. The procedure of search & seizure, as contained in the Code of Criminal Procedure is quite elaborate and has stood the test of time. Reference may be made to the provisions contained in Chapter VIII of the Code. Elaborate provisions have been made therein to regulate search and seizure. Reference may be made to Sec. 103 which provides that such a search must be made in presence of witnesses and how the list of things seized should be made out. It also makes it compulsory to permit the occupant of the place searched or some other person on his behalf, to attend when the search takes place. That the provision in the Code contains some safeguards is not denied, but what is argued is that the safeguards are not sufficient when applied to sub-sec. (2) of Sec. 37. It is argued that under the Code of Criminal Procedure the matter is dealt with by a Magistrate, which is a Court, and a person affected has a right to prefer objections to a Court, which would be judicially considered. Then again, it is pointed out that when articles are seized, Section 517 of the Cr PC provides that after the completion of the enquiry or a trial in any criminal court, the court may make an order for delivery, to any person claiming to be entitled thereto, of any article which has been seized. It is said that such a procedure cannot be applied to sub-sec. (2) of Sec. 37. The first question namely, the right to make a representation, must be examined in greater detail hereafter. With regard to Section 517 of the Cr PC, I do not see why the procedure laid down therein should not be applied. A search and seizure can only be made during the existence of a proceeding, which must mean a pending proceeding. Such a proceeding must conclude sometime. I do not see why, after the conclusion of the income-tax proceedings, an application cannot be made, upon an analogy of Section 517 of Cr PC for return of the books of account etc. Such an application would have to be made before the Income-tax Officer, who has jurisdiction in the matter, and who has been concerned in the search and seizure.

78. These are the express limitations that one can deduce from the provisions in the impugned sub-sec. (2) of Sec. 37. But apart from this we have to take into consideration certain other factors, before it can be said that the Powers conferred upon executive authority are regulated and not naked and arbitrary. The first factor to be considered is the underlying purpose of the restrictions imposed, and the legislative policy behind the promulgation of the law. Section 37 was radically recast in 1956 and the power to search and seize books of account etc. was introduced. It would be necessary to state the short history culminating in this action by the legislature. Previously, there was no provision in the Act conferring the power of entry, search and seizure upon Income-tax Officers. The Income-tax (Amendment) Bill, 1938 introduced a clause to give effect to the suggestion which had been made, to the effect that the position of the Income-tax Officer should be strengthened in the matter of tackling tax evaders and that he should be given the right, by specific legislation to enter business premises and other buildings and seize books and documents which he might consider relevant for the purpose of assessment. The Bill was, however, not enacted, because at that time there was strong opposition to it in the legislature. Thereafter, the Income-tax Investigation Commission Act, being Act No. 30 of 1947, was passed. The Commission recommended that the powers of search and seizure should be conferred on all Income-tax Officers but should be subject to obtaining the previous approval of the Inspecting Assistant Commissioner, or where this was not possible to report to him immediately after the action had been taken. In 1948, rules were framed under Act 30 of 1947 and such powers were included. Thereafter, however, some of the operative sections of the Act were declared ultra vires. In 1956 the Taxation Enquiry Commission reported that such powers should be conferred. The following statement appears in the rejsort:—

“We gather from the report of the Income-tax Investigation Commission that important evidence is deliberately kept away by some assessees from the Income-tax authorities, and that subsidiary books which contain valuable clues to concealments are not, many a time, produced along with the main account books. We are, therefore, of the opinion that the income-tax authorities should be placed in a position to be able to discover such evidence that is withheld from them.”

79. This was followed by a report made by the Direct Taxes Administration Enquiry Committee, in the year 1958–1959. It not only endorsed this view but stated that the Income-tax authorities were not making sufficient use of such powers. It stated as follows:

“These powers were bestowed on the Income-tax Officers in 1956 in pursuance of the recommendations of the Taxation Enquiry Commission. It was urged by some witnesses that, as these powers had been exercised only in a small number of cases, there was no need for them and that they should be withdrawn. We do not agree with this view…… We find that other revenue authorities like the officers of the Sales Tax Customs and Central Excise Departments are vested with similar, and even wider, powers. Such powers are essential for catching the tax evader and establishing beyond doubt the fact of concealment. As a matter of fact, we feel that the Income-tax authorities are not making full use of these powers. This is perhaps due to the fact that the Department is not able, at present, to obtain adequate intelligence about the activities of tax evaders.”

80. In this background, we are entitled to take notice of the fact that there is going on in this country a large scale evasion of payment of taxes by business men, who conceal books of account and documents, and sometimes have duplicate sets of books, and it is necessary that Income-tax Officers should be armed with sufficient powers to remedy this evil. In this particular case, it is admitted before us that the petitioners had been proceeded against by the Income-tax Investigation Commission, and they voluntarily attempted to settle the amount of income-tax which they had evaded to pay, and we were told that they made payments of about a crore of rupees. That, in my view, gives an indication of the urgency of the situation.

81. It is in the background of these facts that we have to consider the reasonableness of the restrictions. For example, much has been said before us about the rules of natural justice and the necessity of giving prior notice to persons whose fundamental rights are going to be affected. In cases where action is contemplated under the impugned provision, the element of surprise is necessarily the most essential factor for achieving success. It is inconceivable, that if you are going to search and if possible seize, concealed books of account and documents, that you should start by giving prior notice to the person who has concealed the same, because the natural result of such action would be the immediate disappearance thereof. The question however remains as to whether, after the search and seizure have been completed, there should he granted an opportunity of making representations against the action taken. There can be no doubt that such a right should exist in some form or other. In other words, a person whose fundamental rights have been affected, must be given some opportunity of ventilating his objections against such action, and to seek redress. It is obvious that if such opportunities do not exist at all, in any shape or form, the restriction cannot be called reasonable, for it would open the way to executive tyranny. The question naturally arises as to whether in this impugned provision there is any opportunity given for making a representation, or preferring an objection, with the object of redressing any wrong that may have been committed by executive action. I must state at once that there is no express provision. Strong reliance has been placed by learned counsel appearing on behalf of the petitioners on the Supreme Court decision in 1958 SCR 308 : ((S) AIR 1957 SC 896) (Supra). In that case, the validity of the Punjab Special Powers (Press) Act, 1956 was under challenge. In 1953, the Akali party in the Punjab started a campaign for the partition of the State on communal and linguistic basis. In 1956, the impugned Act came into force. Under Section 2 of the said Act the Government was given power to prohibit the printing or publication of any document or any class of documents relating to a particular subject or a class off subjects for a specified period, or any particular issue or issues of a newspaper or periodical. Section 3 provided that the State Government or any authority authorised in that behalf, if satisfied that such an action was necessary for the purpose of preventing or combating any activity prejudicial to the maintenance of communal harmony affecting or likely to affect public order or tranquillity, can by Notification, prohibit the bringing into the State of Punjab any newspaper, periodical, leaflets or other publications. Certain orders were made under this provision, upon the editor of the ‘Daily Pratap’, who then made an application challenging the two sections mentioned above, as being violative of his fundamental rights guaranteed under Article 19(1)(f) and (g) of the Constitution. Section 2 was held to be valid because, under it, an aggrieved person had the right to make a representation to the State Government. It was held that a power, the exercise of which was conditioned by the purposes mentioned in the section, and which was temporary in operation, and liable to be modified upon a representation, could not be held to be unreasonable Section 3, however, failed to pass the test of reasonableness. There was no time limit for the operation of any order made under it, nor any provision for any representation to be made. In the absence of these safeguards, the provisions of Sec. 3 were held to be unreasonable and were struck down. P. is pointed out that in the present case we are not dealing with a temporary statute. The power to be exercised is conditioned by the purposes of the Act, but it is argued that there is no power of representation given and, therefore, the restrictions cannot be said to be reasonable. It is true, as I have mentioned above, that no express power is contained therein. The question is as to whether a person affected by, any action taken under the impugned provision, is entirely without a remedy. An order or authorisation made under the impugned provision is an administrative order, and the action taken is an administrative action taken by Income-tax Officers. It has been pointed out that under the scheme of the Income-tax Act, an Income-tax Officer has been made subordinate to certain other officials, and there is nothing in the Act which precludes an application to such higher officials for redress. Under Sec. 5(7)(ii), Income-tax Officers have been made subordinate to certain Director of Inspection, the Commissioner of Income-tax and the Inspecting Assistant Commissioner of Income-tax within whose jurisdiction they perform their functions. This power is expressly recognised by S. 5(7-B) which runs as follows:

“The Director of Inspection, the Commissioner or the Inspecting Assistant Commissioner, as the case may be, may issue such instructions as he thinks fit for the guidance of any Income-tax Officer subordinate to him in the matter of any assessment and for purposes of making any enquiry under this Act (which he is hereby empowered to do), the Director of Inspection, the Commissioner and the Inspecting Assistant Commissioner shall have all the powers that an Income-tax Officer has-under this Act in relation to the making of inquiries.”

82. Under these provisions, an application may be made to these Officials for issue of instructions, if the limits of reasonableness have been violated. It is contended that search and seizure is in the nature of an inquiry for the purpose of assessment. This power of superintendence has been expressly recognised by section 5(8) which runs as follows:—

“All officers and persons employed in the execution of this Act shall observe and follow the orders, instructions and directions of the Central Board of Revenue…….”

83. Reliance has been placed next on Section 33-A of the Act, which gives power of revision to the Commissioner, who can, either of his own motion or on an application made by an assessee, revise any order under the said Act Passed by any authority subordinate to him.

84. Lastly, reference is made to Section 21 of the General Clauses Act, which provides that where by any Central Act there is a power conferred, to make-an order, there is included a power to add to, amend vary or rescind the same. It is argued that such power presumes that an application would he on behalf of the aggrieved assessee for review of any order made under the impugned provision. It is pointed out that the provisions in the said Act clearly show that the aggrieved assessee can, not only ask the Income-tax Officer to reconsider his action, but he can also make a representation in that behalf to various higher officials and that herein lies the difference between this case and that of 1958 SCR 308 : ((S) AIR 1957 SC 896) (supra). In Virendra's case, 1958 SCR 308 : ((S) AIR 1957 SC 896) (supra) even if a right of representation was given, it would be to Government itself, which had issued a Notification, and it was very unlikely that having publicly stated that it was satisfied as to the existence of an emergent situation, it would change its view. But even so, such a Power of representation saved section 2. In my opinion, having regard to the underlying Purposes of the impugned provision and the scheme of the Act, it cannot be said that an assessee aggrieved by action taken under the impugned provision is totally bereft of any opportunity of making a representation. The action is an administrative action, and the Act lays down a hierarchy of officials in whom has been vested the power of superintendence, and it is inherent in the scheme of the Act that they can be approached for setting aside any unreasonable action taken by their sub-ordinates. They have not only the power of superintendence, but have been expressly given the power to issue instructions to their subordinates for the guidance in any matter regarding inquiries and investigations made under the Act, in respect of assessment proceedings. It is, of course, very desirable that Provisions should be made under the rules framed under the impugned provision, for regulating the making of representations and I hope such rules will speedily be framed. In this respect, there is however, very little scope for distinguishing this case from (S) AIR 1957 SC 397 (supra), where the question raised was the validity of section (5)(7-A) of the said Act. Section 5(7-A) is also a measure of administrative convenience, and the action taken thereon was an administrative action. There is no express provision made there for any right of representation, except such as is contained in the scheme of the Act itself. That provision was upheld as valid. It was also pointed out that if in a particular case, the assessee seeks to impeach the administrative order as an abuse of power, he could come to Court by way of a writ petition and the executive authority would have to justify its action. When we are dealing with administrative orders, the strictness with which the rules of natural justice are to be applied in the case of judicial orders, are not to be imported. In Bapurao v. The State, (S) AIR 1956 Bom 300, Chagla, C.J, was dealing with section 37(3) of the Bombay Police Act. It was urged that this provision of law was bad, because it did not afford any opportunity to a Party or a person affected by the order to show cause against it. It was stated that the Commissioner of Police could make an order without hearing a Party who might be affected by it. Not only that, but even after the order had been made, the Commissioner of Police was not bound to hear any representation by any party so as to persuade the Commissioner of Police that there was no further necessity for the continuance of the order. The learned Chief Justice said as follows:—

“Now, the order complained of and the order that has got to be made under Sec. 37 is clearly an administrative order and it would be erroneous to import into the consideration of an administrative order the principles of natural justice. When the Legislature requires an authority to adopt the judicial process and the judicial approach, then undoubtedly any order passed by such an authority without hearing the party to be affected by it would be clearly bad because it would violate a fundamental principle of natural justice.

But when we are dealing with an administrative order the approach must be different. Mr. Kotwal is right that when a citizen is deprived or is about to be deprived of his fundamental right, ordinarily he should be heard in his defence before such an order is passed. A fundamental right is so valuable and the Constitution has attached such a great importance to it that the Court will not permit the Legislature to pass a law depriving a citizen of that right in ordinary circumstances without at least giving an opportunity to that citizen to say what he wants to say in the defence of that right.

But it would be equally erroneous to suggest that in every case where a fundamental right is sought to be taken away by the administrative order, the provision of the law would be bad because it did not give the citizen the right to make a representation with regard to the deprivation of that right. It must depend upon the particular right which is being taken away, it would depend upon the circumstances and the conditions under which the authority is empowered to take away the right, and it also depends upon the safeguards provided by the Legislature.”

85. For the reasons aforesaid, I am of the opinion that the provision of sub-section (2) of Section 37 of the Income-tax Act does not impose unreasonable restrictions upon the fundamental rights of the petitioners, and is not violative of the provisions of Article 19(1)(f) and (g) of the Constitution.

86. I now come to the point No. 2, namely, that the provisions are violative of Article 14 of the Constitution. It is argued that sub-section (1) of Sec. 37 deals with discovery and inspection and compelling the production of books of account and other documents. This is done as if the matter was an ordinary action in a Civil Court, governed by the provisions relating to discovery, inspection etc. as are to be found in the Code of Civil Procedure 1908. It is argued that the same result is sought to be achieved by sub-section (2) of Sec. 37, but in a much more drastic manner. It is stated that the provision of sub-sections (1) and (2) have the same object in view and yet one is a much more drastic procedure than the other, and there is no indication whatever to show whether the one or the other provision should be applied to the same class of persons. In other words, either of the two alternative provisions, one more drastic than the other may be applied to the same class of Persons indiscriminately. This, it is stated, has been condemned in the case of (1955) 1 SCR 448 : (AIR 1954 SC 545). In that case, the Supreme Court was considering sub-section (4) of Section 5 of the Taxation on Income (Investigation Commission) Act, 1947. It was held that sub-section (4) of Section 5 of the said Act dealt with the same class of persons as fell within the ambit of section 34 of the Indian Income-tax Act. It was admitted that the provisions in the Taxation on Income (Investigation Commission) Act, 1947 were much more rigorous than that of the Income-tax Act, and, therefore, there was no proper classification, and the Provision was struck, down as being discriminatory, Mahajan, C.J, expounded the doctrine of discrimination in the following words:—

“It is well settled that in its application to legal proceedings Article 14 assures to everyone the same rules of evidence and modes of Procedure in other words, the same rule must exist for all in similar circumstances. It is also well settled that this principle does not mean that every law must have a universal application for all persons who are not by nature, attainment or circumstance, in the same position. The State can by classification determine who should be regarded as a class for Purpose of legislation and in relation to a law enacted on a particular subject, but the classification permissible must be based on some rule and substantial distinction bearing a just or reasonable relation to the objects sought to be attained and cannot be made arbitrarily and without any substantial basis. Classification means segregation in classes which, have a systematic relation, usually found in common properties and characteristic.”

87. A similar case is the decision in (1955) 1 SCR 787 : ((S) AIR 1955 SC 13). In that case, section 5(1) of the said Act was struck down, because it was applicable to the same class of Persons to whom section 34 of the Indian Income-tax Act was applicable. I do not think that it is correct to say that the two sub-sections of Sec. 37 were enacted so as to apply to the same class of persons. Sub-section (1) deals with the normal procedure for discovery and inspection, and the Production of documents. At first the assessee would be called upon to make discovery of documents in his possession or power. His affidavit would Prima facie be conclusive. Sub-section (2), however, is intended to apply to a different class altogether. As will appear from the reports of the various committees mentioned above, sub-section (2) was introduced to cope with assessees who concealed their areal books of account and in many cases concocted several sets of account, and in whose cases it was apprehended that the relevant documents would not be produced when called upon to do so. In order to get at them, it was necessary to introduce a procedure which may be characterised as a surprise attack. The idea was to get at these concealed books of account and documents by an unexpected search and seizure. Therefore, these two sub-sections were not intended to apply to the same class of persons or in similar circumstances. There is therefore, no element of discrimination involved. The intention of the Legislature, as to what class of person or persons were to be affected by sub-section (2) can be determined by looking at the underlying policy of the Act and the particular background in which this sub-section had to be introduced into the Act by way of an amendment. As was stated in (S) AIR 1957 SC 397 (supra) the impugned provision of law there was introduced for the purpose of meeting a particular circumstance and to meet the exigencies of tax collection. St is not left to the subjective satisfaction, merely of the Income-tax Officer, but approval has to be obtained from a highly placed official, namely, the Commissioner of Income-tax. In this respect, the facts of this case are indistinguishable from that of (S) AIR 1957 SC 397 (supra) where the plea of Section 5(7-A) of the Income-tax Act being discriminatory was repelled. In my opinion, this point; of discrimination under Article 14 of the Constitution is so overloaded with authorities that it is not easy to discover the principles that should be applied to any given, case. In AIR 1958 SC 538 Das, C.J, has however attempted to summarise the law on the subject. The learned Chief Justice classified the cases under the following five headings:—

1. Where a statute itself indicates the persons or things to whom its provisions are intended to apply, and where the basis of the classification of such persons or things appear on the face of the statute, or gathered from the surrounding circumstances, known to, or brought to the notice of the Court. In such a case, the Court has to examine whether there is an intelligent differentia between the persons or things grouped together and those left out of the group and whether such differentia has a nexus to the object sought to be achieved by the statute (see Ghiranjitlal v. Union of India, AIR 1951 SC 41, State of Bombay v. F.N Balsara, AIR 1951 SC 318 : AIR 1952 SC 75 : AIR 1953 SC 404 : AIR 1952 SC 123 and Qasim Razvi v. State of Andhra, AIR 1953 SC 156).

2. A statute may direct its Provisions against a person or persons or tilings, but no reasonable basis of classification appears on the face of it or is deducible from the surrounding circumstances, or matters of common knowledge. This is a naked discrimination, and will be struck down. (see Ameerunnessa Begum v. Mahboob Begum, AIR 1953 SC 91, Ram Prosad Narain Sahi v. State of Bihar, AIR 1953 SC 215).

3. A statute may not make any classification of the persons or things for the purpose of applying its provisions but may leave it to the discretion of the Government to select and classify persons or things to whom its provisions are to apply. In such a case the Court must examine and ascertain if the statute has laid down any principle or policy for the guidance and the exercise of discretion by the Government in the matter of selection or classification. If the statute does not lay down any such principle or policy, but delegates arbitrary and uncontrolled power to Government so as to enable it to discriminate between persons or things similarly situate, the Court will strike down/both the law as well as executive action taken under it. (see AIR 1952 SC 75 (supra), AIR 1954 SC 224 (supra) and Dhirendra Kumar Mondal v. Superintendent and Remembrancer of Legal Affairs, AIR 1954 SC 424.)

4. A statute may not itself make any classification of the persons or things for the purpose of applying its provisions but may leave it to the discretion of Government to select and classify the persons or things to whom its provisions were to apply, laying down a policy or principle for the guidance of the exercise of such discretion, in the matter of such selection or classification. Such a law must be upheld as constitutional. See AIR 1952 SC 123 (supra).

5. A statute may not make a classification of the persons or things to whom its provisions are intended to apply, but leave it to the discretion of Government to select or classify such persons or things according to the policy or the principle laid down by the statute itself for the guidance of the exercise of discretion by the Government in the matter of such selection or classification. If the statute does contain such policy or principle then the law must be declared to be constitutional. If Government in making the selection or classification does not proceed on or follow such policy or principle, the executive action but not the statute may be condemned as unconstitutional. Such discretion may be left to highly-placed officials, and provided that it is not merely left to their subjective satisfaction but that a policy may be deduced from the object of the Act and the evil to be remedied, the statute should be upheld: See (S) AIR 1957 SC 397 (supra).

88. Applying these principles to the facts of the present case, we find that the impugned statute itself indicates the persons or things to whom its provisions are intended to apply. As I have stated above, action under sub-section (2) of Sec. 37 cannot be taken in all cases but only where the Income-tax Officer has a certain object in view and is satisfied upon several points. There must be a proceeding under the Act Pending, and the Income-tax Officer must have reason to believe that any books of account and other documents which in his opinion, will be useful for or relevant to, such proceedings, are to be found in any building or place. It is inherent that he must have reason to believe that such books and/or documents have been kept concealed and are not likely to be produced by action taken under sub-section (1). In other words, evasion and concealment must be apprehended. It is only in such cases, that fee provisions of sub-section (2) can be invoked. Even of the classification is not at once perceptible from the provisions of sub-sections (1) and (2) of Sec. 37, at may be gathered from the surrounding circumstances. The object and Policy of the Act and particularly of sub-section (2), which was introduced by way of an amendment. The object appears clearly from the background of the amendment and the particular evil which it sought to remedy. Taken in this background, there is sufficient indication of classification, which is reasonable, and which has a nexus with the object of the Act. In my opinion, having regard to these Principles and having regard to the decision of (S) AIR 1957 SC 397 (supra), it must be held that the provisions of sub-section (2) of Sec. 37 are not discriminatory or violative of Article 14 of the Constitution. In the case of Pannalal Binjraj, (S) AIR 1957 SC 397 (supra), the Income-tax Act was involved. The impugned section was Section 5(7-A) which had been brought in by an amendment, giving wide and drastic powers to the Commissioner of Income-tax and the Central Board of Revenue to transfer any case from any one I.T.O to athother. Such transfer may be made at any stage of the proceeding, and an assessee may have his case transferred from one end of India to another. This provision was inter alia challenged as being discriminatory. It was argued that, amongst the same class of assessees similarly situate, the case of one may be transferred to a distant place, while the case of another need not be transferred at all. It was pointed out that there was no direct indication in the section itself as to the time and circumstance when such order should be made, and an absolute discretion is given to the Commissioner of Income-tax or the Central Board of Revenue as the case may be. Even so, at was upheld on the ground that the object of the Income-tax Act and the exigencies of tax collection laid down a sufficient policy for classification and the fact that the discretion was to be exercised by high officials was a sufficient safeguard that the classification would not be arbitrary. The possibility that such discretion may be abused was held not to invalidate the piece of legislation. It was pointed out that the abuse any be struck down. Bhagwati, J., said as follows:—

“It may also be remembered that this power is vested not in minor officials but in top ranking authorities like the Commissioner of Income-tax and the Central Board of Revenue who act on the information supplied to them fey the Income-tax Officers concerned. This power is discretionary and not necessarily discriminatory and abuse of power cannot be easily assumed where the discretion is vested in such high officials……. If, in a particular case, the assessee seeks to impeach the order of transfer as an abuse of power pointing out circumstances which prima facie and without anything more would make out the exercise of the Power discriminatory qua him, it will be incumbent on the authority to explain the circumstances under which the order has been made. The Court will, in that event, scrutinise these circumstances having particular regard to the object sought to be achieved by the enactment of Section 5(7-A) of the Act.”

89. If the decision of (S) AIR 1957 SC 397 (supra) be correct, as we are bound to hold it to be, then I think that this case is indistinguishable on the facts and the law involved, and it must be held that the provisions of sub-section (2) of Sec, 37 are not discriminatory and not violative of Article 14 of the Constitution.

90. I now come to point No. 3. I have already dealt with 3(i) and will now Proceed to deal with 3(ii) and 3(iii). It is argued that voider sub-section (2) of Sea. 37, the Commissioner of Income-tax has a duty to perform, and is not merely a rubber-stamping authority. Indeed, this has been readily admitted by the respondents, and has been recognised by the rules made under the impugned provision, to which reference has already been made above. It comes to this that the Commissioner of Income-tax must specially authorise an Income-tax Officer, before he can take action under sub-section (2) of S. 37. Assuming that he is not a mere rubber-stamping authority, he has himself to be satisfied that there was prima facie reason for the action to be taken as proposed by the Income-tax Officer. Mr. Sanyal has referred us to the letters of authorisation, which are Exhibits A and B to the petition at pages 17–19 of the Paper Book. He Pointed out that the wordings of the authorisation letters show that only the Income-tax Officer had reason to believe that certain documents which would be useful for or relevant to, the Income-tax assessment of the assessees, were to be found at certain specified premises. It is argued that this is not a sufficient compliance with the provisions of sub-section (2) of Sec, 37. In my opinion, however, this is not quite accurate. In each of these letters of authorisation, the Commissioner not only states that “you have reason to believe”, but he also states that “I am satisfied on your report”. I do not see what he could say to escape being accused of acting as a rubber-stamping authority. It is then argued that in the petition, paragraph 31(ii) it has been specifically alleged that at the time of issuing the purported letters of authorisation, the Commissioner did not form any opinion as to the identity of any books of account and other documents which, would be useful to any of the proceedings under the Income-tax Act, and yet, the Commissioner has not filed an affidavit himself, denying this allegation. Perhaps it would have been much better if the Commissioner had himself filed an affidavit. Still, we find that the allegations have been denied by one of the Income-tax Officers. The allegation in paragraph 31(ii) of the petition that the Commissioner did not form any opinion, has been affirmed as true to the knowledge of Deoki Nandan Jalan, one of the Petitioners. I do not see how he could have any personal knowledge of such a fact, and I do not think that much reliance can be placed on this statement. After all the letters of authorisation are there, and state categorically that the Commissioner was satisfied. I do not see what else the Commissioner could have said in an affidavit, except to repeat the statement, and I am not certain how much it would have advanced matters. There is no allegation of mala fides in this case.

91. I next come to point No. 3(iv). This relates to the alleged search at premises No. 63/1, Harrison Road, and seizure of books and documents therefrom. As has been stated above, the letters of authorisation issued by the Commissioner expressly mention the premises Nos. 61 and 63, but not premises No. 63/1, Harrison Road. It is stated that there never was any authorisation to enter the premises No. 63/1, Harrison Road or to carry out any search and seizure therein, and yet, the Income-tax Officer forcibly entered into that premises and not only carried out an illegal search, but seized books of account and documents from there, without any legal authority. That there is no such letter of authorisation expressly mentioning the premises No. 63/1, Harrison Road, is admitted. It is for this purpose that I have set out above, the topography of the various premises on Harrison Road. The premises No. 61 and 63/1, Harrison Road really form part of the same building. Actually, it was originally premises No. 61, Harrison Road, which has been divided into premises Nos. 61 and 63/1, leaving the premises No. 63, Harrison Road as a vacant plot of land, upon which there are C.I sheds used as motor garages. In the affidavit in opposition, it has been admitted that the premises No. 63/1, Harrison Rd and 61, Harrison Rd are connected premises, and it was never brought to the notice of the respondents that they were separate, and that no objection was taken at the time of the search. So far as seizure is concerned, it is not admitted that any books, papers and documents were seized from the premises No. 63/1. Harrison Road, Calcutta, it is significant that no such objection is mentioned in the letter dated 7th July, 1956, which speaks about “No. 63, Harrison Road, Calcutta, and our other adjoining premises”. Apart from this, the real answer is that the letters of authorisation not only mention the premises Nos. 61 and 63, Harrison Road, but “other places connected therewith”. That the premises No. 63/1, and 61 are inter-connected is not disputed. In paragraph 6 of the affidavit in reply by Deoki Nandan Jalan, affirmed on the 17th December, 1956, it is admitted that access can be obtained from each of the premises No. 61 and 63/1, Harrison Road and 8-A, Beniatola Lane from one premises to the other, without having to go out on the public road for the purpose. It is argued that a letter of authorisation, cannot be issued in this manner. It is said that in a city like Calcutta, most buildings bearing different municipal Nos. can be said to have some kind of inter-connection. The authority to search one premises cannot include the search of inter-connected premises. In my opinion, no such general principle can be laid down. It is true that the letter of audiorisation in such a case is an important document, and must be precise, and drawn up in accordance with law. We cannot however, be excessively technical in such matters. Whether the letter of authority includes, or was intended to include, a particular municipal premises, is a question of fact. The whole idea is to introduce an element of surprise, and avoid giving opportunity to the assessee to remove the offending books and documents, after coming to know of the proposed search. If the premises are physically inter-connected, then the apprehension of such action on the Part of the assessee is well-founded. I do not see, therefore, why the letter of authorisation cannot be of a Particular municipal premises and other buildings connected therewith. The inter-connection must of course be real and not imaginary. In the facts and circumstances of the present case, I have no doubt that the premises Nos. 61 and 63/1, are, for all intents and purposes, one building. Originally they bore the same municipal number, and even now they are used by the members of the same family, who do go from one premises to the other without having to go out of the building. This particular Point did not seem to have struck anyone at the time of the search, as is obvious from the letter dated 7th July, 1956. Then again, at the present moment, there is no material before us to prove that any books of account and documents have actually been seized from the premises No. 63/1, Harrison Road. It is, therefore, not possible to make an order that such books and documents should be released.

92. Lastly, I come to the point No. 3(v). It is pointed out that under sub-section (2) of Sec, 37, only books and other documents which are considered to be useful for, or relevant to, any proceeding under the Act, may be seized. The complaint is that other articles or things have been seized and taken away, which do not come under this category. This again, does not seem to be a point of substance on the facts and circumstances of the present case. For this Purpose, it is necessary to visualise the events as they happened. At first, there was the letter of authorisation for the search of premises Nos. 57, 61 and 212, Cornwallis St., together with other places connected therewith. Then thiere was a separate authorisation with regard to No. 63, Harrison Rd and other places connected therewith. Armed with × these leters of authorisation, there was search and seizure. In this case, the books and documents which were procured as a result of the search were looked into, and only such of them were seized as were considered to be relevant, after making an inventory. As this took some time, and it was apprehended that the search was going to take a long time, the parties agreed to follow a particular course which has been set out in the letter dated 7th July, 1956. It was agreed that the books and documents which were procured upon search would be put in steel trunks and gunny bags, and removed to the office of the Income-tax authorities, and later on would be scrutinised and inventories prepared. With regard to the inventory that was prepared on the spot, it has not been shown to our satisfaction that any irrelevant document was seized. With regard to the other group, an order was made by me in the presence of the parties, that the documents etc. which were put in steel trunks and gunny bags should be scrutinised in the presence of the parties and any inventory made. Naturally, in carrying out this operation the list is likely to contain books and documents which may turn out to be irrelevant. These will be returned. The decision, as to whether a particular document is relevant or irrelevant, is by no means an easy task. While an envelope containing photographs is manifestly irrelevant, it is not disputed that a certain Bhajan hook contained in it a slip of paper which has led to the discovery of assets exceeding 10 lacs of rupees and is thus found to be extremely relevant. Regard being had to the particular procedure agreed upon by the parties, I do not see how the complaint can be justified.

93. For the reasons set out above, I am of the opinion that no valid grounds have been made out for our interference and I agree that the rule should be discharged and order made as proposed by Mukharji, J.

V.N Mookerjee, J.:— I agree that the two Rules, out of which these References arise, should be discharged and the References answered accordingly. I Proceed to give hereinbelow my reasons for the above view with brief statements of the relevant facts and the nature and circumstances of the two cases before us and certain necessary preliminary observations.

94. The instant References raise certains common questions of law which, for their answer, require a close and careful study of some of the provisions of the Indian Income-tax Act and the Constitution. Of these, the first and foremost will be Section 37 of the Act and Articles 14 and 19 of the Constitution.

95. The References arise out of two applications under Article 226 of the Constitution, praying for appropriate writs upon the Income-tax Authorities to return the documents, books and papers, seized, under certain search warrants, issued under Section 37(2) of the Indian Income-tax Act, from premises Nos. 61, 63 and/or 63/1, Harrison Road, and 212. Cornwallis Street, Calcutta, and to forbear from taking any further steps in furtherance or in pursuance of the searches and seizures, made in the aforesaid premises under the said search warrants. The applications were moved before Sinha, J., upon whose report under Chapter V, Rules 2 and 3, of the Original Side Rules of this Court, after the issue of a Rule Nisi with appropriate and interim injunction in each case, they were eventually referred by the learned Chief Justice to this Special Bench.

96. The References have been elaborately argued on both sides, the petitioners' case being ably put by the learned Additional Solicitor General Mr. H.N Sanyal and the learned Standing Counsel Mr. A.C Mitter and the opposite Parties' by the learned Solicitor General Mr. C.K Daph-tary and by their learned junior Counsel Mr. Ellis Meyer who followed Mr. Daphtary. The arguments covered a wide field and had, of necessity, to wade through a bewildering mass of case law. Either side had the apparent support of high authorities which made the Judges' task somewhat difficult.

97. The relevant facts lie within a short compass and they stand as follows:

98. Five Municipal Premises, belonging to the petitioners, namely, premises Nos. 57, 61 and 63/1, Harrison Road, 8.A, Beniatolla Lane and 212, Cornwallis Street, were searched by the Income-tax Authorities on July 4, 1956. The searches were carried out by the Income-tax Officers under Section 37(2) of the Indian Income-tax Act under certain authorisations of the Commissioner of Income-tax (Central), Calcutta, purporting to have been given or issued under the said section. These authorisations are to be found at pp. 17–24 and 53–54 of the Paper Books of the two References.

99. Following the searches, a large number of documents, papers and books were seized by the Income-tax Authorities which, or most of which, are set out at pp. 89–352 of the printed Paper Book.

100. The petitioners object to the above searches and seizures and attack their validity under the law and claim that they were illegal and they ask for return of the seized documents, books and papers and for other reliefs, mentioned hereinbefore, under Article 226 of the Constitution.

101. Broadly, the petitioners contend:

(a) that Section 37(2) of the Indian Income-tax Act is invalid and ultra vires, being violative of (i) Article 14 and (ii) Article 19(1), clauses (f) and (g) of the Constitution, and

(b) that, even if the said section be intra vires and valid, the Income-tax Authorities acted in contravention of it as:

(i) on a proper interpretation of the section, its terms were not complied with;

(ii) the authorisation letters, under which the aforesaid searches were made or conducted and seizures effected, were not in terms of the said section or in conformity with it; and

(iii) there was not even an authorisation letter in respect of one, at least, of the aforesaid premises, namely, 63/1, Harrison Road, and, as the authorities have not disclosed the documents, books and papers, which were seized from the said premises, nor have they affirmed that no documents etc. were seized therefrom, they could not retain any of the seized articles or papers.

102. In the Petitions, a further ground was taken on Sec. 54, — more particularly, on sub-Section (5) thereof, — of the Indian Income-tax Act, questioning its validity and challenging its vires, but, in view of the present structure and contents of the said section, this argument was not eventually pressed. The point of mala fide also was not pressed by Mr. Sanyal, as, even according to him, there was no evidence — and no sufficient allegation either — to justify the same.

103. The constitutionality or vires of the impugned section (Sec. 37(2)) has been attacked and its application, as made in the case before us, has been seriously questioned. Under both heads, the construction of the said section forms a major consideration. I would, therefore, Proceed first to the said question of construction in its broad details, relevant for our present purpose, but, before I do so, I would make a few preliminary observations and state, in brief, the events which led to the introduction or enactment of the said impugned section (Section 37(2) of the Indian Income-tax Act).

104. The entire section (Sec. 37), — of which the impugned Sec. 37(2) forms a Part of sub-section, — as it now stands, reads as follows:

“37(1): The Income-tax Officer, Appellate Assistant Commissioner, Commissioner and Appellate Tribunal shall, for the purpose of this Act, have the same powers as are vested in a Court under the Code of Civil Procedure, 1908 (V of 1908), when trying a suit, in respect of the following matters, namely,

(a) discovery and inspection;

(b) enforcing the attendance of any person, including any officer of a banking company, and examining him on oath;

(c) compelling the production of books of account and other documents;

(d) issuing commissions;

(2) Subject to any rules made in this behalf, any Income-tax Officer, specially authorised by the Commissioner in this behalf, may:

(i) enter and search any building or place where he has reason to believe that any books of account or other documents, which, in his opinion, will be useful for, or relevant to, any proceeding under this Act, may be found, and examine them if found;

(ii) seize any such books of account or other documents or place marks of identification thereon or make extracts or copies therefrom;

(iii) make a note or an inventory of any other article or thing found in the course of any search under this section which, in his opinion, will be useful for, or relevant to, any proceeding under this Act;

and the provisions of the Code of Criminal Procedure, 1898 (V of 1898), relating to searches, shall apply, so far as may be, to searches under this section.

(3) Subject to any rules, made in this behalf, any authority, referred to in sub-sec. (1), may impound and retain in its custody for such period as it thinks fit any books of account or other documents produced before it in any proceeding under this Act.

Provided that an Income-tax Officer shall not;

(a) impound any books of account or other documents without recording his reasons for so doing; or

(b) retain in his custody any such books or documents for a period exceeding fifteen days (exclusive of holidays) without obtaining the approval of the Commissioner therefor.

(4) Any proceeding before any authority referred to in this section, shall be deemed to be a judicial proceeding within the meaning of Secs. 193 and 228, and for the Purposes of Sec. 196 of the Indian Penal Code (XLV of 1860)”.

105. Of the above four sub-sections, sub-section (1) which invests the Income-tax authorities with powers of Civil Courts in the matter inter alia of production of documents, together with the present sub-sec. (4), constituted the whole of the original Sec. 37. Then, in 1953, the present sub-sec. (3) was added as sub-sec. (2) and, in 1956, came to be introduced the new sub-sec. (2) and, at that time the several sub-sections were re-arranged, Jas they appear now. This new sub-section (2), with which we are here more directly concerned, was introduced by an amendment under Section 20 of the Finance Act of 1956 and the broad events, which led to it or necessitated it, may be shortly recounted as follows:

106. In 1948–1949, the Income-tax Investigation Commission recommended conferring of powers on Income-tax Officers substantially on the lines as now appearing in Sec. 37(2) (Vide Paragraphs 286, 290 and 293 of the Report, pp. 131, 132 and 133-4). The Taxation Enquiry Commission of 1953–1954 affirmed the necessity and justification of such powers in the Income-tax Officers (vide paragraph 33, Chapter XII, pp. 201–2 of Volume II of the Report). That necessity arose because of large-scale evasion of income-tax and the inadequacy of the existing machinery of law to real with the tax-dodgers or tax-evaders. In that state of things, came the financial proposals of the year 1956, recommended by the Budget Speech of the said year. To give effect to the same, the new sec. 37(2) was inter alia enacted by Section 20 of the Finance Act of 1956. This is the short history of the events, which led to the enactment of the impugned legislation and to which I shall return again in the course of this judgment.

107. On the question of construction of the section, various arguments were made. Of them, the one, relating particularly to the scope of the section, is inextricably connected with the question of its vires or constitutional validity and it, may, accordingly, be more conveniently dealt with along with the said question. That indeed, was also the approach, made by the Parties themselves. In the premises, I would deal with the other points first about the interpretation of the aforesaid Section 37(2) of the Indian Income-tax Act.

108. On the above question of interpretation or construction of the relevant sub-section namely, sub-section (2) of Section 37 of the Indian Income-tax Act, three points may be noted at this stage. The sub-section opens with the words “subject to any rules made” which, in my opinion, mean the same thing as ‘subject to rules, if any, made’. The sub-section, again, speaks of “any Income-tax Officer, specially authorised by the Commissioner in that behalf,” which, more appropriately, would contemplate this special authority in each particular case. It seems to me also that the words “he has reason to believe” and “in his opinion” refer to the Income-tax Officer and not the Commissioner. My reasons for the above view will be given Presently “when I shall be dealing with the specific arguments on these particular points.

109. The point of construction, apart from the constitutional aspect, has been put by Mr. Sanyal on the several Parts of the impugned section (Sec. 37(2)) as follows:

He has argued first that, as the sub-section opens with the words “subject to any rules made in this behalf”, its proper interpretation would be that, until and unless rules are made, the powers, given under the section, could not and should not operate and could not and should not be exercised. He has sought to re-inforce this submission by pointing to the very wide, extensive and drastic nature of the powers, conferred by the impugned sub-section, and has urged that, in the circumstances, it is only reasonable to hold that the legislature never intended to give these extensive and drastic powers to the Executive without appropriate check by or in the shape of necessary rules for regulating their exercise and, from that point of view, the phrase in question should be construed, as suggested by him. The importance of this submission lies in the fact that, when the impugned searches and seizures were made, there were, admittedly, no rules, relevant for purposes of this sub-section, and, accordingly, if the said submission, be correct, the above searches and seizures would obviously be illegal and cannot be supported or sustained.

110. I am, however, unable to accept Mr. Sanyal's contention. The words are plain and they do not suggest necessary pre-existence of the rules. The rules may be existing or future and, if, at the point of time, the Powers under the section are sought to be exercised, there be any rules, relevant for the purpose, the exercise of those powers must, of course, be subject to the same. The phrase, however, does not, in my opinion, necessarily suggest pre-existence of any rules and does not forbid the exercise of the powers in question without the framing of rules. The sub-section, again, as we shall see hereinafter, would be perfectly constitutional even without rules and so there is no occasion here for construing the phrase differently to avoid unconstitutionality of this particular statutory provision. Mr. Sanyal relied on the decision of the Supreme. Court in the case of Narendra Kumar v. Union of India, AIR 1960 SC 430, in support of his suggested construction, but it is obvious that the said decision, far from supporting Mr. Sanyal, is really against his aforesaid contention. There the relevant words were “except and in accordance with”, which obviously contemplate pre-existence of the particular thing, contemplated therein, as, unless it is there, no question can arise of acting “except and in accordance with” the same, or, even “in accordance with” the same. In my opinion, there is, ordinarily, — and as it is usually found, — a fundamental difference between the two phrases “subject to” and “in accordance with”, — not to speak of the more extreme and emphatic phrase “except and in accordance with”, — in that the latter contemplates necessary preexistence of the particular thing, while, normally speaking, the former would not necessarily contemplate such-pre-existence and, particularly, when the words are “subject to any rules made in this-behalf’, — and here I lay special stress on the word ‘any’, — they contemplate rules, if any, or, in other words, the phrase is synonymous with and should be read as ‘subject to rules, if any, made in this behalf’. Incidentally I may point out here that Section 41 of the Indian Arbitration Act, 1940, to which our attention was specifically drawn by Mr. Meyer in the course of his argument, even though much weaker and less happily worded, the word ‘any’ not being there in the said section, seems to support the above view, as it has never been contended, — and it is almost impossible to contend, — that, although the old Indian Arbitration Act of 1899 and the arbitration provisions to the Code of Civil Procedure, which constituted, at the time, the entire law of arbitration in this, country, were repealed by this new Act of 1940, — thus creating and leaving a void without the said new Act, — the aforesaid Section 41 of the new 1940 Act, which provided for the Procedure and powers of courts in the matter of arbitration, could not operate without prior framing of rules. Indeed, it seems to me that, if the legislature's intention was, as suggested by Mr. Sanyal, the statute would have been differently worded as in Narendra's case, supra, or in a like or similar manner (Vide, for example, Section 10(7) of the Indian Income-tax Act itself, which Provides a fitting contrast to stress the distinction). I would, accordingly, reject this submission of Mr. Sanyal.

111. Mr. Sanyal next argued that, in Sec. 37(2)(i), the words ‘he’ and ‘his’ in the two phrases, “where he has reason to believe” and “in his opinion” refer to the Commissioner and not the Income-tax Officer. It is difficult to accept this argument for various reasons. Structurally and according to plain rules of grammar, the section would abhor any such construction. To adopt it, again, would be to create an absurd impractical situation, as the relative or relevant Proceeding would clearly be one before the Income-tax Officer and relevant and/or usefulness of the books and documents would be for purposes of the said Proceeding and that, obviously, cannot be judged except by one who is acquainted with the details of the same. It would be absurd to require the Commissioner to get himself acquainted with and satisfy himself as to all those details before issuing the special authorisation mentioned in the section. That, indeed, would practically defeat its Purpose. It is to be seen further that Clause (iii) of the sub-section also contains a similar phrase “in his opinion” which cannot but refer to the opinion of the Income-tax Officer, actually conducting or present at the search, and which, in the context, in which it appears, would reasonably point to a similar interpretation of the same phrase in Clause (i), the latter referring to the relevant and/or useful books and documents and the former to any other article or thing, useful or relevant to the Particular proceeding. I am, therefore, unable to accept Mr. Sanyal's contention on this point.

112. Upon the above interpretation of section 37(2), the only other point which will arise on this part of the case is what, if any, are the duties of the Commissioner when granting the special authority or issuing the special authorisation, referred to in the opening Part of the said sub-section. The statute does not expressly say anything on the point, but, as this special sanction or special authority of the Commissioner is obviously intended to act as a check or necessary safeguard against arbitrary, indiscriminate or mala fide exercise of the power of search and seizure, conferred by the statute upon the Income-tax Officers, and as otherwise there would be no meaning in laying down this condition of special sanction as a pre-requisite for the purpose, the Commissioner cannot act here as a mere rubber-stamping authority, according automatically and at the mere wish, desire or request of the Income-tax Officer concerned, the special sanction, required under the statute. Such a view would defeat the very purpose of this salutary provision and stands to be rejected at once. Indeed, the learned Solicitor General did not advance any such argument, but what he contended was that, though, undoubtedly, the Commissioner has to apply his mind to the matter and exercise his individual judgment or discretion while granting or refusing the special sanction, his duty doe, not extend to anything more than a due consideration, possible and appropriate at that stage, as to whether there is a prima facie case for the proposed or intended search and seizure etc. Indeed at the stage and in the circumstances, when this question of special sanction may arise, no greater duty can be cast upon the Commissioner or, conceived on his part, as, upon observations, already made by me, he can only have, at that point of time, a prima facie examination of the Position to satisfy himself that the Income-tax Officer concerned has not neglected or failed in his duties under the statute, namely, of forming the opinion and having the belief and the reason for it as envisaged or required by the statute, and that books and documents etc., relevant or useful to or for Purposes of the proceeding before the said Income-tax Officer, are likely to be found in the building or Place in question further having regard to the stage, at) which, and the circumstances, in which, this question may arise, the report of the said Income-tax Officer would ordinarily be the primary, — though, not necessarily, the only, material for the Commissioner's examination or consideration, upon which, he will have to satisfy himself as aforesaid, and such satisfaction will not necessarily be either improper or insufficient (vide 1957 SCA 660, at p. 684 : ((S) AIR 1957 SC 397 at p. 408)).

113. In the above view, I would hold that the authorisation letters in the present case, in all of which the grant of the necessary sanction or authority to the Income-tax Officer concerned to “search and seize” followed the Commissioner's express statement: “Whereas on information, received by you, you have reason to believe and I am satisfied on your report that books of account which, in your opinion, will be useful for or relevant to the Income-tax assessments of the assessees, noted in the margin, under the Indian Income-tax Act, are to be found at premises No. (Municipal number given) and compound, offices and out-houses or other places in connection with the said premises,” satisfy the requisite test under the statute and are, accordingly, valid and quite in order and in accordance and conformity with law.

114. The foregoing discussion also makes it plain that, in granting the necessary sanction or special authority as above, the Commissioner will have to consider each individual case and so the sub-section (Sec. 37(2)) contemplates special authority in each individual case, thus confirming what I have held above to be the more appropriate sense of the phrase “specially authorised”, used in the statute.

115. On Article 14 the arguments were the longest and for obvious reasons. On the face of the impugned sub-section, there is no classification but it plainly provides for two types of powers for obtaining the desired or required documents etc. There can be no denying also that the Powers in that behalf under sub-sec. (1) are the usual, normal 9 and ordinary powers, available to like authorities or tribunals, and sub-sec. (2) confers extraordinary, abnormal and drastic powers. Prima facie, therefore, there is scope for discrimination and the question naturally arises whether this is violative of Article 14.

116. The underlying principle of this Article and its requirements are now well-established, but, that notwithstanding, its application is a matter of considerable difficulty in many individual cases. This is due, primarily, to the fact that there is or can be no rigid or inflexible rule for the purpose and the approach and emphasis must vary and cannot be uniform and it must depend upon the nature, scope, purpose, aim and object of the Particular legislation. Indeed, no hard and fast rule can be laid down in the matter of such application. This has been pointed out by the Supreme Court on numerous occasions and it will be useful to recall some of those observations to get a broad outline of the Court's duty in such matters and a true perspective of the relevant materials which will aid it in the discharge of that duty.

117. Thus, in (1956) SCA 259 at page 286 of the report (SCA): ((S) AIR 1956 SC 246) (at page 262 of AIR), Bhagawati, J., delivering the unanimous judgment of the Court, spoke on the point as follows:—

“The principles underlying Article 14 of the Constitution are well-settled. The only difficulty which arises is in regard to the application of these Principles to the facts of a particular case and the Court has to consider the terms of the impugned legislation having regard to its background and the surrounding circumstances so far as may be necessary to do so in order to arrive at a conclusion whether it infringes the fundamental right in question”

and, in the more recent case of AIR 1960 SC 457 at page 459, in the majority judgment, delivered by Gajendragadkar, J., the matter was elaborated further in the following manner:—

“The scope and effect of the provisions of Article 14 have been considered by this Court on several occasions and the matter has been clarified beyond all doubt. The equality before law which, is guaranteed by Article 14 no doubt prohibits class legislation, but it does not prohibit the Legislature from legislating on the basis of a reasonable classification. If the classification is reasonable and is found on intelligible differentia and the said differentia have a rational relation to the object, sought to be achieved by the statute, based on such reasonable classification, the validity of the statute cannot be successfully challenged under Article 14. These propositions have been repeated so many times during the past few years that they now sound almost platitudinous. Thus the enunciation of the principles which flow from the fundamental right enshrined in Article 14 now presents no difficulty; it is, however, in the application of the said Principles that difficulties often arise. In applying the said principles to the different sets of facts, Presented by different cases, emphasis may shift and the approach may not always be identical; but it is inevitable that the final decision about the vires of any impugned provision must depend upon the decision which the Court reaches, having regard to the facts and circumstances of each case, the general scheme of the impugned Act and the nature and effect of the provisions, the vires of which are under examination.”

118. It has further been laid down by the Supreme Court in the same case at p. 464 that—

“In considering the validity of the impugned statute on the ground that it violates Article 14, it would first be necessary to ascertain the Policy, underlying the statute, and the object, intended to be achieved by it. In this process, the Preamble to the Act and its material provisions can and must be considered. Having thus ascertained the policy and the object of the Act, the Court should apply the dual test in examining its validity: Is the classification rational and based on intelligible differentia and has the basis of differentiation any rational nexus with its avowed Policy and object? If both these tests are satisfied, the statute must be held to be valid; and in such a case the consideration as to whether the same result could not have been better achieved by adopting a different classification would be foreign to the scope of the judicial enquiry. If either of the two tests is not satisfied, the statute must be struck down as violative of Article 14.”

119. The scope and context of the necessary examination has been further elucidated by the Supreme Court in the still more recent case of AIR 1960 SC 554, where their Lordships observed at page 559 that—

“When the constitutionality of an enactment & challenged on the ground of violation of any of the Articles in Part III of the Constitution, the ascertainment of its true nature and character becomes necessary, i.e, its object matter, the area, in which it is intended to operate, its purport and intent have to be determined. In order to do so, it is legitimate to take into consideration all the factors such as history of the legislation, the Purpose thereof, the surrounding circumstances and conditions, the mischief which it intended to suppress, the remedy for the disease which the legislature resolved to cure and the true reason for the remedy.”

and the test of reasonableness for purposes of Article 14 has also been formulated by the Supreme Court in the following passage:—

“A classification must have reasonable relation to the object, sought to be achieved. The standard or reasonableness is inextricably conditioned by the extent and nature of the evil and the urgency for eradicating the same. (Madhubhai Amathalal Gandhi v. Union of India, AIR 1961 SC 21 at p. 28).”

120. For judging, then, the validity of a statute under Article 14 of the Constitution, it may be necessary to ascertain its terms, scope and object, its policy and purpose, its general scheme and its true nature, character and effect and this ascertainment may well involve, — and that quite legitimately, — a study of its entire background, represented by its history and the history of the times, which mean and include the surrounding circumstances and conditions, prevailing at the date of its enactment, the mischief which it was designed or intended to suppress, the remedy, adopted by the legislature for that purpose, and the true reason for the same and, in this process of study and ascertainment, the preamble of the particular statute, — and I would include here its title too, — and its material Provisions, read in the above background or as part of it, — may well be the key to the understanding of the true constitutional Position, bearing and touching upon the question of vires of the impugned legislation.

121. Having indicated broadly the various materials which may require consideration for determining the validity or otherwise of a particular statute under Article 14 of the Constitution, I Proceed now to set out — though, possibly, at the risk of some repetition, — its underlying principle, — and with it also some of the general principles, relevant for purposes of the above determination, — and the several classes or categories of cases which, in the light of the excellent and exhaustive analysis of the Article in the case of (1958) SCA 754 sc : 1959 SCR 279 : (AIR 1958 SC 538), use fully define its scope for all practical purposes.

122. Article 14 is one of those Articles of the Constitution which have repeatedly come up before the Supreme Court ever since the Constitution came into force. It was scanned, analysed and considered by the Supreme Court in a series of cases, which were reviewed by a Constitution Bench of seven Judges in the case of Budhan Choudhury v. The State of Bihar, (1955) 1 SCR 1045 sc : (1955) SCA 173 : ((S) AIR 1955 SC 191), and its meaning, scope and requirements were authoritatively laid down in that case. In Ram Krishna Dalmia's case, 1958 SCA 754 : (AIR 1958 SC 538) (supra), there was a re-statement of this branch of the law in the following terms:—

“It is now well-established that while Article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of Legislation. In order, however, to pass the test of permissible classification, two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things, that are grouped together, from others, left out of the group, and (ii) that differentia must have a rational relation to the object, sought to be achieved by the statute in question. The classification may be founded on different bases, namely, geographical, or according to objects or occupation or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration. It is also well-established by the decisions of this Court that Article 14 condemns discrimination not only by a substantive law but also by a law of procedure.”

123. Which may well be said to contain a full and exhaustive statement of the underlying principle or principles of the aforesaid Article of the Constitution.

124. Of the general Propositions or Principles, to which reference has been made above, it will be sufficient, for our present purpose, to recall only the following:—

“(b) that there is always a presumption in favour of the constitutionality of an enactment and the burden is upon Him, who attacks it, to show that there has been a clear transgression of the constitutional principles;

(c) that it must be presumed that the legislature understands and correctly appreciates the need of its own people, that its laws are directed to problem made manifest by experience and that its discriminations are based on adequate grounds:

(d) that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases, where the need is deemed to be the clearest;

(e) that, in order to sustain the presumption of constitutionality, the Court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation; and

(f) that, while good faith and knowledge of the existing conditions on the part of a legislature are to be presumed, if there is nothing on the face of the law or the surrounding circumstances, brought to the notice of the Court, on which the classification may reasonably be regarded as based the presumption of constitutionality cannot be carried to the extent of always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals' or corporations to hostile or discriminating legislation.”

125. And, of the several classes or categories of cases under the Article, as mentioned in Ram Krishna Dalmia's case, 1958 SCA 754 : (AIR 1958 SC 538), we need not concern ourselves with any except with the last three, namely,—

“(iii) A statute may not make any classification of the persons or things for the purpose of applying its provisions, but may leave it to the discretion of the Government to select and classify persons or things to whom its provisions are to apply. In determining the question of the validity or otherwise of such a statute, the Court will not strike down the law out of hand only because no classification appears on its face or because a discretion is given to the Government to make the selection or classification, but will go on to examine and ascertain if the statute has laid down any Principle or policy for the guidance of the exercise of discretion by the Government in the matter of the selection or classification. After such scrutiny the Court will strike down the statute if it does not lay down any Principle or policy for guiding the exercise of discretion by the Government in the matter of selection or classification, on the ground that the statute provides for the delegation of arbitrary and uncontrolled Power to the Government so as to enable it to discriminate between persons or things, similarly situate, and that, therefore, the discrimination is inherent in the statute itself. In such a case, the Court will strike down both the law as well as the executive action taken under such law, as it did in the case of 1952 SCR 284 : (AIR 1952 SC 75); 1954 SCR 803 : (AIR 1954 SC 224), and Dhirendra Krishna Mandal v. The Superintendent and Remembrancer of Legal Affairs, (1955) 1 SCR 224 : (AIR 1954 SC 424).

(iv) A statute may not made a classification of the persons or things for the purpose of applying its provisions and may leave it to the discretion of (the Government to select and classify the persons or things to whom its Provisions are to apply but may at the same time lay down a policy or principle for the guidance of the exercise of discretion by the Government in the matter of such selection or classification; the Court will uphold the law as constitutional, as it did in 1952 SCR 435 : (AIR 1952 SC 123).

(v) A statute may not make a classification of the persons or things, to whom their provisions are intended to apply, and leave it to the discretion of the Government to select or classify the persons or things for applying those Provisions according to the policy or the principle, laid down by the statute itself, for guidance of the exercise of discretion by the Government in the matter of such selection or classification. If the Government in making the selection or classification does not proceed on or follow such Policy or Principle, it has been held by this Court, e.g, in 1952 SCR 435 : (AIR 1952 SC 123), that in such a case the executive action but not the statute should be condemned as unconstitutional,”

as, obviously, the instant case is one, where no classification appears on the face of the statute but the matter of selection or classification is left to the discretion of the Executive.

126. In the above context, the question at once arises, within which of the above classes or categories would the present case fall, and the answer would clearly depend upon the existence or otherwise of a guiding principle or policy of the impugned statute, which would define its scope and purpose, and aid, regulate and control the intended selection or classification.

127. It thus becomes necessary to ascertain the policy and purpose of Section 37(2) of the Indian Income-tax Act and to see whether they offer any guide or guidance in the matter of the aforesaid selection or classification, and, if so, to determine its scope by finding out the said classification and to examine them whether the said classification is reasonable in the sense that it is or can be reasonably held to be based on ‘an intelligible differentia’ which has a rational or reasonable relation or nexus to the object of the statute, or, to put in broadly, in the sense that the said particular classification, based as aforesaid, has such a relation or nexus to the said object.

128. To ascertain the policy and purpose of the impugned sub-section, I shall refer first to its title and preamble, which as seen above, are legitimate matters for consideration in that behalf. It has already been stated that the said impugned sub-section was introduced by the Finance Act of 1956. Its title and preamble would thus be necessarily referable to the same. That Act was entitled the Finance Act, 1956, with a further description that it was an Act to give effect to the financial proposals of the Central Government for the financial year 1956–1957 and these proposals embraced inter alia the conferring of powers on the Income-tax Authorities as made in the new Sec. 37(2). This is evident from the Finance Minister's Budget Speech of the year (1956–1957), by which the said proposals were commended to Parliament, leading eventually to the enactment of the said new sub-section. The relevant portion of the said Budget Speech was as follows:—

“It is also proposed to give the Department powers of search and seizure of accounts and documents which the Investigation Commission had and which the Taxation Enquiry Commission have recommended the Department should have. The experience of the last year and a half has shown that unless the Department is armed with these powers it is not possible effectively to investigate cases of tax evasion. I have no doubt that the House will give its wholehearted support to measures taken to prevent and detect large-scale tax evasion and it may take my assurance that the new powers taken now will not be exercised unless they are absolutely necessary.”

129. Earlier, the short history of the events, leading to this particular legislation, has been set forth. Therein, reference has been made to the reports of the Income-tax Investigation Commission (1948–1949) and the Taxation Enquiry Commission (1953–1954). These reports make it abundantly dear that there was large-scale tax evasion and grave necessity of dealing with the same and, for that purpose, they recommended the measure which ultimately was commended to Parliament by the Budget Speech of 1956–1957 and to implement that) recommendation the Present sub-section (S. 37(2)) was enacted.

130. In the above background and in the light of its title and preamble, as set out hereinbefore, the impugned statute discloses a clear policy of achieving the purpose of Preventing tax-evasion and, with that end in view, it seeks to invest the Income-tax authorities with the special Powers, provided in it. That policy which must guide the selection or classification for application of the sub-section at once defines its scope by limiting it to cases of Income-tax evasion and it becomes further defined when the impugned sub-section (2) is read in the context and sequence of sub-sec. (1) and in juxta-position with it and the resultant and ultimate effect may well be put as showing that sub-section (2) was designed to apply to cases of tax-evasion where sub-section (1) was not likely to yield the desired result and ensure Production of the required documents. Thus limited, sub-section (2) would disclose a classification which is or can reasonably be held to be based on an intelligible differentia, much more than the classification, implied in the idea of substantial tax-evaders and upheld by the Supreme Court in 1956 SCA 259 : ((S) AIR 1956 SC 246) (supra) and, clearly also, it has or bears a rational relation or nexus to the object of this particular statute, namely, detection and prevention of tax-evasion. It has been argued by Mr. Sanyal that the discretion here is vested in the Income-tax Officers and, in the circumstances, merely policy, as noted above, may not be a sufficient guide or its exercise and thus the impugned sub-section would still be vulnerable under Article 14 of the Constitution and/or on the ground of invalid delegation. That argument, however, cannot, in my opinion, succeed. The discretion, though vested, in the first instance, in the Income-tax Officers, is expressly subject to control by the Commissioner, without whose special authorisation it cannot be exercised or effectively exercised. This requirement about previous sanction of the Commissioner is, roughly speaking, a sufficient check in the context of the above policy, and, in the circumstances, the statutory discretion cannot be said to be arbitrary, unguided, uncanalised or uncontrolled so as to invalidate the particular statute as a piece of unwarranted or invalid delegated authority or legislation. If authority be needed for this view, reference may at once be made to the following observations of Mukherjea, J., in (1952) SCA 245, s.c (1952) SCR 435 : (AIR 1952 SC 123), quoted with approval in 1956 SCA 259 at p. 294 : ((S) AIR 1956 SC 246 at p. 260):—

“But a statute will not necessarily be condemned as discriminatory, because it does not make the classification itself but, as an effective way of carrying out its policy, vests the authority to do it in certain officers or administrative bodies…… In my opinion, if the legislative policy is clear and definite and as an effective method of carrying out that policy a discretion is vested by the statute upon a body of administrators or officers to make selective application of the law to certain classes or groups of persons, the statute itself cannot be condemned as a piece of discriminatory legislation……… In such cases, the Power, given to the executive body, would import a duty on it to classify the subject-matter of legislation in accordance with the objective indicated in the statute. The discretion that is conferred on official agencies to such circumstances is not an unguided discretion; it has to be exercised in conformity with the policy to effectuate which the direction (discretion) is given and it is in relation to that objection that the propriety of the classification would have to be tested.”

and to the more direct decision of the Supreme Court in (1957) SCA 660 : ((S) AIR 1957 SC 397), where a similar argument was repelled by their Lordships by the following observations:—

“Even if there is a possibility of discriminatory treatment of persons, falling within the same group or category, such possibility cannot necessarily invalidate the piece of legislation (vide p. 683 (of SCA): (p. 408 of AIR)……… It may also be remembered that this power invested not in minor officials but in top-ranking authorities like the Commissioner of Income-tax who act on the information supplied to them by the Income-tax Officers concerned. This power is discretionary and not necessarily discriminatory and abuse of power cannot be easily assumed where the discretion is vested in such high officials……… There is, however, a Presumption that public officials will discharge their duties honestly and in accordance with the rules of law … (and) that the administration of a particular law would be done ‘not with an evil eye and unequal hand’” (Vide p. 684 (of SCA): (at p. 408 of AIR) (See also Ram Krishna Dalmia's case, (1958) SCA 754 at p. 777 : (AIR 1958 SC 538 at p. 551)).

131. Indeed, the decision and dicta in Pannalal Binjraj's case, (1957) SCA 660 : ((S) AIR 1957 SC 397), which are binding on us and cannot be questioned by this Court, — practically conclude the matter here against the petitioners, so far as Article 14 is concerned. From the Point of view of that Article, that was probably a worse case, if, as it appears from the Report (Vide p. 682 (of SCA)): (p. 407 of AIR), the preamble there, far more remote and in much more general terms, disclosing only the purpose of levying, assessing and collecting Income-tax, had to be brought in aid for meeting the challenge under Article 14, but, even there, the said challenge was repelled. If that Preamble and exigencies of tax collection could save the section (Sec. 5(7-A)), there impugned, the same would also be sufficient for saving the present impugned sub-section. It is unnecessary, however, to go to that length in the instant cases or to examine tile view, apparently taken, — or the impression left, — at p. 687 of the above report (SCA): (at p. 410 of AIR), that Article 14 of the Constitution applies only to matters of fundamental rights as distinguished from statutory rights but I may just add, with respect, that it may well be contended, — and that was not seriously disputed by the learned Solicitor General, — that Article 14 itself enshrines a fundamental right, namely, the right to equality or equal protection, be it in the matter of fundamental rights or statutory rights, and the above distinction may well be misunderstood. Nothing further need be said here on this particular subject.

132. It is to be noted here, that, under the impugned Section 37(2) of the Indian Income-tax Act, the legislature has also provided other checks, requiring inter alia that the Income-tax Officer concerned must form the opinion that the books, documents, etc., to be searched and seized thereunder, are relevant and/or useful to the Particular Proceeding or proceedings. Though such relevancy and/or usefulness of the aforesaid books and documents etc. will be determined in the first instance by the said Income-tax Officer concerned, his determination is expressly made subject to a prima facie check up by the Commissioner of Income-tax, who should also satisfy himself prima facie as to their possible location or availability in the Premises to be searched, where, the statute requires, the said Income-tax Officer must have reason to believe that they will be found. The duty thus cast upon the Income-tax Officer, of forming opinion and having reason to believer as aforesaid, must, in the context and background of the provision for compulsory checkup by the Commissioner, be held to be valuable and substantial safeguards in the matter of searches and seizures under the impugned section 37(2). Further, the legislature has also provided, in Clause (iii) of the said impugned sub-section for the application of the relative Provisions of the Code of Criminal Procedure to searches under the said sub-section, and, of them, Sec. 103 is a well tested procedural check against arbitrary conduct of search and seizure and Sec. 96, if attracted by the aforesaid Clause (iii), may well support the scope of she impugned Sec. 37(2), as defined above by me.

133. In the absence of mala fide and in the context of the object and policy of the statute, as explained hereinbefore, the above are, in my opinion, sufficient checks under the law for the effective control of the statutory discretion, both from the substantive and the procedural point of view and, in the circumstances, the said discretion cannot be said to be naked or arbitrary or unguided, uncontrolled or uncanalised so as to render the statute in question bad, unreasonable or unconstitutional. I have only to add that, in the light of the foregoing discussion, the instant cases will be distinguishable from and will not be affected by the decision in AIR 1960 SC 468, laying down that the mere requirement of the State Government's sanction is not sufficient guarantee of reasonableness in all cases and under all circumstances and/or conditions. That, indeed, from its very nature, is not an absolute rule but depends on the nature of the particular restriction and the facts and circumstances of the particular case.

134. I have held above that, in the relevant context for purposes of Article 14, the impugned sub-section has a limited scope and embodies a classification. It may be said that, in so doing, I have interpreted the statute and that, in this process of interpretation, I have taken the aid of extraneous materials, which may not be strictly relevant or legitimately available for such purpose. I do not think, however, that this charge is true. I have ascertained the scope of the impugned statute from a reading of its title and preamble, in the background of its history and surrounding circumstances and on a reckoning of the mischief or the evil which it was designed to suppress and which explains the necessity and the reason for its enactment, and, to the use of these materials for the aforesaid purpose, no legitimate objection can now be taken. Whatever view might have prevailed on this point in earlier times, — and there the divergence of judicial opinion was somewhat acute, — the modern tendency favours a bolder and more liberal outlook, marking a new orientation in the matter of this approach, and, particularly, when the scope of a statute falls to be determined, the above are, undoubtedly, relevant and legitimate matters or materials to be taken into consideration. There is abundant high authority for this point of view but it is unnecessary and obviously impossible to refer to all of them and it is enough to cite only the following.

135. Thus in Poppadal Shah v. The State of Madras, (1953) SCA 466 : (AIR 1953 SC 274), their Lordships of the Supreme Court made the following observations:—

“It is a settled rule of construction that to ascertain the legislative intent, all the component parts of a statute are to be taken together and each word, phrase or sentence is to be considered in the light of the general purpose and object of the Act itself……… The title and Preamble, whatever their value might be as aids to the construction of a statute, undoubtedly throw light on the intent and design of the legislature and indicate the scope and purpose of the legislation itself.”

and in (1956) SCA 259 : ((S) AIR 1956 SC 246), occurs the following passage at page 291 (of SCA): (at p. 264 of AIR) of the report:—

“In order to ascertain the scope and Purpose of the impugned section reference must first be made to the Act itself. The preamble of a statute has been said to be a good means of finding out its meaning and as it were a key to the understanding of it.”

136. And even more emphatic and elaborate — and obviously more direct and more comprehensive — were the words, used by Lord Simonds in Attorney General v. Prince Earnest Augustus of Hanover, (1957) 1 All ER 49, and appearing at pp. 53–4 of the report, namely:—

“Since a large and ever increasing amount of the time of the Courts has, during the last three hundred years, been spent in the interpretation and exposition of statutes, it is natural enough that in a matter so complex, the guiding principles should be stated in different language and with such varying emphasis on different aspects of the problem that support of high authority may be found for general and apparently irreconcilable Propositions. I shall endeavour not to add to their number, though I must admit to a consciousness of inadequacy if I am invited to interpret any part of any statute without a knowledge of its context in the fullest sense of that word.” (Vide pp. 53–4).

137. And, by ‘context’, the noble Lord meant, inter alia,

“the historical background …… and the state of the relevant law as well as the verbal context of the Act itself, including its Preamble, the existing state of the law, other statutes in pari materia and the mischief which I can, by those and other legitimate means, discern that the statute was intended to remedy.” (Vide p. 53 of the report).

138. Indeed, as I have occasion to remark on an earlier occasion (Vide Mukunda Das Nandy v. Bidhan Chandra Boy, 63 Cal WN 834 at p. 849 : (AIR 1960 Cal 67 at p. 74):—

“The recent observations of Lord Simonds in (1957) 1 All ER 49 at pp. 53–4, may open a new chapter and serve as a new guide to the development of this branch of the law too in the light of requirements under modern conditions. Those observations echo the sentiments of many judicial minds and they are so very instructive and so pregnant with possibilities that it will be useful to recall them whenever difficult statutes will fall to be construed, from whatever standpoint such construction may arise or be deemed to be necessary.”

139. The above statements and principles will support, sustain and justify the construction, placed by me on sub-section (2) of section 37, limiting its scope and applicability to cases where sub-sec. (1) would be or would be deemed to be unlikely to yield any result. That construction would also be supported by the purpose, scheme and structure of the above two sub-sections (1) and (2) of Sec. 37 and two other recognised rules of construction to which I shall presently advert.

140. It is a well-established rule of interpretation that courts should try to construe a statute, wherever possible, so as to avoid a conflict between its various provisions and to preserve its constitutionality (Vide State of Uttar Pradesh v. Basti Sugar Mills Co. Ltd., AIR 1961 SC 420 at p. 426).

141. It is also well-settled that

“where the language of a statute in its ordinary meaning and grammatical construction, leads to a manifest contradiction of the apparent purpose of, the enactment, or to some inconvenience or absurdity, hardship or injustice, presumably not intended, a construction may be put upon it which modifies the meaning of the words, and even the structure of the sentence.”

(Maxwell on ‘The Interpretation of Statutes’, 10th Edition (1953), page 229).

142. Bearing the above in mind, let us study and construe this particular statute. Clearly enough, the aim and object of the section (Sec. 37) is to obtain relevant and/or useful books and documents etc. for purposes of Income-tax Proceedings. Sub-section (1) is the usual or normal procedure, providing for ordinary or common powers in that behalf, and sub-section (2) is, from its very nature and provisions, obviously drastic and severe with powers of similar description.

143. In the above view and in the light of the above rules or principles of construction, in the context of sub-section (1) and having regard to the sequence and juxta-position of the two sub-sections (1) and (2) of Sec. 37, the said sub-section (2), reasonably construed, cannot but be held to be applicable only to those extraordinary or abnormal cases, where sub-section (1) would be deemed to be inadequate or unlikely to yield any result. The powers under sub-section (2) are additional or special powers, designed to supplement those under sub-section (1) and to meet the above abnormal or special cases and exercisable only when the powers under sub-section (1) are not likely to be effective.

144. I have therefore, come to the conclusion that Section 37(2) of the Indian Income-tax has a well defined scope, as explained above, implying and embodying a classification, which satisfied the test of reasonable classification, permissible under Article 14 of the Constitution, being based on an intelligible differentia and having a rational relation or nexus to the object of this particular statute. The classification, — or rather the making of it, — is no doubt, left to the discretion of the Executive or the Administrative authority but it has to be made upon and in the light of the principle, policy and purpose of the particular statute and as, in the ultimate analysis, it will also be the discretion of the highest officer in this Particular administration, it cannot be held to be naked of arbitrary or unguided discretion, uncanalised or uncontrolled so as to bring the statute in question either within the mischief of Article 14 of the Constitution or of invalid delegation.

145. In the above view, which will also be supported by the more recent decision of the Supreme Court in (S) AIR 1957 SC 329, I would hold that Sec. 37(2) is not violative of Article 14 of the Constitution. I am conscious that, in (S) AIR 1957 SC 329, their Lordships of the Supreme Court found, from the impugned section itself, its purpose and policy and the relative scope of its different provisions but, here, too, as seen above, the purpose, scope and policy of the impugned provision (Sec. 37(2) has been found from the scheme, structure and contents of the entire Sec. 37 and the sequence and juxtaposition of its different parts, — and, particularly, of sub-sections (1) and (2) thereof, — and, also, from other extraneous but legitimate materials. For Purposes of Article 14, therefore, the present cases cannot be distinguished from Niemla Textile Finishing Mills case and the petitioners' challenge under that Article must fail on the authority of that decision too.

146. On Article 19 my discussion will be short as I do not think that the impugned search and seizure under Sec. 37(2) can be said to affect a fundamental right under that Article in view of the decision of the Supreme Court in M.P Sharma v. Satish Chandra (1954) S.C.A 449 at p. 543, s.c 1954 SCR 1077 at p. 1081 : (AIR 1954 SC 300 at p. 302). That decision, which is binding on us and the authority whereof cannot be questioned by this Court, has definitely ruled that mere search does not touch any fundamental right and seizure, if temporary, will also be of the same character. The seizure, here contemplated, that is, under Section 37(2) of the Indian Income-tax Act, is obviously temporary, as it cannot last beyond the relative proceeding or proceedings under the Act, for which or in connection wherewith the same is made. A point has been raised that there is no provision for return of the seized articles, but that does not seem to be necessary, as, when the seizure is for or in connection with a Particular proceeding, the Income-tax Officer would have no power or jurisdiction to retain the seized articles beyond the same. In that view, the seizure under Section 37(2) of the Indian Income-tax Act would be temporary and thus not violative of any fundamental right upon the authority of the above Supreme Court decision. While, on the above, it is necessary to add that the case of (1955) 2 SCR 603 sc : (1955) S.C.A 1140 : ((S) AIR 1955 SC 661), which was cited by Mr. Sanyal in answer to the above decision in 1954 SCR 1077 : (AIR 1954 SC 300), cannot serve his purpose as, beyond a mere expression of opinion, though in somewhat emphatic terms (Vide p. 1152 of (1955) SCA: (p. 669 of AIR)), not ultimately taken to a decision, that case ((1955) SCA 1140 : ((S) AIR 1955 SC 661)) contains nothing more on this particular Point, which appears to have been left open by their Lordships (Vide the second paragraph at the very same p. 1152 of the said Report (SCA): (at p. 669 of AIR)). I do not think that, in the circumstances, Sharma's case, — which contains a definite decision on the point — can be said to have been affected at all as, obviously, a mere dictum, — an obiter dictum, at the most, — cannot prevail against a decision. On the present state of the authorities, therefore, the petitioners' challenge under Article 19 of the Constitution would fail.

147. Even otherwise, that is upon the assumption that search and seizure violates a fundamental right under Article 19(1), clauses (f) and (g), the only point will be whether or not the restriction or limitation of that right by reason of the impugned Section 37(2) of the Indian Income-tax Act is a reasonable restriction ‘in the interests of the general public’ within the meaning of Article 19, sub-Articles (5) and (6).

148. On this Part of the case, it is necessary to observe, in the first instance, that the words ‘in the interests of the general public’ are of wide import and great amplitude (Vide (1958) SCA 891 at p. 898 : ((S) AIR 1957 SC 896 at p. 899). Vide also 65 Cal WN 213 at p. 245 : (AIR 1961 Cal 125 at p. 142) (SB)). It is also well to recall here the of quoted observations of the Supreme Court in 1952 SCR 597 at p. 607 : (AIR 1952 SC 196 at p. 200), on the Point of application of the test of reasonableness to a particular restriction. Those observations run as follows:

“It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned and no abstract standard, or general pattern of reasonableness can be laid down as applicable to all cases. The nature of the right, alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict.” (See also AIR 1959 SC 300 at p. 303).

149. I may also point out at this stage that mere absence of a right of representation would not necessarily make the restriction unreasonable and the statute bad. A right of representation may of course, be a matter for consideration in judging the reasonableness or otherwise of a particular restriction but it will be only one of several such matters and its presence or absence would not necessarily be decisive of the reasonableness or otherwise of the particular restriction and the consequent validity or otherwise of the impugned statute. Support for this view would be found from AIR 1959 SC 626 at p. 632.

150. I would, therefore, hold that the impugned Section 27(2) of the Indian Income-tax Act cannot be struck down as violative of Article 19(1), clauses (f) and/or (g) of the Constitution. Indeed, the validity of the impugned Sec. 37(2) will be amply supported by the authority of the Supreme Court in 1957 SCA 660 : ((S) AIR 1957 SC 397) to which reference has already been made and which upheld the validity of another section (S. 5(7-A)) of the same statute, (the Indian Income-tax Act), which stood in no better position than the Present sub-section from the Constitutional point of view.

151. It is argued, however, that Virendra's case, (1958) SCA 891 : (S) AIR 1957 SC 896 would militate against the above point of view and, for this, reliance is placed on that passage in the said decision (Vide pp. 905–6 of (1958) SCA and pp. 903 of the AIR report) which invalidated one of the sections (Section 3 of the Punjab Special Powers (Press) Act, 1956), there involved, on the ground of absence of right of representation and absence of time limit. I do not think, however, that the position here is similar.

152. As to time limit, I have already Pointed out that is inherent in the present sub-section itself in that the seizure and detention or retention cannot last beyond the particular proceeding or proceedings.

153. On the point of representation also, I have already said that it is not a pre-requisite or an essential requisite of the reasonable restriction. But, that apart, the present cases are distinguishable from Virendra's case. Here, too, as in the said case cited, (Vide also P.B.N.C.M.U v. Commissioner of Police, 65 Cal WN 213 at p. 248 : (AIR 1961 Cal 125 at p. 143) (SB), no right of representation prior to the impugned act can be reasonably claimed or conceded, as, obviously and from the very nature of things, that would defeat the propose of the statute. But, while, in Virendra's case, 1958 SCA 891 : ((S) AIR 1957 SC 898), there was no right of post-act representation also, the instant statute is materially different. And it seems to me that the Party affected or aggrieved by any action under the impugned new S. 37(2) would have a right to move against it, be it the action of the Commissioner or of the Income-tax Officer, either by way of review or revision administratively, to the Commissioner and even to the Central Board of Revenue. It is enough for this purpose to refer to Section 5(7)(ii), 5(7-B) and 5(8) of the Indian Income-tax Act and to Section 21 of the General Clauses Act, the last one applying to review, though, even apart from this last-quoted section, the power of administrative review always exists.

154. On behalf of the petitioners, particular reliance was placed on the three decisions of the Supreme Court, reported in (1954) SCA 743, sc : (1955) 1 SCR 448 : (AIR 1954 SC 545), (1955) SCA 1271, sc : (1955) 1 SCR 787 : ((S) AIR 1955 SC 13) and (1955) 2 SCR 1247 sc : (1956) SCA 227 : ((S) AIR 1956 SC 269), but, in my view, all of them are distinguishable and the instant cases are sufficiently and effectually covered by the other three decisions of the Supreme Court, on which the learned Solicitor General practically based his entire argument on the constitutional aspect of the present matter. These are the three decisions in (1955) 2 SCR 1196 sc : (1956) SCA 259 : ((S) AIR 1956 SC 246), 1957 SCR 233 sc : 1957 SCA 660 : ((S) AIR 1957 SC 397) and 1954 SCR 1077 sc : (1954) SCA 449 : (AIR 1954 SC 300), all cited above, and, while the first two appear to conclude the point under Article 14 against the petitioners, the last two, taken together, do, in their cumulative effect, repel and sufficiently answer the petitioners' challenge under Article 19.

155. In Suraj Mall Mohta's case, 1954 SCA 743 : (AIR 1954 SC 545) and also in the Meenakshi Mills case, 1955 SCA 1271 : ((S) AIR 1955 SC 13) and Muthiah's case, 1955-2 SCR 1247 : ((S) AIR 1956 SC 269), the same field was occupied by two statutory provisions (Section 5(4) or 5(1) of the Taxation on Income (Investigation Commission) Act on one side and Section 34 (old and amended) of the Indian Income-tax Act, on the other), disclosing drastic differences in procedure and consequence, and it was left to the Executive to make a selective application of either the one or the other provision, without there being any classification made by the Legislature, or any guiding principle, laid down by it in that behalf. Indeed, it was open to the Executive to apply either of the aforesaid two provisions arbitrarily and indiscriminately against any of the persons, coming under the said two provisions, both of which were applicable to the same class of persons, there being nothing to distinguish one from the other in the matter of such application or as to the persons, to whom they would apply.

156. In Musaliar's case, 1955-2 SCR 1196 : ((S) AIR 1956 SC 246), there was a permissible classification, as found by their Lordships, and the two statutory provisions (Section 5(1) of the Travancore Taxation on Income (Investigation Commission) Act and Section 47 of what may be called the Travancore Income-tax Act, corresponding respectively to section 5(1) of the Taxation on Income (Investigation Commission) Act and old section 34 of the Indian Income-tax Act) were held not to apply to the same class or classes of persons.

157. Indeed, the above two lines of cases, present a marked contrast and the distinction justified different approaches, leading to diametrically opposite conclusions, the constitutional challenge to the vires of the impugned legislation being accepted in the first three cases and repelled and rejected in the fourth.

158. I would now conclude this constitutional discussion by observing that, under both the above Articles (Arts. 14 and 19), the question or reasonableness is relevant and is ultimately a matter for the Court. Under Article 14, however, the question is of reasonable classification on the above two tests of intelligible differentia and reasonable or rational relation or nexus to the object of the particular statute. Under Article 19, the question is one of reasonable restriction to be judged in the light of the observations of the Supreme Court in 1952 SCR 597 at page 607 : (AIR 1952 SC 190 at p. 200), quoted hereinbefore. Under neither, however, for the application of the relative test or tests, is there any fixed standard or uniform approach. The matter, indeed, may differ from case to case and would depend upon the facts and circumstances, bearing upon the particular legislation, and its nature, necessity and purpose.

159. This disposes of all the constitutional attacks on the impugned sub-section and the said sub-section, in my view, survives the same. I need only add, that in substance and on principle, this view on the Constitutional question or questions, involved to these two cases, would also be amply supported by the decisions, already cited in the case of AIR 1961 SC 420.

160. Finally, it was urged by Mr. Sanyal that, in any event, the search and seizure, so far as it related to Premises No. 63/1, Harrison Road, have no valid authorisation in support of the same. He has drawn our attention to the several authorisation letters on record and has pointed out that none of them refers to the said Premises and he has urged, — and urged very strongly, — that, in the premises, the said search and seizure were illegal and without authority of law and, at any rate, therefore, the books and documents etc., seized from that premises could not be retained or detained by the authorities, and, if the said documents etc., could not be separated, all the books, documents and articles, seized under the impugned searches, would have to be returned.

161. The argument is ingenious and attractive but, despite its apparent strength, it must fail in the ultimate analysis. It is to be noticed, in the first place, that premises No. 63/1, Harrison Road, though bearing different municipal number, is sufficiently connected with, inter alia, premises No. 61, and, as a matter of fact, the same building covers both the said premises which have inter-communication and mutual access. The authorisation letter in respect of premises No. 61, Harrison Road, covered places, connected with or in connection with the same, and that, in my opinion, would be sufficient to include premises No. 63/1, in the present case.

162. Indeed, I am inclined to think that, for purposes of these authorisation letters under Section 37(2) of the Indian Income-tax Act, physical connection in the shape, inter alia, of inter-communication and mutual access would ordinarily be sufficient for including properties under the same and one authorisation in respect of one of those properties or particular municipal Premises and places, connected therewith, The test is sufficient identification for purposes of search and seizure under the particular authorisation letter and, in my opinion, that test is amply satisfied here in respect of premises No. 63/1, Harrison Road, by the relevant description in the authorisation letter in respeat of premises No. 61, Harrison Road, covering places, connected therewith or in connection therewith, notwithstanding non-mention therein of the particular municipal number of the said other premises, namely, 63/1, Harrison Road. In matters like these, the substance and not the form should prevail. Any other view would lead to evasion of the statute by unscrupulous persons and I do not feel obliged or justified to permit such evasion. Moreover, in the present case, no such objection was taken at the time of the search of this premises No. 63/1, and apparently, all the interested parties, including the petitioners concerned, described it as premises No. 63, Harrison Road (Vide Exhibit ‘G’ to the petition, — page 30 of the printed paper book Volume I), for which, admittedly, there was a proper authorisation letter.

163. In the circumstances, I feel neither inclined nor compelled to accept Mr. Sanyal's above argument and it is rejected.

164. For the foregoing reasons, I would dismiss these applications and discharge these Rules and concur in the order, proposed by my Lords.

FE/C.

165. Applications dismissed.