Lima Leitao and Co. Ltd. v. Union of India

The short question for consideration in Writ Petitions Nos. 156 and 157 of 1966 is whether a ship chartered by a non-resident time charterer which carries goods shipped at a port in India, and of which the time charterer is disponee owner, is liable to pay tax under section 172 of the Income-tax Act (hereinafter referred to as "the Act"). The question lies in a narrow compass and is primarily one of correct construction requiring examination of the scheme of this section. I shall presently refer to this scheme but before I do so, it would be convenient to briefly recall the material facts giving rise to the petitions. The petitioner is Lima Leitao and Company Ltd.—a company incorporated under the relevant Portuguese statute and the respondents are: (1) the Union of India, and (2) the Income-tax Officer, Panjim. The facts are substantially the same in these petitions except for some minor variations. I shall first discuss the merits of Petition No. 156 before recording the conclusion in Petition No. 157. The answer to the above question would also be the answer in Petition No. 157.

The case of the petitioner-company and the respondents is broadly set out in the correspondence exchanged between them. The affidavits and the counter-affidavit elaborate their case. This correspondence is material. To begin with, the petitioner-company wrote a letter to the respondent No. 2 on 13th April, 1966 (exhibit A). In that letter the petitioner-company stated that Messrs. General Ore International Corporation of Vaduz, Lichten-stein, through their New York office, had taken the ship s.s. "Angelica" on daily hire rate basis and as they were the disponee owners of the ship and also the owners of the iron ore carried by the ship, therefore, they are not liable to pay the tax under section 172 of the Act. A copy of the charter party agreement was enclosed for the information of the respondent No. 2 (exhibit B). This letter was replied by the respondent No. 2 on 23rd April, 1966 (exhibit C). He required the petitioner-company to furnish a guarantee letter—as in the case of the other ship s.s. "Olymos" —to enable him to issue "no objection certificate", as soon as the ship touched Mormugao port for loading the cargo. The ship touched this port on or about 28th of April, 1966. The master of the ship addressed a letter dated 29th April, 1966, to the Commissioner of Income-tax (exhibit D). This was a letter authorising the petitioner-company to act as the agents of the master of the ship for all matters relating to tax on freight earnings. This letter also authorised the petitioner-company to act as the agents for the disponee owners of the ship. The petitioner-company, in order to facilitate the departure of the ship after the cargo was loaded, executed a guarantee bond in favour of the President of India the same day, i.e., 29th of April, 1966, guaranteeing payment of the tax in case of default by their principals, Messrs. General Ore International Corporation of Vaduz, Lichtenstein (exhibit E). They were the disponee owners of the ship. By his letter dated 30th April, 1966 (exhibit F), addressed to the petitioner-company, the respondent No. 2 enclosed the "no objection certificate" for the purposes of port clearance of the ship. He also called for information "in respect of freight earning", etc. This letter was followed by another letter by him dated 3rd August, 1966 (exhibit G). He required the petitioner-company to intimate to him the amount of hire payable to the owners of the ship by the charterers for the entire voyage "due to carriage of iron ore from Mormugao." The cargo carried by the ship was iron ore. He added incidentally that the hire paid to the owners of the ship would form the basis for an assessment under section 172 of the Act. The ship left the port on or about 7th May, 1966. The petitioner-company in their letter dated 16th August, 1966, furnished the information required by him (exhibit H). The information received from their principals (Messrs. General Ore International Corporation of Vaduz, Lichtenstein) was to the effect that the ship was delivered by its owners to their principals on 26th April, 1966. It was re-delivered to these owners on 4th June, 1966. The hire paid to these owners along with other incidental charges was 56,953.68 dollars. The additional information given was to the effect that their principals had stated "that since the voyages terminated prior to June 6th, 1966, the rate of conversion should be that of pre-devaluation and not the present one". The respondent No. 2, on the basis of the information supplied, passed an order of assessment dated 20th August, 1966 (exhibit I). According to that order, one-sixth of the hire paid to the owners of the ship by the time charterers was regarded as the taxable income for the purposes of section 172, and the petitioner-company was, accordingly, held liable to pay tax amounting to Rs. 29,528. This assessment, according to the petitioner-company, was not in conformity with this section and accordingly it had not the support of the law. The assessment order was then followed by the notice of demand under section 156 of the Act, threatening to recover the tax assessed in accordance with the relevant provisions of the Act (exhibit J). The petitioner-company felt aggrieved by this action of the respondent No. 2 and hence, the present petitions under article 226 of the Constitution for an appropriate relief. This, in short, is the background of the case.

Mr. Porus Mehta, learned counsel for the petitioner-company, raised the following questions: (1) that the petitioner-company is not liable to pay the tax as guarantor in terms of the guarantee bond because the time charterers are not liable under section 172 of the Act; (2) that the petitioner-company is not the guarantor for the owners of the ship and, consequently, it is not liable for tax liability, if any, incurred by these owners; (3) that the order of assessment violates the principles of natural justice; and (4) that the guarantee bond is not enforceable as it is not in accordance with the provisions of article 299(1) of the Constitution. The questions Nos. (1) to (3) arise on the affidavits and counter-affidavit. The question No. (4) is not raised in the affidavits.

The first question is the main question. It is conceded in the order of assessment passed by the respondent No. 2 that the ship was time chartered by Messrs. General Ore International Corporation of Vaduz, Lichtenstein (hereinafter referred to as "the time charterers"). It is also conceded in the order that the petitioner-company acted as the agents of these charterers. In their letter dated 13th April, 1966,—and this is an important letter—it was stated by the petitioner-company that the ship was taken on daily hire basis and, therefore, the time charterers became the disponee owners of the ship. It was also stated therein that the time charterers having purchased the iron ore at Mormugao they also become the owners of the iron ore and, therefore, section 172 was not attracted. In other words, the case of the petitioner-company at the earliest stage was that the time charterers were disponee owners both of the ship and of the iron ore shipped and, hence, the question of payment of freight by them for the carriage of their own goods did not arise. Section 172 is self-contained. As will appear from its heading and its scheme, "Profits of non-residents from occasional shipping business" are assessed to tax. The section corresponds to sections 44A, 44B and 44C of the Income-tax Act, 1922, since repealed. It contains 7 sub-sections. Sub-section (1) is a special provision for the levy and recovery of tax in the case of any ship, belonging to, or chartered by a non-resident, which carries goods shipped at a port in India, unless the Income-tax Officer is satisfied that there is an agent of the non-resident from whom the tax will be recoverable under the other provisions of the Act. It is common ground that this sub-section applies to the facts of the case. Sub-section (2) is a charging provision which is mainly relied upon by the respondent No. 2 in support of the order of assessment. A summary assessment in substitution of the regular assessment is what is contemplated. Where a ship referred to in sub-section (1) carries goods shipped at a port in India, one-sixth of the amount paid or payable on account of such carriage to the owner or the charterer, shall be deemed to be income accruing in India to the owner or charterer on account of such carriage. The fiction is employed for the purposes of a speedy assessment. The nexus is between the goods shipped at a port and the amount paid or payable for their carriage to the owner or the charterer. The parties are at issue in regard to the liability under this sub-section. Sub-section (3) imposes an obligation on the master of such a ship to prepare and furnish to the Income-tax Officer a return of the full amount paid or payable to the owner or charterer on account of the carriage of goods shipped at that port since the last arrival of the ship thereat. Provided that where the Income-tax Officer is satisfied that it is not possible for the master of the ship to furnish the return required by this sub-section before the departure of the ship from the port and provided the master of the ship has made satisfactory arrangements for the filing of the return and payment of the tax by any other person on his behalf, the Income-tax Officer may, if the return is filed within thirty days of the departure of the ship, deem the filing of the return by the person so authorised by the master as sufficient compliance with this subsection. It is not in dispute that a return in the prescribed form was not prepared and furnished by the master of the ship before its departure as required. There was also no compliance with the proviso. Sub-section (4) enables the Income-tax Officer, on receipt of the return, to assess the income referred to in sub-section (2), and determine the sum payable as tax thereon at a certain rate specified therein. The return is the basis of assessment. Sub-section (5) is also an enabling provision enabling the Income-tax Officer to call for such accounts or documents as he may require for the purpose of determining the tax payable under subsection (4). This sub-section is linked with the return received under sub-section (4). Sub-section (6) prohibits grant of port clearance to the ship until the Collector of Customs or authorised officer, is satisfied that the tax assessable under this section has been duly paid or that satisfactory arrangements have been made for the payment thereof. Lastly, under sub-section (7), before the expiry of the assessment year, the assessee can exercise the option of being assessed in the regular course under section 143 of the Act. This, in broad, is the scheme of section 172. The guarantee bond was given by the petitioner-company in terms of sub-section (6). The combined operation of this section seems to show that it is intended to ensure the due recovery of tax from the owners or charterers of ships in respect of the profits made by them from carrying of goods, etc, from a port in India.

Mr. Poras Mehta invited my attention to the phraseology used in subsection (2) "where such a ship carries goods shipped at a port in India, one-sixth of the amount paid or payable on account of such carriage to the owner or the charterer shall be deemed to be income accruing in India to the owner or charterer on account of such carriage." The words underlined^* are important. He also invited my attention to similar phraseology in subsection (3) "full amount paid or payable to the owner or charterer 'on account of carriage of all' goods shipped at that port". While denying the liability of the petitioner-company to pay the tax levied in terms of the guarantee bond, he developed his argument thus ; the time charterers hired the ship on time basis as would be clear from the charter party agreement. They were disponee owners of the ship. They carried iron ore purchased by them. There was thus no question of any amount being paid or payable to them on account of carriage of the iron ore. Accordingly the time charterers are not liable under section 172 of the Act. The liability of the petitioner-company—as guarantor—is contingent upon the liability of the time charterers. This section not being applicable to the time charterers because they carried their own goods and, therefore, earned no freight, consequently the petitioner-company is not liable on the guarantee bond. This line of argument is not without substance. I shall examine it but before I do so, it may not be out of place to refer to the charter party agreement placed by the parties on the record by consent.

Charter party agreements are of two main categories: (1) charter party agreements by demise; and (2) time charter or voyage charter agreements not by way of demise. The category (1) is fallen out of use in modern times except in the case of oil tanker trade. We are not concerned with this category. We are concerned with category (2). It is this category which is commonly concerned with charters for a single voyage as in the present case. As will appear from the terms and conditions of the charter party agreement, the ship was chartered for a single voyage from Cochin to Japan via Mormugao. The charterers were given the liberty to sublet the ship for all or any part of the time covered by the charter party agreement. The ship was to be placed at the disposal of the charterers on sailing from Cochin on dropping pilot. The charterers were required to pay for the use and hire of the ship at the rate of 22/6d. (twenty-two shillings and six pence) British Sterling per ton on ship's total deadweight carrying capacity. The hire was to continue until the hour of the day of re-delivery of the ship, at Japan, at a safe port specified in the agreement. The captain with ship's crew was to be under the orders and directions of the charterers as regards employment and agency. The agreement was not to be construed as a demise of the ship to the time charterer. There are certain other terms and conditions which are not material for the present purpose. It will appear from this agreement that for the voyage determined the time charterers were the disponee owners and the master of the ship was their agent. The dictionary meaning of the words "dispone" mean "to convey legally" and "disponee", "the person to whom anything is disponed". In certain cases, the master of a ship may be regarded for the purposes of law relating to carriage of goods by sea as two persons rolled into one. He is the agent of the ship owner. He is also the agent of the owner of the cargo shipped as in the present case. In each of these capacities he has certain duties and a certain authority.

The guarantee bond states that the petitioner-company "hereby agree and undertake that if default shall be made by the principals in payment of the sum payable as income-tax we shall be liable to pay the said sum to the President of India". It follows by necessary implication from this agreement that in case the principals, i.e., the time charterers, are not liable to pay the tax under section 172, the petitioner-company would then be absolved from all liability to pay the tax assessed and later demanded by the respondent No. 2 in terms of the guarantee bond. There can be no default when there is no liability. The liability is to be restricted on the bond consistent with its recitals. There can be no contract of guarantee if liability does not exist. The liability of the guarantor presupposes the existence of a separate liability of the principal debtor and his liability is thus secondary which comes into existence only in default by the principal debtor. It may be stated that the words underlined in sub-section (2) are not words of art. They are words commonly used. They are to be construed in their popular sense: "that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it": Ratnavatar v. Assistant Sales Tax Officer [1961] 12 STC 286; [1962] 1 SCR 279; AIR 1961 SC 1325. What was the amount paid or payable to the time charterers on account of carriage of the iron ore owned by them ? This question is important. According to Mr. Porus Mehta, the answer is "nothing". He seemed to be right. Where a ship earns freight for carriage of goods then section 172 would seem to be attracted, but not when it earns no frieght, as in the present case. The amount paid to the owners of the ship by the time or voyage charterers by way of daily hire, it seems, is not the determining factor for the purposes of assessment under this section. According to the respondent No. 2:

"It is nowhere said in the Act that freight must be payable to the charterers before tax become exigible under section 172(4). It is seen from the charter party that the time charterers have taken over the vessel on hire from the owners after it had called at previous port of call. Further, as already mentioned, the hiring out is only for 'A trip out to Japan via Mormugao'. Therefore, according to me, the amount payable to the owner by way of hire for the entire journey from the date the vessel was hired out until the vessel was restored to the owner together with the amount payable on account of port charges and fuel for the voyage will be the amount payable on account of such carriage to the owner. One-sixth of such hire will be the taxable income for the purpose of section 172(4)."

This is also the trend of argument of Mr. S. Tamba, learned Government pleader. It is true that section 172 does not state that freight should be paid or payable to the owner or time charterer before tax liability is incurred. It may, however, be stated that when payment is made to the owner or charterer on account of the carriage of goods shipped that payment is to be regarded as freight for the purposes of a contract of affreightment. When a ship owner or charterer agrees to carry goods in return for some money paid or payable such a contract is called a contract of affreightment and the amount paid is called "freight". "Freight" in the ordinary mercantile sense is the reward payable to the carrier for the carriage of the goods. The true test of the right to freight is the question whether the service in respect of which the freight was contracted to be paid has been performed. When the time charterers carried their own iron ore in this case they served their own interests, and, in my opinion, this kind of self-service is not what seems to be contemplated for the purposes of assessment. It is said in the counter-affidavit that what is liable to tax under sub-section (2) of section 172 is the amount paid or payable on account of carriage of goods to the owner or charterer whether this amount is termed as freight or termed charter hire. This statement is correct in so far as freight is concerned, but I have my doubt whether the time charter hire of the kind we are considering is also the determining factor for the purposes of assessment. The time charter hire was for the use and hiring of the ship at a certain rate, but this hire paid to the owners of the ship was not on account of carriage of iron ore shipped on the ship chartered by the time charterers. There has to be a shipper of goods other than a time charterer carrying his own cargo before liability to tax can arise. What was paid or payable to the owners of the ship—strictly speaking is not freight at all, but it is in the nature of a rent for the use and the hire of the ship.

The learned Government pleader wanted me to construe the words underlined in sub-section (2) of section 172 in a liberal sense. In Cape Brandy Syndicate v. Inland Revenue Commissioners [1921] 1 KB 64, 71, it was stated :—

"... in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used."

This principle was approved by Viscount Simon, L.C. in Canadian Eagle Oil Co. v. R. [1946] AC 119. Neither a strict nor a liberal construction is called for. It is well-settled that words are primarily to be construed in their ordinary sense, and as they would have been generally understood the day after the statute was enacted, unless such a construction would lead to absurd results. It may be adding words in sub-section (2) if the amount payable by the time charterers to the owners of the ship as hire for the voyage until it was re-delivered to them is to be considered as the basis of assessment. This is not permissible according to the well-settled principles of construction. "If there is nothing to modify, nothing to alter, nothing to qualify the language which a statute contains, the words and sentences must be construed in their ordinary and natural meaning." (Index animi sermo .... a verbis legis non recedendum)—See Salomon v. A. Salomon and Co. Ltd. [1897] AC 22, 29, 38 and Inland Revenue Commissioners v. Smyth [1914] 3 KB 406, 420. In construing an All India statute, like the Act, uniformity of construction is desirable and the considered opinion of other High Courts has to be followed unless there are good reasons for taking a different view. This is a well-settled rule of construction. There is, however, it is urged, no case law on the construction of section 172 and, therefore, none was cited at the Bar by counsel for the parties. The section, therefore, has to be construed on its own language.

Mr. Porus Mehta argued—and I think rightly—that the respondent No. 2 had misread the charging sub-section (2) of section 172 and made the assessment. In substance, his argument was that the petitioner-company as guarantor would be liable only in case the time charterers are liable, but not otherwise ; the petitioner-company is bound by the terms of the bond and the bond only; and if the owners of the ship are liable to assessment let them be assessed but this would not make the petitioner-company liable. The petitioner-company swears and stands by the bond but it repudiates—and rightly—the liability imposed as a result of misconstruction or misreading of this sub-section. Mr. Porus Mehta cited Calcutta Discount Co. Ltd. v. Income-tax Officer [1961] 41 ITR 191 , 208; [1961] 2 SCR 241; AIR 1961 SC 372, in support of his contention that the respondent No. 2 acted without or in excess of jurisdiction when he passed the order of assessment; he misread section 172 when he considered the hire paid by the time charterers to the owners of the ship as the determining factor for the purposes of assessment. In this decision of the Supreme Court Das Gupta J., speaking on behalf of the majority, observed at page 380:

"In the present case the company contends that the conditions precedent for the assumption of jurisdiction under section 34 were not satisfied and came to the court at the earliest opportunity. There is nothing in its conduct which would justify the refusal of proper relief under article 226. When the Constitution confers on the High Courts the power to give relief it becomes the duty of the courts to give such relief in fit cases and the courts would be failing to perform their duty if relief is refused without adequate reasons. In the present case we can find no reason for which relief should be refused."

The basic condition in the charging sub-section must necessarily be satisfied before the time charterers could be assessed to tax in a summary way. This condition must exist before the respondent No. 2 could assume jurisdiction to assess, as in the decision of the Supreme Court where both conditions of section 34 of the Act had to be satisfied. Mr. Porus Mehta also cited the observation of Chagla C.J. in S.C. Prashar v. Vasantsen Dwarkadas [1956] 29 ITR 857, 897; AIR 1956 Bom. 530, 535 :

"No tribunal and no officer can confer jurisdiction or authority or competence upon itself or himself by misconstruing a section. It is inarguable that an authority could claim to exercise jurisdiction by construing a section erroneously and thereby contending that the section so wrongly construed gives him the necessary power. In such a case, if the section has been wrongly construed, it would be a clear case of absence of jurisdiction apparent on the face of the record because the court has got to look at the section and to decide whether the officer construing the section was in the right or in the wrong."

I agree with Mr. Porus Mehta that the respondent No. 2 assumed jurisdiction by misreading or misconstruing the charging sub-section. The statement by the time charterers—that the rate of conversion should be that of pre-devaluation—has no bearing on the question of liability to tax for the purposes of the law. The principle of estoppel would not apply in this case. According to Mr. Tamba, liability to tax can be spelled out from this statement. This approach is not logical. What we are considering here is a case of patent want of jurisdiction, i.e., a want of jurisdiction apparent on the face of the order of assessment, and, therefore, this court can give appropriate relief under article 226 of the Constitution.

Mr. Tamba next contended that the petitioner-company should have filed an appeal under section 246(c) of the Act against the order of assessment instead of approaching this court in the first instance. This, according to him, is an effective alternative remedy. Mr. Porus Mehta replied that the petitioner-company is not an "assessee" within the meaning of section 2(7) of the Act and hence, it is doubtful if the remedy of appeal is competent, but assuming it is, even then this is not a case where the petitioner-company should be subjected to lengthy proceedings and harassment. In this connection, he relied on the following observation of Das Gupta J. in the decision cited earlier [1961] 41 ITR 191, 207 (SC) :

"Mr. Shastri mentioned more than once the fact that the company would have sufficient opportunity to raise this question, viz., whether Income-tax Officer had reason to believe that under-assessment has resulted from non-disclosure of material facts, before the Income-tax Officer himself in the assessment proceedings and if unsuccessful there before the Appellate Officer or the Appellate Tribunal or in the High Court under section 66(2) of the Indian Income-tax Act. The existence of such alternative remedy is not, however, always a sufficient reason for refusing a party quick relief by a . writ or order prohibiting an authority acting without jurisdiction from continuing such action."

The respondent No. 2 ought not to be permitted to levy tax on the basis of misconstruction of section 172. I accept the contention of Mr. Porus Mehta that the petitioner-company is not liable to pay the tax as guarantor in terms of the guarantee bond, because this section is not applicable. The question No. 1 accordingly is decided in favour of the petitioner-company.

The second question need not detain me long. The guarantee bond would seem to show that the liability of the petitioner-company is qua the time charterers and not qua the owners of the ship. The respondent No. 2 proceeded to assess the petitioner-company without ascertaining whether it represented the owners or the time charterers. As pointed out earlier, the petitioner-company agreed to pay the tax if the time charterers were to commit any default in payment of tax due from them; but not when such default was on the part of the owners of the ship. It was further submitted by the learned Government pleader that the petitioner-company acted as the agents for the master of the ship and since the master of the ship was the agent of the owners of the ship therefore for the liability to tax incurred by the owners of the ship, the petitioner-company is liable. This argument has the attraction of simplicity, but not the attraction of good logic. It assumes that the owners of the ship are liable to pay the tax under section 172. It also assumes that the petitioner-company acted as the agents of the owners of the ship through the master of the ship. The latter assumption is wrong. The petitioner-company did not act as such. It is true that the petitioner-company acted as agents for the master of the ship, but, as explained earlier, the master of the ship was an agent of the time charterers for the duration of the voyage of the ship and, therefore, as there were no freight earnings by the time charterers, consequently the petitioner-company would not be liable. The master of the ship combined two roles for the purposes of the charter party agreement. The facts on the record show that the owners of the ship after the ship was let out on hire to the time charterers and placed at their disposal, had nothing to do with the carriage of the iron ore. Therefore, prima facie, the owners of the ship also may not be liable. But this question does not call for determination in this case for the guarantee bond is given on behalf of the time charterers and not on behalf of the owners of the ship. The liability of the petitioner-company arises out of the guarantee bond, and not independently thereof. The respondent No. 2 proceeded on the basis of this bond in support of the demand notice requiring the petitioner-company as guarantor to pay the tax. It is open to the respondent No. 2 to assess the owners of the ship in case they are liable. The second question also is decided in favour of the petitioner-company.

The third question for consideration is whether the order of assessment violates the principles of natural justice. The question is considered on the assumption that the basis of assessment arrived at by the respondent No. 2 is not incorrect. As will appear from the scheme of section 172 of the Act, the assessment proceeding is a quasi-judicial proceeding. There was a lis between the petitioner-company representing the time charterers and the respondent No. 2. The former repudiated the liability on the ground that the time charterers were not liable. The latter regarded the petitioner-company as liable. The liability was not merely contractual in terms of the guarantee bond. It was dependent on the liability of the time charterers to the tax assessed. The lis had to be determined objectively after ascertainment of facts and possibly legal argument and not according to the personal opinion of the respondent No. 2. The assessment was to be arrived at on objective as distinguished from a purely subjective consideration. The test to ascertain whether a particular act is a judicial act or an administrative act was indicated by Atkin L.J. in the oft-quoted case Rex v. Electricity Commissioners [1924] 1 KB 171, 204, 205 in the following classic words:

"Whenever any body of persons having legal authority to determine questions affecting the rights of subjects, and having the duty to act judicially, act in excess of their legal authority, they are subject to the controlling jurisdiction of the King's Bench Division exercised in these writs."

This decision is the foundation of a long line of decisions in England and in India. It has been approved by their Lordships of the Supreme Court in more than one decision. In Xec Ayub v. Government of Goa, Daman and Diu AIR 1967 Goa 102 the case-law on the distinction between quasi-judicial and administrative acts has been reviewed at some length. Mr. Porus Mehta, learned counsel, argued that the petitioner-company was not given a hearing before it was asked as guarantor to pay the tax assessed. This is correct. The petitioner-company was not given any reasonable opportunity to convince the respondent No. 2 that the view taken by him was not in con formity with the scheme of section 172. A personal healing is not a necessary pre-requisite in all cases of quasi-judicial proceedings, but a reasonable opportunity is necessarily to be given. According to Government Pleader, the petitioner-company was appraised of the basis of assessment by the respondent No. 2 and therefore a reasonable opportunity was given. In this connection he drew my attention to the letter written by the respondent No. 2 dated 3rd August, 1966, addressed to the petitioner-company where they were informed that the amount of the hire payable to the owners of the ship by the charterers of the ship would be the basis of assessment under section 172(4). This, I am afraid, is no proper compliance with the principles of natural justice. The petitioner-company was confronted with fait accompli and this, according to me, was not fair play. The respondent No. 2 was under a duty to act judicially. He was acting quasi-judicially when he proceeded to assess the petitioner-company. As pointed out in Xec Ayub's case (Supra) decided by this court, a received rule is that no one should be condemned, punished or deprived of his property in any judicial or quasi-judicial proceeding unless he has had an opportunity of being heard. This rule is of greater antiquity and higher authority than perhaps is generally realized. "Even God himself did not pass sentence upon Adam, before he was called upon to make his defence, 'Adam' (says God) 'where art thou? Hast thou not eaten of the tree whereof I commanded thee that thou shouldst not eat ?' And the same question was put to Eve also." As observed by Lord Reid in Ridge v. Baldwin [1963] 2 All E.R. 66 the laws of God and man both give the party an opportunity to make his defence if he has any. According to Mr. Porus Mehta, the respondent No. 2 also assessed the petitioner-company without complying with the requirements of the proviso to sub-section (3) and sub-section (4) of section 172. The assessment was arrived at in absence of any return received either from the petitioner-company or the time charterers. This is also the stand taken in the affidavit filed by the petitioner-company. This is one more ground on the vulnerability of the order of assessment. I am satisfied that the principles of natural justice were not observed in this case. The assessment proceeding under section 172 being quasi-judicial in its nature, the respondents are subject to the writ of prohibition or certiorari. This writ will not issue against an executive officer, but the High Courts have power to issue in a fit case an order prohibiting him from acting without jurisdiction or in excess of jurisdiction. Assuming the respondent No. 2 acted as an executive officer when he proceeded to act in terms of the guarantee bond, even then he would be subject to the direction prohibiting him from acting arbitrarily. The third question is also decided in favour of the petitioner-company.

There remains the fourth question—and the last one—to be decided. This can be disposed of in a few words. It is argued by Mr. Porus Mehta that the guarantee bond does not comply with the mandatory requirements of article 299 of the Constitution. This plea was not taken by the petitioner-company either in the writ petition or in the affidavits filed. It is well-settled that a party cannot be allowed to raise any plea which has not been made the subject-matter of the contents of the writ petition and its affidavit. The respondent cannot be taken by surprise. The object of the pleadings is to apprise the opposite party of the case which he has to meet. According to Mr. Porus Mehta, this is a question of law and, therefore, it should be considered. He argued that ex facie the bond is void as it does not comply with the mandatory requirements of this article. It may be emphasized that questions of law are also to be pleaded in the writ petitions or in the affidavits. This is, however, not an inflexible rule of practice. In this case evidence may also be necessary to show that the bond conforms to the provisions of this article, It is not necessary to answer question No. 4.

The petitioner-company succeeds on the above three questions. The respondents fail. Counsel are agreed that the order governing petition No. 156 would also govern petition No. 157. The conclusion is also the same in petition No. 157. In the view taken of the three questions discussed earlier, a writ of certiorari or a direction in the nature of certiorari is issued quashing the order of assessment and the notice of demand based thereon. The respondents are also hereby directed not to give effect to them so far as the liability of the petitioner-company and the time charterers is concerned. Rule nisi is accordingly made absolute. The petitions are allowed with costs. The costs assessed in each case is Rs. 100.

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*Here printed in italics.