New India Assurance Co. Ltd. Vs. Braja Kishore Sutar and anr. - Court Judgment

Excerpt:
- state financial corporations act, 1951 [63/1951]. section 29; [p.k. tripathy, a.k. parichha & n.prusty, jj] discharge of loan orissa forest act (14 of 1972), section 56 confiscation of vehicle - held, the authorities under section 56 of the orissa forest act, 1972 are not obliged to release the vehicle from the confiscation proceeding or to pay the sale proceeds of the vehicle after the order of confiscation in favour of orissa state financial corporation when such vehicles were purchased on being financed by the orissa state financial corporation and the loan had not been liquidated by the date of the seizure/confiscation of the vehicle. concept of first charge or second charge has no applicability when the vehicle is not otherwise disposed of to determine the liabilities of the loanee. on the other hand the vehicle having been found indulged in forest offences was made subject matter of a confiscation proceedings, and therefore, the procedure followed for confiscation of the vehicle and for its sale is punitive in nature and not with a view to give benefit to anybody including the department which initiated the confiscation proceeding. apart from that, the claim of the orissa state financial corporation as against its loanee (who had taken the vehicle on hire- purchase agreement) brings the loanee and the sureties within the default clause under the state financial corporation act, 1951 or the heirs and successors of such persons. procedure is provided in the act, 1951 and the rules thereof about the manner in which such loan is to be recovered, and in that context only the vehicle under the hire-purchase agreement is placed as the first charge. if such property is not available for any reason, then the loan is not automatically waived or the loanee and his sureties are not automatically redeemed of the liabilities to repay. the financial corporation is concerned with repayment of loan either from the property or persons offered as surety. thus, a vehicle, which is subject matter of confiscation proceeding under the act, 1872, being not available to the orissa state financial corporation for adjustment of the unpaid loan, that does not at all bring out an anomalous situation so as to defeat the right of the orissa state financial corporation. agreement between the orissa state financial corporation and the loanee is a pure and simple contract governed by the provisions of the contract act, 1872 read with the provisions in the act, 1951 and its rules. on the other hand, a confiscation proceeding under the act, 1972 is punitive in nature for commission of a forest offence. thus, by virtue of the provision in section 56 read with section 64 (2) of the act, 1972, the action taken for confiscation of the vehicle cannot be extended to grant protection of the loan advanced by orissa state financial corporation. by doing that it amounts to grant premium to the pick-pockets in as much as, by making payment of the confiscation amount in favour of the orissa state financial corporation the loan burden of the accused of the forest offence is reduced to the extent of the sale proceeds of the vehicle. in other words, on payment of the sale proceeds of the confiscation proceeding to the orissa state financial corporation towards discharge of the loan account of the accused of a forest offence, it would lead to a system to reward him by repayment of his loan. then it does not become a penalty nor the action become punitive, but it remains as a reward to the accused of forest offence. such a concept is totally not conceivable from any provision in the act, 1972 or the act, 1951. [air 2002 orissa 130 overruled]. -- state financial corporations act, 1951. section 29; discharge of loan orissa forest act (14 of 1972), section 56 confiscation of vehicle - held, the authorities under section 56 of the orissa forest act, 1972 are not obliged to release the vehicle from the confiscation proceeding or to pay the sale proceeds of the vehicle after the order of confiscation in favour of orissa state financial corporation when such vehicles were purchased on being financed by the orissa state financial corporation and the loan had not been liquidated by the date of the seizure/confiscation of the vehicle. concept of first charge or second charge has no applicability when the vehicle is not otherwise disposed of to determine the liabilities of the loanee. on the other hand the vehicle having been found indulged in forest offences was made subject matter of a confiscation proceedings, and therefore, the procedure followed for confiscation of the vehicle and for its sale is punitive in nature and not with a view to give benefit to anybody including the department which initiated the confiscation proceeding. apart from that, the claim of the orissa state financial corporation as against its loanee (who had taken the vehicle on hire- purchase agreement) brings the loanee and the sureties within the default clause under the state financial corporation act, 1951 or the heirs and successors of such persons. procedure is provided in the act, 1951 and the rules thereof about the manner in which such loan is to be recovered, and in that context only the vehicle under the hire-purchase agreement is placed as the first charge. if such property is not available for any reason, then the loan is not automatically waived or the loanee and his sureties are not automatically redeemed of the liabilities to repay. the financial corporation is concerned with repayment of loan either from the property or persons offered as surety. thus, a vehicle, which is subject matter of confiscation proceeding under the act, 1872, being not available to the orissa state financial corporation for adjustment of the unpaid loan, that does not at all bring out an anomalous situation so as to defeat the right of the orissa state financial corporation. agreement between the orissa state financial corporation and the loanee is a pure and simple contract governed by the provisions of the contract act, 1872 read with the provisions in the act, 1951 and its rules. on the other hand, a confiscation proceeding under the act, 1972 is punitive in nature for commission of a forest offence. thus, by virtue of the provision in section 56 read with section 64 (2) of the act, 1972, the action taken for confiscation of the vehicle cannot be extended to grant protection of the loan advanced by orissa state financial corporation. by doing that it amounts to grant premium to the pick-pockets in as much as, by making payment of the confiscation amount in favour of the orissa state financial corporation the loan burden of the accused of the forest offence is reduced to the extent of the sale proceeds of the vehicle. in other words, on payment of the sale proceeds of the confiscation proceeding to the orissa state financial corporation towards discharge of the loan account of the accused of a forest offence, it would lead to a system to reward him by repayment of his loan. then it does not become a penalty nor the action become punitive, but it remains as a reward to the accused of forest offence. such a concept is totally not conceivable from any provision in the act, 1972 or the act, 1951. [air 2002 orissa 130 overruled]. - - it is well established that an enactment in form mandatory might in substance be directory and that the use of the word 'shall' does not conclude the matter. executive engineer, electrical division). of course, the learned judge having noted other decisions to which reference shall be made later has come to the conclusion that in deciding this question at hand, the court has option to see whether there has been failure of justice. it was further stated that failure to give all particulars required by the section in the claim for compensation or to file a certificate referred to in rule 20(2) of the rules would not bar the claim. audh behari, 1958-ii-llj-682, wherein it was observed that it was not possible to state definitely that issues had been struck in the case but as the parties were not prejudiced by the failure of the same, the lapse was not regarded as material. chander prakash 1981 lab ic 359, in which it was held that rule 28 was in substance like order 14, rule 1 of the c. 17. before closing it would be of some interest to refer to section 464 of the code of criminal procedure, 1973 as per which even non-framing of the charge in a criminal trial does not invalidate any finding, sentence or order by court unless a failure of justice has been occasioned thereby.hansaria, c.j.1. the question referred to this bench is whether rule 28 of the workmen's compensation rules, 1924 (shortly called 'the rules') is mandatory. the question has been referred because of different views taken by this court in different decisions.2. rule 28 is one of the rules framed by the government to carry out the purposes of the workmen's ompensation act, 1923 and deals with framing of issues. it reads as below:'28. framing of issues - (1) after considering any written statement and the result of any examination of the parties, the commissioner shall ascertain upon what material propositions of fact or of law the parties are at variance and shall thereupon proceed to frame and record the issues upon which the right decision of the case appears to him to depend. (2) in recording the issues, the commissioner shall distinguish between those issues which in his opinion concern points of facts and those which concern points of law.' relying on the use of the word 'shall' in the rule, it is contended by shri roy that the provision relating to framing of issues is mandatory and any violation of the same would render the entire order of the commissioner for workmen's compensation invalid. as against this, the contention of shri mohapatra is that the provision of framing issues is only directory and non-compliance of the same would not vitiate the proceeding unless some prejudice has been caused to the concerned party.3. as shri roy has built up his argument, inter alia, on the strength of the use of the word 'shall' in rule 28, it may be pointed out that though the word 'shall' is ordinarily mandatory, but it is sometimes not so interpreted if the context or the intention otherwise demands as observed in paragraph 12 of sainik motors v. state of rajasthan (air) 1961 sc 1480. what is stated in this regard in paragraph 29 of state of up. v. baburam, (air) 1961 sc 751, is that when a statute uses the word 'shall', prima facie it is mandatory, but the court may ascertain the real intention of the legislature by carefully attending to the whole scope of the statute. we may also refer in this connection to govindlal chhaganlal v. agriculture procedure committee (air) 1976 sc 263, in paragraph 11 of which reference has been made to maxwell, crawford and craies in which illustrations abound where the words 'shall' and 'may' are treated as interchangeable. 'shall be liable to pay interest' does not mean 'must be made liable to pay interest', and 'may not drive on the wrong side of the road' must mean 'shall not drive on the wrong side of the road'. the question posed, therefore, was : does the legislature intend that its command shall at all events be performed? or, it is enough to comply with the command in substance? in other words, the question is: is the provision mandatory or directory? reference was also made in paragraph 13 to the following observation of law in crawford on 'statutory construction', edn. 1940, article 261, page 516 wherein it was stated:-'the question as to whether a statute is mandatory or directory depends upon the intent of the legislature and not upon the language in which the intent is clothed. the meaning and intention of the legislature must govern, and these are to be ascertained not only from the phraseology of the provision, but also by considering its nature, its design and the consequences which would follow from construing it the one way or the other.' 4. we may also refer with profit the observation made in hari vishnu kamath v. ahmed ishaque,(air) 1955 sc 233, wherein at page 245 it was stated:-'it is well established that an enactment in form mandatory might in substance be directory and that the use of the word 'shall' does not conclude the matter.'this observation was quoted with approval, in state of u.p. v. baburam, (supra).5. it has been stated in an oft-quoted passage by lord campbell as below:-'no universal rule can be laid down as to whether mandatory enactments shall be considered directory only or obligatory with an implied nullification for disobedience. it is the duty of the courts of justice to try to get at the real intention of the legislature by carefully attending to the whole scope of the statute to be considered.' [liverpool borough bank v. turner, (1860) 30 lj ch 379].this observation of lord campell has been referred with approval by the supreme court in a number of decisions, (see 'principles of statutory interpretation' by g.p. singh, 3rd edn. p. 272).6. the law as to when a provision can be regarded as mandatory or directory was stated as below in maxwell's 'interpretation of statutes' which was quoted with approval in paragraph 18 of banarasi das v. cane commissioner, (air) 1963 sc 1417:-'it has been said that no rule can be laid down for determining whether the command (of the statute) is to be considered as a mere direction or instruction involving no invalidating consequence in its disregard, or as imperative with an implied nullification for disobedience, beyond the fundamental one that it depends on the scope and object of the enactment. it may, perhaps, be found generally correct to say that nullification is the natural and usual consequence of disobedience, but the question is in the main governed by considerations of convenience and justice [r.v. ingall) (1876) 2 qbd 199 at p. 208, per lush, j.], and, when that result would involve general inconvenience or advantage of those guilty of the neglect, without promoting the real aim and object of the enactment, such an intention is not to be attributed to the legislature. the whole scope and purpose of the statute under consideration must be regarded. the general rule is that an absolute enactment must be obeyed or fulfilled exactly, but it is sufficient if a directory enactment be obeyed or fulfilled subsequently.'7. the requirement of framing issues being a part of procedural law, it is worthwhile to remember that procedure, after all, is a handmaid of justice and is not a weapon to obstruct its free flow. this apart, the requirement of framing issues being to enable the parties to know the points on which there is a contest and to enable them to bring materials on record to satisfy the court about the soundness of the contentions advanced by each of them, it would meet the requirement of law.and the intention of the legislature if, even without issues having been framed, parties have understood the case of each other and have led evidence in support of their respective cases. the consequences which follow from not construing the requirement of framing issues as mandatory are, therefore, such which do not obstruct the free flow of justice. the contrary view would, however, have the undesired effect of sacrificing the substance at the altar of form. the intention of the legislature behind the requirement of framing issues being to put the parties on notice about the case of the other side, the rendering of the proceeding as invalid due to non-framing of issues despite the parties having known the case of the otherside and having led evidence either in support of their cases or in rebuttal of the case of the other side would be undesirable and not one which was intended by the legislature.8. if despite one party having understood the rival case and having led evidence in support of his case and in rebuttal of the case of the other side, insistence is made on the requirement of framing issues, the same would cause injustice to innocent persons without promoting the real aim and object behind framing of issues. in such a situation, in view of what has been stated in maxwell, the provision has to be regarded as directory and not mandatory.9. let us now have a look at the decisions of this court on the point in issue.shri roy relies on two decisions, the first of which is by shri g.k. misra, j. (as he then was) in o. kay electric company v. laxmi devi, 1968 -ii-llj-323 and the second by shri s.k. ray, j. (as he then was) in k.s. modi v. vichitrananda,: (1974 lab ic 954). in o. kay electric company case, it is observed in paragraph 10 that as no issues had been framed, the trial was contrary to statutory procedure. the further observation in paragraph 12 in this connection was that as the mandatory procedure for giving opportunities to the parties to adduce evidence has not been followed, the case must go back on remand to the commissioner who would frame relevant issues and would give full opportunities to the parties to lead evidence. what was held in this connection in k.s. modi's case is that the rule relating to framing of issues is mandatory and the consequence of non-compliance of the same would be that the final order awarding compensation would be vitiated. in taking this view reference was made to ramautar choudhury v. sone valley portland cement co., (air) 1958 patna 540, wherein it was held that if rule 28 was not followed and judgment was pronounced without framing of issues, the procedure would not be in accordance with law and would be vitiated.10. the aforesaid two decisions were followed by the learned single judge who has referred the matter to the division bench in misc. appeal no. 426 of 1983 (nityananda samantray v. apsara bewa) and misc. appeal no. 237 of 1984 (beda blsi v. executive engineer, electrical division). of course, the learned judge having noted other decisions to which reference shall be made later has come to the conclusion that in deciding this question at hand, the court has option to see whether there has been failure of justice.11. shri mohapatra in his turn refers to what was observed by barman, j. (as he then was) in central engineering corporation v. dorai raj, (air) 1960 orissa 39,) wherein while dealing with the requirements of rule 20 of the rules which deals with filing of application and furnishing of particulars, it was observed that it was never the intention of the legislature that a claim should not be entertained or enquired into or that no compensation should be granted unless the application was in strict form. it was further stated that failure to give all particulars required by the section in the claim for compensation or to file a certificate referred to in rule 20(2) of the rules would not bar the claim. this decision was approved by s.c. mohapatra j. in bhajanlal padia v. bajinath, (1986) 1 orissa lr 607.12. as to the aforesaid two decisions, it is urged by shri roy that the same being related to interpretation of rule 20 of the rules, may not apply to the requirement of framing of issues visualised by rule 28 inasmuch as if the particulars and certificate visualised by the concerned section of rule 20(2) are deemed necessary, the commissioner can obtain the same. the learned counsel, therefore, submits that what has been stated about rule 20 may not be applied to the requirement of rule 28.13. before proceeding further, it may be pointed out that in none of the aforesaid decisions of this court, any reason has been given for requiring the particular provision as mandatory or directory except that mohapatra, j. has said in bhajanlal padia (supra) that requirement of rule 20 being part of procedure, the same should not be allowed to obstruct free flow of justice as procedure is a hand-maid thereof.14. it may be of some interest to refer to three decisions of two other high courts interpreting rule 28 of the rules, before adverting to two decisions of the supreme court which would be clinching. one is of allahabad high court in makhan lal v. audh behari, 1958-ii-llj-682, wherein it was observed that it was not possible to state definitely that issues had been struck in the case but as the parties were not prejudiced by the failure of the same, the lapse was not regarded as material. the two other decisions are of jammu and kashmir high court and were rendered in vijay ram v. janaki raj 1981 lab ic 143 and vijay ram v. chander prakash 1981 lab ic 359, in which it was held that rule 28 was in substance like order 14, rule 1 of the c.p.c. and its non-observance in the absence of miscarriage of justice would not vitiate the award.15. we may now refer to two supreme court decisions about which mention has made earlier. the first in nedupuri v. sampati (air) 1963 sc 684, wherein absence of issues was not regarded as fatal to the case where the parties had gone to trial fully knowing the rival case and had led all the evidence not only in support of their contentions but in refutation of those of the other side. on these facts, absence of framing of issues was not regarded to have resulted in any mis-trial. the dismissal of the suit on this narrow ground was not approved, nor was a need felt to remit the case as the evidence which had been led was sufficient to reach the right conclusion. the same view was taken in kunju kesavan v. mm. philip (air) 1964 sc 164, in which on the facts of the case it was held that the absence of the relevant issue did not lead to mis-trial sufficient to vitiate the decision. these two decisions have been recently followed by a learned single judge of this court in duryodhan v. bharat, (air) 1989 orissa 142, and form the basis of the views expressed in the jammu and kashmir high court in the aforenoted two decisions.16. it is worth noting that these two decisions of the apex court took the aforesaid view despite the requirement of order 14, rule 1(5), c.p.c. that the court shall proceed to frame and record issues on which the decision of the case appears to depend. the use of the word 'shall' did not stand in the way of the court in taking the aforesaid view. it is, however, contended by shri roy that these decisions have dealt with the law reference to order 14, rule 1(5), c.p.c. which provision has not been made applicable to the working of the commissioner as would appear from rule 41 of the rules. this aspect of the matter does not make any difference according to us inasmuch as what has to be looked into is whether the requirement of framing of issues has to be taken as mandatory or directory. though order 14, rule 1, c.p.c has not been made applicable to the working of the commissioner, rule 28 of the rules does require framing of issues. so, whether the requirement of framing issues is enjoined by applying order 14, rule 1 or by rule 28 does not make any difference in so far as the applicability of the ratio of the two decisions is concerned.17. before closing it would be of some interest to refer to section 464 of the code of criminal procedure, 1973 as per which even non-framing of the charge in a criminal trial does not invalidate any finding, sentence or order by court unless a failure of justice has been occasioned thereby. what applies to a criminal trial has to apply a fortiori to a civil proceeding.18. because of what has been stated above about the legal position which emerges from the discussion of the principles behind a provision being regarded as mandatory or directory and the precedents of the two supreme court cases, we hold that the requirement of framing issues mentioned by rule 28 of the rules is not mandatory and an order of commissioner would not be rendered vitiated because of the non-framing of the issues unless the same has caused prejudice to the affected party.19. let the matter be placed now before the learned single judge to dispose of the matter in the light of the views expressed by us. while doing so, other points raised by the appellant shall also be examined.b.n. dash, j.20. i agree.