whether the respondent­ who is allegedly a trustee in the Sumandeep Charitable Trust which established and sponsors the said University (‘Deemed to be University’) is a ‘public servant’ covered under Section 2(c) of the PC Act, can be broken up into two parts: first, whether the 7 8 ‘Deemed University’ is covered under the provisions of the Prevention of Corruption Act, 1988, and secondly, whether the ‘respondent­trustee’ can be termed as ‘public servant’ under Section 2(c)(xi) of the PC Act? ii. Whether the accused­respondent can be discharged under Section 227 of CrPC?

 whether the respondent­ who is allegedly a trustee in the Sumandeep Charitable Trust which established   and   sponsors   the   said   University   (‘Deemed   to   be University’) is a ‘public servant’ covered under Section 2(c) of the PC   Act,  
can   be   broken   up   into   two   parts:  
first,   

whether   the 7 8 ‘Deemed   University’   is   covered   under   the   provisions   of   the Prevention of Corruption Act, 1988, and  

secondly, 

whether the ‘respondent­trustee’   can   be   termed   as   ‘public   servant’   under Section 2(c)(xi) of the PC Act? 

 ii. Whether   the   accused­respondent   can   be   discharged under Section 227 of CrPC?


1
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL No.989 OF 2018
State of Gujarat …APPELLANT
Versus
Mansukhbhai Kanjibhai Shah      …RESPONDENT
JUDGMENT
N. V. RAMANA
1. Corruption is the malignant manifestation of a malady menacing
the   morality   of   men.   There   is   a   common   perception     that
corruption in India has spread to all corners of public life and is
currently choking the constitutional aspirations enshrined in the
Preamble. In this context, this case revolves around requiring
this Court to facilitate making India corruption free.
2. This Appeal is from the impugned judgment and   final order
dated   02.02.2018,   passed   by   the   High   Court   of   Gujarat   at
Ahmedabad   in   Criminal   Revision   Application   (against   Order
passed by Subordinate Court) No. 1188 of 2017.
3. The respondent herein is allegedly a Trustee of a trust called the
Sumandeep Charitable Trust, which established and sponsors
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REPORTABLE
2
‘Sumandeep   Vidyapeeth’,   a   deemed   University,   which   is   the
institution concerned herein.
4. Brief facts necessary for the disposal of the case are that an FIR,
being I­ER No. 3 of 2017, dated 28.02.2017 was filed by one Dr.
Jasminaben, wife of Dilipbhai Devda, before the Vadodara City
A.C.B. Police Station against four accused persons including the
present   respondent.   Broadly,   the   allegations   were   that   the
complainant’s elder daughter was admitted to the MBBS Course
in the above­mentioned Deemed University in the year 2012. Her
daughter’s course fee was completely paid up as per the annual
fee slab. In the year 2017, her elder daughter while filling up her
final   examination   form,   was   asked   to   meet   the   respondent
herein. On meeting, the respondent, in conspiracy with others,
had   communicated   that   the   complainant’s   husband   had   to
further pay Rupees Twenty Lakhs for allowing the complainant’s
daughter to take the examination.  Further, it is alleged that the
accused­respondent had communicated that they can deposit a
cheque and the same would be returned on payment of cash,
considering that demonetization had recently taken place. In lieu
of   the   same,   cheques   were   deposited   with   the   accused2
3
respondent   herein.   Thereafter,   the   complainant,   who   was
unwilling to pay the amount, filed the FIR.
5. After following the necessary procedure, phenolphthalein powder
was applied to the currency notes and were delivered to accused
Vinod alias Bharatbhai Savant (the alleged companion/agent of
respondent   through   whom   the   demand   was   facilitated).
Thereafter, accused Vinod confirmed the receipt of money to the
respondent   over   the   telephone.   The   aforesaid   incriminating
conversation stood intercepted in an audio video camera set up
by   the   complainant.   Further,   separate   raids   were   conducted
whereupon several undated cheques drawn in the name of the
institution worth more than Rs. 100 crores and certain fixed
deposits were recovered.
6. The chargesheet came to be filed on 25.04.2017 against several
accused persons, including the present respondent for various
offences under Sections 7, 8, 10 and 13 (1)(b) and 13(2) of the
Prevention of Corruption Act, 1988 [hereinafter referred to as the
‘PC   Act’] read with Section 109 of Indian Penal Code, 1860
[hereinafter referred to as the ‘IPC’],.
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4
7. The   respondent   herein   filed   a   discharge   application   under
Section 227 of CrPC before the District and Sessions Court in
Special ACB Case No. 2 of 2017. The District and Sessions Court
by an order dated 29.11.2017, rejected the application.
8. Aggrieved   by   the   rejection   of   the   aforesaid   application,   the
respondent herein filed a criminal revision application, being
Criminal Revision Application No. 1188 of 2017, before the High
Court   of   Gujarat,   at   Ahmedabad.   The   High   Court,   by   the
impugned judgment and order dated 02.02.2018, allowed the
revision and discharged the accused­respondent herein.
9. Aggrieved   by   the   impugned   order,   the   State   of   Gujarat   is   in
appeal before this Court.
10. The senior counsel on behalf of the appellant submitted that the
PC Act is a comprehensive statute which was passed to prevent
corruption and therefore, should be construed liberally as the
legislature intended to include the abovementioned acts, which
harm the public at large, within the ambit of the PC Act. The PC
Act is a social legislation intended to curb illegal activities of
public servants and is designed to be construed so as to advance
its objectives. The Courts, while keeping the public interest in
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5
mind,   must   ensure   that   technicalities   should   not   defeat   the
object sought to be achieved.
11. The counsel further argued that public function need not be the
exclusive   domain   of   the   State;   private   institutions   such   as
universities  may  also  perform  a  public  function.  The  counsel
placed   reliance   upon  Modern   Dental   College   &   Research
Centre   v.  State  of  Madhya  Pradesh., (2016) 7 SCC 353 and
Janet Jeyapaul v. SRM University., (2015) 16 SCC 530 to state
that imparting education to the public is a welfare activity and
hence   can   be   called   as   an   activity   done   for   public   good.
Considering   the   UGC   guidelines,   the   counsel   submitted   that
Deemed Universities effectively discharge the public function of
imparting education to the public.
12. Moreover,   the   counsel   placed   reliance   upon   the   case   of  K.
Veeraswami   v.  Union  Of   India,  (1991) 3 SCC 655 to submit
that   there   is   no   requirement   of   having   a   master­servant
relationship   between   the   competent   authority   and   the   public
servant. The PC Act does not define public servant, rather, it
provides categories of the same. The counsel further stated that
the lack of any authority to grant the sanction cannot result in
non­prosecution. In such situations, there is no necessity for
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obtaining sanction. In any case, the sanction was obtained from
the Charity Commissioner out of abundant caution.
13. Lastly,   the   counsel   submitted   that   the   respondent   was
discharging a public duty. In the present facts, it was a precondition to pay the respondent before obtaining an examination
pass, although he was never formally assigned this task or role.
The   counsel   therefore   concluded   that   there   need   not   be   a
requirement of positive command under the law to discharge his
public duty. In fact, there may not be any formal requirement of
providing   remuneration   or   payment   in   lieu   of   the   service
rendered.
14. On   the   contrary,  the   counsel   on   behalf   of   the   respondent
submitted that it is a settled principle of law that a criminal
statute   has   to   be   construed   strictly.   In   cases   where   two
interpretations are possible, the Courts must lean towards the
construction which exempts the subject from penalty rather than
the one which imposes the same.
15. The   counsel   further   vehemently   argued   that   the   respondent,
being a trustee, cannot be termed as a Public Servant. There is
no allegation in the charge sheet that the respondent was holding
any position or post in the institution which was Deemed to be
University or that he was engaged by the institution for rendering
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7
any service. In light of the above fact, the High Court was correct
in discharging the respondent as he does not qualify within the
ambit of Section 2 (c)(xi) of the PC Act.
16. Moreover, the counsel argued that the High Court has correctly
held that the relevant provision as laid down under Section 2 (c)
(xi) is inapplicable in the present case as the said Institution was
a “deemed to be university”. Finally, the counsel argued that no
valid   or   proper   sanction   was   obtained   for   prosecuting   the
respondent.   The   sanction   obtained   from   the   Charity
Commissioner   is   not   valid   as   he   cannot   be   considered   as   a
Competent Authority, since he does not have the power to remove
or appoint a Trustee.
17. Having heard the learned counsel for the parties, the questions to
be answered herein arei. Whether  the   respondent­trustee  is  a   ‘public   servant’
covered under Section 2(c) of the PC Act?
ii. Whether   the   accused­respondent   can   be   discharged
under Section 227 of CrPC?
18. The first question before us, that is, whether the respondent­who
is allegedly a trustee in the Sumandeep Charitable Trust which
established   and   sponsors   the   said   University   (‘Deemed   to   be
University’) is a ‘public servant’ covered under Section 2(c) of the
PC   Act,  can   be   broken   up   into   two   parts:  first,   whether   the
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8
‘Deemed   University’   is   covered   under   the   provisions   of   the
Prevention of Corruption Act, 1988, and  secondly, whether the
‘respondent­trustee’   can   be   termed   as   ‘public   servant’   under
Section 2(c)(xi) of the PC Act?
19. Before   we   proceed   further,   we   need   to   observe   the   relevant
provisions under the PC Act:
2(c.). "public servant" means­
…
(xi) any person who is a Vice­Chancellor
or   member   of   any   governing   body,
professor, reader,  lecturer  or any other
teacher   or   employee,   by   whatever
designation called, of any University and
any   person   whose   services   have   been
availed of by a University or any other
public   authority   in   connection   with
holding or conducting examinations;
20. Simply   speaking,   any   person,   who   is   a   Vice­Chancellor,   any
member of any governing body, professor, reader, lecturer, any
other teacher or employee, by whatever designation called, of any
University, is said to be a public servant. Further, the definition
inter alia, covers any person whose services have been availed of
by a University, or any other public authority in connection with
holding or conducting examinations.
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9
21. However, the interpretative necessity arises in this case due to
the fact that the ambit of the term ‘University’, as occurring
under Section 2(c)(xi) of the PC Act, has not been clearly defined
and the question arises as to whether the same covers ‘deemed to
be University’ as well. In this regard, we need to observe certain
ground rules on interpretation, concerning the PC Act.
22. There is no gainsaying that nations are built upon trust. It is
inevitable that in a democracy one needs to rely on those with
power and influence and to trust them of being transparent and
fair. There is no doubt that any action which is driven by the selfinterest   of   these   powerful   individuals,  rather   than   the   public
interest,   destroys   that   trust.   Where   this   becomes   the   norm,
democracy, the economy and the rule of law, all take a beating,
ultimately putting the whole nation at  risk. Corrupt societies
often   spring   from   the   examples   set   at   the   highest   levels   of
government, but small­scale corruption can be equally insidious.
In   this   regard,   the   PC   Act   was   formulated   to   bring   about
transparency   and   honesty   in   public   life,   as   indicated   by   its
objects and reasons. We need to keep the aforesaid legislative
intention in mind while interpreting the provisions of the PC Act.
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10
23. Learned   senior   counsel   for   the   appellant­State,   vehemently
contended that the PC Act, being a welfare legislation, cannot be
narrowly   interpreted,   and   rather,   that   a   broad   interpretation
needs   to   be   provided   for   the   same   [refer  State   of   Madhya
Pradesh   v.   M.   V.   Narasimhan,  (1975)   2   SCC   377;  M.
Narayanan Nambiar v. State of Kerala, (1963) Supp. (2) SCR
724].
24. The golden rule of interpretation for any penal legislation is to
interpret   the   same   strictly,   unless   any   constitutional
considerations   are   involved,   and   in   cases   of   ambiguity,   the
benefit of the same should enure in favour of the accused. Having
said so, we need to clarify that strict interpretation does not
necessarily mean literal interpretation in all cases, rather the
interpretation should have regards to the genuine import of the
words,   taken   in   their   usual   sense   [refer  Commissioner   of
Customs (Import), Mumbai v. Dilip Kumar & Company, (2018)
9 SCC 1].
25. However,   we   are   concerned   herein   with   interpreting   the
provisions of the PC Act. There is no dispute that corruption in
India is pervasive. Its impact on the nation is more pronounced,
due to the fact that India is still a developing economy. Presently,
10
11
it can be stated that corruption in India has become an issue
which affects all walks of life. In this context, we must state that
although anti­corruption laws are fairly stringent in India, the
percolation and enforcement of the same are sometimes criticized
as being ineffective. Due to this, the constitutional aspirations of
economic and social justice are sacrificed on a daily basis. It is in
the above context that we need to resolve the issues concerned
herein.
26. In  Subramanian  Swamy  v.  Manmohan  Singh,  (2012) 3 SCC
64, this Court observed:
“68. Today, corruption in our country not only
poses   a   grave   danger   to   the   concept   of
constitutional governance, it also threatens the
very foundation of Indian democracy and the
Rule of Law. The magnitude of corruption in
our public life is incompatible with the concept
of a socialist, secular democratic republic. It
cannot   be   disputed   that   where   corruption
begins   all   rights   end.   Corruption   devalues
human   rights,   chokes   development   and
undermines justice, liberty, equality, fraternity
which are the core values in our preambular
vision.  Therefore,   the  duty  of   the  Court   is
that   any   anti­corruption   law   has   to   be
interpreted   and   worked   out   in   such   a
fashion   as   to   strengthen   the   fight   against
corruption.   That   is   to   say   in   a   situation
where   two   constructions   are   eminently
reasonable, the Court has to accept the one
that   seeks   to   eradicate   corruption   to   the
one which seeks to perpetuate it.”
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12
(emphasis supplied)
27. We shall accordingly have due regard to the aforesaid principles
while interpreting the provisions herein. The point of contention
relates to whether a deemed University would be included within
the ambit of the PC Act, particularly under Section 2(c)(xi) of the
same, where the word used is “University”. The learned senior
counsel   for   the   appellant­State   submits   that   the   word
“University”   as   used   in   Section   2(c)(xi)   of   the   Act,   must   be
purposively interpreted. An institution which is “deemed to be a
University” under the University Grants Commission Act, 1956
[UGC Act] plays the same role in society as a “University”. These
institutions have the common public duty of granting degrees,
which are ultimately qualifications recognized in society. As such,
an institution which is “deemed to be University”, such as the
institution in the present case, is included within the ambit of the
term “University” used under the Act.
28. On   the   other   hand,   the   learned   senior   counsel   for   the
respondent, supporting the decision of the High Court in the
impugned judgment, submits that the term “University” as used
in Section 2(c)(xi) of the PC Act, does not include an institution
12
13
which is “deemed to be a University”.  The learned senior counsel
submitted that the inclusive definition of a “University” under the
UGC   Act   is   only   for   the   limited   purpose   of   funding,   and   an
institution   which   is   “deemed   to   be   a   University”   is   not   a
University  for  any  other purpose.  The  learned  senior  counsel
submitted that the same is abundantly clear from the provisions
of   the   UGC   Act,   which   makes   a   distinction   between   a
“University”, and an institution “other than a University” which is
“deemed to be a University”.
29. At this juncture, it would be apposite to look to the holding of the
High Court in the impugned judgment on this point:
“27.…However, the fact remains that either as a
trustee or in any other capacity, even if applicant is
connected with Sumandeep Vidyapith, which is not
a regular  University getting Government  grant  in
any manner whatsoever and thereby, when there is
no dispute that it is only a Deemed University, the
submissions recorded herein above on behalf of the
applicant   makes   it   clear   that   such  Deemed
University   cannot   considered   as   a   regular
University   and   thereby,   applicant   cannot   be
termed   as   a   public   servant   and   therefore,
irrespective   of   such   change   report   after   the
complaint, it is clear and obvious that applicant
cannot be termed as a public servant.”
(emphasis supplied)
30. The counsel for the respondent has contended that the term
“University” needs to be read in accordance with the Section 2(f),
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14
3  and  23  of  the  UGC  Act, wherein   a  “deemed  University” is
different from a “University”,  stricto sensu. However, we do not
subscribe to such contention for the reasons provided below.
31. The contention of the respondent is that the term “University”
needs to be read in accordance with the UGC Act, wherein only
those Universities covered under the Section 2(f) of the UGC Act
are   covered   under   the   PC   Act.   Such   an   interpretation,   by
importing the technical definition under a different Act may not
be feasible herein. It is a settled law that technical definitions
under one statute should not be imported to another statute
which is not in pari materia with the first. The UGC Act and the
PC Act are enactments which are completely distinct in their
purpose, operation and object. The preamble of the UGC Act
states that it is ‘an Act to make provision for the co­ordination and
determination of standards in Universities, and for that purpose, to
establish a University Grants Commission’. On the other hand,
the PC Act is an enactment meant to curb the social evil of
corruption in the country. As such, the extension of technical
definitions   used   under   one   Act   to   the   other   might   not   be
appropriate, as the two Acts are not  in  pari materia  with one
another.
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15
32. The above principle of law was recently applied by a 3­Judge
Bench of this Court in Bangalore Turf Club Ltd. v. Regional
Director,   ESI   Corporation,  (2014)   9   SCC   657,   where   an
argument was advanced by counsel that the interpretation of the
term ‘shop’ under the ESI Act should be determined in light of
the   definition   of   the   same   under   the   relevant   Shops   and
Commercial Establishments Act. Negativing this contention of the
counsel, the Court went on to hold that:
“52. An argument raised by the appellants herein is
the issue relating to the “doctrine of pari materia”. It is
contended that since the ESI Act does not define the
term “shop”, the said definition may be ascertained in
the light of the definitions under the relevant Shops
and Commercial Establishments Act as enacted by
the respective State Legislatures, since the purpose
and object of both the enactments are one and the
same.
53. For the above purpose, it would be necessary to
look into the concept of “doctrine of pari materia” and
further ascertain whether the given statutes are in
fact pari materia with the ESI Act. It is settled law
that two statutes are said to be in pari materia with
each other when they deal with the same subjectmatter. The rationale behind this rule is based on the
interpretative   assumption   that   words   employed   in
legislations are used in an identical sense. However,
this assumption is rebuttable by the context of the
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16
statutes.   According   to   Sutherland   in Statutes   and
Statutory Construction, Vol. 2, 3rd Edn.:
“Statutes   are   considered   to   be   in   pari
materia to pertain to the same subjectmatter   when   they   relate   to   the   same
person or things, or to the same class of
persons   or   things,   or   have   the   same
purpose or object.”
…
58. It can be concluded that though the ESI Act,
the 1948 Act and  the 1961 Act deal  with  labour
and  workmen,   in  essence  and  spirit  they  have  a
different  scope  and  application.  The  Acts  do  not
appear   to   have   any   overlap   in   their   fields   of
operation  and  have  mutually  exclusive   schemes.
Therefore,   the   argument   that   the   Acts   are   pari
materia with each other, must fail.
59. This  Court  must   also   address   the   issue   that
arose   in   the   course   of   the   arguments   that   the
word   “shop”   has   been   used   in   the   impugned
notifications as well as the 1948 Act and the 1961
Act  and  therefore  assistance  may  be  taken   from
the   latter   statutes   to   interpret   the   notification.
This  argument,   in   light  of  the  above  discussion,
does not appeal to us…”
(emphasis supplied)
It is for the same reasoning that we are of the opinion that the
High Court’s reliance on the judgment of this Court in  Orissa
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17
Lift Irrigation Corporation Ltd. v. Rabi Sankar Patro, (2018)
1 SCC 468 was not appropriate, as the same was with reference
to   enactments   relating   to   administration/regulation   of
universities, and is unconnected with the objects of the PC Act.
33. This brings us to the conclusion that purport of UGC Act cannot
be borrowed under the PC Act, and that an independent meaning
needs to be provided for the term “University” as occurring under
the PC Act. In India, there are 12,206 Universities under Section
2(f) and 12B of the UGC Act, as of 31.07.2019. While there are
about 124 deemed universities across India, as of 23.06.2008.
The education sector in India has seen a general rise. There is no
dispute that  the education sector, which is  a very important
service sector in the country, has seen various scandals. In this
context, we need to understand whether a deemed university
would be covered within the ambit of the Section 2(c)(xi) of the PC
Act.
34. On a perusal of Section 2(c) of the PC Act, we may observe that
the emphasis is not on the position held by an individual, rather,
it is on the public duty performed by him/her. In this regard, the
legislative   intention   was   to   not   provide   an   exhaustive   list   of
authorities   which   are   covered,   rather   a   general   definition   of
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‘public   servant’   is   provided   thereunder.   This   provides   an
important   internal   evidence   as   to   the   definition   of   the   term
“University”.
35. The use of ‘any’ is critical in our understanding as to the term
University. We are aware of the line of authorities, wherein this
Court has reduced the impact of term ‘any’ to not mean ‘every’
[See Hira Devi v. District Board, Shahjahanpur, (1952) S.C.R.
1122]. However, we cannot accept such a view as the context in
which the present dispute emanates, differs from the above.
36. Our   attention   was   also   drawn   to   the   notes   on   clauses   of
Prevention of Corruption Bill dated 20.02.1987. Clause 2 of the
Notes on Clauses in the Gazette of India, Extraordinary, Part II,
Section   2,   clarifies   the   legislative   intent,   wherein   it   was
commented as under:
“2. This clause defines the expressions used in the
Bill.   Clause   2(c)   defines   ‘public   servant’.  In   the
existing   definition   the   emphasis   is   on   the
authority   employing   and   the   authority
remunerating.   In   the   proposed   definition   the
emphasis   is   on   public   duty.  The   definition   of
‘election’ is based on the definition of this expression
in the Penal Code, 1860.”
(emphasis supplied)
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37. Additionally   our   attention   is   drawn   to   the   legislative   debates
which took place prior to the enactment of the PC Act. It was
uniform across the party line that the purpose of  preventing
corruption in educational institutions was emphasised.
38. Coming to external aids of interpretation, the word “University” is
etymologically derived from the Latin, universitas magistrorum et
scholarium, which roughly means "community of teachers and
scholars". Black’s Law dictionary defines “University” as:
“An institution of higher learning, consisting of an
assemblage  of colleges united under one corporate
organization and government, affording instruction in
the arts and sciences and the learned professions.
and conferring degrees. See Com. v. Banks, 198 Pa.
397. 48 Atl. 277.”
39. Law Lexicon, defines the same as:
“A corporation of teachers or assemblage of learned
men or colleges for teaching the higher branches of
learning: ;and having power to confer degrees.
University. A place where all kinds of literature are
universally taught. (Tomlin’s Law Dic.) See also Act
VIII of 1904, S.2, Cl. (2)(c).
A University, of normal type, may be described in
popular language as an organization of teachers and
learners, settled in a fixed locality, for the purpose of
nature   study,   in   which   the   body   of   teachers   has
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authority to attest the proficiency of the learners, by
bestowing upon them titles, signifying that they also
possess the qualifications and are admitted to the
rank   of   those   that   are   learned   in   the   particular
branch of knowledge in which they are taught.
The term ‘University’ is usually understood to mean a
body incorporated for the purpose of learning, with
various endowments and privileges. Such bodies were
anciently founded by papal bull or charter, later by
royal charter or  act of  Parliament.  University is  a
corporation   aggregate­Aggregation   of   corporationsThe corporations are usually colleges or schools.”
40. Third Edition of Halsbury's, Volume 13, page 707, at para 1441
deals with the term “Universities”. According to the same:
“The   word   "university   is   not   a   word   of   art   and,
although the institutions to which it refers are readily
identifiable,   precise   definition   is   difficult.   The
essential features of a university seems to be that it
was incorporated as such by the sovereign power.
Other   attributes   of   a   university   appear   to   be   the
admission of students from all parts of the world, a
plurality of masters, the teaching of one at least of
the   higher   faculties,   namely   theology,   law   or
philosophy, which in some definitions are regarded as
identical, and medicine, provision for residence, and
the right to confer degrees, but possession of these
attributes will not make an institution a university in
the absence of any express intention of the sovereign
power to make it one.
Incorporation was anciently affected by papal bull or
charter later by royal charter or Act of Parliament.”
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41. In  Words   and   Phrases,   Permanent   Edn.   (West   Publishing
Company), the word “Universities” is defined as follows:
“Universities:
Bodies  politic   and  corporate   have  "been   known   to
exist as Far back at last as the time of Cicero, and
Gaius   traces   them   even   to   the   laws   of   Solon   of
Athens, who lived some 500 years before…. And from
time immemorial, as at the present day, this privilege
of being a corporation or artificial body of individuals,
with   power   of   holding   their   property,   rights,   and
immunities in common as a legally organized body
and of transmitting the same in such body by an
artificial   succession   different   from   the   natural
succession of the property of individuals has been
considered a franchise which could not be lawfully
assumed by any associated body without a special
authority for that purpose from the government or
sovereign power."
42. Under the UGC Act, University is defined and recognized under
Section 2(f) in the following manner:
“University”   means   a   University   established   or
incorporated by or under a Central Act, a Provincial
Act or a State Act, and includes any such institution
as   may,   in   consultation   with   the   University
concerned,   be   recoginsed   by   the   Commission   in
accordance with the regulations made in this behalf
under this Act.
43. A ‘deemed to be University’ is recognized under Section 3 of the
UGC Act, in the following manner:
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Application   of   Act   to   institutions   for   higher
studies other than Universities
3. The Central Government may, on the advice of the
Commission,   declare   by   notification   in   the   Official
Gazette,   that   any   institution   for   higher   education,
other   than   a   University,   shall   be  deemed   to  be   a
University for the purposes of this Act, and on such a
declaration being made, all the provisions of this Act
shall   apply   to   such   institution   as   if   it   were   a
University within the meaning of clause (f) of section
2.
44. As discussed earlier, the object of the PC Act was not only to
prevent the social evil of bribery and corruption, but also to make
the same applicable to individuals who might conventionally not
be considered public servants. The purpose under the PC Act was
to   shift   focus   from   those   who   are   traditionally   called   public
officials, to those individuals who perform public duties. Keeping
the same in mind, as rightly submitted by the learned senior
counsel   for   the   appellant­State,   it   cannot   be   stated   that   a
“Deemed University” and the officials therein, perform any less or
any different a public duty, than those performed by a University
simpliciter, and the officials therein.
45. Therefore, for all the above reasons, we are of the opinion that
the   High   Court   was   incorrect   in   holding   that   a   “Deemed
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University” is excluded from the ambit of the term “University”
under Section 2(c)(xi) of the PC Act.
46. Having come to the above conclusion, in the present case, the
pivotal question is whether the appellant­trustee in the Board of
‘Deemed   to   be   University’  is   a   ‘public   servant’   covered   under
Section 2(c) of the PC Act. Recently, this Court in the case of CBI
v. Ramesh Gelli, (2016) 3 SCC 788, dealt with the question as to
whether Chairman, Directors and officers of a private bank before
its amalgamation with a public sector bank, can be classified as
public servants for prosecution under the PC Act. While dealing
with the aforesaid proposition of law, the Court analysed the
purpose   and   scope   of   the   PC   Act   and   made   the   following
observations:
“15. From the Statement of Objects and Reasons of
the PC Bill it is clear that the Act was intended to
make   the   anti­corruption   law   more   effective   by
widening its coverage. It is also clear that the Bill
was   introduced   to   widen   the   scope   of   the
definition  of   “public   servant”.  Before the PC Act,
1988, it was the Prevention of Corruption Act, 1947
and Sections 161 to 165­A in Chapter IX IPC which
were governing the field of law relating to prevention
of corruption. Parliament repealed the Prevention of
Corruption Act, 1947 and also omitted Sections 161
to 165­A IPC as provided under Sections 30 and 31 of
the PC Act, 1988. Since a new definition of “public
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servant” is given under the PC Act, 1988, it is not
necessary here to reproduce the definition of “public
servant” given in Section 21 IPC.
…
17. The   above   definition   shows   that   under   subclause   (viii)   contained   in  Section  2(c)  of   the  PC
Act, 1988, a person who holds an office by virtue
of which he is  authorised  or required to perform
any  public duty, is a public servant.  Now, for the
purposes of the present case this Court is required to
examine   as   to   whether   the   Chairman/Managing
Director   or   Executive   Director   of   a   private   bank
operating   under   licence   issued   by   RBI   under   the
Banking Regulation Act, 1949, held/holds an office
and performed/performs public duty so as to attract
the definition of “public servant” quoted above.”
(emphasis supplied)
47. This   Court   in   the   case of  P.V.   Narasimha   Rao v. State
(CBI/SPE), (1998) 4 SCC 626, has clarified the word “office” in the
following manner:
“61.  … The word ‘office’ is normally understood to
mean ‘a position to which certain duties are attached,
especially a place of trust, authority or service under
constituted   authority’.   (See Oxford   Shorter   English
Dictionary, 3rd Edn., p. 1362.) In McMillan v. Guest,
(1942) 1 All ER 606 (HL), Lord Wright has said:
‘…The   word   “office”   is   of   indefinite
content. Its various meanings cover four
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columns of the New English Dictionary,
but   I   take   as   the   most   relevant   for
purposes of this case the following:
“A   position   or   place   to   which
certain   duties   are   attached,
especially one of a more or less
public character.”’
In   the   same   case   Lord   Atkin   gave   the   following
meaning:
‘…“an office or employment which was
subsisting,   permanent,   substantive
position,   which   had   an   existence
independent of the person who filled it,
which   went   on   and   was   filled   in
succession by successive holders.”’
In Statesman (P) Ltd. v. H.R. Deb, AIR 1968 SC 1495
and Mahadeo v. Shantibhai,    (1969) 2 SCR 422 this
Court has adopted the meaning given by Lord Wright
when it said:
‘An office means no more than a position
to which certain duties are attached.’”
48. This Court in the case of Manish Trivedi v. State of Rajasthan,
(2014) 14 SCC 420 further elucidated upon the ambit of the
phrase   “public   servant”   by   stressing   upon   the   relevance   of
“office”, wherein the emphasis was upon the duties performed.
The Court noted therein:
“19.  The   present   Act   (the   1988   Act)   envisages
widening   of   the   scope   of   the   definition   of   the
expression “public servant”. It was brought in force to
purify public administration. The legislature has used
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a   comprehensive   definition   of   “public   servant”   to
achieve   the   purpose   of   punishing   and   curbing
corruption among public servants. Hence, it would be
inappropriate to limit the contents of the definition
clause by a construction which would be against the
spirit of the statute. Bearing in mind this principle,
when we consider the case of the appellant, we have
no   doubt   that   he   is   a   public   servant   within   the
meaning of Section 2(c) of the Act.  Clause   (viii)   of
Section 2(c) of the present Act makes any person,
who   holds   an   office   by   virtue   of   which   he   is
authorised or required to perform any public duty,
to   be   a   public   servant.   The   word   “office”   is   of
indefinite connotation and, in the present context,
it would mean a position or place to which certain
duties are attached and has an existence which is
independent of the persons who fill it.”
(emphasis supplied)
49. In order to appreciate the amplitude of the word “public servant”,
the relevance of the term “public duty” cannot be disregarded.
“Public duty” is defined under Section 2(b) of the PC Act, which is
reproduced below:
2(b) ‘public  duty’ means a duty in the discharge of
which the State, the public or the community at large
has an interest.
50. Evidently, the language of Section 2(b) of the PC Act indicates
that any duty discharged wherein State, the public or community
at   large   has   any   interest   is   called   a   public   duty. The   first
explanation to Section 2 further clarifies that any person who
falls in any of the categories stated under Section 2 is a public
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servant whether or not appointed by the government.  The second
explanation further expands the ambit to include every person
who  de facto  discharges the functions of a public servant, and
that he should not be prevented from being brought under the
ambit   of   public   servant   due   to   any   legal   infirmities   or
technicalities.
51. In the present case, on a prima­facie evaluation of the statements
of   the   Gaurav   D.   Mehta   (the   Vice­Chancellor);   Mr.
Pragneshkumar   Rameshbhai   Trivedi   (account   officer   of
Sumandeep   Vidhyapith   University)   and   other   witnesses   it
appears that the present respondent was the final authority with
regard to the grant of admission, collection of fees and donation
amount.
52. The   charge   sheet   specifically   discloses   that   the   respondent
allegedly was collecting certain extra amount over the prescribed
fees   on   the   pretext   of   allowing   the   students   to   fill   up   their
examination forms. Therefore, paying the respondent the alleged
amount was a condition precedent before filling up the forms, to
appear for the examinations. Specifically, in the complaint, it was
alleged that the respondent had demanded an amount of Rupees
Twenty Lakhs to be paid to the co­accused Bharat Savant, failing
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which the daughter of the complainant would not have been
permitted to appear in the examination. In our opinion, the fact
that there were a large number of cheques which were found
during   the   raid   is   more   than   sufficient   to   establish   a   grave
suspicion as to the commission of the alleged offence.
53. The respondent has vehemently stressed upon the fact that he is
admittedly a trustee of the “Sumandeep Charitable Trust” and
has   no   connection   with   the   “Sumandeep   University”.   But,   it
ought to be noted that the courts below have failed to analyze the
connection between the trust and the University, as well as the
relationship of the respondent with the university. Prima facie, a
grave suspicion is made out that the respondent was rendering
his service by dealing with the students and the examination
aspect of the University. But a detailed appreciation of evidence
is called for before one can reach a conclusion as to the exact
position of the respondent vis­à­vis the University. 
54. At this stage, we may note that the jurisdiction of this Court, with
regards to Section 227 of CrPC, is limited and should not be
excercised by conducting roving enquiries on the aspect of factual
inferences. This Court, in Union of India Vs. Prafulla Kumar
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Samal, 1979 (3) SCC 4, had an occasion to consider the scope of
Section 227 CrPC and it held as under:
“7. Section 227 of the Code runs thus:
“If, upon consideration of the record of
the case and the documents submitted
therewith, and     after     hearing     the
submissions   of   the accused and the
prosecution   in   this   behalf,   the   Judge
considers       that       there       is       not
sufficient ground for proceeding against
the accused, he shall     discharge     the
accused   and   record   his reasons for
so doing.”
The   words   “not   sufficient   ground   for   proceeding
against the accused” clearly show that the Judge is
not   a   mere   post   office   to   frame   the   charge   at   the
behest   of   the   prosecution,   but   has   to   exercise   his
judicial   mind   to   the   facts   of   the   case   in   order   to
determine whether a case for trial has been made out
by the prosecution. In assessing this fact, it is not
necessary for the court to enter into the pros and cons
of   the   matter   or   into   a   weighing   and   balancing   of
evidence and probabilities which is really his function
after the trial starts. At the stage of Section 227, the
Judge has merely to sift the evidence in order to find
out   whether   or   not   there   is   sufficient   ground   for
proceeding   against   the   accused.   The   sufficiency   of
ground would take within its fold the nature of the
evidence   recorded   by   the   police   or   the   documents
produced   before   the   court   which   ex   facie   disclose
that   there   are   suspicious   circumstances against
the accused so as to frame a charge against him.”
55. Further, in Sajjan Kumar v. Central Bureau of Investigation,
2010 (9) SCC 368, this Court, inter alia, observed :
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“21. On   consideration   of   the   authorities   about   the
scope   of  Sections  227   and   228   of   the   Code,   the
following principles emerge:
…
(ii)   Where   the   materials   placed   before   the   court
disclose grave suspicion against the accused which
has not been properly explained, the court will be fully
justified in framing a charge and proceeding with the
trial…”
56. Therefore, in line with the aforesaid proposition, this case is not
an appropriate one to have exercised the power under Section
227 to discharge the accused­respondent herein, having regards
to the facts and circumstances of the case. However, it should be
noted that this judgment is rendered for a limited purpose, and
we have not expressed any opinion on the merits of the case. The
trial court is directed to proceed with the case expeditiously.
57. Accordingly, the impugned judgment of the High Court is set
aside. Appeal is allowed.
                                                ……….........................J.
                   (N.V.Ramana)
……….........................J.
(Mohan M. Shantanagoudar)
NEW DELHI;                                         
April 27, 2020.
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO(S). 989 OF 2018
STATE OF GUJARAT ….APPELLANT(S)
VERSUS
MANSUKHBHAI KANJIBHAI SHAH             ….RESPONDENT(S)
J U D G M E N T
Ajay Rastogi, J.
1. I   have   had   the   advantage   of   going   through   the   draft
judgment proposed by my esteemed Brother Mr. Justice N.V.
Ramana.  I entirely agree with the conclusions which my erudite
Brother   has   drawn,   based   on   the   remarkable   process   of
reasoning.  I would all the same like to add some of my views, not
because   the   judgment   requires   any   further   elaboration   but
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looking   for   the   question   of   law   that   emerged   of   considerable
importance.
2. The question that emerged for consideration in the present
appeal is whether the respondent­trustee in the board of ‘deemed
to be university’ is a ‘public servant’ covered under Section 2(c )
(xi) of the Prevention of Corruption Act, 1988(hereinafter being
referred to as “Act 1988”).
3. Zero tolerance towards corruption should be the top­notch
priority for ensuring system based and policy driven, transparent
and responsive governance.   Corruption cannot be annihilated
but strategically be dwindled by reducing monopoly and enabling
transparency in decision making.  However, fortification of social
and moral fabric must be an integral component of long­term
policy for nation building to accomplish corruption free society.
4. The Prevention of Corruption Act, 1947 was amended in
1964   based   on   the   recommendations   of   the   Santhanam
Committee. Although, there are provisions in Chapter IX of the
Indian Penal Code to deal with public servants and those who
abet them by way of criminal misconduct, they were found to be
inadequate to deal with the offence of corruption effectively.
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5. To   make   the   anti­corruption   laws   more   effective,   the
Prevention of Corruption Bill was introduced in the Parliament.
The   object   and   statement   of   reasons   of   the   Act,   1988   was
intended to make the existing anti­corruption laws more effective
by widening their coverage and by strengthening the provisions.
The Act 1988 caters to its wide scope by providing for “different
paths to liability, some of which are especially suited to, but by
no means confined to, those who hold public office.” 
6. There are number of judicial precedents dealing with the
definition and meaning of corruption. The simplest definition of
corruption   is,   any   act   or   omission   by   a   public   servant   for
securing   pecuniary   or   other   material   advantage   directly   or
indirectly for himself, his family or friends. It will be apposite to
refer the provisions of the Act, 1988 relevant for the purpose ad
infra:­
(c) “public servant” means—
(i)­(x)…..
(xi)  any  person  who is a Vice­Chancellor or  member  of   any
governing body, professor, reader, lecturer or any their teacher
or   employee,  by   whatever   designation   called,   of   any
University and any person whose services have been availed of
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by a University or any other public authority in connection with
holding or conducting examinations;
(xii)…”
 (Emphasis supplied)
7. It  will   be   relevant   to   note   that   prior   to   the   Act,   1988,
employees of the university, professors, readers, etc. were not
covered   within   the   definition   of   ‘public   servant’   as   it   was
contained  in  Section  21  of  the  Indian  Penal   Code.  Thrust  of
submission of the learned counsel for the respondent is that
respondent herein who is a trustee of deemed to be university
which cannot by any stretch of imagination be construed to be a
public servant and would not fall within the ambit of Section 2(c )
(xi) of the Act, 1988. The High Court although has accepted the
contention of the learned counsel for the respondent on the said
premise but it needs to be examined in the context in which the
term “University” has been referred to under Section 2(c )(xi) of
the Act, 1988.
8. The  UGC Act was established by an Act of 1956 to make
provisions for the coordination and determination of standards of
education in universities.   “University” has been defined under
Section   2(f)   of   the   UGC   Act   and   those   who   are   declared   as
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‘deemed to be university’, a declaration has to be notified under
Section 3 with restrictions which has been imposed upon the
deemed to be university as referred to under Section 23 of the
UGC Act.  The relevant Sections of the UGC Act are as infra:­
“Section  2(f)  – “University” means a University established or
incorporated by or under a Central Act, a Provincial Act or a
State   Act,   and   includes   any   such   institution   as   may,   in
consultation with the University concerned, be recognized by the
Commission in accordance with the regulations made in this
behalf under this Act.
Section 3 ­ The Central Government may, on the advice of the
Commission, declare by notification in the Official Gazette, that
any institution for higher education, other than a University,
shall be deemed to be a University for the purposes of this Act,
and on such a declaration being made, all the provisions of this
Act shall apply to such institution as if it were a University
within the meaning of clause (f) of Section 2.
Section  23  – No institution, whether a corporate body or not,
other than a University established or incorporated by or under a
Central Act, a Provincial Act or a State Act shall be entitled to
have   the   word   “University”   associated   with   its   name   in   any
manner whatsoever.  Provided that nothing in this Section shall,
for a period of two years from the commencement of this Act,
apply   to   an   institution   which,   immediately   before   such
commencement, had the word “University” associated with its
name.”
9. “University” under Section 2(f) of the UGC Act is established
either in the Central Act, a Provincial Act or a State Act.  At the
same time, such of the institutions for higher education other
than the University created under the statutory enactment, after
being declared by the Central Government by notification in the
35
36
Official Gazette, shall be deemed to be university for the purposes
of this Act and all provisions of the UGC Act shall apply to such
institutions as if it were a university within the meaning of clause
(f) of Section 2 of the Act.
10. It   cannot   be   lost   sight   of   that   the   Act,   1988,   as   its
predecessor that is the repealed Act of 1947 on the same subject,
was   brought   into   force   with   avowed   purpose   of   effective
prevention of bribery and corruption.   The Act of 1988 which
repeals and replaces the Act of 1947 contains a definition of
‘public servant’ with vide spectrum in clause (c ) of Section 2 of
the Act, 1988, so as to purify public administration.  The objects
and reasons contained in the Bill leading to passing of the Act
can be taken assistance of, which gives the background in which
the legislation was enacted. When the legislature has introduced
such a comprehensive definition of “public servant” to achieve the
purpose   of   punishing   and   curbing   the   growing   menace   of
corruption   in   the   society   imparting   public   duty,   it   would   be
apposite not to limit the contents of the definition clause by
construction which would be against the spirit of the statute.
36
37
11. By introduction of Section 2(c )(xi) of the Act, 1988, any
person   or   member   of   any   governing   body   with   whatever
designation called of any university has been included in the
definition   of   “public   servant”   and   any   university   includes   all
universities regardless of the fact whether it has been established
under the statute or declared deemed to be university under
Section 3 of the UGC Act.  It is true that the distinction has been
pointed out by the Parliament under the provisions of the UGC
Act   for   consideration   and   determination   of   standards   of
education in universities, but in my view, no distinction could be
carved out between the university and deemed to be university so
far it relates to the term ‘public servant’ as defined under Section
2(c ) (xi) of the Act 1988.
12. In construing the definition of ‘public servant’ in clause (c )
of Section 2 of the Act 1988, the Court is required to adopt an
approach as would give effect to the intention of the legislature.
The  legislature has, intentionally, while extensively defining the
term ‘public servant’ in clause (c ) of Section 2 of the Act and
clause (xi) in particular has specifically intended to explore the
word   ‘any’   which   includes   all   persons   who   are   directly   or
37
38
indirectly actively participating in managing the affairs of any
university   in   any   manner   or   the   form.     In   this   context,   the
legislature has taken note of ‘any’ person or member of “any”
governing body by whatever designation called of “any” university
to be termed as ‘public servant’ for the purposes of invoking the
provisions of Act 1988.
13. Heavy reliance was placed on the judgment in Orissa Lift
Irrigation  Corporation  Vs.      Rabi  Sankar1 wherein, the scope
and parameters were examined by this Court under which the
deemed to be university would regulate its educational fora under
the regulations framed by the UGC for the purpose of imparting
education by the deemed to be university.
14. But so far as the present case is concerned, the question for
consideration is the term ‘any’ university in the broader spectrum
to curb corruption in the educational institutions as referred to
under Section 2(c )(xi) of   Act 1988 and the legislature in its
wisdom has referred to the word “any university” which clearly
mandates   the   university   referred   to   and   controlled   by   its
statutory mechanism referred to under Section 2(f) and deemed
to be university under Section 3 of the UGC Act.
1 2018(1) SCC 468
38
39
15. In my considered opinion, the view expressed by the High
Court is unsustainable in law and all the questions raised on
merits are left open to the respondent to urge during the course
of the trial. The appeal is accordingly allowed.  The judgment of
the High Court of Gujarat dated 2nd February 2018 is hereby set
aside.  No costs.
……………………………………J.
    (AJAY RASTOGI)
NEW DELHI
APRIL 27, 2020

39

whether as a condition of giving the benefit of Section 6(2) of the said Act, the tax authorities can impose a limit or timeframe within which delivery of the respective goods has to be taken from a carrier when the goods are delivered to a carrier for transmission in course of inter-state sale?

whether as a condition of giving the benefit of Section 6(2) of the said Act, the tax authorities can impose a limit or timeframe within which delivery of the respective goods has to be taken from a carrier when the goods are delivered to a carrier for transmission in course of inter-state sale?

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2217 OF 2011
COMMERCIAL TAXES OFFICER ...APPELLANT
VERSUS
M/S. BOMBAY MACHINERY STORE ...RESPONDENT
WITH
CIVIL APPEAL NO. 2220 OF 2011
CIVIL APPEAL NO. 10000 OF 2017
CIVIL APPEAL NO. 10001 OF 2017
J U D G M E N T
ANIRUDDHA BOSE, J.
All these four appeals are being dealt with by this judgment
as they all involve adjudication on a common question of law
arising out of Sections 3 and 6 of the Central Sales Tax Act, 1956
(1956 Act), which was operational at the material point of time.
2
The question is as to whether as a condition of giving the benefit
of Section 6(2) of the said Act, the tax authorities can impose a
limit or timeframe within which delivery of the respective goods
has to be taken from a carrier when the goods are delivered to a
carrier for transmission in course of inter-state sale. For proper
appreciation of the dispute involved in these appeals, the aforesaid
provisions are reproduced below:-
“3. When is a sale or purchase of goods
said to take place in the course of interState trade or commerce. A sale or
purchase of goods shall be deemed to take
place in the course of inter-State trade or
commerce if the sale or purchase—
(a) occasions the movement of goods from
one State to another; or
(b) is effected by a transfer of documents of
title to the goods during their movement
from one State to another.
Explanation 1 — Where goods are delivered
to a carrier or other bailee for transmission,
the movement of the goods shall, for the
purposes of clause (b), be deemed to
commence at the time of such delivery and
terminate at the time when delivery is taken
from such carrier or bailee.
Explanation 2 — Where the movement of
goods commences and terminates in the
3
same State it shall not be deemed to be a
movement of goods from one State to
another by reason merely of the fact that in
the course of such movement the goods pass
through the territory of any other State.
Explanation 3 – Where the gas sold or
purchased and transported through a
common carrier pipeline or any other
common transport or distribution system
becomes co-mingled and fungible with
other gas in the pipeline or system and such
gas is introduced into the pipeline or system
in one State and is taken out from the
pipeline in another State, such sale or
purchase of gas shall be deemed to be a
movement of goods from one State to
another.”
6. Liability to tax on inter-State sales.—
[(1)] Subject to the other provisions
contained in this Act, every dealer shall,
with effect from such date as the Central
Government may, by notification in the
Official Gazette, appoint, not being earlier
than thirty days from the date of such
notification, be liable to pay tax under this
Act on all sales [of goods other than
electrical energy] effected by him in the
course of inter-State trade or commerce
during any year on and from the date so
notified:
[Provided that a dealer shall not be liable to
pay tax under this Act on any sale of goods
which, in accordance with the provisions of
4
sub-section (3) of section 5 is a sale in the
course of export of those goods out of the
territory of India.]
[(1A) A dealer shall be liable to pay tax
under this Act on a sale of any goods
effected by him in the course of inter-State
trade or commerce notwithstanding that no
tax would have been leviable (whether on
the seller or the purchaser) under the sales
tax law of the appropriate State if that sale
had taken place inside that State.]
[(2) Notwithstanding anything contained in
sub-section (1) or sub-section (1A), where a
sale of any goods in the course of inter-State
trade or commerce has either occasioned the
movement of such goods from one State to
another or has been effected by a transfer of
documents of title to such goods during their
movement from one State to another, any
subsequent sale during such movement
effected by a transfer of documents of title
to such goods, -
(a) to the Government, or
(b) to a registered dealer other than the
Government, if the goods are of the
description referred to in sub-section (3) of
section 8,
shall be exempt from tax under this Act:
Provided that no such subsequent sale shall
be exempt from tax under this sub-section
unless the dealer effecting the sale furnishes
to the prescribed authority in the prescribed
manner and within the prescribed time or
5
within such further time as that authority
may, for sufficient cause, permit,—
(a) a certificate duly filled and signed by the
registered dealer from whom the goods were
purchased containing the prescribed
particulars in a prescribed form obtained
from the prescribed authority; and
(b) if the subsequent sale is made –
(i) to a registered dealer, a declaration
referred to in clause (a) of sub-section (4) of
section 8, or
(ii) to the Government, not being a
registered dealer, a certificate referred to in
clause (b) of section (4) of section 8:
Provided further that it shall not be
necessary to furnish the declaration or the
certificate referred to in clause (b) of the
preceding proviso in respect of a subsequent
sale of goods if,—
(a) the sale or purchase of such goods is,
under the sales tax law of the appropriate
State exempt from tax generally or is subject
to tax generally at a rate which is lower than
four per cent. (whether called a tax or fee or
by any other name); and
(b) the dealer effecting such subsequent sale
proves to the satisfaction of the authority
referred to in the preceding proviso that
such sale is of the nature referred to in
clause (a) or clause (b) of this sub-section.
[(3) Notwithstanding anything contained in
this Act, if –
6
(a) any official or personnel of –
(i) any foreign diplomatic mission or
consulate in India; or
(ii) the United Nations or any other similar
international body, entitled to privileges
under any convention to which India is a
party or under any law for the time being in
force; or
(b) any consular or diplomatic agent of any
mission, the United Nations or other body
referred to in sub-clause (i) or sub-clause (ii)
of clause (a), purchases any goods for
himself or for the purposes of such mission,
United Nations or other body, then, the
Central Government may, by notification in
the Official Gazette, exempt, subject to such
conditions as may be specified in the
notification, the tax payable on the sale of
such goods under this Act.”
(4) The provisions of sub-section (3) shall
not apply to the sale of goods made in the
course of inter-State trade or commerce
unless the dealer selling such goods
furnishes to the prescribed authority a
certificate in the prescribed manner on the
prescribed form duly filled and signed by
the official, personnel, consular or
diplomatic agent, as the case may be.”
2. We shall narrate the factual context of Civil Appeal No.2217
of 2011, before we address the legal issue involved in these
7
appeals, treating this to be the lead case. The dispute relating to the
other three appeals are not identical, but the question of law being
the same in all these appeals, we shall avoid narrating in detail the
sequence of events which led to filing of the said appeals, except
to the extent such narration is necessary for understanding the
scope of these appeals. In Civil Appeal No.2217 of 2011, the
period of assessment is 1995-96. The respondent-assessee
Bombay Machinery Store had purchased electricity motors and its
parts in the said financial year out of the State and sold them to
purchasers within the Kota region of the State of Rajasthan. For
such sales, they obtained the benefit of exemption under Section
6(2) of the 1956 Act. These goods had remained with the transport
company upon arrival in Kota for more than a month. Revenue’s
case is that after importing these goods into Rajasthan, sale was
effected through bilty (transport receipt) on obtaining separate
orders. Such sale, it is the revenue’s case, constituted sale within
the State and hence taxable @12% per annum under the Rajasthan
Sales Tax Act, 1954. Civil Appeal No.2220 of 2011 relates to the
8
same firm but for the assessment year 1994-95. Quantum of sales
for the year 1994-95 effected through the same process was
Rs.3,15,639/- and for 1995-96 it was Rs.2,60,93/-. Claim of
benefit under Section 6(2) of the 1956 Act was rejected and tax
along with interest and penalty was imposed under the State Act by
Commercial Tax Officer, Anti-Evasion Circle-I, Kota after a
survey by two orders, both dated 11th December, 1997. The
appeals by Bombay Machinery Stores were allowed by the Deputy
Commissioner (Appeals), Commercial Taxes, Kota following a
decision delivered on 8th March, 1996 by the Rajasthan Tax Board
in the case of CTO vs. Bhagwandas & Sons (1996 Tax World
107). The orders of the first appellate authority were passed on
interpretation of the first explanation to Section 3B(1) of the 1956
Act. Imposition of tax, interest and penalty under the State Act was
quashed. In State Tax authority’s appeal before the Tax Board,
reliance was placed on two circulars issued by the Commissioner
bearing S.No.1132A: CCT Circular F.11(3)CST/Tax/CCT/1/61
dated 15th April, 1998, clarified by a further circular dated 19th July,
9
1999. The Board did not take into consideration these two
circulars. These were not referred to in the orders of the Tax
Assessment Officer. The Board sustained the view of the Deputy
Commissioner (Appeals) in a composite order. This order was
challenged by the revenue by filing two revision petitions before
the High Court, as two appeals were disposed of by the Board by
its order dated 24.11.2004. The High Court, in the judgment
delivered on 14th September, 2007 confirmed the Board’s order and
quashed two circulars bearing S.No.115B dated 16th September,
1997 and S.No.1132A dated 15th April, 1998. These circulars
sought to impose a time limit on retention of goods in the carrier’s
godown, beyond which time the revenue was to treat obtaining of
constructive delivery of the goods involved. That judgment is
under appeal before us. Before we deal with this judgment, we
shall briefly refer to the other appeals which have been heard
together.
3. In Civil Appeal No.2220 of 2011, incidences of sale relate to
different dates between 24th March, 1994 and 30th January, 1995.
10
4. Civil Appeal No.10000 of 2017 and Civil Appeal No. 10001
of 2017 relate to another assessee, Unicolour Chemicals Company.
That firm purchased chemical and colour from a Gujarat based
company, and the goods reached the godown of the carrier
transport company on 12th May, 2000. They were sold to a firm in
Jaipur in two tranches, after 55 days and 80 days from the date of
arrival. The monetary value of these goods was Rs.1,27,592. In
Civil Appeal No. 10001 of 2017, revenue’s case is that survey of
the business place of the same firm revealed that:-
“the stock of taxable good colour chemical of
price Rs.4,72,653/- has been found less and
on doubt on the nature of sale showing in the
Section 6(2) of the Central Sales Tax Act and
seeing the possibility of tax evasion the
record found in the survey of the business
firm has been seized.”
(quoted from the order
annexed to the paper book)
These goods had reached the godown of the transport
company on 25th July, 2001. These were brought against bilty and
the documents were transferred to the same firm on 4th September,
11
2001. There was thus delay of 41 days. The tax fixation authorities
directed application of the State Act treating the transactions to be
local sales. This order was sustained by the Deputy Commissioner
(Appeals) and the order of the Tax Board also went against
Unicolour. The High Court, following the judgment in the case of
Bombay Machinery Store (which we are treating as the lead case
in this judgment), quashed the orders of the statutory authorities in
both the appeals and also invalidated the two circulars.
5. The two circulars issued by the Commissioner, Commercial
Taxes Department, Rajasthan have been quoted in the impugned
judgment in the case of Bombay Machinery Store. Henceforth,
wherever we refer to the expression judgment under appeal, we
shall imply that judgment only, unless we specifically refer to any
of the three other decisions under appeal. These circulars read:-
“S. No. 1115B : CCT Circular
F.11(3)/CST/Tax/CCT/1997/1563 dated
16.9.1997
As you are aware of the fact that to avoid
multiple taxation of goods sold by transfer
of documents of title to the goods in their
12
single movement from one State-to another,
provisions for exemption of such
transaction are embodied in S. 6(2), CST
Act, 1956. It appears that application of this
provision has been made more or less
mechanical by the assessing authorities in as
much as on furnishing form E-I/E-II and C
forms without looking into the material facts
regarding single inter-State movement of
such goods, benefits are conferred to such
dealers. If the movement of the goods from
one State to another terminates, the
subsequent sales will be treated as intraState sales and benefit of the above subsection (2) of Section 6 will not be available
in such cases. It is found that trade is often
claiming large exemptions under this
provision, particularly in respect of paper,
dyes and chemicals, etc. It is, therefore,
directed that all the assessing authorities
should specifically examine the nature of
transactions before granting benefit under
the said section.
It may be argued that in view of the
Explanation I to Section 3 of the CST Act,
1956, inter-State movement of goods
continues until the consignee obtains
physical delivery of goods from the carrier,
after arrival of these goods at the
destination. This argument is based on the
incorrect notion that “delivery” in the
Explanation means only “physical
delivery”. This argument can be countered
on the basis of the well settled proposition
of “constructive delivery”.
13
The material fact to be looked into by the
assessing authorities while granting benefit
of Section 6(2) of the CST Act relate to the
termination of the movement of goods in the
inter-State transactions. If after arrival of the
goods at the destination, the consignee asks
the transporter expressly or impliedly, to
retain the goods at his godown until further
directions, then the carrier ceases to hold the
goods as transporter, and in the eyes of law,
the goods are as much in possession of the
consignee as if he had taken them into his
own godown. As per the settled legal
concept this sequence of events tantamounts
to constructive delivery of the goods by
transporter to the consignee and transit ends.
Any sale by the consignee thereafter will be
local sale and benefit of Section 6(2) will
not be available.
The transporters, whether Railways or
Roadways, impose condition of delivery of
goods transported through them at the
destination usually within ten days and the
consignee is required to check up with such
transporting agency as to the arrival of the
goods. In these circumstances, if the carrier
retains the goods for an extended period,
then there is a clear inference that the
consignee was aware of the arrival of his
goods and the transporter is holding the
goods on his behalf as a bailee for the
consignee. These factual matrix leads to the
conclusion that there is a local sale and not
sale under said Section 6(2). Payment of
warehouse rent/demurrage charges by the
14
consignee to the transporter is conclusive
evidence that transporters have assumed the
role of bailee and transit having ended. It
may be observed that bailment can be either
gratuitous or for remuneration or partially
both. In law, there can also be bailment
without contract.
As per legal position, ‘transit’ gets over as
soon as a reasonable time elapses for the
consignee to elect whether he would take
the goods away or leave them in the
transporters premises, because at the
conclusion of reasonable time there is
deemed to be a constructive delivery of
goods from the transporters to the
consignee. If a dealer claims that the had not
obtained the delivery of goods, the burden
of proving that the goods really remained
with the carrier from the date of their arrival
till the date of their clearance is on the
dealer. If the dealer fails to furnish this
proof, then the assessing authority would be
justified in concluding that the dealer had
himself taken physical delivery of the goods
from the carrier and thereby disallowing his
claim of exemption under S. 6(2), CST Act.
The decision of the Delhi High Court
in Arjun Dass Gupta and Bros. v. Commer
of Sales Tax, New Delhi, reported in (1980)
45 STC 52, lays down the basic guidelines
regarding exemption of sales under S. 6(2),
CST Act. The Delhi High Court had held
that Explanation I to S. 3(b) of the CST Act,
1956 did not permit the dealer to expand the
movement of goods beyond the time of
15
physical landing of the goods in the Union
Territory of Delhi. As to the knowledge
except this there are no other directly
relevant or contra judgment reported from
any other High Court. It is understood that
Special Leave Petition is pending in the
Supreme Court on the issue but there is no
stay. As such Delhi High Court judgment
holds the field.
It is therefore, enjoined upon the assessing
authorities that in future they should not
grant the benefit of exemption under S. 6(2),
CST Act, simply on furnishing of the Form
E-I/E-II and C Form. If on the contrary
it is found that assessee had taken physical
delivery or the goods remained with the
transporter beyond a reasonable time
looking to the facts and circumstances of
each case, the doctrine of constructive
delivery should be invoked and action be
taken accordingly.
S. No. 1132A : CCT Circular F.11(3)
CST/Tax/CCT/61 dated 15.04.1998
It may be recalled that vide circular dated
16.9.1997 [S. No.1115B], instructions were
issued clarifying therein the legal position of
granting benefits under Section 6(2) of the
CST Act, 1956. It has been clarified that the
concept of constructive delivery shall also
be invoked while determining when the
transit comes to an end. It was also clarified
that the Railways or Roadways usually
impose conditions of delivery of goods
16
transported by them at the destination within
10 days and the consignee is required to
check up with such transporting agency as
to the arrival of the goods. In view of this, it
was desired by the above referred circular
that the AAs should ascertain the fact that
whether the goods remained with the
transporter beyond reasonable time.
Looking to the facts and circumstances of
each case, the doctrine of constructive
delivery should be invoked and action be
taken accordingly.
The representatives of various associations
of trade and industry had brought to the
notice that in almost all cases the AAs are
invoking the doctrine of constructive
delivery in a mechanical manner
immediately after ten days of arrival of the
goods at the destination. As per these
Associations, this approach has resulted in
hardship to the dealers and avoidable
harassment is being caused to them with
adverse effect on the trade. They have
requested for increasing this limit.
Keeping in view these factual aspects and
the discussions at the Govt; level, it is
reiterated that the reasonability of the time
should be looked into after analysing the
facts and circumstances of each case and the
usual period of treating constructive
delivery which may even extend upto thirty
days instead of ten days as suggested in the
above referred circular.
17
Deputy Commissioner (Admn) should
ensure that, while ensuring the State
revenue, no harassment shall be caused to
the dealers by enthusiastic assessing
authorities while determining the end of
transit.”
6. The High Court has referred to two decisions, one by the
Rajasthan High Court itself, in the case of Guljag Industries
Limited vs. State of Rajasthan & Another reported in (2003) 129
STC 3 (Raj.) and the other of the Delhi High Court in the case of
Arjan Dass Gupta and Brothers vs. Commissioner of Sales Tax,
Delhi Administration (1980) 45 STC 52 (Delhi). In the latter
decision, a Bench of the Delhi High Court construed certain
provisions of 1956 Act and the Bengal Finance (Sales Tax) Act,
1941, (as it was applicable to Delhi at the material point of time).
On the aspect of what would be implication of the expression
‘delivery’ in Section 3(b) of the 1956 Act, it was, inter-alia, held:-
“10…….Normally, when the goods are
carried by a carrier from one State to
another, the delivery is taken by the
importer immediately after the goods land in
the importing State. Thus, normally, the
18
landing of the goods in the importing State
and the delivery of the goods are almost
simultaneous acts, although technically
there will be some hiatus between the two.
Considering these commercial facts, it is
difficult to accede to the retailer's contention
that the movement of goods continues even
if the goods have landed in Delhi only
because the importer has transferred the
documents of title to the purchasing retailers
and such retailers take delivery from the
railways at a subsequent time. If taking
delivery is the test of termination of
movement and not the landing of the goods
in an importing State, Explanation 1
to Section 3(b) of the Central Sales Tax Act
would lead to anomalous results. If, after the
landing of the goods in Delhi, the railway
receipts are endorsed one after another to
ten persons and the delivery is taken by the
tenth person, say after three months, the
movement of goods would on the dealer's
interpretation artificially continue for three
months after the landing of the goods in
Delhi.”
7. In the judgment under appeal, the Rajasthan High Court,
however, disagreed with this view of the Delhi High Court relying
on the case of Guljag Industries Limited (supra), in which three
19
appeals were dealt with in a common judgment. It was held by the
High Court in the judgment under appeal:-
“12. Therefore, the proposition of law by
the learned Commissioner in the impugned
circulars that “as per legal position, ‘transit’
gets over as soon as a reasonable time
elapses for the consignee to elect whether he
would take the goods away or leave them in
the transporters premises, because at the
conclusion of reasonable time there is
deemed to be a constructive delivery of
goods from the transporter to the
consignee”, cannot be said to be a correct
legal position. The subsequent Circular
dated 15.4.1998 purportedly issued to
ameliorate the situation for dealers created
by previous circular dated 16.9.1997,
merely ended up extending the time limit of
10 days to 30 days without undoing the
damage done by the previous circular by
propounding a particular view of
constructive delivery. In fact, the very
power to issue such circulars by the learned
Commissioner giving a particular
interpretation of law purportedly binding on
all the assessing authorities is doubtful.
There is no specific provision in the Sales
Tax Act, either under the RST Act or under
the CST Act, empowering the
Commissioner to issue such circulars, as
against such powers conferred under
Section 119 of the Income Tax Act on the
Central Board of Direct Taxes. Even
20
Section 119 of the Income Tax Act, which
empowers the highest administrative body
under the Act, namely CBDT, by way of its
proviso restricts and provides that no such
order, instruction or direction shall be issued
so as to require any Income Tax authority to
make a particular assessment or dispose of a
particular case in a particular manner and
such orders or instructions shall also not
interfere with the discretion of the
Commissioner (Appeals) in exercise of its
appellate functions. Therefore, this court
cannot countenance the issuance of such
circulars by the Commissioner of Sales Tax,
which unduly fetter with the quasi-judicial
discretion of the assessing authorities, who
are expected in law to give their findings of
fact and interpret the statutory law in their
own quasi-judicial discretion in accordance
with the law as interpreted by the Supreme
Court or jurisdictional High Court. The
circulars issued by the Commissioner in the
aforesaid manner like done vide Circulars
dated 16.9.1997 and 15.4.1998 are likely to
hamper and throttle such quasi-judicial
discretion which vests with the assessing
authorities. Therefore, the aforesaid
circulars issued by the Commissioner
aforesaid on 15.4.1998 (S. No. 1132A) and
16.9.1997 (S. No. 1115B) are in conflict
with the Division Bench decision of this
Court in Guljag Industries Ltd's
case (supra) and even otherwise they are
found to be without any authority of law.
Consequently, both these circulars are
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found to be ultra vires and are hereby
quashed.
13. In view of aforesaid, since there was no
basis for the learned Commissioner to
stipulate the time frame of 10 days or 30
days and thereafter, to require the assessing
authority to invoke the concept of
constructive delivery so as to deny the
exemption of CST on subsequent sales
made by transfer of documents of title to the
goods made under Section 6(2) of Act,
though requisite conditions of Section 6(2)
of the Act are fulfilled by the dealer and
such circulars have already been held to be
ultra vires and have been quashed and in
absence of any other material justifying the
denial of exemption under Section 6(2) of
the Act to the assessee, the impugned order
of the Tax Board allowing such exemption
to the assessee is not required to be
interfered with in the present revision
petitions filed by the Revenue.”
8. We must add here that the decision in the case of Guljag
(supra) was subsequently carried up in appeal before this Court. It
appears from the records of this Court that two of these appeals
were disposed of on 30th September, 2010 as the assessee chose to
approach the statutory forum whereas another appeal was
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dismissed having regard to the quantum of tax involved in the
appeal.
9. We, accordingly, shall test the revenue’s case including the
question of legality of the said two circulars in the context of the
provisions of Sections 3 and 6 of the 1956 Act. The respondent in
this case had taken benefit of sub-section (2) on the ground that this
was a case involving inter-state sale and the sale took place by way
of transfer of documents of title of such goods during their
movement from one State to another. It is also the respondents’
case that the requisite forms and certificates were duly furnished
pertaining to such sales. On the part of the State, barring retention
of the goods in the transporters’ godown at the destination point for
a long period of time, default on no other count by the assesses has
been asserted.
10. In the two appeals in which the respondent is Bombay
Machinery Stores, sales pertained to financial years before the
circulars came into subsistence. In these instances of sales, the
Commercial Tax officer in the respective orders treated retention of
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goods beyond 30 days in the transporters’ godown as the cut-off
period. After that date, the assessee was deemed to have had taken
constructive delivery of goods and sale beyond that period within
the State of Rajasthan was held to be local sales and subjected to
sales tax under the State Law. Same reasoning was followed in the
respective orders of the tax authorities forming subject-matters of
two appeals involving Unicolour Chemicals Company. The Tax
Board, while deciding the issue in favour of revenue, referred to the
aforesaid two circulars in upholding the concept of constructive
delivery.
11. As per the aforesaid circulars, retention of goods by the
transporter beyond the time stipulated therein (being 30 days as per
the later circular) would imply that constructive delivery of the
goods has been made by the transporter to the consignee. In such a
situation, the transit status of the goods would stand terminated and
the deeming provision in first explanation to Section 3 of the 1956
Act conceiving the time-point of delivery as termination of
movement shall cease to operate.
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12. In this set of appeals we have already indicated that transfer
of documents of title were effected subsequent to the goods
reaching the location within destination State. But when the goods
are delivered to a carrier for transmission, first explanation to
Section 3 of the 1956 Act specifies that movement of the goods
would be deemed to commence at the time when goods are
delivered to a carrier and shall terminate at the time when delivery
is taken from such carrier. The said provision does not qualify the
term ‘delivery’ with any timeframe within which such delivery
shall have to take place. In such circumstances fixing of timeframe
by order of the Tax Administration of the State in our opinion
would be impermissible.
13. Before the High Court, the revenue authorities has relied on
Section 51 of the Sale of Goods Act, 1930 (hereinafter referred to
as the “1930 Act”). But the said provision also does not aid or assist
the revenue. Section 51 of the 1930 Act reads: -
“51. Duration of transit.—(1) Goods are
deemed to be in course of transit from the
time when they are delivered to a carrier or
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other bailee for the purpose of transmission
to the buyer, until the buyer or his agent in
that behalf takes delivery of them from such
carrier or other bailee.
(2) If the buyer or his agent in that behalf
obtains delivery of the goods before their
arrival at the appointed destination, the
transit is at an end.
(3) If, after the arrival of the goods at the
appointed destination, the carrier or other
bailee acknowledges to the buyer or his
agent that he holds the goods on his behalf
and continues in possession of them as
bailee for the buyer or his agent, the transit
is at an end and it is immaterial that a further
destination for the goods may have been
indicated by the buyer.
(4) If the goods are rejected by the buyer and
the carrier or other bailee continues in
possession of them, the transit is not deemed
to be at an end, even if the seller has refused
to receive them back.
(5) When goods are delivered to a ship
chartered by the buyer, it is a question
depending on the circumstances of the
particular case, whether they are in the
possession of the master as a carrier or as
agent of the buyer.
(6) Where the carrier or other bailee
wrongfully refuses to deliver the goods to
the buyer or his agent in that behalf, the
transit is deemed to be at an end.
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(7) Where part delivery of the goods has
been made to the buyer or his agent in that
behalf, the remainder of the goods may be
stopped in transit, unless such part delivery
has been given in such circumstances as to
show an agreement to give up possession of
the whole of the goods
14. Sub-clause (1) of the said provision specifies when the goods
shall be deemed to be in course of transit and sub-clause (3) thereof
lays down the conditions for termination of transit. That condition
is an acknowledgment to the buyer or his agent by the carrier that
he holds the goods on his behalf. There is no material to suggest
such an acknowledgment was made by the independent transporter
in these appeals. In such circumstances we do not think the decision
of the High Court requires any interference.
15. In the case of Arjan Dass Gupta (supra) principle akin to
constructive delivery was expounded and we have quoted the
relevant passage from that decision earlier in this judgment. In our
opinion, however, such construction would not be proper to
interpret the provisions of Section 3 of the 1956 Act. A legal fiction
is created in first explanation to that Section. That fiction is that
27
the movement of goods, from one State to another shall terminate,
where the good have been delivered to a carrier for transmission, at
the time of when delivery is taken from such carrier. There is no
concept of constructive delivery either express or implied in the
said provision. On a plain reading of the statute, the movement of
the goods, for the purposes of clause (b) of Section 3 of the 1956
Act would terminate only when delivery is taken, having regard to
first explanation to that Section. There is no scope of incorporating
any further word to qualify the nature and scope of the expression
“delivery” within the said section. The legislature has eschewed
from giving the said word an expansive meaning. The High Court
under the judgment which is assailed in Civil Appeal No.2217 of
2011 rightly held that there is no place for any intendment in taxing
statutes. We are of the view that the interpretation of the Division
Bench of the Delhi High Court given in the case of Arjan Dass
Gupta does not lays down correct position of law. In the event, the
authorities felt any assessee or dealer was taking unintended benefit
under the aforesaid provisions of the 1956 Act, then the proper
28
course would be legislative amendment. The Tax Administration
Authorities cannot give their own interpretation to legislative
provisions on the basis of their own perception of trade practise.
This administrative exercise, in effect, would result in supplying
words to legislative provisions, as if to cure omissions of the
legislature.
16. For these reasons, we do not want to interfere with the
judgments of the High Court in these four appeals. The appeals are
dismissed. Any connected applications shall also stand disposed
of.
There shall be no order as to costs.
..………………………….J.
(Deepak Gupta)
 …………..……………….J.
 (Aniruddha Bose)
 New Delhi,
 April 27, 2020.
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