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Judgment
P. Rajagopalan, Offg. C.J.
In anticipation of the abolition of the zamindari estates and other estates as defined by Madras Act I of 1908 the Madras Legislature enacted the
Madras Estates Land (Reduction of Rent) Act, 1947 (Act 30 of 1947) to relieve immediately the tenants in the estates of the burden of what were
considered to be the excessive rents they were then paying the landholders. Subsequently the Madras Estates (Abolition and Conversion into
Ryotwari) Act, 1948 (Act 26 of 1948) provided for the abolition of the estates themselves and for bringing those areas under the ryotwari system.
A number of religious, educational and charitable institutions, to which we shall hereafter refer comprehensively as institutions or religious
institutions, owned such estates, which had been granted in inam for the upkeep and maintenance of these institutions. Special provisions were
made in both the Acts to maintain what was considered by the legislature to be a just balance between the interests of such public institutions and
those of the tenants in the estates they owned.
While the interests of the tenants were safeguarded on the same lines as those of the tenants in other types of estates, a more favourable treatment
was accorded to the institutions, which owned inam estates, than to the landholders of the other abolished estates, obviously to provide against any
undue diminution of the annual income which the institutions had been entitled to get from those inam estates before these tenancy laws were
enacted. S. 5 of the Rent Reduction Act and S. of the Abolition Act were amongst such legislative provisions.
It is enough to note at this stage that these provisions were not identical in their scope. S. 5 of the Rent Reduction Act, which applied also to
estates other than inam estates was in force till the estates were notified and taken over by the Government under the Abolition Act. S. 38 of the
Abolition Act which was confined to inam estates came into play after the estates vested in the Government.
The common question that arises for determination in this batch of applications preferred under Art. 226 of the Constitution, for the issue of a
writ of mandamus in each case to the Government to discharge their statutory obligations is, what is the scope of S. 38 of the Abolition Act and
what is it that is payable to the institutions thereunder.
The petitioner in W. P. No. 296 of 19571 was the erstwhile landholder of the Ramanathapuram zamindari estate. He was also the hereditary
trustee of the religious and charitable institutions set out in schedules A and B appended to that petition. The inam estates owned by each of these
institutions were also enumerated in the schedules. The petitioner filed a separate application with reference to each of these institutions and they
formed the batch W. P. Nos. 296 to 363 of 1957. W. P. No. 1031 of 1956 was filed by the Raja of Sivaganga who was the hereditary trustee of
the 84 religious and charitable institutions which were set out in the schedules to that petition together with the inam estates each of these institutions
owned.
It was common ground that the rents in these estates were reduced and that the notifications under the Rent Reduction Act were issued in 1949-
These notifications however took effect from 1-7-1947 in fasli 1357, as directed by S. 3(3) of the Rent Reduction Act. It was again common
ground that all these estates were notified under the Abolition Act. Most of them vested in the Government with effect from 1-10-1951 in the
course of fasli 1361.
S. 5 of the Rent Reduction Act was amended by Madras Act 29 of 1956, S. 1(2) of which directed that the amended S. 5 should be deemed
to have come into force on 7-1-1948, when the Rent Reduction Act itself came into force. In view of that it may not be necessary to examine the
difference between the scope of S. 5 as it was originally enacted, and that of S. 5 as it was amended. Sec. 5 as it now stands runs :
State Government to make good income lost by religious, educational or charitable institutions: (1) Where, by reason of the foregoing
provisions, the net income derived by any religious, educational or charitable institution from any estate or part of an estate belonging to it, in the
fasli year 1957 or in any subsequent fasli year until the commencement of the fasli year in which the estate may finally be taken over by the State
Government, becomes less than the net income which the institution would have derived in such fasli year if the rates of rent had not been reduced
under this Act, the State Government shall pay the difference to the institution at the end of the fasli year in question.
The net income derived in each of the faslis years beginning with the fasli year 1357 and the net income which the institution would have derived
in each fasli year as aforesaid shall for the purpose of sub-sec. (1) be determined by such authority, and in such manner, as may be laid down in
the rules made by the State Government.
In determining the net income in both the cases aforesaid all amounts which accrued to the institution concerned during the relevant fasli year
shall be taken into account whether the amounts were actually collected or not.
The effect of S. 5 can be summed up thus. The rates of rent were reduced only for the ryoti lands in the estate. Those reduced rents, cesses and
the items of miscellaneous revenue constituted the beriz or the demand of the estate village. The demand under the head of rents would be
comparatively static, while the demand under the heads of miscellaneous revenue were liable to variation from year to year. That beriz could not
obviously include the income of the institution which the landholder got from its private lands.
No rent was payable at all on those lands, and no question of reduction of rent could arise. The items of miscellaneous revenue and the rates
therefore were also left untouched by the Rent Reduction Act. So the result of Sec. 5 was that the difference between what constituted rent from
the ryoti land calculated on the basis of what could be conveniently called the contract rates which prevailed before the Rent Reduction Act, and
the rent as reduced under the Rent Reduction Act became payable to the institution which owned that estate.
We can leave out of account the deductions for which S. 3(4) of the Rent Reduction Act provided. In other words, with reference to each village
which constituted an estate, the difference between the actual beriz based on the reduced rents and the notional beriz computed on the assumption
that the rents were not reduced under the Rent Reduction Act, was ascertained and that became payable to the institution as the landholder of the
estate.
That payment was a statutory liability imposed on the State, obviously to be met of its consolidated fund. It did not come out of anything which the
Government could collect in the estate under the terms of the Rent Reduction Act. It was a payment in addition to what was payable under S. 3(4)
of the Rent Reduction Act, which could be correlated to what the Government could collect from the tenants in possession of the ryoti lands in the
estate.
The religious institution as the landholder was entitled to this additional payment upto the commencement of the fasli year in the course of which the
estates were taken over by the Government under the Abolition Act. As we pointed out earlier, most of the inam estates involved in these
proceedings were taken over in the course of fasli 1361.
Obviously there can be no real dispute about what was payable to the institution under S. 5 of the Rent Reduction Act. It was a sum which
could be computed with comparative case.
What the institution as the landholder of an inam estate is entitled to after that estate vests in the Government under the Abolition Act is regulated
by S. 38 of the Act, the relevant portion of which runs :
Payment of tasdik allowance and additional compensation to institutions: (1) Where an inam estate or part thereof was held immediately before
the notified date by any religious, educational or charitable institution, the Government shall pay to the institution every year as a tasdik allowance -
(a) in the case of an entire inam estate, the basic annual sum;... (2) Where the tasdik allowance so payable is less than the difference between - (a)
the average net annual income derived by the institution from all sources in the estate.... as calculated in the prescribed manner during the five
complete fasli years immediately preceding the notified date or during that portion of those fasli years in which the estate... was held by the
institution, and (b) the income as calculated in the prescribed manner which the institution may be expected to receive from the lands in respect of
which it is entitled to a ryotwari patta, the deficiency shall be made good to the institution by the Government every year;
(3) All amounts which accrued due to the institution during the period referred to in sub-sec. (2), clause (a), shall be taken into account, whether
the amounts were actually collected or not;....
Sec. 54 of the Abolition Act provides for the interim payments to the institutions till the quantum of the tasdik allowance payable under S. 38 is
finally determined.
Instead of a lump sum compensation payable in instalments, which the landholders of even, other inam estates were entitled to under the
Abolition Act, religious and other institutions which owned inam estates became entitled to the recurring annual payment which was styled a tasdik
allowance. The grant of a tasdik allowance to such institutions in lieu of the income they had enjoyed before was not a new concept. The basis of
calculation of that allowance as compensation for the loss of the inam estates was new and was furnished by S. 38.
The primary constituent of that tasdik allowance was the ""basic sum"", to be ascertained in accordance with the provisions of S. 31 of the Abolition
Act. What was payable under S. 38(1) of the Abolition Act corresponded to some extent to the payments the institutions were entitled to get
under S. 3(4) of the Rent Reduction Act. Sec. 5(1) of the Rent Reduction Act provided for an additional payment to the institution. Something akin
to that was the provision for additional allowance under S. 38(2) of the Abolition Act. But the: scheme of sub-secs. (1) and (2) of Sec. 38 of the
Abolition Act was very different from that of Secs. 3(4) and 5(1) of the Rent Reduction Act.
While S. 3(4) of the Rent Reduction Act was linked up with the rents payable on ryoti lands reduced under that Act, the statutory concept of
the basic annual sum in S. 31 of the Abolition Act was linked up with the land revenue payable on what had been really ryoti lands in the estate
after the contemplated ryotwari settlement was carried out. There was a reasonable certainty that the landholder''s income from the ryoti lands
would suffer a diminution, often a drastic diminution, after the rents were reduced under the Rent Reduction Act.
It was that diminution that was provided against by S. 5(1) of the Rent Reduction Act. It is true the exact rates of ryotwari settlement to be
introduced in the inam estates taken over under the Abolition Act could not be visualised when Ss. 31 and 38(1) of that Act were enacted. It
should however be remembered that Ss. 2 and 3 of the Rent Reduction Act had directed in effect the adoption of the ryotwari rates in the
neighbourhood as the standard.
Just as S. 3(4) of the Rent Reduction Act did not take into, account the income of the institution from such private lands as it owned in the inam
estate, that income was left out in calculating the basic annual sum under Sec. 31 of the Abolition Act. It should be more convenient to refer to that
as income from private lands, though the statutory provision in S. 31 of the Abolition Act was for the exclusion of the ryotwari demand on the
lands for which the landholder was entitled to a ryotwari patta which statutory right might be of larger ambit in many cases than the right to a patta
for private lands.
While Ss. 31 and 38(1) of the Abolition Act excluded in effect the income from the private lands, S. 38(2) made that income from the private lands
one of the items to be taken into account in calculating what an institution could get in addition to the tasdik allowance it was entitled to under S.
38(1). To that extent it radically differed from S. 5(1) of the Rent Reduction Act, which, as we have pointed out, left out of account the income
from private lands even as S. 3 (4) of the Rent Reduction Act did.
Except that both S. 5 (1) of the Rent Reduction Act and S. 38 (2) of the Abolition Act provided for an additional payment, one has no
resemblance to the other. Unlike S. 5(1) of the Rent Reduction Act S. 38 of this Abolition Act was confined to inam estates. What was payable
under S. 5 of the Rent Reduction Act ceased when the inam estate was taken over by the Government. What was payable under S. 38(2) of the
Abolition Act had to be computed on a wholly different basis.
Factually, religious institutions did get in addition to the beriz of the estate based on the reduced rent, reduced under the Rent Reduction Act,
the additional sum for which S. 5(1) of that Act provided. That was also part of the income of the institution in the fasli years for which that
additional sum was payable. Did S. 38 (1) or S. 38(2) of the Abolition Act or both provide for the inclusion of that item of income in the annual
tasdik allowance payable to the religious institution after it was divested of its inam estate, is the main question, for determination in these
proceedings.
What is payable under S. 38(1) of the Abolition Act is the basic annual sum. The computation of the basic annual sum is provided for under S.
31 of that Act. What was payable under S. 3 of the Rent Reduction Act cannot be brought within the scope of items (i) and (ii) of S. 31 of the
Abolition Act. It may not therefore be necessary to set out these provisions. Item (iv) of S. 31 of the Abolition Act runs :
the whole of the average net annual miscellaneous revenue derived from all other sources in the estate specified in S. 3, clause (b), but not including
lands in respect of which the landholder is entitled to a ryotwari patta, as ascertained under S. 34.
S. 34 specified the years for which the average was to be taken. The relevant portion of S. 3(b) to which reference was made in S. 31(iv) of the
Abolition Act runs :
the entire estate (including all communal lands and porombokes; other non-ryoti lands; waste lands; pasture lands; lanka lands; forests; mines and
minerals; quarries, rivers and streams, tanks and irrigation works; fisheries; and ferries,...
Miscellaneous revenue was a known revenue concept with a fairly precise connotation both in the ryotwari and the estate villages. What were the
sources of miscellaneous revenue were also known. It was really that that was given statutory recognition in S. 3(b) of the Abolition Act.
What was payable under S. 5(1) of the Rent Reduction Act during the interim period between fasli 1357 and fasli 1360, that is, up to the
commencement of fasli 1361 in which most of the estates were notified, cannot, in our opinion, be brought within the scope of the miscellaneous
revenue, for the inclusion of which in the basic annual sum S. 31(iv) of the Abolition Act provided.
As we said, S. 38(1) read with S. 31 of the Abolition Act was to a considerable extent analogous to S. 3(4) of the Rent Reduction Act.
Both provided for the payment to the landholder of what was the beriz of the village which constituted the inam estate. They included the rents, or
land revenue lawfully payable for the time being on what were or had been ryoti lands the assesses therein and the miscellaneous revenue.
What was payable under S. 5(1) of the Rent Reduction Act was no part of the beriz, either for purposes of S. 3(4) of the Rent Reduction Act or
for those of S. 38(1) of the Abolition Act.
The next question is whether the additional sum payable under S. 5(1) of the Rent Reduction Act can be taken into account for computing the
additional payment for which S. 38(2) of the Abolition Act provided.
The factors to be taken into account for S. 5 of the Rent Reduction Act were (1) the net income factually derived by the religious institution
from the estate in fasli 1357 and in each of the following fasli years; and (2) the net income the institution would have derived from that estate in the
given year if the rates of rent had not been reduced, that is, if the Rent Reduction Act had not been enforced.
The expression ""net income derived from an estate"" in item (1) mentioned above obviously refers to the net income calculated on the basis of
S. 3(4) of the Rent Reduction Act. What was payable under S. 5(1) of that Act could obviously have no place in the net income or in the notional
net income referred to in item (2) mentioned above. That net income was in the words of the Rent Reduction Act ""the net income derived by any
religious institution from any estate.
The language employed in S. 38(2) of the Abolition Act is not identical. The situation and the context were different from those for which S. 5
(1) of the Rent Reduction Act had to provide. S. 38 (2) of the Abolition Act refers to the ""average net annual income derived by the institution
from all the sources in the estate."" We shall presently advert to the significance of the average based on the figures of five years.
One feature to be considered is whether the expression in S. 38(2) of the Abolition Act ""the net annual income derived from all the sources in the
estate"" is of wider amplitude in its context than the statutory expression in S. 5(I) of the Rent Reduction Act, ""the net annual income derived from
the estate."" The submission of the learned counsel for the petitioners was that S. 38(2) of the Abolition Act included within its scope what was
payable under S. 5(1) of the Rent Reduction Act.
Factually it was part of the income of the religious institution in the relevant years. The learned Advocate General, who appeared for the State
submitted that the sources specified in S. 38(2) of the Abolition Act were sources (i) to (iv) mentioned in S. 31 of that Act and that in effect both
S. 5(1) of the Rent Reduction Act and S. 38(2) of the Abolition Act had reference to the same set of sources for computing the net income of the
landholder.
At first sight there might appear to be little practical difference between the two statutory expressions ""income derived from the estate"" and
income derived from all the sources in the estate."" It should however be clear that every expression must be given the meaning the context
warrants.
We shall explain the point by an illustrative example. Income from the private lands owned by the religious institution in an inam estate is
certainly income derived from the estate as well as income derived from one of the sources in the estate. Yet that income was outside the ambit of
S. 5(1) of the Rent Reduction Act never admitted of any controversy. The further requirement in S. 5(1) ""if the rates of rent had not been reduced
under this Act"" makes that clear.
We have pointed out that in the case of private lands there was no rent and no occasion for any reduction of the non-existent rates of rent. The
income from private lands would appear to be equally outside the scope of S. 38 (2) (a) though that was the only item included in S. 38(2)(b) of
the Abolition Act. If such an income had to be included in calculating the average net income for S. 38(2)(a) only to deduct it under S. 38(2)(b),
the result would be totally different from what S. 38 as a whole was intended to achieve.
The additional allowance the institution has to get is not the difference between the basic annual sum and the average net annual income during the
five years that preceded the notified date. To arrive at what is payable under S. 38(2) we have first to arrive at the difference between the average
net annual income and computed income from the private lands. The next step is to see if the basic annual sum is less than that difference; if it is that
deficiency is to be made up under S. 38(2).
If the income from the private lands is put in under S. 38(2)(a) and taken out under S. 38(2)(b) we would be left only with the average net income
from all the sources other than the private lands which could in effect only lead us to the essence of the basic annual sum what was payable as land
revenue on what had been ryoti lands in the estate. of course the basic annual sum is the gross ryotwari demand on such lands less the 3 1/2; per
cent which has to be deducted for maintenance of sources of irrigation under S. 38(2) of the Abolition Act.
We pointed out earlier that the rates of rent payable on ryoti lands reduced under the Rent Reduction Act might not eventually accord in every
case with the rates finally determined at the ryotwari settlement which was to follow the vesting of the estate in the Government. Still we cannot
forget the assumption that underlay the scheme of the Rent Reduction Act especially Ss. 2 and 3 thereof, that the rents would be reduced to bring
them to the extent possible in conformity with the prevalent ryotwari rates in the neighbourhood of the estate.
It is apparently on this basis that the beriz or demand, based on the reduced rates of rent, furnished the main factor for the computation of the
interim payment under S. 54 of the Abolition Act subject to final adjustment when the ryotwari demand was ascertained after the settlement.
If the legislature had in view that the eventual ryotwari demand on what had been ryoti lands would not be very different from the beriz or demand
worked out on the basis of reduced rents under S. 3(4) of the Rent Reduction Act, what was it the legislature intended as compensation to the
religious'' institutions that had owned inam estates in addition to the basic annual sum payable as tasdik allowance? of course, the intention of the
legislature has to be gathered primarily from the words of the statute, in this case the words used in S. 38, and in particular those in S. 38(2)(a) of
the Abolition Act.
The policy that underlay S. 5 of the Rent Reduction Act was obviously to stabilise at least for the interim period the income of the religious
institution at the levels that prevailed in fasli 1356 and before, when the original and the contract rates of rents applied to the ryoti lands. As we said
the rent from the ryoti lands was a comparatively static factor in the annual income of the institution. The other main item, income from the private
lands, was left out of consideration and remained unaffected by the Rent Reduction Act.
Does the scheme that can be gathered from the words of S. 38 of the Abolition Act give any Indication that that principle was abandoned even
with reference to the inam estates alone to which S. 38 was confined? Was it the intention of the legislature, unequivocally expressed in S. 38 of
the Abolition Act, that the tasdik allowance should be lower than the lawful income in fash 1356? These are among the aspects of the question to
be considered.
The prominent feature of S. 38(2) of the Abolition Act was that, while S. 5 of the Rent Reduction Act in effect wholly ignored the income from
the private lands, S. 38(2)(b) directed that the income from private lands should be one of the factors for determining the quantum of the additional
allowance. Under the Rent Reduction Act a religious institution could get (1) the beriz of the estate based on the reduced rates of rents for ryoti
lands, (ii) the income from the private lands, and (iii) if the beriz calculated on the original and contract rates of rent which were those that prevailed
in fasli 1356, was higher than the reduced beriz in item (i) above, then the difference between the two.
All this at least factually constituted the annual income of tins institution. What the institution can get under the Abolition Act is (1) the basic annual
sum which in effect is the reduced beriz, the beriz made up of the ryotwari demand of what had been ryoti lands computed on the basis of the
ryotwari rates introduced after settlement operations had been carried out, which were necessarily expected to be lower than the fasli 1356 level of
rents, (2) the income from the private lands for which the landholder was entitled to a ryotwari patta, which in effect meant that, instead of holding
those lands-free of all rent, the landholder would have to pay land revenue, thereby diminishing his net income from the private lands, and (3) the
additional allowance For which provision was made in S. 38(2) of the Abolition Act.
If the expression ""average net annual income derived from all the sources in the estate"" in S. 38(2)(a) meant in effect only the basic annual sum, it
would have been easier for the. legislature to have said so. The difference between the beriz of the village excluding the demand of the land revenue
payable on what had been private lands which would be the basic annual sum computed on the basis of S. 31 and the beriz calculated on the basis
of the reduced rents in S. 3(4) of the Rent Reduction Act would have, in most cases, been negligible, and would not have necessitated recourse to
the elaborate formula of ''average net income derived From all the sources in the estate.''
The five year period for which the averages had to be taken was from fasli 1356 to 1360 in the case of the inam estates taken over in fasli
1361. We should remember that the expectation was that all the inam estates would be taken over in the course of fash 1361. of these years, the
beriz for fash 1356 alone was based on the original rates of rent.
Apart from the income from the private lands that was the main income of the institution. The Income for the next four faslis was made up of the
beriz based on the rates reduced under S. 3(4) of the Rent Reduction Act and the allowance in S. 5(1) of that Act, which brought up the amount
to the normal beriz, e.g., the beriz of fasli 1356.
The very concept of average appears to us to be a clear indication of the intention of the legislature which enacted S. 38(2)(a) of the Abolition
Act, that what it had in view was the factual income of the religious institution in the five faslis that preceded fash 1361, the fasli year in which the
estate was notified under the Abolition Act. Averaging again is not a new concept in tenancy legislation. Averages are taken of years which have
much in common with each other, in other words, of years normal but for ordinary seasonal fluctuations.
From the point of view of the institution whose Interests the legislature intended to protect, there can be little in common between fasli 1356 and
each of the four succeeding fash''s, when the rates of rent were reduced, and often drastically reduced by operation of law. The guarantee against
the loss expected by that statutory reduction was the provision in S. 5(1) of the Rent Reduction Act. Unless that amount also is taken into account,
the average for which S. 38(2)(a) of the Abolition Act provided can have little meaning.
It is against this background we have to determine the scope and content of the statutory expression in S. 38(2)(a) of the Abolition Act ""the
average net annual income derived by the institution from all the sources in the estate"", which was obviously and designedly different from the
expression in S. 5(1) of the Rent Reduction Act, and further which was to provide for a wholly different situation.
The learned Advocate General pointed out that the additional allowance for which S. 5(1) of the Rent Reduction Act provided was only a
statutory right from the view point of the institution and a statutory liability imposed on the Government and he urged that it could not be viewed as
income from any source in an estate. It is true that that payment which the Government undertook did not come out of anything the Government
itself could collect from the estate under S. 3(4) of the Rent Reduction Act, and that it had to come out of the consolidated fund of the State.
But that appears to be of little relevancy deciding what the legislature intended to signify by the expression ""income from all the sources in an
estate."" The right and the corresponding liability created by S. 3(4) of the Rent Reduction Act were also statutory though it imported the fiction of a
statutory agency. So was the liability imposed by S. 39(1) of the Abolition Act. For at least four of the five year period specified in S. 38(2)(a) of
the Abolition Act. the right to receive the income was statutory and the liability of the Government to pay that amount was also statutory.
All the payments had to be made by the Government out of the consolidated fund. It should be remembered that the liability of the Government to
pay was independent of the collections made, either under the Rent Reduction Act or under the terms of the Abolition Act. The receipts went into
the consolidated fund. The statutory payments were out of that fund. Both S. 5(3) of the Rent Reduction Act and S. 38(3) of the Abolition Act
made the accrual and not the actual receipt the basis for computing the net income of the institution. In our opinion the real test is, would the
institution have been entitled to any of these payments had it not owned the estate? First the right to collect rents vested in the Government under
the Rent Reduction Act. Next the estate itself vested in the Government under the Abolition Act. The right of the institution as the landholder to
receive any amount as income was thereafter only a statutory right. That was a right that flowed from the ownership of the estate.
Independent of the ownership of that estate the institution could have no right to receive any payment from the Government. Once again we have
to emphasise that factually what the institution was entitled to receive under S. 5(1) of the Rent Reduction Act was its income. Equally factually it
was income that the institution became entitled to because it owned that estate. In the context of S. 5(1) of the Rent Reduction Act, the additional
allowance paid under that sub-section stood excluded from ""the income derived from the estate.
The context of S. 38(2)(a) of the Abolition Act, demands, in our opinion, the inclusion of that allowance in the net income derived by the institution
during the four relevant fash''s. Otherwise the scheme and policy that underlay S. 38 of the Abolition Act can have no real significance. We may
point out that, if the intention of the legislature was, as the learned Advocate General contended it was, to limit ""all the sources in the estate"", as the
expression stands in S. 38(2)(a) of the Abolition Act, to the sources specified in clauses (i) to (iv) of S. 31, it could easily have said so, even as the
legislature referred to S. 3(b) when it referred the sources of miscellaneous revenue in S. 31(iv) of the Abolition Act.
Despite the definition of ""estate"" in S. 2(3) of the Abolition Act, to construe that expression and to confine it strictly to the geographical or
territorial unit in the context of S. 38(2)(a) would be really to ignore the realities. The estate as such ceased to exist in the eye of law on the date it
was notified, and S. 38 provided for what was to follow. The income from the sources in the estate at that stage could not mean income directly
springing from the soil of the territorial unit that had been an estate.
Even before the date of that notification under the Abolition Act to the institution ""the estate"" represented to a considerable extent only the right to
receive the statutory payments for which S. 3(4) and S. 5 of the Rent Reduction Act provided. Payments under S. 3(4) were substituted for the
rents which of course could be strictly called income from a source in the estate. If income received under S. 3(4) could be viewed as income from
a source in an estate, it is doing no violence to the language employed in S. 38(2)(a) of the Abolition Act to look upon the payment under S. 5(1)
of the Rent Reduction Act also, as ""income from sources in the estate"", the main right at that stage in the estate, inclusive of all its sources of
income, being only the right to receive payments out of the consolidated fund for which the statute provided.
As we said the real test should be, was it a payment which become a receipt of income in the hands of the institution, correlated to the ownership
of what was an estate as defined by the Estates Land Act. That test, in our opinion was satisfied by what was payable under S. 5(1) of the Rent
Reduction Act.
Though the ultimate result of the construction placed on the relevant statutory expression may have no bearing on the process of construction
itself, we shall set out the results that would follow in the case of one of the inam estates by the adoption of the construction each side suggested of
the statutory expression in S. 38(2)(a) of the Rent Reduction Act. The data sheets for Vethioor and some other villages were furnished to us.
In the case of Vethioor the total income derived by the institution during all the five years that preceded fasli 1357 when the Rent Reduction Act
came into force was the unreduced beriz, i.e., Rs. 38869-10-1. The unreduced beriz of fasli 1356 and the reduced beriz of the next four faslis -
the five year period for which S. 38(2)(a) of the Rent Reduction Act provided-amounted to Rs. 16020-14-5 of this the beriz for fasli 1356 alone
was Rs. 8234-4-0 more than half the total.
During the four years faslis 1357 to 1360, the additional allowance payable under S. 5(1) of the Rent Reduction Act amounted to Rs. 26070-14-
Certain allowances for the statutory deductions had to be made from Rs. 16020-14-5. Thereafter the total net income for the five years faslis
1356 to fasli 1360 amounted to Rs. 12599-13-0 which was without taking into account the additional allowances paid for four of the fasli years
under S. 5(1) of the Rent Reduction Act.
If that was also taken into account, the income the institution was actually entitled to during the five years was Rs. 38670-11-0, what we referred
to earlier as the factual income. That corresponded in reality to the total of the five years that preceded fasli 1357. Taking into account the
payments both under S. 3(4) and S. 5(1) of the Rent Reduction Act the average net annual income, the factual income was Rs. 7734-2-2. If,
however, the income factually received under S. 5(1) of the Rent Reduction Act is left out, the average would work out only to Rs. 2519-15-5.
For the interim payments permitted under S. 54 of the Abolition Act what was payable as tasdik allowance under S. 38(1) of the Abolition Act
was computed as Rs. 2017-14-1. That, as the data sheet showed bore a close resemblance to the reduced beriz during each of the fasli years
1357. to 1360. On the assumption that the amounts payable under S. 5(1) of the Rent Reduction Act should be ignored for computing the
additional allowance payable under S. 38(2) of the Abolition Act that additional allowance was computed at Rs. 455-1-9.
Thus the interim payment was made up of Rs. 2017-14-1 plus Rs. 455-1-9. Instead of Rs. 455 1-9 that was computed as allowance permissible
under S. 38(2) of the Act, a sum of Rs. 5716-4-1 would have to be paid, were the additional payments under S. 5(1) of the Rent Reduction Act
to be taken into account. This made a difference of Rs. 5261-2-4 each year to the institution. That would be the loss tested by the factual income
derived by the institution in the period that preceded fasli 1361, when the estate was notified and that would be the extent of this loss in the fasli
years that followed the notification of the estate. We find it difficult to accept that such a drastic reduction in income was what the legislature
contemplated when it enacted S. 38(2) of the Abolition Act.
Both in the affidavit in support of the petitions, and during the course of the arguments or the learned counsel for the petitioners reliance was
placed on the wording of the forms which formed part of the rules framed by the Government to give effect to S. 38(2) of the Abolition Act.
During the course of arguments the learned counsel realized that the wording of these forms was changed with retrospective effect by a subsequent
amendment of the rules.
Neither the original set of forms nor the amended set of forms can be of any real significance in defining the statutory concept of ""income derived
from all the sources in the estate"" as embodied in S. 38(2)(a) of the Abolition Act.
In the counter affidavits filed on behalf of the Government, a preliminary objection was taken to the maintainability of these applications under
Art. 226. of the Constitution for the issue of a writ of mandamus. That objection was not persisted in and the learned Advocate General
represented to us that the Government also would welcome an adjudication of the real questions at issue between the parties in these proceedings.
One feature of the case we have to point out at this stage. Though we have discussed so far the scope of S. 38 of the Abolition Act, what is
payable at this stage to the institutions which the petitioners represent is the interim payment for which S. 54 of the Act provides. As Sec. 54 itself
directs, the interim payment has to correspond at least on a rough calculation to the payment for which S. 38 of the Abolition Act provides.
As a basis for that rough calculation the beriz arrived at under the Rent Reduction Act provisionally took the place of the anticipated ryotwari
demand for which provision was made in S. 31 of the Act. The other sources of income had also to be taken into account for computing the
interim payments under S. 54 of the Act.
Admittedly the Government declined to take into account the payments to which the institutions were entitled under S. 5(1) of the Rent
Reduction Act in computing, even on a rough calculation the amounts payable to each of these institutions under S. 38(2) of the Abolition Act. It
was a statutory duty imposed on the Government by S. 38(2) read with S. 54 of the Abolition Act. To discharge that statutory duty the amounts
lawfully due to the institutions have to be correctly computed. That obligation can be enforced by the issue of necessary directions by this court.
The rule in each of these cases is made absolute and there will be a direction, in each of these cases, to the Government to compute on a
correct basis the amount lawfully payable to each of these institutions under Sec. 38(2) of the Abolition Act, in the light of the observations in this
judgment. There will be no order as to costs.