LAKSHMINARAYAN RAM GOPAL AND SON LTD. versus THE GOVERNMENT OF HYDERABAD

Citation: [1955] 1 S.C.R. 393 · Decided: 01-04-1954 · Supreme Court of India · Bench: SUDHI RANJAN DAS · Disposal: Dismissed

Cited by 4 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

• 
S.C.R. 
SUPREME COURT REPORTS 
393 
The result therefore is that in our opinion the pro-
visions of sections 3, 4 and 6 of the Essential Supplies 
(Temporary Powers) 
Act, 
1946, are constitutional and 
the impugned order is also constitutional. Accordingly 
this appeal is dismissed, and the trial Court is directed 
to proceed expeditiously with the 
ca~e in accordance 
with law . 
Appeal di.fmissed. 
LAKSHMINARAYAN RAM GOPAL 
AND SON LTD. 
tJ. 
THE GOVERNMENT OF HYDERABAD. 
[S. R. DAS, BHAGWATI and 
JAGANNADHADAS n.·1 
Master and Servant-Principal and Agent-Distinction between 
-! fyderabad 
Excess 
Profits 
Tax 
Regulation-Activities 
tt•hicl1 
constitute business-Remuneration which constitutes income, profits 
<Jr gains from business. 
The difference 
between the relations 
of master and 
servant 
and of principal and agent may be said to be this : a principal has 
the right to direct what work the agent has to do : but a master 
has the further right to direct how the work is to be Jone. 
The 
pos1t10ns 
of 
an 
agent, 
a 
servant 
and 
independent 
.contractor are distinguished as under : 
An agent is to be distinguished on the one hwd from a servant, 
and on the other from an independent contractor. 
A servant acts 
under the direct control and supervision of his master, and is bound 
to conform to all reasonable orders given to him in the 
course of 
'bis work ; an independent contractor, on the other hand, is entirely 
-independent of any control 
or interference and merely undertakes 
to produce a specified result, employing his own means to produce 
that result. 
An agent, though bound to exercise his authority in 
accordance with. all lawful instructions which may be given to him 
from time to time by his principal, is not subject in its exercise to 
the direct control or supervision of the principal. An agent, as 
such is not a servant, but a servant is generally for some purposes 
his master's implied 
agent, 
the extent of the 
agency 
depending 
upon the duties or position of the servant. 
Held, that 
the 
position of the appellants in the light of the 
principles stated above and the terms of the Agency Agreement was 
that of the agents of the Dewan Bahadur Ram Gopal Mills Ltd., 
and they carried on the general management of the business of the 
.company subject to the control and supervision of the 
Directors . 
. SI 
1954 
Harishankar 
Bagla and Another 
v. 
The State of 
Madhya Pradesh. 
Mehr Chand 
Mahajan C. J. 
1954 
April t. 
1954 
lakshminarayan 
Ram Gopal and 
Son l.Jd. 
v. 
The Government of 
Hyderabad. 
394 
SUPREME COURT REPORTS 
[1955] 
The 
control and 
supervision 
of the 
Directors 
was, however, a: 
general control and supervision 
and 
within 
the 
limits of their 
authority the appellants 
as the agents of the company had perfect 
discretion as to ho\V 
that work of general management was to be· 
done both in regard to the method and the manner oJ such work 
and therefore the circun~stances of 
the 
case 
together with 
the 
power of sub-delegation reserved 
under the Articles of Association 
established beyond doubt that the appellants 
were the 
agents of 
the company and not merely the 
servants of the company 
remu~ 
nerated by wages or salary. 
Held further, that 
various factors 
along 
'vith 
the 
fixity of 
tenure, the nature of ren1uneration and the assignability 
of their 
right<> \Vere sufficient to prove 
that the activities of the appellants 
as 
the 
agents 
of the company 
constituted a business 
and 
the 
remuneration which the appellants received from the company under 
the terms of the 
Agency Agreement \Vas income, 
profits or gains. 
fro1n business and the appellants \Vere rightly 
assessed under 
the 
provisions of Hyderabad Excess Profits Tax Regulation. 
CIVIL 
APPELLATE 
JURISDICTION: 
CIVIL 
APPEALS 
Nos. 292 and 312 of 1950. 
Appeals from 
the Judgment and Order of the 
High Court of Judicature at Hyderabad (Ansari, Qamar 
Hasan and Manohar Pershad JJ.) in Cases Nos. 180-181 
of 1954 F. 
Ved Vyas, (S. K. Kapur and Ganpat Rai, with him) 
for the appellant. 
M. C. Setalvad, Attorney-General for India (Poru> 
A. Mehta, with him) for the respondent. 
1954. April I. The Judgment of the Court was 
delivered by 
BHAGWATI 
J.-These are two appeals from the 
judgment and decision of the High Court of Judicature 
at 
Hyderabad answering certain questions 
referred at 
the instance of the appellants by the Commissioner of 
Excess 
Profits Tax, Hyderabad, and adjudg

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