LexTHE NANDLAL BHANDARI MILLS LTD., INDORE versus THE STATE OF MADHYA BHARAT
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2 S.C.R. SUPREME COURT RE~'tS
839
THE NANDLAL BHANDARI MJI.JS LTD.,
INDORE
v.
THE STATE OF MADHYA BRAIUT
(S. K. DA!:!, M. H:!DAYATULLAH and J. C. SlliH, JJ.)
Agem-Gommi&tio" paid 01.t of nel pra/iU-Jj dedvctib le
from aM.-bie i1Ul0111t-TM J..dore bulwtrial l'ax Rukd-
Notiji()<JtioM.
By a Cabinet Resolution of the Holltar Sta~ certain Rules
known as The Indore Industrial Tax R.ulcs wen: framed for
the purpose _of_ levying_ industrial. tax. After the decisio~ of the
Privy Council m Pondickerru Railway Co., Ltd. v. Commi88ioner
of l>1COme-tax, (1931) L. R. 58 I. A. 239, disallowing deduction
of Commission paid out of profits to agents from the aaoesaabk
profits, the Government of Holkar State of which the Mahar.aj&
was the Supreme Ruler, issued certain Notifications ordering
that the Agents' Commission on profits should not be allowed
to be deducted from the assessable profits. The appellants
who under an agrcemen t paid commission to their agents out
of the company's net profits contended, illltt alia, that the
Notifications in question did not have the force of law and was
not enforceable against the appellants.
Hild, that every general order emanating from the
sovereign ruler having its roots in a resolution of the cabinet
muat be regarded as a law binding on the subject and the
Notification• di.allowing commission paid to agents to be
deducted from the assessable profits were therefore binding on
the appellants, because that was the normal mode by which
laws were ma.de in the Holkar State.
Rajkum»r Milt. Ltd. v. Madhya Bharat State, A. I. R.
1953 Madhya Bharat 135, approved,
Ameer-un-nissa Begum v. Mahboob Begum, A. I. R. 1955
S.C. 352, followed.
The Unio11 Cold Storage Co., Ltd. v. A11ders0fl, (1931) 16
T. C. 293 and l'he "llldian Radio and Gabl. Co-uai<.atiotu
Co., Ltd. v. Commis•ioner of Income-tax, (1937) I. T. R. 270,
discussed.
Madhd<>orao v. State cf Madhya Bharat, A.I.R. 1961 S. C.
298, rcferrc to.
Ml
_,._, 17.
1961
The Na?tdlat
lihandari Mills
ltd., Indore
v.
The State of
.lf adhya Bharat
8fi0
SUPRE.l\IE COURT R.EPORTS
[l!J62)
CIVIL APPELL.;1.'.l'E' JuRISDIC1'ION: Civil Appeals
Nos. 34'1-346 of 1960.
·
Appeals.by SJ!f>Cial leave from tho judgment
and ordn datf'd Scpt<'.mber 8, 1958, of the Madhya
Prndcsb High Court (Indore Bench), Indore, in Civil
Scc011clAppeals Nos. ll0-112 of 1952 .
S. T. De,sai and J. B. Dadacharr;ji, for the
appellant.
B. Sen, R. J. l]lJave and ·I. N. Shroff, for the
"respondent.
·
1961. July 17. T,he Judgment of the Court
was delivered by
H ;duyatullczh J.
HIDAYA'IUL-LAR, J.-'-These three consolidated
appeals by spedal · leave are agairn~t a common
judgm~nt and order of the High.Court of Madhya
Pradesh, dated Septrmbe;r 8,.1958, in three second
appeals !!led und<•r R. 13 of the Indore Industrial
Tax Rules, 1927 of the .former Holkar St.ate, which
wer<' i11 forcQ before the St.ate l;ccame part of
Madhya Bharat St.ate.
They c01w0rn thu·c a_ssc-
ssmr11ts r<' lating to tho asscssmeni yl'a rB, l !)4 J, JU,12
and l-!}4:{ respectively. These second app1·nls \\·cro
originally .Jjlcd in the MacH1ya Bharat High Court
as early as 19"52 ;- but the records of the appeals
were dl'stroyed by fire· and had to be r,econstructed.
By the time the appeals were ready, Madhya
Bharat had me:·ged in the new state of l\fo.~a
Pradesh, and t.he appeals were accordingTy heard
by a Divisionnl Bench of that High Court.
The appellant is a Textile Mill and a l"' blic
Joint Stock Company call!•d the Nan dial Bhandari
Mills, Lt<l.
The appellant had appointc•l a firm,
Messrn Na11dla I :11handa~i and
Sollti as agents,
Re(',retarit\S and treasurers of the Mills, am.I under
cl. (6) of \Jic agre<:mont of agem·y, it agreed to pay
tu t,hr ag1·11ts :i.n office allo\1·ance, cummisF-ion on
the, Compm1y's.11et.'prntit~ ftTitl eommission tin the
sale p1·nct>.;ds of ~!l Jes of yarn,
<: !o:.b, eto; 'I'he
2 S.C.R. SUPREME COURT REPORTS
861
remuneration of the agents for the three account-
ing years was as follows :
Remuneration As per
Accounting ,Years
agree- ------------
ment.
HJH
19 ±:l
19-±:l
Rs.
Rs.
Rs.
1961
The
Nand/al
Bhandari Mills
Ltd., Indore
v.
The State of
Madhya Bharat
Clause ti
1500
18,000 18,00(l
18,000 HidayatullahJ.
(a) Fixed
monthly allow-
ance as office
allowance.
(b) Commission
on the Com-
pany's Net
Profits.
P.M.
for the for the
year.
year.
@ 16% 2,68,:335 6, 15,946 10,52,939
net o.n Excerpt shown. Read the full judgment & AI analysis in Lexace.