Basheshar Nath v. Commissioner of Income-tax

Supreme Court of India · 19 November 1958 · 5 judges · 1959 AIR 149; 1959 SCR Supl. (1) 528

The Court set aside a settlement made under section 8A of the Taxation on Income (Investigation Commission) Act, 1947 as hit by Article 14, holding that an assessee cannot waive a breach of the fundamental right under Article 14.

Facts

In July 1948 the Central Government referred the assessee's case to the Income-tax Investigation Commission under section 5(1) of the Taxation on Income (Investigation Commission) Act, 1947. The investigation continued after the Constitution came into force. In May 1954, after the Commission indicated that Rs. 4,47,915 had escaped assessment, the assessee applied for a settlement under section 8A, offering Rs. 3,50,000 as tax and penalty; the Central Government accepted it and ordered recovery, and he paid in monthly instalments. In Muthiah (1955) the Supreme Court held section 5(1) discriminatory and void under Article 14 from the commencement of the Constitution. The assessee asked the Commissioner of Income-tax to treat the settlement as invalid, release his attached properties and refund his payments. The Commissioner replied on 29 January 1958 that the settlement was binding. The assessee appealed by special leave.

Questions before the Court

Was a settlement under section 8A of the Investigation Act, made after the Constitution came into force, affected by the decision holding section 5(1) void under Article 14?
Can a person waive a breach of the fundamental right under Article 14, or any other fundamental right, and had the assessee done so by entering into the settlement?

What the Court held

The Investigation Act did not provide two separate procedures. Settlement under section 8A could arise only during an investigation, in which the Commission exercised the same jurisdiction and powers and followed the same procedure; the settlement was therefore covered by the Muthiah decision and was invalid under Article 14.
The observations in the majority judgment in Syed Qasim Razvi v. State of Hyderabad must be confined to the special facts of that case and do not apply here, since the discriminatory investigation continued after the Constitution came into force.
Per Das, C.J. and Kapur, J. (with Bhagwati and Subba Rao, JJ. concurring on this point): Article 14 is a command to the State founded on public policy, and no person can by any act or conduct relieve the State of that obligation, so a breach of Article 14 cannot be waived.
Bhagwati and Subba Rao, JJ. held further that no fundamental right in Part III can be waived. S.K. Das, J. held that a right primarily for an individual's benefit may be waived, but agreed the plea failed because its factual foundation was not proved.
The appeal was allowed, the Commissioner's order of 29 January 1958 set aside, and all pending proceedings to implement the Government's order of 5 July 1954 quashed, with costs.

Why it matters

The judgment holds that a breach of the fundamental right under Article 14 cannot be waived, because Article 14 is a constitutional command to the State founded on public policy. Two judges went further and held that no fundamental right can be waived, while one judge accepted waiver of rights meant primarily for individual benefit, so the case also records the range of views on waiver of fundamental rights.

In the Court's words

Copied from the official judgment; each passage links to its page.

“It seems to us absolutely clear, on the language of Art. 14 that it is a command issued by the Constitution to the State as a matter of public policy with a view to implement its object of ensuring the equality of status and opportunity which every welfare State, such as India, is by her Constitution expected to do and no person can, by any act or conduct, relieve the State of the solemn obligation imposed on it by the Constitution.”

Das, C.J. (for himself and Kapur, J.)Page 17 of the judgment

“In our opinion s. 8A did not provide for a separate procedure at all. When a case was referred under s. 5(1) it was really for investigation and a settlement was something which could crop up in the process of that investigation just as in the course of a suit parties may arrive at some compromise.”

Das, C.J. (for himself and Kapur, J.)Page 13 of the judgment

“This, in my opinion is the true position and it cannot therefore be urged that it is open to a citizen to, waive his fundamental rights conferred by Part III of the Constitution. The Supreme Court is the bulwark of the fundamental rights which have been for the first time enacted in the Constitution”

Bhagwati, J.Page 25 of the judgment

“The true position as I conceive it is this: where a right or privilege guaranteed by the Constitution rests in the individual and is primarily intended for his benefit and does not impinge on the right of others, it can be waived provided such waiver is not forbidden by law and does not contravene public. policy or public morals.”

S.K. Das, J. (differing on waiver)Page 49 of the judgment

Provisions interpreted

Article 14, Constitution
Article 13, Constitution
Sections 5(1) and 8A, Taxation on Income (Investigation Commission) Act, 1947

Related judgments

Followed in Olga Tellis v. Bombay Municipal Corporation (1985)

Case and bench

Parties: Basheshar Nath v. The Commissioner of Income-tax, Delhi & Rajasthan & Another
Case: Civil Appeal No. 208 of 1958
Decided: 19 November 1958
Bench: Sudhi Ranjan Das, Natwarlal H. Bhagwati, S.K. Das, J.L. Kapur, K. Subba Rao
Opinions: Unanimous in result. Das, C.J. delivered the judgment for himself and Kapur, J.; Bhagwati, S.K. Das and Subba Rao, JJ. delivered separate judgments. On waiver, four judges held a breach of Article 14 cannot be waived (Bhagwati and Subba Rao, JJ. extending this to all fundamental rights); S.K. Das, J. differed on that point.

Questions on this case

2 questions in live Law Maker papers mention this case. Practise them with the landmark judgments questions.