Mahant Sri Jagannath Ramanuj Das And... vs The State Of Orissa And Another

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: supreme-court

Case Number: Petition No. 405 of 1953

Decision Date: 16 March, 1954

Coram: B.K. Mukherjea, Ghulam Hasan, Mehar Chand Mahajan, Vivian Bose

Mahant Sri Jagannath Ramanuj Das and another filed a petition against the State of Orissa and another, with the judgment delivered on 16 March 1954 by the Supreme Court of India. The opinion was authored by Justice B.K. Mukherjea, and the bench included Justices Ghulam Hasan, Mehar Chand Mahajan and Vivian Bose. The parties are styled as petitioner Mahant Sri Jagannath Ramanuj Das and another and respondents the State of Orissa and another. The judgment date is noted as 16 March 1954 and the bench composition is repeated as Justice B.K. Mukherjea, Justice Ghulam Hasan, Justice Mehar Chand Mahajan, and Justice Vivian Bose. The case is reported as 1954 AIR 400 and 1954 SCR 1046, with subsequent citators listed as F 1956 SC 432 (2,5), R 1959 SC 942 (12,15), R 1961 SC 459 (11,43), R 1962 SC 853 (34), RF 1962 SC 1371 (37,78), R 1965 SC 1107 (48), RF 1971 SC 344 (6), R 1971 SC 1182 (5), R 1972 SC 1586 (12), RF 1973 SC 724 (43), R 1975 SC 846 (14), R 1976 SC 1059 (29), F 1978 SC 1181 (5), R 1980 SC 1008 (11), RF 1981 SC 1863 (24), R 1992 SC 2038 (3,7). The statutes involved are Article 19(1)(f), Article 25, Article 26 and Article 27 of the Constitution of India, together with the Orissa Hindu Religious Endowments Act, 1939, as amended by Amending Act II of 1952, specifically sections 38, 39, the proviso to section 46 and section 49. The principal issues examined were whether sections 38 and 39 and the proviso to section 46 of the Orissa Hindu Religious Endowments Act, 1939, as amended, were ultra vires the Constitution, and whether section 49 was ultra vires Article 27. The headnote held that sections 38, 39 and the proviso to section 46 are indeed ultra vires Articles 19(1)(f), 25 and 26, whereas the annual contribution prescribed in section 49 constitutes a fee rather than a tax and therefore falls within the legislative competence of the provincial legislature. Moreover, that contribution is not prohibited by Article 27 because its purpose is not the promotion or preservation of the Hindu religion or any of its denominations, but the proper administration of religious trusts and institutions wherever they exist. The case is identified as Civil Appeal No. 38 of 1953. The original jurisdiction arose from Petition No. 405 of 1953 filed under Article 32 of the Constitution for enforcement of fundamental rights. The appellate jurisdiction stems from Case No. 1 of 1950, an appeal under section 205 of the Government of India Act, 1935, from a judgment and decree dated 13 September 1949 of the High Court of Judicature, Orion, in First Appeal No. 39 of 1949, which itself arose from a judgment and decree dated 11 September 1945 of the District Judge, Cutback, in Original Suit No. 3 of 1943. Counsel for the petitioners and appellants Nos. 1 to 13 appeared, as did counsel for appellants 14 to 16, and counsel for the respondents in both matters.

The judgment was delivered by Mukherjea J. For convenience, the two related matters were considered together and disposed of in a single judgment. Petition No. 405 of 1953 was presented to this Court under article 32 of the Constitution. The petitioners were the Mahants, or superiors, of two ancient and well-known religious institutions of Orissa, each possessing endowments of considerable value situated both within and outside the State of Orissa. An Act known as the Orissa Hindu Religious Endowments Act had been passed by the Orissa Legislative Assembly, which was functioning under the Government-of-India Act, 1935. The Act received the Governor-General’s assent on 31 August 1939. Its preamble stated that the purpose of the Act was “to provide for the better administration and governance of certain Hindu religious endowments.” The Act defined a “religious endowment” broadly to include all property belonging to, given to, or endowed for the support of Maths or temples or for the performance of any service or charity connected therewith. The scheme of the Act vested control and supervision of public temples and Maths in a statutory authority designated as the Commissioner of Hindu Religious Endowments, and conferred upon the Commissioner certain powers so that he could effectively control the trustees of the Maths and temples. The Commissioner was required to be a member of the Judicial or Executive Service of the Province and his actions were subject to the general control of the provincial Government. Under section 49 of the Act, every Math or temple whose annual income exceeded Rs 250 was required to pay an annual contribution calculated as a percentage of its income, the percentage increasing progressively as the income rose. Section 50 provided that, together with loans and grants made by the Government, these contributions would constitute a special fund from which the expenses of administering the religious endowments were to be met. In July 1940 a suit was instituted in the court of the District Judge of Cuttack by a number of Mahants, including the two petitioners in the present article 32 petition, and this suit gave rise to Case No. 1 of 1950. The petitioners prayed for a declaration that the Orissa Hindu Religious Endowments Act of 1939 was ultra vires the Orissa Legislature and for other consequential reliefs. The validity of the Act was challenged on three principal grounds: (i) that the subject matter of the legislation was not covered by Entry 34 of List I in Schedule VII of the Government-of-India Act, 1935; (ii) that the contribution levied under section 49 was, in substance, a tax and could not have been imposed by the Provincial Legislature; and (iii) that the provisions of the Act affected the income of properties situated outside the territorial limits of the Province, rendering the Act extra-territorial in its operation and therefore inoperative. All of these contentions were overruled by the District Judge of Cuttack, who, by his judgment dated 11 September 1945, dismissed the plaintiffs’ suit. The plaintiffs appealed that decision to the High Court of Orissa, where a Division Bench consisting of Jagannath Badas and Narasimham JJ delivered two separate but concurring judgments dated 13 September 1949, affirming the District Judge’s decree and dismissing the appeal. The present Case No. 1 of 1950 arose from that judgment. During the pendency of the appeal the Constitution of India came into force on 26 January 1950, introducing a chapter on fundamental rights, and the Orissa Hindu Religious Endowments Act had been recently amended by the State Legislature of Orissa.

The petitioners argued that the Act could not be enforced because the contributions imposed under it had been levied by the Provincial Legislature, and that, since the provisions of the Act affected the income of properties located beyond the territorial limits of the Province, the Act operated extra-territorially and was therefore inoperative. All of these contentions were rejected by the District Judge of Cuttack, who delivered a judgment on 11 September 1945 and dismissed the suit filed by the plaintiffs. The plaintiffs appealed this decision to the High Court of Orissa, where the appeal was heard by a Division Bench comprising judges Jagannedbadas and Narasimham. By two separate but concurring judgments dated 13 September 1949, the learned judges affirmed the District Judge’s decision and dismissed the appeal. The present case, identified as Case No. 1 of 1950, arose from that judgment. While the appeal was pending, the Constitution of India came into force on 26 January 1950, introducing a chapter on fundamental rights, and the Orissa Hindu Religious Endowments Act was subsequently amended by the State Legislature through Amending Act II of 1952. In view of these developments, two of the Mahants who had been plaintiffs in the original declaratory suit of 1940 filed the present application under article 32 of the Constitution, framing the application so comprehensively that it would encompass every point that could be raised against the validity of the Orissa Hindu Religious Endowments Act on constitutional grounds. Both parties agreed that, under the present circumstances, it was unnecessary to adjudicate the earlier appeal separately; the decision to be rendered in the article 32 petition would constitute the authority on the validity of each provision of the impugned Act. It may be stated at the outset that the Orissa Hindu Religious Endowments Act of 1939 closely follows the pattern of the Madras Hindu Religious Endowments Act of 1927, which has subsequently been superseded by a later statute enacted by the Madras Legislature in 1951 and known as the Madras Hindu Religious and Charitable Endowments Act. The grounds on which the validity of the Orissa Act has been attacked are substantially the same as those advanced in the challenge to the constitutional validity of the Madras Act in Civil Appeal No. 38 of 1953 (The Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar), a judgment that has just been delivered. These grounds can be conveniently divided into two categories. First, certain provisions of the impugned Act have been challenged on the basis that they infringe the fundamental rights guaranteed to the petitioners under articles 19(1)(f), 25, 26 and 27 of the Constitution. The second category of contention, referenced as (1) [1954] S.C.R. 1005, relates to the provision that authorises the levying of a contribution on religious institutions under the Act.

In this case the Court examined the constitutional challenges raised against Section 49 of the Act, noting that the petitioners had attacked the provision on two principal grounds. First, they contended that the contribution prescribed by Section 49 was, in substance, a tax and that the Provincial Legislature lacked the jurisdiction to enact a law imposing such a tax. Second, they argued that the imposition of the contribution was forbidden by Article 27 of the Constitution. The Court observed that the broader questions concerning the reach of the fundamental rights guaranteed under Articles 19(1)(f), 25, 26 and 27 in relation to mathas and temples had already been exhaustively addressed in its earlier judgment in the Madras appeal, and therefore it would be unnecessary to repeat those discussions for the present proceedings. Consequently, the Court proceeded directly to scrutinise the specific provisions of the Orissa Act that had been objected to by the petitioners’ counsel, applying the principles previously articulated in the Madras appeal. The Court remarked that many of the contested provisions of the Orissa Act closely resemble corresponding provisions in the Madras Act. Regarding Section 11, the petitioners argued that it conferred an almost unfettered and arbitrary power upon the Commissioner. The Court noted that Section 11 mirrors Section 20 of the Madras Act and, as explained in its earlier judgment, although the powers appear broad, they can be exercised solely to ensure that mathas and temples are properly maintained and that endowments are correctly administered. Since the purpose and object of the powers have been clearly indicated, the Court held that it cannot be said that the authority vested in the Commissioner is arbitrary or unrestricted; the explanatory note to the section merely clarifies that the Commissioner may pass interim orders as he deems appropriate. The Court then turned to Section 14, which delineates the duties of a trustee and the standard of care required in managing the affairs of religious institutions. The Court explained that the required care is the same as that expected of any prudent person managing his own property, and that this requirement concerns estate administration without infringing any fundamental rights of the trustee. For the same reason, the Court found no basis to object to Section 28, which obliges a temple trustee to obey all orders issued under the Act by the Commissioner, provided that those orders are lawful and issued within the scope of the authority properly vested in the officer. The Court concluded its preliminary analysis by indicating that the remaining provisions of the Act that had attracted serious objections were those listed subsequently.

In this case the Court examined the provisions of sections 38, 39, 46, 47 and 49 of the Act. Sections 38 and 39 dealt with the preparation of a scheme for the administration of endowed property. The Court observed that while a scheme could be useful for ensuring proper management, the Act prescribed that the scheme be drawn up by the Commissioner, who was an administrative officer, rather than by a civil court or under its supervision. The Court noted that the Act provided no right of appeal from the Commissioner’s order to any court. By contrast, under section 58 of the Madras Act, a scheme prepared by the Deputy Commissioner could be appealed to the Commissioner, and a party dissatisfied with the Commissioner’s order could institute a civil suit and subsequently appeal to the High Court. The Court further explained that the original sub-section (4) of section 39 allowed a trustee or any person with an interest in the institution to file a civil suit to modify or set aside a scheme-framing order, and that section 40 made the Commissioner’s order final only subject to the outcome of such a suit. However, the Amending Act of 1952 deleted that sub-section (4) and replaced it with a provision that rendered the Commissioner’s order final and conclusive. The Court pointed out that despite this change, section 41 remained unchanged and still permitted a court to set aside or modify a scheme-settling order, creating a contradictory drafting situation. The Attorney-General for the State of Orissa admitted that these sections required redrafting. On this basis, the Court concluded that allowing an executive officer to settle a scheme for a religious institution without any judicial oversight imposed an unreasonable restriction on the property rights of the institution’s superior, and therefore declared sections 38 and 39 invalid.

The Court then turned to section 46. It held that the provision itself was not faulty, but that the proviso appended to it could be legitimately questioned. According to existing law, the Mahant or the head of a Math possessed broad authority to dispose of surplus income, with the only recognized limitation being that the income could not be used for personal purposes unrelated to the dignity of the office. The Court noted that the purposes listed in section 46 were all aimed at the benefit of the institution, and there was no justification for further restricting the trustee’s discretion over the expenditure of surplus for those purposes through additional directions from the Commissioner. Consequently, the Court found no reason to strike down the main text of section 46, while signalling that the proviso might be subject to a legitimate exception.

Section 47(1) provides that the Commissioner may issue orders applying the rule of cy pres not only when the original purpose of a trust becomes impossible to fulfil, either wholly or partially, because of subsequent events, but also when, after the institution has satisfied its legitimate expenses, a surplus remains. Although the last part of the sub-section might appear open to objection, subsection 4 of section 47 expressly permits any party aggrieved by such an order of the Commissioner to institute a suit in a civil court, and that court is empowered to modify or set aside the Commissioner’s order. Consequently, the Court found no reasonable ground for a complaint on that basis.

The next provision examined was section 49, which obliges every Math or temple whose annual income exceeds rupees 250 to make an annual contribution for the purpose of meeting the expenses of the Commissioner and the officers and servants employed under him. The primary issue raised by this provision was whether the contribution constituted a tax or a fee. It was not contested that, if the contribution were a tax, the Provincial Legislature would lack the authority to enact such a provision. This question had been thoroughly discussed in the Court’s earlier judgment in the Madras appeal, and the present analysis did not repeat that discussion. The Madras appeal had observed that there is no inherent distinction between a tax and a fee; both are manifestations of the State’s power to raise revenue. Nevertheless, the Constitution draws a legislative distinction between taxes and fees, providing specific entries for various taxes in the three lists of the Seventh Schedule and, at the end of each list, a separate entry for fees that may be levied in respect of the matters included in those lists.

The Court explained that a tax is a compulsory exaction of money by a public authority for public purposes, enforceable by law, and imposed without any reference to a special benefit for the persons who pay it. Tax revenue is merged into the general fund of the State and is applied to general public expenditures; the only return to the taxpayer is a share in the common benefits enjoyed by the public. In contrast, a fee is a payment made primarily in the public interest but in consideration of a specific service rendered or a particular work performed for the benefit of those from whom the payment is demanded. Thus, a fee always contains an element of quid-pro-quo that is absent in a tax. Applying this test, the contribution required by section 49 was deemed a fee rather than a tax, because it is demanded solely to meet the expenses of the Commissioner and his office, which constitute the machinery established for the proper administration of religious institutions, and the amount collected is not merged into the State’s general revenue.

The Court explained that for a payment to be classified as a fee, two essential elements were required. First, the payment had to be levied in consideration of certain services that the individuals either willingly or unwillingly accepted. However, the Court noted that this condition alone was insufficient to constitute a fee if the amounts collected for those services were not earmarked or specifically appropriated for that purpose but were instead merged into the State’s general revenue and spent for generic public purposes. Applying this test, the Court examined the contribution imposed by section 49 of the Orissa Act and concluded that it satisfied both elements and therefore had to be regarded as a fee rather than a tax. The Court observed that the demand for payment under the provision was made solely to meet the expenses of the Commissioner and his office, which formed the machinery for the proper administration of the affairs of the religious institution. The amounts collected were not absorbed into the general public revenue; instead, they were directed to a special fund contemplated by section 50 of the Act. This fund, to which the Provincial Government also contributed by way of loan and grant, was expressly set apart for the rendering of services required to give effect to the provisions of the Act. Consequently, the Court held that, following the principles it had earlier articulated in the Madras appeal, the contribution could legitimately be characterized as a fee and that the Provincial Legislature was within its competence to enact the provision.

The Court further observed that the fact that the levy was graded according to the payers’ capacity did not transform it into a tax, nor did it provide a decisive test for classification. Moreover, the Court expressed the view that the imposition could not be said to fall foul of article 27 of the Constitution. Article 27 prohibited the specific appropriation of tax proceeds for the promotion or maintenance of any particular religion or religious denomination. The Court noted that the purpose of the contribution under section 49 was not the fostering or preservation of the Hindu religion or any of its denominations; rather, it was aimed at ensuring that religious trusts and institutions, wherever they existed, were properly administered. The legislation sought to secure secular administration of the religious institutions and to guarantee that the endowments attached to them were correctly managed and that their income was applied to the purposes for which the institutions were founded. Since there was no intention to favour any specific religion or denomination, the Court concluded that article 27 could not be invoked. Accordingly, the Court held that the only provisions of the Act that were invalid were sections 38, 39 and the proviso to section 46.

In the present matter, the Court explained that the petition filed under article thirty-two of the Constitution was permitted to proceed only to the limited extent that it called for the issuance of a writ of mandamus. The purpose of that writ was to restrain both the Commissioner and the State Government from enforcing, against the petitioners, the statutory provisions that had been earlier identified in the judgment as the sections declared to be unconstitutional. By issuing the writ, the Court intended to prevent the authorities from applying those specific provisions to the petitioners, thereby protecting the petitioners from the effect of the invalid sections. The Court further observed that the petition contained several additional prayers seeking relief beyond the restraining order, and that none of those further requests were granted. Consequently, all of the petitioners’ remaining claims for relief were disallowed. In addition, the Court noted that there was no necessity for a separate order in the proceeding listed as Case No. I of 1950; that case was therefore ordered to stand dismissed without any further adjudication. Finally, the Court expressly declined to award costs to either side, stating that no order as to costs would be made either in respect of the original petition or in respect of the appeal that was before the Court.