PETITIONER:
NORTHERN INDIA CATERERS (INDIA) LTD.
Vs.
RESPONDENT:
LT. GOVERNOR OF DELHI
DATE OF JUDGMENT21/12/1979
BENCH:
PATHAK, R.S.
BENCH:
PATHAK, R.S.
KRISHNAIYER, V.R.
TULZAPURKAR, V.D.
CITATION:
1980 AIR 674 1980 SCR (2) 650
1980 SCC (2) 167
CITATOR INFO :
R 1981 SC1751 (1,2)
R 1983 SC1125 (7)
ACT:
Review of judgments of the Court-When undertaken.
HEADNOTE:
HELD : (per Tulzapurakar and Pathak, JJ.) (Krishna Iyer
J. concurring)
It is well-settled that a party is not entitled to seek
a review of a judgment delivered by this Court merely for
the purpose of a rehearing and a fresh decision in the case.
Normally the principle is that a judgment pronounced by the
Court is final and departure from that principle is
justified only when circumstances of a substantial and
compelling character make it necessary to do so. If the
attention of the Court is not drawn to a material statutory
provision during the original hearing the Court will review
its judgment. The Court may also reopen its judgment if a
manifest wrong has been done and it is necessary to pass an
order to do full and effective justice. [656H]
Sajjan Singh v. State of Rajasthan [1965] 1 S.C.R. 933,
948; G. L. Gupta v. D. N. Mehta [1971] 3 S.C.R. 748, 760; O.
N. Mahindroo v. Distt. Judge Delhi & Anr. [1971] 2 S.C.R.
11, 27 referred to.
Power to review its judgment has been conferred on the
Supreme Court by Article 137 of the Constitution read with
the provisions of a law made by Parliament or the rules made
under Article 145. In a civil proceeding an application for
review is entertained only on a ground mentioned in O.
XLVII, Rule 1 of the Code of Civil Procedure and in a
criminal proceeding on the ground of an error apparent on
the face of the record (Order XL r. 1, Supreme Court Rules
1966). Whatever be the nature of the proceedings a review
proceeding cannot be equated with the original hearing of a
case and the finality of the judgment delivered by the Court
will not be reconsidered except “where a glaring omission or
patent mistake or like grave error has crept in earlier by
judicial fallibility.” [657C-D]
Chandra Kanta v. Sheikh Habib, [1975] 3 SCR 933
referred to.
Apart from the fact that the material placed before the
Court in the review petition was never brought to its notice
when the appeals were heard, the judgment does not suffer
from an error apparent on the face of the record. Such an
error exists if of two or more views canvassed on the point
it is possible to hold that the controversy could be said to
admit of only one of them. If the view adopted by the Court
in the original judgment is a possible view having regard to
what the record states, it is difficult to hold that there
is an error apparent on the face of the record. [657E-F]
In the instant case the appellant prepared and served
food both to residents in its hotel as well as to the casual
customers who came to eat in the restaurant. In both cases
it remained a supply and service of food not amounting to a
sale. The facts alleged by the appellant were never disputed
at any stage. No attempt
651
was made by the taxing authorites to enquire into the truth
of the facts so accepted. It was in that factual context
that this Court examined the question whether any liability
to sales tax was attracted. The earlier judgment rested on
that factual foundation and must be understood in that
light. [658H]
Krishna Iyer, J. (concurring)
A case is decided on its particular conspectus of
facts. When the facts materially vary the law selectively
shifts its focus. The factual setting in which the decision
in the judgment was founded becomes critical. The appeal
proceeded on the admitted footing that the visitor to the
restaurant who sat at the table and was served the dishes he
desired, had no right to carry home what he wanted. The
basic assumption was that victuals as such were not sold and
the consideration was for the complex of activities which
included eating and drinking. On these facts the conclusion
arrived at was impeccable. [652G]
If circumstances differ the decision too will be
different. But no alternative situations were presented. If
counsel defaults in the submission he cannot find fault with
the Court for the decision. [653A]
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Review Petition Nos.
111-112 of 1978.
(Application for Review of this Court’s Judgment dated
7-9-1978) In the matter of :-
Civil Appeal Nos. 1768-69 of 1972.
Soli J. Sorabjee, Addl. Sol. Genl. and P. A. Francis
and B. B. Ahuja, M. N. Shroff, R. S. Chauhan and R. N.
Sachthey for the Petitioners.
F. S. Nariman, Lalit Bhasin, M. N. Karkhanis, Mrs. S.
Bhandare and Miss Malini Poduval for the Opposite side.
FOR INTERVENERS :
S. T. Desai and M. N. Shroff for the State of Gujarat.
Soli J. Sorabjee Addl. Sol. General and M. N. Shroff
for the State of Maharashtra.
Badridas Sharma for the State of Rajasthan.
T. V. S. N. Chari and M. S. Ganesh for the State of
Andhra Pradesh.
Soli J. Sorabjee Addl. Sol. Genl. and G. S. Chatterjee
for the State of West Bengal.
N. Nettar for the State of Karnataka.
A. V. Rangam for the State of Tamil Nadu.
S. C. Manchanda and O. P. Rana for the State of U.P.
V. J. Francis for the State of Kerala.
652
M. C. Bhandare for the Federation of Hotel and
Restaurant Associations, of India.
Y. S. Chitale for Hotel Restaurant Association Calcutta
and Eastern Region.
Lalit Bhasin, Vinay Bhasin and Vineet Kumar for South
Region Fariya Hotel.
Mrs. Shyamala Pappu and A. Minocha for Zonth Club.
A. K. Rao and A. T. M. Sampath for Tamil Nadu Hotel
Association.
N. Sudhakaran for Hotel and Restaurant Association,
Ernakulam.
Anil Diwan, Ravinder Narain and Sri Narain from Walcom
Hotels and Indovilles Hotel Division.
S. K. Gambhir for State of Madhya Pradesh.
The Judgment of V. D. Tulzapurkar and R. S. Pathak, JJ.
was delivered by Pathak, J. Krishna Iyer, J. gave a separate
Opinion.
KRISHNA IYER, J.-A plea for review, unless the first
judicial view is manifestly distorted, is like asking for
the moon. A forensic defeat cannot be avenged by an
invitation to have a second look, hopeful of discovery of
flaws and reversal of result. I agree with my learned
brother Pathak J, both on the restrictive review
jurisdiction and the rejection of the prayer in this case-
subject to the qualifications made below.
Indeed, a reading of the last paragraph of my learned
brother, with which I concur, makes it clear that Sri Soli
Sorabjee has more or less won the war, although he has
rightly lost this battle because of factual constraints. A
case is decided on its particular conspectus of facts. When
the facts materially vary, the law selectively shifts its
focus. Here, the factual setting in which the decision is
founded becomes critical. My learned brother has made it
perfectly plain that the appeal proceeded on the admitted
footing that the visitor to the restaurant who sat at the
table and was served the dishes he desired had, in that
case, no right to carry home what he wanted, after eating
what he wanted, and to pay for the eatables as distinguished
from the total blend of services, including supply (not
sale) of what he chose to eat. The basic, indeed decisive,
assumption was that victuals, as such, were not sold and the
consideration was for the complex of activities which
included eating and drinking. This sophisticated situation
being granted, the conclusion is impeccable.
653
But if circumstances differ, the decision too will be
different. But no alternative situations were presented. If
counsel defaults in the submission, he cannot find fault
with the court for the decision. This is the long and short
of it.
It sometimes happens that high-style restaurants or
residential hotels render a bungle of special services like
ball dance, rare music, hot drinks, `viands of high regale’,
glittering crockery, regal attention or `bikini’ service and
even sight-seeing transport or round-the-city visits, shoe-
shining, air-conditioning, masage in the room etc., on a
consolidated sum. You cannot dissect the items or decode the
bill to discover separately the component of goods sold.
This situation may obtain even in India with the throng of
foreign tourists who want to be taken care of and pay all-
inclusively. This may happen in some fashionable restaurants
where you cannot, as of right, remove from the table what is
left over. In these cases the decision under review squarely
applies. My learned brother has clarified and confined the
ratio to the contours so set out. He has also pointed out
that counsel, at the earlier hearing, did not contest this
factual matrix. A review in counsel’s mentation cannot
repair the verdict once given. So the law laid down must
rest in peace.
The learned Solicitor General took us through English
and American legal literature of vintage value and alien
milieu. They enlightened us but did not apply fully, as
explained by my learned brother. Had they been earlier
cited, had been seriously considered. But India is India. It
lives in its one lakh villages, thousands of towns, millions
of pavement pedlars and wayside victuallers, corner coffee
shops and tea stalls, eating houses and restaurants and some
top-notch parlours. Habits vary, conventions differ and one
rigid rule cannot apply in diverse situations. If you go to
a coffee house, order two dosas, eat one and carry the other
home, you buy the dosas. You may have the cake and eat it
too, like a child which bites a part and tells daddy that he
would eat the rest at home. Myriad situations, where the
transaction is a sale of a meal, or item to eat or part of a
package of service plus must not be governed by standard
rule. In mere restaurants and non-residential hotels, many
of these transactions are sales and taxable. Nor are
additional services invariably components of what you pay
for. You may go to an air-conditioned cloth-shop or sweet-
meat store or handcrafts emporium where cups of tea may be
given, dainty damsels may serve or sensuous magazines kept
for reading. They are devices to attract customers who buy
the commodity and the price paid is taxable as sale. The
substance of the transaction, the dominant object, the
654
life-style and other telling factors must determine whether
the apparent vendor did sell the goods or only supply a
package of services. Was there a right to take away any
eatable served, whether it be bad manners to do so or not?
In the case we have, the decision went on the ground that
such right was absent. In cases where such a negative is not
made out by the dealer-and in India, by and large, the
practice does not prohibit carrying home-exigibility is not
repelled.
I agree with my learned brother and dismiss the plea
for review.
PATHAK, J.-These Review Petitions are directed against
the judgment of this Court dated September 7, 1978 disposing
of Civil Appeals Nos. 1768 and 1769 of 1972.
Northern India Caterers (India) Ltd. run a hotel in
which besides providing lodging and meals to residents it
also operates a restaurant where meals are served to non-
residents or casual visitors. In a reference made to the
High Court of Delhi under s. 21(3) of the Bengal Finance
(Sales Tax) Act, 1941 as extended to the Union Territory of
Delhi, the High Court expressed the opinion that the service
of meals to casual visitors in the restaurant was taxable as
a sale. On appeal, this Court took a contrary view and held
that when meals were served to casual visitors in the
restaurant operated by the appellant the service must be
regarded as providing for the satisfaction of human need and
could not be regarded as constituting a sale of food when
all that the visitors were entitled to do was to eat the
food served to them and were not entitled to remove or carry
away uneaten food. Supporting considerations included the
circumstance that the furniture and furnishings, linen,
crockery and cutlery were provided, and there was also
music, dancing and perhaps a floor show.
Mr. Soli J. Sorabjee, the learned Additional Solicitor
General, who has been briefed by the respondent to appear at
this stage in the case has, with his usual thoroughness and
ability, succeeded in putting together a mass of legal
material which we greatly wish had been before the Court
when the appeals were originally heard. On the basis of that
material, he submits that the judgment delivered by this
Court ought to be reviewed. We have no hesitation in saying
that had this material been available earlier, it would have
enabled the Court to consider still further aspects of the
problem and examine it more comprehensively. But having
regard to the basis on which the appeals proceeded, we are
unable to say that the result would necessarily have been
different.
655
The learned Additional Solicitor General contended that
the judgment of this Court is amendable to review because,
he says, it proceeds on the erroneous assumption that a
restaurant can, for the purposes of the point of law decided
by us, be likened to an inn. We have been referred to
Halsbury’s Laws of England(1) and the Hotel Proprietors Act,
1956 mentioned therein. Our attention has also been invited
to a statement in Benjamin’s “Sale of Goods”(2) that when a
meal is served to a customer in a restaurant there is a sale
of goods, the element of service being subsidiary. As
regards judicial opinion in England, reliance has been
placed on Rex v. Wood Green Profiteering Committee; Boots
Cash Chemists (Southern) Lim-Exparte, (3) Rex v. Birmingham
Profiteering Committee; Provincial Cinematograph Theatres,
Lim. Exparte(4) and Lockett v. A. & M. Charles, Ltd.(5) It
appears, however, that the first and third of these three
cases cannot be said to bear directly on the point. It was
also urged that Merrill v. Hodson(6) and Mary Nisky v.
Childs Company,(7) on which this Court relied, represent the
Connecticut-New Jersey rule, but the opposite view embodied
in the Massachusetts-New York rule and expressed in Friend
v. Childs Dining Hall Co.(8) represents the true law. It was
said that the subsequent enactment of the Uniform Commercial
Code(9) in the United States has preferred the
Massachusetts-New York rule “by providing that for the
purpose of the implied warranty of merchantibility, the
serving for value of food or drink to be consumed either on
the premises or elsewhere is a sale.”(10) We were invited to
consider Vishnu Agencies (Pvt.) Ltd. v. Commercial Tax
Officer & Ors.(11) for the proposition that the concept of
“sale of goods” as understood in the legislative entry in
List II of the Seventh Schedule of our constitutional
enactment should be enlarged to take into account a meaning
not intended earlier but necessitated by an environment of
social control measures. Finally, reference has been made to
certain observations in State of Punjab v. M/s. Associated
656
Hotels of India Ltd.(1) and Municipal Corporation of Delhi
v. Laxmi Narain Tandon etc. etc.(2)
Learned counsel for the intervener States generally
adopted the submissions of the learned Additional Solicitor
General.
The review petitions have been vigorously opposed by
Mr. F. S. Nariman, appearing for the appellant, who has
urged that no ground for review has been made out and that,
in any event the judgment of this Court does not suffer from
error. He pointed out that the decisions based on the
Massachusetts-New York rule holding that the service of
meals to customers in a restaurant constitutes a sale of
food turned on the need for the importing an implied
warranty that the food was fit for eating. That
consideration, it was said, need not influence the courts in
India because the lacuna had been filled by law such as the
Food Adulteration Act aimed at ensuring the supply of
wholesome food to consumers. The submission is that whether
the service of meals is or is not a sale must be determined
by the nature of the transaction and not be the need to
import an implied warranty of fitness. In other words, it is
said, the factor of implied warranty must follow on the
transaction being a sale and not that the transaction is a
sale because an implied warranty is a necessary guarantee
for public health. We are reminded that the true basis of
our judgment is that no title in the food passes to the
consumer as is evidenced by the circumstance that the
unconsumed portion of the food cannot be carried away by
him. It is pointed out that there never was any dispute by
the respondent that customer in a restaurant who orders food
for consumption by him on the premises is not entitled to
take away the unconsumed portion of the food. The essential
nature of the transaction, he reiterates, is that it is a
service afforded for the satisfaction of a bodily need, and
the service is provided by supplying food for eating. In the
end, he has emphasised the limited scope of the power of
review and the strict conditions in which it can be invoked.
Dr. Y. S. Chitale and Mr. Anil Dewan, appearing for some
intervenors, adopt the same line of argument.
The question is whether on the facts of the present
case a review is justified.
It is well settled that a party is not entitled to seek
a review of a judgment delivered by this Court merely for
the purpose of a rehearing and a fresh decision of the case.
The normal principle is
657
that a judgment pronounced by the Court is final, and
departure from that principle is justified only when
circumstances of a substantial and compelling character make
it necessary to do so. Sajjan Singh v. State of
Rajasthan.(1) For instance, if the attention of the Court is
not drawn to a material statutory provision during the
original hearing, the Court will review its judgment. G. L.
Gupta v. D. N. Mehta.(2) The Court may also reopen its
judgment if a manifest wrong has been done and it is
necessary to pass an order to do full and effective justice.
O. N. Mahindroo v. Distt. Judge Delhi & Anr.(2) Power to
review its judgments has been conferred on the Supreme Court
by Art. 137 of the Constitution, and that power is subject
to the provisions of any law made by Parliament or the rules
made under Art. 145. In a civil proceeding, an application
for review is entertained only on a ground mentioned in
XLVII rule 1 of the Code of Civil Procedure, and in a
criminal proceeding on the ground of an error apparent on
the face of the record. (Order XL rule 1, Supreme Court
Rules, 1966). But whatever the nature of the proceeding, it
is beyond dispute that a review proceeding cannot be equated
with the original hearing of the case, and the finality of
the judgment delivered by the Court will not be reconsidered
except “where a glaring omission or patent mistake or like
grave error has crept in earlier by judicial fallibility.”
Chandra Kanta v. Sheikh Habib.(4)
Now, besides the fact that most of the legal material
so assiduously collected and placed before us by the learned
Additional Solicitor General, who has now been entrusted to
appear for the respondent, was never brought to our
attention when the appeals were heard, we may also examine
whether the judgment suffers from an error apparent on the
face of the record. Such an error exists if of two or more
views canvassed on the point it is possible to hold that the
controversy can be said to admit of only one of them. If the
view adopted by the Court in the original judgment is a
possible view having regard to what the record states, it is
difficult to hold that there is an error apparent on the
face of the record.
What were the considerations on which this Court held
that the transaction was not a sale? The Court said, and
this was emphasised in no small degree, that the supply and
service of food to a customer to be eaten in the restaurant
was not a sale for the reason that he was merely entitled to
eat the food served to him and not to remove
658
and carry away the unconsumed portion of the food. Had that
amounted to a sale, the unconsumed portion would have
belonged to the customer to take away and dispose of as he
pleased. Besides, the Court noted, there were other
amenities and services of considerable materiality which
were also provided. That was the case set up by the
appellant before the assessing, appellate and revisional
authorities, and it was apparently also the case pleaded
before the High Court. It was summarised thus in the
petition under Article 136(1) of the Constitution filed in
this Court:
“(1) The Hotelier and Catering industry is a
service oriented industry unlike and as distinguished
from other sale oriented industries. The purpose of a
Hotelier and Caterer is not to sell food, but to
service it in proper atmosphere so as to make the
service and consumption of food enjoyable for the
guests. In the dining hall, the petitioner provided
certain basic facilities and amenities, such as, air-
conditioning services, music, facilities for dancing
(i.e. dancing floor) specially designed crockery,
special lighting, etc. The petitioner had built up a
reputation for providing the aforesaid services and
people patronise the dining halls as a result of these
amenities.
(2) Though the customer pays for the food, he can
enjoy only that much of food as can be consumed by him
at one particular time. The guest is not entitled to
carry away the unconsumed portion of his food. There is
thus no passing of property for a stipulated money
consideration, which would imply the guests’ right to
carry away the unconsumed portion of his food.
(3) The amount received by the petitioner is not
the price of any goods. On the other hand, it
represents the petitioner’s charges for looking after
the convenience and enjoyment of the customer including
his needs for food and rendering him various kinds of
other services and providing him with various
facilities and comforts.”
The appellant prepared and served food both to
residents in its hotel as well as to casual customers who
came to eat in its restaurant, and throughout it maintained
that having regard to the nature of the services rendered
there was no real difference between the two kind of
transactions. In both cases it remained a supply and service
of food not amounting to a sale. It is important to note
that the facts alleged by the appellant were never disputed
at any stage. and we
659
find no attempt by the taxing authorities to enquire into
the truth of the facts so asserted. It is in that factual
context that this Court examined the question whether any
liability to sales tax was attracted. Our judgment rests on
that factual foundation, and must be understood in that
light.
It appears from the submissions now made that the
respondent as well as other States are apprehensive that the
benefit of the judgment of this Court will be invoked by
restaurant-owners in those cases also where there is a sale
of food and title passes to the customers. It seems to us
that having regard to the facts upon which our judgment
rests-undisputed as they have remained throughout the
different stages of the litigation-and the considerations
which they attract, no such apprehension can be reasonably
entertained. Indeed, we have no hesitation in saying that
where food is supplied in an eating-house or restaurant, and
it is established upon the facts that the substance of the
transaction, evidenced by its dominant object, is a sale of
food and the rendering of services is merely incidential,
the transaction would undoubtedly be exigible to sales-tax.
In every case it will be for the taxing authority to
ascertain the facts when making an assessment under the
relevant sales tax law and to determine upon those facts
whether a sale of the food supplied is intended.
We are of the view that these review petitions must
fail. They are, accordingly, dismissed. There is no order as
to costs.
P.B.R. Review petitions dismissed.
660