Northern India Caterers (India) Ltd. Vs.
Lt. Governor of Delhi  INSC 275 (21 December 1979)
CITATION: 1980 AIR 674 1980 SCR (2) 650 1980
SCC (2) 167
R 1981 SC1751 (1,2) R 1983 SC1125 (7)
Review of judgments of the Court-When
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  1 S.C.R. 933, 948; G. L. Gupta
v. D. N. Mehta  3 S.C.R. 748, 760; O.
N. Mahindroo v. Distt. Judge Delhi & Anr.
 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,  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]
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
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
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
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
A. K. Rao and A. T. M. Sampath for Tamil Nadu
N. Sudhakaran for Hotel and Restaurant
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.
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
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.
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
P.B.R. Review petitions dismissed.