Holding

The Explanation to s.2(5) deems the manager or agent of a dealer who resides outside Orissa to be a dealer for the purposes of the Act, regardless of any residence or place of business in the State.

Summary

Mecleod & Co. Ltd., a Calcutta‑registered company, was appointed managing agent and secretary‑treasurer for two jute mills (Nellimarla and Chitavalsah) that were registered as dealers under the Orissa Taxation (on Goods carried by Road and Inland Waterways) Act, 1959. Mecleod handled the storage of jute in godowns at Kendupatna, Orissa and its transport by motor boats, but it had no place of business or residence in Orissa. The tax authorities assessed Mecleod as a “dealer” under s.2(5) read with its Explanation and levied tax. Mecleod challenged, arguing that a dealer or its agent must have residence or a place of business in Orissa and that the principal jute companies were not non‑resident dealers. The Orissa High Court set aside the assessment on procedural grounds but held that Mecleod was a dealer. The Supreme Court examined the statutory definition and the Explanation, holding that the Explanation deems a manager or agent who resides outside the State to be a dealer for the purpose of the Act, irrespective of any residence or place of business in the State. Consequently, Mecleod was a dealer and liable to tax. The Court dismissed the appeal, affirming the High Court’s view on the dealer issue.

Issues considered

The meaning of ‘dealer’ under s.2(5) of the Orissa Taxation (on Goods carried by Road and Inland Waterways) Act, 1959, read with its Explanation, particularly whether the manager or agent must have residence or a place of business in Orissa.
Whether the two jute mills, having additional places of business in Orissa, qualify as non‑resident dealers for the purpose of the Act.

Legislation cited

Orissa Taxation (on Goods carried by Road and Inland Waterways) Act, 1959s. 12(1), s. 12(3), s. 2(5), s. 3
Orissa Taxation (on Goods carried by Road and Inland Waterways) Act, 1968 (validation)

Subjects

TaxationDealer definitionCorporate residenceAgent liabilityOrissa Taxation ActStatutory interpretationNon‑resident dealer

Judgment

865
'
MECLEOD & CO. LTD.
A
• v.

STATE OF ORISSA & ORS.

November 23, 1983
B
~ [VJ). TuLZAPURKAR,
. R.S.. PATHAK AND SABYASACHJ MuKHARJI,
. JJ.)

Orlssa Taxation (on Goods carried by Road and Inland Waterways) Act,
1959 valid'lted by Art of 1968-S. 2(5)-Read with explanation thereto-Definition
of deaier-Interpret(aion of . !Janager o'r agent of non-res(den:·. dealdr. need not
have place ofbusine_ss or residence ;n Orissa Staie to be deemed to be dealer. c
Dealer-Whether non resident de~ler-Testfor determining r'esidence.

°.the. ·a~p~Uant-company w~s appoi~ted as 'Managing . Agent•. and
S.ecretary & Treasurer' respectivel:Y by .tWo independent and separate -public
.1in1ited ..jute mills coirpanieS. Tbcise jute mills had their registered office· at
Calcutta and additio ai places of business in several parts of_ ihe· country D
· including-Kendupatna in the State of Orissa ·and were- registered as 'dealers'
under the Otissa Taxation (on Goods carried by Road arid Inlaiid Waterways)
ACt, 1959. The appellant-company di4 not do any business nor had any place of
its business in any part of . the. State of Orissa. But the appellant-company ·
lOOked after the wor~ of storing jute of the two jute mills In their godowns at
Kendupatna in-the State of Orissa. The Assistant Tax Officer· passed ex-parte .
.
~ssessmeitt orders against the appellant-company on the. business of stocking, E
· storing and carrying jute by boats of the jute mills in' the State of OrisSa on the
basis.- that the appellant-'company was a ·4ealer~ (as agent of both the jute ihills)'

l within the n1eaning of s. 2(5) read With the Explanation _thereto Or the Act. The
Assistant Commissioner ofTaxcS .disffiissed the appeal· and Coi11miS£ioner of
·Taxes dismissed the revision J,eiition filed by the appellant-company against the
assessment orders. Jn a writ petition, the High Couft negatived·the contention
of the a'ppellant-companY that il Was not a deale"r. Int.his appeal;. the appellant- .
11 .
_company contended: (1) that in order to be deemed to be 'a dealer ullder.s. i(S)
read with Explanation thereto a manager, or an ·agent of a dealer must ·reside
or have a place of business .in "the State of· Ori_ssa. a_nd since the :appeIJant-
company did not have an}: such place of business in the State:o·f Orissa it was
not a dealer under that section, and .(2) that the jute companies (PrinciPals).
were Dot 'n_on.-re~ident dealers' as required by the Explanation to s. 2(5) since G
each one had a _place of business of its own in the State of Orissa.

·Disn~issing ~he appe8I, ...

HELD : The appell3.nt-company was a d.ealer within ·the meaning of

t~ s. 2(5) read with· the F xplanation thereto of the Orissa Taxation (on Goods.
carried by Road.and Inland Waterways) Act; 1959. ~876 El,
H
I
866 SUPREME COURT RBPOR'lll (1984) I S.C.R.

Under the Ex,.Planation ·to s. 2(5) of the Act, the manager or agent of .a
A.' 'dealer' who resides outside the State is:atso deemed to be a ~dealer• for the
purpOse of the Act inespective of whether he resi~es inside or outside the State.
. The.artificial definition of a •dealer' under the Explanation is·merely an enabl~
. ing provision which facilitates the assessment against a non~resldent dealer but
•
'' •
the provision does not require that the n1anager or the agent sll.ould have either
a residence or a place of business within thf: State: of Orissa. There is nothing
.either in the main.definition or in the Explanation tO suggest ·that the manager
B . or agent of the dealer (Principai) should have his own buSiness within the State'
of.Orissa before he could be proceeded against or assessed under the Act; All ~-
that the Explanation requires is that the managet or the .agent should 'Store
such goods of the non-residt!nt •dealer' within the State of Orissa but that dqes
_not mean t)tat for such p,urposc the manager or the agent either reside or have
a place of business within the State of Orissa;. even if he carries out the opera-
c tion of storing the goods and carrying the same by motor boats· within. the
. State of Orissa from outside the State it would suffice. [871 G-H; F; 872 B-C]

In the insianr ca~e, it is true that during the relevant pefiod it ~as the.
. ..
jute cOmpanies (the Principals) who carrfod on· their jute· business at Kendu-
patna within the State of OriSsa and that the appellant-company ha.d no
business or' its oWn anywhere in that State but it was Iook.ing after the business
D of the Principals as their aient at Kendupatna and such business included the
operation of stocking or storing of jute in iheir godowns at Kendui)atna and
carrying the same by motor boats, [871 C-DJ
. ,,.
IO respect of an artificial person like a company the fest to determjne
• 'its residence will have to be considered in the .context of the iaw prescribing the
E criteria in that beha1f. So far as Jaw of taxation is concerned,. or~inarily the
residence of a con1pany wiJl be at. the place where th~ actual 1nanagement of the

-
compan'y is carded on and that if this is done at several places .it may have· a
dual residence but in that case at I.east some part of the superior and directing
authoritY of the company must be present ·at the place where its residence is
sought to .be established. [873 A; 874 F-GJ .

F .Palmer's Company Law (23rd Ed.) Vol. I .at. pages 101 to 103, referred
. to.

The test of residence is not registration, bqt where the company docs its
real ~usi.nesS, where the central management and control abides. It is the achial
place Of management of the company and not the place where it ought to be
G managed whic~ fixeS its residence. {875 BJ

Buckley OIJ the Companies Act (14th Ed°n.}, Vol. 1 at pages 299; Egyptjan
Delta and Investment Co. v. Todd., [1929] A. C.1 <ind De Beers Consolidated
Mines v. Howe, [1906) A. C. 455 referred to. •
H
In the instant case bOth the priricipals (the jute companies) had their
registered offices in Calcutta (West Bengal), that their principal businesses were
.+
1 C{lrfiecf On in CaICl,ltta (West Ben~al) ·and that the Ceptral management an~

•
.MECLEOD AND co. ·v. ORJSSA (Tulzapurkar, J.) 867
'
control of the businesses was done ·from Calcutta. It is' true that these two jute
companies. had . storage equipment and gOdowns at Kenduj:>atna i~ the States A
of Orissa bu't on their own showing (vide Certificates of Registration) at ·
Kendupatna they had 'additional places of businesses'. As the central manage-
. meut and control of the two con1panies• busiriesses obtaiIJ.ed in Calcutt_a (West
Bengal). the two jute colnpanies would be nort-resident dealers in the Stat~, of
Orissa. (876 A.-D] · •

C1V1L APPELLAT.B JuR1smcnoN ; Civil Appeal No. 43 of 1972. ·B

Appeal by Specia!"leave fr()m the Judgment and Order d.ated
the 16th April, 1971 oJ the Orissa High Court in O.J.C.No.24 of 66.

V. S. Desai, S. Bhandare and·· T. Sridharan with him for the C
Appellant .• ·

~' Govinga Mukhoty, G. S. Chatterjee and Sujeet K. Bhattacharya
for the' Respondents.

The Judgment of the Court was delivered by D
TuLZAPURKAR, J. This app.eal by special leave raises the question
whether the appellant-company ~ould be regarded as a 'de~ler' within
the meaning of sec.2(5) read with the Explanation .thereto of the
Orissa Taxation (on goods carried by Road and Inland Waterways)
Act, 1959 (hereinafter referred to as the Orissa Taxation· Act and
E
)
which was validated by Act of 1968) a~d as such was liable to be
assessed under the Act for the quarters covering the period· 30-9' 1960
to 31-3-1962? The question-which pertains to th.e proper interpreta-
tion of the aforesaid provisions of the Act arises in the following
circumstances. •· F
Nellimarla Jute Mills Co. Ltd., and Chitavalsah Jute Mills Co.
Ltd. are two independent and separate companies having their regis-
tered offices at J\;1ecleod House, 3, Nctaji Subhas Road, Calcutta and ·
additional places of business in several .part of the country including
one at Kendupatna, P. 0. Kendupatna, District Cuttack, in the State G
of Orissa. These two public Limited Companies primarily carried
on the - business of jute jllanufacturing and owned jute mills in
.. I
.different parts of the country, such as, Nellimaria'Jute Mills Co. Ltd,.
owing Jute Mills at Elore iii Andhra Pradesh and Chitavalsah Jute
Mills Co. Ltd. owing· Jute Mills:at Chitavalsah in Andbra Pradesh. H
The appe!lant-c0 mpany (M/s. Mccleod & Co. Ltd. having its Regis-
tered Office at Mccleod House, 3, Netaji Subhas Road, Calcutta), by
868 SUPREME COURT REPORTS [I 984) .i s.c.li..

· virtue of A~reernents with the said two jute mills . was appointed the
A ·'Managing Agent'· for Chitavalsah Juie. Mills. Co. Ltd. and the
'secretary & Treasurer' for Nellimarla Jute Mills Co. Ltd. The
appellant-company did not do any business nor had any place of its
· business in. any. paft of the ·State of Orissa. But as the Managing·
Agent of ·Chitavalsah and as the Secretary and Treasurer of'
B NeJlimara lqoked after the ·work ·of storing their jute i~ .their
godowns at Kendupatna, Dlstrict Cutt~ck, State of Ori8'a. It may
be stated that under cl.(4)of the Agreement dated 7-10-1960 with
Nellimarla the appellant-co!!rpany was precluded .from and was "not
entitled (unless and except to the extent they are authorised hy the
Board of Directors) to s.ell any goods -0r articles manufactured or
c · produced by the Coinpa.ny or ·to purchase, ·obtain, o·r acquire
machinery.- stores,· goods or materials for the purpbses of the
Company or to sell tl1e .same." In ~ther. words, the prohibition
contained in cl.(4). ofthe Agreement with Nelfim.arla merely perta-
ined to selling or purchasing of goods or materials for the purposes
·of~the company . but left intact tl:e · appellaht;company's powers to
sto;e jute of the Company in its godowns at Kendupatna in th.e .State•
of Orissa.

·Since the two jute mills carried on the trade of purchasing and
storing of jute, inter alia at Kendupatna, they were registered as
E 'Dealers' under the Orissa Taxation Act and the Rule.s framed.
thereirnder, each one having a separate Registrntion Certificate•. It
. may be stated that Nellimarla had filed Returns of their iurn-civer
for all the quarters from 30-9-1959 to 30-6-196'.; and had paid the
ad~itted tax for.the said period under the ,\ct. Similarly, Chitava-
lsah had filed Returns of their turn~oveiO for all quarters from
J
F
30-9-1959 to· 31-3-1960 and had paid the admitted tax. for the said
period under the Act. It appears that thereafter some time in.1963
"·
the said jute companies filed writ petitions.in the Oriss·a High Court.
under· Art.226 of the Constitution challenging the validity of the
original Act of 1959 as also the Validation Act of 1968 and obtained
G foterim stay of pro.cecdings under. t.he said Act but we were i.nforn\ed
by counsel that. ultimately the challenge to the validity of the Acts
failed; however; we are not concerned with those proceedings in- this
·appeal. In the ffiJ"'1while, seven ex parte assessment orders were
passed against.the appellant-company· by the Assistant Tax Offiper
H for quarters coveting the period froin 30-9-1960 to 31"-.3-1962 on the
business of the. said two companies on. tnbe ·asis that appellant-
company was a 'dealer' (as agent of both the companies) within the
Miior'.Eoo AND co. v. ORISSA (Tulzap~rkar, i.) 869

meaning of sec.2(5) read with. the faplanation th,.reto and had
c·arried on -the business of stocking or storing jute and tarrying the A
same by motor boats at Kendupatna in District Cuttack, State of
Orissa and the appellant-company received. a notiGe of dem·a.nd along
with. the said assessment ord_ers claim_ing a fotal amount of Rs.74,125
inclusive .of penalty. Against the said assessment orders the appellant:·
company preferred appeals u~der sec.12(1) of the Act ti:> the B
Assista,nt Commissioner of Taxes . but th.e appeals Jailed. The
appellant-company preferred_ re.visions under sec.12(3) of the Act to
the Commissioner of Taxes, Orissa but the Commissioner of Taxes
by'his order dated 15th Octbber, 1965 dismissed the"revisions and ,.
confirmed the Assessment Orders · made agajnst the appellallt-
company. Aggrieved by ihe order of the Commissioner of Taxes c
the appellant-company approached the .High Court by means of a
Writ Petit.ion under Art.226 of the. Constitution and· challenged the
·assessments made against them on the basis. that as agent" of the two
JuterCompanies it was not a 'Dealer' within the meaning of sec.2(5)
·read with the Expfanation. thereto of the Orissa Taxation Aet. The
D
assessment .orders were also challenged_o'n the ground.tbat these had .
. been :->asscd withotit following .the principles· of natural justice. inas..
much as the appellant-company had_ no opportunity to meet the
materials, particularly the Inspector's Report relied upon by the ..
Assistant Taxing Officer while making· the assessments. -The High
·Court by its judgment dated )6th April, 1971 negatived the E
appellant-company's principal contention that it could not be regar-
ded as a 'Dealer' within the meanfog af sec.2(5). read with' Explana:
tion thereto of the'. Act and therefore it c'ould not be assessed at all .
. under the Act but set aside the assessment orders and remanded the
assessment proceedings to. the taxing authority to pa;s fresh orders
on the grou_nd ihat through notice of the assessment proceedings had
F
actually been served on the appellant-company ·the assessment orders
had been made arbitrarily without the app~llani-company getting·a
reasonable opportunity of meeting or· explaining the materials .in
the Inspector's -Report which had beert relied npon by the Assessing
Officer for makii1g the _assessment. · Though the '.matter has been G
·remanded by _the· 6igh Court for fresh assessment, ihe principal .
. contention or the appellant-company which goes to the root of the
matter hav._ing been negatived by the High Court the appellant-
company has preferred this appeal t_o this Court chaUen.ging the High ··
Court's view thereon. · . . · I • • H
870 SOPR.llMB COURT REPORTS [1984] 1 s.c.il.

.Counsel for the appellant-company put forward a couple of
A contentions in··support of his case that on the facts and circumstances
obtaining here in regard to the business of stocking or storing their
jute and transporting the same by motor boats within the State of
Qrissa which was done by the two jute companies at Kendupatna
in District Cuttack, the two' jute companies . (the ·Principals)
n who had registered themselves as 'dealers' under the Act could be
assessed by thetaxing authorities and not.the appellant-company who
was not a 'c!aler' as defined by Sec.2(5) read with the Explanation
thereto of the Act. In the first place Counsel urged that though it
was tru'e that the appellant·company was acting as the agent of the
- two jute companies during the relevant quarters it did not have any
c place of busin.ess either at Kendupatna· or· anywhere else ii) the
State of Orissa and unless it had -such place of business in the State
of Orissa which could facilitate the assessment, the appellant-company
. could not be proceded against or assessed. In other words; the·
submission was that under the Explanation an artificial definition of
a 'dealer' by means of a ,deeming clause had been provided with the
D
objec! of facilitating tlie assessment proce.edings against non-resident
principals which could not be achieved if the agent was also a non-
resident in the State of Orissa, Secondly, cou!isel contended that
jute companies (Principals) were ·not 'non-resident dealer'. as r~quired
liy the Explanation since each one had a place of business of its own
E atKendupatna District Cuttack. Relying on these aspects counsel
for the .appellant c~mpany. contended that on. true construction of
· the relevant provision the appellant. company could not be held
to be a dealer and as such the assessing authoriW hed no jurisdic-
. tion or power to proceed against or assess the appellant-company
in respect of the business· of the principals (the jute companies).
F For the reasons_ which" we shall indicate presently we do not find
any substance in either of the contentions and both these are liable
to be rejected

Obviously the two contentions urged by counsel for the appel-
lant-company have.a bearing on the proper construction to be placed
G- on sec.2(.5) read with the Explanation of the Otissa Taxation Act.
'It was not cltsputed before us that under the charging provision ·con- -
tained in sec.3 of the Act the Taxing event is the carriage of jute and
other articles· by motor vehicle, cart, trolley-, boat etc. within the
State of Orissa and the liability to be. asses·sed in that behalf under
H
the·provisions of the Act has been laid upori a 'dealer' as defined in·
sec.2(5) and the Explanation thereto of the Act. ·· Secti~n 2(5) and
the Explanation theretb run as under : "
MilCL.BOD AND co .•. ORISSA (Tuizapurk'ar, J.) 871
·"2(5) "Dealer" means any per.son who stores at one
time jute in excess of fifty maunds or bamboos in excess A
of one thousand in number or )<:endu ·leaves in excess of
one standard inaund or minerals and mineralores before
or after being carried by motor vehicle, cart, trolley, boat,
animal. or human a~ency or any other means except
·railways cir airways and includes. his agent : • B
Explanation : The manager or agent of a dealer who
resides outside Orissa and who stores such goods shall
be deemed to be a dealer for the purpose. of this' Act."
•
• It is irue that during the .relevant quarters covering the period c
from :i0-9-1960 to 31-3-1962 it was the jute companies (the Principals)
who carried on their jute business at Kendupatna within the State·
of Orissa and that the appellant-company had no business of its
own.anywhere in that State but it was looking after the business of
the Principals as their agent at Kendupatna and such business inclu-
D
ded the operation of stocking or storing of jute in their. godowns at
· Kendupatna and carrying the· same by motor boats but there is noth-
ing either in the main definition or in the Explanation to suggest that
the manager or agerlt of the dealer (Principal) should have his own
b11siness within the ·State of Oriisa before he could be proceeded
against or assessed under the Act. In our view it would be sufficient E
if the .manager or agent of a non-resident. dealer. looks' after the
operation of stocking or storing the jute of that non-resident dealer

I and carrying the same by motor' boats ·etc. within the State of Orissa.
Apart from this aspect of the matter, the main thrust of Counsel's
contentio~ has been that the manager 6r agent should at least reside
or have a place of business within the State of Orissa before he could
F
be proceeded against or assessed under the Act. On a plain reading
of the Explanation that clearly is not-a requirem\:nt qua the manager
or agent. Under the Explanation the manager or agent of a 'dealer'
who resides outside the State is also deemed to be a 'dealer' for the
purpose of the Act irrespective of whether be resides inside or out- G
side the State. In other words the place of residence or of business
of the manager or the agent is utterly irrelevant. Th~ artificial defi-
nition of a 'dealer' under the Explanation is merely an· enabling
provision which. facilitates the asse\sme'nt against a non-resident
dealer but the provision· does not require that the manager or the H
.~· . agent should have either a residence or a place of busii1ess within the
State of Orissa. Emphasis was laid by Counsel on the phrase 'who ·
S72 SUPRliME COURT REPORTS · [i984l 1. S.C.R.
stores s.uch .goods'. occurring in the Explanation· as referring to
A · manager or agent and it was submitted that the said phrase suggests
that the manager or the agen( should have either residence or place
of business within the State Of Orissa. ft is not. possible to accept
this submission for the reason that all that the Expl.anation requires is
that the manager or the agent should store such goods of the non-
B resident 'dealer' within the State of Orissa but that cioes not mean
thaftor such purpose the manager or the agent must either reside o~
have a place of business within the State of Orissa; even if he carries
out the 6peration of stori~g the goods and carrying the same by
motor boats within the State of Orissa from outside the State it
would suffice. bn a fair reading of the main definition together with
c the Explanation. it seems ·to us quite clear' that the concept of resi-
-·
dence or non-residence iS relevant qu2 the. principal who must be a
non-residence dealer before his manager or agent could be proceeded
'against or .assessed urider the Act and it is uot the requirement of
the provision that the manager or the agent of.a non-resident 'dealer'
D should have either residence. or. the .place of business within the
State of Orissa. · •
J.·
. The next.submissio.n o(Counsel for the appellant-company has
been that the two principals namely Nellimarla and Chitavalsah who .
' ..
'are 'dealers' falling within the main definition could not be said to
E be non-resident dealers becaµse in the case of a company, unlike an
individual every place·· where.it ·carries ·on its business would be a
' place of its residence and since admittedly each carried on business at
certain places at Kendupatna in the State of Orissa during the rele-
vant quarters jt could not be said that they had been residing outside
'the State.. Elaborating this contention Counsel pointed out that the
J
F. · ·. residenc~ of a company must be distinguished from its nationality
and domicile. According to. Counsel the place of.registered" office .
.of a company would be relevant for determining its nationality or
domicile but it does not .determine the residence. Counsel pointed
oul that in law a company· may have a dual residence or multiple
G ·residences depending· upon ·at how many places it carries on its
businesses and this aspect Of the company's residooce. "issu,QJes consi-
derable relevance in the context of tax laws and since here thetwo
Jute companies (the P1focipals) haci also places of business within the ..
State ofOrissa, apart from having their.registered offices in Calcutta,
H they could be regarded as having their. residences within the State
of Orissa and as such could no(be'regarded as no11·resident 'dealer'.
MBCLEOD AND co. v. OR.tSSA (Tu/zapurkar, J.) . 873

·It is true that in rem~ct of an artificial person like a company
the test to <;l~termine its· residonce. wi.11 have to be considered in the A
context of the Law.· prescribing the criteria in tbat behalf and would
be different from the test that· determines its nationality or domicile.
In Palmer's Company Law (2'.lrd Edn) Vol.I these three. ·concepts in
relation to a company have been dealt wfth in paragraphs 8.10., 8.11
. at pages 101 to 103 thus : · • B
. 8.10 Nationality, ·domicile and residence of company .

The situation of.the· registered office determines the'
nationality and domicile of the company but i.t does not
. determine its residence, _Where legal ·rules use these c
criteria and it is ob.vious that the rules.have to he applied
to legai persons, ·it becomes necessary to apply these
criteria by way of analogy from the case_of natural.
persons. It is . obvious that a corporation. 'can no more
have a domicile or residence than it can· marry_or have
children. On the other hand, effect must be. given to the D
legal prescript, which. is clearly intended to cover the case
of the ariilicial person' as well as· that of the natural person ..

.. Here the task· of the courts is to interpret the.enactment
in question in relation to the artificial person .....

... f ...... ; ....
.E

I
Nationality
• The nationality·of a comp~ny.is determined by the
law of th~ country. in. which it is incorporated and from . F
whirh it. derives its personality.
'
. In English law, nationality is rarely adopted as a
legal test. ·
•

Domicile G
.The place of registration is like-wise the domicile of
.a C<>mpany, and this domicile clings to it throughout its
0

existence. It is;. however, possibie that by operation of.
· the Jaw or'the Company's domicile, another system oflaw H
may be substituted f~t the law of the place of registration.
874 . SUPREME COURT REPORTS [1984] t s.c.il.

Unlike ari individual, a company cannot have a.
A domicile of choice. ,
'Residence

8.11 The residence ·of a company is not as easily
• established as its nationality or its domicile. The test of
B residence is mainly used if questions pertaining to taxa-
tion, the character of the company as an overseas trading. t
corporation, service of process on the company and attri'
· bution of enemy character to the· company arise. In these
cases, the residence of the company is not .determined by
the· application of a uniform test but a different meaning
is given to those words in' each of them. Moreover, a
company-like an individual-may have several residences
at the same time, whereas it can have one domicile and .
• one nationaliiy only .

D Tax {-aw

8.12 In ta~ law ·a company is ordinarily resident
where the. actual management of the company is carried
on, even tliough it ought to be managed elsewhere accor-
E ding to its constitution. If this is done at·. several places,
•
the company has a dual.residence (or possibly even more
residences), bur in that case at least some part of the
superior and directing authority of the company must be
present in the. country in which it is sought to establish the
residence of the com'/any.
.. I
F -·
From what is stated above it will-be clear that so far as law of
taxation is concerned-and in the instant case. we are concerned with
t"a};l iaw, namely, t~e Orissa Taxation .Act-ordinarily the resi~ence of
a company will be at the place where the actual management of the
G ·comp~ny is carried on and that if this is done at several places it may
,;have a dual residence b.ut in that ·case at least some p'art of the·
s~perior and. directing authority of ~he company piust be present at
the place w1!ere its residence is sou.ght to be established. ·

H In Buckly on the Companie> Act (14th Edn.), VoL! at page 299 ·
the following passage occurs :
:
.
MECLEOD AND co. v. ORISSA (Tulzapurkar, J.) 875

For the purpose of the Income Tax Acts, the place
of registration of a company is not, any more than· the A
birth place of an individual, conclusive as to i.ts 'residence'.
A company ·registered ·here (in England), with a registered
office here, (in England) and governed by a board which
ineefs here, is no doubt resident here. But also" a company
registered abroad, whose head office and directors' meet- ll
ing ·are here, is resident here. The test of residence is not
registration, btit where the compa'!Y does its real business,
where the central management and control abides. It is the
actual place of management of the c·ompany and not the
place where it ought to be managed which fixes its
residence." c
,>-- The underlined portion in the passage quoted from Buckley is
based on the· decision of the House of Lords iii the leading · case of
Egyptian Delta Land and Investment Co .. v. Todd.( 1) · In that _case the
company was incorporated in England, had its registered office in
England and fulfilled its statutory obligations in that country but D
had transferred. the whole of its business to Egypt ·which a was entirely
~ controlled ·and _managed from. Cairo where the director ai).athe
' secretary permanently resided and the question arose whether for the
purposes of Income Tax Acts the company could be regarded as a
resident in England". After exhaustive survey of the earlier case law E
'

t
, on the point the House of Lo"rd took the view that the incorporation
under th~ Comp.a.nies Acts, with the attendant statutory obligation~ ·
did not in itself, as a matter of· law, constitute a British company
a person· iesidirig in the United Kingdom within ilie meaning
of the Ii!come Tax Acts; that it was merely a factor to be consi-
~ ... pered in determining residence, and was a matter for the Commi-
ssioners to decide. It also too]< the view that it was settled by
~- a
authority that the.residence of c?mpany, whether British or foreign,
for mcome tax purposes was, preponderantly and if not exclusively,
determined by the place 'yhern its real qusiness was carried on and
since the whole of the. oompany's business was controlled from. Cairo
..
G
the company was not resident in England and it upheld the Commi·
ssioners' decision of discharging the assessments. In taking the
aforesaid view the House of Lords approved and followed.ihe criteria .
that had been laid down in an earlier decision in the case of De Beers
Consolidated Mines v. Howe(') to the effec! "the test of residence is H
(I) [1929] A.C. !.
(2) [1906] A.C. 455.
•

876 SUPREME COURT REPORTS (l984j 1 S.C.R.
. . .
no~ registration but where the company does its real business; where
A
'
the central
.. . .
management and control abides." ·

Applying. the ·aforesaid criteria to the facts Qf the present case
. it was not disputed before us that both· the principals· (the jute
companies) had their .registered offices in Calcutta (West Bengal),
that their principal businesses were cartied oir .in Calcutta (West
Bengal) and that the central management and control of the busi- t
nesses was. done from Cal~utta. It is true that these two jute
companies. had storage equipment and godowns at Kendupatna in
the State of Orissa but ori their own showing (vide certificates of
Registration) at kendupatna they had 'additional places ·of busi·
c . ' . . . .
nesses. It was not even· the appellant company's case that the
central m.a:nagement and .the control of t.he two jute companies'
·businesses was in .. the State of Ofissa. The test laid down in the.·
House of Lords' decision does not suggest that at every place where
some business. of the compl\nY is carried ·on it shail have its residence
D there. As poinied out above, the central 111anagemcnt and. contro I · ·
of the two companies' businesses. obtained in Calcutta (West ·Bengal} ·
and that being the position the two jute companies would be non·
reside11t dealers in th.e State of Orissa .. The se.cond contention of the .
x
\

counsel for the appella.it company, therefore, fails;

E In the result we are bf the view that t]1e High Court was right
a
in coming to the conclusion tliat the appellant-company was dealcrf'
with\n .the meaning of s.2(5) .read with the Explanation thereto of the
Qrfssa Taxation Act, 1959. The. ·appeal is, therefore, dismis~ed
with. costs. · •
F .,. ,,
H.S.K. Appeal dismissed.

•
.

+ '