ORDER S. B. Majmudar, J. 1. In this group of 17 appeals by special leave, the Commissioner of Income-tax, Kanpur has brought in challenge the judgment and order dated 20th February, 1975 of the Allahabad High Court in Income-tax References Nos. 18 of 1973 and 715 of 1972 (reported in 1975 Tax LR 829). Respondent--Kamla Town Trust--is the common respondent in all these appeals. As common questions of law and fact are involved between the very same parties in all these appeals, the appeals were heard together and are being disposed of by this common judgment. 2. The common respondent, Kamla Towm Trust, was assessed to income-tax for the relevant assessment years 1949-50 to 1965-66. These assessment orders gave rise to hierarchy of appeals under the Income-tax Act which ultimately culminated into 17 income-tax appeals by the assessee before the Income-tax Appellate Tribunal, Allahabad Bench, Allahabad. The common question in the appeals before the Tribunal was whether for the relevant assessment years the respondent-assessee was entitled to exemption from payment of income-tax as per the provisions of Section 4(3)(i) of the Income-tax Act, 1922 (hereinafter referred to as the 1922 Act), and under Section 11 read with Section 2(15) of the Income-tax Act, 1961 (hereinafter referred to as the 1961 Act) in so far as they applied to the relevant assessment years. The Income-tax Appellate Tribunal dismissed respondent-assessees appeals for assessment years 1949-50 to 1955-56 but it allowed respondent-assessees appeals for assessment years 1956-57 to 1965-66 subject to the rider that the income derived from the trust property by the assessee will be exempt only within the limit permissible under Section 11 (1)(a) of the 1961 Act to the extent to which the income so accumulated is not in excess of 25 of the income from trust property or Rs. 10,000/- whichever is higher, after the 1961 Act came into force. In other words the rider applied to the assessments for the years 1962-63 to 1965-66. As both the Revenue and the assessee were partly aggrieved by the aforesaid common order of the Tribunal, they sought reference of the question. ventilating their grievances under Section 256(1) of the 1961 Act. The Tribunal accordingly granted these reference applications under Section 256(1) and referred the following questions for opinion of the High Court. As both the Revenue and the assessee were partly aggrieved by the aforesaid common order of the Tribunal, they sought reference of the question. ventilating their grievances under Section 256(1) of the 1961 Act. The Tribunal accordingly granted these reference applications under Section 256(1) and referred the following questions for opinion of the High Court. At the instance of the respondent-assessee two questions were referred for the opinion of the High Court : "(1) Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that the assessee was not a public charitable trust and its income was not exempt under Section 4(3)(i) of the Income-tax Act, 1922, for the assessment years 1949-50 to 1955-56? (2) Whether on the facts and in the circumstances of the case the Tribunal was legally correct in holding that the second rectification decree dated 10th May 1955, in suit No. 163 of 1954 operates prospectively from the assessment year 1956-57 and does not have the effect of rectifying the deed of trust dated 27th October, 1941, as from the dated of its execution." While at the instance of Revenue the Tribunal referred five question as under : "(a) Whether on the facts and in the circumstances of the case the Tribunal was right in holding by following the decision of the Allahabad High Court in the case of M/s. J. K. Hosiery Factory v. Commr. of Income-tax, (1971) 81 ITR 557, that even the unamended clause 3(19) of the Memorandum of Association of the settlor company viz., M/s J. K. Cotton Spinning & Weaving Mills Co. Ltd., empowered the company to create a public charitable trust and the insertion of sub-section (22) in clause 3 of the Memorandum of Association by the company was a matter of abundant caution? (b) Whether on the facts and in the circumstances of the case, it is open to the Revenue to take the objection in these proceedings that the second rectification Suit No. 163 of 1954 was barred by Section 11 and Order 2, Rule 2 of the Code of Civil Procedure? (b) Whether on the facts and in the circumstances of the case, it is open to the Revenue to take the objection in these proceedings that the second rectification Suit No. 163 of 1954 was barred by Section 11 and Order 2, Rule 2 of the Code of Civil Procedure? (c) Whether on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the objects and activities of the trust fell within the first limb of the definition of charitable purpose in Section 2(15) of the new Act and the residuary clause thereof is not attracted for the assessment years 1962-63 to 1965-66? (d) Whether on the interpretation of the various clauses of the trusts deed even as amended by the second rectification decree dated 10-5-1955, the trust is void for uncertainty and was not a public charitable trust? (e) Whether on the facts and in the circumstances of the case the Income-tax Officer was entitled to go behind the civil Court decree dated 10-5-1955 in Suit No. 163 of 1954 and adjudge the validity of the rectification?" The Division Bench of the High Court after hearing the rival contentions canvassed by the parties answered all the referred questions in favour of the respondent-assessee and against the Revenue. It is under these circumstances that the Revenue through Commissioner of Income-tax, Kanpur having obtained special leave to appeal has preferred these 17 appeals. It may be noted at the outset that though the Revenue lost on all the referred seven questions before the High Court, in the present proceedings at the stage of final hearing Dr. Gauri Shankar, learned senior counsel for the appellant-Commissioner of Income-tax highlighted the grievance of the Revenue centering round the answers of the High Court on some of the referred questions. The grievance highlighted on behalf of the Revenue by De. Gauri Shankar centered round the answers of the High Court to Question Nos. 1 and 2 referred on behalf of the assessee-respondent as well as answers of the High Court on Question Nos. (d) and (e) referred on behalf of the Revenue. 3. The grievance highlighted on behalf of the Revenue by De. Gauri Shankar centered round the answers of the High Court to Question Nos. 1 and 2 referred on behalf of the assessee-respondent as well as answers of the High Court on Question Nos. (d) and (e) referred on behalf of the Revenue. 3. Before proceedings to deal with the main submissions canvassed by learned senior counsel for the Revenue centering round the answers of the High Court on the aforesaid questions and the rival contentions canvassed by learned senior counsel Shri Verma for the respondent-assessee in support of these answers, it will be apposite to have a look at the relevant background facts leading to the present proceedings. Background facts. 4. The assessee is a trust created by a trust deed dated 27-10-1941 executed between M/s. J. K. Spinning & Weaving Mills Co. Ltd., Kanpur (hereinafter called the Company) of the one part and Sir Padampat Singhania, Lala Kailashpat Singhania and Lala Laxmipat Singhania (hereinafter called the trustees) of the other part. The company was registered under the provisions of the Indian Companies Act, 7 of 1913, with its registered office at Cawnpore in U. P. The objects of the trust deed in its original form show that it was created with a view to construct a settlement or colony for their workmen together with amenities in the shape of hospitals, schools, temples, mosques, recreation places and for such other works directly concerning the amenities of workmen. The company made an application to the Improvement Trust, Kanpur for demising to it two tracts of land in Kanpur at concessional rates. The Improvement Trust demised on plot of land to the company for constructing the colony with an extra plot of land for the purpose of constructing a Water Pump Station by an indenture dated 19-10-1936 for a consideration of Rs. 43,700/-. Another plot of land was demised by the Improvement Trust to the company by an indenture dated 2-2-1938 for a consideration of Rs. 26,300/- for constructing an office for the said settlement. Both these plots were demised to the company at confessional rates for the welfare of workmen. The company transferred both the plots by the said trust deed of 27-10-1941 to the trustees for effectuating its object of settling these plots upon the charitable trust thereinafter mentioned in the deed. 5. 26,300/- for constructing an office for the said settlement. Both these plots were demised to the company at confessional rates for the welfare of workmen. The company transferred both the plots by the said trust deed of 27-10-1941 to the trustees for effectuating its object of settling these plots upon the charitable trust thereinafter mentioned in the deed. 5. We will deal with the relevant recitals in the Trust Deed, in details, at an appropriate stage in latter part of this judgment. Suffice it to state at this juncture that one of the objects of the trust, as mentioned in paragraph 2(b) of the Trust Deed of 1941 was a under : "To erect, establish, equip, furnish, fit, maintain and repair on the said two plots of land, and any land that may hereafter be acquired by the Trust. (1) residential quarters, chawls or buildings for the workmen and staff and other employees of the Company or other allied concerns under the management or in which the Directors of the Company may for the time being be interested and for their respective families and dependents and for such other skilled and unskilled workmen, craftsmen, traders, merchants, technical or professional men whom the trustees may permit to reside or work in the said two plots with a view to supply their needs and requirements or to render them services or to cater to their wants, comforts, conveniences and amenities." Later on the Settler Company filed a suit being Suit No. 40 of 1945 in the Court of Civil and Sessions Judge, Kanpur under Section 31 of the Specific Relief Act, 1877 for rectification of the Trust Deed so as to bring it in conformity with its real intention to create a public charitable trust. It was alleged in the plaint that having regard to its Memorandum of Association, the Settler Company intended to settle the properties mentioned in the Trust Deed and transfer them to the trustees for the purposes of creating a public charitable trust including the benefits of its own employees, but the operative part of the Trust Deed was found to be less comprehensive than what was intended by the parties thereto at the time when instructions were given for preparing a draft of the same and when they executed the Deed of Trust. The Settler Company further alleged that through a misunderstanding on the part of the draftsman and through a mutual mistake the Deed of Trust did not truly express their intention. It was asserted that the real intention of the parties was to create a public charitable trust, but the Company was advised that it was doubtful whether the Trust Deed on a strict construction thereof might not exclude from its benefits the rest of the public apart from the employees of the company and residents of the said settlement. In order to give effect to the said intention the company submitted that certain amendments by way of rectification of the deed should be made in the Object Clause 2 of the Trust Deed. The learned Civil Judge by his judgment dated 18th August, 1945 ordered the Deed of Trust to be rectified as prayed for in the Plaint. We will refer to the relevant rectified paragraphs of the Trust Deed as per the aforesaid order of the Civil Court a little later. 6. The Deed of Trust of 1941 as rectified in 1945 became a subject-matter of interpretation by the Appellate Income-tax Tribunal and High Court of Allahabad in the case of J. K. Hosiery Factory v. Commr. of Income-tax, U. P., (1971) 81 ITR 557. In the said partnership the respondent-assessee trust happened to be a partner. The High Court held the rectification decree passed by Civil Court to be valid and further held that it was not possible for the Income-tax Officer to question the validity of the rectification on the ground that conditions for grant of rectification did not in fact exist. However, it was further held that the objects of the Trust Deed as rectified in 1945 did not create a public charitable trust and on an analysis of the object clause 2(b)(i) of the Trust Deed held that it being a mixture of charitable and non-charitable objects, could not be treated to be creating a public charitable trust. 7. In the meanwhile the Settler Company had filed another suit being Suit No. 163 of 1954 in the Court of First Civil Judge. Kanpur for further rectification of the Trust Deed. 7. In the meanwhile the Settler Company had filed another suit being Suit No. 163 of 1954 in the Court of First Civil Judge. Kanpur for further rectification of the Trust Deed. It was reiterated in the plaint that the real intention of the Settler Company was to create a public charitable trust for the benefit of the public in the city of Kanpur and the surrounding areas particularly, the members of the working class including the workmen employed in the plaintiff-Company, but in their capacity as members of the working class. The intention, it was repeated, was to create the said trust wholly and exclusively for charitable objects and purposes. It was alleged that the trustees had, in fact, been giving the benefit of the trust to the members of the public and no part of the trust moneys had, at any time, been used for a non-charitable or non-religious object or purpose. It was contended that the said Deed of Trust even as rectified was less comprehensive than what was intended by the parties thereto at the time when instructions were given for preparing a draft of the same and when they executed it and the Settlor Company was advised that it did not truly express the intention of the parties. It was prayed that the rectifications sought for be allowed so as to bring it in conformity with the real intention of the parties. In the said suit besides the trustees two persons interested in the trust were impleaded as defendants in their representative capacity after the service of a public notice under Order 1, Rule 8 of the Code of Civil Procedure. The Civil Judge, Kanpur by judgment and decree dated 10-5-1955 decreed the suit. By the second rectification decree certain rectifications were made in the Preamble of the Trust Deed and in paragraphs 1 and 2 of the Trust Deed. At an appropriate stage in latter part of this judgment we will deal with these rectified clauses inserted in the Trust Deed in 1955. 8. The jurisdictional Income-tax Officer issued notice under Section 34 of 1922 Act and Section 148 of 1961 Act for the relevant assessment years to the assessee-trust alleging that the income had escaped assessment for the relevant years. In response to the said notices the assessee filed NIL returns for all the assessment years under reference. 8. The jurisdictional Income-tax Officer issued notice under Section 34 of 1922 Act and Section 148 of 1961 Act for the relevant assessment years to the assessee-trust alleging that the income had escaped assessment for the relevant years. In response to the said notices the assessee filed NIL returns for all the assessment years under reference. The contention of the trust before the Income-tax Officer was that it was a public charitable trust and, therefore, its income was exempt from income-tax. The Income-tax Officer rejected this contention as discussed in his earlier assessment order for the assessment year 1948-49. He stated that in the earlier assessment order, he had come to a clear conclusion that the trust was a private trust for the benefit of the employees only and was not at all exempt from tax. With regard to the rectifications made by the decrees of the Civil Court, the Income-tax Officer held that the trust was originally created for the benefit of the Settlor Company and the objects of the trust could not be altered subsequently unless the trust was revoked for which there was no power under the Deed. The income from it was, therefore, assessed to tax. He relied on the decision of the Calcutta High Court in re, Mercantile Bank of India (Agency) Ltd., (1942) 10 ITR 512, and held that a trust for the benefits of its employees and members of the staff is not a charitable trust. 9. Respondents-assessee preferred appeals to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner dismissed all the appeals of the respondent. It is under these circumstances that the respondent-assessee approached the Income-tax Appellate Tribunal as noted earlier. The assessee partly succeeded while the Revenue also succeeded in part before the Income-tax Tribunal and that is how seven questions came to be referred to the High Court under Section 256(1) by the Tribunal, two at the instance of the assessee and five at the instance of the Revenue and which came to be wholly decided in favour of the respondent-assessee as already noted earlier. Rival Contentions 10. Learned senior counsel Dr. Rival Contentions 10. Learned senior counsel Dr. Gauri Shankar raised the following contentions in support of these appeals: (1) The second rectification in the year 1955 as decreed by the Civil Court was without jurisdiction as in substance by the so-called rectification a new Trust Deed was sought to be substituted, which was beyond the powers of the Civil Court. (2) The condition precedent for invoking the jurisdiction of the Civil Court under Section 26 of the Specific Relief Act of 1963 or under Section 31 of the earlier Act that there should be mutual mistake on the part of parties to the document was absent in the facts of the present case and consequently the Civil Court had no jurisdiction to grant such rectification. (3) The rectification decree was in personam and not in rem to which Revenue was not a party and, therefore, it was not binding on the Income-tax authorities. (4) Even assuming that Rectification Order of 1955 was validly made, it would operate only prospectively and could not have any retrospective effect. This submission was made for challenging the answer to Question No. 2 posed for consideration of the High Court at the instance of the respondent-assessee. (5) Even after the rectification of 1955 the Trust Deed as rectified did not create any public charitable trust entitling the respondent-assessee to claim income-tax exemption under the relevant provisions of 1922 Act as well as 1961 Act as applicable to the concerned assessment years. (6) The entire Trust Deed as originally executed and as twice rectified in 1945 and 1955 was merely a colourable device on the part of the three main trustees--Singhania brothers who held partnership interest in the firm of J. K. Hosiery Factory but went out as partners of the said partnership and entered by the back door assuming the garb of the trustees of respondent-trust which became a partner in the same partnership firm claiming income-tax exemption. Consequently such a colourable device on the part of the respondent should not be countenanced. 11. Consequently such a colourable device on the part of the respondent should not be countenanced. 11. Shri Verma, Learned senior counsel for the respondent-assessee on the other hand combatted the aforesaid contentions of learned senior counsel for the Revenue and submitted that even for the assessment years 1949-50 to 1955-56 wherein the rectified Trust Deed of 1945 prior to its further rectification in 1955 was holding the field, it was a trust for public charitable purpose and consequently even apart from the retrospective effect of the rectification in 1955, the respondent-assessee was entitled to claim exemption from payment of income-tax for these relevant years. However, so far as the answer to Question No. 2 referred for the opinion of the High Court at the instance of the respondent-assessee was concerned, Shri Verma fairly stated that he was not supporting the said answer and that he was conceding that 1955 rectification of the Trust Deed had only prospective effect. 12. Shri Gauri Shankar, learned senior counsel for the Revenue in Rejoinder submitted that 1945 rectification did not create a public charitable trust. He, however, fairly stated that as there was no clear indication from the judgment of the High Court about any colourable device on the part of the assessee or its trustees underlying the creation of trust he was not pressing that point any further. 13. In the light of the aforesaid rival contentions the battle lines are clearly drawn between the contesting parties wherein the first five contentions canvassed on behalf of the Revenue by Dr. Guari Shankar will have to be examined and the sixth and the last contention which arise for consideration in the light of the additional contention of learned senior counsel Shri Verma for the respondent, namely, whether the rectification of 1945 created a public charitable trust or not, will also fall for determination. 14. We shall not deal with the aforesaid six contentions canvassed for our consideration seriatim : Contention No. 1 So far as jurisdiction of the Civil Court to grant rectification of the Trust Deed is concerned the relevant provisions is found in Section 26 of the Specific Relief Act, 1963 which had succeeded the prior Specific Relief Act of 1877. Under the earlier Act an analogous provision was found in Section 31 of the Act. Under the earlier Act an analogous provision was found in Section 31 of the Act. As per these provisions a suit could be filed before competent Civil Court for rectification of an instrument when through fraud or a mutual mistake of the parties a contract or other instrument in writing does not express their real intention. It is obvious that a Trust Deed is not a contract in the strict sense of then term but it would certainly be covered by the expression other instrument in writing. It could, therefore, not be urged with any emphasis that competent Civil Court which was approached by the Settlor Company for rectification of the instrument of trust, was not having requisite jurisdiction to entertain such proceedings. However, Dr. Gauri Shankar, learned senior counsel for the Revenue pitched his faith on a decision of the Andhra Pradesh High Court in the case of Trustees of H.E.H. the Nizams Pilgrimage Money Trust v. Commr. of Wealth-tax, (1988) 171 ITR 323 : (1988 Tax LR 213). In that case the trustees of H.E.H. Nizams Pilgrimage Money Trust had applied to the Chief Judge, City Civil Court, Hyderabad, under Section 34 of the Indian Trusts Act, 1882 seeking his opinion, advice and directions with respect to the utilisation of the income of the trust fund in terms of the resolution. By the said resolution the trustees contrary to the objects of the trust had resolved to utilise the income of the trust fund for charitable purposes in India when the settlor had clearly laid down in the Trust Deed that the trust fund and unspent accumulations, if any, were to be utilised for religious or charitable objects at Hedjaz and/or Iraq. It was, therefore, held that the resolution of the trustees was invalid and the order of the Chief Judge permitting the trustees to spend the trust income in India was equally inoperative and without jurisdiction. It was also held that the Trust Act applied only to private trusts and not to public trusts. And that after the death of settlor, the trust had become a public trust. Moreover, Section 34 of the Trust Act provided only for a summary enquiry and order with respect to managment or administration of the trust property other than questions of detail, difficulty or importance. And that after the death of settlor, the trust had become a public trust. Moreover, Section 34 of the Trust Act provided only for a summary enquiry and order with respect to managment or administration of the trust property other than questions of detail, difficulty or importance. We fail to appreciate how the aforesaid decision can be of any assistance to the learned senior counsel for the Revenue in the present case. On the facts of the case before Andhra Pradesh High Court the City Civil Court, Hyderabad, had no jurisdiction under Section 34 of the Trust Act to bring about any changes in the objects of trust which had become a public trust. On the facts of the present case Section 31 of 1877 Act (Specific Relief Act) or the corresponding provisions of Section 26 of 1963 Act could be effectively invoked for rectification of the instrument of trust. Such a Court does not suffer from any inherent lack of jurisdiction, like the City Civil Court in the Andhra Pradesh case which had no such jurisdiction under Section 34 of the Indian Trusts Act. The first contention must, therefore, be rejected. It is no doubt true that the trustees are enjoined to utilise the trust properties subject to the terms and provisions of the indentures dated 19th October 1936 and 2nd February 1938 which require the trustees to utilise the trust property for the benefit of settlor company's own workmen. But as rightly submitted by Shri Verma, learned senior counsel for the assessee-trust, the said clause would not detract from the public charitable nature of the trust as projected by the relevant operative parts of the object clause to which we have made detailed reference earlier. But as rightly submitted by Shri Verma, learned senior counsel for the assessee-trust, the said clause would not detract from the public charitable nature of the trust as projected by the relevant operative parts of the object clause to which we have made detailed reference earlier. Shri Verma was also right when he contended that if at all the trustees diverted the benefit to the beneficiaries other than the workmen of the company itself it would give a cause of action to the original vendor, namely, the Town Improvement Trust, which had taken no steps in all these years or made any grievance about the same and secondly as provided by the indentures themselves all that would result on account of any alleged breach of the conditions of the indentures on the part of trustees would be that they would be liable to pay additional quantified amount to the original vendor and the concessional rate of consideration for the grant in that eventuality, may stand withdrawn. But it would not amount to any breach of trust on the part of the trustees if such benefit is conferred on outside workmen who fell within the clearly earmarked class of beneficiaries as per object clause 2(b)(i). On the contrary, the trustees not only would not be alleged to be guilty of any breach of trust but can be said to have acted according to the object of the trust. 22. Dr. Gauri Shankar, learned senior counsel for the Revenue next contended that as observed by the Appellant Assistant Commissioner in connection with assessment year 1948-49 not a pie of the income of the trust was utilised during the relevant years by the trust for the benefit of outside workmen and almost nothing was spent on charity. He particularly invited our attention to the following observations as found in Annexure F-2 in Volume II of the Paper Book which contains the order of the Appellant Assistant Commissioner of Income Tax Range II, Kanpur, for assessment year 1948-49. In paragraph 13 of the judgment the learned Appellate Assistant Commissioner has observed as under : "13. The appreciation of the real nature of the trust would not be complete without referring to its balance sheets and the income and expenditure accounts right from the year of inception of the trust up to the date. In paragraph 13 of the judgment the learned Appellate Assistant Commissioner has observed as under : "13. The appreciation of the real nature of the trust would not be complete without referring to its balance sheets and the income and expenditure accounts right from the year of inception of the trust up to the date. I have gone through the income and expenditure accounts of the various years and I find that not a single paisa was even spent by the trust for charity. The balance sheet of the trust shows that all its funds were mostly employed by the various companies and firms of J. K. Group to whom huge advances were made from time to time. A certain portion of the trust funds was no doubt employed in the construction, maintenance and repairs of quarters which were let out to the employees of J. K. Cotton Sag. & Wvg. Mills Co. Ltd. and to other allied concerns like J. K. Jute Mills Company, J. K. Hosiery Factory, J. K. Iron & Steel Co. Ltd. and J. K. Cotton Manufacturers Ltd. but all the surplus funds available to the trust were either given over to the various concerns of J. K. Group for the advancement of their business or advanced to J. K. Charitable Trust. From the day to day working of the trust also it is thus quite clear that it ensured for no charitable purposes." Now it must be at once noted that the said observations are made in connection with the assessment proceedings for 1948-49. They would be governed by the Trust Deed as rectified by the first rectification in 1945. Consequently these observations cannot apply to the interpretation of an entirely different set of recitals found in the rectified deed of 1955. Even that apart Shri Verma, learned senior counsel for the assessee has invited our attention to various documents which are on record in Volume I of the Paper Book at pages 21, 28, 176, 179, 183 and 184 to indicate that in fact benefit of the income from the trust was made available not only to workmen of the company but to outside workmen also who resided within Kanpur town. It was also submitted that the aforesaid documents clearly showed that the rent recovered from the workmen who occupied these 160 cottages put up by the settlor company on the trust land was minimal and was highly subsidised as compared to the market rent. That water and electricity were given free to the beneficiaries and a part of the land was also made available to the Municipality to establish a primary school. It was also contended that the income tax appellate tribunal itself had noted in the common judgment from which the references arose, that Appellant Assistant Commissioner had himself conceded that no exorbitant rents were charged from the tenants who occupied the residential quarters in question and in fact the average rent recovered showed that the rents were only nominal. Shri Verma also submitted that the Income-tax Tribunal had noted the contention on behalf of the assessee that as regards rent charged it was pointed out that the average rent realised from 160 cottages was Rs. 7660/- per annum from 1947-48 to 1964-65. That amenities of water and electricity were provided free and even the schools were free. In other words rent including service and electricity charges work out to less than Rs. 16/- per mensem for the accommodation whose fair market rate in an industrial city like Kanpur would be over Rs. 150/- per mensem. This according to assesses' counsel shows that cottages were given to poor employees at concessional rent. In our view these contentions on behalf of the assessee are well supported on the evidence on record. It cannot, therefore, be urged that the trustees had indulged in any profit making while employing the income of the trust on the beneficial objects of the Trust Deed and in discharging the obligations with which they are charged under the said Trust Deed. In fact in fairness it must be stated that Dr. Gauri Shankar did not also pursue this aspect any further. Before parting with the discussion on this aspect we may also mention that at page 410 of the Paper Book Vol. II a list of tenants not working in J. K. Group of Mills but who are living in Kamla town Trust quarters, was furnished by the respondent-assessee before the Income-tax Tribunal along with the affidavit of one Shri R. B. Somnath, Engineer of the respondent-trust. II a list of tenants not working in J. K. Group of Mills but who are living in Kamla town Trust quarters, was furnished by the respondent-assessee before the Income-tax Tribunal along with the affidavit of one Shri R. B. Somnath, Engineer of the respondent-trust. This also showed that the beneficiaries of the trust income and properties are not only the workmen of the settlor company but also outside workmen who are residing in Kanpur town being a part and parcel of the general public. It must, therefore, be held that the rectified Trust Deed of 1955 did create a public charitable trust as rightly held by the High Court. Contention No. 5, therefore, stands rejected. Contention No. 6 23. So far as this contention is concerned it is canvassed for the first time before us by Shri Verma, learned senior counsel for the assessee trust for supporting the ultimate answer given by the High Court on Question No. 1 referred for the opinion of the High Court at the instance of the assessee. Shri Verma submitted that leaving aside 1955 second rectification even the original Trust Deed of 1941 as rectified in 1945 did create a public charitable trust. The main plank of his argument was based on the following premises : 1. Workmen in general and in particular of the company are also a part and parcel of public and it cannot be said that they are not members of the general public residing in Kanpur. 2. We have to judge the correct connotation of the term 'workmen in general' in the light of economic and social conditions that prevailed in 1945 when the deed was rectified. 2. We have to judge the correct connotation of the term 'workmen in general' in the light of economic and social conditions that prevailed in 1945 when the deed was rectified. According to Shri Verma, construction of residential quarters, chawls or building for the workmen in general and in particular for the workmen, staff and other employees of the company or other allied concerns under the management of or in which the Directors of the company may for the time being be interested and for their respective families and dependents and for such other skilled and unskilled workmen, craftsmen, traders, merchants, technical or professional men whom the trustees may permit to reside or work in the said two plots with a view to supply their needs and requirements or to render them services or to cater to their wants, comforts, conveniences and amenities, as enjoined by clause 2(b)(i) of the Trust Deed as rectified in 1945 would indicate a well defined class out of general members of the public in Kanpur city. It is trite to note that workmen as a class would consist of poor and needy persons and it cannot be said that they would be representing an affluent class of society or public who would not be in need of a roof over their head for themselves as well as for their dependents. Consequently, implicit in the said provisions is the object of charity for these poor and well defined class of needy persons constituting a part and parcel of the general public residing in Kanpur. 24. On this premises it was submitted that even the 1945 deed did create a public charitable trust. It was also contended that the Tribunal and the High Court had wrongly taken the view that because of the earlier judgment of the Allahabad High Court in J. K. Hosiery Factory, (1971 (81) ITR 557) (supra), the Trust Deed as rectified in 1945 could not be said to have created a valid public charitable trust. That in the proceedings before the Allahabad High Court in the said case respondent-trust was not a party. The assessment was of the partnership. Even otherwise the said decision could not be binding on parties in the present assessment proceedings pertaining to entirely different years and for entirely different assessee. That in the proceedings before the Allahabad High Court in the said case respondent-trust was not a party. The assessment was of the partnership. Even otherwise the said decision could not be binding on parties in the present assessment proceedings pertaining to entirely different years and for entirely different assessee. Shri Verma relying on a series of decisions of different courts including this Court submitted that if the Trust Deed provides a charitable object for the benefit of a class of public and also gives preference to a smaller class of public which may consist of even the workmen of the settlor company or even the poor and needy relatives of the settlor himself the public charitable nature of the trust does not get whittled down or effaced. On the other hand Dr. Gauri Shankar for the Revenue relying upon number of the other judgments including the judgments of Chancery Division of English Court submitted that workmen by themselves cannot be treated to be a poor class of citizens for whom any benefit given under the Trust Deed would necessarily make it a public charitable object and if the trustees under the deed are under an obligation to provide the benefit of the trust properties to the employees of the settor company itself the company by giving such benefit would in turn be exonerating itself from its otherwise contractual obligation or even statuary obligation of providing welfare facilities and residential facilities to its own workmen who because of these facilities would work more efficiently for the company. Thus there would be quid pro quo between the settlor on the one hand and the beneficiaries, namely the workmen and employees of the company on the other. That such a provision would detract from real public charitable nature of the endowment. In the light of the aforesaid rival contentions on this issue we shall now proceed to examine this moot question. 25. Before we deal with these rival submissions, it will be profitable to have a look at the relevant recitals in the rectified Trust Deed of 1945. Clause 2(b)(i) of the Deed of Trust after the said rectification dated 18-9-1945 laid down amongst others, the following object : "To erect, establish, equip, furnish, fit, maintain, and repair on the said two plots of land and any other land that may hereafter be acquired by the Trustees on behalf of the Trust. Clause 2(b)(i) of the Deed of Trust after the said rectification dated 18-9-1945 laid down amongst others, the following object : "To erect, establish, equip, furnish, fit, maintain, and repair on the said two plots of land and any other land that may hereafter be acquired by the Trustees on behalf of the Trust. (i) residential quarters, chawls or building for the workmen in general and in particular for the workmen staff and other employees of the company or other allied concern under the management of or in which the Directors of the company may for the time being be interested and for their respective families and dependents and for such other skilled and unskilled workmen craftsmen traders merchants technical or professional men whom the trustees may permit to reside or work in the said two plots with a view to supply their needs and requirements or to render them service or to cater to their wants comforts conveniences and amenities." Shri Verma submitted that if workmen in general represent a poor and needy class of persons who are a part and parcel of the general public residing in Kanpur, as residential quarters, chawls or buildings had to be constructed in Kanpur, then even if a preference is given to similarly needy and poor workmen staff members or the other employees of the company it could not be said that only because of such preference the charitable aspect of the endowment would get frustrated or would become a private trust. In order to support his contention Shri Verma invited our attention to a decision of this Court in the case of Trustees of the Charity Fund v. Commr. of Income-tax, Bombay, In that case, the clause in the Deed of Trust provided for grant of relief and benefit to the poor and indigent members of Jewish community or any other community of Bombay or other parts of India or of the world and preference was to be given to the poor and indigent relations or members of the family of the settlor Sir Session David. It was held that despite such preference the trust would remain a public charitable trust. It was held that despite such preference the trust would remain a public charitable trust. Relying on sub-clauses (a) to (f) of clause 13 of the Deed of Trust it was held that the deed constituted a valid public charitable trust and as the relations or members of Sir Sassoon David did not figure as direct recipients of any benefits under sub-clauses (b) to (f) and the circumstances that in selecting the beneficiary under sub-clause (a) preference had to be given under the provisos to the relations or members of the family of Sir Sassoon David could not affect that public charitable trust, the income from the properties came within the scope of Section 4(3)(i) of the Income Tax Act and were exempt. Reliance was also placed on number of other decisions of various High Courts which obviously fell in line with the aforesaid decision of this Court and which had taken the view that if the main benefit of the settled property in trust had to go to charity, if the trustees were permitted to give preference to poor relations of the settlors the trust would remain a public charitable trust. In this connection our attention was invited to the decisions of Gujarat High Court in Commr. of Income-tax v. Moosa Haji Ahmed, (1964) 52 ITR 147, Calcutta High Court in Commr. or Income-tax Calcutta v. Board of Mutwallis to the Wakf Estate, Ebrahim Solaiman Saleji, (1968) 69 ITR 758 and three decisions of Bombay High Court in Commr. of Income-tax Bombay City II v. Trustees of Seth Meghji Mathuradas Charity Trust, (1959) 37 ITR 419: Commr. of Wealth-tax, Bombay City II v. Trustees of the J. P. Pardiwala Charity Trust, (1965) 58 ITR 46; and Commr. of Income-tax, Bombay City III v. D. D. Deshpande, (1976) 102 ITR 390. 26. On the other hand Dr. Gauri Shankar, learned senior counsel for the Revenue submitted that as the benefit is made available under the Trust Deed to workmen in general and in particular to the workmen staff and other employees of the company it cannot necessarily be held that these workmen must be poor and needy as no such words are found in the clause. He submitted that any Trust Deed conferring benefit on an identified group of persons like workmen or employees of the company would make the trust a private trust and not a public charitable trust. He submitted that any Trust Deed conferring benefit on an identified group of persons like workmen or employees of the company would make the trust a private trust and not a public charitable trust. In support of this contention he heavily relied upon decision of the Madras High Court in Sakthi Charities v. Commr. of Income-tax, Madras, (1984) 149 ITR 624: (1986 Tax LR 70). In that case it was held agreeing with the view of the Tribunal that as the Trust Deed provided for conferring benefit only on the employees of M/s. Sakthi Sugar Ltd. and the relatives of the deceased employees, the said benefits could not be available to the members of the general public not connected with M/s. Sakthi Sugar Ltd. Consequently all these clauses were not charitable in nature. Our attention was also invited by Dr. Gauri Shankar to two decisions of the Chancery Division of the High Court of Justice in England in Trustees of the William Vernon & Sons, Ltd. Employees Fund v. Commissioner of Inland Revenue, (1956) 36 Tax Cas (Chancery Division) 484 and in Ashworth v. Drummond, (1914) 2 Ch 90. In Trustees of the William Vernon (supra) the question was whether a bequest under the will directing 20 of the received moneys to be paid to some organisation or charity at the discretion of the executors for the benefit of employees of the firm would constitute a public charitable endowment. It was held that the objects of the scheme were not charitable only. Justice Upjohn at page 495 of the Report observed as under : "Thirty years ago it was not always appreciated that in order to constitute a valid charitable trust it must be a public trust, and that if a trust is limited to the employees of a company the personal nexus constituted by that common employment does not satisfy the necessary test of the character of publicity. That is now well established, and it was established in a line of authorities after the last war culminating in Oppenheim v. Tobacco Securities Co., LTD., (1951 (1) All ER 31) in the House of Lords in 1951. Therefore, it is common ground that the scheme does not constitute valid charitable trusts. ....." In Re Drummond, (1914(2) Ch 90) (supra) it was held that work people in question could not be regarded as poor people within the statute of Elizabeth. Therefore, it is common ground that the scheme does not constitute valid charitable trusts. ....." In Re Drummond, (1914(2) Ch 90) (supra) it was held that work people in question could not be regarded as poor people within the statute of Elizabeth. In our view the aforesaid decision of English Chancery Courts cannot ipso facto be made applicable to workmen residing in this country and who had to face entirely different socio-economic conditions, especially in 1945, when the rectified object of the Trust Deed saw the light of the day. While interpreting the word 'workmen in general' as employed in 1945 rectified Trust Deed, we have to sit in settlor's arm chair with a view to visualizng what was meant by the Settlor Company when it used these terms in 1945, keeping in view the then prevalent socio-economic conditions in this country. It is easy to visualise that workmen who were to toil for their existence would necessarily represent a class of needy persons requiring a shelter over their head, when the settlor company in 1945 contemplated to construct residential quarters, chawls or buildings for workmen it necessarily meant to provide these facilities for a needy class of persons who could legitimately be presumed to be a class of downtrodden persons suffering from penury and want. The socio-economic situation prevailing in England treating workmen as not necessarily poor, cannot almost automatically be imported and applied for judging the economic status of working class in India especially in 1945 when even the definition of 'workmen' under the Industrial Disputes Act, 1947 had also still to see the light of the day. We, therefore, cannot agree with the general proposition canvassed by Dr. Gauri Shankar for the Revenue that any provisions made for the benefit of workmen in general would not necessarily be a provision for needy or poor class of citizens who may be forming part of the general public. 27. We, therefore, cannot agree with the general proposition canvassed by Dr. Gauri Shankar for the Revenue that any provisions made for the benefit of workmen in general would not necessarily be a provision for needy or poor class of citizens who may be forming part of the general public. 27. Shri Verma, learned senior counsel for respondent-assessee was also right when he submitted, relying upon decision of this Court in Trustees of the Charity Fund, (supra) and other decisions of the High Court to which we have made a reference earlier, that when any property is settled for charitable purposes for catering to the needs of a class of public which is poor and needy, any preference given to poor and needy workmen of the settlor company would not necessarily detract from the charitable object underlying such bequest or settlement. It is trite to observe that if settlor's poor relatives can legitimately be the recipients of charitable benefits under a public charitable trust, then if such preference is given to poor workmen of the settlor company who are not even related to the settlor, they would stand at least on an equal if not a better footing and in no eventuality on a worse footing, in judging the public charitable nature of the settlement in their favour. However, the basic fact must remain that the settlement is made in favour of a well earmarked class of needy and poor persons who may form a part of the general public and for whom such charitable bequest or endowment is made, and the preferred class of beneficiary must form a part and parcel of that very general earmarked class. It must, therefore, be held that the provisions for construction of houses for 'workmen in general' as found in clause 2(b)(i) of 1945 rectified Deed, so far as it went, did constitute a charitable object. 28. However, this conclusion of ours does not end the controversy centering round the aforesaid clause. There are two clear hurdles in the way of Shri Verma for the respondent which militate against his submissions that the said clause when read as a whole does create a public charitable trust in favour of workmen in general. 28. However, this conclusion of ours does not end the controversy centering round the aforesaid clause. There are two clear hurdles in the way of Shri Verma for the respondent which militate against his submissions that the said clause when read as a whole does create a public charitable trust in favour of workmen in general. The first hurdle is that the term 'workmen in general' as employed in the clause is too general and vague but even assuming that in the context of the residential quarters, chawls or buildings to be constructed for them on the lands situated at Kanpur which are settled in trust by the Settlor Company, it would refer to workmen in Kanpur town, even then the more substantial hurdle in the way of the respondent is projected by the fact that there is an obligation cast on the trustees to construct these residential quarters, chawls or building in particular for the workmen, staff and other employees of the company or other allied concerns under the management of and in which the directors of the company may for the time being be interested and for their respective families and dependents. In the light of the words in particular' as found in this clause, Dr. Gauri Shankar, learned senior counsel for Revenue rightly submitted, that they represent a scheme of priority for workmen of the Settlor Company and not a scheme of preference. In that words the trustees are bound under an obligation to construct residential quarters etc. first for the workmen or employees of the Settlor Company or its allied concerns. They have no choice in the matter. They cannot in their discretion select an outside workman as recipient of the benefit under the scheme of the Trust Deed. In effect the general class of beneficiaries constituted by the words 'workmen in general' gets whittled down and circumscribed by the words in particular for workmen of the company etc.' Thus in substance it becomes a trust for the benefit of a well defined smaller class of beneficiaries, namely, employees or workmen of the company and its allied concerns and it fails to meet the requirement of a genuine or public or charitable trust. We are in agreement with this submission of Dr. Gauri Shankar. We are in agreement with this submission of Dr. Gauri Shankar. Once such an obligation is cast on the trustees the public character of the endowment gets whittled down and in substance becomes the settlement for an identified group of persons. In this connection we may profitably refer to a Division Bench Judgment of the Bombay High Court in the case of Commr. of Income-tax, Bombay City II v. Walchand Diamond Jubilee Trust, (1958) 34 ITR 228 : (AIR 1959 Bombay 148) wherein Chagla, C. J., spoke for the Bench. In that case the question was whether the provisions made in the Trust Deed to utilise the accumulated income of the property of the trust on charitable objects like giving scholarship to deserving students or giving medical reliefs of the nature and kind such as starting maternity homes etc., or giving monetary help to the poor and needy persons and for providing relief to the poor and distressed in time of famine would get adversely affected and would cease to be a charitable object if preference was to be given to such persons as are eligible under the aforesaid provisions who are at the time or have in the past been employees of Premier Construction Co. Ltd., and of the associated companies and their relatives and dependents as the trustees may in their discretion think expedient and proper. In this connection the following pertinent observations were made by Chief Justice Chagla at page 236 (of ITR) of the Report: "....Now. undoubtedly, we would have taken a different view of this trust if there was an obligation upon the trustees to prefer the employees. In other words, if the other members of the public were postponed to the employees of the Premier Construction Co. Ltd., then, looking to the other provisions of the deed, we might easily have taken the view that the main purpose of the trust was to benefit the employees and the charity to the public was merely illusory. But there is no obligation cast upon the trustees by this proviso to prefer the employees of the Premier Construction Co. Ltd. It is for the trustees to exercise their discretion. In the first place, they have to utilise the income for carrying out the four objects, and any member of the public who comes within these four objects would be qualified to receive the bounty of the settlor. Ltd. It is for the trustees to exercise their discretion. In the first place, they have to utilise the income for carrying out the four objects, and any member of the public who comes within these four objects would be qualified to receive the bounty of the settlor. If a member of the public also happens to be an employee of the Premier Construction Co. Ltd., it is open to the trustees to give him preference. Therefore, the trustees would not be guilty of committing any breach of trust if they selected for the bounty of the settlor such members of the public as did not fall in the category of employees of the Premier Construction Co. Ltd. That is the real test which we have got to apply. We must not assume that the trustees will exercise their discretion dishonestly or improperly. The test is whether the exercise of the discretion of the trustees is so fettered that they are bound to select particular persons in preference to others. That is clearly not the case here......" In our view aforesaid is the correct test evolved by the High Court. Applying the said test to the clause in question we find that though residential quarters, chawls or buildings are to be constructed for the workmen in general and who, as we have already shown earlier, may be a well defined class of workmen residing in Kanpur and who may be poor and needy in the light of their socio-economic conditions as prevailed in 1945 when the clause was drafted, once we turn to the second part of this clause which lays down in clearest terms that in particular the quarters are to be constructed for the workmen staff and other employees of the company and of its allied concerns, it becomes clear that no discretion is left with the trustees and on the contrary they are enjoined, called upon and under an obligation to construct these quarters, chawls and buildings necessarily for the workmen, staff and other employees of the company and its allies. It is also easy to visualise that other employees of the company may include even affluent employees who may not necessarily constitute an object of charity. It is also easy to visualise that other employees of the company may include even affluent employees who may not necessarily constitute an object of charity. Once this conclusion flows from the wording of the clause, it becomes clear that reference to workmen in general becomes illusory and the settlement can be said to be in substance meant only for catering to the needs of a well defined group of persons, namely, workmen, staff and other employees of the company and its allied concerns and in that case on the aforesaid ratio of the decision of the Bombay High Court, which we approve, the object clause in question would fall short of creating any public charitable trust. In this connection we may also refer to two decisions, one of Calcutta High Court and another of Allahabad High Court, to which our attention was drawn by Dr. Guari Shanker for the Revenue. In the case of Mercantile Bank of India (Agency) Ltd., (1942 (10) ITR 512 (supra) a Division Bench of the Calcutta High Court speaking through Derbyshire, C. J., held that in order to constitute a valid charitable trust it should be for the benefit of the public or the specified section of it. A fluctuating body of private individuals such as the present and further officers and members of the staff and other employees of a company would not be a part of the general public or of any section of the public and therefore the income of the trust fund was not exempt from the payment of income-tax under Section 4(3)(i). It was further observed that Andrew Yule & Co. Ltd., and their subsidiary concerns for whose employees benefit was conferred under the deed employed a larger number of persons. The trust was for the benefit of the past, present and future officers, members of the staff and other employees of those concerns. Anyone from the Secretary or some other highly paid member of the staff down to the lowest menial may be included within the benefit of this fund. Necessitous circumstances might include the case of a superior employee earning some thousands of rupees per month, who owing to some misfortune -- say the burning down of his house, or the loss of his property -- might find himself suddenly in necessitous circumstances, and in need of money to replace his lost property. Necessitous circumstances might include the case of a superior employee earning some thousands of rupees per month, who owing to some misfortune -- say the burning down of his house, or the loss of his property -- might find himself suddenly in necessitous circumstances, and in need of money to replace his lost property. The learned Judge could see no reason why the administrators of the fund should not be in a position to make a grant to such a person to make up his loss. It might be a most desirable thing to do and the administrators might justly think that they had used some of the funds to the best advantage. But such use cannot be said to be for the relief of poverty. Even if (as had been argued) the administrators are bound to use this fund solely "to relieve persons suffering from indigence, ill-health or other necessitous circumstances," it was impossible to say that the fund is to use the words of the section -- "property held in trust wholly for charitable purposes." A Division Beach of the Allahabad High Court in the case of J. K. Hosiery Factory, (1971 (81) ITR 557) (supra) had an occasion to consider the very same clause of the rectified deed of 1945. It is of course true that the said decision was rendered in assessment proceedings of the firm wherein respondent-assessee was a partner and not in the assessment proceedings of the respondent firm itself. Still the interpretation placed on the very same Trust Deed as rectified in 1945 in proceedings to which respondent-assessee was party in another capacity cannot be said to be totally irrelevant. H. N. Seth, J., speaking for the Division bench made the following observations in this connection :