UNION OF INDIA v. P. C. RAY AND CO. INDIA (P) LTD.
1974-08-21
A.C.GUPTA, S.K.DUTTA
body1974
DigiLaw.ai
( 1 ) THIS is an appeal by the Union of India its officers against the judgment and order of P. K. Benerjee, J. dated July 7, 1970 making the C. R. No. 1076 (W) of 1969 absolute. The petitioner's case is as follows: the petitioner no. 1, P. C. Ray and Co. India (P) Ltd. , an existing company, (hereinafter referred to as the Company), where of the petitioner no. 2 was its Managing Director and the principal shareholder (since deceased and substituted by his heirs and legal representatives) had been carrying on at all material times the business of extraction, export and import of timber and other forests products inter alia, in Andaman Islands and Indian ports. By an Agreement of license dated August 31, 1951, in writing and registered, the Company was given by the President of India the ?sole right to cut, fell and extract all trees of the North Andaman Islands for a period of 25 years in accordance with the approved working plan? to be complied by the Union of India. The Company was to construct at its costs roads, bridges, buildings, house, staff quarters, sheds, tram lines for facilitating its works. Any such work, on termination or sooner determination of the Agreement, would vest in the Government on payment of due compensation free from encumbrances. Further, lands were to be allotted and leased to the Company at an annual rent of Re: 1/- per acre for depots, labour camps, etc. , erection of machinery Lands were also to be allotted and leased to the Company for raising food crops for use of its workers and animals at the said rent. The Company was also to take steps to establish saw mills, plywood factory, seasonings kiln, and at its option a match factory. The Company was to put in security deposit of Rs. 10 lacs with the Chief Commissioner, Andaman and Nichobar Islands for due fulfillment of its obligations under the Agreement. The Agreement further provided a minimum guaranteed quantity of extraction of timber in every financial year ranging from 10,000 tons per year from 1950-51 and rising progressively in course of six years in 1957-58 to 75,000 tons. It was further provided that normally there should be no arrears in felling and extraction of timber at the end of each financial year.
It was further provided that normally there should be no arrears in felling and extraction of timber at the end of each financial year. The Company was to make its own arrangement for transport and the Chief Commissioner would render all assistance for chartering ships. The royalty payable by the Company would be levied at specified percentage on f. o. b. prices of matchwood, plywoods, hardwoods, ornamental woods, such price to be fixed by the Chief Commissioner in consultation with Inspector General of Forests of the Government of India. There was a provision for reference of any dispute, difference or question between the parties regarding the observance of the terms, covenants and conditions of the Agreement or relating to the construction, meaning and effect of those presents or rights or liabilities of parties to two arbitrators each to be appointed by each of the parties and in case of difference of opinion to an umpire to be appointed by the Chief Justice of India. These are the broad provisions of the Agreement of license relevant for our purpose. ( 2 ) THE Company, it was stated, thereafter set up bridges, roads, buildings, houses, staff quarters in the North Andaman Islands at an investment of about Rupees Two crores. The Company also set up jetties, wharves for extraction and transport of timber, put to use teams of elephants, launches, boats as also stores of timber, food machinery etc. The Company set up in the area buildings, labour depots, houses, quarters valued at over Rs. 25 lacs. The Company contended that in the premises it was to be deemed to acquire an interest in the land covered by the Agreement of license. Alternatively the Agreement of license should be deemed to be license coupled with grant of immoveable properties. No right of re-entry or forfeiture of the said license or lease was reserved and no right except under very special and specific contingencies, to cancel the Agreement provided therein. No working plan was forwarded to the Company as required and to show its bonafides the Company made substantial extraction of timber and pad Rs. 25 lacs as royalty. As a result of absence of working plan there was deadlock in the work of the Company for which the officers of the Government of India were solely responsible.
No working plan was forwarded to the Company as required and to show its bonafides the Company made substantial extraction of timber and pad Rs. 25 lacs as royalty. As a result of absence of working plan there was deadlock in the work of the Company for which the officers of the Government of India were solely responsible. ( 3 ) ON December 16, 1968 the Company received a letter from the Under-Secretary to the Government of India writing on behalf of the President of India alleging that the Company had totally abandoned contract since August, 1964 by its various acts referred to therein. It was alleged that it was evident from the above actions that the Company had no intention of performing the contract in future. It was further stated:now, therefore, the Government of India hereby gives you notice that the Government treats the aforesaid breaches on your part as a repudiation of the contract by you and that the Government hereby revokes the said agreement of license dated 31st August, 1951 and accordingly takes possession of the areas covered by the license. The Company contended that the allegations therein were utterly frivolous and the Government and its officers had no right to interfere with the property rights of the Company by means of an executive fiat without recourse to due process of law. The Company lodged its protest by letter dated December 21, 1968 denying the allegations and the Government right to deprive the Company of its property and other rights under the Agreement. The Government had issued circulars in the meantime notifying that the Agreement of license with the Company had been revoked with effect from December 21, 1968 and that it had taken possession of the areas covered by the license all rights of the company under the license stood ceased and determined. ( 4 ) THE Company submitted that the actions of the Government in taking possession and in revoking the licence was malafide as no indication was given of such action in its notice of December 16, 1954 which prevented it from moving court for appropriate relief.
( 4 ) THE Company submitted that the actions of the Government in taking possession and in revoking the licence was malafide as no indication was given of such action in its notice of December 16, 1954 which prevented it from moving court for appropriate relief. It was further submitted that the Company was a licensee under an irrevocable license and even so the Company was deprived of any opportunity of making any representation against wrongful revocation putting it to serious and irreparable injury, loss and damage which in modest calculation would be about Rs. 95 lacs. The Company filed an application in this Court for adjudication of the dispute by arbitration, which, it appears, had since been withdrawn. The Company apprehended serious threat of immediate loss of its valuable property as a result of the highhanded executive fiat of the Government without authority of law. The Company further submitted that the impugned order of December 16, 1968 was in gross violation of Article 31 (1) and other provisions of the Constitution and property rights could not be taken away without authority of law by executive fiat. The said order as also notification were contrary to provisions of law and the license could not be revoked nor the Government was entitled to interfere with the Company's right to extract and deal with the timber of the forest of the islands in the North Andamans. On these allegations and contentions the Company and its Managing Director who was also its major share-holder moved this Court by an application under Article 226 (1) of the Constitution praying, inter alia, for a writ I the nature of mandamus commanding the respondents to cancel and withdraw the said order of December 16, 1968 and notices referred to above and to restore status quo ante. On this application this Court issued a Rule on March 11, 1969 in terms of the prayer made in the petition. ( 5 ) THE respondents, Union of India and its officers on service of the Rule duly entered appearance and contested the rule by filing an affidavit-in-opposition affirmed on January 298, 1970 by S. N. Tulsiani the Under-Secretary of the Government of India who issued the impugned letter of December 16, 1968.
( 5 ) THE respondents, Union of India and its officers on service of the Rule duly entered appearance and contested the rule by filing an affidavit-in-opposition affirmed on January 298, 1970 by S. N. Tulsiani the Under-Secretary of the Government of India who issued the impugned letter of December 16, 1968. It was stated therein that the petitioners had no legal right which had been infringed, and the Agreement of license entered into between the parties could not be enforced in writ proceedings. The Government of India invited tenders for extraction of timber from North Andaman Islands for export to main land. Pursuant thereto the Company's tender was accepted and an Agreement of license was executed between the parties on August 31, 1951 and supplementary Agreement was executed between the parties on October 6, 1953. The Company thereafter committed and went on committing various breaches in respect of the said Agreements. ( 6 ) THE petitioners on April 3, 1961 referred the disputes to arbitration in terms of the Agreement of license for period from August 31, 1951 to March 3, 1961. In the award in the said arbitration it was held that the Company was liable to the Government in a sum of about Rs. 19 lacs; subsequently this Court passed a decree in terms of the said award and an appeal therefrom was pending in this Court. There was successive references to arbitration on March 9, 1964 and July 13, 1964 which were then pending. The Company also filed a suit for alleged loss of profit for 1963-64 to 1966-67 in the sum of Rs. 1. 73 crores being Money Suit No. 1482 of 1968 which however had been stayed by this Court in view of the provisions for arbitration. ( 7 ) SINCE August 1964 the Company had totally abandoned the work and extraction ad export of timber was ?at a standstill?. The workmen had left on account of non-payment of wages, the tractors were abandoned, collected logs had been washed away and the elephants used for logging had been abandoned and let loose, and being a danger to the community, some were captured and sold in auction. It was thus clear that the Company had repudiated the contract and had no intention to perform its part of the contract.
It was thus clear that the Company had repudiated the contract and had no intention to perform its part of the contract. In this state of affairs, the Government of India gave notice to the Company on December 16, 1968 stating that the Government treated the said breaches on the part of the Company as a reputation of the contract. The Government in the circumstances revoked the said Agreement of Licence dated August 31, 1951 and took possession of the areas covered by the said Agreement. ( 8 ) THE Company instituted in this Court Special Suit No. 2 of 1969 challenging the said notice of revocation, alleging that it was prevented from working as no approved working plan was given to it. It was prayed that the existing disputes should be referred to the arbitrators to be appointed by Court. The said suit was dismissed on April 21, 1969 and the order therein accordingly operated as res-judicata. ( 9 ) THE respondents in their affidavit-in-opposition also denied all material allegations made in the petition. It was denied that the Company acquired or to be deemed to have acquired any interest in the lands under the said Agreement or that the license was to be deemed to be license coupled with grant of immoveable properties. It was stated that the Company was given only the right to cut, fell and extract trees marked by the Government who always owned the forests of the island. Reference was made to the findings of the joint arbitrators who held that though the working plan handed over to the Company was not strictly ?approved Working Plant?, the Company did not suffer any loss on that score. It was denied that the right of the parties would not accrue till such plan was prepared and handed over the Company, as the Company, had already worked for over ten years and paid large sums of money as royalty. It was stated that since 1964 the Company stopped work as it had no finance and entire staff had left for non-payment of salary and wages. It was reiterated that the Company by its defaults and breaches having repudiated the said Agreement of Licence, the Government had lawfully and validly revoked the Agreement of Licence and had taken possession of the abandoned area. The rule in the premises should be discharged.
It was reiterated that the Company by its defaults and breaches having repudiated the said Agreement of Licence, the Government had lawfully and validly revoked the Agreement of Licence and had taken possession of the abandoned area. The rule in the premises should be discharged. ( 10 ) THE petitioners filed an affidavit-in-reply wherein the allegations and contentions made in the affidavit-in-opposition were denied and those made in the petition were reiterated. It was specifically stated that in absence of the approved working plan, there was no occasion for breach of the terms f the Agreement of licence. Accordingly the action of the Government of India was highhanded, arbitrary and unconstitutional and the petitioner in the circumstances entitled to the reliefs claimed. ( 11 ) THE Rule came up for hearing before Banerjee J. and on the question of enforcement of contractual obligation arising out of a contract by an application under Article 226 of the Constitution, it was held that as the Company had constructed buildings and had some right in respect of the other portions, the petitioners were entitled to maintain such application. Relying on the decision in (1) Bishan Das and others v. State of Punjab, AIR 1961 S. C. 1570, it was held that even if the company had made breaches of the agreement of licence, and had abandoned the contract, the order of Government taking possession was illegal and its was not given to the licensor to enter into the areas covered by the licence by executive action. Such action would be destructive of the basic principle of the rule of law, and absence of display of force was of no consequence when possession was taken without authority of law. Further, when Government of India took action by executive fiat, it must be deemed that the Government servants taking possession had all the force of the Government behind them. The learned Judge referred to other decisions wherein it was laid down that the lessor has no right to re-enter and take possession of the demised premises even if the lessee has ceased to be the lessee and recourse must be had to the due process of law for taking possession, and no one can be permitted to take law in his own hand. The Court concluded without any authority of law and thus violative of the rule of law.
The Court concluded without any authority of law and thus violative of the rule of law. The learned Judge further held that the Company's rights were in respect of the immoveable property and such right could not be terminated without due process of law. When possession was taken without authority law and by an executive fiat the writ court, it was held, had jurisdiction to direct restoration of possession illegally taken. The bar of res judicata was not sustainable as the application for arbitration filed by the petitioner was withdrawn. The learned Judge accordingly set aside only the portion of the order of the Government of India in so far as it related to taking over possession which was quashed. It was further directed that the Government must restore possession of the areas covered by the license. ( 12 ) THIS appeal is against this decision by the Union of India and its officers impleaded. During the pendency of the appeal an affidavit was filed by the Company in the appeal denying the allegations of its abandonment of the agreement and in support reference was made to the Fourth Arbitration matter in which the Government demanded Rs. 1. 98 crores as the amount royalty on shortfall from April 1, 1964 to March 31, 1967. Reference was also made to the notice dated January 10, 1972 in which royalty on shortfall for about Rs. 50 lacs for year 1968-69 upto December 20, 1968 was demanded. Correspondence between the parties after 1964 was also referred to which according to the petitioners indicated that the allegations of abandonment of the agreement by the Company was untrue. Reference was also made to the judgment of this Court in Criminal Revision Case No. 62 of 1965 dated July 5, 1965 wherein this Court quashed a proceeding started by the Andaman and Nicobar Administration against two directors of the Company under Rule 125 (a) of the Defence of India for not having extracted 25000 tons of timber as directed by the authorized Controller. This Court held that such contravention was not punishable under the rules and the proceeding initiated was an abuse of the process of Court. The appellants, the Union of India and others filed an affidavit-in-opposition to the above affidavit stating, inter alia, that the petitioners respondents should not allowed to use the said documents which made out an inconsistent case.
This Court held that such contravention was not punishable under the rules and the proceeding initiated was an abuse of the process of Court. The appellants, the Union of India and others filed an affidavit-in-opposition to the above affidavit stating, inter alia, that the petitioners respondents should not allowed to use the said documents which made out an inconsistent case. It was further stated that the case made therein would involve consideration of questions of fact which was not permissible in writ proceedings. It was reiterated that the Company's extraction timber came to a complete standstill in August 1964. In 1963 the working of the agreement of licence was brought under the purview of the Defence of India Rules in the interest of security of the country. The Controller authorized under the Rules issued directions for accelerating and not interfering with the work of the Company. Because of inaction on the part of the Company for labour trouble, proceedings were launched which were quashed by the High Court. In the Suit No. 1482 of 1968 instituted by the Company in this Court, the Government lodged its counter claim for over Rs. 2. 05 crores which claim included shortfall for years 1964-65 to 1966-67 for about Rs. 1. 90 crores. The letter of December 16, 1968 was received by the Company on December 21, 1968 and hence shortfall upto December 29, 1968 was claimed at revised rates. All letters referred to in the affidavit of the Company pertain to claims for period prior to December 21, 1968 and did not indicate that the work was not abandoned since August, 1964. ( 13 ) MR. Nani Coomar Chakraborti, learned Advocate appearing for the appellants, has made several contentions in support of the appeal. His first contention is that the agreement of licence being in essence a contract, the same cannot be enforced in proceedings under Article 226 of the Constitution. By the agreement of licence the Company was given merely ?the sole right to cut, fell and extract all trees from the clear-felling area, all trees marked' by Government officer for consideration. It was an agreement simpliciter and if any action was taken by a party in violation or breach of the terms of the agreement the remedy lay elsewhere and not in writ proceedings in this Court. Reliance was placed in several decisions referred hereinafter.
It was an agreement simpliciter and if any action was taken by a party in violation or breach of the terms of the agreement the remedy lay elsewhere and not in writ proceedings in this Court. Reliance was placed in several decisions referred hereinafter. In (2) P. K. Banerjee v. L. J. Simonds, AIR 1947 Calcutta 307 it was held that the duty imposed upon a public servant which could be the subject of an order under section 45 of the Specific Relief Act, 1877 must be a statutory duty towards the applicant under section 45 independently of any duty which as a servant he owed to the Crown. Any duty or obligation falling upon the public servant out of a contract entered into by him could not be enforced by the machinery of section 45. This view was approved in (3) Lekraj Sathramdas Lalvani v. N. M. Shah, Deputy Custodian-cum, Managing Officer Bombay, AIR 1966 S. C. 334 in which it was observed:. . . . . a writ of mandamus may be granted only in a case where there is a statutory duty imposed upon the officer concerned and there is a failure on the part of that officer to discharge that statutory obligation. The chief function of the writ is to compel the performance of public duties prescribed by the statute and to keep the subordinate Tribunals and officers exercising public functions within the limits of their jurisdictions. In our opinion, any duty or obligation falling upon a public servant out of a contract entered into by him as such public servant cannot be enforced by the machinery of a writ under Article 226 of the Constitution. In (4) Satish Chandra Anand v. Union of India, AIR 1953 S. C. 250 it was held that where a person enters into a contract of service with Government, if any rights under the contract are denied to dim, he was free to pursue in the ordinary courts of the land, such remedies for such breach and the remedy of a writ was misconceived. In (5) G. A. Leslie v. State of Kerala, AIR 1970 Ker 21 , following above decisions it was held that remedy for breach of contract with state must be in a suit and a Court exercising jurisdiction under Article 226 is not the proper forum for deciding the matter.
In (5) G. A. Leslie v. State of Kerala, AIR 1970 Ker 21 , following above decisions it was held that remedy for breach of contract with state must be in a suit and a Court exercising jurisdiction under Article 226 is not the proper forum for deciding the matter. Similar view in regard to contract of employment under the Government was also expressed in (6) Banchhanidi Rath v. State of Orissa, AIR 1972 S. C. , 843. On the above and other authorities Mr. Chakarabarti submitted that the remedy in writ proceedings, even if there had been breach of contract, was misconceived. ( 14 ) MR. Sankardas Banerjee, learned Advocate appearing for the petitioners respondents in the appeal did not dispute, as he would not, the above proposition of law. He sought to distinguish the cases mostly on service contracts by drawing or attention to the disputed agreement, which according to him, conferred rights in immoveable, property in the Company where from there could be no deprivation in violation of Article 31 (1 ). Further according to the petitioners there was no provision in the agreement for cancellation of the contract as was sought to be done by the Governmental authorities and accordingly the petitioners had the legal right which could be enforced in this proceeding. As was held in the decision in (7) Calcutta Gas Company Proprietary Ltd. v. Union of India, AIR 1962 S. C. 1044, the right of the petitioner under an agreement to manage the Calcutta Gas Company and to receive remuneration for the same was a legal right which was infringed by the West Bengal Oriental Gas Company Act, 1960 and the petitioner had the locus standi to file the petition under Article 226. ( 15 ) THE maintainability of the application will thus have to be considered on an interpretation of the agreement of licence and other attending circumstances. In case it is found that the agreement conferred rights on the Company in immoveable property or any other legal right as claimed, other considerations would arise. We accordingly proceed to consider whether the agreement conferred on the Company any legal right or interest in immoveable property as claimed. ( 16 ) MR. Chakrabarti submitted that the writ of mandamus is not available without establishment of a legal right and such right must flow from statute. He referred to the decision in (8) Dr.
We accordingly proceed to consider whether the agreement conferred on the Company any legal right or interest in immoveable property as claimed. ( 16 ) MR. Chakrabarti submitted that the writ of mandamus is not available without establishment of a legal right and such right must flow from statute. He referred to the decision in (8) Dr. Rai Shivendra Bahadur v. The Governing Body of the Nalanda College, AIR 1962 S. C. 1210 in which it was held that in order that mandamus may issue to compel the authorities to do something, it must be shown that the statute imposes a legal duty and the aggrieved party had a legal right under the statute to enforce its performance. In the (9) State of Orissa and others v. Rajasaheb Chandanmull Indrakumar P. Ltd. and another, AIR 1972 S. C. 2112 it was held that the applicant was required to prove his legal right to continue in possession of the mine and unless the legal right is established the High Court exercising writ jurisdiction cannot grant him any relief. The (10) Corporation of Calcutta and others v. Dhirendra Nath Sen and others, AIR 1973 Calcutta 506, was a case where the Corporation in assertion of property rights under the law, dispossessed persons in possession without recourse to law. It was found that such person was not entitled in law to remain in possession at the time of dispossession and was not entitled to any relief in proceedings under Article 226 of the Constitution. In a latest decision (11) N. C. Chockalingam and others v. V. Manickavasagam, AIR 1974 S. C. 104 the Court referred to the distinction between lawful possession and judicial possession. It was stated that lawful possession is with the concomitant existence of a lawful relationship between the landlord and tenant and must have some foundation in a legal right to possess the property. Judicial possession on the other hand is possession protected by law against wrongful dispossession and consent of the landlord is irrelevant and such possession could ot always be equated with lawful possession. Section 6 of the Specific Relief Act, 1963 does not offer protection to one who is not in lawful possession but only forbids forcible dispossession even with the best of title.
Section 6 of the Specific Relief Act, 1963 does not offer protection to one who is not in lawful possession but only forbids forcible dispossession even with the best of title. The High Court in that case in reversal of the order of the Board of Revenue and the decision the Single Judge affirmed the grant of a cinema licence to a lessee whose lease had expired but who remained in possession though such possession, not lawful, was also not protected by law like Rent Legislations. The Supreme Court set aside the order of the High Court on the ground that possession of erstwhile lessee was not lawful possession and as a result the order dismissing the application of the lessee under Article 226 was affirmed. ( 17 ) STRONGLY relying on the above decisions, Mr. Chakrabarti submitted that the company had no legal right to be in lawful possession of the properties on the revocation of licence. He has referred us to various clauses in the agreement of licence which conferred, according to him, no right in the property except to fell, cut and extract trees specifically marked by the Government for the purpose. The right of the Company to construct buildings, sheds and depots was merely incidental and ancillary to the main work of extraction of timber and such constructions could only be done on lands to be allotted for the purpose, on execution of separate lease deeds and no such lease, it appears, was executed. Other constructions made by the Company were to vest in Government on determination of the agreement of licence, for which only compensation was payable. According to the Government, as indicated in letter of December 16, 1968, on the abandonment of the work by the Company, the Government took possession of the properties on revocation of the licence. It was further contended that the licence was a revocable one and was duly revoked. It was further submitted that at the highest the action of the Government wold be in breach of agreement for which the remedy lay in a suit for damages in appropriate forum and writ proceeding was not tenable in law. ( 18 ) MR.
It was further contended that the licence was a revocable one and was duly revoked. It was further submitted that at the highest the action of the Government wold be in breach of agreement for which the remedy lay in a suit for damages in appropriate forum and writ proceeding was not tenable in law. ( 18 ) MR. Banerjee contended on the other hand that the licence was a grant coupled with interest in land or in the alternative the licence, as its terms indicate, was an irrevocable licence and could not be revoked at the option of the Government. The Company was granted right to construct permanent structures which were in fact constructed and the licence in the premises be deemed as irrevocable. There was also no provision for revocation of licence or resumption of lands under the agreement. Even if it is profits a pendre, as accepted by the appellant, such interest must be treated as an interest in land as a benefit arising out of land as was held in (12) Ananda Behara v. State of Orissa, AIR 1956 S. C. 17. Mr. Banerjee further submitted that ?property? in Article 31 (1) included not merely immoveable property but the benefit under a contract is also a property under the protection of the said Article which could be deprived only under authority of law. Further on a correct interpretation, the document is to be construed a lease granting right to set up permanent constructions on the principle laid in (13) Qudrat Ullah v. Municipal Board Bareilly, AIR 1974 S. C. 396 in which it was held that if an interest in immoveable property entitling the transferor to enjoyment is created it would be a lease. ( 19 ) STRONG reliance was however placed in the decision in (1) Bishan Das and others v. State of Punjab and others, AIR 1961 S. C. 1570 which arose out of an application under Article 32 of the Constitution.
( 19 ) STRONG reliance was however placed in the decision in (1) Bishan Das and others v. State of Punjab and others, AIR 1961 S. C. 1570 which arose out of an application under Article 32 of the Constitution. It was held in that case that the petitioners' predecessor ha bona fide built on Government land a Dharmasala and temple for benefit of the traveling public and he and the petitioners after him had been in possession thereof managing the same would not be trespassers nor would the buildings so constructed vest in the owner of the land on the maxim quicquid plantatur sole, solo cedit (whatever is affixed to the soil belongs to the soil ). The petitioners were dispossessed therefrom by the Government officials by force and without any authority of law and were also deprived of the control and management of the dharmasala and the Municipal Committee was put in possession of the same. Even though, the buildings were constructed on Government land with permission, they could not be held to belong to State irrespective of the question whether the trust created was of public or private nature. It was further held that if the State thought that the constructions should be removed or that condition of resumption of the land should be invoked, it was open to the State to take appropriate legal action for the purpose. If it was a public trust, a suit under section 92 was necessary for removal. The Court further observed:. . . . . they (petitioners) are in bona fide possession of the constructions in question and could not be removed except under authority of law. The respondents clearly violated their fundamental rights by depriving them of the possession of the Dharmasala by executive orders. Those orders must be quashed and the respondents must now be of the Dharmasala, temple and shops. A writ will now issue accordingly. The Court further found that the executive action taken in that case by the State and its officers was destructive of the basic principle of the rule of law. It was found that (i) the building construction did not belong to Government, (ii) the petitioners were in possession and occupation of the buildings, (iii) by virtue of enactments binding on the Government, the petitioners could be dispossessed, if at all, by a decree of civil court in appropriate proceedings.
It was found that (i) the building construction did not belong to Government, (ii) the petitioners were in possession and occupation of the buildings, (iii) by virtue of enactments binding on the Government, the petitioners could be dispossessed, if at all, by a decree of civil court in appropriate proceedings. The action of the Government in taking law into their hands and disposing the petitioners by display of force exhibited and callous disregard of the normal requirements of the rule of law apart from what was expected of a Government governed by the Constitution which guarantees to its citizens against arbitrary invasion by the executive of peaceful possession of property. ( 20 ) UNDER the instant agreement of licence dated August 31, 1951, the Company was given ?the sole right to cut, fell and extract, all trees from the clear-felling area and all trees marked by the Chief Conservator of Forest? of the islands and other forest produce according to a working plan to be made by the Government. The Company was given the right to make his own arrangements for transport like tramways, tractors, elephants, boats, wharves etc. The royalty was payable according to specified rates within scheduled dates and any default in payment thereof with interest would render the agreement liable to cancellation. The agreement further provided that the Company would be entitled to construct roads, buildings, staff quarters and any other works of improvement but on termination of the agreement or its sooner determination, all works executed under powers given by this clause (26) would vest free from all encumbrances in the Government on payment of the compensation. The Company was also given the right to construct houses, depots, labour camps and erect machinery on lands to be leased to the Company by separate deeds and the buildings, machinery, live stock would become the property of the Government if they were not removed within four years of the termination of lease. It would however be mentioned that no lease deed was ever executed between the parties. ( 21 ) IT was contended by the Company in view of the aforesaid provisions, particularly the provisions for constructions of permanent buildings and structures the licence is to be deemed as irrevocable as provided in Section 60 under condition (b) of the Easements Act, 1882, the principles whereof it is not disputed are applicable to Andaman and Nicobar Islands.
( 21 ) IT was contended by the Company in view of the aforesaid provisions, particularly the provisions for constructions of permanent buildings and structures the licence is to be deemed as irrevocable as provided in Section 60 under condition (b) of the Easements Act, 1882, the principles whereof it is not disputed are applicable to Andaman and Nicobar Islands. The Company had the right to construct buildings under Cause 26 of the agreement, clause 23 having no operation in absence of the execution of the lease agreement. Clause 26 provides that on termination or sooner determination of the agreement, all works including obviously all permanent constructions would vest in the Government on payment of due compensation. It is thus clear that the mere construction of permanent structures under this agreement would not render the licence irrevocable when such constructions were to vest in the Government on determination of the licence. ( 22 ) IT is contended that the agreement of licence also conveyed interest in the immoveable property. It however appears that the cutting and felling of trees and extraction of the same per se does not involve any grant of right in immoveable property. As we shall presently see, the trees which are fit for immediate use as timber are considered as standing timber which is not included within the definition of immoveable property. In (14) Mohanlal Hargobind v. Commissioner of Income-tax C. P. and Berar, AIR 1949 P. C. 311 it was observed:the contracts (for collecting forest produce) grant no interest in land and no interest in the trees or plants themselves. They are simply and solely contracts giving to the grantees the right to pick and carry away leaves which of course implies the right to appropriate them as their own property. These observations were quoted with approval in the decision in Firm Chhotobhai Jathabai Patel and others v. The State of Madhya Pradesh, AIR 1953 S. C. 108 and it was observed:the contracts and agreements appears to be in essence and effect licences granted to the transferees, to cut, gather and carry away the produce in the shape of kendu leaves, or lac, or timber or wood.
In the agreement of licence under our consideration, the position is the same in that the right to fell, cut and extract standing timber marked for the purpose by the Government officers thus accepted as moveable property in judicial decisions also by definition, was granted to the Company. If the right was given to construct permanent or other structures it was only incidental and ancillary to the licence granted under terms of the agreement. On determination of the said agreement all such constructions are to vest in the Government which will be inconsistent with the grant of any interest in the land or a licence coupled with the grant of immoveable property. ( 23 ) MR. Banerjee has next submitted that the Government reserved no right in the agreement to revoke the licence agreement and the purported revocation of licence was illegal and wrongful and beyond the competence of the grantor. We have seen that section 60 of the Easements Act make a licence revocable unless the licence is coupled with transfer of property or acting on the licence work of a permanent character has been executed incurring expenses. Mr. Chakrabarti has drawn our attention to clause 18 of the agreement which provides for its cancellation for non-payment of royalty and interest thereon on specified dates. Clause 26 mentions about the ?sooner determination? of the agreement which according to him indicated the tenor of the instrument contemplating termination. Apart from express provisions, it seems that all licences are revocable unless protected by section 60 or principles thereunder and the grantor has expressly or even by implication contracted out or waived his right to revoke the same. We have seen that the constructions in the lands under the agreement were to vest in the grantor in the event of the determination of agreement subject to the liability to pay compensation. We also do not find here such contracting out or waiving the right of revocation expressly or by implication by the Government nor was the licence protected from cancellation by the conditions mentioned in section 60 of the Easements Act. The grantor has as we have noticed, always the inherent right to cancel a licence unless prohibited by law or by contract or waiver as indicated above.
The grantor has as we have noticed, always the inherent right to cancel a licence unless prohibited by law or by contract or waiver as indicated above. ( 24 ) IT is also seriously contended that the Government admitted the right under the agreement of licence as a profit a pendre (ground no. 11) of the memorandum of appeal, which according to judicial decisions is an immovable property being a benefit arising out of land. Such right could not be put to an end by mere notice as was sought to be done and the action following was wholly arbitrary, illegal and without authority of law. Reliance was placed in (12) Ananda Behara's case as indicated above. Mr. Chakrabarti submitted that the Ground No. 11 was obviously an expression in error as the Government never accepted the right of the Company under the agreement as a profit a pendre. There can be no estoppel on the State preventing it to urge that right of profit a pendre was never granted under the agreement of licence. The rights under the agreement related to standing timber which under the definition of immoveable property in the Transfer of Property Act, does not include standing timber. Standing timber are trees fit for use for building or repairing houses, bridges or ships. As was held by Bose J. in (16) Shantabai v. State of Bombay, AIR 1958 S. C. 532 standing timber must be a tree in a state fit for these purposes, so that it could be looked upon as a timber for all practical purposes. In the agreement of licence the company was given the right to fell and cut trees specially marked by forest officers and there can be little dispute that trees so marked or liable to be marked were fit for use as timber. Accordingly the right of extraction of marked trees under the agreement in question may be held to be a right in respect of moveable property. All other rights under the agreement were incidental or ancillary to the extraction of standing timber marked for the purpose and not independent rights created by the agreement. Accordingly we accept the contentions that the right conferred by the licence agreement was not a profit a pendre as contended.
All other rights under the agreement were incidental or ancillary to the extraction of standing timber marked for the purpose and not independent rights created by the agreement. Accordingly we accept the contentions that the right conferred by the licence agreement was not a profit a pendre as contended. ( 25 ) AS to the contention that the document on proper interpretation should be treated as a lease, it is clear that under the agreement the right was only to fell and extract timber of trees marked by the State officers. Thereby no exclusive possession of the areas under the agreement was given to the Company for its enjoyment, but the grant was restricted for specified works in the areas only. It is accordingly not possible to hold that the agreement was other than a licence and it was held in (13) Qudrat Ullah's case that the permission to use land without right to exclusive possession is a licence. As has been rightly observed the learned Judge we are not concerned in these proceeding as to whether the licence was revoked lawfully or not. If there has been wrongful or illegal revocation the remedy of the petitioner would be other proceeding for damages for wrongful breach of agreement. We are concerned with the question about taking over the possession of areas covered under the agreement by an executive order of the Government and to examine if such action violates the fundamental or legal rights of the Company vis-?-vis the other petitioners; further if the action taken in the circumstances is destructive of the rule of law. ( 26 ) UNDER the agreement of licence dated August 31, 1951 as we have seen the Company was given rights to construct buildings, staff quarters, houses, depots etc. and ancillary and incidental to the grant of licence to fell, cut and extract trees. The said agreement provides that in the event of termination or sooner determination of the agreement these structures would vest in the Government however on payment of compensation. Accordingly, along with the determination of the agreement by revocation of licence under notice dated December 16, 1968 the buildings and structures referred to above vested in the Government subject to the liability of compensation.
Accordingly, along with the determination of the agreement by revocation of licence under notice dated December 16, 1968 the buildings and structures referred to above vested in the Government subject to the liability of compensation. In these state of affairs, it could not be said that on determination of the agreement the Company had any legal or proprietory right or title to these structures constructed by it except the right to receive compensation is in respect thereof on revocation of licence. The position here is completely different from the one prevailing in the Bishan Das's case where the permanent structures, as found by the Supreme Court, continued to remain in ownership and possession of the applicants therein without any scope or occasion for vesting in the Government. Accordingly, no question of infringement of Article 31 (1) of the Constitution was involved in the instant case before us as there was no question or occasion of deprivation of property of the Company by the Government since the properties no longer belonged to the Company on revocation of licence. In this view we are of opinion that no infringement of fundamental or legal right was involved in the matter and Article 31 (1) had no application to the facts of the case. The principle of law enunciated in the (1) Bishan Das's case therefore do not apply in the facts of the case as there was no violation of the provisions of the Constitution as contended by Mr. Banerjee. ( 27 ) THE next question relates to the taking of possession by the Government of the areas under the agreement by executive fiat as alleged. Learned Advocates of the parties referred us to various decisions which we shall presently consider. Mr. Chakrabarti referred to the Bench decision of this Court in (17) State of West Bengal v. Birendra Nath Basunia and other, AIR 1955 Calcutta 601 in which the Court was considering the right of the Government to take possession of land under a lease granted by it when the lessees on expiry of the lease continued to be in possession. It was observed by Chakravarti, C. J. : the principles laid down by the Court of Appeal (in Hemmings vs. Stoke Foges Gold Club Ltd. , (1920) 1 K. B. 720) are simple and I do not see why they should not apply in India.
It was observed by Chakravarti, C. J. : the principles laid down by the Court of Appeal (in Hemmings vs. Stoke Foges Gold Club Ltd. , (1920) 1 K. B. 720) are simple and I do not see why they should not apply in India. On the termination of a lease, the full rights in the leasehold property, including the right to possession, revert to the lessor. He then becomes entitled to enter his own land and take with it what order he likes. If the lessee continues to remain on the land with on longer any right to be there and refuses to vacate, the lessor has every right to deal with him as a trespasser and use reasonable force against him for his eviction in defence of his right to property and in assertion of his right to possession which right to property embraces. If the lessor in making a forcible entry infringes the criminal law, he will make himself liable to be punished under a prosecution but he will infringe no right of the lessee. . . . For forcible entry, the lessee himself, if he has become a trespasser, has no cause of action against the lessor merely on the ground that it was forcible. This view however did not find favour with the courts and in (18) Lallu Teshwant Singh (dead) by his legal representative v. Rao Jagdish Singh and others, AIR 1968 S. C. 620, the Supreme Court referred to the above Calcutta case and observed:in that case the High Court refused to issue an order under Article 226 of the Constitution prohibiting the Government from forcibly taking possession of lands which had been validly resumed by do not agree with the conclusion of the High Court that a lessor is entitled in India to use force to throw out his lessee. The Supreme Court approved the decisions referred below as laying the correct position in law. In (19) Midnapur Zamindary Co. Ltd. v. Naresh Narayan Roy, AIR 2924 P. C. 144, the Privy Council observed: in India persons are nt permitted to take forcible possession : they must obtain such possession as they are entitled to through a Court.
The Supreme Court approved the decisions referred below as laying the correct position in law. In (19) Midnapur Zamindary Co. Ltd. v. Naresh Narayan Roy, AIR 2924 P. C. 144, the Privy Council observed: in India persons are nt permitted to take forcible possession : they must obtain such possession as they are entitled to through a Court. Again in (20) K. K. Verma v. Naraindas C. Malkhani, AIR 1954 Bombay 358, it has been laid down:under the Indian Law the possession of a tenant who has ceased to be a tenant is protected by law. Although he may not have a right to continue in possession after the termination of the tenancy his possession is juridical and that possession is protected by statute. In the Full Bench decision of the Allahabad High Court in (21) Yar Mohammad v. Lakshmi Das, AIR 1959 Allahabad, it is observed:law respects possession even if there is no title to support it. It will not permit any person to take the law in his own hands and to dispossess a person in actual possession without having recourse to a Court. ( 28 ) THE ratio of the decisions appear to be that a lessee continuing in possession on expiry of lease is entitled in law to retain his possession against all including those having best of title till evicted by due process of law. This principle was extended in Bishan Das's case to persons who are bonafide in possession of constructions made by them in exercise of their fundamental rights and they could not be removed therefrom except under authority of law. Government action in taking possession by force and without authority of law was held to be destructive of the basic principle of the rule of law. Accordingly writ was issued restraining the Government and its officers from interfering with the possession of the applicants. ( 29 ) THE basic and essential factor which only will afford relief to the person in such circumstances is his possession of the property at the time of taking possession by the grantor. If he is a in possession of the property whether on expiry of lease or in bonafide exercise of his fundamental or legal rights, such possession cannot be disturbed except by due process of law.
If he is a in possession of the property whether on expiry of lease or in bonafide exercise of his fundamental or legal rights, such possession cannot be disturbed except by due process of law. If however the person is not at all in possession of the property which remains in an abandoned state the principles indicated above will, in our opinion, have no application. It will be extending the principle to an unreasonable and untenable degree if the owner is told that he will not be entitled to possession of the property except by process of law even when the property remains abandoned with the person, erstwhile in possession, nowhere in the field. The action of the Government in taking possession in this state of affairs will not be forcible possession by show of force with the might of Government behind nor will be destructive of the rule of law. On the contrary it will be in public interest for the Government to take adequate steps to safeguard its valuable property lying abandoned and uncared for. ( 30 ) IN the notice of December 16, 1968, the Government enumerated various facts relating to the abandonment of the areas under the agreement by the Company. It was stated that since August, 1964 the extraction and export of timber was at a stand still, the logs collected at the export depots were washed away as nobody took care of the same; extraction camps ceased functioning from August 1964; elephants used for logging had been abandoned and let loose causing a danger to the community and some of the had to be captured and sold on auction; the structures situated in the forest were abandoned and all the employees of the Company had left due to non-payment of wages; the entire organisation including the managerial staff was in abandoned condition. In the State of affairs, it was stated in the said notice that the Government treated the aforesaid breaches as a repudiation of the contract by the Company and revoked the agreement of the licence and accordingly was taking possession of the areas covered by the licence.
In the State of affairs, it was stated in the said notice that the Government treated the aforesaid breaches as a repudiation of the contract by the Company and revoked the agreement of the licence and accordingly was taking possession of the areas covered by the licence. In reply to the said letter dated December 21, 1968 by the Company there was a general denial of the above allegations and it was stated that the Company could not carry on the work under the agreement of the licence as the Government defaulted in preparing and not handling over the approved working plan. The Government was threatened that if wrongful possession was taken the Company would hold the Government liable for loss tentatively assessed at Rs. 95 Crores. In the petition of motion it has been stated in paragraph 26 that as a result of the default in the supply of working plan the Company had not been able to carry on the work under the agreement of licence in North Andaman Islands. In paragraph 28 again it was stated that the Government was solely responsible if the deadlock in the matter of extraction of timber and/or complete suspension of work of the company for over last few years. ( 31 ) ON above averments, it appears to us that the islands were completely abandoned by the Company and its staff since August 1964 as alleged and in this state of affairs the Government took possession of abandoned areas on revocation of the licence as it appears without any opposition or obstruction from any quarters as there was one to oppose and obstruct. In other words, possession was taken without any application of force or display of Government might. If the Company or its staff were not in possession of the property as contemplated under the agreement and the property was abandoned we do not think that the action of the Government in taking possession of the areas amounted to wrongful action by executive fiat or show of force without authority of law. ( 32 ) IN the affidavit subsequently filed on behalf of the petitioners in this appeal, the allegations of abandonment of the areas after August 1964 were denied.
( 32 ) IN the affidavit subsequently filed on behalf of the petitioners in this appeal, the allegations of abandonment of the areas after August 1964 were denied. In support of the allegations, reference was made: (i) to the claim of the Government for shortfall of the royalty for period from April 1, 1964 to March 1967 in the sum of about Rs. 1,98 crores in the Fourth Arbitration matter; (ii)to the notice of demand dated January 20, 1972 made by the Government for shortfall of royalty due for 1968-69 upto December 20, 1968 in the sum of about Rs. 50 lacs; (iii)to the correspondence after 1964. In its affidavit-in-opposition to the above affidavit, the Government reiterated its allegations that the areas were abandoned from August 1964. It was stated that the claim for shortfall of royalty due under the agreement made by the Government was for year 1964-65 to 1966-67 under clauses 6 and 7 of the agreement which was then subsisting. Further as the notice of revocation dated December 16, 1968 was received by the Company on December 21, 1968, the claim for shortfall was made till December 20, 1968 upto which date the agreement was subsisting. The other correspondence did not at all indicate that the properties were not abandoned since August 1964 as alleged. ( 33 ) ON a consideration of the affidavits we accept the case of the Government that the documents produced do not support the petitioners' case that areas were not abandoned since August 1964. Even in this affidavit filed by the petitioners as also in the petition of motion there is complete absence of any positive averment that the Company did not abandon the area since August 1964 as stated on behalf of the Government and was in possession of the areas under the agreement. ( 34 ) FOR all these reasons we find that the Government's action in taking possession of the areas in the North Andaman in lands covered by the agreement of licence did not amount to deprivation of the fundamental or legal or property rights of the petitioner violating Article 31 (1) of the Constitution. Nor did such action amounted to dispossession of the petitioners from the areas under the agreement nor confiscation of any property belonging to the petitioners by executive fiat or show of force without authority of law.
Nor did such action amounted to dispossession of the petitioners from the areas under the agreement nor confiscation of any property belonging to the petitioners by executive fiat or show of force without authority of law. Such action again could not be said to be destructive of the rule of law which governs and must govern all governmental actions as also the actions of the people in India. Accordingly no occasion for restoration of possession of the said areas by the Government. to the Company ever arose. ( 35 ) THE appeal in the premises succeeds and is allowed and the judgment and order under appeal are set aside and the connected Rule is discharged. There will be no order for costs in the circumstances. All interim orders are vacated. Gupta J,: I agree. Appeal succeeds.