Skip to content


The State of Bombay Vs. the Estate Investment Co. Ltd. - Court Judgment

LegalCrystal Citation
SubjectTenancy
CourtMumbai High Court
Decided On
Case NumberSecond Appeal No. 339 of 1958
Judge
Reported in(1959)61BOMLR660
AppellantThe State of Bombay
RespondentThe Estate Investment Co. Ltd.
DispositionAppeal dismissed
Excerpt:
.....of the act. - - the title of chapter iv in which these sections are contained is 'management of estate held by landholders'.section 44 deals with the power given to the state government to assume management of lands belonging to a 'landholder' and provides that when the state government is satisfied that on account of the neglect of a 'landholder' or disputes between him and his tenants, the cultivation of his estate has seriously suffered, or when it appears to the state government that it is necessary for that reason or for the purpose of ensuring the full and efficient use of land for agriculture to assume management of any landholder's estate, a notification announcing such intention shall be published in the official gazette. in my view, sections 48, 60 and 61 clearly show that..........these sections. the title of chapter iv in which these sections are contained is 'management of estate held by landholders'. section 44 deals with the power given to the state government to assume management of lands belonging to a 'landholder' and provides that when the state government is satisfied that on account of the neglect of a 'landholder' or disputes between him and his tenants, the cultivation of his estate has seriously suffered, or when it appears to the state government that it is necessary for that reason or for the purpose of ensuring the full and efficient use of land for agriculture to assume management of any landholder's estate, a notification announcing such intention shall be published in the official gazette. section 44 also provides that such a notification.....
Judgment:

Shelat, J.

1. This appeal raises two questions under the Bombay Tenancy and Agricultural Lands Act, 1948. They are, whether the State Government, where it has taken over management of lands belonging to a landholder under Chapter IV of the Act, is liable to render an account of its management during the pendency of the management, and secondly whether a suit filed by a landholder for accounts can be entertained by a civil Court.

2. By an Indenture of grant and demise dated November 7, 1870, the Secretary of State in Council granted and demised certain lands, hereditaments and premises therein described to one Ramehandra Laxinanji of Bombay for a term of 999 years on certain terms and conditions therein contained. By diverse transfers made subsequently the plaintiff-company became the owner of part of these lands, situate at Bhayandar, Mira and Ghodbunder, aggregating in all to about 7000 acres. The plaintiff-company took over possession of these lands in 1949 and thereafter managed them as the owner thereof and recovered rents and profits arising therefrom.

3. Under the powers reserved under Section 88(2) of the Bombay Tenancy and Agricultural Lands Act, 1948, the Government of Bombay issued a notification dated July 14, 1949, where under the provisions of the Tenancy Act were made applicable to all Crown Leases in the State. Consequently the lands belonging to the plaintiff-company became subject to the provisions of the Act. By a notification dated December 19, 1949, (exh. 21) the State Government declared the plaintiff-company to be a 'landholder' within the meaning of Section 2(9) of the Act. By the said notification the State Government also assumed management of this property under Section 44 of the Act. The notification declared that management of the said lands was being assumed by the State Government for the purpose of improving the economic and social conditions of the peasants and to ensure full and efficient use of these lands for agriculture. Thereafter the Government appointed first the Collector of Thana and after sometime the Prant Officer of Thana as the Manager. Since December 19, 1949, the lands in suit have been in the possession and management of the Manager appointed as aforesaid by the State Government.

4. On January 17, 1955, the plaintiff-company gave a notice (exh. No. 22) to the State of Bombay under Section 80 of the Civil Procedure Code calling upon them to render an account of the management of these properties and declaring therein its intention to file a suit. The State of Bombay did not choose to give any reply to this notice nor to comply with the demands made therein. On April 11, 1955, the plaintiff-company filed the present suit, being Suit No. 123 of 1955, in the Court of the learned Civil Judge (Senior Division), Thana, for rendition of accounts and payment of the balance left in the hands of the State Government.

5. The State of Bombay contended in the written statement inter alia that it was not liable to render any account during the continuance of the management of these lands, that the property in the lands by virtue of the notification dated December 19, 1949, and the provisions contained in Chapter IV of the Act had vested in the Manager, that ownership in these properties had passed to the State of Bombay, that there was no provision in the Act whereby a claim for the rendition of accounts could be made against the State of Bombay while the management was still continuing and finally that by virtue of Section 85(1) of the Act, a civil Court had no jurisdiction to try the suit.

6. The trial Court raised three issues, viz. whether the plaintiff-company was entitled to ask for accounts from the defendant, whether the plaintiff-company was debarred from claiming such accounts or the balance due during the pendency of the management, and lastly whether the Court was barred under h. 85(1) of the Act from trying the suit. The trial Court answered all the three issues in favour of the plaintiff-company and decreed the suit.

7. Aggrieved by the said decree and judgment the State of Bombay filed an appeal in the Court of the District Judge of Thana being Civil Appeal No. 288 of 1956. The learned Assistant Judge, Thana, who heard the appeal, confirmed the decree and judgment passed by the trial Court and dismissed the appeal. It is against this order of dismissal that the State of Bombay has preferred this appeal.

8. The learned Assistant Government Pleader has raised before me the same questions which were raised before the Courts below. The two questions that are raised are (1) that there is no liability of the State of Bombay to render an account to the plaintiff-company during the pendency of the management and to pay the balance and (2) that by virtue of Section 85(2) of the Act, a civil Court has no jurisdiction to try the suit.

9. On the first question the learned Assistant Government Pleader relied upon Sections 44 to 61 of the Act. It becomes, therefore, necessary to briefly examine these sections. The title of Chapter IV in which these sections are contained is 'Management of Estate held by Landholders'. Section 44 deals with the power given to the State Government to assume management of lands belonging to a 'landholder' and provides that when the State Government is satisfied that on account of the neglect of a 'landholder' or disputes between him and his tenants, the cultivation of his estate has seriously suffered, or when it appears to the State Government that it is necessary for that reason or for the purpose of ensuring the full and efficient use of land for agriculture to assume management of any landholder's estate, a notification announcing such intention shall be published in the Official Gazette. Section 44 also provides that such a notification shall be conclusive. Section 45 then lays down the effect of such notification and provides that on the publication of such notification, the estate in respect of which the notification has been published, shall, so long as the management continues, vest in the State Government. Such management shall be deemed to commence from the date on which the notification is published and the State Government shall appoint a Manager to be in charge of such estate.

10. It was under Section 45 that the State Government appointed in the first instance the Collector of Thana as the Manager of the lands in question and thereafter the Prant Officer to manage the lands. The management was in continuance when the plaintiff-company filed the present suit.

11. Section 46(3) provides:-

So long as the management continues the holder of the estate shall be incompetent-

(a) to enter into any contract involving the estate in pecuniary liability,

(b) to mortgage, charge, lease or alienate the property under management or any part thereof, or

(c) to grant valid receipts for the rents and profits arising or accruing therefrom:

Sub-section (4) enacts that so long as the management continues, no person other than the Manager shall be competent to mortgage, charge, lease or alienate such estate or any part thereof. Section 47 deals with the powers of the Manager including the power to receive rents and profits arising from such lands. Section 48, on which considerable reliance was placed by the learned Assistant Government Pleader, provides that the Manager shall make certain payments as provided in Clauses (i) to (v) of Sub-section (1) and thereafter he shall retain the residue for the liquidation in the manner provided in the Act of the debts and liabilities other than those mentioned in Sub-section (1) and also for the repayment, either before or after the liquidation of such debts and liabilities of any loan received from Government by the Manager under the Act. Sub-section (2) of Section 48 provides that thereafter 'the balance, if any, shall be paid to the holder'. Section 49 and the sections thereafter following provide for the settlement of debts and liabilities of the holder of the land incurred by him prior to the management and the liquidation thereof in the manner provided in those sections. Section 54 provides that when the total amount of debts and liabilities including those due and incurred to the Government has been finally determined by the Manager, he shall submit to the Collector a schedule of such debts and liabilities and a scheme, called the liquidation scheme, showing the manner in which it is proposed to pay and discharge the same, whether from the income of the property under management or with the assistance of funds raised under the powers conferred by sections following Section 54. Section 58 no doubt provides that subject to the rules made under this Act the Manager after the liquidation scheme has been sanctioned as provided in these sections shall have the power to sell or grant on lease all or any part of the estate under the management. Section 60 states that even if the holder of the estate were to die after the publication of the order of management, the management shall continue and proceed in all respects as if the holder was still living. Sub-section (2) of that section then provides that:

Any person succeeding to the whole or any part of the estate under management shall, while such management continues, be subject in respect of such estate to the disabilities imposed under this Act.

Section 61 then deals with the termination of the management and provides that when the State Government is of opinion that it is no longer necessary to continue the management, it shall direct, by an order published in the Official Gazette, that the said management shall be terminated. On the termination of the management, the estate shall be delivered into the possession of the holder or, if he is dead, of any person entitled to that estate together with 'any balances which may be due to the credit of the said holder'.

12. The learned Assistant Government Pleader relying upon these sections and particularly the sections dealing with the scheme of liquidation, which inter alia gives powers to the Manager to sell or grant on lease all or any part of the estate under management, contended that as soon as a notification under Section 44 is issued and the Manager is appointed, all rights in the property in question would vest in the Manager appointed by the State Government. In other words, he contended that on the commencement of such management all rights and property in the land would vest absolutely in the State Government and, therefore, the effect of such notification would be to transfer all rights of ownership in such lands to the State Government. Such ownership would remain vested in the State Government so long as the management continues and that, therefore, until such management is terminated, the landholder would not be entitled to call upon the State Government to render account of its management or to recover the balance remaining in the hands of the Manager and referred to in Section 48(2). It is not possible to accept such a wide contention as raised by the learned Assistant Government Pleader. In my view, Sections 48, 60 and 61 clearly show that the effect of the notification issued under Section 44 and the taking over of management of the lands would be to vest only the right to possession and management of the lands in the State Government. It must be remembered that the title of Chapter IV is 'Management of Estates held by landholders'. If the object of enacting Chapter IV was to transfer ownership of the lands in question, the title of that Chapter would not be 'Management' but it would be 'Transfer of ownership of estates held by landholders'. But the terms of Section 48 make abundantly clear that the only thing that vests in the Manager is the right of possession and management of the lands in question. Under Sections 47 and 48 the Manager has, amongst other powers, the power to receive rents and profits arising from the land and thereafter to make disbursements in the order of priority set out in Section 48. Sub-section (2) of Section 48 then expressly provides that if, after making these disbursements, any balance remains in the hands of the Manager, such balance shall be paid to the landholder. It is clear that if the object in enacting Chapter IV was to transfer rights of ownership in the property either to the State Government or the Manager appointed by it, there would be no necessity for making provision, first, for the payment of debts and liabilities other than those mentioned in Sub-section (-0 which means the debts and liabilities incurred on the land by the landholder prior to the management and for the payment of the balance left thereafter in the hands of the Manager to the landholder. This provision is a clear indication that ownership remains vested in the landholder and that the only effect of Chapter IV is that the Manager appointed by the State Government gets the right of possession of the land and the right of management together with all powers for the purposes of such managment which the landholder, but for the notification, could have exercised. The provisions of Section 60 furnish even a clearer indication than those of Section 48. Sub-section (2) of Section 60 expressly provides that in the event of a landholder dying while the management is continuing, a person succeeding to the whole or any part of his estate would be subject to the same disabilities as are imposed by Chapter IV upon the landholder. Although Sub-section (2) is primarily enacted for the purpose of imposing these disabilities upon a successor, that sub-section clearly implies that in spite of the notification for management the ownership still remains in the landholder and the rights of such a landholder to such ownership devolve upon his death on his successor. The fact that under Section 61 the State Government has to deliver possession of the lands to the holder thereof after an order of termination has been issued again shows that under Chapter IV the ownership in the property is not transferred to the State Government.

13. The learned Assistant Government Pleader, however, argued that the ownership is vested in the Government only during the period that the management continues. The concept of an interim ownership is something novel and nothing has been shown to me either in the Bombay Tenancy and Agricultural Lands Act, 1948, or any other statute whereunder it vests in a party other than the rightful owner for a limited period and thereafter again reverts to the rightful owner. It is no doubt true that under Section 58 a power to sell or grant on lease all or any part of the estate is conferred upon the Manager but Rule 33 framed by the State Government under the Act shows that where a Manager proposes to sell any estate or any part thereof under Section 58, he has to give notice to the landholder to show cause why his estate or a part thereof should not be sold and after hearing the landholder or a person acting on his behalf, the Manager has to submit a report to the Collector for permission for the sale. That rule further provides that before giving such permission the Collector has again to hear the landholder or a person acting on his behalf as to why the estate should not be sold. If one were to analyse Section 54 of the Act and the sections following it, it becomes clear that the powers given to the Manager thereunder are powers analogous to those that are given to a Receiver or a Liquidator in winding-up proceedings.

14. As held in F. & V. Merchants Union v. Improvement Trust, Delhi : [1957]1SCR1 , the word 'vest' has not a fixed connotation. It does not mean in all cases that the property is owned by the person or authority in whom it vests. Such property may vest, in title, or it may vest in possession or it may vest in a limited sense, depending upon the context in which such vesting is enacted. The word 'vest' therefore is a word of variable import. For instance, under Section 56 of the Provincial Insolvency Act, property of an insolvent vests in the receiver for the purpose of administering his estate for payment of his debts. In that case the property of the insolvent vests in the receiver not for all purposes but only for the purpose of the Insolvency Act and the receiver has no interest of his own in the property. On the other hand, under Sections 16 and 17 of the Land Acquisition Act, 1894, the property acquired thereunder upon the happening of certain events vests absolutely in the Government free from all encumbrances and without any conditions or limitations either as to title or possession.

15. It is thus clear from the provisions of Chapter IV that ownership of lands taken under management does not vest in the State Government. There is nothing in these sections indicating any such intention or object. On the contrary, as I have pointed out from Sections 48, 60 and 61 and Rule 33, the only thing that vests in the State Government or in the Manager appointed is the right to possession and of management, though in the course of such management wide powers have been conferred under Chapter IV on the Manager. The contention raised by the learned Assistant Government Pleader therefore cannot be accepted.

16. The next contention raised on behalf of the State was that even if the ownership in the property does not vest in the State Government there is nothing in Chapter IV which imposes upon the Manager any obligation to render account of his management or to pay to the landholder the balance that may remain in his hands after making the disbursements provided for in Section 48. It was contended that there being no such provision in Chapter IV the Courts below were in error in holding that the Manager was liable to render an account and to make payment of the moneys lying with him after making provision for the payment of items mentioned in Section 48. Reliance was placed upon Section 61 which provides that on the termination of the management the estate is to be delivered to the holder together with any balance which may be left to the credit of the holder. It was contended that Section 61 shows that it is only on and after the termination of management that there could be any obligation to render an account or to make payment of monies that may be left in the hands of the Manager. The Courts below rejected this contention and held that by virtue of the provisions contained in Chapter IV the position of the Manager was that of a trustee or an agent of the landholder and the Manager was consequently liable to render an account of his management and to pay the balance lying in his hands. In my view, there is considerable justification in the conclusion arrived at by both the Courts below. If Sections 48 and 61 are properly looked at, it becomes apparent that their objects are different. Section 48 deals with payments to be made during the course of the management; whereas Section 61 deals with the things that are to happen on and after the termination of management. If this difference is borne in mind, there would be no difficulty in construing Section 48. As I have pointed out, under Section 48 the Manager has to make payments in the order of priority laid down in Sub-section (1) from the rents and income received by him under Section 47. He has first to make provision for the costs of management, the Government revenue, all debts and liabilities due or incurred to the Government in respect of the property in question, the rent due to any superior holder, periodical allowances allowed to the holder and his family by the Collector from time to time and costs of improvement of the estate. After making these disbursements if there is any residue left then the same is to be utilised for the repayment of debts and liabilities other than those mentioned in Sub-section (1) and if thereafter any balance is still left it has to be paid to the holder. It is true that Section 48 does not expressly state that the Manager has to do all these things at the end of the year or at a particular fixed time. But the section impliedly means that these disbursements and payments are to be made during the year of management and like every other management accounts have to be maintained and made, up at the end of the year of management and if any balance is left the same is to be paid to the holder at the end of the year. On the other hand Section 61 shows that if on the termination of management any balances are due to the credit of the holder either as a result of a balance left in the hands of the Manager or otherwise, the same are to be handed over when the lands are delivered to the holder. Considering the scheme of Chapter IV, it is clear that except for certain special powers given to the Manager, the Manager appointed by the State Government is no more than a manager and has all the obligations of a trustee or an agent of the landholder. Consequently he is under all the obligations that such an agent would be except where such obligations are expressly saved by Chapter IV or any other provision of the Act. In that view the Courts below were right in holding that the State Government was liable to render an account of the management of the lands in question and to pay the balance left at the end of the year.

17. Finally it was contended by the learned Assistant Government Pleader that in any event a civil Court was barred under Section 85(1) from entertaining a claim such as the one made by the plaintiff-company in this case. A somewhat different contention was raised in the Courts below than the one that is now sought to be raised by the learned Assistant Government Pleader. The contention raised before them was that as these matters arise under the Bombay Tenancy and Agricultural Lands Act, 1948, they are triable by the tenancy Courts only, and consequently there is a bar to the jurisdiction of a civil Court, That contention has not been persisted before me. What the learned Assistant Government Pleader now contends is that Section 85(1) provides that no civil Court shall have

jurisdiction to settle, decide or deal with any question which is by or under the Act required to be settled, decided or dealt with by a Manager.

He, therefore, contends that rendition of accounts and the payment of any balance left in his hands being questions which the Manager is entitled to decide or deal with there is a bar against a civil Court dealing with such questions. In my opinion, such a construction is untenable. This question was neither raised in the lower Courts nor has it been raised in the Memo of Appeal. But the learned Assistant Government Pleader submitted that though it is so, he should be allowed to argue this question as it is a point of law. Mr. Gupte says that he has no objection to the State being allowed to raise this point even at this late stage. It is clear, however, that the Act does not call upon nor does it confer any power upon the Manager 'to settle, decide or deal with any question' as to the Manager's obligation to render account of the management or to the payment of the balance. It cannot surely be the intention of the Legislature to invest a Manager with the power to decide questions about his own obligations, in other words, to enable him to act both as a party and as a judge. It is difficult to conceive that the Legislature had such an extraordinary intention while enacting Section 85(1) of the Act. The only construction, and that seems to be the only reasonable construction, that can be placed upon Section 85(1) is that a civil Court is barred from entertaining questions dealing with the exercise of powers conferred upon the Manager by Chapter IV of the Act. The bar of Section 85(1) cannot possibly come in the way of the plaintiff-company, because what it is claiming in the suit is an account of its estate, of which the State Government has taken over management. The question that arises in the suit is whether the plaintiff-company is entitled to the relief of having an account rendered of the management by the State. This obviously is not a question which the Manager is entitled to decide, deal with or settle. Consequently Section 85(1) has no application.

18. These were the only contentions raised on behalf of the State. In my view, none of them has any substance.

19. The result is that the appeal fails and is dismissed with costs. Rule in Civil Application No. 1315 of 1958 for stay is also discharged with costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //