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Manoharlal Rameshwardas Vs. State of Madhya Pradesh - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtMadhya Pradesh High Court
Decided On
Case NumberFirst Appeal No. 195 of 1955
Judge
Reported inAIR1959MP120
ActsSale of Goods Act, 1930 - Sections 4(3); Tenancy Law; Madhya Pradesh Abolition of Propriety Rights (Estates, Mahals, Alienated Lands) Act, 1950 - Sections 3, 4, 4(1), 6(3) and 87; Transfer of Property Act, 1882 - Sections 3 and 105; Registration Act, 1908 - Sections 2(6) and 2(9); Limitation Act, 1908 - Schedule - Articles 2, 14, 36 and 115
AppellantManoharlal Rameshwardas
RespondentState of Madhya Pradesh
Appellant AdvocateP.R. Padhye, Adv.
Respondent AdvocateH.L. Khaskalam, Govt. Adv.
DispositionAppeal dismissed
Cases ReferredP) and State of Madhya Pradesh v. Chintaman
Excerpt:
.....the matter, the claim for compensation against the defendant must fail on this ground. we are satisfied that these transactions called leases did not create any right to enjoy immovable property for a term and did not for that reason create any leasehold interest in immovable property. however, as we have held earlier, the suit must fail because the transactions only amounted to executory contracts and the property in the fruit of the trees, which did not accrue till after the date of vesting did not pass to the plaintiff. 29. the only other question awaiting consideration is the quantum of compensation payable to the plaintiff if his claim were well-founded in other respects. in our view, these accounts, which would have been the best prima facie evidence of the quantum of produce, were..........on the dates when the transactions were made or even on the date of vesting and were in that sense future goods. he, however, drew a distinction. things which are the natural produce or expected increase of something already owned or possessed by a seller have a potential existence and the seller may grant an immediate right to such goods, though they may come into existence in future. so a person having an interest in land may sell all the fruit that may grow upon it after the sale. also, on this principle a grant of the next year's wool of all the sheep which a person now has is valid. it is urged that the distinction is based on the principle that the goods haying a potential existence are more or less specific goods, there being no difficulty about their identification since the.....
Judgment:

K.L. Pandey, J.

1. The plaintiff initiated an action claiming Rupees 10,100/- as compensation for not being allowed to pluck and remove myrobalan from the forests of certain villages in the Baihar tahsil of Balaghat district. The lower Court accepted the claim in part and passed a decrete for Rs. 1,222/-. The plaintiff has appealed against that part of the decree by which his claim was dismissed. The defendant has filed a cross-objectionagainst the claim decreed by the lower Court. This judgment will govern the appeal as well as the cross-objection.

2. It is no longer disputed that, by three unregistered documents, the plaintiff purported to acquire from the proprietors of certain villages for consideration the right to rear and pluck for some years myrobalan in their forests and to take away the myrobalan so obtainable. The details of those transactions are as given below:--

Names of villagesName of proprietor Date of transaction.Years for which rights were created. I. Pondi

Bharri

Sarad (Fazal & Duchand)

Samnapur Mahal IParasram4-12-19491949-50

1950-51

1951-52II. Roopjhar--/5/4

Khursud--/10/8Dayaram10-10-19501951-52III. Khamaria

Kinardah

Kandai

KiniaYadunathsao29-3-19511951-52

3. It is common ground that after the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950 (1 of 1951) came into force on 31st March, 1951, the villages referred to in Paragraph 2 above vested in the defendant, who thereafter had all myrobalan obtainable from the forests of those villages in 1951-52 auctioned in favour of third persons. Thereupon the plaintiff served the usual notice under Section 80 of the Code of Civil Procedure for compensation.

4. The plaintiff claimed that the licenses which he had obtained from the proprietors of the aforementioned villages to take away myrobalan from their forests bound the defendant, in whom those villages subsequently vested by operation of law. However, the defendant did not permit the plaintiff to remove myrobalan from the forests in 1951-52 and sold away the produce to other persons. According to the plaintiff, this wrongful act of thedefendant entitled him to claim damages which he assessed at Rs. 10,100/-.

5. The claim was contested on several grounds. It was stated that the right to extract, collect and remove myrobalan from the forest in future amounted to an interest in immovable property and attracted Section 6(1} of the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950, with the consequence that all transfers of such rights became void as from thedate of vesting.

It was also stated that transfers in favour of the plaintiff amounted to leases or in any case licenses coupled with a grant falling within Section 17(1)(b) of the Registration Act. That being so and the documents creating the rights in favour of the plaintiff being unregistered, the transactions were unprovable and legally ineffective. Further, on his own showing, the plaintiff was a licensee and, therefore, he could not maintain the suit in his own name.

The claim was also barred by time under Articles 2, 14 and 36 of the Limitation Act. Moreover, the action of the Deputy Commissioner, who acted in good faith, was protected under Section 87 of the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950. Finally, it was pleaded that the damages claimed were exaggerated and could not be more than Rs. 505/- in any case,

6. As shown, the lower Court accepted the claim to the extent of Rs. 1,222/- only. In this appeal, the plaintiff has attacked the basis on whichdamages were assessed in the lower Court. On its part, the defendant has urged all those grounds on which the claim was resisted in the Court below:

7. The first question for consideration is what rights the plaintiff acquired under the various transactions which he made with the proprietors of the several villages. The learned counsel for the plain-tiff conceded that the goods, that is, myrobalan obtainable from the forests in 1951-52. did not exist on the dates when the transactions were made or even on the date of vesting and were in that sense future goods.

He, however, drew a distinction. Things which are the natural produce or expected increase of something already owned or possessed by a seller have a potential existence and the seller may grant an immediate right to such goods, though they may come into existence in future. So a person having an interest in land may sell all the fruit that may grow upon it after the sale.

Also, on this principle a grant of the next year's wool of all the sheep which a person now has is valid. It is urged that the distinction is based on the principle that the goods haying a potential existence are more or less specific goods, there being no difficulty about their identification since the things out of which they grow are clearly identified.

8. The distinction seems to be established in English law:

'Goods are in potential existence when they arc the natural product, or expected increase, of something owned or possessed by the seller at the time of the contract such as the hay or wheat to be grown in his field, the wool to be clipped from his existing sheep, the milk to be given by his existing cows, the young to be produced by his existing animals, and similar products.' (Halsbury's Laws of England, Second Edition, Volume 29 page 80),

9. The principle is also recognised in America:

'According to the rule generally prevailng in this country, goods having a potential existence, that is, goods which are the natural product or growth or expected increase of property already belonging to the seller, or in which he has a present interest may be the subject of a valid contract of sale, which operated to pass the property in the goods on their coming into existence as discussed infra: Section 252.' (Corpus Juris Secundam, Volume 77, page 603).

10. This view does not find favour with eminent authors. Benjamin says in his treatise on Sale (Eighth Edition) at page 138:

'Although the authorities thus treat a present grant or assignment of goods in which the grantor has a potential property as possible, and a grant of other future goods as impossible, it is submitted that in neither case can there be an actual grant or assignment, but only an agreement to assign; the real distinction being that goods in which the seller has a potential property become the buyer's as soon as they 'are extant,' whereas other future goods require some further act of appropriation--some novtis actus interveniens. In neither case is there an immediate assignment or sale of the goods; although in the former case there may be said to be a sale of a present right to the goods as soon as they come into existence; and this is probably what is meant when the authorities speak of a present grant or assignment. The only difference therefore between the two classes of future goods seems to be in respect of the time of the passing of the property.'

11. In 'The Law of governing the Sales of Goods,' Williston observes:

'The doctrine of potential possession has not been much applied in England. It was, however, applied to one modern case in which Grantham v. Hawley was cited and followed. This case escaped the attention of the draftsman of the English Sale of Goods Act and, therefore, no exception was made to the general rule of Sub-section (3) of Section 5 of the English Act, providing that what purports to be a present sale of future goods shall operate as an agreement to sell. Since the passage of that Act in England, it may be assumed that if a remnant of the doctrine of potential possession still exists there, it goes no farther than to warrant an inference that the property passes when it comes into existence without any act of appropriation.' (Williston on Sales, Volume I, Section 134, pages 377-8).

12. Sir M. D. Chalmers, in his commentary on the English Sale of Goods Act, 1893, says;

'There was one case in which it was supposed at common law that future goads could be assigned. It was said that a man might sell future goods which had a 'potential existence' and that then the legal property in them would pass to the buyer as soon as they came into actual existence. Goods were supposed to have a potential existence if they would naturally grow out of anything already owned by the seller. For instance, it was said a man might sell the wool to be grown on sheep which he then had but not the wool on sheep which he was going to buy. There seems to be no rational distinction between one class of future goods and another.'

13. Even if the concept of 'potential existence' of goods, the implications of which have not received universal acceptance, be imported into India, it is obvious that the property in such goods passes only when they come into existence or, as Benjamin says, 'are extant'. This has to be considered in the light of the Indian Statute law to determine whether a transaction involving sale of goods having potential existence should be regarded as a sale of goods or merely an agreement to sell.

14. Section 4 of the Sale of Goods Act, 1930, is as follows:--

'4(1). A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part owner and another.

(2) A contract of sale may be absolute or conditional.

(3) Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell.

(4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred.'

It is clear from Sub-section (3) of Section 4 that there can be no sale of goods until the property in the goods is transferred to the buyer. The words 'where the transfer of property is to take place at a future time' are not restricted in operation to future goods in respect of which there is a specific provision in Sub-section (3) of Section 6. So far as the question of the passing of the property in the goods is concerned, it makes no distinction between potentially existing goods and other future goods and lays down in effect that there can be no present sale of goods in potential existence because the property in such goods cannot be transferred until they are in existence.

15. Reliance has been placed upon Mohanlal Hargovind v. Commissioner of Income-tax, C.P. and Berar Nagpur, ILR (1949) Nag 892: (AIR 1949 PC 311), Chhotabhai Jethabhai Patel and Co. Firm v. State of Madhya Pradesh, 1953 SCR 476: (AIR 1953 SC 108) and Anand Behera v. State of Orissa, (S) AIR 1956 SC 17. In the first case, the Privy Council dealt with a question as to the application of Section 10(2), paragraph (xii) of the Indian Income-tax Act, 1922, and considered whether the expenditure incurred over obtaining tendu leaves under short-term contracts with Government and other owners of forests was on revenue account or on capital account. The point whether the contracts should be regarded as sales or only as agreements to Sell tendu leaves did not arise in that case.

16. Chhotabhai's case 1953 SCR 476: (AIR 1953 SC 103). dealt with contracts giving for a term the right to pluck, collect and carry away tendu leaves and miscellaneous forest produce or the right to cut and remove timber, hard-wood and bamboo or the right to culture and cultivate lac. In petitions under Article 32 of the Constitution, the Supreme Court held that the subject matters of the several contracts were goods which had a potential existence and there could be a sale of the present right to such goods as soon as they come into existence. About the passing of title, their Lordships observed:

'Whether title passes on the dates of the contract itself or later is really dependent on the intention of the parties, and as already stated, in these petitions the stipulated consideration has passed from the transferees to the proprietors and possession also has been taken.''

This case was explained and distinguished in the case of (S) AIR 1956 SC 17 which related to the sale of a right to catch and carry away fish in specific portions of a lake over a specified future period.

17. The authority of Chhotabhai's case 1953 SCR 476: (AIR 1953 SC 108) is weakened by the case reported in Shantibai v. State of Bombay, (AIR 1958 SC 532). There, in a petition under Article 82 of the Constitution, the petitioner claimed under an unregistered document executed by the Zamin-dar before the date of vesting the right to enter cut, and appropriate all kinds of wood from a zamindari forest for a period of twelve years. The majority of the Judges who decided that case observed:

'If the petitioner maintains that, by some process not quite apparent, the State is also bound by that contract, even then she, as the owner of that contract, can only seek to enforce the contract in the ordinary way and sue the State if she be so advised, as to which we say nothing, and claim whatever damages or compensation she may be entitled to for the alleged breach of it. This aspect of the matter does not appear to have been brought to the notice of this Court when it decided the case of 1953 SCR 476: (AIR 1953 SC 108) and had it been so done, we have no doubt that that case would not have been decided in the way it was done.'

The petitioner had complained against interference with her rights by the State after the date of vesting. Their Lordships declined to interfere, as they did in Chhotabhai's case 1953 SCR 476: (AIR 1953 SC 108) on the ground that there could be a sale of the present right to goods in potential existence and the State had no right to interfere.

18. For the reasons set out in the earlier paragraphs, we are of the view that the transactions which the plaintiff made with the several proprietors were merely executory contracts of sale or agreements to sell under Sub-section (3) of Section 4 of the Sale of Goods Act, 1930. Since the property in the goods forming the subject-matter of the several contracts had not passed, the contracts created only a jus in personam and not a jus ad rem as in the case of an actual sale, which is often called a 'bargain and sale.'

That being so, the plaintiff has no proprietary remedies in respect of the subject-matter of the contracts. Also, the defendant who was not a party to those contracts, is not bound by them. In this view of the matter, the claim for compensation against the defendant must fail on this ground.

19. We have next to consider whether the transactions in question amounted to leases or licenses coupled with a grant. We are satisfied that these transactions called leases did not create any right to enjoy immovable property for a term and did not for that reason create any leasehold interest in immovable property.

20. A profit a prendre is a light to take some thing off the land of another person: per Lindley LJ in Duke of Sutherland v. Heathcote. 1892-1 Ch 475. It may be more fully defined as 'a right to enter the land of another person and to take some profit of the soil or a portion of the soil itself for the use of the owner of the right': Halsbury's Laws of England, Simond's Edition, Volume XII, page 620. In England, a profit a prendre is an interest in land and must be in writing: See Section 53 of the Law of Property Act, 1925.

21. It has been urged that, although called leases, the transactions here were not leases of the myrobalan fruit. By these transactions what was transferred was a right to enter the land and to pluck and remove the fruit not then in existence. Each transaction was, therefore, a license and a grant. As a license, it permitted the plaintiff to go to the forest in order to pluck and collect the fruit.

It is true that in view of Section 52 of the Easements Act, the license did not by itself amount to an interest in property. But there was in addition a grant, namely, the right to pluck and remove from myrobalan trees their fruit for a time. Since the trees were attached to the earth and with them all their parts, the grant created a right to take some profit of the soil.

In this connection, it has been submitted that the subject-matter of a profit a prendre may consist of animals, including fish and fowl, which areon the land, or of vegetable matter growing or deposited upon the land, or by some agency other than that of man, or of any part of the soil itself, including mineral accretions to the soil by natural forces. Accordingly, it has been contended that the right created here was a profit a prendre which was an interest in land.

22. The point here is whether myrobalan not in existence on the dates of the transactions should be regarded as 'benefits to arise out of land' within the meaning of Section 3(25) of the General Clauses Act and Section 2(6) of the Registration Act or as 'growing crops' which have been excluded from the definition of immovable property by Section 3 of the Transfer of Property Act and Section 2(6) of the Registration Act, The real question is whether the expression, 'growing crops' should be extended to other vegetable growths, particularly those not in existence on the date of contract.

23. In Seeni Chettiar v. Santhanathan Chettiar, ILR 20 Mad 58(FB), Collins CJ. said:

'It has long been settled that an agreement for the sale and purchase of growing grass, growing timber or underwood, or growing fruit, not made with a view to their immediate severance and removal from the soil and delivery as chattels to the purchase, is a contract for the sale of an interest in land '

The observations of Bose, J. in AIR 1958 SC 532 support that view, although all other Judges who decided the case based their decision on reasons slightly different from those adopted by Bose J.

24. Their Lordships of the Privy Council who were dealing with a contract of sale of tendu leaves, observed as follows:--

'The contracts 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. The small right of cultivation given in the first of the two contracts is merely ancillary and is of no more significance than would be, e.g. a right to spray a fruit tree given to the person who has bought the crop of apples. The contracts are short-term contracts. The picking of the leaves under them has to start at once or practically at once and to proceed continuously.' ILR 1949 Nag. 892 at p. 898: (AIR 1949 PC 3ll at p. 312).

These observations of the Privy Council were quoted by the Supreme Court in Chhotabhai's case 1953 SCR 476: (AIR 1953 SC 108) and it was held that the contracts and agreements in that case appeared to be in essence and effect licenses granted to the transferees to cut, gather and carry away the produce in the shape of tendu leaves, or lac, or timber or wood, It is true that in a later case, AIR 1958 SC 532, the decision in Chhotabhai's case 1953 SCR 476: (AIR 1953 SC 108) was dissented from. But in (S) AIR 1956 SC 17, the Supreme Court observed:

'It is necessary to advert to 1953 SCR 476: (AIR 1953 SC 108) and explain it because it was held there that a right to 'pluck, collect and carry away' tendu leaves does not give the owner of the right any proprietary interest in the land and so that sort of right was not an 'encumbrance' within the meaning of the Madhya Pradesh Abolition of Proprietary Rights Act.

But the contract there was to 'pluck, collect and carry away' the leaves. The only kind of leaves that can be 'plucked' are those that are growing on trees and it is evident that there must be a fresh crop of leaves at periodic intervals

That would make it a growing crop and a growing crop is expressly exempted from the defi-nition of 'immoveable property in the Transfer ofProperty Act.'

25. In our opinion, there is much to be said in favour of the view that fruit not yet in existence, which would derive in future nourishment from the soil from the ovular stage till it is ripe is a part of the soil itself and is not a growing crop. This is particularly so where the fruit is obtainable from trees growing naturally. In England, any interest created in such fruit would amount to an incorporeal hereditament lying in grant : 1892-1 Ch 475 at p. 483. Benjamin also observes in his treatise on Sale at p. 176 :

'Growing crops, if fructus naturales, are part of the soil before severance, and an agreement, therefore, vesting an interest in them in the purchaser before severance, is governed by the fourth section; but if the interest is not to be vested till they are converted into chattels by severance, then the agreement is an executory agreement for the sale of goods, wares, and merchandise, governed by the seventeenth, and not by the fourth section of the Statute.'

Perhaps the view that such fruit should be regarded as falling within the extended meaning of 'growing crops' may require reconsideration. At present we are bound to follow the view authoritatively expressed in Chhotabhai's case 1953 SCR 476: (AIR 1953 SG 108) and Anand Behera's case (S) AIR 1956 SC 17 and hold that the transactions here related to sale of growing crops and did not create an interest in land.

26. Since we have held that the transactions in question did not create an interest in land liable to ve.st in the State under the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950 (I of 1951), Section 4(1) of that Act is not attracted. However, as we have held earlier, the suit must fail because the transactions only amounted to executory contracts and the property in the fruit of the trees, which did not accrue till after the date of vesting did not pass to the plaintiff. The property in the fruit which came into being subsequently passed to the State as an accretion to the trees which vested in the State under Act I of 1951.

27. We shall now take up the other points that were pressed before us. First is the question of limitation. The plaintiff claimed that the contracts which he had made with the several proprietors were binding on the State and laid the suit for compensation for breach of those contracts. In our view limitation for a suit of this nature is governed by Article 115 of the Limitation Act and not by Articles 2, 14 or 36 of the Act.

28. The next is the question whether the suit is barred under the provisions of Section 87 of Act t of 1951. As held in State of Mudhya Pradesh v. Yakinuddin F.A. No. 133 of 1855, D/- 13-10-1958 (MP) and State of Madhya Pradesh v. Chintaman FA No. 174 of 1955 D/-19-11-1958 (MP), Section 87 of Act I of 1951 is not attracted and a suit of this kino would not be barred if the property in the goods had passed to the plaintiff before the date of vesting.

29. The only other question awaiting consideration is the quantum of compensation payable to the plaintiff if his claim were well-founded in other respects. The parties have led evidence on the point and the question of burden of proof is no longer important. It is, however, significant that the plain-tiff's joint father and his nephew took the myrobalan produced in 1951-52 in the forests of seven out of the ten villages affected by these transactions and maintained accounts of the produce obtained and the expenses incurred, but the plaintiff failedto get these accounts tendered as evidence in Support of the claim. In our view, these accounts, which would have been the best prima facie evidence of the quantum of produce, were not called because presumably they would not have supported the claim as laid.

30. We are in agreement with the lower Court tkat the estimates of produce given bv Manoharlal P.W. 1 (plaintiff) and Dharamchand P.W. 7 (plaintiff's nephew), who neither saw the forests at any time nor supervised the removal of myrobalan from the forests, are without any basis and therefore unacceptable.

31. So far as villages Pondi, Bharri, Sarad and Samnapur (Mahai No. 1) are concerned, the lower Court has rightly accepted the evidence of Harlal D.W. 1 (the proprietor's son) in preference to that of Mansaram P. W. 5, who was called to testify to the produce of myrobalan from village Pondi in 1951-52 and who had to admit in cross-examination that he could not give the quantity.

So far as village Roopjhar is concerned, the testimony of Tundilal P.W. 6 (a co-sharer) based on personal knowledge should nave been accepted in the absence of any other evidence. As regards the remaining villages, the lower Court has based its conclusion on the evidence of Udail Singh D.W. 2 in the absence of any other evidence. Thus only 150 pallas of produce attributable to village Roopjhar should he added to the lower Court's estimate of 611 pallas so as to make it 761 pallas.

32. The plaintiff accepted in the witness-box that the market rate of myrobalan in 1952 was Rs. 10/- per palla. According to him, the overall expenses incurred on collection and transport came to Rs. 5/- per palla but he was contradicted by Jugal-kishore P.W. 8 (an independent dealer), who said that the expenses came to Rs. 8/- per palla. In the circumstances, we accept the lower Court's conclusion that a net profit of Rs. 2/- per palla of myrobafan could be made in 1952. The compensation thus assessed comes to Rs. 1,522/- only.

33. Having regard to the view that we have taken of this case, the appeal fails and is dismissed and the cross-objection is allowed. The decree of the lower Court is reversed and the suit is dismissed. The plaintiff will bear his own costs and pay all costs of the defendant throughout. Counsel's fee here according to schedule.


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