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Lekhraj Satramdas, Lalvani Vs. Deputy Custodian-cum-managing Officer and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtSupreme Court of India
Decided On
Judge
Reported inAIR1966SC334; [1966]1SCR120
ActsAdministration of Evacuee Property Act, 1950 - Sections 10(2); ;General Clauses Act - Sections 16; Administration of Evacuee Property Rules, 1950 - Rule 34; Displaced Persons (Compensation and Rehabilitation) Act, 1954; Constitution of India - Article 226
AppellantLekhraj Satramdas, Lalvani
RespondentDeputy Custodian-cum-managing Officer and ors.
Cases ReferredP. K.Banerjee v. L. J. Simonds
Excerpt:
.....and section 16 of general clauses act - appellant appointed as manager of two firms vested in custodian of evacuee properties under section 8 - appellant later on removed from management by order of respondent no. 1 - appellant filed writ petition under article 226 for quashing order of respondent no. 1 - high court allowed petition - division bench of high court decided in favour of respondent - appeal before supreme court - observed custodian had power under section 10 (2) (b) to appoint and remove manager - appellant not entitled to issue of writ as no failure on part of officer to discharge statutory obligation - terms and conditions of contract not finally settled - no contract of sale of firms as alleged by appellant - held, appellant had no legal right to conduct business of..........states : 'the deputy custodian isinformed that the government of india have decided that the two evacueeconcerns viz., firms of adam hajee peer mohammed essack and hajee ebrahimkassam cochinwala of kozhikode are to be allotted to the present manager shri l.s. lalvani and ultimately sold to him. he is also informed that until thequestion of terms and conditions of allotment of the concerns in question isdecided shri lalvani will continue to function as custodian's manager for theseconcerns in terms of section 10(2)(b) of the administration of evacueeproperty act, 1950 read with rule 34 of the rules made thereunder. the deputycustodian is requested to evaluate the business concerns properly after gettingprepared a balance sheet of each year of the vesting of the concerns,evaluating the.....
Judgment:

Raaswami J.

1. The proprietors of two firms styled 'Adam Haji Peer Mohd.Essack' and 'Haji Ebrahim Kasim Cochinwala' had, in the year1947, migrated to Pakistan and both these firms became vested in the Custodianof Evacuee Properties for the State of Madras under s. 8 of the Administrationof Evacuee Property Act, 1950, hereinafter referred to as the 1950 Act. OnMarch 6, 1952 the appellant was appointed as Manager of the two firms under s.10(2)(b) of the 1950 Act. The appellant also furnished security of Rs.20,000/- before taking possession of the business of the firms as Manager. Theorder of appointment - Ex. P-1 dated March 6, 1952 states :

'The Custodian approves the proposal of the DeputyCustodian, Malabar that the Management of both the firms of Adam Hajee PeerMuhammad Issack and Hajee Ibrahim Kassam Cochinwala at Kozhikode may beallotted to Sri L. S. Lalvani for the present on the same system as exists nowbetween the Government and the present two managers and on his furnishing asecurity of Rs. 20,000 to the satisfaction of the Deputy Custodian. Tv.hequestion to outright allotment as contemplated in Custodian General's letterNo. 2811/CG/50 dated 20-3-50 will be taken up in due course.'

2. On October 9, 1954 the Displaced Persons (Compensation andRehabilitation) Act, 1954 was passed which will hereafter be referred to as the1954 Act. On April 11, 1956 there was an advertisement published in the Pressfor the sale of the aforesaid evacuee properties. The appellant applied to theChief Settlement Commissioner for stopping the sale of the two concerns. OnApril 25, 1956 the Central Government made an order - Ex. P-5 - which states :

'I am directed to state that it has been decided inprinciple that the aforesaid evacuee concerns will be allotted to you. Theterms of allotment will be communicated to you separately. Meanwhile, you willcontinue to function as the Custodian's Manager for these concerns in terms ofsection 10(2)(b) of the Administration of Evacuee Property Act, read with Rule34 of the rules made under the Act.'

3. On June 21, 1956 another letter - P-8 - was written to the appellant bythe Custodian of Evacuee Properties which states :

'The Deputy Custodian isinformed that the Government of India have decided that the two evacueeconcerns viz., firms of Adam Hajee Peer Mohammed Essack and Hajee EbrahimKassam Cochinwala of Kozhikode are to be allotted to the present Manager Shri L.S. Lalvani and ultimately sold to him. He is also informed that until thequestion of terms and conditions of allotment of the concerns in question isdecided Shri Lalvani will continue to function as Custodian's Manager for theseconcerns in terms of Section 10(2)(b) of the Administration of EvacueeProperty Act, 1950 read with rule 34 of the rules made thereunder. The DeputyCustodian is requested to evaluate the business concerns properly after gettingprepared a balance sheet of each year of the vesting of the concerns,evaluating the concerns, the Deputy Custodian should keep in view the otherassets and liabilities of the concerns and their goodwill etc. His comment andsuggestions as to how and by what easy instalments the value of the concerns ifsold to Shri Lalvani is to be realised from him should also be intimated.

The bargain was not concluded andon March 25, 1958 there was an advertisement in the Press about the publicauction of the business of the firms. The appellant moved the High Court of Keralafor grant of a writ restraining the District Collector from selling thebusiness of the firms by a public auction. The application was allowed and onJune 25, 1959 the Kerala High Court directed the District Collector not to sellthe properties of the business of the two firms without an appropriate order ofthe Chief Settlement Commissioner. The decision of the High Court is based uponthe ground that there was no order under the 1954 Act by the Chief SettlementCommissioner for sale of the properties and that in the absence of such anorder the sale of the properties cannot take place. It appears that the orderof the Chief Settlement Commissioner was subsequently made on September 15,1959. In pursuance of that order the management of the appellant was terminatedand the possession of the business was taken over by the DeputyCustodian--Respondent no. 1. The order--Ex. P-13--dated December 18, 1959states:

'Shri L. S. Lalvani isinformed that his services as Manager of the business concerns of Adam HajiPeer Mohd. Essack and Haji Ibrahim Kassam, Cochinwala, at Kozhikode, are herebyterminated with immediate effect. He is further required to hand over immediatepossession of the premises and the stock-in-trade, account books and otherassets of the business including furniture etc.'

4. The appellant filed a writ petition in the High Court of Kerala - beingO. P. no. 1438 of 1959 for grant of (1) a writ of certiorari for quashing theorder dated December 15, 1959 - Ex. P-13 - and the proceedings dated December18, 1959 - Ex. P-16, (2) a writ of mandamus directing respondents nos. 1 and 2to hand over possession of the two business concerns including the premises,stock-in-trade all records etc. to the appellant, and (3) a writ of mandamus orappropriate writ or order directing respondents nos. 1 to 3 not to sell bypublic auction or otherwise the two evacuee business concerns. S. Velu Pillai,J. by his order dated June 8, 1960, granted writ to the appellant as prayed forin prayer (1) & (2) but refused prayer (3) for a writ of mandamusrestraining the respondents from selling the business by public auction.Against the order of the Single Judge the respondents filed an appeal being A.S. no. 484 of 1960 before the Division Bench of the High Court. The appellantalso preferred an appeal A.S. no. 445 of 1960 against the order of Single Judgewhich was in regard to the refusal of the third relief. By judgment datedDecember 6, 1960 the Division Bench of the High Court dismissed Appeal A.S. no.445 of 1960 filed by the appellant but allowed the appeal A.S: no. 484 of 1960filed by the respondents. The present appeals are brought on behalf of theappellant by certificate of the Kerala High Court granted under Art. 133(l)(a)of the Constitution.

The first question arising in this case is whether the appellant waslawfully removed from the management of the business by the order of therespondent no. 1 dated December 18, 1959 - Ex. P-13 and P-16. It was submittedon behalf of the appellant that under s. 10(2)(b) of the 1950 Act theCustodian had the power to appoint a Manager for the Evacuee Property forcarrying on any business of the evacuee and there was no power conferred by theAct upon the Custodian to remove the Manager so appointed. It was argued by theCounsel on behalf of the appellant that an indefeasible right of management wasconferred upon the appellant because of the order of the Custodian - Ex. P-1dated March 6, 1952. In our opinion, there is no warrant for this argument. Thepower of appointment conferred upon the Custodian under s. 10(2)(b) of the1950 Act confers, by implication, upon the Custodian the power to suspend ordismiss any person appointed. Section 16 of the General Clauses Act states :

'Where by any Central Act orRegulation, a power to make any appointment is conferred, then, unless adifferent intention appears, the authority having for the time being power tomake the appointment shall also have power to suspend or dismiss any personappointed whether by itself or any other authority in exercise of thatpower.'

5. It is manifest that the management of the appellant with regard to thebusiness concerns can lawfully be terminated by the Deputy Custodian by virtueof s. 10(2)(b) of the 1950 Act read with s. 16 of the General Clauses Act. Theprinciple underlying the section is that the power to terminate is a necessaryadjunct of the power of appointment and is exercised as an incident to orconsequence of that power.

6. It was then contended on behalf of the appellant that the order ofremoval- Ex. P-13 and P-16 - was made by the Management Officer-cum- DeputyCustodian of Evacuee Property of Southern States under the 1954 Act whichconferred no power on such on officer to cancel the appointment of a Manager.It was pointed out that the order of removal was made after the provisions ofthe 1954 Act had come into force. In our opinion, there is no justification forthis argument. We shall assume that the Management Officer under the 1954 Actis not the proper authority to cancel the appointment of a Manager but it isnot disputed that the provisions of the 1950 Act have not been repealed andstill continue to be in force. Under s. 10(2)(b) of the 1950 Act the DeputyCustodian is the proper authority to cancel the appointment of a Manager andthe order - Ex. P-13 and P-16 dated December 18, 1959 is, therefore, legallyvalid. It is true that the order Ex. P-13 and P-16 is signed by Mr. Mathur as'the Managing Officer-cum-Deputy Custodian of Evacuee Property' butthe order of removal of the appellant from the management is valid because Mr.Mathur had the legal competence to make the order under the 1950 Act, though hehas also described himself in that order as 'Managing Officer'. It iswell-established that when an authority passes an order which is within itscompetence, it cannot fail merely because it purports to be made under a wrongprovision if it can be shown to be within its power under any other rule, andthe validity of the impugned order should be judged on a consideration of itssubstance and not of its form. The principle is that we must ascribe the Act ofa public servant to an actual existing authority under which it would havevalidity rather than to one under which it would be void (See Balakotaiah v.The Union of India.) [1958] S.C.R. 1052 We, therefore, reject theargument of the appellant on this aspect of the case.

In our opinion, the order of the Deputy Custodian - P-13 and P-16 - removingthe appellant from the management of the business is not vitiated by anyillegality. But even on the assumption that the order of the Deputy Custodianterminating the management of the appellant is illegal, the appellant is notentitled to move the High Court for grant of a writ in the nature of mandamusunder Art. 226 of the Constitution. The reason is that a writ of mandamus maybe granted only in a case where there is a statutory duty imposed upon theofficer concerned and there is a failure on the part of that officer todischarge that statutory obligation. The chief function of the writ is tocompel the performance of public duties prescribed by statute and to keep thesubordinate tribunals and officers exercising public functions within thelimits of their jurisdictions. In the present case, the appointment of the appellantas a Manager by the Custodian by virtue of his power under s. 10(2)(b) of the1950 Act is contractual in its nature and there is no statutory obligation asbetween him and the appellant, In our opinion, any duty or obligation fallingupon a public servant out of a contract entered into by him as such publicservant cannot be enforced by the machinery of a writ under Art. 226 of theConstitution. In Commissioner of Income-tax Bombay Presidency and Aden Bombay Trust Corporation Ltd. (63 I.A. 408) an application was made under s. 45for an order directing the Commissioner to set aside an assessment to incometax and to repay the tax paid by the applicant; the Bombay High Court made theorder asked for but the decision of the Bombay High Court was set aside by theJudicial Committee. At page 427 of the report it is observed by the JudicialCommittee :

'Before mandamus can issueto a public servant it must therefore be shown that a duty towards theapplicant has been imposed upon the public servant by statute so that he can becharged thereon, and independently of any duty which as servant he may owe tothe Crown, his principal.'

7. A similar view has been expressed by the Calcutta High Court in P. K.Banerjee v. L. J. Simonds (2) : AIR1947Cal307 . In our opinion, thesecases lay down the correct law on the point.

8. We pass on to consider the next question presented on behalf of theappellant viz., whether there was a final allotment of the business in favourof the appellant by the Chief Settlement Commissioner. It was contended for theappellant that in view of Ex. P-5 dated April 25, 1956 there was finalallotment of the business, though the terms of allotment had to be subsequentlydetermined. In Ex. P-5 the Government of India state that 'It has beendecided in principle that the aforesaid evacuee concerns should be allotted toyou' and the 'terms of allotment would be communicated to youseparately'. Reference was made to Ex. P-8 dated June 21, 1956 wherein itis stated that the Government of India have decided that 'the two evacueeconcerns viz., firms of Adam Hajee Peer Mohammed Essack and Hajee Ebrahim KassamCochinwala of Kozhikode are to be allotted to the present Manager Shri L. S.Lalvani and ultimately sold to him'. It is also mentioned in the letterthat 'until the question of terms and conditions of allotment of theconcerns is decided Shri Lalvani will continue to function as Custodian'sManager for these concerns in terms of s. 10(2)(b) of the Administration ofEvacuee Property Act, 1950 read with rule 34 of the rules madethereunder'. It was submitted on behalf of the appellant that in view ofthese two letters it must be held that there was a final allotment of thebusiness in favour of the appellant. We do not, however, think there is anyjustification for this argument. It is manifest that the terms and conditionsof allotment were not finally settled between the parties and there was noconcluded contract of sale and, therefore, the appellant had no legal right tothe business of the two concerns and the High Court was right in holding thatthe appellant was not entitled to the grant of a writ in the nature of mandamuswith regard to the possession of the two business concerns.

9. In our opinion, there is no merit in these appeals which are accordinglydismissed with costs.

10. Appeals dismissed.


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