Skip to content


Petlad Bulakhidas Mills Co. Ltd. and anr. Vs. Union of India and anr. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtGujarat High Court
Decided On
Case NumberSecond Appeal Nos. 452 and 463 of 1961
Judge
Reported inAIR1970Guj59; (1970)0GLR330
ActsIndian Contract Act, 1872 - Sections 14, 15 and 72
AppellantPetlad Bulakhidas Mills Co. Ltd. and anr.
RespondentUnion of India and anr.
Appellant Advocate K.S. Nanavati, Adv. for; I.M. Nanavati, Adv. In S.A. 463/61 and K.S. Nanavati, Adv. for;
Respondent Advocate R.H. Daru, Adv. In S.A. 463/61 and R.H. Daru, Adv. In S.A. 452/61
Cases ReferredKanhaya Lal v. National Bank of India Ltd.
Excerpt:
contract - agreement - sections 14, 15 and 72 of indian contract act, 1872 - second appeal against order of district judge allowing appeal of respondent - as per general clause of contract agreement could be terminated by giving notice of six months - no such notice given by respondent - termination of agreement illegal - appellant paid amount under compulsion - violative of provisions of contract act - respondent failed to show that they had right to recover amount from appellant - appeal allowed. - - 23 from the divisional superintendent, western railway, baroda, intimating it that the revised agreement containing the revised charges should be executed early and failure to do so, will result in siding being disconnected by the respondent-defendant no. the plaintiff was clearly.....1. the plaintiff-appellant sued the respondent-defendants, the union of india and the western railway, for recovery of rs. 1,680.06 nps. the plaintiff-appellant is the petlad bulakhidas mills co. ltd., petlad. it filed a civil suit no. 213 of 1959 in the court of the civil judge, junior division, petlad to recover the aforesaid amount.2. the undisputed facts in that suit are as under:-3. the plaintiff had entered into a contract for a railway siding at petlad for their mills with the then b.b. & c.i. railway company administration. that agreement is ex. 33, dated 20-1-1922. the said agreement was continued when the union of india took over the administration of all the indian railways. by a letter, dated 3rd sept., 1955. ex. 21, the general manager of the respondent no. 2, railway,.....
Judgment:

1. The plaintiff-appellant sued the respondent-defendants, the Union of India and the Western Railway, for recovery of Rs. 1,680.06 nPs. The plaintiff-appellant is the Petlad Bulakhidas Mills Co. Ltd., Petlad. It filed a Civil Suit NO. 213 of 1959 in the Court of the Civil Judge, Junior Division, Petlad to recover the aforesaid amount.

2. The undisputed facts in that suit are as under:-

3. The plaintiff had entered into a contract for a railway siding at Petlad for their mills with the then B.B. & C.I. Railway Company Administration. That agreement is Ex. 33, dated 20-1-1922. The said agreement was continued when the Union of India took over the Administration of all the Indian Railways. By a letter, dated 3rd Sept., 1955. Ex. 21, the General Manager of the Respondent No. 2, Railway, intimated to the plaintiff that the agreement regarding siding facilites of the plaintiff would be terminated after six months from 1st October, 1955 if the plaintiff did not agree to revised rates as proposed by the defendant No. 2, Railway Administration. There was some correspondence between the Railway and the plaintiff, which resulted in a letter from the Divisional Superintendent, Western Railway, Baroda, dated 24-1-1957, informing the plaintiff amongst other things that the revised charges mentioned in the notice, dated 3rd September, 1955 will be effective from the date of the said notice, i.e., 3-9-1955. After some further correspondence, the plaintiff received a letter, dated 21st February, 1957, Ex. 23 from the Divisional Superintendent, Western Railway, Baroda, intimating it that the revised agreement containing the revised charges should be executed early and failure to do so, will result in siding being disconnected by the respondent-defendant No. 2. The plaintiff thereupon having no other alternative, agreed to execute a draft agreement sent to it and sent that agreement with the necessary copies duly signed with its letter, Ex. 24, dated 25th February, 1957, It also remitted a sum of Rs. 75/- for stamp charges as required by the said letter, dated 21st February, 1957. After about 10 months, the plaintiff received a letter from the Divisional Superintendent, Western Railway, Baroda, dated 22nd January, 1958, Ex. 26. It was stated that letter that the Railway was proposing to put into effect the revised charges mentioned in its notice, dated 3-9-55, from 5-11-1951. That was the date on which the B.B. & C. I. Railway was integrated into the Western Railway and not from 3-9-1955 as mentioned in its earlier letter, dated 24th january, 1957. With that letter, the defendant No. 2 sent a bill of Rs. 2,876.93 nPs, being the difference between the old rates and new rates from 5-11-1951 to 30-9-1958. On receipt of it, the plaintiff took objection to it and stated that such a retrospective effect of revised charges could not be made effective legally and that they were always ready and willing to pay the revised charges frm 3-9-1955, for which the plaintiff had approved the draft agreement as required by the Divisional Superintendent, Western Railway, Baroada. Some correspondence ensued between the parties, but the plaintiff's request ws not acceded to. The plaintiff was sent a letter Ex. 27, dated 27-6-58, informing finally that if it did not pay the bill as mentioned within 15 days from the date of the receipt of the letter, the Sation Master, Petlad was informed to discontinue the siding facilities from that date and that the Station Master, Petlad shall not permit any traffic on the siding from the said date. The plaintiff had thereupon paid under protest the amount demanded by its letter, Ex. 28, making a specific mention that the demand was illegal and it was paying the amount under protest. The plaintiff gave the necessary notice under Section 80 of the Civil Procedure Code thereafter on 21st December, 1958 and thereafter filed the present suit for recovery of the amount paid in exercise. The suit claim was made as under:-

'Rs. 2,876.93 nPs. . . . Amount demanded at the revised rates for the period from 5th November, 1951 to 30th September, 1958 as per statement from Divisional Superintendent, Baroda, paid on 2nd July, 1958 and 16th October, 1958.Less:-Rs. 1,291.87 nPs. . . . Amount due at revised rates from 3rd September, 1955 to30th September, 1958.Add:-Rs. 80.00 nPs. . . . By way of damages from 2nd July, 1958 till date of suit.Rs. 15.00 nPs. . . . Notice charges.Rs. 1,680.06 nPs. Total.'

4. The defendants by their written statement Ex. 11, contended inter alia that the Railway had authority to withdraw the facilities of siding afforded to the plaintiff. A notice was given for the same. The Railway had revised rates were to be put into force from 5th November, 1951. The plaintiff had an option not to avail of that opportunity of continuance of siding facilities. The plaintiff did not avail of that opportunity and acceded to the request made by the Respondent No. 2, Railway. It could not, therefore, be said that the amount was recovered under coercion and duress. The plaintiff had, therefore, no right of repayment.

5. The learned Civil Judge, Junior Division, Mr. M.A. Baqui who heard the aforesaid suit, decreed the plaitniff's suit with costs. The following decretal order was made on 11th August, 1960:-

'Plaintiff's suit is decreed. Defendants shall pay Rs. 1,680.06 nPs. Together with cost of the suit and together with 6 per cent interest thereon from the date of the suit till realisation within 6 months in default of which plaintiff shall be entitled to recover that amount from the defendnats by due process of law. Defendants shall bear their own costs.'

6. Being dissatisfied with the judgment and decree, the defendants filed the Civil Appeal NO. 232 of 1960 in the District Court, Kaira at Nadiad. The learned Extra Assistant jduge, nadiad, Mr. M. O. Trivedi, allowed the appeal with costs.

7. Being disatisfied with that judgment and decree, the plaintiff has preferred this second apeal to this Court.

8. The Second Appeal NO. 452 of 1961 is filed by M/s. Rajratna Naranbhai Mills Co. Ltd., Petlad. That plaitniff had filed a Civil Suit No. 566 of 1958 in the same Court against the respondents-defendants for recovery of Rs. 2,999-21 nPs. That Company had entered into an agreement with B.B. & C.I. Railway Administration on 5th January, 1922 for the railway siding at Petlad for the said Mills. That agreement was amended and that amended agreement was dated 24th April, 1926. Those two agreements are Exs. 29 and 30. The said agreement was continued when the defendant No. 2, the Union of India took over the Administration of all Indian Railways. On 21-6-1967, the plaintiff received a notice from the General Manager of defendant No. 1, Railway, purporting to be a notice of terminating the aforesaid agreement for the railway siding after six months from 1st July, 1957, if the plaintiff did not agree to revised charges proposed in the notice and that too, from 5th November, 1951. That notice is Ex. 32, Ex. 33 was the reply given by the plaintiff, stating that they were forced to accept the new basis of charges from 5-11-1951 retrospectively. They did take an objection that this action of the railway was unjustified and they had to accept the aforesaid offer as there was a threat to dismantle the siding and withdraw the facilities of railway siding given to it. The amount was, therefore, paid under protest vide Ex. 37. It was the say of the plaintiff that the said demand was illegal and they had submitted to the illegal demand as there was a threat of withdrawing the facilities of siding. The plaintiff gave a requisite notice under Sction 80 of the Civil Procedure Code and thereafter filed the present suit to recover the said amount together with interest and costs.

9. The defendants by their written statement Ex.10 in this suit, also had taken up the same contentions as in the suit referred to above earlier.

10.The learned Joint Civil Judge, Junior Division, Petlad, Mr. S. T. Shah who heard that suit, decreed that suit with costs. He made the following decretal order on 11th April, 1960;

'The plaintiff shall recover Rs. 2,999.21 nPs. (Two thousand nine hundred and ninty-nine rupees and 21nPs.) together with the running interest at 4 per cent from the date of the suit till realisation and costs of the suit from the defendants

A decree shall be passed in favour of the plaintiff and against the properties of both the defendants jointly and severally.'

11. Being dissatisfied with that judgment and decree, the defendants preferred a Civil Appeal No. 159 of 1960 in the District Court of Kaira at Nadiad. This appeal was heard alongwith the aforesaid Appeal NO. 232 of 1960 by the learned Extra Assistant Judge, Mr. M.C. Trivedi and both these appeals have been disposed of by a common judgment. Both the appeals are allowed with costs and suits have been dismissed with costs.

11-A. Being dissatisfied with that judgment and decree, the plaintiff-appellant has preferred this second appeal to this Court.

12. As some common questions are involved in both these appeals, they are heard together and they are being disposed of, by a common judgment. It may be at the outset noted that in both the appeals, the facts are not practically challenged. They are undisputed facts. More or less, the question involved is the question of law.

13. The learned Extra Assistant Judge has disposed of both the appeals and allowed the appeals on the ground that the plaintiffs paid the amount of the excess charge demandedby the Railway Administration and they did so under the protest. Subsequently they have filed the present suits for refund of the amounts paid by them alleging that the amounts were paid by them under coercion and duress. So the question before him for decision was whether it could be said that the two plaintiffs had paid the amounts of excess charges under the threat of withdrawing the facility of the assisted siding and if they paid the amount under such a threat, whether it amounted to coercion and duress. It was not disputed that under the original agreements with the plaintiffs, the Railway Administration had reserved to it a right to withdraw the facility of the assisted Railway siding by giving six month's notice without assigning any reason for it. In the present cases the Railway Administration has exercised its said right and the plaintiffs were compelled to execute the proposed revised agreement and pay the revised charges retrospectively because they were not prepared to allow the Railway Adminsitration to exercise its right of withdrawing the facility of assisted railway siding as agreed under the original contract. The plaintiffs had no right to say that the Railway Administration was not at liberty to terminate the agreement by a six months' notice.

14. The learned Extra Assistant Judge has also observed that 'the plaintiffs are not in a position to say that the Railway was not authorised to give notice to the plaintiffs that the facility of the assisted railway siding would be withdrawn on expiry of the period of six months' notice. It was true that the plaintiffs would have been put to great hardship and loss if the facility of the assisted railway siding was withdrawn by the railway. It is also proved that the plaintiffs would not have paid the amounts demanded by the railway and they would not have executed the proposed revised agreements if the Railway Administration had not threatened them by serving upon them a notice for withdrawing the facility of the assisted railway siding. ('I quite agree with the learned pleader of the respondents that the amounts were paid by them under the threat given by them by the Railway Administration'). But the question is whether the threat given by them by the Railway Administration amounts to coercion under Section 72 of the Indian Contract Act? It has been contended by Shri R. M. Bhatt for the appellants that it was a proposal made to the plaintiffs in the normal course of business and they had chosen to accept the proposal because it was to their advantage. The plaintiffs are nto in a position to say that the acceptance of the proposal by them was not advantageous to them. They had chosen to pay the amounts demanded by the Railway Administration rather than lose the benefit of the assisted Railway siding. They were at liberty to lose the benefit of the assisted Railway siding if they thought that the terms of the revised agreement were not to their advantage. It is also proved that the notice given by the Railway Adminsitration to the plaintiffs for withdrawing the facility of the assisted Railway siding on expiry of the agreed period of six months was also not in contravention of the terms of the original contract. According to Shri Yagnik and Shri Shah the act of the Railway was illegal because under the terms of the original contract the Railway could not recover excess charges with retrospective effect. I would have agreed to their contention if the Raiwlay had claimed the excess charges with retrospective effect without exercising its right of withdrawing the facility of the assisted Railway siding by six months' notice. The act of the Railway Administration in serving the plaintiffs with a notice to disconnect the Railway siding by itself is neither illegal nor in contravention of the terms of the original contract. The recovery of the excess charges with retrospective effect cannot be said to be illegal or in contravention of the terms of the original contract because the plaintiffs had a right to choose to let go the facility of the assisted Railway siding and if they had chosen that course, the Railway Administration could not have recovered from them, the revised rates from 5th November, 1951. The amount of the revised rates was paid by them in consideration of the Railway Administration withdrawing the notice served upon them for disconnecting the railway line as provided by the original contract.'

15. The learned Extra Assistant Judge, in support of his concluion, has relied upon certain observations made inan English decision, to which I will make reference at an appropriate stage. After referring to those observations, he has observed as under:-

'In the present case it is not disputed that the Railway Administration was not entitled under the original contract to demand from the plaintiffs the amount of the revised rates but the threat given by the Railway Administration to disconnect the Railway line of the plaintiffs was completely in accordance with the terms of the original contract and, therefore, it cannot be said that the revised agreement was obtained by the Railway Administration from the plaintiffs by threatening to do an act which was not lawful. The proposed revised agreement wsa executed by the plaintiffs in reply to the threat of the Railway Administration to cut off the assisted Railway siding which threat was not unlawful. Now when the threat gven was not unlwful, the agreement executed by the plaintiffs under the said threat cannot be said to be unlawful and therefore, it cannot be said that the said agreement was executed by them under coercion.'

It has been further observed in para 11 as under:-

'It should be noted that the plaintiffs cannot be said to have executed the proposed revised agreement and also cannot be said to have paid the amounts of the revised charges without consideration. They were offered an option either to pay the revised charges without consideration or to allow the Railway Adminsitration to exercise its right under the original contract to withdaw the assisted Railway siding. The plaintiffs chose the first course and they paid the revised charges retrospectively and they chose to take the advantage of the assisted Railway siding on the terms offered by the Railway. In my opinion, all this was done in the normal course of business and the plaintiffs cannot be said to have executed the proposed revised agreement and they also cannot be said to have paid the amount in question under coercion and duress. The act of the Railway in serving the plaintiffs with a notice to withdraw the facility of the assisted Railway siding was in accordance with the terms of the contract and the plaintiffs had chosen to accept the offer for the consideration paid by them. Hence it cannot be said that the amounts in question were recovered by the appellant Railway Adminsitration by coercion and the duress.'

It appears that the ratio laid down by the learned Extra Assistant Judge is quite correct.

16. Section 15 of the Indian Contract Act defines 'coercion' as under:-

' 'Coercion' is the committing or threatening to commit, any act forbidden by the Indian Penal Code or the unlawful detaining, or threatening to detain, any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement.'

If this was the meaning to be given to the word 'coercion', even so far as the use of that word in Section 72 of the Contract Act was concerned, it could be said that in the instant case there was no coercion. That Section 72 of the Contract Act runs as under:-

'A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it.'

The question, therefore, that arises for consideration is as to what is contemplated by the word 'coercion' used in this Section 72 of the Contract Act.

17. In the case of the Kanhaya Lal v. National Bank of India Ltd., (1913) ILR 40 Cal 598 (P.C.), to which the learned Advocate Mr. Nanavati has drawn my attention it has been observed as under:-

'Section 72 of the Contract Act (IX of 1872) is not exhaustive. The meaning of the words 'coercion' used in that section is not controlled by the definition in Section 15; but is used in its general and ordinary sense. The definition in Section 15 is expressly inserted for the special object of applying to Section 14, i.e., to define what is the criterion whether an agreement was made by means of a consent extorted by coercion, and does not control the interpretation of 'coercion' when the word is used in other surroundings.'

Some of the relevant observations have been made by their Lordships at page 609 to 612 which can be referred to, with advantage at this stage:-

'A wrongful interference with the plaintff's lawful enjoyment of hisown property is alleged. The plaintiff was clearly entitled to rid himself of that unlawful interference by any lawful means without thereby affecting his right to hold the defendants liable for that which they have thus caused him to do. It is true that paying under protest the sum demanded was not the only course open to him. He might have taken legal proceedings, by which sooner or later he might have rid himself of the interference.but to do so would have involved his submitting to the wrong for all the period necessary for those proceedings to be effective, and that might have been a serious aggravation of the wrong. To this he was in no way bound to submit. He was free to choose a course which did not involve any such prologation of the trespass. Accordingly he paid under protest the sum demanded, and under English law he was unquestionably entitled to demand a repayment of that sum, because it was an involuntary payment produced by coercion, viz., the wrongful interference of the defendants with his full and free enjoyment of his property. By English law it is not open to the wrongdoer to prescribe by which of two lawful alternatives the injured man puts a stop to the wrong under which he is suffering. His choice of any one alternative does not make it as between him and the wrongdoer a voluntary act, or estop him from claiming that it was done under coercion.

The argument before their Lordships accordingly turned chiefly on contention that the Indian Statute Law precluded the appliction in India of these well known principles of English Common Law. These contentions were two in number. In the first place, the respondents contended that in case the property of a stranger is seized under an attachment, the Code of civil Procedure requires him to proceed under the group of sections commencing with Section 278, and that this is his only remedy. Their Lordships have no doubt that the procedure referred to, is merely permissive. It is analogous to the procedure by interpleader, which in England would be open in similar cases to parties owning the goods seized. But the fact that such a procedure is open to him if he chooses to adopt it interferes in no way with his right to take any other lawful alternative.

The main contention, however, was that the allegations in the plaint did not show 'coercion' according to Indian Law. It was contented that nothing could be 'coercion' under Indian Law unless it satisfied the definition of 'coercion' which is found in Section 15 of the Indian Contract Act and that the allegations in the plaint failed so to do because they did not show that the 'unlawful detaining or threatening to detain' the property was 'with the intention of causing any person to enter into an agreement'. Their Lordships are of opinion that this argument is not sound and that it is based on fundamental misunderstanding of the object and effect to Section 15 of the Indian Contract Act.'

After referring to Sections 11, 12, 13 and 14 to 18 of the Contract Act, the relevant observations made at page 612 are as under:-

'It is clear, therefore, that this definition of 'coercion' is solely a definition which applies to the consideration whether there has been 'free consent' to an agreement so as to render it a contract under Section 10. This explains why in the definition of 'coercion' it is limited to an unlawful act done 'with the intention of causing the person to enter into an agreement.' But it would be to make non-sense of the statute if it were to be taken to mean that 'coercion' in a legal sense could only exist if the object was to bring about a contract. Indeed such an interpretation would render the Act inconsistent with itself. Section 72, which is in Chapter 5, which deals with 'certain relations resembling those created by contract', reads as follows:-

'A person to whom money has been paid or anything delivered by mistake or under coercion must repay or return it', and illustration B to that section reads as follows:-

'A railway company refuses to deliver up certain goods to the consignee, except upon the payment of an illegal charge for carriage. The consignee pays the sum charged in order to obtain the goods. He is entitled to recover so much of the charge as was illegally excessive.'

It is impossible to contend that the coercion referred to in this section or in the above illustration is 'with the intention of causing any person to enter into an agreement.' The word 'coercion' must therefore be there used in its general and ordinary sense as an English word, and its meaning is not controlled by the definition in Section 15. That definition is expressly inserted for the special object of applying to Section 14, i.e., todefine what is the criterion whether an agreement was made by means of a consent extorted by 'coercion' and does not control the interpretation of 'coercion' when the word is used in other surroundings.' This decision lends support to the submission made by Mr. Nanavati, appearing for the plaintiffs. It is submitted by him that if the amount is not legally payable and if the plaintiff is required to pay it under compulsion, the plaintiff is entitled to repayment unless the defendants can show that they had a right to recover from him or it under law.

18. So far as the facts of the second Appeal No. 452 of 1961are concerned, it will be significant to note that by the very first letter, dated 21st June, 1957, the plaintiff was asked to pay the revised charges proposed by the notice and that too, from 5th November 1951. If the plaintiff did not want to accept that offer, the respondents-defendants had stated that the agreement for railway siding would be terminated after six months from 1-6-1957. Under the old agreement it is an admitted position that the Railway had authority to terminate the agreement after giving six months' notice without assigning any reason. The plaintiff did not want to lose this facility of siding. It was advantageous to it. It was more advantageous to have an assisted railway siding than to have a private railway siding. The defendants had a legal right to give such notice for terminating the agreement. They made such an offer and the plaintiff accepted that offer. It may be that the plaintiff accepted that offer, it being more advantageous, though it was under a threat, that if it did not accept the personal to pay the revised rates from 5th November, 1951, it would lose the advantage of having an assisted railway siding. But that would not make the payment illegal, as the railway had an authority to terminate this agreement and had given such a notice. The plaintiff had an option to accept the revised rates or to forego the facility of assisted railway siding and the plaintiff chose to have the facility of siding. It cannot, therefore, be said in the circumstances of that case that the defendant had no right to recover the amount from the plaintiff under law. The plaintiff having agreed to pay this amount, the defendant had a right to recover that amount. The reason underlying is that the Railway had authority to withdraw this facility. The plainiff was put to an option to pay the revised rates or to forego the facility, of a railway siding. Mr. Nanavati has not been able to show that there was any statutory obligation on the part of the Railway to give such a facility, the plaintiff accepted that offer. In that very offer, it was specifically mentioned that the revised rates will have to be paid from 5-11-1951 and the plaintiff agreed to it. It is, therefore, obvious that the plaintiff agreed to it. It is, therefore, obvious that the plaintiff could not make any grievance in regard to such payment. At any rate, the plaintiff cannot say that it is required to pay this amount illegaly under compulsion. The defendant having a right to recover this amount from the plaintiff under law, the plaintiff is not entitled to repayment of that amount.

19. So far as the Second Appeal No. 463 of 1961 is concerned, the position is quite different. In that case, the plaintiff was given a notice by the Railway on 3-9-1955 vide Ex. 21. By that notice the plaintiff was informed as to the basis of computation of the revised rates. It was also stated in para 2 that on that basis, revised rates were being uniformly charged and recovered from all siding owners. These charges were to compensate the railway for their share of capital spent on such siding and to reimburse the cost of maintenance of such sidings by them and they are subject to revision from time to time to meet the contingencies.

20. In Para 4, it is stated as under:-

'As all the siding agreements are being revised to bring them in line on the standard form of agreement and charges prevailing on this Railway, you are also required to accept the above basis of charges and execute fresh agreement on the standard form, which can be obtained from the District Engineer.'

It is true evident that by this letter, the Railway authority intimated to the plaintiff to execute an agreement on the standard form in the revised form. In para 5 it is stated as under:-

'In the circumstances, I hereby serve you with six calendar months' notice of determination of the above mentioned agreement to be computed from the 1st day of October, 1955, and if you donot convey your acceptance of the above said charges and take steps to execute a tripartite agreement on the standard form within one month, then on the expiry of the notice period the said sidings shall be cut off and dismantled which please note and acknowledge.'

This para 5 of the letter Ex. 21 makes it quite clear that this plaintiff was given an option to accept the revised charges otherwise, after the expiry of the period of the notice, the sidings shall be cut off and dismantled. This was six months' notice given as per the old agreement. It is thus evident that by that notice he was not asked to pay the revised charges from 5-11-1951 as has been done in the other suit.

21. Ex. 22 is another important document which is material for our purposes in this appeal. It is a letter written by the Divisional Railway Superintendent, Baroda, dated 24-1-1957, to the plaintiff. It has been specifically mentioned therein that these revised charges will have effect from 3rd September, 1955, the date of the General Manager's letter quoted above. The letter quoted is the letter, dated 3rd September, 1955, Ex. 21. It is thus abundantly clear that by this letter it was made clear that the plaintiff had to pay the revised charges from 3rd September, 1955. It is further mentioned therein:-

'As the charges at the old rate have been paid by you for the period ending 30-9-1956, due credit for them will be given to you in the revised bill for the various charges indicated above which will be furnished to you on your approval of these revised charges.'

Copies of the standard form of agreement were also sent along with this letter. Two copies duly signed were to be sent to the Railway in token of approval. It is significant to note that the plaintiff was also asked to pay Rs. 75/- to meet with the stamping charges. It was also recited in para 7 of this letter that in case those instructions were not complied with, within 15 days, Permanent Way Inspector, Petlad was ordered to disconnect the siding on the expiry of the period, Ex. 23 was a reminder, dated 21st February, 1957, stating that no extention of time limit can be allowed. The plaintiff was again asked to signify its approval or face the disconnection of the siding from 1-3-1957. The plaintiff ultimately signified its approval and duly signed the copies of the standard form of agreement and sent them along with the stamping fees of Rs. 75/- by its letter Ex. 24, dated 25th February, 1957. It is, therefore, evident that the plaintiff accepted this offer made by the Railway and signed the agreement on 25th February, 1957 and sent the copies duly signed to the Railway authorities as instructed. It is, therefore, evident that a valid agreement came into force on that day. That agreement is Ex. 34. In that agreement, there is a clause 13 which runs as under:-

'Notwithstanding anything herein or in the said conditions contained this agreement is entered intoon the express understanding that either party hereto shall be at liberty to terminate this agreement by giving to the either of them at anytime six calender months' previous notice in writing of their intention so to do without assigning any reason therefore and giving of such notice by the Administration shall not entitle the licensee to any claim for compensation for or by way of damages by reason of the termination of this agreement. On the expiry of such notice, it shall be lawful for the Administration to remove the permanent-way materials. . . . . . .'

It is thus evident that if the Railway Administration felt that it had committed some mistake in not demanding the revised rates from 5th November, 1951, as was done in the case of other plaitniff who was given siding facilities and uniform policy was thereby not pursued, the course open to the Railway Administration was to give such a notice terminating this agreement and give an alternative offer to the plaintiff that if it wants to continue to have the facility of assisted railway siding, it shoudl pay the revised rates from 5-11-1951 or it may decide not to have this facility and the facility will be eventually withdrawn. That is not the course that has been followed by the Railway Administration. What the Railway authority did was that it had given a notice Ex. 26, dated 22-1-1958, stating that the revised charged advised to the plaintiff, vide letter, dated 3-9-1955 Ex. 21, had come into vogue from 5-11-1951, the date of integration of Ex. B.B. & C.I. Railway into the Western Railway and, there being a uniformity applies in all the cases including the facility allowed to the plaintiff, it was not possible to make an exception in this case. As such the plaintiff was requested to pay the revised charges with retrospective effect, i.e. from 5-11-1951. The plaintiff was accordingly given a revised bill. It is significant to note that in para 2, it has been specifically mentioned that the plaintiff had conveyed its approval to the railway terms and conditions by its letter dated 25-2-1957. It is further recited therein that this railway is ready to continue the facility, provided the plaintiff agrees to the payment of arrears indicated in para 1. By para 3, it was mentioned that a substitution be made in previous letter, dated 24-1-1957, i.e.,charges will have effect from 5-11-1951, i.e., the date of integration of Exs. B.B. & C.I. Railway into the Western Railway. This letter also does indicate that the plaintiff had already accepted the offer made by its letter, dated 25-2-1957 and that was as per the terms and conditions suggested in the letter of the Railway, dated 24-1-1957. It was only after sometime, that this letter of the Railway, dated 24-1-1957. It was only after sometime, that this letter was written by the Railway asking the plaintiff to signify its approval to pay the revised rates from 5th November, 1951. This letter was written after a valid agreement had come into force between the parties. The plaintiff paid this amount under protest, stating clearly that the defendants were not entitled to make such demands and were not entitled to recover it legally. It is, therefore, evidence that the plaintiff paid this amount under compulsion. If the plaintiff did not pay, the plaintiff would have lose the facility of siding, to which it was entitled as per agreement Ex. 34 till that agreement was termianted by giving a legal notice as contemplated by clause 13 of the Agreement. That having been not done, it could be said without any doubt that the amount was not legally payable and the plaintiff was required to pay it under compulsion and the defendants were not in a position to show that they had a right to recover this amount from the plaintiff under law. It is, therefore, evident that so far as this appeal is concerned, the plaintiff is entitled to repayment of this amount. The learned Extra Assistant Judge had committed a mistake in regared to this case as probably, he disposed of both the appeals together by a common judgment and did not notice this difference in the facts of the two cases.

22. The learned Extra Assistant Judge has referred to the decision in the case of Hardie and Lane Ltd., v. Chilton (1928) 2 K. B.D. 306, Scrutton Lord Justice, in his judgment at pages 313 and 314, made the following observations which are relevant for our purposes:-

'If a trader may withdraw his custom without breaking any law, he may with equal legality express his intention of withdrawing it unless his wishes are met subject always to the condition that the purpose of the threat is to forward his trade interests and not wilfully and ultraneously to injure the trade of another.' And he refers to certain authorities Lord Dunedin in the same case says, 1925 A.C. 700 at p. 730:-

'Expressing the matter in my own words, I would say that a threat is a preintimation of proposed action of some sort. That action must be either per se a legal action or an illegal, i.e, a tortious action. If the threat used to effect some purpose is of the first kind, it gives no ground for legal proceeding; if of the second, it falls within the description of illegal means, and the right to sue of the person injured is established?

If we judge the facts of these cases from the aforesaid test, we find that so far as the facts of Appeal No. 452 of 1961 are concerned, the case would fall within the first category. No doubt, a threat was given by a letter, dated 21st June, 1937 that in cse the plaintiff is not agreeable to the payment of revised retes from 5-11-1951 agreement would be termianted after the expiry of the period of the notice. The Railway authority had under the old agreement such power to terminate the agreement after giving a requisite six months' notice without assigning any reasons. No doubt, a threat was used to effect some purpose. But it was the purpose of the first kind. It was a lawful act. The plaintiff of that case, therefore, has no ground for a legal proceeding and the plaintiff is not entitled to repayment of the amount paid.

23. So far as the facts of appeal No. 463 of 1961 are concerned, the case falls under the second category. At the time when the notice, dated 3-9-1955 was given, it was not stated that the plaintiff has to pay the revised rates from 5-11-1951 and in case he is not agreeable to those terms and conditions, the agreement will be terminated after the expiry of the period of notice. Even in the letter, dated 21st April, 1957, the plaintiff was asked to pay the revised rates from 3-9-1955. In case it was not agreeable to it, the agreement was to be terminated after the expiry of the period of notice. The plaintiff ultimately agreed to those terms and conditions and duly signed the copies of the standard form and sent them on 25-2-1957 and sent the stamping charges also as demanded. It means that a new agreement came into force between the parties. No doubt, that agreement, the Railway could have terminated by giving a notice of six months' as required by clause 13 of that agreement. No such notice was given. The plaintiff had shown its approval. That fact has been also acknowledged in the letter Ex. 26, dated 22-1-1958 by the Railway. The Railway had, therefore, no authority in law to make such a demand of payment of the revised rate from 5-11-1951 and in the event of the plaintiff's failure to do so, to withdraw the facility of raiwlay siding. That action of the railway was illegal. The Railway could have resorted to the action contemplated by clause 13. That having been not done, it is clear that this amount was received by the Railway by illegal means. The plaintiff had paid that amount under compulsion. The defendnats have not been able to show that they had a right to recover it from the plaintiff in law. It is, therefore, evident that the plaintiff is that appeal is entitled to repayment of that amount.

24. At pages 317 and 318 in the aforesaid judgment, the relevant observations have been made:-

'(1) Where the money is not legally due without an agreement, but is due under an agreement obtaine dby the threat to do an act which may be lawfully done, if the agrement is not made, both the agreement and the threat are lawful, the direction would make them unlawful. If the agreement is unlawful, or the threat inducing it is to do an unlawful act, the case would be different. In the present case it was unlawful to put a member who broke the rules on the stop list; it was lawful to say one was going to do it; it was lawful or not unlawful, to agree not to exercise the legal right to put a man who broke the rules on the stop list. If a more lenient alternative in the shape of a payment of money was exercised; (2) which is a minor form of the same point. In my opinion, the direction is wrong if it assumes that to threaten to do what you have a legal right to do can ever be a ground for obtaining back money alleged to be paid under duress. A man lawfully claims a lien on property of which you are in urgent need; because of your urgent necessity you pay, the necessity disturbing your power of judgment. Is it suggested you can recover money back? To do so, you must prove the lien unlawful.'

Relying upon these observations, the learned Extra Assistant Jduge has disposed of these two appeals. But as said above, he missed one important fact so far as second appeal No. 463 of 1961 is concerned. That was probably the reason why he came to an erroneous decision in that appeal, though he had made a correct statement of law. The result is that the appeal in Second Appeal NO. 463 of 1961 succeeds. The appeal in Second Appeal No. 452 of 1961 fails.

25. Second Appeal No. 463 of 1961 is allowed. The decree passed in Civil Appeal No. 232 of 1960 is reversed and the decree passed by the trial Court in Civil Suit No. 213 of 1959 is restored. The respondentss-defendants are ordered to bear the costs of the appellant in this second appeal as well as in the District Court Civil Appeal No. 232 of 1960. Second Appeal No. 452 of 1961 is dismissed with costs.

26. Order accordingly.


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