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The Sankara Mining Syndicate Ltd. by Its Managing Agent R. Pattabhirama Reddi and anr. Vs. the Secratery of State for India in Council Represented by the Collector of Nellor and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtChennai
Decided On
Reported inAIR1938Mad749; (1938)2MLJ141
AppellantThe Sankara Mining Syndicate Ltd. by Its Managing Agent R. Pattabhirama Reddi and anr.
RespondentThe Secratery of State for India in Council Represented by the Collector of Nellor and ors.
Cases ReferredCouncil v. The Chettyar Firm of S.R.M.M.R.M. I.L.R.
Excerpt:
- - the sub-collector thereupon held an inquiry into the matter and found that there had in fact been encroachment by the second respondent after the collector's order of the 1st october, 1923. he was, however, unable to ascertain the extent of the encroachment that had taken place and therefore recommended that the collector should allot a moiety of the margin to each of the petitioners, leaving a strip of 10 feet in breadth between the two holdings. like powers are given for mortgaging and the granting of assurances......respondent) and yettigadda audemma (the second respondent), for a declaration that an order of the local government granting a mining lease to yettigadda audemma is illegal and for a decree for specific performance of a contract which he alleged had been entered into between him and the local government for a lease of the area in suit. in 1903 the local government granted a mining lease of the area known as survey no. 499 to one r.v. kuppuswami aiyar. the lessee subsequently transferred this lease to the appellant company. in 1904 the local government granted a mining lease in respect of the area known as survey no. 500 to kalappa chetti, the husband of the second respondent. kalappa chetti is now dead and the lease of this area has vested in the second respondent. from the second.....
Judgment:

Alfred Henry Lionel Leach, C.J.

1. This appeal arises out of a suit filed in the Court of the Subordinate Judge of Nellore by the appellant against the Secretary of State for India in Council (the first respondent) and Yettigadda Audemma (the second respondent), for a declaration that an order of the Local Government granting a mining lease to Yettigadda Audemma is illegal and for a decree for specific performance of a contract which he alleged had been entered into between him and the Local Government for a lease of the area in suit. In 1903 the Local Government granted a mining lease of the area known as Survey No. 499 to one R.V. Kuppuswami Aiyar. The lessee subsequently transferred this lease to the appellant company. In 1904 the Local Government granted a mining lease in respect of the area known as Survey No. 500 to Kalappa Chetti, the husband of the second respondent. Kalappa Chetti is now dead and the lease of this area has vested in the second respondent. From the second respondent's area a strip of land three furlongs in length and 133 feet in breadth, lying on the boundary of Survey No. 499, was excluded from, Kalappa Chetti's lease. This area has been referred to as the ' margin ' and I will so refer to it in this judgment. The object in reserving the margin was to prevent disputes between the two lessees. On the 5th August, 1923, the appellant company applied to the Collector for a lease of the margin. A similar application was filed by the second respondent on the 4th September, 1923. The Collector considered both the petitions and by an order dated the 1st October, 1923, rejected' them as he was of the opinion that it was not desirable to grant a lease of the margin to either of them. The second respondent appealed against this order to the Board of Revenue, which confirmed the Collector's order on the 8th November, 1924. The second respondent then preferred an appeal to the Local Government, which by an order dated the 31st July, 1925, granted her petition. The appellant company was dissatisfied with this decision and applied to the Local Government to reconsider it and to grant the area to the appellant company. The Local Government did consider the matter and decided to cancel the lease of the margin to the second respondent on the ground that its previous order was ultra vires and had been passed without full knowledge of the fact that the second respondent, or her predecessors in title, had undermined the margin of the land to a considerable extent and had extracted mica therefrom. The Local Government left it to the Collector to determine whether any portion of the margin should be leased and, if so, to whom.

2. On the 15th March, 1926, the second respondent filed another petition asking that a lease of the margin be granted to her, and two days later the appellant company applied. The Sub-Collector thereupon held an inquiry into the matter and found that there had in fact been encroachment by the second respondent after the Collector's order of the 1st October, 1923. He was, however, unable to ascertain the extent of the encroachment that had taken place and therefore recommended that the Collector should allot a moiety of the margin to each of the petitioners, leaving a strip of 10 feet in breadth between the two holdings. The Collector accepted this recommendation, but the parties were dissatisfied with it and further appeals were preferred to the Board of Revenue. By an order dated the 7th February, 1927, the Board of Revenue reversed the Collector's order and directed that neither party should be given any portion of the margin. The appellant company appealed against the Board's order to the Local Government, which by an order dated the 7th May, 1927, directed that the margin should be given to the. appellant company after the reservation of a strip of five links lying on the second respondent's boundary. The Local Government considered that the second respondent had forfeited any claim to consideration.

3. In pursuance of this direction of the Local Government, the Collector on the 27th March, 1927, passed a formal order directing that the margin originally excluded from Survey No. 500 should be assigned to the appellant company, after reserving a strip of five links as suggested in the order of the Local Government. The order of the Collector was communicated to the appellant company on the 10th June, 1927, and the appellant company was required to deposit in the Treasury a sum of Rs. 3 as a sketch fee and Rs. 100 by way of security deposit. Before the order of the Collector of the 27th March, 1927, could be complied with the second respondent appealed to the Government of India and asked the Local Government for a stay of all proceedings pending the receipt of the order of the Government of India. The stay was granted on the 20th July, 1927. The orders of the Government of India were communicated to the Board of Revenue in a letter dated the 14th June 1928. In this letter the Government of India expressed the opinion that as the power to grant mining leases had been delegated to the Board of Revenue, the Local Government could not interfere with the Board's orders so long as the Board had acted, whether by granting a lease or refusing to grant a lease, and that the Local Government could not direct the Board to grant a mining lease to a particular person. All that the Local Government could do was to give a direction to the Board of Revenue that a particular area should be assigned on a mining lease. In view of this decision the order passed by the Local Government directing the Board of Revenue to assign to the appellant company the area was ultra vires and was accordingly cancelled. In accordance with this order of the Government of India the Board of Revenue on the 11th October, 1928, granted a lease of the margin to the second respondent, leaving a strip of five links as visible boundary between the two areas. On the 4th December, 1928, a formal lease of this area was granted to the 2nd respondent. The present suit was filed on the 11th October, 1928, for a decree cancelling the lease to the 2nd respondent and granting one to the appellant company. The trial Court found against the appellant company on all of its contentions and dismissed, the suit.

4. Before us three arguments have been advanced in support of the appeal. In the first place, it is said that the Government of India exceeded its powers when it cancelled the order of the--Local Government and left the matter open. In the second place, it is said that even if the Local Government was bound to obey the order of the Government of India, the order of the Board of Revenue dated the 27th May, 1927, granting the lease to the appellant company, amounted to an acceptance of an offer to take the lease on the usual terms and therefore there was a binding contract which entitled the appellant-company to a decree for specific performance. The third argument is that, even if there was no contract in law, the appellant company was entitled to the lease as the Mining Rules recognised that by virtue of the order of the 27th May, 1927, it had got a vested right in the margin.

5. The arguments involve the consideration of certain sections of the Government of India Act, 1919, and certain statutory rules. The Government of India Act, 1935, does not apply because the case concerns events which took place before that Act was placed on the Statute book. Section 28(1) of the Act of 1919 states:

The Secretary of State in Council may, with the concurrence of a majority of votes at a meeting of the Council of India, sell and dispose of any real or personal estate for the time being vested in His Majesty for the purpose of the Government of India, and raise money on any such real (or personal) estate by way of mortgage (or otherwise) and make the proper assurances for any of those purposes.

6. Section 30(1) provides that the Governor-General in Council and any Local Government may, on behalf and in the name of the Secretary of State in Council, and subject to such provisions or restrictions as the Secretary of State in Council with the concurrence of a majority of votes at a meeting of the Councilof India, prescribe, sell and dispose of any real or personal estate vested in His Majesty for the purposes of the Government of India. Like powers are given for mortgaging and the granting of assurances. But it has to be borne in mind that with regard to the exercise of powers conferred on the Governor-General in Council or Local Government, the exercise must be on behalf of and in the name of the Secretary of State in Council. Section 30(2) is in these terms:

Every assurance and contract made for the purposes of Sub-section 1 of this section shall be executed by such person and in such manner as the Governor-General in Council by resolution directs or authorises, and if so executed may be enforced by or against the Secretary of State in Council for the time being.

7. The only other section which this case is concerned with is Section 45(1) which says:

Subject to the provisions of this Act and rules made thereunder, every Local Government shall obey the orders of the Governor-General in Council, and keep him constantly and djligently informed of its proceeding and all matters which ought, in its opinion, to be reported to him, or as to which he requires information and is under his superintendence, direction and control in all matters relating to the Government of its province.

8. This sub-section is very wide in its application.

9. The Government of India have framed certain rules regulating the grant of mining concessions, and the validity of these rules is not in question. Under Rule 1 no mining lease can be granted by a Local Government otherwise than in accordance with the rules, except with the previous sanction of the Secretary of State for India in Council, or with that of the Governor-General in Council under any general or special authority which he may have received in this behalf from the Secretary of State in Council. Rule 4 states that for the purpose of the rules the Local Government may, in provinces where there is a Board of Revenue, delegate to such authority all or any of the powers conferred on the Local Government by the rules. The authority of the Local Government to grant mining leases has been delegated to the Board of Revenue, and it was for this reason that the Government of India cancelled the order of the Local Government with regard to the margin. At one time it was thought that the Local Government had the power to revise the orders of the Board of Revenue and a note to this effect was inserted in the previous edition of 'The Mining Manual'. The deletion of this note was, however, directed by an order of the Local Government dated the 19th November, 1925, the Local Government recognising that it had not the power to revise.

10. The learned advocate for the appellant company contends that, inasmuch as the rule refers to delegation and not to devolution, the Local Government must be deemed to have still vested in it powers of granting leases, irrespective of the power granted in this behalf to the Board of Revenue. The acceptance of this contention would mean that in this province there would be two authorities with equal powers of granting leases. The learned Advocate for the appellant company, would have it that the ordinary law of principal and agent must be applied. We are unable to accept this contention. In our opinion, the statutory authority to grant raining leases passed from the Local Government to the Board of Revenue by the order made under Rule 4. The Local Government agrees with the Government of India that this is the effect of the order; and we see no ground for disputing this. Consequently we hold that the Local Government had no power to reverse the order of the Board of Revenue granting the lease to the second respondent. We are also of the opinion that the order of the Government of India setting aside the Local Government's order was intra vires. Section 45 gives the Government of India full power to interfere with the orders of the Local Government in matters of this nature. This disposes of the first argument.

11. With regard to the contention that a valid contract had been entered into by the Local Government with the appellant company and consequently the appellant company is entitled to a decree for specific performance, we have seen that by reason of Section 30(2) of the Government of India Act, 1919, contracts have to be executed by the person and in the manner directed by the Governor-General in Council and until they are so executed they cannot be enforced by or against the Secretary of State in Council. The short answer to the second argument is that the Governor-General in Council has prescribed rules governing the execution of contracts with the local Government and they required a formal lease to be executed by the Collector. They have been framed in the exercise of the powers conferred by Sub-section 2 of Section 30, and are published in the Manual of Statutory Rules and Orders. Therefore, until a formal lease has been signed, there can be no enforceable contract against the Secretary of State in Council. The wording of the sub-section in my opinion leaves no room for any other construction; but, if authority is required it is to be found in the case of the Municipal Corporation of Bombay v. Secretary of State for India in Council I.L.R.(1932) 58 Bom. 660 and in The Secretary of State for India in Council v. The Chettyar Firm of S.R.M.M.R.M. I.L.R.(1926) Rang. 291 In this case no lease was executed and therefore there is no enforceable contract. The third argument hardly calls for serious consideration. It is based on the fact that Rule 46 of the Mining Rules states: - 'If a lease is not executed within six months after leave has been granted for it, the right of the applicant to such lease shall be held to have lapsed, unless the Local Government for special reasons consents to grant the same notwithstanding the delay, or considers that the delay is not attributable to the applicant'. Emphasis is laid on the words 'right of the applicant'. These words cannot be read as a recognition of a vested right. The effect of the rule merely is that if the applicant does not complete the contract within six months, the order directing the lease to issue will lapse unless the time is extended.

12. For these reasons we consider that the decision of the trial Court is right and the appeal must be dismissed with costs, one set to the first respondent and one set to the second respondent.


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