(1) This civil miscellaneous appeal raises a question of great contemporary significance and some legal interest, though the facts themselves are extremely simple. The facts are that in I. A. No. 1289 of 1959 in O. P. No. 67 of 1953 on the file of the learned District Judge of Coimbatore, the present appellant (the property guardian of a minor sought, under S. 29 of the Guardians and Wards Act (VIII of 1890), for permission to sell 55 standard acres of lands belonging to the minor. The legal principles which are applicable to the matter are clear, and not in dispute. The interest of this case arises, not from any difficulty with regard to the interpretation of the sections of law, but from the peculiar and, exceptional grounds upon which necessity for the alienation was sought to be based.
Section 31 of the same Act lays down that such permission ought not to be granted by the court 'except in the case of necessity or for an evident advantage to the ward. ' Section 31 sub sections 2 and 3 relate to the requirements that the order granting the permission should recite the necessity or advantage, and that conditions of special kinds may be attached to the permission of court, at its discretion. We may conveniently note two other sections of the Act here. Section 27 lays down that guardian of the property of the ward 'is bound to deal therewith as carefully as a man of ordinary prudence would deal with it if it were his own, and subject to the provisions of this Chapter, he may do all acts which are reasonable and proper for the realisation, protection or benefit of the property.'
In other words, the guardian certainly has the power to alienate the property of the minor, if the conditions of prudence or necessity or benefit to the estate requires such alienation. Again it is laid down under S. 30 that 'a disposal of immovable property by a guardian in contravention of either of the two last foregoing sections (28 and 29) is voidable at the instance of any other person affected thereby.' In other words, the transaction is only voidable and not void, and there is no dispute that the court should therefore grant the permission under S. 29, if the proposal satisfies the test under S. 31(1) of 'necessity or for an evident advantage to the ward.'
(2) In the present context, the property guardian (the appellant) filed this petition because of an impending piece of legislation fixing a ceiling upon the possession of landed property by any single individual in the State. Here, the facts are not in dispute that a declaration of the intentions of Government in this regard was made upon the floor of the Legislature, and that it was generally published that this land reform was imminent, and that the ceiling would be fixed at 30 standard acres or so. Further, the appellant had adequate grounds for the belief that compensation might be awarded only at Rs. 1000 per acre for the lands taken over by the Government, this amount also being distributed in payment over a period of years.
(3) The appellant submitted to court that the lands of the minor above this ceiling, consisting of both nanja and punja could be sold at current market value for Rs. 3000 to Rs. 5000 per acre. If this was not immediately done, the estate of the minor would suffer great injury if the land reform legislation were enacted, and the surplus of the estate above 30 acres or so taken away by Government, at the anticipated rates of compensation. this was, in brief, the broad ground of the proposal, it appears to be indisputable that other persons owning such lands, who were sui juris and who could thus take effective action without formal court proceedings, were actually engaged in reducing the sizes of their estates by sales, in conformity with the anticipated law.
(4) In a brief order, the learned District Judge dismissed this application. He gave two grounds therefor. The first was that 'nothing definite is known about the anticipated legislation.' The second was that the avowed object appeared to him to be to get over the legislation, which might even amount to contravention of a public policy. The learned district Judge added 'No court can countenance such a proposal.' the petition was dismissed with these observations.
(5) I think that very little discussion is needed to show that the reasoning of the learned District Judge is fallacious and that both grounds given by him for refusal of the permission are unsustainable. Firstly, it appears to be indisputable that this legislation is impending or imminent, and that its broad outlines at least have been publicly declared by the authorities of Government at the highest level. The learned Advocate General for the respondents (the other relatives of the minor) who opposed the proposal, expressly concedes this. It is also not disputed before me that the ceiling is likely to be fixed at about 30 acres per individual, so far as the existing declarations of policy permit us to make a forecast at all.
An argument is possible that, even so, it cannot be said that the immediate sales of the surplus extents of the estate, which would more or less be forced sales at current market value are likely to be of great advantage to the minor, because, in any event, the State will pay compensation for the lands taken over. But this argument does not stand scrutiny. My attention has been drawn, not merely to certain passage in 'The Indian Land problem and Legislation' by G. D. Patel, 1954 Edn. p. 508, setting forth this particular scheme of land reform, together with the ceilings proposed in respect of different States, but also, to what is surely more authoritative, paragraph 42 at page 197 of the 'Second five Year Plan' (Government of India 1956) giving the principles on which compensation is to be assessed in such matters.
Actually, the learned Advocate General has conceded that though the land reform bill has not been introduced in Madras State, drafts of similar bills introduced in other States, are available at the moment. According to the authoritative statement of the principles upon which compensation may be paid, it might either be specified amounts related to different classes of land, or in terms f a multiple of land revenue, or in some other manner. In brief, it may not necessarily approximate to market value at all. Again, it seems to be indisputable that such compensation will not be justifiable because of Art. 31(A) of the Constitution.
We find that the Select Committee omitted the reference to 'agricultural holdings' with regard to the amendment bill introduced in Parliament on 20-12-1954 on the ground that this was unnecessary because the further amendment proposed would place questions as to the adequacy of compensation outside judicial review. Consequently, the following inferences are undeniable, and well established. Firstly, the reform itself is imminent, probably fixing a ceiling of about 30 acres, and, secondly, the compensation may be no where near the market value of Rs. 3000 to Rupees 5000 acre, which is the rate alleged; it may be on a quite different basis altogether, and while it may quite probably be Rs. 1000 an acre, the actual rate proposed in certain declarations of Government, it will not be subject to judicial review.
(6) In brief, these facts clearly show that it is greatly to the benefit of the estate of the minor that the surplus lands should be now sold and the income realised and invested in other forms, such as cash securities etc. A broad view must be taken of the concept of what is a measure to the benefit of the estate of the minor. It is sufficient here to refer to the expositions in Hunooman Persuad Panday v. Mt. Babooee Munraj Koonweree, 6 Moo Ind App 393 (PC), in Palaniappa v. Deivasikamani Pandara Sannadhi, ILR 40 Mad 709 : AIR 1917 PC 33. and in Jagatnarain v. Mathuradas : AIR1928All454 .
(7) There is, therefore, no doubt whatever that the permission sought was upon justifiable ground, that it related to an event at least as foreseeable as most events which would impel a prudent man to take immediate action to preserve his estate from injury, or to retain some benefits with regard to it, and that the suggested sales were justified by benefit to the minor in a very real sense. Obviously, there cannot be any hard and fast rule laid down in all such matters, of the material which a court would take judicial notice of, in judging benefit. But, certainly, in the present instance, there is a material of an objective and authoritative nature which would justify the court in considering the proposed land reform fixing a ceiling, and the probable trend of compensation, as reasonably certain.
(8) The argument of the learned District Judge that this is opposed to the spirit of the legislation and amounts to some kind of circumvention of the law, is clearly based on a misconception. On the contrary, the sales, by private owners of land, of surplus areas above the probable ceiling are, by themselves, as effective instrumentation of the reform. This is a mode by which a more equitable distribution of landed property is effected, even before the enactment itself comes into force. Had it been otherwise, the State would have declared a prohibition similar to a moratorium upon sales of land, which it has advisedly refrained from. To anticipate a law, and to take certain measures dictated by prudence, which are legally permitted, is not at all in contravention of public policy.
(9) Upon this aspect of the case alone, which is a matter of contemporary significance and legal interest. I have not been able to find any precedents in this country. But, there is a very interesting decision reported in House of Lords, Morgan v. Tate and Lyle Ltd., 1955 AC 21, which involved the judicial consideration of a very similar situation. The sugar industry was proposed to be nationalised, the legislation was imminent. A company engaged in sugar refining incurred expenses in propaganda to oppose the threatened nationalisation.
The question was whether these expenses could be considered as money laid out for purposes of the company's trade, and an admissible deduction from profits for income-tax purposes. The Law Lords held that the object of the expenditure being to preserve the assets of the company from seizure, and so to enable it to carry on, it could be properly claimed as an admissible deduction from profits for income-tax purposes. In other words, the question cannot be judged upon the plane of the ethics of nationalisation at all.
It ought to be judged from the standpoint of the company, so long as the expenditure was neither illegal nor in contravention of public policy. In the present case also, I think it is clear that the question ought to be judged from the standpoint of benefit to the estate of the minor. As I have already emphasised, there is nothing illegal nor opposed to public policy in the sale, by a landlord, of surplus extents of land, in anticipation of a land ceiling reform.
(10) Consequently, I allow the civil miscellaneous appeal to the extent of holding that the permission should be granted in the case, setting aside the order of the learned District judge. the petition itself is remitted to the Court below for further disposal, in the light of these observations. The particulars of the precise extents of nanja and punja to be now sold, the rates at which, and the purchasers to whom, the sales should be effected by the property guardian, and further the conditions to be attached t the permission under S. 31, are all matters to be worked out by the lower court after hearing all the parties concerned. But this must be done expeditiously, for, otherwise, the purpose of the permission will be frustrated. Under the circumstances, I direct the parties to bear their own costs.
(11) Appeal allowed.