1. This is a petition under Rule 20 of the Ganjam and Vizagapatam Agency Rules requesting this Court to direct the Agent to review his judgment in a civil appeal. The suit was one brought against the Zemindar of Bodokimidi to obtain damages for breach of contract and was filed in the Court of the Agent to the Governor in Ganjam. The Agent after settling issues referred the suit for the decision of the Special Assistant Agent, Berhampore Division. From his decree in the plaintiff's favour there was an appeal to the Agent, who confirmed the Special Assistant's decision and dismissed the appeal with costs.
2. The suit arose out of an agreement entered into by the parties in September 1915, whereby it was arranged that the plaintiff should out and take timber for railway sleepers from the defendant's forests for a term of four years and pay royalty to the defendant upon the timber so removed.
3. One of the conditions was that the defendant Zemindar was to send a forest officer or other subordinate to mark such trees as might be pointed out by the plaintiff or his agent upon intimation of the plaintiff's intention to start work in any particular area. The object of this condition is stated, namely, that no delay should occur in starting felling in a forest area after finishing in an old area. Another condition was that no trees below three feet in girth at one foot from the ground should be out. The plaintiff was to construct at his own cost the necessary tracks for removing the timber and was not to remove any wood that would not be useful for sleepers; but he might utilize third class wood for purposes of fuel and building huts for his men, provided that the buildings so constructed were to become the property of the defendant after the lease expired. A sum of Rs. 3,000 was to be deposited by the plaintiff as security for his cutting a sufficient quantity of timber to yield Rs. 32,600 royalty in each half of the whole period of contract, the deposit being returnable upon fulfilment of all the conditions of the agreement.
4. After nine months of working the parties came to a disagreement and the agreement was put an end to, and this suit was brought in consequence of that disagreement.
5. Now it has been argued before us (1) that the plaintiff was not entitled to any damages, (a) because the agreement did not purport to transfer any right to the exclusive enjoyment of any particular property and so was not a lease but a license revocable at the pleasure of the grantor; (6) because the plaintiff himself signified his intention of breaking the contract in March 1916; (c) because the plaintiff failed to prove that he would have sustained a loss on the whole if he had accepted the new condition sought to be imposed by the defendant that no trees of less girth than 4 1/2 feet at breast height should be felled; (2) that the Special Assistant Agent had no jurisdiction to try the suit as it was not transferred to his file before the commencement of the trial.
6. A number of authorities have been cited on the subject of the leases and licenses and their respective revocability.
7. It is sufficient to say that I am satisfied from a perusal of the terms of Exhibit A, which describes itself as a deed of lease, that it is not a bare license, but an instrument creating certain contractual relations between the persons who were parties to it and intended to be for their mutual profit. It conveyed an interest in immoveable property comparable to, though hedged about with more limitations than, the lease which formed the subject of Seeni Chettiar v. Santhanathan Chettiar 6 M.L.J. 281. The case of Mammikkutti v. Puthahhal Edom 29 M. 353, which was cited for the appellant-, was decided upon a point of limitation. Certain dicta that occur in it as to the covenants for title and quiet enjoyment which are implied in a lease have little bearing on the present case, as those were not matters upon which the parties finally fell out here.
8. Exhibit A was registered and the parties to it were legally entitled to enforce all its terms as terms of a contract.
9. If either party to a contract breaks it, the party who suffers by such breach is entitled under Section 73 of the Indian Contract Act to receive from the party who has broken the contract compensation for any loss caused to him thereby. If, either party to a contract rightfully rescinds it, he is entitled under Section 75 to compensation for any damage which he has sustained through its non-fulfilment. Having found that contractual obligations were established between the plaintiff and the defendant, we have only to see to the application of the law of contract to the existing facts as found by the lower Courts.
10. On the second and third issues there are unanimous findings by both the lower Courts that the defendant imposed fresh terms on the plaintiff on March 2nd and June 1st, when he informed him in his letter, Exhibit L, and at a personal interview that he would not hand over a fresh block of forest until the plaintiff remitted the royalty on the trees felled in blocks previously entered, and that he would not permit the plaintiff to continue to work the forest on the original terms of the lease so far as the girth of the trees to be out were concerned. The Courts have also found that the plaintiff did not put an end to the contract in March, when in his letter, Exhibit 0, dated 24th March, he mentioned that he was placing all his papers in the hands of his lawyers, but that both parties treated the contract as subsisting till June. After referring to the correspondence that has been exhibited on both, sides and the oral evidence as defendant's 1st witness and Exhibits L, M, O, Q, R, S, III and IV, I see no reason to doubt the correctness of these findings of fact. There can be no doubt that the alteration in the girth of the trees to be felled from three feet at a foot above ground to 4 1/2 feet at breast height was a material alteration, which was calculated to seriously affect the plaintiff's prospects of working the forests at a prost. Under Section 39 of the Contract Act when a party to a contract has refused to perform his promise in its entirety, the promisee may put an end to the contract. Accordingly in Exhibit S, the plaintiff through his Vakil intimated to the defendant on 2nd September 19i6 that he found it impossible to work according to the new terms which the defendant tried to import into the lease and that he would not treat it as any longer subsisting. I consider that he was fully justified in so doing. On the question of damages, I consider it unnecessary to enquire whether the plaintiff might have continued to work the forests at a profit, seeing that he has only been awarded his out of pocket expenses and that he would be entitled to these even if his rights were no higher than those of a licensee. Vide Kesava Pillai v. Pedu Reddi 1 M.H.C.R. 268 and also Prosonna Coomar Singha v. Ram Coomar Ghose 8 Ind. Dec. 422, where it was held that a licensee is entitled to damages if any contract is broken when his license is revoked. The special contention advanced at the hearing of this petition that the plaintiff if, in any event, not entitled to get back the whole of his deposit of Rs. 3,000 is untenable. Even if this were a contract voidable at the option of the defendant and the defendant rescinded it, he would be bound under Section 64 of the Contract Act to restore any benefits received by him under the contract. The penalty of forfeiture of the deposit was according to the terms of Exhibit A one that could only occur after two years and as the contract was dissolved before that period expired, it follows that the question of forfeiture never arose, and that being so, the money still belonged to the plaintiff.
11. There remains the question of jurisdiction. Rule 10, Clause 2, of the Agency Rules for Ganjam merely declares that suits exceeding Rs. 5,000 in value shall be instituted in the Court of the Agent who may, however, when he thinks proper, refer any suit for the decision of the Divisional Assistant. The words 'at any stage', which occur in Section 24 of the Civil Procedure Code of 1908, are not found in the rule. They seem to have been inserted in the present Code in consequence of the rulings in Sita Ram v. Nauni Dulaiya (1899) A.W.N. 38 and Kurnarasami Reddiar v. Subbaraya Reddiar 10 M.L.J. 51.; Kumarasami Reddiar v. Subbaraya Reddiar 10 M.L.J. 51 was a decision with regard to a District Judge's power under Section 13 of the Civil Courts Act to transfer appeals, and Sita Ram v. Nauni Dulaiya (1899) A.W.N. 38 : 9 Ind. Dec. 856 proceeded on the theory that a District Judge, after once having transferred a suit to his file from that of a subordinate Court, had exhausted his power of transfer and could not again remand it to the Subordinate Judge's Court when it came back on appeal to the High Court with a direction for a fresh hearing on the merits. As the Civil Courts Act does not apply to the Ganjam Agency, and as Knmarasami Reddiar v. Subbaraya Reddiar 10 M.L.J. 51 has been superseded by the law as it now stands and as Sita Ram v. Nauni Dulaiya (1899) A.W.N. 38 : 9 Ind. Dec. 856 relates to an entirely different matter, I do not think there is anything to preclude me from holding that the Agent's power to refer a suit to the Special Assistant Agent after framing issues and before decision is not affected by the absence of the words Pending' or 'at any stage.' The rule does not mention the word trial.' It speaks only of referring suits for decision. I do not find any ground for limiting the Agent's power of transfer to suits in which no proceedings have been taken at all before they are transferred. In Sri Rajendra Singh Baku Garu v. Sri Sri Sri Vikarama Deo Garu 30 Ind. Cas. 76 the Agency Rules were interpreted by a Bench of this Court strictly as they stood, and it wag held that in the absence of any words of prohibition, an Agent could even hear appeals in suits referred by him to a Divisional Assistant for decision, although the value of such suits might be so great that only the Agent could entertain them in the first instance. The petition, therefore, fails on all points and is dismissed with costs.
12. I agree with my learned brother that this application fails. The nature of the application and the terms of the arrangement between the parties and the circumstances which led to this suit are set out by him and need not be repeated. Before considering the arguments of the learned Vakil for the Zamindar I think it is necessary that we should see what exactly the scope of the Rule 20 is under which this application is made.
13. No decided oases have been brought to our notice where this question has been considered. It will be observed from the wording of the rule that it does not give any right to parties by way of appeal or otherwise, as Section 93 and 100 of the Code of Civil Procedure do. The rule gives us power to direct the Agent to revise his judgment on special grounds.'
14. It seems to me we should not interfere under it on any technical grounds or on account of any errors which have not led to any prejudice on the merits and in oases where the application to us is in the nature of a second appeal we should not ordinarily interfere with the findings of facts.
15. Bearing this in mind I shall consider the arguments addressed to us by the learned Vakil for the Zemindar. He urges in the first instance that the transaction evidenced by Exhibit A was not a lease but a license and that the Agent was wrong in holding it to be a lease. Exhibit A calls itself a lease of the forest and the parties went to trial on the footing that it was a lease, both the plaint and the written statement calling it a lease; and no question was raised about its nature in the first Court. If we are, however, to consider its legal character it may be difficult to hold it to be a lease, as it does not purport to give possession of the forest to the plaintiff and the cutting of the trees is itself contingent on their being marked by defendants men in advance (vide paragraph 6 Exhibit A). The requirements of a lease were considered by Subramania Aiyar, J., in his judgment in the Fall Bench case in Seeni Chettiar v. Santhanathan Chettiar 6 M.L.J. 281. His view was followed in Mammikhutli v. Puzhakkal Edom 29 M. 353. The latter case was one similar to the present where an arrangement to cut trees from a forest for a period of six years on payment of Kuttikonam was held to be a license and not a lease. Assuming the present case to be one of a license, it is still not a bare license but one coupled with a contract to continue the license for a period of four years on certain conditions. That being so, the party committing a breach of that contract is liable in damages. Sea Kerrison v. Smith (1897) 2 Q.B. 445 and Prosonna Coomar Singha v. Ram Coomar Ghose 8 Ind. Dec. 422. As the present decree is one for damages and as the error committed by the lower Court in holding the transaction to be a lease is not shown to have affected its decree, it is not a point on which we should interfere under Rule 20.
16. It was next argued that nothing was proved to have been done by the defendant which would amount to a revocation of the license under Exhibit A and that the question of defendant's proprietary right to the forest was irrelevant so long as he was ready to perform his part of the contract. Under paragraphs 6 and 7 of Exhibit A defendant was bound to mark and allow plaintiff to out all Sall and Paisal trees of a girth of three feet and more. It is now found by the lower Court that after the receipt of Exhibit I from the Agent to the Governor, the Zemindar told the plaintiff in June 1916 that it was not possible for him to continue work according to the original terms so far as girth of tress was concerned; that is, he could not allow trees of a smaller girth than 4 1/2 feet to be out. We must accept this finding as it is based on the Zemindar's own admission in cross-examination.
17. That, of course, was a clear breach of contract and amounted to a revocation of the original arrangement. It was said that was only a partial revocation and did not justify the plaintiff in throwing up the whole contract. Plaintiff was entitled to have his contract performed in its entirety; a breach of the part is a breach of the contract and unless the parties waive the breach, the contract is at an end. As a licensee plaintiff was not bound to continue under altered conditions. It was then said that plaintiff was not actually stopped from cutting any trees under 4 1/2 feet girth and, therefore, his action in treating the arrangement as at an end was premature. I do not think a person is bound to ask for' performance when he has notice from the opposite party that performance will be refused ; he can treat the notice as a breach. It was next suggested that plaintiff really terminated the arrangement by Exhibit O in March 1919 or by Exhibit Q in April 1916 and that anything done by the Zamindar subsequently, even if it was against the terms of Exhibit A, was immaterial and that to get damages plaintiff should justify his action under those letters. But, as found by the lower Courts, plaintiff did not in fact terminate the contract till June. Exhibit L would have been a justification for him if he had terminated it on receipt of that letter. Exhibit N does not amount to a withdrawal of the improper demand for payment in Exhibit L. But plaintiff did not rescind the contract then, whatever his intentions may have been. It was also argued that plaintiff's letter Exhibit M, when it said 'I express my inability, as I hereby do, to pay the royalty before I remove the timber from the forest to the Railway station or any mother place outside the forest,' contained a statement opposed to the terms of Exhibit A and that would have justified the defendant in revoking the license and therefore he was not liable in damages. But the statement seems to be quite in accord with the provision in paragraph 12 of Exhibit A. Under it plaintiff has only to pay before removing the timber from the forest and not earlier. It was perhaps for this reason that the point was not taken in the lower Courts. Considering that it was the defendant's own case in his written statement that the above-mentioned letters were mere misunderstandings that were going to be cleared up and they did not in any way terminate the lease, his present argument is inconsistent with it and untenable. The question of defendant's title to the forest is no doubt irrelevant in this case and it was, therefore, rightly ignored by the Appellate Court. It is clear for the above reasons that the defendant is liable in damages to the plaintiff.
18. The next point raised by the learned Vakil for the Zemindar was that the measure of damages adopted by the lower Courts was entirely erroneous and that plaintiff was not entitled to his out of-pocket expenses in any event. It may be that the proper measure of damages under Section 13, Contract Act, is the profit that plaintiff would have made if the terms of the contract had been carried out, It was, however, pointed out by the respondent's Vakil that in a case where a license was revoked this Court allowed it to be dona only on payment of the expenses the licensee was led to incur in connection with it. See Kesava Pillai v. Pedu Reddi 1 M.H.C.R. 268. No doubt the out of-pocket expenses had been incurred before the breach occurred but by the breach plaintiff lost the opportunity of recouping the moneys spent by him. As there is no reason to suppose and there is no evidence to suggest that plaintiff would not have recouped himself the amounts spent by him by carrying on the contract, we may well treat an amount equal to it as included in the loss caused by the breach. In fact it is defendant's own case that even if the contract had been worked under the altered condition of cutting only trees of 4 1/2 feet girth plaintiff would have suffered no manner of loss. It is so stated in paragraphs 7 and 10 of his written statement and in his lawyer's notice Exhibit T. The defendant's contention in the first Court also seems to have been that plaintiff was not entitled to claim any profits at all and his objection was upheld and plaintiff's claim for damages of Rs. 4,500 was disallowed. Plaintiff did not appeal from the Assistant Agent's decree and we need not consider whether he should not have an opportunity to prove his damages in full. As regards the Rs. 3,000 deposit it is clear, as shown by my learned brother, that the defendant is bound to refund it, not as plaintiff's money in his hands. There does not seem to be any substance in the defendant's objections to the amount decreed, for even if we direct a fresh trial to ascertain the profits plaintiff would have made if the contract had been carried out, there is no likelihood of the amount now decreed being in any way reduced. It is suggested that this is all speculation bat considering the defendant's case in the first Court and the course of the trial, I am not prepared to act under Rule 20 in defendant's favour and direct a review of judgment on the point.
19. The last point taken is as to the jurisdiction of the Special Assistant Agent to try this case. The case was filed in the Agent's Court as required by Rule 10, Clause (2), the claim being above Rs. 5,000. That rule gives the power to the Agent to transfer any such suit for the decision of his Assistant and the transfer in this case was made under that provision. It is argued that the power to transfer can be exercised only before the first hearing and not after a case is part-heard and as issues had been framed by the Agent in this case, the transfer to the Assistant Agent was ultra vires and the latter had no jurisdiction to try the case. I do not think the question is one of jurisdiction at all. The rule does not in terms restrict the power of transfer to a stage before the first hearing. It is more a question of the impropriety of the order than of want of jurisdiction when the Agent transferred a part-heard case to his Assistant. Ordinarily the Agent should not so transfer as the appeal from the decree has to be heard by him, when objections may be raised to any part of the trial. But the question is only one of an irregularity if he does so transfer. In the present case no objection was taken by the defendant before the trial Court to the course adopted but he awaited the decision of that Court on the merits; he must, therefore, be taken to have waived all objections. The point, though taken in appeal, does not seem to have been argued even in the Appellate Court as there is no reference to it in its judgment. It is not shown that defendant has been in' any way prejudiced by the procedure adopted. I think, therefore, this is not a point which we ought to consider under Rule 20 of the Agency Rules, as the objection seems to be a purely technical one. In an analogous matter the High Court of North Western Provinces refused to allow a similar point to be taken for the first time in appeal. See Yakoob Ali v. Luchmun Dass 6 N.W.P.H.C.R. 80. I, therefore, agree that this petition should be dismissed with costs.