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The State of Madras, Represented by the Collector of Chingleput District Vs. W.V.A. Govindaraja Chettiar - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai High Court
Decided On
Reported in(1968)2MLJ596
AppellantThe State of Madras, Represented by the Collector of Chingleput District
RespondentW.V.A. Govindaraja Chettiar
Cases ReferredThe New Marine Coal Co. v. Union of India
Excerpt:
- .....buildings, sheds, etc., and which admittedly excluded the value of the machinery constituting the pumping installation. the compensation was paid in pursuance of exhibit b-7, the proceedings of the collector of chingleput, dated 31st march, 1958, and right from that date, the department continued to be in possession of the entire premises including the pumping installation.4. nearly a year later, the respondent addressed a communication, exhibit a-4, dated 17th march, 1959, to the special tahsildar, land acquisition, pointing out that the entire property, including the pumping installation, had, been taken by the government in pursuance of the acquisition and asked him to furnish the necessary document to enable him to produce it before the madras state electricity board for certain.....
Judgment:

K. Srinivasan, J.

1. The point that arises in this appeal is a very simple one. It is whether the State of Madras, acting through its officers, agreed to purchase certain pieces of machinery from the respondent and whether any such agreement operates as a binding contract. The contention of the State of Madras, which is the appellant, before the Court below was that whatever might have been the position during the earlier stages of the negotiation, there was no concluded contract for the purchase and that the claim made by the respondent plaintiff to recover any sum as the value of the machinery is not maintainable. The following facts are necessary to clarify the stand taken by either party.

2. The respondent was the owner of an extent of over 17 acres of land which he was running as a farm. He had fitted up an oil engine, electric motors, pump lines and masonry channels to carry on water as part of the equipment of the farm. It is not in dispute that originally the property was taken on lease by the Government for a period of six months on 21st August, 1957, the lease to be effective from 1st October, 1957 to 31st March, 1958. Even during the currency of the lease, proceedings were started under the Madras Requisitioning and Acquisition of Immovable Property Act, (Madras Act XLII of 1956), and a notice under Section 3(1) of the Act was issued on 5th January, 1958 by the Collector of Chingleput District. This notice stated that, as in the opinion of the competent authority, the property was needed for a public purpose, viz., for the establishment of a State Seed Farm, it was proposed)to requisition the property under the provisions of that Act and the owner, the respondent, was called upon to show cause why such requisition should not be made. The notice also prevented the owner to dispose of or structurally alter the said property or let it. out to a tenant for a period of two months from the date of the notice. From the evidence on record, it transpires that the move for the requisition of the property proceeded from the Department of Agriculture, though certain relevant documents in the chain have not been produced. In pursuance of this notice, the Special Tahsildar, presumably acting under the directions of the Collector, recorded a statement from the respondent. The respondent expressed himself as agreeable to the proposal. In this statement, it was pointed out that the lands together with the wells, pumpset and brick-built buildings thereon had been in the possession of the Department from 1st October, 1957, and it further stated, 'the wells, pumpsets and the buildings situate on the lands to be acquired by the Government belong to me alone'. A detailed description of the property together with the value set upon it by the owner finds place in this statement, Exhibit B-2, and the owner valued the entire property, including the irrigation facilities thereon, which consisted of the wells, electric machine, oil engine, etc., at Rs. 30,000 and the statement' ended by saying that the owner agreed to give over the entire property, inclusive of these machinery to the Government. In due course, this was followed by an order under Sections 3 (2) and 4 of the Act, requisitioning the property and directing surrender and delivery of possession thereof. The latter part of this order is 'obviously a formality, for the Department of Agriculture was on that date in possession of the property by virtue of the lease that had been entered into.

3. On the same day as. the order of requisition, the competent authority proceeded to take proceedings to acquire the property under Section 7 of the Act. It is clear from the proceedings that the acquisition of the property must have been in the minds of the appropriate authorities from the beginning, but they purported to follow a somewhat devious course, firstly, by taking on lease and thereafter proceeding to apply the Madras Requisitioning and Acquisition of Immovable Property Act, rather than the Land Acquisition Act. Whatever that may be, the acquisition was not objected to and for the purpose of working out the compensation payable the parties entered into an agreement. This agreement is Exhibit B-6. It is common ground that originally it was intended to value the pumpsets, etc., for the purpose of computing the compensation, but in the final agreement that was reached with regard to the compensation, those items were left out, While this feature is depended upon by the appellant as indicating that there was no intention at all to acquire these pieces of machinery, on behalf of the respondent it is pointed out that there was in fact a valuation of these pieces of machinery independently of the valuation of the land, permanent structures thereon, the wells and the trees, and the reason why the pieces of machinery were left out was the view taken by the Collector that they did not form part of the immovable property, which alone could be acquired under the relevant Act, a view which seems to us to be entirely erroneous. But we shall deal with that later. The respondent was paid a compensation of Rs. 29,000 and odd which included the value of the lands, trees, wells, buildings, sheds, etc., and which admittedly excluded the value of the machinery constituting the pumping installation. The compensation was paid in pursuance of Exhibit B-7, the proceedings of the Collector of Chingleput, dated 31st March, 1958, and right from that date, the Department continued to be in possession of the entire premises including the pumping installation.

4. Nearly a year later, the respondent addressed a communication, Exhibit A-4, dated 17th March, 1959, to the Special Tahsildar, Land Acquisition, pointing out that the entire property, including the pumping installation, had, been taken by the Government in pursuance of the acquisition and asked him to furnish the necessary document to enable him to produce it before the Madras State Electricity Board for certain purposes connected with the supply of energy to the premises. He followed this up with a lawyer's notice, Exhibit-A, dated 26th March, 1959, pointing that at the time of taking possession of the lands, the Department of Agriculture bad also taken 'for sale' the electric motor, oil engine, pump with, pipes and other accessories, and that though a year had passed, the value of these articles had not been paid. The notice also stated that even the lease amount for a period of six months prior to the acquisition and requisition remained unpaid and called upon the Collector of Chingleput to arrange to pay the amounts. This letter would appear to have been transmitted to the Department of Agriculture and the plaintiff-respondent was directed to contact the District Agricultural Officer for further action. The District Agricultural Officer informed the Collector by Exhibit B-11 that the pumping installations were not required by the Department. This was the letter which was sent in May, 1959. By Exhibit B-10, dated 7th April, 1959, the Collector asked the District Agricultural Officer to ascertain from the plaintiff whether he was agreeable to the dismantlement and removal of the pumping installations. By the middle of May, 1959, the Collector informed the District Agricultural Officer that the lands were acquired and the compensation for the lands, .wells, trees and other structures had been paid but that 'the oil engine, electric motors, etc., fitted in the wells have hot been acquired, as they do not come within the definition of immovable property of the Act'. He also stated, ' as there is no provision in the Act to acquire the machinery, you may make your own arrangement to purchase them'. Following this, the Acting District Agricultural Officer wrote Exhibit B-14 to the Director of Agriculture to say that ' the electric motors and the oil engine fitted to the wells in the above farm are not of any use as there is no water in the above wells', and sought instructions and he finally called upon the plaintiff to. take back the oil engine, the electric motors and the accessories. Presumably, this letter indicated the unwillingness of the Department to pay for the pumping installation. The plaintiff replied through his lawyer by Exhibit B-16, dated 15th June, 1959, refusing to take back the machinery . He pointed out that this was a case of compulsory acquisition of his property and it was only after the lapse of more than 20 months when he demanded the payment of the price that the Department chose to go back upon what was agreed. He further pointed out that the State of Madras through the appropriate Department was in possession of these properties and had used all these properties for this lengthy period and he insisted upon being paid the price. Following a notice under Section 80, Civil Procedure Code, the suit was laid.

5. The above sets out in fair detail the contentions of the plaintiff-respondent. On behalf of the defendant, the State of Madras, it was denied that the pumping installation was acquired at all. It was also denied that there was any representation that they Would be purchased. There was a further denial that the Department in possession used the machinery at all. It was alleged that the plaintiff was at liberty to dismantle and remove the machinery at any time he chose and that he defaulted to do so. It was finally alleged that there was at no time any agreement with regard to the purchase, no concluded contract relevant thereto and that any statements found in the correspondence to the contrary would be a misconstruction of the state of affairs.

6. Upon a careful consideration of the voluminous correspondence and the conduct of the parties, the learned Subordinate Judge came to the conclusion that no doubt there was at least an understanding regarding the purchase of the pumping installation and that there was undoubtedly a transfer of the ownership thereof leaving only the question of price to be determined later. He also found that the Government had been in possession and had used the machinery. He categorically expressed his view that there was originally an intention to buy and an intention to sell. He examined the other material and came to the conclusion that the machinery could be valued at Rs. 7,837-3-0 as on 1st April, 1958 and granted a decree therefor together with interest thereon. The State of Madras appeals.

7. We have been taken through the entire correspondence and we find ourselves totally unable to agree with the learned Additional Government Pleader that there was no agreement to purchase. Even the Collector's letter, Exhibit 6-13, explaining that the pumping installation could not be brought within the scope of the Requisitioning and Acquisition Act and that it was for the Department to arrange for the purchase of the pumping installation outside the scope of that Act lends considerable support to the plaintiff's contention. Even at the stage of the requisition, when pursuant to the notice under Section 3 (1) of the Act, a statement was recorded from the plaintiff by the Special Tahsildar, he clearly stated that the property included the pumping installation and put a value upon the whole property. Mr. C. R. Krishna Rao, for the plaintiff-respondent, points out that this was not a statement submitted by the plaintiff, but was one recorded from him by an authorised officer, and if that officer ascertained the value of the several items and the compensation demanded by the owner in respect of these various items, that would certainly indicate that at that stage, the appropriate authorities intended to acquire the entire property as one unit. It will be noticed that the plaintiff had been running this extensive acreage as an agricultural farm fitted with all the necessary installation and the Government also proposed to acquire it for a seed farm. As a seed farm, it would certainly require these pumping installations for the purpose of irrigation and there is no reason why the Department should have, in any event, at that stage thought it necessary to restrict its acquisition only to the mere land and the buildings. The matter does not rest there. Shortly after the notice for requisition, Exhibit B-1, dated 5th January, 1958, was issued, the Special Tahsildar, Land Acquisition, appears to have addressed a communication, dated 24th January, 1958 to Sri K. Dhandayudham, the Assistant Agricultural Engineer. That letter has not been produced by the Department. In reply to that letter, the Assistant Agricultural Engineer furnished by Exhibits 3-34 and 6-33 the particulars of the oil engine and electric motors, together with their then value. He valued the various items, including the machinery, the pipes and Other fittings and gave their then probable price valued on the basis of the then market price less depreciation. This letter is dated, 26th December, 1958, nearly nine months after the acquisition under Section 7 of the Act had been made. Even at that stage, which was long before the demand made by the plaintiff for the payment of the value of the pumping installation, there was no suggestion that the Department came out with its present stand that there was at no time any intention to purchase the installation. In the letters addressed by the Department in June, 1959, to the plaintiff, he was only asked to take back the motors and the accessories. He was not categorically told that they had not been purchased at all. It was only in Exhibit 6-14, dated 1st June, 1959, that the Acting District Agricultural Officer informed the Director of Agriculture that ' the electric motors and the oil engine are not of any use as there is no water in the above wells.' Though this letter refers to the fact that the Collector had informed him. that the machinery could not be acquired under the provisions of that Act, nowhere did he say on the basis of the correspondence or the records of his office that originally the arrangement was that these installations were to be excluded altogether from the scope of the acquisition by the Department, acquisition not in the sense of the Acquisition Act but in its ordinary sense. It was also established both by documentary and oral evidence that these pieces of machinery were repaired by the Department. The Department continued to maintain the service connection and did not ask the party, that is, the owner, to obtain a disconnection. D.W. 1, who was the District Agricultural Officer during the relevant period, stated during his cross-examination, ' We were paying varying amounts in various months for these two motor connections. That was because of varying consumption.' He also admitted that the Department incurred expenditure for repairs for the plaintiff's motors.

8. It seems to us on a careful consideration of the entire material that from the inception it must have been the intention of the appropriate Department to acquire the farm as a going concern including the pumping installation. The fact that the Department maintained the service connection and incurred expenditure for repairs to the machinery establishes that the machinery was used for the purpose of the State Seed Farm and it was only at a very late stage that the Department purported to disclaim the purchase. Even so, we have pointed more than once that the Department pretended to find the machinery useless because there was no water in the wells. It did not say that there had been no water at all at any time, despite the fact that there were no less than three wells, or that the pumping installation was useless. It would certainly be remarkable if the officers of the State went about securing property for agricultural purposes which they found even at the beginning could hardly be used for that purpose for lack of water in the area. The fact that even before the acquisition, the Department proceeded to obtain a valuation of the , pumping installation by a departmental engineer is a clinching circumstance about the agreement between the parties. The agreement was clearly that the farm should be taken over as a whole including the pumping installation.

9. We do not think that the Collector was correct in his view that the pumping installation could not have been acquired under the Act as it was not immovable property. Immovable property, both under the Transfer of Property Act and the General Clauses Act, would include anything imbedded in the earth or attached to what is so imbedded. The fact it is capable of being removed does not render it any the less immovable property when it is fastened to earth in the manner in which high-power motors and a pumping installation as a whole are imbedded. It may however be that the competent authority acting under the provisions of the Requisitioning and Acquisition of Immovable Property Act, proceeded to acquire only the land, buildings, trees, wells, etc., for both the agreement with regard to the compensation and the award passed by the enquiring officer only covered these items. That does not mean that there could not have been a separate agreement with regard to the purchase of the pumping installation. In our opinion, there clearly was.

10. The learned Additional Government Pleader urged that on the authority of The Board of Revenue v. Venkataswami (1955) 2 M.L.J. 215, the pumping installation cannot be regarded as immovable property. That was a case where stamp duty payable on a lease relating to a touring cinema was in question. The decision is a short one and consists of a single paragraph, which runs thus:

The answer to the question depends upon whether the equipment of the touring cinema would fall within the category of immovable property. We have no hesitation in holding that it does not. In the question referred to us, the properties are described as collapsible and capable of being removed. In the Very nature of things, properties of that nature cannot be immovable property. The expression 'permanently fastened' occurring in the question is a little misleading. Actually, some of the machinery or the poles of the tent, may be embedded in the earth, but they are embedded only temporarily and not permanently. If they were permanently fixed, the equipment would not form part of the touring cinema.

It is obvious that this decision depended more upon the manner in which the articles were fastened to the earth and the nature of the touring cinema as a unit. This decision cannot be applied to a case where a pumping installation is in question. A pumping installation necessarily involves a more permanent fixture to the earth, than a touring cinema does. For the matter of that, even walls can be dismantled and replaced, but that would not make them movable property.

11. It was next urged by the learned Additional Government Pleader that it has not been shown that any person authorised to do so entered into the contract of sale and that if the requirements of Article 299 of the Constitution are not complied with, there cannot be an enforceable contract against the State. That is no doubt true. But it is not denied by the learned Additional Government Pleader that the Director of Agriculture is a person who could enter into a valid contract on behalf of the State. The entire process of acquisition was started by the Department of Agriculture and must obviously be by the Head of the Department, the Director of Agriculture. In entering into a transaction with private parties, the Department acts through its various subordinate links and it is not always that the Head of the Department enters into direct negotiations with the parties. If the entire activity of the Department as disclosed by the correspondence means anything at all, it means that the departmental officials acting under proper directions issuing from the Head of the Department proceeded with the negotiations in the present case and it must be assumed that when they told the plaintiff that the property would be acquired as a whole, they did so under proper authority. As we have pointed out more than once, there has been no express denial of this circumstance, the plea put forward at a late stage being only that the installation was no longer required. That was more or less the view taken in a decision of the Supreme Court in The State of Bihar v. Karamchand and Brothers Ltd. : [1962]1SCR827 . In K. P. Chowdary v. State of Madhya Pradesh : [1966]3SCR919 , their Lordships of the Supreme Court pointed out that in view of Article 299 (1) of the Constitution, there can be no implied contract between the Government and any other person, and that unless the contract is in compliance with that Article, it would be no contract at all. That was a case where a forest contractor failed to complete his bid by payment of the amount and a re-auction was held at his risk. The deficiency occurring therefrom was sought to be recovered from the defaulting bidder. The question arose whether there was a contract between the contractor and the Government before the bid at the auction. It was held that notwithstanding the acceptance by the contractor of the conditions before the bid and that the contract form had been signed by the contractor as required under the rules, a dispute arose before the contract was concluded, and in those circumstances, there was no valid contract which conformed to the requirements of Article 299 of the Constitution and that the Government could not recover the deficiency on account of the re-sale. But to our minds there is no doubt that the proceedings for the acquisition of the property including the pumping installation had been authorised by the Director of Agriculture, as otherwise it is impossible to understand the steps taken by the various officers of the Department in that regard. Though the contract was not in writing and might not come within the scope of Article 299 of the Constitution, for that reason the claim of the plaintiff cannot be defeated, as there is sufficient authority in support of his, claim.

12. In The State of West Bengal v. B. K. Mondal and Sons : AIR1962SC779 , the question of an unauthorised contract, in the sense that it did not conform to the requirement of Article 299-arose. But their Lordships found that where the Government of a State on the basis of such an unauthorised contract has obtained an advantage and enjoyed it at the expense of another persons, Section 70 of the Indian Contract Act, would apply thereto and the claim can be maintained thereunder. This part of the headnote is illuminating:

Where a claim for compensation is made by one person against another under Section 70, it is not on the basis of any subsisting contract between the parties; it is on the basis of the fact that something was done by the party for another and the said work so done has been voluntarily accepted by the other party. In regard to the claim made against the Government of a State under Section 70, it may be that in many cases, the work done or the goods delivered are the result of a request made by some officer or other on behalf of the said Government. In such a case, the request may be ineffective or invalid, for the reason that the officer making the request was not authorised under Section 175 (3) of the Government of India Act, or if the said officer was authorised to make the said request, the request becomes inoperative because it was not followed up by a contract executed in the manner prescribed by Section 175 (3) of the Government of India Act. In either case, the thing has been delivered or the work has been done without a contract, and that brings in Section 70. It would not be reasonable to suggest that in recognising the claim for compensation under Section 70, the Court is either directly or indirectly nullifying the effect of Section 175 (3) of the Government of India Act, or treating as valid a contract which is invalid. The fields covered by the two provisions are separate and distinct; there is no conflict between the two provisions. In the functioning of the vast organisation represented by a modern State, Government Officers have invariably to enter into a variety of contracts which are often of petty nature. Sometimes, they may have to act in emergency, and, on many occasions in the pursuit of the welfare policy of the State Government, officers may have to enter into contracts orally or through correspondence, without strictly complying with the provisions of Section 175 (3) of the Act. If, in all these cases, what is done in pursuance of the contract is for the benefit of the Government and for their use and enjoyment and is otherwise legitimate and proper, Section 70 would step in and support a claim for compensation made by the contracting parties, notwithstanding the fact that the contracts had not been made as required by Section 175 (3).

In yet another decision, The New Marine Coal Co. v. Union of India : [1964]2SCR859 Section 70 of the Contract Act was applied in respect of a contract which contravened the provisions of Section 175 (3) of the Government of India Act, following the earlier decision cited above. Their Lordships observed:

It is also clear under this decision that if in pursuance of the said void contract, the appellant has performed his part, and the respondent has received the benefit of the performance of the contract by the appellant, Section 70 would justify the claim made by the appellant against the respondent.

13. These decisions make it clear that even if there is any invalidity attaching to the contract regarding the purchase, the fact that the Department took the property covered by such invalid contract and used it for a considerable length of time justifies the plaintiff's claim. It follows that the conclusions reached by the Court below are correct in so far as this part of the case is concerned.

14. The learned Additional Government Pleader sought to claim that the valuation was too high and in supporting this argument he relied upon the valuation that was made in Exhibits 6-34 and 6-33 by the Assistant Agricultural Engineer in December, 1958. It may be noticed that this Valuation was never communicated to the plaintiff and a one-sided valuation of that kind cannot be relied upon. The learned Subordinate Judge has given adequate reasons for fixing the relief at the figure for which the decree has been made. We see no reason to interfere. The appeal is. accordingly dismissed with costs.


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