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Karnaphuli Jute Mills Ltd. Vs. Union of India (Uoi) - Court Judgment

LegalCrystal Citation
CourtKolkata High Court
Decided On
Case NumberSuit No. 3641 of 1950
Reported inAIR1956Cal71
ActsIndian Independence (Right, Properties and Liabilities) Order, 1947 - Articles 9 and 10(1); ;Defence of India Act, 1939 - Sections 17 and 19; ;Code of Civil Procedure (CPC) , 1908 - Section 9; ;Defence of India Rules; ;Requisition of Land (Contiuance of Powers) Act, 1947 - Section 6; ;Arbitration Act, 1940 - Section 1; ;Displaced Persons Institution of Suits Act, 1948 - Section 4; ;Limitation Act, 1908 - Articles 48 and 120
AppellantKarnaphuli Jute Mills Ltd.
RespondentUnion of India (Uoi)
Appellant AdvocateA.K. Sen and ;B.K. Chowdhury, Advs.
Respondent AdvocateG.P. Kar, Sr. Central Government Counsel and ;S.P. Mitra, Adv.
DispositionSuit dismissed
Cases ReferredBata Shoe Co. Ltd. v. Union of India
- 1. this is a suit for recovery of rs. 9,72,579/- on various causes of action which are not very clearly set out in the body of the plaint itself, but have to be gathered from theparticulars given in prolix and rambling an-nexure to the plaint.2. the plaintiff company is incorporated under the indian companies act and formerly used to carry on business at chittagong; it describes itself in the cause title of the plaint as having its registered office at present at 1b, old post office street, calcutta. it claims to he a 'displaced person' within the meaning of the displaced persons institution of suits act, 1948.3. the main facts which can tie gathered from the plaint are as follows:(4) the plaintiff was the owner of a mill and factory at chittagong consisting of certain buildings, plants.....

1. This is a suit for recovery of Rs. 9,72,579/- on various causes of action which are not very clearly set out in the body of the plaint itself, but have to be gathered from theparticulars given In prolix and rambling an-nexure to the plaint.

2. The plaintiff company is incorporated under the Indian Companies Act and formerly used to carry on business at Chittagong; it describes itself in the cause title of the plaint as having its registered office at present at 1B, Old Post Office Street, Calcutta. It claims to He a 'Displaced person' within the meaning of the Displaced Persons Institution of Suits Act, 1948.

3. The main facts which can tie gathered from the plaint are as follows:

(4) The plaintiff was the owner of a mill and factory at Chittagong consisting of certain buildings, plants and machinery. In the factory premises were stored, at the relevant time, various movables including logs of timber, stacks of bricks etc. The factory stood on land belonging to the Commissioners for the Post of Chittagong. On the 7-2-1942 the premises of the mill and factory of the plaintiff were requisitioned under the Defence of India Rules and possession thereof is alleged to have been made over to the defendant immediately thereafter.

The plaintiff's properties were de-requisitioned on 3-7-1947 and formal possession delivered to the plaintiff shortly , after the said date. The plaintiff complains that the military authorities of the Government of India converted the mill and factory area into a military base by demolishing certain portions of the buildings and structures and thereby damaged plants, machinery and movables lying therein.

Complaint is also made that the defendant did not accord facility to the plaintiff to remove the moveables lying in the factory and failed further to take proper or reasonable care of the plaintiff's properties.

5. The plaintiff's claim can be summarised under the following heads :--

(a) Compensation for requisition of the premises of the mill and the factory.

(b) Damages suffered by reason of the defendant's failure to allow the plaintiff opportunity to remove various movables.

(c) Damages suffered on account of the defendant's failure to take proper or reasonable care of the plaintiff's properties by reason whereof machinery ana other movables have become entirely unfit for use.

(d) Damages for conversion of three lakhs of bricks and 370 tons of Gamar logs taken over by the defendant in 1942.

(e) Damages suffered through the defendant's default in allowing the plaintiff's properties to be looted and pilfered.

6. The plaintiff charges that in spite of its efforts in that behalf no agreement could be arrived at with respect to the compensation due and payable to it and the defendant was not ready and willing to appoint an arbitrator to assess the compensation.

7. By its written statement the defendant refers to the order of requisition dated 7-2-1942 for the scope and effect thereof. The defendant does not admit its liability to pay any compensation to the plaintiff and denies the plaintiff's claim in its entirety. The defendant further states that the liabilities, if any, arising out of the requisition of the plaintiff's properties and premises are those of the Dominion of Pakistan, and this Court is not competent to try and determine the suit inasmuch as no part of the cause of action for It has arisen within the jurisdiction of this Court.

8. The following issues were settled as preliminary issues :--

(1) Is the liability to the plaintiff, If any, that of the Dominion of Pakistan? .

2. Is the suit maintainable by reason of the provisions of the Defence of India Act and Rules made thereunder and the Requisition of Land (Continuance of Powers) Act, 1947?

3. Has this Court jurisdiction to try and determine this Suit?

4. Is the suit barred by limitation?

9. Issue No. 1: The plaintiff's claim can be grouped under two main heads, the first being compensation for requisition of the building and premises of the mill and factory and the second being damages on various counts, the nature whereof has already been described.

10. As regards the claim for damages suffered on the various heads there can be no doubt I that the liability, if any, Is in respect of 'action-able wrong other than breach of contract' with-in the meaning of Article 10 Sub-clause (1) Indian Independence (Rights, Properties and Liabilities Order, 1947. The cause of action in respect of such damages arose wholly within territories which, as from 15-8-1947 are the territories of the Dominion of Pakistan and consequently there can be no room for contention that the defendant Is liable therefor.

As regards the claim for compensation for requisition of buildings and premises of the Mill and factory it was argued by Mr. Sen, learned Counsel for the plaintiff that the same are really statutory liabilities, and as such should properly be classed under 'other financial obligations' mentioned in Article 9, Indian Independence (Rights, Properties and Liabilities) Order, 1947.

But unfortunately for him the point is covered by authority binding on me. In 'State v. Ser-ajuddin Batiey' : [1954]1SCR378 , it was held that the expression 'other financial obligations' occurring in Article 9, Indian Independence (Rights, Properties and Liabilities) Order 1947 is to be considered 'ejusdem generis' with the words 'loans, guarantees' in the said Article. The facts of that case are wholly unlike the facts in the case before me.

The question there was whether the liability to pay rent in respect of a lease dated 22-2-1947 in respect of property demised to the Governor of the undivided Provinces of Bengal, being the first, second and third floors of premises No. 73, Dhurromtolla Street in the town of Calcutta, was a liability of the State of West Bengal or of the Dominion of Pakistan.

Before the Supreme Court it was contended on behalf of the State of West Bengal that the liability to pay rent under the lease fell within the category of 'other financial obligations' in Article 9, Indian Independence (Rights, Properties and Liabilities) Order, 1947.

It was argued further that all obligations to pay money or (sic) by way of damages for breacts of contract might properly be described as 'financial obligations'.

Delivering judgment of the Supreme Court Das J. observed:

'It is no doubt true that an obligation to pay money under a contractor for breach thereof is in a sense a 'financial obligation' but the question Is not what may popularly be described as 'financial obligation' in the context in which it has been used. To accept the argument of the learned Advocate General will be to rob Article 8 of practically the whole of its content excepting claims for injunction or specific performance of the contract or the like.

Such, we apprehend, could not have been the intention of the framers of that Article. This difficulty does not arise if the expression be construed 'ejusdem generis', for so construed, it implies an obligation in the nature of an obligation in respect of loans and guarantees incurred or undertaken by the State as held by Harries C. J.

The phrase 'loans -- guarantees and other financial obligations' occurred in Section 178 in Part 7, Government of India Act, 1935, and there cannot be any doubt that those expressions used in that section did not refer to all and sundry pecuniary obligations of the State arising out of contracts of every description. The loans and guarantees there referred to meant, it would seem, the special kinds of contracts relating to State loans and State guarantees,

In that context financial obligations would mean obligations arising out of arrangements or agreements relating to State finance such as distribution of revenue, the obligation to grant financial assistance by the Union to any State or the obligation of a State to make contributions and the like'.Harries C. J. made similar observations In the case 'Nilima Sarkar v. Governor General-in-Council' reported in 86 Cal LJ 98 (B). His Lordship observed (see at p. 102) : 'That phrase I think must be held to mean financial obligations of the nature of loans and guarantees'. The point came up for consideration before my learned brother Bose J. in 'Hindusthan Housing and Land Development Trust Ltd. v. State of West Bengal reported in 59 Cal WN 405 (C). The plaintiff's claim in this case was in respect of compensation for requisition of certain lands. His lordship observed (see at p. 411) :--

'The liability arises out of the statute and the agreement taken together. The cause of action of the plaintiff is based on the fact of requisition, the liability to pay the compensation by reason of the requisition and the agreement fixing the amount of compensation. But the liability arises for non-fulfilment of the statutory obligation to pay the compensation as provided by the Defence of India Act. The liability is a creature of statute. The cause of action is the breach of statutory obligation which is an actionable wrong'.

With respect I agree with the conclusion arrived at by Bose J. and I hold, therefore, on issue No. 1 that the liability in respect of the requisition, if any, has not devolved on the defendant.

11. Issue No. 2: Mr. Kar learned Counsel for the defendant advanced a twofold argument against the maintainability of the suit. The first branch of his argument was that if any property was requisitioned by Government for military purposes under the Defence of India Act a suit in respect thereof would be barred both under the general law of the land and Section 17 of the said Act.

The second branch of his argument was that the relief, if any, open to the plaintiff was that indicated by Section 19 of the said Act i.e., the aggrieved person must follow the procedure there laid down and in default of agreement as to compensation, must resort to arbitration and could not file a suit.

12. On the first of these points Mr. Kar argued relying on the case of 'Peninsular and Oriental Steam Navigation Co. v. Secy, of State' 5 Bom HCR App 1 (D) that the position at the date of the suit was the same as that obtaining in the year 1861 when that case was decided and he drew my attention to recent judgments in which that case has been followed. He referredme to a passage from the Judgment of Chakra-vartti J. (as he then was) in the case of 'Udoy Chand Mahatab v. Province of Bengal' 51 Cal WN 537 at p. 541 (E). The relevant portion is as follows :

'The principles deduclble from those and other cases as we understand them, are as follows: a distinction must be made between the acts done by the Crown in pursuance of ventures which a private individual might undertake equally well, and acts done in exercise of Governmental powers which could not be lawfully exercised save by the sovereign authority or persons to whom the sovereign authority might delegate those powers.

Acts of the former class are mercantile operations or operations of like kind in which the East India Co., actually engaged itself before and even after it had acquired sovereignty.

Acts of the second class fall under two categories. One class are acts of State, properly so called, such as making a treaty, commandeering private property for war purposes, or quelling. civil disturbances by force. Such acts are never justiciable in Courts of Laws, and since the Crown itself is not answerable for such acts in its courts there is no principle upon which it could be made liable for the acts of its officers or subordinates. The immunity is absolute.

The other class of acts are those which are done under the sanction of some municipal law or statute and in exercise of powers thereby conferred. This class can be sub-divided further into two classes -- (i) those consisting in detention by the Crown of land, goods or chattels belonging to the subject and (ti) those done by officers of the Crown for the discharge of their official duties.

With regard to acts of the first sub-class, art. action would lie in the Courts in India, and it would seem that even In England, a petition of right would lie. With regard to acts of subclass (ii), however, no action would lie excepting-cases where it could be proved that the impugned act had been expressly authorised by the Crown or that the Crown has profited by Its performance'.

13. This question has also been discussed at great length in the judgment of Mukherjee J. (as he then was) in a case before the Supreme-Court, 'Province of Bombay v. Khusaldas S. Ad-vant' : [1950]1SCR621 . The relevant pass-ages in his Lordship's judgment are contained in paras 129 and 123.

This was a case where the Province of Bombay had requisitioned a flat under the provisions of the Land Requisition Ordinance 5 of 1947 and the High Court at Bombay was asked to issue a writ of certiorari against the Province of Bombay to quash the order of requisition. It was observed by the learned Judge (at p. 248) as follows :

'It was true that the East India Co., was invested with powers and functions of a two-fold character. They had on the one hand powers to carry on trade as merchants; on the other hand!1 they had delegated to them powers to acquire, retain and govern territories, to raise and maintain armies and to make peace and war with native powers In India.

But the liability of the East India Company to be sued was not restricted altogether to claims arising out of undertakings which might be carried on by private persons; but other claims if not arising out of acts of State could be entertained by Civil Courts, if the acts were done un-der sanction of municipal law and in exercise of powers conferred by such law.'

His Lordship further observed (at p. 249),

'In the case before us the act of requisition which purports to have been done under sanction of municipal law, and in exercise of powersconferred by such law cannot be an act of State. An action on the powers being illegally exercised could certainly have been brought against Secretary of State if the Constitution Act of 1935 had not been passed.'

14. It appears to me that the claim in the present case arising out of requisition of a property under the Defence of India Act is in respect of an act done under the sanction of municipal law. If the law gives the right to claim compensation a subject undoubtedly has the right to complain if it is not given. Mr. Kar referred me to my judgment in the case of -- 'Purnendu v. Union of India' : AIR1956Cal66 .

In that case some timber, claimed by theplaintiffs to be theirs, was taken possession of by military authorities following the requisition of a tea estate where the timber lay. There was some dispute as to the ownership of this timber and the military authorities called upon the plaintiffs to establish, their claim in a Court of law. The plaint in that case proceeded on the basis that the timber had been commandeered by military authorities for war purposes & it wasconceded by learned counsel appearing for the plaintiffs that Section 17, Defence of India Act was a bar to such a suit.

The point about the maintainability of the suit even on the face of Section 17, Defence of India Act was not argued at all.

15. On the second branch of his contention Mr. Kar submitted that where a statute creates a liability and prescribes a particular mode by which redress is to be had, it is not open to a claimant to seek any redress other than that laid down by the statute.

In support of this contention he referred me to the Judgment of the Madras High Court in--'Secy, of State v. Allu Jagannadham' AIR 1941 Mad 530 (FB) (H), and to certain observations occurring at p. 532. The fountain-head of this line of authorities is the well known case of -- 'Wolverhampton New Waterworks Co. Ltd. v. Hawkesford' (1859) 6 CB (NS) 336 (I), where Willes J., laid down that

'where a liability not existing at common law is created by a statute which at the same timegives a special and particular remedy for enforcing it ..... the remedy provided bythe statute must be followed, and it is not com-petent to the party to pursue any other cause .....The form given by the statute mustbe adopted and adhered to.'But the obstacle in Mr. Kar's way lies in the factthat the statute in this case prescribes, in myopinion, no complete remedy. If there is no agreement between the parties there must be an arbitration for the purpose of assessing the compensation. If Government did not choose to ap-point an arbitrator it would not be open to aclaimant to have one appointed under the Indian Arbitration Act because that Act does not applyto arbitrations under the Defence of India Act or the Rules thereunder.

Possibly in the mofussil a suit would have lain to compel the Government to appoint an arbitrator while so far as this Court was concerned steps might have been taken under the provisions of Section 45, Specific Relief Act. But an aggrieved person's difficulty might not end there. Sup-posing an arbitration did take place and compensation was awarded but in spite of it Government did not choose to pay the amount of the award the claimant would still have to resort to Courts of law.

It seems that he would still be relegated to a suit on the award. In view of these difficulties I cannot hold in favour of Mr. Kar that Section 17, Defence of India Act or the provisions of Act 17 of 1947 prohibit the filing of a suit in respect of compensation due for requisition of a claimant's premises.

16. In this connection I should also note the contention of Mr. Sen that arbitration under the provisions of Section 19, Defence of India Act would only be sought in respect of acquisition of premises and not of requisition thereof and he referred me to certain Judgments of the Supreme Court for the purpose of showing that there was a clear distinction between acquisition and requisition. However that may be so far as this point is concerned there is clear authority in favour of the arguments put forward by Mr. Kar viz., that Section 19 of the Act applies not only to acquisitions properly so called but also to requisitions of premises.

In 'Province of Bengal v. Board of Trustees for Improvement of Calcutta' AIR 1946 Cal 416. (J), Mitter J., pointed out that under Sub-section (5) of Section 299, Government of India Act, 1935, land included immovable property of every kind & any rights in or over such property and by the provisions of Section 19 Sub-section (1), Clause (e) Sub-clause (ii), Defence of India Act the arbitrator in making his award was to have regard to the question as to whether the acquisition was of a permanent or temporary character.

Clearly, acquisition properly so called cannot be of a temporary character. Acquisition of at temporary character can only mean requisition. Mitter J., observed as follows (at page 418):

'The relevant portion of Section 299 requires that land (which includes immovable property of every kind and any right in or over such property -- Sub-section (5) can only be acquired under the authority of law and only under a law which provides for the payment of compensation and specifies the principles on which and the manner in which it is to be determined. Rule 2 (11), Defence of India Rules, defines the term 'requisition' and Rule 75A deals with requisition of movable and immovable property.

According to its definition requisition means taking over of possession by the requisitioning authority -- The Central or the Provincial Government as the case may be and in relation to the owner of immovable property the effect is that the owner is deprived of his possession, though not of his ownership, unless under Sub-rule (2) of Rule 75A the requisitioning authority chooses to acquire the property out and out.

On requisition an owner loses his possession only which is transferred to the requisitioning authority. Requisition in relation to land without more is thus the 'acquisition' of an interest in land for a time or for an uncertain period as the case may be.

Section 19, Defence of India Act, does not in terms speak of requisition.

It, however, contemplates the case of 'temporary acquisitions' see Clause (e), Sub-clause (ii). In view of that provision In the Defence of India Act and of the provisions of Section 299, Sub-section t.2) read with Sub-section (5), Government of India Act, we hold that Section 19, Defence of India Act, governs 'requisitions' also and by reason of Clause (3) thereofcompensation has to be awarded to the owner of the land requisitioned.'

This judgment does not stand by itself. It has been referred to with approval by the High Court of East Punjab in the case of -- 'Governor General in Council v. Indar Mani Jatia' AIR 1950 EP 296 (K), decided by Das C. J., and Harnam Singh J. No decision to the contrary has been shown and no valid ground has been shown as to why I should come to some other conclusion.

17. I hold, therefore, that Section 19, Defence of India Act applies to requisitions of lands and premises but I do not hold that Section 17 of the Act bars the filing of a suit in all cases.

18. Issue No. 3 is 'Has this Court jurisdiction to try or determine this suit? Arguments were advanced under this issue on two heads. Mr. Kar contended that it has not been shown that any part of the cause of action for the suit has arisen within the Jurisdiction of this Court, and that the Displaced Persons Institution of Suits Act, 1948 cannot apply. I hold in favour of Mr. Kar on this issue.

It has not been shown anywhere in the plaint that any part of the cause of action for this suit, has arisen within the jurisdiction of this Court. The plaint makes a mention of some negotiations for settlement which had gone on prior to the Institution of the suit between a firm, Katy & Co., an Engineering Concern, and the military authorities of the defendant for the purpose of assessing compensation but nothing had come out of it. I do not see how much negotiations can form any part of the plaintiff's cause of action here.

19. The Displaced Persons Institution of Suits Act, 1948 received the assent of the Governor General on 4-9-1948. This Act was passed in order to make certain special provisions for the institution of suits by displaced persons. By Section 3 of the Act a displaced person means any person who on account of civil disturbances or fear of such disturbances in any area now forming part of Pakistan has been displaced from, or has left his place of residence in such area after 1-3-1947, and who has subsequently been residing in India.

20. Section 4 of the Act reads as follows:

'Notwithstanding anything contained in Section 20, Civil P. C., 1908 (5 of 1908) or in other law relating to the local limits of the jurisdiction of Court or in any agreement to the contrary, a displaced person may institute suit in a Court within the local limits of whose Jurisdiction he or the defendant or any of the defendants, where there are more than one at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, if

(i) the defendant or, where there are more than one, each of the defendants, actually and voluntarily resides or carries on business or personally works for gain in India and is not a dis-placed person,

(ii) the cause of action wholly or in part, arises or has arisen in a place now situate within the territories of Pakistan:

(iii) the Court in which the suit is institut-ed is otherwise competent to try it; and

(iv) the suit does not relate to immovable property.'

21. I have grave doubts whether a company incorporated under the Indian Companies Act, can ever be a displaced person within the meaning of Section 3. It does not appear to me that the Act was intended to apply to the case of anartificial person like a company for fear of civil disturbances cannot affect it, nor do I see how an artificial person, even if it has a place of residence, can be displaced therefrom through anycivil commotion.

It has not been suggested that the plaintiff has no connection with Pakistan or that it has ceased to hold all properties there but as the point was not expressly raised I need not say anything more about it. Mr. Kar contended that it was not open to the plaintiff to file a suit against the Government under the provisions of Section 4 of the Act and in this he is fortified by a judgment of this Court delivered by Bose J., in -- 'Tilok Chand Agarwalla v. Dominion of India', in Suit No. 3658 of 1948 (Cal) (L). This suit was in respect of a claim of Rs. 22,065/- for compensation for non-delivery of certain goods entrusted to the railway for carriage from Bogra to Siliguri railway station.

Before his Lordship it was contended on behalf of the defendant that Section 4 was not applicable to a case where the defendant was the Government and reliance was placed on various decisions, turning on the construction of Clause 12, Letters Patent. Before Bose J., it was argued by Mr. Deb, learned counsel for the plaintiff that all that the cases had decided was that Government could not be said to carry on business at a particular place but that no case had gone to the length of deciding that Government did not reside in the country which it governed.

Although admitting that there was considerable force in the argument of Mr. Deb, his Lordship held, following the long line of decided cases, that the expressions contained in Section 4, Displaced Persons Institution of Suits Act 1948 which are very similar to those in Clause 12, Letters Patent of this Court did not warrant the proposition that a suit could be filed against the Government under this Act.

All these cases have been neatly summarised, if I may say so, with respect, by Bose J., and I do not think any useful purpose will be served by analysing those cases over again. That the wording of the Letters Patent did not apply to Government was decided not only by this Court but also by the Bombay and the Madras High Courts. Coutts-Trotter C. J., in the case of --'Govindrajulu Naidu v. Secy, of State' AIR-1927 Mad 689 (M), observed as follows:

'I think that the word 'reside' must be taken to refer to natural persons and not to legal entities such as limited companies or Government. His Lordship was then considering the applicability of the word 'reside' in Section 19, Civil P. C. The Bombay High Court took a similar view In the case of -- 'Bata Shoe Co. Ltd. v. Union of India' : AIR1954Bom129 (N). This case turned on the construction of Section 18(b), Presidency Small Cause Courts Act (15 of 1882) which contained very similar expressions.

It was argued by Mr. Sen, learned counsel for the plaintiff, that this construction of the Act would lead to a great hardship and wpuTd deprive persons like the plaintiff from any relief if the cause of action was against Government. There is certainly some force in his contention but I cannot ignore the long line of decisions of this Court and other Courts and construe this Act against the current of authority simply to give relief to the plaintiff.

The legislature must be taken to have been aware of the said decisions and if it intended to give relief to displaced persons in cases where redress was claimed against Government I see no reason why suitable provision could not have been made in respect thereof. I answer Issue No. 3 in the negative.

22. As regards the claim for compensation for requisition of immovable property it would, in my view, be governed by Sub-clause (iv) of Section 4, Displaced Persons Institution of Suits Act and be barred thereunder.

23. Issue No. 4 -- 'Is the suit barred by limitation'? No argument was addressed on this issue and I see no reason for holding that the claim, if otherwise good, would be barred by limitation. It has been held by Bose J., in the case I have just referred to that a claim for compensation in respect of immovable property requisitioned by Government would be governed by Article 120, Indian Limitation Act.

The claim for damages on the other heads, in my opinion, would be governed by Article 48 of the same Act and as such, no part of the plaintiff's claim can be said to be barred by limitation.

24. In the result, I must dismiss the plaintiff's suit with costs.

25. Certified for two Counsel.

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