1. This rule was granted upon an application under Order XLI, Rule 5 of the Civil Procedure Code of 1908, for stay of execution of the decree of the Court below. At the time the rule was issued, the Court also made an order under sub-rule (4) of that rule for stay of execution pending the hearing of the application. The circumstances under which the application has been made may be briefly narrated. Maharani Beni Prasad Kuari of Dumraon died on the 13th December 1907. The plaintiff, Kesho Prosad Singh, alleges that two days later, he was evicted from the Raj estate, though he was the rightful owner thereof, and on the 16th December 1907 the Court of Wards declared an infant Jung Bahadur Singh, now known as Maharaj Kumar Srinivasa Prosad Singh, as the owner thereof and took possession of the Raj on his behalf. On the 5th February 1909, Kesho Prosad Singh commenced an action in the Court of the Subordinate Judge of Shahabad for declaration of his title, for recovery of possession of the Dumraon Raj estate, for accounts and mesne profits and for incidental reliefs. The suit which was valued at three crores of rupees was brought against the infant Jung Bahadur Singh alleged to have been adopted by the late Maharani under an authority from her husband Maharaja Sir Radha Prosad Singh the Collector of Shahabad, as representing the Court of Wards, and the manager under the Court were also joined as defendants. The claim was strenuously resisted on behalf of the defence and after a protracted trial, extending over many months, a decree was made in favour of the plaintiff on the 12th August 1910. The operative part of the decree is in the following terms: 'The plaintiff Babu Kesho Prosad Singh, being the Lawful heir of the Dumraon Raj is entitled to recover possession of all the properties appertaining thereto and the defendant should make over peaceful possession of the same. He is further entitled to the reliefs prayed for in the plaint. The Court of Wards is liable to render accounts of all moneys, moveables and immoveables, of which it took possession at the time of its assumption of the charge of the estate. It is further declared to be liable for mesne profits and other benefits for the period the plaintiff is kept out of possession, that is, from the date of dispossession up to the time he is restored to possession. The plaintiff shall be entitled to all his costs from the Court of Wards with interest up till realization.' On the 8th September 1910, the infant defendant, represented by his guardian under the Court of Wards, and also the Collector of Shahabad appealed to this Court against the decree of the Subordinate Judge and obtained the rule now under consideration as also the interim order for stay of proceedings to which reference has been made. The rule first came to be heard before my learned brother Coxe and myself on the 4th December 1910. The materials then before the Court were the petition upon which the rule had been issued, verified on 7th September 1910, and the affidavit of the plaintiff-respondent Kesho Prosad Singh sworn on the 1st December 1910. After elaborate arguments, the petitioners obtained an adjournment to enable them to consider what security they might offer under Order XLI, Rule 5 sub-rule 3 Clause (c), if the Court felt disposed to make an order for stay of execution. The rule came on for further arguments on the 19th December 1910. Meanwhile, the petitioners had adopted, what must be regarded as an unusual and irregular course. On the 15th December 1910, they filed an affidavit which was ostensibly an affidavit in reply to that filed by the respondent Kesho Prosad Singh on the 1st December 1910, but which in reality introduced new matters to supplement the allegations in their original application. Thereupon, Kesho Prosad Singh on the 19th December 1910 filed another affidavit in which he protested that the affidavit filed by the petitioners on the 15th December 1910 was irregular and ought not to be accepted. Kesho Prosad Singh also contradicted various allegations made in the second affidavit filed by the petitioners. The rule was then further heard before my learned brother Coxe and myself on the 19th December 1910. But as the petitioners were not ready to make a definite offer of security they obtained another adjournment. The rule then came to be heard by my learned brother Teunon and myself on the 4th January 1911 when the petitioners offered as security what was described as a guarantee by the Secretary of State for India. The case was then further adjourned to enable the Advocate-General to be heard as amicus curix on behalf of the Secretary of State for India. Full arguments were addressed to the Court on the 17th and 18th January by the learned Advocate- General and by learned Counsel on behalf of the decree-holder respondent and the judgment-debtors-appellants. On behalf of the decree holder, it was contended that the rule ought to be discharged, first, because upon the materials placed before the Court, there was no proof that substantial loss might result to the appellants unless an order for stay of execution was made, and secondly, because the security offered was not legally enforceable, and at any rate, its validity was open to such grave doubt that it ought not to be accepted as a good security for the purposes of stay of execution. The learned Counsel for the decree-holder further contended that the petitioners had acted in an entirely irregular manner, as it was not open to them to place on the record what was essentially a supplemental affidavit after the hearing had commenced and the matter had been adjourned to enable the appellants to consider whether they could comply with the requirements of the Code in the matter of security. On behalf of the judgment-debtors petitioners, it was contended that substantial loss would result to them if execution was not stayed and that the guarantee offered furnished adequate security for the protection of the decree-holder in the event of his ultimate success. On behalf of the Secretary of State for India, the learned Advocate-General, as amicus curix, further contended that the guarantee offered on his behalf was ample security and its validity could not be questioned in a Municipal Court. The questions raised are of some novelty and by no means free from doubt and difficulty. The Court has consequently taken time to give the fullest consideration to the arguments advanced on both the sides.
2. Order XLI, Rule 5 of the Code of 1908 provides in sub-rule (1) that an appeal shall not operate as a stay of proceedings under a decree, except so far as the Appellate Court may order, nor shall execution of a decree be stayed by reason only of an appeal having been preferred from the decree, but the Appellate Court may for sufficient cause order stay of execution of such decree. Sub-rule (3) next provides that no order of stay of execution shall be made under sub-rule (1) unless the Court making it is satisfied, (a) that substantial loss may result to the party applying for stay of execution unless the order is made; (b) that the application has been made without reasonable delay, and (c) that security has been given by the applicant for the due performance of such decree as may ultimately be binding upon him.
3. Each of these three elements is an essential pre-requisite to the grant of an order for stay of execution and it is the duty of the Court to satisfy itself that each of these conditions has been fulfilled before an order is made in favour of the judgment-debtor. In the present case, no question arises as to the second element; the application was made very promptly, in fact, even before the decree-holder could make an application for execution of his decree. The question, therefore, is restricted to the other two elements, and they may be separately considered.
4. The first question is, whether the petitioners have satisfied the Court that substantial loss may result to them unless the order is made. Gaikwar v. Ghandi 25 B. 243. Here it cannot be disputed that the petitioners have adopted an irregular course. The affidavit upon which they applied for a rule is not sufficiently specific. This appears to have been realised after the hearing of the rule had commenced on the 2nd December 1910, and an attempt was consequently made to import new matter in the supplemental affidavit filed on the 15th December 1910 as an affidavit in reply Strictly speaking, the matter ought to be decided upon the petition verified on the 7th September 1910 and the affidavit in answer sworn on the 1st December 1910. I do not desire, however, to base my decision upon what may bear even the semblance of a technical rule of procedure, and, I shall, therefore, take into consideration the materials furnished by all the four affidavits. When the statements in the petition are analysed they reduce to this, that the plaintiff-opposite party is a man of small means, that he has carried on the litigations with the aid of borrowed capital furnished by speculators, that if he obtains possession, restitution may be impracticable, and that the ascertainment of the mesne profits may be difficult and protracted. This is supplemented by the stereotyped allegation that if proceedings are pot stayed, irreparable injury will result to the appellants. The plaintiff-respondent challenges all these allegations. In his affidavit of the 1st December, he states that he is prepared to furnish ample security for restitution, and that it is untrue that he has carried on the litigation with the aid of speculators, though he has been obliged to borrow money to defeat the unfounded claim of the Court of Wards who had at their disposal all the resources of the estate for over three years. He further asserts that the income of the estate is not eleven lacs a year as stated by the petitioners but sixteen lacs a year as stated in official papers, but that whatever the precise income may be, practically the whole of the income has been spent by the Court of Wards during the three years that the estate, has been in their charge, besides cash to a considerable extent of which the Court of Wards took possession upon the death of the Maharani. In the so-called affidavit in reply, filed on the 15th December 1910, the statement of Kesho Prosad as to the income is disputed. An attempt is also made to justify the expenditure of the income during the three years that the estate has been in the possession of the Court of Wards. Statements then are made in the four concluding paragraphs of the affidavit as to the difficulty that may result if the management is changed, and reference is made to settlement proceedings and numerous suits for rent now pending. A suggestion is also faintly made that the decree holder, if allowed to obtain possession, may levy Nazaranahs, harass the tenants and make improvident settlements. The final affidavit of Kesho Prosad Singh, filed on the 19th December, makes various allegations of improvident management and reckless expenditure during the years that the estate has been in the possession of the Court of Wards, and it cannot be seriously doubted that even if a fraction of these allegations is true, the management of the estate has not been above criticism. This, however, is a matter upon which the Court is not called upon to form a definite opinion at the present stage of the proceeding's. The point for determination now is, whether the appellants have satisfied the Court that substantial loss may result to the infant unless execution is stayed. After anxious consideration and scrutiny of the materials placed before the Court, I have arrived at the conclusion that the question ought to be answered in the negative. As already stated the decree-holder offers to furnish security for restitution if an order for execution is made in his favour. If such security is furnished, it is difficult to appreciate how substantial loss may result to the appellants. The essence of the complaint of the petitioners is that the decree-holder is a man of limited means and that if he be permitted to execute his decree, restitution will be impossible. This is effectively met by the decree-holder when he offers to furnish security to the satisfaction of the Court for restitution, before he obtains an order for execution. The allegation that the ascertainment of mesne profits may be difficult is wholly unsubstantial. The appellants have now been in possession of the estate for over three years, and they may be assumed to be intimately acquainted with its condition. If, therefore, the decree-holder is allowed to execute his decree after he has furnished security for restitution in the event of reversal of the decree of the Court below, the defendants-appellants may be expected to be able to prove without difficulty the amount of profits actually receivable from the Estate. The learned Counsel for the judgment-debtors-appellants has, however, contended that the estate might be wasted and injured if placed in the possession of the decree-holder, who might not improbably oppress and harass the tenants of this extensive estate. I confess, speculative considerations like these do not carry any weight with me. The decree-holder claims the property as his own; he has successfully conducted a protracted and expensive litigation to assert his rights; why should he, as soon as placed in possession, begin to waste the property; if he makes improvident alienations pendente lite the transferees will be bound by the result of the appeal. On the other hand, there is considerable force in the argument of the learned Counsel for the decree-holder that as under the management of the Court of Wards during three years, the whole of the income has been spent,--it is immaterial whether such income is taken to be eight or twelve lacs a year--and as the savings made by the late Maharani to the extent of nearly eight lacs of rupees have also disappeared, the estate could not very well fare worse in his hands than it has done under the management of the Court of Wards. I am, therefore, not able to appreciate why the decree-holder should be kept out of the fruits of his decree, if he is prepared to furnish security for restitution. The policy of the Legislature in this matter is obvious from the provisions of the Code; that policy is that the decree-holder is to be allowed to reap the fruits of his decree, unless sufficient cause is established for stay of execution. It may be conceded that in many cases where, upon presentation of an appeal to this Court, an application for stay of execution is made on the allegation that substantial loss will otherwise result to the judgment-debtor, the decree-holder does not challenge the truth of the allegation and is very often content to allow execution to be stayed if sufficient security is furnished. Where, however, as here, the decree-holder challenges the allegation of possible substantial injury to the judgment-debtor, it is the duty of the Court to scrutinize the matter. This view is strengthened by an examination of the history of the legislation on this subject, as reviewed in my judgment in the case of Tribeni Sahu v. Bhagwat Bux 34 C. 1037 at p. 1057 : 11 C.W.N. 1030 : 6 C L.J. 298. By Sections 12 and 14 of Regulation V of 1793 and Sections 10 and 12 of Regulation VI of 1793, in the case of an appeal against a decree for the possession of land, the judgment-debtor could, as a matter of right, obtain stay of execution upon furnishing security, and in the case of all other decrees, the Court could, in its discretion, either stay proceedings and take security from the judgment-debtor or allow execution and take security from the judgment-creditor. This policy, however, was abandoned as early as 1859 and from the provisions of the Code of 1908 which are applicable to the case before me, it is clear that the judgment-debtor cannot obtain an order for stay of execution, unless he has satisfied the Court that substantial loss might otherwise result to him. To put the' matter briefly, it is competent to the Court, to accomplish the ends of justice, to allow execution to proceed and take security for restitution from the judgment-creditor under Rule 6 or stay execution and take security from the judgment-debtor under Rule 5. For each alternative, however, the burden is upon the judgment-debtor to show sufficient cause. In the circumstances of the case before us, sufficient ground, in my opinion, is not shown for stay of execution of the decree, whether we confine our attention to the allegations in the original petition or take them along with those contained in the supplemental, affidavit of the 15th December 1910. The conclusion follows that the first element essential for grant of stay of execution has not been established.
5. The second question arises in connection with Order XLI, Rule 5 sub-rule (3) Clause (c) of the Code of 1908. That clause provides that no order for stay of execution shall be made unless the Court making it is satisfied that security has been given by the applicant for the due performance of such decree as may be ultimately binding upon him. Now, in the present case, there are two applicants, the infant represented by his guardian who is manager under the Court of Wards and the Collector of Shahabad who represents the Court of Wards. It is stated that the infant has no property of his own except the Dumraon Raj Estate, the title to which is in controversy. The Collector of Shahabad also, who represents the Court of Wards, has no funds at his disposal as representative of the Court of Wards. Neither of the applicants, therefore, is able to furnish security as required by the Code. The learned Counsels on their behalf have consequently intimated to this Court, that they are able to furnish a bond executed by the Chief Secretary to the Government of Bengal for and on behalf of the Lieutenant Governor of Bengal in Council for and acting in the premises for and on behalf of the Secretary of State for India in Council. The guarantee offered is in the following form.
6. To the Registrar of the High Court of Judicature at Fort William in Bengal in its Appellate Jurisdiction.
7. This security bond in stay of execution of decree, executed by the Secretary of State for India in Council witnesseth:
That in Title Suit No. 29 of 1909 in the Court of the 2nd Subordinate Judge, Shahabad, wherein Kesho Prosad Singh is plaintiff and (1) Maharaj Kumar Srinivasa Prosad Singh, minor, of the Court of Wards, Bengal, (2) The Collector of Shahabad and (3) Captain, J.B. Rutherford, Manager, Court of Wards, are defendants; a decree was made on the 12th August 1910 declaring the plaintiff to be entitled to the properties forming and known as the Dumraon Raj in the District of Shahabad, and directing the defendants to make over possession to the plaintiff of the said properties and directing the Court of Wards to pay the costs of the suit and further directing the Court of Wards to account to the plaintiff for all properties moveable and immoveable taken charge of by the Court of Wards in December 1907 as on behalf of the defendant No. 1 and of the profits arising therefrom since that date and to arise therefrom until the date of possession given to the plaintiff.
The defendants Nos. 1 and 2 have preferred an appeal to this Court from the said decree in the said Suit No. 29 of 1909 which appeal is still pending. Now the defendants Nos. 1 and 2 have made an application praying for stay of execution and have been called upon to furnish security.
Accordingly, I, the Secretary of State for India in Council, stand security and covenant that if the said decree of the Court, of the 2nd Sub-Judge, Shahabad, be confirmed or varied by the Appellate Court, the said defendants shall duly act in accordance with the decree of the Appellate Court and shall pay whatever may be payable, by them there under and if they should fail therein, then I, Secretary of State for India in Council, will be liable to pay the same.
In witness, the hand of Chief Secretary to the Government of Bengal for and on behalf of the Lieutenant Governor of Bengal in Council, for and acting in the premises for and on behalf of the Secretary of State for India in Council, this day of January one thousand nine hundred and eleven.
8. The learned Counsel on behalf of the decree-holder inquired whether this guarantee was proposed to be given by the Secretary of State in Council with the concurrence of a majority of votes at a meeting under Section 40 of Statute 21 and 22 Victoria, Chapter 106. The learned Counsel for the judgment-debtors-appellants could not furnish any information on the subject. The learned Advocate-General, who appeared as amicus curix on behalf of the Secretary of State for India, declined at one stage to give any information in the matter; but when the Court intimated to him that the guarantee would not be considered, unless the Court was satisfied that the requirements of the Statute have been strictly observed, the learned Advocate-General put in a copy of the following telegram dated the 31st December 1910 from the Secretary of State for India to His Excellency the Viceroy.
Your telegram dated 22nd December. Dumraon Estate. I sanction security being furnished by Government of Bengal to the extent required by High Court Judicature for stay of execution pending final decision on appeal. I sanction also your proposal as towards maintenance and provision of funds for prosecuting appeal.
9. The learned Counsel for the decree-holder then contended that the guarantee ought not to be accepted substantially for two reasons; namely first, that it was not shown to have been given by the Secretary of State for India in Council with the concurrence of a majority of votes at a meeting; and secondly, that even if the provisions of Section 40 of the Government of India Act 1858 were shown to have been strictly followed, the guarantee was ultra vires, because it was not a contract for the purposes of the Government of India within the meaning of Section 2 of the Statute, and was generally in excess of the authority delegated by the Crown to the Secretary of State for India in Council. In answer to these contentions, it was argued by the learned Advocate-General that it was not competent to any Municipal Court to determine the validity of the guarantee, that if a Municipal Court has such jurisdiction, it ought to refrain from an inquiry into the validity of the guarantee, because once the guarantee has been given the Secretary of State for India in Council cannot challenge its validity, and that, in any event, it is improbable that after such guarantee has been given, the Secretary of State for India in Council will repudiate the same, should occasion arise to enforce it. It was further contended that the Court need not ascertain whether there has been strict compliance with the provisions of Section 40 of the Government of India Act, 1858, and that the guarantee is not beyond the scope of the authority conferred upon the Secretary of State for India in Council by the Crown under that Statute. It is necessary to consider, in the first place, the preliminary points urged by the learned Advocate-General. The first of these contentions in bar is that a Municipal Court has no jurisdiction to investigate the validity of the guarantee, because this was an act of State. It is not easy to follow how, when the Secretary of State for India in Council chooses to give a guarantee for the due performance of a decree obtained by one private individual A. against another private individual B., the act can be appropriately designated as a Sovereign Act. As Lord Justice Fletcher Moulton observed in Salaman v. Secretary of State (1906) 1 K.B. 613 at p. 639 : 75 L.J.K.B. 418 : 94 L.T. 858 an act of State is essentially an exercise of Sovereign power, and because it is an exercise of Sovereign power it cannot be challenged, controlled, or interfered with by Municipal Courts; but if an act is relied on as being an act of State and as thus affording an answer to claims made by a subject, the Courts must decide whether it was in truth an act of State and what was its nature and extent. The true view of an act of State appears, observed the same learned Judge, to be that it is a catastrophic change, constituting a new departure. Municipal law has nothing to do with the act of change by which this new departure is effected. Its duty is simply to accept the new departure. But although this be so, the principles of interpretation applicable to an act of State are not necessarily the same as those which apply to other Courts. For instance, if an act of State be expressed in a document purporting to confer benefits upon an individual, it by no means necessarily follows that there is any intention to create a contract or that the document should be construed by the same canons of interpretation as would be adopted in the case of a contract between two individuals. If this be the true view of the nature of an act of State, it is not easy to appreciate how the offer of a guarantee by the Secretary of State for India in Council can be appropriately designated as an act of Sovereign power. But if that were its true character, and if for that reason the Municipal Courts are deprived of all jurisdiction in respect of the matter, the decree-holder-respondent would be justly entitled to maintain the position that a guarantee of this character ought not to be accepted for purposes of stay of execution. In my opinion, the true view of the situation is that when the Secretary of State for India in Council offers a guarantee for the due performance by the appellants of any decree that might be made against them and in favour of the decree-holder respondent, the Municipal Courts have not only jurisdiction but it is their duty to determine, when invited by the party against whom an order for stay is sought, to do so, whether the guarantee is valid and would be enforceable if the occasion arose for its enforcement.
10. The argument upon the second point in bar falls into two branches. It is first suggested that the Court ought to refrain from an inquiry into the validity of the guarantee, because once the guarantee has been given, it would not be open to the Secretary of State for India in Council to question its validity. It is suggested in the second place, that it is not likely that after the guarantee has been given, the Secretary of State for India in Council would repudiate it, if occasion arose for its enforcement. In so far as the first branch of this contention is concerned, I am unable to uphold it as well-founded. As pointed out in the Laws of England edited by Lord Halsbury, Volume 13, Section 537, a party cannot by representation any more than by other means raise against him an estoppel so as to create a state of things which he is under a legal disability not to do. No person can by his conduct or otherwise waive or renounce a right to perform a public duty or estop himself from insisting that it is his right to do so. The doctrine has been frequently applied to cases of corporate bodies, and it has been ruled that a corporate body cannot be estopped from denying that they have entered into a contract which it was ultra vires for them to make; no corporate body can be bound by an estoppel to do something beyond its powers or to refrain form doing what is its duty. For illustrations reference may be made to Fairtitle v. Gilbert (1787) 2 T.E. 168 : 1 R.R. 455; Attorney-General v. Dublin Corporation (1841) Dr. and War 545; Ashbury v. Riche (1875) 7 H.L. 653; Grant v. Secretary of State for India (1877) 2 C.P.D. 445 : 46 L.J.C.P. 681 : 37 L.T. 188 : 25 W.R. 848; MacAllister v. Bishop of Rochester (1880) 5 C.P.D. 194 : 49 L.J.C.P. 443 : 42 L.T. 481 : 28 W.E. 584; Dunn v. Queen (1896) 1 Q.B. 116 at p. 118; Great North Western Central Railway Company v. Charlebois (1899) A.C. 114 : 68 L.J.P.C. 25 : 79 L.T. 35; Islington Vestry v. Hornsey Urban District Council (1900) 1 Ch. 695 : 63 J.P. 488 : 80 L.T. 746. It may be observed here incidentally that Section 5 of the Government of India Act, 1859, to which reference was made by the learned Advocate-General, is of no real assistance, because if a contract is ultra vires, no liability under such a contract is imposed upon the Secretary of State in Council and none can consequently pass to his successors. It was further suggested, however, by the learned Advocate-General that this principle is restricted in its application to corporation strictly so called, and that it does not apply to the Secretary of State for India in Council. The distinction suggested is, in my opinion, without any foundation. As was observed by Lord Esher, M.R. in Dunn v.Queen (1896) 1 Q.B. 116 at p. 118, if any authority representing the Crown were to make a contract so as to derogate from the powers of the Crown, the contract could not be enforced against the Crown. It is well-settled that the effect of the doctrine of equitable estoppel does not apply to the Government in the case of unauthorised acts or omissions on the part of its Officers and agents, nor, are public Officers concluded by acts done in their official capacity. The principle is perfectly intelligible that though individuals may be estopped by the unauthorized acts of their agents apparently within the scope of their agency. The Sovereign power ought not to be bound by the ultra vires acts of its agents see Filor v. United States (1869) 9 Wallace 45. Now what is the position of the Secretary of State for India in Council? The powers and duties of the Secretary of State for India in Council are defined by Statute, and the Secretary of State for India in Council is not competent to act in excess of the authority delegated to him by the Crown. As Lord Justice James observed in Kinloch v. Secretary of State for India in Council (1880) 15 Ch. D. 1 at p. 8, if we look at the Government of India Act of 1858, which put an end to the East, India Company, all the property and assets of the East India Company were not transferred to any body corporate which were successors to the East India Company, but were vested in the Crown in trust for the Government of India and the words 'the Secretary of State for India in Council' which are mere words providing that that Officer and department would be capable of suing and being sued, are nothing more than words indicating the mode by which the Government of India is to sue and be sued, that is to say, the mode in which the Indian Exchequer might itself institute proceedings and might be made the subject of proceedings for the purpose of determining the rights between any of Her Majesty's subjects. Lord Justice James added that there was no such person in truth as the Secretary of State for India in Council, and there was no such body known except as a name for suing and being sued on behalf of the Indian Exchequer. This decision of the Court of Appeal was taken on appeal to the House of Lords Kinloch v. Secretary of State for India in Council (1882) 7 App. Cas. 619 : 51 L.J. Ch. 885 : 47 L.T. 133 : 30 W.R. 845, and was ultimately affirmed. In my opinion there is no room for reasonable doubt that the powers and obligations of the Secretary of State for India in Council are defined by the Statute, and that if he exceeds the authority delegated to him, the holder of the office for the time being when sued in a Municipal Court is entitled to urge by way of defence the ultra vires character of the transaction. In this view of the answer which ought to be given to the first branch of the argument, it is not necessary to deal seriously with the second branch that the Court ought to refrain from an inquiry into the validity of the guarantee, because it is improbable that its validity will ever be questioned on behalf of the Secretary of State for India in Council. Instances are not unknown in which when an attempt has been made to enforce agreements alleged to have been entered into by High Officers of Stated, their validity has been successfully impeached by the Secretary of State for India in Council on the ground that the arguments were ultra vires. King v. Secretary of State 13 C.L.J. 357 : 9 Ind. Cas. 858; Sarat Chandra Das v. Secretary of State 13 C.L.J. 360 : 9 Ind. Cas. 859 see also Shivabhajan v. Secretary of State 28 B. 314 and Municipal Corporation of Bombay v. Secretary of State 29 P. 580 : 7 Bom. L.R. 27. In any event, if the guarantee is unenforceable in a Municipal Court the decree-holder cannot legitimately be asked to accept it on the assumption that its validity is not likely to be challenged if occasion arises for its enforcement. In my opinion, the grounds suggested why the Court should refrain from an inquiry into the question of the validity of the guarantee offered are wholly unsubstantial, and the Court would fail in its obvious duty if a security were accepted without question, when it is fairly obvious that grave complications might result if occasion arose for the enforcement of the security. I must now proceed to examine the grounds urged by the learned Counsel for the decree-holder in support of his contention that the guarantee offered ought not to be accepted for stay of execution of the decree against the judgment-debtors.
11. The first objection taken by the learned Counsel for the decree-holder is that the security offered is not shown to have been sanctioned by the Secretary of State for India in Council with the concurrence of a majority of votes at a meeting. This, in my opinion, is a valid objection. The powers of the Secretary of State for India in Council are, as I have already stated, defined by the Statute, and strict compliance with its provisions is essential. Section 40 of the Government of India Act, 1858, lays down,--I quote only so much of the section as is necessary for the present purpose that the Secretary of State in Council with the concurrence of a majority of votes at a meeting shall have full power to enter into any contracts whatsoever as may be thought fit for the purposes of the Act. I need not repeat that the learned Advocate-General at one stage declined to give any information on the subject, but subsequently placed before us a communication that had passed between His Majesty's Secretary of State and His Excellency the Viceroy. The terms of the telegram, however, are not explicit and the learned Advocate-General was unable to furnish to the Court precise information upon this fundamental point. In the events which have happened, I must decline to act upon the assumption that the Secretary of State in Council with the concurrence of a majority of votes at a meeting, proposes to give this guarantee. The Secretary of State for India in Council is not a party to the suit or to the decree under appeal nor is he a party to these proceedings for stay of execution, and if a security is offered on his behalf for the benefit of the judgment-debtors, the decree-holder and the Court are plainly entitled to have definite information that the provisions of the Statute have been strictly complied with. Such information has not been given and, therefore, the first objection taken by the learned Counsel for the decree-holder has not been successfully met.
12. The second objection taken by the learned Counsel for the decree-holder is that the security offered is ultra vires. Here the learned Counsel based his contention upon two grounds, namely, first, that under Section 40 of the Government of India Act, 1858, the Secretary of State for India in Council may enter into any contract for the purposes of the Act, that is for the purposes of the Government of India alone, as mentioned in Section 2 of the Statute: secondly, that under Sections 39, 40, 41, 42 and 65 of the Statute, only such liabilities undertaken by the Secretary of State for India in Council may be enforced against the revenues of India, as might have been enforced against the East India Company, if the liabilities had been lawfully contracted and incurred by the said Company, and the revenues of India shall not be applied to any other purpose whatsoever. The learned Counsel for the decree-holder contended that, tested from each of these points of view, the guarantee offered on behalf of the Secretary of State for India in Council is ultra vires and unenforceable in law. In answer to these contentions, the learned Advocate-General argued that the guarantee offered was for the purposes of the Government of India within the meaning of Section 2 of the Government of India Act, 1858, because, on the principle recognised in the eases of Wellesley v. Beaufort (1827) 2 Russell 1 at p. 20; In re: Spence (1847) 2 Phillips 247 : 16 L.J. Ch. 300 : 11 Jur. 399 and Queen v. Gyngall (1893) 2 Q.B. 232 : 62 L.J. Q.B. 559 : 4 R. 448 : 69 L.T. 481 : 57 J.P. 773 it is the duty of the Crown to protect infants, the doctrine which is the foundation of the Statutory provisions embodied in the Court of Wards Act, 1879. The learned Advocate-General further contended that the powers of the Secretary of State for India in Council to deal with the revenues of India were wider than those possessed by the East India Company, and that the judicial decisions upon which reliance is placed on behalf of the decree-holder, namely P. and Order Steam Navigation Company v. Secretary of State (1861) 2 Bourke 166; Nobin Chunder v. Secretary of State 1 C. 11 : 24 W.K. 309; Secretary of State v. Hari Bhanji 5 M. 273 and Shivabhajan v. Secretary of State 28 B. 314 are clearly distinguishable. Reference was also made in this connection to Sections 1, 2 and 5 of the Government of India Act, 1859 (Statute 22 and 23 Vic. Chapter 40). Now, in so far as the first reason assigned by the learned Counsel for the decree-holder is concerned, it lies in a very narrow compass. It cannot be seriously disputed that for the validity of a contract entered into by the Secretary of State for India in Council under Section 40 of the Government of India Act, 1358, it is an essential pre-requisite that the contract should be for the purposes of the Act; and it may be observed that the same remarks apply to contracts entered into by the Governor-General in Council and the other statutory bodies mentioned in Section 1 of the Government of India Act, 1859, in exercise of the authority delegated to them thereby. Now the expression 'for the purposes of the Act' or 'for the purposes of the Government of India means, as was pointed out by Sir Lawrence Jenkins, C.J., in Shivbhajan v. Secretary of State 28 B. 314 'the superintendence, direction and control of the country.' Consequently, if a question arises, whether a particular contract may be rightly described as made for the purposes of the Government of India, the answer must depend upon its scope and character. Now in the case before us, what is the scope and character of the guarantee offered on behalf of the Secretary of State for India in Council? The Secretary of State for India in Council covenants that the defendants in the suit shall duly act in accordance with the decree of this Court and shall pay whatever may be payable by them thereunder, and if they should fail therein, the Secretary of State for India in Council will be liable to pay the same. If, therefore, we look to the essence of the matter, it reduces to this. The Court of Wards is entitled, under the Statutory powers, to take charge of the property of an infant who has been adjudged a Ward of the Court. The Officers of the Court of Wards take possession of an estate which does not belong to the infant who has been declared a Ward of the Court. The officers keep out of possession the rightful owner who after protracted litigation successfully asserts and establishes his title in the ultimate Court of Appeal. Meanwhile, the Officers of the Court of Wards continue in possession of the estate and spend the income on the assumption that it belongs to the Ward of the Court. The Court of Appeal not only makes a decree for possession in favour of the successful owner, but also directs the defendants in the suit to account for the profits they have unlawfully spent. The Secretary of State for India in Council undertakes to pay out of the revenues of India the sums unlawfully spent by the defendants out of the estate which is finally adjudged never to have belonged to the infant. The question is, is a security given for this purpose by the Secretary of State for India in Council, an engagement made for the purposes of the Government of India? Upon the arguments addressed to us by the learned Advocate-General, I am not convinced that a contract of this character can be appropriately described as a contract for the purposes of the Government of India. I cannot appreciate how the case is strengthened by a reference to the familiar doctrine that infants are entitled, in respect of their person and property, to the, protection of the State, In the case before us, if the decision of the Court below is ultimately affirmed in substance--and that is the contingency in which occasion will arise for the fulfillment of the obligation offered to be undertaken by the Secretary of State for India in Council the position will be that the infant defendant had no property at all, that there was never any question of protection of such property, and that the Officers of the Court of Wards unlawfully took possession of the estate of which the plaintiff has been adjudged to be the rightful owner and spent the income of his estate on the assumption that it could be rightly applied for the benefit of the infant. After the most anxious and careful consideration I have been able to bestow on the matter, I am not prepared to uphold the position that a contract of this description falls within the scope of Section 40 of the Government of India Act, 1858. In the second place, in so far as the other reason urged by the learned Counsel for the decree-holder in support of his contention that the guarantee is ultra vires, is concerned, it opens up a question of much wider scope than what is essential for the purposes of the case before us. The learned Counsel has contended broadly that if occasion arises for the enforcement of the security and an objection is taken as to its validity, the test to be applied will be, whether the security would have been valid if it had been given by the East India Company, and that tested from this point of view, the security ought to be pronounced unenforceable. I reserve my opinion upon the question raised, because apart from the circumstance that its decision is not necessary for our present purposes, the judicial pronouncements which relate to the liability of the Secretary of State for non-contractual obligations and upon which reliance is placed, are by no means uniform, while the question of the extent of the powers of the East India Company is necessarily not altogether free from doubt and difficulty. I, therefore, prefer to rest my decision upon the grounds already explained. I may add that objection was also taken as to the form of the security and the proper mode of its execution; these are obviously questions of minor importance, and if it was necessary to do so, the difficulty suggested might no doubt have been removed.
13. I may add that at one stage of the arguments, reference was made to Section 1 of the Government of India Act, 1859, and we were invited to accept the security as given by the Government of India alone. Here also, the applicants are in a difficulty, because no information was given to us by the learned Advocate-General as to the elements which have to be considered, before a contract under that section can be pronounced valid. In addition to this, there is the difficulty that any contract entered into by the Government of India must, in order that it may be valid, be for the purposes of the Statute.
14. Besides the considerations mentioned, there are, in my opinion, two other points which must carry weight in the decision of this matter. In the first place, it is the well settled practice of this Court that when security is offered for stay of execution, it is not accepted unless its legal validity is reasonably free from doubt. It is perfectly true that security has to be furnished to the satisfaction of the Court. But, when the Court accepts a security, it does so for the possible benefit of the decree-holder, and it would, in my opinion, be obviously unreasonable to accept a security the validity of which is by no means free from doubt and the enforcement of which may lead to protracted litigation, In the second place, Section 745 of the Civil Procedure Code of 1908, lays down that where any person has become liable as surety for the performance of any decree or any part thereof or for the payment of any money or for the fulfillment of any condition imposed on any person under an order of the Court in any suit or in any proceeding consequent thereon, the decree or order may be executed against him, to the extent to which he has rendered himself personally liable in the manner herein provided for the execution of decrees and such person shall, for the purposes of appeal, be deemed a party within the meaning of Section 47. In the case before us, the Secretary of State for India in Council does not make himself personally liable nor is any specific property hypothecated. Consequently, if the security is accepted and occasion arises for its enforcement, Section 145 might be deemed inapplicable, with the result that the decree-holder might be driven to an expensive and protracted regular suit to enforce the security. In my opinion, it would be unreasonable to place the decree-holder in a position of such embarrassment. It may be observed here incidentally that under Section 145 the surety who has rendered himself personally liable is treated as a party within the meaning of Section 47 only for one specified and limited purpose, namely, for the purpose of appeal. In other words, if execution is taken out against the surety who has rendered himself personally liable and an order is made against him, the order may be treated under Section 47, as one between the parties to the suit and consequently appealable. But the surety who has rendered himself personally liable is not to be deemed a party for any other purposes; consequently, in the case before us, even if we were to hold that the security offered was valid in law, that would not amount to an adjudication between the decree-holder and the Secretary of State for India in Council, so as to bar a determination of the question if it should be raised in, a suit brought for the enforcement of the security.
15. In my opinion, for the reasons stated, the application for stay of execution ought to be refused, but I desire it to be distinctly under stood that if the decree-holder applies to execute the decree the Court will require security from him under Rule 6 of Order XLI of the Code as he has himself, through his learned Counsel, offered to furnish. It is to be observed further that this matter has been argued before us only as regards the execution of the decree for delivery of possession, and the present decision relates to that point only. If the decree-holder should apply for execution as regards costs or for an inquiry into the mesne profits, it will be open to the appellants to apply to this Court again for stay in respect of those two matters. The rule must, therefore, be discharged with costs 15 gold mohurs.
16. The suit out of which the present application arises is one brought to recover possession, with mesne profits of the estate known as Dumraon Raj, on establishment of title. It appears that the last Maharajah of Dumraon, Sir Radha Prosad Singh Bahadur, died on the 5th of May 1894. Before his death he had executed a Will by which he devised the Raj to the Maharani Beni Prosad Koeri for the term of her natural life and also authorised her to adopt unto him a son. The Maharani died on the 13th of December 1907 and the allegations of the defendants are that on the day preceding her death she had taken in adoption the 1st defendant, previously known as Jung Bahadur and thereafter known as Mahraj Kummar Srinivasa Prosad Singh, and that since her death the Court of Wards has been in charge of the properties on this minor defendant's behalf. The plaintiffs' allegations, inter alia, are that no adoption in fact took place, and that he, as the heir-at-law, is entitled to succeed to the properties.
17. The suit having been decreed in plaintiff's favour the minor defendant and the Collector of Shahabad, who was impleaded as representing the Court of Wards, have appealed to this Court and have also made the present application under Order XLI, Rule 5 of the Code of Civil Procedure, 1908, for stay of execution. By the decree the Court of Wards has been made liable for mesne profits and costs, but at the hearing of this rule nothing has been said with regard to this part of the decree and the application has, therefore, been treated and may be considered as one made for stay of execution only in so far as delivery of possession is concerned.
18. In view of the terms of Order XLI, Rule 5, the facts of this case, and the contentions of the parties, the questions that arise for determination are two, namely (1) whether if the order for stay be not made substantial loss may result to the minor appellant and (2) whether the security offered by him is such as should be accepted.
19. On the first question the materials before us consist of two affidavits sworn in support of the petition, one on the 7th September and one on the 13th December and two affidavits in reply thereto sworn by the plaintiff respondent on the 1st and 19th December. Exception has been taken to the acceptance of the supplementary affidavit filed on behalf of the petitioners on the 15th December and it would doubtless have been made in accordance with the rules of practice had the details given in the second affidavit been set out at length in the first. But the plaintiff-respondent has had a full opportunity of answering the second or supplementary affidavit, and as all four affidavits have been placed before us we may with propriety decide on the materials thus furnished.
20. In his affidavits the plaintiff impeaches the management and expenditure of the Court of Wards, but his allegations or suggestions appear to be founded mainly on some misconception of the figures and statements contained in the official reports to which he refers. This much at least appears to be clear, that the administration of the estate by the Court has been more efficient and more economical than the management of the late Maharani and in all probability would have been even more successful but for the existence of the dispute which has given rise to the present litigation. In any case, I can find no reason to suppose that if the estates be handed over to the plaintiff his management will be as beneficial to the minor defendant as the management of the Court of Wards. From the second or supplementary affidavit filed on behalf of the defendant, we find that survey and settlement proceedings under the Bengal Tenancy Act are in progress in some 900 villages, and that there are many rent suits pending. It is essential that in these suits and proceedings the interests of the estate should be efficiently safeguarded, but apart from these details, to my mind that a temporary transfer of possession in the case of an extensive property such as the one now in question will dislocate the management and in all probability cause grave loss to the minor defendant if eventually adjudged to be the true owner is a proposition which requires but little evidence in its support. No doubt, on behalf of the plaintiff-respondent it has been stated that when he seeks possession he will under Rule 6 of Order XLI of the Code offer sufficient security for the restitution of the property with the rents and profits realised during the period for which he may remain in possession. But the ascertainment of these mesne profits, I am of opinion, will necessarily be a matter of some time, expense and difficulty, and I am further unable to discard from consideration the very possible waste and injury which may result--should the estate, at this stage, be handed over to the plaintiff-respondent who on his own showing in carrying on this litigation by means of borrowed capital.
21. For these reasons, I am of opinion that it is of great importance that, if possible, possession should not be disturbed until the question of title involved in the suit is finally decided and I am satisfied that if execution be not stayed, substantial loss may result to the appellant.
22. This brings me to the second question, namely, whether the security offered by the applicants is such as should be accepted. The security offered is a guarantee or simple bond to be executed by the Chief Secretary to the Government of Bengal for and on behalf of the Lieutenant Governor in Council acting for and on behalf of the Secretary of State for India in Council.
23. It is not disputed that the revenues of India will amply suffice to meet any demands that may accrue under this bond, and it may be conceded, as urged by the learned Advocate-General, that the Government of India's guarantee would be readily accepted by any ordinarily prudent man of business. But the decree-holder, it appears, has been otherwise advised and on his behalf it is contended that a bond of this nature is one which, if occasion arises, the Courts will hereafter be unable to enforce, and it is urged that, however improbable the repudiation by the Secretary of State of such a solemn undertaking may be, the decree-holder should not be required by the Court to accept a security which if the occasion arises he may be unable to enforce by legal proceedings.
24. I agree with my learned brother and generally for the reasons given by him that the opposition of the decree-holder to the acceptance of the security makes it incumbent upon the Court to inquire whether the bond in question is valid in law and capable of enforcement in the Municipal Courts. Now, it seems reasonably clear that the bond under consideration can be enforced against the Secretary of State for the time being as a charge upon the revenues of India only if it is found to be within the scope of the authority conferred upon the Secretary of State, the Governor-General in Council or the Local Government by the Government of India Act, 1858, and the Government of India Act, 1589, and is, moreover, entered into in compliance with the provisions of the said Statutes.
25. The objections then taken to the bond on behalf of the decree-holder are four in number, namely (1) that under the Government of India Act, 1858, the power of the Secretary of State to deal with the revenues of India is no wider than the power previously possessed by the East India Company, and that the proposed bond or contract is one which could not have been lawfully entered into by that Company were it now in existence, (2) that the proposed bond or contract is not one for the purposes of the administration or Government of India within the meaning of Sections 2, 40 and 42 of the said Act, (3) that if the bond be considered as one entered into by the Secretary of State it has not been shown that he is acting with the concurrence of a majority of votes at a meeting of his Council as required by Section 40 of the Act, and (4) that if the bond or contract be considered as one entered into by the Government of India or the Government of Bengal in exercise of the powers conferred by Section 1 of the Government of India Act, 1859, it has not been shown that the contract does not contravene the restrictions which under the same section the Secretary of State in Council is authorised to impose.
26. In support of the first objection learned Counsel for the decree-holder relies upon Sections 39, 40 41, 42 and 65 of the Government of India Act, 1858, refers to the Government of India Act, 1833, cites the cases of Nabin Chundar v. Secretary of State 1 C. 11 : 24 W.K. 309; Secretary of State v. Hari Bhanji 5 M. 273 and Siva Bhanjan v. Secretary of State 28 B. 314 and also invites reference to the charters of the East India Company. I am of opinion that I need not discuss this objection at length for it appears to me to be reasonably clear that whatever may be the case with respect to other rights and powers and liabilities arising otherwise than out of contract, Section 40 of the Statute does not in respect of contracts restrict the Secretary of State to the position previously held by the East India Company but authorises him to enter into any contract whatsoever for the purposes of the Act, that is to say for the purposes of the Government of India by and in the name of His Majesty. The effect of Sections 42 and 65 in this connection then appears to be that on all contracts entered into by the Secretary of State in pursuance of Section 40 of the Act the Secretary of State for the time being may be sued and the debts arising out of such contracts become chargeable upon the revenues of India.
27. In support of the second objection it is urged that a guarantee given for the due performance by a private person of a decree passed against him and in favour of another private person can in no sense be said to be a contract made for the purposes of the Government of India.
28. But in the present case the principal defendant-appellant is a minor, and it cannot be disputed that the protection of the person and property of infant is one of the functions of every civilised Government. Pending the decision of the ultimate Court of Appeal, Government, in my opinion, cannot be said to be wrong in acting on its belief that the estate belongs to the infant in possession. Moreover, the estate now in question, we are informed extends over some 800,000 acres and comprises thousands of villages, and the case thus involves the interests of an enormous body of tenantry. If, therefore, the Secretary of State or the Government of India be of opinion that it is in the best interests of the administration that pending the ultimate decision of the highest Court of Appeal present possession over this vast area should be maintained it cannot, in my opinion, be successfully denied that the security offered in order to effect this object is being offered and the contract is being entered into for the purposes of Government. For these reasons, I should overrule the 1st and 2nd objections taken by the decree-holder to the security under consideration.
29. I now come to the 3rd and 4th objections. Section 40 of the Government of India Act, 1858, requires that the Secretary of State should enter into contracts for the purposes of Government with the concurrence of a majority of votes at a meeting of his Council. The learned Advocate-General who at our instance has appeared in this matter on behalf of Government has been able to show us that the furnishing of security by the Government of Bengal has been sanctioned by the Secretary of State but he has not found himself in a position to say whether this sanction has been given with the concurrence of a majority of votes at a meeting of his Council.
30. Section 1 of the Government of India Act empowers the Government of India, and the Local Governments, within the limits of their respective Governments to enter into any contract whatsoever for the purposes of the Government of India Act, 1858, that is, as I have already stated, for the purposes of the Government of India by and in the name of His Majesty. At the same time, the exercise of the power thus conferred is made subject to such restrictions as the Secretary of State in Council may from time to time prescribe. In respect of contracts such restrictions it is conceivable may be either in respect of their value or in respect of their kind or character. The learned Advocate-General has been unable to give the Court any information regarding the restrictions, if any, which the Secretary of State has seen fit to impose. In the absence of informations on the points staffed, I must agree with my learned brother in holding that the 3rd and 4th objections taken to the preferred security by the decree-holder have not been successfully met and must prevail.
31. It is further to be observed that having regard to the language of Section 145 of the Code, the security under consideration, it appears fairly clear, may be enforced only by a regular suit.
32. In this state of the law the opinion entertained by my learned brother on the 2nd objection of the decree-holder, and the fact that any decision arrived at by us in these proceedings would apparently not be binding upon the Secretary of State in a suit brought, should occasion arise, to enforce the security, afford additional reasons why I should not in this matter of discretion differ from my learned brother. I, therefore, agree in discharging the rule.