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Union of India (Uoi) Vs. Sansar Chand and ors. - Court Judgment

LegalCrystal Citation
SubjectLimitation;Civil
CourtHimachal Pradesh High Court
Decided On
Case NumberFirst Appeal No. 9 of 1957
Judge
Reported inAIR1960HP1
ActsCode of Civil Procedure (CPC) , 1908 - Section 149; ;Arbitration Act, 1940 - Section 8 and 8(1); ;Contract Act, 1872 - Sections 56, 73, 126 and 127
AppellantUnion of India (Uoi)
RespondentSansar Chand and ors.
Appellant Advocate L.N. Sethi, Adv.
Respondent Advocate V.V. Mahajan, Adv.
DispositionAppeal allowed
Cases ReferredVeeraraghava Reddi v. Kamalammal.
Excerpt:
limitation - court fees - himachal pradesh court fees (amendment) act, 1952 - appellant filed suit for recovery of balance amount due on account of sale of right to levy octoroi - suit dismissed by senior sub-ordinate judge - appeal - respondent contended that suit time barred as deficiency of court fees was made long after expiry of limitation period - facts revealed that suit was filed before act of 1952 came into force - appellant overlooked provision of amendment act - appellant being union of india had no intention to evade court fees - fit case for granting extension of time. judgment t. ramabhadaran, j.c. 1. this appeal, by a plaintiff, arises out of a suit for the recovery of a sum of rs. 32,726/-/-, representing the balance due to him (the plaintiff) from defendants 1 and 2.....t. ramabhadaran, j.c.1. this appeal, by a plaintiff, arises out of a suit for the recovery of a sum of rs. 32,726/-/-, representing the balance due to him (the plaintiff) from defendants 1 and 2 (sansar chand and hari chand) on account of the sale of the right to levy octroi at chamba for 2005 b. the remaining defendants stood sureties for defendants 1 and 2 and were accordingly impleaded in the suit. after a protracted trial, the suit was dismissed by the learned senior subordinate judge, chamba on 31-8-1957. hence, this appeal.2. when this appeal came up for hearing at chamba on the 9th ultimo, three preliminary objections were raised by the learned counsel for the respondents to its competency. (a) the memorandum of appeal was not properly signed or presented, since shri l.n. sethi was.....
Judgment:

T. Ramabhadaran, J.C.

1. This appeal, by a plaintiff, arises out of a suit for the recovery of a sum of Rs. 32,726/-/-, representing the balance due to him (the plaintiff) from defendants 1 and 2 (Sansar Chand and Hari Chand) on account of the sale of the right to levy octroi at Chamba for 2005 B. The remaining defendants stood sureties for defendants 1 and 2 and were accordingly impleaded in the suit. After a protracted trial, the suit was dismissed by the learned Senior Subordinate Judge, Chamba on 31-8-1957. Hence, this appeal.

2. When this appeal came up for hearing at Chamba on the 9th ultimo, three preliminary objections were raised by the learned counsel for the respondents to its competency. (A) The memorandum of appeal was not properly signed or presented, since Shri L.N. Sethi was not the Government Advocate of Chamba at the relevant period. (B) Talbana had not yet been paid. (C) The appeal was time-barred because when it was presented to the Court of the Senior Subordinate Judge, Chamba (on behalf of this Court) on 29-11-1957, there was a deficiency of Rs. 351/8/- in court-fees--which deficiency was made good as late as 9-7-1958, i.e. long after the expiry of the limitation period.

3. Learned counsel for the appellant prayed for, and was granted, time to meet these objections. At the renewed hearing on 12-6-1959, an application, purporting to be under Section 149, Civil P. C., read with Section 5, Limitation Act, supported by an affidavit, was submitted by Mr, Sethi, counsel for the appellant. A reply thereto, supported by a counter-affidavit, was filed by Sansar Chand, respondent No. 1. Arguments on both sides were then heard on the preliminary objections. On the 16th ultimo, I indicated that there was no force in the preliminary objections and so they were not fatal to the appeal. I had promised to give my reasons later on for coming to that conclusion. I now proceed to do so

4. (A) Mr. V.V. Mahajan for the respondents urged that the memorandum of this appeal was neither properly signed, nor presented. He pleaded that Himachal Pradesh became an Union Territory with effect from 1-11-1956, following the States Reorganisation Act, 1956. He contended that under Order 27, Rule 1, Civil P. C., read with Article 289 of the Constitution and Section 122 of the States. Reorganisation Act, the present appeal could have been filed only by the President of India or by his lawfully constituted attorney, and not by the Lieutenant-Governor.

5. Mr. L.N. Sethi for the appellant, on the other hand, pointed out that this very question has already been settled by this Court in a case interpartes (Misc. First Appeal No. 14 of 1957), decided on June 16th 1958 (Him-Pra). Therein, I had referred to Notification No. LR 107-420/54-1 dated 28-6-1955, issued by the Himachal Pradesh Government Judicial Department empowering all Collectors of districts in Himachal Pradesh to act for the Central Government in respect of all judicial proceedings.

This notification was issued, in exercise of the powers conferred upon the Lieutenant-Governor, Himachal Pradesh, by Order 27, Rule 2 read with Central Government, Ministry of Law Notification No. S.R. O. 699 dated 8-4-1953. On the record of this appeal, there is a copy of a letter issued by the Assistant Secretary (Judicial), Himachal Pradesh Administration, on 20-11-1957 to the Deputy Commissioner, Chamba, conveying the sanction of the Lieutenant-Governor to the filing of the present appeal.

There is also an order of the Deputy Commissioner, Chamba, dated 27-11-1957, authorising Mr. L.N. Sethi, ex-Government Advocate, to file the present appeal, since Shri Shakti Prasad, present Government Advocate, had appeared as a defence witness in the suit on behalf of the respondents, Sansar Chand and others, and therefore he court not appropriately file an appeal on behalf of the plaintiff. Accordingly, this memorandum of appeal was signed both by Mr. T.S. Negi, then Deputy Commissioner, Chamba, as well as Mr. L.N. Sethi, Advocate, and presented to the Court of the Senior Subordinate Judge, Chamba, on 29-11-1957. That Court had been authorized by this Court since long to accept memoranda of appeals etc. on behalf of this Court. Under these circumstances, there is not force in this objection. I hold that Mr. L.N. Sethi, holding power from the Deputy Commissioner, Chamba, was competent to present this appeal and it was properly presented on 29-11-1957 to the Court of the Senior Subordinate Judge, Chamba, 011 behalf of this Court.

6. (B) Talbana is realized when an appeal is admitted and a date is fixed for regular hearing. The circuit to Chamba this year was finalized in the second half of May, 1959. Due to lack of time, notices were directed to be issued without talbana. On 26-5-1959, I had passed a specific order that process fee should be realized at Chamba and there should be no delay in the issue of notices. Talbana was accordingly realized at Chamba on, 11-6-1959. Under these circumstances, no delay can be attributed to the appellant on this score.

7. (C) Mr. V.V. Mahajan for respondentsnext pointed out that when this appeal was presented on 29-11-1957, it bore court-fees to the tuneof Rs. 1,523/8/- only, i.e. there was a deficiencyof Rs. 351/8/-. According to Mr. Mahajan thedeficiency v/as noticed by the Reader of the Chainsba Court and the parsers, including the memorandum of appeal, were forwarded to the Registrar ofthis Court on 9-12-1957 under the order of theSenior Subordinate Judge. The deficiency wasmade good as late as 9-7-1958. It was, accordingly,argued that the appeal was beyond time by 2211days and, therefore, should be dismissed as time-barred.

8. My attention was invited, in this connection, to the provisions of Section 4 and 6 of the Indian Court Fees Act and of the Himachal Pradesh Court Fees (Amendment) Act, 1952. Since the present appeal' was filed after the coming into force of the Himachal Pradesh (Amendment) Act, court-fees to the tune of Rs. 1875/- were payable thereupon. Reliance was placed upon the following case law: (i) Krishnasami Panikondar v. Ramasami Chettiar, AIR 1917 PC 179. Therein, their Lordships of the Privy Council observed that:

'The practice of admitting a time-barred appeal without notice to opposite party and allowing the question of sufficiency of cause shown for admitting it beyond limitation, to be raised at thehearing is open to grave objection. It may lead to a needless expenditure of money and an unprofitable waste of time, and thus create elements of considerable embarrassment when the Court comes to decide on the question of delay. It is urgently expedient to adopt a procedure which will secure at the stage of admission, the final determination (after due notice to all parties) of any question of limitation affecting the competence of the appeal.'

(ii) Jodhan Pershad Singh v. Nanhku Pershad Singh, AIR 1918 Pat 336. There, a Division Bench of that High Court, in considering the scope of Section 5 of the Limitation Act, indicated that:

'Wanton negligence on the part of a legal adviser is not a sufficient ground for the exercise of the Court's clemency under. Section 5.'

'Where owing to the gross negligence of the appellant's legal adviser the memorandum of appeal was filed bearing insufficient court-fee and the deficit was not made up till after the expiry of the period of limitation.'

Held that under Section 4 the memorandum could not be considered to have been properly filed till the deficit in the court-fee was paid; the deficit in the court-fees having been paid after the expiry of the period of limitation, the appeal was barred by time, and that the negligence of the legal advise was not a sufficient cause for extending the period of limitation under Section 5.'

(iii) Lekh Ram v. Ramji Das, AIR 1920 Lab, 92. There, a Division Bench of that High Court remarked that :

'A Court would not in its discretion under Section 149, Civil P. C., grant time for a deficiency in court-fees to be made up, unless it is satisfied that some grounds exist for the exercise of its discretion; and the principal ground would ordinarily be that a bona fide mistake has been made.'

'Where, however, there is no bona fide mis-lake but deliberate attempt either to avoid payment of sufficient court-fee or to defer the day of payment as long as possible, extension of time will not be granted.'

(iv) Gursaran Das v. District Board, Jullundur, AIR 1927 Lah 884. There, the facts were :

'The appellant's counsel acted with gross negligence in valuing the appeal and thus it was presented with insufficient court-fees and the deficit was made good beyond limitation.' Under the circumstances, Zafar Ali, J., held that :

'The delay in making good the deficiency that occurred in consequence of clear negligence, cannot be condoned.'

(v) Ghulam Mohammad v. Barkat Alt, AIR 1936 Lah 935. There, a learned Judge of that High Court observed that:

'Where an application, for extension of time to make up the deficient court-fee is not made by the pleader till after about 7 months since the discovery of deficiency and the appeal is time-barred by that time, the question of court-fee not being difficult and the error of counsel not being bona fide, it is not a fit case for granting extension A time.'

(vi) Balwant Singh v. Jagjit Singh, AIR 1947 Lah 210. There, a Division Bench of that High Court expressed itself in the following terms :

'If an insufficiently stamped memorandum of appeal is presented in an appellate Court, it cannot be held that a proper appeal has been filed at all. The memorandum of appeal is a piece of paper, which may develop into a proper memorandum, if the Court extends time for payment of the deficit court-fee under Section 149, Civil P. C; Once the Court has exercised its powers under S. 149, the memorandum of appeal would be validated retrospectively from the date of which it is filed.

If, on the other hand, the Court refuses to extend the time the document presented will never become a proper memorandum of appeal. The appeal must in such a case be taken to have been filed on the day on which the insufficient court-fee is made up and if this takes place beyond the period of limitation the appeal is liable to be dismissed. In cases of this type the appeal is not rejected because of the insufficiency of court-fees. It is dismissed on the question of limitation by virtue of Section 6, Court-fees Act, and Section 3, Limitation Act.'

(vii) Pushkar Narain v: Chand Beharilal Ghisulal, AIR 1954 Ajmer 15. There, it was held :

'Order 7, Rule 11 does not apply and Court is not bound to direct appellant to amend the valuation and pay deficit court-fee within a fixed time. No question of extension of time also can arise when no application under Section 149 is before the Court.'

(viii) Bhojraj Krishnarao v. Darsu, AIR 1959 Madh-Pra 52. There, a learned Judge of that High Court pointed out that:

'It is not every mistake of the counsel or of his clerk which entitles the appellant to invoke the provisions of Section 5 of the Limitation Act. It is not sufficient for the appellant to show that he acted on the advice of a counsel, but the Court must further be satisfied that! the advice was given with due care and attention.'

(ix) Gopal Rao v. Dolegobinda Sahu, AIR 1959 Orissa 31, where a Division Bench of (hat High Court indicated that:

'It cannot be the rule of law that any mistaken advice given by a counsel is a sufficient ground under Section 5 of the' Limitation Act. A party is not completely absolved of his responsibility and automatically becomes entitled to the protection under the said section merely by entrusting his work to a senior advocate. But if the view taken by the legal adviser is quite a reasonable view even though mistaken and the advice could be given by any senior lawyer, in spite of due care and caution then only the party is entitled to the benefit of the provisions of Section 5 or Section 14 of the Limitation Act.'

(x) The decision of this Court dated 5-7-1957 in Regular Second Appeals Nos. 29 and 30 of 1956 (Him-Pra). Therein, I had found, on facts, that the question of court-fee payable in those appeals was a clear cut one, leaving no room for doubt. When the question was raised, for the first time, by the other side, the appellant's counsel there sought to justify his action by reference to the amount of court-fees paid in the trial Court and in the lower appellate Court. It was only at a later stage that he offered to make good the deficiency of court-fees. Under the circumstances, I had held that the mistake was not a bona fide one and time could not be extended under Section 149, Civil P. C.

9. Learned counsel for the appellant, on the other' hand, submitted that he was misled by the fact that the plaint bore court-fees only to the extent of Rs. 1523/8/- and the same was noted in the decree sheet of the trial Court. He further invited my attention to note 1 made by the Reader of the Senior Subordinate Judge's Court on 9-12-1957. Sethi submitted that he was not present when this note was written and further--there seems to be some force in this--that the note, to start with, read as 'rasum appeal theek hai'.

Later on, the word 'nahin' was interpolated between the words 'theek' and 'hai'. Mr. Sethi further submitted that if the deficiency had been pointed out, he would have been the last person to avoid or delay making it good. He also pointed out that although the memorandum of appeal was directed by the Senior Subordinate Judge to be forwarded to the Registrar of this Court on 9-12-1957, nevertheless, either that order was not complied with or the file was misplaced when the appeal reached this Court.

In the notes portion of this appeal, I had pointed out that the memorandum of this appeal was found along with Execution First Appeal No. 4 of 1957, when it came up for hearing at Chamba on 8-6-1958. This appeal had not even been registered. There was no scrutiny report. A report was called for from the Registrar and the matter was taken up separately. On 5-6-1958, when the deficiency was pointed out to Mr. L.N. Sethi, he prayed for, and was granted, one month's time to make it good (vide this Court's order dated 5-6-1958). I had, however, made it clear that the grant of time was subject to any objections that might be raised by the other side or by the Court suo motu. Thus, the dictum laid down in AIR 1917 P.C. 179 has been followed.

10. Mr. L.N. Setihi, as already stated, put in a formal application under Section 149, Civil P. C., on 11-6-1959, supported by an affidavit. Therein, it has been stated that he was misled by the amount of court-fee paid on the plaint and entered in the decree sheet. It is further averred therein that he was not present in the Court of the Senior Subordinate Judge, Chamba, when the Reader's note 1 (purporting to point out deficiency in court-fees) was recorded. I was accordingly requested to extend the time under Section 149, Civil P. C. Reliance was placed upon the following authorities :

(1) Achut Ramchandra Pai v. Nagappa, AIR 1914 Bom. 249. There, a Division Bench of that High Court observed that :

'The concession referred to in Section 149, is not restricted to cases where there is a bona fide mis-understanding of the law as to valuation; the inference is that the legislature intended that the Court should have a free and unshackled discretion in this matter.' (2) Diyal Das v. Sundar Das, AIR 1922 Lah 225. There, a Division Bench of that High Court remarked that:

'Under Section 149, on the payment of court fee within time allowed, the memorandum of appeal has the same force and effect as if the court fee had been paid in the first instance. The respondent is not entitled to challenge its validity on) the ground of limitation.'

(3) Basavayya v. m. Venkatappayya, AIR 1926 Mad 676. There, Wallace, J., pointed out that:

'The Court must fix a time within which the! deficient court-fee shall be paid and has no discretion to refuse to fix it. The Court also has discretion to extend the time already fixed. Section 149 implies that Court may, in its discretion, at any stage, allow a party to pay the deficient court-fee. But this will not override Order 7, Rule 11, in the sense that Section 149 gives the Court any discretion to refuse to grant the time, which Order 7, Rule 11, says it shall grant.'

(4) Jagannath v. Ram Gopal, AIR 1934 All 160. There, Kendall, J., observed that :

'Although the court-fee had not been paid on 11-10-1932, the order of the Court passed under Section 149 allowing the plaintiff two days in which to make good the deficiency undoubtedly had the effect of giving the plaint the same force and effect as if such fee had been paid in the first instance.'

(5) Ganesh Das v. Kanthu, AIR 1935 Lah 448, There, a Division Bench of that High Court held that time could be allowed under Section 149 to make up the deficiency where the appeals had been filed without proper court-fees and there was no deliberate attempt to evade payment of the proper fee.

(6) Jagat Ram v. Misar Kharaiti Ram, AIR 1938 Lah 361 (FB). There, a Full Bench of that High Court expressed itself in the following terms :

'The discretion conferred on the Court by Section 149 is normally expected to be exercised in favour of the litigant except in cases of contumacy or positive mala fides or reasons of a similar kind. The question of bona fides in this connection Should be construed in the sense that the, word is used in the General Clauses Act and not as used in the Limitation Act.'

(7) Ganesh Prasad v. Narendra Nath, AIR 1953 SC 431. There, it was held that :

'The question of payment of court-fees is primarily a matter between the Government and the person concerned and therefore where the High Court, in the exercise of its discretion, allows the appellant to amend his memorandum of appeal and grants time for payment of deficient court-fee under Section 149, the other party cannot attack the order on ground that it takes away, his valuable right to plead the bar of limitation.'

(8) Mahabir Ram v. Kapildeo Pathak, AIR 1957 Pat 111. There, a learned Judge of that High Court held that:

'The provisions of Order 7, Rule 11, are applicable to appeals also and that being so, where the memorandum of appeal, is insufficiently stamped, the Court must) afford the appellant an opportunity of making good the deficiency of the court-fee payable on the memorandum of appeal. It is, therefore, clear that a memorandum of appeal not sufficiently stamped cannot be rejected summarily on the ground, unless an opportunity is given to the appellant to explain, or to make good the deficiency within the stated time.'

11. With this background, I carefully considered the facts and circumstances of the present case. At the risk of repetition, I may point out that the appeal has been filed by the Union of India, which obviously could have had no intention of evading payment of court-fees. The suit had been filed before the Court Fees (Amendment) Act came into force in Himachal Pradesh. When the present appeal was filed, learned counsel for the appellant overlooked the provisions of the Amendment Act.

I have already referred to the fact that there is some interpolation in note No. 1 made by the Reader of the Chamba Court in his scrutiny report on 9-12-1957. I am inclined to believe that this note was not recorded in the presence of Mr. L.N. Sethi. It is also a fact that after 9-12-1957, this appeal lay unattended to either in the office of the Senior Subordinate Judge, Chamba, or of this Court till 3-6-1958, when it was found along with Execution First Appeal No. 4 of 1957. If the deficiency had been pointed out to Mr. Sethi at the earliest opportunity, I am sure he would not have delayed in making it good. Under the circumstances, I am clearly of the opinion that this is a fit case, where time should be extended under Section 149, Civil P. C. Accordingly, Civil Miscellaneous Petition No. 47 of 1959 is allowed. The result will be as if the full amount of court-fee had been paid on the memorandum of this appeal, when it was presented on 29-11-1957.

12. The preliminary objections, therefore must fail.

13. It was for these reasons that on the 16th ultimo, I had indicated that the preliminary objections were not fatal to the appeal and, accordingly, I proceeded to hear the appeal on its merits.

14. It is common ground that on 9-4-1948 A. D., Sansar Ghand and Hari Cband, respondents, purchased in open auction the right to levy octroi on goods entering Chamba town and Sarol during 2005 B, for an aggregate Sum of Rs. 1,31,000/-. The other respondents stood sureties for the payment of the above sum by Sansar Chand and Hari Chand. A sum of Rs. 98,274/- was paid by respondents 1 and 2 on various dates leaving a balance of Rs. 32,726/-. The Chief Commissioner, Himachal Pradesh, was moved by the lessees to remit the balance, but the request was turned down. Since the lessees failed to pay up the amount, the plaintiff filed a suit for the recovery of the afore-Said sum of Rs. 32,726/- against the two lessees as well as their sureties. The penalty provided in the patta was, however, given up.

15. The suit was resisted by the defendants on various grounds. Inter alia it was contended that the plaintiff had committed several breaches of the contract and accordingly was estopped from filing the suit. As a result of those breaches, the lessees allegedly were put to serious losses. Another contention was that the surety bonds executed by defendants 3 to 6 were without consideration and, therefore, illegal. The defendants claimed a set off to the tune of Rs. 3,774/-. Finally, it was contended that the civil court had no jurisdiction to try the suit.

16. Out of the pleadings of the parties, the following issues were framed by the Court below :

1. Whether the suit is barred under Clause 22 note 2 of the lease deed in suit? O.P.D.

2. Whether the surety bonds executed by the defendants 3 to 6 are illegal and without consideration? O.P.D.

3. Whether by advertising and including Clauses 2, 3, 20 and 22 in the lease deed matters were misrepresented by the plaintiff and whether this resulted in losses to the defendants for which the plaintiffs are liable? O. P. D.

4. Whether the plaintiff remitted octroi in the trans-Ravi area and whether this resulted in a loss of Rs. 12,000/- to the defendants for which the plaintiffs are liable under the terms of the lease deed? O. P. D.

5. Did the defendants suffer loss of Rs. 5,500/- on account of refugees bringing with them) articles liable to octroi tax and the Rehabilitation Department importing rations etc. for them, without paying octroi? If so, are the plaintiffs liable for the same? O. P. D.

6. Whether the defendants were bound to provide! the defendants with a police guard on octroi posts and whether the guard was withdrawn during the lease period resulting in a loss of Rs. 12,000/- to the defendants? If so, are the plaintiffs liable for the same? O.P.D.

7. Were the complaints against the non-paying refugees dismissed on account of the illegal terms of the lease deed and did the defendants suffer a loss of Rs. 5,000/- on that account for which the plaintiffs are liable? O. P. D.

8. Whether on the imposition of cloth control the plaintiffs failed to appoint their nominee for the import of cloth which resulted in the lapse of monthly quotas? If so, did the defendants suffer a loss of Rs. 12,000/- on that account and are the plaintiffs liable for the same? O. P. D.

9. Whether the defendants are entitled to a decree for Rs. 3,774/- by way of set off? O. P. D.

10. Whether the defendants have not paid proper, court-fee on the set off? O. P. D.

11. Relief.

12. Whether for the reasons stated in the written-statement), the plaintiffs are estopped from suing? O. P. D.

13. Whether in the presence of the suit agreement the plaintiff was not competent to impose control on cloth as pleaded in the written-statement and what is the effect of the imposition oa the suit? O.P.D.

17. The findings of the trial Court on these issues may be summarized as under : Issue No. 1.

The suit was not barred and the Court had jurisdiction to try the suit. Issue No. 2.

The surety bonds were without consideration and, therefore, not binding.

Issue No. 3.

There was misrepresentation by the plaintiff to defendants 1 and 2 consequent to the insertion of Clauses 3, 20 and 22 in the lease deed (Patta), Ex. D.W. 31/B, as a result of which the defendants were put to loss. There was, however, no misrepresentation by the insertion of Clause 2.

Issue No. 4.

By the remission of octroi in the trans-Ravi area, the defendant's were put to loss. The amount of loss, however, could not be estimated.

Issue No. 5.

The issue was decided against the defendants, i.e. it was not proved that refuges brought with them articles liable to octroi. As regards rations imported by the Rehabilitation Department, no octroi was payable thereupon and therefore no loss accrued to the defendants on that score.

Issue No. 6.

Due to the withdrawal of the police guard from Sitla and other bridges, there was evasion of payment of octroi with the result that the defendants suffered losses. The amount of the loss, however, could not be estimated.

Issue No. 7.

Loss did accrue to the defendants due to the dismissal of the complaints against defaulting refugees. The amount of the loss, however, could not be estimated.

Issues 8 and 13.

Due to the reimposition of the cloth control, the defendants were put to loss, which they were entitled to recoup from the plaintiff. The plaintiff also failed to appoint his nominees for the import of the cloth in time. Consequently, some of the quotas were not lifted as they fell due. This led to a fall in the amount of octroi collected by the defendants (estimated not less than Rs. 12,000/-). Loss as a result of reimposition of cloth control was 'several times more.'

Issues 9 and 10.

Deficiency in court-fee on the set off was made good by the defendants on 5-11-1952. At the trial, however, the claim to set off was not pressed. It was accordingly disallowed.

Issue No. 12.

The plaintiff was estopped from suing in view of the misrepresentations made by him, the reimposition of cloth control and inefficient working o that control.

Issue No. 11.

The trial Court dismissed the suit, holding that as a result of misrepresentations made by the plaintiff, the reimposition of cloth control and the inefficient working of that control, the defendants had suffered losses much greater than the amount claimed in the suit.

18. I shall deal with these issues one by one.

19. I take up Issue No. 1 first. In my opinion, the trial Court has rightly held that the jurisdiction of the civil Court was not barred. Learned, counsel for the appellant submitted that although under the terms of the lease deed, Ex. D.W. 31/B (Cluase 22 note 2) disputes between the parties arising out of the Patta were to be referred to the decision of the Executive Council, Chamba, nevertheless, with the merger of Chamba State in the Union of India on 1.5-4-1948, the Executive Council was dissolved and it ceased to exist. Mr. Sethi submitted that the case is parallel to the death of an appointed arbitrator, under Section 8 (1) (b) of the Arbitration Act. He further pointed out that the defendants made no request at the trial for reference to arbitration and, to all intents and purpose, submitted to the jurisdiction of the Court.

20. In F. A. No. 5 of 1954, Union of India v. Bansi Lal, 11-7-1957 (Him-Pra), I had occasion to dispose of a similar argument--with this difference that in that case the Dewan of Chamba, and not the Executive Council, Chamba, was to act as the arbitrator. I had held that since the office of Dewan had ceased to exist, when the suit giving rise to that appeal was instituted, the jurisdiction of the civil Court was not ousted. Learned counsel' for the respondents very rightly did not challenge the finding of the Court below on this issue. Therefore, it need not detain us any further.

21. Issues 9 and 10. The Court below has not granted the respondents any decree, by way of set off. It has remarked that the issue was not pressed on behalf of the defendants. It is noteworthy that no cross-objections have been filed by the respondents--although it was open to therri to do so. Learned counsel for the respondents did not advance any arguments to this Court on these issues. Therefore, the trial. Court's findings on these issues will stand,

22. Issue No. 2. Learned counsel for the appellant urged vehemently that the Court below as erred in holding that the surety bonds were! without consideration and accordingly void. Mr. Sethi's arguments were two-fold : In the first place, he submitted--& in my opinion with considerable justification--that the Court below has wrongly assumed that the provisions of the Indian Contract! Act were in force in Chamba district at the relevant time. He pointed out that the surety bonds were executed by respondents 3 to 6 on 29th Bai-sakh, 2005 B. (corresponding to 11-5-1948 A.D.I while the Patta, Ex. D.W. 31/B, was completed on 12th Har, 2005 B. (corresponding to 25-6-1948 A.D.). The provisions of the Indian Contract Act were applied to Himachal Pradesh, including the Chamba district, by the Himachal Pradesh (Application of Laws) Order, 1948, dated 25-12-1948 and by the Merged (States) Laws Act, 1949, which came into force on 1-1-1950. It has not been shown that prior to merger any legislation parallel to the Indian Contract Act was in force in Chamba State. This all imporant point has been overlooked by the Court below. The rulings, reported in Nanak Ram v. Mehin Lal, ILR 1 All 487 (wrongly referred to by the trial Court as 1 Allahabad 497) and Paulo Varghese v. Ittine Abraham, AIR 1952 Trav-Co. 202 were both decisions under Section 126 and 127 of the Indian Contact Act. If the provisions of the Contract Act were not in force in Chamba at the relevant time, it follows that the ratio decidendi of these rulings could not apply to the present case.

23. In the second place, Mr. Sethi pointed out that the Court below has laboured under the wrong impression that the surety bonds had been executed more than one month after the Patta had been completed. As stated earlier, the surety bonds were executed by respondent 3 to 6 on 29th Baisakh, 2005 B. (corresponding to 11-5-1948) while the Patta, Ex. D.W. 31/B was completed on 12th Har, 2005 B. (corresponding to 25-6-1948 A.D.). Mr. Sethi urged that the Patta would not have been completed by the lessors, unless the surety bonds had been forthcoming. He cited Mathra Das v. Shamboo Nath, AIR 1929 Lah 203 and Chakhan Lal v. Kanhaiya Lal, AIR 1929 All 72. In the Lahore case, Jai Lal, J., held that :

'It is not necessary that the consideration should be received by the surety. Consideration between the principal and the creditor is a good consideration for the guarantee given by the surety.' In the Allahabad case, the facts were :

'A person stood surety for his brother for the payment of a sum, part of which was due on previous debts of the brother, part was due on hundist jointly executed by both, part was paid at the time the person agreed to stand as surety and part was to be paid later on by the creditor, who did not pay the same. It was agreed that the surety would e released on payment of a certain sum.' A Division Bench of that! High Court held that:

'There was sufficient consideration for the undertaking of suretyship for the whole sum to render it valid even though the surety may not have benefited from any of the advances made.'

24. Mr. Ved Vyas Mahajan, for the respondents, submitted that the surety bonds were executed 29 days after work had started and the first instalment of Rs. 21,834/- had been paid on 12-4-1948.

25. In my opinion, however, this is not the deciding factor. As Mr. Sethi pointed out, defendants 1 and 2 were permitted to start work on payment of the first instalment in anticipation that the surety bonds would be filed within a reasonable time and the same was got done before the Patta Ex. D.W. 31/B, was completed. Under the circumstances, I am unable to support the finding of the Court below i.e. to the effect that the surety bonds were without consideration. At the risk of repetition, I may point out that the Patta would not have been completed by the lessors, unless the surety bonds were forthcoming. Consequently, I reverse the finding of the Court below on Issue No. 2.

26. Issue No. 6. The Court below has held that the defendants were put to loss consequent to the withdrawal of the police guard from Sitla and other bridges. The amount of such loss, however, could not be estimated.

27. Learned counsel for the appellant contended that there was no obligation on the part of the lessors to station a police guard at these bridges. He submitted that police guards were deputed to these bridges primarily for security purposes and they were liable to be withdrawn at any time without notice to the respondents. Mr. Sethi further urged that it was no part of the duties of the police to help the respondents in realizing octroi. He took me through the statements of D.Ws. Bhawani Datt. Tej Ram, Amar Singh, Mool Chand, Shri Mahant Pal and Mansa Ram Mahant and Rupa constablesAnd submitted that the testimony of these witnesses was vague and hardly sufficient to establish the alleged evasion of payment of actroi.

28. Mr. V.V. Mahajan, for the respondents-submitted that although the Patta. Ex. D.W. 31/B, did not stipulate that the constables would be deputed to the bridges, nevertheless, it was an old practice to depute them. In this connection, he invited my attention to the statement of Shri Baldev Ram, former Deputy Commissioner of Chamba, who appeared as P.W. 4 as well as D W. 50. On 7-10-1948, respondents 1 and 2 applied to the Deputy Commissioner, Chamba, praying that constables be deputed to the bridges.

That prayer was allowed on 20-11-1948, vide Ex. P.A. Reliance was also placed upon an application, Ex. P.D. dated 28-3-1949 A. D. submitted by respondent No. 1 to the Deputy Commissioner of Chamba. Therein, it was alleged that following a quarrel between the refugees from Parachinar (N.W.F.P.) and a cyclist of Chamba, he (Sansar Chand) was sent for by the Inspector of Police, Chamba and detained in the lock up for about six hours. On this application, the Head Vernacular Clerk (one Bishan Das) made the following comment :

'The contractor's main difficulty is that the refugees are avoiding the payment of octroi on their goods. The Superintendent of Police may be asked to see that the payment of octroi is not avoided on the goods in any way.'

29. From this I was requested to infer that the refugees were in fact evading payment of octroi. It is true that the Deputy Commissioner directed issue of necessary instructions to the Superintendent of Police, vide Ex. PD(i). From this, however, it cannot be inferred that the contents of the application were necessarily correct. Mr, Sethi, for the appellant, rightly pointed out that this application was made on 28-3-1949, i.e. on the eve of the expiry of the Patta period. Under the circumstances, the finding of the Court below to the effect that the defendants suffered loss due to the withdrawal of the police constables from the bridges must be regarded as based upon surmises' and conjectures and nothing more. I would, therefore, reverse the finding of the Court below on this issue.

30. Issue No. 7 : I am constrained to remark that the finding of the Court below on this issue also is based upon surmises. Clause 3(b) of the Patta, Ex. D.W. 31/B, says that the District Magistrate would be competent to order the registration of a criminal case against any one committing the offence of cheating or any other offence in relation to the payment of octroi. Mr. Sethi, rightly, submitted that by the insertion of this clause, the creation of no new offence was envisaged. He pointed out that only one criminal complaint was filed by Saasar Chand against one Dayal Singh, purporting to be under Clause 3 (b) of the Patta. The complaint was dismissed by the Magistrate first class, Chamba on the ground that he could not take cognizance of the complaint as it stood (vide Ex. D.W. 54).

In case Sansar Chand felt that the accused person in that case had committed the offence of cheating or any other offence punishable under the Indian Penal Cods or other enactment in force in Chamba he should have filed a complaint under the proper section. Clause 3 (b) of the Patta cannot be read as a penal enactment, i.e. in the sense of defining a new offence. Learned counsel for the respondents invited my attention to para 8 of the application, Ex. D. C., sent by respondent No. 1 on 11-1-1949 to the Deputy Chief Commissioner, Himachal Pradesh. Therein, it has been stated that the complaint filed by him (Sansar Chand) against a person for evading payment of octroi was dismissed by the Magistrate.

Mr. Sethi in reply pointed out that this application was made about 9 months after the lease rights had been sold to the respondents 1 and 2. He further urged that the dismissal of the complaint was due to the fact that it had been wrongly worded, i.e. as an offence under Clause 3 (b) of the Patta. He contended that if the complaint had been drawn up properly, i.e. by quoting the relevant section of the Penal Code or other enactment in force in Chamba, the Magistrate would not have refused to take cognizance of the complaint. I find considerable force in this argument. Under these circumstances, I am unable to uphold the finding of the Court below on this issue, which appears to me to be unwarranted. I, therefore, reverse the finding of the Court below on this issue.

31. Issue No. 5. The Court below has held, firstly, that the refugees did not bring with them! articles liable to octroi and, secondly, that no octroi was payable on the foodgrains imported by the Rehabilitation Department for free distribution to refugees. Consequently, it found that no loss had accrued to the defendants on this score. Learned counsel for the respondents contended that the finding on this issue, recorded by the Court below, was erroneous. He invited my attention to the statement of Shri Shakti Prasad (D.W. 52), the then Rehabilitation Officer, to the effect that foodgrains worth! one lac or two lacs of rupees were imported by the Central Government for free distribution to refugees from Pakistan and no octroi duty was permitted to be levied by the respondents thereupon.

The Court below was of the opinion that the statement of Shri Shakti Prasad was too vague to be acted upon. It has pointed out that according to the list of exemption from octroi contained in the schedule to the Patta Ex. D.W. 31/B (Ex. P.W. 2/A), articles imported into Chamba from outside for Sarkari use were exempt from the payment of octroi. It was of the opinion that although the inn port of foodgrains for distribution to refugees was not contemplated at the time the Patta was executed, nevertheless, having regard to the subsequent course of events and the plight of the refugees, the Government was within its rights in exempting these foodgrains from octroi. Mr. V.V. Mahajan submitted that the expression 'Sarkari' to be found in the list of exemptions (Ex. P.W. 2/A) refers to the Ruler of Chamba State, and not the Central or the Himachal Pradesh Government.

I was, accordingly, requested to reverse the finding of the Court below on this issue. The learned Advocate for the appellant, on the other hand, invited my attention to the statements of Chaudhary Hira Singh (D.W. 17), Chaudhary Asa Singh (D.W. 27) and Chaudhary Balchand (D.W, 36). These were three out of the several hundred of refugees from Pakistan, who were temporarily housed in Kurukshetra camp and subsequently settled in Chamba under the directions of the Central Government. According to these witnesses, they, as well as their companions, reached India in a very miserable condition and did not even have proper clothes or bedding for their use.

At Kurukshetra camp, they were provided with beddings and some clothes to wear and it was in this condition that they reached Chamba. Hence, it was argued that the question of these refugee bringing costly articles, liable to octroi, with them to Chamba, did not arise. My attention was also invited to the statements of Shri Dharam Nath (P.W. 1), formerly Accountant, Rehabilitation Department at Chamba as well as of Shri Chattar Singh (D.W. 53), formerly Revenue Assistant at Chamba. Mr. Sethi submitted that the condition of these refugees was so pitiable that the Central Government had to distribute free foodgrains to them, for about three years.

Under these circumstances, he pleaded that the Court below was right in holding that no articles liable to octroi were imported by refugees into Chamba and further .octroi was not payable upon the foodgrains imported by the Central Government into Chamba for free distribution to the refugees--having regard to the list of exemptions contained in the list Ex. P.W. 2/A. In my opinion, there is considerable force in this argument. The expression 'barai musarif Sarkari' to be found in Ex. P.W. 2/A should not be narrowly interpreted as referring to articles imported for the use of the former Ruler of Chamba. It would also include articles imported by the Central or the Local Goyernment after merger--especially when we bear in mind that the theka was sold to the respondents only a few days before the merger of Chamba State into the Union of India. I, therefore, uphold the finding of the Court below on this issue.

32. Issue No. 4. The Court below has found that consequent to the remission of octroi in the Trans-Ravi area, the defendants were put to loss. The amount of loss, however, could not be estimated.

33. Learned counsel for the appellant invited my attention to Clause 20 of the Patta, Ex. D.W. 81/B, which runs as follows : 'Kapada ki chungi dariyaye Ravi ke dain taraf yane bataref Chamba wah ilaqa undaroonj thekadar chungi wasul karcga, aur. dariyaye Ravi ke parli yane bain taraf ke ilaqa ki chungi Sarkar wasul karegi.' He submitted that the purport of this Clause was merely to demarcate the respective jurisdictions of the Government and of the lessees (respondents 1 and 2) for the purpose of realizing octroi, i.e. octroi on the right bank of the river Ravi (Cis-Ravi area) would be collected by the lessees, while octroi on the left side of the River (Trans-Ravi area) would be collected by the Government.

He urged that by inserting this clause no under-taking was given by the Government that it would continue to levy octroi in the Trans-Ravi area. I find considerable force in this contention. Mr. Sethi, for the appellant, further pointed out that the levy of the octroi in the Trans-Ravi area had to be stopped with the merger of the Chamba State in the Union of India, because under the law octroi could be levied only in Municipal areas. The lessees surely could not expect the Government to levy octroi in the Trans-Ravi a real after merger when such a levy would have, obviously, become illegal. In this connection, Mr. Sethi further submitted that the remission of octroi in the Trans-Ravi area did not, and could not, have had any appreciable effect on the quantum of octroi levied in Cis-Ravi area.

He pleaded that the Court below has erred in holding that the rise and fall of the income, realized from the sale of the Pattas, (for the collection of octroi in the Cis-Ravi area) depended upon the levy or remission of a similar duty in the Trans-Ravi area. He argued that the rise and fall of such income depended upon many factors, i.e. increase of population, increase or decrease in the rate of octroi charged on various articles, economic conditions of the public etc. My attention was invited to the statements of Punna Ram, Tani, Palas Ram, Dahaju and Rihju, D.Ws. 12 to 16, to the effect) that with! a view to avoid payment of actroi duty persons in the Trans-Ravi area, in the vicinity of Chamba: town, used to go to far off places like Bathari and Chawari, to purchase cloth etc.

The learned Subordinate Judge has remarked that the people in the hilly areas would not mind, undertaking a long journey in order to save a few annas. This is a sweeping statement. Mr. V.V. Mahajan for the respondents, on the other hand, took me through the statements of D.Ws. 1, 2, 5, 7, 8, 13, 18, 25, 30 to 32 and 53 as well as Pattas D.W, 31/A, 49/A, 49/B, 31/B and 49/C imd submitted that there was a sharp fall in the income realized from the sale of thekas in 'those years, during which no octroi was levied in the Trans-Ravi area. He further pointed out that in the Patta for 2006 B) (Ex. D.W. 49/C) there was no provision that octroi would be levied in the Trans-Ravi area.

That Patta fetched only Rs. 1,12,500/- (as against Rs. 1,31,000/- realized for the previous year), despite the fact that the octroi duty on ghee for 2006 B. stood at Rs. 3-12-0 per cent as against Rs. 1-8-0 per tin costing Rs. 80/- or Rs. 85/- the previous year. From this, I was requested to conclude that the remission of octroi in the Trans-Ravi area from 15-4-1948 did result in serious losses to the lessees. In my opinion, however, the evidence on the record was far-too-meagre and unsatisfactory to justify the finding arrived at by the Court below, i.e. that the remission of octroi in the Trans-Ravi area adversely affected octroi income in the Cis-Ravi area. I art not impressed by the argument of the Court below that with a view to save a few annas by way of octroi, some persons living in the vicinity of Chamba undertook a journey upto Bathari, Banikhet or Chawari to purchase the cloth.

Some persons, who happened to go to Banikhet etc. in connection with other business might have utilized the opportunity to purchase cloth etc. It is difficult, however, to believe that the majority of persons living in Chamba would undertake an inconvenient and fairly expensive journey just with a view to save a few annas, over octroi. The rise and fall of theka income cannot be attributed fairly to the remission of the octroi in the Trans-Ravi area. They were due to various causes, e.g. increase of population, economic conditions etc. In the view I have taken, I would reverse the finding of the Court below on Issue No. 4 and hold that the remission of octroi in the Trans-Ravi area has not been shown to have resulted in a loss of Rs. 12,000/-or less to the lessees. Therefore, the question of the plaintiff becoming liable, under the terms of the lease deed, would not arise.

34. Issue Nos. 8 and 13. The Court below has held that, due to the re-imposition of cloth control with effect from 2-8-1948 A.D., the lessees (respondents 1 and 2) were subjected to loss, which they were entitled to recoup from the plaintiff-appellant. The Subordinate Judge has further held that the plaintiff failed to appoint his nominees, for the import of cloth into Chamba, in good time with the result that some of the quotas lapsed. As a result, there was a fall in the amount of octroi collected by the lessees estimated at not less than Rs. 12,000/-. In view of the trial Court, the total loss Buffered by the lessees as a result of reimposition of the cloth control was 'several times more.'

35. Learned counsel for the appellant urged, vehemently, that the above findings are erroneous and are not sustained by the evidence on the record. Mr. Sethi, for the appellant, pointed out that the provisions of the Essential Supplies (Temporary Powers) Act, 1946, were in force at the time the theka was auctioned in favour of respondents 1 and 2. The Cotton Textiles Control Order, 1948, was passed by the Government in the exercise of powers conferred by Section 2 of the Essential Supplies (Temporary Powers) Act. It was accordingly suggested that while bidding at the auction, respondents 1 and 2 must have been aware that it was open to the Government to re-impose control on cloth at any time! and it was not open to the lessees to make a grievance out of it.

36. Mr. Sethi also pointed out that the trial Court had conceded that if the respondents had entered into a contract with a third party and if, during the currency of that contract, control had been imposed by the Government as a result of which the respondents were put to loss, they (the respondents) would have been left without a remedy. In this connection, the learned Subordinate Judge has referred to President of District Board, South Kanara v. G. Santhappa Naik, AIR 1925 Mad 907. There, the facts were :

'The plaintiffs purchased the right to collect toll at two toll gates, Hoshangadi and Kollur during the official year 1918-19. In September of that year the Government passed an ordinance that foodgrains etc. should not be transported from the British Territory to Mysore; and the Mysore Government also passed a similar ordinance as regards the transport of foodgrains etc., from Mysore to South Kanara. In consequence of these two ordinances, the traffic in foodgrains etc. was entirely stopped between South Kanara and Mysore. The plaintiffs naturally suffered a loss on account of the stoppage of the traffic in foodgrains, etc.'

In holding that the lessees could not sue the District Board for the recovery of the amounts collected from them, a learned Judge of that High Court remarked that :

'It cannot be said that the contract became wholly incapable of performance by reason of the ordinance passed by the Madras Government. In order to make out a case of impossibility of performance, it has to be shown that the contract could not be performed, by the reason of anything that the Government did in the matter. Under Section 56 of the Indian Contract Act, if a contract becomes impossible or by reason of some event which the promisor could not prevent, becomes unlawful then the contract becomes void. Here, it cannot be said that the contract to collect tolls at these two toll gates became impossible by reason of the Government passing an ordinance.'

The District Board was, however, disallowed costs, since in the opinion of the High Court, it had not dealt with the contractors fairly and equitably. Mr. Sethi submitted that the above Madras ruling has no direct application to the facts of the present case, which are different.

37. Reliance was placed by the Court below on the ruling, reported in Maritime National Fish. Ltd. v. Ocean Trawlers, Ltd., AIR 1935 PC 128 (from Canada). There, the facts were :

'The appellants wece charterers of a steam trawler the St. Cuthbert, which was the property of the respondents. The charter party, dated 25-10-1928, had originally been entered into between the respondents and the National Fish Company Ltd., but was later by agreement taken over by the appellants.

It was for 12 calendar months, but was to continue from year to year unless terminated by three month' notice from either party, the notice to take effect at the end of one of the years. It was expressly agreed that the trawler should be employed in the fishing industry only : the amount of monthly hire was to be fixed on a basis to include a percentage of the purchase price, and also operating expenses. There was option given to the charterers to purchase that trawler.'

'By letters dated 6th and 8th July, 1932, exchanged between the appellants and the respondents, it was agreed that the charter party as then existed should be renewed for one year from 25-10-'1932, but at a rate of monthly hire which was 25 per cent lower than that previously paid: the amount so agreed came to $ 590.97 per month. It was also then agreed that in the event of the appellants giving notice on or before 25th July in any year that they did not intend to renew, they should further give notice, whether or not, they intended to exercise the option to purchase. In fact the appellants gave notice on 27-1-1933, that they did not intend to renew the charter or to purchase the vessel.'

'When the parties entered into the new agreement in July, 1932, they were well aware of certain legislation consisting of an amendment of the Fisheries Act (c. 73 Revised Statutes of Canada, 1927) by the addition of Section 69-A, which in substance made it a punishable offence to leave or depart from any port in Canada with intent to fish with a vessel that uses an otter or other similar trawl for catching fish, except under licence from the Minister : it was left to the Minister to determine the number of such vessels eligible to be licensed, and Regulations were to be made defining the conditions in respect of licenses.'

'In consequence, as from 30-4-1933, it was no longer lawful for the appellants to employ the St. Cuthbert as a trawler in their business. On 1-5-1933, the appellants gave notice that the St. Cuthbert was available for re-delivery to the respondents; they claimed they were no longer bound by the charter.'

'The main defence was that through no fault, act or omission on the part of the appellants, the charter party contract became impossible of performance on and after 30-4-1933, and thereupon the appellants were wholly relieved and discharged from the contract, including all obligations to pay the monthly hire which was stipulated.'

38. The defence succeeded before the trial Judge, but his decision was reversed by the Supreme Court of Canada, who pointed out:

'The discharge of a contract by reason of the frustration of the contemplated adventure follows automatically when the relevant event happens and does not depend on the volition or election of either party.'

'There was in this case no discharge of the contract for one or both of two reasons. In the first place, the appellants when they renewed the charter in 1932 were well informed of the legislation and when they renewed the charter at a reduced rate and inserted no protecting clause in this regard, must be deemed to have taken the risk that a licence would not be granted. If there was frustration of the adventure, it resulted from the deliberate act of the appellants in selecting the three trawlers for which they desired licenses to be issued.'

In advising His Majesty that the appeal should be dismissed, their Lordships of the Privy Council remarked that:

'Their Lordships are of opinion that the loss of the St. Cuthbert's licence can correctly be described, quoad the appellants as 'a self-induced frustration.' '

'It cannot be predicated that what is here claimed to be a frustration, that is, by reason of the withholding of the licence, was a matter for which the appellants were not responsible or which happened without any default on their part. In truth, it happened in consequence of their election.'

39. In my opinion, the Privy Council ruling will not help the respondents. The trial Court has conceded that control of cloth was re-imposed in the public interest and there was no intention to cause loss to the respondents. At the same time, through a process of reasoning, which I have found it difficult to follow, the trial Court has come to the conclusion that the respondents were entitled to claim damages from the plaintiff on account of the re-imposition of the cloth control. It has gone to the extent of holding that re-imposition of control was 'a breach of contract and duty.' In this connection, I may quote the following passage from the judgment of the Subordinate Judge :

'The plaintiff had the right and power to impose the control which was imposed by it. But its act has directly hit the defendants. It cannot make capital out of its own action. It cannot plead its own act in defence of its case. It is bound to make good the loss which the defendants have suffered as a result of the imposition of control by it. When Hie Government enters into a contract with one of its subjects it cannot claim any superior status. Its status becomes equal to the status of the party with whom it enters into the contract. Had the defendants entered into a contract with a third party and if they were to sustain any loss at the hands of that party relating to the contract the defendants would have been entitled to claim the loss resulting from the act.

On that principle the defendants are entitled to claim damages against the plaintiff. The act of the plaintiff so far as the defendants are concerned, is a breach of contract and duty. The plaintiff, therefore, is bound to make good the loss which the defendants have suffered at its hands. It is, therefore, proved that the defendants failed to appoint nominee in time which resulted in some of the quotas not being brought at a time to enable the defendants to realize duty. Holding the contractual position as it did the plaintiff had no right to impose the control to the prejudice of the defendants. The plaintiff is bound to restore the defendants to the position which they would have occupied, if the control was not imposed.'

40. In my opinion, however, there was no justification for these remarks, which were not only un-called for, but also unwarranted by law and facts.

41. Learned counsel for the appellant pointed out that on 7-8-1948, Shri Dewan Chand (D.W. 28), then Manager of the Chamba Central Co-operative Bank, was appointed as a nominee to lift the quotas. The Bank ceased to be the nominee with effect from (26-12-1948, when it was succeeded by the Cloth and Yarn Association, Chamba. Mr. Sethi took me through the statements of M/s. Dewan Chand, Dev Raj, and Kans Raj, D.Ws. 28, 48 and 55 respectively, and submitted that although the lifting of quotas was irregular, it ha? not been established that certain quotas were permitted to lapse. He also contended that the burden lay heavily upon the respondents to prove, affirmatively,--by establishing the total quota of cloth sanctioned and the actual amount lifted--that due to the negligence of the plaintiff or his agents, the control was not worked in an efficient manner with the result that some quotas lapsed and ultimately there was a fall in the octroi income collected by the lessees.

42. Mr. V.V. Mahajan for the respondents, on the other hand, took me, through the statements of M/s Chaiju Ram, Janak Raj, Amar Nath, Shri Niwas and Raghubir Das, cloth merchants of Chamba (D. Ws. 19, 20, 21, 23 and 25 respectively) and submitted that according to their testimony, five monthly quotas were not utilized i.e. allowed to lapse. My attention was also invited to a representation, Ex. P. W. 5/1 dated 11-1-1949 made by respondent No. 1 to the Deputy Commissioner, Chamba. Therein, it has been alleged that the sanctioned quota of cloth had not been brought to Chamba with the result that the public was put to inconvenience and he (Sansar Chand) was put to loss of Rs. 6,000/- per mensem over octroi.

The Deputy Commissioner forwarded the application to the Textile Commissioner, Chamba, forreport. The latter reported on 7-2-1949 that thecloth was being imported into Chamba since 15-12-1948 and the allotment fort September and Octoberhad been lifted by the district nominee and wouldbe reaching Chamba shortly (vide report at foot ofEx. PW5/1). In my view, the evidence producedby the respondents was not sufficient to dischargethe onus which lay heavily upon them. At the riskof repetition, I may point out that no undertakingwas given by the Government that control wouldnot be re-imposed.

If anything the re-imposition of control ensued that there would be fair and equitable distribution of cloth and the public would not be at the mercy of speculators and hoarders. Looked at from this point of view, respondents 1 and 2 should have welcomed the re-imposition of cloth control. If such control had not been re-imposed, it was possible that the supply of cloth would have dried up altogether with the result that the octroi income on this commodity would have dwindled down to practically nothing.

Mr. Sethi pointed out--and quite rightly--that the octroi at the rate of 61/4 per cent was paid to the respondents 1 and 2 in respect of that amount of cloth, which was imported into Chamba town. It follows accordingly that there was neither a breach of contract nor frustration of contract, due to re-imposition of control as the Court below has thought. It further follows that the trial Court's findings that as a result of re-imposition of control, loss to the tune of Rs. 12,000/- and more accrued to the lessees, cannot be maintained. I would accordingly reverse the finding of the Court below on Issues 8 and 13,

43. Issue No. 3. The Court below has held that there was no misrepresentation to the lessees: by the insertion of Clause 2 in the Patta, Ex. D.W. 81/B. At the same time, it has held that misrepresentation was caused to the lessees by the insertions of Clauses 3, 20 and 22 in the Patta, Ex. D.W. 31./B, as a result of which they (the lessees) were put to loss. In the opinion of the Court below, the plaintiff was liable to make good this loss.

44. Clause 2 provides that octroi duty would be paid in cash at the time goods imported into Chamba were unpacked or sold. While discussing1 issue No. 5 supra, I have given my reasons for agreeing with the finding of the Court below, firstly, that the refugees from Pakistan did not bring with them articles liable to octroi and, secondly, that no octroi was payable on the foodgrains imported by the Central Rehabilitation Department for free distribution to refugees. It, therefore, fellows that the Court below was right in holding that there was no misrepresentation by the insertion of Clause 2 in the Patta.

45. Clauses 3 and 22 may be discussed together. These Clauses provide that cases of evasion or refusal to pay octroi duty should be reported to the District Magistrate, whose decision would be final. There was no bar to civil proceedings if the aggrieved party desired to take the case to a civil Court. It was further laid down that where an offence of cheating or other offence was made out, it was open to the District Magistrate to direct the registration of a criminal case against the culprit. Clause 22 prescribed imprisonment of either description extending upto one year or fine extending up to Rs. 1,000/- or both as punishment for such offences. While discussing issue No. 7 earlier, I had occasion to point out that the only criminal complaint liled by Sansar Chand, respondent, against one Dayal Singh, purporting to be under Clause 3 of the Patta, was dismissed by the Magistrate first class, Chamba, on the ground that he could not take cognizance of it, as it stood.

I had further pointed out that in case Sansar Chand felt that Dayal Singh had committed the offence of cheating or any other offence, punishable under the Indian Penal Code or any other enactment in force in Chamba, he should have filed a complaint under the proper section. I had observed that Clause 3 (b) of the Patta cannot be read as 3 penal enactment, i.e. in the sense of defining a new offence. It was for these reasons that I had reversed the finding of the Court below on issue No. 7. It, therefore, follows, as a necessary corollary that the Court below has erred in holding that there was a misrepresentation to the lessees by the insertion of Clauses 3 and 22 in the Patta.

46. There remains Clause 20. This refers to the collection of octroi in the Trans-Ravi area. While discussing issue No. 4 earlier, I had occasion to point out that the true purport of this clause was merely to demarcate. the respective jurisdictions of the Government and of the lessees (respondents 1 and 2) for the purpose of realizing octro, i.e. while octroi on the right bank of the river Ravi (Cis-Ravi area) would be collected by the lessees, octroi on the left side of the river (Trans-Ravi area) would be collected by the Government. No undertaking was, obviously, given by the Government that it would continue to levy octroi in the Trans-Ravi area. The levy had to be remitted in the Trans-Havi area, because, after the merger of Chamba State in the Union, of India, octroi could be levied only in municipal area. Accordingly, it follows that there was no misrepresentation by the insertion of Clause 20 either.

47. The result is that while I agree with the finding of the Court below on this issue as far as Clause 2 of the Patta is concerned, I reverse its findings on this issue as far as Clauses 3, 20 and 22 are concerned.

48.Issue No. 12. The Court below has held that the plaintiff-appellant was estopped from suing, in view of the misrepresentations made by him, the re-iinposition of cloth control and inefficient working of that control.

49.Learned counsel for the appellant urged that this finding of the Court below was erroneous both on law and facts. He pointed out that before the theka was auctioned its terms were read over and explained to prospective bidders, vide the statement of Jai Dayal (D.W. 1). Mr. Sethi further pointed out that although Sansar Chand, respondent No. 1, had on three occasions (i. e., on 13-12-48, 11-1-49 and 28-3-49) applied for the cancellation of the theka, under Clause 17 thereof, vide the last paragraph of Ex. D.C., referring to a previous application of 13-12-1948, Ex. D.C. itself dated 11-1-1949 and Ex. P.D. dated 28-3-1949, nevertheless, he did not press the same and was allowed to continue, vide Ex. P. B. dated 21-2-1949 and P.C. dated 23-3-49. It is noteworthy that Ex. P.D. was submitted by Sansar Chand only about 15 days before the Patta period was due to expire.

I find considerable force in Mr. Sethi's contention that Sansar Chand was not serious about giving up the theka. It should be borne in mind thatit was after working the theka for nearly eight months that Sansar Chand thought of invoking Clause 17 of the Patta. i.e. for cancellation of the theka. Ex. P. E. letter from the Development Secretary, Himachal Pradesh, dated 27-5-1949 to the Deputy Commissioner, Chamba, shows that the Government refused to grant any remission to Sansar Chand as requested by him. Sansar Chand was accordingly called upon to pay up the balance of Rs. 32,726/-. Since he failed to do so, the suit, giving rise to this appeal, was filed on 6-7-1950.

50.Mr. V.V. Mahajan, for the respondents, on the other hand, submitted that the finding of the Court below on this issue was perfectly right and the appellant was debarred from suing, 'in view of the misrepresentations allegedly made by him to the lessees.

51.While discussing issues 3, 4, 5, 6, 7, 81 and 13, I have given my reasons for holding that there was no misrepresentation by the plaintiff to the lessees by the insertions of Clauses 2, 3, 20 and 22 in the Patta, that the Government was within its rights in remitting octroi in the Trans-Ravi area and the same did not result in loss to the lessees as alleged, that no taxable articles were brought into Chamba by the refugees from Pakistan and rations imported for free distribution to them by the Rehabilitation Department was not liable to octroi, that no loss accrued to the lessees, either due to the withdrawal of the police guard from Sitla and other bridges, or due to the dismissal of criminal complaints against alleged defaulting refugees, that the re-imposition of cloth control was within the discretion of the Government and it was not established that the control was inefficiently worked.

On these premises, I had held that there was no breach or frustration of the contract as the Court below thought. Accordingly, it follows, as a logical corollary, that the plaintiff was not estopped from suing. Dhiyan Singh v. Jugal Kishore AIR 1952 SC 145, cited on behalf of the respondents, will not, under the circumstances, help them. Therein, Fazl Ali and Bose, JJ., held that :

'Now it can be conceded that before an estoppel can arise, there must be, first, a representation of an existing fact as distinct from a mere promise de futuro made by one party to the other; second, that the other party, believing it, must have been induced to act on the faith of it; and third, that he must have so acted to his detriment.' I have already given my reasons for holding that there was no misrepresentation by the plaintiff to the defendants. Similarly, Veeraraghava Reddi v. Kamalammal. AIR 1951 Mad 403 and AIR 1925 Mad 907, relied upon by the Court below, are not applicable to the facts of the present case. It has to be borne in mind that respondents 1 and 2 bid at the auction with their eyes open. No undertaking, obviously, was given to them by the lessors that in case octroi realizations did not come up to their (lessee's) expectation, remissions would be granted. I am constrained to remark that the Court below has gone out of its way in finding that thd plaintiff had made misrepresentations to respondents 1 and 2 and, consequently, the latter were put to 'tremendous loss.'

Further, I find it impossible to follow the reasoning of the Court below, when it says that, 'in equity, the plaintiff should not have claimed more than the sum of Rs. 98,274/- so far paid by respondents 1 and 2.' In the absence of proof of misrepresentation (which is lacking here), the plaintiff certainly was not estopped from suing for the balance of the theka amount. The appellant was) under no obligation to remit the balance of the theka amount. Respondents 1 and 2 could not demand remissions as of right. In this state of affairs, I am unable to support the finding of the Court below on issue No. 12. Accordingly, I reverse that finding.

52.Issue No. 11. The trial Court dismissed the suit holding that as a result of misrepresentations made by the plaintiff, the reimposition of cloth control, and the inefficient working of that control, the defendants had suffered losses much greater than the suit amount and, therefore, the plaintiff was estopped from suing. I had upheld the finding of the Court below on issue No 5, i.e. to the effect that it was not proved that refugees had brought with them into Chamba articles liable to octroi. Further, that foodgrains imported by the! Rehabilitation Department for free distribution to the refugees were not liable to octroi and, therefore, no loss accrued to the defendants on that score. While discussing issues 3, 4, 6, 7, 8, 13 and 12, I had given my reasons for differing from the findings of the Court below on these issues.

I had held that there was no misrepresentation by the plaintiff to the defendants 1 and 2, that the plaintiff was entitled to remit octroi in the Trans-Ravi area and no loss accrued to the lessees on that account, that the plaintiff was not bound to station police guards at Sitla and other bridges and the withdrawal of those guards did not result in loss to the lessees. Further, that the dismissal of the complaints against the alleged defaulting refugees was due to the fact that the complaints were not properly worded; that the plaintiff was entitled to reimpose cloth control and it was not established that the control was inefficiently worked and, therefore, no loss to the defendants was established on that account; and finally that the plaintiff was not estopped from suing for the suit amount.

It accordingly follows that this appeal must succeed and the plaintiff must be granted a decree for the sum of Rs. 32,726/-, being the balance due under the theka, Ex. D.W. 31/B. It further follows that, the appellant is entitled to its costs here and in the Court below. The plaint also contains a prayer for interest pendents lite and future. The suit was instituted on 6-7-1950. After a protracted trial, it was dismissed on 31-8-1957. The present appeal was filed on 29-11-1957. Several preliminary objections to the competency of this appeal were raised by the respondents,

These have been overruled in the opening portion of this judgment. Under Section 34, Civil P. C., it is open to this Court to order interest at a reasonable rate from the date of the suit to the date of the decree and from the date of the decree to the date of payment. Considering the defence taken, I am of the opinion that this is a fit case where interest pendente lite and future, should be awarded. In my view, interest at the rate of six per cent per annum would be fair and reasonable. Court-fee of course would be payable on the amount of interest to be realized.

ORDER

53. I allow this appeal, and set aside thedecision of the Senior Subordinate Judge, Chamba,dated 31-8-1957 (purporting to dismiss the suit). 1grant the plaintiff-appellant a decree for a sum ofRs. 32,726/- jointly against all the defendants-respondents. The appellant will also get intereston this amount pendente lite and future at the rateof six per cent per annum, from the respondentsThis would be subject to payment of the necessarycourt-fee. The appellant will further get its costs,here and in the Court below, from the respondents.


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