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Secy. of State Vs. Saroj Kumar Acharjya Choudhury and Others - Court Judgment

LegalCrystal Citation
CourtPrivy Council
Decided On
Case NumberPrivy Council Appeal No. 92 of 1933 (From Calcutta: Bengal Appeal No. 13 of 1932)
Judge
AppellantSecy. of State
RespondentSaroj Kumar Acharjya Choudhury and Others
Advocates:A.M. Dunne and J. Pringle, for Appellant; L. DeGruyther and J. M. Parikh, for Respondents. Solicitors for Appellant, The Solicitor, India Office; Solicitors for Respondents, T.L. Wilson and Co.
Excerpt:
.....july 1917 after it had been set aside by the high court. four separate suits for possession and mesne profits had been instituted against the present appellant, secretary of state for india in council, by four sets of cosharers, each claiming a one-fourth share in the suit lands but three of these suits had been compromised while the decrees were under appeal to the high court, and the present respondents are the plaintiffs in suit no. 17 of 1902, who were not parties to the compromise. the suit lands form part of an island chur which began to emerge out of the bed of the river padma, a part of the ganges, in 1888, and was taken possession of on behalf of government on 30th may 1890 by the subdivisional officer of manikganj under the provisions of s. 3, bengal act 4 of 1868. ".....
Judgment:

Sir John Wallis:

The appeal in this case, which now comes before the Board for the third time, is solely concerned with questions of the ascertainment of mesne profits under the decrees of the Subordinate Judge of Faridpore, of 22nd July 1907, which were restored, with a variation, which is not material, by the judgment of this Board of 2nd July 1917 after it had been set aside by the High Court. Four separate suits for possession and mesne profits had been instituted against the present appellant, Secretary of State for India in Council, by four sets of cosharers, each claiming a one-fourth share in the suit lands but three of these suits had been compromised while the decrees were under appeal to the High Court, and the present respondents are the plaintiffs in suit No. 17 of 1902, who were not parties to the compromise. The suit lands form part of an island chur which began to emerge out of the bed of the river Padma, a part of the Ganges, in 1888, and was taken possession of on behalf of Government on 30th May 1890 by the Subdivisional Officer of Manikganj under the provisions of S. 3, Bengal Act 4 of 1868.

" Whenever it shall appear to the local revenue authorities that an island has been thrown up in a large and navigable river liable to be taken possession of by Government under Cl. 3, S. 4, Regn. 11 of 1825 of the Bengal Code, the local revenue authorities shall take immediate possession of the same for Government, and shall assess and settle the land according to the rules in force in that behalf, reporting their proceedings forthwith for the approval of the Board of Revenue, whose order thereupon, in regard to the assessment, shall be final. Provided however that any party aggrieved by the act of the revenue authorities in taking possession of any island as aforesaid, shall be at liberty to contest the same by a regular suit in the civil Court."

The third clause of S. 4, Bengal Regulation 11 of 1825,

" for declaring the rules to be observed in determining claims to lands gained by alluvion or by dereliction of a river or the sea,"

is in these terms:

" When a chur or island may be thrown up in a large and navigable river (the bed of which is not the property of an individual), or in the sea, and the channel of the river, or sea, between such island and the shore may not be fordable, it shall, according to established usage, be at the disposal of Government. But if the channel between such island and the shore be fordable at any season of the year, it shall be considered an accession to the land tenure or tenures of the person or persons whose estate or estates may be most contiguous to it, subject to the several provisions specified in the first clause of this section, with respect to increment of land by gradual accession."

This clause had been interpreted in some decisions as meaning that islands etc., thrown up were the property of Government, but they were overruled by this Board in 13 M. I. A. 467 (1). Appeals from the order of the Subdivisional Officer were preferred to the Commissioner and to the Board of Revenue, and after further investigations a large part of the chur was surrendered as re-formation in situ to the former owners; but as regards the suit lands, the Board of Revenue dismissed the appeal on the ground that they were not shown to be reformations in situ of lands belonging to the plaintiffs, but were re-formations in situ of lands which had been in the khas possession of Government. The Courts in India differed on this question, which was apparently one of considerable difficulty; but as already stated, this Board agreeing with the Subordinate Judge, gave the plaintiffs a decree for possession and mesne profits, and the only questions in these appeals are whether mesne profits have been correctly determined by the High Court in the judgment under appeal: (1) as to the defendant's liability for the omission of the revenue authorities to collect any salami or premium from tenants admitted to the suit lands; (2)as to the defendant's right to a deduction of 10 per cent for expenses of collection; (3) as to the rate at which the interest provided for in the definition of mesne profits in S. 2 (12), Civil PC, should be charged. Mesne profits are there defined as

"those profits which the person in wrongful possession of such property actually received or might with ordinary diligence have received therefor together with interest thereon."

As regards the finding of the High Court that the defendant is accountable for additional profits which the revenue authorities could have realised with reasonable diligence, by way of salami or premia, the contention has been raised for the first time before the Board that in taking possession of, assessing, and settling the lands according to the rules in that behalf, those authorities only did what they were required to do by the statute, and that the defendant cannot be held liable for their failure to do more. Their Lordships are unable to accept that contention, because in their opinion the proviso that the party aggrieved by the action of the revenue authorities in taking possession should be at liberty to contest the same by a regular suit necessarily imports that, where possession has been taken on behalf of Government of property which is the subject of private ownership, the defendant in such regular suit cannot justify under the section, but must be held answerable to the party aggrieved in the same way as a trespasser, as has been done in this case. To hold otherwise might seriously affect the remedy given by the proviso. Even so, on the terms of the definition of mesne profits, what the plaintiffs have to show is that, with reasonable diligence, more might have been realised than was actually realised by the revenue authorities in the way of profits, which term includes both rents and premia, if any. As to what amounts to due diligence, in their Lordships' opinion, the person in wrongful possession is not liable for failure to realise the highest possible rates of rent and premium from the tenants. It is enough if taking account of both rent and premium, if any, a fair return has been realised from the land, and their Lordships will deal with the case on that basis in considering whether the plaintiffs have shown that there has been a want of reasonable diligence on the part of the defendant.

The accounting period, beginning three years before the date of the suit, was from 29th May 1899, to 15th April 1921, the date of delivery of possession under the judgment of the Board of 2nd July 1917. The Special Commissioner appointed to take the necessary accounts covering a period of 22 years, after taking evidence, reported on 9th January 1927, that the revenue authorities could have realised an additional sum of Rs. 25,200 by way of rents and a sum of Rupees 30,300-12-9 by way of salami or premium on the admission of tenants, during the accounting period. The Subordinate Judge affirmed the finding of the Commissioner as to rents, but disallowed the claim for salami on the erroneous view that it would not come within the definition of mesne profits.

There were cross appeals to the High Court, and the two Indian Judges who heard the appeal subjected the evidence adduced for the plaintiffs both as to rates of rent and salami to a very careful examination, and came to the conclusion that it was most unsatisfactory and wholly unreliable. They accordingly reversed the finding of the Subordinate Judge which held the defendant liable for want of reasonable diligence in collecting rent, and from this part of their judgment the plaintiffs have not preferred an appeal.

As regards salami, the learned Judges most carefully examined the evidence adduced for the decree holders as to the rates of salami collected by them and other landowners in the neighbourhood, and commented, among other things, on the fact that the nathis, or orders, for the admission of tenants on payment of an adequate salami and the sumars, or special collection books in respect of salami, were only opened after the institution of the suit, and that the entries in these sumars were not corroborated as they should have been by the entries in the ordinary accounts. These are matters about which the learned judges were in a much better position to Judge than this Board, and their Lordshirs see no reason to differ from their conclusion that the documentary evidence for the decree-holders as to salami was extremely unsatisfactory and unconvincing, and that in the circumstances it was not possible to calculate a rate of salami with any degree of accuracy.

In these circumstances the learned Judges had recourse to the terms of the compromise between the defendant and the decree-holders in the other three suits, and finding that the defendant had agreed to pay a salami of Rs. 5 per begha under that compromise, applied the same rate not only to cases of admission after the beginning of the accounting period in 1899, but to all admissions from the taking of possession, with the result that they awarded Rs. 19,710-9-5 under this head as salami, as compared with Rs. 30,300-12-9 awarded by the Commissioner. As to this award their Lordships' agree with the appellant's contention that the fact that the defendant had agreed to pay a salami of Rs. 5 per begha in a compromise in which both sides agreed to give up a great deal does not afford a proper basis for settling a rate of salami in this case and cannot be accepted. They agree also with the appellant's further contention that the defendant could not be held liable for not collecting salami during the accounting period from tenants who were already in possession at the beginning of that period, that is to say, in 1899, as the respondents have failed to show that during the accounting period salami could have been collected from tenants in possession before the beginning of that period. The plaintiffs' claim for salami must therefore be limited to salami in respect of admissions during the accounting period.

As regards the claim for failure to collect salami on the admission of tenants during the accounting period, as already observed, the profits of the land consist of rents and salami, if any; and in considering whether the revenue authorities failed to exercise reasonable diligence, it is necessary to see what was done by them in this matter. As required by the section under which possession was taken, they proceeded to assess and settle the lands according to the rules in that behalf, that is to say, under the provisions of Cl. 6, S. 2 and the following 33 sections of Regn. 7 of 1822 which by S. 2, Regn. 9 of 1825 were made applicable to all lands in Bengal which had not been permanently settled, and to all lands in the khas possession of Government.

The Regulation of 1822 imposes upon the settlement officers the duty of seeing that the raiyats are not made to pay excessive rates of rent to their landlords, and the Bengal Tenancy Act of 1885, which is applicable to these lands, contains provisions for securing that raiyats should pay rents at fair and equitable rates. In this case the revenue authorities would appear to have done their best to settle rates of rent which would be fair to both parties. The Board of Revenue refused to confirm the rates imposed at the first settlement in 1894, and directed a fresh settlement, with the result that the rates were increased to such an extent that the settlement officer recommended that the settlement should be for 15 years, instead of five, as otherwise the increase would cause hardship to the tenants. The learned Judges of the High Court most carefully considered what was done by the revenue authorities in this matter, and arrived at the conclusion that there was no want on their part of such diligence as a prudent and fair-minded proprietor could be expected to show in dealing with his own property in the matter of the realization of rent. This is in effect a finding that the rents realized were fair and equitable, and therefore such as contemplated by the legislature. In those circumstances it would, in their Lordships' opinion, be difficult to hold that the defendant, assumedly a person in wrongful possession, had been wanting in reasonable diligence in not realizing more. Moreover in the present case, having regard to the very unsatisfactory nature of the decree-holders' evidence as to what was obtainable from the suit lands by way of rent and salami and the fact that the learned Judges refused to act on it, their Lordships are of opinion that plaintiffs have failed to show that there was any want of reasonable diligence in realising mesne profits from the suit lands. Consequently, the plaintiffs' claim for additional profits by way of salami fails and the decree of the High Court must be varied accordingly.

The next objection is that both the lower Courts refused to make any allowance for the expenses of collection on the ground that the defendant failed to adduce any evidence as to the amount of such expenses. Profit always means the difference between the amount realized and the expenses incurred in realizing it; and this rule has been expressly applied by this Board as regards mesne profits in 8 Cal 332 (2). In India 10 per cent is the customary allowance for mesne profits, and it was therefore unnecessary for the defendant to adduce any evidence on this subject. In 27 Cal 951 (3), 10 per cent was substituted by this Board under the head for 5 per cent although the rate had not been made the subject of evidence. The decree must therefore be varied by allowing the defendant a reduction of 10 per cent on the collections.

The third objection is that the rate of interest on mesne profits awarded to the plaintiffs as forming part of the mesne profits under the definition has been fixed at 12 per cent, whereas the proper rate is 6 per cent. The Subordinate Judge allowed interest at 12 per cent on the ground that the Government were not bona fide trespassers, and the High Court, rightly reversing this finding, nonetheless maintained the rate of 12 per cent, which they regarded as a fair compensation for the decree-holders who had been kept out of their property. That was also the rate adopted in some earlier decisions of that Court. In 27 Cal 951 (3), where the High Court had varied the decree of the Subordinate Judge by disallowing interest on mesne profits at 6 per cent, this Board, when restoring the decree of the subordinate Court, awarded interest at 6 per cent, and this was apparently done without objection being taken. In 1921 Cal 699 (4), the question of the proper rate of interest to be granted on mesne profits was fully considered, and it was decided that under existing conditions 6 per cent was the proper rate. Their Lordships are of opinion that, in the absence of special circumstances, 6 per cent is a fair rate of interest, a sufficient compensation to the decree-holder for having been deprived of the rents and profits of the suit lands. The rate of interest should be reduced at 6 per cent. In the result their Lordships are of opinion that the decree of the High Court should be varied by disallowing salami, by allowing the defendant a deduction of 10 per cent for the expenses of collection, and by reducing the rate of interest from 12 to 6 per cent, and they will humbly advise His Majesty accordingly.

The respondents will pay the appellant's costs.

Decree varied.


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