Madras High Court
Commissioner, Kadayanallur Panchayat ... vs A. Puthuran Padayachi on 30 November, 2005
Equivalent citations: 2006(2)CTC392, (2006)2MLJ547
Author: Parbha Sridevan
Bench: Prabha Sridevan
JUDGMENT Parbha Sridevan, J.
1. Defendants are the appellants. The respondent/plaintiff in auction obtained the fishing rights in the pond belonging to the appellants for the year 1991-1992. He paid a sum of Rs. 32,927. According to him, because of the failure of rains, there was no water in the pond. The Plaintiff did not receive the order confirming the auction and therefore, he asked for refund of auction amount. Since the appellants refused to refund the amount, suit was filed. The Trial Court, decreed the suit and the Appellate Court, confirmed it. Against that, the present Second Appeal has been filed.
2. The following substantial questions of law has been raised:
Whether in law are not the Courts below wrong in overlooking that the respondent having accepted the conditions in auction is estopped from questioning the same.
3. Learned Counsel for the appellants would submit that the contract given to the respondent was a lease and when there is demise of property in praesenti, there is no frustration of contract as per Section 56 of the Contract Act. The only right which the respondent had was under Section 108(e) of Transfer of Property Act. To support his case that the contract was not a licence but a lease, learned Counsel for the appellants relied on the following judgments:
(1) M.V. Rajan v. Gopal and Ors. ; (2) The Bihar Eastern Gangetic Fishermen Cooperative Society Ltd. v. Sipahi Singh and Ors. and (3) Santhosh Jayaswal and Anr. v. State of M.P. and Ors. .
4. In M.V. Rajan v. Gopal and Ors. , it was observed that:
If these passages give an impression that the learned Judges had treated Exhibit-D as executory agreement incapable of specific performance because of frustration, that view cannot be regarded as correct. In our view on a correct interpretation of the lease, Exhibit-D is a demise in praesenti and on that basis the appellant would have been entitled to mesne profits because on the day when possession could have been given, the second respondent with full notice of the lease in favour of the appellant and with the knowledge that respondent 1 had not renewed it continued in possession. It is not as if the later impediment created by the Rent Control Act precludes the first, respondent from agitating his appeal as he was bound to in order to give effect to the demise granted by him to the appellant.
5. In The Bihar Eastern Gangetic Fishermen Cooperative Society Ltd. v. Sipahi Singh and Ors. , it was observed that:
That apart, there is an additional reason for holding that the settlement of Jalkar with respondent No. 1 was not valid and enforceable. The right to catch and carry away the fish being a 'profit a prendre' i.e. A profit or benefit arising out of the land, it has to be regarded as immovable property within the meaning of the Transfer of Property Act read in the light of Section 3(26) of the General Clauses Act. If a 'profit a prendre' is tangible immovable property, its sale has to be by means of a registered instrument, in case its value exceeds Rs. 100 because of Section 54 of the Transfer of Property Act. If it is intangible, its sale is required to be effected by a registered instrument whatever its value. Therefore, in either of the two situations, the grant of the 'profit a prendre' has to be by means of a registered instrument. Accordingly, the transaction of sale of the right to catch and carry away the fish if not effect by means of a registered instrument would pass no title or interest.
6. In Santhosh Jayaswal and Anr. v. State of M.P. and Ors. , it was held that the right to catch fish is profit a prendre and benefit to arise out of land, is an immovable property. The following is the extract from the judgment:
Under Section 17 of the Registration Act, read with Section 2(16) of the Indian Stamp Act lease means a lease of immovable property and includes apatta kabuliyat or other undertaking in writing not being a counter-part of a lease to cultivate, occupy or pay or deliver rent for immovable property, etc. Right to catch fish is. profit a prendre and benefit to arise out of land is an immovable property for the purpose of stamp duty. It would, therefore, be clear that since it is a right given to the appellants to catch fish in the tank, it is a profit prendre attached to or benefit to arise out of the land. Therefore, it is an instrument for the purpose of stamp duty.
7. Learned counsel for the appellants also submitted that when there is a specific clause in the contract, that because of natural causes, the person, who has been given the fishing rights, suffers loss of income, then he is not entitled to refund. According to the learned Counsel for the appellants, when the contract was entered into with eyes open, the respondent cannot now claim refund.
9. Learned counsel also referred to the following judgment Tarsem Singh v. Sukhminder Singh . The following is the extract from the judgment:
The Privy Council in Thakurain Harnath Kaur v. Thakur Indar Bahadur Singh AIR 1922 PC 403 : ILR (1922) 45 All 179 : 21 Cal WN 949 : 1923 (44) MLJ 489, while considering the provisions of Section 65 held that:
The Section deals with (a) agreements, and (b) contracts. The distinction between them is apparent from Section 2. By Clause (e) every promise and every set of promises forming the consideration for each other is in agreement, and by Clause (h) an agreement enforceable by law is a contract. Section 65, therefore, deals with (a) agreement enforceable by law, and (b) with agreements not so enforceable. By Clause (g) an agreement not enforceable by law is said to be void.
An agreement, therefore, discovered to be void is one discovered to be not enforceable by law, and, on the language of the section would include an agreement that was void in that sense from its inception as distinct from a contract that becomes void.
This case before the Privy Council also related to sale of certain villages for which some money had been paid in advance. The sale was found, to be inoperative as there was a misapprehension as to the rights of the transferor in the villages which he purported to sell and that the true nature of those rights was discovered much later. In this background, the Privy Council, held the agreement to have been "discovered to be void". The Privy Counsel, therefore, passed a decree for compensation in favour of the vendee and in assessing that compensation, the sum of money, which was advanced, was included in the amount of compensation decreed with 6% interest payable from the date of suit.
10. Section 56 of the Indian Contract Act reads as follows:
Agreement to do impossible Act. An agreement to do an act impossible in itself is void.
Contract to do act afterwards becoming impossible or unlawful. A contract to do an act which, after the contract is made, becomes impossible, or by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.
Compensation for loss through non-performance of act known to be impossible or unlawful. Where one person has promised to do something which he knew, or with reasonable diligence, might have known, and which the promisee did not know, to be impossible or unlawful, such promisor must make compensation to such promise for any loss which such promisee sustains through the non-performance of the promise.
11. Section 65 reads as follows:
Obligation of person who has received advantage under void agreement or contract that becomes void. When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantages under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it.
12. Learned counsel far the appellants would submit that Section 108(e) of the Transfer of Property Act would apply. The appellants themselves have only referred to the agreement as one of licence. There is no disputing the fact that the basis of the contract itself was destroyed and therefore, the contract in the strict sense of the word "became impossible of performance", but even if one were to accept, the appellants' case, that Section 108(e) Transfer of Property Act alone applies, then the lease gets extinguished when the lessee exercises such option.
13. The stand taken by the plaintiff that the lease in favour of him was not confirmed has not been denied. Ex.A-7 is the certificate given by the Tahsildar that there was no water in the pond in 1990-1991, 1991-92. Ex.A-8 and A-9 are the letters written to the District Collector by the 1st defendant that the ponds did not get filled up for the relevant years and that the plaintiff was entitled to refund. Ex.A-10 is the Section 80 notice. Then the plaintiff gave a petition to the District Collector on the Grievance Day. Ex.A-12 shows that the second defendant had written to the first defendant either to refund the money or renew the license for the next years.
14. The auction was not confirmed by the appellant. The contract becomes impossible because the pond was dry and fish rearing could not be done. As per Section 56 and 65 of the Indian Contract Act the person who has derived any advantage from another should restore it to the said person when the contract becomes impossible. Even as per Section 108 of Transfer of Property Act, when the demised property becomes totally destroyed, the lease becomes void at the option of the lessee. By issuing the notice and claiming refund, the plaintiff can be said to have exercised this option. The term in the auction notice which disentitled the lessee from seeking refund if he sustained loss cannot apply here, since the contract itself became void on account of impossibility. The Courts below have dealt with this question, correctly.
15. In these circumstances, the substantial question of law raised by the appellants, therefore, must be answered against the appellants. The Second Appeal is dismissed with coats. Connected miscellaneous petitions are also dismissed.