Patna High Court
Mineral Development Ltd. vs State Of Bihar on 2 May, 1962
Equivalent citations: AIR1962PAT443, AIR 1962 PATNA 443
JUDGMENT S.C. Misra, J.
1. This appeal arises out of an order passed by the learned Subordinate Judge of Hazaribagh, holding the appellant, the Mineral Development Limited, a Company incorporated under the Indian Companies Act, guilty of violating the order of ad interim injunction passed by the Court and as such liable to punishment under Order 39, Rule 2 (3), of the Code of Civil Procedure. The order passed was attachment of the properties of the appellant of the value of Rs. 6,000/-. The appellant is defendant No. 4 in Title Suit No. 53 of 1954 brought by the respondent, State of Bihar, for a declaration that the appellant had no right to continue the operations of the mines in certain areas which were leased out to it by the proprietor of the Ramgarh Raja after the interest of the lessor vested in the State of Bihar by virtue of a notification issued under Section 3 of the Bihar Land Reforms Act. The plaintiff prayed for issue of ad interim injunction restraining the appellant from carrying on the work of mining pending the final decision of the suit. It is stated that the villages concerned in respect of which the order of ad interim injunction was effective are Pundri, Bairi Tanr, Ambakola, Goriato, Kawabar and Pujari. The appellant appeared in Court after notices were duly served on all the defendants, who were 24 in number, on the 18th January, 1955, and filed a petition showing cause against the order of injunction. In spite of knowledge, therefore, of the order of restraint passed by the learned Subordinate Judge, the appellant continued the working of the mine as before which amounted to disobedience of the order of injunction and as such the appellant was liable to be dealt with in accordance with Order 39, Rule 2 (3). This was discovered when the Mining Officer Sri S. Sinha Choudhury visited village Pundri on the 1st February, 1955, and found two cart-loads of mica being transported from Pundri godown to Bhade Dih godown of the Mineral Development Limited, the appellant, under miner's licence No. 261 issued in favour of the Company. It is unnecessary to set out further facts about this matter as learned counsel for the appellant has not denied the factum of operation carried on in the mine at Pundri on the 5th of February, 1955, when the Mining Officer and the Inspector of Mica Accounts, Kodarma, visited the mine.
2. The defence urged on behalf of the appellant was that it was not the appellant which was engaged in carrying on mining operations which came to the notice of the Mining Officer, both on the 1st of February and the 5th of February, 1955, but it was one Ambika Prasad Singh in whose favour the lease was granted by an agreement, dated the 3rd of August, 1954, authorising him to carry on the mining operations at village Pundri and to certain other lessees in respect of other villages on different dates. The same having been done by agreement dated the 28th of October, 1954, thus, prior to the institution of the aforesaid title suit, and they not having been made parties to the suit, and the order of interim injunction not having been issued and served upon them, these grantees were not affected by the order. The appellant also not having disobeyed the order, it was not liable for disobedience of the order of ad interim injunction knowledge of which was not denied by the appellant.
The learned Subordinate Judge, however, was informed by the learned counsel for the State of Bihar that so far as the removal of mica, from the mines in villages Bairi Tanr, Ambakola, Goriato, Kawabar and Pujari was concerned, there was no evidence in support thereof. The application was accordingly confined to the removal of mica only from village Pundri which was also the subject-matter of the suit which, as I have said above, was for a declaration that the conveyances, leases and sub-leases described in the various schedules were sham, colourable and farzi and did net pass any title to the transferees. In fact, all these properties were still in exclusive possession of defendant no. 1, Raja Bahadur Kamkshya Narain Singh, the proprietor of Ramgarh; and after the vesting of the estate of defendant No. 1 in the State of Bihar as per notification dated the 3rd of November, 1951, the mining rights in the areas comprised within the ambit of Ramgarh Raj also vested in the State of Bihar. A permanent injunction has also been prayed for in the suit, restraining the proprietor from executing any lease or sub-lease etc., in respect of any portion of the Ramgarh Estate and Serampore Estate. There was also a prayer for restraining the defendant from working any mine or obtaining any minerals as also restraining the other defendants from doing the same on foot of the leases or sub-leases granted to them by defendant No. 1. There was further a prayer for compensation.
3. The learned Subordinate Judge has come to the following findings:-
1. The mine at Pundri was being worked and the mica extracted being transported from the Pundri mine from the date alleged by the plaintiff.
2. This was being done by Ambika Prasad Singh; the sub-lessee of Mineral Development Ltd., as its agent and as such the act of the agent of the Company will be deemed to be the act of the Company itself, if it authorised the agent to do so.
The learned Subordinate Judge for coming to the conclusion that the act of the agent would make the principal liable, relied upon the decision of the Privy Council in S.N. Bannerjee v. Kuchwar Lime and Stone Co., Ltd., AIR 1938 PC 295. The Court overruled the argument advanced on behalf of the appellant. The order of ad interim injunction was passed by the learned Subordinate Judge; but on the date of the alleged disobedience of the order, the suit itself, Title Suit No. 53 of 1954, was transferred to the Court of the first Additional Subordinate Judge, Hazaribagh, and was pending there.
4. It is contended on behalf of the appellant that in that view of the matter the learned Subordinate Judge, who was orginally in seizin of the suit and had issued the order of ad interim injunction, was not the proper authority to dispose of the application for disobedience of the order of injunction and this application should have been decided in the Court of the first Additional Subordinate Judge, and not in the Court of the learned Subordinate Judge.
5. Dr. Sultan Ahmed appearing in this Court on behalf of the appellant has urged that the Court below was inferior in regard to both questions viz., the liability of the appellant for the act of Ambica Prasad Singh as also on the question of jurisdiction of the learned Subordinate Judge to pass the order of attachment for disobedience of the order of ad-interim injunction. He has contended that he does not dispute the proposition that their Lordships of the Privy Council have laid down that if disobedience of an order of injunction has been made by the agent, who is authorised to do the act, which amounts to disobedience, then the principal is liable for the act of the agent; but he has contended that the learned Subordinate Judge is in error in construing the agreement executed by Ambika Prasad Singh in favour of the appellant as showing that Ambika Prasad Singh was a mere agent of the appellant. The correct reading, however, of the agreement concerned would be that Ambika Prasad Singh was not the agent of the appellant, the Mineral Development Limited, but as a sub-lessee he was working the mine in Ms own right. The agreement, prima facie, having been brought into existence prior to the institution of the suit and the sub-lessee not having been made party to the suit, the appellant could not be made liable for the act of Ambika Prasad Singh.
It is accordingly necessary to scrutinise the agreement between the appellant and Ambika Prasad Singh in order to determine its real character. The agreement in question is Annexure C to the petition of show cause filed by the appellant. Paragraph one of the terms of the lease runs thus:-
"That the said Second Party shall be solely responsible for the proper and lawful conduct of all such mining operations in the said villages and shall always abide by the Act, Rules, Regulations and Orders for the time being in force and governing the working of Mica Mines and shall carry on such Mica Mining Operations at his own cost and shall keep the First Party indemnified against all suits, claims and damages which may be brought or made by any person in respect of any damage and/or injury whatsoever sustained by anybody in Course of such mining operations."
The other terms are that the second party, being Ambika Prasad Singh, the sub-lessee, shall be solely responsible for regular payment of the staff employed in carrying on Mica Mines etc., and for proper maintenance of the records and books of account. Paragraph four recites that the second party will be deemed to be a licencee of the first party. Paragraph five recites that the second party shall have to start Mica Mining operations within a period of six months from the date of the agreement in a scientific and mechanised manner and shall also be responsible for the control, working and safety of the labourers. Paragraph seven recites that the second party shall pay the first party a net commission of 15 per cent., on sale of mica-got as a result of mining operations in the said area for the first three months. It is unnecessary to recite the other terms of the agreement, inasmuch as the terms quoted above themselves will show that it was Ambika Prasad Singh who took the responsibility for running the mines on his own initiative and made himself liable for the observance of the provisions of the Indian Mines Act and the rules made thereunder. Ambika Prasad Singh was, no doubt, bound to pay 15 per cent., as Commission on sale of mica extracted as a result of mining operations at the beginning and the same might be raised to 50 per cent., at a subsequent stage; and in default of the payment of commission, the agreement would stand terminated at the option of the appellant first party. But the other terms of the agreement confer an independent status upon the grantee who was also described not as an agent but as a licencee for the first party.
An agent is a person who is under the direct supervision and control of the principal and is liable to account to him for every matter which he has dealt with and whose only duty is to establish a jural relation between the principal and a third party or who represents him in dealings with a third party. As opposed to that, an independent contractor is "one who undertakes to produce a given result, but so that in the actual execution of the work he is not under the order or control of the person for whom he does it, and may use his own discretion in things not specified before hand"--vide Bowstead on Agency, page 2, 12th edition. In the present case, however, Ambika Prasad Singh has been authorised to carry on all the operations of these mines, according to the agreement as referred to, independent of the supervision and control of the principal and as such he cannot be regarded as an agent. He might well be regarded as a lessee or sub-lessee, but not as an agent working under the control of the Mineral Development Limited. In the Privy Council case also the Kalyanpur Company which was in actual possession as lessee under the Govt., whose officer was Mr. S.N. Bannerjee, the appellant although it held a lease from the Government, was held not to be an agent of the Government, and, as such, neither the Government who were not in possession nor the Kalyanpur Company, against whom no order of injunction was issued, could be held liable. The appeal was accordingly allowed and the order of this Court set aside, which proceeded on the footing that the Government encouraged Kalyanpur Company to disobey the order of injunction by treating the Company as lessee. It was held further by the Privy Council that the Government, if at all liable, might be proceeded against for aiding and abetting the Kalyanpur Company in its act of disobedience, but Government themselves would not be liable for committing contempt by disobedience of the order of injunction. Dr. Sultan Ahmad has relied upon this passage from Bowstead on Agency (page 2, 12th edition) in support of the proposition that Ambika Prasad Singh could not be regarded as the agent of the appellant and, if that be not so then, according to the pronouncement of the Privy Council in S.N. Bannerjee's case, AIR 1938 PC 295 the company would not be liable for the act of Ambika Prasad Singh. He has further drawn our attention to Bowstead on Agency, Article 104 at page 349 (7th edition), which runs thus:-
"No principal is liable for any wrongful act or omission of his agent while acting, without the principal's authority, outside the ordinary course of his employment, or while not acting nor purporting to act on the principal's behalf."
The point stressed on the authority of this proposition is that in the present case the removal of mica, if any, by Ambika Prasad Singh, even if he be regarded as an agent of the appellant, cannot fasten any liability upon the principal, viz., the appellant, because there is no evidence that the appellant authorised the removal of mica by Ambica Prasad Singh even after the order of injunction was served upon it. In my opinion, this question does not arise in the present case because I have already held that Ambika Prasad Singh cannot be regarded as an agent but as an independent contractor.
6. Learned Government Pleader appearing for the respondent had contended that the stand of the Government in the suit is that all these transactions are farzi and sham and, accordingly, Ambica Prasad Singh, if he at all did the actual act of removal, must be deemed to have done so as an agent. I am unable to accede to this contention. In the first place, if the allegation in the plaint of the suit that the Mineral Development Limited, which is sought to be proceeded against, had no real existence of its own but was set up as a mere show by the proprietor Raja Bahadur Kamakshya Narain Singh himself, is to be taken at its face value, then the appellant also, which has no real existence but is a sham and non-existent entity, is not liable but defendant No. 1, Raja Bahadur Kamakshya Narain Singh, should have been proceeded against and not defendant No. 4, and the application would be liable to be dismissed on this ground alone. Assuming, however, that the plaintiff State of Bihar does not go to that extent in the present proceeding, the logical corollary to this is that it will be for the learned Additional Subordinate Judge, who has to hear the suit, to decide conclusively as to whether the various transactions, entered into by defendant No. 1 in favour of other defendants were real or sham, and what the effect thereof would be upon the mining right concerned in respect of the mines comprised in the estate of defendant No. 1 which has been taken over the State of Bihar.
The proceeding for contempt being ancillary to the suit and being of a punitive nature, the prima facie allegation of the parties for the time being should form the basis of the decision of the proceeding. If, therefore, the agreement in favour of Ambika Prasad Singh had been brought into existence at a date subsequent to the institution of his suit, prima facie, it would be affected by lis pendens and the lessor might be held to be liable as principal in respect of any act done by the lessee whose right began after the institution of the suit. As it is, however, admittedly, the leases bear the dates 3-8-1954 and 28-10-1954 which are prior to the institution of the suit, being the nth November, 1954. It must accordingly be taken that for the purposes of the present contempt proceeding, Ambika Prasad Singh, unless he be taken as an agent in terms of the agreement, must be held to be a person working the mine in his independent character, either as a licencee or sub-lessee, and the Mineral Development Limited cannot be held liable for the act of Ambika Prasad Singh. It will not be proper in the summary proceeding like the present one to pronounce finally upon the validity of the transaction of the lease or the agreement between the appellant and Ambika Prasad Singh and, in that view of the matter, the appeal must succeed and the order of the Court below set aside.
7. As for the question of jurisdiction which was urged by Dr. Sultan Ahmed, it appears that the Court below proceeded upon a decision of the Calcutta High Court in the case Jaharuddin v. Haricharan, AIR 1914 Cal 815 which has held that even where a suit or proceeding is transferred from one Court to another, it is for the transferor Court which has issued the injunction to dispose of any act concerning the injunction and not the transferee Court. The decision in Sheobrich Singh v. Basgit Singh, AIR 1957 Pat 73, which is a Bench decision of this Court, is to the contrary. It has laid down that when a suit or proceeding is transferred from one Court to another, it means the transfer not only of the suit or proceeding alone, leaving intact the transferor Court's jurisdiction to dispose of any act of disobedience of an injunction which may have been issued by that Court prior to the transfer, but that order of transfer, of the suit or proceeding includes the suit as also the ancillary proceeding such as disobedience of an order of injunction by the party concerned and both these matters must be disposed of by the transferee Court itself. Even in that view of the matter, the order passed by the Court below would have to be set aside. In that case, however, the case might have to be remanded to the Court of the learned Additional Subordinate Judge where the title suit instituted by the plaintiff-respondent is pending at present. Since, however, it has already been held that Ambika Prasad Singh was not an agent of the Mineral Development Limited, and claims to have been working the mine under the agreement dated the 3rd August, 1954, prior to the institution of the suit, it must be held that the appellant could not be held liable for any disobedience of the order of injunction by Ambika Prasad Singh. It may, however, be made clear beyond question that this decision is not to affect the Hading on merits in the suit itself which the trial Court may have occasion to record as to the genuineness or validity of the transactions, which are sought to be challenged by the plaintiff on the footing that they were sham and collusive and were devised by defendant No. 1 to retain the interest in the mining areas comprised in the zamindari even after it vested in the State of Bihar in accordance with the provisions of the Bihar Land Reforms Act.
S.P. Singh, J.
8. I agree.