Patna High Court
Kalyanpur Lime Works Ltd. vs The State Of Bihar And Anr. on 30 August, 1950
Equivalent citations: AIR1951PAT226, AIR 1951 PATNA 226
JUDGMENT Das, J.
1. This is an appeal from an order of the learned Subordinate Judge of Sasaram, dated 1-6-1950, rejecting a prayer for an ad interim injunction, under the provisions of Order 39, Civil P. C., against the defendants in the action, namely, (1) the State of Bihar and (2) Messrs Dalmia Jain & Company Ltd. The form of the order of injunction which the appellant, plaintiff in the action, asked for was in these terms (I am quoting the prayer portion of the petition for interim injunction):
"It is, therefore, prayed that your honour may be pleased to restrain defendant 1 from executing any lease in favour of defendant 2 during the pendency of the suit."
2. The facts leading up to the suit and the prayer for interim injunction are these : There is a Hill known as Murli Hill (the upper portion being known as upper Murli Hill and the lower-portion as lower Murli Hill) within the sub division of Sasaram in the district of Shahabad, The Hill contains lime stone etc. On 1-4-1928, the Secretary of State for India (the then competent authority) granted two leases to the Kutchwar Lime and Stone Company Ltd. (hereinafter to be referred to as Kutchwar) in respect of the two portions of the Hill in question for a period of twenty years, for the purpose of quarrying: lime stone, and converting the same into lime etc. In 1933, Kutchwar went into voluntary liquidation. On 30-9-1933, Kutchwar through their managing agents and liquidators, purport, ed to transfer the leases to one Mr. Bose, subject to the sanction of the Board of Revenue,, but in the meantime appointed Bose as their local agent The Board of Revenue refused to sanction the proposed transfer of the leases. On 25-1-1934, the Kalyanpur Lime Works Ltd. (hereinafter to be referred to as the appellant) wrote to the Collector of Shahabad and applied for leases in respect of both upper Murli Hill and lower Murli Hill. On 27-3-1934, the Government of Bihar in the Revenue Department appeared to have sanctioned the proposal to forfeit the two leases held by Kutchwar, and on 31-3-1934, the Board of Revenue approved the proposal to grant leases for quarrying lime stone to the appellant. The relevant letter is printed at p. 17 of the paper book, and shows that the proposal to grant leases in favour of the appellant was approved :
"On the existing terms and condition as set forth in Chap. V. Bihar and Orissa Waste Lands and Minerals Concession Manual, on the understanding that after the lease is executed the question of royalty will be re-examined by the Board provided it is well understood that any reduction, if made, would be a matter of grace."
It is stated that on 15-4-1931, the appellant got possession, and the appellant started operations on 15-5-1934. On 18-7-1934, the Board of Revenue, by a formal resolution, forfeited the leases in favour of Kutchwar. On 24-9-1934, Kutchwar filed a suit against Government. The suit was dismissed by the Subordinate Judge. There was an appeal to this Court, and on 25-4-1935, this Court issued an injunction restraining Government from granting leases to the appellant. On 7-2-1936, this Court decreed Kutchiwar's suit. There was an appeal to the Privy Council which was dismissed on 9-11-1937 (see Secy of State v. Kuchwar Lime and Stone Co. Ltd , 65 I.A. 45 : (A.I.R. (25) 1938 P.C. 20)) In the meantime certain contempt proceedings were instituted by Kutchwar against Government and the appellant, though the appellant was not a party to the suit which Kutchwar had brought in 1934. In the contempt proceedings, this Court held on 9-10 1936, that both Government and the appellant had been guilty of contempt of Court, see Kutchwar Lime & Stone Co. Ltd. v. Secy. of State, 16 pat. 159 : (A. I. R. (24) 1937 Pat. 65 S. B ). The appellant alleged that as a result of this decision in the contempt proceedings, it had to give up possession which it had got in 1934. Against the decision in the contempt proceedings, there was an appeal to the Privy Council. On 31-10-1938, the Privy Council held that there was no contempt, see S. N. Bannerjee v. Kuchwar Lime & Stone Go. Ltd., 17 Pat. 770 : (A.I.R. (25) 1938 P.C. 295). After this decision, the appellant applied for restitution, that is, to be restored to possession. This application for restitution was dismissed by this Court on 11-5-1939. The matter again went to the Privy Council, and the Privy Council affirmed the decision of this Court on 30-7-1941 see S. N. Bannerjee v. Kuchwar Lime & Stone Co. Ltd., 21 Pat 243 : (A.I.R. (28) 1941 P.C. 128). On 31-3-1948, Kutchwar's leases expired. On 10-8-1949, two leases were granted to Messrs. Dalmia Jain & Company Ltd. (hereinafter to be referred to as Dalmias) for a period of one year only. On 21-11-1949 the present suit was instituted by the appellant against the State of Bihar and Dalmias.
3. It was alleged in the plaint that the period of the leases in favour of Kutchwar having expired on 31-3-1948, the State of Bihar entered into possession. The appellant then asked the State of Bihar to execute leases in its favour and thus perform the agreement which had been entered into between the appellant and Government in 1934. The State of Bihar did not pay any heed to these requests. A notice was then served under Section 80, Civil P. C. and Dalmias were also served with a notice informing them of the existence of the agreement between the appellant and the State of Bihar. The draft leases which had been agreed to and settled between the parties in 1934, were annexed to the plaint. On these allegations, the appellant sued for specific performance of the contract entered into in 1934. Of the various dates mentioned with reference to the cause of action, the important date was 2-6-1949, when the appellant was informed that the State of Bihar was going to execute leases in favour of Dalmias.
4. The plaint asked for the following reliefs:
"1. A decree for specific performance of contract in terms of the agreement and as claimed hereinbefore with a direction that defendant 1 through his authorised agent do execute the necessary documents for completing the title of the plaintiff for twenty years' lease.
2. Possession of the properties aforesaid be delivered to the plaintiff by evicting the defendants or such of them as may be in possession.
3. Defendant 1 may be restrained by an order of injunction from executing any lease in favour of defendant 2.
4. A decree for compensation to be ascertained in further proceedings.
5. Any other or further relief to which the plaintiff may be entitled."
On 28-4-1950, the appellant applied for a temporary injunction, the terms whereof I have already stated, and on 1-6-1950, the learned Subordinate Judge rejected the application.
5. The learned Subordinate Judge found in favour of the appellant on the question of a prima facie case, and expressed himself as follows :
"On a perusal of the papers and the Judgment of the previous litigations, there can be no manner of doubt that the plaintiff has got a fair question to raise, and if he has got a fair question to raise, then this Court would like to express the view that the plaintiff has got a prima facie case."
On the other two questions of balance of convenience and irreparable injury, the learned Subordinate Judge held against the appellant.
6. We have been addressed at great length by learned counsel for the parties on the question of a prima facie case, as also on the other questions involved. It is, I think, unnecessary to state again the principles which have to be kept in mind in granting or refusing to grant temporary injunctions under the provisions of Order 39, Civil P. C. These principles have been stated and re-stated in several decisions of this Court vide, Brajendra Nath v. Kashibai, 24 pat. 656 : (A. I. R. (33) 1946 Pat. 177) and Subodhgopal Bose v. Province of Bihar, A. I. R. (37) 1950 Pat. 222 : (31 P. L. T. 100). On the question of title, we are in agreement with the learned Subordinate Judge, and hold that the appellant has raised a fair question for trial. The two principal points which were urged before us on behalf of the respondents in this connection were : (1) that there was no concluded agreement on behalf of the State of Bihar, and (2) that the suit was barred by time. We have been taken through the pleadings of the parties and the correspondence of 1934 between the appellant and Government, The learned Advocate-General, who appeared for the appellant in this case, drew our attention to Para. 12 of the written statement of the State of Bihar which, according to the learned Advocate-General, amounted to an admission of the case of the appellant. On the question of limitation, Mr. P. R. Das appearing for respondent 2, referred to Article 113, Limitation Act and relied on the decision in Mani Singh Mandhata v. Nawab of Murshidabad, 46 I. A. 60 : (A. I. R. (5) 1918 P. C. 180). He further contended that the claim for compensation, in any view, was barred under Article 115, Limitation Act. The learned Advocate-General has, on the contrary, contended that the suit for specific performance which his client has brought, is of the nature contemplated by Section 18, Specific Relief Act, and the period of limitation will run from the date when performance of the contract was refused after the lessor had re-entered possession on the expiry of the leases in favour of Kutchwar. There has been some discussion before us as to what the expression "imperfect title" means in Section 18, Specific Relief Act. Mr. Das has contended that the expression merely means inchoate title, where something remains to be done to complete title, such as confirmation of a court sale, etc. His contention is that a distinction must be drawn between "imperfect title" and "absence of title." He has contended that in 1934 Government had no right or title to grant a lease, because the leases in favour of Kutchwar were still running. Therefore, Mr. P. R. Das has argued that Section 18, Specific Relief Act, has no application; moreover, he contends that the suit as framed was not a suit of the nature contemplated by Section 18, Specific Relief Act. In my view, it is unnecessary to decide these questions at this stage. These are questions which will fall for decision at the trial. It is sufficient to state that in view of the pleadings of the parties and the correspondence which had passed between the appellant and the State of Bihar, there is a prima facie case in the sense that the appellant has raised a fair question for trial. I desist, therefore, from expressing any opinion on the questions mooted before us in this connection.
7. The more important points, for the decision of this appeal, are what I am going to state presently. It is not disputed that Dalmias were in possession by virtue of the leases which they obtained on 10-8-1949, and that they are still in possession after the expiry of the leases this month. It is also not disputed that if the State of Bihar grants any lease now to Dalmias, during the pendency of the litigation, it would be hit by the doctrine of lis pendens. Dalmias who are a party to the suit, would be bound by any decision given. The appellant has, there fore, the security of lis pendens. It is also reasonably clear that by granting a temporary injunction in the terms in which it has been asked for, the possession of Dalmias, or of the State of Bihar through any of its agents, or of anybody else cannot be disturbed. In the course of arguments we put to the learned Advocate. General the question as to the benefit his client would get or what irreparable injury he would be saved from, if we granted the injunction in the terms asked for. The learned Advocate-General said that no question of disturbing the possession of anybody arose; but the granting of a lease would complicate matters and embarrass his client. He placed very strong reliance on the decision in Promotha Nath v. Jagannath Kishore, 17 C. L. J. 427 : (16 I. C. 359), and contended that, though the appellant might have the security of lis pendens, yet the Court would always grant an injunction to prevent an apprehended breach of contract. He drew our attention to the provisions of Rule 2, Order 39, Civil P. C., which states, inter alia, that in any suit for restraining the defendant from committing a breach of contract or other injury of any kind, the plaintiff may, at any time-after the commencement of the suit, apply to the Court for a temporary injunction to restrain the defendant from committing the breach of contract. The argument of the learned Advocate-General is: Here is a case where there was an enforceable contract between the appellant and the State of Bihar; the State of Bihar is going to break that contract by granting leases to Dalmias; therefore, the Court must step in and stop the apprehended breach of contract. The learned Advocate-General has placed very strong reliance on the dictum of Turner L. J. in Hadley v. London Bank of Scotland, (1865) 3 De. G. J. & Sm. 63 : (12 L. T. 747), quoted at p. 430 in Promotha Nath v. Jagannath Kishore, 17 C. L. J. 427 : (16 I. C. 359). Turner L. J., stated as follows:
"I have always understood the rule of the Court to be that if there is a clear valid contract for sale, the Court will not permit the vendor afterwards to transfer the legal estate to a third person, although such third person would be affected by lis pendens."
It was observed by Mookerjee J., that the rule enunciated above was not in consistent with the settled doctrine of the balance of convenience of the parties. To understand this observation of Mookerjee J., it is necessary to state the facts of that case. In that case, a contract was alleged to have been made with the plaintiff by the father of the infant defendant, and subsequent to the death of the father, the contract was affirmed by the mother and guardian of the infant. A suit was instituted to enforce the contract, and seven days later an application was made under Rule 2, Order 39, Civil P. C., for an injunction to restrain the defendant from dealing with the property during the pendency of the litigation. An obvious distinction between that case and the case before us at once presents itself. No third party was in possession at the time when the litigation was pending, and the purpose or object of the temporary injunction was to prevent the introduction of such a third party in that case. In the case before us, a third party was already in possession by virtue of a valid lease. That third party continues in possession, rightly or wrongly. There has bean some argument before us if Dalmias are merely holding over after the expiry of their leases, or are merely trespassers. I do not think that that question can be decided on the materials before us. But I think that it is sufficient to state that Dalmias are in possession, and if we grant the injunction in the terms asked for, the possession of Dalmias or, for the matter of that, of the State of Bihar or of its agents cannot be disturbed. The learned Advocate-General has said that we are not bound by the terms in which the prayer for injunction has been made, and if we are satisfied that an order of injunction should be passed in wider terms, there is nothing to prevent us from passing such an order. We may have the right to pass an order of injunction in terms wider than those asked for; but the question is whether this is a case in which an order of injunction should be passed in order to prevent an irreparable injury. In cases of the kind referred in Promotha Nath v. Jagannath Kishore, 17 C. L. J. 427 : (16 I. C. 359), the main purpose of the order of injunction was to maintain the status quo, in order to avoid embarrassment or complication by the introduction of a third party, But what is the real purpose of the prayer for injunction in the case before us ? It is obvious that the real purpose of the prayer for injunction is not to maintain the status quo, but to change the status quo. In the course of his argument, the learned Advocate-General stated that if Dalmias continued in possession after an order of injunction restraining the State of Bihar from granting a lease to Dalmias; Dalmias would be trespassers in the eye of law and might even be guilty of contempt. I do not think that an order of injunction should be granted in order to disturb the status quo. There cannot be any doubt that the appellant has no right to immediate possession, and the appellant's title would accrue after the contract has been specifically performed. In referring to English decisions on the subject, one must bear in mind that the English doctrine of an equitable estate, on a contract for sale, does not apply in India, and the law of India does not recognise such equitable estates.
8. For the reasons given above, I do not think that the principle laid down in Promotha Nath v. Jagannath Kishore, 17 C. L. J. 427 ; (16 I. C. 359) applies in the present case. The other decision on which the learned Advocate-General relied is Subba Naidu v. Haji Badsha Sahib, 26 Mad. 168 : (13 M. L. J. 13). There also the facts were entirely different, and the question considered was the distinction between a permanent injunction granted under the Specific Belief Act and a temporary injunction granted under the provisions of the Code of Civil Procedure.
9. Then, there is another aspect of the matter. The stopping of quarrying of lime stone will not only cause Joss to respondent 2, but may cause harm to the State. I do not think that the appellant has any right to come to Court and say that the quarrying operations be put an end to during the pendency of the litigation. The circumstance that the appellant has a prima facie case, does not necessarily mean that an order of injunction must follow. This point has been dealt with at great length in Brajendra Nath v. Kashibai, 24 Pat. 656: (A. I. R. (33) 1946 Pat. 177), a decision to which I was a party. I think that the learned Advocate-General is putting his case too high when he contends that where a prima facie case has been made out by showing that there is a fair question for trial, a temporary injunction must follow restraining the contracting defendant from dealing with the property. Whether an order of injunction should or should not issue will, in my opinion, depend on the facts of the case, and the Court must also consider the questions of irreparable or serious injury and balance of convenience. I do not think that there is any such irreparable or serious injury from which the appellant is required to be saved by an order of injunction in the present case.
10. We have also been addressed on the question whether the appellant can be sufficiently compensated by money in respect of any loss suffered before specific performance of the contract. The learned Advocate General has drawn our attention to Section 12, Expln. and Sections 54 and 56 Specific Relief Act. He has also drawn our attention to Section 19, Specific Relief Act, which says that any person suing for the performance of a contract may also ask for compensation for its breach, either in addition to or in substitution for such performance. Personally, I do not see any reason why the appellant cannot be compensated by money for any loss he may suffer, provided the appellant is entitled to compensation in addition to specific performance, under the low, as to which I express no opinion at this stage. If, as I have already stated, there is no question of stopping the quarrying operations during the pendency of the suit for specific performance, the question of compensation will remain whether an order of injunction is or is not passed. It cannot surely be urged that in a suit for specific performance the plaintiff is entitled to ask, during the pendency of litigation, that the defendant in whom the legal title still vests should be restrained from using the property. If the plaintiff were so entitled, then in a suit for specific performance the defendant would be required to vacate the property which he had contracted to sail or lease. That surely cannot be the law.
11. In the course of the argument some suggestions were made for expediting the hearing of the suit. It was stated before us that the issues had been settled and as the points at issue depended mainly on documentary evidence, the parties desired to give very little oral evidence. We consider that this is a fit case in which the rights of the parties should be determined as soon as possible. We would, accordingly, direst that the learned Subordinate Judge should intimate to the parties at once that the suit would be taken up for hearing within one week, or as soon thereafter as may be possible, of the re-opening of the civil. Courts after the Puja holidays. The learned Subordinate Judge should fix a peremptory date and proceed with the trial as expeditiously as possible. In order to obviate any apprehended difficulties in ascertaining the amount of lime stone extracted from time to time by the party in possession, we direct that the defendant in possession roust produce in Court monthly returns of limestone extracted, so that it may be easy to ascertain the profits made in ease the appellant succeeds in establishing his legal right to compensation.
12. Subject to the directions given above, I would dismiss this appeal, and would further direct that each party must bear its own costs of this appeal.
Sinha, J.
13. I agree.