Lekhraj Satramdas, Lalvani Vs. Deputy
Custodian-Cum-Managing Officer & Ors  INSC 127 (4 May 1965)
04/05/1965 RAMASWAMI, V.
CITATION: 1966 AIR 334 1966 SCR (1) 120
R 1968 SC 292 (4) RF 1975 SC1121 (17) RF 1976
SC2243 (28) RF 1977 SC1496 (19) F 1977 SC2149 (15) F 1977 SC2257 (14)
Administration of Evacuee Property Act 1950,
s. 10(2)(b)- Manager for evacuee shops appointed by Deputy Custodian of Evacuee
Property Deputy Custodian whether can cancel appointment subsequently.
The appellant was appointed Manager of two
evacuee shops which vested in the Custodian of Evacuee Property. The
appointment was made in 1952 under s. 10(2) (b) of the Administration of
Evacuee Property Act, 1950, In 1956 the appellant was informed by letter Ex.
p.8 written by the Custodian of Evacuee Property that a decision to allot the
shops to him had been taken and that subsequently the shops would be sold to
him. The letter was based on the orders of the Chief Settlement Commissioner in
Ex. p. 5. However the said decision could not be implemented and in pursuance
of orders from the Chief Settlement Commissioner the Deputy Custodian by Ex. p.
13 and proceedings Ex. p. 16 cancelled the appointment of the appellant as
Manager and asked him to hand over possession of the shops. The appellant tiled
a writ petition in the High Court praying that the order Ex.
p. 13 and proceedings p. 16 be quashed, that
the ion of the shops be given to him, and that the sale of the shops be
stopped. The High Court granted the first two prayers but not the third. Both
parties appealed to a Division Bench of the High Court which held against the
appellant on all these counts. By certificate under Art,. 133(1) (a) he came to
the Supreme Court.
It was contended on behalf of the appellant :
(1) that he was not lawfully removed from the management of the shops as the
Deputy Custodian had no power to cancel an appointment, (2) that the order of
removal in Ex. 13 and Ex. 16 was made by the Managing Officer cum Deputy
Custodian of Evacuee property under the Displaced Persons (Compensation and Rehabilitation)
Act 1954 which conferred no power on such an officer to cancel the appointment
of the manager and (3) that by virtue of Ex. p. 5 and Ex. p. 8 the shops stood
allotted to the appellant.
HELD:(i) Section 16 of the General Clauses
Act provides that the power to ternunate is a necessary adjunct of the power of
appointment and is exercised as an incident to or consequence of that power.
The power of appointment conferred on the Custodian under s. 10(2) (b) of the
1950 Act confers by implication upon the Custodian the power to suspend or
dismiss any person appointed. It is manifest that the management of the
appellant with regard to the business concerns could be lawfully terminated by
the Deputy Custodian by virtue of s. 10(2) (b) of the 1950 Act read with s. 16
of the General Clauses Act. [124 F-G] (ii)The order cancelling the appellant's
appointment as manager could not be said to be invalid on the ground that it
purported to have been made under the 1954 Act. The Act of 1950 was not
repealed by the Act of 1954 and continued in force. Under s. 10(2) (b) of the
1950 Act the Deputy Custodian is the proper authority to cancel the appointment
of a manager and the order of cancellation must therefore be held to be valid.
The principle is that the act of public servant must be ascribed to an actual
existing authority under which it would have valid rather than one under which
it would be void. [125 C-E] 121 Balakataiah v. The Union of indict, 
S.C.R. 1052, referred to.
(iii) Even on the assumption that the order
of cancellation was illegal the appellant was not entitled to a writ from the
High Court. Writs can be issued only to enforce the performance of statutory
duties, not duties under a contract. The appointment of the appellant was under
a con- tract [126 A-B] Commissioner of Income-tax Bombay Presidency and Aden v.
Bombay Trust Corporation Ltd., 63 I.A. 408 and P. K.
Barnerjee v. L. J. Simonds, A.I.R. 1947 Cal.
307 referred to, (iv)Ex. 5 and Ex. 8 did not make any final allotment in
favoitr of the appellant, The letters did not show any concluded co a tract of
sale. 127 A-B]
CIVIL APPELLATE JURISDICTION : Civil Appeal
Nos. 414- 416 of 1963.
Appeals from the judgment and order dated
December 6, 1960 of the Kerala High Court in A.S. Nos. 445 and 484 of 1960.
R.Mahalingier and K. N. Keswai, for the
appellant (In both the appeals):
Gopal Singh, R. N. Sachthey and B. R. G. K. A
char, for the Respondents (In both the appeals).
The Judgment of the Court was delivered by
Ramaswami. J. The proprietors of two firms styled "Adam Haji Peer Mohd.
Essack" and "Haji Ebrahim Kasim Cochinwala" had, in the year
1947, migrated to Pakistan and both these firms became vested in the Custodian
of Evacuee Properties for the State of Madras under s. 8 of the Administration
of Evacuee Property Act, 1950, hereinafter referred to as the 1950 Act. On
March 6, 1952 the appellant was appointed as Manager of the two firms under S.
10(2) (b) of the 1950 Act.
The appellant also furnished security of Rs.
20,000/- before taking possession of the business of the firms as Manager.
The order of appointment-Ex. P-1 dated March
6, 1952 states :
"The Custodian approves the proposal of
the Deputy Custodian, Malabar that the Management of both the firms of Adam
Hajee Peer Muhammad Issack and Hajee Ibrahim Kassam Cochinwala at Kozhikode may
be allotted to Sri L. S. Lalvani for the present on the same system as exists
now between the Government and the present two managers and on his furnishing a
security of Rs. 20,000 to the satisfaction of the Deputy Custodian. The
question of outright allotment as contemplated in Custodian General's letter
No. 2811/CG/50 dated 20-3-50 will be taken up in due course." 122 On
October 9, 1954 the Displaced Persons (Compensation and Rehabilitation) Act,
1954 was passed which will hereafter be referred to as the 1954 Act. On April
11, 1956 there was an advertisement published in the Press for the sale of the
aforesaid evacuee properties. The appellant applied to the Chief Settlement
Commissioner for stopping the sale of the two concerns. On April 25, 1956 the
Central Government made an order-Ex. P-5 -which states :
"I am directed to state that it has been
decided in principle that the aforesaid evacuee concerns will be allotted to
you. The terms of allotment will be communicated to you separately. Meanwhile,
you will continue to function as the Custodian's Manager for these concerns in
terms of section 10(2) (b) of the Administration of Evacuee Property Act, read
with Rule 34 of the rules made under the Act." On June 21, 1956 another
letter-P-8-was written to the appellant by the Custodian of Evacuee Properties
which states :
"The Deputy Custodian is informed that
the Government of India have decided that the two evacuee concerns viz., firms
of Adam Hajee Peer Mohammed Essack and Hajee Ebrahim Kassam Cochin wala of
Kozhikode are to be allotted to the present Manager Shri L. S. Lalvani and
ultimately sold to him. He is also informed that until the question of terms
and conditions of allotment of the concerns in question is decided Shri Lalvani
will continue to function as Custodian's Manager for these concerns in terms of
Section 10(2) (b) of the Administration of Evacuee Property Act, 1950 read with
rule 34 of the rules made there under. The Deputy Custodian is requested to
evaluate the business concerns properly after getting prepared a balance sheet
of each year of the vesting of the concerns, evaluating the concerns, the
Deputy Custodian should keep in view the other assets and liabilities of the
concerns and their goodwill etc. His comment and suggestions as to how and by
what easy installments the value of the concerns if sold to Shri Lalvani is to
be realised from him should also be intimated.
The bargain was not concluded and on March
25, 1958 there was an advertisement in the Press about the public auction of
the business of the firms. The appellant moved the High Court of Kerala 123 for
grant of a writ restraining the District Collector from selling the business of
the firms by a public auction. The application was allowed and on June 25, J959
the Kerala High Court directed the District Collector not to sell the
properties of the business of the two firms without an appropriate order of the
Chief Settlement Commissioner. The decision of the High Court is based upon the
ground that there was, no order under the 1954 Act by the Chief Settlement
Commissioner for sale of the properties and that in the absence of such an
order the sale of the properties cannot take place. It appears that the order
of the Chief Settlement Commissioner was subsequently made on September 15,
1959. In pursuance of that order the management of the appellant was terminated
and the possession of the business was taken over by the Deputy
Custodian--Respondent no. 1.
The order-Ex. P-13 dated December 18, 1959
"Shri L. S. Lalvani is informed that his
services as Manager of the business concerns of Adam Haji Peer Mohd. Essack and
Haji Ibrahim Kassam, Cochinwala, at Kozhikode are hereby terminated with
immediate effect. He is further required to hand over immediate possession of
the premises and the stock-in- trade, account books and other assets of the
business including furniture etc." The appellant filed a writ petition in
the High Court of Kerala being O.P. no. 1438 of 1959 for grant of (1) a writ of
certiorari for quashing the order dated December 15, 1959--Ex. P-13 -and the
proceedings dated December 18, 1959-Ex. P-16, (2) a writ of mandamus directing
respondents nos. 1 and 2 to hand over possession of the two business concerns
including the premises, stock-in-trade all records etc. to the appellant, and
in prayer ( 1 ) & (2) but (3)for a writ of mandamus or appropriate writ or
order directing respondents nos. 1 to 3 not' to sell by public auction or
otherwise the two evacuee business concerns. S. Velu Pillai, J. by his order
dated June 8, 1960, granted writ to the appellant as prayed for restraining the
respondents from selling the business by public auction. Against the order of
the Single Judge the respondents filed an appeal being A.S. no. 484 of 1960
before the Division Bench of the High Court. The appellant also preferred an
appeal A.S. no. 445 of 1960 against the order of Single Judge which was in
regard to the refusal of the third relief. By judgment dated December 6, 1960
the Division Bench of the High Cl/65-9 124 Court dismissed Appeal A.S. no. 445
of 1960 filed by the appellant but allowed the appeal A.S. no. 484 of 1960
filed by the respondents. The present appeals are brought on behalf of the
appellant by certificate of the Kerala High Court granted under Art. 1 3 3 ( 1
) (a) of the Constitution.
The first question arising in this case is
whether the appellant was lawfully removed from the management of the business
by the order of the respondent no. 1 dated December 18, 1959Ex. P-13 and P-16.
It was submitted on behalf of the appellant that under s. 10(2) (b) of the 1950
Act the Custodian had the power to appoint a Manager for the Evacuee Property
for carrying on any business of the evacuee and there was no power conferred by
the Act upon the Custodian to remove the Manager so appointed. It was argued by
the Counsel on behalf of the appellant that an indefeasible right of management
was conferred upon the appellant because of the, order of the Custodian-Ex. P-1
dated March 6, 1952. In our opinion, there is no warrant for this argument. The
power of appointment conferred upon the Custodian under s. 10 (2) (b) of the
1950 Act confers, by implication, upon the Custodian the power to suspend or
dismiss any person appointed. Section 16 of the General Clauses Act states
"Where, by any Central Act or Regulation, a power to make any appointment
is conferred, then, unless a different intention appears, the authority having
for the time being power to make the appointment shall also have power to
suspend or dismiss any person appointed whether by itself or any other
authority in exercise of that power." It is manifest that the management
of the appellant with regard to the business concerns can lawfully be
terminated by the Deputy Custodian by virtue of s. 10(2) (b) of the 1950 Act
read with s. 16 of the General Clauses Act. The principle underlying the
section is that the power to terminate is a necessary adjunct of the power of
appointment and is exercised as an incident to or consequence of that power.
It was then contended on behalf of the
appellant that the order of removal-Ex. P-13 and P-16-was made by the Managing
Officer-cum-Deputy Custodian of Evacuee Property of Southern States under the
1954 Act which conferred no power on such an officer to cancel the appointment
of a Manager. It was pointed out that the order of removal was made after the
provisions of the 1954 Act had come into force. In our opinion, there is no 125
justification for this argument. We shall assume that the Managing Officer
under the 1954 Act is not the proper authority to cancel the appointment of a
Manager but it is not disputed that the provisions of the 1950 Act have not
been repealed and still continue to be in force. Under S. 10(2) (b) of the 1950
Act the Deputy Custodian is the proper authority to cancel the appointment of a
Manager and the order-Ex. P-13 and P-16 dated December 18, 1959 is, therefore,
legally valid. It is true that the order Ex. P- 13 and P-16 is signed by Mr.
Mathur as "the Managing Officer-cum-Deputy Custodian of Evacuee
Property" but the order of removal of the appellant from the management is
valid because Mr. Mathur had the legal competence to make the order under the
1950 Act, though he has also described himself in that order as "Managing
Officer". It is well- established that when an authority passes an order
which is within its competence, it cannot fail merely because it purports to be
made under a wrong provision if it can be shown to be within its power under
any other rule, and the validity of the impugned order should be judged on a
consideration of its substance and not of its form. The principle is that we
must ascribe the Act of a public servant to an actual existing authority under
which it would have validity rather than to one under which it would be void
(See Balakotaiah v. The Union of India.) (1) We, therefore, reject the argument
of the appellant on this aspect of the case.
In our opinion, the order of the Deputy
Custodian-P-13 and P-16-removing the appellant from the management of the busi-
ness is not vitiated by any illegality. But even on the assumption that the
order of the Deputy Custodian terminating the management of the appellant is
illegal, the appellant is not entitled to move the High Court for grant of a
writ in the nature of mandamus under Art. 226 of the Constitution. The reason
is that a writ of mandamus may be granted only in a case where there is a
statutory duty imposed upon the officer concerned and there is a failure on the
part of that officer to discharge that statutory obli- gation. The chief
function of the writ is to compel the performance of public duties prescribed
by statute and to keep the subordinate tribunals and officers exercising public
functions within the limits of their jurisdictions.
In the present case, the appointment of the
appellant as a Manager by the Custodian by virtue of his power under s. 10(2)(b)
of the 1950 Act is contractual in its nature and there is no statutory
obligation as between him and the appellant. In our opinion, any duty or
obligation falling (1)  S.C.R. 1052 at p. 1059.
126 upon a public servant out of a contract
entered into by him as such public servant cannot be enforced by the machinery
of a writ under Art. 226 of the Constitution. In Commissioner of Income-tax
Bombay Presidency and Aden v.
Bombay Trust Corporation Ltd. (1) an
application was made under s. 45 for an order directing the Commissioner to set
aside an assessment to income tax and to repay the tax paid by the applicant;
the Bombay High Court made the order asked for but the decision of the Bombay
High Court was set aside by the Judicial Committee. At page 427 of the report
it is observed by the Judicial Committee :
"Before mandamus can issue to a public
servant it must therefore be shown that a duty towards the applicant has been
imposed upon the public servant by statute so that he can be charged thereon,
and independently of any duty which as servant he may owe to the Crown, his
principal." A similar view has been expressed by the Calcutta High Court
in P. K. Banerjee v. L. J. Simondsd. ( 2 ) In our opinion, these cases lay down
the correct law on the point.
We pass on to consider the next question
presented on behalf of the appellant viz., whet-her there was a final allotment
of the business in favour of the appellant by the Chief Settlement
Commissioner. It was contended for the appellant that in view of Ex. P-5 dated
April 25, 1956 there was final allotment of the business, though the terms of
allotment had to be subsequently determined. In Ex. P-5 the Government of India
state that "It has been decided in principle that the aforesaid evacuee
concerns should be allotted to you" and the "terms of allotment would
be communicated to you separately". Reference was made to Ex. P-8 dated
June 21, 1956 wherein it is stated that the Government of India have decided
that "the two evacuee concerns viz., firms of Adam Hajee Peer Mohammed
Essack and Hajee Ebrahim Kassam Cochinwala of Kozhikode are to be allotted to
the present Manager Shri L. S. Lalvani and ultimately sold to him". It is
also mentioned in the letter that "until the question of term and
conditions of allotment of the concerns is decided Shri Lalvani will continue to
function as Custodian's Manager for these concerns in terms of s. 10 (2) (b) of
the Administration of Evacuee Property Act, 1950 read with rule 34 of the rules
made thereunder". It was submitted on behalf of the appellant that in view
of these two letters it must be held that there was a final allotment of the
business in favour of the appellant. We do not, (1) 63 I.A. 408.
(2) A.I.R. 1947 Cal. 307.
127 however, think there is any justification
for this argument.
It is manifest that the terms and conditions
of allotment were not finally settled between the parties and there was no
concluded contact of sale and, therefore, the appellant had no legal right to
the business of the two concerns and the High Court was right in holding that
the appellant was not entitled to the grant of a writ in the nature of mandamus
with regard to the possession of the two business concerns.
In our opinion, there is no merit in these
appeals which are accordingly dismissed with costs.