State of Bihar Vs. Bishnu Chand Lal
Chaudhary & Ors [1985] INSC 1 (8 January 1985)
VENKATARAMIAH, E.S. (J) VENKATARAMIAH, E.S.
(J) MISRA, R.B. (J)
CITATION: 1985 AIR 285 1985 SCR (2) 527 1985
SCC (1) 449 1985 SCALE (1)1
ACT:
Tortious liability of State for damages for
trespass and unauthorised intereference by if with the proprietory interest and
negligence-Effect of Section 31 of the Bihar State Management of Estates and
Tenures Act 1949-Act done in good faith-Whether Section 31 of the Act read with
Section 4 (22) of the Bihar and Orissa General Clauses Act 1917 protects such
State action against and alleged claim for loss by wilful default or gross
negligence.
HEADNOTE:
By a Notification dated November 19, 1949
issued under section 3(1) of the Bihar State Management of Estates and Tenures
Act, 1949 (Bihar Act XXI of 1949), as duly certified by the President under
clause (6) of Article 31 of the Constitution, the estate of the Prithwi Chand
Lall Choudhary called "Raj Nazarganj" spread over the District of
Purnea and some other districts in the State of Bihar as also in the State of
West Bengal, was taken under the management of the Bihar State Government. One
J.P. Mukherjee who was the Additional Collector of Darbhanga was appointed as
the Manager of the estate. In the meanwhile, the Maharajadhiraja of Darbhanga
Sir Kameshwar Singh filed a civil suit challenging the validity of the Act as
his estate was also similarly notified under the said section. The Patna High
Court withdrew that Suit to its own file for being tried in its Extra-ordinary
Original Civil Jurisdiction and by its judgment dated June 5, 1950 reported as
M D. Sir Kameshwar Singh V. State of Bihar ILR 29 Patna 790, declaring the Act
to be ultra vires and wholly void, issued an injunction restraining the State
Government from enforcing the Act.
Against that judgment the State of Bihar
preferred an appeal to the Supreme Court. However, on the basis of the judgment
of the High Court, Prithwi Chand Lall Choudhary demanded on June 9, 1950 that
he should be put back in possession of the estate whose management had been
taken over from him. On July 3, 1950 the then Collector by his letter informed
Choudhary that the Government had decided to relinquish charge of the estates
and tenures and that Choudhary should co-operate in taking over charge by July
15, 1950. On July 6, 1950 the Government cancelled the Notification issued
under section 3(1) of the Act. The charge of collection papers was handed over
by the middle of July, 1950 to Choudhary. The abstracts and synopsis of
accounts were given on August 7, 1950. About Rs. 1,46,000/had been collected on
behalf of the estate during the Government's management.
After the estate was thus handed over to him,
Choudhary filed a suit on September 21, 1951 in the Court of the Subordinate
Judge, Purnea, for damages of Rs. 2,00,000 for wrongful and illegal
interference with his estates and tenures and for other consequential reliefs,
528 Broadly the grounds of the claim were (a) that due to gross negligence ., and
wilful default the appellant herein, contravened the provisions of section 'S
3(1) in notifying and taking possession of part only of Choudhary's interest in
Estates and Tenures and in omitting to notify other parts of his Estates and
Tenures on the first occasion when the Notification dated November 19, 1949 was
issued the Government was unable to realise all the rents and other dues, (b)
that due to wrong Notification and omission to notify all parts of his Estates
and Tenures and also on account of amalgamated rentals maintained by the
Respondent in respect of his estates and tenures he could not fully realies the
balance share of unnotified estates and tenures, (c) that certain rents and
decress had been allowed to become barred by time, (d) that on account of
non-payment of Agricultural Income Tax and consequent imposition of penalty
which was no doubt reduced to Rs. 2,000 on appeal the Estate suffered a loss of
Rs. 12,000 and, (e) that on account of issue of wrong collection certificates
by Collector and his staff the respondent had suffered some loss which was yet
to be ascertained. It was alleged that the action of the appellant suffered
from negligence, bad faith and malice and the appellant alongwith its Manager
as tortfeasor was jointly and severally for all such losses suffered by him.
The appellant traversed all the material
allegations in the plaint and the plea was one of bona fides carrying out of
their duties under the Act.
The Trial Court which proceeded on the basis
that the Act was unconstitutional, and the appellant was a trespasser on the
respondents' estate held: (1) that the cost of management incurred by the
Collector over and above 12 1/2% of the gross collection was excessive, and
therefore, the State should refund such excess amount; (2) that the mistake in
not notifying all the shares held by Choudhary in Tauzis Nos. 7/8 and 30 at the
first instance resulted in non- collection of the dues and Choudhary thereby
had suffered;
(3) that the State being trespassers,
Choudhary owed no duty to make available to them the separated Jamabandi to
facilitate collection of dues in the said Tauzis, and therefore, the State
should reimburse Choudhary the amount he would have been able to collect from
those tauzis during the period of their management, and also to make good the
loss caused on account of arrears or decreaes which had been allowed to become
barred. The Trial Court, accordingly, passed a preliminary decree and directed
that a Commissioner should enquire into the above items.
Against the said preliminary decree the
State, filed an appeal before the High Court. At the instance of the State and
on a reference by the Division Bench hearing the appeal, a Full Bench of the
Court reconsidered the decision reported in ILR 29 Patna 790, by its judgment
dated February 15, 1963 overruled the said decision, and declared that the Act
was constitutional. Thereafter the Division Bench finally heard the appeal and
took the view that though it was open to the State to notify only a fraction of
an estate under section 3(1) of the Act, yet, it was not absolved from the duty
of taking appropriate steps for the preparation of suitable collection papers
in respect of the notified shares in Tauzis No. 7/8 and 30. The Division Bench
held that the State was liable to compensate Choudhary for not preparing the
collection papers in time; (i) that even though Choudhary had been told to file
suits for rents in respect of unnotified share of the estate, the State were
negligent in the matter of issuing certificates for recovery, some of which
were later on struck off; (ii) that the material on 529 the record did not
indicate that necessary steps were taken by the Collector with regard to
pending suits and execution proceedings and there was every probability that loss
had been suffered by Choudhary on account of the inaction or failure to
continue pending proceedings which amounted to wilful default and gross
negligence; (iii) that the State was liable to reimburse Choudhary to the
extent of Rs. 2,000 levied as penalty for non-payment of Agricultural Income
Tax; (iv) in so far as the cost of management of Rs. 43,507 which was in the
order of 30 per cent of the gross collection was concerned about a sum of Rs.
8,000 (=25% of the gross collection) had been incurred as cost of management in
excess of what was authorised and that (Choudhary was entitled to it; and (v)
that section 31 of the Act did not give protection in respect of loss which was
caused by wilful default and gross negligence. The appeal of the State and the
cross objections of Choudhary regarding certain matters disallowed by the trial
Court were, accordingly, dismissed. Hence the State Appeal by certificate.
Allowing the appeal in part, the Court C ^
HELD 1.1 The Bihar State Management of
Estates and Tenures Act, 1949 (Bihar Act XXI of 1949) was intended to bring
about a reform in the land distribution system of Bihar for the general benefit
of the community. The taking over of the management and control over land was
found to be necessary as a preliminary step towards the implementation of the
Directive Principles of State Policy. Therefore, section 31 of the Act provided
that no suit or other legal proceeding would lie in any Court against the State
Government or against any servant of the state Government or against any person
acting under the orders of a servant of the State Government for or on account
of or in respect of anything done or purporting to be done in good faith under
the Act or in respect of any alleged neglect or omission to perform any duty
devolving on the State Government or any of the officers subordinate to it or
acting under the Act, or in respect of the exercise of or on failure to
exercise any power conferred by the Act on the State Government or any officer
subordinate to it and acting under the Act, except for the loss or the
misapplication occasioned by the wilful default or gross negligence of any
officer of the State Government. Under section 4(22) of the Bihar and Orissa
General Clauses Act, 1917, a thing shall be deemed to be done in 'good faith'
where it is in fact done honestly, whether it is done negligently or not.
[532E; 545C-E] 1.2. In the instant case, there was no proof of deliberate abuse
of statutory power nor of usurpation of a power which the authorities knew that
they did not possess.
It cannot be said that either the State
Government or any of the officers acting under it in performance of their
duties under the Act had not acted honestly either in issuing the Notification
under section 3(1) of the Act, on November 19, 1949 by which only parts of
Tauzis Nos. 7/8 and 30 had been notified or in not preparing separate
collection statements before April 1950. Further, the following facts, namely,
(a) the respondent himself had acquired the said Tauzis in instalments; (b) as
soon as the error was pointed out steps were taken by the Manager to get the
unnotified share also notified and the Government issued a Notification
accordingly within about four months; (c) on account of not- handing over by
the respondent even the consolidated collection statements by April 1950, the
separate collection statements could not be got prepared by the Manager 530 By
April 1950; (d) even according to the respondent himself if would have taken
six months to prepare separate collection statements on the basis of the
consolidated statements; and (e) unawareness of the State Government or any of
its officers before hand that the respondent had maintained a consolidated
statement of accounts on the date of issue of the first Notification in respect
of a portion of Tauzis Nos. 718 and 30, constituted a good defence under
section 31 of the Act against any claim based on any alleged neglect or
omission since there was no proof of any wilful default or gross negligence on
the part of the defendants.
[545F-H; 546A-B] 1.3. In the instant case;
(i) the claim for damages on all counts should fail except with regard to the
claim for Rs. 8,000 which had been incurred as cost of management in excess of
what was authorised by law. With regard to the penalty of Rs. 2,000 imposed for
non-payment of the Agricultural Income Tax when once it was conceded that the
first notification was not unauthorised one, the State could not be held liable
for reimbursing the penalty of Rs. 2,000 to the respondent; (ii) It cannot be
said that the Manager acted in excess of his powers vested under the Act of
1949 or mala fide. Lack of bona fides cannot be attributed to him merely
because some of the suits out of a large number of suits filed for recovery of
the arrears due to the Estate, were dismissed on merits or on the ground that
some of the persons sued were dead or not traceable. In fact nearly, 7,000
certificate cases had to be filed in a short period and hurriedly on the basis
of arrears list submitted by the respondent himself and by the middle of July
1950 the management of the state itself was relinquished. Further if a certain
share in a tauzi had not been notified on the first occasion it again cannot be
said as having been done either mala fide or deliberately to harm the
respondent. The Manager therefore, could not be charged for wilful default or
gross negligence in as much as in view of the definition of the expression
'tenure' in section 2(k) of the, Act it was open to the government to notify
even a fraction of a tenure under section 3(1) of the Act; (iii) Since the
respondent himself failed to discharge his duty imposed the State cannot be
made liable to any damages on the ground that the Manager had failed to get the
collection papers prepared in respect of Tauzis Nos. 718 and 30 in time and
thus caused loss to the respondent. [546C; 544G; 542F-G; 543A-B]
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
2296 of 1970.
On appeal by Certificate from the Judgment
and Decree dated 17th August, 1963 of the High Court of Patna from Original
Decree No 248 of 1955 D. Goburdhan for the Appellant J. P. Goyal and R. A.
Gupta for the Respondents The Judgment of the Court was delivered by
VENKATARAMIAH, J. This appeal by certificate under Article 133 (1) (a) of the
Constitution arises out of an action in tort for damages 531 for trespass and
unauthorised interference by the defendants with the A proprietary interest of
the plaintiff. The defendants were the State of Bihar and J.P. Mukherjee, an
officer in the service of the Bihar Government.
The plaintiff, Prithwi Chand Lall Choudhary
was the karta of a Hindu joint family which owned extensive properties
collectively known as the "Raj Nazarganj". The said properties were
spread over the District of Purnea and some other districts in the State of
Bihar as also in the State of West Bengal. The plaintiff was the recorded
proprietor of several tauzis situated in the Districts of Purnea and Monghyr
and also the proprietor of several tenures and patnis within the said
Districts. The plaintiff was liable to pay about Rs. 2,50,000 by way of taxes,
cesses etc. annually.
In the year 1949, the Bihar Legislature
passed a law known as the Bihar State Management of Estates and Tenures Act,
1949 (Bihar Act XXI of 1949) (hereinafter referred to as 'the Act') to provide
for the management of estates and tenures in the Province of Bihar. It received
the assent of the Governor-General on September 29, 1949 and was published in
the Bihar Gazette Extraordinary of October 17, 1919. On the coming into force
of the Constitution of January 26, 1950, the Act was certified by the President
in exercise of his powers conferred by Article 31 (6) of the Constitution.
The said certificate which was published in
Notification No. 43/3/50-Judicial dated March 11, 1950 read as follows:
"that the said Act shall not be called
in question in any court on the ground that it contravenes the provisions of
clause (2) of Article 31, or has contravened the provisions of sub-section (2)
of section 299 of the Government of India Act, 1935." Clauses (2) and (6)
of Article 31 which are relevant for these cases as they stood at the
commencement of the Constitution read as follows:- "31. (1) (2) No
property, moveable or immovable, including any interest in, or in any company
owning, any commercial or industrial undertaking, shall be taken possession of
or 532 acquired for public purposes under any law authorising the taking of
such possession or such acquisition, unless the law provides for compensation
for the property taken possession of or acquired and either fixes the amount of
the compensation, or specifies the principles on which, and the manner in
which, the compensation is to be determined and given.
...... ...... ... ..... . ... ...... .. ...
(6) Any law of the State enacted not more
than eighteen months before the commencement of this Constitution may within
three months from such commencement be submitted to the President for his
certification; and thereupon, if the President by public notification so
certifies, it shall not be called in question in any court on the ground that
it contravenes the provisions of clause (2) of this article or has contravened
the provisions of sub- section (2) of section 299 of the Government of India
Act, 1935." A persual of the provisions of the Act shows that it was
intended to bring about a reform in the land distribution system of Bihar for
the general benefit of the community. l`he taking over of the management and
control over land was found to be necessary as a preliminary step towards the
implementation of the Directive Principles of State Policy. The Act was similar
in nature to the Bihar Land Reforms Act (Act XXX of 1950), the constitutional
validity of which was considered by this Court in The State of Bihar v
Maharajadhiraja Sir Kameshwar Singh of Darbanga Ors (1) The object of the Act
was to bring the Government face to face with the cultivators of the soil in
order to facilitate the further reform of abolition of zamindari. It was also
intended to make provision for better irrigation facilities and to prevent
realisation of excessive rent or revenue from the cultivators. The Statement of
Objects and Reasons of the Act published in the Bihar Gazette said:
"For some years past there has been wide
spread anti zamindari agitation amongst the cultivators of the province leading
to frequent agrarian troubles. These troubles, as is well known, owe their
origin to the feeling of dissatisfaction that the tenants have against the
landlords owing to the (1) [1952] S.C.R. 889.
533 latter's failure to provide for the
upkeep of irrigational facilities, to the realisation of abwab, to the
enhancement of rents and to ejectment from holdings and other similar causes.
The landlord's apathy towards the upkeep of the irrigational facilities has
been considerably accentuated recently on account of the large scale
commutation of rents in kind into cash rents. In the interest of all concerned
and particularly in order to further the programme of Grow More Food, it has
become necessary to assume the management by Government of estates and tenures.
Hence this Bill. It is proposed under Government management to make adequate
arrangements for saving the cultivators from the harassment to which they are
often subjected at present by the amlas of the zamindars, to save them from the
ruinous financial drain of litigation for the recovery of arrears of rents and
above all to benefit them by providing for irrigation facilities. After making
payment for objects specified in the Bill and reserving a reasonable balance
for cost of management, the net surplus will be paid over to the
proprietors." Section 3 to 5 c-f the Act were in Chapter 11 of the Act.
Section 3 provided as follows :- "3. (1) The Provincial Government may, by
notification declare that the estates or tenures of a proprietor or tenure
holder, specified in the notification, shall be placed under the management of
the Provincial Government, and on the publication of the said notification, the
estates or tenures of such proprietor or tenure-holder shall, so long as the
notification remains in force, be deemed to have been placed under the
management of the Provincial Government with effect from the date of the
commencement of management.
(2) The notification under sub-section (1)
shall- (a) specify such particulars of the estates or tenures as may be
prescribed;
(b) specify the period for which the estates
or tenures shall be placed under the management of the Provincial Government;
and 534 (c) vest the management of such estates or tenures in a person who shall
be an officer not below the rank of Deputy Collector (hereinafter called the
Manager) (3) The notification under sub-section (1) shall be published in the
Official Gazette and a copy of such notification shall be sent by registered
post, with an acknowledgment due, to the proprietor of the estates recorded in
the general registers of revenue-paying or revenue-free lands maintained under
the Land Registration Act, 1876, or in case such estates are not recorded in
any such registers, and in the case of tenure-holders, to the proprietor or
tenure-holder of the estates or tenures, as the case may be, if the Collector
of the district is in possession of a list of Such proprietors or tenure
holders together with their addresses (4) The publication and posting of such
notification, where such notification is sent by post, in the manner provided
in sub-section (3), shall be conclusive evidence of the notice of the
declaration to the proprietor or tenure-holder whose estates or tenures are
affected by the notification under sub-section (1) and of the service of such
notice on the proprietor or tenure-holder 7' Section 4 of the Act laid down the
consequences of the issue of a notification in respect of any estate or tenure.
It provided inter alia that (a) the proprietor
or tenure- holder shall cease to have any power of management of his estates or
tenures and (b) subject to the provisions of sections 7, 8, 9, 10. 11 and 12,
the Manager shall take charge of such estates or tenures together with such
buildings, papers and other properties appertaining to the estates or tenures,
as in the opinion of the Manager are essential for the proper management of the
estates or tenures.
Section 5 of the Act read as follows:
"5. The Manager may, by a written order,
require the proprietor or tenure-holder or his agents and employees on a date
to be specified in such order to produce before him such documents, papers or
registers relating to the estates or tenures of such proprietor or
tenure-holder or to furnish him with such information as the Manager may deem
necessary for the management of the estates or tenures:
535 Provided that the proprietor or
tenure-holder shall have A the option to comply with such written order either
himself or through authorised agent." Chapter III of the Act contained the
special provisions regarding trust estates or tenures, homesteads and lands
used for agricultural and horticultural purposes and certain buildings
comprised in estates or tenures placed under the management of the Provincial
Government. Chapter IV of the Act authorised the removal of mortgagees and
lessees in possession of an estate or tenure. Chapter V contained provisions
regarding the filing of claims by secured creditors and other persons in
possession of the estate or tenure, determination of liabilities and
preparation of scheme for their liquidation. Chapter VI of the Act provided for
the filing of claims by creditors other than secured creditors. Chapter VII
made provisions for granting protection from sale of certain estates. Chapter
VIII of the Act contained detailed provisions regarding the management of the
estates by the Manager. Section 22 of the Act which was in Chapter VIII
provided that 'every Manager shall manage the property committed to him
diligently and faithfully and shall, in every respect, act to the best of his
judgment'. Chapter IX of the Act provided for an appeal to the order of
prescribed authority against the Manager.
Chapter X made provision for the constitution
of Estates and Tenures Management Advisory Committee and their functions.
Sections 30 and 31 of the Act which were in
Chapter XI of the Act barred the jurisdiction of courts regarding matters
referred to therein. They read as under:
"30. Notwithstanding anything contained
in any law or anything having the force of law, the declaration of the
Provincial Government under sub- section (1) of section 3 and the order of the
Manager under sub-section (1) of section 13 or where on appeal has been
preferred, the order of the appellate authority under section 27, shall,
subject to the provisions of this Act, be final and shall not be questioned in
any Court; and so long as the management of the estates and tenures by the
Provincial Government continues, it shall not be lawful for any court to pass
any order or do anything which may in any way interfere or have the effect of
interfering with such management by the Provincial Government.
31. No suit or other legal proceeding shall
lie in any court against the Crown or any servant of the Crown or 536 against
any person acting under the orders of a servant of the Crown for, or on account
of, or in respect of, anything done or purporting to be done in good faith
under this Act or in respect of any alleged neglect or omission to perform any
duty devolving on the Provincial Government or any of the officers subordinate
to it and acting under this Act or in respect of the exercise of, or the
failure to exercise, any power conferred by this Act, on the Provincial
Government or any officer subordinate to it and acting under this Act, except
for the loss or the misapplication occasioned by the wilful default or
gross-negligence of any officer of the Provincial Government." Chapter XII
of the Act contained some miscellaneous provisions regarding suits and appeals
by or against the proprietor or tenure-holder during the period of management
by the Government. Section 33 in Chapter XIII of the Act provided for
relinquishment of management of an estate taken over by the Government and
other consequential matters. The other parts of the Act contained provisions
regarding other miscellaneous matters.
By a notification dated November 19, 1949
issued under section 3 (1) of the Act the estate of the plaintiff i.e. the 'Raj
Nazarganj Estate' was taken under the management of the State Government. J P
Mukherjee, defendant No. 2, who was the Additional Collector of Darbhanga, was
appointed as the Manager of the said estate. In the meanwhile the
Maharajadhiraja of Darbhanga, Sir Kameshwar Singh filed a suit in the Civil
Court challenging the validity of the Act as his estate also had been similarly
notified under section 3 (1) of the Act. That suit was withdrawn by the Patna
High Court being tried in its Extraordinary Original Civil Jurisdiction. That
suit was decided on June 5, 1950. The judgment of the High Court in that suit
is reported as M.D.
Sir Kameshwar Singh v. State of Bihar.(1) By
that judgment the Patna High Court declared that the Act was ultra vires and
wholly void and an injunction was issued restraining the State Government from
enforcing the Act. Against that judgment, the State of Bihar preferred an
appeal before this Court. But the plaintiff in the case before us, however, on
the basis of the judgment of the High Court demanded on June 9, 1950 that he
should be put back in possession of the estate whose management had been taken
over from him. On July 3, 1950 the then Collector by his letter informed the
plaintiff (1) I.L.R.'29 Patna 790.
537 that the Government had decided to
relinquish charge of the estates A and tenures of the plaintiff and that the
plaintiff should cooperate in taking over charge by July 15, 1950. On July 6,
1950 the Government had already cancelled the notification s issued under
section 3 (1) of the Act.
The charge of collection papers was handed by
the middle of July, 1950. The abstracts and synopsis of accounts were given on
August 7, 1950. About Rs. 1, 46,00" had been collected on behalf of the
estate during the Government's management. After the estate was thus handed
over to him, the plaintiff filed a suit on September 21, 1951 in the court of
the Subordinate Judge, Purnea for damages of Rs.
2,00,000 for wrongful and illegal
interference with the plaintiff's estates and tenures and for other
consequential reliefs.
The plaint proceeded on the basis that the
Act was unconstitutional as declared by the High Court earlier and that taking
over of the possession and management of the estate etc. was illegal. The
plaintiff pleaded that the Act having been declared void, the defendants were
liable for not only the amount of loss actually suffered by the plaintiff but
were also liable to recoup the amount spent by them during their management of
the estate which was wrongful. It was alleged that the action of the defendants
suffered from negligence, bad faith and malice. The plaint claimed that the
defendants were liable jointly and severally as tort feasors for all such
losses suffered by him. In paragraph 27 of the plaint the plaintiff set out
broadly the grounds of his claim thus: (a) that due to gross negligence and
wilful default the defendants contravened the provisions of section 3 (1) in
notifying and taking possession of part only of plaintiff interests in Estates
and Tenures and in omitting to notify other parts of his Estates and Tenures on
the first occasion when the notification dated November 19, 1949 was issued the
Government was unable to realise all the rents and other dues, (b) that due to
wrong notification and omission to notify all parts of his Estates and Tenures
and also on account of amalgamated rentals maintained by the plaintiff in
respect of his estates and tenures, the plaintiff could not fully realise the
balance share of unnotified estates and tenures, (c) that certain rents and
decrees had been allowed to become barred by time and (d) that on account of
non payment of Agricultural Income Tax and consequent imposition of penalty
which was no doubt reduced to Rs.
2,000 on appeal the Estate suffered a loss of
Rs. 2,000 He also pleaded that on account of the issue of wrong collection
certificates by defendant No. 2 and his staff the plaintiff had suffered some
loss which was yet to be ascertained.
538 In the written statement the defendants
traversed all the material allegations in the plaint. They pleaded inter alia
that the notification was issued in November, 1949 on the basis of the
requisition of the Collector, P.K.J. Menon and that defendant No. 2 was
appointed as Manager by that notification. The allegations of negligence, bad
faith and malice were denied. The defendants pleaded that on the basis of
information available in the records of the Government the notification was
issued in November, 1949 and at the request of the plaintiff after verification
second notification was issued on March 16, 1950, and that plaintiff requested
for the issue of the second notification in order to escape the processes of
law which had been taken out against him by his creditors and to shield his
entire properties from the creditors. In fact the Government appointed the very
collecting agents who were working under the plaintiff and after the management
was handed back he reappointed them as his collecting agents. The plaintiff had
accepted without protest the final accounts which had been prepared at the end
of the period of management. Tauzis Nos. 7/8, 30 and 38 about which there was
some dispute remained all along with the plaintiff and the collection papers
pertaining to them were made over to defendant No. 2 only in the latter part of
April, 1950 and if no collection could be made prior thereto in the said area
till then the defendants could not be blamed. The defendants pleaded that they
had bona fide carried out their duties.
One fact which requires to be noted here is
that the plaint did not have any reference to the effect of section 31 of the
Act which is set out above, but it proceeded on the basis that the Act was
unconstitutional. At the conclusion of the trial, the trial court held that the
cost of management incurred by defendant No 2 over and above 12.1/2% of gross
collection was excessive and the dependents should refund such excess amount.
Secondly, it held that the mistake in not notifying all the shares held by the
plaintiff in Tauzis Nos. 718 and 3 at the first instance resulted in non
collection of the dues and the plaintiff thereby had suffered. The trial court
held that the defendants being trespassers, the plaintiff owed no duty to them
to make available to them the separated Jamabandi to facilitate collection of
dues in the said Tauzis. The trial court, therefore, held that the defendants
should reimburse the plaintiff the amount he would have been able to collect
from those tauzis during the period of their management.
Similarly, the defendants were liable to make
good the loss caused on account of arrears or decrees which had been allowed to
become barred. The trial court directed that a commissioner should enquire into
the above items.
Accordingly a preliminary decree was passed.
539 Against the said preliminary decree the
defendants filed an appeal before the High Court. When the appeal came up
before a Division bench of the High Court, the defendants contended that the
decision of the High Court in which the Act had been declared as
unconstitutional required to be reconsidered by the High Court in view of some later
decisions of this Court. Accordingly the Division Bench referred the case to a
larger Bench on July 14, 1962. The case was then heard by a Full Bench of five
learned Judges of the Patna High Court. By its judgment dated February 15, 1963
the Full Bench overruled the earlier decision in MD.
Sir Kameshwar Singh v. State of Bihar (supra)
and declared that the Act was constitutional. The appeal was then referred back
to the Division Bench for disposal in accordance with the opinion of the Full
Bench.
The Division Bench which finally heard the
appeal was of the view that though it was open to the State to notify only a
fraction of an estate under section 3 (1) of the Act yet the defendants were
not absolved from the duty of taking appropriate steps for the preparation of
suitable collection papers in respect of the notified shares in Tauzis Nos. 718
and 300. It held that the defendants were liable to compensate the plaintiff
for not preparing the collection papers in time.
The Division Bench further held that even
though the plaintiff had been told to file suits for rents in respect of
unnotified share of the estate, the defendants were negligent in the matter of
issuing certificates for recovery, some Of which were later on struck off. The
Division Bench also held that the material on the record did not indicate that
necessary steps were taken by defendant No. 2 with regard to pending suits and
execution proceedings and there was every 17 probability that loss had been
suffered by the plaintiff on account of the inaction or failure to continue
pending proceedings which amounted to wilful default and gross negligence. The
Division Bench agreed with the trial court that the defendants were liable to
reimburse the plaintiff to the extent of Rs. 2,000 levied as penalty for
non-payment of Agricultural Income Tax. In so far as the cost of management of
Rs. 43,507 which was in the order of 30 per cent of the gross collection was
concerned while the trial court had allowed 12.112 per cent, the Division Bench
allowed 25 per cent of the gross collection.
In other words the Division bench found that
about Rs. 8,000 had been incurred as cost of management in excess of what was
authorised. The Division Bench found that the plaintiff was entitled to it. The
Division Bench held that section 31 of the Act did not give protection in
respect of loss which was caused by wilful 540 default and gross negligence.
The appeal of the defendants was accordingly dismissed. The cross objections of
the plaintiff regarding certain matters disallowed by the trial court were also
dismissed Aggrieved by the decree passed by the High Court, the State of Bihar
applied for a certificate under Article 133 (1) (a) of the Constitution in
S.C.A. No. 137/63 on the file of the High Court to file an appeal before this
Court.
On the HIGH Court granting the certificate
accordingly on December 10,1961, the State of Bihar has filed the above appeal.
The plaintiff also applied for a similar certificate in S.C.A No. 1/64 on the
file of the High Court to file an appeal against the decree in so far as it had
gone against him. The High Court granted in his case also a similar certificate
by She same order on December 10,1964 but the said certificate was later on
cancelled by the High Court on July 6, 1965. Thus the said proceedings came to
an end. We are now concerned with only the appeal field by the State of Bihar.
In this appeal, the constitutionality of the
Act is not questioned before us.
On going through the record of the case, we
find that the following facts are established. The notification issued on
November 19,1949 under section 3 (1) of the Act referred to the name of the
proprietor, the name of the estate, tauzi numbers of the estate and the share
of the proprietor in the tauzis. Defendant No. 2, J.P. Mukherjee who was then
the Additional Collector of Purnea was appointed as the Manager of the estate.
On December 14, 1949, the plaintiff was informed by the Collector at Purnea
that the management of the estate was to commence from December 30, 1949 and that
he should produce before the Manager a list of villages included in the estate
and also the Jamabandis, Karchas and Wasil Baukis upto date before December
27,1949 and also to make over a complete and clear list of the papers showing
Jamabandis of each village, the arrears collected and the arrears outstanding
before the commencement of the management under the Act. He was requested to
cooperate in the matter and was also informed that if he did not do so the
responsibility for any loss would be his. On December 27, 1949 the plaintiff
wrote a letter to the Collectorate. In that he stated that the work of handing
over papers properly of a big and complicated estate was not an easy task and
it would certainly take a considerable number of days to complete it. He
pointed out that the Government had committed an error in taking over the
management of only 2A-11A-2C-2K 541 share out of Tauzi No 7/8 under the
notification, because the collection papers had been maintained for 5-12. 1 /2
and odd share in respect said of the said tauzi. He pleaded that unless the
whole of 5-12.1/2 share was notified, the work of separation of the notified
share from the notified share could not be completed even within a period of
six months. He, therefore, asked for the modification of the notification. Then
we find that the plaintiff had met the Collector many times when the affairs of
the estate were discussed. On March I 1,195 ', the Collector wrote the
following letter to the plaintiff:
"District Office, Purnea The 11th March.
1950 My dear Raja Saheb,
1. With reference to our discussions on the
7th March. 1950, the following action may be taken with regard to the notified
and unnotified portions of your estate as agreed to between us.
2. We will not be taking over the unnotified
portion until the notification is made. As soon as a notification is made we
will take over these portions.
Meanwhile in order to see that no limitation
occurs with regard to any rent payable to you, you are requested to prepare a
copy of arrear list for the unnotified portions.
3. With regard to Tauzi No. 7, sufficient
number of Tahsildars and other staff required may be employed after selection
on the 14th of March, 1950, at Kishanganj, by the Additional Collector and by
your Circle Officer. A certain number of these, according to the proportion
that is notified will be selected by the Additional Collector and paid by
Government. You are requested to employ a certain number according to the
proportion of the unnotified interest. These staff together may be put on the
job of preparing the arrear list.
4. If notification is made before the Tamadi
Day, we will arrange to issue certificates in respect of arrears due. If.
however, notification for some reason or other is not made, 542 then we will
arrange to file joint suits for these arrears before the Tamds Day.
Yours sincerely, sd/- (Illeg ) 13/3 Raja P.C.
Lal Choudhuri, C.B.E. Nazarganj Palace, Purnea City. " A supplementary
notification was issued on March 16, 1950 as desired by the plaintiff. Then we
find that there is some further discussion and correspondence between the
plaintiff and the Manager. On April 7,1950, the Manager wrote to the plaintiff
that he had been able to persuade the Government to advance Rs. 35,000 to meet
the expenses of suits to be field for recovery of rents due to the estate. The
plaintiff replied to that letter on the same date appreciating the step taken
by the Government in advancing Rs. 35,000 as loan to the estate. On April
14,1950, the Manager sent a telegram to the plaintiff stating that since he had
not cooperated in sending the previous records of cases in time in respect of
Tauzi No. 7/8, it was not possible to file joint suits in respect of both the
notified share and the unnotified share and that he was responsible for filing
Tamadi suits in respect of the unnotified share in Tauzi No. 718. The defendant
No. 2 in his evidence has stated that he could not make any collection in
Tauzis Nos. 7/8 and 30 prior to the second notification because the collection
papers were with the plaintiff and they were actually received by him on April
24,.1950. In the lengthy cross-examination of defendant No. 2 we do not find
any material which would discredit his evidence or which would show that he had
either acted in excess of his powers or mala fide. We also find that a large
number of suits had been filed for recovery of the arrears due to the estate
and merely because some of the suits were dismissed on merits or on the ground
that some of the persons sued were dead or not traceable, it cannot be said
that there was lack of bona fides on the part of the Manager. By the middle of
July, 1950, the management of the estate itself was relinquished. From the
foregoing, we find that it could not be said that there was want of good faith
on the part of either the Government or defendant No. 2 who was the Manager. If
a certain share in a tauzi had not been notified on the first occasion it again
cannot be said as having been done either mala fide or deliberately to harm the
plaintiff.
We shall now deal with the specific findings
recorded by the Division Bench of the High Court.
543 The first ground on which the Division
Bench has held that the A defendants were liable to pay damages is that
defendant No. 2 had failed to get the collection papers prepared in respect of
Tauzis Nos. 7/8 and 30 in time and thus caused loss to the plaintiff. it may be
stated here that the Division Bench accepted and we think rightly in view of
the definition of the expression 'tenure' in section 5 of the Act that it was
open to the Government to notify even a fraction of a tenure under section 3
(1) of the Act It, however, omitted to notice that the plaintiff had failed to
discharge his duty imposed on him under section 5 of the Act which provided
that the Manager could by a written order require the proprietor or
tenure-holder or his agents and employees on a date to be specified in such
order to produce before him such documents or papers or registers relating to
the estate or tenure concerned or to furnish him with such information as he
may deem necessary for the management of the estate or tenure. In the present
case defendant No. 2 did call upon the plaintiff to submit the documents from
which it was possible to find out the ability of persons in respect of the
notified share in Tauzis Nos. 718 and 30. The plaintiff pleaded that he had not
maintained such separate set of' accounts and that it would take a long time to
prepare it. He, how- ever, produced the registers by the end of April, 1950
only, after the remaining shares were also notified. Hence if the collection
papers were not prepared till then by defendant No 2 in time it was not on
account of any negligence on the part of defendant No. 2.
On the other hand he recommended that the
unnotified share also should be notified as desired by the plaintiff and such
notification was also issued. By the time steps could be taken to prepare the
collections papers the Act had been struck down by the High Court. Then steps
were taken to hand over the estate back to the plaintiff. It is difficult to
agree with the High Court that there was any wilful default or gross negligence
on the part of defendant No. 2 in this regard.
With regard to the charge that defendant No.
2 had filed a large number of certificate cases, some of which were later on
struck off, the observation of the High Court itself supports that there was no
negligence on the part of defendant No. 2 but on the other hand the plaintiff
was responsible for it. The High Court has observed thus:
"It appears that it was on the basis of
some arrears list submitted by the plaintiff of defendant No. 2 and without
subjecting it to proper scrutiny, that a large number of certificate cases were
hurriedly filed by the defendants at the time of the Tamadi in the middle of
April 1950, and, it was.
544 therefore, not strange that quite a large
number of them had subsequently to be struck off, with the result that a
considerable portion of the arrears of rents and profits of the plaintiff's
estate remained unrealised and became time barred. It is manifest that the loss
caused to the plaintiff's estate on this account was due to the inaction of
defendant No. 2 amounting to wilful default and gross negligence on his part.
The responsibility for such loss must undoubtedly lie with the
defendants." (underlining by us) The High Court omitted to notice that the
certificate cases had been filed though hurriedly on the basis of the arrears
list submitted by the plaintiff, himself. In the circumstances it is difficult
to charge defendant No. 2 with wilful default or gross negligence on a
complaint by the plaintiff. Further the High Court did not refer in the course
of its judgment at least to a few such cases which showed that there was gross
negligence.
The High Court overlooked that nearly 7,000
certificate cases had to he filed in a short period. On the material before us
we are not satisfied that the above ground has been made out against the
defendants.
The third ground that defendant No. 2 had not
diligently attended to any pending proceeding is also not made out since no
specific case is dealt with by the High Court which prima facie established
that charge.
With regard to the penalty of Rs. 2,000
imposed for non-payment of the Agricultural Income Tax it is seen that a penalty
of Rs. 5,000 was first imposed as the plaintiff was unable to pay the
Agricultural Income Tax in time because he could not collect arrears in time.
In fact on the intervention of the Collector it was reduced to Rs.
2,000. Even then it was too remote to the
management of the notified estate by defendant No. 2. The trial court had held
that it was due to the issue of a wrong notification at the first instance. But
when once it is conceded that the first notification was not an unauthorised
one the defendants could not be held liable for reimbursing the penalty of Rs
2,000 paid by the plaintiff.
In so far as the cost of management is
concerned, the dispute is confined to about Rs. 8000. It is seen that the
estate had to be returned prematurely to the plaintiff Owing to the judgment of
the High 545 Court declaring the Act as unconstitutional within a period of
about seven months. But since defendant No. 2 had offered to refund any
expenditure incurred in excess of 25% of the gross collections to the plaintiff,
defendant No. I has to pay back Rs. 8,000 to the plaintiff.
It is seen that in present case while the
trial court proceeded on the basis that the Act was unconstitutional that the
defendants were trespassers on the plaintiff's estate and that the plaintiff
owed no duty to them, the Division Bench of the High Court which finally
disposed of the appeal failed to give due attention to section 31 of the Act
which had been held to be constitutional earlier. Section 31 of the Act
provided that no suit or other legal proceeding would lie in any court against
the State Government or against any servant of the State Government or against
any person acting under the orders of a servant of the State Government for or
on account of or in respect of anything done or purporting to he done in good
faith under the Act or in respect of any alleged neglect or omission to perform
any duty devolving on the State Government or any of the officers subordinate
to it or acting under the Act or in respect of the exercise of or on failure to
exercise any power conferred by the Act on the State Government or any officer
subordinate to it and acting under the Act, except for the loss or the
misapplication occasioned by the wilful default or gross negligence of any
officer of the State Government. Under section 4 (22) of the Bihar and Orissa
General Clauses Act, 1917, a thing shall be deemed to be done in 'good faith'
where it is in fact done honestly, whether it is done negligently or not. There
is no ground to hold that either the State Government or any of the officers
acting under it in performance of their duties under the Act had not acted
honestly either in issuing the notification under section 3 (l) of the Act on
November 19,1949 by which only parts of Tauzis No. 7/8 and 30 had been notified
or in not preparing separate collection statements before April, 1950. the
mistake appears to have occurred because the plaintiff himself had acquired the
said Tauzis in installments. Further as soon as the error was pointed out steps
were taken by defendant No. 2 to get the unnotified share also notified and the
Government issued a notification accordingly within about four months. It is b
cause the plaintiff did not hand over even the consolidated collection
statements by April, l950, the separate collection statements could not be got
prepared by defendant No. 2 by April, 1950 and even according to the plaintiff
himself it would have taken six months to prepare separate collection
statements on the basis of the consolidated statements. It is not shown that
either the State Government or any of its officers knew before hand that the
plaintiff 546 had maintained a consolidated statement of accounts and that
deliberately in order to cause loss to the plaintiff the first notification had
been issued in respect of a portion of Tauzis Nos. 7/8 and 30. These facts
constituted a good defence under Section 31 of the Act against any claim based
on any alleged neglect or omission since there was no proof of any wilful
default or gross negligence on the part of the defendants. There was also no
proof of deliberate abuse of statutory power nor of usurpation of a power which
the authorities knew that they did not possess. In the circumstances the claim
for damages on all counts should fail except with regard to the claim for Rs.
8,000 which had been incurred as cost of management in excess of what was
authorised by law.
For the foregoing reasons, we set aside the
judgment and decree by the trial court and the judgment and decree dated August
17, 1963 passed by the Division Bench of the High Court and pass a decree
against defendant No. 1, the State of Bihar directing it to pay the plaintiff's
legal representatives a sum of Rs. 8,000/-with interest thereon at 6 per cent
per annum from the date of suit i.e. September 21, 1951 till the date of
payment.
The rest of the claim in the suit is
dismissed. Parties shall bear their own costs in all the courts. The appeal is
accordingly allowed in part.
S.R. Appeal allowed.
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