Full Judgment Text
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PETITIONER:
STATE OF BIHAR
Vs.
RESPONDENT:
BISHNU CHAND LAL CHAUDHARY AND ORS.
DATE OF JUDGMENT08/01/1985
BENCH:
VENKATARAMIAH, E.S. (J)
BENCH:
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
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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
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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,
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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]
JUDGMENT:
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
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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
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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
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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
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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
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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
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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
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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
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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.
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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
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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
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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
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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.
547