# [1954] 1 S.C.R. 958

- **Citation:** [1954] 1 S.C.R. 958
- **Court:** Supreme Court of India
- **Decided:** 1954-03-31
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1954-1-s-c-r-958-287
- **Pages:** 19

## Headnote

195
December 14.
958
SUPREME COURT REPORTS
KALYANPUR LIME WORKS LTD.
fl.
STATE OF BIHAR AND ANOTHER.
[MuKHERTEA,
GHuLAM
HASAN and
JAGANNADHADAS JJ. J
[1954]
Indian Contract Act (IX of 1872), ss. 20 and 21-Mistake as to
fact and 1nistake as to law-GoverTnnent of India Act (5 and 6 Geo.
5 Ch. 61; 6 and 7 Geo. 5 Ch. 37; and 9 and 10 Geo. 5 Ch. 101), s. 30
-Contract granting lease
for quarrying lime-stone-JV hether falls
within the section-Civil Procedure Code (Act V of 1908), Or. VI,
r. 8 a•d Or. VJ//, r. 2-Denial of contract-Absence of a specific
plea of unenforceability-Specific Relief Act (Act 1 of 1877), ss. 15
and 18(a)-Purchaser's right against vendor with imperfect titleSpecific performance of part of contract t1Jhere part unperformed is
large.
The Government of Bihar (defendant No. I) gave a lease of
hills on April I, 1928, to K (a company) for a period of 20 years
for the purpose of quarrying lime-stones \Vith a condition attached
thereto that it would not assign its lease-hold rights to anyone
without its consent.
In 1933 K assigned its lease-hold rights to
one Bo:;e by an unregistered deed handing over
the possession of
the leased property to him.
The Government stopped the assignee
from working the quarry and forfeited the lease in favour of K in
March, 1934; and re-entered into
possession.
L (plaintiff) took
the lease of the hills from the Governn1ent on the 1st April, 1934,
taking possession thereof on the 15th April, 1934.
K sued the
Secretary of State for India in Septe1nber, 1934, for a declaration
that leases in its favour had not been validly forfeited and for an
injunction restraining him from
granting leases to anyone else
and for damages. The suit, though dismissed by the trial court,
was decreed by the High Court in appeal in 1936.
Pending the
.appeal before the High Court K obtained an interim injunction
restraining the Secretary of State from granting lease to L. The
decision of the High Court vvas affirmed by the Privy Council. K,
\vhich had been reinstated into possession surrendered it when the
lease in its favour expired on 31st March, 1948, and the Governn1ent entered into possession informing the plaintiff that it had
decided to lease the hills to defendant No. 2. L obtained a decree
against the Government for specific
perfonnance and compensation from the trial court for the period commencing from 1st April,
1948, till L would get possession of lease hold property. Tlic High
Court dismissed plaintiff's suit on the grounds, inter alia,
(i) that the agreement was void under s. 20 of the Indian
Contract Act as both the parties were under a mistake of fact ;
•
S.C.R.
SUPREME COURT REPORTS
959
(ii) that it was void under s. 30 of the Government of India
Act, 1915, as the conditions laid down in that section had not
been complied with ;
.
,
(iii) that no relief under s. 18(a) of the Specific Relief Act
could be gi:;anted to plaintiff as that would amount to a reconstruction of the agreement between the parties; and
(iv) that no alternative relief under s. 15 of the Specific
Relief Act could be granted as plaintiff had· not relinquished all
further claims.
Held, (reversing the judgment of the High Court) (i) that
neither party was under a mistake of fact as both knew that K
had assigned its interest to Bose and, the assignment having been
made without the consent of the lessor, K's interest was liable to
forfeiture and the mistake, if any, was a mistake of law as it was
regarding the validity of the assignment deed under the registration law;
(ii) that inasmuch as the objection founded on s. 30 of the
Governn1ent of India Act, 1915, involved investigation into the
fact whether the draft leases bore the signatures of the appropriate
authority on behalf of the Government and the plaintiff had no
opportunity in the trial court to produce necessary evidence to
111eet the point, the High Court was not justified in allowing the
question to be raised at the time of arguments, in view of the
provisions of Or. VI,

## Text

_Characters 0–39,370 of 43,469. This is a partial read: ask again with offset=39370 for what follows._

195
December 14.
958
SUPREME COURT REPORTS
KALYANPUR LIME WORKS LTD.
fl.
STATE OF BIHAR AND ANOTHER.
[MuKHERTEA,
GHuLAM
HASAN and
JAGANNADHADAS JJ. J
[1954]
Indian Contract Act (IX of 1872), ss. 20 and 21-Mistake as to
fact and 1nistake as to law-GoverTnnent of India Act (5 and 6 Geo.
5 Ch. 61; 6 and 7 Geo. 5 Ch. 37; and 9 and 10 Geo. 5 Ch. 101), s. 30
-Contract granting lease
for quarrying lime-stone-JV hether falls
within the section-Civil Procedure Code (Act V of 1908), Or. VI,
r. 8 a•d Or. VJ//, r. 2-Denial of contract-Absence of a specific
plea of unenforceability-Specific Relief Act (Act 1 of 1877), ss. 15
and 18(a)-Purchaser's right against vendor with imperfect titleSpecific performance of part of contract t1Jhere part unperformed is
large.
The Government of Bihar (defendant No. I) gave a lease of
hills on April I, 1928, to K (a company) for a period of 20 years
for the purpose of quarrying lime-stones \Vith a condition attached
thereto that it would not assign its lease-hold rights to anyone
without its consent.
In 1933 K assigned its lease-hold rights to
one Bo:;e by an unregistered deed handing over
the possession of
the leased property to him.
The Government stopped the assignee
from working the quarry and forfeited the lease in favour of K in
March, 1934; and re-entered into
possession.
L (plaintiff) took
the lease of the hills from the Governn1ent on the 1st April, 1934,
taking possession thereof on the 15th April, 1934.
K sued the
Secretary of State for India in Septe1nber, 1934, for a declaration
that leases in its favour had not been validly forfeited and for an
injunction restraining him from
granting leases to anyone else
and for damages. The suit, though dismissed by the trial court,
was decreed by the High Court in appeal in 1936.
Pending the
.appeal before the High Court K obtained an interim injunction
restraining the Secretary of State from granting lease to L. The
decision of the High Court vvas affirmed by the Privy Council. K,
\vhich had been reinstated into possession surrendered it when the
lease in its favour expired on 31st March, 1948, and the Governn1ent entered into possession informing the plaintiff that it had
decided to lease the hills to defendant No. 2. L obtained a decree
against the Government for specific
perfonnance and compensation from the trial court for the period commencing from 1st April,
1948, till L would get possession of lease hold property. Tlic High
Court dismissed plaintiff's suit on the grounds, inter alia,
(i) that the agreement was void under s. 20 of the Indian
Contract Act as both the parties were under a mistake of fact ;
•
S.C.R.
SUPREME COURT REPORTS
959
(ii) that it was void under s. 30 of the Government of India
Act, 1915, as the conditions laid down in that section had not
been complied with ;
.
,
(iii) that no relief under s. 18(a) of the Specific Relief Act
could be gi:;anted to plaintiff as that would amount to a reconstruction of the agreement between the parties; and
(iv) that no alternative relief under s. 15 of the Specific
Relief Act could be granted as plaintiff had· not relinquished all
further claims.
Held, (reversing the judgment of the High Court) (i) that
neither party was under a mistake of fact as both knew that K
had assigned its interest to Bose and, the assignment having been
made without the consent of the lessor, K's interest was liable to
forfeiture and the mistake, if any, was a mistake of law as it was
regarding the validity of the assignment deed under the registration law;
(ii) that inasmuch as the objection founded on s. 30 of the
Governn1ent of India Act, 1915, involved investigation into the
fact whether the draft leases bore the signatures of the appropriate
authority on behalf of the Government and the plaintiff had no
opportunity in the trial court to produce necessary evidence to
111eet the point, the High Court was not justified in allowing the
question to be raised at the time of arguments, in view of the
provisions of Or. VI, r. 8 and Or. VIII, r. 2 of the Civil Procedure
Code;
(iii) thats. 18(a) of the Specific Reiief Act applied to the case
as when the Government entered
into the
contract to
grant
lease to 1. in 1934 it had an imperfect title, and it could not grant
the fresh lease to anyone during the existence of previous lease in
favour of K, but after 31st March, 1948, when the lease in favour
of K had expired, the impediment in the way of the Government to grant leases of property was removed and L's right to get
the leases. had revived.
It was ther,fore entitled to sue for a
specific performance but as a substantial portion of the period had
already expired relief could only be granted under s. 15 of the
Specific Relief Act and in compliance with its conditions ;
(iv) that though s. 15 applied to the case it was not a fit case
in which a decree for specific performance should be granted as
only a few months were left before the expiry of the lease and it
\vould not be worthwhile to carry on any quarrying operations.
But nevertheless the plaintiff was entitled to compensation from
1st April, 1948, till the 31st March, 1954; and
( v) that the relinquishment of the claim to further performance can be made as in the present case, at any stage of the
litigation.
Waryam Singh & Others v. Gopichand and Others (I.L.R. 11
Lah. 69) referred to.
C1v1L APPELLATE JuR1sorcTION: Civil Appeals Nos.
189 and 190 of 1952.
1953
Kalyanpur Lime
Works fltrl.
••
State_of!Bihar
and Another.
Gulam Hasan J.
1953
Kalyanpur Limt
Works Ltd.
v.
State of Bihar
and Anot!ur.
960
SUPREME COURT REPORTS
[ 1954]
Appeals from the Judgment and Decree dated the 27th
day of March, 1952, of the High Court of Judicature
at Patna (Reuben and Das JJ.) in Appeal from Original Decrees Nos. 99 and 197 of 1951 arising out of the
Judgment and Decree dated the 7th
day of February,
1951, of the Court of the 2nd Additional
Subordinate
Judge at Sasarain in Title Suit No. 18/87 of 1950/49.
M. C. Setalvad,
Attorney-General
for
India,
and
Mahabir Prasad (Avadh Behari Saran,
R. f.
Bahadur
and B. K. Saran, with them) for the appellant.
Lal Narain, Government Advocate (Ugra Singh, with
him) for respondent No. 1.
N. C. Chatterjee, Senior Advocate (K. C. fain
and
A. K. Dutta, with him) for respondent No. 2.
1953.
December 14. The Judgment of the Court
was delivered by
GHULAM HASAN J.-Two appeals have been filed
by
the plaintiff
because of the existence of two
decrees
prepared
by the High Court.
The
appeals
are in substance against the dismissal of the suit. \Ve
·accordingly treat them as one appeal.
This appeal by the plaintiff is directed against the
judgment and decree
of
the High Court at Patna
dated March 27, 1952, dismissing the
suit of tbe
plaintiff by reversing the judgment and decree dated
February 7,
1951, of .the Second Additional Subordinate
Judge, Sasaram, District
Shahabad, who had
decreed the suit.
Kalyanpur Lime Works Ltd., hereinafter referred to as the Lime Co., instituted
a suit for
specific performance of the contract made by it with
the State of Bihar, hereinafter referred to as defendant
No. 1. To this suit Dalmia Jain & Co. Ltd. was rmpleaded as defendant No. 2.
The facts
leading up
to the present appeal are
these :
Defendant No. 1 is admittedly the owner of what
is
called. Murli
Hills situate in the Sub-Division of
Sasaram
in the District of
Shababad, the upper portion of which is known as the upper Murli Hill and
the lower portion as the lower Murli Hill.
On the
S.C.R.
SUPREME COURT REPORTS
961
1st April, 1928, the defendant No. 1 gave a lease of
the Murli Hill to the Kuchwar Lime and Stone Co.
Ltd.,
hereinafter called
the
Kuchwar Co., for 20
years for the purpose of quarrying limestone therein,
on the basis of two indentures of leases in respect of
the two portions of the Murli Hill. The leases contained a
prohibition
against
assignment
of
the
company's
leasehold
rights without the perm1ss10n
of
the
Government.
In
January,
1933, Kuchwar
Co. went into
voluntary liquidation and the liquidators of the
company
purported
to
assign
the
leasehold
interest
of
the company
to one Subodh
Gopal Bose for Rs. 35,000 by an unregistered deed
dated
the
30th September 1933.
The assignee took
possession of the property, on the 9th October, 1933,
but was stopped from working
the quarries under
orders of the Government from the 8th December,
1933,
as
the Government considered the assignment
to be a breach of the contract in the lease which made
the
lessees'
interest
liable to forfeiture.
It appears
from the proceedings of the Lime Co. that on the 4th
January,
1934,
the
managing
director
and
the
manager of the Lime Co. were. authorized to take
all steps to apply for and secure the lease of the Murli
Hill property and on the 25th January, 1934, the
Lime Co. made an application
(Exhibit A) to the
Collector of Shahabad for getting the
lease.
The
Lime Co. offered a minimum royalty of Rs. 10,000 and
on
the
14th March, 1934,
the Board
of Revenue
granted an interview to Mr.
Banerjee, the representative of the Lime Co. and recorded an order that "the
commissioner may be told
that the
Board
approves
of
the execution
of the lease
but the letter
should
not
issue
until the Government order cancelling the
old lease,
is
received" (A. 5). The defendant No. 1
forfeited the lease in favour of Kuchwar Co. by an
order ·dated the 27th March, 1934, and re-entered into
possession. Thereafter the defendant No. 1 offered to
grant leases of Murli Hill to the Lime Co. for a period
of 20 years on the existing
terms and conditions as
set forth in Chapter V of the Bihar
& Orissa Waste
Lands & Mineral Concession Manual. This offer was
•
1953
Kalyanpur Li'711
Works Ltd.
v.
State of Bihar
and Another.
Ghulam Hasan J.
1953
K alyanpur Lime
Works Ltd.
v.
State of Bihar
and Another.
Ghufom Hasan].
962
SUPREME COURT REPORTS
[1954]
made by a letter of the Board of Revenue dated the
31st March, 1934,
(Annexure B)
and was accepted by
the
Lime Co.
in their letter dated the 15th April,
1934,
communicated
to
the Collector
of Shahabad
(Annexure C). The Lime Co. obtained possession on the
15th of Apr.ii, 1934, bu' the leases were to take effect
from
the
1st April,
1934.
The Lime Co.
started
quarrying operations
on the
15th May, 1934.
It
appears that on the 24th September, 1934, the Kuchwar
Co.
sued
the Secretary of State for India for a declaration that the leases in their favour had not been
validly forfeited
and for an injunction restraining him
from granting leases to any one else and for damages.
The suit was dismissed
by
the trial court but was
decreed by the High Court of Patna on the 7th February,
1936.
While the appeal was pending before the High
Court, an ad interim
injunction was issued on the
25th April,
1935,
restraining the Secretary
of
State
for India from granting leases to the Lime Co. The
decision of the High Court was affirmed by the Privy
Council on the 19th November, 1937.
The Lime Co.
not being impleade<l
as a party to the suit,
filed by
Kuchwar Co., continued to remain in possession. The
Kuchwar Co.,
however, started proceedings
fo~ contempt against
the
manager
and
the
managing
director
of the Lime Co. and the Secretary of State
for India, and upon their being found guilty of contempt
the
Lime
Co. vacated
the quarries in April,
1936.
The
order
of
the High
Court in contempt
proceedings
was
ultimately set aside by
the Privy
Council on the 31st October, 1938, but the Lime Co.
did not succeed in getting restitution.
The case put forward by the Lime Co. was that
both the Lime Co. and defendant No. 1 proceeded on
_the assumption
that the latter was
fully
competent
to lease the Murli Hill to the former.
The Kuchwar
Co.,
which
had been reinstated
into
possession,
surrendered
it when the lease in its favour expired on
the 31st March,
1948.
The defendant
No. 1 then reentered
into
possession
and although the Lime Co.
repeatedly
asked
the defendant No. 1 to execute the
leases
agreed upon between
the
par~ies
and get
S.C.R.
SUPREME COURT REPORTS
963
them registered1 they refused to do so and on the 2nd
June, 1949, informed the Lime Co. that the defendant
No. 1 had decided
to
lease
the Murli Hill to the
defendant
No. 2.
Accordingly
the
primary relief
sought was
for specific performance of the contract,
as also for possession
and for compensation.
The defendant No. I resisted the suit inter alia on
the ground that no contract was entered into, that
wliile
tlie terms
of the proposed
leases were in the
stage
of
negotiations, the proposal fell through and
that
there
was no, concluded contract.
The pleas of
limitation, estoppel, acqmescence
and
waiver
were
also raised.
The defendant
No. 2 in a separate statement questioned the right of the Lime Co. to sue and denied its
legal existence. They also denied the contract and even
alleged that
the Lime Co. was never inducted into
possession
by
the Government.
They alleged that the
order
of
the Government sanctioning the forfeiture of
the leases in favour of
the Kuchwar Co. and offering
to lease the quarries
to the Lime Co. was based on
misapprehension of the actual facts
and had no binding effect.
The right of the Lime Co. to obtain specific
performance on the basis of the draft leases relied on
by the Lime Co. was denied and it was stated that the
Lime Co. was not entitled to claim any equity against
defendant No· 2 who were subsequent lessees of the
Murli Hills for valuable consideration.
The trial cpurt framed as many as 13 issues in the
case.
The two main issues relating to the existence of
the contract are issues 3 and 4 which are as follows:-
"3. Was there
any
legal,
valid
and
binding
contract
between
the
plaintiff
and defendant No. 1,.
and can any such contract be enforced?
4. Was the agreement between the plaintiff and
the Government
defective
for
lack
of settlement of
any essential term as alleged by the defendants, and
was it bad for uncertainty or vagueness?"
·
The trial court
took up the two issues together. It
held that the
letter
of
the Lime Co. dated the 25th
January, 1934, (Exhibit A) and the Board of Revenue;s
3-97 S. C. India/59
1953
Kalyanpur Lime
Wo~ks Ltd.
v.
State of Bihar
and Another.
Ghulam Hasan'].
1953
Kalyanpur Lime
Works Ltd.
v.
State of Bihar
and Another.
Ghulam Hasan J.
•
%4
SUPREME COURT REPORTS
[1954]
approval contained in Exhibit 3z (26) did
constitute
an agreement for lease between the plaintiff and the
Government according to the terms and conditions in
Chapter V of the Bihar and Orissa Waste Lands and
Mineral Concession Manual, 1926.
The trial court further found that the parties to the agreement intended
that the lease was to commence from the date of its "
execution
and
that
it was to be for a period of
20 years. It also found that the parties had agreed as
to the distribution of the minimum royalty between
the leases for
the two
portions of the Murli Hills as
contained
in the letter dated the
19th January, 1935,
of the Board of Revenue
(Exhibit A12), namely that
the royalty
for the upper portion of the Hill was to
be Rs. 7,500 and for the lower portion Rs. 2,500. Both
the issues were found in favour of the Lime Co. The
trial court rejected the plea of the defendant No. 2
that
the Lime Co. had no legal existence and had
consequently no right to sue.
It found that the suit
was not barred by limitation or by estoppel, waiver or
acquiescence.
It also found that the defendant No. 2,
who was a lessee for one year with notice of
the
Lime
Co.'s prior contract, had no locus standi to contest
specific performance of
that contract.
As a result of
these findings the suit for specific performance and for
compensation
against defendants Nos. 1 and 2 for the
period commencing from the !st April, 1948, till the
Lime Co. gets possession of the lease-hold
properties,
was decreed, the amount of compensation to be determined in subsequent proceedings
between the parties.
Both the defendants
appealed and the appeals were
disposed of by a Division Bench of the High Court
(Reuben and Das JJ.) by a judgment and decree dated
the 27th March, 1952.
By
~wo separate and concurrent
judgments the
learned Judges reversed the decree of the trial court
and dismissed the suit.
They held in concurrence with
the finding of the trial court that the contract by the
Government to grant
a lease in favour of the plaintiff
was made out but
they held
that the contract of
which specific performance was sought in the plaint
was
not the contract which the parties had entered
•
S.C.R.
SUPREME COURT REPORTS
965
into, that the agreement was void
under section 20 of
the Indian Contract Act, as both parties were under a
mistake of fact as regards the title of the Government
to
the subject matter
of the proposed lease, that it
was
also void
under section 30 of the Government of
India Act, 1915, as the conditions laid down in that
section had not been complied with, that no relief
under section 18(a) of the Specific Relief
Act could be
granted to the Lime Co., as it would amount to a reconstruction
of the agreement between the parties,
that
under
section 15 no alternative relief could be
granted as the Lime Co. had not relinquished all further claims,,
that
the Lime Co. was not ready and
willing
to perform its part of the contract as it was
asking for more than it was entitled
to
under the
contract
by
invoking
section 18 (a) of the Specific
·Relief Act, that the Lime Co. was not the real plaintiff and that in the circumstances of the case the discretion
to
grant
a decree
for specific performance
could not be exercised
in its favour.
As a result of these findings the decree of the trial
court was reversed and the suit dismissed.
So far as the factum of the contract is concerned,
we agree
with
the concurrent finding of the courts
below
on this
point. The finding was sought to be
challenged on the ground that
there was variance bet-.
ween pleadings and the findings
but that, in our
opinion,
is
not a
matter
of substance. We have examined the relevant materials on the record and we
are satisfied that the
finding of the High Court is not
open to any exception.
The first question
which arises for consideration
before
us is whether
the contract js void and .unenforceable
under section 20
of
the Contract Act
because both parties were under a mistake of fact as
regards the title of the Government to
the subject
matter of the proposed leases. It
is
contended on
behalf . of the appellants that the point was not raised
in the pleadings and is not open to the defence. This
contention is not without substance.
It appears
that
originally the trial court framed a draft issue
to the
effect whether
the contract
alleged by the Lime Co.
1953
Kalyanpur.Lime
Works :Ltd.
.v.
Stat~ of Bihar
.and Another.
Ghulam HasanJ.
1953
KalyanpUT Lime
Works Ltd.
v.
State of Bihar
and Another.
Ghulam Hasan J.
966
SUPREME COURT REPORTS
[1954}
was bad due to mutual mistake of law and fact but
on the objection of the plaintiff the issue was deleted
on the 29th November, 1950, and was substituted by
another issue which has
no bearing upon the
point.
The plea seems to have . been expressly abandoned in
the trial court as appears from the following observation in its judgment:-
"The learned counsels for the defendants do not
challenge the completeness or the
validity
of the
contract
entered
into
between the plaintiff and the
Government
on any other ground.
They do not contend that the contract was vitiated on account of any
mistake of fact or mistake of law on the part of the
parties
to the contract and there is no allegation in
the written statements in that regard."
Be that
as it may, it is difficult to see how the
agreement
can be challenged under section 20 of the
Contract Act as being vitiated by reason of a mistake
as
to
a matter
of
fact
essential to the agreement.
Neither party was
under any mistake of fact: both
parties knew that Kuchwar Co. had assigned its interest
to
Bose and that the assignment having been made
without the consent of the lessor, its interest was liable
to be forfeited.
The Government Pleader advised the
Government that it had the right to forfeit the leases
and to grant fresh leases to the Lime Co. The Lime
Co. accepted the position and proceeded on the assumption that the Government possessed the right to forfeit
the leases and
then to grant them to the Lime Co. It
is not easy to discover any mistake of fact on the part
of either of the parties.
The case of Edward H. Cooper v. William Phibbs,
Charlotte S. Cooper and Others(1 ) upon which reliance
was placed by the defendant No~ 1 was a case in which
a person not knowing that he himself was the tenant
for life of the fishery agreed to take a lease of it from
another who mistakenly supposed
himself as owner of
the fishery
and the agreement was set aside
on the
ground of mutual mistake of fact.
Lord Westbury in
setting aside the agreement put the matter thus: "The
petitioner did not suppose that he was, what in truth
(r) 2 H.L.p. 149.
:S.C.R.
SUPREME COURT REPORTS
. 967
he was, tenant for life of the fishery. 'fhe other parties
.acted upon the impression given to them by their
father,
that he
(their father) was the owner of the
fishery, and that the fishery had descended to them.
In such a state of things there can be no doubt of the
rule of a court of equity with regard to the dealing
with that agreement.
Now that was the case with
these parties-the respondents believed
themselves to
be entitled to the property, the petitioner believed that
he was a stranger to it, the mistake is discovered, and
the -agreement
cannot
stand."
The case before us is
not one in which there is absence of title like the above
case;
on the contrary
the
Government had an
undoubted
title
to
the property
but
the
assignment not being evidenced by a registered instrument,
the forfeiture did not legally take effect.
We think that in the present case the Bihar Government could be taken to have represented to the plaintiff that
they
had the right to forfeit the lease of the
Kuchwar
Company
and grant
a fresh lease to the
plaintiff.
The plaintiff no doubt believed in that representation
and
entered
into the contract on that
understanding.
As a result
of
the decision of the
Privy Council, however, tl1e Bihar Government became
incapable of making out the title which it asserted it
had at the time of the contract.
But its title was not
wholly gone;
it was restricted only by reason of the
lease which had still several years to run.
In these
circumstances, it might have been open to the plaintiff
to repudiate
the
contract
if they so liked, but the
defendant No. I could not certainly plead
that the
contract
was void on the ground of mistake and refuse
to perform that
part
of the agreement which it was
possible for it to perform.
Furthermore, as has been stated already, neither
party was in error as regards the essential facts upon
which tile contract proceeded.
It
was known to both
parties that there was an assignment of the lease by
the Kuchwar Company
in
favour
of S. G. Bose and
both parties knew that under thee terms of the lease an
assignment by the lessee wiiliout the consent of , the
lessor would make his interest liable to forfeiture. The
1953
K alyanpur Lithe
Works Ltd.
v.
State of Bihar
and Another.
Ghulam Hasan J.
1953
Xalyanpur Lime
Works Ltd.
v.
State of Bihar
r;,nd Another.
Ghulam Hasan].
968
SUPREME COURT REPORTS
[1954]
mistake, if any, was with regard to the effect of the
law of registration upon the validity of the assignment
deed.
At the most, such mistake would be a mistake
of
law
and under section 21
of the Indian Contract
Act the contract would not be void on that ground.
As the facts of the present case seem to us to negative the existence
of any mistake of fact under which
either of the parties laboured, we are of opinion that
the High Court was wrong in the conclusion that the
contract was void under section 20 of the Contract
Act.
We
may also
observe that the finding of the
High Court that the parties came to a final agreement
on all the essential terms of the leases which were
embodied in Exhibits. 22 & 22 (a) would leave no room
for
the
further
linding
that it
was induced by a
mistake of fact.
The
next point
which requires consideration
is
whether the contract is unenforceable on the ground
that it did not conform to the provisions of section 30
of
the
Government
of India Act, 1915.
Section 30
reads thus :-
" ( l) The Governor-General in Council and any
local Government may,
on behalf and in the name of
the Secretary
of
State in Council and subject to such
provisions
or
restrictions as the Secretary of State in
Council,
with the concurrence of a majority of votes
at a meeting of the Council of India, prescribes, sell
and dispose
of any real or personal estate whatsoever
in British India, within the limits
of their respective
Governments, for the time being vested in His Majesty
for the purposes of the Government of India, or raise
money
on
any such real estate by way of mortgage,
and make proper assurance for any of those purposes,
and
purchase
or acquire any
property in British
India within the said respective limits, and make any
contract for the purposes of this Act.
(2) Every assurance and contract made for
the
purposes of this
section shall be executed by such
person and in such manner as
the Governor-General
in Council by resolution directs
or
authorises, and if
so
executed
may be enforced by
or against the
Secretary of State in Council for the time being."
S.C.R.
SUPREME COURT REPORTS
969
There can be no doubt that
the local Government
was entitled under sub-section ( 1) to make any contract
for the purposes of the Act and the contract to grant
leases for quarrying limestone is perfectly within the
purview of this provision.
Rule 7 of the Waste Lands
Manual refers to Notification No. 713-734 of the 2nd
June, 1913, which was issued by the Governor-General
in
Council
in exercise
of his power under section 2
of the East India Contract Act,
1870 ( 33 and 34 Viet.
Chap. 59).
This notification was preserved by section
130 of the Government of India Act, 1915.
For the
Province of Bihar and Orissa it specifies Collectors and
Deputy Commissioners as the proper authority to execute "contracts and other instruments in matters connected
with ...... mining
leases."
It is
agreed that
there was
no particular manner prescribed by the
Governor-General
as
to
how the contract was to be
executed.
The first question which arises in this con_nection is whether the contract was to be executed by
a formal document or whether it could be speit out
from the correspondence
in
which the negotiations
were
carried
on by the parties.
We do not think it
necessary
to go into this question, for assuming that a
formal document was necessary, the plea of section 30,
it
is
to
be noted, was not raised in the pleadings.
Objection
is taken on behalf of the appellant that the
point not having been raised in the written statement,
it was not incumbent
upon the plaintiff to show that
the contract was executed according to the provisions
of section 30, before it
could be specifically enforced
and reliance was placed UJlOn the provisions of Order
VI,
rule 8, and Order VIII, rule 2 of the Civil Procedure Code·
Paragraph 6 of the plaint stated the offer
by the Government for settlement of the leases and the
acceptance
by the plaintiff and referred
to annexures
B
and
C of
the plaint
as embodying the .contract.
Defendant No. 1 in reply accepted the accuracy of the
averment in para 6 of the plaint, except that the terms
of the lease were not final in the sense it
was
understood that the question of. royalty would be reexamined by the officer of the defendant and any reduction in rates, if made, would be a matter of good grace.
1953
Kaljanpur··Lime·
Works Ltd.
v.
State of Bihar·
and Another.
Ghulam Hasan J.
\
1953
K alyanpur Lime
Works Ltd.
v.
State of Bihar
and Another.
Ghulam Hasan].
970
SUPREME COURT REPORTS
[1954]
It is obvious
that on these pleadings the only question
that arose was
one of fact.
No defence was raised
that the contract was not enforceable because it was
not executed as required
bv section 30.
Rule 8 of
Order VI of the Civil Procedure Code lays down ttnt
where a contract is alleged in any pleading, a bare
denial
of the same by the opposite party shall he construed
only as a denial in fact of the express contract alleged or of the matters of fact from which the
same may be
implied,
and
not as a denial of the
legality or sufficiency in law of such contract. Rule 2
of Order VIII requires that the defendant must rais~
by his pleading all matters which show the suit not to
be maintainable, or that the transaction
is either void
or voidable in point of law, and all such grounds of
defence as, if not raised, would he likely to take tlie
opposite party
by surprise, or would raise issues
of
fact not arising out
of
the plaint, as, for instance,
fraud,
limitation,
release,
payment, performance, or
facts showing
illegality.
These
provisions
leave
no
doubt that the party denying merely the factum of
the contract and not alleging its unenforceability in law
must be held bound by the pleadings and be precluded
from raising the legality
or validity of the contract.
It
appears that not only was this point not raised
in
the pleadings before
the
trial
court
but it was not
raised
in
the memorandum of appeal
to the High
Court
and
was
mentioned for the first time in the
course
of arguments before that court. It is no answer
to say that it was not raised because on the face of it
the draft leases Exhibits 22 and 22( a) were not executed in accordance with the provisions of section 30, nor
1s it correct
to say that it was a pure point of law.
Reference
is made to para. 14 of the plaint involving
all alleged admission on the part of the plaintiff that the
leases were not so executed. That paragraph merely says
that by reason
of the ad interim injunction the Secretary of State for India or his officials or agents could
not execute the necessary
indentures, terms whereof
had been already settle.cl between the parties, although
the plaintiff on
his part
had duly signed
the documents incorporating the terms of the lease as approved
S.C.R.
SUPREME COURT REPORTS
971
by Government.
This statement refers only to the
indentures of leases and not to the contract.
It is urged on behalf of the plaintiff, and in ow
<>pinion rightly, that the objectiofl founded on section
30 involves investigation into the fact whether the
draft
leases
bore
the signature
of the appropriate
authority on behalf
of the Government and the plaintiff had no opportunity
to adduce necessary evidence
in the trial court to meet the point.
It appear$ that
the Lime Co. sent six copies of draft leases Exhibits
22 and 22(a) to defendant No. 1.
These leases are
undoubtedly signed
on behalf of the plaintiff but the
. signature of the Collector, who was competent to sign
<>n behalf of the Government, is wanting.
The Government produced two copies
only but withheld the
other four.
It is contended that had the other four
leases been produced, they could have shown that they
bore the signature of the Collector on behalf of the
Government.
In its application to the trial court on
the 19th September, 1950, the Lime Co. did call for the
leases from defendant No.
1.
The court made an
order
on
the same
date, Clirecting
the defendant
No. l's pleader to produce them on the date fixed.
Another application was made by the Lime Co. on the
14th November, 1950, drawing the attention of
the
court that the papers had not been produced and
praying that the defendant No. 1 be reminded to produce them
before
the next hearing of the suit.
The
court on the same day made the order in terms of the
plaintiff's prayer.
Yet another attempt was made by
the plaintiff on the 20th November, 1950, by filing an
application that
urgent
telegrams be sent to
the
Collector, Shahabad, and other officers for producing
these documents.
The telegrams were sent
but the
documents were never produced. In view of these
facts it seems to us clear that the High Court was not
justified in allowing this quest~on to be raised at the
time of the arguments when the plaintiff had had no
·opportunity to adduce evidence upon the question of
fact whether the leases were signed on behalf of the
Government.
It is also
clear
that despite
the best
efforts of the plaintiff, the Government withheld the
1953
Kalyanpur Lime
Works Ltd.
v.
State of Bihar
and Another.
Ghulam Hasan J.
1953
.Kalyanpur Lime
Works Ltd.
v.
State of Bihar
and Another.
Ghulam Hasan J.
972
SUPREME COURT REPORTS
[1954)
production of the other leases.
Without going further
into the matter, we shall rest
our decision on
the
gtound that the question ought
not to have been
allowed to be raised and we accordingly reject the plea
founded on section 30 on this ground.
The next question which arises for consideration is
whether the High Court was right in its conclusion that
the contract of which the specific performance is asked
for in the plaint is not the contract which the parties
entered into.
In this connection the High Court found
that the parties came to the final agreement on all the
essential terms of the proposed leases on or before the
30th
April,
1935, and these terms were embodied in
Exhibits 22 and 22 (a).
It is contended before us on
behalf of the appellant that the substance of the contract entered into between the parties was the lease
for 20 years under the rules of the Waste Lands and
Mineral Concession Manual and that the time from
which
the lease
was
to commence was
not of its
essence.
This intention, it is urged, flows clearly from
the relevant correspondence which passed
between the
parties on the subject.
That such was the intention is
said to be further confirmed by the fact that precisely
the same terms were entered into with Kuchwar Co.
We agree with the High Court that although the period
of the leases was to be for twenty years, yet this period
was not to commence from
the date when the leases
were
to be executed.
In
para.
7 of the plaint the
plaintiff alleged that in pursuance of the contract it
was inducted by Government into possession of the
property though the leases were
to
be
subsequently
executed and
were to take effect from the 1st April,
1934.
The draft leases, while specifying the duration
as twenty years, make it clear that they were to commence from the 15th April, 1934. That is the contract
of which specific performance can be allowed but as
the defendant No.
1 is unable to perform it in its
entirety, the plaintiff can claim leases for the unexoired
portion, that
is
to say up to the 31st March, 1954, if
it
can invoke
the provisions
of section 15 of the
Specific Relief Act in its favour.
We agree with the
High Court that section 18(a)
of the Specific Relief
S.C.R.
SUPREME COURT REPORTS
973
Act applies to the case.
That section lays down that
where a person contracts to sell or let certain property
having only imperfect title thereto, if the vendor or
lessor has subsequently to the sale or lease acquired
any
interest
in the property, the purchaser or lessee
may compel him to make good the contract out of
such interest.
There can be no doubt whatever that
when the Government entered
into the contract to
grant
leases to the Lime Co. in 1934, it had an imperfect title, inasmuch as it could not grant a fresb lease
to anyone during the existence
of the previous lease in
favour of Kuchwar Co. No doubt the Govern!Ifent
thought that it had the right to forfeit
those leases
and did in fact
order forfeiture
but it having been
fou ~d
subsequently
that
the forfeiture
was legally
in valid, rights of the previous lessees were restored.
As :tlready pointed out
above this is not a case of
absence of title but is one of imperfect title and hence
falls within the meaning of section 18.
After the 31st
Marich, 1948, when the leases in favour of Kuchwar Co.
expired, the impediment
in
the way of the Government to grant leases of the property stood removed,
and the Lime Company's right to get the leases revived
in it'> favour.
This right of the plaintiff was resisted
by
the
Government who, on the other hand, granted
the leases to defendant No. 2.
The High Court of Patna right! y took the view that
section 18 (a) was applicable
to the facts of this case
and although defendant No. 1 was not in a position to
grant a lease from the time it agreed to do, the impediment being now removed and a suit for specific performance not being barred,
the Lime Company was
entitled to sue for that relief.
We have already held
in agreement with the view of the High Court that
section 18 is attracted to the facts of this case, and the
contract of which specific performance can be decreed
in
favour of the plaintiff
is the one embodied in
Exhibits 22 and 22(a).
But as a substantial portion ot
the period has already expired, relief can be given only
under secion 15 of the Specific Relief Act and in compliance with its conditions.
The High Court while
holding that section 15 applied, disallowed the plaintiff's
1953
Kalyanpur Lime
Works Ltd.
v.
State of Bihar
and Another.
Ghulam Hasan].
1953
Ka{Janpur Lime
J1lorks Ltd.
v.
State of Bihar
and Another.
Ghulam Hasan J.
974
SUPREME COURT REPORTS
[1954]
claim because in its view these conditions were not
fulfilled.
According to the High Court, the application
of the plaintiff, dated
the 18th
February, 1952,
did
not show that it had relinquished all claims to further
performance
and all right to compensation either for
the deficiency, or for the loss or damage sustained by
it through the default of the defendant as required by
section 15.
The relevant portion of the application is
in the following terms:-
"That without prejudice to the submissions made
by the petitioner under section 18 of. the Specific Relief
Act the petitioner alternatively claims
relief
under
section
15
of the Specific
Relief Act and claims a
decree 'for specific performance of
contract' for
the
period after the expiry of the lease of Kuchwar Lime
and Stone Co. Ltd., that is from 1st April, 1949, to 31st
March, 1954, on the usual convenants as mentioned in
Waste Land Mineral Concessions Manual with such
compensation
as
may be permissible.
He further
relinquishes all claims to further performance and all
right to compensation either for
the deficiency
or for
the loss or damages sustained by him for default of the
defendant for the period prior to 1st April. 1948·"
This statement only shows
that the Lime Co.
initially put forward its claim
to full specific performance under section 18, but in the alternative confined
it to the period from 1st April, 1949, to 31st March,
1954,
with
compensation.
The last
portion of the
application, however, leaves
no doubt whatever that
all claims
to further performance were relinquished
and compensation prior to 1st April, 1948, was
also
given up. The
plaintiff's learned counsel has asked
for that relief in the course of his arguments and he has
made it clear that he insists on no further performance,
nor does he claim any compensation for any period
prior to the execution of the leases.
Relinquishment
of the claim
to further performance can be made at
any stage of the litigation.
See
W aryam Singh and
Others v. Gopi Chand and Others('). We think, therefore,
that subject to what we are going to say on the last
point, the plaintiff can claim relief under section 15 of
the Specific Relief Act.
(1) l.L.R.