# KARANPURA DEVELOPMENT CO., LTD v. RAJA KAMAKSHYA NARAIN SINGH

- **Citation:** [1956] 1 S.C.R. 325
- **Court:** Supreme Court of India
- **Decided:** 1956-04-10
- **Case number:** Civil Appeals Nos. 191 & 192 of 1953
- **Bench:** S. R. Das, Bhagwati, Venkatarama Ayyar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/karanpura-development-co-ltd-v-raja-kamakshya-narain-singh-1312
- **Pages:** 33

## Headnote

Court of Wards-Powers-Transactions by Court of WardsCourt's power to review-Court of Wards acting on behalf of a ward
and a guardian acting on behalf of a minor-Difference in the legal
position of-Licences extending beyond the period of the minority of
the ward-Validity-Sanction-Requirements-Ooitrt of Wards Act,
1879 (Bengal Act IX of 1879), s. 18-Guardians and Wards Act,
1890 (VIII of 1890), s. 29( a).
Section 18 of the Court of Wards Act, 1879, provides that the
Court of Wards "may sanction the giving of leases or farms of the
whole or part of any property under its charge, and may direct the
mortgage or sale of any part of such property, and may direct the
doing of all such other acts as it may judge to be most for the benefit
of the property and the advantage of the ward".
In exercise of the power conferred by this section the Court of
Wards sanctioned a deed of prospecting license in favour of l3, the
predecessor in interest of the appellant, and the same was executed
on 26-3-1915. Subsequently, on 23·11·1917 the manager of the
Court of Wards executed a deed modifying the terms of the deed
dated 26-3· 1915, by. virtue of which the period of license could be
extended up to 26-3-1951 under certain conditions. On 10-8-1937
the respondent having become major assumed management of the
estate and thereafter repudiated the aforesaid deeds and contested
their validity on the grounds, inter alia, (1) that the deed dated
26-3-1915 was not for the benefit of the ward as the clause therein
relating to the payment of the cess was less advantageous to him
than the corresponding clause in the prospecting license executed
by the then proprietor of the estate on 26-11-1907 in respect of
another property known as the Bokaro license, and that the Court
of Wards executed the deed in question without bestowing any
thought to it, (2) that the Court of Wards had no power to enter into
the transaction dated 23-11-1917 as it had the effect of preventing
the ward from dealing with his estate for over a period of 32 years
after he attained majority, (3) that in granting the deed dated
23-11-1917 the Court of Wards considered only the benefit of the
grantee and not that of the ward and (4) that the deed was void because no sanction had been given to it by the Court of Wards, as
required bys. 18 of the Court of Wards Act, 1879.
Held, (1) that the Court of Wards is not in the same position
as a guardian of the properties of a minor. It is a statutory body
with powers defined by the Court of Wards Act, 1879. Under s. 18
~3
1956
April 10
1956
Karanpura
Develo.Ptnent Co.,
Ud.
v.
Raja K aniakshya
Narain Singh
326
SUPREME COURT REPORTS
[1956)
of the Act the Court of Wards is given the power to jndge for itself
whether a transaction entered into by it on behalf of the ward ·is
for the benefit of the property and the advantage of the ward and
its a.ct cannot be impugned in a court of law by the ward on attaining majority unless he shows that it did not act bona fide and in the
interests of the ward and that its action amounted to a fraud
on the power, or that it did not, in fact, apply its mind to the
question whether the act was for the benefit of the property or
the advantage of the ward, and that though it purported to exercise the power under s. 18, it did not,
i~ fact, come to a judgment as required by the section. Its decision cannot be questioned on the ground that it was erroneous on the merits, or
that it was reached without considering some aspects which
ought to have been considered, unless the failure to consider them
was of such a character as to amount to there being no exercise
of judgment at all;
Allcroft v. Lord Bishop of London: Lighton v. Lord Bishop
of London, ([189i] A.O. 666), relied on.
(2) that assuming that the cess clause in the deed dated
26-3-1915 was less advantageous to the ward than that in the
Bokaro license, as the Court of Wards had applied its mind to
the question and formed its own judgment on it, its decision is
not open

## Text

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-
S.C.R.
SUPREME COURT REPORTS
KARANPURA DEVELOPMENT CO., LTD.
v.
RAJA KAMAKSHYA NARAIN SINGH.
325
[S. R. DAS, C.J., BHAGWATI and VENKATARAMA
AYYAR JJ.]
Court of Wards-Powers-Transactions by Court of WardsCourt's power to review-Court of Wards acting on behalf of a ward
and a guardian acting on behalf of a minor-Difference in the legal
position of-Licences extending beyond the period of the minority of
the ward-Validity-Sanction-Requirements-Ooitrt of Wards Act,
1879 (Bengal Act IX of 1879), s. 18-Guardians and Wards Act,
1890 (VIII of 1890), s. 29( a).
Section 18 of the Court of Wards Act, 1879, provides that the
Court of Wards "may sanction the giving of leases or farms of the
whole or part of any property under its charge, and may direct the
mortgage or sale of any part of such property, and may direct the
doing of all such other acts as it may judge to be most for the benefit
of the property and the advantage of the ward".
In exercise of the power conferred by this section the Court of
Wards sanctioned a deed of prospecting license in favour of l3, the
predecessor in interest of the appellant, and the same was executed
on 26-3-1915. Subsequently, on 23·11·1917 the manager of the
Court of Wards executed a deed modifying the terms of the deed
dated 26-3· 1915, by. virtue of which the period of license could be
extended up to 26-3-1951 under certain conditions. On 10-8-1937
the respondent having become major assumed management of the
estate and thereafter repudiated the aforesaid deeds and contested
their validity on the grounds, inter alia, (1) that the deed dated
26-3-1915 was not for the benefit of the ward as the clause therein
relating to the payment of the cess was less advantageous to him
than the corresponding clause in the prospecting license executed
by the then proprietor of the estate on 26-11-1907 in respect of
another property known as the Bokaro license, and that the Court
of Wards executed the deed in question without bestowing any
thought to it, (2) that the Court of Wards had no power to enter into
the transaction dated 23-11-1917 as it had the effect of preventing
the ward from dealing with his estate for over a period of 32 years
after he attained majority, (3) that in granting the deed dated
23-11-1917 the Court of Wards considered only the benefit of the
grantee and not that of the ward and (4) that the deed was void because no sanction had been given to it by the Court of Wards, as
required bys. 18 of the Court of Wards Act, 1879.
Held, (1) that the Court of Wards is not in the same position
as a guardian of the properties of a minor. It is a statutory body
with powers defined by the Court of Wards Act, 1879. Under s. 18
~3
1956
April 10
1956
Karanpura
Develo.Ptnent Co.,
Ud.
v.
Raja K aniakshya
Narain Singh
326
SUPREME COURT REPORTS
[1956)
of the Act the Court of Wards is given the power to jndge for itself
whether a transaction entered into by it on behalf of the ward ·is
for the benefit of the property and the advantage of the ward and
its a.ct cannot be impugned in a court of law by the ward on attaining majority unless he shows that it did not act bona fide and in the
interests of the ward and that its action amounted to a fraud
on the power, or that it did not, in fact, apply its mind to the
question whether the act was for the benefit of the property or
the advantage of the ward, and that though it purported to exercise the power under s. 18, it did not,
i~ fact, come to a judgment as required by the section. Its decision cannot be questioned on the ground that it was erroneous on the merits, or
that it was reached without considering some aspects which
ought to have been considered, unless the failure to consider them
was of such a character as to amount to there being no exercise
of judgment at all;
Allcroft v. Lord Bishop of London: Lighton v. Lord Bishop
of London, ([189i] A.O. 666), relied on.
(2) that assuming that the cess clause in the deed dated
26-3-1915 was less advantageous to the ward than that in the
Bokaro license, as the Court of Wards had applied its mind to
the question and formed its own judgment on it, its decision is
not open to question;
(3) that the Court of Wards was competent to enter into the
transaction dated 23-11-1917 and extend the period of license so
as to enure for a period beyond the date of the ward coming of
age, as s. 18 of the Act which confers authority on the Court of
Wards is genera.I and unqualified in terms and there is no provi·
sion in the Act such as there is in s. 29(b) of the Guardians and
Wards Act, 1890, that a lease by the Court of Wards was to
enure for a period related to the minority of th'e ward;
(4) that assuming that the words in s. 18 that the act should
be "for the benefit of the property and the advantage of the ward"
should he read cumulatively and not disjunctively, the deed dated
23-11-1917 satisfies the requirements of the section inasmuch as the
benefits which the transaction conferred on the estate in the form of
minimum ground rent, salami and royalty must also enure to the
advantage of the ward who will be the person who will receive this
revenue;
(5) that the requirements as to sanction under s. 18 of the Act
must be held to he satisfied if the transaction in all its essential
particulars had been sanctioned by the Court of Wards, even though
there were details to be worked out in furtherance of the sanction
and the document as finally drafted had not been submitted again
for its approval.
A mere recital in the deed that the transaction
was sanctioned is not conclusive and it must be shown that,
as a matter of fact, sanction was given, and as the order of the Court
of Wards dated 9-10-1917 contained the sanction to the proposal in
S.C.R.
SUPREME COURT REPORTS
327
all its essential particul&rs it was sufficient compliance with the re·
1956
quirements of the section;
Karanj>l4ra
Gulabsingh v. Seth Gokuldas, (40 I.A. 117) and Ramkanai Singh
DeTJeloj>ment Co.,
Deo Darpashaha v. Mathewson, (42 I.A. 97), relied on.
Ud.
and (6) thats. 18 only requires that the transaction should be
v.
entered into with the sanction of the Court of Wards and if the Raja Kamakshya
transaction subsequently turns out to be bad on the merits, either
Narain Singh
in part or in toto, it does not render the sanction originally given
ineffective.
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 191 & 192 of 1953.
Appeal from the judgment and decree dated the
27th October 1949 of the Patna High Court in Appeals
from the Original Decrees Nos. 127 & 125 of 1943
arising out of the decrees dated the 30th day of April
1943 of the Court of Additional Subordinate Judge,
Hazaribagh in Suits Nos. 28 & 82 of 1940 respectively.
M. C. Setalvad, Attorney-General for India, N. C.
Chatterjee, S. Chaudhry, S. N. Mu.khe1ji and B. N.
Ghosh, for the appellant.
Atul Chandra Gupta and Ganpat Rai, for respondents Nos. 1 & 12.
Atul Chandra Gupta and I. N. Shroff, for respondents Nos. 2, 4, 5, 6 & 13.
Lal Narain Sinha, Bajrang Sahai and R.C. Prasad,
for respondent No. 9.
Sanjib Chaudhry and R.R. Biswas, for respondent No. 10.
Sanjib Chaudhry and Ganpat Rai, for respondent
No. 11.
Ganpat Rai, for respondents Nos. 3, 7 & 8.
1956. April 10. The Judgment of the· Court
was delivered by
VENKATARAMA AYYAR J.-These appeals raise
questions as to the validity of a prospecting license
granted on 26-3-1915 in favour of Messrs Bird and
Co., by the Court of Wards as representing the Ram-
1956
KaranPura
Develo:Pment Co.,
Ud.
v.
Raja Kamakshya
Na rain Singh
Venkata,.ama
AyyarJ.
328
SUPREME COURT REPORTS
(1956]
garb Estate and of two deeds dated 23-11-1917 and
1-6-1937 executed by the Court of Wards modifying
the terms of the license dated 26-3-1915.
The Ramgarh Raj is an ancient principality situate
in Bihar. It has three coal-fields, Bokaro Jharia,
Bokaro Ramgarh and Karanpura. Of these, the
Karanpura coal-fields are the largest being of the
extent of 550 sq. miles, of which about 415 sq. miles
belonged to the estate. On 26-11-1907 Raja Ramnarain Singh, the proprietor of the estate, granted
in favour of Messrs Anderson Wright & Co., a prospecting license in respect of the Bokaro Ramgarh
coal-fields, referred to in these proceeding as the
Bokaro license. He was also negotiating for a similar
license in respect of the Karanpura coal-fields ( vide
Exhibit 155-b dated 1-12-1912), but before anything
was concluded, he died on 26-1-1913 leaving him
surviving his widow, Rikinath Kaur, and a minor son,
Lakshminarain Singh. At the time of his death, the
debts owing by the estate amounted to about Rs. 9
lakhs.
On 20-5-1913 the Court of Wards took over the
management of the estate, and its first concern was
to relieve it from the pressure of creditors, and for
that purpose, to arrange for a loan on easy terms. It
was at this juncture that Messrs Bird and Co., made
an application for a prospecting license for the
Karanpura coal-fields, and in reply thereto, the
manager of the Court of Wards informed them on
4-9-1913 that "the estate being involved and anxious
to pay off the debts, one of the conditions of the lease
would be an advance of about Rs. 8 to Rs. 11 lakhs
including salami, etc., to the estate on the same terms
as advanced by the Bokaro and Ramgarh Company".
Then, there were negotiations extending over several
months, a good deal of correspondence and personal
discussions, and eventually on 29-7-1914 the_ terms
were finally agreed upon, and on 26-3-1915 the deed
of prospecting license was actually executed. Its
main terms were as follows: It was to be in force for a
period of six years. A sum of Rs. 1,00,000 was paid
as salami. The licensees were to pay a minimum
S.C.R.
SUPREME COURT REPORTS
329
ground rent of Rs. 8,000 per annum commencing from
the second year of the license, and if the leases were
actually taken by the licensees, this amount was
to be adjusted towards royalties payable thereunder.
The terms of the leases which were to be granted in
pursuance of the license were firstly, the lessees• were
to pay a salami at Rs. 40 per bigha, the payment to
commence either when railway facilities were available for transport of coal from the mouth of the pit
or after a lapse of six years after the period of the
license, that is to say, after 26-3-1927, whichever was
earlier; secondly, royalty was to be paid on coal, dust
and coke at rates specified therein, subject to a minimum of Rs. 5 per bigha payable after the first year
of the lease; and thirdly, the lessees were to pay the
ceases payable under the law by the occupier or tenant
of the land. As consideration for the grant of the
license, Messrs Bird and Co., were to advance Rs. 9
lakhs as loan to the estate. This amount was not to
carry interest and was to be discharged by adjusting
the royalties which would become payable under the
leases. If no. leases were taken and the license was
abandoned, then the amount of the loan was to carry
interest at 4! per cent per annum from that date and
it had to be repaid in half-yearly instalments such
that the entire debt would be discharged within a
period of six years. A mortgage bond was executed
on the same date as the prospecting license embodying these terms.
The next phase of the transaction begins on 3-8-1915
with Messrs Bird and Co., applying to the Court of
Wards for extension of the period of the license on
the ground that as the result of war conditions, new
and unexpected difficulties had cropped up and that
to achieve the purpose of the license, is was necessary to extend the period of six years fixed therefor.
This proposal was subjected to close scrutiny, and
there was prolonged correspondence between Messrs
Bird and Co., ·and the Court of Wards on the expediency of extending the period of license and on the
terms on which such extension should be granted.
Ultimately, on 23-11-1917 the manager of the Court
1956
Karanpura
Development Co.,
Ltd.
v.
Raja Kamakshya
Narain Sing/1
Venkatarama
AyyarJ.
1956
/{aranjura
Dc.vclojnne1tt Co.,
Ud.
v.
Rrrja /{a111aksliya
Narai1i Singh
Vt.'11katara1na
AyyarJ.
330
SUPREME COURT REPORTS
[1956]
of Wards executed a deed modifying the terms of the
deed dated 26-3-1915.
Under this deed, the period
of license was extended in the first instance from 6
to 12 years; that is to say, it would expire on 26-3-1927
instead of on 26-3-1921 as originally fixed. It was
then provided that if within this extended period the
licensee took a lease or leases of mines of the extent
of at least 10,000 bighas, then the period of the
license would be extended by a second term of 12
years; i.e., up to 26-3-1939. There was a further provision that if before 26-3-1939 the licensees took
leases of at least 20,000 bighas, the period of the
license would be extended by another term of 12
years, i.e., up to 26-3-1951.
While under the prospecting license dated 26-3-1915 a minimum ground
rent of Rs. 8,000 was payable from the second year,
under the deed dated 23-11-1917 a minimum ground
rent of Rs. 50,000 per annum at Rs. 5 per bigha on
the covenanted number of 10,000 bighas was payable
from the seventh to the twelfth year. These are the
salient features of the license as revised by the
document dated 23-ll-1917.
Raja Lakshmina.rain Singh, the ward, became a
major on 6-4-1919, and died shortly thereafter on
10-4-1919 leaving him surviving a minor son, Raja
Kamakshya Narain Singh, the main respondent in
these appeals. The Court of Wards accordingly continued in management of the estate on behalf of the
Raja until 10-8-1937, when he became a major. On
14-7-1920, the appellant Company was registered
under the provisions of the Indian Companies Act,
and it took over the interests of Messrs Bird & Co.,
under the license dated 26-3-1915 as modified by the
deed of variation dated 23-11-1917. In pursuance
of these deeds, the Company took six leases covering
in all an area of 17,539 bighas on divers dates between 17-7-1922 and 17-7-1933. Under the terms of
the deed dated 23-ll-1917 the appellant would be
entitled to extension of the licence from 26-3-1939
for the third period of 12 years only if it had taken
lease of at least 20,000 bighas before 26-3-1939.
Accordingly, it applied for and obtained three leases
S.C.R.
SUPREME COURT REPORTS
331
on 2-8-1937 covering an area of 2,461 bighas, thus
making up along with the six leases mentioned above,
the minimum area of 20,000 bighas.
There is one more deed to which reference must
now be made. Clause 6 of the deed dated 23-11-1917
provides that the minimum royalty on areas in excess
of 10,000 bighas taken on lease would not be payable
till 26-3-1939. Thereafter, the appellant would under
this clause become liable to pay a minimum royalty
for an area in excess of 10,000 bighas. The appellant
applied to modify this term by postponing the date
of payment by a further period of 12 years. This
proposal was accepted by the Court of Wards, and
on 1-6-1937 a deed was executed providing in modification of clause 6, as it stood in the deed dated
23-11-1917, that the minimum royalty for the areas
in excess of 10,000 bighas was not to become payable
by the company until railway facilities for transport
of the coal from the mouth of the pit were available
or from 26-3-1951, whichever happened earlier. These
are the three transactions, which form the subjectma tter of this litigation.
On 10-8-1937 the Raja became, as already stated,
a major, and assumed management of the estate. On
9-3-1939 he sent a notice to the appellant repudiating
the license dated 26-3-1915 and the two deeds of variation dated 23-11-1917 and 1-6-1937 as not binding on
him. The appellant in turn sent a notice on 14-5-1940
calling upon the Raja to execute a lease in respect of
250 bighas in accordance with the deeds dated
26-3-1915, 23-11-1917 and 1-6-1937, and followed it
up by instituting on 8-6-1940 Title Suit No. 28 of
1940 in the court of the Subordinate Judge of Hazaribagh for compelling specific performance thereof. On
9-8-1940 the Raja filed Title Suit No. 82of1940 in
the Sub-Court, Hazaribagh, and therein, he pleaded
that the deed dated 26-3-1915 was void, because the
Court of Wards had no power to grant a prospecting
license and also because it had acted with gross negligence in granting the same; and that the deeds dated
23-11-1917 and 1-6-1937 were bad, because there was
no sanction therefor as required by section 18 of the
1956
Karanpura
Development Co.,
Ud.
v.
Raja Kamakshya
Narain Singh
Venkatarama
Ayyarj.
1956
f{aranjiura
Development Co.,
Ltd.
v.
Raja Kamakshya
Narain Singh
Vtnkataratua
AyyarJ.
332
SUPREME COURT REPORTS
[1956)
Bengal Court of Wards Act IX of 1879, hereinafter
referred to as the Act, and also because they were not
for the benefit of the estate. He accordingly prayed
for a declaration that the three deeds aforesaid were
void, and for possession of the properties comprised in
the leases, with mesne profits, past and future.
Both these suits, which were really cross-actions
involving the determination of the same points, were
heard together by the Subordinate Judge of Hazaribagh, and by his judgment dated 30-4-1943 he held
that the deeds dated 26-3-1915 and 23-11-1917 were
intra vires the powers of the Court of Wards, that
they were beneficial to the estate, and were therefore
valid, and he accordingly upheld the six leases granted pursuant to those deeds. He, however, held that
the deed dated 1-6-1937 was not valid, both because
the Court of Wards had not sanctioned it and also
because it was not for the benefit of the estate. In
view of this finding, he held that the clause in the
lease deeds dated 2-8-1937 based on the deed dated
1-6-1937 postponing the payment of minimum royalty
was bad, but that the leases themselves were otherwise valid. As a result of these findings, he granted a
decree for specific performance in Title Suit No. 28
of 1940 and in Title Suit No. 82 of 1940 he awarded
reliefs consequential on the invalidity of the deed
dated 1-6-1937.
Against this judgment, the Raja preferred appeals
to the High Court of Patna, F. A. No. 125 of 1943
against the decree in Title Suit No. 82 of 1940 and
F.A. No. 127 of 1943 against that in Title Suit No. 28
of 1940. The company also filed cross-objections
in F.A. No. 125 of 1943. The learned Judges agreed
with the Subordinate Judge that the Court of Wards
was competent to grant a prospecting license, but
they were of opinion that it had not applied its mind
to certain important aspects of the transaction, that
the interests of the ward had suffered in consequence,
and that the deed dated 26-3-1915 was therefore not
valid. Dealing next with the deed dated 23-11-1917,
they held that it was void, because the Court of
Wards had not sanctioned it. They also held that it
-
S.C.R.
SUPREME COURT REPORTS
333
was not binding on the Raja, firstly because its terms
were not beneficial to him, secondly because it had been
obtained by Messrs Bird and Co., on false representation, and thirdly because Mr. MacGregor, the then
manager of the Court of Wards, was acting in his
own interests and adversely to those of the minor
ward, and the Court of Wards had been misled by him
into entering into the transaction. For these reasons,
the learned Judges held
that the deed dated
23-11-1937 was void and inoperative as against the
ward. Then, as regards the deed dated 1-6-1937, the
learned Judges agreed with the Subordinate Judge
that it was invalid on both the grounds given by him.
In the result, in Title Suit No. 82 of 1940 a declaration was made that the deeds dated 26·3-1915,
26-ll-1917 and 1-6-1937 as well as the leases granted
pursuant thereto were void and a decree passed in
favour of the Raja for possession of the demised properties with mesne profits, past and future. Title Suit
No. 28 of 1940 instituted by the appellant for specific performance and the cross-objections filed by it in
F.A. No. 125 of 1943 were dismissed.
Against this
judgment, the present appeals have been preferred
by the company, C.A. No. 191 of 1953 being directed
against the decree in F.A. No. 127 of 1943 and C.A.
No. 192 of 1953 against the decree in F.A. No. 125 of
1943. The first respondent in these appeals is the
Raja of Ramgarh, the other respondents being transferees from him, and he will be referred to in this
judgment as the respondent.
Though the questions that were agitated by the
parties in the courts below ranged over a wide area,
many of them have been abandoned in the argument
before us, and the scope of the controversy in these
appeals has been considerably narrowed down. Thus,
the appellant does not challenge the correctness of
the decision of the courts below that the deed dated
1-6-1937 is not binding on the estate.
Mr. Atul
Chandra Gupta, learned counsel for the Raja, has
limited his attack on the deed dated 26-3-1915 to the
ground that it was not for the benefit of the ward,
because the clause therein relating to the payment of
H
1956
Karanpura
Development Co.,
Ud.
v.
Raja Kamakshya
Narain Singh
Venkatarama
AyyarJ.
1956
Karanj>Ura
Deoeloj>ment Co.,
Ud,
v.
Raja Kamakshya
Narain Singh
Venkatara1na
AyyarJ.
334
SUPREME COURT REPORTS
[1956]
cess, or more compendiously, the cess clause was less
advantageous to him than the corresponding clause in
the Bokaro license, and the Court of Wards executed
the deed in question without bestowing any thought
to it. He attacked the deed dated 23-II-1917 on the
following grounds: (1) The Court. of Wards had no
power to enter into a transaction, which had the
effect of preventing the ward from dealing with his
estate for over a period of 32 years after he attained
majority, and which bound him to grant leases down
to the year 1951 at the rates of salami and royalties
fixed in the year 1915.
(2) In granting the deed
dated 23-ll-1917, the Court of Wards considered only
the benefit of Messrs Bird and Co., and not of the
ward.
(3) The deed is void, because no sanction had
been given to it by the Court of Wards, as required
by section 18 of the Act.
Before dealing with these contentions on their
merits, it is necessary to consider the question which
was discussed at the Bar as to the grounds on
which the deeds dated 26-3-1915 and 23-11-1917 are
open to attack in these proceedings.
A transaction
entered into by a guardian on behalf of a minor will
be valid and binding on the latter, only if it is for
proved necessity or benefit.
When a transaction is
entered into by a Court of Wards on behalf of the
ward, is its validity to be judged on the same considerations, and is it open to the ward on attaining
majority to challenge it on the ground that it was
not beneficial to him? The Court of Wards is not in
the same position as a guardian of a minor.
It is a
statutory body, and its powers are those which are
conferred on it by the statute, which creates it. Section 14 of the Act provides that the Court of Wards
may, acting through its manager, do all such things
requisite for the proper care and management of the
property as the proprietor of such property might
do, if not disqualified. Section 18 enacts that:
"The Court may sanction the giving of leases or
farms of the whole or part of any property under its
charge, and may direct the mortgage or sale of any
part of such property, and may direct the doing of all
S.C.R.
SUPREME COURT REPORTS
335
such other acts as it may judge to be most for the
benefit of the property and the advantage of the
ward".
It was in exercise of the power conferred by this sec1956
Karanpura
De<Jelopmenl Co.,
Ua.
tion that the Court of Wards executed the two imv.
pugned deeds dated 26-3-1915 and 23-11-1917. Now, RajaKamakshya
what is the true scope of section 18? Is the exercise
Narain Singh
of the power conferred by that section conditioned
on the act being in fact for the benefit of the ward,
or is it sufficient that the Court of Wards judges it to
be for the benefit of the property and the advantage
of the ward?
The contention of Mr. Gupta for the respondent is
that the words "as it may judge" do not signify that
the judgment could be made without reasonable
grounds therefor, that they should be construed as
meaning "as it may on reasonable grounds judge",
and that it is therefore open to the Court to consider
whether the decision of the Court of Wards was a
reasonable one to come to, and that if it came to the
conclusion that it was not, then to hold that it fell outside the ambit of the authority conferred by section 18.
In support of this contention, he relied on certain observations in Nakkuda Ali v. M. F. De. S.Jayaratne(1).
There, the Board was considering the meaning of the
words "where the Controller has reasonable grounds
to believe" occurring in a Regulation of Ceylon.
In
an application for certiorari to quash an order of the
Controller made under this enactment, it was argued
for him that the words of the Regulation left the
matter to his subjective satisfaction, that his decision
therefore was not liable to be questioned on the
ground that, in fact, there existed no reasonable
ground therefor; and the decision in Liversidge v. Sir
John Anderson(2)
was relied on as establishing that
position. In negativing this contention, Lord Rad-
. cliffe observed that the words "where the Controller
had reasonable grounds to believe" might mean either
"where it is made out to his subjective satisfaction"
or "where there are reasonable grounds on which he
could believe", and that whether the words were
\1) [1951] A.C. 66, 76.
(2) [1942] A.C. 206.
Venkatarama
AyyarJ.
1956
Karanpura
De'PeloJment Co,1
Ud.
v.
Raja Kamaksh,a
Narain Singh
Venkatarama
AyyarJ.
336
SUPREME COURT REPORTS
[1956]
used in the one sense or the other in the enactment
in question must depend upon the context. The question then is ultimately one of construction of the
words of the particular statute.
Now, what do the words "as it may judge" in section 18 mean? Do they confer on the Court of Wards
a power to be exercised if the act is, in its judgment,
for the benefit of the property or the advantage of
the ward, or do they confer a power to be exercised
only if, in fact, the act is for the benefit of the property or the advantage of the ward? In Liversidge v.
SirJohn Anderson(1), Lord Atkin who held that the
words of Regulation 18-B of the Defence Regulations
1939 that "if the Secretary of State has reasonable
cause to believe" meant "if, in fact, there was reasonable cause for the belief", discussed what words were
susceptible of importing an objective standard as contrasted with subjective satisfaction, and observed:
"It is surely incapable of dispute that the words
'if A has X' constitute a condition the essence of
which is the existence of X and the having of it by A
.... And the words do not mean and cannot mean 'if
A thinks that he has'. 'If A has a broken ankle' does
not mean and cannot mean 'if A thinks that he has
a broken ankle'.
'If A has a right of way' does not
mean and cannot mean 'if A thinks that he has a
right of way'. 'Reasonable cause' for an action or a
belief is just as much a positive fact capable of determination by a third party as is a broken ankle or a
legal right".
Examining the language of section 18 in the light of
these observations, we are unable to construe the
words "as it may judge most for the benefit of. the
property and the advantage of the ward" as equivalent to "as may be for the benefit of the property and
the advantage of the ward" or "as might be judged
to be most for the benefit of the property and the advantage of the ward". The statute confides in clear
and unambiguous terms the authority to judge whether the act is beneficial to the estate, to the Court
of Wards and not to any outRide authority.
(1) (1942] A.O. 206.
S.C.R.
SUPREME COURT REPORTS
337
That being the true scope of the power conferred
by section 18, what are the grounds on which the
exercise of such a power could be impugned in a court
of law?. It can be attacked on the ground that the
Court of Wards did not act bona fide and in the interests of the ward, and that its action amounted to
a fraud on the power. It can also be attacked on the
ground that the Court of Wards did not, in fact,
apply its mind to the question whether the act was
for the benefit of the property or the advantage of
the ward, and that though it purported to exercise the
power under section 18, it did not, iri fact, come to a
judgment as required by the section. But where it
bas applied its mind and given thought to the question whether the act is for the benefit of the property
or the advantage of the ward and comes to an honest
judgment in the matter, its decision is not liable to
be questioned on the ground that it was erroneous
on the merits, or that it was reached without considering some aspects which ought to have been considered, unless the failure to consider them is of such
a character as to amount to there being no exercise
of judgment at all.
The question as to the limits within which courts
could interfere with the exercise of a power of the
nature now in question was considered at some length
in Allcroft v. Lord Bishop of London: Lighton v. Lord
Bishop of London(1).
There, the statute provided for
certain action being taken "unless the Bishop shall
be of opinion that proceedings shall not be taken".
Acting under this section the Bishop of London decided not to take proceedings, and the correctness of
this decision was challenged in an application for
mandamus. It was held by the House of Lords that
the Bishop having acted within his jurisdiction and
exercised his judgment honestly, his decision was
not liable to be questioned on the ground that it was
erroneous or that he had not considered all the aspects of the matter. The following observations of
Lord Bramwell may be quoted:
"Then it was said that there was something' he
(1) [1891] A.O. 666.
7956
Kat'anjJura
DeoelojJment Co.,
Ud.
v.
Raja [{ amakshya
Narain Singh
Venkatarama
Ayyar J,
1956
l<aranpura
Development Co.,
Ud.
v.
Raja J{amakshya
Narain Singh
Venkatarama
Ayyar J.
338
SUPREME COURT REPORTS
[1956)
had considered which he ought not to have considered, and something he had not considered which
he ought, to have, and so he had not considered the
whole circumstances and them only. It seems to me
that this is equivalent to saying that his opinion can
be reviewed. I am clearly of opinion it cannot be. If
a man is to form an opinion, and his opinion is to
govern, he must form it himself on such reasons and
grounds as seem good to him".
And Lord Herschell observed:
"It is impossible to read the bishop's statement
without seeing that he has honestly considered what
appeared to him to be all the circumstances bearing
on the question whether the proceedings should be
allowed to go on. That being so, it is not for your
Lordships, on this application for a mandamus; to
consider whether the bishop's reasons are good or bad;
whether they ought or ought not to have led him to
form the opinion he did".
Bearing these principles in mind, the question to
be considered is whether the Raja has, the burden
thereof being on him, established any grounds on
which the deeds entered into by the Court of Wards
on 26-3-1915 and 23-11-1917 could be held to be outside the power conferred on it under section 18. That
leads us to a consideration of the four contentions
on which Mr. Atul Chandra Gupta attacked the two
deeds aforesaid as not binding on the estate. The first
is directed against thedeeddated26-3-1915, the point
of the attack being that the clause relating to the
payment of cess in that deed is less advantageous to
the ward than the corresponding clause in tbe Bokaro
license dated 26-11-1907.
To appreciate this contention, it must be stated that when Messrs Bird and
Co., applied to the Court of Wards for a prospecting
license, negotiations were carried on on the understanding that the Bokaro license granted by Raja
Ramnarain Singh was to be the basis for the contract,
subject to any variation on which the parties might
agree. Pursuant to this understanding, there wa.s a
discussion of the terms of the license between the
representatives of Messrs Bird and Co., and the
S.C.R.
SUPREME COURT REPORTS
339
officers of the Court of Wards on the 1st and 2nd
April 1914. Exhibit 130(i) is a record of those discussions in the handwriting of the Deputy Commissioner, Mr. Lister. On 11-4-1914 Messrs Bird and Co.
were informed that the Board had generally approved
of the proposal, and there was a further communication to them on the 17th ..April 1914 that "formal
sanction cannot be given until the terms are embodied
in a formal document." On 12-5-1914 Messrs Bird
and Co. sent a draft agreement for the approval of
the Court of Wards, and on that, there was further
correspondence and personal discussion, and ultimately, the Board gave its final sanction on 29-7-1914,
and the deed which was executed by the manager on
26-3-1915 is in accordance with the draft as approved.
This deed, however, differs from the Bokaro license
in one respect. Schedule A to that license contains
a draft of the mining lease to be granted in pursuance
thereto, and one of the covenants contained therein
is that the lessee "will also pay all Government and
other cesses, taxes and other imposition which now
are or may at any time hereafter during the continuance of this lease be assessed or imposed on the
said lands." In the deed dated 26-3-1915 the corresponding clause runs as follows:
"The lessee covenants to bear, pay and discharge
all existing and future Government and other rates,
cesses, taxes, assessments, duties, impositions, outgoings and burdens whatsoever imposed or charged
upon the demised premises ........ which may be payable
by the occupier or lessees thereof."
Thus, while under the Bokaro license the lessee had
to pay all the cesses imposed on the land, under the
deed dated 26-3-1915 the lessees had to pay only the
cesses payable by the occupier or lessee of the property.
Now, the contention of the respondent is that as
it was the intention of both parties that Messrs Bird
and Co. should have a license on the same terms as
were contained in the Bokaro license unless otherwise
agreed, and as Exhibit 130(i) shows that there was
no special agreement with reference to this matter,
1956
[{ ara1'pura
Development Co.,
Ltd.
v.
Raja: J{amakshya
Narain Singh
Venkatara1na
Ayyar J.
340
SUPREME COURT REPORTS
(1956]
1956
the Court of Wards must be held not to have applied
its mind to the cess clause when it agreed to its incluKaranJura
d
Developmrnt co., sion in its present form in the dee of 1915, and that
u.i.
as it related to a matter of substance going to the
v.
root of the transaction, the deed was in its entirety
Raja Kamakshya void. The basic notion on which this contention rests
Narain Sing/I
is that the cess clause in the deed dated 26-3-1915 is '
Vmkatarama
as compared with that in the Bokaro license, disAyyar J.
tinctly disadvantageous to the ward. But this, however, is controverted by the appellant, which contends
that the difference between the two deeds with reference to the cess clause is one of form rather than of
substance.
To appreciate this contention, it is necessary to
refer to the provisions of the Bengal Cess Act IX of
1880. Under sections 80 and 81 of that Act, where
there is a lease of a mine, the cess payable thereon is
to be borne equally by the owner and the lessee. The
Government, however, is entitled to realise the whole
of it from either of them, in which case the person
who pays the cess has a right to recover from the
other his share of it. The cess clause of the 1915
license is in accordance with the rights of the parties
as declared in section 81 of the Act.
The contention
of Mr. Gupta is that it was open to the parties to
contract themselves out of their rights under section
81, and he relied on the decisions in Ashutosh Dhar v.
Amir Mollah(1) and Mahanand Sahai v. Mussmat
Sayedunissa Bibi(") in support of this position. There,
the question related to section 41 of the Act; but it
is argued that the principle underlying those decisions is equally applicable to section 81 and that, in
our opinion, is correct. The next step in the argument
is that the cess clause in the Bokaro license embodies
a contract modifying the rights declared by section
81 of the Act by throwing the liability for the cess
wholly on the tenant; but that the clause in the 1915
deed restricts it to the obligation as declared in section 81 and has therein resulted in serious disadvantage to the proprietor. For the appellant, it is
contended that the clause in the Bokaro license could
(1) (1900] 3 Cal. u J. 337.
(2) (1907] 12 C.W.N. lM.
'
i
S.C.R.
SUPREME COURT REPORTS
341
not be construed as modifying the rights declared
under section 81, because it merely provides for payment by the lessee of the entire cess, which must
mean that they had to pay it in the first instance and
then reimburse themselves from the proprietor, and
that that was how the clause was understood by the
Court of Wards when it was in management. If that
was the true scope of the cess clause in the Bokaro
license, it cannot be said that the cess clause in the
deed of 26-3-1915 differs in substance from it.
On the question as to the interpretation to be put
on the cess clause in the Bokaro license, the principle
applicable thereto was thus stated in Mahanand
Sakai v. Mussmat Sayedunissa Bibi(1):
"It is indisputable that when an exemption is
claimed from statutory liability, the contract under
which exemption is claimed, must be strictly construed
against the claimant and it must appear from its
terms, beyond the possibility of any dispute, that the
parties intended to vary the liability as imposed by
the statute. This rule is especially applicable where
exemption is claimed from taxation imposed by the
State".
It was accordingly held that no contract to the contrary could be spelt from the clause providing generally for payment of cess, and this view has been
adopted in Balwantrao Naik v. Biswanath Missir( 2)
and Rarnkumari Devi v. Hari Das(3). The contention
of the appellant, therefore, that the cess clause in the
Bokaro license cannot be construed as a clear expression of an intention on the part of the parties to contract themselves out of the statute is not without
force. It is, however, unnecessary to decide this
question, as assuming that the cess clause in the deed
dated 26-3-1915 is less advantageous to the ward than
that in the Bokaro license, the respondent, has, before
he can succeed on this contention, still to establish
that the Court of Wards did not apply its mind to
this matter. And what is the evidence which he has
adduced to establish it? In the pleadings, he raised
(1) (1907] 12 C W.N. 154.
. (21 A.I.R. 1945 Patna 417.
t3) A.LR. 1952 Patna 239.
45
1956
Karanj>ura
Deve/oj>mcnt Co.,
Ltd.
v.
Raja Kamakshya
Naraiu Si11gh
Venkatarama
Ayyar J.
1956
Karanj>ura
DevcloPtnent Co.,
Ud.
v.
Raja Kantakshya
Narain Singh
Venkatarania
Ayyar J.
342
SUPREME COURT REPORTS
(1956]
no such question. At a late stage, however, he applied to ame.nd the plaint so as to raise the contenttion that the deed dated 26-3-1915 was not in accordance with the Bokaro license, but that application
was
dismissed by the Subordinate
Judge on
24-12-1942. It was contended for the appellant that
the question now sought to be argued should not be
allowed to be raised at this stage as it is purely one
of fact, especially
in view of the order <lated
24-12-1942 refusing amendment of the plaint. But it
is unnecessary to say more on this objection, as we
are satisfied on the evidence on record that the Court
of Wards did apply its mind to the cess clause and
did adopt it after giving thought to it.
The clause
in its present form appears in the draft prepared by
Messrs Bird and Co. and sent to the Court of Wards
for approval on 12-5-1914.