Karanpur HC 29 Pat 19 AIR 1950 Pat 134

SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd.
Page 1 Wednesday, December 07, 2022

Printed For: vijay br
SCC Online Web Edition: http://www.scconline.com
© 2022 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
1949 SCC OnLine Pat 3 : ILR (1950) 29 Pat 19 : AIR 1950 Pat 134
In the High Court of Patna

Appellate Civil
(BEFORE SINHA AND MAHABIR PRASAD, JJ.)
R.B.K.N. Singh
Versus
Karanpura Development Co.*
Appeals from Original Decree nos. 125 and 127 of 1943, from a decision of Mr.
Shiva Pujan Rai, Additional Subordinate Judge of Hazaribagh
Appeals from Original Decree nos. 125 and 127 of 1943
Decided on July 26, 1949, July 27, 1949, August 1, 1949, August 2, 1949, August
3, 1949, August 4, 1949, August 8, 1949, August 9, 1949, August 10, 1949,
August 11, 1949, August 12, 1949, August 17, 1949, August 18, 1949, August
19, 1949 and October 27, 1949
Bengal Court of Wards Ad, 1879 (Bengal Act IX of 1879), section 18 scope of whether
debars Court of Wards from entering into a contract to lease in future on behalf of the ward
— whether entitles civil courts to question such transaction.
Page: 20
Although it may be that a guardian of a minor or a trustee is not entitled under the common law
to bind a minor or a cestui que trust by a personal contract to lease in future or to enter into a
transaction like that of a prospecting license with an agreement to lease, the Court of Wards is
empowered under the concluding words of section 18 of the Bengal Court of Wards Act, 1879, to
enter into such a contract provided it judges that to do so is most for the benefit of the property and
the advantage of the ward.
Held :
That the prospecting license in the case was executed by the Court of Wards in excess of its
powers as it was done regardless of the advantage of the ward and benefit to his property. No
thought was taken as to whether the terms regarding the rates of salami, royalty and taxes were
beneficial to the ward.
Held further :
That the prospecting license was therefore void and inoperative and that the civil court had
complete jurisdiction to pass a decree in ejectment against the lessee.
Rudradas Chakravarty v. Kumar Kamakhya Narain Singh(1), relied on.
Srikakulam Subrahmanyam v. Kurra Subba Rao(2), Loknath Prasad Singh v. Wahib Hussain(3) and
Rosenbaum v. Belson(4), referred to.
First Appeal no. 125 by the plaintiff. Cross-objection by the defendant company.
First Appeal no. 127 by the defendant.
The facts of the cases material to this report are set out in the judgment of the Court.
P.R. Das, L.K. Jha, S.P. Singh, K.B. Jha, Harinandan Singh, K.B.N. Singh, Angad Ojha, Bishun Kumar
Singh and Balbhadra Prasad Singh, for the Raja.
Sir S.M. Bose, S.K. Mitra, K.C. Mukherji, U.N. Sinha, Bimal Bhusan Sen, R.K. Bagchi, Government
Pleader and A.K. Mitter, for the Company.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
Page: 21
The Judgment of the Court was delivered by

SINHA and MAHABIR PRASAD, JJ.:— These two appeals arise out of two suits
decided by one judgment of the Additional Subordinate Judge of Hazaribagh, dated
the 30th of April, 1943. They raise identical, questions regarding the validity of
transactions entered into by the Court of Wards on behalf of Raja Kamakshya Narain
Singh Bahadur of Ramgarh (who will hereafter be called the appellant Raja) with
Messers. Bird and Company on behalf of the Karanpura Development Company,
Limited (who will: hereafter be called the respondent Company) evidenced by a
prospecting license in respect of extensive coal lands lying within the estate of the
appellant Raja accompanied by an agreement to lease, dated the 26th of March, 1915,
and two subsequent deeds, dated the 23rd of November, 1917, and the 1st of June,
1937, and a number of leases granted to the respondent Company, in pursuance of
the prospecting license as varied by the deeds of variation, just mentioned.
First Appeal no. 125 of 1943 arises out of suit no. 82 of 1940 by the appellant Raja
against the respondent Company for a declaration that the transactions evidenced by
the deeds, just mentioned, were void and inoperative in law, and for possession of the
lands covered by them, as also for mesne profits to the tune of about two crores of
rupees as being the price of coal extracted by the lessees of the respondent Company
during the period that they have been in possession of the lands under the leases
granted in pursuance of the impugned prospecting license.
The learned Subordinate Judge held that the deed of prospecting license with the
agreement to lease and the deed of variation dated the 23rd of November, 1917, were
valid transactions binding on the appellant Raja. He, however, held that the deed of
variation dated the 1st of June, 1937, was void and inoperative in law. He accordingly
dismissed the suit except with regard to the deed of variation of 1937. The
Page: 22
Raja, therefore, has appealed to this Court against the part of the decree dismissing
his suit and the I Company has filed a cross-objection to the part of the decree holding
that the deed of variation of 1937 was void and inoperative.
First Appeal no. 127 of 1943 arises out of suit no. 28 of 1940 instituted by the
respondent Company against the appellant Raja for a declaration that the transactions
covered by the deeds in question were valid and for specific performance of the
agreement to lease contained in the deed of prospecting license dated the 26th of
March, 1915, as varied by the deeds of 1917 and 1937. The Subordinate Judge
decreed the suit of the respondent Company so far as it related to the prospecting
license of 1915 and the deed of variation of 1917 but dismissed the suit in respect of
the deed of variation of 1937. He ordered that the Company's possession over the
leasehold properties be confirmed and the Raja be ordered to execute, register and
perfect in favour of the Company a lease in respect of 250 bighas of land as prayed for
in the plaint. He has also issued an injunction restraining the Raja from interfering
with the Company in exercise of its rights under the prospecting license of 1915 and
the variation deed of 1917. The Raja has appealed.
The main question, which arises for consideration in these appeals is, whether the
Court of Wards had power to enter into a transaction like that of a prospecting license
-----------------------------------------------------------------------------------------------------------------------------------------------------------
with an agreement to lease, and, if so, whether it acted in so doing and in varying its
terms from time to time within the ambit of its powers as defined in the Court of
Wards Act (Act IX B.C. of 1879 to be referred to hereafter as the Act). It is conceded
that if it is held that the impugned deeds were executed by the Court of Wards in
excess of its powers under the Act, they will be void and inoperative in law, and that
the respondent Company will have no title to the lands in their possession and will be
mere trespassers and liable to be ejected.
Page: 23
The facts leading up to the execution of the deed, of prospecting license of 1915 are
these.
* * *
This prospecting license accompanied by an agreement to grant leases was for a
period of six years in respect of coal-lands comprised in 312 villages known as the
Karanpura Coalfields. It may be stated that in Ramgarh Raj there are large areas of
coal bearing lands. These lands have been divided by the Geological Survey of the
district into three broad divisions: The Bokaro Jharia Coalfields, the Bokaro Ramgarh
Coalfields and the Karanpura Coalfields. The prospecting license, as already stated
covered the last of them, the Karanpura Coalfields.
Under the terms of this license, Messrs Bird and Company had to take up on mining
lease in one lot or in parcels either at one time or from time to time within a period of
six years an aggregate area of not less than 10,000 bighas, but the Company was at
liberty to take up such further area in excess of 10,000 bighas as it might think fit.
Further, under the terms of the indenture upon the execution of every such lease the
lessee was to pay salami at the rate of Rs. 40 per bigha and a minimum royalty at the
rate of Rs. 5 per bigha, provided that if at the time of taking the lease no railway
connection or railway facilities were available to despatch from the mouth of the pit
the coal won from the mines, no salami or premium was to be payable in respect of
such coal mines or lands until such time as railway connection and railway facilities
should be available. Simultaneously with the execution of the prospecting license,
Messrs Bird and Company advanced, as already stated, a sum of Rs. 9 lakhs. As
security for the payment of this sum the Court of Wards, through the Manager,
mortgaged to Messrs Bird and Company the zamindary interest in 312 villages covered
by the prospecting license. The terms regarding the period for which the
Page: 24
license was to remain in operation and regarding minimum royalty in respect of any
area or areas in excess of 10,000 bighas were subsequently varied by two deeds,
which deeds are also impugned and will be dealt with later. It may be stated that no
mining leases were taken by the respondent Company during the period of six years
from the date of the prospecting 0 license. The terms on which the leases were to be
granted in persuance of the agreement to lease as included in the prospecting license
were substantially those as contained in the draft lease incorporated in Bokaro
Ramgarh prospecting license, except the cess clause which, instead of making the
lessee liable to pay all impositions by way of cess and taxes made them liable to pay
only their own share of cesses and taxes, and the lessor, the appellant Raja, liable to
-----------------------------------------------------------------------------------------------------------------------------------------------------------
pay all such cesses and other taxes as may be imposed upon him in respect of the
leasehold property.
Before the grounds on which this deed is attacked on behalf of the appellant Raja
are stated and dealt with, it will perhaps be better to give an idea of what this
Karanpura Coalfield is like.
The Karanpura Coalfields are divided into two portions known as the North
Karanpura Coalfield and the South Karanpura Coalfield. The south portion of the field
is 77 square miles while the north portion which is much larger in area is 473 square
miles. The total area of the entire Karanpura Coalfields is 550 square miles. Out of the
entire fields, Ramgarh Estate has got 350 square miles in North Karanpura and 65
square miles in South Karanpura, the total being 415 square miles. Dr. Jowett in his
report (Ext. 153-K) states at page 144 that in these fields some first class coalseams
had been discovered and a greater number of second class seams, which were
estimated by him to be between 5,000 and 10,000 million of tons at least without
considering any coal below 2,000 feet from the surface. It appears that other coalfields
like Raniganj and Jharia were opened in 1830 or 1840 and 1890 respectively and that
both of them have been thoroughly explored and developed. Mr. Russell,
Page: 25
the then Deputy Commissioner, Hazaribagh, was perfectly justified in stating in the
year 1934 (Ext. 95) that the total deposits of Ramgarh Estate would be one of the
most important coalfields in India. Dr. Jowett described Karanpura as one of the
principal coalfields of the country. There can be no doubt, therefore, that the
properties which are the subject-matter of the present suits are very valuable and Mr.
Roberts, partner of Messrs Bird and Company could not but say in his evidence that
the prospecting license held by the respondent Company was a valuable concession.
Mr. Das, for the appellant Raja, attacks this deed, in the first place, on the ground
that the prospecting license in question also contained a contract to lease and a draft
of such a lease, which the Court of Wards had to adopt if the respondent Company
applied for a lease within the next six years, and the Court of Wards which was in the
position of a guardian of a minor had no power to bind the ward by a contract to lease
in future. He contends that it is settled law that no guardian can bind a ward or the
estate of a ward by a contract to sell or lease. Reliance is placed on the case of Mir
Sarwarjan v. Fakhruddin(1) for the proposition that “it is not within the competence of
a manager of a minor's estate or within the competence of a guardian of a minor to
bind the minor or the minor's estate by a contract for the purchase of immoveable
property”. It was, however, conceded by Mr. Das that if power to enter into a contract
is conferred by a statute, this rule of common law is abrogated and the guardian will
be competent to bind the minor or his estate by a contract to sell or lease.
The question, therefore, is whether any of the provisions of the Court of Wards Act
confers a power on the Court of Wards to enter into such a contract.
Page: 26
None of the sections of the Court of Wards Act (Act IX B.C. of 1879) in specific terms
confer on the Court of Wards power to enter into an agreement to lease. Section 18 of
the Act provides:
-----------------------------------------------------------------------------------------------------------------------------------------------------------
“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 such other acts as it may judge to be most
for the benefit of the property and the advantage of the ward”.
Section 14 of the Act provides:
“Subject to the provisions of this Act the Court may, through its Manager, do all
such things requisite for the proper care and management of any property…as the
proprietor of any such property, if not disqualified, might do for its care and
management.”
Are these provisions wide enough to include by necessary implication the power to
enter into an agreement to lease? Mr. Das submits that they are not. The expression
“do all such things as the proprietor of any such property, if not disqualified, might do”
in section 14 cannot be said to confer such a power as to enter into a contract to give
leases in future; and cannot be said to be an act necessary for the care and
management of the property. Section 14, therefore, according to his submission, does
not even impliedly confer power on the Court of Wards to enter into an agreement to
lease. He next contended that the power to lease conferred by section 18 of the Act
did not include the power to contract to execute a lease. He cited a passage in
“Farewell on Power” (p. 394, 3rd edition): “If an Act of Parliament speaks of a lease, it
means lease and not an agreement to lease”. He also relied on the case of Seth
Hukumchand v. Raja Ran Bahadur Singh(1) where Sir Dawson Miller, C.J., after citing
Farewell on Power, held that the power conferred by section 17 of the Encumbered
Estates Act (Act VI of 1876) on the Manager to grant leases did not include the power
to enter into an executory contract to grant leases in future. The question whether the
Court of Wards Act empowered the Court to enter into an agreement for leases,
however, arose
Page: 27
in the case of Rudradas Chakravarty v. Kumar Kamakhya Narain Singh(1) (the

appellant Raja) and it was held by Kulwant Sahay, J. who delivered the judgment of
the Court that on a careful consideration of the provisions of the Court of Wards Act
the Court of Wards had power to enter into an agreement to grant a lease. The case of
Seth Hukumchand v. Raja Ran Bahadur Singh(2) was considered and distinguished. It
is pointed out by Mr. Das that the case of Seth Hukumchand(2) went up to the Privy
Council and the judgment of this Court was affirmed (51 I.A. 208 at pp. 216 and 219).
So far as the decision in the case of Rudradas Chakravarty(1) on the question at issue
is concerned, he rightly contends that it is obiter. This suit for specific performance of
a contract was dismissed on the other grounds. It was held in that case that there was
no concluded agreement, that there was no sanction by the Board, and that the
contract was incomplete as no date was fixed for the commencement of the lease. The
determination of the question as to whether the Court of Wards had the power to enter
into a contract to lease was not necessary for the decision of the case.
Looking, however, afresh at the question whether the Court of Wards Act empowers
the Court to enter into a contract of this description, it appears to us that the view
taken by Kulwant Sahay, J. in the case of Rudra Das(1) is the correct view. The
concluding words of section 18 of the Court of Wards Act:
“The Court 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.”
are wide enough to include within their ambit the power to enter into a contract
-----------------------------------------------------------------------------------------------------------------------------------------------------------
to lease. “Such other acts” it was contended by Mr. Das should be construed
Page: 28
ejusdem generis with “the giving of leases or farms” the words used in the first part of
the section. We are not inclined to accede to this contention. The section by its
concluding portion clearly empowers the Court to do all other acts, the only limitation
being that those acts must be, what the Court after applying its mind, judges as being
“most for the benefit of the property and the advantage of the ward”. In other words,
if the entering into a contract to lease is, in the circumstances of the case, judged by
the Court to be necessary to benefit the property and to confer advantage on the ward,
the Court will be acting within its power in entering into such a contract. Even
conceding to the contention that statutory power must be construed strictly and power
to lease does not include a power to contract to lease, there is no difficulty in
construing the last clause of section 18 as conferring upon the Court a power to enter
into an executory contract of this nature, if a situation arises which calls for the
exercise of such power for the benefit of the property and the advantage of the ward.
The test to be applied for the purpose of finding as to whether the Court has such a
power seems to be whether the contract to lease is one which the Court can be said to
have judged as being most for the benefit of the property and the advantage of the
ward.
It may also be added that the decision of their Lordships of the Judicial Committee
in the case of Mir Sarwarjan v. Fakhruddin Mahomed Choudhury(1) is not meant to be
of universal application. That was a case of a Muslim. The case of a Hindu may present
differentiating characteristics in so far as considerations of benefit to the minor may
easily be available to the other party who has entered into a contract with the minor's
guardian. The latest decision of their Lordships of the Judicial Committee in the case of
Srikakulam Subrahmanyam v. Kurra Subba Rao(2) may be referred to with advantage.
Page: 29
It may also be added that Mr. Das's contention that a power to sell does not include
the power to enter into a contract of sale is not sound. Apart from authority, it is
manifest that, if a person is authorized to sell another person's property, he is also
clothed with, the authority to enter into a contract of sale which invariably precedes a
sale. The observations of a Division Bench of this Court in the case of Loknath Prasad
Singh v. Wahib Hussain(1) support the same conclusion. The observations of Buckley,
J. in the case of Rosenbaum v. Belson(2) to the following effect are also in point:—
“I have been unable to find any case in which it has been held that instructions
given by A.B. to sell for him his house, and an agreement to pay so much on the
purchase price accepted, are not an authority to make a binding contract, including
an authority to sign an agreement. If a power of attorney were given to A.B. to sell
an estate, he would, in my opinion, be entitled, in the absence of anything
narrowing the meaning of the word “sell” not only to negotiate for but to sign an
agreement for sale; and that would give to the word “sell” the full meaning—
namely, to conclude a binding agreement for sale.”
It must, therefore, be held that Mr. Das's contention that the power to grant a lease
given by the Court of Wards to the Manager, or the higher officials of the Court of
Wards does not include the power to enter into a contract to lease is not sound.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
The question to be put and answered in each case is this. Did the Court of Wards in
the circumstances of the case judge that to enter into a contract to lease is most for
the benefit of the property and the advantage of the ward? If so, it must be held that
the final words of section 18 of the Court of Wards Act empower the Court to direct the
entering
Page: 30
into such a contract. On the other hand, if the Court; without taking thought and
exercising its judgment regarding the benefit of the estate and the advantage of the
ward sanctioned such a contract, it must be held that it acted in excess of the power
conferred by the statute, as also beyond the powers of a trustee or guardian of a
minor, and the transaction is void and not binding on the ward.
Tn this view of the matter, it seems unnecessary to refer to and to discuss at length
the authorities cited by Mr. Das for the proposition that cestui que trust cannot be
bound by a personal contract of the trustee or that the minor cannot be so bound by
the contract of his guardian—such as, cases of Zeebunnissa v. Mrs. H.B. Danagher(1) ,
Oceanic Stean Navigation Company v. Sutherberry(2) , Trevelyan on Minors p. 186,
Waghela Rajsanji v. Sheikh Masludin(3) , Indur Chunder Singh v. Radhakishore Ghose(4) .
Maharana Shri Ranmalsinghji v. Vadilal(5) and Fatima Bibi v. Debnauth Shah(6) .
The question, therefore, which falls to be decided is whether the transaction in
question was judged by the Court of Wards as being most for the benefit of the
property and the advantage of the ward, or was entered into without any thought
having been taken as to what was beneficial to the ward or his estate. The grounds on
which it is contended by Mr. Das for the appellant Raja that no such thought was
taken are: (1) The Court of Wards preferred Messrs Bird and Company to other
applicants without any judgment of their respective merits; (2) it did not apply its
mind to the question of the market rate of salami and royalty obtaining in 1915 when
the
Page: 31
transaction was entered into, and agreed to the rates prevalent in 1907; and (3) it
departed from the cess clause from that in Bokaro leases in that it did not make the
respondent Company liable for the whole of the cessee, taxes and other impositions on
the leasehold property.
To take up the first ground. Mr. P.R. Das for the appellant Raja contends that it
would appear that the transaction in question was not only, as a matter of fact, far
from being for the benefit of the property and the advantage of the ward, but that the
Court of Wards never applied its mind to this aspect of the matter. There is he
submits, ample material on the record to show that the Court of Wards' and its
officers' sole anxiety was that Messrs Bird and Company should be able to get this
concession in preference to others who had applied for this license. He points out that
it refused to consider the application for this concession of Messrs Andrew Yule and
Company and the offer of the Railway Board and did not utilise such offers as an
opportunity for getting the best terms out of the respondent Company.
* * *
It is submitted; on behalf of the appellant Raja that the evidence on the record
-----------------------------------------------------------------------------------------------------------------------------------------------------------
leaves no manner of doubt that Mr. MacGregor, the Manager, for his personal benefit
and the other officers of the Court of Wards who happened to be friends of the
partners of Messrs Bird and Company, were anxious that no other party except Messrs
Bird and Company should obtain this concession, and they never gave any thought to
the question as to whether in the interest of the Estate other parties should be made
interested in taking up this concession. The letter of the 16th of May, 1914, from the
Manager, Ramgarh Wards Estate, to Messrs Bird and Company [Ext. 125(e)] asking
the Company not to insist on any departure from the terms already arrived at as
proposals for
Page: 32
such modification would open the door to other parties who were already approaching
the Board and the Government with “gradually increasing offers”, it is pointed out,
clearly shows that offers better than that of Messrs Bird and Company were available
but that the Manager did not think it worth his while to give the competitors a chance
to outbid Messrs Bird and Company. The conclusion is irresistible, Mr. Das argues, that
in the matter of this transaction the Court of Wards was acting in the interest of
Messrs Bird and Company and was giving no thought to the benefit of the property
and the advantage of the ward.
Sir S.M. Bose on behalf of the respondent Company met those arguments by urging
that the offers made by different parties were judged on their merits and the
conclusion arrived at was that the terms offered by Messrs Bird and Company were
more advantageous to the estate than those offered by other parties including Messrs
Andrew Yule and Company. He submits that the grounds on which this conclusion was
based may not be good grounds and not only the reasoning employed for coming to
that conclusion but the conclusion itself may be erroneous, but that it cannot be said
that the Court of Wards did not apply its mind to the various offers and judge them on
their merits. He relied on Ext. 147 and contended that it was clear that before deciding
to give that concession to Messrs Bird and Company the Court of Wards applied its
mind to the terms offered by other parties, and even if the Court of Wards erred in
preferring Messrs Bird and Company to other parties, it is not open to this Court to
test objectively whether the license in question was in fact advantageous to the
estate. In the terms of section 18 of the Act, he submitted, it was left to the Court of
Wards to direct the doing of all other acts as it may judge most to be for the benefit of
the property and the advantage to the ward, and that the Civil Court can have no say
in the matter. On the evidence on the
Page: 33
record there is no escape from the conclusion, according to him, that the Court of
Wards, in entering into this particular transaction, with Messrs Bird and. Company did
what it considered to be the most for the advantage of the estate. In the
circumstances, he submitted, the Civil Court had no jurisdiction to sit in judgment
upon the decision of the Court of Wards and to declare that the transaction in question
was not for the benefit of the property and the advantage of the ward.
Sir S.M. Bose further pointed out that the Court of Wards, when it assumed charge
in the year 1913, was confronted with the problem of freeing the estate from financial
difficulties, that the most important resources which could be utilised for the purpose
-----------------------------------------------------------------------------------------------------------------------------------------------------------
were the mineral deposits of the estate, and that one of the essential conditions for
granting the concession was, therefore, an advance of Rs. 10 lakhs without, interest.
In considering the merits of other offers. Sir S.M. Bose submitted, it was considered
by the Court of Wards as to which of the parties was in a position to advance this large
amount of money at once. The application of Messrs Andrew Yule and Company, he
pointed out, could not be accepted because although they were willing to pay a
prospecting salami of Rs. 2 lakhs immediately regarding the advance of Rs. 10 lakhs,
they stated that they could do so at the end of three years if at the end of that period
they considered that it was worth their while to take up the concession. The estate was
in immediate necessity of the advance of that amount. The Court of Wards, in the
circumstances, had no alternative but to accept the offer of Messrs Bird and Company
who were prepared and did actually advance the amount needed to pay off the loans
of the estate. It is, therefore, not right to say, he submitted, that the Court of Yards
preferred Messrs Bird and Company to other applicants for any other reason than that
Page: 34
it judged that the offer of Bird and Company was distinctly more advantageous in so
far as it met the necessities of the estate at the time, and other terms on which they
agreed to take the concession were analogous to those on which the late Raja had
himself granted leases to Bokaro Ramgarh Coal Company. Besides, the Court of Wards
was entitled to take into consideration that by granting this concession to Messrs Bird
and Company it was able to put an end to the litigation regarding mineral rights in
which the estate was involved. Judging the situation at this distance of time, it may
perhaps appear that the Court of Wards should have been better advised not to enter
into this transaction with Messrs Bird and Company, but the question is, he argued,
whether at the time when this transaction was entered into, the Court of Wards
exercised its judgment and in its opinion the transaction was for the benefit of the
property and the advantage of the ward. The appellant Raja, he submitted, has not
alleged that the Court of Wards or its officers acted fraudulently in the matter of the
impugned transaction, and although Mr. P.R. Das in his submission went very near
making out a case of frand, but did not, in fact, do so, and he realised that on the
pleadings he was not entitled to do so. In the circumstances, he argued, the Court of
Wards must be held, to have acted bona fide in the matter of this transaction, and
even if it can be shown that the Court of Wards or its officers did not take that amount
of care as was required of them and were negligent, the transaction in question cannot
be held to be void; at best, it will be voidable which the appellant Raja could avoid if
his suit was within time. In this connection Sir S.N. Bose pointed out that the father of
the appellant Raja had attained majority before he died on the 10th of April, 1919,
and time against him had begun to run. In the circumstances, the suit, construed as a
suit for avoiding the transaction, he contended, is hopelessly barred by time.
Page: 35
In the state of evidence on the record, it is difficult to accede to the contention of

Mr. Das that the Court of Wards before accepting the offer of Messrs Bird and Company
did not apply its mind to the question of the respective merits of an the applications
for this concession. Ext. 147 clearly shows that such applications as were made for
-----------------------------------------------------------------------------------------------------------------------------------------------------------
taking up this concession were analysed by the Commissioner of the Chota Nagpur
Division, who after giving thought to their respective merits, came to the conclusion
that the terms which had been agreed upon by Messrs Bird and Company were
distinctly more advantageous than those offered by others. The offer of Messrs
Anderson Wright and Company who had obtained, a parwana from the late Raja on
payment of Rs. 25,000 that they would have the first refusal in the matter of this
concession was disposed of on the ground that the syndicate which Messrs Anderson
Wright and Company represented had definitely reported, their inability to pay the
very high initial salami and advance which were required for this concession. The
application of Messrs Andrew Yule and Company was disposed of on the assumption
that the proposals contained in that Company's letter of the 24th of April and the 2nd
of May, 1914, represented the highest term which that Company was willing to offer.
That Company had offered salami of Rs. 20 per bigha and although willing to pay a
salami for prospecting license of Rs. 2 lakhs, the advance of Rs. 10 lakhs was to be
made at the end of three years and that also only if the Company thought it worth
while to take up the concession. So far as the offer of the Railway Board was
concerned, the letter of the Bihar Government shows that they wanted certain
informations from the Board of Revenue before entertaining the offer of the Railway
Board. The Board of Revenue having already informally approved of the granting of
this concession to Messrs Bird and Company could not invite the Bihar Government to
Page: 36
start negotiation with the Railway Board. It appears that the Bihar Government having
been informed by the Board of Revenue in their letter of the 24th of July that the draft
deeds of the license and other documents in connection with this transaction had
already been approved unofficially, it did not take any steps because it thought it was
no use opening up fresh negotiations. Mr. Das has, however contended that none of
the reasons given for preferring the offer of Messrs Bird and Company was a, valid
reason. To say that this prospecting license was granted to Messrs Bird and Company
in consideration of the settlement of the litigation regarding mineral rights was a
myth. The question is not as to whether the Court of Wards should have agreed to
grant this license to Messrs Bird and Company for ending the litigation which was
bound to be decided in favour of the estate, but that the Court of Wards on a
consideration of the circumstances then prevailing, came to the conclusion that
everything being equal, the granting of the license to Messrs Bird and Company was
going to end the litigation regarding mineral rights. In the note (Ext. 147) it was
stated that the compromise with Messrs Bird and Company was itself a pecuniary
consideration to the estate as whatever the ultimate result of the litigation, if it were
to be carried in appeal the expenses to be incurred by the estate would be
considerable. This aspect of the question, the learned Subordinate Judge rightly
observes, could not be ignored at a time when the estate was heavily involved in
debts. It appears, therefore, that so far as this ground is concerned, it cannot be said
that the Court of Wards accepted the offer of Bird and Company without applying its
mind to the merits of the other offers before it and without rightly or wrongly judging
that it was the most advantageous to the estate.
But the matter stands differently so far as the second ground is concerned. It has to
be held that
Page: 37
-----------------------------------------------------------------------------------------------------------------------------------------------------------
no thought was given by the Court of Wards to the prevailing market rates of salami
and royalty on which such mining leases could be given in the year 1915 at the time
of the transaction. The Court of Wards, Mr. Das submitted, never applied its mind as to
what was the market rate of salami and minimum royalty in respect of such mining
leases in 1915 when this concession was going to be granted. It agreed without any
demur to grant this concession on the same rate of salami and minimum royalty as
were considered good enough, in the year 1907 at the time when Bokaro Ramgarh
license was executed.
The Court of Wards agreed to give leases on a salami of Rs. 40 per bigha and
royalties of four annas per ton on steam coal, three annas per ton on rubble coal, two
annas per ton on dust coal and 8 annas per ton on hard coke—the rates at which
Bokaro Ramgarh leases were given in 1907. There is evidence to show that the rates
at which leases could be given in the year 1915 were Rs. 300 per bigha as salami and
royalties of eight annas per ton on steam coal, six annas per ton on rubble coal and
four annas per ton on all dust coal raised and despatched and twelve annas per ton on
all hard coke and ten annas per ton on all soft coke. Ext. 152(a)—mining lease
between Bokaro and Ramgarh Limited and G.I.P. Railway dated the 1st, of November,
1915, may be referred to in this connection. It is argued that there is nothing to
indicate why the Court of Wards agreed to adopt the rates of the leases of 1907 and
not the market rates obtaining in the year 1915 at the time when the transaction in
question was entered. Mr. Das rightly contends that if the Court of Wards had applied,
its mind to the question as to whether it should agree to lease at the rates prevalent in
the year 1907 or at the rates then obtaining, and if it found that the situation was that
the estate was under a compelling necessity to lease out the coalfield in question and
no one was available to take it at the market rate then obtaining,
Page: 38
it could then be said that the Court of Wards having regard to the situation then
prevailing acted to the best of its judgment in entering into the transaction in
question, and exercised its power to enter into such a contract within the terms of the
statute. It must be held that there is clear absence of material to show that any
thought was given by the Court, of Wards to, what was the highest rate of salami and
royalty at which the leases could be given in the year 1915, keeping in view the fact
that the deposit of coal in Karanpura fields was of a higher and superior quality. From
the documents on the record it appears that the sub-leases of parts of the very same
coalfields which were covered by the prospecting license in question were given by
Messrs Bird and Company to other parties at the rates of salami and royalties very
much higher than the rates at which Messrs Bird and Company had obtained this
license.
* * *
Coming now to the third ground regarding the negligence on the part of the Court
of Wards in accepting the cess clause as drafted by the solicitors of Messrs Bird and
Company different from what it was in Bokaro Ramgarh leases, it must be said that
there is nothing to indicate as to why the variation against the interest of the ward
was made. Mr. Das urged that there was no trace to be found in the voluminous
correspondence on the record for any justifiable or unjustifiable reason for its having
agreed to execute this document with the cess clause so drafted as to relieve the
respondent Company from its liability to pay whole of taxes and cesses, unlike the
-----------------------------------------------------------------------------------------------------------------------------------------------------------
cess clause in Bokaro Ramgarh leases or other leases executed by the Court of Wards.
Mr. Das, therefore, argued that the Court of Wards was grossly negligent and guilty of
omission to take care in the matter of entering into this transaction and exceeded its
powers as conferred upon it by the Act, which in substance were no larger than the
powers of a trustee. What was required of the Court of Wards, he submitted, by the
provisions of sections 14 and 18 of the Court of Wards Act was the same degree of
diligence
Page: 39
on its part as the proprietor of any such property, in other words, a man of ordinary
prudence would exercise in the management of his own property.
It appears that the prospecting licence in favour of Messrs Bird and Company was
agreed to be on terms analogous to those contained in the prospecting license of the
Bokaro Ramgarh Company, and whenever there was to be any variation from those
terms, there was a discussion and correspondence on the subject [vide Ext. 131(b)].
The covenants to be incorporated in the prospecting license to be granted to Messrs
Bird and Company were otherwise to be identical with those of Bokaro Ramgarh
leases. The amount of prospecting salami at Rs. 40 per bigha and the royalty at Rs. 5
per bigha were fixed on that basis. Clause (1) of the lessee's covenant of the draft
lease incorporated in the prospecting license of the Bokaro Ramgarh and Company
provides that the lessee will during the continuance of the lease pay all Government
and other cesses, taxes and other impositions which now are or may at any time
thereafter during the continuance of the lease be assumed or imposed on the said
lands and premises. The corresponding clause in the draft lease incorporated in the
prospecting license in question is to the effect that the lessee shall 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 or the produce thereof or any land acquired or
occupied by the lessees as aforesaid or any buildings, machinery or works thereon and
which, may be payable by the occupier or lessee thereof. There is no correspondence
on the record to show as to why and how this clause was varied so as to cause a
recurring loss of large sums of money to the ward estate. The clause, as provided in
the Bokaro Ramgarh prospecting, license, is in the common form of such a covenant in
leases both in India, and England. Mr. Pas drew our attention to page 499 of Woodfall.
Landlord, and Tenant (23rd edition) as also to page 49 of Waste Land Manual which
contain model of leases
Page: 40
in respect of minerals. He has also drawn our attention to leases granted by Messrs
Bird and Company itself to its sub-lessees to show that the cess clause contained
therein are in the same form as in Bokaro Ramgarh leases and the only leases which
do not contain cess clause in that form are those which were executed in favour of
Messrs Bird and Company. If there was anything to show on the record that Messrs
Bird and Company raised the question regarding the cess clause being altered from
that in Bokaro Ramgarh leases, and the Court of Wards after applying its mind to the
question, for some reason, or other came to the conclusion, that the cess clause was to
be varied to the great advantage of Messrs Bird and Company, the matter would have
been entirely different. It appears that the solicitors of Messrs Bird and Company
-----------------------------------------------------------------------------------------------------------------------------------------------------------
altered the cess clause to the advantage of the respondent Company without any
notice to the authorities of the Court of Wards, and the Court of Wards and its officers
were grossly negligent in not detecting it. Sir S.M. Bose failed to give any explanation
as to how and why the cess clause came to be incorporated in the document in the
form in which it actually stands now. The learned Subordinate Judge has attempted to
explain this omission on the part of the Court, of Wards by a process of reasoning
which Mr. Das rightly characterised as being no better than justifying one act of
negligence by another act of negligence. The reasoning adopted by the learned
Subordinate Judge is that although Bokaro leases contained the cess clause which
made the lessees liable for all cesses but Bokaro Ramgarh Company was not made to
pay the whole of cesses and taxes and paid only its share of these. Mr. Das rightly
pointed, out that it was an act of negligence on the part of the Court of Wards not to
have insisted on Bokaro Ramgarh Company to pay all the taxes in accordance with the
terms of the lease, and their not doing so cannot justify their agreeing to the cess
clause
Page: 41
as incorporated in the document in question. Mr. Roberts, who was examined as a

witness for the respondent Company stated:
“The terms of our leases are more advantageous from the lessees' point of view
than the terms of the Bokaro Ramgarh but the terms of our leases are more usual
so far as our firm is concerned.”
The leases executed by the Court of Wards in favour of other parties contained the
cess clause in the usual form as contained in Bokaro Ramgarh leases. They are Exts. A
(g)-21, A(g)-22 and A(g)-20. The sub-leases executed by the respondent Company in
respect of parts of the coalfield covered by the prospecting license in question in
favour of third parties also contained the cess clause in the usual form making the
lessees liable for all cesses and taxes. These sub-leases are Exts. A, B, C, E and F. Ext.
D is a sub-lease to South Karanpura Company. This does not contain the cess clause in
the usual form. The covenant regarding cesses and other taxes in this lease make both
the lessor and the lessee liable for payment of their own share. What has to be noticed
in this connection is that South Karanpura Coal Company and the respondent
Company are managed by the same set of directors. Large block of shares in this
Company were held by Messrs Bird and Company who were its managing agents. Mr.
Roberts in his evidence stated:—
“Other sub-leases granted by the Karanpura Development excepting the cease in
favour of South Karanpura Coal Company contain similar stipulations.”
By “similar stipulations” he meant the cess clause in the usual form. The learned
Subordinate Judge has referred to Exts. A(g)-1, A(g)-2 and A(g)-3 for the purpose of
showing that these leases contain the cess clause in the form in which the cess clause
stands in the prospecting license in question. These, leases were granted by the
Manager, Encumbered Estates, to Messrs Bird and Company. These leases
Page: 42
establish, if anything, that the officers of the Encumbered Estates did not, as they
should have, carry out the instructions contained in the Bihar Waste Lands Manual, but
were in a hurry to grant licenses to the Company, on its own terms without
-----------------------------------------------------------------------------------------------------------------------------------------------------------
considering the advantage of the disqualified proprietor, who was helpless in the
matter. Further more, as already pointed out, Messrs Bird and Company took the
licenses from the Encumbered Estates just to fight the Ramgarh Raj and to use them
as levers to obtain the license from the rightful owner.
It has been contended on behalf of the respondent Company that the draft of the
document was examined by Mr. Sarda Charan Mitra, Counsel for the Court of the
Wards, and was approved by him before it was executed. The Court of Wards,
therefore, cannot be held guilty of negligence. It had the document examined carefully
by its legal adviser and is, therefore, protected. Ext. 152, the original draft bears the
endorsement “approved” signed by S.C. Mitra. Whether the consequences of this
negligence on the part of the Court of Wards can be avoided by showing that the draft
of the document was scrutinised and approved by its legal adviser requires
consideration. There is no evidence that S.C. Mitra, was told as to what the terms
agreed between the parties were. There is no evidence that, he knew that agreement
between the parties was that all the covenants incorporated in the draft lease attached
to the Bokaro Ramgarh prospecting license except those which were specifically
agreed to be varied had to be incorporated in the draft lease attached to the
prospecting license in question. There is nothing to show that he was told as to what
the agreement between the parties was in regard to the cess clause. Mr. Das argues
that in absence of such evidence, approval of the draft by Mr. Sarda Charan Mitra
cannot absolve the Court of Wards of its gross negligence in not applying its mind to
this very important term of the agreement
Page: 43
which has resulted in considerable loss to the Estate. Reliance was placed by Mr. Das
on the case of Devey v. Thornton(1) for the proposition that opinion of a Counsel cannot
exonerate a trustee unless it is known what data were given to the Counsel for advice.
Assuming, however, that S.C. Mitra had full knowledge of all relevant facts Mr. Das
argued, even then the Court of Wards is not protected. He submits that the trustee
cannot free himself from the charge of negligence by merely producing Counsel's
opinion, and it makes no difference that the trustee acted negligently on the advice of
a Counsel. For this proposition he relies on Peers v. Ceeley(2) in which the Master of
Rolls made the following observations:—
“The Court can never sanction the proposition, that a party, having acted in a
manner which the Court has decided to be improper, can protect himself by
shewing that he had received bad advice, however eminent the person may be who
gave it.” See also In re Knight's Trusts(3) and National Trusts Company of
Australasia v. General Finance Company of Australasia(4) .
To us it appears that the question which has to be decided in the present case is
not whether a trustee can escape the consequences of his negligence. The appellant
Raja by this suit is not pursuing the Court of Wards for having neglected to protect his
interest. What has to be decided in the present case is whether by reason of the
negligence of the Court of Wards in not detecting the cess clause drafted by the
solicitors of the respondent Company as not rightly incorporating the agreement
arrived at between the parties, the document in question is vitiated to such an extent
as
Page: 44
-----------------------------------------------------------------------------------------------------------------------------------------------------------
to cease to be binding on the appellant Raja Secondly, if the cess clause as

incorporated in the document: did represent accurately what was agreed between the
Court, of Wards acting for the appellant Raja and, Messrs Bird and Company, whether
such an agreement in regard to the cess clause was arrived at after the Court of Wards
had applied its mind to the question, and in its judgment it was for the benefit of the
property and advantage of the ward that the taxes and cesses were not to be wholly
payable by the lessee. It is clear, that the cess clause, as it stands in the document; in
question, was agreed to by the Court of Wards without any thought having been given
to its consequences. The Court of Wards acted in utter violation of the last clause of
section 18 of the Act, in not bringing to bear its judgment upon the question of
payment of taxes and cesses, and the contract to lease with the cess clause in the
unusual form contained in the prospecting license in question has to be held to be in
excess of its powers and ultra vires.
Their Lordships of the Privy Council in the case of Raja Mohammad Mumtaz Ali Khan
v. Sakawat Ali Khan(1) which was a suit for possession by a ward on his attaining
majority of the properties alienated by the Court of Wards held that the plaintiff was
entitled to recover possession of the property, the act of; the Court of Wards being
ultra vires of its power under section 172 of Oudh Land Revenue Act, 1876. It will be
seen that the final words of section 172 provided exactly in the same terms as those of
section 18 of the Court of Wards Act, that—
“the Court of Wards shall have power to give such leases or farms of the whole
part of the immovable property under its charge, and to mortgage or sell any part
of such property, and to do all such other acts as it may judge to be most for the
benefit of the property and the advantage of the disqualified proprietors”.
What had happened in that case was that the junior members of the family
Page: 45
of the Raja were held entitled to receive from the estate maintenance, allowance by an
award of the arbitrators. The arbitrators had also held that two villages were to be
allotted to these persons in lieu of their maintenance. The Court of Wards in pursuance
of that award allotted two villages to the defendants, and put them in possession. The
plaintiff brought the suit to recover possession of the villages so allotted to the
defendants. The transaction was attempted to be justified under section 172 of the Act
as having been most for the benefit of the property and the advantage of the plaintiff.
Their Lordships of the Judicial Committee held:—
“Nor can the assignment of the villages to the respondents be justified under
section 172 of the Act. Clearly it cannot, unless it comes within the final words, that
the Court may do all such acts as it may judge to be most for the benefit of the
property and the advantage of the infant. It was not for the advantage of the
appellant or the benefit of his property that two considerable portions of his estate
should be disposed of without consideration. And there is not any trace throughout
the proceedings of any thought having been taken as to what was beneficial to him
or his estate”.
The position here is no different. Clearly it was not for the advantage of the
appellant Raja or the benefit of his property that it was agreed that the cess clause
should be in the form in which it stands, and to use the language of the Judicial
Committee, there is not any trace throughout the proceedings of any thought having
been taken as to what was beneficial to him or his estate so far as the question of
-----------------------------------------------------------------------------------------------------------------------------------------------------------
payment of cesses and taxes was concerned. There is therefore, no escape from the
conclusion that the transaction in question cannot be justified under the final words of
section 18 of the Act.
Page: 46
There is, however, the question if by sheer over sight the cess clause remained in
the document in a form, different than that in Bokaro Ramgarh document, contrary to
the agreement between the Court of Wards and Messrs Bird and Company, whether
such negligence vitiates the transaction. Mr. Das for the appellant Raja argues that if
the guardian is negligent, in looking after the interest of the minor, there is no identity
of interest and he ceases to represent the ward. He relies upon the decisions of
Mathura Singh v. Ram Rudra Prasad Sinha(1) and Siraj Fatma v. Mahmud Ali(2) which
held that where the ward, is a party to the suit and the decree is passed against him,
and if it is found in a subsequent suit by the ward that the Court of Wards was
negligent in looking after the interest of the minor, the Court of Wards ceases to
represent the ward and the decree passed against the ward is a nullity. Mr. Das
submitted that the same principle will apply to a transaction entered into by the Court
of Wards on behalf of the ward, if the Court of Wards is found guilty of negligence in
the matter of that transaction. In the circumstances of the present case, he argued, it
must be held that the omission on the part of the Court of Wards to detect that the
document it was going to sign on behalf of the minor did not correctly represent the
terms to which it had agreed, must have the consequence of vitiating the transaction
to such an extent as to make it cease to be a transaction to which the ward can be
said to have been a party, and the deed void ab initio, and as of no effect against the
ward.
The learned Subordinate Judge has not accepted this contention. His view is that
mere negligence or gross negligence on the part of the Court of Wards does not entitle
the ward to challenge the transaction as being void and not binding upon him.
Page: 47
It is hardly necessary to consider the question in abstract and such a general form.
What calls for decision in this particular case is whether regard being had to the terms
of section 18 of the Court of Wards Act the negligence on the part of the Court of
Wards to judge whether the terms it agreed to were for the benefit of the property or
the advantage of the ward will vitiate the transaction. While it may be true, that
negligence on the part of the Court of Wards leading it to a wrong judgment as to
Discuss-
understand what was for the benefit of the property and the advantage of the ward will not make
Need to the transaction void and as of no effect against the ward, negligence to take any
analyze thought as to what was beneficial for the property and advantageous to the ward will
bring about that result. The learned. Subordinate Judge noticed that Lister's note of
the 1st and 2nd of April and Mr. Walsh's letter of the 6th of July, 1914, [Exts. 130(1)
and 131(a)] which contained a full report of the discussion and showed how far it
agreed to modify the terms of the agreement of Bokaro Ramgarh. Company did not
show that it was agreed that the cess clause was to be modified, and that it was not
-----------------------------------------------------------------------------------------------------------------------------------------------------------
the case of the respondent Company that there was any intention to modify the
clause. It is clear, therefore, that failure of the Court of Wards, its officers, and its legal
advisers to detect, that the cess clause in the deed did not correctly incorporate the
agreement between the parties or, if it did, their failure to judge whether it was
beneficial for the property and advantageous for the ward that the cess clause should
be so modified was a kind of negligence which went to the root of the power of the
Court of Wards to enter into such a transaction and rendered the deed void and not
binding on the appellant Raja.
The learned Subordinate Judge thought that even if the modification of the cess
clause was due to the negligence on the part of the Court of Wards, the whole
transaction cannot be said to be void for
Page: 48
that reason, and held that the cess clause did not go to the root of the transaction and
it could not affect its validity. The learned Subordinate Judge seems to be clearly
wrong in his conclusion in this behalf. It is in evidence that in consequence of the cess
clause being what it is, the estate has already suffered loss of lakhs of rupees, and if it
is held that the transaction is binding upon the ward, the leases to be granted in
pursuance of this agreement to lease, up to 1951 will have to leave the cess clause in
this form, causing considerable loss to the estage in future. What the learned
Subordinate Judge failed to realise is that if any of the covenants of the lease,
specially one which means less of such a, considerable amount either to one or the
other party, is held void, the covenants of the lease being inter-dependent and not
separable, the transaction as a whole becomes void, and unenforceable in law.
There remains to consider one other point raised on behalf of the appellant Raja. It
was contended by Mr. Das that this deed in question should have been executed, by
the Manager on behalf of the ward and not on behalf of the Court of Wards which was
not the owner of the property. The argument is that there is no provision in the Court
of Wards Act vesting the property of the ward, in the Court of Wards, and, therefore,
the Court of Wards is not entitled to deal with the property of the ward on its own
behalf. Our attention has been drawn to section 51 of the Court of Wards Act under
which suits brought by or against a ward has to be instituted in the name of the ward,
and the Manager or the Collector of the district, as the case may be, has to be named
as the next friend or guardian for the suit. On the analogy of the provisions of this
section, it was contended that the ward should have been described in the deed in
question as the executant. The learned Subordinate Judge has rightly dealt with
Page: 49
this contention. It appears that rule 242 framed under section 70 of the Court of
Wards Act prescribes that all leases appertaining to estates under the Court of Wards
should be executed by the Manager in accordance with the opinion of the Legal
Remembrancer. Such opinion was to the effect that it was not desirable to make the
proprietors parties to the lease or to make the proprietors the real lessors. The official
acts have to be presumed to have been performed regularly and legally, and there is
nothing to show that rule 242 was not in force at the time when the deed of this
prospecting license was executed. It may also be added that section 7 of the Transfer
of Property Act contemplates the transfer by another person of property not his own, if
that person is authorised to transfer such property by any law for the time being in
-----------------------------------------------------------------------------------------------------------------------------------------------------------
force. Under section 14 read with section 18 of the Court of Wards Act, the Manager
could be competent to enter into a transaction of lease, or to contract to grant a lease,
if the Court of Wards judged the transaction or the contract to be most for the benefit
of the property and the advantage of the ward. Section 41(g) authorizes the Manager
to sign deeds or documents which may be executed by him by virtue of his office, and
rules 238 and 242 made under section 70 of the Court of Wards Act are apparently
meant to carry out the provisions of the sections referred to above. Hence, it cannot be
said that there was any irregularity in the execution of the documents impugned in
this case.
The conclusions which we reach, so far as the deed of the prospecting license of
1915 is concerned may be summed up as these:—
(1) Although it may be that a guardian of a minor or a trustee is not entitled under
the common law to bind a minor or a cestui que trust by a personal contract to
lease in future, the Court of Wards is empowered under the concluding words of
section 18 of
Page: 50
the Court of Wards Act to enter into such contract provided, it judges that to do so is
most for the benefit of the property and the advantage of the ward;
(2) while the Court of Wards applied its mind to the question whether it was
advantageous to the ward to prefer Messrs Bird and Company to other applicants
for this concession and rightly or wrongly came to the conclusion that it was so,
no thought was taken is to whether the terms regarding the rates of salami and
royalty were the highest which could be obtained at the time when this
concession was given, and the term regarding the payment of cesses and taxed
should have been any different than what was usual and incorporated in Bokaro
Ramgarh concession;
(3) the failure of the Court of Wards, its officers and its legal advisers to have
applied their mind to and judged that the terms regarding salami, royalty and
payment of taxes, which prima facie are not the best available at the time, puts
this transaction beyond the powers conferred by the concluding words of section
18 of the Act, and renders this deed void and inoperative in law;
(4) the deed of prospecting license was executed by the Court of Wards in excess of
its power and conferred no title on the respondent Company to the lands in their
possession; and
(5) the Civil Court has, in the circumstances, complete jurisdiction to pass a decree
of ejectment in favour of the appellant Raja.
On the finding just arrived at by us that the prospecting license granted by the
Court of Wards to the Company under the deed dated the 3rd of August, 1915, is not
binding on the appellant Raja, the whole fabric of the Company's title falls to the
ground. If we are right in so holding, no further question arises between the parties,
the very foundation of the Company's title having been found to be not only defective
but entirely lacking in validity. The first variation
Page: 51
of the licence of 1915, or, as it has been characterised in the course of the arguments
-----------------------------------------------------------------------------------------------------------------------------------------------------------
at the Bar, the first, extension of the licence, is evidenced by the deed dated the 23rd
of November, 1917. By this document, the Company got an unconditional extension of
the terms of the licence from six years to twelve years, that is, up to the 26th of
March, 1927, and a further extension of twelve years, if ten thousand bighas more of
coal lands were taken on lease by the Company. Further, and this is the more
objectionable part of the transaction, no minimum royalty for an area above ten
thousand bighas was payable before the 26th of March, 1939, unless railway
communication was available earlier. The terms of this transaction have been attacked
by Mr. Das for the appellant Raja on the grounds (1) that they were entirely for the
benefit of the Company without due and proper regard having been paid to the
interest of the ward, or the benefit of the property; (2) that the extension was
obtained on false pretences; (3) that there was no sanction of the Court of Wards, that
is to say, the Board of Revenue for the terms of the document as finally drawn up; and
(4) that, in any view of the matter, the Court of Wards acted beyond its powers in
virtually making a gift of large sums of money to the Company in the shape of
minimum royalty in so far as it was payable after the 26th of March, 1939, or earlier,
only if railway facilities became available, without the Court of Wards insisting upon
the railway company giving an undertaking to the effect that they would introduce
railway facilities within a certain specified time.
* * *
On the question of the validity of this transaction, at the forefront of his argument,
Mr. Das, on behalf of the appellant Raja, contended that there was really no sanction
given by the Court of Wards to the document as finally drawn up and executed on the
23rd of November, 1917. It was contended that the letter of the Board of Revenue,
Page: 52
dated the 3rd July, 1916, could not be the sanction, inasmuch as a number of
questions were still outstanding. The learned Subordinate Judge has acceded to that
contention, and we have already indicated that we agree with this conclusion of the
learned Subordinate Judge. It is not necessary, therefore, to repeat those reasons once
again. The learned Counsel for the respondent Company, on the other band,
contended that document was the sanction of the Board of Revenue. But he contended
further that, if that was not the sanction of the Board of Revenue, certainly the
memorandum of the Board, dated the 10th October, 1917, was such a sanction. The
learned Subordinate Judge has accepted this contention. But, in our opinion, neither in
form nor in substance, could the memorandum aforesaid of the Board of Revenue be
treated as the sanction of the Board. This memorandum was, as contended on behalf
of the appellant, a routine communication from the higher authority to the;
subordinate authority for consideration of the matters raised, in the letter of the Legal
Remembrancer and the Solicitor to the Government of India. While reciting those
letters, the matters which were still outstanding have been noticed, and it will appear
therefrom that, rightly or wrongly, the Board had raised the question that eight
thousand rupees had to be paid as dead rent for the first year. Certainly, the Board
itself and not the Manager, or the Deputy Commissioner, could have been the final
authority to dispose of that matter. The Manager, or the Deputy Commissioner, may
have been right in thinking that it was not in the contemplation of the parties that the
eight thousand rupees would be payable as a result of the alteration of the terms of
the licence. But the final say in the matter lay with the Board itself, and the Manager,
or the Deputy Commissioner, could have only indicated their reason's for the
conclusions they had arrived at. But it was open to the Board to insist upon the
-----------------------------------------------------------------------------------------------------------------------------------------------------------
payment
Page: 53
of eight thousand rupees for the first of the six years, if it took the view that should be
insisted upon as a consideration for the further concession to be granted to the
Company. Furthermore, it cannot be said that the last word in the matter of drafting of
the terms of the alteration of the licence lay with the Solicitors of the Company. The
draft as revised by the Solicitors of the Company was never submitted to the
consideration of the Board. The Board had already indicated in one of the letters,
quoted above, that they treated the matter of drafting the terms as of great
importance, and, therefore, had insisted upon the terms being examined not only by
the Legal Adviser of the Provincial Government (the Legal Remembrancer) but also by
the Solicitor to the Government of India. Hence, in the ordinary course of business, in
order to obtain the final sanction of the Board, the revised draft as finally made by the
Solicitors of the Company should have been submitted through the proper channel to
the Board of Revenue for examination by them, or, on their behalf, by the Legal
Remembrancer, or the Solicitor to the Government of India, as the Board thought fit
and proper. This was never done; nor were the other matters raised in the letters of
the Solicitor to the Government of India and of the Legal Remembrancer again
submitted to the Board for their consideration and final approval. The Board had not
delegated its power to the Deputy Commissioner, or to the Manager, to decide finally
the questions in controversy raised by them, and which had not been accepted by the
Company or their Solicitors in their entirety. On the other hand, the Company's
Solicitors had made their own draft of the amendments purporting to carry out the
intentions of the Board of Revenue. But certainly it was not for them to have the last
say in the matter. The proper authority to deal with the question finally was the Board
of Revenue itself.
Page: 54
Mr. Das, on behalf of the appellant Raja, pointed out that, whenever the Board
accorded its sanction to such a transaction, it did so in unequivocal terms, the
instances of which are to be found in,
* * *
These instances of sanction by the Board of the final transactions were quoted by
Mr. Das, on behalf of the appellant Raja, to show that it appears to have been the
invariable practice of the Board to use the commencing words of section 18 of the
Court of Wards Act [IX (B.C.) of 1879], namely, “The Court may sanction………”. Mr.
Das urged that the Court of Wards invariably use those words with a view to leaving
no doubt in the mind of anyone dealing with the Court of Wards that a particular
transaction had been sanctioned by the Court.
On the other hand, Sir S.M. Bose, on behalf of the respondent Company, contended
that, though, in form, the letter of the 9th of October, 1917, is not a sanction, in
substance, it would amount to a sanction, because nothing had been left to be done
by the Court of Wards towards completing the transaction, namely, the variation of the
original licence. He drew our attention to a number of decisions. The first case relied
-----------------------------------------------------------------------------------------------------------------------------------------------------------
upon by him is the decision of their Lordships of the Judicial Committee in Gulabsingh
v. Seth Gokuldas(1) . That was a decision under the Central Provinces Government
Wards Act (XVII of 1885). In that case, the Chief Commissioner had sanctioned the
assumption by the Court of Wards of the management of the estate of a certain
zamindar, and also accepted the proposal for the liquidation of the debt owing from
the estate, which was the chief purpose of the assumption of the management of the
estate by the Court of Wards. It appears that in that case the
Page: 55
Deputy Commissioner had asked for the acceptance of the proposal, to raise one lac of
rupees from, the respondent in that case for the purpose of meeting the liabilities of
the estate. Their Lordships of the Judicial Committee considered the letter from the
Secretariat to the Commissioner sanctioning the proposal for the liquidation of the
debt of the estate as a sufficient sanction by the Court of Wards to effecting a
mortgage of the property under the management of the Court of Wards to raise a
sufficient sum for the liquidation of the indebtedness of the estate. Their Lordships
further observed that it was not necessary that the actual mortgage to be made by the
Court of Wards should be submitted to the Chief Commissioner for his sanction, or
that the Court of Wards should have the Chief Commissioner's sanction to the precise
terms of the mortgage. It has to be noted that the decision of their Lordships of the
Judicial Committee was based on a consideration of the provisions of the Central
Provinces Act which may not be in pari materia with the Bengal Court of Wards Act.
We have not before us the Central Provinces Act (XVII of 1885); but it would appear
from the trend of the decision of their Lordships that the Chief Commissioner in that
case had to sanction acts of the Court of Wards itself. In the present case before us,
we are concerned with the sanction of the Court of Wards in relation to the acts of its
subordinate officers, namely, the Manager and the Deputy Commissioner or the
Commissioner. The scheme of the two Acts does not appear to have been the same.
Hence, the argument by analogy in the present case does not hold good. The next
case relied upon on behalf of the respondent is that of Ramkanai Singh Deb
Darpashaha v. Mathewson(1) . This was a decision under the Chota Nagpur Encumbered
Estates Act of 1876. In this case, a patni lease was sanctioned by the Commissioner in
favour of Robert Watson & Co. A patni lease is a
Page: 56
well defined transaction, the essential features of which had, in that case, been
sanctioned by the sanctioning authority, namely, the Commissioner. In those
circumstances, it was held by their Lordships of the Judicial Committee that it was not
necessary that the document ultimately prepared should also have been submitted for
his sanction, 1 in that case, their Lordships further pointed out that what was left to be
done by the subordinates of the Commissioner was only entering formal details in the
document. In that suit, therefore, there were no essential terms outstanding to be
settled between the contracting parties, as in the present Case. If it were clear that
the Board of Revenue as the Court of Wards had sanctioned all the essential
particulars of the transaction, it may not have been necessary to submit the final draft
for the formal sanction of the Board; but, as already indicated, in the present case
certain essential terms of the transaction had to be settled, and the draft had to be
made accordingly. The correspondence already summarised indicates that the parties
were not ad idem on all the essential terms of the variation of the original licence.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
Even after the Board of Revenue had sent back the draft along with the suggestions of
the Legal Remembrancer and the Solicitor to the Government of India, the Company's
Solicitors were suggesting changes in substantial terms of the agreement. Therefore, it
was necessary that the terms as finally drafted by the Company's Solicitors should
have been submitted to the Board of Revenue: for their examination and ultimate
formal sanction, if the Court of Wards found that their intentions had been fully and
properly incorporated in the document as finally drafted. It will be seen that it was not
the practice of the Board of Revenue as the Court of. Wards to accord the formal
sanction until the terms were embodied in a formal document.
* * *
So far as the Company were concerned, they
Page: 57
may have said their final word; but, so far as the other party, the Court of Wards, was
concerned, they had not yet done so, though the Manager and the Deputy
Commissioner had taken the view that the draft as made by the Company's Solicitors
truly ??? the intentions of both the parties. Further, if may be mentioned in this
connection that rule 242 framed under section 70 of the Act requires sanction to be
reproduced in the deed to be executed by the Court of Wards. The rule reads thus:—
“All leases appertaining to an estate under the Court of Wards should be ??? by
the Manager in accordance with the opinion of the Legal Remembrancer quoted
below:—
It is not desirable to make the proprietors parties to the lease or to make the
proprietors the veal lessors.
Words should be added reciting (1), that the Manager was appointed on such
and such a date, and (2) that the lease was sanctioned by the Court of Wards in
exercise of the power conferred by section 18, Court of Wards Act, 1879, by order
dated so and so.”
The obvious implication of the rule seems to be that the sanction is to be
incorporated in the deed evidencing the transaction, as was done in all other
instances. There is nothing to show that, in the cases cited by Sir S.M. Bose, a, similar
rule requiring incorporation of the Boadr's formal sanction in the deed was to be found.
Hence, in our opinion, the cases relied upon on behalf of the respondent Company do
not support their contention that there was a sanction by the Court of Wards to the
transaction of the year 1917.
It was also argued on behalf of the appellant Raja that the agreement of 1917,
varying the terms of the agreement of 1915, was not for the benefit of the ward, or
the advantage of the property, inasmuch as the terms of the transaction of 1907 in
favour of Bokaro Ramgarh & Co. could not be the basis for a transaction which could
entitle the grantees to have leases up to 1951 on the same terms as regards minimum
royalty and salami and royalty. Mr. Das's contention was that the Court of Wards never
Page: 58
applied its mind to this aspect of the case. They never considered whether the terms
of 1907 would be fair and equitable from the point of view of the Estate for leases to
be granted between 1917 and 1951. In our opinion, there is much to be said in
-----------------------------------------------------------------------------------------------------------------------------------------------------------
support of this contention. The correspondence already discussed above between the
Company on the one hand and the officers of the Court of Wards on the other discloses
the fact that all the time they were discussing the advantages of the Company, and
the facilities to be granted to them for further extension of the terms of their licence
which meant, in effect, the terms of the lease or leases to be ultimately created in
favour of the Company. It was never considered by the officers of the Court of Wards
as to whether the giving up of the claim to minimum royalty in respect of areas above
the first ten thousand bighas would be beneficial to the ward. The question of the
market rate and other allied, questions will be dealt with in connection with the second
extension which was granted in 1937, as it is more convenient to deal with that aspect
of the case at one place.
Mr. Das contended further that, on the question of minimum royalty, the officers of
the Court of Wards completely misdirected themselves by considering only one aspect
of the matter whether the absence of a term regarding payment of minimum royalty
for all additional areas taken under the extended licence would lead the Company to
procrastinate in raising coal or in working the mines. Mr. Das contended, and, in our
opinion, rightly, that the provision in a lease for payment of minimum royalty is
directed not only to preventing procrastination on the part of the grantee in opening
mines and raising coal but is also meant to ensure a regular flow of income to the
grantor. In this connection, reference was made to the following observations of
Stirling, D.J. in In re Aldam's Settled Estate.(1) .
Page: 59
“The object of a fixed or minimum rent is twofold: first, to provide a specified

income on which the tenant for life may rely; and secondly (and this is the more
important reason), as a security that the mine will be worked, and worked with
reasonable rapidity.”
Mr. Das contended, therefore, that the officers of the Court of Wards did not
consider the question whether it could possibly be in the interest of the ward to forego
his claim to substantial sums of money every year in the shape of minimum royalty for
all additional areas to be taken in pursuance of the extended term. It was pointed out
that the extension of the term was mainly, if not entirely, for the benefit of the
Company, and no thought was given to any corresponding benefit to the owner of the
property. It was also contended that, by the revised terms of the licence, the Company
were given the right to take further areas under lease up to the year 1951 without any
liability for payment of minimum royalty until the 28th March, 1939, or until railway
facilities were available; but at the same time the Court of Wards never insisted on the
Company giving an undertaking that they would provide for railway facilities within a
reasonable time. Hence, it was argued that the revised terms really means all rights
for the Company but practically no corresponding obligations. In this connection, Mr.
Das referred to exhibit P(16), a letter from Anderson Wright & Co. representing Bokaro
& Ramgarh, Ltd., to the Manager, Ramgarh Wards Estate, dated the 3rd March, 1916,
in which they say that the Company had—
“……… entered into an arrangement with the East Indian Railway and the B.N.
Railway under which these Railways covenanted to put in a Railway Line to serve
the coalfields, in consideration for which the Company agree to give them a sub-
lease of extensive blocks of coal-bearing land, for the granting of which no
pecuniary benefit would accrue to the Company, either by way of salami or royalty,
-----------------------------------------------------------------------------------------------------------------------------------------------------------
Page: 60
the whole of the benefit being reserved for the Raj. As you are aware these Railway
Companies have already constructed a line into the field at an expenditure of some
sixty lacs of rupees which not only facilitates the opening up of the coalfields but must
undoubtedly most materially benefit the Raj………………”.
Mr. Das contended that the Court of Wards should have insisted upon the Company
doing some such thing as Bokaro Ramgarh did with a view to bringing railway facilities
to the coal area.
Mr. Das further contended that the extension of the term of the original licence of
1915 was obtained by the Company on false pretences.
* * *
Mr. Das also contended that the Company had made a misleading representation to
the officers of the Court of Wards when they stated in their letter exhibit H(1) that the
result of the survey by their geologists of the coalfields were most disappointing Mr.
Das's grievance on this score was that the officers of the Court of Wards accepted this
statement of the Company at its face value without calling for Dr. Jowett's report on
those coalfields. Mr. Das has drawn our attention to the fact, as noted in the judgment
of the Court below, and mentioned by us earlier that, far from being disappointing,
even the limited surveying done by Dr. Jowett disclosed that there were first class coal
seams and a large number of second-class coal seams in the areas in question. As to
how far those alleged misleading statements by the Company influenced the officers of
the Court of Wards is not absolutely clear. But the fact remains that those statements
of the Company were incorporated in one of the letters, already set out, of the officers
of the Court of Wards [vide exhibit 139(AX)]. Summing up Mr. Das's contentions on
this part of the case, his grounds for urging that the
Page: 61
officers of the Court of Wards were guilty of negligence are (1) in assuming without
any foundation, or even a suggestion by the Company, that the Company will give up
the concession unless the extension asked for were granted; (2) in not insisting upon
the Company to give an undertaking that they will introduce railway facilities within a
reasonable specified time, failing which they would be liable to pay minimum royalty
in respect of the excess areas taken by them as a result of the extended term of the 1
lease; and (3) that the officers of the Court of Wards did not call upon the Company to
produce Dr. Jowett's report on the prospects of the coal lands.
Mr. Das further urged, in connection with the grant of the extension of the term of
the prospecting licence, that Mr. MacGregor had himself an interest in the promotion of
the Karanpura Development Company for whom, admittedly, Bird & Co. were acting in
the matter of securing the concession from the Court of Wards.
* * *
In pursuance of the concession as altered by the terms of the deed of variation of
the 23rd November, 1947, six leases were executed between the years 1922 and
1937. The first lease was executed on the 17th of July, 1922, in respect of 3,035
bighas—vide exhibit 9. Salami at the rate of Rs. 40, per bigha, amounting to Rs.
1,21,400 was paid. Royalty was to be paid at four annas per ton for steam coal, three
-----------------------------------------------------------------------------------------------------------------------------------------------------------
annas for rubble, two annas for dust, eight annas for hard coke, and six annas for soft
coke. In respect of this area, a sub-lease (exhibit A) was executed on the 20th of
April, 1923, in favour of Andrew Yule & Co., with effect from the date of the head-
lease, that is to say, 17th of July, 1922, in respect of 2.011 bighas, and another sub-
lease (exhibit B) was executed on the same date in favour of Villiers, Ltd., in respect of
1,024 bighas with retrospective effect from the 31st December, 1921, the total salami
for these two areas being Rs. 5,31,125.
Page: 62
The second lease was in respect of 1,150 bighas at a salami of Rs. 46,000, (vide
exhibit 8). It was executed on the 26th of January, 1924, but with retrospective effect
from the 17th October, 1922 (as stated in the sub-lease). The sub-lease (exhibit D) in
respect of this area was given to South Karanpura Company on the 25th April, 1927,
with retrospective effect from the 3rd November, 1922, at a salami of five lacs of
rupees.
The third lease was executed on the 19th of March, 1924, in respect of 2,309 bighas
at a salami of Rs. 92,360 (exhibit 6, with effect from the 24th March, 1923. The sub-
lease (exhibit E) in respect of this area was granted in favour of the Bengal Nagpur
Railway Company on the 28th February, 1927, with effect from the date of the
commencement of the head-lease, that is to say, 24th March, 1923, at a salami of Rs.
7,64,685.
The fourth lease was executed on the 26th November 1923, in respect of 6,800
bighas at a salami of Rs. 2,72,000, (exhibit 7). The sub-lease (exhibit C) in respect of
this area was given to the. Railway Board on the 27th March, 1928, at a salami of Rs.
11,90,000, with effect from the 17th October 1922, that is to say, even earlier than
the execution of the head-lease.
The fifth lease is dated the 12th April, 1927, with effect from the 1st April, 1924, in
respect of village Religara of 4.045 bighas at a salami of Rs. 1,61,800 (exhibit 10).
The sub-lease (exhibit: F) in respect of this area was given to B.B.C.I. and M.S.M.
Railways on the 26th of, November, 1931, with effect from the 1st of April, 1924, at a
salami of Rs. 14,15,750.
The last, and the sixth lease was given on the 17th of July, 1933, in respect of 200
bighas at a salami of Rs. 8,000, (exhibit 13). The sub-lease (exhibit G) in respect of
this area was given on the 6th March, 1935, to South Karanpura Company with effect
from the 3rd of November, 1922 at a
Page: 63
salami of Rs. 11,343.
Putting side by side the two series of transactions, namely, one the lease between
the Court of Wards and the Company, and the other, the sub-lease, between the
Company and the sub-lessees Aforesaid, it would appear that the Wards Estate, got
Rs. 7,01,560, by way of salami; whereas the Company made Rs. 44,12,903, by way of
salami from their sub-lessees. It will be seen further that the sub-leases, in most of
the cases, came into existence before the leases themselves, that is to say, the
Company merely played the part of middlemen. They settled to lease out to sub-
-----------------------------------------------------------------------------------------------------------------------------------------------------------
lessees certain specified areas on their own terms, and then obtained leases from the
Raj for the corresponding areas. As regards the rate of royalty, it will appear that the
rates to be paid by the Company to the Wards Estate were at a uniform rate stated
above, and the rate of royalty payable by the sub-lessees to the Company were double
or more than double the rates for the different kinds of coal or coke, though the two
series of transactions are, more or less, contemporaneous. Mr. Das argued, on the
basis of those figures, that the Court of Wards did not act like prudent men of
business in agreeing to extend the period of the licence from 1921 to 1951 on the
same terms as regards royalty and salami which, obtained in the year 1907, that is to
say, the terms on which the lease was granted in favour of Bokaro Ramgarh, Ltd., Mr.
Das contended that the Court of Wards should have taken into account the rising
prices of commodities, particularly during and after the first World War, and that, in so
far as they did not take this aspect of the case into their consideration, they were
guilty of gross negligence in the discharge of their duties to the ward of the Court.
In view of these considerations, it must be held that the agreement of 1917, the
first deed of variation of the original licence, is vitiated on account of the fact that
there is no valid sanction of the Court of
Page: 64
Wards to that transaction. It is also void for another equally good reason, namely, that
the Court of Wards acted beyond their powers in foregoing the claim of the ward to
minimum royalty in respect of additional areas to be taken in pursuance of the
extended term of the licence, without any thought being taken as to the benefit of the
property and the advantage of the ward. The transaction is not binding on the
appellant Raja also because the Court of Wards were misled by false representations
made by the Company as to the reasons for granting the extension of the licence. As
Mr. MacGregor, the then Manager of the Court of Wards, was acting not entirely in the
interest of the Court of Wards but of the Company, which fact was not known to the
Court of Wards, the latter were misled, into granting extension of the term of the
licence beyond the real necessity of the situation and on terms which are not beneficial
to the interest of the proprietor. For all these reasons, it must be held that the first
variation of the prospecting licence is not binding upon the appellant Raja. That being
so, all the six leases, set out above, granted in pursuance of the variation deed of
1917, must be held to be void.
The second deed of variation of the original licence came to be executed on the 1st
of January, 1937.
* * *
From the statement of the negotiations and the correspondence between the
Company and the officers of the Court of Wards, set forth above, it is clear (1) that the
Member. Board of Revenue, agreed to sanction the exemption from payment of
minimum royalty up to 25th March, 1951, apparently on the ground that there was a
precedent afforded by the extension of the term of Bokaro Ramgarh, Ltd., without
payment of minimum royalty; and (2) that the sanction given by the Court of Wards
was
Page: 65
conditional on the fulfilment of the condition laid down in the Board's letter of
-----------------------------------------------------------------------------------------------------------------------------------------------------------
sanction, set out above, namely, the execution of the lease by the end of December,
1936. But the three leases were executed on the 2nd of August, 1937, that is to say,
about a week before the appellant Raja attained majority. Hence, the condition
precedent as laid down by the Board was not fulfilled by the Company. But it may be
said on their behalf, that the question of the selection of coal lands had not been
settled until May, 1937. The obvious thing for the Company, to do was to obtain a
fresh sanction by the Board as was done previously when, the sanction of the Board of
the 4th/5th December, 1935, not having been carried out by the Company, another
sanction was given on the 19th of March, 1936, giving them a further period of grace
until the end of December, 1936. The Court below has rightly taken the view that the
condition precedent laid down by the Board in their final sanction was not carried out
by the company. Hence, the three leases executed on the 2nd of, August, 1937, were
bad as they must be deemed to have been executed without the sanction of the
Board.
But, in our opinion, the more serious objection to the legality of the sanction of the
Board rests on the consideration that the Board was misled by the Manager of the
Wards Estate into granting the sanction on the supposition that there were
precedents, for such a course, namely, that Bokaro Ramgarh, Ltd., had been granted
several extensions without the liability for payment of minimum royalty, which, as a
matter of fact, has been found, as already indicated, not to be based on truth. The
sanction of the Board therefore, is entirely vitiated.
Even assuming that the sanction granted by the Board of Revenue is free from the
vitiating influences pointed out above, the sanction, on the face of it, is
Page: 66
beyond the powers of the Board of Revenue, inasmuch as it amounts to making a gift
of large sums of money which would be payable by the Company to the ward of the
Court, if they were anxious to avail of the further extension of twelve years. The Court
of Wards may have been generous to the Company, but should have been just to the
ward of the Court. Certainly, the transaction of the year 1937, extending the period of
the licence without the corresponding obligation of payment of minimum royalty, is,
on the face of it, not for the benefit of the ward, and there is no trace in the record of
any thought being given to this aspect of the question. As a matter of fact, the entire
correspondence, set out above, betrays an anxiety on the part of the officers of the
Court of Wards beginning from the Manager, Mr. Walter, to secure the maximum
benefit to the Company without insisting upon their fulfilling their corresponding
obligations. It has been admitted on behalf of the Company that there is no other case
in which the term of a licence had been extended without the liability for the payment
of minimum royalty. That being so, the action of the Court of Wards in extending the
period of the licence without the liability for payment of minimum royalty was beyond
their legitimate powers. It must, therefore, be held that the transaction of 1937 was
also void.
Another aspect of the question that was raised in connection with the validity of the
extension of 1937 is whether the Court of Wards was justified in granting the
extension by going to the length of agreeing to write off the minimum royalty payable
after the 25th March, 1939, without considering the question of whether this
transaction would be for the benefit of the ward. Connected with this question is the
other question whether the Court of Wards at all considered the desirability of
extending the licence beyond 1939 on terms as regards salami and rates of royalty
-----------------------------------------------------------------------------------------------------------------------------------------------------------
which had been settled in 1907. It has been
Page: 67
argued that, after the first extension of the year 1917, the Company did nothing but
make the middleman's profit by granting sub-leases to different parties, as already set
forth above, even before taking the leases from the Court of Wards. In making those
subleases, it has already been noticed, the Company obtained much more favourable
terms as regards salami and royalty during the years 1922 to 1927, it was naturally
emphasized that the Court of Wards themselves could have found parties to take
leases on much better terms than those settled on the basis of the lease in favour of
Bokaro Ramgarh, Ltd., in 1907. On the very face of it, there is no doubt that the
market rates of salami and royalty in 1937 could not be the same as those in 1907.
But nowhere in the lengthy correspondence between the parties is there any trace of
the consideration by the officers of the Court of Wards whether it would be beneficial
to the ward to grant the extension of the licence, and thus open the door to further
leases on the original terms. Not only that; the Court of Wards agreed even to release
the Company from their obligation to pay minimum royalty after the 25th of March,
1939. It is manifest, therefore, that the Court of Wards practically agreed to make a
gift of a large sum of money, which should have come into the coffers of the ward, to
the Company. Such a transaction cannot, on the face of it, be justified, apart from any
other considerations of the validity of the sanction.
It has not been contended on behalf of the Company that, if the first and the
second variation deeds of the year 1917 and 1937, respectively, are void either for
want of the necessary sanction of the Board of Revenue or for non-consideration of the
benefit of the ward, the several leases executed in pursuance of those extensions
would not be equally void.
It has been, as noticed earlier, argued on behalf of the respondent Company that,
there being no
Page: 68
allegation of fraud against the Company in the matter of obtaining the leases, no
action will lie against them, though the plaintiff-appellant may have had a cause of
action, if any, against the Court of Wards itself. In this connection, it has been pointed
out that the allegations in the plaint, even after the amendments of the same, amount
to averments of negligence or even gross negligence on the part of the Court of
Wards; but that those allegations could not sustain an action against the Company
either for rescission of the contracts or a declaration that the contracts were void. It is
true that the action is not based on fraud either of the Court of Wards; or of the
Company; nor is it an action based on negligence. The plaintiff-appellant has alleged
negligence on the part of the officers of the Court of Wards or the Court of Wards
itself, only as ancillary to his claim for a declaration that the action of the Court of
Wards was not within its competence, inasmuch as it did not consider the benefit of
the ward: in other words, negligence is not the cause of action but it has been alleged
against the Court of Wards to show that the Court of Wards did not act, as it was
bound to do, as a prudent man of business would manage his own property. Hence, it
must be held that this contention raised on behalf of the respondent Company is not
well-founded in law.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
It was next contended on behalf of the respondent Company that the suit for
possession is barred by limitation, inasmuch as, it is contended, the Company came in
possession of the coalfields by virtue of the prospecting licence of 1915, that is to say,
tin the life-time of the appellant Raja's father who died on the 10th of April, 1919. If it
can be shown that the Company has been in possession of the coalfields since 1915,
they may have acquired title by adverse, possession. But there is no evidence of such
a possession. The Company had only a licence to dig and search for coal. No interest
was created by those licences in the land itself. Casual
Page: 69
and spasmodic acts of digging or boring holes on different spots within the coal area
cannot be said to be such possession as to attract the rule of adverse possession. All
the leases came into existence after the death of the present Raja's father; hence,
certainly the claim for possession in respect of those leases cannot be said to be
barred by limitation or adverse possession.
Sir S.M. Bose further contended that the persons in actual possession of different
areas within the coalfields were not parties to this suit, and that, therefore, the suit for
possession was not maintainable. This suit for possession must be taken to be for;
possession in the same sense, in which the defendant Company is in possession, and
the plaintiff's suit, if it is to be decreed, must be for possession as against the
defendant Company. The rights of third parties, if any, cannot be affected by the
decree to be passed in this litigation.
Sir S.M. Bose, on behalf of the Company, further contended that some of the letters
passing between the Court of Wards and the Company were not admissible in
evidence. But it is admitted that both Mr. MacGregor and Mr. Walter are dead, and
their statements made in the course of the correspondence between the Company and
the Court of Wards would be admissible under section 32 of the Evidence Act, as they
were made in the ordinary course of business. Furthermore, they will be admissible
under, section 6 of the Evidence Act as res gestae. It cannot be denied that those
letters passed in the course of the negotiations between the parties for the settlement
of the terms of the licence, or the extensions of the original licence. It also appears
that many of those letters were adduced by the Company themselves, and adduced in
evidence on their own behalf. Naturally, therefore, no objection appears to have been
taken as to their admissibility in the Court below. But, if they are not relevant under
the
Page: 70
Evidence Act, mere want of objection on their part will not make them admissible. But,
as already pointed out, those letters are admissible under the provisions of the
Evidence Act.
It was also suggested that the appellant Raja must be deemed to have waived any
objections that he may have had to the validity of the leases executed between the
parties, as he received royalties in the years 1938 and 1939 before the suit was
instituted by him. The Court below has decided this issue against the, defendant
Company, and no arguments have been addressed to us to show that the decision of
the Court below on this part of the case is erroneous in law or in fact.
As all the pleas raised on behalf of the defendant Company in bar of the suit fail, it
-----------------------------------------------------------------------------------------------------------------------------------------------------------
must be held that the plaintiff Raja is entitled to a decree for a declaration that the
prospecting licence dated, the 26th March, 1915, and its variations in 1917 and 1937
were all void and inoperative, and not binding on the plaintiff, and, consequently, the
leases granted by the Court of Wards in pursuance of those transactions, as mentioned
in Schedule B, are equally void and inoperative. The plaintiff is also entitled to
possession and mesne profits. It must also be held that the plaintiff in Suit No. 28 of
1940 is not entitled to any relief, and the suit must be dismissed with costs
throughout. The plaintiff in Suit No. 82 of 1940 is entitled to his costs both here and in
the Court below. It follows that both the appeals are allowed, and cross-objection by
the respondent Company is dismissed. Mesne profits shall be determined not on the
basis claimed by the plaintiff Raja, but on the basis of the profits made by the
respondent Company from the coalfields in question.
K.D.
Appeals allowed.
Cross-objection dismissed.
———
*Appeals from Original Decree nos. 125 and 127 of 1943, from a decision of Mr. Shiva Pujan Rai, Additional
Subordinate Judge of Hazaribagh, dated the 30th April, 1943.
(1) (1924) I.L.R. 3 Pat. 968.
(2)
(1948) L.R. 75 Ind. App. 115.
(3) (1929) 11 Pat. L.T. 121.
(4) (1900) 2 Ch. Div. 267, 271.
(1)
(1911) L.R. 39 Ind. App. 1.
(1) (1919) 4 Pat. L.J. 580, 603 to 604.
(1) (1924) I.L.R. 3 Pat. 968.
(2)
(1919) 4 Pat. L.J. 580, 603 to 604.
(1) (1929) 11 Pat. L.T. 1221, 129.
(2)
(1948) L.R. 75 Ind. App. 115.
(1)
(1929) 11 Pat. L.T. 121, 129.
(2) (1900) 2 Ch. Div. 267, 271.
(1) (1935) I.L.R. 59 Mad. 942.
(2) (1880) 16 Ch. Div. 236.
(3) (1887) L.R. 14 Ind. App. 89.
(4) (1892) L.R. 19 Ind. App. 90.
(5)
(1894) I.L.R. 20 Bom. 61.
(6) (1893) I.L.R. 20 Cal. 508.
(1) (1851) 68 Eng. Rep. 483.
(2) (1852) 51 Eng. 517.
(3) (1859) 54 Eng. Rep. 18, 20.
(4) (1905) A.C. 373, 377.
(1) (1901) L.R. 28 Ind. App. 190.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
(1) (1935) I.L.R. 14 Pat. 824, 834.

(2) (1932) I.L.R. 54 All. 646, 658, F.B.
(1) (1913) L.R. 40 Ind. App. 117.
(1) (1915) L.R. 42 Ind. App. 97.

(1) (1902) 2 Ch. Div. 46, 60.
Disclaimer: While every effort is made to avoid any mistake or omission, this casenote/ headnote/ judgment/ act/ rule/ regulation/ circular/
notification is being circulated on the condition and understanding that the publisher would not be liable in any manner by reason of any mistake
or omission or for any action taken or omitted to be taken or advice rendered or accepted on the basis of this casenote/ headnote/ judgment/ act/
rule/ regulation/ circular/ notification. All disputes will be subject exclusively to jurisdiction of courts, tribunals and forums at Lucknow only. The
authenticity of this text must be verified from the original source.

Karanpur HC 29 Pat 19 AIR 1950 Pat 134

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Karanpur HC 29 Pat 19 AIR 1950 Pat 134

Uploaded by

Copyright:

Available Formats

SCC Online Web Edition, © 2022 EBC Publishing Pvt. Ltd.

Page 1 Wednesday, December 07, 2022

In the High Court of Patna

The Judgment of the Court was delivered by

in the case of Rudradas Chakravarty v. Kumar Kamakhya Narain Singh(1) (the

In the state of evidence on the record, it is difficult to accede to the contention of

as incorporated in the document in question. Mr. Roberts, who was examined as a

to cease to be binding on the appellant Raja Secondly, if the cess clause as

“The object of a fixed or minimum rent is twofold: first, to provide a specified

salami of Rs. 11,343.

which had been settled in 1907. It has been

(1) (1935) I.L.R. 14 Pat. 824, 834.

(1) (1915) L.R. 42 Ind. App. 97.

You might also like