JUDGMENT
Hamratna Singh, J.
1. This appeal by the State of Bihar (defendant No. 2) arises out of a suit for recovery of Rs. 34,650 either from defendant No. 1 (Raja Bahadur Girwar Prasad Narayan Singh of Ranka) or, in the alternative, from defendant No. 2. Before the vesting pf the estates and tenures in the State of Bihar under the Bihar Land Reforms Act 1950 defendant No. 1 owned a large estate in the district of Palamau and within that estate he owned and possessed a large area of jungles outside the area demarcated under the provisions of the Bihar Private Protected Forcstg Act.
The Plaintiff, a contractor, hailing from the district of Murshidabad in West Bengal, secured from the Raja, under a registered deed, dated the 12th April, 1952, a license to collect Biri or Kendu leaves from these jungles for a Period of three years commencing with 1952 on payment of Rs. 22,500 as the first year’s premium and of a further sum of Rs. 7,500 to be held as security by the Raja for being set off ultimately towards the premium for the third year. The premium agreed to be paid for each year “was Rs. 22,500. After payment of security money and the first year’s premium, the plaintiff began collecting the biri leaves from the jungles from the year 1952, the collection season commencing from the beginning of May and lasting for about a month and a half.
In the middle of December 1952 the plaintiff was served with a notice issued from the office of the Additional Collector of Palamau by which he was asked to show cause why the lease or license granted to him by defendant No. 1 should not be cancelled and why he should not be made to pay Rs. 22,500 to the State of Bihar for the 1952 season, because the estate of the Raja had vested in the State under a notification dated the 14th November, 1951. The plaintiff showed cause, but the Additional Collector rejected it on the 31st January 1953 and referred the matter to the Government of Bihar for a final decision.
But before the decision of the Government could be received, the collection season of 1951 arrived and by a letter of the Additional Collector dated the 28th April 1953 the plaintiff was allowed to collect the biri leaves in that season. By a notice dated the 2nd May 1953 the Additional Collector informed the plaintiff that, unless he were ready to pay the Government. Rs. 22,500 for the 1952 season and another sum of Rs 22,500 for the 1953 season and unless he were ready to make a deposit of an additional sum of Rs. 7500 as security, the lease for collecting leaves from the said jungles would be given to some other person. The plaintiff thereupon paid the two sums of Rs. 22,500 and deposited the security money at required by the Additional Collector. He, however, withdrew subsequently the security deposit of Rs. 7,500.
2. On the refusal of the Raja to refund the security money as well as the premium which he had paid for 1952 season, the plaintiff instituted the suit for recovery of Rs. 22,500 paid by him twice over for the 1952 season from such of the two defendants as may be held liable. He has also claimed refund of the security money Rs. 7,500 from the Raja and claimed in the alltertive sum of Rs. 10,125 as compensation from the State of Bihar for the loss he sufferer on account of the fact that the State did not allow him to collect) the biri leaves in the 1954 season. Thus, thc plaintiff have claimed Rs. 30,000 plus interest on Its. 4,650, from defendant No. 1, or, in the alternative, the principal amount of Rs. 22,500 with interest on Rs. 2,025 plus a. compensation of Ra 10,125 from defendant No. 2.
3. Both the defendants resisted the claim of the plaintiff through separate written statements. Defendant No. 1 contested, inter alia, that he was not bound to make the refund’ whatsoever, as the latter had, before taking the lease, made a full investigation into the title of this defendant to the jungles in question and as the relevant notification vesting his estate in the State of Bihar was never published in any newspaper and no notice of such vesting was ever sent to him, as per registered post, as required under thc provisions of the Bihar Land Reforms Act, 1950. It is further said that this defendant executed the lease in favour of the plaintiff for collection of the biri leaves in good faith, as, in spite of the publication cf the notification in the Gazette on the 14th November 1951, the State of Bihar did not take possession of his estate before the 13th June 1952 and did not cease to realise from the defendant the land revenue and cess for his entire estate for the kists following the said notification.
It is, therefore, contended that, if the plaintiff, with full knowledge of all the facts, chose to pay the premium over again to the State of Bihar, the loss incurred thereon should be borne by the plaintiff alone. The last assertion was that, as fifty per cent of the yield of the leaves to the plaintiff came from this defendant’s bakasht and zirat land, which never vested in the State of Bihar, the plaintiff was not entitled to recover even the security money from him inasmuch as he had collected biri leaves from such lands in the second year as well without paying any royalty or premium to this defendant for the leaves collected for 1953.
4. Defendant No. 2, on the other hand, asserted that, inasmuch as the plaintiff took the lease from defendant No. 1 with full knowledge of want of title from that defendant to the jungles, the payment made by him. to the said defendant in 1952 should not exonerate him from his liability to pay the premium for that year to the State of Bihar, It was further contended that no coercion was ever exercised on the plaintiff in the matter of payment and that the amount paid by him for 1952 to the State of Bihar must be deemed to have been paid in satisfaction of the liability which the plaintiff had incurred on account of the collection of Biri leaves by him in 1952 and 1953.
The last contention was that, as the estate had vested in the State of Bihar under the notification dated the 14th November 1951, the lease taken by the plaintiff from the Raja was not valid and the entire transaction between the plaintiff and defendant No. 1 must be treated as a colourable one.
5. The learned Subordinate Judge found as follows:–
(1) The estate of the Raja vested in the State of Bihar on the 14th November 1951 and, therefore, on the 12th April, 1952 when the Raja purported to have granted a lease or license to the plaintiff, he had no title whatsoever to enable him to execute a valid agreement in that behalf.
2.In view of the fact that the State of Bihar had demanded and accepted revenue and cess from the Raja subsequent to the 14th November 1951 and a proclamation was issued by the State of Bihar announcing that the State would take over the Raja’s estate with effect from the 13th June, 1952, the principle of estoppel applied and the State of Bihar was- bound to refund to the plaintiff a sum of Rs. 22,500 as the premium for 1952.
3. The Raja was bound to refund, the security deposit of Rs. 7,500, as he had failed to prove that the plaintiff was authorised to collect biri leaves from the bakasht and zirat lands or that the plaintiff had really collected leaves from such lands.
4. The plaintiff was not entitled to any damages from the State of Bihar.
5. The plaintiff was also not entitled to any interest from any of the defendants.
6. In view of these findings, the plaintiff was granted a decree against defendants 1 and 2 for Rs. 7,500 and Rs. 22,500 respectively, with future interest at six per cent. per annum. Hence this appeal by the State of Bihar. The plaintiff has filed a cross objection in respect of the interest disallowed; and defendant No. 1 has filed another cross-objection in respect of the decree of Rs. 7,500 passed against him in favour of the plaintiff.
7. The first question to be considered is whether the Raja had any authority to grant a lease or license in favour of the plaintiff from 1952 onwards. The finding of the lower court that the estate of the Raja had vested in the State of Bihar by virtue of the notification dated the 14th November 1951, issued Under Section 3 of the Bihar Land’ Reforms Act, 1950, has not been challenged during the hearing of this appeal.
But Mr. S. N. Dutt counsel for the Raja Bahadur, defendant No. 1, relied On certain event? which admittedly took place after this dats of vesting. In spite of the notification, the Raja was left in possession of the estate. Exhibit A and B are letters addressed to the Raja by the Tauzi Deputy Collector and the Additional Collector of Palamau in February and April 1952 demanding arrears of cess from him. Exhibits C series are chalans showing deposits of cess and revenue by the Raja in March and May 1952. Exhibit D is a proclamation to the public in general issued by the Additional Collector on the 13th Juno 1952 that the estate of the Raja had vested in the State of Bihnr with effect from that date. Admittedly the local officers took possession of the estate of the Raja on this date on behalf of the Government. It is necessary to state here why possession was not taken over by the officers of the Government before that date. The said Act was challenged by the Maharaja of Darbhanga and some other zamindars; and a Special Bench of this court decided on the 12th March, 1951 that the Act was unconstitutional (see, Kameshwar Singh v. State of Bihar, AIR 1951 Pat 91). An appeal was preferred by the State of Bihar to the Supreme Court against that decision, and on the 5th May 1952 the Supreme Court decided substantially that the Act was constitutional (see, the State of Bihar v. Sir Kameshwar Singh, AIR 1952 SC 252).
While the above case was pending before the Patna High Court, certain other zamindars, including the Raja Bahadur of Ranka, filed petitions (before the Supreme Court) under Article 82 of the Constitution of India challenging the validity of the Bihar Land Reforms Act as well RS the amendment of the Constitution of India in 1951 which had validated this Act.
These petitions were dismissed by the Supreme Court on the 5th October 1951, and The Bihar Act as well as the amendment of the Constitution of India were held to be valid (see, Shankari Prasad Singh v. Union of India, AIR 1951 SC 458). Apparently, however, the possestion of the estate of the Raja of Ranka was taken over after the disposal of the appeal by the State of Bihar against the decision of Special Bench of Patna High Court. The learned Subordinate Judge has found that, in view of Exhibit. A, B, C series and D, the State of Bihar could not challenge the settlement made by Raja for ths year 1932 at least. On the authority of the decision of the Colonial Rank v. John Cady, (1890) 15 AC 267, on which Mr. Dutt also relied, the Subordinate Judge has observed thus:
”A person is not to be permitted to represent a state of fact, at one time and afterwards, when some representation has induced another to change his position, seek to show that as such his representation was erroneous.”
But this principle is net attracted by the facts of the present case; and the view taken by the Subordinate Judge is not tenable. Section 3(1) of the Bihar Land Reform, Act, which provides for the vesting of estates and tenures in the State, lays down that the State Government may, from time to time, by notification, declare that the estates or tenures of proprietor or tenure-holder specified in the notification, “have passed to and become vetted in the State”. It was under this section that a notification dated the 14th November 1951 in respect of the estate of the Raja of Ranks was published. Section 4 of the Act lays down the consequences °f the vesting; and those consequences ensue on the publication of the notification under Section 3(1). Hence, the State of Bihar way entitled to take possession of the Raja’s estate immediately after the 14th November 1951 in the present case. It is well settled that there can be no estoppel against a statute. Further, there was no question of the Raja being misled by Exhibits A and B through which arrears of revenue and cess were demanded or by exhibits C series and D.
The law of estoppel is embodied in Section 115 of the Evidence Act and, in order to bring a case within its purview, there must be a representation by one party, the representation must bo a representation of fact, the representation must have been made with the intention that the other party should act upon the faith of the statement, and the other party must believe the representation to be true and act upon it. In the present case, there was no question of the Raja of Ranka being misled by the actions of the tauzi Deputy Collector and the Additional Collector in respect of the revenue and cess demanded from him or deposited by him. The Raja knew the truth that his estate had vested under Section 3 of the Bihar Land Reforms Act by virtue of the notification published on the 14th Novem bcr 1951. He could not have been misled by these acts of the tauzi Deputy Collector and the Additional Collector, particularly when his petition under Article 32 of the Constitution way dismissed by the Supreme Court on the 5th October 1951.
It is also remarkable that, though the lease in favour of the plaintiff was executed on the 12th April 1952, the Raja admitted its execution before the Sub-registrar on the 12th June 1952; but before that date the decision of the Supreme Court against the decision of the Special Bench of the Patna High Court had been given on the 5th May 1952. If the Raja was acting in good faith, he ought to have refused to admit execution on the 12th June 1952. Hence, there is no material to justify the inference that the Raja was misled on account of any representation made by the local officers.
This view is supported by a Division Bench decision of this Court in State of Bihar v. Kamakshya Narain Singh, 1961 BLJR 446. In that case the officers of the State of Bihar (a) demanded and accepted from the plaintiff revenues, cesses and other public dues on different dates; (b) filed certificates against him for recovery of cesses, agricultural income-tax and other public demands; (c) represented him as proprietor in the proceedings under the Land Acquisition Act and paid him compensation as such; (d) attached the compensation money under the Land Reforms Act in satisfaction of cesses due from him; (e) attached his estates and tenures under Section 99 of the Cess Act for recovery of cesses due from him as proprietor and subsequently released them from attachment thereby according to him the status of a proprietor; and (f) omitted to get its name mutated in Register D in his place.
In spite of these facts it was held that the plea of estoppel could not be sustained in that case. It was argued on behalf of the Raja Bahadur in that case that, notwithstanding the fact that the State had acquired indefeasible title to estates and tenures, the State represented that he was still a proprietor. But it was held that the alleged representation was a representation of law and the State was not estopped from denying the Raja Bahadur’s title, as it is well settled that there is no estoppel against a statute. It was further observed that once it was held that the estate of the Raja Bahadur vested absolutely in the State on a particular date by virtue of a notification under Section 3 of the Act,
”then all realisations made, compensation paid and proceedings taken in respect of the said estates constituted the ultra vires acts of the various Government servants, and, as a matter of law, were inadmissible to raise estoppel against the Government. They were obviously the outcome of their ignorance of the correct legal position or mistakes on their part, induced presumably by the proceedings taken by the plaintiff to avoid vesting. The Government was, therefore, not bound by them and was, not estopped from denying the plaintiff’s title.
Apart from ibis, all these collections were made by the Government officials in exercise of their power or discretion vested in them by relevant rules or laws and not in pursuance of any implied authority derived from the Government and, therefore, the Government cannot be bound by those acts.”
The facts of that case were similar to those of the present case.
8. In view of these observations of this Court, Mr. S. N. Dutt did not support the finding of the Subordinate Judge regarding estoppel, but he contended that the possession of the Raja after the 14th November 1951 and before the 13th June 1952 was either that of an “agent of the Bihar Government or that of a constructive trustee and, therefore, the Raja was competent to create the lease in favour of the plaintiff. But this contention is without any substance. It is not the case of the Raja that he was ever appointed by the State of Bihar as its agent; but it is argued that the Raja had an implied authority to act as an agent. Under Section 187 of the Indian Contract Act, such an authority can be inferred from the situation of the respective parties, the circumstances of a particular case, the conduct of the principal and the like. In other words, the relationship of implied agency is also based on the principle of law of estoppel.
The test for determining whether a person is acting as an agent of another person is whether he is purporting to enter into the transaction on behalf of his principal, that is, whether he is acting in a representative capacity. In the present case, the Raja never purported to act on behalf of or Rs a representative of the State of Bihar. There is nothing on the record of the caste either to raise a presumption that the lease Or license for collecting biri leaver was created by the Raja on behalf of the State. The evidence on the re-cord shows that neither the Raja intended to act as an agent of the State of Bihar, nor did the plaintiff understand that he was acting as such an agent.
The plaintiff’s servant, Nabadwip Chandra Chaudhary (P. W. 1) has merely said that in 1952 the plaintiff and his servants did not know that the Government had acquired the jungles of the landlords of thc district of palamau and he learnt about the same for the first time when the plaintiff received a notice from the Additional Collector in 1952. But the Bihar Land Reforms Act had been passed and the notification under Section 3 of the Act in respect of the estate of the Raja had been published in the Bihar Gazette in November 1951. It was, therefore, the duty of the plaintiff to make inquiries about the right of the Raja to settle the biri leaves with him. It cannot be said that the plaintiff and his men were strangers to the district of palamau. P. W. 1 has stated that the plaintiff was doing the work of collecting biri leaves in that district since 1938-39; and this witness has been looking after the affairs of the plaintiff in the district since about 1947.
Moreover, one of the decisions of the Supreme Court declaring the Act to be constitutional had been made long before the execution of the patta dated the 12th April 1952 and the second decision of the Supreme Court to the same effect had been made about a month before the registration of the patta. It may be recalled that the Additional Collector had given a notice on the 21st December 1952 to the plaintiff that, in as much as the estate of the Raja of Ranka had vested in the Government since the 14th November 1951, the lease executed by the plaintiff in favour of the Raja was not legal, valid and the same will be treated as cancelled, unless the plaintiff deposited the sum of Rs. 22,500 as royalty to the credit of the Government for the year 1952. But in his letter dated the 18th April 1953 from the Additional Secretary to the Government to the Deputy Commissioner of Palamau, a copy of which was forwarded to the plaintiff by the Additional Collector, it was stated that the existing lessee may continue in possession till final orders of the Government. The final order of the Government vvas communicated by the Additional Collector to the plaintiff through his letter dated the 2nd May 1953.
According to this order, the plaintiff was required to deposit to the credit of the Government a sum of Rs. 7,500 as security money and a sum of Rs. 22,500 as royalty for each of the ycary 1952 and 1953. In view of the letter dated the 18th April it was contended that the plaintiff acted in good faith in paying the royalty for 1952 to the Raja. But good faith cannot be inferred on account of this letter, because the plaintiff did not make any inquiry about the vesting of the estate of the Raja either from the Government or from the local officers beare executing the patta or before the registration of the patta.
It, is, therefore, not possible to accept the contention of the plaintiff that the Raja was acting 33 an agent of the Government or that the Raja was the ostensible owner of the jungles from which biri leaves were to he collected. There was no representation to the plaintiff by the local officials and, as already held, any representation by the local officers inconsistent with the correct legal position would not bind the Government. The Raja cannot, therefore, be held to be an implied agent of the Government for the purpose of authorising the plaintiff to collect biri leaves from the jungles which had legally vested in the Government.
9. There is no material on the record either o justify the contention that the Raja acted as the constructive trustee of the Government. Construe live trusts, which are not resulting trusts, arise:
(a) when some person holding fiduciary position has made a profit out of the trust property; and (b) in all other cases where there is no trust, the legal and equitable rights in property are nevertheless not so extensive and united in the same individual. (See, Underbill’s Law relating to Trusts and Trustees, 1950 edition, p. 171). There was no question of fiduciary relation between the Raja of Ranka and the Bihar Government and, therefore, Clause (a) does not apply. Clause (b) would apply when the person in whom the property is vested at law has not the whole equitable interest therein and in such a case that person is pro tanto a trustee of the property for the persons having such equitable interests. But in the present case the property was vested at law in the Government and no other person had any equitable interest therein.
10 Mr. Dutt also relied on Section 27 of the Indian Sale of Goods Act, which corresponds’ to Section 41 of the Transfer of Property Act. These Sections provide for the consequences: of the transfer of a property by an ostensible owner and they are also based on the principle of the law of estoppel. But, in order to attract the application of these provisions, it is necessary to show that the transferor is the ostensible owner of the property by the consent, express or implied, of the true owner and the transferee has acted in good faith, taking reasonable care to ascertain that the transferor had power to transfer.
It was contended that the consent of the Government was implied in as much as possession of the Raja’s etate was not taken before the 13th June 1952. But the implied consent of the real owner cannot be inferred, unless the real owner acquiesces in the acts of the transferor in dealing with the property; and such a consent on the part of the real owner cannot be inferred merely by his silence, unless it is such as to induce a belief that the party keeping, silence has no rights.
In the present case, the Government of Bihar never did any act which might induce such a belief; rather the Government was insisting on its legal right by virtue of the notification under Section 3 of the Act by contesting the claims of the zamindars in the Patna High Court as well as in the Supreme Court and ultimately it succeeded. The pla’intiff has also failed to prove that he acted in good faith in taking the lease from the Raja. In order to show that he acted in good faith, the plaintiff has to prove that he took reasonable care to ascertain that the Raja had power to make the lease. It is well settled that the expression “reasonable care” means such care as an ordinary business-man would take; but it has already been pointed out that the plaintiff did not make the usual inquiry into the title of the Raja either be-Fore the execution or the registration of the patta. Moverover, these provisions of law are meant for the protection of the transferees and not for the benefit of the transferor.
Mr. Dutt relied on the well known principle that, wherever one of two innocent persons must suffer by the act of third, he who has enabled such person to occasion the loss must sustain it. But this principle cannot help the Raja for two reasons. Firstly, there is nothing to show that the conduct of the Government misled the plaintiff; and secondly there is no question of the plaintiff suffering in the present case and the court has sufficient powers to compel the Raja to refund the amount that he took from the plaintiff by his fraudulent act. This contention of Mr. Dutt must also fail.
Mr. Dutt referred to some decisions in support of his contentions: but none of them applies even remotely to the present case. In Ram Pertab v. Marshall, ILR 26 Cal 701 (PC) the right of A third party against the principal on the contract of his agent, though made in excess of the agent’s actual authority, was nevertheless enforced by the Privy Council where the evidence showed that the contracting party had been led into an honest belief in the existence of the authority to the extent apparent to him.
In Commonwealth Trust Ltd. v. Akotey, 1926 AC 72, the respondent consigned by railway certain quantity of cocoa to one Laing to whom he had previously sold cocoa. Before a difference as to the price had been settled, Laing sold the cocoa to the appellants and handed the consignment notes to a third agent, who reconsigned the cocoa. to the appellants. The respondent sued the appellants for damages for conversion. It was found that the appellants bought the cocoa in good. faith and for the full price.
In these circumstances, it was held by the Privy Council that the respondent by his conduct was precluded from setting up his title against the appellants and accordingly the action failed. But in both these cases, agency was proved and the conduct of the principal misled the purchaser, whereas in the present case it has been found that there was nothing in the conduct of the Government to induce the plaintiff to believe that the Raja was acting on its behalf.
The last case Satgur prasad v. Hari Narain Das, 59 Ind App 147: (AIR 1932 PC 89) cited by Mr. Dutt, was decided on the bais of Section 88 of the Trusts Act, because it was found that the defendant stood in a fiduciary relation to the plaintiff and that he procured the conveyance by taking advantage of this relationship. In the present case, however, there was no such relation between the Government and the plaintiff.
11. In view of the foregoing discussion, defendant No. 1 (or the Raja) had no right to settle with the plaintiff the jungles which had vest- ‘ ed in the State of Bihar by virtue of the notification dated the 14th November 1951.
12. It was then argued on behalf of the Raja that the jungles standing on his zirat and bakasht lands were also included in the lease and such lands were preserved to him under Section 6 of the Act. There is nothing in the deed of agreement itself to show that any trees or shruby from which biri leaves could be collected were standing on the bakasht and zirat lands of the Raja. He has, however, examined several witnesses on this point. The Raja (D.W. 1} has himself got no personal knowledge about such bakasht and zirat lands. There is no paper in his office to show how many such trees were on his bakasht and zirat lands D. W. 2 a servant of the Raja, and D.W. 4, who is a cultivator and claims to be a biri leave dealer admitted that, when the lands are ploughed, and cultivated the existing shrubs and weeds ave smashed and cleared off.
In view of this statement it is impossible to believe that any shrub or plant would grow up on such lands, So that biri leaves’ could have been collected from them. D.W. 4 claims to have taken settlement of biri leaves after 1953 from the trees on the bakasht lands of the Raja under written pattas; but these documents were not produced. I agree, therefore, with the learned Subordinate Judge that the biri leaves on the bakasht and zirat lands were not included in the patta executed by the Raja in favour of the plaintiff Hence, this part of the Raja’s cage must also fail.
13. In view of the aforesaid findings, the plaintiff is not entitled to get refund of any sum from the appellant, that is. the State of Bihar. Hence, the next question to be considered is whether the plaintiff is entitled to get refund of Rs. 22,500 paid by him to the Raja for the year 1952. Mr. Dutt contended that the plaintiff is not entitled to get the same from the Raja for several reasons. The first reason given by him was that the plaintiff collected biri leaves in the year 1952 in lieu of Rs. 22.500 paid by him to the Raja.
But this argument is misconceived, as the plaintiff had to pay the same amount over again for the same year to the Government, the legal owner of the jungles from which the biri leaves were collected. He cannot obviously be made to pay twice over for collecting the biri leaves in 1952; and, as he had to make double payment on account of the misrepresentation of the Raja who did not admittedly inform the plaintiff that a notification vesting his estate in the State of Bihar had been published, the Raja who cannot take advantage of his own misrepresentation, must disgorge the amount. Another reason given by Mr. Dutt was that advantages to the plaintiff and to the Raja were reciprocal in the present case; but this is not correct inasmuch as the plaintiff had to pay for the biri leaves of 1952 to the Government as well.
14. The third reason advanced by Mr. Dutt was that the plaintiff could not get any decree against the Raja, because Section 65 of the Indian Contract Act does not appty to the present case, inasmuch as the contract was not wholly void or even partly void. But, in view of the earlier finding that the Raja had no transferable interest in the jungles in question since the 14th November 1951 and that the provision of Section 27 of the Indian Sale of Goods Act does not apply, this argument has no substance. Section 65 reads thus:
“When an agreement is discovered to be void or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the Person from whom he received it.”
It will be noticed that this section is attracted when (a) an agreement is discovered to be void.
or (b) a contract becomes void. In other words, the section deals with agreements enforceable by law and with agrements not so enforce. is. By Clause (e) of Section 2 of the Contract Act, every promise and every set of promises forming the consideration for each other is an agreement and by Clause (h), an agreement is enforceable by law is a contract. By Clause (g), an agreement not enforceable by law is said to be void.
It was held in Thakurani Ilarnath Kuar v. Thakur Indar Bahadur Singh AIR 1922 PC 403 that an agreement
“discovered to be void, is one discovered to be not enforceable by law and, on the language of the section, would include an agreement that was void in that sense from its inception as distinct from a contract that becomes void,”
In that case, the right of a reversionar was transferred by a sale deed executed on the 2nd January 1880 by the defendant in favour of the plaintiff’s deceased husband. It was held that the plaintiff, though not entitled to recover possession of the property sold, was entitled to recover compensation under Section (85, because the agreement to sell the right, of the reversioner was manifestly void from its very inception on account of the fact that the subject-matter of the sale was incapable or being bound by the sale.
In the present case. the Raha had no right to enter into any agreement in respect of the biri leaves of the jungles in question; and, therefore, the lease or licence, by whatever name the transaction is called, was void from its inception. The plaintiff discovered this fact when he received the notice from the Additional Collector. Hence, Section 65 would, in terms, apply to this case.
But Mr. Dutt further contended that this section does not apply to an agreement or contract which is void by virtue of a statute; and he has relied on a single Bench decision of this Court in Dhanna Munda v. Mt. Kosila Baniao, AIR 1941 Pat 510. In that case a raiyat of Chotanagpur transferred a part of his holding in contravention of the provision of Section 46 of the Chotanagpur Tenancy Act, 1908. It was held that Section 65 of the Contract Act was not attracted in that case and the aforesaid decision of the Privy Council was distinguished on the ground that the contract for sale was based on. mutual mistake of the parties as to the true nature of the right of the transferor.
But in another single Bench decision of this Court in Abhi Singh v. Daso Bhogla, AIR 1952 Pat 455, a contrary view was taken and it was held that Section 65 applied in the case of a transfer in contravention of Section 46 of the Chotanagpur Tenancy Act.
The earlier Patna decision does not appear to have been considered in the later decision but the later decision is based on an observation of the Privy Council in Mohan Manucha v. Manzoor Ahmad Khan, AIR 1943 PC 29. in that case, a judgment-debtor had mortgaged the property under the contiol of the Collector under paragraph 11 of Schedule III to the Code of Civil Procedure without the permission of the Collector; and it was held that inasmuch as the mortgagor had no right to transfer the property, the agreement was void since its inception and Section 65 of the Contract Act was attracted,
In arriving at that conclusion,” Sir Ceorge Rankin observed on behalf of the Judicial Committee thus:
“The principle underlying Section 65 is that a right to restitution may arise out of the failure of a contract though the right be not itself a matter of contrctual obligation. If it be settled law that the incapacity imposed on a judgment-debtor by para. 11 of Schedule 3 is an incapacity to affect his property and not a general incapacity to contract it follows that the covenant to repay is not made void by the mere operation of the paragraph. But the lender who has agreed to make a loan upon security and has paid the money, is not obliged to continue the loan as an unsecured advance’. The bottom has fallen out of the contract and he may avoid it if he does nor so avoid the contract, he brings himself within the terms of Section 65 and within the principle of restitution of which it is an expression–whether for all purposes adequate or exhaustive need not here be considered.”
In other words, Section 65 would be attracted, where the incapacity is in relation to the property and not general Incapacity as in the casts of a minor. As. the transfer of a piece of land in contravention of Section 46 of the Chotanagpur Tenancv Acl involves the incapacity of the transferor in relation to a property, the later decision of this Court is, if I may say so with respect, correct. In the present ease also, the incapacity of the Raja to transfer was in respect of a property, and not a general incapacity; and, therefore. Section 65 of the Contract Act is attracted and the contention of Mr. Dutt fails.
15. The last argument of Mr. Dutt was that the plaintiff cannot claim in this appeal the refund of Rs. 22,500 paid by him to tne Raja for collecting biri leaves for 1952, because he has not filed any cross-objection in respect of the same, and no court-fee has been paid by him in this appeal for any claim against the Raja. He relied on two decisions In support of this argument. It was held in Suraj Prakash v. Sant Lal, AIR 1940 Pat 137, that although the wording of Order 41, Rule 33 of the Code of Civil Procedure gives wide power to the appellate court, still it should not be exercised in such a way as to interfere with the provision of other enactment e.g. Court feess Act.
In Surendra Nath v. Surendra Nath, AIR 1939 Cal 593, it was held that, where the plaintiffs suit against several defendants is dismissed as against one of them and the plaintiff does not prefer an appeal Or cross-objection, it is not proper to give the plaintiff any relier under Older 41, Rule 33 against the defendants again, whom the’ suit was dismissed. But the observations in these two decisions were based on facts completely different from those in the present case. In the present case the plaintiff prayed for the following reliefs, namely,–
“(1) A declaration whether the lease granted by defendant No. 1 in favo-ir of the plaintiff On 12-4-52 is valid and binding or not on the defendant No. 2 on the defendant No. 2 talcing possession of the defendant No. l’s estate purporting to act according to the Bihar Land Reforms Act of 1950.
(ii) On such declaration
(a) if the lease be declared valid a decree be made in favour of the plaintiff against defendant No. 2 for Rs. 22,500 with interest at 6 per cent per year with effect from 8-5-1953 till realisation and for Rs. 10,125 or for such sum of money as the court may think proper, as compensation for loss of profit for 1954 season; and
(b) if. on the other hand the Iease be declared invalid and not binding on the defendant 2 a decree for Rs. 30,000 otherwise for Rs. 7,500 out of Rs. 30,000 with interest at 6 per cent per year with effect from 12-4-52 till realisation be made in favour of the plaintiff against defendant No. 1.”
In the account portion the plaintiff claimed Rs. 22,500 plua Rs. 7,500 plus interest from defendant No. 1, if he was in the wrong, and Rs. 22,500 besides interest and damages from defendant No. 2 if it wag in the wrong. It is, therefore, apparent that the plaintiff sought for alternative reliefs against the two defendants and he left it to the court to decide what he was entitled–to get from which defendanr. The claim of the plaintiff, except interest and damages way allowed by, the court below, partly against defendant No. 1 and partly against defendant No. 2. He could not, therefore, prefer any appeal in respect of the principal amounts; and. in view of the. provisions of Order 41, Rule 22 of the Code of Civil Procedure, he could not in such a case take any crossobjection. Hence, there was no question or payment of any court-fee in the appeal by the plaintiff on any portion of the principal amounts. Hence, this contention of Mr. Dutt also fails.
16. A court of appeal has got very wide powers under Order 41; Rule 33 of the Code of Civil Procedure in order to do complete justice between the parties: but these powers should be exercised with care and caution. AS an ordinary rule, an appellate court must not reverse or vary a decree in favour of a party which has not preferred any apneal or cross-objection against it. The illustration to the rule gives some Indication of the class of cases to which rule 33 will apply, e g., where, as a result of interference in favour of: the appellant, further -In-terference -with the decree is rendered necessary to adjust the rights of the partiey according to justice, equity and good conscience (see” Bir Singh v. Budhu Ram, AIR 1950 Pat 340).
17. In view of the earlier findings that the plaintiff ig not entitled to any refund from the State of Bihar and that the Raja defendant must disgorge the amounts that he received from the plaintiff on the basis of the lease granted by him without any title, the plaintiff is entitled to get refund of the security money of Rs. 7,500 and the premium amount of Rs. 22,500 from the Raja defendant.
18. Consequently, the cross-objection by respondent No. 2 in respect of the decree for the refund of Rs. 7,500 must fail.
19. Then remains the cross-objection of the plaintiff respondent in respect of interest, it is well settled that interest for the period prior to the date of the suit may be awarded, if there is an agreement for the payment of interest at a fixed rate, or it is payable by the usage of trade having the force of law, or under the provision of any substantive law entitling the plaintiff to recover interest as for instance the court may award interest at the rate of six per cent, per annum: when no rate of interest is specified in a promissory note or bill of exchange under Section 80, Negotiable Instruments Act (see Bemgal N g ur Railway Co. Ltd. v. Ruttanjj Ramji, AIR 1938 PC ,67).
In the present case, there wan no contract: for payment of interest; and (SIC)rest by way of damages cannot be allowed as there is nothing on the record to justify any claim for compensation or damages against any of the defendants. The plaintiff is not entitled to any interest during the pendency of the suit either, particularly because the principal issue between the parties was debatable. This cross-objection must, therefore, also fail,
20. In the result, the appeal is allowed and the cross-objections are dismissed. The plaintiff is not entitled to get any decree against defendant No. 2 and he is entitled to a decree against defendant- No. 1 for Rs. 22,500 plus Rs. 7,500 with corresponding costs of the lower court and interest at fix per cent, per annum from the date of the judgment of that court. The judgment and decree of the lower court are accordingly modified. In the circumstances of the case, parties will hear their own costs of the appeal and the cross-objections.
Kanhaiya Singh, J.
21. I agree.
