1956 Supreme(SC) 30

SUPREME COURT OF INDIA
10th April, 1956
S.R. DAS, C.J.I., BHAGWATI AND VENKATARAMA AYYAR, JJ.
Karanpura Development Co. Ltd., Appellant
Versus
Kamakshya Narain Singh and others.
Civil Appeals Nos. 191 and 192 of 1953.
Advocates Appeared
Mr. M. C. Setalvad, Attorney-General for India, Mr. N. C. Chatterjee and Mr. S. Chaudhry, Senior Advocates, (Mr. S. N. Mukherji and Mr. B. N. Ghosh, Advocates, with him), for Appellant; Mr. Atul Chnadra Gupta, Senior Advocate, (Mr. Ganpat Rai, Advocate, with him), (for Nos. 1 & 12); Mr. Atul Chandra Gupta, Senior Advocate, (Mr. I. N. Shroff, Advocate, with him) (for Nos. 2, 4, 5, 6 & 13); Mr. Lal Narain Sinha, Senior Advocate, (Mr. Bajrang Sahai and Mr. R. C. Prasad, Advocates, with him), (for No. 9); Mr. Sanjib Chaudhry, Senior Advocate, (Mr. R. R. Biswas, Advocate, with him) (for No.10); Mr. Sanjib Chaudhry Senior Advocate, (Mr. Ganpat Rai, Advocate, with him), (for No. 11) and Mr. Ganpat Rai, Advocate (for Nos. 3, 7 & 8), for Respondents.

Headnote:Bengal Court of Wards Act (IX of 1879)-Section 18Meaning and scope-Power to be secured by the Court of WardsExtent of the power-Grounds on wbich power under the section may be impugned-When sanction of the Board said to be given.

       The Ramgarh Raj is an ancient principality situate in Bihar. It has three coal-fields, Bokaro ]haria, Bokaro Ramgarh and Karanpura. On 26-11-1907 Raja Ram Narain Singh, the proprietor of thc estate, granted in favour of Messrs Anderson Wright & Co., a prospecting licence in respect of Bokaro Ramgarh coalfields. He died on 28-1-1913 leaving him surviving his widow and a minor son, Lakshminarain Singh. On 20•5-] 913 the Court of Wards took over the management of the estate, and its first concern was to relieve it from the pressure of creditors and for that purpose to arrange for a loan on easy terms. At this juncture Messrs Bird & Co. made an application for a prospecting licence for the Karanpura coal-fields. The terms were finally concluded and necessary documents entered into on 26-3-1915 On the representation of Messrs Bird & Co., on the ground of war conditions, the terms of the licence were revised by a document dated 23-11-1917.

       Raja Lakshminarain Singh, the ward, became a major on 6-4-1919, and died shortly thereafter on 10-4-1919 leaving him surviving a minor son, Raja Kamakshya Narain Singh. The Court of Wards accordingly continued in management of the estate on behalf of the Raja till 10.8-1937, when he became a major.

       The appellant Company was registered under the Indian Companies Act, and it took over the interests of Messrs Bird & Co. under the license dated 26-3_19 J 5 as modified by the deed of variation dated 23-11-1917. In pursuance of these deeds, the company took six leases. Clauses 6 of the deed dated 23-11-1917 provided that the minimum royalty on areas in excess of 10,000 bighas taken on lease would not be payable till 26-3-1939. Thereafter, the appellant would under that clause become liable to pay a minimum royalty for an area in excess of 10,000 bighas. The appellant applied to modify this term by postponing the date of payment by a further period of 12 years. This proposal was accepted by the Court of Wards, and on 1-6-1937 a deed was executed providing for modification of clause 6, as it stood in the deed dated 23-11-1917.

       On the Rajas becoming major, litigation in respect of these leases and documents started between him and the appellant company. The appellant brought a suit for specific performance to execute a lease in retpect of 250 bighas on land in accordance with the deeds dated 26-3-1915, 23-11-1917 and 1-6-1937. The Raja filed a suit pleading that the deed dated 26-3-1915 was void because the Court of Wards had

        no power to grant a prospecting license and also because it had acted with gross negligence in granting the same; and that the deeds dated 23-11-1917 and 1-6-1937 wcre bad, beeause there was no sanction therefor as required by section 18 of the Bengal Court of Wards Act, IX of 1879, and also because they were not for the benefit of the estate. He accordingly prayed for a "declaration that the three deeds aforesaid were void, and for possession of the properties comprised in the leases, with mesne profits, past and future.

       Both these suits were heard together by the Subordinate Judge of Hazaribagh. He held that the deeds dated 26-3-1915 and 23-11-1917 were ultra vires the powers of the Court of Wards, that they were beneficial to the estate, and were therefore valid, and he accordingly upheld the six leases granted pursuant to those deeds. He, however, held that the deed dated 1•6-1937 was not valid, both because the Court of Wards had not sanctioned it and also because it was not for tbe benefit of the estate.

       On appeal the High Court held that the Court of Wards was competent to grant a prospecting license, but that it had not applied its mind to certain important aspects of the transaction, that the interest of the ward had suffered in consequence, and that the deed dated 26-3-1915 was therefore not valid. It was also held that the deed dated 23-11-1917 was void because the Court of Wards had not sanctioned it, and also that it was not binding on the Raja, firstly because its terms were not beneficial to him, secondly because it had been obtained by Messrs Bird & Co., on fdlse representation, and thirdly because the then manager of the Court of Wards, was acting in his own interests and adversely to those of thc minor ward, and the Court of Wards had been misled by him into enter;ng into the transaction. For these reasons the learned Judges held that the deed dated 23-11-1917 was void and inoperative as against the ward. As regards the deed dated 1-5-1937, the learned Judges agreed with the Subordinate Judge that it was invalid on both the grounds given by him. The company appealed.

       Held (allowing the appeaP) : (1) A transaction entered into by a guardian on behalf of a minor will be valid and binding on the latter, only if it is for proved necessity or benefit, and it is open to the minor on attaining majority to challenge it on the ground that it was not beneficial to him. The Court of Wards is not in the same position as a guardian of a minor. It is a statutory body, and its powers are those which are conferred on it by the statute, which creates it. Section 14 of the Bengal Court of Wards Act, IX of 1879, provides that the Court of Wards may, acting through its manager do all such things requisite for the proper care and management of the property as the proprietor of such property might to, if not disqualified. Section 18 enacts that:

       The Court may sanction the giving of leases or farms of the whole or part of any property under its charge, and may direct the mortgage or sale of any part of such property, and may direct the doing of all such other acts as it may judge to be most for the benefit of the property and the advantage of the ward.

       It was in exercise of the power conferred by this section that the

       Court of Wards executed the two impugned deeds dated 26-3-1915 and 23•11-1917.

       1. From A.I.R. 1950 Pat. 134-. (2) The point to be considered is what do the words "as it may judge" in section J 8 of the Act mean? Do they confer on the Court of Wards a power to be exercised if the act is in its judgment for the benefit of the property or the advantage of the ward or do they confer a power to be exercised only if, in fact th1j.t act is for the benefit of the property or advantage of the ward?

       , The words "as it may judge most for the benefit of the property and the advantage of the ward" cannot be construed as equivalent to <Cas may be for the benefit of the property and the advantage of the ward" or "as might be judged to be most for the benefit of the property and the advantage of the ward." The statute confides in clear and unambiguous terms the authority to judge whether the act is beneficial to the estate, to the Court of Wards and not to any outside authority.l

       (3) The grounds on which exercise of power under section 18 of the Act could be impugned in a Court of law are: It can be attacked on the ground that the Court of Wards did not act bona fide and in the interests of the ward, and that its action amounted to a fraud on the PQwer. It can also be attacked on the ground that the Court of Wards did not in fact, apply its mind to the question, whether the act was for the benefit of the property or the advantage of the ward, and that though it purported to exercise the power under section 18, it did not, in fact, come to a judgment as required by the section. But where it has applied its mind and given thought to the question whether the act is for the benefit of the property or the advantage of the ward and comes to an honest judgment in the matter, its decision is not liable to be questioned on the ground that it was erroneous on the merits, or that it was reached without considering some aspects which ought to have been considered, unless the failure to consider them is of such a character as to amount to there being no exercise of judgment at all.

       (4) The question to be considered is whether the Raja has, the burden thereof being on him, established any grounds on which the deeds entered into by the Court of Wards on 26•3-1915 and 23-11-19]7 could be held to be outside the power conferred on it under section 18.2

       Regarding the deed dated 26-3-]915, the Court of Wards applied its mind to the question and formed its own judgment on it. Its decision is therefore not open to question. The Court of Wards is a statutory body with powers granted to it by section 18, and its action thereunder cannot be attacked on the ground that it had erred or was mistaken in its conclusion.

       The same applies to the deed dated 23-11-1917. The contention that the agreement dated 22-11-1917 was in substance a gift to Messrs Bird and Co., of a license for a period of 30 years, and that therefore section 18 of the Act could not be invoked in support of it, cannot be sustained. The transaction in question was not beyond the competence of the Court of Wards. Section 18 which confers authority on the Court of Wards to enter into the transaction is general and unqualified in its terms. There is no provision in the statute such as there is in section 29 (b) of the Guardian and Wards Act, 1890, that a lease by the Court

       1.Liversidge v. Sir John Anderson, (1942) A.C. 206 referred to.

       2.Allcroft v. Lord Bishop of London: Lighton v. Lord Bishop of London (1891) A.C. 666 applied.

        of Wards was to enure for a period related to the minority of the ward. Such a limitation cannot be read into section 18 for the obvious reason that the wards whose estates are to be administered under the Act, may, under section 6 of the Act, be females including majors declared incompetent to manage the properties or lunatics or persons who themselves apply that their estates might be taken over by the Court of Wards. Nor is there any substance in the contention that as the ward would shortly be attaining majority, no transaction should be entered into so as to tie his hands or prevent him from dea]ing with his estate after he becomes suiduris. The Court of Wards has not only the power but is under a duty to manage the estate, so long as it continues to be in its charge in the same manner as a prudent owner will manage his own estate, and the fact that the ward would be coming of age cannot operate to divest it of its powers and duties under the Act, though it might enter as an element in judging under section 18 whether the transaction should be entered into.

       On the facts of the case it could not be said that the Court of Wards had failed to consider the interests of the estates while entering into the transaction dated 23-11-1917, The deed is also not open to attack on the ground that in entering into the transaction, the Court of Wards did not consider the interests of the ward,

       Regarding sanction of the Board under secdon 18 of the Act, the position in law is that the requirements as to sanction must be held to be satisfied if the transaction in all its essential particulars had been sanctioned, even though there are details to be worked out in furtherance of the sanction and there is no further sanction given to the deed as finally settled. 1 The letter dated 9-10-1917 from the Board must therefore be construed as sufficient sanction under section 18 of the Act.

       (5) The result is that the deeds dated 26-3-1915 and 23-11-1917 are valid but •not the deed dated 1-6-1937 and that the leases granted to the appellant are valid but the clause postponing the payment of minimum royalty in the lease deed or deeds of 2-8-1937 is inoperative. - New question of fact-Art. 136 of the Constitution.

       Held: The question whether a transaction concerning a prospecting license with an agreement to lease in future was bad under S. 18 Bengal Court of Wards Act, 1879, for the reason that the rates of salami and royalty fixed there were less than the current market rates is essentially one of fact on which evidence would have to be adduced, and cannot be raised in appeal to the Supreme Court for the first time. - Article 132- Supreme Court Practice-New point regarding question of fact-Civil Procedure Code, S. 112.

       Held: . The question whether a transaction concerning a prospecting license with an agreement to leave in future was bad under S. 18, Bengal Court of Wards Act, 1879, for the reason that the rates of salami and royalty fixed there were less than the current market rates is essentially one of fact on which evidence would have to be adduced, and cannot be raised in appeal to the Supreme Court for first time.

       See further under "Bengal Court of Wards" at p. 94 ante. - Deed-partly void-Effect-Transfer of Property Act, 1882, ection 8.

       The fact that a clause in a deed is not binding on the ground that it is unauthorised cannot ipso facto render the whole deed void, unless it forms such an integral part of the transaction as to render it impossible to sever the good from the bad.

       Where a proviso in a lease deed is void as it is unauthorised, and the effect of declaring the proviso void will leave the rest of the deed, whole and intact, the lease without the proviso is perfectly valid.