GUJRAT GINNING AND MANUFACTURING COMPANY, LIMITED, AHMEDABAD vs MOTILAL HIRABHAI SPINNING AND MANUFACTURING COMPANY, LIMITED, AHMEDABAD

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1935 Supreme(SC) 66

PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD MAUGHAM, SIR JOHN WALLIS, AND SIR GEORGE RANKIN
GUJRAT GINNING AND MANUFACTURING COMPANY, LIMITED, AHMEDABAD - Appellant
Versus
MOTILAL HIRABHAI SPINNING AND MANUFACTURING COMPANY, LIMITED, AHMEDABAD - Respondents
On appeal from the High Court at Bombay
Decided On : December 6, 1935.

Advocates:
Solicitors for appellants:Hy. S. L. Polak & Co. Solicitors for respondents: T. L. Wilson & Co.

Important Points

A license is not irrevocable under Section 60(b) of the Indian Easements Act, 1882, if the permanent works were executed on the licensee's own land. Furthermore, permissive use under a common agent does not imply a perpetual contract without clear evidence of mutual contractual intent.

Subject

Property Law - Easements and Licenses

Act Referred

EASEMENTS ACT: S.62, S.52, S.60(b), S.54

Headnote

(A) Indian Easements Act, 1882 - Sections 52, 54, 60(b) and 62 - License - Irrevocability - Execution of work of a permanent character - To render a license irrevocable under Section 60(b), the licensee must have executed work of a permanent character and incurred expenses while "acting upon the license," which implies performing acts on the grantor's land that would otherwise be unlawful - Execution of permanent works and incurring expenses on the licensee's own property does not constitute "acting upon the license" and therefore does not render the license to use the grantor's land irrevocable. (Paras 23-25)

(B) Equitable Doctrine - Implied Contract - Perpetual way-leave - For a license to be inferred as perpetual by implication, the conduct of the parties must justify the legal inference that they contracted for such a right - Permissive use of a facility under a common agent, where the arrangement is primarily for the benefit of the licensee, is insufficient to establish a perpetual right or an equitable claim against the grantor. (Paras 26-28)

Facts of the case:
Three companies under the management of a common agent used a railway siding that crossed the land of one company to reach the main railway line. The respondent company paid for the construction of the siding on its own land and a small portion on the appellant company's land. Following a change in management and a dispute over other property, the appellant company revoked the permission to use the siding and removed portions of the rails. The respondent company sought an injunction to protect its right of passage.

Findings of Court:
The court found that the permanent works executed by the respondent company were on its own land and not on the appellant's land. Consequently, the requirements of Section 60(b) of the Indian Easements Act, 1882, were not met. Additionally, there was no evidence of a contract, express or implied, that the license was perpetual.

Issues: Whether the license to use the railway siding was irrevocable under Section 60(b) of the Indian Easements Act, 1882, and whether the conduct of the parties established an equitable right to a perpetual way-leave.

Ratio Decidendi: The court ruled that "acting upon a license" requires the licensee to perform works on the grantor's land. Works done on the licensee's own property do not make a license to use another's land irrevocable. Furthermore, a perpetual license cannot be implied from permissive use under a common agent when the benefit is one-sided and no clear contractual intent is established.

Result: Appeal allowed; judgment reversed; injunction discharged.

Legal Category Hierarchy

Judgement

Appeal (No. 56 of 1934) from a decree of the High Court (April 10, 1930) affirming a decree of the District Judge of Ahmedabad (April 29, 1926), which reversed the decree of the Joint Subordinate Judge of Ahmedabad (November 30, 1925).

The question in this appeal was whether the respondent cotton mill company were entitled to the use of a railway siding running from the Bombay Baroda and Central India Railway to the respondents property across the adjoining property of the appellant cotton mill company.

The respondent company alleged (inter alia) that on the facts of the case there was an implied grant to them of the use of the portion of the siding passing through the appellants land, and that the appellant company were estopped from contesting the grant in view of the fact that the respondent company had spent a large amount of money in the construction and maintenance of the portion of the siding on their own land.

The facts appear fully from the judgment of the Judicial Committee.

The Joint Subordinate Judge dismissed the suit upon the ground that the respondent company had laid their case as one of co-ownership of the siding, and that effect could not be given to any other form of claim.

Upon appeal, the District Judge gave effect, by injunction, to the right claimed by the present respondents.

An appeal to the High Court (Marten C.J. and Murphy J.) was dismissed. Marten C.J. held that the present respondents had been given a license within the meaning of ss.52 and 54 of the Indian Easements Act, 1882, and that it was irrevocable under s. 60 (6) of that Act. Murphy J., in a separate concurring judgment, took the same view, and held that the license had become irrevocable because the licensee had been allowed to put up permanent structures.

1935. Nov. 11, 12. Upjohn K.C., and Parikh for the appellant company.

Gavin Simonds K.C., and Sir Thomas Strangman for the respondent company.

The relevant contentions as to license and irrevocability are set out in the judgment of the Judicial Committee.

Dec. 6. The judgment of their Lordships was delivered by

LORD MAUGHAM. The appellant company—the Gujrat Ginning and Manufacturing Company, Ld.—appeal from an injunction granted by the District Judge at Ahmedabad, and affirmed by the High Court of Bombay, restraining them from interfering with the passage of railway wagons between the respondents land and the line of the Bombay Baroda and Central India Railway upon railway lines laid down in the appellants premises. Part of the order complained of requires the appellants to replace certain rails which they had taken up. The suit was brought by the Motilal Hirabhai Spinning, Weaving and Manufacturing Company, Ld. (the respondents), in the Court of the Subordinate Judge at Ahmedabad on June 29, 1923. The trial judge had dismissed the suit.

Law. Rep. 63 Ind. App. 140 ( 1935- 1936) Gujrat Ginning and Manufacturing C ompany V. Motilal Hirabhai 218

A third company, the Gujrat Spinning and Weaving Company, Ld., has to be referred to, and, as its name is very similar to the name of the appellants, it will be referred to in this judgment as " the third company." The three companies just mentioned appear all to have been engaged in cotton manufacture, but it is not possible to form an opinion whether, and if so how far, they were rivals in business, or were in the habit of assisting one another, or were independent altogether.

In 1903 the three companies had for a long time been managed by the same firm of managing agents, and from before that year until his death in 1913 the individual who in fact managed the affairs of all three companies was one Mansukhbhai. On his death in that year, leaving an infant son, the business of all three companies was in fact managed by his brother and partner, Jamnabhai, until 1922, when Jamnabhai retired. Different agents were then appointed for the respondents and for the appellants, and in 1923 the present suit, and another suit to be hereafter mentio

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