Back
1951 Supreme(Cal) 231
HIGH COURT OF CALCUTTA
Harries, Banerjee
DINENDRO MULLICK - Appellant
Versus
UNION OF INDIA (UOI) - Respondent
A. F. O. D. 4 Of 1951
Decided On : AUGUST 14, 1951
A.K.BHATTACHARJEE, A.N.ROY, H.N.SANYAL, S.K.MUKHERJEE, S.M.BOSE
An agreement made by Receivers appointed to collect rents and profits, which purports to settle compensation for the requisition of property under the Defence of India Rules, is not binding on the owner of the property if it is not made in accordance with Section 175 of the Government of India Act, 1935, and if the Receivers did not have the authority to agree to the compensation.
Headnote:
COMPENSATION - DEFENCE OF INDIA ACT - AGREEMENT BY RECEIVERS - VALIDITY - GOVERNMENT OF INDIA ACT, 1935, SECTION 175 - CONSTRUCTION - RECEIVERS' AUTHORITY - ESTOPPEL.
Fact of the Case:
The appellant, the owner of premises in Calcutta, had created a mortgage in favor of the Imperial Bank of India in 1927. In 1938, two Receivers were appointed to take possession of the premises and realize rents and profits. In 1941, a part of the property was requisitioned by the Government under the Defence of India Rules, and compensation was payable. The Receivers agreed to Rs. 6000 as compensation, but the owner refused to accept it. The owner filed a suit for a mandatory injunction directing the Government to refer the dispute regarding compensation to arbitration under Section 19 of the Defence of India Act.
Finding of the Court:
The court held that the agreement made by the Receivers was not binding on the owner because it was not made in accordance with Section 175 of the Government of India Act, 1935, which required that such contracts be made in a specific manner. The court also held that the Receivers did not have the authority to agree to the compensation on behalf of the owner because the agreements appointing them only authorized them to collect rents and profits, not to settle compensation.
Issues: 1. Whether the agreement between the Government and the Receivers fixing the amount of compensation was valid in view of Section 175, Government of India Act? 2. Whether the plaintiff was bound by the act of the Receivers in accepting the compensation?
Ratio Decidendi: 1. Section 175 of the Government of India Act, 1935, required that contracts made in the exercise of the executive authority of the Federation or of a Province be made in a specific manner. The agreement between the Government and the Receivers was not made in accordance with this section and was therefore not valid. 2. The agreements appointing the Receivers only authorized them to collect rents and profits, not to settle compensation. Therefore, the Receivers did not have the authority to agree to the compensation on behalf of the owner.
Final Decision: The court allowed the appeal and made a mandatory injunction directing the defendant to appoint an arbitrator in terms of Section 19, Defence of India Act for the determination of the compensation payable by the Government to the plaintiff.
( 1 ) THE appellant is the owner of premises No. 8, Esplanade Row East, in Calcutta, situate within the Ordinary Original Civil Jurisdiction of this Court. In July 1927, he created a mortgage in favour of the Imperial Bank of India, by deposit of title deeds relating to the property for money lent.
( 2 ) BY a registered agreement dated 7-2-1938, made between the mortgagor and the Bank, two Receivers were appointed to take possession of the premises and realise the rents and profits thereof. By another agreement dated 22-12-1938, one of the Receivers was discharged and another appointed in his place, with like powers.
( 3 ) IN 1939, the Defence of India Act was passed and rules made thereunder. Rule 75a of the Defence of India Rules empowered the Government of India to requisition any property, movable or immovable, if that was needed for the maintenance of public order or the efficient prosecution of the war. But if the Government requisitioned a property, it was liable to pay compensation, the amount of compensation being determined under the provisions of Section 19, Defence of India Act. That section, so far as relevant, is as follows : " (1) Where by or under any rule made under this Act any action is taken of the nature described in sub-s. (2) of Section 299, Government of India Act, 1935, there shall be paid compensation, the amount of which shall be determined in the manner, and in accordance with the principles, hereinafter set out, that is to say- (a) Where the amount of compensation can be fixed by Agreement, it shall be paid in accordance with such agreement. (b) Where no such agreement can be reached, the Central Government shall appoint as arbitrator a person qualified under sub-s. (3) of Section 220 of the above mentioned Act for appointment as a Judge of a High Court. * * * * *
( 4 ) SECTION 299 provides for compulsory acquisition of land etc. Sub-section 2 says that neither the Federal nor a Provincial legislature shall have power to make any law authorising the compulsory acquisition for public purposes of any land. . . . . . . unless the law provides for the payment of compensation for the property acquired. . .
( 5 ) A very considerable part of the property in question was requisitioned in February 1941 by the Government under the Defence of India Rules and it became liable to pay compensation for it. Certain correspondence passed between the Government and the Receivers, and ultimately the Receivers agreed to Rs. 6000 as compensation payable by the Government to the owner. The owner refused to accept the figure and there was a dispute.
( 6 ) THE agreement regarding the compensation was made at a time when the Government of India Act, 1935, and not the Constitution was in force. The cause of action arose before the Constitution. Therefore the whole matter must be governed by the Government of India Act.
( 7 ) THE appellant's ease is that the agreement made by the Receivers is not binding on him. He urges two grounds for it : (l) that the agreement was not made in terms of Section 175, Government of India Act, and (2) that the Receivers had no authority under the documents appointing them, to make an agreement relating to compensation, which binds the owner.
( 8 ) THE relevant portion of Section 175 is as. follows:"section 175. (3) Subject to the provisions of this Act with respect to the Federal Bailway Authority, all contracts made in the exercise of the executive authority of the Federation or of a Province shall he expressed to be made by the Governor-General, or by the Governor of the Province, as the case may be, and all such contracts and all assurances of property made in the exercise of that authority shall be executed on behalf of the Governor-General or Governor by such persons and in such manner as he may direct or authorise. "
( 9 ) THERE is no dispute that the agreement regarding compensation was not made by the Receivers in the manner provided in Section 175.
( 10 ) THE mat
