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High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE V. RAMASWAMI & THE HONOURABLE MR. JUSTICE SENGOTTUVELAN
The Government of Tamil Nadu represented by the Secretary to Government
Versus
Hajee S.V.M. Mohamed Jamaludeen Bros. and Company represented by S.M.A. Basheer Mohideen, Managing Partner
O.S. No. 2 of 1979
Decided On :Decided on : 12-04-1982
GOVERNMENT GRANTS ACT - LEASE AGREEMENT - CANCELLATION - VALIDITY - DAMAGES - CALCULATION - CHANK FISHERY - RIGHT TO FISH AND CARRY AWAY CHANKS - PROFIT A PRENDRE - IMMOVABLE PROPERTY - TRANSFER OF PROPERTY ACT - APPLICABILITY - GOVERNMENT GRANTS ACT - APPLICABILITY - DAMAGES - MEASURE - COST OF CHANKS - MARKET PRICE - DIFFERENCE.
Fact of the Case:
The appellant, the Government of Tamil Nadu, entered into lease agreements (Exs. P11 to P15) with the respondent, a partnership firm, granting the respondent the right to fish and carry away chanks from various regions in Tamil Nadu. The agreements contained a clause (Cl. 11 of Ex. P11 and Cl. 7 of Exs. P12 to P15) empowering the appellant to cancel the lease at any time without assigning any reason. The respondent took possession of the fisheries on 2nd February, 1971, but was prevented from enjoying the rights granted under the agreements due to non-cooperation and refusal of assistance from the appellant. The appellant unilaterally cancelled all the leases on 10th June, 1971, without giving any notice to the respondent. The respondent filed a suit for damages, claiming a sum of Rs. 27,65,544. The trial court held that the unilateral power of the appellant to cancel the agreements was void and unenforceable and awarded damages to the respondent.
Finding of the Court:
The High Court upheld the trial court's findings and dismissed the appeal filed by the appellant. The court held that: * The right to fish and carry away chanks is a profit a prendre, which is a benefit arising out of the land, and as such it is an interest in immovable property. * The agreements Exs. P11 to P15 conferred on the respondent a licence coupled with interest in immovable property. * The provisions of the Government Grants Act, 1895 apply to the agreements Exs. P11 to P15, but S. 3 of the Act validates all provisions, restrictions, conditions, and limitations contained in such grants, notwithstanding any rule of law, statute, or enactment of the Legislature. * The clause in the agreements empowering the appellant to cancel the lease without assigning any reason is void and unenforceable as it is repugnant to the earlier clause prescribing a fixed term of three years for the lease. * The respondent is entitled to damages for the breach of contract by the appellant. * The measure of damages is the difference between the cost price of the chanks that would have been incurred by the respondent if the lease agreements had been acted upon and the market price prevalent after the cancellation of the lease.
Issues: 1. Whether the unilateral power of the appellant to cancel the agreements is void and unenforceable? 2. Whether the respondent was prevented from enjoying the fishery right in the Palk Bay and Sivaganga regions? 3. Whether the respondent is entitled to any damages and if so to what amount? 4. Whether the agreements created a lease in favor of the plaintiff or only conferred a license in favor of the plaintiff to collect and carry away chanks? 5. Whether the claim towards damages in respect of Kanyakumari region on the enhanced amount of Rs. 6,92,649-86 is barred by limitation?
Ratio Decidendi: 1. A clause in a lease agreement that empowers the lessor to cancel the lease at any time without assigning any reason is void and unenforceable if it is repugnant to an earlier clause prescribing a fixed term for the lease. 2. The right to fish and carry away chanks is a profit a prendre, which is a benefit arising out of the land, and as such it is an interest in immovable property. 3. The provisions of the Government Grants Act, 1895 apply to grants by the Government, including lease agreements granting the right to fish and carry away chanks, but S. 3 of the Act validates all provisions, restrictions, conditions, and limitations contained in such grants, notwithstanding any rule of law, statute, or enactment of the Legislature. 4. The measure of damages for breach of a contract to sell goods is the difference between the contract price and the market price on the date of the breach.
Final Decision: The appeal was dismissed, and the judgment and decree of the trial court were upheld.
SENGOTTUVELAN, J.
1. This appeal is filed by the Government of Tamil Nadu represented by the Department of Agriculture, the defendant in the suit in O.S. No. 143 of 1974 on the file of the Original Side of this Court, against the judgment and decree passed in the said suit by Padmanabhan, J., awarding a sum of Rs. 26,79,930-50 with interest at 12 per cent from the date of cancellation of lease amounting to Rs. 9,64,775 totalling Rs. 36,44,705-50 and future interest from the date of the suit till the date of decree to the respondent herein.
2. The facts of the case are briefly as follows:— In 1970 the Director of Fisheries. Madras called for sealed tenders for the lease of the right to fish, take and carry away chank shells from the Government Chank Fisheries, of (1) Palk Bay region of Ramanathapuram District; (2) The coast of Kanyakumari District; (3) the coast of Chingleput District including Madras and South Atcotand excluding the French Kuppam of Pondicherry; (4) the coast of Thanjavur District excluding the chank fishery of the French K uppam of Karaikal and also excluding the Thanjavur coast from Puthukudu to Point Calimere; and (5) The coast line of Ramanathapuram District i.e. from Sundarapandian Pattinam to Karangadu in the Palk Bay, generally known as Sivaganga Fishery. The tenders were called for by the notification dated 17th August, 1970. The respondent, a partnership firm submitted tenders along with others. The tenders submitted by the respondent being the highest was accepted by the Government of Tamil Nadu, the appellant he rein. The bid amount of the respondent in respect of several fisheries which were accepted by the appellant are as follows:—
1. PalkBayregion Rs. 81,001
2. Kanyakumari region Rs. 9,5001
3. South Arcot, Chingleput and Madras region Rs. 85,087
4. Thanjavur region Rs. 81,082
5. Sivaganga region Rs. 45,601
The respondent also executed lease deeds in respect of the above said fisheries in favour of the appellant. According to the lease deeds the respondent was permitted to collect chanks from the various regions upto the limits prescribed in the lease deeds in respect of each fishery. The particulars of the lease as evidenced by the lease deeds can conveniently be stated by means of a tabulation:—
S. No. Ex. No. Name of the Fisheries Period of lease Lease amount Limit upto which chanks
can be collected Security deposit.
1. P- Palk Bay region From 2-#1511971 to 1-- Rs. 81,000/- per annum to be paid half yearly in
advance. 6,00,000 full sized chanks of size of 57.15 mm per year. Rs. 8,100
2. P- Kanyakumari region —do— Rs. 9,501/- per annum to be paid yearly in advance. 1,50,000 full sized chanks per year. Rs. 950-10
3. P- South Arcot, Chingleput and Madras region. —do— Rs. 85,087/- per annum to be paid half yearly in advance. 1,75,000 full sized chanks per year. Rs. 8,508-70
4. P- Thanjavur region —do— Rs. 81,082/- per annum to be paid half yearly in advance. 2,00,000 full sized chanks per year. Rs. 8108-20
5. P- Sivaganga region —do— Rs. 45,601/- per annum to be paid half yearly in advance.
3,00,000 full sized chanks per year Rs. 4,560-10
3. As per the terms of the abovesaid lease agreement, viz., Exs. P11 to P15, the respondent took possession of the fisheries on 2nd February, 1971. The case of the respondent is that immediately thereafter the appellant prevented the respondent from enjoying the right to fish in Palk Bay and Sivaganga regions by the non-co-operation of the appellant and its refusal to render the respondent the necessary assistance. On 7th March, 1971 the respondent sent a notice Ex. P17 through their Advocate to the Secretary to Government of Tamil Nadu complaining about their being prevented from having quiet possession and peaceful enjoyment of the leasehold rights and privileges and calling upon the appellant to render all assistance in the matter of peaceful fishing of the chanks. There was no disturbance from others from 14th March, 1971 for some days. However,
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