PETITIONER:
CHHOTABRAI JETHABAI PATEL AND CO.
Vs.
RESPONDENT:
THE STATE OF MADHYA PRADESH(and other cases)
DATE OF JUDGMENT:
22/12/1952
BENCH:
AIYAR, N. CHANDRASEKHARA
BENCH:
AIYAR, N. CHANDRASEKHARA
MAHAJAN, MEHR CHAND
BHAGWATI, NATWARLAL H.
CITATION:
1953 AIR 108 1953 SCR 476
CITATOR INFO :
E&D 1956 SC 17 (12)
D 1958 SC 532 (5,23,24,25)
NF 1959 SC 735 (28)
O 1962 SC1916 (4,5,12)
O 1966 SC1637 (2,7,8,9,10)
RF 1968 SC1218 (2,4)
E 1970 SC 706 (5,6,7,8)
R 1976 SC1813 (13)
RF 1978 SC1635 (20)
R 1985 SC1293 (107,112,114,115,124,127)
ACT:
Madhya Pradesh Abolition of Proprietary Rights (Estates,
Mahals and Alienated Lands) Act, 1950, Ss. 3, 4 -Rights
under contracts with proprietors for plucking tendu leaves,
collecting lac, cutting timber etc.-Whether vest in State-
Nature of such contracts -Indian Sale of Goods Act (III of
1930) S. 4 (3) -”Future goods”, meaning of.
HEADNOTE:
The Madhya Pradesh Abolition of Proprietary Rights
(Estates, Mahals, Alienated Lands) Act of 1950 put an end to
all proprietary rights in estates, mahals and alienated
villages situated in the State and vested them in the State
for the purposes of the State, free from all encumbrances.
The petitioners, who had entered into various contracts and
agreements with the proprietors of the estates before the
date on which the estates vested in the State under the Act
(and,some of them even before the 16th March, 1950) under
which they were entitled to pluck, collect and carry away
tendu leaves, to cultivate, culture and acquire lac, and to
out and carry away teak and timber and other species of
trees, applied for writs under art 32 of the Constitution
prohibiting the State from interfering with the rights they
had, acquired under the contracts with the proprietors:
Held, (i) On construction of the contracts in a question,
that the contracts were in essence and effect licenses
granted to the petitioners to cut, gather and carry away
produce in the shape of tendu leaves, lac, timber, or wood
and the petitioners were neither proprietors nor persons
having any interest in the proprietary rights through the
proprietors, within the meaning of the Act;
(ii) The rights of the petitioners were not encumbrances
within the meaning of the expression “free from encumbrances
in s. 3 . 1) of the Act and the petitioners were entitled to
a writ against the State prohibiting the State from
interfering with the rights of the petitioners under the
contracts which they had entered into with the proprietors.
Mohanlal Hargovind v. Commissioner of Income-tax, C.P,&
Berar (I.L.R. [19491 Nag. 892) referred to.
Held also, that s. 4 (3) of the Indian Sale of Goods Act
which lays flown that in the case of sale of future goods
the contract
477
amounts only to an agreement to sell did not apply to the
contracts in the present case as "future goods" are defined
in the Act as meaning goods to be manufactured or produced
or acquired by the seller after making the contract of sale.
JUDGMENT:
ORIGINAL JURISDICTION: Petition is Nos. 232,233, 286, 309,
320, 351, 319, 350, 354 and 490 of 1951. Applications under
article 32 of the Constitution for writs to enforce the
fundamental rights of the petitioners.
C. K. Daphtar (R. M. Hajarnavis, with him) for the
petitioner in Petition No. 232.
M. C. Setalvad (G. N. Joshi and B. M. Hajarnavis, with him)
for the petitioner: in Petition No. 233.
B. M. Hajarnavis for the petitioners in Petitions Nos. 286,
309 and 320.
V. N. Swami for the petitioners in Petitions Nos., 350 and
351.
N. S. Bindra (B. S. Narula with him) for the petitioners
in Petitions Nos.'319, 354 and 490.
T. L. Shivde, Advocate-General of Madhya Pradesh, for the
respondent in all the petitions, the State of Madhya
Pradesh.
1962. December 22. The Judgment of the Court was delivered
by
CHANDRASEKHARA AIYAR J.-These are petitions under article 32
of the Constitution of India for directions or orders or
writs to enforce the fundaments rights, of the petitioners
to property by prohibiting, the respondent, the State of
Madhya Pradesh, from enforcing their alleged rights under
the Madhya Pradesh Abolition of Proprietary Rights
Act, 1950.
The several petitioners entered into contracts and
agreements with the previous proprietors of certain estates
and mahals in the State under which it is said they acquired
the rights to pluck, collect and carry away tendu leaves, to
cultivate, culture and acquire lac and to cut and carry away
teak and timber and miscellaneous special of trees called
hardwood and
478
bamboos. The contracts and agreements are in 'writing some
of them are registered. There is no dispute about their
genuineness, and it has not been alleged that they are
'collusive or fraudulent transactions. Their dates and the
several sums of money paid as consideration are set out in
the petitions. The petitioners allege that they have spent
large sums of money in the exercise of their rights, and his
fact too is not controverted.
Petitions Nos. 232, 233, 286, 309 and 320 of 1951 relate to
tendu leaves which grow in shrub jungles and which are used
in the manufacture of beedis or country made cigarettes, a
very extensive and competitive business carried on by some
of the petitioners involving an outlay of one to two lakhs
of rupees in some cases. For instance, 406 contracts are
involved in Petition No. 232 of 1951 ; the consideration
paid comes to Rs. 1,65,385 and the expenses are alleged to
be in the region of Rs. 1,90,000. In Petition No. 233 of
1951 there are 785 contracts; the purchase money is Rs.
1,10,605 and the outlay byway of 'expenses is said to be Rs.
50,000.
Petition No. 319 of 1951 relates to the culture and
cultivation of lac, and there are several lease deeds of
different dates enuring for different periods; two of them
go up to the years 1966 and 1967.
Teak,, timber and hardwood form the subject-matter of the
rights involved in Petition No. 350 of 1951 and the
registered lease deed is dated 8th October, 1949, and it is
for a term of ten years.
Petition No. 351 of 1952 involves tendu leaves and
miscellaneous forest produce and timber.
Petition No. 354 of 1951 relates to bamboo forests, and
Petition No. 490 of 1951 to hardwood and bamboo.
The contentions of the petitioners are mainly three in
number. They say that the rights acquired by them under
these contracts and agreements were got before the passing
of the Madhya Pradesh Abolition
479
of Proprietary Rights Act, 1950, and that the legislation
therefore does not affect them. It is urged next that they
are not proprietors within the meaning of the Act and
consequently the Act does not apply to them. Lastly, the
question is raised that the Act itself is ultra vires, as
many of its material provisions offend their fundamental
rights guaranteed under the Constitution.
The full title of the Act is the " Madhya Pradesh, Abolition
of Proprietary Rights (Estates, Mahals, Alienated Lands)
Act, 1950 ", and it is Madhya Pradesh Act I of 1951. It
came into force on 26th January, 1951. On the very next
day, there was a notification under section 3 of the Act
putting an end to all proprietary rights in estates, mahals
and alienated villages and vesting the same in the State for
the purposes of the State free of all encumbrances with
effect from 31st March, 1952.
The validity of the Act was questioned by the affected
proprietors in Visheshwar Rao v. The State of Madhya Pradesh
(1) before this Court, and the Act was held to be valid.
The petitioners are concluded.
We have to consider only the other two points raised
on behalf of the petitioners.It is clear from the provisions
in the impugned Act that only those rights of the proprietor
vest in the State which the proprietor had on the specified
date. Section 3 provides that on and from a date to be
specified by a notification by the State Government, all
proprietary rights in an estate or mahal vesting in a
proprietor shall pass from him to and vest in the State.
The consequences of vesting are given in section 4 of the
Act, and it is provided that the vesting will take place,
notwithstanding anything. contained in any contract, grant
or document or in any other law for the time being in force
and save as otherwise provided in this Act. But this again
deals only with the rights existing on the date of the
notification the section is not retrospective.
(1) [1952] S.C.R. 1029.
480
Clause (a) speaks of all rights,title and interest vesting
in the proprietor or any person having interest in such
propreitory right through the proprietor.
Clause (b) is to this effect
“all grants and confirmation Of title of or to land in the
property so vesting Or Of or, to any right or privilege in
respect of such property orland revenue in respect thereof
shall, whether liable to resumption or not, determine;”
The right or privilege referred to is the right or privilege
of the proprietor or any person having interest in the
proprietary right through the proprietor.
Clause (c) is quite clear on the subject; it runs thus:
“all rents and cossesi in respect of any holding in the
property so vesting for any period after the date of vesting
and which. but for the vesting, would be payable to the
proprietor shall vest in and be payable to the State
Government…….”
The words ” after the date of vesting ” are important.
Sub-section (3) of section 4 says
Nothing contained in subsection (1) shall operate as a bar
to the recovery by the outgoing proprietor of any sum which
becomes due to him-before the date of vesting by virtue of
his proprietary rights and any such sum shall be recoverable
by him by any- process of law which but for this Act would
be available to him.”
If the outgoing proprietor is entitled to, recover any sums
as quid pro quo for what he has parted with under the
transfer, it can only be on the basis that the transfer is a
good and valid transaction unaffected by the Act. Section 6
is very material, and it is in these terms’
(1) Except as provided in sub-section (2), the transfer of
any right in the property ‘Which is liable
481
to vest in the state under this Act made by the proprietor
at any time after the 16th March, 1950, shall,. as from the
date of vesting, be void.
(2) Where on the. application of the transferor or the
transferee, the Deputy Commissioner is satisfied that any
transfer of property referred to in subsection (1) was made
by a proprietor in good faith and in the ordinary course of
village management, he may declare that the transfer shall,
not be void* after the date of vesting.”
The date, 16th March, 1950, is probably the date when
legislation on these lines was actively thought of, and sub-
section (1) hits at transfers made after this date. This
means that transfers before that date are not to be regarded
as void. Even in the case of transfers after the said date,
sub-section (2). provides that the Deputy Commissioner may
declare that they .are not void after the date of vesting,
provided they were made in good faith and in the ordinary
course of management. ,
The scheme of the Act as can be gathered from the provisions
referred to above makes it reasonably clear that whatever
was done before 16th March, 1950, by the proprietors by way
of transfer of rights is not to, be disturbed or affected,
and that what vests in the State is what the proprietors had
oil the vesting date. If the proprietor had any rights
after the date of vesting which he could enforce against the
transferee such as a lessee or a licensee, those rights
would no doubt vest in the State. In all these petitions,
the several contracts and, agreements were before the date
of vesting, and many of them were prior even to the 16th
March, 1950. The petitioners had taken possession of the
subject-matter of the contracts, namely, tendu leaves, lac
palsadies, teak, timber and hardwood, bamboos and
miscellaneous forest produce.
Under the Indian Sale of Goods Act, “goods” include growing
crops, grass and things attached to or forming part of the
land, which are agreed to be severed before sale or under
the contract of sale
482
notwithstanding the -definition of “immovable property “ in
section 3 (25) of the General Clauses Act of 1897.
In Petition No. 232 of 1951 two sample agreements relating
to tendu leaves are given as annexures A and B to the
petitions. They may be quoted in extenso for a clear
understanding of the nature of the right created. Exhibit A
dated 16th November, 1950, is in these terms:
” Receipt written in favour of Seth Chhotabhai Jethbai Patel
Company shop Gondia, and written by Shri Madhavrao Gangadhar
Rao Chitnavis shop Itan receipt is written that we are
owners of forests of Tendu leaves of Monza Sawarla 0-12-0
Mauza Khatkheda 0-5-0 Mouza Nati Kheda 0-16-0 and Monza
Welwa 0-16-0. We have given contract (Theka) of cutting
Tendu leaves from these four villages for one year that is
till the end of June for Rs. 2,500 out of this we had
received Rs. 300 on 21st September, 1950, at Bhandara and
the balance Rs. 2,200 was received from your Bhandara shop
through Balubhai. Nothing remains to be paid to us. You
have a right to coppice the trees.”
The terms of Exhibit B dated 12th July, 1948, Emitting
unnecessary portions are as follows:
In the year 1948 A.D. theka patra is executed that in
consideration of the amount received as detailed above I had
given the full tendu leaves jungle for taking out tendu
leaves for five years from 1949 A.D. to 1053 A.D. I have
immediately given possession. Now you can take tendu leaves
of the tendu leaves forests described above every year for
five years till the end of June, 1953. You may coppice the
plants and take leaves. At the end of June, 1953, you
should return my jungle without damage or loss to me. After
the end of the period it depends upon my will whether or not
I give you the forests on theka (again). If any one
obstructs you in coppicing or taking away leaves, I will be
responsible for the damages. Hence I have executed
483
this theka pathi for five years for consideration after
reading and understanding. I agree with it. Dated 12th
July, 1948, by pen of Waman Sadeshic Amte Petition Writer
Bhandara.”
The contracts and agreements appear to be in essence and
effect licenses granted to the transferees to cut, gather
and carry away the produce in the shape of tendu leaves, or
lac, or timber, or wood.
A similar agreement came up for consideration by the
Judicial Committee of the Privy Council in Mohanlal
Hargovind of Jubbulpore v. Commissioner of Income-tax,
Central Provinces and Berar, Nagpur (1) in connection with a
question arising out of the Income-tax Act. Some of the
observations contained in the judgment dealing with the
nature of such an agreement are useful and may be quoted
here :
” The contracts grant no interest in land and no interest in
the trees or plants themselves. They are simply and solely
contracts giving to the grantees the right to pick and carry
away leaves, which, of course, implies the right to
appropriate them as their own property.
The small right of cultivation given in the first of the two
contracts is merely ancillary and is of no more significance
than would be e.g., a right to spray a fruit tree en to the
person who has bought the crop of apples. The contracts are
short term contracts. The picking of the leaves under them
has to start at once or practically at once and to proceed
continuously.”
There is nothing in the Act to affect the validity of the
several contracts and agreements. The petitioner are
neither proprietors within the meaning of the Act nor
persons having any interest in the proprietary right through
the proprietors. There is no provision in the Act which
extinguishes their rights in favour of the State. ‘What
exactly is meant by a ,proprietary right ” under the revenue
laws has been
(1).I.L.R. [1949] Nag. 892,
63
484
pointed out at page 217 of Volume I of Baden Powell’s Land
Systems of British India, where he says:
The first thing that will strike the student is the .use of
the term ‘ proprietary right’ in these pages and in Indian
Revenue Books generally. It does not occur in text-books on
English law or jurisprudence. I presume that the use of
such a phrase is due to the ad feeling that we rarely
acknowledge anything like a complete unfettered right vested
in any one person. The interest in the soil has come to be
virtually shared between two or even more grades, the cause
of which we just now discussed. It is true that, in many
cases, only one person is called ‘ landlord ‘ or ‘ actual
proprietor ‘ but his right is limited; the rest of the
right, so to speak, is in the hands of the other grades,
even though they are called ‘tenants’ or by some vague title
such as ‘ tenure-holders.’ In many cases, as we have seen,
this division of right is accentuated by the use of terms
like sub-proprietor’ or proprietor. of his holding’. The
‘proprietary right seems then a natural expression for the
interest held by a landlord, when that interest is not the
entire ‘bundle of rights’ (which in the aggregate make up an
absolute or complete estate) but only some of them, the re-
mainder being enjoyed by other persons.”
The definitions given in the Act do not abrogate or vary
this meaning. The respondent State cannot invoke in its aid
section 3, sub-clause (1) of the Act which speaks of the
vestina of proprietary rights free of all encumbrances,
because the rights of the petitioners either as buyers or
lessees or licensees are not encumbrances as ordinarily
understood. The last part of clause (a) of section 4 (1)
indicates that mortgage debts and charges on the proprietary
right are meant by encumbrances.
In this view, it becomes unnecessary to consider the
question as to when title in the property passes to the
transferee. Section 4, sub-section (3) of the Indian Sale
of Goods Act which lays down that in the case of sale of
future goods the contract amounts
485
only to an agreement to sell does not seem to be applicable
to the contracts and agreements here, as the goods are not ”
future goods ” as defined in subclause (6) of the Act which
states that they mean goods to be manufactured or produced
or acquired by the seller after the making of the contract
of sale. Benjamin says in his treatise on Sale (8th
Edition) at page 136:
” Things not yet existing which may be sold (that is to say,
a right to which may be immediately granted) are those which
are said to have a potential existence, that is, things
which are the natural produce, or expected increase of some
thing already owned or possessed by the seller. A man may
sell the crop of hay to be grown in his field, the wool to
be clipped from his sheep at a future time, the milk that
his cows will yield in the coming month, and similar things.
Of such things there could be, according to the authorities,
an immediate grant or assignment, whereas there could only
be an agreement to sell where the subject of the contract is
something to be afterwards acquired; as the wool of any
sheep, or the milk of any cows, which the seller might buy
within the year, or any goods to which he might obtain title
within the next six months.”
The goods covered by the present petitions are goods which
have a potential existence, and according to the decisions
discussed by the learned author, there can be a sale of a
present right to the goods as soon as they come into
existence. Whether title passes on the date of the contract
itself or later is really dependent on the intention of the
parties, and as already stated, in these petitions the
stipulated consideration has passed from the transferees to
the proprietors, and possession also has been taken.
We hold that the respondent has no right to interfere with
the rights of the several petitioners under the contracts
and agreements in their favour set out in their petitions,
and we hereby issue a writ prohibiting the State from
interfering in any manner whatsoever with the enjoyment of
those rights by the
486
petitioners. In cases where the periods under the contracts
have expired, or where the proprietors have ill to recover
anything from the transferees after he date of vesting, the
State will be at perfect liberty to assert and enforce its
rights standing in the shoes of the proprietors. The
respondent will pay the petitioners their respective costs.
Petition allowed.
Agent for the petitioners in Petitions Nos. 232, 233, 286,
309 and 320 : Bajinder Narain.
Agent for the petitioners in Petitions Nos. 360 and 351: M.
S. H. Sastri.
Agent for the petitioners in Petitions Nos. 319, 354 and
490: Harbans Singh.
Agent for the respondents in all petitions: G. H.
Rajadhyaksha.