State of Orissa vs Madan Gopal Rungta

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: 300 to 304 of 1951

Decision Date: 25 October 1951

Coram: Hiralal J. Kania, B.K. Mukherjea, N. Chandrasekhara Aiyar

The case was styled State of Orissa versus Madan Gopal Rungta and was decided on 25 October 1951 by the Supreme Court of India. The bench comprised Chief Justice Hiralal J. Kania together with Justices B.K. Mukherjea and N. Chandrasekhara Aiyar. The appellant was the State of Orissa and the respondent was Madan Gopal Rungta. The judgment was recorded under the citation 1952 AIR 12 and 1952 SCR 28, and it was subsequently cited in several later decisions, including 1962 SC 1044, 1962 SC 1305, 1964 SC 685, 1965 SC 745, 1966 SC 1441, 1968 SC 733, 1973 SC 2720, 1975 SC 2238, 1976 SC 578, 1980 SC 962, and 1983 SC 1272. The headnote of the judgment explained that a High Court could not issue a direction under Article 226 of the Constitution merely to grant interim relief pending the institution of a civil suit when the suit could not be filed until after the expiry of sixty days from a notice under Section 80 of the Civil Procedure Code, because the applicant might suffer irreparable loss in the interim. It further observed that, although writs under Article 226 may be issued for purposes other than the enforcement of fundamental rights, the concluding words of the article must be read in the context of the preceding material, and the existence of a right is the foundation of the Court’s jurisdiction under that article. Accordingly, the Court held that an interim relief could be granted only as an aid to, and ancillary to, the main relief that might be available to the party when his rights were finally determined in the suit or proceeding.

The appeals were filed in civil appellate jurisdiction as Cases 300 to 304 of 1951, each appeal being taken under Article 132(1) of the Constitution from the judgment dated 2 August 1951 of the High Court of Judicature at Orissa, which had been delivered by Chief Justice Ray and Justice Narasimham in Miscellaneous Judicial Cases Nos. 126, 127, 128, 129 and 130 of 1951. The appellant was represented by M.C. Setalvad, Attorney-General for India, accompanied by G.N. Joshi, in all of the appeals. The respondents were variously represented by counsel: N.C. Chatterjee, assisted by H.J. Umrigar and A.N. Roy, appeared for the respondent in Case 300; Roshan Lal appeared for the respondents in Cases 301 and 304; N.C. Chatterjee, assisted by A.N. Roy, appeared for the respondent in Case 302; and N.C. Chatterjee, assisted by A.N. Roy and A.N. Sinha, appeared for the respondent in Case 303. On 25 October 1951, the judgment of the Court was delivered by Chief Justice Kania. These were five companion appeals arising from the High Court’s judgment, each originating from a separate petition filed by the respondent in the respective appeal, seeking a writ of mandamus or directions under Article 226 of the Constitution.

In each of the five companion appeals the respondents asked the Court for a writ of mandamus or for directions issued under article 226 of the Constitution of India. The respondents claimed that between the year 1941 and the year 1947 they had entered into an agreement with the Ruler of Keonjhar whereby they would obtain a mining lease and that they had subsequently taken possession of the mine area. Some of the petitioners further alleged that they had spent money on developing the mines and that they had installed machinery for mining operations. It was, however, unanimously accepted that no lease had been formally registered in favour of any of the respondents before the year 1947. On 14 December 1947 the Ruler of Keonjhar signed a merger agreement with the Dominion of India and, effective from 1 January 1948, the State of Keonjhar was merged into the Dominion. After the merger agreement was executed the Ruler issued registered leases to the respondents on 27 December 1947.

Subsequently, exercising the powers granted to the Government of Orissa by section 4 of the Extra-Provincial Jurisdiction Act, 1949, in conjunction with Notification No. 172/1B dated 23 March 1948 issued by the Government of India, the Government of Orissa issued a notification on 8 June 1949. That notification declared, among other matters, that the leases granted on 27 December 1947 were void and would not be binding upon the State. The annulment was expressly based on the ground that the commitments embodied in those leases were not reasonable and not made in good faith. Following that declaration the respondents, together with other interested parties, applied to the Orissa Government for fresh leases. The State Government responded by granting them temporary permits to work the mines in November 1949.

On 3 July 1951 the State Government issued an order cancelling those temporary permits and directed the respondents to remove all their assets situated at the respective mines within a period of fourteen days. In response the respondents filed petitions before the Orissa High Court seeking writs or directions in the nature of mandamus, demanding that the State withdraw the notices dated 8 June 1949 and 3 July 1951 and that it refrain from giving effect to those notices. After hearing the parties, the Court rejected the contention that the cancellation of the permits and the alleged attempt by the State to take possession constituted a mere act of State. The Court then framed the principal question: whether the legal basis for annulment relied upon by the State applied to the mining leases granted to the petitioners, or alternatively, whether the State possessed any legal authority to cancel those leases before the expiry of the period specified therein.

Addressing the State’s argument concerning the respondents’ acceptance of the temporary permits and the possible estoppel arising therefrom, Ray C.J. observed in his judgment: “In determining the validity of this contention (relating to the temporary permit and estoppel arising therefrom) the circumstances under which these applications were made and the legal implications of such applications and the permissions granted under them will have to be considered.” The Court clarified that it was not its purpose to pass judgment on the merits of the rival contentions at this stage, but that the surrounding facts and logical sequence created a matter worthy of trial.

In this summary proceeding the Court clarified that it did not intend to pass a final view on the competing arguments of the parties, but it was convinced that, given the surrounding facts and the logical sequence of events, a genuine dispute existed that required a trial. The Court then examined the reach of a writ of mandamus and found that the respondents presently had no other legal recourse that was equally convenient, effective, and protective, because the respondents were barred from instituting a suit until after the sixty-day waiting period stipulated by section 80 of the Civil Procedure Code. The Court expressed concern that, without interim protection from the Court, the respondents would suffer an irreparable and unremediable loss of possession of the mining leases, which would involve the needless waste of labour, machinery and other valuable equipment, losses that could not be adequately compensated by a simple monetary award. Consequently, the Bench issued an order dated 2 August 1951 directing that, for a period of three months from the date of the order or for one week after the filing of the respondents’ contemplated suit—whichever occurs first—the Government of the State of Orissa must refrain from disturbing the petitioners’ possession of the mining areas in question. The order further specified that it would cease to have effect after the earlier of those two periods and included detailed directions on how the mines should be operated during the protected interval.

The judgment concluded by stating that the petitions were allowed in part, but only to the limited extent described in the earlier order. Justice Narasimham concurred with the order articulated by the Chief Justice, although his agreement was expressed with some hesitation. He explained that he was reluctant to invoke the powers granted under article 226 because the respondents could, in principle, institute a suit; however, the mandatory sixty-day delay prescribed by section 80 would inevitably cause irreversible loss, compelling him to endorse the interim order. Near the end of his opinion, he emphasized that the observations contained in the judgment should not be interpreted as a pre-determination of any issues that might later arise before a civil court if the petitioners were to commence a regular suit seeking interim relief such as a temporary injunction or the appointment of a receiver. He underscored that questions concerning the existence of a prima facie case, the maintainability of the suit, the balance of convenience, and related matters must be decided by the appropriate civil court, free from any influence of the present observations, which were intended solely to provide temporary relief under article 226.

The Court observed that the observations contained in the earlier judgment were made solely for the limited purpose of granting temporary relief under article 226 and were not intended to embarrass either party or the Court in any future litigation. After that observation, an application was filed seeking to stay the operation of the order dated 2 August 1951 so that the Government of Orissa could appeal against that order. The same judges, on 6 August, granted a stay of the order for fifteen days and recorded that the effect of the 2 August order was merely to provide the respondents with an interim measure of relief for the period during which the petitioners were without remedy, while the judges were not inclined to accept the petition and issue a writ of mandamus as prayed for. The State of Orissa then lodged an appeal before this Court. After hearing arguments from both sides, the Court concluded that the High Court’s order could not be sustained. Consequently, on 15 October, the Court issued an order allowing the five appeals, setting aside the High Court’s order in each case, noting that the High Court had passed no other orders on the petitions and had expressly stated that it was not prepared to pass any further orders. The petitions were therefore dismissed, the respondents were ordered to pay the costs of the appeals, and the Court indicated that reasons for the decision would be delivered subsequently.

The reasons given by the Court began with a recitation of article 226 of the Constitution of India, which provides that, notwithstanding anything in article 32, every High Court shall have the power, throughout the territories over which it exercises jurisdiction, to issue to any person or authority, including, where appropriate, any government, directions, orders or writs—including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari—for the enforcement of any of the rights conferred by Part III and for any other purpose. Clause 2 of the same article adds that the power conferred on a High Court by clause 1 shall not be in derogation of the power conferred on the Supreme Court by clause 2 of article 32. The Court explained that the language of article 226 shows that the power to issue writs or directions is not limited only to situations where a fundamental right under Part III is infringed; the Court may also issue writs or similar directions for any other purpose. The concluding words of article 226 must be read in the context of the preceding text, so that the existence of a right forms the foundation of the Court’s jurisdiction under the article. The Court observed that the judgment of the Orissa High Court under appeal demonstrated that the judges had decided nothing at all concerning the rights of the parties.

In its judgment the judges expressly stated that their observations were not to be regarded as a determination of any of the parties’ rights or of the contentions raised in the petitions. The judgment explained that, because section 80 of the Civil Procedure Code required the present respondents to wait at least sixty days before filing a suit against the Government, the respondents’ position should not be disturbed during that period. Accordingly, the court issued directions on 2 August 1951 to preserve the status quo. To remove any doubt about the nature of the relief intended by the order of 2 August, the same judges clarified on 6 August that, apart from those specific directions, they were not prepared to make any other order on the petitions. Thus, while the judges declined to investigate or pronounce on the parties’ substantive rights and expressly kept the determination of those rights in abeyance pending the suit that the respondents intended to file, they nonetheless granted interim relief directions to operate until such a suit was filed. It must be noted that, with the issuance of the 2 August 1951 order containing these interim-relief directions, the petitions were entirely disposed of and were not left pending for further disposal. Those directions therefore constituted the final order of the court on the petitions. A preliminary objection was raised concerning the maintainability of the appeals, on the ground that no final orders had been passed on the petitions. That objection had to fail, since the petitions had been finally concluded by the directions and nothing further remained to be done with respect to them. The fact that the operation of the order was limited to three months or a week after the filing of the intended suit did not prevent the order from being final. On behalf of the appellant it was argued that the court lacked jurisdiction to pass such orders under article 226 in the circumstances of the case. The court observed that this was not a situation in which, before finally disposing of a petition under article 226, it gave interim-relief directions merely to maintain the status quo. The question before the court was whether interim-relief directions alone could be granted under article 226 when the court expressly refrained from determining the parties’ rights on which a writ of mandamus or similar direction could be issued. In the court’s opinion, article 226 could not be used to grant interim relief as the sole and final relief on an application, as the High Court had attempted to do. The directions were given solely to circumvent the provisions of section 80, which, in the court’s view, lay beyond the scope of article 226.

In its analysis, the Court observed that the provision of the Civil Procedure Code that had been invoked fell outside the reach of article 226 of the Constitution. The Court held that an order of interim relief may be granted only as a support to, and in connection with, the principal relief that could be awarded to a party after a full determination of that party’s rights in a suit or other proceeding. The Court explained that, had it been of the view that the petitioners had no other convenient or adequate remedy, it could have examined the merits of the case, decided whether the petitioners had established an infringement of any legal right that would justify the issuance of a writ of mandamus or a similar directive, and, pending that final determination, could have fashioned a suitable interim order to preserve the status quo ante. However, the Court noted that it had expressly declined to adjudicate the parties’ rights and had directed that the questions should be more properly examined in a civil suit. Consequently, the Court concluded that it could not, for the purpose of enabling the institution of such a suit, issue temporary injunctions or other provisional directions under article 226, because the language of article 226 does not authorize such a step. On this basis, the Court dismissed the appeal against the decision of the Orissa High Court and allowed the appeals. The Court recorded that the agent for the appellant in all the appeals was P.A. Mehta. The agents for the respondents were as follows: S.P. Varma for case number 300; Ganpat Rai for cases numbered 301 and 304; and P.K. Chatterjee for cases numbered 302 and 303.