Kalyanpur Lime Works Ltd vs State Of Bihar And Another

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

Court: supreme-court

Case Number: Civil Appeals Nos. 189 and 190 of 1952

Decision Date: 14 December 1953

Coram: Ghulam Hasan, B.K. Mukherjea, B. Jagannadhadas

Kalyanpur Lime Works Ltd filed a petition against the State of Bihar and another party, and the judgment was delivered on 14 December 1953 by the Supreme Court of India. The opinion was authored by Justice Ghulam Hasan, and the bench comprised Justices Ghulam Hasan, B. K. Mukherjea and B. Jagannadhadas. The case is reported in 1954 AIR 165 and 1954 SCR 958, and it is cited in later reports as R 1964 SC1789 (7), R 1979 SC1701 (5) and F 1980 SC1109 (5). The matters addressed in the judgment involve the Indian Contract Act of 1872, specifically sections 20 and 21 relating to mistake as to fact and mistake as to law; the Government of India Act, with references to chapters 5 and 6 Geo. 5 Ch. 61, chapters 6 and 7 Geo. 5 Ch. 37 and chapters 9 and 10 Geo. 5 Ch. 101, section 30; a lease contract for quarrying limestone; provisions of the Civil Procedure Code of 1908, Order VI rule 8 and Order VIII rule 2; the Specific Relief Act of 1877, sections 15 and 18(a); and the doctrine concerning a purchaser’s right against a vendor who holds an imperfect title and the possibility of ordering specific performance of a portion of a contract that remains unexecuted.

The factual background set out in the headnote shows that on 1 April 1928 the Government of Bihar, designated as defendant No. 1, granted a twenty-year lease of certain hills to a corporation identified as K for the purpose of quarrying limestone, with the express condition that K could not assign its lease-hold rights without the Government’s consent. In 1933 K purported to assign those rights to an individual named Bose by means of an unregistered deed, thereby transferring possession of the leased land to Bose. The Government intervened, prevented Bose from operating the quarry, and in March 1934 forfeited the lease in favour of K, subsequently retaking possession. On 1 April 1934 the plaintiff, denoted as L, obtained a lease of the same hills from the Government and took possession on 15 April 1934. In September 1934 K instituted proceedings against the Secretary of State for India seeking a declaration that its forfeiture had been invalid, an injunction restraining the Secretary from granting further leases, and damages. The trial court dismissed K’s suit, but the High Court reversed that decision in an appeal in 1936. While the appeal was pending, K secured an interim injunction preventing the Secretary of State from granting a lease to L. The High Court’s decision was later affirmed by the Privy Council. After K was restored to possession, it surrendered the lease when it expired on 31 March 1948, at which point the Government regained possession and informed L that the hills would be leased to defendant No. 2. L subsequently obtained a decree from the trial court for specific performance of the lease and compensation for the period beginning in April 1948 until L could take possession of the lease-hold property. The High Court dismissed L’s suit on several grounds, including that the agreement was void under section 20 of the Indian Contract Act because both parties were under a mistake of fact, that it was void under section 30 of the Government of India Act, 1915 because the statutory conditions had not been fulfilled, that relief under section 18(a) of the Specific Relief Act could not be granted as it would amount to reconstructing the parties’ agreement, and that alternative relief under section 15 of the Specific Relief Act was unavailable because L had not relinquished all further claims.

The Court observed that the agreement was void under section 20 of the Indian Contract Act because both parties were operating under a mistake of fact. It further held that the agreement was void under article 30 of the Government of India Act, 1915, since the conditions specified in that provision had not been fulfilled. The Court also concluded that relief could not be granted to the plaintiff under article 18(a) of the Specific Relief Act, as doing so would amount to a reconstruction of the parties’ agreement. Additionally, the Court found that alternative relief under article 15 of the Specific Relief Act could not be awarded because the plaintiff had not relinquished all of his further claims.

In reversing the High Court’s judgment, the Court noted that the High Court had erred in stating that neither party was under a mistake of fact. It was evident that K had assigned its interest to Bose, and because the assignment was made without the lessor’s consent, K’s interest was liable to forfeiture. Accordingly, any mistake that existed was a mistake of law concerning the validity of the assignment deed under the registration law. The Court further observed that the objection based on section 30 of the Government of India Act, 1915, required an inquiry into whether the draft leases bore the signatures of the appropriate governmental authority. Since the plaintiff had not been given an opportunity in the trial court to produce the necessary evidence to address this point, the High Court was not justified in allowing the issue to be raised during arguments, contrary to Order VI, Rule 8 and Order VIII, Rule 2 of the Civil Procedure Code. The Court then applied section 18(a) of the Specific Relief Act, explaining that when the Government entered into a contract to grant a lease to L in 1934, it possessed an imperfect title and therefore could not grant a fresh lease while the earlier lease to K was in force. After the expiry of K’s lease on 31 March 1948, the impediment was removed, reviving L’s right to obtain the lease. Consequently, L was entitled to sue for specific performance, but because a substantial portion of the period had already elapsed, relief could only be granted under section 15 of the Specific Relief Act, subject to its conditions. Although section 15 applied, the Court held that the case was not suitable for a decree of specific performance, as only a few months remained before the lease’s expiry, rendering continuation of quarrying operations impractical. Nevertheless, the plaintiff was awarded compensation from 1 April 1948 until 31 March 1954. Finally, the Court affirmed that relinquishment of the claim to further performance could be made at any stage of the litigation in the present case. Waryam Singh & Others.

In this matter, the Court referred to the case of Gopichand and Others reported in I.L.R. 11 Lab. 69. The judgment concerned civil appellate jurisdiction involving Civil Appeals Nos. 189 and 190 of 1952. Both appeals arose from the judgment and decree dated 27 March 1952 rendered by the High Court of Judicature at Patna, whose members were Justices Reuben and Das. Those appeals challenged the High Court’s decision to set aside the original decrees numbered 99 and 197 of 1951, which themselves were based on the judgment and decree dated 7 February 1951 of the Court of the Second Additional Subordinate Judge at Sasaram, related to Title Suit No. 18/87 of 1950/49. The appellant was represented by the Attorney-General for India, M. C. Setalvad, together with counsel Mahabir Prasad and the advocates Avadh Behari Saran, R. J. Bahadur and B. K. Saran. Respondent No. 1 was represented by Government Advocate Lal Narain, assisted by Ugra Singh, while Respondent No. 2 was represented by Senior Advocate N. C. Chatterjee, with K. C. Jain and A. K. Dutt appearing in support. The judgment was delivered on 14 December 1953 by Justice Ghulam Hasan. Two separate appeals had been filed by the plaintiff because the High Court had issued two distinct decrees. Since both appeals essentially contested the dismissal of the same suit, the Court treated them as a single combined appeal.

The combined appeal was directed against the High Court’s judgment and decree of 27 March 1952, which dismissed the plaintiff’s suit and reversed the earlier judgment and decree of 7 February 1951 issued by the Second Additional Subordinate Judge of Sasaram, District Shahabad, who had originally granted the decree in favour of the plaintiff. The plaintiff, Kalyanpur Lime Works Ltd., referred to in the judgment as “the Lime Co.”, had instituted a suit for specific performance of a contract it claimed to have entered into with the State of Bihar, identified in the proceedings as defendant No. 1. The suit also named Dalmia Jain & Co. Ltd. as defendant No. 2. The factual background presented to the Court was as follows: the State of Bihar, as defendant No. 1, was the acknowledged owner of the land known as Murli Hills, situated in the Sasaram Sub-Division of Shahabad District. The hill comprised an upper and a lower portion, respectively called Upper Murli Hill and Lower Murli Hill. On 1 April 1928, the State granted a lease of the Murli Hill property to Kuchwar Lime and Stone Co. Ltd., hereinafter “the Kuchwar Co.”, for a term of twenty years. The lease was intended for quarrying limestone and was executed through two separate indentures, each covering one portion of the hill. The lease terms expressly prohibited the assignment of the lessee’s leasehold rights without prior permission from the Government.

In January 1933, the Kuchwar Co. entered voluntary liquidation. Its liquidators attempted to assign the company’s leasehold interest to Subodh Gopal Bose for a sum of Rs. 35,000 through an unregistered deed dated 30 September 1933. Bose took possession of the property on 9 October 1933. However, the Government issued orders on 8 December 1933 prohibiting any quarrying activity on the site, thereby preventing Bose from exercising the lease rights. The Court’s discussion continued from this point, examining the legality of the assignment and the Government’s subsequent actions.

In this case, the Court considered the assignment to be a breach of the lease contract, rendering the lessee’s interest liable to forfeiture. The records of the Lime Company show that on 4 January 1934 the managing director and the manager were given authority to take all steps necessary to apply for and obtain the lease of the Murli Hill property. Subsequently, on 25 January 1934 the Lime Company submitted an application, identified as Exhibit A, to the Collector of Shahabad requesting the grant of the lease. In that application the company proposed a minimum royalty of ten thousand rupees. On 14 March 1934 the Board of Revenue interviewed Mr Banerjee, who represented the Lime Company, and recorded an order stating that the commissioner could be informed that the Board approved the execution of the lease, but that no formal letter should be issued until a Government order cancelling the old lease was received (A.5). Defendant No 1 then forfeited the lease in favour of Kuchwar Co. by an order dated 27 March 1934 and re-entered possession of the premises. Following that forfeiture, Defendant No 1 offered to grant a fresh lease of Murli Hill to the Lime Company for a period of twenty years, on the same terms and conditions prescribed in Chapter V of the Bihar and Orissa Waste Lands and Mineral Concession Manual. The offer was communicated through a Board of Revenue letter dated 1 March 1934 (Annexure B). The Lime Company accepted the offer in a letter dated 15 April 1934, which was sent to the Collector of Shahabad (Annexure C). The Lime Company took possession of the property on 15 April 1934, although the lease was stipulated to become effective from 1 April 1934. The company commenced quarrying operations on 15 May 1934. On 24 September 1934 the Kuchwar Company instituted suit against the Secretary of State for India, seeking a declaration that the leases in its favour had not been validly forfeited, an injunction restraining the Secretary from granting any further leases, and damages. The trial court dismissed the suit, but the High Court of Patna decreed in favour of the Kuchwar Company on 7 February 1936. While the appeal was pending before the High Court, an interim injunction dated 25 April 1935 restrained the Secretary of State for India from granting any lease to the Lime Company. The High Court’s decision was upheld by the Privy Council on 19 November 1937. The Lime Company, which had not been made a party to the suit filed by the Kuchwar Company, remained in possession of the quarries. Nevertheless, the Kuchwar Company commenced contempt proceedings against the manager, the managing director of the Lime Company, and the Secretary of State for India. After those individuals were found guilty of contempt, the Lime Company vacated the quarries in April 1936. The High Court order in the contempt matter was later set aside by the Privy Council on 31 October 1938, but the Lime Company did not obtain any restitution.

The Privy Council gave its decision on 31 October 1938, but the Lime Company was unable to obtain restitution of the property. The Lime Company contended that both it and Defendant No 1 had proceeded on the belief that Defendant No 1 possessed full authority to lease Murli Hill to the Lime Company. After the Kuchwar Company had been restored to possession, it surrendered the lease when it expired on 31 March 1948. Following that date, Defendant No 1 re-entered the premises. The Lime Company repeatedly requested that Defendant No 1 execute the leases that had been agreed upon with the Government and register them, but Defendant No 1 refused. On 2 June 1949 Defendant No 1 informed the Lime Company that it had decided to lease Murli Hill to Defendant No 2. Consequently, the Lime Company sought specific performance of the lease contracts, possession of the land, and compensation for its loss.

Defendant No 1 opposed the suit on several grounds. It asserted that no binding contract had ever been concluded, that the lease terms were still under negotiation when the proposal collapsed, and therefore no enforceable agreement existed. In addition, Defendant No 1 raised defenses of limitation, estoppel, acquiescence, and waiver. In a separate pleading, Defendant No 2 questioned the Lime Company’s right to sue, denied the legal existence of the Lime Company, and repudiated any contract, claiming that the Lime Company had never been placed in possession by the Government. Defendant No 2 further alleged that the Government order authorising the forfeiture of the leases in favor of the Kuchwar Company and offering the quarries to the Lime Company was based on a misapprehension of the facts and therefore lacked any binding effect. The court rejected the claim that the Lime Company could obtain specific performance on the basis of draft leases and held that the Lime Company could not claim any equitable relief against Defendant No 2, who had become the subsequent lessee of the Murli Hills for valuable consideration.

The trial court identified thirteen issues for determination. The two principal issues related to the existence of a contract and were numbered as issues three and four, namely: (3) whether a legal, valid and binding contract existed between the plaintiff and Defendant No 1 and, if so, whether such a contract could be enforced; and (4) whether the agreement between the plaintiff and the Government was defective for lack of settlement of any essential term, as alleged by the defendants, and whether it suffered from uncertainty or vagueness. The trial court considered these two issues together. It held that the Lime Company’s letter dated 25 January 1934 (Exhibit A) together with the Board of Revenue’s approval set out in Exhibit 3z (26) constituted an agreement for lease between the plaintiff and the Government according to the terms and

In this case the trial court held that the lease agreement complied with the conditions stipulated in Chapter V of the Bihar and Orissa Waste Lands and Mineral Concession Manual, 1926. The court further observed that the parties to the agreement intended the lease to become effective on the date on which it was executed and that the lease was to continue for a term of twenty years. The court also found that the parties had decided the manner in which the minimum royalty would be apportioned between the two portions of the Murli Hills. This apportionment was set out in a letter dated 19 January 1935 issued by the Board of Revenue and marked as Exhibit A12. According to that letter the royalty payable for the upper portion of the hill was fixed at Rs. 7,500 and the royalty for the lower portion was fixed at Rs. 2,500. Both of these issues were decided in favour of the Lime Company. The trial court rejected the argument raised by the second defendant that the Lime Company did not possess a legal existence and therefore lacked standing to bring the suit. The court concluded that the suit was not barred by any limitation defence, nor by estoppel, waiver or acquiescence. Moreover, the court determined that the second defendant, who held the lease for only one year and who had been put on notice of the Lime Company’s earlier contract, did not have the locus standi to challenge the specific performance of that earlier contract. On the basis of these findings the trial court decreed the suit for specific performance and for compensation against both defendants, that is, the first and second defendants, for the period beginning on 1 April 1948 and continuing until the Lime Company obtained possession of the lease-hold properties. The court directed that the amount of compensation be ascertained in subsequent proceedings between the parties. Both defendants appealed the trial court’s decree. Their appeals were heard by a Division Bench of the High Court comprising Justice Reuben and Justice Das, and a judgment and decree were issued on 27 March 1952. In two separate but concurrent judgments the learned judges set aside the trial court’s decree and dismissed the suit. While they agreed with the trial court that a contract for the grant of a lease by the Government to the plaintiff had been established, they held that the contract for which the plaintiff sought specific performance was not the contract actually entered into by the parties. The judges further held that the agreement was void under section 20 of the Indian Contract Act because both parties were under a mistake of fact concerning the Government’s title to the subject matter of the proposed leases. They also ruled that the agreement was void under section 30 of the Government of India Act, 1915, since the statutory conditions prescribed in that section had not been satisfied. In addition, the judges found that relief under section 18(a) of the Specific Relief Act could not be granted to the Lime Company because doing so would amount to a reconstruction of the agreement between the parties. They observed that under section 15 no alternative relief was available because the Lime Company had not relinquished all of its further claims, and they concluded that the Lime Company was not ready and willing to perform its part of the contract as

The Court observed that the plaintiff was seeking relief that exceeded the entitlement granted by the contract by invoking section 18 (a) of the Specific Relief Act; the Court further held that the Lime Company was not the genuine plaintiff and that, given the circumstances, the Court’s discretion to issue a decree for specific performance could not be exercised in its favour. Consequently, the Court reversed the decree of the trial court and dismissed the suit. Regarding the factual existence of the contract, the Court agreed with the concurrent finding of the lower courts. Although the finding was challenged on the ground that there was a discrepancy between the pleadings and the findings, the Court considered this objection to be immaterial. After examining the relevant material on record, the Court was satisfied that the High Court’s finding could not be set aside. The first question before the Court was whether the contract was void and unenforceable under section 20 of the Contract Act because both parties were alleged to have been under a mistake of fact concerning the Government’s title to the subject matter of the proposed leases. The appellants contended that this issue had not been raised in the pleadings and therefore could not be raised as a defence. The Court noted that this contention had some merit. Initially, the trial court had drafted an issue framed as whether the contract alleged by the Lime Company was void due to a mutual mistake of law and fact; however, on the plaintiff’s objection, that issue was deleted on 29 November 1950 and replaced by another issue that did not address the point. The trial court’s judgment indicated that the plea had been expressly abandoned, stating that the learned counsel for the defendants did not challenge the completeness or validity of the contract entered into between the plaintiff and the Government on any other ground, did not contend that the contract was vitiated by any mistake of fact or law, and that there was no allegation of such a mistake in the written statements. Be that as it may, the Court found it difficult to see how the agreement could be challenged under section 20 on the basis of a mistake as to a material fact, because neither party was under any mistake of fact. Both parties were aware that Kuchwar Company had assigned its interest to Bose, and that the assignment, having been made without the lessor’s consent, rendered the interest liable to forfeiture. The Government Pleader advised the Government that it possessed the right to forfeit the leases and to grant fresh leases to the Lime Company. The Lime Company accepted that position and proceeded on that assumption.

It was held that the Government claimed to have the authority to cancel the existing leases and subsequently award them to the Lime Company. No clear error of fact could be identified on the part of either party. The judgment referred to the earlier case of Edward H. Cooper v. William Phibbs, Charlotte S. Cooper and Others(1), which the defendant No. I relied upon. In that precedent, a person who was unaware that he himself was the tenant for life of a fishery had agreed to take a lease of that fishery from another individual who mistakenly believed himself to be the owner. The agreement was annulled on the basis of a mutual mistake of fact. Lord Westbury, in overturning that agreement, explained: “The petitioner did not suppose that he was, what in truth (1) 2 H.L.P. 149. he was, tenant for life of the fishery. The other parties acted upon the impression given to them by their father, that he (their father) was the owner of the fishery, and that the fishery had descended to them. In such a state of things there can be no doubt of the rule of a court of equity with regard to the dealing with that agreement. Now that was the case with these parties—the respondents believed themselves to be entitled to the property, the petitioner believed that he was a stranger to it, the mistake is discovered, and the agreement cannot stand.” The present matter differs from that case because here the Government possessed an undisputed title to the land, but the assignment of the lease had not been documented by a registered instrument, so the forfeiture could not take legal effect. The Court observed that the Bihar Government could be said to have represented to the plaintiff that it possessed the right to forfeit the Kuchwar Company’s lease and to grant a new lease to the plaintiff. The plaintiff apparently relied on that representation and entered into the contract based on that belief. However, following the decision of the Privy Council, the Bihar Government was no longer able to substantiate the title it claimed to have at the time of the contract. The Government’s title was not entirely lost; it remained limited by the existing lease, which still had several years remaining. Under those circumstances, the plaintiff could have chosen to repudiate the contract, but the defendant No. I could not successfully argue that the contract was void on the ground of mistake and refuse to perform the portion of the agreement that it was capable of performing. Moreover, as already noted, neither party was mistaken about the essential facts underlying the contract, and both were aware that an assignment of the lease by the Kuchwar Company had been made in favour of S. G. Bose.

Both parties were aware that the lease expressly stipulated that any assignment made by the lessee without obtaining the lessor’s consent would cause the lessee’s interest to become liable to forfeiture. The possible mistake, if any existed, related solely to the effect that the law of registration would have on the validity of the assignment deed. At most, such a mistake would constitute a mistake of law; consequently, under section 21 of the Indian Contract Act, a contract cannot be declared void on the basis of a mistake of law. In the present case, the material facts appear to negate the presence of any mistake of fact on which either party might have relied. Hence, the Court is of the view that the High Court erred in holding that the contract was void pursuant to section 20 of the Contract Act. Moreover, the High Court’s finding that the parties had reached a final agreement on all essential terms of the leases, as set out in Exhibits 22 and 22(a), leaves no room for an additional conclusion that the contract was induced by a mistake of fact. The next issue to be examined is whether the contract is unenforceable because it failed to comply with the requirements of section 30 of the Government of India Act, 1915. Section 30 provides that the Governor-General in Council and any local Government, acting on behalf of the Secretary of State in Council and subject to any restrictions imposed by the Secretary, may, with a majority vote of the Council of India, prescribe, sell, dispose of, or mortgage any real or personal estate in British India vested in His Majesty for governmental purposes, and may make appropriate assurances and contracts for those purposes. The section further directs that every assurance or contract made under it must be executed in the manner prescribed by a resolution of the Governor-General in Council and, if so executed, may be enforced by or against the Secretary of State in Council. There can be no doubt that, under sub-section (1), the local Government possessed the authority to enter into any contract for the purposes of the Act, and a contract to grant leases for limestone quarrying falls squarely within that authority. Rule 7 of the Waste Lands Manual refers to Notification No. 713-734 dated 2 June 1913, which was issued by the Governor-General in Council exercising powers under section 2 of the East India Contract Act, 1870. That notification was preserved.

Section 130 of the Government of India Act, 1915, authorized the Collector and the Deputy Commissioner of the Province of Bihar and Orissa to execute “contracts and other instruments in matters connected with… mining leases.” Both parties agreed that the Governor-General had not prescribed a specific method for executing such a contract. Consequently, the first issue that arose was whether the contract had to be executed as a formal document or whether it could be inferred from the correspondence that recorded the negotiations between the parties. The Court did not consider it necessary to decide this question, because even if a formal document were required, the argument based on section 30 was never raised in the pleadings. The appellant objected that, because the point had not been raised in the written statement, the plaintiff should not have been required to demonstrate that the contract had been executed in accordance with the requirements of section 30 before it could be specifically enforced; the appellant instead relied on Order VI, Rule 8 and Order VIII, Rule 2 of the Civil Procedure Code. Paragraph 6 of the plaint described the Government’s offer to settle the leases, the plaintiff’s acceptance of that offer, and referred to annexures B and C as embodying the contract. In response, Defendant No 1 acknowledged the correctness of the allegation in paragraph 6, but qualified it by stating that the lease terms were not final, because the royalty rate was to be reconsidered by a defendant officer and any reduction would be made as a matter of grace. From the pleadings it was clear that the only dispute was factual; no defence was advanced on the ground that the contract was unenforceable because it had not been executed pursuant to section 30. Rule 8 of Order VI of the Civil Procedure Code provides that when a contract is alleged in any pleading, a simple denial by the opposite party is to be interpreted only as a denial of the existence of the contract or of the factual circumstances from which the contract may be inferred, and not as a denial of the contract’s legality or sufficiency in law. Rule 2 of Order VIII requires the defendant, in his pleadings, to raise every matter that would show the suit to be untenable, or that the transaction is void or voidable at law, and to set out any defence that, if omitted, would surprise the opposite party or raise factual issues not arising from the plaint, such as fraud, limitation, release, payment, performance, or illegality. These procedural provisions leave no doubt that a party who merely disputes the fact of the contract, without alleging its invalidity under law, is bound by the pleadings and cannot later invoke the contract’s legality or validity.

In this case, the Court observed that a party who merely denies the existence of a contract, without alleging that the contract is unenforceable under law, is bound by the pleadings and therefore cannot later contest the contract’s legality or validity. The Court noted that this issue had never been raised in the pleadings before the trial court, nor had it been included in the memorandum of appeal to the High Court; it was introduced for the first time only during oral arguments before that court. The Court rejected the contention that the objection could not have been raised earlier simply because the draft leases identified as Exhibits 22 and 22(a) appeared, on their face, not to have been executed in accordance with the requirements of section 30, and also dismissed the argument that the matter involved only a pure point of law. The Court referred to paragraph 14 of the plaint, which allegedly contained an admission by the plaintiff that the leases were not executed as required. That paragraph, however, merely stated that because of the interim injunction, the Secretary of State for India, his officials, or agents were unable to execute the necessary indentures whose terms had already been settled between the parties, while the plaintiff had nonetheless signed the documents containing the lease terms approved by the Government. The Court clarified that this statement concerned only the indentures of the leases and not the contract itself, and it agreed that the plaintiff’s objection founded on section 30 required an inquiry into whether the draft leases bore the signature of the appropriate Government authority, a question on which the plaintiff had had no opportunity to present evidence at trial.

The Court further explained that the Lime Company had forwarded six copies of the draft leases, identified as Exhibits 22 and 22(a), to the first defendant. All six copies bore the plaintiff’s signature, but the signature of the Collector, who was authorized to sign on behalf of the Government, was missing from those documents. The Government produced only two of the copies and retained the remaining four. It was argued that, had the four withheld copies been produced, they might have shown the Collector’s signature, thereby satisfying the requirement of section 30. On 19 September 1950, the Lime Company filed an application with the trial court requesting the four missing leases from the first defendant. On that same day, the court ordered the pleader for the first defendant to produce the documents on the specified date. Subsequently, on 14 November 1950, the Lime Company filed another application indicating that the documents had still not been produced and asking the court to remind the first defendant to produce them before the next hearing. The court again issued an order granting the plaintiff’s request on that same day. Finally, on 20 November 1950, the plaintiff filed yet another application seeking further relief regarding the production of the documents.

In this case the Court noted that the plaintiff had asked that urgent telegrams be dispatched to the Collector of Shahabad and other officials demanding production of the missing lease documents. The telegrams were indeed sent, yet the requested documents were never produced. Because of these circumstances the Court found that the High Court was not justified in permitting the issue to be raised during argument when the plaintiff had not been given an opportunity to present evidence concerning whether the leases bore the Government’s signature. The Court also observed that, despite the plaintiff’s diligent attempts, the Government continued to refuse production of the remaining leases. Consequently the Court decided to base its judgment on the ground that the issue should not have been allowed to be raised, and therefore it rejected the plaintiff’s plea that relied on section thirty of the applicable law. The Court then turned to the next question, namely whether the High Court correctly concluded that the contract for which specific performance was claimed in the plaint was not contract entered into by the parties. The High Court had held that the parties had reached a final agreement on all essential terms of the proposed leases on or before thirty April nineteen thirty-five. It also held that those terms were set out in Exhibits twenty-two and twenty-two (a). Counsel for the appellant argued that the substance of the agreement was a twenty-year lease governed by the Waste Lands and Mineral Concession Manual. He further submitted that the commencement date of the lease was not essential to the agreement. It was submitted that this intention was clearly reflected in the correspondence exchanged between the parties, and that the same terms had later been used in a lease with Kuchwar Co. The Court agreed with the High Court that, although the leases were to last twenty years, the period was not intended to begin on the date of execution of the leases. Paragraph seven of the plaint alleged that, under the contract, the Government had taken the plaintiff into possession of the property even though the leases were to be executed later. It also stated that the leases were to become effective on first April nineteen thirty-four. The draft leases, while stating a twenty-year term, indicated that the lease period would start on fifteen April nineteen thirty-four. The Court held that this is the contract for which performance may be granted, but because defendant number one cannot perform the contract in full, the plaintiff may seek the lease for the unexpired portion. That period extends up to thirty first March nineteen fifty-four, and the plaintiff can rely on the provisions of section fifteen of the Specific Relief Act. Finally, the Court concurred with the High Court that section eighteen a of the Specific Relief Act applies to the

In this case the Court explained that section 18(a) of the Specific Relief Act provides that when a person contracts to sell or let property while possessing only an imperfect title, the vendor or lessor who later acquires an interest in the same property may be compelled to fulfil the contract out of that later-acquired interest. The Court observed that when the Government entered into the 1934 contract to grant leases to the Lime Company, it did so without a full title because a pre-existing lease in favour of Kuchwar Company prevented the Government from granting any fresh lease during the term of that earlier lease. Although the Government believed it had the authority to forfeit the Kuchwar lease and indeed ordered such forfeiture, the forfeiture was later held to be illegal and the rights of the earlier lessees were restored. Consequently the situation was one of imperfect title rather than an absence of title, bringing it within the ambit of section 18(a). After the Kuchwar lease expired on 31 March 1948 the obstacle to the Government’s ability to grant new leases was removed, thereby reviving the Lime Company’s entitlement to the lease. The Government opposed this claim and instead granted a lease to defendant No 2. The Patna High Court correctly held that section 18(a) applied to the facts, and although defendant No 1 was unable to grant the lease at the time the contract was made, the removal of the impediment and the fact that a suit for specific performance was not time-barred meant that the Lime Company was entitled to sue for that relief. The Court agreed with the High Court that section 18 is attracted, and that the contract for which specific performance may be decreed is embodied in Exhibits 22 and 22(a). However, because a substantial portion of the lease period had already elapsed, any relief could only be granted under section 15 of the Specific Relief Act, subject to its conditions. The High Court, while recognizing that section 15 applied, dismissed the plaintiff’s claim on the ground that the plaintiff’s application of 18 February 1952 failed to demonstrate that it had relinquished all claims to further performance and all rights to compensation for any deficiency or loss caused by the defendant, as required by section 15. The Court quoted the relevant part of the application, which indicated an alternative claim for specific performance from 1 April 1949 to 31 March 1954 together with compensation, and a statement that the plaintiff relinquished all claims to further performance and any compensation for loss prior to 1 April 1948. The Court noted that this language showed the plaintiff initially sought full specific performance under section 18, but in the alternative limited the claim to the later period with compensation, and that the final paragraph unequivocally indicated a total relinquishment of earlier claims. The plaintiff’s counsel subsequently sought clarification on that point.

In this case the plaintiff sought relief under section 15 of the Specific Relief Act, asking the court to decree specific performance of a contract for the period after the expiry of the lease held by Kuchwar Lime and Stone Co. Ltd., namely from 1 April 1949 to 31 March 1954, on the usual covenants set out in the Waste Land Mineral Concessions Manual and with any compensation that the law might permit. The plaintiff also expressly relinquished all claims to any further performance and all rights to compensation, whether for any deficiency or for loss or damage suffered by the plaintiff, for the period prior to 1 April 1948. This wording shows that the plaintiff originally pursued a claim for full specific performance under section 18, but as an alternative limited the claim to the five-year span from 1 April 1949 to 31 March 1954 together with compensation. The concluding part of the application leaves no doubt that the plaintiff has entirely given up any right to further performance and has also abandoned any claim for compensation for the time before 1 April 1948. The learned counsel for the plaintiff reiterated this position during oral arguments, making clear that the plaintiff demanded no further performance and did not seek any compensation for any period before the leases were executed. It is well settled that a relinquishment of the right to further performance may be made at any stage of the proceedings, as observed in Waryam Singh and Others v. Gopi Chand and Others (I.L.R. 11 Lah. 69). Accordingly, the court was of the opinion that, subject to the final point to be considered, the plaintiff was entitled to claim relief under section 15 of the Specific Relief Act. While the court accepted that section 15 was applicable, it was not of the view that the present case warranted a decree of specific performance in favour of the plaintiff. The High Court had denied the relief on the ground that the Lime Company was not the real plaintiff and that the suit was intended for the benefit of Kalyanpur Lime and Cement Works Ltd. Whether that view was correct was open to argument, but it could not be denied that the plaintiff company had not been dissolved under the Indian Companies Act and therefore continued to exist as a legal entity. The more persuasive reason for refusing specific performance was that only a few months remained before the unexpired portion of the lease would terminate; even if the lease were executed in accordance with the court’s order, quarrying operations would scarcely be worthwhile at that stage. The appellant contended that upon the expiry of the lease the appellant would be entitled to a renewal on fresh terms, but the court observed that paragraph 20 of the draft lease did not confer any automatic right of renewal upon the lessee. Consequently, the court could not find any material advantage for the Lime Company in obtaining a decree of specific performance for merely a short residual period.

The Court observed that the draft lease provision stated that, upon the expiry of the lease term, the lessee might obtain renewal of the lease provided that the lessee had duly complied with all the preceding conditions and that the renewal terms were to be agreed between the Collector and the lessee, subject to the approval of the Commissioner. Assuming that this clause was applicable to the present dispute and that it did not require the lessee to have occupied the land for the entire twenty-year period, the Court noted that two further substantive conditions had to be satisfied before any renewal could be effected. First, the renewal terms had to be mutually agreed by the Collector and the lessee; if the Collector did not agree, renewal could not occur. Second, even if the Collector agreed, the Commissioner retained the discretion to refuse approval of the renewal. In view of these statutory safeguards, the Court concluded that the Lime Company would obtain no real advantage from having the lease executed for only a few remaining months, because renewal was not a matter of right but depended on the uncertain concurrence of both the Collector and the Commissioner. The Court further held that, had the lease contained an unconditional option of renewal, the analysis would have been different, but such an option was absent. Accordingly, the Court declined to grant a decree for specific performance of the contract for the short residual period. Nonetheless, the Court found no justification for depriving the Lime Company of compensation. The plaintiff’s plaint included a prayer for a compensation decree, and the trial court had already ordered compensation for the period beginning 1 April 1948 up to the date when possession of the leasehold property would be obtained, leaving the quantum to be fixed in later proceedings. Since the Court’s view eliminated any question of possession, it followed that the plaintiff was entitled to compensation for the entire period from 1 April 1948 to 31 March 1954. Consequently, the Court allowed the appeal, set aside the judgment and decree of the High Court, and directed that the plaintiff be granted a compensation decree covering the said period, with the exact amount to be determined by the trial court, which would thereafter issue an appropriate decree. No order regarding costs was made. The appeal was allowed. The agents for the parties were recorded as S. P. Varma for the appellant, B. C. Prasad for respondent No. 1, and B. P. Maheswari for respondent No. 2.