Ganga Ram Das vs Tezpur Kaibarta Co-Operative Fishery Society Ltd.

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 374 of 1956

Decision Date: 29 January, 1957

Coram: Natwarlal H. Bhagwati, Bhuvneshwar P. Sinha, S.K. Das

In the matter titled Ganga Ram Das versus Tezpur Kaibarta Co-Operative Fishery Society Ltd., the Supreme Court of India delivered its judgment on 29 January 1957. The judgment was authored by Justice Natwarlal H. Bhagwati, with Justices Bhuvneshwar P. Sinha and S. K. Das forming the bench. The case was recorded as Civil Appeal No. 374 of 1956 and cited as 1957 AIR 377 and 1957 SCR 479. The principal issue concerned the validity of Rule 12 of the Assam Fishery Rules, specifically whether that rule exceeded the authority of the Provincial Government and conflicted with section 16 of the Assam Land Revenue Regulation, 1 of 1886. Section 16 defines the “right of fishery,” while section 155(f) authorises the Provincial Government to make rules relating to the granting of licences or the farming of that right. The State Government, exercising that power, framed the Fishery Rules, and Rule 12 stipulates that no fishery may be settled except by sale unless the State Government intervenes. The petitioners argued that Rule 12 was ultra vires and repugnant to section 16. The Court held that Rule 12 was neither beyond the Provincial Government’s authority nor inconsistent with section 16, noting that the latter provision does not prescribe any particular principle or policy for framing fishery-right acquisition rules, leaving such matters to the State’s discretion. The Court further observed that Rule 12 expressly empowers the State Government to settle fishery rights by means other than sale, such as individual settlements, thereby rejecting the contention that the rule was invalid. The Court distinguished this decision from the earlier case of Nuruddin Ahmed v. State of Assam (A.I.R. 1956 Assam 48), noting that the precedent was overruled, and also held that State of Assam v. Keshab Prasad Singh (1953 S.C.R. 865) was not applicable.

The appeal arose from a judgment of the Assam High Court in Revenue Appeal No. 33 (M) of 1955 and Civil Rule No. 76 of 1955. The State of Assam, identified as respondent No. 3, had settled the Charduar Brahmaputra Fishery with respondent No. 1 for a three-year term from 1 April 1954 to 31 March 1957, requiring an annual zamas of Rs. 19,600 under Rule 12 of the Fishery Rules. Subsequently, the Deputy Commissioner of Darrang, respondent No. 2, received reports alleging that respondent No. 1 had breached clause VI of the fishery lease and had created an under-lease in favour of certain persons. Acting on those reports, the Deputy Commissioner concluded that respondent No. 1 had violated the lease conditions and ordered the cancellation of the settlement. After the cancellation, respondent No. 3, purporting to act again under Rule 12, entered into a new settlement of the same fishery with the appellant, effective from 4 May 1955, and directed respondent No. 1 to vacate possession as of that date. In response, respondent No. 1 obtained a rule from the Assam High Court asserting that the new settlement was unlawful and that the fishery should be settled in accordance with the usual procedural rules. Additionally, a revenue appeal was filed against the order of respondent No. 2 under rule 11 of section 1 of the Fishery Rules. Both the rule application and the revenue appeal were heard together by the Assam High Court, which had previously delivered its decision on 31 August 1955.

The Deputy Commissioner of Darrang observed alleged breaches of the conditions of the lease and therefore sought further information. He obtained reports from the Sub-Deputy Collector and the Extra Assistant Commissioner concerning those allegations and, after reviewing them, concluded that respondent No. 1 had created an under-lease in favour of certain persons and had consequently cancelled the original settlement of the fishery.

Following that cancellation, respondent No. 3, claiming authority under rule 12 of the Fishery Rules, entered into a new settlement of the same fishery with the appellant, effective from May 4 1955, and respondent No. 1 was instructed to surrender possession of the fishery as of that date. In response, respondent No. 1 promptly filed a rule before the Assam High Court asserting that the new settlement was absolutely illegal and that the fishery should be settled in accordance with the ordinary rules governing such settlements. At the same time, a revenue appeal was lodged against the order of respondent No. 2 under rule 11 of section 1 of the Fishery Rules, and both the rule and the revenue appeal were heard together by the Assam High Court.

On August 31 1955, the High Court delivered a judgment in Civil Rule No. 56 of 1955, Nuruddin Ahmed v. State of Assam (1), wherein it declared that rule 12 of the Fishery Rules was ultra vires the State Government and therefore invalid and unenforceable. Relying on that judgment, the Court held that respondent No. 3 possessed no jurisdiction to make a settlement under rule 12 of the Fishery Rules with respondent No. 1, and that the order of cancellation should be upheld on that ground alone. Consequently, the appeal filed by respondent No. 1 was dismissed.

The High Court reached the same conclusion with respect to the appellant, holding that the settlement made by respondent No. 3 in favour of the appellant was wholly without jurisdiction. Accordingly, the rule obtained by respondent No. 1 was made absolute, and both the settlement with respondent No. 1 and the settlement with the appellant were set aside. The Court directed the authorities to effect a fresh settlement of the disputed fishery in accordance with the existing Fishery Rules.

The State of Assam had not obtained leave to appeal the decision of the High Court in Nuruddin Ahmed v. State of Assam (1) and appeared to accept the finding that rule 12 was ultra vires. Nevertheless, the appellant secured special leave to appeal against the High Court’s order that set aside the settlement made by respondent No. 3, and the State of Assam was impleaded as respondent No. 3 together with respondent No. 1. The appellant’s objective in this appeal was to establish that rule 12 of the Fishery Rules was intra vires; although the State of Assam had previously acquiesced in the view that the rule was ultra vires, by joining the appeal as respondent No. 3 it adopted the position that rule 12 of the Fishery

The State of Assam maintained that Rule 12 of the Fishery Rules was intra vires, yet it had not previously chosen to defend that view by appealing the High Court’s judgment in Nuruddin Ahmed v. State of Assam (1). In the present proceeding the State attempted to lend support to its position indirectly by joining the appeal as a respondent and by siding with the appellant. Respondent No. 1 appeared to face a comparable dilemma. The appellant sought a declaration that Rule 12 was intra vires; had the Court affirmed that proposition, the settlement of the fishery effected by respondent No. 3 together with respondent No. 1 would have been within jurisdiction, and the cancellation order issued by respondent No. 2 would have become void and inoperative. However, that relief was not available to respondent No. 1 because it had not appealed the High Court’s judgment, as indicated by the citation (1) A. 1. R. 1956 Assam 48. Moreover, respondent No. 1 could not adopt the position that Rule 12 was intra vires, since only about twenty-one months remained for the lease to run, and at the expiry of that period the respondent would have been placed in the same disadvantageous situation that existed when allegations of breach of the fishery lease conditions were originally made against it. Consequently, at the hearing of the appeal respondent No. 1 adopted the unusual stance of supporting the High Court’s decision and contending that Rule 12 of the Fishery Rules was ultra vires. That contention provided the sole basis on which the settlement made by respondent No. 3 with the appellant could be set aside, and no further comment was necessary on the apparently inconsistent approach taken by respondent No. 1. The core issue therefore contested between the appellant, who was backed by respondent No. 3, the State of Assam, and respondent No. 1, concerned whether Rule 12 of the Fishery Rules was intra vires. At this juncture it was appropriate to set out the relevant statutory provisions governing fisheries under the Assam Land and Revenue Regulation, 1886 (Regulation I of 1886). Section 16 provides: “Right of fishery.- The Deputy Commissioner, with the previous sanction of the Provincial Government, may, by proclamation published in the prescribed manner, declare any collection of water, running or still, to be a fishery; and no right in any fishery so declared shall be deemed to have been acquired by the public or any person, either before or after the commencement of this Regulation, except as provided in the Rules made under section 155; Provided that nothing in this section shall affect any express grant of a right to fish made by or on behalf of the British Government, or any fishery-rights acquired by a proprietor before the commencement of this Regulation, or the acquisition by a proprietor of such rights in any fishery forming after the commencement of this Regulation in this estate.” Section 155 adds further authority for the Provincial Government to make rules consistent with the Regulation, including provisions relating to the granting of licences and the farming of the right to fish in fisheries proclaimed under section 16.

The Provincial Government possessed the authority, in addition to the other powers granted by the Regulation, to formulate rules that were consistent with that Regulation and that dealt specifically with matters such as the granting of licences or the farming of the right to fish in fisheries that had been proclaimed under section 16. Rule 12 of the Fishery Rules stated that a fishery could be settled only by sale, except when the State Government itself performed the settlement, and that any settlement order issued by the State Government was final. The rule further provided that the State Government could, whenever it deemed necessary, replace the auction sale system with a tender system for the settlement of fisheries. This rule was contained in chapter X of the Assam Land Revenue Manual, Volume I, sixth edition, under the heading “Rules for settlement of fisheries.” The chapter was organized into four sections: Section I dealt with general matters and settlement of fisheries; Section II covered miscellaneous provisions; Section III addressed sanctuaries; and Section IV described the rules for settlement of fisheries by tender system. According to rule 3 of Section I, the normal method for settling fisheries was by holding auction sales. This applied to all registered fisheries whose leases expired on the last day of the current year or whose leases had been reserved for sale at the previous auction pursuant to rule 9. After provisions were made regarding the place of sale, the conditions of sale, the execution of leases and the confirmation of sale, rule 11 allowed an appeal to the Assam High Court against any order of a Deputy Commissioner or Sub-Divisional Officer issued under the rules, while expressly providing that no appeal could be made against a settlement order passed by the State Government under rule 12. The text of rule 12, repeated above, reiterated that no fishery could be settled except by sale unless the State Government intervened, and the accompanying proviso authorised the State Government to introduce a tender system in place of the auction system whenever it considered such a change necessary. The remaining provisions of Section I and those of Sections II and III were not required to be set out for the purposes of this appeal; however, reference could be made to Section IV, which contained the rules governing settlement of fisheries by tender system. Rule 42 empowered the Government, from time to time, to select any fishery or fisheries for settlement by tender system and to direct the Deputy Commissioner to lease them for any specified period, and it set out the procedure to be followed in such tender settlements. From this summary it was clear that the ordinary procedure for settlement of fisheries was the holding of auction sales, but the State Government retained the power to introduce a tender system in place of the auction system whenever it deemed it necessary and if the Government selected any fishery or

The rules empower the State Government to select any fishery or group of fisheries for settlement by the tender system. The State Government may also direct the Deputy Commissioner to lease the selected fishery for a specified period, acting under that authority. Section IV of the regulations prescribes the detailed procedure to be followed for settlement of fisheries by the tender system. The question that arises for determination is whether these rules confer on the State Government a power to settle fisheries by means other than sale, such as individual settlements without an auction or tender process. The Court may now consider an argument raised on behalf of Respondent No. I, which the High Court had accepted. The argument asserts that rule 12 of the Fishery Rules, which is the source of the alleged power, is ultra vires and conflicts with section 16 of the Assam Land Revenue Regulation of 1886. Section 16 deals with fishery rights and provides that the Deputy Commissioner, with prior sanction of the State Government, may by proclamation declare any water body a fishery. It further states that no right in a fishery so declared shall be deemed acquired by the public or any person except as provided in rules made under section 155. The facts of the present cases are not covered by the proviso, and therefore the Court will not discuss that aspect further. Consequently, the only enquiry that remains is whether any rule validly enacted under section 155 exists that would enable the State Government to settle a fishery by means other than sale. The question includes whether an individual settlement with Respondent No. I or the appellant, as was done, could be authorised. Section 16 contains no guidance on the principles or policy that should govern the making of rules for acquisition of fishery rights by the public or any person, leaving the matter entirely to the discretion of the State Government. Accordingly, the matter is left entirely to the discretion of the State Government.

Section 155 authorises the State Government, among other powers, to make rules concerning the granting of licences and the farming of fishing rights in fisheries proclaimed under section 16. Such rules must be consistent with the regulation. Consequently, the State Government would also be bound by any such rule and could not make a settlement of fishery rights unless and until a rule made under section 155 authorises it. The State Government cannot claim absolute ownership of the fishery rights that would allow it to settle them in any manner it chooses. Therefore, unless the State Government’s action can be justified by reference to a rule made under section 155, the appellant’s claim cannot succeed. The appellant therefore relies on the provisions of rule 12 of the Fishery Rules and submits that. These rules therefore constitute the legal foundation for any licensing or farming arrangement concerning fisheries that have been proclaimed under the earlier provision. Without such a rule, any attempt to allocate fishery rights outside the auction or tender mechanisms would lack statutory support. The principle is that statutory authority must be exercised within the framework established by the legislature and not on an arbitrary basis. Accordingly, the Court must carefully examine whether a rule authorising such a settlement exists under the statutory scheme.

The Court observed that rule twelve of the Fishery Rules expressly granted the State Government the authority to settle fishery rights by means other than a sale. Accordingly, the State Government possessed the power to conclude individual settlements of fishery rights without adhering to the auction or tender mechanisms prescribed elsewhere in the regulations. Although the rule did not contain an explicit statement of this power, the Court held that the surrounding context of rule twelve clearly revealed the intention of the rule-making authority. The earlier provisions, namely rules one through eleven of section one, had laid down a procedure based on auction sales, and rule twelve introduced a prohibition against any settlement of fishery rights except by sale. That prohibition was expressed in general terms but contained a specific carve-out for the State Government. The only reasonable construction, the Court said, was that the State Government was permitted to settle fishery rights by means other than a sale. No limitation was placed on this power; therefore, the State Government could, at its discretion, adopt a tender system if it deemed such a method suitable, or it could enter into individual settlements when the facts of a particular case warranted that approach. The Court further explained that circumstances might arise, for example, when a fishery lease was cancelled or relinquished before its term expired, making it impractical or undesirable to sell the unexpired portion through a public auction or by inviting tenders. In such situations, the State Government could find it advantageous to negotiate an individual settlement so as to secure the maximum possible revenue for the State. The Court emphasized that no restriction could be imposed on the State Government’s discretion in this regard, because the State Government was best positioned to assess the situation and decide which procedure—whether tender, auction, or individual settlement—should be employed for settling fishery rights other than by sale. The Court noted that there was nothing in section four, which contained rules for settlement of fisheries by tender, that conflicted with this interpretation. Consequently, the Court concluded that rule twelve specifically empowered the State Government to settle fishery rights by means other than a sale and that this provision did not clash with section sixteen of the Assam Land and Revenue Regulation of 1886. The appeal hinged on the proper construction of rule twelve, and the Court found that it was unnecessary to consider whether the rule was intra vires or ultra vires, as the argument presented by the respondent was based on a misconception and could not be sustained.

The Court held that the issue of whether rule twelve could be invoked at all did not arise for consideration. It observed that the entire line of argument presented on behalf of respondent No. I was founded on a misunderstanding of the law and therefore could not be sustained. The Court further noted that the earlier decision of this Court in State of Assam v. Keshab Prasad Singh (1), which the learned judges of the Assam High Court had apparently relied upon in the case of Nuruddin Ahmed v. State of Assam (1), did not address the controversy presently before this Court. Consequently, the reliance on that precedent was misplaced and could not be upheld. Having rejected the argument of respondent No. I, the Court concluded that the appeal must be allowed. Accordingly, the settlement of the fishery rights entered into by respondent No. 3 with the appellant was declared to be valid and operative. The Court further expressed that, in logical terms, respondent No. 1 might also have been entitled to a similar relief; however, the Court identified several factual questions that needed to be resolved to determine whether the fishery lease granted to respondent No. 1 had been lawfully cancelled by respondent No. 2. Moreover, respondent No. I had expressly renounced any claim to benefits by maintaining that rule twelve concerning the fishery rights was ultra vires. On that basis, the Court found that respondent No. 1 could not be awarded any relief. The Court stated that respondent No. 3, being the only party with a vital interest in the resolution of this issue, would nevertheless obtain the benefit of this judgment, even though its entry had been made by an unconventional “back-door” method. The Court described this as an unsolicited relief that would arise as a consequence of the decision on the principal point in dispute. Finally, taking into account the unusual circumstances of the case, the Court ordered that each party should bear and pay its own costs of the appeal. The appeal was therefore allowed. (1) [1953] S.C.R. 865. (2) A.I.R. 1956 Assam 48.