Find a Lawyer

First Appeal No. 152 of 1957, decided on 2nd August 1961.

(a) East Bengal State Acquisition and Tenancy Act, 1950 (XXVIII of 1951),

Ss. 3(2)(4)(a)(f), 20(2)(3)(4)(5), 9 & 75‑A‑Lease of Rent‑receivers khas land other than agricultural land not exceed ing ten bighas‑Not permissible under S. 9‑S. 9 in conflict with S. 75‑A, both not applicable simultaneously to demise of khas lands but S. 75‑A to prevail‑Cumulative effect of cls. (a) & (f) of S. 3(4) Khas lands held by rent‑receivers, to be directly under tenancy of Provincial Government on rent determined by latter‑Excess of retainable limit can be retained subject to S. 20 (2)(3)(4)(5).

(b) East Bengal State Acquisition and Tenancy Act, 1950 (XXVIII of 1951),

S. 75‑A read with Ss. 23 & 56 Contract Act (IX of 1872)‑Lease becoming void for coming into operation of S. 75‑A‑Lease contract becomes unenforceable Doctrine of frustration under S. 56, Contract Act comes into play‑Lease is executory contract and rights in suit properties not vested right‑Hit by S. 56.

Satyabrata Ghose v. Mugneeram Bangur A I R 1954 S C 44 ref.

(c) Stamp Act (II of 1899),

Arts. 5, 35 & 61(2)‑Duty on lease, under lease or sub‑lease and agreement to let and sublet governed by Art. 35 but agreement not operating as lease in praesent by Art. 5‑Document not bearing required stamp‑Penalised at 10 times and impounded.

Ahmad Sobhan for Respondents.

AM. Jani Alam, Assistant Government Pleader for the State.

M. R. KHAN, J.‑

This is a defendant's appeal from an original decree in a suit for specific performance of a contract of lease.

2. The suit out of which this appeal has arisen was instituted alleging the following facts:‑--

The suit lands having an area of 8 gandas in local measure ment and the huts thereon constitute holdings 205 and 206 of Ward D' of the Chittagong Municipality. Those lands belonged to the defendants 2 to 10 (respondents 2 to 10) and were their khas lands. The plaintiff (respondent No. 1) and the defendants 12 to 18 (respondents 11 to 17) held the suit properties as Bharatias (monthly tenants) under the defendants 2 to 10. While they were in possession of the suit properties as Bharatias, the defendant No. 1 Himangsu Bimal Mitra as Manager of the defen dants 2 to 10 agreed to lease out those properties to them at an annual rental of Rs. 24/8/. It was settled that the lease would be granted to the defendants 12 to 18 and also to the defendant No. 19 on behalf of her husband, the plaintiff: Accordingly, Rent Suit No. 5 of 1955 was brought against them on the 13th January, 1955, and two days thereafter, that is, on the 15th January, 1955, the defendant No. 1 received from them Rs. 350 as premium. Meanwhile, the defendant No. 1 was gained over by the defendant No. 11 (appellant), and it was at his instance that the defendant No. 1 withdrew the said rent suit. Thereafter, on the 18th October, 1955, the defendants 2 to 10 executed a power of‑attorney in favour of the defendant No. 1, empowering him to transfer and settle the suit properties among other lands on their behalf. Accordingly, the defendant No. 1 published a general notice on 2‑11‑55 stating that those lands would be settled. Thereupon the plaintiff and the defendants 12 to 18 approached the defendant No. 1 for taking lease of the suit pro perties. The defendant No. 1 gave out that the previous rent suit against the defendants 12 to 19 having been with drawn, it would not be proper to grant settlement in their names. It was, therefore, settled that the lease in respect of the suit properties would be granted in the name of the plaintiff. Accordingly, a bainanama (memorandum of agreement) was executed by the defendant No. 1 on the 25th November, 1955 on behalf of the defendants 2 to 10 stipulating‑

(i) that the defendant No. 1 would settle the suit properties with the plaintiff for a period of 99 years at an annual rental of Rs. 24‑8‑0 ;

(ii) that the premium for 8 gandas of lands in suit would be payable at the rate of Rs. 600 per ganda. In addition, a further sum of Rs. 500 would be payable as extra premium.

(iii) that from the total premium of Rs. 5,300 the sum of Rs. 350 paid previously on 15‑1‑55 and the further sum of Rs. 400 paid on the date of the bainanama would be deducted, leaving a balance of Rs. 4,550 and

(iv) that the defendant No. 1 would execute the lease and get it registered within one month on receipt of the balance premium of Rs. 4,550,

3. After the execution of the bainanama the defendant No. 1 went to Calcutta from where he wrote to the plaintiff to keep in readiness for the lease. After his return from Calcutta, the defendant No. 1 took the plaintiff to their pleader Kamini Kumar Sen for drafting the proposed lease. At that time, the bainanama and the power‑of‑attorney were shown to that pleader who, how ever, returned the power‑of‑attorney to the defendant No. 1 after taking some notes. He also returned the bainanama to the plain tiff after taking down the schedule of the properties there from. On getting the draft lease from the pleader the next day, the plaintiff detected that an incorrect schedule of the properties was inserted in the draft. The defendant No. 1 misrepresented to the plaintiff that the Kamini Kumar Sen was not returning the power of‑attorney. It was on that plea that the defendant No. 1 did not execute the lease in favour of the plaintiff in pursuance of the contract, although the balance premium of Rs. 450 was offered to him. It was further alleged in the plaint that the defendant No. 11 in collusion with pleader Kamini Kumar Sen and the defendant No. 1 managed to take lease of the suit properties and other lands from the defendant No. 1 on the basis of the said power‑of‑attorney, but the defendant No. 11 did so with know ledge of the plaintiff's pre‑existing contract of lease.

4. The defendants 12 to 19 (respondents 11 to 18) filed a joint written statement supporting the plaintiff's case in full.

5. The defendant No. 11 filed a separate written statement. His case is that in the year 1952 the defendant No. 1 proposed on behalf of the defendants 2 to 10 to lease out the suit properties and their other lands. It was then settled that the defendant No. 11 would take lease of all those properties for 99 years and that a kabala in respect of the superior interest of the lessors would be obtained in favour of Begum Sufia Ahmad, the wife of the defendant No. 11. It was further settled that those tran sactions would be completed after obtaining a power‑of‑attorney from the defendants 2 to 10. Accordingly, the defendants 2 to 10 executed a power‑of‑attorney on 18‑10‑55, appointing the defendant No. 1 and their cashier Surendra Kumar Sarkar as their joint attorneys and empowered them to act and do all things conjointly: On the strength of the said power of‑attorney, a lease for 99 years was executed for valuable con sideration in favour of the defendant No. 11 in respect of the suit properties among other land. Thus, the defendant No. 11 alleged to be a bona fide lessee in. respect of the suit pro perties without any notice of the plaintiff s alleged contract of lease.

6. Among the owners, the defendants 2,4,6 and 10 appeared and filed a joint written statement denying the cases of both the plaintiffs and the defendants No. 11. They, however, admitted to have executed a power‑of‑attorney appointing the defendant No. 1 and Surendra Lal Sarkar as their attorneys having power to act jointly, and categorically stated that the defendant No. 1 along had no power to lease out lands on their behalf. These defendants, however. did not appear at the time of the hearing of the suit.

7. The learned Subordinate Judge decreed the suit holding that the defendant No. 1 as manager of the defendants 2 to 10 had authority to lease out the suit properties, that he duly entered into an agreement for lease with the plaintiff who bona fide accepted the same, that there was no previous legally valid contract between the defendant No. 11 and the defendants 2 to 10 through the defen dant No. 1 and that the lease executed in favour of the defendan t No.11 is bad in law, the same having been hit by section 75‑A of the East Bengal State Acquisition and Tenancy Act, 1950.

8. It is undisputed that the lands in suit belonged to the defendants 2 to 10 and were their khas lands. It appears from the records‑of‑rights Exh. K that out of the three R. S. plots in suit, plot No. 1753 was held in proprietary right and that the remain ing plots 1744 and 1752 were held in permanent tenure right. It is alleged in the plaint that Himangsu Bimal Mitra, the defendant No. 1 was the manager of the defendants 2 to 10. This was admit ted by the defendants 2 to 10 in the first preamble to the lease deed (Exh. B) executed by them in favour of the defendant No. 11. The bainanama, dated 25‑11‑55 (Exh. 1) evidencing the plaintiff's contract of lease was executed by the defendant No. 1. This was proved by the evidence of its scribe (P. W. 3) and the attesting witnesses (P. Ws. 1 and 2) and also by that of the plaintiff (P. W. 4). This bainanama has not been duly stamped, and we shall discuss this matter hereinafter at the appropriate place. For the present, we shall confine our discussion to its merits. The bainanama supports not only the terms of the contract of lease as alleged in the plaint but also the receipt of Rs. 750 in all by the defendant No. 1 from the plaintiff towards the stipulated pre mium of Rs. 5,300. Thus, the contract of lease, dated 25‑11‑55 sought to be specifically enforced by the plaintiff is apparently established. But the validity of this contract of lease is challenged by the defendant appellant on the ground that the defendant No. 1 had no authority to lease out any lands on behalf of the defen dants 2 to 10. This attack was made also in his written statement. Exh. F is the power‑of‑attorney which, according to the fourth paragraph of the plaint, was executed by the defendants 2 to 10 on 18‑10‑55. It appears from Exh. F that the defendants 2 to 10 appointed the defendant No. 1 and their cashier Surendra Kumar Sarkar as their joint attorneys for one year to jointly act and do all necessary things on their behalf in respect of their properties in the district of Chittagong, including the suit properties. It is abundantly clear from the power‑of‑attorney that the two attorneys were empowered to act conjointly and that neither had power to act independently. The power‑of‑attorney was executed out of this Province and was authenticated by the Notary Public, Calcutta. It appears that after the receipt of the power‑of attorney in this Province, it was duly stamped on 12‑11‑55 in accordance with the provision of section 18 of the Stamp Act, 1899. Thus, the power‑of‑attorney was in the hands of the attorneys here at least on the 12th November, 1955, on which date it was stamped in this Province. The said date is prior to the date of execution of the bainanama (Exh. 1), the date of execution of the bainanama being the 25th November, 1955. Thus, according to the power‑of‑attorney, the defendant No. 1 alone had no authority on the said date to lease out the suit properties on

behalf of the defendants 2 to 10. Realising the formidable difficulty created by the power‑of‑attorney, Mr. Ahmed Sobhan, the learned Advocate for the plaintiff‑respondent submits that prior to the execution of the power‑of‑attorney, the defendant No. 1 as the manager of the defendants 2 to 10 had power to deal with and settle lands on their behalf that the defendant No. 1 had given out that besides being the manager he was the attorney of the defendants 2 to 10; that the plaintiff bona fide believed that the defendant No. 1 as manager and attorney had power to lease out lands on behalf of the defendants 2 to 10 and acted in that belief and that in order to defeat the plaintiff's claim the defendant No. 1 in collusion with the defendant No. 11 and Pleader Kamini Kumar Sen (D. W. 8) fraudulently got the name of Surendra Kumar Sarkar inserted in the power‑of‑attorney as one of the attorneys of the defendants 2 to 10. We may, however, observe that no such definite case has been made out in the plaint. Of course, it appears from the evidence of D. Ws. 3 and 4 and Exh. B that the defendant No. 1 was the manager of the defendants 2 to 10 and use to deal with their properties. It is also true that the defendant No. 1 alone issued the general notice (Exh. 2) stating that the suit lands among other lands would be settled. It is further true that the defendant No. I alone executed the bainanama (Exh. 1) without disclosing the name of this co attorney. Again, the defendant No. 1 jointly with his co‑attorney executed the lease deed (Exh. B) in favour of the defendant No. II, although defendant No. 1, had, in his earlier letter (Exh. 3), asked the plaintiff to be ready for the lease deed. All these facts and circumstances may, no doubt, give rise to a suspicion about some foul play on the part of the defendant No. 1, but these, in the absence of any definite case in the plaint as to fraudulent insertion of the name of second attorney in Exh. F, are not themselves sufficient to establish that the defendant No.1 perpetrated a fraud on the plaintiff in collusion with the defendant No. 11 and Pleader Kamini Kumar Sen. Even this suspicion will be shaken when we examine the plaint and analyse the evidence of the plaintiff himself. The plaint refers to two contracts for lease. One between the defendant No. 1 and the defendants 12 to 19 and the second between the defendant No. 1 and the plaintiff. The first contract was said to have been made orally in January 1955 and the second contract was made as per bainanama (Exh. 1) which alone is now sought to be specifically enforced. The first contract has been given up, but pleaded in the plaint only by way of intro duction. Now, coming to the second contract in dispute, we find from the fourth paragraph of the plaint that before applying for the grant of a lease in respect of the suit properties, plaintiff was fully aware of the execution of a power‑of‑attorney on 18‑10‑55 by the defendants 2 to 10. It is stated in the ninth paragraph of the plaint that the defendant No. 1 took the plaintiff to pleader Kamini Kumar Sen for obtaining a draft of the proposed lease and that the power‑of‑attorney was then shown by the defendant No. 1 to that Pleader. The fact of making over the power‑of attorney by the defendant No. 1 to Pleader Kamini Kumar Sen was also admitted by the plaintiff (P. W. 4) in his examination‑in chief. This, the plaintiff had an opportunity to examine the power‑of‑attorney. The plaintiff appears to have knowledge of English. So, it would not have been difficult for him to under stand the power‑of‑attorney typed in English had he cared to look into it. The plaintiff as P. W. 4 stated as follows:

"I know Himangsu Babu (defendant No. 1) since 1955 January. I required of his authority to grant settlement then, but he told us that he will bring the power later Himangsu Babu had sole power as manager before 15‑1‑55."

Thus, the plaintiff was anxious to be satisfied as to the authority of the defendant No. 1 to settlement of lands on behalf of the defen dants 2 to 10. Was it not then all the more necessary for him to look into the power‑of‑attorney when it was made over to Pleader Kamini Sen by the defendant No. 1 in his presence 7 When the suit lands among other lands were advertised for settle ment admittedly on the strength of the power‑of‑attorney executed by the defendants 2 to 10 on 18‑10‑55 and when the plaintiff was anxious to be satisfied as to the authority of the defendant No. 1 to settle lands, it is too much to say that the plaintiff bona fide believed that the defendant No. 1 had full power to lease out lands on behalf of the defendants 2 to 10. At any rate, the suspicion about some foul play on the part of the defendant No. 1 created by certain facts and circumstances was allayed by the above examination of the plaint and analysis of the plaintiff's evidence, On the question of authority of the defendant No. 1, the learned Subordinate Judge, after discussing the evidence, held thus:

"In the circumstances there might be honest belief in the plaintiff and pro‑defendants 12 to 19 that defendant No. 1, Himangsu Bimal Mitra had full authority to grant settlement though in fact the landlords might have tagged another per son to defendant No. 1 Himangsu Bimal Mitra for granting final settlement."

On such finding, the learned Subordinate Judge further held that the defendants 2 to 10 are bound under section 237 of the Contract Act by the contract of lease (Exh. 1) executed by the defendant No. 1. In coming to the finding as above, the learned Subordinate Judge did not appear to have considered the plaintiff's previous knowledge of the existence of the power‑of‑attorney, dated 18‑10‑55, his anxiety to obtain satisfaction as to the authority of the defendant No. 1 to settle lands and the opportunity available to him to examine the power‑of‑attorney at the time of its presentation to Pleader Kamini Sen by the defendant No. 1 in his presence. In view of these facts, we are unable to accept the finding of the learned Subordinate Judge that the plaintiff might have honestly believed that the defendant No. 1 had full authority to grant settlement. As regards the applicability of section 237 of the Contract Act, the said section enacts a rule of estoppel to the following effect : When a third party, because of the words or conduct of the agent, honestly believes in the existence of his authority, the principal is bound by the act done or the obligation incurred to the third party by the agent on behalf of the principal. In the present case, the plaintiff himself was aware of the existence of the power‑of‑attorney executed by the principals, namely, the defendants 2 to 10. Besides, he admittedly wanted satisfaction a to the authority of the agent i.e., the defendant No. 1. Moreover the defendant No. 1 admittedly promised the plaintiff to obtain the power. These facts lean heavily against the contention that the plaintiff honestly believed that the defendant No. 1 had full authority to grant settlement. Therefore, section 237 of the Contract Act is not attracted here. It then follows that the defendant No. 1 alone had no authority to execute the bainanama (Exh. 1) on 25‑11‑55, inasmuch as the power‑of‑attorney authorised the two attorneys to act conjointly and not severally. Prior to the execution of the power‑of‑attorney, the defendant No. I, as manager of the defendants 2 to 10 might have authority to settle lands on their behalf. But the authority of the defendant No. I to settle lands as manager, if any, must be taken to have been withdrawn by the power‑of‑attorney whereby the authority to settle lands on behalf to the defendants 2 to 10 was conferred jointly on the defendant No. 1 and Surendra Kumar Sarkar. As the bainanama Exh. 1 was executed by the defendant No. I alone subsequent to the power‑of‑attorney, the contract of lease created by it was un-authorised and invalid and as such, the same is not binding on the defendants 2 to 10 and cannot be specifically enforced.

9. The defendant appellant resists the plaintiff's prayer for specific performance on the further ground that he himself is a bona fide lessee in respect of the suit properties without any notice of the plaintiff's contract of lease. It appears from the registered patta (Exh. B) that on 28‑1‑56 the defendant No. 11 obtained a lease of the suit properties among other lands for 99 years from the two attorneys named in the power‑of‑attorney (Exh. F) executed by the defendants 2 to 10. The learned Subordinate Judge has found the lease of the defendant No. 1 to be illegal and void, the same having been obtained in violation of the provision of section 75‑A of the East Bengal State Acquisition and Tenancy Act, 1950 (hereinafter called "the Act"). The said section totally prohibits subletting of any khas land by any person with effect from the date of publication of a notification under subsection (3) of section 17 or subsection (1) of section 31 of the Act and provides that such letting, if any, shall be null and void, and the land concerned shall be forfeited to the Provincial Government. The relevant notification under subsection (3) of section 17 was undeniably made on 13‑12‑55 and published in the Gazette on 16‑12‑55. The patta (Exh. B) of the defendant No. 11 was obtained on 28‑1‑56. Thus, the patta being subsequent to the publication of the relevant notification under subsection (3) of section 17 falls within the mischief of section 75‑A of the Act. Hence, the lease of the defendant No. 11 as per Exh. B cannot be invoked to resist the plaintiff's prayer for specific performance of his contract of lease. Thus, the defendant-- appellant's second ground of attack against the plaintiff's prayer for specific performance falls through.

10. In this connection, there has arisen another question whether the plaintiff's contract of lease as per bainanama (Exh. 1) does not similarly fall within the mischief of the said section 75‑A or is not restricted by section 9 of the Act. This question was not considered by the trial Court. As, however, this is a question of law and does not require any further investigation into facts, the same can and should be considered and decided by u9 in this appeal. Section 9 forbids, with effect from the date of publication of a Notification under section 3 (1) of the Act, all kinds of transfers of the rent‑receivers khas lands, except with the previous permission of the prescribed authority. A proviso, however, was subsequently added to this section permitting only sale and mortgage of agricultural lands not exceeding ten bighas, Thus lease of rent‑receivers khas lands, other than agricultural lands not exceeding ten bighas, is not permissible under section 9, except with the previous permission of the prescribed authority. Section 75‑A, on the other hand, totally prohibits the sub‑letting of khas lands of any person, whether he is rent‑receiver or not. Thus, section 9, so far as concerns demise of khas lands of rent‑receivers, is in conflict with section 75‑A. These two sections cannot stand together and apply simultaneously so far as the demise of khas lands is concerned. Of them, section 9 which deals with transfers in general is in the statute book from the very inception, but section 75‑A dealing with sub‑letting alone was subsequently incorporated in the Act by an amending legislation, namely, the East Bengal Act XII of 1954. Now, the rules of inter pretation in such a case appear to be as follows :‑

(i) "If two sections are repugnant, the known rule is that the last must prevail." Vide Maxwell's Interpretation of Statutes 9th edition, page 165.

(ii) "Again, if the co‑existence of two sets of provisions would be destructive of the object for which the later was passed, the earlier would be repealed by the later," vide ibid, page 171.

(iii) "The rule is that whenever there is a particular enactment and a general enactment in the same statute, and the latter, taken in its most comprehensive sense, would overrule the former, the particular enactment must be operative, and the general enactment must be taken to affect only the other parts of the statute to which it may properly apply", vide (raies on Statute Law, fifth edition, page 205.

11. On these rules of interpretation, section 75‑A, so far as demise of khas lands is concerned, whether such lands 1'elong to rent‑receivers or not, shall prevail over section 9, but with regard to the other matters covered by section 9, that section shall continue to apply. As the suit lands are khas land add as the bainanama of the plaintiff relates to the demise of those lands, section 75‑A (and not section 9) calls for consideration here

12. It is an admitted fact that all interests of all rent receivers were summarily acquired on the 14th April, 1956 by notifi cations issued under subsection (1) of section 3 of the Act. It is also admitted that the defendants 2 to 10 to whom the suit properties belonged were rent‑receivers. Thus, the interests of the defendants 2 to 10 as rent‑receivers were also acquired by the said notifications. Now, clause (a) of subsection (4) of section 3 provides that on and from the date specified in a notification under subsection (1) of that section, all interests of the rent‑receivers including their khas lands and interest in sub‑soil etc. shall vest absolutely in the provincial Government, free from all incumbrances. Simultaneously, clause (of subsection (4) of the said section 3 provides that all such rent‑receivers shall be entitled to hold as tenants directly under the Provincial Government such of their khas lands as has not been acquired under subsection (2) of section 3 and shall be liable to pay to the Provincial Government, the rent determined under section 5. The cumulative effect of clauses (a) and (f) of sub‑section (4) of section 3 on khas lands of rent‑receivers is that on and from the date specified in a notification under subsection (1), all khas lands hitherto held by them in their capacity as rent-receivers, that is, as proprietors, tenure‑holders etc. shall, with effect from the said date, be held by them in a different capacity, namely, as tenants directly under the Provincial Government on payment of the rent determined for the khas lands under section 5. As the acquisition of khas lands of rent‑receivers, according to subsection (2) of section 3, is subject to the provisions of subsections (2), (3), (4) and (5) of section 20, the rent‑receivers whose interests have been acquired under subsection (1) of section 3 can retain all their khas lands in excess of the retainable limit till the excess lands are determined and taken out in the manner prescribed in subsections (2), (3), (4) and (5) of section 20, but those rent‑receivers shall till then hold all their khas lands as tenants directly under the Provincial Government under clause (f) of subsection (4) of section 3.

13. It follows from the above analysis of the relevant provisions of the Act that since the wholesale acquisition of all rent‑receiving interests with effect from the 14th April 1956, the defendants 2 to 10 were holding their khas lands including the suit properties as tenants directly under the Provincial Government.

14. Having regard to the above status of the defendants 2 to 10 in respect of the suit properties, let us examine if section 75‑A of the Act stands in the way of specific performance of the plaintiff's contract of lease. Section 75‑A runs thus:

"(1) On and from the date of publication of a notification under subsection (3) of section 17 or under subsection (1) of section 31, no person shall sublet any land in his khas possession in the area which such notification relates.

(2) Any sub‑letting made in contravention of subsection (1) shall be null and void and the lands so sublet shall be forfeited to the Provincial Government.

(3) Any person may, at any time, apply to the Provincial Government for the acquisition of any of his khas lands under subsection (2) of section 3 on payment of compensation at the rate prescribed for such land in section 39."

As already said, the relevant notification under subsection (3) of section 17 was published in the Gazette on 16‑12‑55. Therefore, sub‑letting of the suit properties on and from the said date is absolutely prohibited. Moreover, any sub‑letting of those properties on or after the said date shall be not only null and void but also entail forfeiture of the land demised. The plaintiff's contract of lease as per bainanama (Exh. 1) was made on 25‑11‑55, i.e., prior to the coming into operation of section 75‑A in the area to which the suit properties relate. Therefore, it falls to be considered whether the plaintiff's contract of lease made at a time when there was no restriction on the making of that contract now be specifically enforced in face of the total prohibition against sub‑letting under section 75‑A. This brings us to the consideration of sections 23 and 56 of the Contract Act. Section 23 provides, among others, that the consideration or object of an agreement is lawful, unless it is of such a nature that, if permitted, it would defeat the provisions of any law; it further provides that every agreement of which the object or consideration is unlawful is void. It is true, the plaintiff's contract of lease having been made prior to the coming into operation of section 75‑A was lawful at the time when it was made. But if the object of that contract i.e., the demise of the suit properties is now permitted, the same will defeat the provisions of section 75‑A. Thus, section 75‑A has rendered the object of the plaintiff's contract of lease unlawful and thereby made the contract itself void. This appears to be the effect of section 23 of the Contract Act, read with the said section 75‑A.

15. Section 56 of the Contract Act is more specific and directly applies to this case. Paragraph 2 of section 56 which is relevant here runs thus:

"A contract to do an act, which after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful."

Section 56 enacts the doctrine of frustration. In the words of Viscount Maugham in Joseph Constantine Steamship Line Ltd. v. Imperial Smelting Corporation Ltd. (1942 A C 154), "the doctrine of frustration is only a special case of the discharge of contract by an impossibility of performance arising after the contract was made." The performance of a contract may be impossible as a matter of fact, or it may be impossible in law. Section 56 deals with impossibilities of both kinds. The second para graph of that section provides that a contract becomes void if it means the doing of an act which, after the contract is made, (i) becomes impossible or, (ii) by reason of some event which the promisor could not prevent becomes unlawful. Thus, a distinction has been made between the two classes of supervening impediments; the latter class applies where the supervening impediment arises by reason of some event which the promisor could not prevent, In other words, in the case of supervening impediment of the second class, the doing of the act promised must be rendered unlawful by reason of some event beyond the control of the promisor. The present case clearly falls under the second class of supervening impediment. Here, the plaintiff contract of lease, though lawful at the time when it was made, has been rendered impossible of performance by the operation o section 75‑A of the Act over which the parties to the contract have no control. The said contract cannot be performed or specifically enforced except in violation of the absolute prohibition contained in section 75‑A the performance of that contract has, therefore, been rendered unlawful by the said section. Thus, the doctrine of frustration coming within the purview of the second paragraph of section 56 of the Contract Act comes into play in this case with the result that the plaintiff's contract of lease has become void and unenforceable.

16. Judicial decisions with regard to the scope and applicability of the second paragraph of section 56 of the Contract Act are not wanting. In the case of Satyabrata Ghose v. Mugneeram Bangur & Co. (A 1 R 1954 S C44), the Supreme Court of India has recently examined this mater vis‑a‑vis the doctrine of frustration under the English law. In that case, it was held as follows :‑

"We hold, therefore, that the doctrine of frustration is really an aspect or part of the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done and hence comes within the purview of section 56 of the Indian Contract Act. It would be incorrect to say that section 56 applies only to physical impossibility and that where this section is not applicable, recourse can be had to the principles of English law on the subject of frustration. It must be held also, that to the extent that the Indian Contract Act deals with a particular subject, it is exhaustive upon the same and it is not permissible to import the principles of English law dehors' these statutory provisions. The decision of the English Courts possess only a persuasive value and may be helpful in showing how the Courts in England have decided cases under circum stances similar to those which have come before our Courts *** *** In deciding cases in India, the only doctrine that we have to go by is that of supervening impossibility or illegality as laid down in section 56 of the Contract Act, taking the word 'impos sible' in its practical and not literal sense. It must be borne in mind, however, that section 55 lays down a rule of positive law and does not leave the matter to be determined according to the intention of the parties (as under the English law). *** *** *** The relief (under section 56) is given by the Court on the ground of subsequent impossibility when it finds that the whole purpose or basis of a contract was frustrated by the intrusion or occurrence of an unexpected event or change of circumstances which was beyond what was contemplated by the parties at the time when they entered into the agreement."

17. In the above quotations, the words within the parenthesis are ours. It will be seen that the view of the Supreme Court of India as regards the effect of supervening illegality resulting from circumstances beyond the control of the parties to a contract is the same as has been taken by us in this case.

18. Even according to the principles of English law, if the performance of a contract becomes impossible by subsequent legislation, the contract is discharged. Decisions of English Courts in this regard are not few. Suffice it to cite the case of C. B. Reilly v. The King (1934 A C 176). In that case, the appellant before their Lordship of the Privy Council was appointed by Letters Patent to be a member of the Federal Appeal Board established by a statute of Canada which specified the period of appointment and the salary attaching to it. During the currency of the appointment, the Parliament of Canada abolished the office by repealing the provision which established the Board. By a petition of right, the appellant claimed damages for branch of contract. Applying the doctrine of frustration, their Lordships held

"In the present case the office held by the appellant was abolished by statute: thenceforward it was illegal for the executive to continue him (the appellant) in that office or pay him any salary : and impossible for him to exercise his office. The jurisdiction of the Federal Appeal Board was gone. The position, therefore, seems to be this. So far as the rights and obligations of the Crown and the holder of the office rested on statute, the office was abolished and there was no statutory provision made for holders of the office so abolished. So far as the rights and obligations rested on contract, further performance of the contract had been made by statute impossible, and the contract was discharged. It‑ is perhaps unnecessary to add that discharge means put to end does not mean broken. In the result, therefore, the appellant has failed to show a breach of contract on which to find damages."

19. It follows from the foregoing discussions that the plaintiff's contract of lease cannot be specifically enforced for two reasons. Firstly, the contract of lease itself is illegal, the same having been made by only one out of the two joint attorneys of the defendants 2 to 10. Secondly, the contract, by reason of the operation of section 75‑A of the Act, has become frustrated.

20. Mr. Ahmad Sobhan then submits that the defendant appellant has no locus standi to challenge the plaintiff's contract of lease and oppose its specific performance inasmuch as his own lease in respect of the suit properties has fallen though, the same having been hit by section 75‑A of the Act. We do not find any substance in this contention. When the decree under appeal has been made also against the defendant‑appellant, he is entitled to attack the decree on appeal.

21. The last contention of Mr. Ahmad Sobhan is that as the plaintiff's contract of lease was lawful at the time when it was made, he acquired a right there under which being a vested right remains unaffected by the operation of section 75‑A of the Act. In other words, his contention is that section 75‑A not being retrospective in operation, the right acquired by the plaintiff under the contract of lease prior to the coming into operation of that section remains unaffected by it. In support of this contention, he has referred to. the following passage in Maxwell's Interpretation of Statutes, 9th edition, page 222

"No rule of construction is more finally established than this that a retrospective operation is not to be given to a statute so as to impair an existing right or obligation, otherwise than as regards matter of procedure unless that effect cannot be avoided without doing violence to the language of the enact ment."

Besides he has cited also a number of judicial decisions in support of his contention. These are: Henshall v. Porter ((1923) 2 K B 193); Bigan Singh v. Sayid Shah Zafer Hussain and others (A I R 1940 Pat. 567); Jatindra Nath De v. Jetu Mahato and others (A I R 1946 Cal. 339); The Colonial Sugar Refining Company Limited v. Irving (1905 A C 369) and H. P. Banerjee v. Commissioner of Income‑tax (A I R 1941 Pat, 59).

22. It is not necessary to discuss all those reported cases, for it is a well‑recognized rule that no statute shall be construed to have a retrospective operation so as to affect vested rights, unless such a construction appears very clearly in the terms of the statute or arises by necessary and distinct implication. What, however, is necessary to consider here is whether the right acquired by the plaintiff under his contract of lease may properly be called a vested right. The contract of lease in question is a mere executory contract; it is a simple agreement stating that on the fulfillment of certain terms of lease would be granted and is no a deed effecting an actual demise or operating as a lease praesenti. Thus, the right acquired by the plaintiff under the contract is only a contractual right to have a lease of the suit pro parties on the fulfillment of the terms mentioned therein but is no a completed and accomplished right so as to be termed as vested, right. No vested right having accrued under the contract of lease, the contract is governed by the provisions of the Contract Act, including the rule of frustration as laid down in section 56 of that Act. In Dip Narain Singh v. Nageshur Prasad and others Sulaiman, J, observed:

"There can be no doubt that there is a clear distinction between a contract which still remains to be performed and specific performance of which may be sought, and a conveyance by which title to property has actually passed. Cases of mere contract are governed by the provisions of the Contract Act."

Also in the case of Satyabrata v. Magneeram Bangen & Co. cited hereinbefore, the Supreme Court of India held:

"The rule of frustration can only put an end to purely contractual obligations, but it cannot destroy an estate in land which has already accrued in favour of a contracting party."

23. When no vested right accrued to the plaintiff under the contract of lease, that contract falls within the mischief of the aforesaid section 75‑A, and is, therefore, hit by section 56 of the Contract Act. Hence, the well‑recognized rule as to retrospective operation of a statute stated hereinbefore and invoked by Mr. Ahmad Sobhan in support of his contention is of no avail.

24. Defendant No. 12 (respondent No. 11) who deposed as D. W. 5 on behalf of the answering defendants 12 to 19 said that after the acquisition of the rent receiving interest by the Govern ment, they paid rent to the Government in respect of the suit lands and produced the rent‑receipts Exhs. B‑1 to B‑1 (2). These rent‑receipts showing payment of rent to the Government were obtained in the name of the plaintiff who, it is alleged, represents the defendants 12 to 19. Whether these rent‑receipts created any title in favour of the plaintiff or the defendants 12 to 19 does not call for any decision in this appeal and is therefore left open.

25. Before we conclude, we shall deal with one more matter which was left over. This relates to stamp duty on the bainanama, dated the 25th November 1955, executed by Himangsu Bimal Mitra (Exh. 1). It appears that the bainanama has been stamped with a postage stamp of annas four only. The postage stamp being wholly inappropriate, Exh. 1 should be deemed to be unstamped. The learned Subordinate Judge admitted it in evidence without having realised the duty and penalty payable under section 35 of the Stamp Act. Section 36 of the said Act lays down that where instrument has been admitted in evidence, such admission shall not, except as provided in section 61 of that Act, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped. In order to take action by this Court under section 61, it shall be necessary to determine the amount of duty with which the bainanama is chargeable. Stamp duty on lease, including an under‑lease or sub‑lease and any agreement to let or sub‑let is payable under Article 35 of Schedule IA to the Stamp Act as in force in East Pakistan. But an agreement or memorandum of agreement not falling under Article 35 and not otherwise provided or falls under Article 5 (c) of the said Schedule. Under Article 35, both lease and agreement to let or sub‑let are chargeable with the same duty. The proviso to Article 35 lays down that when an agreement to lease is stamped with the ad valorem stamp required for a lease, and a lease in pursuance of such agreement is subsequently executed, the duty on such lease shall not exceed twelve annas. This indicates that in order to be chargeable with the like duty under Article 35, an agreement to let or sub‑let, like lease itself, should effect an actual demise. According to the decision of the Privy Council in Hementa Kumari Devi v. Midnapur Zamindary Company (16 1 A 240), an agreement to lease, for the purpose of the Registration Act, must be an agreement to writing which effects a present demise. The same view can be applied to an agreement to lease for the purpose of the Stamp Act when both lease and agreement to let or sub‑let are chargeable with the same duty under Article 35. We think that an agreement to lease which effects a present demise is chargeable with duty under Article 35, but an agreement to let or sub‑let which does not operate as a lease in praesenti falls under Article 35 for the purpose of stamp duty. An exactly similar question was con sidered by the Bombay High Court in 1928 in re: Maneklal Manilal (I L R 1929 Rom. 1). In that case" too, a distinction was made between a simple agreement to let on the fulfillment of certain terms and an agreement to lease which effects a present demise. Keeping this distinction in view., it was decided in that case that only an agreement to lease which effects an actual demise or operates as a lease in praesenti in chargeable with duty under Article 35 of Schedule I of the Stamp Act which corresponds to Article 35 of Schedule IA of that Act as in force in this Province.

26. We have already held that the bainanama (Exh. 1) is the written memorandum of a simple exeoutory contract and that it has not effect a present demise. Therefore, the bainanama is charge able with duty under Article 5 and not under Article 35 of Schedule IA of the Stamp Act. Mr. Jani Alam, the learned Assistant Government Pleader whom we heard on this point supported this 'view. As the bainanama falls under clause (c) of Article 5, it is chargeable with the duty of Rs. 1‑8‑0. As the duty has not been paid, the bainanama is impounded.

27. We, therefore, record a declaration under section 61 (2) of the Stamp Act that with regard to the bainanama (Exh. 1) the stamp duty payable is Rs. 1‑8‑0 and the penalty is Rs. 15 at ten times the amount of stamp duty, under section 35 of the said Act. A copy of this declaration, together with the bainanama be sent to the Collector, Chittagong for action under subsection (4) of section 61 of the Stamp Act.

28. In the result, the appeal succeeds. The appeal is allowed and the judgment and decree of the trial Court are set aside and the suit is dismissed. Having regard to the fact that the lease of the defendant‑appellant has also fallen through and the nature of the questions of law involved in this case, the parties are directed to bear their respective costs throughout.

S. B./A.H.

Find a Lawyer Near You

Dealing with a matter like this? Connect with a verified advocate in your city — free on SJP Lawyers Directory.