Decided on September 16,1960

KADAR KHAN Appellant
HAZRAN Respondents

Referred Judgements :-



MODI, J. - (1.)THIS is a second appeal by the plaintiff Kadarkhan against the judgment of the learned District Judge, Merta, dated 19th October, 1954, by which he dismissed the plaintiff's suit for recovery of a certain amount of money in disagreement with a judgment and decree of the learned Munsiff, Nagaur, decreeing the plaintiff's suit.
(2.)THE facts and circumstances leading up to this appeal may be shortly stated as follows. Kadarkhan had obtained a lease to work lime stone from the Mining Deprt. of the State of Jodh. as it then was by an order dated on the 16 Oct. ,1943. On 11 Oct. 1943 it appears that he sub-let this contract to defendant Mehmood. This contract of sub-letting is contained in document Ex. P-8 dated the 11th Oct. 1943. THE plaintiff's case was that it had been mutually agreed between the parties, among other things, that defendant Mehmood would pay the instalments of royalty to the Government if and as they would fall due. Accordingly Mehmood carried on the work of this contract from the nth Oct. , 1943, to the 31st August, 1944. THE plaintiff's grievance is that although the defendant had recovered whatever income accrued from the contract during this period, the latter did not pay the full amount of the royalty which was payable for this period and which amounted to Rs. 998/- and the defendant had paid only Rs. 298/- to the Mining Department. Consequently, the plaintiff brought the present suit for the recovery of Rs. 700/- only.
The defendant resisted the suit on a number of grounds. He denied that he had ever entered into any contract with the plaintiff as alleged by the latter vide Exs. 1 and 2 on which point of fact, both courts below have found against him. He also raised several other pleas but these are immaterial for the purposes of the present appeal save the plea that the contract of sub-letting alleged to have been made by the plaintiff in his favour was invalid or unlawful without the permission of the Mining Department.

The trial court held that the impugned contract could not be held to be unlawful within the meaning of Sec. 23 of the Contract Act, and, therefore, was binding on the defendant, and in this View of the matter, decreed the plaintiff's suit. The defendant then went in appeal to the learned District Judge, Merta, who reversed the decision of the trial court on the aforesaid point and dismissed the suit of the plaintiff. The plaintiff has now come up in the second appeal to this Court.

It is to be regretted that the defendant has not put in appearance before this Court.

The sole question for decision in this appeal is whether the finding of the learned District Judge that the contract of sub-letting between the parties dated the nth Oct. , 1943, was invalid and, therefore, unenforceable in law is correct.

What the learned District Judge felt persuaded to say on this point was as follows- "the terms of the agreement show that rights the plaintiff had acquired from the Government under the licence, he had transferred them to the defendant. This was a clear case of transferring the contract and that was not permissible according to the terms of the licence and thus the agreement (Ex. P-l) was invalid. " The learned Judge then sought assistance for the conclusion at which he had arrived from a decision of the Madras High Court in Ramnayudu Vs. Seetaramayya (1) where it has been held that an illegal partnership was actually being carried on and the fair inference was that the object of the partnership was to do that which it did in fact do, namely, carry on the business in contravention of Cl. 27 of the General Sale Notification issued annually by the Commissioner of Excise under the Abkari Act (No. 1 of 1816) and which laid down the general conditions applicable to all Abkari and opium licences. In this view of the matter, the learned Judge dismissed the plaintiff's suit.

I have given this aspect of the case my earnest consideration and have arrived at the conclusion that the view of the learned Judge is not sound and cannot be sustained in law.

Now, before I proceed further, I should like to mention at this place that there was no statute governing the grant of a lease of the types with which we are concerned here in the former State of Jodhpur. My attention has been drawn to the rules for the grant of licenses in Marwar, 1922, which were published in the Marwar Gazette dated 1st July, 1922. Rule (3) of these Rules, however, provides that: - "nothing in these rules shall apply to minor minerals such as slate, marble, building stone, time stone, gypsum (khaddi), and clay, the extraction of which will continue to be regulated by such separate rules as the Durbar may lay down in accordance with local circumstances and requirements". I may state atonce that I have not been able to lay my hands on any separate rules which may be applicable to lime-stone. That being so, the Rules of 1922 clearly cannot apply to the case in hand.

(3.)WE are then left with the conditions of the licence which was granted to the plaintiff by the order of the Mining Department dated the 16th Oct. , 1942. Cl. (8) of these conditions provides that the contract will be heritable but not otherwise transferable and subletting of the contract would render the contract liable to cancellation in which case no claim for compensation will be considered and no payment will be refunded. It is by virtue of this clause of the contract that the learned Judge felt persuaded to hold that the contract of sub-letting between the patties was illegal and could not be enforced in law. With all respect, I find it difficult to agree with the finding of the learned Judge that the contract in question was unlawful or that it was forbidden by law or that it was of such a nature that if permitted, it would defeat the provisions of any law or further still that the contract was immoral or opposed to public policy. So far as the meaning of the phrase 'public policy' is concerned, it is undoubtedly a wide expression which may cover a great variety of topics; but there is authority for the proposition that the doctrine of 'public policy' should not be extended beyond the classes of the cases already covered and that the courts should be extremely slow to invent a new head of public policy. There is also authority for the proposition that any covenant or clause in a lease or grant by the Government would not be one opposed to public policy as such. See Vassandmal Daveldas Vs. Hiromal Mohanmal (2 ). I am, therefore not prepared to hold that a breach of the clause in the conditions like the present was opposed to public policy or was in any way immoral.
It only remains to consider whether it was unlawful. Now, before a breach of a condition may be held to be unlawful, it is axiomatic that there must be some law to which it can be opposed. The learned District Judge has not referred to any law to which the 'condition in question may be held to be opposed and all he means to say is that the contract which was sought to be enforced by the plaintiff against the defendant in the present case was made in contravention of a departmental rule. That in my judgement is saying a very different tiling from the proposition that the contract was opposed to law. I am, therefore, definitely of the opinion that the consideration or object of the agreement reached between the parties in this case could not be said to be unlawful nor the agreement based upon such con-sideration could be said to be void in law within the meaning of sec. 23 of the Contract Act.

So far as the decision of the Madras High Court in Ramanayuddin Vs. Scechara-mayya (1) is concerned, i think that it is clearly distinguishable. For cl. 27 of the General Sale Notification which was to be issued annually by the Commissioner of Excise was issued under a statute namely the Abkari Act. By this clause, among the other general conditions applicable to all Abkari and opium licences, the condition was laid down prohibiting the transfer or sub-renting of a licence without the Collector's previous permission. Under the circumstances, it could be said with justification that the partnership which was formed by the plaintiff with the defendant in that case was illegal, or opposed to a condition enacted under the Act itself. I am extremely doubtful that the same proposition can hold good with respect to a contract made in breach of a condition of the licence as to sub-letting as in the present case for, as I have already shown above, there was hardly any statutary law which governed the grant of licences in the matter of minor minerals in the former States of Jodhpur and, consequently, any conditions attached to the license were rules of an administrative character rather than statutory. It cannot be predicated of the breach of an administrative rule that it is unlawful.

From what I have stated above, it must follow that the opinion formed by the learned District Judge that the impugned contract between the parties was void or illegal within the meaning of sec. 23 of the Contract Act is incorrect.


Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.