S N BANNERJEE Vs. KUCHWAR LIME AND STONE CO LTD

JUDGEMENT

(1.) These are consolidated appeals from an order of the High Court of Judicature at Patna, dated 9 October 1936, made on the petition of the Kuchwar Lime and Stone Company (in liquidation), whereby it was ordered that (1) the Secretary of State for India in Council, (2) S. N. Ghose and (3) S. N. Bannerjee had been guilty of contempt and that the Secretary of State should forthwith pay to the petitioners one half of their costs and that the other respondents should also pay to the petitioners one-half of their costs and should be jointly and severally liable therefor. Of these persons S.N. Ghose is the managing director of a Company called the Kalyanpore Lime Works, Ltd. and S.N. Bannerjee then manager of that Company. The reason for the petition is to be found in the previous acts and relationship of the parties. On 1 April 1928, the Secretary of State granted to the petitioners two leases: one of the mineral rights in Lower Murli Hill and the other of the surface and mineral rights in Upper Murli Hill for a period of 20 years. The leases contained stipulations against assignments or the transfer of any right or interest thereunder without the previous assent of the Board of Revenue of Bihar and Orissa, and provided that a breach of those stipulations should entail a right of forfeiture by the Government. On 23 September 1928 the respondents purchased the surface rights in Lower Murli Hill from the local zamindar.

(2.) In January 1933 the respondents went into voluntary liquidation and on 30 September of that year entered into a written agreement with one S.G. Bose for the sale to him of their right under the two leases. On 6 October the respondents who had acquired the surface rights in Lower Murli Hill, sold those rights to Bose and on 9 October 1933 applied to the Collector of Shahabad for permission to assign the lease to him. On the same day Bose started quarrying operations. On 6tb December 1933, the sub-divisional officer of Sasararo, acting under the instructions of his superiors, refused permission to assign and directed Bose to stop work. On 20 April 1934, the Commissioner of the Division informed the respondents' solicitors that the Government had by order dated 27 March 1934, forfeited the leases and the Government formally confirmed the forfeiture on 18 July 1934.

(3.) Meanwhile S.N. Ghose, as managing director of the Kalyanpur Lime Works, Ltd., having heard that the leases were being terminated, wrote to the Collector of Shahabad offering, on behalf of his company, to take leases of the properties. By letter dated 31 March 1934, from the Secretary to the Board of Revenue to the Commissioner, a copy of which was forwarded to S.N. Bannerjee as manager of that Company, the offer was accepted. On receiving the copy of this letter, the Kalyanpur Company took possession of the quarries in April 1934, and this action was approved by the Collector in a letter dated 13 May 1934, in which he stated that "having been granted a lease of lime stone concession in the Upper and Lower Murli areas you are lawfully entitled to start work on them at once." On 21 April 1934, S.N. Bannerjee informed the respondents that the Board of Revenue had sanctioned the leases to the Kalyanpur Company. Certain disputes arose between that Company and Bose as to rights of ingress to and egress, from the quarries but the Company continued to work the quarries until 20 May 1935, when they temporarily suspended operations. The events which led up to this suspension were as follows: On 24 September 1934, the respondents brought a suit in the Court of the Subordinate Judge of Arrah against the Secretary of State for a declaration that their leases had not been validly forfeited and for an injunction to restrain the Secretary, his servants and agents, from granting leases to the Kalyanpur Company or to others and from authorizing such person or parsons to carry on operations in the Murli Hills and from otherwise interfering with any of the rights of the respondents in respect of the said hills. The Secretary of State in his defence contended that he had rightly terminated the leases, ejected the respondents and authorized the Kalyanpur Company to enter and work the quarries. The Subordinate Judge dismissed the suit on 7 March 1935. The respondents thereupon appealed to the High Court and on 25 April 1935 ex parte obtained an interim injunction against the Secretary of State in the terms set out above. S. N. Bannerjee received a copy of this injunction on 20 May 1935, and work was stopped the next day.