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PETITIONER: CHHOTABRAI JETHABAI PATEL AND CO.

       Vs.

RESPONDENT: THE STATE OF MADHYA PRADESH(and other cases)

DATE OF JUDGMENT: 22/12/1952

BENCH: AIYAR, N. CHANDRASEKHARA BENCH: AIYAR, N. CHANDRASEKHARA MAHAJAN, MEHR CHAND BHAGWATI, NATWARLAL H.

CITATION:  1953 AIR  108            1953 SCR  476  CITATOR INFO :  E&D        1956 SC  17  (12)  D          1958 SC 532  (5,23,24,25)  NF         1959 SC 735  (28)  O          1962 SC1916  (4,5,12)  O          1966 SC1637  (2,7,8,9,10)  RF         1968 SC1218  (2,4)  E          1970 SC 706  (5,6,7,8)  R          1976 SC1813  (13)  RF         1978 SC1635  (20)  R          1985 SC1293  (107,112,114,115,124,127)

ACT: Madhya  Pradesh  Abolition of Proprietary  Rights  (Estates, Mahals  and  Alienated Lands) Act, 1950, Ss.  3,  4  -Rights under contracts with proprietors for plucking tendu  leaves, collecting  lac, cutting timber etc.-Whether vest in  State- Nature  of such contracts -Indian Sale of Goods Act (III  of 1930) S. 4 (3) -"Future goods", meaning of.

HEADNOTE:   The   Madhya  Pradesh  Abolition  of  Proprietary   Rights (Estates, Mahals, Alienated Lands) Act of 1950 put an end to all  proprietary  rights in estates,  mahals  and  alienated villages situated in the State and vested them in the  State for  the purposes of the State, free from all  encumbrances. The petitioners, who had entered into various contracts  and agreements  with the proprietors of the estates  before  the date on which the estates vested in the State under the  Act (and,some  of them even before the 16th March,  1950)  under which  they were entitled to pluck, collect and  carry  away tendu leaves, to cultivate, culture and acquire lac, and  to out  and  carry away teak and timber and  other  species  of trees,  applied for writs under art 32 of  the  Constitution prohibiting the State from interfering with the rights  they had, acquired under the contracts with the proprietors: Held,  (i) On construction of the contracts in  a  question, that  the  contracts  were in essence  and  effect  licenses granted  to  the petitioners to cut, gather and  carry  away produce  in the shape of tendu leaves, lac, timber, or  wood and  the  petitioners were neither proprietors  nor  persons having  any interest in the proprietary rights  through  the

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proprietors, within the meaning of the Act; (ii) The  rights  of the petitioners were  not  encumbrances within the meaning of the expression "free from encumbrances in s. 3 . 1) of the Act and the petitioners were entitled to a  writ  against  the  State  prohibiting  the  State   from interfering  with  the rights of the petitioners  under  the contracts which they had entered into with the proprietors. Mohanlal  Hargovind  v. Commissioner  of  Income-tax,  C.P,& Berar (I.L.R. [19491 Nag. 892) referred to. Held  also,  that s. 4 (3) of the Indian Sale of  Goods  Act which  lays flown that in the case of sale of  future  goods the contract 477 amounts  only to an agreement to sell did not apply  to  the contracts in the present case as "future goods" are  defined in  the Act as meaning goods to be manufactured or  produced or acquired by the seller after making the contract of sale.

JUDGMENT: ORIGINAL  JURISDICTION: Petition is Nos. 232,233, 286,  309, 320, 351, 319, 350, 354 and 490 of 1951.  Applications under article  32  of the Constitution for writs  to  enforce  the fundamental rights of the petitioners. C.   K.  Daphtar  (R.   M. Hajarnavis,  with  him)  for  the petitioner in Petition No. 232. M.   C. Setalvad (G.  N. Joshi and B. M. Hajarnavis, with him) for the petitioner: in Petition No. 233. B.   M. Hajarnavis for the petitioners in Petitions Nos. 286, 309 and 320. V.   N. Swami for the petitioners in Petitions Nos., 350 and 351. N.   S. Bindra (B.  S. Narula with him) for the  petitioners in Petitions Nos.’319, 354 and 490. T.   L. Shivde, Advocate-General of Madhya Pradesh, for  the respondent  in  all  the  petitions,  the  State  of  Madhya Pradesh. 1962.  December 22.  The Judgment of the Court was delivered by CHANDRASEKHARA AIYAR J.-These are petitions under article 32 of  the  Constitution of India for directions or  orders  or writs  to enforce the fundaments rights, of the  petitioners to  property  by prohibiting, the respondent, the  State  of Madhya  Pradesh, from enforcing their alleged  rights  under the Madhya Pradesh Abolition of Proprietary Rights Act, 1950. The   several   petitioners  entered  into   contracts   and agreements with the previous proprietors of certain  estates and mahals in the State under which it is said they acquired the rights to pluck, collect and carry away tendu leaves, to cultivate, culture and acquire lac and to cut and carry away teak  and timber and miscellaneous special of  trees  called hardwood and 478 bamboos.  The contracts and agreements are in ’writing  some of  them  are registered.  There is no dispute  about  their genuineness,  and  it  has not been alleged  that  they  are ’collusive or fraudulent transactions.  Their dates and  the several  sums of money paid as consideration are set out  in the petitions.  The petitioners allege that they have  spent large sums of money in the exercise of their rights, and his fact too is not controverted. Petitions Nos. 232, 233, 286, 309 and 320 of 1951 relate  to tendu leaves which grow in shrub jungles and which are  used

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in  the manufacture of beedis or country made cigarettes,  a very  extensive and competitive business carried on by  some of  the petitioners involving an outlay of one to two  lakhs of  rupees in some cases.  For instance, 406  contracts  are involved  in  Petition No. 232 of 1951 ;  the  consideration paid  comes to Rs. 1,65,385 and the expenses are alleged  to be  in the region of Rs. 1,90,000.  In Petition No.  233  of 1951  there  are 785 contracts; the purchase  money  is  Rs. 1,10,605 and the outlay byway of ’expenses is said to be Rs. 50,000. Petition  No.  319  of  1951  relates  to  the  culture  and cultivation  of  lac, and there are several lease  deeds  of different  dates enuring for different periods; two of  them go up to the years 1966 and 1967. Teak,,  timber and hardwood form the subject-matter  of  the rights  involved  in  Petition  No.  350  of  1951  and  the registered lease deed is dated 8th October, 1949, and it  is for a term of ten years. Petition   No.  351  of  1952  involves  tendu  leaves   and miscellaneous forest produce and timber. Petition  No.  354 of 1951 relates to  bamboo  forests,  and Petition No. 490 of 1951 to hardwood and bamboo. The  contentions  of  the petitioners are  mainly  three  in number.   They  say that the rights acquired by  them  under these  contracts and agreements were got before the  passing of the Madhya Pradesh Abolition                            479 of  Proprietary Rights Act, 1950, and that  the  legislation therefore does not affect them.  It is urged next that  they are  not  proprietors  within the meaning  of  the  Act  and consequently  the Act does not apply to them.   Lastly,  the question  is raised that the Act itself is ultra  vires,  as many  of  its material provisions offend  their  fundamental rights guaranteed under the Constitution. The full title of the Act is the " Madhya Pradesh, Abolition of  Proprietary  Rights (Estates, Mahals,  Alienated  Lands) Act,  1950  ", and it is Madhya Pradesh Act I of  1951.   It came  into  force on 26th January, 1951.  On the  very  next day,  there  was a notification under section 3 of  the  Act putting an end to all proprietary rights in estates,  mahals and alienated villages and vesting the same in the State for the  purposes  of the State free of  all  encumbrances  with effect from 31st March, 1952. The  validity  of  the Act was questioned  by  the  affected proprietors in Visheshwar Rao v. The State of Madhya Pradesh (1) before this     Court, and the Act was held to be valid. The petitioners are concluded.     We have to consider only the other two points     raised on behalf of the petitioners.It is clear from the provisions in the impugned Act that only those rights of the proprietor vest in the State which the proprietor had on the  specified date.   Section  3 provides that on and from a  date  to  be specified  by  a notification by the State  Government,  all proprietary  rights  in  an estate or  mahal  vesting  in  a proprietor  shall  pass from him to and vest in  the  State. The  consequences of vesting are given in section 4  of  the Act,  and it is provided that the vesting will  take  place, notwithstanding  anything. contained in any contract,  grant or document or in any other law for the time being in  force and save as otherwise provided in this Act.  But this  again deals  only  with  the rights existing on the  date  of  the notification the section is not retrospective. (1)  [1952] S.C.R. 1029. 480 Clause  (a) speaks of all rights,title and interest  vesting

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in  the  proprietor or any person having  interest  in  such propreitory right through the proprietor. Clause (b) is to this effect "all  grants and confirmation Of title of or to land in  the property  so vesting Or Of or, to any right or privilege  in respect  of such property orland revenue in respect  thereof shall, whether liable to resumption or not, determine;" The right or privilege referred to is the right or privilege of  the  proprietor  or any person having  interest  in  the proprietary right through the proprietor. Clause (c)  is quite clear on the subject; it runs thus: "all  rents  and cossesi in respect of any  holding  in  the property so vesting for any period after the date of vesting and  which.  but for the vesting, would be  payable  to  the proprietor  shall  vest  in  and be  payable  to  the  State Government......." The words " after the date of vesting " are important. Sub-section (3) of section 4 says Nothing  contained in subsection (1) shall operate as a  bar to the recovery by the outgoing proprietor of any sum  which becomes  due to him-before the date of vesting by virtue  of his proprietary rights and any such sum shall be recoverable by  him by any- process of law which but for this Act  would be available to him." If the outgoing proprietor is entitled to, recover any  sums as  quid  pro  quo for what he has  parted  with  under  the transfer, it can only be on the basis that the transfer is a good and valid transaction unaffected by the Act.  Section 6 is very material, and it is in these terms’ (1)  Except as provided in sub-section (2), the transfer  of any right in the property ’Which is liable 481 to  vest in the state under this Act made by the  proprietor at any time after the 16th March, 1950, shall,. as from  the date of vesting, be void. (2)  Where  on  the. application of the  transferor  or  the transferee,  the Deputy Commissioner is satisfied  that  any transfer of property referred to in subsection (1) was  made by a proprietor in good faith and in the ordinary course  of village management, he may declare that the transfer  shall, not be void* after the date of vesting." The  date,  16th  March, 1950, is  probably  the  date  when legislation on these lines was actively thought of, and sub- section  (1) hits at transfers made after this  date.   This means that transfers before that date are not to be regarded as void.  Even in the case of transfers after the said date, sub-section  (2). provides that the Deputy Commissioner  may declare  that they .are not void after the date of  vesting, provided  they were made in good faith and in  the  ordinary course of management. , The scheme of the Act as can be gathered from the provisions referred  to above makes it reasonably clear  that  whatever was done before 16th March, 1950, by the proprietors by  way of  transfer of rights is not to, be disturbed or  affected, and that what vests in the State is what the proprietors had oil  the  vesting date.  If the proprietor  had  any  rights after the date of vesting which he could enforce against the transferee  such  as a lessee or a  licensee,  those  rights would  no doubt vest in the State.  In all these  petitions, the  several contracts and, agreements were before the  date of  vesting,  and many of them were prior even to  the  16th March,  1950.  The petitioners had taken possession  of  the subject-matter  of the contracts, namely, tendu leaves,  lac palsadies,   teak,   timber  and   hardwood,   bamboos   and miscellaneous forest produce.

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Under the Indian Sale of Goods Act, "goods" include  growing crops,  grass and things attached to or forming part of  the land,  which are agreed to be severed before sale  or  under the contract of sale 482 notwithstanding the -definition of "immovable property "  in section 3 (25) of the General Clauses Act of 1897. In  Petition No. 232 of 1951 two sample agreements  relating to  tendu  leaves  are given as annexures A  and  B  to  the petitions.   They  may  be quoted in  extenso  for  a  clear understanding of the nature of the right created.  Exhibit A dated 16th November, 1950, is in these terms: " Receipt written in favour of Seth Chhotabhai Jethbai Patel Company shop Gondia, and written by Shri Madhavrao Gangadhar Rao  Chitnavis  shop  Itan receipt is written  that  we  are owners  of forests of Tendu leaves of Monza  Sawarla  0-12-0 Mauza  Khatkheda  0-5-0 Mouza Nati Kheda  0-16-0  and  Monza Welwa  0-16-0.   We have given contract (Theka)  of  cutting Tendu  leaves from these four villages for one year that  is till  the  end  of June for Rs. 2,500 out  of  this  we  had received  Rs. 300 on 21st September, 1950, at  Bhandara  and the  balance Rs. 2,200 was received from your Bhandara  shop through  Balubhai.   Nothing remains to be paid to  us.  You have a right to coppice the trees." The  terms  of  Exhibit B dated 12th  July,  1948,  Emitting unnecessary portions are as follows: In  the  year  1948 A.D. theka patra  is  executed  that  in consideration of the amount received as detailed above I had given  the  full tendu leaves jungle for  taking  out  tendu leaves  for  five years from 1949 A.D. to 1053 A.D.  I  have immediately given possession.  Now you can take tendu leaves of  the tendu leaves forests described above every year  for five years till the end of June, 1953.  You may coppice  the plants  and  take  leaves.  At the end of  June,  1953,  you should return my jungle without damage or loss to me.  After the end of the period it depends upon my will whether or not I  give  you  the  forests on theka  (again).   If  any  one obstructs you in coppicing or taking away leaves, I will  be responsible for the damages.  Hence I have executed 483 this  theka  pathi for five years  for  consideration  after reading  and  understanding.  I agree with it.   Dated  12th July,  1948, by pen of Waman Sadeshic Amte  Petition  Writer Bhandara." The  contracts  and agreements appear to be in  essence  and effect  licenses granted to the transferees to  cut,  gather and carry away the produce in the shape of tendu leaves,  or lac, or timber, or wood. A  similar  agreement  came  up  for  consideration  by  the Judicial   Committee  of  the  Privy  Council  in   Mohanlal Hargovind  of  Jubbulpore  v.  Commissioner  of  Income-tax, Central Provinces and Berar, Nagpur (1) in connection with a question  arising  out of the Income-tax Act.  Some  of  the observations  contained  in the judgment  dealing  with  the nature  of  such an agreement are useful and may  be  quoted here : " The contracts grant no interest in land and no interest in the trees or plants themselves.  They are simply and  solely contracts giving to the grantees the right to pick and carry away  leaves,  which,  of  course,  implies  the  right   to appropriate them as their own property. The small right of cultivation given in the first of the two contracts is merely ancillary and is of no more significance than would be e.g., a right to spray a fruit tree en to  the person who has bought the crop of apples.  The contracts are

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short term contracts.  The picking of the leaves under  them has  to start at once or practically at once and to  proceed continuously." There  is nothing in the Act to affect the validity  of  the several  contracts  and  agreements.   The  petitioner   are neither  proprietors  within  the meaning  of  the  Act  nor persons having any interest in the proprietary right through the  proprietors.   There is no provision in the  Act  which extinguishes  their  rights in favour of the  State.   ’What exactly is meant by a ,proprietary right " under the revenue laws has been (1).I.L.R. [1949] Nag. 892, 63 484 pointed  out at page 217 of Volume I of Baden Powell’s  Land Systems of British India, where he says: The first thing that will strike the student is the .use  of the  term ’ proprietary right’ in these pages and in  Indian Revenue Books generally.  It does not occur in text-books on English  law  or jurisprudence.  I presume that the  use  of such  a  phrase  is due to the ad  feeling  that  we  rarely acknowledge anything like a complete unfettered right vested in any one person.  The interest in the soil has come to  be virtually shared between two or even more grades, the  cause of  which we just now discussed.  It is true that,  in  many cases,  only one person is called ’ landlord ’ or  ’  actual proprietor  ’  but  his right is limited; the  rest  of  the right,  so  to speak, is in the hands of the  other  grades, even though they are called ’tenants’ or by some vague title such  as ’ tenure-holders.’ In many cases, as we have  seen, this  division of right is accentuated by the use  of  terms like  sub-proprietor’ or proprietor. of his  holding’.   The ’proprietary  right seems then a natural expression for  the interest  held by a landlord, when that interest is not  the entire ’bundle of rights’ (which in the aggregate make up an absolute or complete estate) but only some of them, the  re- mainder being enjoyed by other persons." The  definitions  given in the Act do not abrogate  or  vary this meaning.  The respondent State cannot invoke in its aid section  3,  sub-clause (1) of the Act which speaks  of  the vestina  of  proprietary rights free  of  all  encumbrances, because  the rights of the petitioners either as  buyers  or lessees  or  licensees are not  encumbrances  as  ordinarily understood.   The last part of clause (a) of section  4  (1) indicates that mortgage debts and charges on the proprietary right are meant by encumbrances. In  this  view,  it  becomes  unnecessary  to  consider  the question  as  to when title in the property  passes  to  the transferee.   Section 4, sub-section (3) of the Indian  Sale of  Goods  Act which lays down that in the case of  sale  of future goods the contract amounts 485 only to an agreement to sell does not seem to be  applicable to the contracts and agreements here, as the goods are not " future goods " as defined in subclause (6) of the Act  which states  that they mean goods to be manufactured or  produced or  acquired by the seller after the making of the  contract of  sale.   Benjamin  says  in his  treatise  on  Sale  (8th Edition) at page 136: " Things not yet existing which may be sold (that is to say, a right to which may be immediately granted) are those which are  said  to have a potential existence,  that  is,  things which are the natural produce, or expected increase of  some thing  already owned or possessed by the seller.  A man  may sell  the crop of hay to be grown in his field, the wool  to

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be  clipped from his sheep at a future time, the  milk  that his cows will yield in the coming month, and similar things. Of such things there could be, according to the authorities, an  immediate grant or assignment, whereas there could  only be an agreement to sell where the subject of the contract is something  to  be afterwards acquired; as the  wool  of  any sheep,  or the milk of any cows, which the seller might  buy within the year, or any goods to which he might obtain title within the next six months." The  goods covered by the present petitions are goods  which have  a potential existence, and according to the  decisions discussed  by the learned author, there can be a sale  of  a present  right  to  the  goods as soon  as  they  come  into existence.  Whether title passes on the date of the contract itself or later is really dependent on the intention of  the parties,  and  as  already stated, in  these  petitions  the stipulated consideration has passed from the transferees  to the proprietors, and possession also has been taken. We  hold that the respondent has no right to interfere  with the  rights of the several petitioners under  the  contracts and  agreements in their favour set out in their  petitions, and  we  hereby  issue a writ  prohibiting  the  State  from interfering  in any manner whatsoever with the enjoyment  of those rights by the 486 petitioners.  In cases where the periods under the contracts have  expired, or where the proprietors have ill to  recover anything from the transferees after he date of vesting,  the State  will be at perfect liberty to assert and enforce  its rights  standing  in  the shoes  of  the  proprietors.   The respondent will pay the petitioners their respective costs. Petition allowed. Agent  for the petitioners in Petitions Nos. 232, 233,  286, 309 and 320 : Bajinder Narain. Agent for the petitioners in Petitions Nos. 360 and 351:  M. S. H. Sastri. Agent  for  the petitioners in Petitions Nos. 319,  354  and 490: Harbans Singh. Agent   for  the  respondents  in  all  petitions:   G.   H. Rajadhyaksha.