Letters Patent Appeal No.208 of 2000 ---- Against the judgment and order dated 02.02.2000 passed by learned Single Judge of this Court in CWJC No. 2328 of 1999. ---- KEDAR NATH JHUNJHUNWALA SON OF LATE SATYANARAYAN JHUNJHUNWALA, RESIDENT OF BASANT VIHAR COLONY, P.S.SHRIKRISHNAPURI, TWON AND DISTRICT PATNA ………… PETITIONER/APPELLANT Versus 1. THE STATE OF BIHAR THROUGH THE SECRETARY, DEPARTMENT OF REVENUE AND LAND REFORMS, GOVERNMENT OF BIHAR,PATNA 2. THE DEPUTY SECRETARY, DEPARTMENT OF REVENUE AND LAND REFORMS, GOVERNMENT OF BIHAR,PATNA 3. COMMISSIONER, PATNA DIVISION, PATNA 4. COLLECTOR-CUM-DISTRICT MAGISTRATE, PATNA 5. THE ADDITIONAL COLLECTOR, KHAS MAHAL,PATNA 6. THE ADDITIONAL COLLECTOR, REVENUE,PATNA 7. DEPUTY COLLECTOR, LAND REFORMS, PATNA SADAR,PATNA ………. RESPONDENTS ---- For the appellant : M/s.Pushkar Naraian Shahi,Manoj Kumar Ambastha No.1,Pankaj Kumar Singh, Sanjeet Kumar Singh and Ravi Kumar For the respondents : Mr.Lalit Kishore, AAG 3 and Mr.shashi Bhushan Kumar, SC16 ---- P R E S E N T THE HON'BLE ACTING CHIEF JUSTICE THE HON'BLE MR. JUSTICE SHYAM KISHORE SHARMA ----- Shiva Kirti Singh,ACJ. & S.K.Sharma,J. This Letters Patent Appeal is directed against the judgment of learned Single Judge dated 02.02.2000 whereby the writ petition preferred by the appellant was dismissed by holding that the order under challenge dated 30.01.1999 (annexure-28 to the writ petition) in respect of issue of fraud in substituting Condition no.5 of the lease deed was correct. The consequential order dated 26.02.1999 (annexure-31 to the writ petition) was also 2 upheld on that ground alone. However, the writ court set aside the third impugned order dated 09.03. 1999 (annexure-30 to the writ petition) whereby the petitioner had been called upon to remove an alleged encroachment made by him, on a finding that encroachment was regularized long back. The writ court gave a further finding in favour of the writ petitioner that so far as the ground of sub-letting mentioned in the impugned order dated 30.01.1999 is concerned, the Collector had reached the conclusion without proper notice and scrutiny in that regard. That part of the impugned order was also therefore set aside as per finding in paragraph 6 of the judgment under appeal. Thus, while not approving two of the three grounds mentioned for cancellation of Khas Mahal Lease by the impugned order dated 30.01.1999, the writ court found substance in the third ground i.e. in the alleged fraudulent substitution of clause 5 of the lease deed by a clause which was not in earlier lease deed and had not been approved by the State Government. On this ground mainly the writ petition was dismissed. 2. The writ court has noted essential facts and the same are not in dispute. The land in question which is subject matter of the lease is a portion of Khas Mahal Municipal survey plot nos. 1011 and 1131. Its original area was recorded as 5 kathas, 17.54 dhurs ( 0.183 acres), 3 situated within the limits of Patna Municipal Corporation. This land was subject matter of lease deed between the Governor of Bihar and one Sita Ram Bajaj, the erstwhile lessee, executed on 15.07.1961 and registered on 24.07.1961 for a period of thirty years beginning from 22.04.1957. Subsequently, the Collector-cum-District Magistrate, Patna found that the lessee was in possession over additional area of 1 katha,3 dhurs and 10 dhurkis of Khas Mahal land adjoining the leased land. Subsequently, on deposit of necessary fee and rent, possession over that area was also regularized as per facts noticed by the writ court. 3. Sita Ram Bajaj, the earlier lessee sought permission of the Collector to transfer the lease-hold rights in favour of the petitioner (appellant here). The Collector by a letter dated 29.11.1972 directed for deposit of a fee of Rs.100/- which was deposited by challan on the next day. That letter mentions that the petitioner had been granted permission to construct a multi-storeyed building on the lease-hold land and requires the petitioner to hand over stamp paper for execution of modified lease deed. Vide annexure-5 to the writ petition dated 27.04.1973, the Deputy Collector, Land Reforms, Patna under direction informed the petitioner that he can construct a shopping arcade for commercial purposes on the lease-hold land and after 4 construction he could rent out the same. The petitioner could also rent out the whole or part of the constructed building and could mortgage the same for obtaining the loan from any source. For this purpose, he was required to deposit a fee of Rs.100/- which was deposited on 30.04.1973. By another letter dated 30.04.1973 contained in annexure-6 to the writ petition, the letter contained in annexure-5 to the writ petition was reaffirmed. With these developments, the petitioner got by way of transfer the lease-hold land from Sita Ram Bajaj for the balance period of lease deed which was to expire on 21.04.1987. 4. The petitioner applied for renewal of the lease. The Collector made a favourable recommendation to the Commissioner of Patna Division through letter dated 17.01.1987 (annexure-9 to the writ petition). The proposed renewal was for a further period of 30 years on payment of double annual rental. The Government of Bihar through department of Revenue and Land Reforms approved vide letter dated 13.10.1987 (annexure-10) the proposal for renewal of lease in favour of the petitioner on previous terms and conditions subject to double annual rental. The concerned authorities conveyed the said decision for further renewal of lease for 30 years on payment of double annual rental to the petitioner through letter dated 20.11.1987 requiring him to deposit the annual rental for the period 5 1987-88 and also to submit the draft deed. On completing the formalities, the present lease deed was executed by the Collector of Patna on behalf of Governor of Bihar on 10.03.1988 (annexure-12 to the writ petition). It was registered on 11.03.1988. 5. Subsequently, according to State, some complaints were received that Clause 5 of the lease deed dated 10.03.1988 had been fraudulently substituted by a different Clause without such Clause having been approved by the State of Bihar. It appears that a long drawn enquiry was conducted in respect of such complaints in which the comments from the then Collector, Patna and other concerned officials were also obtained. Ultimately, a show cause notice dated 22.09.1994 (annexure-20 to the writ petition) was issued to the petitioner requiring him to explain under what circumstances the original Clause 5 of the draft lease deed vetted by the Government Pleader was crossed out by typewriter and was replaced by a new Clause 5. The petitioner submitted his reply on 04.10.1994 in which he took the stand that draft of the proposed renewal lease was submitted by him in the Collector’s office and it might have contained, inter alia, typographical correction by way of change in Condition 5. His stand was that according to Collector’s letter the draft as submitted by him was vetted by the learned Government Pleader and on that basis the 6 lease deed had been executed by the Collector, Patna and was registered. The stand of the petitioner which is not under dispute is that there was no typographical correction in Condition No.5 of the final registered deed allowing renewal. 6. After about five years of show cause notice and 11 years of renewal, the impugned letter dated 30.01.1999 (ananexure-28 to the writ petition) was issued on behalf of the State Government to communicate the relevant facts and findings as well as the decision to lodge a criminal case against the petitioner for interpolation in Clause 5 of lease deed and to cancel the renewal lease deed. It was further conveyed to the petitioner that if he was desirous, he may apply within 15 days for taking fresh lease over the land concerned. It was also decided to realize rent and cess etc. for unauthorized possession over four decimals of land and to take action for removal of encroachment from that land. If the petitioner failed to apply for fresh lease within 15 days, then the Government would take action as per law for recovery of possession. In substance, besides alleged interpolation in Clause 5 of the draft agreement, it was mentioned in the impugned order that the petitioner had encroached another 4 decimals of khas-mahal land without a valid settlement over such land and that he had been granted permission only to sub-lease 7 the shopping complex on the demised land or to mortgage the same for obtaining the loan but there was no permission to sub-lease any part of the land leased out to the petitioner. 7. As noticed earlier, after discussing the relevant materials and noticing the stand of the rival parties, the writ court has held that the encroachment was made sometime earlier in the year 1971 and the same was regularized by the Collector of Patna by order dated 05.02.1971 (annexure-2 to the writ petition), on payment of rental for the encroached area with effect from 1961. Hence the finding of the Collector in his report dated 22.02.1994 (annexure-17 to the writ petition) as well as in the impugned order dated 30.01.1999 (annexure-28 to the writ petition) was found to be incorrect and based upon non est ground and accordingly, a supplementary show cause notice dated 09.03.1999 (annexure-30 to the writ petition) was set aside which is clear from the discussion made in paragraphs 4 and 11 of the judgment under appeal. 8. It is also clear from the judgment under appeal that the writ court considered the necessary facts and came to a finding that the Collector had reached the conclusion regarding unauthorized sub-letting of land on apparent hyper-technicality, without proper notice and scrutiny in that regard. That part of the impugned order was also,therefore, 8 set aside. 9. This appeal is, in substance, directed against the finding recorded by the writ court in respect of third ground or issue of alleged fraud mentioned in the impugned order dated 30.01.1999. The writ court has held that the petitioner is guilty of substituting original Clause 5 in the draft lease deed by existing Clause 5 surreptitiously which according to the writ court, amounted to fraud and it would render the entire lease deed a nullity as held in paragraph 11 of the judgment under appeal. 10. According to learned counsel for the appellant, there is no material to come to a conclusion that the petitioner changed Clause 5 of the lease deed surreptitiously or fraudulently after it was vetted by the learned Government Pleader so as to get any advantage. He took pains to take us through the original records called by this Court to draw our attention to the letter of the then Collector, Patna dated 29.08.1995 as well as the enquiry report by Special Secretary, Revenue dated 15.04.1997 to persuade us that the new Clause 5 had been executed in the draft in place of original Clause 5 on account of necessity because earlier the authorities had granted permission to the petitioner to construct a shopping arcade with a right to sub-let or sub-lease or even to mortgage and hence it was deemed necessary to incorporate new Clause 9 5 to bring it in conformity with the aforesaid decision taken prior to the renewal of the lease deed. 11. It was next submitted that the cutting of original Clause 5 was open and visible to all concerned. It was easily detectable from before it was incorporated in the final renewal lease deed and in such a situation, the allegation of fraud cannot stand when the alleged interpolation could be detected with due diligence or even without it. In support of this proposition, reliance was placed upon the judgment of the Supreme Court in the case of Shri Krishan. Vrs.The Kurukchetra University reported in AIR 1976 SC 376. It was also pointed out that according to impugned order, a criminal case of fraud was lodged against the petitioner but the police submitted final report holding that no criminal offence of fraud was made out and said report has been finally accepted by the learned Magistrate vide order dated 04.05.2000 which has been annexed as annexure- 27 through supplementary affidavit filed in this appeal. That order shows that final report submitted by the police was accepted with an observation that the records disclose the pendency of civil case between the parties in respect of the lease in question. 12. Lastly, it was submitted that even if it is concluded on the basis of circumstances and inferences that Condition no.5 (Clause 5) of the draft of the renewal 10 deed and also of the final renewal deed was incorporated without the permission of the State Government, it would amount only to an irregularity and not a case of fraud because the deeds were perused by the Officials including the Collector who executed the same on behalf of the Governor of Bihar and in such circumstances, if the State of Bihar or Governor of Bihar are dissatisfied with condition no.5 in the lease deed, they can challenge only that condition, they cannot repudiate the entire lease dead which has been executed on agreed terms for valuable considerations and on account of a right in the petitioner to have a renewal of his lease deed in respect of Khas Mahal land in question. 13. On behalf of the State, it was submitted that action of the Collector and other Officials who examined the draft of the lease deed or the final lease deed cannot bind the State Government or the Governor of Bihar because they exceeded their jurisdiction by ignoring the express direction and decision of the State Government that the lease may be renewed on the same terms and conditions which were existing in the earlier lease deed except the consideration which was to be doubled. It was also highlighted that the right being created in favour of the petitioner by the changed condition no.5 was a larger right than what could be available to him earlier through condition 11 nos. 4 and 13 of the lease deed. It was also submitted that earlier permission granted did not warrant that in future the petitioner would have unrestricted and absolute power of sub-letting/sub-leasing or to mortgage the commercial complex upon the leased land without the restrictions apparent from Condition no.13 requiring previous consent of the Collector in writing and on payment of transfer fees of 25% of annual rent. 14. On behalf of the State, it was further contended that the changed Condition no.5 appears to have been introduced after vetting done by the Government Pleader with a view to avoid further vetting of changed condition otherwise it would have been convenient to replace the entire draft lease agreement itself. It was further submitted that since condition no.5 introduced by way of subsequent interpolation in the draft lease was against the decision of the State Government, it must be viewed as an act of fraud and therefore, the entire lease deed executed for the purpose of renewal has rightly been held to be vitiated in law by the State Government and therefore, the same has been cancelled. Lastly, it was submitted that the option had been given to the petitioner that he could apply again for a fresh lease and hence there was no real or substantial injury to the writ petitioner and he had no valid cause of action. 12 15. On applying our mind to the cutting made in Clause 5 of the draft lease deed it is clear that original Clause 5 or Condition no.5 was different and the same has been substituted by another condition in favour of the petitioner. The change has not been made surreptitiously but openly. It was visible to the representative or agent of the State of Bihar, the Collector, Patna and his subordinates and staff who must have vetted the final renewal lease deed which contains the replaced condition no.5 instead of original condition no.5. The situation is clearly similar to one under which the Hon’ble Supreme Court observed in the case of Shri Krishan.Vrs. The Kurukchetra University (supra) that fraud cannot stand when the alleged interpolation could be detected with due diligence. We have no option but hold that the transaction under which Clause 5 or Condition no.5 got substituted by a new condition cannot be termed as fraud. However, on going through the letters containing terms on which the State Government had permitted renewal of the lease, it is clear that the State Government had not authorized change of Clause 5 of the original lease deed in the manner it has been done in the renewal lease deed. Hence regardless of indifferent intentions or motives, it has to be held that the replaced condition no.5 in the renewal lease deed does not reflect correctly the intention of the one of the parties i.e. the State 13 of Bihar on whose behalf the lease deed is actually made in the name of Governor of Bihar. Under the Khas Mahal Manual, the Collector of the District has a limited authority of only executing lease deed. He has no authority to act contrary to the decision of the State Government in laying down the terms and conditions of the lease. Hence it must be held on the basis of the materials on record that the changed condition no.5 is contrary to the terms and conditions, particularly, the original condition no.5 on basis whereof the State Government had authorized the Collector, Patna to execute renewal lease deed in favour of the petitioner. 16. In view of the aforesaid finding, an issue has arisen as to what would be legal effect of such unauthorized change of condition no.5 of the renewal lease deed upon the validity of the lease deed itself. On this issue, the stand of the learned AAG III appearing for the State is that unauthorized act of the Collector, Patna which may have been on account of mistake, negligence or collusion will not bind the State Government. For this purpose, he placed reliance upon a Division Bench judgment of this Court in the case of Pramod Narain Tiwari & Ors.Vrs.The State of Bihar & Ors. reported in 2008(1) PLJR 798 wherein it has been held that the Government is not bound by the ultra vires acts of its employee. He also placed reliance upon a 14 decision of the Hon’ble Supreme Court in the case of Lakshminarayan Ram Gopal and Son Ltd .Vs.Government of Hyderabad reported in A.I.R. 1954 S.C.364. In that case, the Hon’ble Supreme Court pointed out the difference between the relation of master and servant and of principal and agent by emphasizing that both principal and master have the right to direct what work the agent has to do but a master has his further right to direct how the work is to be done. It was also pointed out in that case that an Agent stands on a different footing from a servant and also from an independent contractor. That distinction is not relevant in the present case. Here the Collector, Patna in the required rule was clearly an Agent and therefore bound to exercise his authority in accordance with lawful instruction which may be given to him by his Principal from time to time. Further even as a Government servant working under the State Government, the Collector can be treated impliedly to be its Agent. Reliance was next placed upon a Division Bench Judgment of Calcutta High Court reported in Vol.XIX CWN 56 (Katyayani Devi. Vrs.Port Canning and Land Improvement Co.). In this case, the relevant law has been clearly enunciated in following words: “…………Every act done by an agent in the course of his employment on behalf of his Principal and within the apparent scope of his authority binds the principal, unless the agent is in fact unauthorized to do the particular act and 15 the person dealing with him has notice that in doing such act he is exceeding his authority”. Lastly reliance was placed upon the judgment of a learned Single Judge of Sind in the case of Rahimbux Haji Karimbux .Vrs.Secretary of State reported in A.I.R. 1938 Sind 6. In that case, a question had arisen whether Secretary of State could be held liable for tortious acts of Government servant, while they were performed in exercise of their duty. The opinion of the court was that Secretary of the State will not be liable for torts or acts of negligence committed by the Government servants while performing acts done in the exercise of powers which are usually termed sovereign. That is not the factual situation in this case because the renewal lease deed under the Khas Mahal Manual is as per instruction contained in the Manual issued by the Government from time to time and in the transaction in question there was no occasion for exercise of sovereign powers. 17. Learned counsel for the State has pointed out various provisions in the Indian Contract Act,1872, particularly, Sections 182,188,226,227,228,237 and 238 to support his stand that usually the Principal is bound by the acts of his Agent but when the Agent exceeds his authority, then as per Section 227 what he does which is within his authority if can be separated from the part which is beyond his authority then only so much what he does within his 16 authority is binding between him and his Principal and as per Section 228 the Principal is not bound when action in excess of agent’s authority is not separable from action within his authority. 18. Learned counsel appearing for the appellant in course of his reply pointed out that in the main order under challenge dated 30.01.1999 there is no reference to or any hint of negligence by the agent i.e. the Collector or that he has done anything without authority. He has further submitted that as per Section 26 of the Specific Relief Act, a suit is required to be instituted to have a written instrument rectified if according to one of the parties a situation has arisen through fraud or a mutual mistake of the parties and a contract or other instrument in writing like the present renewal lease deed does not express real intention of the parties. According to learned counsel, situation at best authorized the respondent-State or its officials to raise a claim for rectification and if that was not agreed, then they could have preferred a suit for rectification instead of resorting to unilateral cancellation of the lease deed. In this connection, learned counsel placed reliance upon a judgment of the Privy Council reported in AIR (33) 1946 Privy Council 42, Messrs.Siddique and Co.V.Messrs.Utoomal and Assudamal Co.. In that case, His Lordships were considering the issue of allowing 17 rectification under Section 31 of the Specific Relief Act and in that context it was held that for such rectification it must be proved that through a mutual mistake of the parties, the instrument did not truly express the intention of the parties. The court, on being satisfied of those two elements, has the discretion to grant rectification. 19. On the issue of severability of the authorized act and unauthorized act of the agent for the purpose of finding out to what extent the principal would be bound in this case by renewal lease deed, learned counsel for the appellant placed reliance upon two judgments of the Hon’ble Supreme Court. In the case of Karanpura Development Co.Ltd.Vrs.Kamakshya narain Singh and Others reported in 1956 S.C. 446 it was held that where a proviso in a lease deed is void on being unauthorized and the effect of declaring the proviso void will leave the rest of the deed whole and intact, the lease without the proviso is perfectly valid. In the case of Shin Satellite Public Co.Ltd. Vrs.Jain Studios Ltd. reported in (2006) 2 Supreme Court Cases 628 it has been observed in paragraph 17 that in several cases, courts have held that partial invalidity in contract will not ipso facto make the whole contract void or unenforceable. Wherever a contract contains legal as well