Case: Karanpura Development Co., Ltd Vs. Raja Kamakshya Narain Singh

reference to the fourth, the suggestion of the Legal Department proceeded on a misapprehension of what had really been agreed to by the parties. Thus, all the essential terms of the agreement must be held to have been sanctioned by the Board by its letter dated 9-10-1917, and is of no consequence, as laid down in 40 Ind App 117 (PC) (J) and 1915 PC 27 (AIR V.2) (K) that the document as finally drafted had not been submitted again for its approval. We should accordingly construe the letter dated 9-10-1917 as sufficient sanction under S. 18.35. The learned Judges of the High Court were of the opinion that R. 242 framed under S. 70 of the Act required that the sanction should be recited in the deed, and they referred to the deed dated 26-3-1915 where that had been done.But R. 242 applied only to leases, and is in terms inapplicable to the deed dated 23-11-1917 which is an agreement.And both sides have argued the case on the footing that the deed in question is governed by the last clause of S. 18. We have no hesitation in holding that the Board directed by its letter dated 9-10-1917 the execution of the agreement dated 23-11-1917, and that it was validly executed under S. 18. The result, therefore, is that the deed dated 23-11-1917 is not open to attack on any of the grounds urged by the respondent, and must be upheld.36. One other contention of the respondent remains to be considered, and that arises on the statement of the appellant that it does not contest the finding of the High Court that the deed dated 1-6-1937 is void. It will be recalled that under the deeds dated 26-3-1915 and 23-11-1917 the licensees would be entitled to an extension of the period for 12 years from 26-3-1939 to 26-3-1951 provided that they had taken on lease a minimum area of 20,000 bighas, and that the appellant had, in fact, taken on lease only a total extent of 17,539 bighas under six leases during the years 1922 to 1933. It was also provided in those deed that for the areas taken in excess of 10,000 bighas, the minimum royalty would become payable after 26-3-1939. The appellant applied to the Court of Wards sometime in 1934 for amendment of the deed dated 26-3-1915 and 23-11-1917 so as to provide that the payment of minimum royalty was to commence from 26-3-1951, unless railway facilities were available earlier. This was sanctioned by the Board, and the deed dated 1-6-1937 incorporates this amendment in the deeds dated 26-3-1915 and 23-11-1917. As a condition of the grant of this concession, the Board required the appellant to take a lease of 2,461 bighas to make up the covenanted extent of 20,000 bighas. The appellant accordingly applied for three leases of the total extent of 2,461 bighas, and the Board gave sanction to the same on 15-7-1937, and on 2-8-1937, the lease deed were actually executed. One of them, that relating to Mauza Saunda, contained, in accordance with the terms of the deed dated 1-6-1937, the following covenant: "Provided always that no minimum royalty shall be payable until the expiration of 36 years from the said 26th day of March 1915 or until railway facilities shall be available as aforesaid, whichever even shall first happen". There is some dispute as to whether the other two leases contained similar covenants, but that is immaterial for the present discussion, because if the lease of Mauza Saunda is bad on account of the aforesaid clause as contended by the respondent, then the total area taken on lease will be less than the minimum 20,000 bighas, and the appellant will have no right to the benefit of the third extension, and the suit for specific performance must fail.37. Now, the contention of the respondent is that the leases dated 2-8-1937 are bad on two grounds. He firstly argues that as the deed dated 1-6-1937 has been held to be bad, the clause in the lease providing for the postponement of payment of minimum of royalty based thereon must also be held to be bad - that is conceded by the appellant - and that as a deed cannot be held to be partly bad, the whole of it must be held to be void. The fact that a clause in a deed is not binding on the ground that it is unauthorised cannot ipso facto render the whole deed void unless it forms such an integral part of the transaction as to render it impossible to sever the good from the bad. That is not the position here. The effect of declaring the proviso void will have the rest of the deed whole and intact. The leases without the proviso are perfectly valid, and indeed, they will be more advantageous to the ward.38.Secondly, it is contended that the sanction that was accorded by the Board was to the lease with the covenant which has been held to be void, and that the deed without that covenant has not been sanctioned. This contention again is clearly untenable. Section 18 only requires that the transaction should be entered into with the sanction of the Board. When that has been done, the force of the section is spent. Whether the transaction turns out to be good or bad on the merits can have no effect on the sanction, which had been granted before it was entered into. If the deed is bad on the merits, it will fail on that ground and not on the ground that by reason thereof, the sanction becomes ineffective. And the result is the same whether the deed is bad in part or in toto. The contention therefore that the lease deeds dated 2-8-1937 are inoperative must be rejected.The result is that the deeds dated 26-3-1915 and 23-11-1917 are valid but not the clause postponing the payment of minimum royalty in the lease deed or deeds of 2-8-1937 is inoperative.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]We have no hesitation in holding that the Board directed by its letter dated 9-10-1917 the execution of the agreement dated 23-11-1917, and that it was validly executed under S. 18.result, therefore, is that the deed dated 23-11-1917 is not open to attack on any of the grounds urged by the respondent, and must be upheld.Now, the contention of the respondent is that the leases dated 2-8-1937 are bad on two grounds. He firstly argues that as the deed dated 1-6-1937 has been held to be bad, the clause in the lease providing for the postponement of payment of minimum of royalty based thereon must also be held to be bad - that is conceded by the appellant - and that as a deed cannot be held to be partly bad, the whole of it must be held to befact that a clause in a deed is not binding on the ground that it is unauthorised cannot ipso facto render the whole deed void unless it forms such an integral part of the transaction as to render it impossible to sever the good from the bad. That is not the position here. The effect of declaring the proviso void will have the rest of the deed whole and intact. The leases without the proviso are perfectly valid, and indeed, they will be more advantageous to the ward.38.Secondly, it is contended that the sanction that was accorded by the Board was to the lease with the covenant which has been held to be void, and that the deed without that covenant has not been sanctioned. This contention again is clearly untenable. Section 18 only requires that the transaction should be entered into with the sanction of the Board. When that has been done, the force of the section is spent. Whether the transaction turns out to be good or bad on the merits can have no effect on the sanction, which had been granted before it was enteredthe deed is bad on the merits, it will fail on that ground and not on the ground that by reason thereof, the sanction becomes ineffective. And the result is the same whether the deed is bad in part or in toto. The contention therefore that the lease deeds dated 2-8-1937 are inoperative must be rejected.The result is that the deeds dated 26-3-1915 and 23-11-1917 are valid but not the clause postponing the payment of minimum royalty in the lease deed or deeds of 2-8-1937 is inoperative.