Mangalmurti v. State of Bombay

_I959_ _Lipton_ _Ltd._ v. _Their Employees_ - _S._ _K._ _Das]._ I9~9 _February a._ ##### 180 SUPitEME .COURT REPOitTS [1959] Supp. by the Industrial Tribunal to bring the present employees into the new scales of pay will stand subject to the necessary modification that instead of January 1, 1954, the relevant date should be November I, 1955. The result,, therefore, is as follows: Appeal No. 715 of 1957 is dismissed with costs. Appeals Nos. 713 and ##### 714 off 957 are allowed to the extent indicated above. The order for the grant of bonus for 1951 is set aside and the new scales of pay will take effect from November 1, 1955, instead of from January 1, 1954. There will be no order for costs in these two appeals. _Appeals Nos. 713 and 714 allowed in part._ _Appeal N_o._ _715 dismissed._ DAMODHAR TUKARAM MANGALMURTI AND OTHERS _v._ ##### THE STATE OF BOMBAY (SYED JAFER IMAM, S. K. DAS and J. L. KAPUR, JJ.) _Lease-Construction-Enha11ce1nent of rent-" Fair and eqitit-_ _able_ _enhancement_ _as_ _the_ _lessor shall determine" -Lease,_ _whether_ _void for_ _uncertainty-Court's power to_ _determine fair and equitable_ _rent._ In r909, for the purpose of residential accommodation, plots of land were given on lease by the Government to the appellants and others for which a premium of Rs. 350 and an annual rent of ll.s. 3-8-0 for each plot had to be paid. Clause III of the deed "of lease in each case provided: " And the lessor does further covenant that he will at the end of the term of 30 years hereby granted and so on from time to time thereafter at the end of each successive further term of years as shall be granted at the request of the _lessee_ execute to him a renewed lease of the land hereby demised for the term of 30 years: Provided that the rent of the land hereby demised shall be subject to such fair and equitable enhancement as the lessor shall determine on the grant of every ~rene\val: Provided also that every such renewed lease of the land shall contain such of the covenants, provisions and conditions in these presents contained as shall be applicable and shall always contain a covenant for further renewal of the lease.' **(2)** **S.C.R.** **SUPREME** **COURT** **REPORTS** **181** By the year 1939 the first 30 years' period of some of the leases came to an end, and the Government sought to enhance the annual rent from Rs. 3-8-0 to Rs. 21-14-0 per plot and also to insert some new terms in the renewed deeds of lease. The appellants brought a suit inter alia for a declaration that the enhancement proposed was not fair and equitable within the meaning of Clause III of the deed of lease, that the fair and equitable rent should be Rs. _7_ per plot and that if the court was of the opinion that Rs. _7_ was not a fair and equitable rent then it should fix such sum as it considered fair and equitable. The respondent pleaded that such a suit was incompetent. The question was whether the civil court had jurisdiction to enquire whether the enhancement of the rent determined by the lessor was fair and equitable within the meaning of cl,.. III of the deed of lease, and whether, in any case, the lease was void for uncertainty. _Held, (per_ Jafer Imam and S. K. Das, JJ.), that the lease is not void for uncertainty; that the expression "fair and equitable" in the clause in question means fair and equitable in fact, and not what the lessor subjectively considered to be fair and equitable ; and, that reading the clause as a whole and giving effect to all the words used therein, the meaning is that the lessor must first determine what it considers to be fair and equitable enhancement, but, if in fact it is not so, it is open to the lessee to ask the court to determine what is fair and equitable enhancement. Accordingly, the suit was maintainable. The rule laid down in _Gourlay_ v. _The Duke of Somerset,_ (1815) 19 Ves. 429; 23 E.R. 576, held applicable. _The_ _New Beerbhom_ _Coal_ _Company Limited_ v. _Boloram Mahata_ _and others,_ (1880) L.R. _7_ I.A. 107 and _Secretary_ _of State for_ _India_ _in Council_ v. _Volkart Brothers,_ (1926) I.LR. 50 Mad. 595, relied on. _1959_ _M angalmurti_ v. _State_ _of_ _Bombay_ _Collier_ v. _Mason,_ (1858) 25 Beav. zoo; 53 E.R. 613 and _Tekchand Kapurchand_ v. _Mt._ _Birzabai,_ A.LR. 1942 Nag. i19, distinguished. P~r Kapur, J.-The correct interpretation to be put on cl. III of the deed of lease is that the lessor was given the authority to determine the enhancement of rent but such enhancement was to be fair and equitable and what would be fair and equitable in any particular case was also to be determined by the lessor. The rule applicable to the present case is that relating to valuation or fixation of prices that where the valuation is fixed by a valuer the court will hold it conclusive in the absence of fraud or mistake or misconduct and the court will not enter into the propriety of the valuation made or substitute its own valuation in place of that determined by the valuer because that will not be an execution of the contract of the parties but making a contract for them. Case law discussed. 182 SUPREME COURT REPORTS [1959] Supp. _I959_ _**M angalmurti**_ v. _**Slate**_ _**of**_ _**Bombay**_ _S._ _K._ _Das]._ Appeals from the judgment and decree dated September 30, 1952, of the former Nagpur High Court in Second Appeals Nos. 699 and 700 of 1946, arising out of the judgment and decree dated February 21, 1946, of the court of First Additional District Judge, Nagpur, in Civil Appeals Nos. 22-A and 23-A of 1946, against the judgment and decree dated January 2, 1945, of the Court of Second Subordinate Judge, Nagpur, in Cjvil Suit No. 143-A of 1944. ##### H.J. Umrigar, Ratnaparkhi A. G. and Shankar· _Anand Zinjarde,_ for the appellants. ### W. s; Barlingay and R. H. Dhebar, for the respon dent. 1959. February 2. The Judgment of Jafer Imam and S. K. Das, JJ., was delivered by S. K. Das, J. Kapur, J., delivered a separate judgment. ##### S. K. DAS, J.-These two appeals arise out of a litigation which has had a chequered career in the courts below. The short facts are these. The suit out of which the appeals arise was instituted on January 13, 1941, but the plaint was amended on May 4, 1942. The amended plaint was to the effect that in or about the year 1905 the defendant, the then Provincial Government of the Central Provinces and Berar, Nagpur, "opened up" an area known as the C1;addock Town Area which was originally called the Sitabuldi Extension Area or Dhantoli Area. Due to the scarcity of residential accommodation in the city of Nagpur, the then Provincial Government along with some prominent members of,the Nagpur Municipal Committee devised a scheme to extend residential accommodation by acquiring agricultural land and making it available for residential purposes. With ##### that object in view, the area .in question was acquired and building sites of the average size of about 10,000 sq. ft. each were carved out. These were leased out on a premium of Rs. 350 and an annual rent of Rs. 3-8-0 each. The indenture of lease in each case contained a. clause to the following effect : CIVIL APPELLATE JURISDICTION: Nos. 181 and 181-A of 1955. Ci vii Appeals (2) S.C.R. SUPREME COURT REPORTS 183 ##### "III. And the lessor does further covenant that he will at the end of the term of 30 years hereby granted and so on from time to time thereafter at the end of each successive further term of years as shall be granted at the request of the lessee execute to him a renewed lease of the land hereby demised for the term of 30 years; Provided that the rent of the land hereby demised shall be subject to such fair and equitable enhancement as the lessor shall determine on the grant of every renewal : Provided also that every such renewed lease of the land shall contain such of the covenants, provisions and conditions in these presents contained as shall be applicable and shall always contain a covenant for further renewal of the lease." One of the leases was executed on May 24, 1909, and some other leases near about that year. By the year 1939 the first 30 years' period of some of the leases came to an end. The original plaintiffs, who were two in number and who sued in their individual right as also representing the members of an association known as the Craddock Town Plot-holders Association alleged that on the expiry of the terms of the leases in question, during which period some of the lessees had built houses on the leasehold property, the then Provincial Government proposed an enhancement of Rs. 21-14-0 from Rs. 3-8-0 as annual rent and also the insertion of some new terms in the re.newed deeds of lease. The plaintiffs, on the contrary, said that Rs. 7 per plot was the fair and equitable enhancement. Various representations to the relevant authorities having proved unavailing, the plaintiffs instituted the suit in which they prayed (a) that the enhancement of rent from Rs. 3-8-0 to Rs. 21-14-0 per plot was not fair and equitable within the meaning of ##### cl. III of the deed of lease; (b) that the offer of Rs. 7 as annual rent made by the association was fair and reasonable; (c) that the defendant do insert in the renewed deeds of lease only such conditions as were to be found in the original deed and not to add to them to the detriment of the lessees' interest ; and (d) that in the event of this Court not agreeing that _r959_ _M angalmurti_ v. _State_ _of_ _Bombay_ _S._ _K._ _Das]._ _I959_ _.i11 angalmurti_ v. _State_ _of_ _Bombay_ _S._ _K._ _Das]._ 184 SUPREME COURT REPORTS [1959] Supp. Rs. 7 was a fair and reasonable rent, a fair and equitable rent should be fixed by it. The suit was contested by the defendant on several grounds, with most of which we are not now concerned. The learned Subordinate Judge of Nagpur, who dealt with the suit in the first instance, took up certain preliminary issues for decision and by a judgment dated April 13, 1942, he disposed of those preliminary · issues. One such issue material for our purpose was #### in these terms: "In case of dispute as to what is fair and equitable rent, has the civil court no right to ##### determine what is fair rent?" On this preliminary issue, he found "that under the terms of cl. III of the indenture of lease, the defendant was entitled to fix a fair and equitable rent; but the civil court has jurisdiction to enquire whether the rent fixed by the defendant is fair and equitable within the meaning of ##### cl. III ". · We need not refer to the other preliminary issues on which the learned Subordinate Judge gave his decision, because those issues no longer survive. On the disposal of the aforesaid preliminary issue, the plaint was amended and some more lessees were added, the 30 years' period of whose leases had also expired ; therefore the position was that the plaintiffs were those lessees, the 30 years' period of whose leases had expired and as respects the renewal of whose leases the defendant had proposed an enhancement of Rs. 21-14-0. The defendant claimed that it had been very reasonable in fixing the enhanced rent and it further claimed the right of withdrawing the offer of ##### Rs. 21-14-0 and of making a fresh demand at a much higher rent if the lessees did not agree to the terms originally proposed by the defendant. The defendant further denied that the offer of Rs. 7, that is, twice the original rent, made by the lessees was a reasonable and fair enhancement. After the disposal of the preliminary issues the learned Subordinate Judge proceeded to try the suit on merits and on January 2, 1945, he found on issue no. 4 that Rs. 14 per year would be the fair and equitable enhanced rent for each plot of about 10,000 sq. ft. ##### and he fixed that rent for the next term of 30 years to (2) S.C.R. SUPREME COURT REPORTS 185 which the lessees were entitled under cl. III; he further directed the grant of a rebate of 25 per cent. to those lessees 'Yho agreed to a renewal for a term ending in 1948. From the decision of the learned Subordinate Judge two appeals, one by the plaintiffs, and the other by the defendant, were taken to the District Judge and they were heard by the Additional District Judge of Nagpur, who by his Judgment dated February 21, 1946, affirmed the decision of the learned Subordi##### nate Judge that under cl. III of the indenture of lease it was open to the Subordinate Judge to determine what was the fair and equitable rent. The learned Additional District Judge, however, reversed the finding of the learned Subordinate Judge as to the quantum of the fair and equitable rent. He came to the ##### conclusion that the enhancement of rent should not exceed Rs. 7, as any increase over that amount would not be a fair and equitable one within the meaning of ##### cl. III of the indenture of lease. - From the decision of the learned Additional District Judge, two appeals were taken to the then High Court of Judicature at Nagpur by the defendant Government. The appeals were first placed before a single Judge who directed that they should be heard by a Division Bench. The appeals were then heard by B. P. Sinha, C. J. (as he then was) and Mudholkar, J. The learned Chief Justice came to the conclusion that the suit must fail on the ground that the authority of the court had been invoked in a matter which really lay in contract and the civil court had no jurisdiction to determine the fair and equitable rent. Mudholkar, J., came to a contrary conclusion and held that the suit was maintainable and the courts below could determine the fair and equitable rent. On ·the question of what should be the fair and equitable rent, the learned Chief Justice gave no finding except saying ##### that " the decision of the lower appellate court on the question of assessment of fai:u and equitable rent was not satisfactory, because it had gone more by the rule of the thumb than upon the evidence adduced in the 2~ _I959_ _M angalmttrti_ v. _Stale_ _of_ _Bombay_ _S._ _K._ _Das_ _j._ _'959_ _**M angalmurti**_ v. _**State**_ _**of**_ _**Bombay**_ _S._ _K._ _Das]._ #### ' 186 SUPREME COURT REPORTS [1959] Supp. case or upon any other sound basis." Mudholkar, J., ##### however, said that he saw no adequate ground for differing from the view taken by the lower appellate court with regard to the quantum of fair and equitable rent. On this difference of opinion between the learned Chief Justice and Mudholkar, J., the case was referred to a third Judge, namely, Hemeon, J., who agreed with the view of the learned Chief Justice that, ##### on a proper construction of cl. III of the indenture of lease, the civil court had no jurisdiction to determine the fair and equitable rent and the parties had consciously and deliberately stipulated to abide by the lessor's fixation of a fair and equitable enhancement of rent; and in that view of the matter, he expressed no opinion as to what s.hould be the fair and equitable rent. ##### In accordance with the opinion of the majority of Judges, the appeals in the High Court were allowed and the suit was dismissed with costs. The plaintiffs, who are the appellants here, then asked for a certifi cate of fitness under Art. 133(l)(c) of the Constitution of India. The High Court granted the necessary certificate by an order dated October 23, 1953, and the present appeals have been filed in pursuance of that certificate. The area in question being now within the State of Bombay, the State of Bombay has been substituted as the respondent before us. The principal question before us is one of construc##### tion of cl. III of the indenture of lease. On behalf of the appellants it has been argued that the construction put upon the clause by the majority of Judges in the High Court is not correct inasmuch as it gives no effect to the words " fair and equitable enhancement " occurring therein. On behalf of the respondent, it has been submitted that the expression " subject to such fair and equitable enhancement as the lessor shall determine " is tantamount to saying " subject to such enhancement as the lessor shall determine to be fair and equitable,, ; in other words, the argument of learned counsel for the respondent is that the parties had deliberately chosen to abide by whatever was determined to be fair and equitable enhancement by (2) S.C.R. SUPREME COURT REPORTS **187** the lessor. Mudholkar, J., had proceeded on the foot- _r959_ ing that the primary intention of the parties was that _Mangalmurti_ the enh~ncement must be air £ and equita bl e an d h t e v. ##### adjectival clause "as the lessor shall determine " state of Bombay following the word 'enhancement' being subordinate to the primary intention of the parties could be _s._ _K._ _Das_ _J._ ignored. Learned counsel for the respondent has very strongly submitted that this view is not correct. • We think that the clause should be read as a whole and every effort should be made to give effect to all the words used therein. The relevant portion of the clause states-" such fair and equitable enhancement ### as the lessor shall determine ". If the construction is ##### that whatever the lessor determines as fair and equit able enhancement must be treated as binding- on the lessee, then the words ' fair and equitable ' are not given the meaning and sense which they have accord##### ing to the ordinary acceptation of those words. ']'air ' and 'equitable' mean fair and equitable in fact, and not what the lessor subjectively considered to be fair and equitable. The words 'fair' and 'equitable' both ##### mean' just or unbiased' (see the Concise Oxford Dic### tionary, 4th Edn., p. 426 and p. 402). If the intention was to.leave the enhancement to the subjective determination of the lessor, the clause would have more aptly ##### said-'such enhancement as the lessor shall determine'. We consider that the words' fair and equitable' must be given their due meaning and proper effect. The ##### question then asked is-what meaning is to be given to the words' such ...... as the lessor shall determine'. #### It is indeed true that these words constitute an adjec tival clause to the expression ' fair and equitable ##### enhancement', but we consider that the meaning of the adjectival clause is merely this : the lessor must first determine what it considers to be fair and equitable enhancement; but if in fact it is not so, it is open to the lessee to ask the Court to determine what is fair and equitable enhancement. We do not think ##### that on a proper construction of the clause, the inten tion was to oust the jurisdiction of the Court and make the determination of the enhancement by the ##### lessor final and binding on the lessee. We think that ' _I959_ _**M angalmurti**_ v. _**State**_ _**of**_ _**Bombay**_ _S._ _K._ _Das]._ 188 SUPREME COURT REPORTS [1959] Supp. the conclusion at which Mudholkar, J., arrived on this point was correct, though not exactly for the reasons given by him. ### If the construction stated above is the correct con strm~tion, then no further difficulty is presented by ##### cl. III. The learned Judges of the High Court unani mously expressed the view that the lease was not void for u\icertainty, and in that view we concur. There ##### is authority in support of the view that a covenant to #### settle land 'at a proper rate' or 'upon such terms and conditions as should be judged reasonable ' is not void for uncertainty (see _-The_ _New_ _Beerbhoom Coal_ _Company Limited v. Boloram Mahata and others(')_ and _Secretary of State for_ _India in Council_ _v._ _Volkart Bro-_ ##### thers(')). In the former case, Sir Barnes Peacock who delivered the judgment of their Lordships said : " The High Court affirmed the decision, but not for reasons which their Lordships consider to be correct. They affirmed it upon the ground that it was impossible to determine what was a reasonable ##### rate. Their Lordships cannot think that in the pre sent 9ase the Court, upon a proper inquiry, would have been unable to determine it. There might have been considerable difficulty in fixing the rate; but difficulties often occur in determining what is a reasonable price or a reasonable rate, or in fixing the amount of damages which a man has sustained under particular circumstances. These are difficulties which the Court is bound to overcome." Our attention has been drawn to some English decisions in which the point arose if a contract which appoints a way of determining the price can be speci##### fically enforced. There are two lines of decisions. In _Milnes_ _v. Grey(')_ the contract provided that the price shall be valued by two different persons to be nominated and if they happened to disagree then those two persons shall choose a third person whose determination shall be final. The question was whether such a contract could be specifically performed and the (1) (1880) L.R. _7_ I.A. 107. (2) (1926) I.L.R. 50 Mad. 595. **(3)** **(1807)** **14** \?'"es, **400;** **33** **E.R.** _**574.**_ (2) S.C.R. SUPREME COURT REPORTS 189 answer given by the Master of the Rolls can be best put in his own words : " The more I have considered this case, the more I am satisfied, that, independently of all other objections, there is no such agreement between the parties, as can be carried into execution. The only agreement, into which the Defendant entered, was to purchase at a price, to be ascertained in a specified mode. No price having ever been fixed in that mode, the parties have not agreed upon any price; Where then is the complete and concluded contract, which this Court is called upon to execute ? " In _Taylor_ v. _Brewer_ ( [1] ) a claim to compensation was founded on the resolution of a committee which provid##### ed that "such remuneration be made as should be #### deemed right ". It was held that the engagement was merely an engagement of honour and no claim could be made on it. An example of the other line of decisions is furnished by _Gourlay_ _v._ _The_ _Duke_ _of_ ##### Somerset (2). In that case the agreement provided for " all such usual and proper conditions, reservations, and agreements, as shall be judged reasonable and proper by John Gale, land surveyor, and in case of his death, by some other proper a.nd competent person to be mutually agreed upon by the said parties". The plaintiff came to court and the question arose whether the reference to ;settle the lease to · be made by the defendant to the plaintiff should be to the Master or to Mr. Gale, the defendant contending tha.t the court decreeing specific performance will take the whole sub ject to itself and determine by its own officer, not by a particular individual, what are usual and proper covenants. Sir William Grant, Master of the Rolls, #### said:-, ##### ·"When the agreement is, that the price of the estate shall be fixed by arbitrators, and they do not fix it, there is no contract as the price is of the essence of a contract of sale, and the Court cannot make a contract, where there is none; but, where the Court has determined, that the agreement is binding and (I) (I8I3) IM. & s. 290; I05 E.R. I08, (2) (1815) 19 Yes. 429; 34 E.R. _576._ _I959_ _M angalmurti_ v. _State_ _of_ _Bombay_ _S._ _K._ _Das]._ _I959_ _**Mangalniurti**_ v. _**State**_ _**of**_ _**Bombay**_ ..S. _K._ _Das_ _]._ 190 SUPREME COURT REPORTS [1959] Supp. ##### concluded and such as ought to be executed, it does not require foreign aid to carry the details into execution. Gale's agency is not of the essence of this con### tract ......... If the parties had gone to Gale, and got him to settle a lease, and one of them had objected to the covenants as improper, and the Bill had been filed by the other, the Court would have inspected. the lease; and if it were found unreasonable, would not have decreed an execution of the agreement." We consider that the present case comes within the rule laid down in _Gourlay_ v. _The Duke of Somerset_ (1). Learned counsel for the respondent placed strong reliance on _Gollier_ v. _Mason_ ('). That was a case in which the defendant had agreed to purchase a property at a valuation to be made by AB ; the Court, though it considered AB's valuation very high and perhaps exorbitant, decreed specific performance, there appearing neither fraud, mistake or miscarriage. The case was ##### decided on the footing that the contract provided that the property shall be purchased at such a price or sum as should be fixed by reference to AB, and it was pointed out that there being no evidence of fraud, mistake or miscarriage the parties were bound by the contract they had made. There was no question in that case of the court stepping in, under the terms of the contract, to determine what was fair and · reasonable. Learned counsel for the respondent also relied on _Tekchand Kapurchand_ v. _Mt. Birzabai_ ('). The principle lai1'l down therein was that a contract binds ##### the parties to it and their representatives and the court's power to interfere with contracts is limited to such cases as fraud, undue influence or mistake and relief against penalty or forfeiture. Indeed, we agree ##### that if the contract in the present case was that what ever the lessor determined as the enhanced rent would be binding on the parties, then the court has no power to interfere with that contract unless it is vitiated by ##### fraud, undue influence, mistake, etc. If, however, the proper construction of cl. III of the contract is what (1) (1815) 19 Ves. 429; 34 E. R. 576. (2) **(1858) 25 Beav.** **200;** **53** **E.R. 613.** (3) A.I.R. 1942 Nag. II9. (2) S.C.R. SUPREME COURT REPORTS **191** w~ have held it to be, then the contract itself provides _1_ _959_ ##### that the enhanced rent though determined by the less _M angalmurti_ or in the first instance, must be fair and equitable. On v. such a construction the determination of the enhance- _state_ _of_ _Bombay_ ment by the lessor would not be final and it would be open to the court to determine what is fair and equit- _s._ _K. Das_ _J._ able enhancement. We say this with respect, but the Patna decisions _(Secretary of State for_ _India_ _in_ _Council_ v. _Nistarini_ _Annie Mitter_ (1) and _Se.cretary of State v. Babu Rajendra_ _Prasad_ ( [2] ) ), referred to by the learned Chief Justice in his judgment are not in point. Those decisions were not concerned with interpreting a clause in the agreement like the one before us and it was rightly held ##### that in the absence of a contract between the parties, the court had no power to impose upon the parties a bargain not of their own making. ##### For the reasons given above, we hold that the deci sion of the majority of the learned,Judges of the High Court with regard to the interpretation of cl. III of the indenture of lease is not correct and these appeals must go back for a fresh hearing by the High Court in accordance with law for determination of what should be t!ie fair and equitable enhancement. On that point there was no concluded finding by the majority of the learned Judges of the High Court, but learned counsel ##### for the appellants submitted that the finding of the learned Additional District Judge on the quantum of fair and equitable enhancement was a finding ~f fact and therefore binding in second appeal. At this stage we express no opinion on such a submission, nor do we express any opinion whether the courts below or any of them have gone wrong in principle in determining what should be the fair and equitable enhancement and whether on merits it should be Rs. 7 or Rs. 14 or Rs. 21-14-0, or even a higher sum. All these points must be considered afresh by the High Court. There is a further point which must also be dealt with in the High Court. The learned Subordinate Judge decided on issue no. 7 with regard to the conditions for a renewal of the lease tha,t the Government (8) (1927) I.L.R. 6 Pat. 446. (9) A.I.R. 1937 Pat. 391. _I959_ _**M**_ _**angaltnurti**_ v. _**State**_ _**of**_ _**Bombay**_ _S._ _K._ _Das]._ _Kapur_ _J._ 192 SUPREME COURT REPORTS [1959] Supp. were not entitled to make any alterations in the clauses relating to re-entry and notice of demand as con##### tained in cl. II of the original lease. The learned Addi. District Judge said : " As regards the new form of lease, it is clear that ##### the chi.use regarding building would be deleted if it is found to be superfluous or redundant. While that in respect of right of lessor to enter on the land without ##### a demand of ground rent (in case of failure to pay it on the appointed date) it is not necessary to interfere as it would amount to making a contract for the part### ies. It is better to leave the matter to the parties and their legal advisers." Whether the view of the learned Subordinate Judge or of the District Judge is correct or not was not considered by the High Court and as the appeals are going back on remand this point should also be dealt with by the High Court. Accordingly, we allow the appeals and set aside the judgment and decree of the High Court dated September 30, 1952. The appeals must go back for a fresh hearing by the High Court in accordance, with law ##### and in the light of the observations made above. In the peculiar circumstances of this case, there will be no order for costs of the hearing of the appeals in this Court. Costs incurred in the two courts below and costs incurred in the High Court, both before and after remand, will be dealt with by the High Court when finally disposing of the appeals. ### KAPUR, J.-I regret I am unable to agree in the proposed judgment that it is open to the Court in the circumstances of this case to go into the question of the valuation and to determine as to what, in its opinion, would be fair and equitable enhancement in rent and to interfere with the enhancement as determined by the lessor under the terms of the indenture of lease executed on May 24, 1909. The original lease was for a term of 30 years with a provision for renewal for another 30 years with the proviso that the rent of the land demised was "subject to such fair and equitable enhancement as the lessor shall determine". (2) S.C.R. SUPREME COURT REPORTS 193. The facts are set out in the judgment of my learned _r959_ brother, S. K. Das, J., and it is not necessary to repeat _Mangalmurti_ t em. h Pl ots o f l an d measuring a out 1 b 0,000 sq. f t. v. were given on lease by the Government to the appel- _state_ _of_ _Bombay_ lants and others, for which the premium to be paid was Rs. 350 and the rent Rs. 3-8-0 per annum or Re. 1 _Kapur_ _J._ per cent. of the premium. Lease deeds were executed in 1909 under clause III of which the lessor determined the enhanced rent at Rs. 21-14-0 and thus raised it from Rs. 3-8·0 per plot to Rs. 21-14-0. The appellants ##### brought a suit for declaration that the enhancement proposed was excessive and the fair and equitable rent should be Rs. 7 per plot and if the Court was of the opinion that Rs. 7 was not a fair and equitable rent then it should fix such sum as i1; considered fair and equitable. The respondent pleaded that such a suit was incompetent. The question for decision is what ##### is the effect of using the adjectival words "fair and equitable". For the appellants it was argued that because in the lease deed the enhancement contemplat##### ed was qualifiea by the words "fair and equitable" the determination became clothed with a qualification which made it subject to judicial review and determi. nation because it was for the Court to say whether the determined enhancement conformed to the standard prescribed in the disputed clause or not. The . respondent contended on the other hand that the rule ##### applicable to determinations by valuers is that it is conclusive and cannot be overhauled except upon proof of fraud and imposition of gross misconduct. Thus according to the submission of the appellant the clause in dispute means such enhancement as the lessor shall determine and which determination shall, in the opinion of the Court, be fair and equitable and according to the respondent it means ##### that the amount of enhancement shall be fair and equitable but what is fair and equitable shall be determined by the lessor, such determination being conclusive. The appellants do not contend that the lessor is not a valuer and that if the qualifying words " fair and equitable" had not been used then 25 ##### · 194 SUPREME COURT REPORTS [1959] Supp. _'959_ the enhancement determined would not- be conclusive but the contention is that by using these words the _**M angalmurti**_ v. quality and the quantity of enhancement is no longer _State_ _of_ _Bombay_ in the sole determination of the lessor but the final determination must be of the Court because otherwise _Hapur_ _J._ any fanciful amount would have to be accepted as fair and equitable and that the parties intended that the lessor was not the final determiner of the quality and quantity of enhancement and his determination was not conclusive but the lessee if dissatisfied could get the matter reviewed by the Court. ##### In my view the correct interpretation to be put on this clause of the lease deed is what is contended for by the respondent. The lessor was given the authority to determine the enhancement but such enhancement was to be fair and equitable and what would be fair and equitable in any particular case was also to be determined by the lessor. The lease deed entered into between ##### the parties is dated May 24, 1909. In the first clause are given the usual obligations of the lessee as to payment of rent, the purpose of the building to be constructed, the period in which it was to be completed, the design of the building and keeping it in proper condition. In the second clause of the agreement the lessor covenanted peaceful possession subject to the right of the lessor to recover rent as arrears of land revenue - and other remedies for non-observance of the obliga· tions contained in the first clause with a provision for ##### re-entry upon failure of certain conditions. In the third clause the lessor covenanted for grant of lease ##### for further periods of 30 years at the request of the lessee with the following proviso : - . "Provided that the rent of the land_ hereby demised shall be subject to such fair and eci,uitable enhancement as the lessor shall determine on the grarit of every ren.ewal ". . . . . · _. ##### This is the disputed clause .. Now it appears that this further covenant was for the benefit of the lessee and the reservations made are couched in such la.nguage which left the discretion in regard to. eµhancement of rent to the lessor. What the enhancement was to be and what would be fair and equitable was left to the (2) S.C.R. SUPREME COURT REPORTS 195 ##### determination of the lessor. It is not an unusual provision in a lease for a long term of years with provision for renewal to leave the· question of rent to b'e ##### determined by the lessor or an outside valuer and it would not, in my respectful opinion, be a correct inter##### pretation to say that the enhancement by a valuer would be unchallengeable if the adjectival words " fair and equitable" are not used but would be subject to court's review if these words are employed. That is going contrary to the very notion of valuations and their legal incidence. The extent of the power of courts over valuations by valuers has been stated in ##### text books and in certain decided cases. In Williston on Contracts, Vol. 3, s. 802, at p. 2252 the law is stated thus: " In the absence of fraud or mistake, the price fixed by agreed valuers is conclusive upon the parties. Though an excessively large or an unreasonably small price involves some element of penalty or forfeiture, the possibility of this is not enough to overcome the express terms of the contract in the absence at least of fraud, gross mistake, or such arbitrary conduct as is outside what the parties could have reasonably contemplated". ##### And it is not a far step to say that in all cases of valuation the parties do contemplate a fair and equitable amount to be fixed or determined and not any price fanciful- or otherwise. In _Collier_ v. _Mason_ (1) the defendant agreed to pur##### chase a property at a valuation to be made by a third party. The defendant repudiated the value as exorbitant and refused to complete his contract and the plaintiff-vendor instituted a suit for specific per##### formance. The Court held that the valuation was very high and perhaps exorbitant but it decreed specific performance of the contract as there appeared ### no fraud, mistake or miscarriage. It was said by the Master of the Rolls "It may have been improvident as between these parties to enter into a contract to buy and sell property at a price to be fixed by an##### other person, but that cannot avoid the contract. (1) (1858) _25_ Beav. 200; 53 E. R 613. _1959_ _Mangalmurti_ v. _State_ _of_ _Bombay_ _Kapur]._ 196 SUPREME COURT REPORTS [1959] Supp. _r959_ Here the referee has fixed the price, which is said to be evidence of miscarriage, but this Court, upon the _**Mangalmiuti**_ ##### v. principle laid down by Lord Eldon, must act on that _State_ _of_ _Hombay_ valuation, unless there be proof of some mistake, or some improper motive, I do not say a fraudulent one; _Kapur_ _J._ as if the valuer had valued something not included, or had valued it on a wholly erroneous principle, or had desired to injure one of the parties to the contract; or even, in the absence of any proof of any of these things, if the price were so excessive or so small as only to be explainable by reference to some such cause ; in any one ·of these cases the Court would #### refuse to act on the valuation ".. It does not a.ppear ##### that in that case the words "fair and equitable" were used but that is implied in every reference. for valuation to be made by an agreed .referee. He cannot act in a fanciful or a corrupt manner or with puerile motives nor can be make a valuation which be does not consider to be fair and equitable. ##### In cases of transfer of property the form of contract to buy and sell may make a provision and very often such a provision is made that the price payable shall be that which a certain valuer shall fix. Such a requirement is an express condition or a condition implied in fact qualifying the obligation of the buyer to pay tbe price and such a contract cannot be performed unless the valuation first takes place. Such a condition is a necessary condition or an inherent condition. Williston on Contracts, 'Vol. 3, s. 800; _Firth_ ##### v. Midland Railway Go. (1). In such contracts it must be assumed that the parties laid weight on the particular individuality of the valuer. Accordingly if the valuer dies. or refuses to act the buyer cannot be compelled to pay the price. A similar condition is common in long-term leases and in provisions for renewal of leases and where the parties choose to abide by the determination of a valuer and that valuation is not acceptable to one of the parties, Courts will not interfere, the only exception being fraud, mistake or misconduct. ##### In Vickers v. Vickers(') which was a suit for specific **{1)** **(1875) L.R.** **20 Eq.** **100,** **112.·** (2) (1867) L.R. 4 Eq. _529._ (2) S.C.R. SUPREME COURT REPORTS 197 performance of a contract enforcing an option of _r959_ purchase where the stock was to be valued in the usual . f h l _M angalnzurti_ way b y two va 1 uers an d [· ] one o t e va uers was ##### not allowed to proceed, it was held that there was no state 0;· Bombay contract between the parties which the Court could specifically enforce. Sir W. Page Wood, V. C., said at _I•apur_ _J._ p. 535: . ### "If a nomination of that kind fails, or if the two persons named do not make their award, this Court has said there is no _constat_ of the price ; the contract is not a complete contract, and there is nothing on which it can act". ##### In Weekes v. Gallard ( [1] ) where a contract was entered into for the sale of certain property, the price to be fixed by two valuers who afterwards valued the pro##### perty at inadequate price, it w'as held that in the ab ence of fraud or collusion on the part of the valuer, the buyer was entitled to specific performance of the contract. Lord Romilly said :##### "The court has really no discretion in the matter. The discretion of the court is bound, as Lord Ellen##### borough says, by fixed rules. In one case of this kind a house and furniture were valued at three times their value, and yet there was a decree for specific performance. The only defence to such a suit would be fraud or collusion". A valuer may, in one sense, be called an arbitrator but not in the proper legal sense of the term. Per Lindley, L. J., _In_ _re_ _Carus Wilson_ _&_ _Greene_ ( [2] ). But there is this difference between arbitration and valua tion that the object of the former is to settle a dispute which has arisen and of the latter to avoid a dispute arising. The arbitrator is called in to settle judicially any matter in controversy between the parties and the valuer by the exercise of his knowledge and skill has to make a valuation the object being to prevent disputes from arising. A valuer like an arbitrator is required to act fairly and diligently. He cannot act in .a fanciful or a perverse manner and his determination must be fair and equitable whether the authority given to him uses these words or not. But once a (I) (1869) 21 L.T. _655._ (2) (1886) 18 Q.B.D. 7, IO, _I959_ _/1.1 angal1nurti_ v. _State_ _of_ _Botnbay_ _Kapur_ _]._ 198 SUPREME COURT REPORTS [1959] Supp. valuation is properly made the valuation is conclusive as between the parties and the Court in the absence of fraud, mistake or collusion · cari no more go info whether it 'is fair and equitable thari a Court can sit in appeal against 'the award of an arbitrator as to what would be fair amount of damages in a particular case of breach of contract. See also _Emery_ v, _Wase_ (:). The decision in _Gourlay_ v. _Somerset (Duke_ _of)(')_ was relied upon by the appellants in support of their case. That does not, in my opinion, deal with the matter now before us. There the suit was for specific performance of an agreement to grant a lease. One of the conditions of the contract was that the farm was to be let on conditions, reservations and agreements "as shal) be judged reasonable and proper by John Gale ......... ". The Court was of the opinion that Gale's agency was not of the essence of the contract and that it could not be contended that the contract was to end ##### if Gale refused to settle a lease. The Court said : " Suppose the reference is made to Gale ; is his ### decision liable to exception ? If it is, the decision with regard to the propriety of the lease will ultimately be #### that of the Court. If not, the Court may be carrying into execution a lease, which it may think extremely ### unreasonable and improper. If the parties had gone to Gale, and got him to settle a lease, and one of them had objected to the covenants as improper and the Bill had been filed by the other, the Court would have inspected the lease; and if it were found unreasonable, would not have decreed an execution of the agreement". That was a case relating to covenants other than fixation of price. With regard to the valuation or fixation of price it was said that if an agreement was that the price of the estate would be fixed by arbitrators and they did not fix it there was no contract of sale as the contract as to the mode of fixing the price was of the essence of the contract of sale and the Court could not make a contract where there is none. Similarly it may ##### be said that where the valuation is fixed by a valuer (1) (1801) _5_ Vos. 846, 847, 848; 31 E.R. 889. (2) (1815) 19 Yes. 429; 34 E.R. 576. (2) S.O.R. SUPREME COURT REPORTS 199 the court will hold it conclusive in the absence of fraud or mistake or misconduct. The Court will not enter into the propriety of the valuation made or substitute its own valuation in place of that determined by the valuer because that will not be an execution of the contract of the parties but making a contract for them. The Transfer of Property Act contains no provision by which the Court is empowered to fix rent of premises demised although by legislation in the case of agricultural holdings certain tribunals have been set up to make such determinations. The appellant relied on _The_ _New_ _Beerbhoom_ _Goal_ _Company_ v. _Boloram_ _Mahata_ (1). The covenant between 'the parties was:##### " Within that aforesaid mouzah we will not give a ### pottah, let give settlement to anybody. If you take possession according to your requirement of extra land over and above this pottah, and we shall settle any such lands with you at a proper rate". A suit was brought by the lessees against the lessor to obtain specific performance to execute a permanent lease of a large area of land claiming benefit of the ##### covenant above given and contended that the defend ants were bound to let them the land whenever called upon to do so. The appellant company stated ##### that they had negotiated with the lessor for lease of the adjoining land (not of land which they had agreed ##### to lease) upon the terms that· they were to pay Rs. 1-8-0 for waste land and Rs. 3 for cultivable land and the suit was for the grant of specific performance of the agreement by compelling the lessor to grant ##### them the lease at those rates and if the Court would not order the lease at those rates then at such rates as the Court shall think reasona hie. The trial Court held that apart from 51 bighas mentioned in the covenant the lessor could not be compelled to grant a lease for the remaining land of the mouzah. The High Court affirmed this decision but on the ground that it was impossible to determine what. was the reasonable ##### rate. Sir Barnes Peacock said:-.. (r) (1880) L.R. _7_ I.A. 107. _z959_ _M angalmurti_ v. _State_ _of_ _Bombay_ _Kapur_ _]._ _I959_ _**Mangalmurti**_ v. _**SJate**_ _**of**_ _**BOmbay**_ _**Kapur**_ _**J.**_ 200 SUPREME COURT REPORTS [1959) Supp. " Their Lordships cannot think that in the present case the court, upon a proper inquiry, would have been unable to determine it (proper rent). There might have been considerable difficulty in fixing the rate; but difficulties often occur in determining what is a reasonable price or a reasonable rate, or in fixing the amount of damages which a man has sustained under particular circumstances. These are difficulties which the Court is bound to overcome ". These observations of the Privy Council are relied ##### upon by the appellants to support the argument that it is open to the Court to determine what the reason able rate would be. This was not a case where any question of valuation arose nor was it a case where a valuation made by a valuer was sought to be reviewed as not being proper and apart from the fact that the observations are mere obiter this case is no authority for saying that the determination of a valuer is subject to review by courts. Another case which the appellant relied upon was _The Secretary_ _of State for_ _India v. Volkart Brothers_ (1). There, in a deed of lease granted for 99 years by the East India Company there was a clause for renewal for another like period on the lessee paying a sum of money and " upon such terms and conditions as should be judged reasonable". The Secretary of State assigned a major portion of the holding to a third party and Volkart Brothers before the expiry of the original lease period tendered the due amount and asked for renewal of the lease which the Secretary of State refused to renew and sued to eject the lessees and the latter sued for specific performance of the covenant #### for renewal. It was held by a majority that the cove nant was not unenforceable on account of uncertainty. Krishnan, J., was of the opinion that such a covenant was too vague and uncertain and unenforceable because the clauses to be inserted in the contract were themselves uncertain and the contract could not be enforced. Venkatasubba Rao, J., was.of the opinion that if the parties· would not agree to a reasonable rent the ##### Court will intervene and fix it; The New Beerbhoom (1) (1926) I.L.R. 50 Mad. 595· (2) S.O.R. SUPREME COURT REPORTS 201 _Coal Company_ v. _Boloram Mahata_ (1) was relied upon. _1959_ ##### Coutts Trotter, C. J., was also of the opinion that the Mangalmurti covenant was not too vague to be enforced. But this v. again was a case not of interfering with the deter- _State_ _of_ _Bombay_ mination of a valuer but of specific performance of a ##### contract of renewal and it was held that by taking Kapur .f. evidence even a vague and indefinite covenant relating to renewal could be made definite. ##### In my opinion, therefore, the Court cannot go into the question of correctness or otherwise of the determination of the lease and the appeal should therefore be dismissed with costs. BY OouRT.-In view of the opinion of the majority, the appeals are allowed, setting aside the judgment and decree of the High Court dated September 30, 1952. No order as to costs of the hearing in this Court. _.Appeals allowed ._ ##### . THE STATE OF MADHYA PRADESH _v._ MUBARAK ALI (P. B. GAJENDRAGADKAR, A. K. SARKAR and ##### K. SuBBA RAo, JJ.) _Criminal_ _Law-Public servant receiving bribe-Investigation by_ _officer_ _below_ _rank_ _of Deputy Superintendent_ _of_ _Police-Permission_ _to_ _investigate granted_ _by_ _Magistrate-Order not disclosing material_ _before_ _Magistrate nor disclosing reasons for order-Permission,_ _if_ _invalid-Investigation, scope_ _of-Prevention of Corruption Act, r947_ _I959_ _February 3._ _(2_ _of_ _r947),_ s. _5A-Code_ _of_ _Criminal Procedure,_ _r898_ _(Act 5 of_ _I898),_ _S._ _4(I)."_ Section 5A of the Prevention of Corruption Act, 1947, provided: "No police officer below the rank ......... of a deputy Superintendent shall investigate any offence punishable under s. 161, s. 165 or s. l65A of the Indian Penal Code or under s. 5(2) of the Act without the order of. ........ a magistrate of the first _class ......... "._ (1) (1880) L.R. _7_ I.A. ro;. 26