Holding

Section 31 shields the State from liability for tortious damages unless loss is caused by wilful default or gross negligence, and since no such default or negligence was established, the State is liable only for the excess management cost of Rs. 8,000.

Summary

The plaintiff, Prithwi Chand Lall Choudhary, claimed Rs. 2,00,000 in damages alleging that the State of Bihar, through its manager J.P. Mukherjee, wrongfully took over his estate under the Bihar State Management of Estates and Tenures Act, 1949, and acted with negligence and bad faith. The trial court, treating the Act as unconstitutional, awarded damages and ordered a commissioner to assess losses. The High Court, after declaring the Act constitutional, held the State liable for several items, including excess management costs, on the basis that the State had been negligent and had wilful default. On appeal, the Supreme Court examined whether Section 31 of the Act immunised the State except for loss caused by wilful default or gross negligence, and whether such default or negligence was proved. The Court found no evidence of wilful default or gross negligence and held that the State was protected by Section 31, except for the excess cost of management incurred, which was payable. Consequently, the Court set aside the lower courts' decrees except for an order directing the State to pay Rs. 8,000 with interest to the plaintiff.

Issues considered

Does Section 31 of the Bihar State Management of Estates and Tenures Act, 1949 bar tort actions against the State except where loss is caused by wilful default or gross negligence?
Did the State's notification of only part of the estate and delay in preparing collection papers constitute wilful default or gross negligence?
Can the plaintiff recover damages for excess management costs despite the statutory protection afforded by Section 31?
Is the Bihar State Management of Estates and Tenures Act, 1949 constitutionally valid (though not directly before the Court)?

Legislation cited

Bihar and Orissa General Clauses Act, 1917s. 4(22)
Bihar State Management of Estates and Tenures Act, 1949s. 3(1), s. 31

Subjects

tort lawstate liabilitygood faithwilful defaultgross negligenceland reformsection 31 protectionmanagement of estatesconstitutional validitydamage claim

Judgment

527
A

STATE OF BIHAR

v.
B
BISHNU CHAND LAL CHAUDHARY AND ORS.

8 January, 1985

[E.S. VENKATARAMIAH AND R.B. MISRA, JJ.)
c
Tortious liability of State for damages for trespass and unauthorised
intereference by it. with the proprietary interest ·and negli'gtnct-Effect of
• Section 31 of the Bihar State ManQgement of Estates and Tenures Act,· 1949._
A.ct done in 'goodfaith'-Whether Section 31 of the Ac1 read with Section 4 (22)
of the Bihar and Orissa General Clau,1,e5 Act, 1917 protects such State action
against any alleged claim for loss by wilful default or gross negligence.

Ely a Notification dated November 19, 1949 issued under section 3(1) of .n
the Bihar State Management of Estates and Tenures Act, 1949 (Bihar Act XX!
of 1949), as duly certified by the President under clause (6) of Article 31 of the
Constitution, the estate of the Prithwi Chand Lall Choudhary caUed "Raj
Nazarganj" spread over the District of Purnea' and some other districts in the
State of Bihar as also in the state of West Bengal, was taken under the manage-
ment of the Bihar State Government. One J.P. Mukherjee who was the Additional
Collector of Darbhanga was appointed as the Manager of the estate. Jn the
meanwhile. the Maharajadhiraja of Darbhanga, Sir Kameshwar Singh filed a
civil suit challenging the vaJidity of the Act as his estate was also similarly
.. notified under the said section. The Patna High Court withdrew that Suit to its
own file Jor being tried in its Extra-ordinary Original Civil Jurisdiction and by
its judgm.ent dated June 5, 1950 reported as MD. Sir Kameshwar Singh V.
State of .Bihar, ILR 29 Patna 790. declaring the Act to be 11/tra vires and who1ly
void, issued an injunction ~straining the State Government from enforcing the
Act. Against that judgment the State of Bihar preferred an appeal to the Supreme
Court. However, on the basis of the judgment of the High Court, Prithwi Chand
Lall Choudhary demanded on June 9, 1950 that he should be put back Jn posses-

. '
sion of the estate whose rnanagement'had been takeO over from him. On July 3,
1950 the then c'ollector by his Jetter Informed Choudhary that the GoYemment
had decided to relinquish charge of the estates and tenures and that Choudhary G
should co-operate in taking over charge by July 15, 1950. On July 6, 1950 the
Government cancelled the Notification issued under section 3(1) of the Act. The
,, charge of collection papers' was handed over by the middle of July, 1950 to
'Cl10udhary. The abstracts and synopsis of accounts were given on AugUst 7,
1950. About Rs. 1,46,000/liad been collected on behalf of the estate during the
Government's management. After the estate was thus handed over-to hilJl,
Choudhary filed a suit on September 21, 1951 in the Court of the Subordinate
Judge,Pmnea, for damages't>f Rs. 2,00,000 for wrongful and illegal interference
with bis estates and tenures and for other consequenlial reUefs. H
528 SUPREME COURT REPORTS [1985] 2 s.c.R.
A Broadly the grounds of the claim were (a) that due to gross negligence
and wilful default the appellant herein, contravened the provisions of section
3(1) in notifying and taking possession of part only of Choudhary's intmst in
Estates and Tenures and in omitting to notify other parts of his Estates and Tenu..
res on the first occasion when the Notification dated November 19, 1949 was
issued the Government was unabk to realise all the rents and other dues, (b) that
due to wrong Notification and omission to no~ify atl parts of his Estates and
B Tenures and a1so on acCount of ama1gamated rentals maintained by the Respon~
dent in respect of his estates and tenures he could not fully realies the balan.cc •
share of unnotified. estates and tenures, (c) that certain rents and decress had
been allowed to become barred by time, (d) that on account of non-pay-
ment of Agricultural Income Tax and consequent imposition of penalty
· which was no doubt reduced to Rs. 2,000 on appeal the Estate suffered a loss of
Rs. 12,000 and, (e) that on account of issue of wrong collection certificates by
c , Collector and his staff the respondent had suffered some Joss which was yet to be
ascertained. It was alleged that the action of the appellant suffered from negli-
gence, bad faith and malice and the appellant alongwith its Manager as tort-
feasor was jointly and severally for all such losses suffered by him. The appel-
lant traversed all the material allegations in the plaint and the plea was one of
.
bona ft des carrying out of their duties under the Act.

. )) The Trial Court which proceeded on the basis that the Act was unconsti-
tutional, and the appellant was a trespa1Ser on the respondents' estate held: (I)
that the cost of management incurred by the Collector over and above 12}% of the
gross cotlection was excessive. and-therefore, the State should refund such excess
amo~nt; (2) that the mistake in not notifying all the shares held by Choudhary
in Tauzis Nos .. 7/8 and 30 at the first instance resulted in non-collection of the
dues and Choudhary thereby had suffered; (3) that the State being trespassers,
Choudhary owed no duty to make available to them the separated Jamabandi to
facilitate collection of dues in the said Tauzls, and therefore, the State should
reimburse Choudhary the amount he would have been able to collect from those
tauzis during the Period of their mana&ement, and also to make good the loss
caused on accOunt of arrears or . decrOOes which had been aJlowed to become
barred. The Trial Court, accordingly, .passed a preliminary decree and directed
that a Commissioner should enquire into the above items.
F
' filed an appeal before the
Against the said preliminary decree the State,
-High Cour,t:._ At. the instance_ -of thC State and on a reference by the Division
Bench hearing the appeal, a Full Bench of the Court reconsidered the declsion
reported in ILR 29 Patna 790, by its judgment dated February 15, 1963 overrukd
-
.tbc said .decision, and declared that the Act ·was constitutional. Thereafter the
·Divisio'n Bench finally heard the appeal and took the view that though it was
G ,open to the State to notify onlx a fraction of an estate under section 3(1) ofthe
Act, yet, it was not absolved from the duty of taking appropriate steps f0< the
preparation of suitable collection papers in respect of the notified shares in 1'•
T~uzls No. 7/& an.d 30. The Division Bench held that the State was liable to
compensate Choudhary .for not preparing the collection papers in time; (i) that
~ven thougl) Choudhary had been told to file suits for rents in respect of unnoti-
.fiaj. ,shJ!re of the estate, the State were negliaent in the matter of Issuing certifica-
ws for i;coyery, •ome of which were later on struck off; (ii) that the material on
DIHAR r. B.C. LAL 529
A
the record did not indicate that necessary steps were taken by the Collector with
regard to pending suits and execution proceedings and there was every pfobabili~
ty that loss had been suffCred by Choudhary on account of'the inaction or failure
to continue pending proceedings which amounted to wilful default and &ross
negligence; (iii) that the State was Iiable to reimburse Choudhary to the extent of
Rs. 2,000 levied as penalty for non-payment of Agricultural Income Tax; (iv)
in so far as the cost of management of Rs. 43 ,507 which was in the order of 30
per cent cf the gross coltection was concerned about a sum of Rs. 8,000 (=25% ·B
of the gross collec.tion) had been incurred as cost of management in excess of
what was authorised and that Choudhary was entitled to it ; and (v) that section
31 of the Act did not give protection in respect of loss which was caused by

.. wilful default and gross negligence. The appeal of the State and the cross objec.
tions of Choudhary regarding certain matters disa1Iowed by the trial Court were,
accordingly, 9ismissed. Hence the State Appeal by certificate.

Allowing the appeal in part, the Court
c

HELD I.I The Bihar State Management of Estates and Tenures Act, 1949
(Bihar Acl XX! of 1949) was intended to bring about a reform in the land distri·
bution sys item of Bihar for· the general benefit of the community..The taking
over of the. management and control over land was found to be necessary as a
preliminary step towards the implementation of the Directive Principles of State
Policy. Therefore, section 31 of the Act provided that no suit or other IegaJ D
procCeding would lie in any Court against the State Government or against any
servant of the State Government or against any person acting under the orders of
n. servant of the State Government far or on account or or in respect of anything
done or purpc..rting to be done in good faith under the Act or in respect of: any
aUeged neglect or omission to perform any duty devolving on the State Govern-
ment or any of the officers subordinate to it "or acting under the Act, or in res·
pect of the exercise or or on failure to exercise any power conferred by tfie Act on
the State Go.vernment or any officer ~ubordinate to it and acting und.er the Act,
except for the loss or the misapp1ication occasioned by the wilful defauJt or gross
negligence of any officer or the State Government. Under section 4(22) of the
Bihar and ()rissa General Clauses Act, 1917, a thing sha11 be deemed to be done
in 'good faith' where it is in fac.t done honestly, whether it is done· negligently
or not. [532E ; 545C·EJ

1.2. In the instant case, there was no proof of deliberate abuse of statutory
'
power nor of usurpation of a power which the ?-Uthorities knew that they did not
possess. It cannot be said that either the State Government or any or the office~
acting unde:r it in performance of their duties under the Act had n6t acted hones.
Uy either in issuing the Notification under section 3(1) of the Act, on November
19, 1949 by which only parts of Tauzis ~os. 7/8 and. 30 had been notified or G
in not preparing separate coUection statements before April 1950. Further, the
following fai~ts, namely, (a) the respondent himself had acquired the said Tauzi~
in instalments; (b) as soon as the error was pointed out steps 'were taken by the
Manager to get the unnotified share also notified and the Government issued a
Notification accordingly within about fqur months; (c) on account of not-hand·
ing over by the respondent even the consolidated c~llection statements by April
1950, lhe separate collection statements could not be got prepared by' the Mlinagar H
S30 SUPREME COURT REPORTS [1985] 2 s.c.R•
A by April 1950; (d) even acco1ding to the respondent himself if would have taken
six n:ionths to prepare separate collection statements on the basis of the consoli-
dated statements; and (e) unawareness of the State Government_ or any of its . .;'f
. officers before hand that the respondent had maintained a consolidated statement
of aCcoutits on the date of issue of the first Notification in respect of a portion Of
. TauZis Nos. 7/8 and 30, constituted a good defence under section 31-of the Act
against any claim based on any alleged neglect or omission since there was no
proof of any wilful default or gross negligence on the part of the defendants.
. . [545F-H; 546A-B]
_;. : 1.3. In the instant_ case; (i) the claim foe damages on all counts should " •
• fail except with regard to the claim for Rs. 8,000 which had been incurred as
__ cost of management in Cxce$S of What" was authorised.by law•. With regard to the
.penalty of Rs. 2,000 imposed for. 'n0n~p3.Yment 'of the Agricultural Income Tax
when once it was conceded that the fiist Notification was not unauthcrised o;ie,
the State could not be held liable for reimbursing the penalty of Rs. 2,000 to the
respondent; (ii) It cannot be said that the Manager 'acted in excess CJf his powers
vested under\he Act of 1949 or ma/a fide. Lack of bona fides cannot be attirjbuted
to him merely because some of the suits out of a large number of suits filed for ..
recovery of thC . ariears· due to the Estate, were _dismiSsed on merits or on the
: ground that some of the persons sued were dead or not traceable. In fact nearly, ' - ...
7,000 certificate" cases had to be filed in a short period and hurriedly on the basis ,__
~ of irrears list submitted by the respondent himself 'ind by the middle of July
,: 1950 tbC management of the estate itself ·was relinquished. Further· if. a certain
· · share iti a tauzi had not been notified .o~ thC .first occasson it again cannot be
said as having been done either mi:ila fide C?r deli!Jerately to harm the · Tespondent.
·: The-Manager· therefore, could not be'charg~d for wilful default or gross negli·
· geD.ce in as much as ill view of the definition of the expression •tenure' in section
· 2(k) of the, ACt it was ope ii to ·the governmCnt to· notify Cven a fraction of a
tenuie under section 3(1) ·or the Act; (iii) Since the respondent bimsClf failed "?""_,,
-to discharge his duty imposed thC State cannot be made liable to any damages on
the ground that the ~fanager had failed to get the collection ·papers prepared in
respCct of Tauzis Nos. 7/8 and 30 in time and thus caused loss to the respondent.
• ....• • ., , . . [S46C; S44G; S42F'a; S4JA-B] . "'
•' CIVIL APPELLAlE JURISI~ICTION_ : Civil Appeal No: 2296 of 1970.
'.
On appeal by Certificate from the Judgment and ·Decree dated
17th August,.1963 of the High Court of Patna [from Origin.ii
F Decree No. 248 of 1955. · ·
• r •

. ';'-~ • , • " . ?

,·-- . _. . . D. Goburdhan for the Appellant,·, '\
•
. G , ..
.~·: '
J. P. Goyal and R; A: Gupta for the Respondents
•i -', ~.. '• - , ' ,' .-. '. > f ' ' I •' • •

. . ·' · 1 he Judg:ineni of the_ court was cieii~ereC! by.
-·:·.·-'.
'• '' 'VE!<KATAKAMIAH, J. This appeal by certificat~ under Article 133
(I) (a~ ~f-~e_C?11~titutjon arises out of llil actlo.d in tort for.damages

'
BllIAR v. a.c. LAL (Venkataramiah, J.) 53i '

- for trespass and unauthorised: interferences by the defendants With: the
X'. proprietary interest of the plaintiff. The defendants were the State of
" Bihar and J.P. Mukherjee, an officer in the service of the Bihar
Government.
B
The plaintiff, Prithwi Chand Lall Choudhary was the"karta of a
Hindu joint family which owned extensive properties collectively
known as the "Raj Nazarganj". The said properties were spread
over the District of Purnea and some other districts in the St_ate of
Bihar as also in the State of West Bengal. The plaintiff was 'the recor·
ded proprietor of several tauzis situated in the Districts of-:Purnea
and Monghyr and also the proprietor of several tenures and_ -patnis
within the said Districts. The plaintiff •was liable: to- pay about
Rs. 2,50,000 by way of taxes, cesses etc. annually.

In the year 1949, the Bihar Legislature passed a law known as
r- _,~
the Bihar State Management of Estates and Tenures Act, 1949 (llihar
Act XX! of 1949) (hereinafter referred to as 'the Act') to provide for
the management of estates and tenures in the Province of Bihar. It
received the assent of the Governor-General on September 29, 1949 D
and was published in the Bihar Gazette Extraordinary of October
17, 1949. On the coming into force of the Constitution of January
26, 19 50, the Act was certified by the President in exercise of his
~-""' powers conferred by Article 31 (6) of the Constitution. The said
certificate which was published in Notification No. 43/3/50-Judicial
E
dated March 11, 1950 read as follows :

"that the said Act shall not be called in qustion in any
court on the ground that it contravenes the provisi6ns of
clause (2) of Article 31, or has contravened the provisions
of sub-section (2) of section 299 of the Government of India - F
Act,_ 1935."
• Clauses (2) and (6) of Article 31 which are relevant for these
• cases as they stood at the commencement of the Constitution read as
follows :--

"31. (!) ............................................................

(2) No property, moveable or inimovable, including
any interest in, or in any company owning, any commercial
or industrial undertaking, shall be taken possession , of -or H
532 SUPREMB <;:!JtlltT REPOJlTS (1985] 2 s.c.Jt.
A acqJ>ired for public purposes under any law authorising the
ta,king of such possession or such acquisition, unless the law
provides for compensation for the property taken possession
of or acquired and either fixes the amount of the compen-
sation, or specifies the principles on which, and the manner
in which, the compensation is to .be determined and given,
B
' ..... .
(6) Any law of the State enacted not more than eigh-
teen months before the commencement of this Constitution
· may within three months from such commencement be sub·
c milted to the President for his certification ; and thereupon,
if the President by public notification so certifies, it shall
not be called in question in any court on the ground that it
contravenes the provisions of clause (2) of this article or has
.
contravened the provisions of sub-section (2) of section 299
of the.• Government of India Act, 1935."
D
A persual of the provisions of the Act shows that it was inten-
ded to bring about a reform in the land distribution system of
Bihar for the general benefit of the comm unity. The taking over of
the management and control over land was found to be necessary a1
a preliminary step towards the implementation of the Directive
Principles of State Policy. The Act was similar in nature to the Bihar
Land Reforms Act (Act XXX of 1950), the constitutional validity of
which was considered by this Court in The State of Bihar v. Maha-
rajadhiraja Sir.Kameshwar Singh of Darba/tanga Ors (1) The object of
the Act was to bring the Government face ,to face with the cultivators
of the ~oil in order. to facilitate the further reform of abolition of
J! . lllmindari. It was also intended to make provision for better irriga-
tion facilities and to prevent realisation of excessive rent or re.venue
from the cultivators. The Statement of Objects and Reasons of the
Act pl)blished in the Bihar ~azette said :
•
"For some years past there has been wide spread anti-
zamindari agitation amongst the cultivators of the province
leading to frequent agrarian troubles. These troubles, as is
well known, owe their origin to the feeling of dissatisfaction
that the tenants have against the landlords owing to the

ff' '. (1) · [19S2] S.C.R. 889.
lllHA!t v. a.t. LAL (Venkataramiah, J.)

latter's failure to provide for the Upkeep of irrigational
facilities, to the realisation of abwab, to the enhancement of
rents and to ejectment from holdings and other similar
causes. The landlord's apathy towards the upkeep of the
irrigational facilities has been considerably accentuated
recently on account of the large scale commutation of rents
in kind into cash rents. In the interest of ali concerned and B
particularly in order to .further the programme of Grow
More Food, it has become necessary to assume the manage-
ment by Government of estates and tenures. Hence this Bill.
It is proposed under Government management to make
adequate arrangements for saving the cultivators from the
harassment to which they are often subjec.ted at present by
the amlas of the zamindars, to save them from the ruinous
c
.. financial drain of litigation for the recovery of arrears of
rents and above all to benefit them by providing for irriga-
tion facilities. After making payment for objects specified in
the Bill and reserving a reasonable balance for cost of
management, the net surplus will be paid over to the pro-
prietors." D

Section 3 to 5 of the Act were in Chapter JI of the Act.
Section 3 provided as follows :-

"3. {I) The Provincial Government may, by notification
declare that the estates or tenures of a proprietor or tenure-
holder, specified in the notification, shall be placed under the
management of the Provincial Government, and on the
publication of the said notification, the estates or tenures
of such proprietor or tenure-holder shall, so long as the
notification remains in force, be deemed to have been placed ,.
under the management of the Provincial Government with
effect from the date of the commencement of management.

• (:!) The notification under sub·section {I) shall-
G
(a) specify such particulars of the estates or tenures as
, may be prescribed ;

(b} specify the period for which the estates or tenures
shall be placed under the management of the Pro-
vincial Government ; and
SU~MB CPURt llEPOllTS [!985) 2 S.C.R.
(c) vest· the management of such estates or tenures in a
person who shall be an officer not.below the rank of
Deputy Collector, (hereinafter called the M8!!llg~r).

(3) The notification under sub-section (I) shalt be published
in the Official Gazette ancl a copy of such notification
shall be sent by registered post, with an acknowfedg-
ment due, to the proprietor of the estates recorded in
the general registers of revenue-paying or revenue-free
lands maintained under the Land Registration Act,
18.76, or in case such estates are not recorded in any
'such registers, and in the case of tenure-holders, to the
proprietor or tenure-bolder ofthe estates or tenures, as
c the case may be, if the Collector of the district is in
possession of a list of such proprietors or tenure-
holders to1;ether with their addresses. ..
(4) The publication and posting of such notification, where
such notification is sent by post, in the manner provi-
ded in sub-section (3), shall be conclusive evidence of
D<i the notice of the declaration to the proprietor· or
tenure-bolder whose estates or tenures are affected by
the notification under sub-section (!)and of the service
of such notice on the proprietor or: tenure-holder."

Section 4 of the Act laid down the consequences of the issue of
a notification in respect of any estate or· tenure. It provided inter a/ia
that (;i); the proprietor or tenure-holder shall cease to have any
power of management of his estates or tenures and (b) subject to the
provi$ions of sections 7, 8, 9, 10. 11 an~ 12, the Manager shall take
charge of such esta.tes or tenures together with such buildings, papers
and qther properties appertaining to the e~tates or tenures, as in the
opinion .of the Manager are essential for the proper management of ,..-
the estates or tenures. f

Section 5 of the Act read as follows :
•
"S. The Manager may, by a written order, require the 1:
proprietor or tenure-holder or .his agents and employees on i.
a date to be specified in such ordeMo produce before him
such documents, papers or registers relating to the estates or
tel)ures of such proprietor or tel)ure-h.older or to furnish
"
him with such information as the.,\fanager may deem neces- A
ff. sary for the management of the esll!tes or tenures ;
BM v. B.C. LAL (Venkatatlimlah, J.)

' Provided that the proprietor or tenure-holdershall have AI
the option to comply with such written order either himself
or through authorised agent."

Chapter Ill of the Act contained the special provisions regarding
trust estates or tenures, homesteads and lands used for agricultural B
and horticultural purposes and certain buildings comprised in estates or
tenures placed under the management of the Provincial Government.
' " Chapter IV of the Act authorised the removal ·of mortgagees and
lessees in possession of ail estate or tenure. Ch~pter V contained
provisions regarding the filing of claims tiy secured creditors and other
persons in possession of the estate or tenure, determination of liabi·
.
J

c '
lities and preparation of scheme for their liquidation. Chapter VI of
the .Act provided for the filing of claims by creditors other than
secured creditors. Chapter VII made provisions for granting protec-
tion from sale of certain estates. Chapter VIII of the Act contained
detailed provisions regarding the management of the estates by the .
Manager. Section 22 of the Act which was in Chapter VIII provided D
that 'every Manager shall manage the property committed to him
diligently and faithfully and shall, in every respect, act to the best of
his judgment'. Chapter IX of the Act provided for an appeal to the
order 9f p:rescribed authority against the Manager. Chapter X made
provision for the constitution of Estates and Tenures Management
Advisory Committee and their functions. ' Sections 30 and 31 of the.~ct E
which were in Chapter XI of the Act barred the jurisdiction of courts
regarding matters referred to therein. They read as under :

"30. Notwithstanding any(hing contained in any law
or anything having the force. of law, the declaration of the
Provincial Government un.der sub-secti.dn (I) of section 3 F
and the order of. the Manager under sub-section (I) of
.section 13 or whereon11ppealhas been preferred, the order
of the appellate authority under section 27, shall, subject to
the provisions of this Act, be final and shall not be questi'o-
ned in any Court j and so long ·as the management of the
estates and tenures by the Provincial Government continues, G
· it shall not be lawful for any court to pass a11y order or do
anything which may in any way interfere or have the effect
of interfering. with sucl) management by the Provincial
Government.

31. No suit or other legal proceeding shall lie in any
court aga1nst the Crown or any servant of the Crown •or ff
536 SUPRl!.l,f2 COURT.RB~ [I 985] 2 S.C.R.

A against an:v. person acting under the orders of a ~rvant of
the Crown for, or on account of, or in r~5pect of, . anything.
done or purporting to be done in good faith under this Act
or in respect of any alleged neglect or omission to perform
any duty devolving on the Provincial Government or any
of the officers subordinate to it and acting under this Act or
B in respect of the exercise of,. or the failure to exercise, any
power conferre~ by this. Act, on the provinced Govern-
ment or any officer subordinate to it and acting under this
Act, except for the loss or the misapplication occasioned by
the wilful default or gross-negligence of any officer of the
c Provincial Government."

Chapter XII of the Act contained some miscellaneous provi-
sions re/larding suits and . apl'eals by or against the proprietor or
tenure-holder during the period of management by the Government.
Section 33 in Chapter XIII of the Act provided for relinquishment
of management of an estate taken over by the Government and other
D consequentia) matters. The other ·parts of the Act contained provi-
sions reSarding other miscellaneous matters.

By a notification dated November 19, 1949 issued under section
3 (I) of the Act the estate of the plaintiff i.e. the 'Raj Nazarganj
Estate' was taken under.the management of the State Government.
J.P. Mukherjee, defendant No. 2, who was the Additional.Collector of
E
Darbhanga, was appointed as the Manager of the said estate. In the
meanwhile the Maharajadhiraja of Darbhanga, Sir Kameshwar Singh
filed a suit in the Civil Court challenging the validity of the Act as
his estate also had been similarly notified under section 3 (I) of the
Act. That suit was withdrawn by the Patna High Court being tried in
its Extraordinary Original Civil Jurisdiction. That suit was decided on
June 5, 1950. The judgment of the High Court in that suit is reported
as M.D. Sir Kameshwar Singh v. State of Bihar.(') By that judgment
the Patna High Court declared that the Act was ultra vires and wholly
void and an injunction was issued restraining the State Government
from enforcing the Act. Against that judgment, the· State of Bihar
preferred an appeal before this Court. But the plaintiff in the case
G before us, however, on the basis of the judgment of the High Court
demanded on lune 9, 1950 that he should. be put back in possession
ii·
of the estate whose management had beeri taken over from him. On •

July 3, 1950 the then Collector by his letter informed the plaintiff
H
(I) I.L.R:29 Patna 790.
' BIHA!l v. B.C. LAL (Venkataramiah, J.) 531

that the Government had decided to relinquish charge of the estates Al
and tenures of the plaintiff and that the plaintiff should cooperate in
taking over charge by July 15, 1950. On July 6, 1950 the Government
had already cancelled the notificatio s issued under section 3 (I) of·
the Act. The charge of collection papers was handed by the middle:
of July, 1950. The abstr>-cts and synopsis of accounts were given on
August 7, 1950. About Rs. I, 46,000 had been collected -On behalf
of the estate during the Government's management. After the estate
was th us handed over to him, the plaintiff filed a suit on September
21, 1951 in the court of the Subordinate Judge, Purnea for damages
of Rs. 2,00,000 for wrongful and illegal interference with the plain-
tiff's estates and. tenures and for other consequential reliefs.
C·

• The plaint proceeded on the basis that the Act was unconstitu;
tional as declared by the High Court earlier and that taking. over of
the possession and management of the estate etc. was illegal. The
plaintiff pleaded that the Act having been declared void, the defen-
dants were liable for not only the amount of loss actually suffered by
the plaintiff but were also liable to recoup the amount spent by them D
during their management of the estate which was wrongful. It was
alleged that the action of the defendants suffered from negligence,
bad faith and malice. The plaint claimed that the defendants were
liable jointly and severally as tort feasors for all such losses suffered
by him. In paragraph 27 of the plaint the plaintiff set out broadly the
grounds of bis claim thus : (a) that due to gross negligence and wilful E•
default the defendants cont.ravened the provisions of section 3 (I) in .
notifying and taking possession of part only of plaintiff interests in
Estates and Tenures and in omitting to notify other parts of bis
Eatates and Tenures on the first occasion when the notification dated
November 19, 1949 was issued the Government was unable to realise F
all the rents and other dues, (b) that due to wrong notification and
omission to notify all parts of his Estates and Tenures and also on
account of amalgamated rentals maintained by the plaintiff in r.espect
of his estates and tenures, the plaintiff conld not fuJly realise the
• balance share of unnotified estates and tenures, (c1 that certain rents
and decrees bad been allowed to become barred by time and (d). that G.
on account of non payment of Agricultural Income Tax and conse-
quent imposition of penalty which was no doubt reduced to Rs. 2,000
on appeal the Estate suffered a loss of Rs. 2,000 He also pleaded
that on account of the issue of wrong collection certificates by defen- H
dant No. 2 and his staff the plaintiff had suffered some loss which
was yet to be ascertained.
SUPllBME COURT REPORTS [1985] 2 s.c.R.
A• · ' In the written statement the defendants traversed all the material
allegations in the plaint. They pleaded inter a/ia that the notification
was.jssued in November, 1949 on the basis of tbe requisition of the
Collector, P.K.J. Menon and that defendant No. 2 was appointed as
Maaag~r by that notification. The all!gation~ of neglig,nce, bad faith
and malice were denied. The defendants pleaded that on the hasis of
B· information available in the records of the Government the notifica-
tion was issued in November, 1949 and at the request of the plaintiff
after verification a second notification was issued on March 16, 1950,
and that plaintiff requested for the issue of the second notification in
order to escape the processes of law which had been taken out against
him by his creditors and to shield his entire properties from the
creditors .. In fact the Government appointed the very collecting
C· agents who were working under the plaintiff and after the manage-
ment was handed back he reappointed them as his collecting agents.
The plaintiff had accepted without _protest the final accounts which
.
had been prepared at the end of the period of management. Tauzis
· Nos ..7/8, :o and 38 about which there was some dispute remained all
along with the plaintiff an!l the collection papers pertaining to them
D· were made over to defendant No. 2 only in the latter part of April,
19SO and if no collection could be made prior thereto in the said area
till then the defendants could not be blamed. The defendants pleaded
thJt they had bonafide carried out their duties.

One fact which requires to be noted here is that the plaint did
E not have any reference to the effect of section 31 of the Act which is
set out above, but it pro~eeded on the basis that the Act was uncons-
titutional. At the conclusion of the trial, the trial court held that the
cost of management incurred by defendant No. 2 over and above
12; 1/£% of gross collection was excessive and the defendents should
I" refund such excess amount. Secondly, it held that the mistake in not
notifying all the shares held by the plaintiff in Tauzis Nos. 7/8 and 30
at the first instance resulted in non collection of the dues and the
plaintiff thereby had suffered. The trial court held that the defendants
being trespassers, the plaintiff owed no duty to them to make available
to them the separated Jamabandi to facilitate collection of dues in
G' the said Tauzis. The trial court, therefore, held that the defendants
should reimburse the plaintiff the amount he would have been able to
collect from those tauzis during the period of their management.
Similarly, the defendants were liable to make good the loss caused on
. • account of arrears or decrees which had been allowed to become
barred: The trial court directed that a commissioner should enquire
II into the above items. Accordingly a preliminary decree was passed.
BIHAR v. B.C. LAL (Vankataramiah, J.) '539
A
Against the said preliminary decree the defendants filed an appeal
before the High Court. When the appeal came up before a Division
bench of the High Court, the defendants contended that the decision
of the High Court in which the Act had been declared as unconstitu-
tional required to be reconsidered by the High Court in view of some
later decisions of this Court. Accordingly the Division Bench referred B
the case to a larger Bench on July 24, 1962.: The case was then heard
by a.Full Bench of five learned Judges of the Patna High Court. By
its judgment dated February 15, 1963 the Full Bench overruled the
earlier decision in MD·. Sir Kameshwar Singh v. State of Bihar ,
(supra) and declared that the Act was constitutional. The appeal was
then referred back to the Division Bench for disposal in accordance c
with the opinion of the Full Bench.

The Division Bench which finally heard the appeal "was of the
view that though it was open to the State to notify only a fraction of.
·f
)~ .. ./ an estate under section 3 (I) of the Act yet the defendants were not
.absolved from the duty of taking appropriate steps for the preparation D
of suitable collection papers in respect of the notified shares in Tauzis
Nos. 7/8 and 300. It held that the defendants were liable to compen-
sate the plaintiff for not preparing the collection papers in time. ..

The Division Bench further held that even though the plaintiff E
bad been told to file suits for rents in respect of unnotified share of
the estate, the defendants were negligent in the matter of issuing
certificates for recovery, some of which were later on struck off. The
Division Bench also held that the material on the record did not
t indicate that necessary steps were taken by defendant No. 2 with
regard to pending suits and execution proceedings and there was every F
probability that loss had been suffered by the plaintiff on account of
the inaction or failure to continue pending proceedings which
amounted to wilful default and gross negligence. The Division
Bench agreed with the trial court that the defendants were liable to
reimburse the plaintiff to the extent of Rs. 2,000 levied as penalty
• for non-payment of Agricultural Income Tax. In so far as the cost of
G
management of Rs. 43,507 w~ich was in the order of 30 per cent
of the gross collection was concerned while the trial court had allo-
wed 12.1 /2 per cent, the Division Bench allowed 25 per cent of the
gross collection. In other words the Division Bench found that about
Rs. 8,000 had been incurred as cost of management in excess of
what was authorised. The Division Bench found that the plaintiff
was entitled to it. The Division Bench held that section 31 of the Act
did not give protection in respect of los~ which was caused. by wilful H
540 SUPREME COURT REPORTS [1985) 2 S.C.R.

A default and gross negligence. The appeal of the defendants was accor-
dingly dismiss!d The cross objections of the plaintiff regarding certain
matters disallowed by the trial court were also dismissed

Aggrieved by the decree passed by the High Court, the State of
B Bihar applied for a certificate under Article 133 (I) .(a) of the Consti-
tution in S.C.A. No. 137/63 on the file of the High Court to file an
appeal before this Court. On the High Court granting the certificate
accordingly on December 10,1964, the State of Bihar has filed !Le
above appeal. The plaintiff also applied for a similar certificate in
S.C.A No. 1/64 on the file of the High Court to file an appeal against
c the decree in so far as it had gone against him. The High Court
granted in his case also a similar certificate by the same order on
December 10, 1964 but the said certificate was later on cancelled by
the High Court on July 6, 1965. Thus the said proceedings came to
an end. We are now concerned with only the appeal field by the
State of Bihar. •
D
In this appeal, the constitutionality of the Act is not questioned
before us.

On going through the record of the case, we find that the follo-
wing facts are established. The notification \ssued on November
J9,1949 under section 3 (I) of the Act referred to the name of the
proprietor, the name of the estate, tauzi numbers of the estate and
the share of the proprietor in the tauzis. Defendant No. 2, J.P.
Mukherjee who was then the Additional Collector of Purnea was
appointed as theManager of the estate. On December 14,1949, the J
F plaintiff was informed by the Collector at· Purnea that the manage-
, ment of the estate was to commence from December 30, 1949 and
'tb,at,he should produce before the Manager a list of villages included
in the estate and also the Jamabandis, Karchas and Wasil Baukis upto
date before December 27,1949 and also to make over a complete and
clear list of the papers showing Jamabandis of each village, the arrears
G
collected and the arrears outstanding before the 'commencement of
.the management under the Act. He wa~ requested to cooperate in
the matter and was also informed that if he did not do so the respon-
' sibility for any loss would be his. On.December 27, 1949 the plaintiff
~wrote a letter to the Collectorate. In that he stated that the work of
handing over papers properly of a big and complicated estate was not
an easy task and it would certain'ly take a considerable number of
days to complete it. He pointed out that the Government had com-
H u:iitted an error in taking over the management of only 2A-l 1A-2C-2K
BIHARV. B.C. LAL (Venkataramiah, J.) 541
A
share out of Tauzi No 7/8 under the notification, because the collec·
tion papers had been maintained for 5-12.' /2 and odd share in respect
of ,the said tauzi. He pleaded that unless the whole of 5-12. l /2 share
was notified, the work of separation of the notified share from the
unnotified share could not be completed even within a period of six
months. He, therefore, asked for the modification of the notification. B

." Then we find that the plaintiff had met the Collector many times
when the affairs of the estate were discussed. On March 11,195 ;, the
Collectorate wrote the following letter to the plaintiff :

• "District Office, C
Purnea
The II th March, I 950.

My dear Raja Saheb,

I. With reference to our discussions on the 7th March, D
1950, the following action may be taken with regard to the
notified and unnotified portions of your estate as agreed to
between us.

2, We will not be taking over the unnotified portion E
until the notification is made. As soon as a notification is
made we will take over these portions. Meanwhile in order
to see that no limitation occurs with regard to any rent
payable to you, you are requested to prepare a copy of
arrear list for the unnotified portions.
F
3. With regard to Tanzi No. 7, sufficient number Of
Tahsildar.s and other staff required may be employed after
selection on the 14th of March, 1950, at Kishanganj, by the
Additional Collector and by your Circle Officer. A certain
number of these, according to the proportion that is notified
G
• will be selected by the Additional Collector and paid by
Government. You are requested to employ a certain number
according 'to the proportion of the unnotified ·interest,
These staff together may be put on the job of preparing the
arrear list.

4. If notification is made before the Tamadi Day, wc
will arrange to issue certificates in respect of arrears due. If.
however, notification for some reason or other is not made, H
•
"542 SUPR'liME COURT REPORTS [1985] 2 S.C,R.
•
A then we will arrange .. to filejoint suits for these arrears
before. the Tamds Day.

Yours sincerely,
sd/- (Illeg) 13/3

B Raja P.C. Lal Choudhuri, C.B.E.
Nazarganj Palace, Purnea City."

A supplementary notificatien was'·issued on March 16, 1950 as
desired by the plaintiff. Then we find that there is some further
discussion a11d correspondence between the plaintiff and the Manager.
·c On April 7, 19.50, the Manager wrote to the plaintiff that be had been
•
abJe,to persuade the Government to advance Rs. 35,000 [to meet
the expenses of suits to be filed for recovery of rents due to the estate.
The plaintiff replied to tbat letter on the same date appreciating the
step taken by the Government in advancing Rs. 35,000 as loan to
the estate. On April 14,1950, the Manage.r sent a telegram to the
D plaintiff stating that since be bad not cooperated in oending the pre-
vious.records of cases in time i.n r.espect of Tauzi No. 7/8, it was not
possible to file joint suits in respect of both the notified share and lbe
unnotified share and that be was responsible for filing Tamadi suits in
respect of the unnotified share in Tauzi No. 7/8. The defendant No. 2
3
in bis evidence bas stated that be ~ould not make any collection in
E
Tauzis Nos. 7/8 and 30 prior to the second notification because the
tl)e collection papers were with the plaintiff and they were actually
r~ceived by him on April 24, 1950. In the lengthy cross-examination
of defendant No. 2 we do not find any material which would discre-
dit bis evidence or which would show that be bad either acted in
F excess of his powers or mala fide. We also find that a large number
of suits had been iiled for recovery of the arrears due to the estate
and merely beclluse some of the.suits were dismBsed on merits or on
th~ ground' that some of the persons sued wetll'delld-0r·not tracc·able,
it cannot be said that there was lack' of bona fides on the part of the
Manager."'By the 'middle of July; 1950, the management of the estate
G itself was telinqUished. · From the t'oregoing, we find that it could not •
be said that there was want of good' faith on the part of either the
Government or!defendant No. 2 who was the Manager. If a certain
s!Jare in a tauzi bad not been notified:on the nrst occasion' it again
cannot be said as having been done either malafidi or deliberately to
harm the plaintiff.

·We shall now deal with the specific findings recorded by the
Division Bench of the High,Court.
.,

BIHAR v. B.C. LAL ( Venkataramfah, J.) 543

The first ground on which the Division Bench has held that the A
defendants were liable to pay damages is that defendant No. 2 had
~ failed to get the collection papei:s prepared in respect of Tauzis Nos.
7/8 and 30 in time and thus caused loss to the plaintiff. It may be
stated here that the Division Bench accepted and we think rightly in
view of the definition of the expression 'tenure' in section 2 (k) of
the Act that it was open to the Government to notify even a fraction B
of a tenure under section 3 OJ of the Act. It, however, omitted to
• -.. notice that the plaintiff had failed to discharge his duty imposed on
~ him under section 5 of the Act which provided that the Manager
could by a written order require the proprietor or tenure-holder or his
agents and employees on a date to be specified in such order to pro-
duce before him such documents or papers or registers relating to the
estate or tenure concerned or to furnish him with such information c
as he may deem necessary for the management of the estate or tenure.
4 In the present case defendant No. 2 did call upon the plaintiff to sub-
mit the documents from which it was possible to find out the liability
,. ..: ' of persons in respect of the notified share in Tauzis Nos. 7/8 and 30.
The plaintiff pleaded that he had not maintained such separate set of
accounts and that it would take a long time to prepare it. He, how- D
ever, produced the registers by the end of April, 1950 only, after the
remaining shares were also notified. Hence if the collection papers
were not prepared till then by defendant No. 2 in time it was not on
account of any negligence on the part of defendant No. 2. On the
~ other hand he recommended that the unnotified share also should be
notified as desired by the plaintiff and such notification was also E
issued. By the time steps could be taken to prepare the collections
papers the Act had been struck down by the High Court. Then steps
were taken to hand over the estate back to the plaintiff. It is difficult
to agree with the High Court that there was any wilful default or
gross negligence on the part of defendant No. 2 in this regard.
F
With regard to the charge that defendant No. 2 had filed a large
number of certificate cases, some of which were later on strck off, the
observation of the High Court itself supports that there was no
• negligence on the part of defendant No. 2 but on the other hand the
plaintiff was responsible for it. The High Court has observed thus:
G

"It appears that it was on the basis of some arrears list
submitttd by 1he plaintiff to defendant No. 2 and without
subjecting it to proper scrutiny, that a large number of certi-
ficate cases were hurriedly filed by the defendants at the
time of the Tamadi in the middle. of April 1950, and, it was. H
544 SUPREME COURT REPORTS [1985] 2 SC.R.

A therefore, not strange that quite a large number of them
had subsequently to be struck off, with the result that a
considerable portion of the arrears of rents and profits of
the plaintiff's estate remained unrealised and became time-
barred. It is manifest that the loss caused to the plaintiff's
estate on this account was due to the inaction of defendant
No. 2 amounting to wilful default and gross negligence on
B
his part. The responsiblity for such loss must undoubtedly
lie with the defendants."
..,
.
(underlining by us)

The High Court omitted to notice that the certificate cases had
been filed though hurriedly on the basis of the arrears list submitted
c by the plaintiff, himself. In the circumstances it is difficult to charge
defendant No. 2 with wilful default or gross negligence on a com- ..l
plaint by the plaintiff. Further the High Court did not refer in the
course of its judgment at least to a few such cases which showed that ~ -<
there was gross negligence. The High Court overlooked that nearly
D 7,000 certificate cases had to be filed in a short period. On the material
before us we are not satisfied that the above ground has been made
out against the defendants.

The third ground that defendant No. 2 had not diligently atten-
ded to any pending proceeding is also not made out since no specific
E case is dealt with by the High Court which prima facie established
that charge. .,.

With regard to the penalty of Rs. 2,000 imposed for non-pay-
ment of the Agricultural Income Tax it is seen that a penalty of
Rs. 5,000 was first imposed as the plaintiff was unable to pay the
Agricultural Income Tax in time because he could not collect arrears
in time. In fact on the intervention of the Collector it was reduced to
Rs. 2,000. Even then it was too remote to the management of the
notified· estate by defendant No. 2. The trial court had held that it
was due to the issue of a wrong notification at the first instance. But
G when once it is conceded that the first notification was not an
unauthorised one the defendants could not be held liable for

..
reimbursing the penalty of Rs. 2,000 paid by the plaintiff.
·:!-'
. In so far .as the cost of mangement is concerned, the dispute is
confined to about Rs. 8,000. It is seen that the· estate had to be retur-
H ned prematurely to the plaintiff· owing to the judgment of the High '
BJHAR v. B.C. LAL (Venkataramfah, J.) 545

Court declaring the Act as unconstitutional within a period of about
seven months. But since defendant No. 2 had offered to refund any
expenditure incurred in excess of 25% of the gross collections to the
plaintiff, defendant No. I has to pay back Rs. 8,000 to the plaintiff.

It is seen that in present case while the trial court proceeded on B
the basis that the Act was unconstitutional that the defendants were
, ~' .. trespassers on the plaintiff's estate and that the plaintiff owed no duty
to them, the Division Bench of the High Court which finally disposed
of the appeal failed to give due attention to section 31 of the Act
which had been held to be constitutional earlier. Section 31 of the
• c
Act provided that no suit or other legal proceeding would lie in any
court against the State Government or against any servant of the
State Government or against any person acting under the orclers of a
,, servant of the State Government for or on account of or in respect of
anything done or purporting to be done in good faith under the Act
or in respect of any alleged neglect or omission to perform any duty D
devolving on the State Government or any of the officers subordinate
to it or acting under the Act or in respect of the exercise of or on
failure to exercise any power conferred by the Act on the State
Government or any officer subordinate to it and acting under the Act,
except for the loss or the misapplication occasioned by the wilful
default or gross negligence of any officer of the State Government.
Under section 4 (22) of the . Bihar and Orissa ·General Clauses Act,
1917, a thing shall be deemed to be done in 'good faith' where it is in
fact done honestly, whether it is done negligently or not. There is no
ground to hold that either the State Government or any of the officers
t acting under it in performance of their duties under the Act had not r
acted honestly either in issuing the notification under section 3 (I) of
the Act on November 19, 1949 by which only parts of Tauzis No. 7/8
and 30 had been notified or in not preparing separate collection state-
ments before April, 1950. The mistake appears to have occurred
because the plaintiff himself had acquired the said Tauzis in instal-
ments. Further as soon as the error was pointed out steps were taken
by defendant 'No. 2 to get the unnotified share also notified and the
Government issued a notification accordingly within about four G
months. It is because the plaintiff did not hand over even the conso-
lidated collection statements by April, 1950, the separate collection
sti;tements could not be got prepared by defendant No. 2 by April,
1950 and even according to the plaintiff himself it would have taken
six months to prepare separate collection statements on the basis of
the consolidated statements. It is not shown that either the State
Government or any of its officers knew before hand that the plaintiff H
546 SUPREME COURT REPORTS (1985] 2 S.C.R.

A had maintained a consolidated statement of accounts and that delibe-
rately in order to cause loss to the plaintiff the first notification had
been issued in respect of a portion of Tauzis ~os. 7/8 and 30. These
facts constituted a good defence under Section 3 I of the Act against
any claim based on any alleged neglect or omission since there was no
proof of any wilful default or gross negligence on the part of the
B defendants. There was also no proof of deliberate abuse of statutory
power nor of usurpation of a power which the authorities knew that
they did not possess. In the circumstances the claim for damages on
all counts should fail except with regard to the claim for Rs. 8,000
which had been incurred as cost of management in excess of what
was authorised by law.

For the foregoing reasons, we set aside the judgment aad decree
c by the trial court and the judgment and decree dated August 17, 1963 ~,

passed by the Division Bench of the High Court and pass a decree
against defendant No. 1, the State of Bihar directing it to pay the
plaintiff's legal representatives a sum of Rs. 8,000/-with interest there-
on at 6 per cent per annum from the date of suit i.e. September 21,
1951 till the date of payment. The rest of the claim in the suit is
dismissed. Parties shall bear their own costs in all the courts. The
D appeal is accordingly allowed in part.

S.R. Appeal allowed.