Gujarat High Court
General Manager,Oil & Natural Gas ... vs Gandhar Salt & Chemical Industries on 25 July, 2025
Author: Sangeeta K. Vishen
Bench: Sangeeta K. Vishen
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
Reserved On : 04/04/2025
Pronounced On : 25/07/2025
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 185 of 2005
FOR APPROVAL AND SIGNATURE:
HONOURABLE MS. JUSTICE SANGEETA K. VISHEN Sd/-
and
HONOURABLE MR.JUSTICE SANJEEV J. THAKER Sd/-
================================================================
Approved for Reporting Yes No
================================================================
GENERAL MANAGER,OIL & NATURAL GAS CORP.LTD. & ANR.
Versus
GANDHAR SALT & CHEMICAL INDUSTRIES & ORS.
================================================================
Appearance:
MR RITURAJ M MEENA(3224) for the Appellant(s) No. 1,2
MR KRUTIK PARIKH, ASSISTANT GOVERNMENT PLEADER for the
Defendant(s) No. 2,3
MR APURVA K. JANI FOR MR ASHISH M DAGLI(2203) for the Defendant(s)
No. 1
================================================================
CORAM:HONOURABLE MS. JUSTICE SANGEETA K. VISHEN
and
HONOURABLE MR.JUSTICE SANJEEV J. THAKER
CAV JUDGMENT
(PER : HONOURABLE MS. JUSTICE SANGEETA K. VISHEN)
1. The captioned appeal, is directed against the judgment dated
09.09.2004 (hereinafter referred to as "the impugned judgment")
passed by the learned Civil Judge, Senior Division, Bharuch whereby,
the Special Civil Suit no.30 of 1990 (hereinafter referred to as "the
suit") filed by the plaintiff, came to be partly decreed and the
plaintiff was allowed to recover Rs.19 lacs together with interest at
the rate of 6% from the date of filing of the suit till its realization
from all the defendants, jointly and severally. For the sake of
convenience, the parties are hereinafter referred to as per their
original status in the suit.
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
2. Tersely stated are the facts:
2.1 The plaintiff, a registered partnership firm is engaged in the
business under the name and style of "M/s Gandhar Salt & Chemical
Industries" and having its manufacturing unit at village Gandhar.
The State Govenment - defendant no.3, with a view to developing
the District Bharuch, invited various parties to establish the
business and trades by providing facilities and benefits. The vast
salty khar lands situated on the western coastline of District of
taluka Gandhar and Vagra needed development and hence, in view
of the scheme of the State Government, the plaintiff surveyed the
khar lands and decided to develop the same. The feasibility of the
project, was also considered and after following the procedure, the
defendant no.3 i.e. the State Government and the defendant no.4
i.e. the Collector, executed the agreement of lease dated
05.05.1980 in favour of the plaintiff. 1500 acres of land of survey
nos.316 to 321 of Gandhar taluka of Vaghra (hereinafter referred to
as "the leased land") was carved out and leased to the plaintiff for
the purpose of manufacturing of salt and chemicals for the period of
20 years. The plaintiff, was put in possession and thereafter, the
plaintiff, pumped in capital expenditure and by the year 1987, an
amount of Rs.59,07,939/- was invested.
2.2 According to the petitioner, initially, the plaintiff, started
developing water pans in the year 1983-1984 on the southern side
for the area of 650 acres. The plaintiff, thereafter, started the
development work of rest of 850 acres of land on the northern side
by infusing full capital investment and by 31.03.1987, the full
capacity project was ready.
2.3 It is the further case of the plaintiff, that the defendant nos.1
and 2, started its operation of oil exploration in the year 1986 in the
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
Gandhar area. The grievance of the plaintiff, was that the defendant
nos.1 and 2 with the help of defendant nos.3 and 4, illegally entered
into the lands of the plaintiff and started constructing the roads and
by-roads which, resulted into division of the leased lands into two
portions, namely, 650 acres on the southern side which was fully
developed and 850 acres on the northern side which was
developing. The construction of the east-west road by the defendant
nos.1 and 2 was completed in the year 1987 causing major damage
to the production programme of the plaintiff. The construction of the
roads, according to the plaintiff, rendered 850 acres of land useless
and the development activities, came to a grinding halt. Also, the
production of salt in 850 acres of land became impossible with
already constructed tube wells, pump station, electrical installation
etc. The suit was instituted against the defendants seeking to
recover an amount of Rs.2.88 crores together with 15% interest
from 01.04.1990 till the date of passing of the decree under various
heads, namely, Rs.29 lacs towards capital expenditure damages,
Rs.181 lacs towards actual loss of profit on production basis and
Rs.35.10 lacs for loss of interest and Rs.43.00 lacs for general
damages for office and labour work, totally to the tune of Rs.288.10
lacs.
2.4 The defendant nos.1 and 2 had filed their written statement-
Exhibit 41, denying the claim of the plaintiff. It is, inter alia, stated
that application was filed by the defendant nos.1 and 2 and as per
Rule 9 of the Petroleum and Natural Gas Rules, 1959 (hereinafter
referred to as "the Rules of 1959") granted petroleum exploration
license dated 20.05.1988 (hereinafter referred to as "the license"),
which gives sole right to the lessee to enter the area of Gandhar as
marked and delineated in the map. Stand is further taken that as
per the terms and conditions of the license, the defendants were to
construct the roads, after obtaining necessary permission from the
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
Collector, who, vide order dated 17.11.1986, had given a temporary
lease for constructing the approach road on the part of the land
bearing survey nos.316 to 318 and also to use part of survey
no.317. The lease has been extended from time to time by the
Collector. In the written statement, it is further averred that there is
not an iota of evidence produced that the plaintiff has suffered any
damage. Merely giving the numerical figures about the cost of the
project and equipments, no inference can be drawn about the
plaintiff suffering any damage at the hands of the defendants. The
allegations of the plaintiff regarding the damages are vague and
without any substance.
2.5 The defendant nos.3 and 4 have also filed written statements
denying the averments made in the plaint. The defendant nos.3 and
4, have stated that as per the terms and conditions, the plaintiff,
after completing the construction by the year 1983, should have
commenced the production of salt in the year 1984. If that be the
case, the plaintiff was under an obligation to have proved the same.
It is stated that as per the case of the plaintiff itself, the production
of salt, was done in the 650 acres of land on the southern side and
in the remaining 850 acres of land on northern side, was not
developed. It is specifically denied that owing to the construction of
two kilometers road the plaintiff was deprived of using the whole of
1500 acres of land. Stand is also taken that if the plaintiff had failed
to use the land within the stipulated period, as per the conditions of
the lease deed, it would automatically stand cancelled. Besides, the
investment of Rs.59 lacs infused by the plaintiff, is also baseless. It
is also the stand taken that as per contract, the defendant nos.3 and
4, have reserved the right and hence, the plaintiff would not be
entitled for any damages.
2.6 The suit, came to be partly allowed and the plaintiff, was
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
permitted to recover Rs.19 lacs (Rupees Nineteen Lacs only)
together with interest at the rate of 6% p.a. from the date of filing of
the suit till its realization from the defendants, jointly and severally.
Being aggrieved, the captioned appeal by the defendant nos.1 and
3. Mr Rituraj M. Meena, learned advocate for the defendant nos.1
and 2, submitted that the lease agreement for a period of 20 years,
was executed between the plaintiff on one hand and the State
Government on the other. As per clause 1(b), it was agreed that if
the lessee fails to use the land continuously for a period of three
years, the lessor would be at liberty to resume land without
payment of any compensation. As per clause 5, the lessor reserves
to himself the right to any quarries with a further right reserved to
levy a royalty. It is submitted that the purpose behind the said
clause is that person authorized may enter and extract the minerals.
When the rights were reserved, the entry of the defendant nos.1
and 2, cannot be said to be unlawful inasmuch as, it was pursuant to
the said clause that the defendant nos.1 and 2, entered into the
land. It is submitted that the lease permits the entry and since the
defendant nos.1 and 2 did not forcibly enter; entry cannot be
termed as unlawful, rendering the claim of the plaintiff as baseless.
3.1 It is submitted that even while constructing approach road,
the defendant nos.1 and 2 have taken full care to see that no
damage is caused to the activities of the plaintiff inasmuch as,
sufficient number of huge culverts across the approach road for
easy flow of the water were provided. It is submitted that 7 to 8
culverts were provided which fact, is strengthened by the
panchnama-Exhibit 104. It states that as many as 7 to 8 culverts are
existing and from amongst the five culverts, the road is turning
towards north-south. Whereas, in the sketch, only two culverts are
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
shown. It is submitted that as per the evidence Exhibit 160 of the
defendant nos.1 and 2, it is clearly stated that the provision is made
for free flow of the water from one side of the road to another side.
In the cross, it is clearly denied that it is not true that in the road,
there is no provision for passing of the water from one side to
another side. It is submitted that the Panchnama-Exhibit 104, says
that there are 7 to 8 culverts whereas, the learned Judge, in the
judgment, has recorded that there are only 2 culverts available
while deciding the issue nos.6, 7, 8 and 15 in paragraph 15, which is
erroneous. It is submitted that the plaintiff relies exclusively on
three evidence, namely, auditor's report, project report/proposal
plan and oral evidence of the Auditor on the basis thereof, the entire
judgment has been passed. Barring these three evidence, nothing
else has been produced by the plaintiff. It is further submitted that
for the claim of the plaintiff investing an amount of Rs.59,07,939/-,
there is not a single evidence or document placed on record to
substantiate the claim, except the report of the Chartered
Accountant. It is further submitted that the defendant nos.3 and 4,
in the written statement, in paragraph 24, have taken a categorical
stand that the plaintiff has not taken any steps on the northern side
and thus, the lease, would automatically stand cancelled.
3.2 It is next submitted that Regular Civil Suit no.51 of 1986 was
filed by the plaintiff against the defendant nos.1 and 2, seeking
permanent injunction and restraint order that Oil & Natural Gas
Corporation (hereinafter referred to as "ONGC") shall not enter the
leased land without the permission; however, the suit, came to be
withdrawn unconditionally. Similarly, the plaintiff, has also preferred
Regular Civil Suit no.154 of 1986 against the defendant nos.1 and 2
which, came to be dismissed for want of prosecution. It is submitted
that in the year 1986 itself, the plaintiff was aware that the ONGC is
coming; however, the suit, is filed in the year 1990.
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
3.3 It is submitted that the plaintiff, in his cross-examination, has
stated that except the documents produced for incurring the
expenditure, he has not produced any other documents. The
amount of Rs.2.88 crores is as per the estimate of the Chartered
Accountant and the plaint, is based on the report of the Chartered
Accountant. Books of account, have not been produced in the suit
proceedings. It is submitted that in the evidence of the Chartered
Accountant-Exhibit 102, he says, he is not aware about anything
except the report and the report, is prepared on the basis of the
details provided by the client. The evidence of the witness, further
states that he has not visited the site and not aware at what place
his client is having the operation. It is further submitted that in the
evidence of the Deputy Salt Commissioner-Exhibit 114, he has
denied everything claiming no knowledge.
3.4 It is submitted that the learned Judge, has rightly concluded
that there are no facts and figures available to infer that the plaintiff
in the relevant years, reached the production of salt as indicated in
the plaint in paragraph 4. The Court, was of the opinion that no
documentary evidence has been adduced on behalf of the plaintiff
for which sale price of salt could be inferred. In such an eventuality,
the learned Judge, could not have decreed the suit. It is submitted
that various culverts were provided at the time of constructing the
road so as to allow the free flow of sea water from southern side to
northern side and therefore, the inference drawn by the learned
Judge, that the flow of water was not hampered, is erroneous and on
such findings, awarding one third portion of capital expenditure to
the plaintiff, was unjustified.
4. Mr Krutik Parikh, learned Assistant Government Pleader,
appearing for the defendant nos.3 and 4, submitted that as per
clause (b), if the land is not used for the purpose for which it is
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
granted for three years continuously, the lessor was at liberty to
resume it without payment of any compensation. With a further
clause that the lessor shall be at liberty to determine the lease by
giving notice. It is further submitted that as per clause no.20, the
usage by the lessee to continue to enjoy the land, was subject to
the conditions enumerated in the lease deed but, in the event of
breach of any of the conditions, the lease, may be determined. It is
submitted that as per the agreement, whole of the 1500 acres of
land was to be developed and if any portion remains undeveloped, it
would automatically stand resumed in the State Government. It is
submitted that there is an admission of the plaintiff that it started
production in the year 1987 whereas, the lease, was granted in the
year 1980 and therefore, clearly for 7 years, the land was not
utilized. There are no details provided of the production and could
not have been inasmuch as, till the year 1987, no production has
commenced.
4.1 It is submitted that as per the petroleum license-Exhibit 89
dated 20.05.1988, if the defendant nos.1 and 2, were desirous of
constructing the road, it was after taking the written permission of
the Collector. In the case on hand, there was no permission
obtained inasmuch as, the defendant nos.1 and 2 have not
produced any record to show that the permission was obtained. It is
submitted that the stand taken by the defendant nos.1 and 2, that it
had been carrying out the activities as per the license and therefore,
not liable to pay any damage and it is the State Government who is
liable to pay damage, is misconceived and misplaced inasmuch as,
clause 7, makes a provision to pay compensation and indemnify the
Government against the claim. Further, clause 10, provides for
payment of compensation for any damage, injury etc. done to the
property of the occupier of the land or any other person.
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
4.2 It is submitted that in Regular Civil Suit no.51 of 1986, the
State Government was not a party and only the plaintiff and
defendant nos.1 and 2 were the parties. Moreover, prayer is only
against the ONGC. The plaintiff, knew that the ONGC, has occupied
and it was owing to the settlement which was arrived at between
the plaintiff and the ONGC that the suit came to be withdrawn.
Similarly, in the second suit being Regular Civil Suit no.154 of 1986,
there was no prayer against the State Government but prayer, was
seeking restraint order against the ONGC not to enter in the leased
land and not to construct the road. The suit, came to be dismissed
for want of prosecution. It is submitted that in the deposition of one
of the partners, there is an admission about filing of the suit of the
year 1987 and it is only after the dismissal of the suit, that the road
was constructed. It is further submitted that in the deposition-
Exhibit 160, also there is a reference of the Regular Civil Suit no.154
of 1986 and its withdrawal. It is submitted that the present suit,
would be barred by constructive res judicata. Reliance is placed on
the judgment in the case of CELIR LLP vs. Mr Sumati Prasad Bapna
reported in 2024 INSC 978. Reliance is placed on the judgment in
the case of Pannalal vs. State of Bombay reported in AIR 1963 SC
1516 for the proposition of Order XL1 of Rule 33.
4.3 It is submitted that as regards the issue no.10, regarding the
suit being barred by the principle of estoppel, pertinently, ONGC
entering the land was known and was aware about the damages
likely to be sustained. Amendment was sought for under Order VI
Rule 17 of the Code of Civil Procedure, 1908 by the plaintiff, which
came to be rejected on the ground that the proposed amendment, if
allowed, would change the nature of the suit. The order was
unsuccessfully challenged before the High Court and thus, the order
rejecting the amendment has attained finality. Therefore, what
remained was only permanent injunction and they could not have
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
claimed for damages.
4.4 It is submitted that the issue as regards plaintiff proving about
the production, it has been held that no documentary evidence has
been adduced on behalf of the plaintiff from which the sale price of
the salt can be inferred. Whereas, while deciding the issue nos.6, 7,
8 and 15, the learned Judge, has awarded one third portion of
capital expenditure to the plaintiff by way of compensation. Such a
contradiction, has rendered the judgment perverse and illegal. It is
next submitted that issue no.6, regarding completion of road by
defendant nos.1 and 2 and 850 acres of land rendering useless was
decided against the ONGC and not against the State Government.
Similarly, the issue no.7, was also restricted to the defendant nos.1
and 2 for damages and not against the State Government. It is
submitted that there are no averments made in the plaint against
the State Government and only in paragraph 20, there is a
reference of the defendant nos.3 and 4. Except this, there is nothing
against the defendant nos.3 and 4 and the defendant nos.3 and 4,
have denied the same. It is submitted that not a single issue is
framed rendering liable defendant nos.3 and 4 for damages. The
focus, was on the defendant nos.1 and 2 considering the fact that
they by undertaking the drilling and exploration activities and by
cordoning the substantial area, subjected the plaintiff to loss. It is
therefore submitted that there are no averments made against
defendant nos.3 and 4, no issues formulated, no claim was laid
despite which, the learned Judge, held defendant nos.3 and 4 liable
to pay the damages.
5. Mr Apurva K. Jani, learned advocate for Mr Ashish M. Dagli,
learned advocate appearing for the plaintiff, submitted that the
ONGC entered prior to the issuance of the license on 20.05.1988.
Clause 6, envisages the previous permission of the proper authority
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
before cutting or injuring the tree in the reserved land. Clause 7
provided for payment of compensation and indemnification. Clause
9, clearly restricts the entry upon any land, inter alia, without the
consent of the occupier or without the permission of the concerned
authority. Clause 10, is regarding payment of compensation for any
damage, injury etc. done to the property of the occupier of the land
or any other person. Therefore, obtaining consent was prerequisite
and the provision is made for the compensation for safe guarding
the interest.
5.1 It is submitted that the contention of the appellant that ONGC
was not privy to the contract and hence, State Government is liable
to pay damages, is misplaced inasmuch as, privity of contract would
not determine the liability of a tortfeasor. Moreover, there need not
be a contract to claim damages. The plaintiff, is not seeking
contractual damages but on account of the action of ONGC. It is
further submitted that the contention raised about automatic
termination of the lease deed, is not tenable considering the fact
that no notice for breach was issued. Besides, after the expiry of 20
years, lease has been renewed for 10 years. Therefore, the
submission about the breach and deemed termination, is misplaced
as there is no termination of lease and is still in currency. It is
submitted that merely retaining right to explore will not dis-entitle
the lessee to claim compensation as clause 5 only permits them to
explore the minerals as indicated in the agreement.
5.2 It is further submitted that as per the Panchnama - Exhibit
104, the road was constructed giving elevation which was 2
kilometers long and 40 meter wide and 4 feet tall. No plea was
taken either by the ONGC or State regarding the culvert and in
absence of any pleadings, there cannot be any evidence much less
any proof. Going by the findings, the whole land was divided by 2
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
kilometers road and lack of culverts were hampering the water flow.
It is submitted that the contention raised about plaintiff knowing
about entry of the ONGC is also incorrect as the plaintiff was not
aware as to what steps ONGC would be taking. There were all
likelihood that ONGC may find nothing and go away. Merely because
ONGC is coming, plaintiff would not stop its commercial activities
after making a huge investment. Construction of road was without
any information to the plaintiff and if at all any claim was laid, it
would be premature.
5.3 While dealing with the submissions made by the State
Government, it is submitted that as per clause 20, if there is any
breach alleged, it has to be notified. In the case on hand, the State
has not notified any breach of conditions. Even subsequently, the
lease has been renewed. It is further submitted that interest of the
State Government, is protected by the indemnity clause and hence,
the contention of Order XL1 Rule 33 of the Code, would not take the
case of the State Government any further. As regards the
contention of the res judicata or the constructive res judicata, it is
submitted that the State was not a party in the earlier suit
proceedings and hence, the question of res judicata will not arise. It
is submitted that section 11, says about final adjudication and there
was no final adjudication and hence, argument of res judicata is
untenable. It is further submitted that the first suit, was for
injunction. Hence, the constructive res judicata will not apply. The
suit was filed and plaintiff, could not have foreseen damages and
therefore, there was no occasion to have claimed damages. In fact,
the High Court, while passing the order, has observed that plea of
damages is a different and distinct cause of action.
5.4 It is further submitted that the issue of limitation raised, is
also misplaced as was only after the completion of the road the
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
injury was sustained and the quantification took place after the road
was completed in the April 1987, and that is how while deciding
issue no.11, the Court, has considered that it is a continuing wrong.
Also, when the defendants, have taken a plea regarding limitation,
they should come with a specific plea and not raising general plea.
5.5 It is further submitted that it is also sought to be argued that
the plaintiff, has not produced the proof of expenditure and only
Auditor's report/Project report are produced, is also misplaced
considering the oral evidence of one of the partners of the plaintiff.
The plaintiff, was cross-examined by the ONGC and the amount has
been categorically stated. In the cross-examination, categorical
stand has been taken that the expenditure is based on the report of
the Chartered Accountant. Besides, in the plaint, clear details have
been provided of Rs.26 lacs towards expenditure and the total
amount of Rs.59,07,939/- was sufficient to undertake the entire
project. The calculation for damages, including the capital
expenditure of Rs.29 lacs was provided and the actual loss of profit
on production basis for the years 1987 to 1990 was Rs.181.00 lacs.
Loss of interest was also indicated for an amount of Rs.43 lacs. It is
submitted that for losses suffered, the Court has not granted
damages.
5.6 It is further submitted that even the office of the Industries
Commissioner has allowed the subsidy which was, disbursed on the
basis of expenditure incurred. Therefore, there were sufficient
documents available to substantiate the incurring of the capital
expenditure. It is submitted that though the plaintiff was cross-
examined, no questions were put to the plaintiff with respect to the
expenditure. Even the plaintiff, has shown the willingness to
produce the vouchers; however, the plaintiff was not asked to
produce the same. It is further submitted that even the Chartered
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
Accountant, was examined and the Chartered Accountant will only
see the bills and on the basis of the documents, the report is
prepared. The Chartered Accountant may not visit the site. Even the
Deputy Salt Commissioner in his evidence-Exhibit 114, has stated
that for production of salt, it is necessary to incur the expenditure;
however, there was no suggestion put by the defendants about the
expenditure. Even incurring of the fresh expenditure has been
accepted. Reliance is placed on the judgment in the case of Jay
Laxmi Salt Works Private Limited vs. State of Gujarat reported in
(1994) 4 SCC 1.
5.7 It is submitted that on one hand, the ONGC has disowned the
Panchnama which is clear from the written statement filed. While,
on the other hand, ONGC wants to derive the benefit of the said
Panchnama. It is further submitted that reading of paragraph 15 of
the Regular Civil Suit no.154 of 1986, the consent, was not absolute
but conditional.
6. Mr Rituraj M. Meena, learned advocate, in the brief rejoinder,
disputed the fact that it is incorrect to say on the part of the plaintiff
that it was not aware of the fact that ONGC is coming and has
constructed the road without the notice. There is no evidence to
substantiate that the land has been rendered useless.
7. Heard the learned counsel appearing for the respective
parties. Perused and considered the record and proceedings so also
the paper-book made available. In view of the above submissions
and counter submissions, the issue that arises for the consideration,
is whether the Court below was right in allowing the 1/3rd of the
total capital expenditure. Answer has to be in negative, for the
reasons discussed hereinafter.
8. In view of the above, few facts have to be emphasized. The
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
plaintiff, deals in the manufacturing of the salt and chemicals. Lease
deed dated 05.05.1980, came to be executed between the plaintiff
on one hand and the State of Gujarat on the other for the land
admeasuring 1500 acres situated at Gandhar taluka of Vaghra for a
period of 20 years commencing from 05.05.1980 and ending on
04.05.2000. The plaintiff - lessee, was allowed to utilize the land
exclusively for the manufacture, storage and sale of salt and its by-
products and for the works connected therewith. Clause (b) of the
lease deed provided that if the land is not used for the purpose for
which it is granted continuously for three years, the State
Government - the lessor would be at liberty to resume the land
without payment of any compensation. Condition no.3, deals with
the determination of the lease on giving notice. As per condition
no.5, the right to quarries, mines, minerals etc. were reserved by
the lessor to himself with a further liberty to enter and search for
such other minerals, doing as little damage to the lessee's work and
interfering as little with their works as possible. Condition no.20,
provides that the lessee shall continue to enjoy the lands
undisturbed for the period of 20 years subject to the conditions
contained in the lease deed with an exception that in case of any
breach of the conditions or in default in making the payment and
the lessor may determine the lease. The above referred conditions
to the extent relevant, are reproduced hereinbelow:
"Clause (b): - If the said land is not used for the purpose for which
it is granted, for 3 years continously, the Lessor may resume the
said land without payment of any compensation.
Condition no.3: - The Lessor or the Lessee/s shall be at liberty to
determine the lease on giving notice. Such notice shall be for a
period of 15 days if given during the period from 1st May to 30th
June of any year. If the notice is given in the period other than that
prescribed above, such notice shall be of 90 days. In either case the
party shall be liable to pay minimum royalty and other dues on land
calculated upto the end of the notice period. Six months from the
date of the notice shall be allowed for the removal of the salt
belonging to the Lessee/s. All salt not removed within that period
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
shall be forfeited to the Lessor, provided that the Lessor shall not be
entitled to determine the lease as aforesaid for any reason except
that such determination becomes necessary as a result of
Government embarking upon a policy of nationalisation or for the
reason described in clauses 1 to 20 of the Agreement.
Condition no.5: - The Lessor reserves to himself the right to any
quarries, mines, voins and of coal, lead, stone, flag or other
minerals in or in the said lands with liberty to himself and the
employees to enter and search for such minerals and to dig and
carry them away doing as little damage to the lessee's work and
interferring as little with their works as possible. The Lessor further
reserves to himself the right to levy a loyalty on the quantity of
finished by products at the time of removal from the said lands if the
Government of Gujarat so directs and at such rate as they may
decide.
The Lessee/s shall pay royalty at the rate of Rupee one for tonne on
all by products of salt, such as Magnesium Chloride, Epsom Salt,
Globular and other salts as may be specified Govt. from time to
time.
Condition no.20: - Subject to the foregoing conditions the
Lessee/s shall continue to enjoy the said lands undisturbed for the
said terms of 20 (twenty) years. In case, however, there is any
breach of any of the above conditions, or in case of the Lessee/s
make default in making the payment of any sum due to the Lessor
for amount from the date of its falling due or in case the licence
granted under clause .. above is cancelled or forfeited the Lessor
may determined the lease may be renewed for such further period
and on such terms and conditions as may be then be mutually
agreed upon."
9. It is the case of the plaintiff that after taking the possession of
1500 acres of the land, the plaintiff, till 22.10.1987, had invested
capital expenditure of Rs.59,07,939/-. The future projection for
production has also been indicated in the plaint. The plaintiff,
initially, has developed 650 acres of land on the southern side and
also decided to develop the rest of 850 acres on the northern side.
10. Owing to the liberty reserved in term of condition no.5, on
20.05.1988, petroleum exploration license came to be executed
between the State Government on one hand and the ONGC on the
other conferring the right to the ONGC to enter upon the leased land
and to carry out in addition to geological and geophysical surveys
information for drilling and test drilling operation for petroleum
coupled with right to carry away the petroleum. As per condition
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
no.3 of the license, subject to the provisions of clause 6 and 8,
rights were conferred upon the ONGC to make and use any roads,
drains or water courses on the said lands with the previous sanction
of the Deputy Commissioner/Collector. Clause 6, restricts cutting or
injuring any tree or any unoccupied or unreserved land without the
permission or writing of the authority. It also provides not to disturb
the surface of any road or enter any public pleasure, ground. Clause
7, speaks about compensation to be paid and indemnification to the
Government against the claims. Similar such conditions are
enumerated in condition nos.9 and 10. The above referred
conditions are reproduced hereinbelow for ready reference:
"Condition no.3: - Subject to the provisions of clauses 6 and 8 of
part II hereof, for the purpose aforesaid, to clear undergrowth and
trushwood and trees and with the sanction of the Deputy
Commissioner/Collector previously obtained in writing, to make and
use any roads, drains or water courses on the said lands and, for
any purpose necessary for effectively carrying on the prospecting
operations and for the workmen employed therein and with the like
sanction to use any water, provided always that the Licensee shall
endeavour to ensure that such use shall not diminish or interfere
with the supply of water to which any cultivated land, village
buildings or watering places for live-stock has heretofore been
accustomed and that no stroams, springe or wells shall be fouled or
polluted by such use or the prospecting operations hereby licensed
but if such liminution, interference or pollusion shall nevertheless
occur the Licensee shall if necessary provide an alternative supply
of water at a suitable place or places and in sufficient quantity to
the satisfaction of the Deputy Commissioner/Collector.
Clause 6: - Not to cut or injure any tree on any unoccupied or
unreserved land without the permission in writing of the proper
authority, nor without such permission disturb the surface of any
road, or enter on any public pleasure ground, building or burying
ground or place held sacred by any class of person, or interfere with
any right of way, wall or tank.
Clause 7: - To make reasonable satisfaction and pay such
compensation as may be assessed by lawful authority in
accordance with the law or force on the subject for all damage,
injury, or disturbance which may be done by him in exercising of
the powers granted by this license and to indemnify and keep
indemnified fully and completely the State Government against all
claims which may be made by any person or persons in respect of
any such damage, injury or disturbance and all costs and expenses
in connection therewith.
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
Clause 8: - Not to enter upon or commence prospecting in any
reserved or protected forest situated upon the said lands without
the sanction in writing of the Conservator of Forest or authority
concerned end to observe such conditions as may be prescribed by
such authority in this behalf.
Clause 9: - Not to enter upon any land or in any way injure trees,
crops, huts or other property without the consent of the occupier or
falling such consent without the written permission of tho Deputy
Commissioner.
Clause 10: - To also pay compensation for any damage, injury
etc., done to the property of the occupier of the land or any other
person."
11. Discernibly, after obtaining necessary permission from the
Collector, on 17.11.1986, the ONGC, constructed a road of 2
kilometers long, 4 feet high above the ground level passing through
the land. It is the case of the plaintiff that with the construction of
the road, the 850 acres of land was rendered useless forcing the
development activities to come to a standstill. According to the
plaintiff, the road completely stopped the possibility of circulation of
water from south to north and as a result, production of the salt in
850 acres of land on the northern side became impossible with the
already constructed tube-wells, pump station, electrical installations
and other heavy installations. According to the plaintiff, it has
suffered damages because of the illegal, wrongful and damaging
construction and operations by the defendant nos.1 and 2 in the
leased land of the plaintiff. The plaintiff therefore, filed a suit
claiming damages under the different heads, namely, (i) capital
expenditure damages - Rs.29.00 lacs; (ii) actual loss of profit on
production basis - Rs.181.00 lacs; (iii) loss of interest on loss of
profit - Rs.35.10 lacs; and (iv) general damages for office and labour
work - Rs.43 lacs, totaling to the tune of Rs.288.10 lacs.
12. The ONGC, had filed its written statement. It has been stated
that the Collector, has vide order dated 17.11.1986 given a
temporary lease for constructing the approach road on some of the
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
portion of the leased land and the temporary lease, has been
extended by the Collector from time to time by charging annual
rent. It has been denied that the defendants have caused any
damage while carrying out the oil exploration activities in the leased
land given to the ONGC as per the license and the mining lease by
the State Government. Stand is taken, that the defendants have to
carry on their oil exploration activities in discharging their statutory
duties and in the national interest. It is also denied that the
construction of the road was completed in April 1987. It is also
denied that the entry of the defendants is illegal and unlawful. Stand
is also taken that while constructing the road, the defendants have
made provision of 7 to 8 culverts for free flow of the water which is
discerned out from the panchnama drawn during the proceedings.
13. The defendant nos.3 and 4, have also filed their brief reply
stating that the plaintiff has to prove that the construction was
completed in the year 1983 and in the year 1984, the production of
salt was started on trial basis. It is also pointed out that it is the case
of the plaintiff that 650 acres of land was developed on the southern
side and remaining 850 acres on the northern side was yet to be
developed and in such an eventuality, the claim of the plaintiff
suffering the damages, is without any basis. It is stated that no
development activities have taken place on the northern side and in
absence of any steps taken, the lease deed, would automatically
stand terminated. The claim of the plaintiff having invested an
amount of Rs.59 lacs for developing the lease land, is without any
basis.
14. In the suit, as many as, 17 issues were formulated and were
answered accordingly. The issues are reproduced hereinbelow
together with the answers:
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
Issue Issues framed Issues answered
No.
1 Whether the plaintiff proves that he is registered In affirmative
partnership firm under Section 69 of Partnership Act ?
2 Whether the plaintiff proves that defendant no.3 In affirmative
declared back work area in Bharuch District ?
3 Whether the plaintiff proves that defendants no.3 and In affirmative
4 executed an agreement of lease on 5-5-80 for 20
years? and plaintiff was put into possession of the
1500 acres of khar lands?
4 Whether the plaintiff prove that he incurred capital Partly in
expenditure as mentioned in plaint para 8? affirmative
5 Whether the plaintiff proves that he has done In negative
production as mentioned in plaint para 12 and also
price was prevailing as mentioned?
6 Whether the plaintiff proves that defendants nos. 1 In affirmative
and 2 completed road in April, 1987 and then after
830 acres of land gone useless for the production?
7 Whether the plaintiff proves that due to illegal, Partly in
wrongful, irrational, irregular and damaging affirmative
construction and operation by the defendants nos.1
and 2 in the lease land? He has to suffer damages as
mentioned in para 1-A of plaint ?
8 Whether the plaintiff proves that defendants nos. 1 Affirmative
and 2 are continuously carrying out oil exploration
activities till today and causing continuous damages
to the plaintiff ?
9 Whether the defendant proves that suit is barred by In negative
delay, laches and acquiescence?
10 Whether the plaintiff's suit is barred by the principle of In negative
estoppel?
11 Whether the suit is barred by limitation? In negative
12 Whether the suit is filed without notice under section In negative
80 of C.P.C. is tenable?
13 Whether ONGC proves that it got P.E.L. (Petroleum At the rate of 6%
Exploration Licence) from defendant no.3 and 4 in the p.a.
year 1986?
14 Whether ONGC proves that it got P.E.L. (Petroleum In affirmative
Exploration Licence) from defendant no.3 and 4 in the
year 1986?
15 Whether the plaintiff is entitled for damages? What As per final order
amount?
16 What is found due? From whom? As per final order
17 What order and decree? As per final order
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
15. Amongst others, most relevant, would be issue nos.4, 5, 6 to 8
and 15. Adverting to issue no.4, which is answered in affirmative, it
may be noted that the case of the plaintiff, as indicated in
paragraph 8, was that capital expenditure for an amount of
Rs.59,07,939/- has been incurred. It reads thus:
"8. After taking the possession of the 1500 Acres of the land, the
plaintiff pumped-in its capital expenditure. Till 22-10-1987, the plaintiff
has incurred following capital expenditure at their Gandhar Work:
(Amount in Rupees)
Sr. Name of the Head Amount for each Total amount
No. item
A: EARTH WORK
A.1 Earth Work 12,72,220
A.2 Salt Pans 10,50,201
A.3 Main Road Construction 1,53,220
A.4 Stacking Ground 1,32,325
A.5 Wooden Gates & Platforms 62,824
Sub-total 'A' 26,70,790
B: BUILDINGS
B.1 Office building, Godown and 1,60,134
Compound Wall etc.
B.2 Pumping Station Room 14,275
B.3 Water & Diesel Storage Tanks 73,302
B.4 Working Shed 17,039
B.5 Labour Quarters 1,57,104
Sub-total 'B' 4,21,854
C. PLANT & MACHINERY
C.1 Tube Well (Borewell) 5,90,261
C.2 Submersible Pump & Motors 2,80,726
C.3 Salt Crushing Mill 1,47,180
C.4 Salt Conveyors 1,40,788
C.5 Pump House (set) 31,361
C.6 Tractors 3,82,527
C.7 Trailors 6,15,822
Sub-total 'C' 21,88,765
D. TOOLS Sub-total 'D' 34,412
E. ELECTRICAL INSTALLATIONS
E.1 Electric Fittings 2,43,261
E.2 H.T. Transmission Line 39,595
Sub-total 'E' 2,82,856
F. PRE OPERATIVE EXPENSES Sub-total 'F' 3,09,262
GRAND TOTAL (A+B+C+D+E+F) 59,07,939
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
16. Evidence of the plaintiff's witness Hasmukhbhai Gunwantbhai-
Exhibit 96 of incurring expenditure for an amount of Rs.26,70,000/-
towards the development of land and Rs.21,88,000/- were towards
the machineries was considered. Further, oral evidence of Mr
Vikasbhai Manilal Shah, Exhibit 102 - the Chartered Accountant of
Bhavnagar, was considered who, has produced the Audit Report-
Exhibit 103. The learned Judge, was of the opinion that though the
Audit Report mentions the Gandhar Salt & Chemical Industries,
Bhavnagar but it does not mean that Gandhar Salt & Chemical
Industries is established at Bhavnagar. The learned Judge,
proceeded on assumption that the plaintiff might have a head office
at Bhavnagar. At this stage, it is pertinent to mention that the
plaintiff, is a partnership firm and some of the partners, are from
Bhavnagar. The promoters, have decided to setup the unit in
partnership which, consists of Patel Doshi and Desai Group having
the salt manufacturing unit and by products unit at Bhavnagar,
namely, Gujarat Salt & Patel Salts & Supreme Chemicals & Central
Chemicals. Besides, the Chartered Accountant who has been
examined and prepared Audit Report, is also from the Bhavnagar.
When the plaintiff claims that it has invested such a huge amount,
at least, there should have been some clear proof regarding the
investment for the leased land at Gandhar. The Chartered
Accountant-Exhibit 102, he has admitted in his evidence regarding
non-mentioning of the working area and the area where the work of
the plaintiff is going on. It is further stated that he can't say with a
surety that the work has been done as per the project report, as the
project report is prepared on the basis of information provided to it.
The witness, has also stated that the plaintiff has salt-pan at
Bhavnagar also. It is denied that he has provided the information of
Bhavnagar and not Gandhar. The witness, in his cross examination
by defendant nos.3 and 4, has stated that he has never visited the
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
leased land and has prepared the report on the basis of the
information provided to him. At the same time, the witness of the
plaintiff in his evidence-Exhibit 96 admits that the claim of Rs.2.88
crores in the suit is based on the report prepared by the Chartered
Accountant and the books of accounts. The books of accounts have
not been produced. Also, no evidence is produced substantiating the
actual production of the salt. Much emphasis has been laid on
Auditor's Report-Exhibit 103 which according to the Chartered
Accountant was prepared solely on the basis of information provided
by the plaintiff. While the plaintiff's claim is based on this Report.
Perceptibly, there is no evidence on record to substantiate the
entries in the Auditor's Report. The learned Judge, accepted the
contents of the report as gospel truth. Reference is made to the
subsidy allowed by the State Government. Subsidy provided by the
Central Government as well as State Government does not establish
the actual capital investment in connection with the entire leased
land. Therefore, the learned Judge, was in error while deciding the
issue no.4.
17. At this stage, relevant would be to discuss the issue no.5
which, was decided in negative regarding plaintiff proving the
production as mentioned in paragraph 12 of the plaint. Paragraph
12 of the plaint, reads thus:
"12. In the meantime, after trial production in the year 1983-84,
the regular production of salt was started by the plaintiff from the
year 1984. In the year 1985 as per the production programme, the
production of salt reached to 25000 м.т. The plaintiff produced
30000 M.T. salt in the year 1986. In the year 1987 it was increased
to 34000 1.7. In the year 1988 & 1989 the plaintiff produced more
than 40000 M.T. of salt. On the other side, the selling market price
of the salt was s.110/- P.M.T. from the year 1985 to 1988. In the
year 1989 the selling market price rose to Ps.250/- Ρ. Κ. Τ. In the
year 1990 this price will increase to Rs.275/- P.M.T."
18. Except the averments made in the plaint, no evidence
substantiating the production of the salt was produced which led the
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
learned Judge, to decide the issue no.5 in negative, observing thus:
".... on the other hand, the market price of the salt has been
mentioned but so far as the quantity of the production in relevant
years and the prevailing rates of the salt in the relevant years no
evidence has been adduced. Mr Ranpalli Mohanbhai has been
examined on behalf of the plaintiff vide Exhibit 114 who, happens
to be Deputy Commissioner of Salt and he has deposed as to the
approximate production of salt per acre per year. He has further
deposed that 25 to 30 tonnes salt has been produced per acre per
year. He has also deposed as to the prevailing rate of salt during
the year 1987-1988 at Rs.100/- per tonne. He has further deposed
as to the cost of the production of salt Rs.50/- to Rs.60/- per tonne.
That no other facts and figures have been mentioned by him from
which, it can be inferred that plaintiff in the relevant years reached
to the production of salt as mentioned in paragraph 12 of Exh.1. No
documentary evidence has been adduced on behalf of the plaintiff
from which sale price of the salt can be inferred. Therefore, I
answer issue no.5 in negative."
Clearly, there was no documentary evidence adduced on
behalf of the plaintiff from which the sale price of the salt could
have been inferred. Therefore, the learned Judge, has observed
about absence of facts and figures from which it could be inferred
that plaintiff reached the production of salt. When the sale price
could not be inferred, the consequent production of the salt also
could not be determined and the learned Judge, rightly decided the
issue no.5 in negative. No appeal has been filed by the plaintiff and
the observations to that extent, have attained finality.
19. Adverting to the issue nos.6 to 8 and 15, it is required to be
noted that construction of the road commenced in the year 1986
which led to the filing of Regular Civil Suit no.51 of 1986 by the
plaintiff seeking restraint order against the ONGC not to enter the
leased land. In the said suit, purshish-Exhibit 11 was filed by the
plaintiff and the Court, permitted unconditional withdrawal of the
suit as the dispute was settled outside the Court. In the subsequent
Regular Civil Suit no.154 of 1986, in the evidence-Exhibit 83, the
partner of the plaintiff has admitted that 650 acres of land on the
southern side is developed and 850 acres on the northern side is
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
under developed. Reference is made of the assurance extended by
the officers of the ONGC of constructing the road on the northern
side and not entering the leased land on the southern side. Further
reference is made of paying compensation in the event of causing
any damage. It is stated that with this understanding, the suit being
Regular Civil Suit no.51 of 1986 was withdrawn. Therefore, the
plaintiff as per the settlement consented the construction of the
road by ONGC on the northern side of the leased land.
20. Furthermore, for deciding the above referred issues, much
emphasis is laid on Exhibit 175 - the Map. According to the learned
Judge, the Map, was significant and it transpired the division of the
leased land into two parts. Southern part, being fully developed;
while, northern part was developing. The learned Judge was of the
opinion that the developing portion of the leased land has been
consumed by the defendant nos.1 and 2. Also roads and by-roads
have been constructed and the learned Judge, was therefore of the
opinion that it goes without saying that the plaintiff's activities was
seriously hampered due to construction of roads, by roads and
drilling points. The learned Judge, has while discussing Exhibit 175,
observed that:
"only two culverts have been mentioned in Map-Exhibit
175 which are situated at drilling point of defendants
nos.1 and 2. No other culverts have been mentioned,
there is no evidence on record to establish that
culverts have been provided by the defendants for the
facility of the plaintiff. Therefore, no natural water flow
from the coastal side can flow from southern to
northern side, therefore, in absence of natural flow, the
production activity of the plaintiff firm bound to
damage."
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
There lies a fallacy in the said findings inasmuch as, the
explanation on the Map-Exhibit 175, does not refer to the culverts.
Assuming that only two culverts were there, the learned Judge, also
ought to have considered the Panchnama drawn by the Court
Commissioner indicating 7 to 8 culverts. The Panchnama-Exhibit
104 was prepared in presence of the managing partner of the
plaintiff. The witness Hasmukhbhai Gunwantbhai at Exhibit 96, has
stated that the Court Commissioner has mentioned what he has
examined. Therefore, the above referred finding is not in sync with
record inasmuch as, the vital evidence Panchnama-Exhibit 104 has
been clearly discarded and drawing of assumption by the learned
Judge regarding activities of the plaintiff being seriously suffered
was far fetched and without evidence.
21. Notably, the application was filed by the plaintiff for
appointment of Court Commissioner for local investigation,
preparation of Map, Panchnama etc. Request was made to draw the
Panchnama of the leased land and file a report containing the
detailed note of the position of the roads constructed. After hearing,
a need was felt for drawing the Panchnama of the leased land and
accordingly, the Court passed an order dated 19.01.1991 appointing
the Court Commissioner to draw the Panchnama and to submit the
report. Accordingly, the Panchnama was drawn - Exhibit 104
wherein, as aforestated, it has been recorded that approximately, 7
to 8 culverts have been constructed and on the fifth culvert, the
road was turning north-south. There is not a whisper much less any
discussion referring the Panchnama - Exhibit 104, rendering the
finding against the evidence inasmuch as, the Panchnama - Exhibit
104, clearly indicates number of culverts available on the leased
land.
22. All throughout, it is undisputed fact that 650 acres of land on
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
the southern side was fully developed, while the northern side of the
leased land was under developed. The claim is by the plaintiff that it
started developing remaining land of 850 acres on northern side;
however, there is not a single evidence to suggest that remaining
850 acres of land, was fully developed and was ready for salt
production. As per the evidence of the plaintiff, owing to the
construction of the road, it has suffered the reduction of salt
production by 20 to 22 tonne in a year and now to develop the
remaining 850 acres, further investment would be required. If there
is no development for the land of 850 acres, it is difficult to fathom
as to how and on what basis the learned Judge concluded that:
"...A prudent man and that is a industrialist man may not
incur this much capital expenditure only for the southern
portion of the land since he was in possession of 1500
acres of land under the lease deed. Considering the area
under the lease, the plaintiff might have incurred this
much capital expenditure and if by the act of defendant
nos.1 and 2 he is prevented fully or partly then his
proportionate capital expenditure go in vain."
The learned Judge, therefore, proceeded on the basis that the
production activity on the northern side of the plaintiff is hampered
and therefore, awarded 1/3rd proportionate capital expenditure to
the plaintiff by way of compensation. The findings of the learned
Judge, is on conjectures and surmises and based on no evidence.
The judgment proceeds on the hypothesis that the plaintiff, "might"
have incurred the loss towards the capital investment or "might"
have suffered the damage. Offering numerical figures about the cost
of the project and equipments would not be enough. It has to be
proved by producing evidence. Drawing of inference on the basis
thereof would be impermissible, and in such an eventuality, the
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
learned Judge, could not have decreed the suit.
23. Pertinently, the plaintiff has claimed Rs.2.88 crores and when
such a substantial amount is claimed, it becomes the solemn
obligation of the plaintiff to substantiate the damages by producing
concrete and reliable evidence regarding; (i) the development of the
leased land as per the lease agreement within the stipulated period;
(ii) production of the salt, (iii) producing the books of accounts on
the basis whereof, the report has been prepared. Except for the
Auditor's report, no supporting evidence has been produced on the
record. The Chartered Accountant has stated that the report was
prepared solely on the basis of information provided by the plaintiff.
While the plaintiff says that the claim is based on the report of the
Chartered Accountant. The books of accounts, are also not on
record. In the absence of such evidence, the learned Judge ought
not to have allowed the claim based on mere assumption. At the
cost of repetition, it is important to note that according to the
plaintiff, only 650 acres of land on southern side was fully developed
while 850 acres of land on northern side remained undeveloped up
to the year 1987. This means that even seven years after grant of
lease deed land was not fully developed. Therefore, mere numerical
projections cannot substantiate the plaintiff's claim. As per the lease
deed, it was the plaintiff's responsibility to develop the entire leased
land, but it did not. Given that the plaintiff failed to develop the land
as stipulated, it is difficult to comprehend how the plaintiff could
have projected future earning. Had it been the case of the plaintiff
that the land was fully developed and the salt production
commenced, leading to profits, the case would have stood on a
different footing but, so is not the position in the case on hand.
Moreover, no documentary evidence is available to suggest the sale
price of the salt and the actual salt sold in the open market. Hence,
the judgment, based on findings that are both unsupported and
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
speculative, is untenable and deserves to be quashed and set aside.
24. Notably, as per the direction contained in the impugned
judgment, the learned Judge, has held the defendants, jointly and
severally liable to pay the damages, once again, without assigning
any reasons. Mr Krutik Parikh, learned Assistant Government
Pleader rightly contended that there is not even a semblance of any
allegation or claim against the defendant nos.3 and 4 except in
paragraphs 20 and 21 of the plaint. The judgment, itself proceeds
and is restricted qua the defendant nos.1 and 2 but the operative
part extends the liability to the defendant nos.3 and 4 without any
discussion or reasons as to how they could be liable or committed
any breach. No substantive finding or discussion, is in the judgment
holding defendant nos.3 and 4 liable. Therefore, it is not only
erroneous but also illegal especially, when this Court, in the
discussion that follows, has categorically held that the entry of the
ONGC was neither illegal nor unlawful.
25. In continuation of the above discussion, it is required to be
noted that by virtue of condition no.5, liberty is reserved to the
State Government the right to quarry and extract other minerals.
The plaintiff has accepted these conditions and was fully aware of
the same. In furtherance thereof, the petroleum license came to be
issued in favour of the ONGC granting it the right to explore and
extract the minerals. Besides, temporary permission was granted by
the Collector for constructing the approach road on the part of the
leased land and for use of the part of survey no.317 as a drilling
site. The plaintiff too has consented to it. Under the circumstances,
to contend that the entry of the ONGC was illegal, is entirely
untenable and without merit.
NEUTRAL CITATION
C/FA/185/2005 CAV JUDGMENT DATED: 25/07/2025
undefined
26. In view of the above discussion, the captioned first appeal
succeeds and is accordingly allowed. The impugned judgment dated
09.09.2004 passed by the learned Civil Judge, Senior Division,
Bharuch, is hereby quashed and set aside. No order as to costs.
27. Record and proceedings, be sent back to the Court concerned,
forthwith.
Sd/-
(SANGEETA K. VISHEN,J)
Sd/-
(SANJEEV J. THAKER,J)
RAVI P. PATEL
