Fortuna Agro Plantations Limited vs The State Of Tripura
2022 Latest Caselaw 504 Tri

                    HIGH COURT OF TRIPURA
                          AGARTALA

                            RFA 07 of 2019

Fortuna Agro Plantations Limited,
having its registered office at Sadhan Ashram,
P.O. Sadhan Ashram, P.O. Kailashahar,
District- Unakoti, Tripura:799277
                                                    Plaintiff - Appellant(s)
                           Versus

1.     The State of Tripura, represented by its
Principal Secretary, to the Government of Tripura,
Forest Department having his office at Civil
Secretariat, Agartala, P.O. Kunjaban, PS New Capital
Complex, Gorkhabasti, Agartala, West Tripura,
PIN:799010

2.    The Principal Chief Conservators of Forests,
Aranya Bhavan, Pandit Nehru Complex, Gorkhabasti,
Agartala, West Tripura: 799006

3.      The Divisional Forest Officer, Kailashahar,
District Unakoti, Tripura : 799277
(Presently renamed as Sub-Divisional Forest Officer)

4.     The Conservator of Forests, Office of the
Principal Chief Conservators of Forests, Aranya
Bhavan, Pandit Nehru Complex, Gorkhabasti,
Agartala, West Tripura: 799006

                                                 Defendant-Respondent(s)

5. Sri Babul Kumar Banik, Palace Compound (West Gate), Opposite Khadi Board Office, Agartala, West Tripura

6. M/S Metalworth Industries Limited of Chennai, C-703, Shivalaya, Ethiragsalai, Egmore, Chennai, PIN:600105

7. Fortuna Greenfields Pvt. Limited, having its registered office at 8/1 Lal Bazar Street, Bikaner Building, Middle Block, 3rd Floor, Kolkata : 700001

Pro-Defendant-Pro-Respondent(s)

For Petitioner (s) : Mr. S Deb, Sr. Advocate Mr. B Debnath, Advocate

For Respondent(s) For respondents No.1-4 : Mr. SP Datta Purakayastha, Advocate Mr. Ratan Datta, Advocate Mr. K De, Addl. GA For respondent No.5 Mr. S Datta, Advocate For respondents No.6&7 Mr. Koomar Chakraborty, Advocate

Date of hearing : 25.02.2020 & 04.03.2022

Date of pronouncement : 17.05.2022

Fit for reporting : YES

HON'BLE THE CHIEF JUSTICE MR. INDRAJIT MAHANTY HON'BLE MR. JUSTICE S. TALAPATRA

Judgment & Order (Talapatra, J.)

This is an appeal under Section 13(1)(a) of the

Commercial Courts Act, 2015 read with Order XLI Rule 1 of

the CPC from the judgment dated 07.01.2019 delivered in

T.S. 01(Com) of 2016 by the District Judge, Unakoti Judicial

District, Kailashahar.

2. By the said judgment dated 07.01.2019 the

commercial suit instituted by the appellant has been

dismissed on returning the finding that the agreement dated

18.10.2004 cannot be acted upon and hence, the action to

renew the licence in favour of Chunilal Banik for the period

from 24.05.2008 to 03.09.2012 by the respondents No. 1 to

4 cannot be challenged by the plaintiff, the appellant herein,

and hence, the question of compensating the plaintiff for loss

of his business due to denial to the action in renewing the

licence in favour of Chunilal Banik for the period from

24.05.2008 to 03.09.2012 cannot be decided in favour of the

plaintiff.

3. It has been further observed that by the

agreement dated 18.10.2004 Chunilal Banik transferred all

his rights emanating from the licence for running a saw mill

or wood-based industry, in favour of M/S Fortuna Agro

Plantations Limited. By dint of the said agreement, the

plaintiff has claimed to have carried on the business. But

from the facts as established by evidence, it is apparent that

Chunilal Banik passed away. The agreement dated

18.10.2004 as entered by the plaintiff and M/S Industrial

Saw Mills is an instrument of transfer, which act has been

prohibited by statute. Consequently, the suit has been

dismissed. This particular finding and its consequences have

been challenged in this appeal.

4. For purpose of appreciation, it would be

appropriate to introduce the facts leading to the institution of

the suit.

5. M/S Fortuna Agro Plantations Limited instituted

the suit being M.S. 09/2015 in the court of the Civil Judge,

Sr. Div. Kailashahar, Unakoti Tripura. With introduction of

the Commercial Courts Act, 2015 the nomenclature of the

suit was changed to TS (Commercial) and it was re-

numbered as T.S. 01(Com) of 2016. The plaintiff is a

Company incorporated under the Companies Act, 1956 (as it

then was). The plaintiff is engaged inter alia, in the business

of tea and other allied industries. One Chunilal Banik, the

predecessor of the defendant No.5, the respondent No.5

herein, used to carry on the business under the name and

style of Industrial Saw Mill as its sole proprietor. Following

the directions of the apex court, Chunilal Banik was required

to relocate his saw mills in the notified industrial estate for

wood based industries, but his mills could not be

accommodated in any industrial estate as there location was

not convenient. It is to be noted that the saw mills of

Chunilal Banik were located at Arundhutinagar, Agartala.

6. In order to run the saw mills, after locating them

in any wood based industrial estate, Chunilal Banik required

the licence from the High Power Committee as was

constituted as per the directions of the apex court. During

that time, Chunilal Banik, as claimed by the plaintiff,

approached the plaintiff and proposed to enter into an

agreement. The plaintiff had informed him that they would

arrange the land from their sister concern, namely, M/S

Fortuna Greenfields Private Limited, the respondent No. 7

herein, for setting up of the wood based industrial estate.

The plaintiff‟s sister concern M/S Fortuna Greenfields Private

Limited, agreed to provide a portion of their land for setting

up of an industrial estate.

7. On protracted negotiations, the agreement dated

18.10.2004 was entered into for operation of saw mills

located in the declared wood based industrial estate,

managed by M/S Fortuna Greenfields Private Limited. The

terms and conditions of the said agreement were broadly as

under:

a) The plaintiff shall run the business of the saw mills by taking all steps at their costs and conveniences, and shall earn all profits and suffer loss, if any. Chunilal Banik shall receive a sum of Rs.12,000/- per month irrespective of the profit or loss.

b) A power of attorney be executed in favour of the plaintiff authorizing them or their directors to do all acts necessary for the setting up and running the Saw Mills in the notified Industrial Estate on the land belonging to M/S Fortuna Greenfields Pvt. Ltd.

8. It has been stated that all steps were taken to set

up the wood based industrial estate on the terms of the said

agreement dated 18.010.2004 (Exhibit-7) on an area of 0.25

acre of land within Mouja Murticherra, pertaining to Khatian

No. 20/20A as provided by M/S Fortuna Greenfields Pvt. Ltd.

The Industrial Saw Mill of Chunilal Banik was relocated. It

has been stated by the plaintiff that Murticherra Wood Based

Industrial Estate was further expanded with the approval of

the Forest Department, Government of Tripura by the

notification No. F. 7(177)/For/FP-03/Part-XII/37161-74 dated

17.02.2006.

9. By virtue of the power of attorney, executed by

Chunilal Banik on 02.12.2014 (Exhibit-6), one agent of the

plaintiff, namely, Gouri Shankar Dey was nominated as the

attorney of Chunilal Banik. The fresh licence bearing No. 01

of 2006 was issued in favour of Chunilal Banik (now

deceased) for carrying on all functions of Saw mills on the

notified land with capacity of sawing to the extent of 3 lac

CFT timber per year and the said licence was declared to be

valid till 31.03.2007.

10. It has been stated that as the official defendants

did not permit the plaintiff to get the trees registered for

purpose of felling and hence, the plaintiff was not allowed by

the Forest Department, Government of Tripura to export the

purchased timber from the Forest. Even though, there were

numerous applications for tree registration, submitted by the

plaintiff to the official defendants for purpose of extraction,

but such registration or permission for extraction was not

allowed. As a result, the plaintiff has suffered huge loss

during the period from 2006-2007 and also on subsequent

years.

11. When the said licence (Exhibit-2) expired, Chunilal

Banik applied for its renewal. Pending disposal of the said

application for renewal, the Divisional Forest Officer,

Northern Division, Kailashahar informed the Saw Mill that

pending instruction from the Principal Chief Conservator of

Forests (PCCF for short) as regards the renewal of licence for

the year 2007-2008, the said Saw Mill shall not undertake

any sawing operation. Despite repeated requests made by

the plaintiff, operation of the saw mill could not resume, as

the licence was not renewed. Even, no communication from

the PCCF (the respondent No.2 herein) was made to the

plaintiff.

12. By the order dated 24.05.2008 the operation of

the saw mills in the said notified industrial estate was

stopped on and from 24.05.2008. It has been admitted that

no challenge was ever thrown against the said order. It has

been asserted in the plaint that the plaintiff applied for

renewal on each consecutive financial year, but nothing

yielded in the positive.

13. All on a sudden on 13.12.2012, Chunilal Banik

died leaving behind a Will. The defendant No.5, his son

applied for the survival certificate. The defendant No.5

applied for issuance of licence in his favour, based on the

said Will left by his deceased father, Chunilal Banik. The

defendant No.5 had authorized the plaintiff to continue with

the operation of the Saw Mills in terms of the agreement

dated 18.10.2004. In the month of July, 2013, the plaintiff

was asked to deposit the renewal fee for seven years

commencing from 2006-2007 to 2012-2013 aggregating to a

sum of Rs.10,500/-. It has been claimed that on receipt of

such fee, the respondent No.3 by an undated communication

renewed the licence and according to the plaintiff, the licence

was renewed till 31.03.2013.

14. The operation of the Saw mill was abruptly

stopped by the defendant No.3, but on 03.09.2012, the

defendant No.3 issued an order allowing the operation of the

saw mill [see para 19 of the plaint].

15. According to the plaintiff, the cause of action for

instituting the suit arose firstly on 03.09.2012 when the

licence of the saw mill was renewed without explaining the

reasons for closing down the saw mills for more than four

years. It is therefore, according to the plaintiff, is apparent

that the defendants No. 1 to 4 were at fault and as such the

damage that has been suffered by the plaintiff became

irreversible.

16. The Divisional Forest Officer of the said concerned

forest division had, by a letter dated 23.09.2009, tried to

clarify whether the plaintiff had any lease to run the Saw mill

under the licence of the competent authority. When the

plaintiff received the communication dated 23.09.2009, he

could understand that the suspension was wholly illegal.

17. As the said saw mills could not be operated during

the period from 24.05.2008 to 03.09.2012, the plaintiff has

estimated the loss and damages @ Rs.46,75,86,569/- out of

which a sum of Rs.36,15,48,920/- has been estimated as

loss of profit and another sum of Rs.60,37,648/- has been

accounted for damage of timber and logs lying at the Saw

mill and the further sum of Rs.10 crores towards loss of good

will. 18. The plaintiff has also prayed for an inquiry

into the damages and prayed for a decree based thereon.

The plaintiff has also prayed for a money decree in terms

thereof, but it may be noted that while issuing the notice

under Section 80(1) of the CPC, the claim was enhanced

from Rs.46,75,86,569/- to Rs.197,25,86,569/-. The

defendants No. 1 to 4 (the respondents No. 1 to 4 herein) did

not respond to the said notice.

19. In the plaint, the appellant has provided an

account of loss of profit from sale of sawn timbers and offsets

which is reproduced hereunder for reference. It is apparent

that the plaintiff estimated the loss on that count at

Rs.36,15,48,921/-.

Loss of profit on sale of Sawn timber and offsets

i) 2008-2009 - Rs. 3,63,79,331.51 for closure of sawmill for 311 days.

ii) 2009-2010 - Rs.7,20,96,000.00 for closure of saw mill for 365 days.

iii) 2010-2011 - Rs. 9,40,86,000.00 for closure of saw mill for 365 days.

iv) 2011-2012 - Rs.10,97,46,000.00 for closure of saw mill for 365 days.

v) 2012-2013 - Rs. 4,92,41,589.00 for closure of sawmill for 155 days.

Total being of Rs. 36,15,48,921/-"

20. The plaintiff has further stated that for the

suspension of the licence, the plaintiff has suffered a loss of

Rs.82,85,792/- as the timber of that amount got totally

damaged. The plaintiff has claimed to have suffered a loss of

Rs.60,37,848/- after salvage. The plaintiff calculated the loss

and damages @ Rs.60,37,848/- on [account of] damage of

sawn timbers. The respondents No.1 to 4, the defendants

No. 1 to 4 in the suit, are liable to compensate the plaintiff

for the aforesaid loss and damage.

21. As stated earlier, for loss of goodwill, the plaintiff

has assessed Rs. 10 crores. The plaintiff has, thus, claimed a

sum of Rs. 108,00,46,763/- for a period of three licensing

tenures and the principal defendants (the respondents No. 1

to 4) are liable to pay the said damages, to the extent of the

above sum, to the plaintiff.

22. The plaintiff used to get the supply orders from

different business houses such as M/S Metalworth Industries

Ltd., of Chennai. During the period from 2007-3rd November,

2012 as the operation of the saw mills was suspended by the

respondents No. 1 to 4, the plaintiff could not enter into any

agreement to supply the required sawn woods to the

different companies and hence, the plaintiff is in a position to

compute and realize the contemplated profits from the

respondents No. 1 and 2.

23. It has been stated that M/S Metalworth Industries

Ltd. of Chennai has claimed a loss of profit @ Rs.300/CFT for

non-implementation of the contract, aggregating to the sum

of Rs. 40,50,00,000/- with interest @ 24% per annum.

24. What has been claimed in the suit, has been

provided in the schedule of claim. For reference, the said

schedule of claim is reproduced hereunder:

SCHEDULE OF CLAIMS

i) Loss of profit by Fortuna Agro plantations Ltd. Rs. 36,15,489,21.00

ii) Loss due to damage of timber lying at the Rs. 60,37,648.00 Saw Mill

iii) Goodwill loss Rs.10,00,00,000.00

iv) Fortuna could not do similar business for 3 Rs. 108,46,46,763.00 terms as per the previous years

v) claimed amount of compensation by Metal Worth Industries Ltd. Chennai to the plaintiff for non Rs.40,50,00,000.00 supplying of products Total Rs.195,72,33,332.00

25. A large quantity of documents have been

introduced to substantiate such claim. But the principal-

defendants No. 1 to 4, against whom the said claim has been

raised, filed their written statement and stated that the

agreement dated 18.10.2004 is completely against the public

policy as the said agreement clearly violates the provisions of

Tripura Forest (Establishment and Regulation of Saw Mills

and other wood based industries) Rules, 1985 as framed

under Section 51A of the Indian Forest Act, 1927 and under

Section 6(d) of the Transfer of Property Act. Such agreement

is forbidden by law and hence, the agreement is hit by

Section 23 of the Indian Contract Act, 1872. Therefore, the

claim as raised by the plaintiff is untenable. Moreover, the

manner in which the licence to run the saw mills was

transferred to the plaintiff by Chunilal Banik falls within

Benami transaction which has been prohibited by Benami

Transactions (Prohibition) Act, 1988.

26. Those defendants have also raised the plea that

the suit is barred by law of limitation as the limitation for the

said suit is one year from the cause of action.

27. In para 10 of the written statement, the

respondents No. 1 to 4 have stated that the plaint has been

signed and verified by one stranger namely, Ajoy Malakar but

he has no locus standi to represent the plaintiff which is a

company incorporated under the Companies Act, 1956. Even

the said Ajoy Malakar is not a principal officer of the plaintiff.

Therefore, the suit has been instituted by an unauthorized

person.

28. The principal defendants did not intend to cancel

or withdraw the licence or to rescind the same. Keeping that

intention on the board, the licence as earlier issued in the

name of Chunilal Banik has not yet been rescinded or

cancelled but its operation by the licencee had only been

permitted at a new venue at „Sadhanashram‟ in Kaliashahar.

Such permission was never granted to the plaintiff or any

other person, not legally entitled to operate the Saw mill

inasmuch as, the licence is granted exclusively in favour of

one Chunilal Banik, since deceased.

29. According to them, the agreement based on which

the plaintiff has raised the claim is entirely unlawful being

prohibited by law inasmuch as the plaintiff has nothing to do

with the licence and the licence cannot be transferred in any

form without prior approval of the licensing authority. The

licence fee for the period from 24.05.2008 till 03.09.2012

was taken by the respondents to keep the continuity of the

licence. The defendants No. 1 to 4 had insisted for shifting of

the saw mill to another notified estate for wood-based

industries. They have categorically stated in the written

statement that nowhere and at no point of time, the

authority revoked its earlier imposed restraint on operation

by any other person, except the licencee, by way of transfer

in whatever form, without approval of the competent

authority in the forest department, Government of Tripura.

30. It has been categorically stated by the

respondents No. 1 to 4 that the plaintiff still operates the saw

mills by defying the lawful orders.

31. The brazen defiance of the conditions of the

licence is apparent when it has been stated that the plaintiff

entered into an agreement with the predecessor of the

defendant No.5 on 18.10.2004 for operation of the saw mill

in the declared wood based industrial estate of M/S Fortuna

Green Fields Pvt. Ltd. The plaintiff had designed to run the

business of saw mills on payment of Rs.12,000/- per month

irrespective of profit or loss. Even a power of attorney was

executed in terms of the said agreement, in favour of a

person who cannot be treated as an authorized agent but the

plaintiff did not disclose his status or how he is associated

with the plaintiff in their business operations. There is no

document, even there is no averment in this regard.

32. But the defendants No. 1 to 4 (the respondents

No. 1 to 4 in the appeal) did not admit that they had given

any nod as regards the said arrangement. It has been rather

disputed that the plaintiff had applied for felling down 20,000

trees during the first financial year vis-à-vis the licence.

Those respondents have categorically stated that the licence

bearing No. 1 of 2006 (valid up to 31.04.2007) was issued in

favour of Chunilal Banik. Hence, they have denied the

statement that the plaintiff had completed the required

preparation including the setting up of saw mills and

machineries spending huge money with great expectation to

earn large profit by running Saw Mill after observing all

formalities and the guidelines of the forest department.

According to those respondents, the said agreement cannot

be held enforceable through the plaintiff against the

defendants No. 1 to 4.

33. The respondent No.2 has got the authority to

suspend the licence or refuse renewal on legally tenable

grounds. They have categorically stated that the plaintiff had

no licence to operate any saw mill in the new arrangement.

No action of the respondents as regards the licence can be

challenged by the plaintiff for obvious reasons. Even the

claim for compensation or damages based on the action of

the respondents is far fetched, unsustainable and is liable to

be rejected. The calculation of the estimated damage and

compensation has not been made within legal pesincts but on

a hypothesis on assuming their right and as such, the suit is

liable to be dismissed.

34. The defendants No. 1 to 3 have categorically

disputed that during the period from 24.05.2008 till

03.12.2012, the plaintiff could not operate the saw mill in the

notified industrial area and that the plaintiff had obtained a

licence having approved by the High Powered Committee.

35. It has been stoutly contended that the plaintiff

cannot challenge any action of the defendants No. 1 to 4 as

the plaintiff had no licence and so called arrangement for

utilization of the licence is grossly illegal and hence, the suit

be shot down at the threshold.

36. It has been further stated in the written statement

by those respondents [the defendants] that the loss of profit

from sale of timber and offset is entirely baseless and as

such, the official defendants are, otherwise also, not liable to

make good of any loss that the plaintiff has at all suffered.

37. So far as the damages are concerned, the supply

of sawn woods to one M/S Metalworth Industries Ltd.,

Chennai have absolutely nothing to do with the licence.

Moreover, the plaintiff cannot raise any claim on the basis of

the licence as the licence was never the property of the

plaintiff at any point of time. As a whole, the entire claim is a

hoax being entirely baseless, false and speculative. That

apart, in respect of the forest goods, nobody can claim

privilege. The State has the authority in the public trust to

take any drastic action in order to conserve the forest.

38. In the written statement, the official defendants,

the respondents No. 1 to 4 in this appeal, have made a

categorical statement as follows:

"In these perspectives, the forest authority did permit continuance or renewal of the licence in question in the name of original licence holder on accepting fees from the attorney or agent of him in the year 2012, expecting that the licence holder himself will operate the industrial unit after a gap

of time instead of allowing anybody else or to the plaintiff. The forest authority had also to bring into consideration the stomachs of the workers and employees engaged but had no scope to over-ride or violate the related rules, as noted in the earlier paragraphs herein. If this plaintiff yet obstinately continues operation of the unit keeping the licence holder off the tract and if this licence holder also indulges in this mode of operation of the unit the forest authority will have no other option but to rescind or cancel this licence ultimately. It is unfortunate that this plaintiff on mis-interpreting this total situation has brought this baseless or causeless suit which is liable to be dismissed with costs."

39. Be that as it may, that para as reproduced above

puts forward the view straightway that in the event of breach

in the rule in continuum the punitive action will be inevitable.

Those statements do not have any relevance for purpose of

determining the relief as sought for in the plaint viz. damage

for the wrongful act of the principal defendants No. 1 to 4 or

decree for the damages to the extent of

Rs.195,72,33,332.00, realizable from the principal

defendants.

40. Based on these rival contentions, the Civil Judge,

Sr. Div. Unakoti Judicial District had framed the following

issues for purpose of adjudication of the suit:

(i) Is the suit maintainable in law?

(ii) Has the plaintiff cause of action in his favour?

(iii) Is the suit barred by limitation?

(iv) Whether the agreement dated 18.10.2004 in between Sri Chunilal Banik (now deceased), predecessor of

proforma-defendant No.5 being the proprietor of "Industrial Sawmill" and the plaintiff firm "M/S fortuna Agro Plantations Limited" is a valid agreement to be acted upon?

(V)Whether the principal-defendants are liable to compensate the plaintiff firm for loss of their business due to staying the renewal of licence issued in favour of Chunilal Banik for the period w.e.f. 24.05.2008 to 03.09.2012?

(vi) Whether the plaintiff firm is entitled to get compensation for the damages to the tune of Rs.195,72,33,332.00 (Rupees one hundred ninety five crores seventy two lacs thirty three thousands and three hundred thirty two only) from the principal-defendants as per schedule of the plaint?

(vii) What other relief/reliefs the plaintiff firm is entitled to get?

41. It is to be noted that the plaintiff has examined

only one witness and admitted some documentary evidence

[Exhibit 1 to Exhibit 16]. The principal defendants have also

adduced one witness and admitted some documents in the

evidence namely, Exhibit A to Exhibit-I.

42. On appreciation of the evidence, as referred

before, the civil judge, Sr. Div. Kailashahar, Unakoti Tripura

has dismissed the suit on clearly deciding the issues No. 3

and 4 against the plaintiff.

43. It has been held by the civil judge, Sr. Div. that

the suit is not maintainable as the plaintiff failed to show the

authorization of one Ajoy Malakar who signed the plaint and

gave evidence on behalf of the plaintiff. That apart, an

attorney cannot adduce evidence beyond his personal

knowledge. It has been further observed that Article 137 of

the Limitation Act will apply in the suit and hence, it has

been stated that even though the suit cannot be maintained

as that has been verified by a person who is not duly

authorized by the plaintiff, at least no such document has

been placed in the record, but the suit is not barred by

limitation.

44. The most pertinent issue, apart from what has

been observed in respect of issue No. 1, is issue No. 4 which

has been framed for examining the validity of the agreement

dated 18.10.2004 no issue on Benami had been framed.

Hence, this point requires no consideration, more so, there is

no challenge in this regard. While answering to that issue

No.4, the Civil Judge, Sr. Div. has observed that on the basis

of the agreement dated 18.10.2004 and by virtue of the

power of attorney executed by Chunilal Banik on 01.11.2004

in favour of the plaintiff, they were operating the business

and applied for the licence in favour of M/S Industrial Saw

Mill on 07.04.2006 before the competent authority and also

paid the requisite fee. According to the Tripura Forest

(Establishment and Regulation of Saw Mills and Other Wood

Based Industries) Rules, 1985, the licence granted under

those rules is not transferable. Rule 6(3) provides as follows:

"6(3) A licence granted under these rules -

(a) shall be valid for one financial year during which it is granted

(b) shall not be transferable, and

(c) shall be renewable for a period not exceeding one financial year at a time on payment of renewal fee of rupees one hundred only and such renewal shall be in Form IV for each unit."

45. It is apparent from the agreement that the

arrangement that had been made was otherwise enforceable

under the Indian Contract Act to obligate the original licencee

to execute the irrevocable power of attorney in favour of the

plaintiff. This arrangement is, according to the civil judge, a

transfer which has been prohibited by Rule 6(3) of the said

rules. Hence, the agreement itself is unlawful under Section

23 of the Indian Contract Act.

46. The observation made in para 9 of the judgment

dated 07.01.2019 is of serious relevance in appreciation of

the appeal and as such, the said passage is reproduced

hereunder:

"9. Apart from this, Section 5 of the Transfer of Property Act says transfer of property means an act by which a living person conveys property, but such transfer shall not effect any law of the time being in force relating to transfer of property to or by companies, associations or bodies of individuals. Even Section 6 of the Transfer of Property Act says that no transfer can be made (1) in so far as it is opposed to the nature of the interest affected thereby, or (2) for an unlawful object or consideration within the meaning of Section 23 of the Indian Contract Act or (3) to a person legally disqualified to be transferee. In view of my above discussion I am of the view that the agreement dated 18.10.2004 is not a valid

agreement to be acted upon. This issue is answered accordingly."

47. Mr. S Deb, learned senior counsel appearing for

the appellant, in the perspective fact as noted above, has

contended that Industrial Saw Mill owned by Chunilal Banik

was allowed to shift to Industrial Estate for Wood Based

Industries at Mouja Murticherra. At the time, an agreement

was entered into between Chunilal Banik, owner and licencee

of the Industrial Saw Mill and the plaintiff, M/s. Fortuna Agro

Plantation Ltd. Simultaneously, Chunilal Banik had executed

one irrevocable power of attorney (Exhibit-6) for operating

the business by dint of the licence as issued in favour of

Chunilal Banik. The attorney was given the power to look

after the shifting and establishment of the saw mill at

Kailashahar. He was under obligation to submit all returns

and look after the entire management of the said saw mill. It

has been also obligated that all acts that would be done in

execution of the agreement dated 18.10.2004 shall be

deemed to have been ratified by Chunilal Banik, the licencee.

48. In the deed of agreement, as Mr. Deb, learned

senior counsel has pointed out, such transfer of authority had

taken place subject to payment of Rs.12,000/- per month to

Chunilal Banik. It has been also provided that the said

agreement will come into force when the licence will be

issued in favour of Chunilal Banik.

49. From a reading of the said agreement, it will be

apparent that Chunilal Banik will have no authority and

control over the management and operation of the said saw

mill for operation of which he had been given the licence.

50. According to Mr. Deb, learned senior counsel, the

agreement is a management agreement and there is no

transfer of the licence in violation of rule 6(3)(b) of the

Tripura Forest (Establishment and Regulation of Saw Mills

and Other Wood Based Industries) Rules, 1985. Mr. Deb has

contended that the attorney of Chunilal Banik, namely, Ajoy

Malakar had applied for renewal of licence on 25.02.2012.

51. The renewal was sought for from 01.04.2007 as

the earlier licence dated 26.08.2006 had expired on

31.03.2007. The licence was earlier renewed till 31.03.2007.

Thereafter, the licence was renewed in terms of the direction

contained in the communication dated 27.04.2012 (Exhibit-J)

by revoking the order dated 23.09.2009 (Exhibit-M).

52. Mr. Deb, learned senior counsel has submitted

that the Civil Judge has committed serious error of law by

holding that the agreement that was entered between

Chunilal Banik and the plaintiff is unlawful inasmuch as, by

clause 10 of the agreement Chunilal Banik, the licencee has

been barred to take any decision in respect of day to day

operation of the saw mill. Chunilal Banik was prohibited from

any interference in smooth running of the unit. In clause 11

of the said agreement Chunilal Banik has been obligated to

execute a general and irrevocable power of attorney in

favour of the plaintiff and by virtue of the power of attorney,

the attorney may apply for renewal of the licence etc.

53. According to Mr. Deb, learned senior counsel no

transfer has taken place within the meaning of Section 5 of

the Transfer of Property Act. Despite that the Civil Judge has

observed that no transfer can be made in so far as it is

opposed to the nature of interest created by the licence or

for an unlawful object or consideration within the meaning of

Section 23 of the Indian Contract Act had taken place.

54. Quite emphatically, Mr. Deb, learned senior

counsel has submitted that the agreement was not executed

for any unlawful object or consideration which may come

within the meaning of Section 23 of the Indian Contract Act.

55. Thereafter, Mr. Deb, learned senior counsel has

submitted that by the Will dated 18.01.2008 the saw mill has

been bequeathed to his two sons, namely, Babul Kumar

Banik and Pradip Kumar Banik. But the said will as it appears

from the record was not formally admitted in the evidence.

56. Mr. Deb, learned senior counsel has submitted

that in State of M.P. & Ors. Vs. Bindal Agro Chemical

Ltd. and Anr., reported in (1996) 5 SCC 362 the apex

court has directed the government of Madhya Pradesh to

recommend the application of the respondent to the

Government of India for change of location of the Vanaspati

Unit from Dewas to Mandideep. The licence granted for

Dewas was amended to be operated at Mandideep.

57. In our considered view, the said decision does not

have any relevance in the context of the present suit

inasmuch as the respondent in that case, in whose favour the

supreme court had issued the direction, had the licence in his

name and he was the person who sought the permission for

relocation of his industry.

58. The moot point in this appeal is that whether by

way of the said agreement, the entire privilege of the

licencee can be acquired on payment of fees by obliterating

the licencee‟s control over the industrial unit.

59. Mr. S.P. Dutta Purakayastha, learned counsel

appearing for the official respondents has submitted that the

said agreement is ex facie unlawful and as such by the said

agreement whatever rights had been created in favour of the

plaintiff cannot be acted upon. It is a clear transfer in

disguise and such transfer is completely prohibited by

Section 6 of the Transfer of Property Act. No permission had

been taken from the licensing authority before such transfer

had taken place. As such, the ratio of Bindal Agro

Chemical Ltd. (supra) cannot be applied in the present

case.

60. Mr. Purakayastha, learned counsel has submitted

that when the prohibition of transfer has been made by the

statute, in violation thereof, any transfer even under guise

will make the entire transaction untenable. In this regard, he

has made reference to Malappa (Dead) by LRs. vs State

of Karnataka & Anr., reported in (2005) 10 SCC 158;

Tashi Delek Gaming Solutions Ltd. & Anr., Vs. State of

Karnataka & Ors., reported in (2006) 1 SCC 442; and

State of Andhra Pradesh Vs. K. Varalakshmi reported in

(2014) 15 SCC 591

61. Those decisions are remotely connected to the

question that we are considering. In Tashi Delek Gaming

Solutions Ltd. (supra) it has been held that the orthodox

rule of interpretation regarding the locus standi of a person

to reach the court has undergone a sea change with the

development of constitutional law in our country and the

constitutional courts have been adopting a liberal approach in

dealing with the cases or dislodging the claim of a litigant

merely on hypertechnical grounds. If a person approaching

the court can satisfy that the impugned action is likely to

adversely affect his right which is shown to be having source

in some statutory provision, the petition filed by such a

person cannot be rejected on the ground of his not having

the locus standi. In other words, if the person is found to be

not merely a stranger having no right whatsoever to any post

or property, he cannot be non-suited on the ground of his

not having the locus standi.

62. In Malappa (supra) it has been held that when

prohibition of transfer of land has been violated, the

government had every right to take action declaring the sale

as null and void in order to resume the land after following

the due process.

63. In K Varalakshmi (supra) also the protection

clause was upheld and it has been held that the government

may take the action for any violation in order to resume the

land but that should be done following the process of law,

inasmuch as the provisions relating to the protection is

structured to encompass all sorts of transaction of the

assigned land to the landless poor.

64. In Satyan Vs. Deputy Commissioner & Ors.,

reported in (2020) 14 SCC 210, the apex court while

dealing with prohibition of transfer of certain land has

observed that as the permission was not taken, nullification

of the sale deed is liable to be affirmed, even if the challenge

was made after 15 years.

65. Having appreciated the submissions and the

evidence as placed in the said commercial suit, the two

pertinent questions which arise for determining the appeal

are as follows:

(i) Whether the assignment of the licence (Exhibit-

2) by the said agreement (Exhibit-7) is a transfer in violation of Rule 6(3)(b) of the Tripura Forest (Establishment and Regulation of Saw Mills and other Wood Based Industries) Rules, 1985? and

(ii) Whether for such violation, the agreement read with the power of attorney (Exhibit-6) is hit by Section 23 of the Indian Contract Act which deals with the lawfulness of a contract?

66. Section 23 of the Indian Contract Act provides

that an agreement is lawful unless is forbidden by law or is of

such a nature that if permitted it would defeat the provisions

of law. No doubt, the contract has not been expressly

forbidden, but the transfer has been prohibited. It is perfectly

settled that the contract/agreement by which the plaintiff

seeks to enforce his rights as claimed, for realizing the

damage, etc. is expressly or by implication forbidden by law.

No court will lend its assistance to give its effect. It is equally

settled that a contract is void if prohibited by the statute,

even if there is provision for imposing penalty. It may,

therefore, be safely laid down that if the contract is rendered

illegal, it is lifeless for all purposes. In our considered view

provision relating to prohibition of transfer is unequivocal and

stringent. No different, by way of interpretation, is

permissible.

67. If the contract be the profit sharing mechanism it

may not be wholly illegal in view of rule 6(3)(b), but the

agreement that has been entered into between the plaintiff

and Chunilal Banik is not at all a profit sharing contract, but

taking away all the authority of licence, which is a transfer in

disguise. Even the right to apply for renewal has been taken

away by dint of the power of attorney which is irrevocable in

nature. The combined reading of the agreement and the

power of attorney would reveal that the licencee did not have

any power or control over the operation of the Industrial Saw

Mill for which the licence has been issued.

68. Thus, it can safely be held that the said

agreement read with the power of attorney offends the

statue and as such, the said agreement being forbidden by

law is not only void but also invalid. No legal relation can be

recognized based on the said agreement.

69. In the present case, the transfer is prohibited as

stated. But, by the said agreement licence has been

transferred on yearly payment of some amount, which can

be termed as consideration for unlawful object. As such

transfer is prohibited by law, the agreement is not

enforceable in any manner. Hence, the plaintiff cannot insist

for granting any relief based on the said agreement read with

the power of attorney.

70. It is apparent that regarding the locus standi of

the attorney or the plaintiff, the Civil Judge, Sr. Div. has

made some observations and those have been challenged by

the appellant.

71. We are of the view that since we have declared

the said agreement read with the power of attorney as

invalid in the eye of law within the precincts of Section 23 of

the Indian Contract Act, the plaintiff had no locus standi to

proceed with the suit.

72. The respondents No. 1 to 4 [the defendants No. 1

to 4 in the suit] for the reasons best known to them, did

allow the arrangements to go on. They ought to have

cancelled the licence the moment they had knowledge of

such arrangement as ushered in the form of said agreement

and the power of attorney. That, however, cannot in any

way, be used as estoppel as there is no estoppel against the

provision of law.

73. Since, the plaintiff did not have any legal right

over the licence or the business operated on the strength of

licence, the plaintiff cannot claim any damages, even if

assumed there had been any financial loss or damage, for

any action of the respondents No. 1 to 4.

74. Having observed thus, this appeal stands

dismissed being devoid of merit.

Draw the decree accordingly.

Thereafter, send down the LCRs.

             JUDGE                              CHIEF JUSTICE



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