Pattipati Ramalingaiah And Another v. Nagulagunta Subbarami Reddi .

1. These two appeals arise out of two actions instituted by the villagers of Somasila and Kammavaripalli in Nellore District for recovery of Rs. 120 and Rs. 240 respectively from defendant 1, in both the actions. There is a tank by name Mallacheruvu which is situate at the junction of three villages, Samasila, Kambhempaud and Kammavaripalli. The right of catching fish in the tank for the year 1941 was leased out by revenue auction. At that auction, defendant 1 was the sole bidder for Rs. 11-4-0. His bid was accepted and he became the purchaser of the right. He appears to have granted a lease of this right to defendant 3 for Rs. 600. There is evidence to show that in that year the fishery crop, if I may use the expression, was a good one, and was probably worth considerably more than Rs. 600 possibly Rs. 800 or 900. The case of the plaintiffs was that there was an arrangement amongst the villagers as a result of which there was an agreement not to bid against each other and to put up defendant 1, as the sole bidder. His bid was really to be for and on behalf of all the villagers, the villagers to share the right in the proportion of 1/5th for Somasila, 2/5th each for the other two villages. The suit was defended by defendant 1, who denied that he bid for the villagers under an agreement as stated in the plaint. He claimed that he was a purchaser in his own and individual right. The trial Court held that the agreement was made out, although it found that the custom pleaded by an agreement on those lines for all preceding years was not established. It decreed the suit in favour of the plain, tiffs. I may refer to a counter suit filed by defendant 1 for recovery of Rs. 500 alleging that the villagers trespassed upon his rights illegally and forcibly and carried away the fish and thereby caused damage to him to the extent of Rs. 500. The learned Munsif found that the damage was not established, and he dismissed that suit. There were three appeals to the District Court. The learned Judge on appeal took a new point, namely, whether the agreements pleaded were not opposed to public policy and illegal. He was of opinion that a “knock out” agreement like this amounted to stifling fair competition in the bid of property belonging to the State and was illegal as being opposed to public policy. In that view, he dismissed all the appeals. The plaintiffs, in the two suits filed by the villagers, have filed these two second appeals. Defendant 1 whose appeal was dismissed has not filed any second appeal of his own.

2. In the appeals it is contended by Mr. Umamaheswaram that an agreement not to bid against each other is not illegal under the common law; nor is the auction sale invalidated because of such an agreement. He relies on the passage in Halsbury's Laws of England, vol. I, p. 708 and the two decisions of the English Courts in Rawlings v. General Trading Co., (1921) 1 K.B 635 : (90 L.J K.B 404) and Cohen v. Roche, (1927) 1 K.B 169 : (95 L.J K.B 945). He points out that the Judicial Committee have recognised a similar doctrine in Mohamed Meera Ravuthar v. Vijaya Raghunadha Gopalar, 23 Mad. 227 : (27 I.A 17 P.C), and all the Courts in India have practically taken the same view. He refers me to the decision in Mohamed Isack v. Sreeramulu, (1946) 1 M.L.J 187 : (A.I.R (33) 1946 Mad. 289), where the learned Judge following Hari Balakrishna v. Naro Moreshwar, 18 Bom. 342, held that such an agreement was not invalid.

3. Mr. Seshachalapathi, the learned advocate for the respondent, draws my attention to the dissenting judgment of Scrutton L.J, in Rawlings v. General Trading Co., (1921) 1 K.B 635 : (90 L.J K.B 404), and pointedly refers to the observations of the House of Lords which are found in the well known case in Moghul Steamship Co. v. Gregor Cow & Co., (1892) A.C 25 : (61 L.J.Q.B 295). He argued that this is a case where there was an implied misrepresentation by the villagers who practised deception upon the revenue official and caused detriment to the public exchequer by an unfair and illegal agreement amongst the villagers and created, as it were, a monopoly right and prevented the possibility of a fair auction. He says that an agreement which has such consequences must be treated in law as illegal on grounds of public policy. In the face of the authorities relied on by the appellants, it is not permissible for me to take the view contended for by the respondent. In England it would appear that there had been an enactment of a statute to remedy the evil of “a knock-out” combination like this. There is no similar statute in India. However, I cannot give effect to the contention of the respondent that such an agreement should be invalidated on the ground of public policy. The precedents are far too numerous to be got over, even if one should be disposed to disagree with the underlying reasoning therein.

4. It would follow that the two second appeals should be sent back to the lower appellate Court. The learned advocate for the appellants argues that there is no necessity to send them back, because there is a finding according to him that the agreement set up in the plaint was true. The District Munsif no doubt recorded a finding to that effect. The District Judge also has, in discussing the general question referred to this aspect of the matter and has held that the circumstances point out that there must have been an agreement in the terms pleased. The advocate for the respondent suggests, however, that the evidence has not been discussed, and that he is entitled to have a revised finding on that point in the light of the evidence. Having regard to the admitted fact that the fishery was worth very much more than Rs. 11-4-0, it seems to be prima facie difficult to hold that the villagers would have kept quiet unless there was an agreement that the bid should be really for and on behalf of the villagers. The defendants' denial does not carry conviction. The appellate Court has stressed the circumstances against the defendants' plea.

5. It seems to me that having regard to the above facts the learned Judge's finding, though there is no discussion of the oral evidence, should be accepted as a definite finding against defendant 1. In this view it would follow that there is no necessity to send back the case for rehearing by the appellate Judge again.

6. The second appeals are therefore allowed, the decrees of the lower appellate Court are set aside, and the decrees of the trial Court are restored with costs both here and in the Court below.

7. No leave.

C.R.K/D.R

8. Appeals allowed.