Holding

The suit is not maintainable because it was instituted by an unregistered partnership firm in violation of Section 69(2) of the Partnership Act and without the mandatory notice under Section 320 of the Gujarat Panchayats Act, and consequently no damages are recoverable.

Summary

The appellants, three brothers who operated under the name Jayantilal Hargovandas Thakkar & Co., filed a suit seeking a permanent injunction and damages for breach of a contract to cut babool trees on 174 acres of Gauchar land awarded by Ratangadh Gram Panchayat. The contract was later obstructed by the Forest Department's claim over 20 acres, leading the plaintiffs to claim the Panchayat breached the agreement. The trial court dismissed the suit on two grounds: the plaintiffs were an unregistered partnership firm, violating Section 69(2) of the Partnership Act, and the suit was filed without the mandatory statutory notice required under Section 320 of the Gujarat Panchayats Act. On appeal, the High Court examined whether the suit was indeed filed by a partnership firm, whether the notice requirement applied, and whether damages could be claimed under the Contract Act. Relying on the plain language of Section 69(2) and the mandatory nature of Section 320, the Court held that the suit was not maintainable and that no damages were recoverable. Consequently, the appeal was dismissed.

Issues considered

Whether the suit was filed by a partnership firm and, if so, whether the firm was registered at the time of filing as required by Section 69(2) of the Partnership Act, 1932
Whether a suit against a Gram Panchayat must be preceded by a statutory notice under Section 320 of the Gujarat Panchayats Act, 1961
Whether the plaintiffs are entitled to damages under Section 73 of the Contract Act, 1872 for the alleged breach of the tree‑cutting contract
Whether the trial court erred in its findings on jurisdiction, notice under Section 80 of the CPC, limitation, estoppel and other ancillary points

Legislation cited

Code of Civil Procedure, 1908s. 80, s. 96
Gujarat Panchayats Act, 1961s. 320, s. 88
Indian Contract Act, 1872s. 73
Indian Partnership Act, 1932s. 4, s. 69(2)

Subjects

Partnership ActUnregistered firmSection 69(2)Gujarat Panchayats ActStatutory noticeContract breachDamagesCivil ProcedureInjunctionLand rights

Judgment

C/FA/5383/1997 CAV JUDGMENT DATED: 07/04/2026

Reserved On : 18/03/2026
Pronounced On : 07/04/2026

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

R/FIRST APPEAL NO. 5383 of 1997

==========================================================
JAYANTILAL HARGOVANDAS THAKKAR & ORS.
Versus
GRAM PANCHAYAT,RATANGADH & ANR.
==========================================================
Appearance:
DECEASED LITIGANT THROUGH LEGAL HEIRS/ REPRESTENTATIVES
for the Appellant(s) No. 2,3
MS ARCHANA R ACHARYA(2475) for the Appellant(s) No.
1,3.1,3.2,3.3,3.4,3.5,3.6,3.7
MR.BHARAT VYAS AGP for the Defendant(s) No. 1
MR AJ YAGNIK(1372) for the Defendant(s) No. 1
NOTICE SERVED for the Defendant(s) No. 2
==========================================================

CORAM:HONOURABLE MR. JUSTICE J. C. DOSHI

CAV JUDGMENT

1. By way of the present First Appeal under Section
96 of the Code of Civil Procedure, 1908 (for short the “Code”),
the appellants, who is the original plaintiffs, challenge the
judgment and decree dated 29.08.1997 passed by learned
Civil Judge (S.D.), Palanpur in Special Civil Suit No.45 of
1982, whereby the suit of the plaintiffs came to be dismissed
with costs.

2. For the sake of brevity and convenience, the
parties are referred to their original status and position to the
learned Trial Court.

3. The brief facts borne out at the record are that the
plaintiffs filed a suit against the defendants for permanent
injunction as well as damages for breach of contract. The case

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of the plaintiffs is that, Ratangadh Gram Panchayat, under the
permission of the Deputy Collector, accept the bid of plaintiffs
for cutting babool trees grown on land bearing Survey
No.269, admeasuring 174 acres, which is a Gauchar land. The
babool trees had grown on the said land was causing
interference for grazing bovine. An auction was held on
16.06.1981 after obtaining the opinion of the Forest Officer
and the Deputy Collector. The plaintiffs, being the highest
bidder with a bid of Rs.17,500/-, succeeded in securing the
right to cut the babool trees. The plaintiffs were informed vide
outward No.13 dated 19.07.1981 and was permitted to cut the
babool trees. The plaintiffs were required to complete the
necessary formalities, including execution of the agreement,
on or before 31.07.1982. According to the plaintiffs, in the
meantime, he received a notice from the Forest Office
restraining them from cutting babool trees on 20 acres of
land, which had been reserved for the purpose of a forest
station. Pursuant thereto, plaintiffs approached Ratangadh
Gram Panchayat, which in turn addressed a letter to the
Forest Department requesting to release of 20 acres of land
that had been handed over to the Forest Department in 1973
for expansion of forest area for a period of five years.

3.1 Since the said period for which forest department
was handed over the 20 acres land, had expired, the Gram
Panchayat requested the Forest Department to permit the
plaintiffs to cut babool trees on the said 20 acres of land.
However, the Forest Department did not grant such
permission. Thereafter, plaintiffs approached the learned Trial

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Court seeking a permanent injunction restraining the
defendants from interfering with their right to cut the babool
trees. Subsequently, the plaintiffs amended the suit and
claimed damages of Rs.5,27,000/- for breach of contract,
contending that they could not cut babool trees from the
entire land of Survey No.269.

3.2 The defendants were duly served. Defendant No.1-
Ratangadh Gram Panchayat, filed its written statement at
Exh.18, raising contentions that the Civil Court has no
jurisdiction to try and decide the suit and the suit is not in
proper form. The plaintiffs, being an unregistered partnership
firm, could not maintain the suit and no notice under Section
320 of the Gujarat Panchayats Act, 1961 (for short, “G.P. Act”)
has been issued prior to filing the suit. Therefore, the suit is
not maintainable. It is further contended that as per the terms
and conditions of the contract, the plaintiffs failed to cut the
babool trees even in other portion of Survey No.269 and had
themselves stopped the work on the illusionary ground that
the Forest Department had restrained them. It is also
contended that the plaintiffs were required to cut the babool
trees while leaving stumps of 2 to 2.5 feet, but in breach of
the terms and conditions, plaintiffs had deforested the trees.
Lastly, it is contended that the plaintiffs had given an
undertaking to the Forest Department that they would not cut
babool trees on the 20 acres of land under its possession.
Thus, claim of the plaintiffs in defiance of undertaking is
barred by principle of estoppel. Therefore, the plaintiffs are
not entitled to permanent injunction or damages for breach of

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contract.

3.2 The State Government also filed its written
statement, mainly contended that the suit is not maintainable
for want of notice under Section 80 of the Code, which is
mandatory. It is further contended that, by Resolution No.4,
20 acres of land from Survey No.269 had been handed-over to
the Forest Department for expansion of forest area, and since
the said land was in possession of the Forest Department, the
Gram Panchayat had no authority to grant permission to the
plaintiffs to cut babool trees on that portion of land.
Therefore, the plaintiffs claim is not maintainable. Upon the
aforesaid contentions, the State Government requested to
dismiss the suit.

3.3 The learned Trial Court framed issues at Exh.40
and, after permitting both parties to lead evidence, dismissed
the suit mainly on two grounds: firstly, the plaintiffs, being an
unregistered partnership firm, could not maintain the suit
against a third party in view of Section 69(2) of the
Partnership Act; and secondly, that notice under Section 320
of the G.P. Act, is mandatory in nature, and in absence of such
statutory notice, the suit is not maintainable.

3.4 Being aggrieved, the plaintiffs have preferred the
present appeal before this Court, inter alia, on the grounds
raised in the appeal memo.

4 I have heard learned advocate Ms.Archana Acharya

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for the appellants, learned advocate Mr. Vedant Gaikwad for
Ratangadh Gram Panchayat and learned AGP Mr.Bharat Vyas
for the respondent – State.

5. Learned advocate Ms.Acharya mainly submitted
that the learned Trial Court failed to appreciate the distinction
between a co-ownership and a partnership, and erroneously
applied Section 69 of the Partnership Act, 1932. She further
submitted that the mere use of a common trade name does
not establish that the persons have formed a partnership firm.
She also contended that even the sharing of income or profits,
by itself, does not constitute a partnership firm. She drew
attention of this Court to the plaint and submitted that it was
not a partnership firm which filed the suit; rather, three
brothers, carrying on business as co-owners, instituted the
suit for recovery of damages and for the relief of permanent
injunction. She further submitted that the learned Trial Court
committed a serious and manifest error in believing that a
partnership firm was the plaintiffs, whereas in fact it was the
three brothers, who had filed the suit seeking the reliefs
prayed for in the plaint. She submitted that even if co-owners
describe themselves as a firm, it does not ipso facto make
them a partnership firm. She contended that, in order to
constitute a partnership, the essential ingredients as defined
under Section 4 of the Partnership Act must be satisfied, and
in the absence of such ingredients, no conclusion can be
drawn that the entity is a partnership firm merely based on
the name under which the suit is filed.

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5.1 She further submitted that the plaint was duly
signed by all three brothers and not by one acting as an agent
of the others, which clearly demonstrates that the suit was
filed by individual acting as co-owners. She submitted that the
contract awarded by the Ratangadh Gram Panchayat for
cutting babool trees was likewise executed by all three
brothers. Thus, the finding of the learned Trial Court is that
the suit filed by an unregistered partnership firm is not
maintainable in view of Section 69(2) of the Partnership Act.

5.2 In support of the aforesaid submissions, she relied
upon the following decisions:

(i) Champaran Cane Concern Vs. State of Bihar &
Anr. reported in 1963 SCC Online SC 240, (ii)
Maliram Chowdhury Vs. Jagannath Modi
reported 1971 SCC Online Ori 25,(iii) Mirza Najm
Effindi Vs. Firm Kohinoor Footwear Co. reported
in 1945 SCC Online All 159; (iv) Mohammad
Laiquiddin & Anr. Vs. Kamala Devi Misra (Dead)
By LRS. & Ors. reported in (2010) 2 SCC 407. (v)
Nath Lal Vs. Sri Mal & Another reported in AIR
1940 All 230;

5.3 She further submitted that even if a transaction
took place in a particular name claiming to be a firm, a
solitary transaction does not constitute a partnership firm.
She submitted that the essential ingredients, as defined under
Section 4 of the Partnership Act, must be satisfied to establish

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the existence of a partnership firm—namely: (i) there must be
an agreement between the partners; (ii) there must be a
sharing of profits and losses of the business; and (iii) the
business must be carried on by all or any of them acting for
all. In the present case, none of these ingredients are
satisfied. Therefore, Section 69 of the Act, is not attracted,
and the learned Trial Court has committed a serious and
manifest error in dismissing the suit on the ground that the
plaintiffs is an unregistered partnership firm and, thus, the
suit is not maintainable.

5.4 The second limb of the submissions canvassed by
learned advocate Ms. Acharya is that the plaintiffs’ claim lies
against the State Government, which failed to grant the
access of 20 acres of land to the plaintiffs for cutting babool
trees. This 20 acres, parcel of land was in the possession of
the Forest Department, which is a branch of the State
Government. Therefore, she submitted that the suit is
maintainable even without issuing notice under Section 320 of
the G.P. Act, as no relief is sought against the Ratangadh
Gram Panchayat. Expanding her arguments, Ms. Acharya
referred to Section 88 of the G.P. Act read with Schedule-I,
and submit that the functions of the Panchayat are limited to
matters such as maintenance of property belonging to the
Panchayat and public purpose maintenance. The Panchayat
has no authority to enter into contract for the clearance of
babool trees or any other trees on Gauchar land. Such a
contract would fall within the domain of the State Government
and, in the present case, permission to cut trees, appears to

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have been granted by the Deputy Collector on behalf of the
State Government. In view of this, the finding of the learned
Trial Court that the suit is not maintainable without issuing a
notice under Section 320 of the G.P. Act, is contrary to settled
legal principles.

5.5 Lastly, learned advocate Ms. Acharya submitted
that it is a clear case where documentary evidence establishes
that the plaintiffs were deprived of access to 20 acres of land
for cutting babool trees. Consequently, the plaintiffs could not
derive the profits that would have accrued from cutting
babool trees on land bearing Survey No.269. She would
submit that, in fact of the case, it is presumed that the
plaintiffs have suffered damages, as the State Government,
despite agreeing to provide access to a total of 174 acres of
land, failed to grant full access, thereby breached its promise.
Therefore, in view of Section 73 of the Contract Act, the
plaintiffs are entitled to claim damages.

5.5 In view of the aforesaid submissions, learned
advocate Ms.Acharya prayed to allow the present First Appeal
and also prayed that the impugned judgment and decree
passed by the Court below be set aside and the reliefs as
prayed for be granted.

6. Per contra, learned advocate Mr.Gayakwad
referred to the title of the suit and submitted that the suit has
been filed by Jayantilal & Hiralal & Amrutlal Company
through three plaintiffs. He submitted that Order XXX Rules 1
and 2 provide that a suit has to be filed in the name of the

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firm, disclosing the names of its partners. He further
submitted that, by strictly following the said procedure, the
plaintiffs have filed the suit. However, the plaintiffs have
taken a contradictory stand by stating that the suit has been
filed by co-owners and not by the partnership firm. He
submitted that if the suits were filed by co-owners, then there
was no need to mention the plaintiffs firm in the cause title of
the plaint.

6.1 Learned advocate Mr. Gayakwad also referred to
the deposition of plaintiff No.2 at Ex. 66 and submitted that,
in the deposition, plaintiff admitted that Jayantilal Hiralal
Amrutlal is a registered partnership firm and plaintiff Nos.1 to
3 are its partners. It is further admitted that the public
auction took place on 16.06.1981, whereas the partnership
firm came into existence in 1984 by execution of a partnership
deed. It is also admitted that on the date when the public
auction took place, the registered partnership firm was not in
existence, although a partnership between the partners
existed whereby. It was decided that the work of cutting babul
trees would be undertaken jointly, and the partnership firm
would be constituted once the contract was awarded. He
further submitted that, upon perusal of the pleadings, the
plaintiffs have not made necessary averments regarding when
the partnership firm came into existence, how the contract
was obtained, what were terms and conditions agreed
between the three brothers to conduct the business, and
whether the business was carried out as a partnership firm.
He further submitted that Ratangadh Gram Panchayat, in its

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written statement at Ex.18, specifically raised these
contentions in unambiguous terms; however, the plaintiffs
failed to clarify these aspects either by leading oral or
documentary evidence but remained silent. He further
submitted that, upon perusal of Exs.232 and 175, it is
demonstrated that the partnership firm was registered
subsequent to the filing of the suit, i.e., on 5th January, 1984.
Prior to the date of filing of the suit, the partnership was
unregistered, which attracts the bar under Section 69(2) of
the Partnership Act. Therefore, he submit that the learned
Trial Court has rightly considered the issue and decided it in
favour of Ratangadh Gram Panchayat.

6.2 In support of his submissions, learned advocate Mr.
Gayakwad relied upon the decisions in the case of M/s.
Shreeram Finance Corporation Vs. Yasin Khan & Or. reported
in (1989) 3 SCC 476 and Purushottam & another Vs. Shivraj
Fine Arts Litho Works & Ors. reported in (2007) 15 SCC 58.

6.3 The next submission of learned advocate Mr.
Gayakwad is that Ratangadh Gram Panchayat is a statutory
body, and under the provisions of the G.P. Act, particularly
Section 320, no suit can be filed against the Gram Panchayat
without prior issuance of a statutory notice. He submitted
that, in the present case, admittedly no such statutory notice
was issued prior to filing of the suit. He submitted that, from
the pleadings of the plaintiffs, it is evident that the plaintiffs
has nowhere alleged mala fide action on the part of
Ratangadh Gram Panchayat. In view of this, the plaintiffs

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were mandatorily required to issue notice under Section 320
of the G.P. Act. The findings of the learned Trial Court in this
regard are fully justified and legally sound.

6.4 On the basis of the above submissions, learned
advocate Mr. Gayakwad prayed for dismissal of the present
First Appeal.

7. Learned AGP Mr.Bharat Vyas adopted the
submissions of learned advocate Mr.Gayakwad and submits
that the judgment and decree passed by the learned Trial
Court be confirmed by dismissing this Appeal.

8. Having heard learned advocates appearing for the
parties and considering their rival submissions, the following
questions arise for consideration, particularly in light of the
bar under Section 69(2) of the Partnership Act, as well as
provision of Section 320 of the G.P.Act.

(i) Whether it is proved that the suit has been filed
by Jayantilal Amrutlal Hiralal and Company?

(ii) Whether the suit of the plaintiffs is not
maintainable against Ratangadh Gram Panchyat on
the ground that notice under Section 320 of the
G.P.Act was not issued?

(iii) Whether the plaintiffs prove that they are
entitled to damage to the tune of Rs.5,27,000/- in
respect of a contract for which they paid
Rs.17,5000/- towards the total amount for cutting

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babool tree standing on land admeasuring 174
acres in survey No.269 of Ratangadh Gram
Panchyat village?

(iv) Whether the learned Trial Court has committed
any error in dismissing the suit of the plaintiffs?

9. From the rival pleadings, the learned Trial Court
framed the following issues at Ex.40:

(1) Whether Plaintiffs prove that Plaintiff is a registered
partnership firm?

(2) Whether Plaintiffs prove that bid of Rs.17,500/- to cut
babul trees standing on 174 acres of Sr.No.269 of village
Ratangadh was accepted by Deft. No.1?

(3) Whether Deft. No.2 proves that the Deft. No.1 was not
authorised to auction 20 acres of land out of 174 acres of Sr.
No. 269 of village Ratangadh ?

(4) Whether Plaintiffs prove that they were restrained from
cutting the trees by Deft. NO.2 from 20 acres of land of
Sr.No. 269? If yes, They are entitled to extend time for
cutting trees ?

(5) Whether Deft. No.1 proves that Plaintiffs were unable to
cut the Babul trees within stipulated period.?

(6) Whether Suit is bad for want of notice u/s 80 CPC ?

(7) Whether the suit is bad for want of notice u/sec. 320 G.P.
Act ?

(8) Whether the Suit is barred by limitation?

(9) Whether the suit is barred by principle of estopal ?

(10) Whether this Court has no jurisdiction ?

(11) What reliefs the Plaintiffs are entitled to ?

(12) What order and decree?

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10. Issue Nos.1, 6, 8 and 11 were answered in the
negative. Issue Nos.2, 7 and 9 were answered in affirmative.
The first part of Issue No.4 was answered in the affirmative,
whereas the second part was answered in negative. The
learned Trial Court held that it had jurisdiction to try the suit
and accordingly answered Issue No.10, ultimately dismissing
the suit.

11. The core dispute between the parties is whether
the partnership firm, as plaintiffs, have filed the suit are three
brothers as co-owners have filed suit? The title of the plaint
indicates that plaintiff Nos.1, 2, and 3 have filed the suit as
persons carrying on business under the name and style of
Jayantilal Hiralal & Amrutlal Company. This suggests that the
suit has been filed in terms of Order XXX of the Code of Civil
Procedure. However, the averments in the plaint do not
clearly specify whether the plaintiffs have filed the suit as
partners of a partnership firm or in the individual capacity in
the name and style of the business under the ownership. In
the absence of specific pleadings, describing the title in the
name of a firm without clarification would suggest that the
suit has been filed by a partnership firm as contemplated
under Order XXX of the CPC.

12. It is an admitted position that the plaintiffs did not
produce the registration certificate of the partnership firm
along with the plaint. The plaintiffs have also failed to plead
the date of registration of the partnership firm or disclose the
names of its partners. Plaintiff No.2 entered into the witness

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box at Ex.66 as P.W.1. In cross-examination, he admitted that,
at the time of filing the suit, the partnership firm was
unregistered. Simultaneously, he did not clarify whether the
suit had been filed by the firm or by three brothers in their
individual capacity as co-owners. Such silence assumes
significance as Ratangadh Gram Panchayat in its written
statement raised this issue with specific contention. He
further admitted that he was unaware whether the
partnership firm is registered. In the cross-examination by the
learned advocate for defendant No. 2, he admitted that the
public auction took place on 16th June, 1981, and the
partnership firm came into existence in 1984. Thus, at the
time of the public auction, the partnership firm was not in
existence. He further admitted that although the firm was not
in existence, there was an understanding of partnership
among the three brothers prior to the auction. It was also
admitted that such partnership was not registered at the time
of the auction and was registered subsequently. Apt to note
that the written statements filed by defendant Nos.1 and 2
raised a specific objection that the partnership firm was
unregistered.

13. In the backdrop of the aforesaid pleadings and
factual aspects as well as evidence, reference made to Section
69(2) of the Indian Partnership Act, which reads as under:-

“69(2) No suit to enforce a right arising from a contract shall
be instituted in any Court by or on behalf of a firm against any
third party unless the firm is registered and the persons suing
are or have been shown in the Register of Firms as partners
in the firm.”

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14. The plain reading of Section 69(2) of the Act
stipulates that the suit to enforce a right arising from a
contract shall not be instituted in any Court by or on behalf of
a firm against the third party unless the firm is registered and
the persons suing are or have been shown in the register of
firm as partners in the firm.

15. The Hon’ble Supreme Court, in the case of M/s
Shriram Finance Corporation (supra), in para 6, has
explained the effect of Section 69(2) of the Partnership Act,
which is as under:-
“6.In the present case the suit filed by the appellants is clearly
hit by the provisions of sub-section (2) of section 69 of the said
Partnership Act, as on the date when the suit was filed, two of
the partners shown as partners as per the relevant entries in
the Register of Firms were not, in fact, partners, one new
partner had come in and two minors had been admitted to the
benefit of the partnership firm regard- ing which no notice was
given to the Registrar of Firms. Thus, the persons suing,
namely, the current partners as on the date of the suit were not
shown as partners in the Register of Firms. The result is that
the suit was not maintainable in view of the provisions of sub-
section (2) of section 69 of the said Partnership Act and the
view taken by the Trial Court and confirmed by the High Court
in this connection is correct.

16. Yet in judgment in the case of Purshottam (supra),
in para 8, the Hon’ble Apex Court has held as under:-

“8. The question as to whether the subsequent registration
of the firm would cure the initial defect in the filing of the
suit arose for consideration in D.D.A. Vs. Kochhar
Construction Work and Anr. (1998) 8 SCC 559. This Court
held that in view of the clear provision of the Act it was not
possible to subscribe to the view that subsequent
registration of the firm may cure the initial defect, because
the proceedings were ab initio defective as they could not
have been instituted since the firm in whose name the
proceedings were instituted was not a registered firm on the
date of the institution of the proceedings. This Court also

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noticed the difference of opinion amongst the High Courts
and concluded thus:- (SCC P.562 para 4)
“4.Counsel for the respondents, however, invited our
attention to two decisions which take a view that
subsequent registration of the firm can cure the initial
defect provided the registration is before the period of
limitation has run out. Our attention was drawn to
M.S.A. Subramania Mudaliar Vs. East Asiatic Co. Ltd.
and Atmuri Mahalakshmi Vs.Jagadeesh Traders.
However, the High Court of Patna in Laduram Sagarmal
Vs. Jamuna Prasad Chaudhuri and the High Court of
Madras in T. Savariraj Pillai Vs. R.S.S. Vastrad & Co.
take a contrary view and hold that the suit is
incompetent ab initio. We have considered these
decisions, but in the light of the plain language of
Section 69 of the Partnership Act read with Section 20 of
the Arbitration Act and in view of the decision of this
Court reported in Shreeram Finance Corpn. We are
clearly of the opinion that proceedings under Section 20
of the Arbitration Act were ab initio defective since the
firm was not registered and the subsequent registration
of the firm cannot cure that defect".

The same view was also reiterated in U.P. State Sugar
Corpn. Ltd. v. Jain Construction Co.

17. In view of the aforesaid aspect, according to this
Court, the plaintiffs have miserably failed to establish their
right to file the suit for enforcement of a contractual right. It
implies that the learned Trial Court has not committed any
error in deciding the issue against the plaintiffs. The
contention of the learned advocate Ms.Acharya that the
plaintiffs were carrying on business as co-owners appears to
be an afterthought. The pleadings and evidence on record
clearly indicate that the suit has been filed by a partnership
firm which was not registered on the date of institution of the
suit. Even though the firm was subsequently registered, such
registration does not cure the defect under Section 69(2) of
the Partnership Act. Accordingly, the first contention raised

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by the learned advocate Ms. Acharya, is rejected.

18. To address next question, it would be apposite to
refer Section 320 of the Gujarat Panchayat Act, which reads
as under:-

“320 (1) No action shall be brought against any panchayat,
conciliation panch or Nyaya Panchayat or any member, officer,
servant or agon of a pan-chayat, conciliation panch or Nyaya
Panchayat acting under its direction, in respect of any-thing in
good faith done under thin Act or any rule or by-law.

(2) No action shall be brought against any panchayat,
conciliation panch or Nyaya Panchayat or any member, officer,
servant or agent of such panchayat, conciliation panch, or
Nyaya Panchayat acting under its direction for anything done
or purporting to have been done by or under this Act until the
expiration of one month next after notice in writing has been
left for delivered at the office of the panchayat, conciliation
panch or Nyaya Panchayat and also at the residence of the
member, officer servant or agent thereof against whom the
action is in-tended to be brought. The notice shall, state the
cause of action, the nature of the relief sought; the amount of
compensation claimed and the name and place of abode of the
person who intends to bring the action.

(3) Every such action shall be commenced within six months
after the accrual of the cause of action, and not afterwards.

(4) If any panchayat, conciliation panch, Nyaya Panchayat or
person to whom the notice un-der sub-section (2) is given shall,
before an action is brought, tender sufficient amends to the
plaintiff, and pay into Court the amount so tendered. The
plaintiff shall not recover more than the amount so tendered;
the plaintiff shall also pay all costs incurred by the defendant
after such tender.

19. The provision begins with the word “no”, indicating
its mandatory nature. Therefore, no action can be instituted
against the Panchayat or its members or officers without
issuing a statutory notice of one month. Further, the limitation
period for filing such a suit is six months from the date of
accrual of the cause of action.

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20. The argument of the learned advocate Ms. Acharya
that the Panchayat is only a formal party and has no authority
under Section 88 of the G.P. Act to award contract to the
plaintiff runs contrary to the pleadings in the suit. It is the
plaintiff’s own case that the Panchayat conducted the public
auction, wherein the plaintiffs were the highest bidder and
was awarded the contract for cutting babool trees on land
admeasuring 174 acres. Since the Panchayat issued the order
in favour of the plaintiffs, the suit was essentially against the
Gram Panchayat as well as the State Government. The learned
Trial Court, with regard to notice under Section 80 of the
Code, granted exemption by passing an appropriate order.
Therefore, the plaintiffs were not required to issue notice
under Section 80 of the Code. The findings are not found to be
germane at this stage, particularly since such findings have
not been challenged.

21. As far as the notice under Section 320 of the G.P.
Act is concerned, the finding of the learned Court is correct.
The notice is mandatory. The suit has been filed against the
Gram Panchayat in the absence of any pleadings or
allegations of mala fide action on the part of the Panchayat, its
members, officers, or servants. Prior to filing suit, the
issuance of notice under Section 320 of the G.P. Act is
mandatory. A plain reading of the plaint does not indicate that
the plaintiffs have alleged any mala fide action on the part of
the Gram Panchayat or its officers or servants. In view of the
above, the finding of the learned Trial Court that, the suit filed
without issuing notice under Section 320 of the G.P. Act, is

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not maintainable, is a correct proposition of law and does not
call for any interference.

22. The argument that, plaintiffs are entitled to
damages of Rs. 5,27,500/- under a contract awarded for a
meager amount of Rs.17,500/- is surprising and laughable, the
contract does not stipulate that, in the event of a breach,
Gram Panchayat or the State Government would be liable to
pay any compensation. Therefore, Section 73 of the Contract
Act, ipso facto, does not entitle the plaintiffs to compensation
for alleged loss or damage caused by breach of contract. A
person claiming damages for breach of contract must first
establish that the contract was breached due to non-
performance of the promise by other party. The promiser
claiming damages must prove that the promisee failed to
perform their part, and vis-a-vis and thus, he actually
sustained damage.

23. Upon perusal of the record, this Court does not find
any evidence to show that the defendants breached the
contract or failed to fulfill their promises. The plaintiffs, who
claim damages for not being permitted to cut babool trees on
20 acres of land and seek compensation of Rs. 5,27,500/-, has
failed to establish how many babool trees, he had cut from the
remaining parcel of land. It is pertinent to note that the
plaintiffs were awarded a contract to cut babool trees on 174
acres of land. Even, if the contention of the plaintiffs is
accepted that they were not permitted to cut trees on 20
acres, they were required to prove that, within the stipulated

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period (i.e. before 31st July 1982), they had cut the babool
trees on the remaining 154 acres. The plaintiffs hopelessly
failed to prove any such contention and, therefore, plaintiff’s
suit does not attract Section 73 of the Contract Act. Another
aspect deserves consideration is that the said 20 acres of land
had already been allotted to the Forest Department by the
State Government under the “Gram Vanikaran Scheme” at the
time when the contract was awarded. Thus, the land was not
in the possession of the Gram Panchayat. Despite this, the
Ratangadh Gram Panchayat awarded the contract for cutting
babool trees on that land. The contract, therefore, suffers
from inherent illegality. This is evident from Exhibit 184, a
letter written by the Sarpanch of Ratangadh Gram Panchayat
to the Divisional Forest Officer (DFO) requesting handover of
possession of the 20 acres. Although, the letter is undated, it
clearly indicates that it was written subsequent to the award
of the contract. In nutshell, at the time of awarding the
contract, the said 20 acres were not in the possession of the
Gram Panchayat or the State Government. Furthermore, the
Forest Department is not a party to the suit. Therefore, the
grant of a contract in respect of land not in possession of the
Gram Panchayat, is bad in law. The plaintiffs cannot claim
right upon such illegal contract to claim for damages.
Noticeable that plaintiff had tendered undertaking to Forest
Department that he will not enter in 20 acres land preserved
by Forest Department under the “Gram Vanikaran Scheme.”

24. In view of the aforesaid reasons, the plaintiffs have
no case and appear to be attempting to claim an exorbitant

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amount of damages under a contract that was awarded for a
meager amount of Rs.17,500/- while claiming an amount of
Rs.5,27,500/-. Consequently, for aforesaid reasons, the appeal
sans merits, inexorably merits dismissal and is, accordingly
dismissed. R&P, if any, be sent back to the concerned Court.

25. Civil Application, if any, does not survive and
stands disposed of accordingly. Interim relief, if any, stands
vacated.

(J. C. DOSHI,J)
MANOJ

Original copy of this order has been signed by the Hon'ble Judge.
Digitally signed by: MANOJKUMAR(HC01092), PRIVATE SECRETARY, at High Court of Gujarat on 07/04/2026 17:02:02

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