- (1.) THE respondents in this appeal were plaintiffs in an action against the appellant to recover Rs. 95,631-14-3 together with interest thereon at the rate of six per cent. per annum from 1st November 1950 to 15th June 1951, amounting to Rs. 3,108 and further interest on the total amount of Rs. 98,739-14-6 from the date of the suit till the date of realisation. The suit was tried by the District Judge of Ratlam and judgment was given for the plaintiff for an amount of Rs. 95,631-14-3 with proportionate costs.
(2.) THE plaintiffs' case was that on 12th January 1947, H. H. Maharaja Sajjan Singh of Ratlam as the sovereign Ruler of the former Ratlam State entered into an agreement with them for the manufacture and distillation of country liquor and for supplying it wholesale to warehouses at Ratlam and Bajna at the rates mentioned therein for a period of seven years from 1st October 1946; that on a representation made by the plaintiffs on 9th May 1947, to the Ruler for an increase in the agreed rates on account of the costs of production having gone up, the Maharaja passed an order on 25th September 1947, raising the rates at which the plaintiffs were to be paid for the liquor supplied by them from 1st February 1947; that when in October 1947, the Council of Ministers of the State recommended to the Ruler that the enhanced rates should be made effective a week after the acceptance of their recommendation, the Maharaja rejected the submission of the Council and on 16th December 1947, passed an order affirming his previous order of 25th September 1947, and directing the State authorities to pay the balance due to the plaintiffs in instalments spread over two years; that subsequently in response to a letter of the Commissioner of Excise of Ratlam State, they submitted a bill claiming Rs. 95,631-14-3 as the balance due to them at the enhanced rate for the liquor supplied by them from 1st February 1947 to 23rd December 1947; and that despite several reminders this amount remained unpaid even until the administration of Ratlam State was handed over to the Raj-Pramukh of Madhya Bharat in accordance with the Covenant entered into on 22nd April 1948, by the Rulers of Gwalior, In-dore and certain other States of Central India including Ratlam State for the formation of Madhya Bharat. The plaintiffs proceeded to aver that by Article VI of the Covenant and the provisions of the Constitution which was accepted as the Constitution for the State of Madhya Bharat by a supplementary Covenant entered into by the Rulers of the covenanting States towards the end of 1949, the Madhya Bharat State, as the successor State, became liable to pay to them the amount of Rs. 95,631-14-3 which was due to them from the Ratlam State. The plaintiffs further stated that on 19th June 1948, the Regional Commissioner purported to cancel the orders dated 25th September 1947 and 16th December 1947, of H. H. Maharaja Sajjan Singh of Ratlam, but the order was illegal as the Regional Commissioner had no power to rescind the orders. As the Madhya Bharat Government did not accept the liability of the plaintiffs, they instituted a suit, out of which this appeal arises, claiming Rs. 95,631-14-3 besides interest as the balance due to them, on account of the enhanced rates for the liquor supplied by them to the Ratlam State.
(3.) THE defendant-State admitted that on 12th January 1947, an agreement was concluded between the plaintiffs and the Ruler of Ratlam State for the supply of country liquor for a period of seven years from 1st October 1946, to the State warehouses at Ratlam and Bajna at the rates specified in the contract and that H. H. Maharaja Sajjan Singh subsequently increased the rates and made the enhanced rates effective from 1st February 1947. The suit was resisted on the grounds : (i) that the order dated 16th December 1947 of H. H. Maharaja Sajjan Singh was validly rescinded by the Regional Commissioner on 19th June 1948; (ii) that the aforesaid order of H. H. Maharaja Sajjan Singh did not create any contractual right in regard to the enhancement of rates but mainly granted gratuitous concessions; (iii) that, therefore, there was no obligation either on the Ratlam State or on the Madhya Bharat State under Article VI of the Covenant to pay the amount claimed by the plaintiffs; and (iv) that the plaintiffs had no right in law enabling them to bring the suit. ;