Srivastava, J. - (1.) These two appeals are connected with each other as they involve a common point of law. They have, therefore, been heard together and we shall dispose them of by a common judgment.
(2.) The appellant in First Appeal No. 41 of 1954 is the Buland Sugar Co. Ltd., Rampur, while the appellant in First Appeal No. 42 of 1954 is the Raza Sugar Co. Ltd. Rampur. Both these limited companies were incorporated in the former Slate of Rampur under the Rampur State Companies Act 1932. The former commenced its business on the 24th November 1935 and the latter on the 17th December 1933. The Nawab of Rampur was the ruler of the Rampur State at that time. He was anxious to develop the sugar Industry in his State and, therefore, promised some facilities and concessions to the promoters of these two companies before they were incorporated. The assurances given to the appellant in First Appeal No. 41 of 1954 were embodied in an agreement entered into between the ruler of the State and the company on the 11th December 1934. It provided, inter alia. "The company shall pay to the first party (the ruler) Sugar Excise duty for the period and at the rates that such duty is levied in British India with the benefit of the like rights of obtaining remissions and refunds in respect thereof upon the sugar produced by the Company at its factory in the State except upon such sugar as is required for bona fide consumption within the State.'' A similar agreement was entered into between the ruler and the Raza Sugar Co. Ltd. by a deed dated the 10th May 1938 as modified subsequently on the 14th December 1934. The arrangement between the ruler and the two companies for the enforcement of these agreements was that the companies used to pay excise duty on the sugar manufactured by them to the ruler but the latter refunded to them every year the excise duty that had been paid on sugar that was consumed in the State itself. The ruler of Rampur State acceded to the Dominion of India after the partition of the country and the Rampur State became a centrally administered area with effect from the 1st July 1949. It was ultimately merged in the State of Uttar Pradesh on the 1st December 1949. The Central Excises and Salt Act 1944 was made applicable to the erstwhile territory of Rampur State with effect from the 26th July 1949. From the date on which the State of Rampur became a centrally administered territory excise duty on sugar produced by the two companies began to be realised by the Union of India. When at the end of the year the two companies claimed a refund of the excise duty paid in respect of sugar consumed in the territory of the erstwhile State of Rampur on the basis of the two agreements already mentioned the Union of India refused to make the refund. The two suits out of which these appeals have arisen were thereupon filed. The Buland Sugar Company Ltd. filed suit No. 6 of 1951 out of which First Appeal No. 41 of 1954 has arisen claiming a sum of Rs. 1,17,855-3-0 from the Union of India on the ground that a sum of Rs. 30,823-14-0 was refundable to it under the agreement in respect of the period 1-7-1949 to 30-11-1949 and that a sum of Rs. 87,031-5-0 was refundable to it on the same ground in respect of the period 1-12-1949 to 30-10-1950. The Raza Sugar Co. Ltd. filed Suit No. 5 of 1951 out of which First Appeal No. 42 of 1954 has arisen for the recovery of Rs. 82,710-12-0 on the ground that Rs. 53,426-9-0 was refundable to it in respect of the period 1-7-1949 to 30-11-1949 and Rs. 29,284-3-0 was refundable to it in respect of the period 1-12-1949 to 31-7-1960.
(3.) Both the suits were contested on almost similar grounds. It was pleaded that the former ruler, having ceded Ms territory to the Government of India with effect from 1st July 1949 all the earlier agreements between, him and the plaintiff had come to an end and could be en-forced against the defendant only as alter the ceding the defendant had recognised those agreements as binding upon it. Such a recognition was, it was contended, never given. It was also pointed out that the territory of Rampur had with effect from the 1st July 1949 become a part of the Union of India and the excise duty on sugar could be realised by the Union of India under the provisions of the Central Excises and Salt Act, 1944 which was applicable to the territory. There was no provision, it was pointed out, in the Act for a refund of the excise duty. It was also pleaded that the suit was barred by Section 40 of the Central Excises and Salt Act 1944, as well as by Section 80 C. P. C. In the suit by the Raza Sugar Co. Ltd. it was pleaded in addition that the period of 15 years for which the concession had been granted by the ruler of Rampur State had ended prior to the 1st July 1949 and that company could not, therefore, claim any refund on the basis of the agreement in respect of a period subsequent to that date.;