NAVIN CHANDRA, J. - (1.) THIS is a first appeal by the defendants against the decree of the District Judge, Pratapgarh (Camp Chittorgarh) dated July 21, 1977 whereby the suit of the plaintiffs respondent for declaration and permanent injunction was decreed against the appellants.
(2.) FACTS giving rise to this appeal are that on April 26, 1976 respondent Bhanwar Lal instituted Civil Suit No. 71 of 1976 against the appellants with the averments that the right to collect royalty from certain mines of Menpura, Footbad and Jai Magri in District Chittorgarh was auctioned by the Mines Department of the State of Rajasthan. The highest bid was of Rs. 26, 300/- per annum. In pursuance of this auction a contract was executed on May 9, 1968 by the Joint Director, Department of Mines and Geology in favour of the plaintiff. It was alleged that the Joint Director of Mines and Geology was not the person authorised to execute a contract on behalf of the Governor of the State of Rajasthan and, therefore, this contract was void. However, in pursuance of this contract, the defendants were bent upon to recover the contract amount from the plaintiff and had issued a notice on March 10, 1976 to deposit the amount of Rs. 11,192. 52 P. The plaintiff alleged that since no contract was executed in accordance with the provisions of Art. 299 of the Constitution, the defendants were not entitled to recover the amount. A notice under section 80 C. P. C. was served but with no effect. The plaintiff, therefore, prayed for a declaration that the contract dated May 9, 1968 was void and ineffective and he further prayed for a decree of permanent injunction restraining the appellants from recovering any amount from the plaintiff under the said agreement. The suit was contested by the appellants. They admitted that the contract to collect royalty was auctioned for Rs. 26, 300/- on February 12, 1968. They pleaded that Joint Director (Administration) was authorised to execute the contract on behalf of the Governor of the State of Rajasthan and the defendants were entitled to recover the amount of Rs 11,192. 52 P. from the plaintiff which was due under the contract. It was also alleged that previously the plaintiff had instituted Civil Suit No. 32 of 1973 in the Court of the Civil Judge Pratapgarh and the amount is being recovered in accordance with the judgment given in that suit. The plaintiff had filed Civil First Appeal No- 30 of 1974 against the decision in Civi1 Suit No. 32 of 1973 but his appeal was dismissed. Lastly, it was pleaded that the plaintiff cannot file the suit unless he deposited the amount under protest before filing the suit. The trial court framed 4 issues in the suit. It held that the Joint Director Mines Department was not a person authorised by the Governor to execute contract on his behalf on May 9, 1968 and, therefore, the contract Ex. I did not comply with the. requirement of Art. 299 of the Constitution. Since the contract was held to be void, it was further held that the defendants were not entitled to recover the amount in question from the plaintiff. On the basis of these findings the District Judge, Pratapgarh decreed the suit of the plaintiff declaring that the agreement dated May 9, 1968 was void and ineffective and also passed a decree for permanent injunction restraining the defendants from recovering the amount in question from the plaintiff. The parties were left to bear their own costs. It is against this decree that the defendants have filed the present appeal. The plaintiff have also filed cross-objections against the decree of the trial court challenging the order whereby the parties have been left to bear their own costs of the suit. Mr. P. K Bhansali, learned counsel for the appellants urged that by virtue of a Notification No. F. 3 (4) (14) Ind. (B)/60 dated April 5, 1963 published in Rajasthan Gazette part IV-C dated August 22, 1963, the State Government had made amendment in the Rajasthan Minor Mineral Concession Rules, 1959 and a note was added in Schedule III to the said Rules that the Joint Director Mines and Geology Department shall have the same power as the Director of Mines and Geology had under various provisions of the Rajasthan Minor Mineral Concession Rules, 1959. On the basis of this notification it was urged that the joint Director was competent to execute the contract on behalf of the Governor of Rajasthan. It may be stated that Rule 34 of the Rajasthan Minor Mineral Concession Rules, 1959 provided that royalty collection contracts may be granted by the Government by auction or tender for a maximum period of 2 years after which on extension shall be granted. The amount to be paid annually by the royalty collection Contractor to the Government shall be determined in auction or by tender to be submitted for acceptance by the authority competent to grant the contract. Rule 40 of the said Rules provided that when a bid or tender is accepted, the bidder or tend-eror shall execute a lease which in the case of royalty collection contracts, contain the terms and conditions notified under Rule 35 (2) or Rule 36 (1) as the case may be, Rule 42 provided that the powers under all or any of these Rules including the power to grant royalty collection contract will be exercised by the Director or any other Officer or Officers of the Department, or by other officers as prescribed in Schedule III of the Rules. Entry at item No. 40 of the III Schedule appended to the Rules of 1959 would go to show that the Director of Mines and Geology was delegated powers under Rule 34 (1) of the Rules to grant royalty collection contract by auction or tender. As already stated, by Notification dated April 5, 1963 it was added at the end of the III Schedule that the joint Director shall have the same powers as the Director of the Mines and Geology had All this implies that under Rule 34 (1) of the Rules, it was the Government which could grant royalty collection contracts for a maximum period of two years. This power to grant royalty collection contracts were deleg-ated by entry 40 of III Schedule to the Director of Mines and Geology and by virtue of the amendment made in the IIIrd schedule the Joint Director was given the same powers as the Director and, therefore, he could as the delegate of the Government grant royalty collection contracts. It is one thing to grant royalty collection contracts, but it is a different thing as to who was competent on behalf of the Governor to execute the contract under Art. 299 of the Constitution. If we go through the Rules, it would appear that while rule 18 of the Rules provides for execution of the mining lease in a form given in Schedule IV of the Rules, but so far as royalty collection contracts are concerned, rule 40 does not refer to any form in which the contract will be executed. Rule 40 of the Rules only states that when a bid or tender is accepted, the bidder or tenderer shall execute a lease in the case of royalty collection contracts. Strictly speaking, therefore, only a unilateral document executed by the lessee is provided for in rule 40. However, there is a form of agreement of collection of royalty on minor minerals which has also been appended to the Rules. This form contemplates a bilateral document to be signed by the contractor as well as on behalf of the Governor of the State of Rajasthan. It has already been observed that Joint Director Mines may be competent to grant royalty collection lease on account of the amendment in the III Schedule, but he was not authorised to execute a contract on behalf of the Governor under Art. 299 of the Constitution. It was only by virtue of another Notification dated January 29, 1972 published in Rajasthan Gazette extra-ordinary dated February 3, 1972 that the Governor authorised Joint Director Mines and Geology Rajasthan Udaipur to execute lease, licence and other agreements under the Mineral Concession Rules, 1960 and the Rajasthan Minor Mineral Concession Rules, 1959 on behalf of the Governor. The document in the present case had been executed on May 9, 1968. The Notification dated February 3, 1972 was issued about four years later and had no retrospective operation Mr. P. K. Bhansali half-heartedly referred to a Notification dated 4th/ 7thfebruary 1958. I wonder why irrelevant notification should be cited by the counsel appearing for the State. The Notification dated 4th/7th February, 1958 refers to Minor Mineral Concession Rules 1955 and not to the Minor Mineral Concession Rules, 1959 and further the authorisation in the notification dated 4th/7th February 1958 has been made in favour of Deputy Director Administration and not in favour of Joint Director.
(3.) SIMILAR question had come before this Court in the case of Shrinarain Vs. Union of India (1) and in Bharat Bhusan Vs. State of Rajasthan (2 ). It was laid down in Bharat Bhusan's case that it was not disputed by the parties in that case that the lease agreement was signed by the Joint Director of Mines and Geology on behalf of the Governor of the State. His Lordship V. P. Tyagi J. , referred to the decision in Shri Narain's case (supra) wherein it had been held that the Joint Director was not authorised by the Governor to sign the agreement on his behalf and, therefore, any agreement signed by the Joint Director cannot be said to a valid agreement as the requirements of Art. 299 of the Constitution had not been complied with in as much as the person who was not authorised by the Governor put his signatures on the agreement which did not give any validity to the agreement in the eyes of law. His Lordship referred to the Notification dated January 29, 1972 published in the Rajasthan Gazette dated February 3, 1972 (Extraordinary) whereby the joint Director had been empowered to execute lease and other agreement under the Rajasthan Minor Mineral Concession Rules 1959, but in that case the agreement had been executed much before that date. It is thus clear that the royalty collection contract Ex. 1 in the present case was not executed by a person authorised by the Governor to execute it. The trial court, therefore, rightly found that the contract dated May 9, 1968 was void on the ground that it was not executed on behalf of the Governor by an authorised person under Art. 299 of the Constitution and, therefore, it was not a valid contract. Thus issue No. 3 was rightly decided in favour of the plaintiffs. The question then remains as to whether the defendants were entitled to recover the balance amount of Rs. 11,192. 52 P. from the plaintiff in pursuance of the notice Ex. 2. The learned counsel for the plaintiff-respondent urged that when the contract Ex. 1 was void, no recovery thereunder can be made. He has referred to certain decisions on the point which may be dealt with. The first decision referred to by the learned counsel for the plaintiff is in the case of State of Rajasthan Vs. Jai Ramdas (3) In this case the plaintiff had given highest bid in auction held in respect of different areas for royalty collection contract in respect of the period from 1. 4. 58 to 3 3. 59 as provided in the Rajasthan Minor Mineral Concession Rules, 1955 which were then in vogue. Under those Rules no bid was to be regarded as accepted unless confirmed by the Government. The acceptance of the Government was not conveyed to the plaintiff till 3. 6. 1958 by which time 2 months' period of contract had already expired. On receipt of the sanction of the State Government on June 3 1958, the plaintiff refused to execute the contract and informed the Government that they were not prepared to enter into the contract and the amount deposited by them in respect of 25% of the bid may be refunded to them. However, the Mining Engineer informed the plaintiffs that they were even liable to pay full amount of the contracts. The plaintiffs filed suits for refund of 25% of the bid amount. The State of Rajasthan pleaded that in these cases that the plaintiffs had commenced the work from 1. 4. 1958 and they were liable to pay the whole contract money. The question for determination was whether the plaintiffs were entitled to get back the deposits of 25% made by them at the time of the completion of the auction and whether they were not liable to pay the balance of the contract money. It was held that since the provisions of Art. 299 were not complied with, there was no contract at all which could be enforced by the Government or by other persons as a contract. The claim of the bidders for refund of 25% deposit was allowed. An argument was advanced on behalf of the State that the bidder had actually taken the benefit of the contract and had started collecting rotyaly from 1. 4 1958 to 9. 6 1958 and, therefore, they were not entitled to the restitution of the deposits. His Lordship CM. Lodha, J , stated that it is true that even if the contract is void but if it was proved that the bidder had collected the royalty in pursuance of the completion of auction, the State could have legitimately claimed the forfeture of the deposits. But there was no evidence in that case that the plaintiff had collected the royalty in pursuance of the contract and, therefore, the State could not take advantage of section 70 of the Contract Act. In the case before me, the plaintiff has not at all alleged in the plaint that he had not collected royalty in pursuance of the invalid agreement dated May 9, 1968. He has only pleaded that the contract was void because provisions of Art. 299 of the Constitution were not com-plied with. The contract may be void, but if in pursuance of this void contract, the plaintiff has collected royalty, he is bound to pay the amount contracted on account of the benefit received by him as a result of the collection of royalty or to restore the royalty amount to the State Government. The plaintiff cannot be allowed undue enrichment that he may collect the royalty which was. payable to the State Government and then turn round a say that the contract was invalid and retained the benefit under the contract with him. The decision in the case of Jairamdas does not help the plaintiff for the simple reason that in that case there was no evidence that the plaintiff had actually taken the benefit of the contract and had started collecting royalty in question. The same was the position in the case of State of Rajasthan Vs. Raghunath Singh. (4) That was a suit for damages for breach of contract while no formal agreement had been executed. Obviously no suit for damages for breach of contract can lie when there was no valid contract. In that case the lease granted to the plaintiff had been cancelled. The provisions contained in sections 65 and 70 of the Contract Act are very clear. Section 65 provides that when an agreement is discovered to be void or when a contract becomes void any person who has received any advantage under such agreement or contract, is bound to restore it or to make compensation for it to the person from whom he received it. Similarly, section 70 states that where a person lawfully does anything for any person or delivers anything to him not intending to do so gratuitously and such other person enjoys the benefit thereof the latter is bound to make compensation to the former in respect of or to restore, the thing so done or delivered. The plaintiff in pursu-ance of the invalid contract collected royalty amount of the lease areas which amounts were payable to the State Government and in respect of the collection of which, the plaintiff was authorised by the invalid contract. The plaintiff had under taken to pay the bid amount to the defendants in lieu of their collecting the royalty amount. They cannot retain the royalty amount collected by them under an invalid contract and in any event they are bound to pay that much amount which they were to pay to the State Government. It has already been stated that neither it has been pleaded nor any evidence whatsoever has been adduced by the plaintiff that they had not collected any royalty amount from the contractors of quarries in pursuance of the invalid contract. The plaintiff was clearly bound to restore the amount to the defendants because they had received an advantage under the invalid contract and the defendants had never intended to give this advantage to the plaintiff gratuitously. The plaintiff was, therefore, not entitled to the declaration which had been granted by the trial court and he was also not entitled to any permanent injunction. The defendants were entitled to recover the amount in question under sections 65 and 70 of the' Contract Act. I, therefore, reverse the findings of the trial court on issue No. 1 and decide it against the plaintiffs. In view of the decision on issue No. I against the - plaintiffs his suit deserves to be dismissed. Cross objections of the plaintiff are dismissed. ;