- (1.) KOTAH Match Factory brought an action for the recovery of Rupees 1,19,000 against the State of Rajasthan, on January 18, 1954, in the court of learned Senior civil Judge, Jaipur City. The plaint averments were that the plaintiff was a partnership firm and carried on business of manufacturing matches at Kotah. On december 23, 1935, the former Kotah State agreed to give a refund of a part of the excise duty paid on the stocks of matches produced by the plaintiff and consumed within the State territory for a period of 20 years. Subsequently on march 10, 1941, the said State entered the excise pool with the then British government of India. Thereafter on April 21, 1941, the said State ordered to pay rs. 14,000/-, per annum to the plaintiff for future years. On August 31, 1942, that order was modified and it was decided by the said State to refund half the excise duty paid, Later on the above State offered to the plaintiff that from August 16, 1944. Rs. 10,000/-, per annum would be paid for the remaining future period. The plaintiff did not accept this offer. On the other hand, it claimed a sum of Rupees 2,21,049/6/-, together with interest thereon, being half the amount of Rs. 4,42,098/ 12/-, paid as excise duty by the plaintiff between October 1, 1940, and december 31, 1947, in accordance with the order, dated August 31, 1942. Eventually, on November 18, 1950, it was agreed between the plaintiff and the successor State of Kotah, i. e. , the State of Rajasthan, that a sum of Rs. 10,000/-, per annum would be paid by the State to the plaintiff with effect from the date on which the last payment was made (i. e. , September SO, 1940), till September 30, 1950. In accordance with the terms of the agreement a sum of Rs. 1,00,000/became due and payable to the plaintiff by the defendant. On May 21, 1953, the plaintiff served a notice on the State of Rajasthan in accordance with the terms of section 80, Civil Procedure Code as the defendant failed to make payment despite the notice, the plaintiff is entitled to claim interest @ 6% per annum as damages and that amount came to Rupees 19,000/ -. Thus, the money outstanding in favour of the plaintiff against the defendant came to Rs. 1,00,000/-, as principal and Rs. 19,000/-, on account of interest. The cause of action accrued on November 18, 1950. The plaintiff, in the end, prayed that a decree for Rs. 1,19,000/-together with future interest @ 6% per annum in addition to costs of the suit be passed in its favour.
(2.) IN its written statement, dated September 23, 1954, the State Government denied the existence of any agreement for giving a refund of the part of the excise duty paid by the plaintiff. The agreement allowing concession to the plaintiff was executed on August 17, 1937. The main provisions of the agreement were:- ( 1) That a monopoly for manufacturing matches was granted till september 30, 1955; (2) That duty was payable on the products of the factory as follows:- (a) on export of matches outside Kotah State 3 pies per gross, and (b) on imports from the factory to Kotah State one rupee, one anna and pies six per gross; (3) That out of the duty, a rebate was payable to the factory at the end of each year at the rate of annas 12 per gross till September 30, 1938, and after that at the rate of annas 8 per gross. It was admitted in the written statement that the former Kotah State joined the government of India match-pool with effect from March 10, 1941. His Highness maharaja of Kotah agreed to give to the plaintiff a subsidy of Rs. 5000/-, annually for a period not exceeding five years, which was later on (i. s. , on April 21, 1941)raised to Rs. 14,000, per annum. This order was further modified on August 31, 1942, and the former Kotah State ordered to refund half the excise duty paid by the plaintiff in 1941-42. Later on, the terms were again changed with the approval of the plaintiff. On August 16, 1944, it was decided by mutual consent that the agreement, D/- 17th August, 1937, be cancelled with effect from March 14, 1941, and as consideration or compensation thereof, the following payments or provisions should be made:- (i) an amount equivalent to the rebate that would have been payable to the factory according Clause 8 of the agreement, dated August 17, 1937, since the date on which the last payment was made and upto 16th august, 1944; (ii) the balance of compensation or consideration would be paid by instalment of Rs. 10,000/-, per annum during the time when the fresh grant to be made to the factory remained in force. The State would be entitled to make deduction from this amount @ Rs. 40/-, per day for the number of days that the factory remained closed without permission or without adequate cause to the satisfaction of His Highness's government; and (iii) a fresh grant should be made to the factory. The plaintiff, however backed out of this agreement and continued making representations to the defendant after the merger of Kotah State with the United state of Rajas-than. It was also averted in the written statement that no agreement was made, as alleged by the plaintiff on November 18, 1950, to pay a sum @ Rs. 10,000/- per year, from the date on which the last payment was made till September, 1950, The State of Rajasthan neither took any decision in the matter on November 18, 1950, nor was any such decision conveyed to the plaintiff. No agreement, as alleged in the plaint, was executed by the State of rajasthan in favour of the plaintiff. The defendant further pleaded in para No. 3 of the written statement that some discussion, no doubt, took place between the representatives of the plaintiff and the Minister of Industries and Commerce on november 18, 1950, and some advice was tendered by the Minister concerned, but the same cannot be said to be a decision or an agreement with the State of rajasthan. In para No. 4 of the written statement, the defendant contended that an amount of Rs. 1,00,000 or any other sum is not payable by the defendant to the plaintiff. The defendant also denied any cause of action alleged to have been accrued in favour of the plaintiff on November 18, 1950, as no Government order was passed, nor was any valid commitment made by the State. The plaintiffs suit according to the defendant is also not within time. The plaintiff's claim includes the amount of the pre-merger period also and on account of a change in sovereign, the defendant State of Rajasthan is not bound by any agreement which the former kotah State might have made, as the same was never recognised by the present government. After coming into force of the Constitution of India, excise duties on goods manufactured in India were included in the Union list and the State of rajasthan could not have validly entered into any agreement with the plaintiff. In the end, it was prayed by the defendant that the plaintiff's suit should be dismissed in the absence of any alleged agreement, dated November 18, 1950.
(3.) ON March 23, 1955, learned Senior Civil Judge, Jaipur City, framed appropriate issues. The plaintiff examined three witnesses, namely, Rajendra Kumar P. W. 1, subhudra Kumar P. W. 2, and Bhanwarlal Sethi, P. W. 3. In its defence, the State government produced one witness, Shri Mathura Nath, D. W. 1. By its judgment, dated May 22, 1958 the trial Court dismissed the plaintiff's suit with costs. The finding of the trial Court is that the plaintiff has not proved that an agreement had been arrived at between the parties in conformity with the provisions of Article 299 of the Constitution. The plaintiff based its claim on the agreement, dated november 18, 1950, and not on the previous liability of the Kotah State and, therefore, Article 6 of the covenant does not give right to a citizen to enforce it in a Court of law. As Article 6 of the covenant is an agreement between high contracting parties, a citizen cannot take advantage of it. Under Section 73 of the contract Act, statutory recognition is given to the general rule that in the event of a contract the party which suffers by a breach thereof is entitled to recover from the party breaking the contract compensation for any loss or damages caused thereby to him, but that is not the plaintiffs case and, therefore, the plaintiff is not entitled to get interest.;