STATE OF RAJASTHAN Vs. RAGHUNATH SINGH

JUDGEMENT

(1.) THIS appeal by the defendant State arises out of the original Civil Suit No. 16/1962, instituted by the respondent Raghunath Singh, for the recovery of Rs. 70,151. 32 as damages for breach of contract and which has been partly decreed by the Senior Civil Judge No. 2, Jaipur City, on 28-2-1966.

(2.) BRIEFLY put,' the plaintiff Raghunath Singh's case is that he was granted a minor mineral lease for lime-stone of the mines, known as Dawa and Seelva in Tehsil Nokha, District Bikaner, Rajasthan, consisting of an area of 40 acres for a period of five years on an yearly dead rent of Rs. 6195/- on the terms and conditions given under the Rajasthan Minor Mineral Concession Rules, 1955. This mining lease was granted by the Director of Mines & Geology, Government of Rajasthan, Udaipur. The sanction was conveyed to the plaintiff by the Assistant Mining Engineer, Bikaner, by his letter, dated 4-7-1957 (Ex. 26 ). The Deputy "director (Administration) of Mines and Geology also communicated this fact, to him by his"letter, dated 5. 7. 1957 (Ex. 25 ). The plaintiff then deposited an amount of Rs. 1550/- by way ,of security with the Assistant Mining Engineer, Bikaner, on 8th August, 1957. He also completed the other formalities regarding demarcation etc. of the area in question. By letter, dated 9. 10. 1957 (Ex. 5), the plaintiff was also informed to commence his work. , Plaintiff Raghunath Singh further deposited Rs. J 550/- on 28th October, 1957, as another part of the security deposit amount. He also paid a sum of Rs. 1550/- on the same date as the first quarterly instalment of the dead-rent. He was then asked to execute the indenture on a duly stamped paper. The plaintiff in response to that got prepared an indenture relating to the mining lease and submitted the same duly signed by him and accompanied by necessary stamp duty. This was done in the month of January, 1958. The said indenture and its copies, duly signed by the plaintiff, are on the record. They are marked Exs. D1/1, Dl/2 and D1/3. According to the plaintiff he engaged necessary staff and labour. He also constructed a, fair weather road for the purpose of working the mines. By his letter, dated 19-2-1958 (Ex. 10), the Assistant Mining Engineer acknowledged the receipt of the formal agreement, executed by the plaintiff and said that it had been sent to the competent authority for his signature.

(3.) IN determining the liability of the Union and the State in respect of contracts, regard must be had to Art. 299 (1) of the Constitution, which prescribes the formal requirements for the making of contracts by the Union and the State for their power to enter into contracts and to carry on trade or business is expressly affirmed by Art. 298, which provides that the executive power of the Union and the State extends to the carrying on of any trade or business, acquiring holding or disposing of any property and the making of contracts. Therefore, if the requirements of Art. 299 are complied with, there remains no doubt that u/art. 300 a valid contract can be enforced against the Union and the State and in case there is a breach damages in respect of the breach can be claimed. It is a settled law that the provisions of Art. 299 are mandatory. It follows, therefore, that any agreement which did not comply with its terms is void. Sec. 2 (g) and (h) of the Contract Act provides that an agreement not enforceable by law is void and an agreement enforceable by law is a contract. If the terms of Art. 299 are not complied with in the present case, the contract will be void as being not enforceable in law. The question was considered in Seth Bhikraj Jaipuria vs. Union of INdia (3) with reference to Sec. 175 (3) and (4) of the Government of INdia Act, 1935, which contained provisions corresponding to those of Art. 299 (1) and (2 ). Shah J. referred to Maxwell on INterpretation of Statutes for the tests to determine whether a statutory provision was mandatory or directory and observed : "it is clear that the Parliament intended in enacting the provision contained in S. 175 (3) that the State should not be saddled with liability for unauthorised contracts and with that object provided that the contracts must show on their face that they are made on behalf of the State, i. e. by the Head of the State and executed on his behalf and manner prescribed by the person authorised. The provision, it appears, is enacted in the public interests and invests public servants with authority to bind the State by contractual obligations incurred for the purposes of the State. "