KOTAH MATCH FACTORY KOTAH Vs. STATE OF RAJASTHAN

JUDGEMENT

(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:- (

(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.