1966 (3) TMI 82 - SC - Indian Laws

Summary

Issues Involved:
1. Applicability of Article 299 of the Constitution to implied contracts.
2. Recovery of the amount as arrears of land revenue under Section 155(b) of the Madhya Pradesh Land Revenue Code.
3. Recovery of the amount under any other provision of law or rules relating to forest contracts.

Issue-wise Detailed Analysis:

1. Applicability of Article 299 of the Constitution to implied contracts:
The Supreme Court examined whether Article 299 of the Constitution, which mandates that government contracts must be expressed to be made by the Governor and executed in writing, allows for implied contracts. The Court referenced previous decisions, including *The State of Bihar v. Messrs. Karam Chand Thapar* and *Seth Bikhrai Jaipuiria v. Union of India*, which emphasized that contracts binding the government must meet specific conditions: they must be expressed to be made by the Governor, executed in writing, and executed by an authorized officer. The Court concluded that Article 299(1) does not permit implied contracts between the government and another person. Allowing implied contracts would render Article 299(1) ineffective, as it would bypass the mandatory requirements for government contracts. Consequently, the Court held that no implied contract existed between the appellant and the government, invalidating the High Court's view that an implied contract could be enforced under Section 155(b) of the Madhya Pradesh Land Revenue Code.

2. Recovery of the amount as arrears of land revenue under Section 155(b) of the Madhya Pradesh Land Revenue Code:
The Supreme Court analyzed whether the recovery of the amount as arrears of land revenue under Section 155(b) of the Madhya Pradesh Land Revenue Code was valid. Section 155(b) allows for the recovery of money due to the State Government under any grant, lease, or contract as arrears of land revenue. The High Court had interpreted the term "contract" to include implied contracts. However, the Supreme Court disagreed, stating that in light of Article 299(1), which precludes implied contracts, the term "contract" in Section 155(b) could not encompass implied contracts. Therefore, the State could not recover the amount under Section 155(b) as arrears of land revenue.

3. Recovery of the amount under any other provision of law or rules relating to forest contracts:
The Supreme Court considered whether the amount could be recovered under any other provision of law or rules, specifically Sections 82 and 85 of the Indian Forest Act and the associated rules. The High Court had not investigated this aspect, focusing instead on the applicability of Rules 28 and 29 of the Madhya Pradesh Forest Contract Rules, which apply only after a written contract has been executed. The Supreme Court found the High Court's interpretation of Rules 28 and 29 to be correct but noted that the broader question of whether the State could recover the amount based on the conditions of auction under any other legal provision remained unresolved. The Court remanded the matter to the High Court for further investigation to determine if any other provision of law or rules would permit the recovery of the amount as arrears of land revenue in light of the auction conditions.

Conclusion:
The Supreme Court allowed the appeal, holding that Section 155(b) of the Madhya Pradesh Land Revenue Code does not support the State's claim to recover the amount as arrears of land revenue. The matter was remanded to the High Court for further investigation to determine whether any other legal provision or rules would permit such recovery. Each party was ordered to bear its own costs.