1973 (3) TMI 147 - HC - Indian Laws

Summary

Issues Involved:
1. Validity of the mining lease.
2. Applicability of Article 299 of the Constitution of India.
3. Entitlement to damages for breach of contract.
4. Refund of deposits and incidental expenses.

Detailed Analysis:

1. Validity of the Mining Lease:
The plaintiff, Raghunath Singh, was granted a minor mineral lease for limestone mines by the Director of Mines and Geology, Government of Rajasthan. The plaintiff completed all formalities, including depositing security and dead-rent, and began preparatory work. However, the lease was later canceled by the State without proper execution of the lease agreement by the Director of Mines and Geology on behalf of the Governor. The trial court held that the Director of Mines and Geology was the competent authority to grant the lease and that the lease was valid under the statutory powers of the Minor Mineral Concession Rules, 1955.

2. Applicability of Article 299 of the Constitution of India:
The defendant State argued that there was no enforceable contract as the lease was not executed in accordance with Article 299 of the Constitution. Article 299 requires that contracts made by the State must be expressed in writing, executed in the name and on behalf of the Governor, and by a person authorized by the Governor. The court agreed with the State's argument, stating that the Director of Mines and Geology acted on behalf of the State and the contract must comply with Article 299. Since the lease agreement was not signed by the Director of Mines and Geology on behalf of the Governor, the contract was void and unenforceable.

3. Entitlement to Damages for Breach of Contract:
The trial court awarded damages to the plaintiff for breach of contract, including security deposit, quarterly dead rent, preliminary expenses, incidental expenses, and loss of profit. However, the High Court held that since the lease agreement was not executed in compliance with Article 299, there was no valid contract, and thus, no damages could be awarded for breach of contract. The court emphasized that the provisions of Article 299 are mandatory, and any agreement not complying with its terms is void.

4. Refund of Deposits and Incidental Expenses:
Despite the invalidity of the contract, the court recognized that the plaintiff had deposited money and incurred expenses in good faith. The plaintiff was entitled to a refund of the deposits and incidental expenses under Section 70 of the Contract Act, which provides for compensation when a person lawfully does anything for another person not intending to do so gratuitously. The court awarded the plaintiff Rs. 4715, which included the security deposit, dead-rent, preliminary expenses, and application fee, along with interest at the rate of 6% per annum.

Conclusion:
The appeal was accepted in part. The judgment and decree of the trial court were set aside, and the plaintiff's suit was decreed for Rs. 4715 against the State with proportionate costs in both courts. The amount was to bear pendente lite and future interest at the rate of 6% per annum. The court expressed displeasure at the arbitrary actions of the State Government and the failure of the Director of Mines and Geology to fulfill his duty, which caused significant loss to the plaintiff.