TMI Blog1969 (8) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod of three months. No sooner the line is energised by the company, the State will take connections at Phoolsagar and the State may take connections for testing water of a few wells for the purpose of supply of water to the city, if so desired. The Company will be entitled during the continuation of this agreement to supply electric energy from the extension for all purposes to the public as well. Energy will be supplied by the company to the State and the public from this extension on the same terms and rates as are prevalent in the Bundi City. The State agrees to guarantee a minimum consumption of at least ₹ 250/-per month from the date the line is energised. The minimum consumption of current for ₹ 250/- as referred above can be consumed by His Highness and Royal family either at Phool Sagar or at proposed palace singly or jointly and will continue to pay so long as the Bundi Electric Licence, 1936, remains in force. Apart from this minimum consumption the State further agrees to pay as rent ₹ 6,000/- in lump sum for the length of a line erected from Power House to Phoolsagar. The amount of ₹ 6,000/-will be paid in advance yearly fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls in this Court. The appeal filed by the State of Rajasthan is No. 31 of 1959 and the appeal filed by the Bundi Electric Supply Co. Ltd., Bundi, is No. 33 of 1959. Both the appeals are, therefore, disposed of by this single judgment. 3. Two arguments have been addressed by the learned counsel for the defendant in support of its appeal. The first argument is that the defendant was in no way liable to pay any amount to the plaintiff under the agreement (Ex. 1) as the agreement was executed by the former Bundi State of which the defendant was not a successor in the eye of law and thus it is not liable to discharge the liability of that State arising under the agreement. It is further contended that under Ex. 1 no benefit was conferred on the public and the electric line was laid down only to supply electric energy to the Phoolsagar palace of the former ruler of the Bundi State. The defendant, therefore, cannot be held liable for anything done by the plaintiff exclusively for the benefit of the former ruler of the State of Bundi. It has been further pointed out that the Phoolsagar palace has become the personal property of the former ruler of the Bundi State since 24-8-49. The la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Covenant, the Raj Pramukh is hereby pleased to make and promulgate the following Ordinance: Clause 2 of the Ordinance was as follows : 2. When in pursuance of para (1) of Article VI of the Covenant, the administration of any Covenanting State has been taken over by the Raj Pramukh, the fact should be notified in the official gazette of the United State of Rajasthan and the provisions of Clauses (a), (b) and (c) of paragraph (1) of Article VI of the Covenant shall immediately come into force, By this Clause, the provisions of Clauses (a), (b) and (c) of paragraph (1) of Article IV of the Covenant came into force. The relevant provisions of Article IV of the Covenant were as follows;-- Article IV-- (1) The Ruler of each covenanting State shall, as soon as practicable, and in any event not later than the first day of May 1948 make over his administration of his State to the Raj Pramukh; and thereupon-- (a) xx xx xx (b) all duties and obligations of the Ruler pertaining or incidental to the Government of the Covenanting State shall devolve on the United State and shall be discharged by its and (c) All the assets a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce in that State. The Covenant entered in the year 1949 read with Ordinance must be taken to mean that the liability of the former State of Bundi devolved on that State. This is the view taken by their Lordships of the Supreme Court in State of Rajasthan v. Shyamlal, AIR 1964 SC 1495. It was pointed out in that case that each time a merger took place the new State by a provision in the Covenant took over the assets and liabilities of the merging States. This provision in the Covenant could not be availed of by the subjects of the new State as in view of the decision in Dalmia Dadri Cement Company's case, AIR 1958 SC 816, the Covenant in whole or in part was an act of State. But according to the same decision the presence of such a Clause in the Covenant throughout would be valuable evidence which would show that the new State assumed the liabilities of the merging State and further every time when there was a merger and formation of a new State, the old laws were always to continue till they were repealed, amended or altered by the New State. Under these circumstances, their Lordships of the Supreme Court took the view that when the new State continued all the old laws till ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. This is clear from Ex. 2 which is a letter from the Government of Rajasthan, Finance Department (Accounts Audit) to the Accountant General, Rajasthan, and a copy of which has been sent to the managing agents of the plaintiff-company. The relevant part of the letter runs as follows; I am directed to convey Government sanction to the admission of the claim of ₹ 15,975/- of the Bundi Electric Supply Company, Bundi, in respect of the following items, which became due for payment of the company on 1-4-48 by debit to pre-April, 1950 liabilities:-- a Phoolsagar cable hire bill of 26th March, 1948 ₹ 6,000/- b Telephone hire bill ₹ 9,975/- I am further directed to request you kindly to adjust the loan of ₹ 15,625/-given to the aforesaid company plus Rs, 215/9/- on account of interest from 12-12-47 to 31-3-48 against the above claim and the balance of ₹ 134/7/- be credited to the loan account of rupees five lakhs outstanding against the Bundi Electric Supply Company. By this letter the State Government must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as argued that this Article is also not applicable, inasmuch as the plaintiff was not suing for compensation but was only seeking to recover what was due to him under the agreement (Ex. 1). He has relied on the decision of the Allahabad High Court in Town Area Committee Raya v. Budh Sen, AIR 1962 All 438. In that case, the defendant took Theka of a shop for one year from the plaintiff and agreed to pay certain sum by instalments but failed to pay agreed sum and therefore, the plaintiff filed a suit for recovery of defaulted instalments without claiming any compensation or damages for the breach of a contract. It was held that the suit was governed by Article 120 and not by Art 115, for it was not a suit for compensation for breach of the contract, but for enforcement of the agreement to pay theka money. With great respect, we find ourselves unable to accept the view taken in that case. No doubt, under Article 115 the suit must be for compensation for breach of the contract, express or implied. In the instant case, it cannot be denied that as soon as the State of Rajasthan failed to make payment of ₹ 6,000/- when it became payable under the agreement (Ex. 1), there was breac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instant case, the plaintiff has also claimed interest as damages, as the money has not been paid to it when it became, payable. Straight, J. also agreed with Spankie, J. and observed as follows:-- Nor upon consideration does it appear to me that the expression compensation is so wholly inapplicable or inappropriate to suits in respect of bonds and promissory notes, as might at first sight seem to be the case. Every bond and promissory note is a contract, by which the obligor or promisor agrees to pay money, either upon a particular date, or upon demand, and such contract can be performed either upon the specified date, or when the demand is made. If payment is refused, or is not forthcoming, then there is a breach, and the suit against the defaulting obligor or promisor is, not to make him do something in furtherance of the contract, for the time for its performance is passed, but is in reality one for damages for the breach of it, the measure of which will be the amount of the debt with interest. Thus, the Full Bench of the Allahabad High Court has taken the view that when the suit is for recovery of money and interest on a bond, Article 116 is applicable and it must b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and must govern the applicability of Article 116 to cases other than those covered by Article 110, wherever the position may reasonably be maintained that the claim sought to be enforced is a claim for compensation for breach of a contract in writing registered. These authorities make It clear that Article 115 is applicable to a case when the creditor seeks to recover the amount he has lent to the debtor. If the argument by the Allahabad High Court in AIR 1962 All 438 (supra) is to be accepted, what will happen to suit on a bond which provides for payment of a certain sum of money on a particular date and further provides for payment of interest as damages if the amount is not paid on the due date. The suit for the money payable under the bond will be governed by Article 120 and the suit for interest by Article 115, because the first part relates to the payment of the money contained in the bond and the second part relates to the payment of damages. Such a queer position has not been accepted by any High Court. In our humble view, the compensation for non-payment of a debt may mean the very sum which has been advanced as debt and such a suit would fall under Article 115 o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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