Mulamchand Vs. State of Madhya Pradesh
 INSC 43 (20 February 1968)
20/02/1968 RAMASWAMI, V.
CITATION: 1968 AIR 1218 1968 SCR (3) 214
RF 1970 SC 706 (9) R 1971 SC2210 (3) RF 1976
SC1533 (8,12) F 1977 SC 151 (7) F 1977 SC2149 (3) E 1980 SC 680 (20) E 1980
SC1109 (3) RF 1980 SC1285 (9) R 1984 SC1326 (10,11) RF 1988 SC2149 (14)
Madhya Pradesh Abolition of Proprietary
Rights (Estates, Mahals, Alienated Lands) Act, 1950 (Act 1 of 1951)-Right to
collect forest produce-Whether a proprietary right-Whether vests in State under
provisions of Act, Constitution of India, Art. 299-Contract not complying with
Article whether valid.
Indian Contract Act (9 of 1872), s.
70-Applicability ofConditions under which restitution should be made.
Before the coming into force on April 1, 1951
of the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals,
Alienated Lands) Act, 1950 (Act 1 of 1951), the appellant had purchased from
certain proprietors of land the right to collect forest produce from the said
land during the years 1951, 1952 and 1953. The right was to be enjoyed after
April 1, 1951 on which date under the aforesaid Act, the proprietary rights
came to vest in the State of Madhya Pradesh. The Deputy Commissioner acting
under s. 7 of the Act prevented the appellant from enjoying the rights he had
acquired from the proprietors, and in April 1951 auctioned the right to collect
forest produce from the land. The appellant deposited Rs. 10,000 to acquire the
right of collecting lac from the said land during 1951, 1952 and 1953. He
collected some lac but thereafter filed a suit claiming refund of the deposit
of Rs. 10,000 on the basis that there was no. valid contract between him and
the State of Madhya Pradesh as the provisions of Art. 299 of the Constitution
were not complied with and the contract was void. The trial court granted him a
decree but the High Court decreded against him. With certificate the appellant
came to this Court.
HELD : (i) The right to collect forest
produce was a proprietary right and vested in the State Government by the
operation of s. 4(1) (a) of the Abolition Act. The contrary view taken in
Chhotabhdi Jethabhai Patel & Co.'s case, was expressly overruled by this
Court in State of Madhya Pradesh v. Yakinuddin. The present case was directly
covered by the latter case. [219 G-220 C] State of Madhya Pradesh v. Yakinuddin
 3 S.C.R. 13, relied on.
Chhotabhai Jethabhai Patel & Co. v. State
of Madhya Pradesh,  S.C.R. 476 and Mahadeo v. State of Bombay,  2
Supp. S.C.R. 339, referred to.
(ii) The provisions of Art. 299(1) of the
Constitution like the provisions of s. 175(3) of the Government of India Act,
1935 have not been enacted for the sake of mete form but they have been enacted
for safeguarding the Government against unauthorised contracts. The formalities
which are embodied therein on grounds of public policy cannot be waved or
dispensed with. The appellant was right in his contention that the Contract
entered into by him was void because Art. 299 had not been complied with. [221
E-F] 215 Seth Bikhraj Jaipuria v. Union of India,  2 S.C.R. 880 and State
of West Bengal v. Mls. B. K. Mondal & Sons,  1 Supp. S.C.R. 876,
(iii) However the refund of Rs. 10,000
claimed by the appellant could not be allowed as he did not satisfy the
conditions of s. 70 of the Indian Contract Act. The person who seeks
restitution has a duty to account to the defendant for what he has received in
the transaction from which his right to restitution arises. The appellant had
not produced sufficient evidence to show to what extent he worked the contract
and what was the profit made, by him in the year 1951 and the succeed in years.
In the absence of reliable evidence on this point the appellant was not
entitled to restitution or refund of the deposit he had mad,-. 1 [223 A-C]
Fibrosa v. Fairbairn,  A.C. 32 and Nelson v. Narholt  1 K.B. 330
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
393 of 1965.
Appeal from the judgment and decree dated
March 21, 1961 of the Madhya Pradesh High Court in First Appeal No. 34 of 1958.
D. N. Mukherjee, for the appellant.
I. N. Shroff, for the respondent.
The Judgment of the Court was delivered by Ramaswami,
J. This appeal is brought by certificate on behalf of the plaintiff from the
judgment of the High Court of Madhya Pradesh dated March 21, 1961 in First
Appeals Nos. 34 and 64 of 1958.
The appellant had purchased a right to pluck,
collect and remove the forest produce like lac, tendu leaves etc. from the
proprietors of the different Malguzari jungles for the years 1951, 1952 and
1953 as detailed in Sch. A attached to the plaint. This right he had acquired
before the proprietary rights in those forests came to vest in the State of
Madhya Pradesh under the Madhya Pradesh Abolition of Proprietary Rights
(Estates, Mahals, Alienated Lands) Act, 1950 (Act No. 1 of 1951), hereinafter
called the 'Abolition Act', and the right was to be enjoyed by the appellant
after April 1, 1951 on which date the proprietary rights came to vest in the
State of Madhya Pradesh. It was alleged by the appellant that the Deputy
Commissioner of Balaghat acting under s. 7 of the Abolition Act took charge of
the entire Malguzari jungles on April 1, 1951 and prevented the appellant from
enjoying the; rights he had already acquired. In the month of April 1, 1951 the
Deputy Commissioner auctioned the forest produce of villages covered. under the
purchases of the appellant. Out of the forest produce only the tendu leaves
crop for the year 1951 was allowed to be enjoyed by the appellant on his
depositing a sum of Rs. 3,000 in the Government Treasury, Balaghat under 216 a
written permit dated April 30, 1951. The deposit was made by the appellant to
save the tendu leaves crop of 1951 from being sold to others by the Deputy
Commissionerof Balaghat. The case of the appellant was that he was entitled to
the refund of the. Amount as the right to collect tendu leaves for the year
1951 had already been purchased by him. Similarly,. the appellant claimed
refund of the amount of Rs. 10,000 which he was required to deposit towards the
right to collect lac from those forests for the years 1951, 1952 and 1953. The
refund was claimed on the basis that there was no valid contract between the
appellant and the State of Madhya Pradesh as the provisions of Art.
299 of the Constitution were not complied
with and the contract was void. The respondent contested the suit mainly on the
ground that the Deputy Commissioner, Balaghat had validity taken charge of the
Malguzari jungles under the provisions of the Abolition Act and the appellant
having removed lac from the jungles on the basis of the contract, was not
entitled to any refund. The trial Judge held that the appellant was not
entitled to claim the refund of the sum of Rs. 10,000, firstly, on the ground
that the contract was good even though not in conformity with Art. 299 of the
Constitution, and secondly, because the appellant was allowed to enjoy the right
of' collecting lac and the appellant actually availed himself of that right. As
regards the appellant's claim for damages for breach of contract, the trial
court was of the view that the contracts were mere licences and enforceable
against the State of Madhya Pradesh even after vesting of the proprietary
interests under the Abolition Act. Acting in accordance with the view expressed
by this Court in Chhotabhai Jethaabhai Patel & Co.v. The State of Madhya
Pradesh(1) the trial court held that the appellant was entitled to enforce the
contracts against the State of Madhya Pradesh and was consequently entitled to
damages for breach of the contracts. The trial court accordingly gave a decree
in favour of the appellant to the extent of Rs. 57,281 and dismissed the rest
of the claim of the appellant. The State of Madhya Pradesh took the matter in
appeal to the High Court of Madhya Pradesh. The appellant also preferred an
appeal to the High Court with regard to the claim which was disallowed by the
trial court. By its judgment dated March 21, 1961, the High Court allowed the
first appeal of the respondent and set aside the decree of the District Judge
in Civil Suit No. 24-B of 1954 and dismissed the entire suit.
The appeal preferred by the appellant was
The High Court took the view that the
decision of this Court in Chotabhai Jethabhai Patel & Co. v. The State of
Madhya Pradesh(-) was overruled in a later decision of this Court in Mahadeo v.
The State of Bombay(1), and in contracts similar to those of the present case
it (1)  S.C.R. 476.
(2)  2 Supp. S.C.R. 339.
217 was held that there was a transfer of
proprietary rights in the estates to the grantees and the effect of the
Abolition Act was that all such proprietary rights vested in the State with
effect from April 1, 1951 free from all encumbrances and the State could
therefore lawfully exclude the grantees from enjoying any such rights secured
to them under the contracts.
Section 3 of the Abolition Act states :
"3. Vesting of proprietary rights in the
State.-(1) Save as otherwise provided in this Act, on and from a date to be
specified by a notification by the State Government in this behalf, all
proprietary rights in an estate, mahal, alienated village or alienated land, as
the case may be, in the area specified in the notification, vesting in a
proprietor of such estate, mahal, alienated village, alienated land, or in a
person having interest in such proprietary right through the proprietor, shall
pass from such proprietor or such other person to and vest in the State for the
purposes of the State free of all encumbrances.
(2) After the issue of a notification under
subsection (1), no right shall be acquired in or over the land to which the
said notification relates, except by succession or under a grant or contract in
writing made or entered into by or on behalf of the State and no fresh clearing
for cultivation or for any other purpose shall be made in such land except in
accordance with such rules as may be made by the State Government in this
Section 4 (1 (a) provides "4.
Consequences of the vesting.(1) When the notification under sec. 3 in respect
of any area has been published in the Gazette, then, notwithstanding anything
contained in any contract, grant or document or in any other law for the time
being in force and save as otherwise provided in this Act, the consequences as
hereinafter set forth shall, from the beginning of the date specified in such
notification (hereinafter referred to as the date of vesting) ensue, namely (a)
all rights, title and interest vesting in the proprietor or any person having
interest in such proprietary right through the proprietor in such area
including 218 land (cultivable or barren), grass land, serub jungle, forest,
trees, fisheries, wells, tanks, ponds, water channels, ferries, pathways,
village sites, hats, bazars and melas; and in all subsoil, including rights, if
any, in mines and minerals, whether being worked or not, shall cease and be
vested in the State for purposes of the State free of all encumbrances; and the
mortgage debt or charge on any proprietary right shall be a charge on the
amount of compensation payable for such proprietary right to the proprietor
under the provisions of this Act;" Section 5 is to the following effect:
"5. Certain properties to continue in
possession of proprietor or other person Subject to the provisions in Sees. 47
and 63(a) all open enclosures used for agricultural or domestic purposes and in
continuous possessions for twelve years immediately before 1948-49; all open
house sites purchased for consideration; all buildings places of worship; wells
situated in and trees standing on lands included in such enclosures or
house-sites or land appertaining to such buildings or places of ownership;
within the limits of a village-site belonging
to or held by the outgoing proprietor or any other person shall continue to
belong to or be held by such proprietor or other person, as the case may be;
and the land thereof with the areas appurtenant thereto shall be settled with
him by the State Government on such terms and conditions as it may determine;
(b) all private wells and buildings on
occupied land belonging to or held by the outgoing proprietor or any other
person shall continue to belong to or be held by such proprietor or other
(c) all trees standing on land comprised in a
home farm or homestead and belonging to or held by the out-going proprietor or
any other person shall continue to belong to or be held by such proprietor or
(d) all trees standing on occupied land other
than land comprised in home-farm or homestead and belonging to or held by a
person other than the outgoing proprietor shall continue to belong to or be
held by such person;
(e) all tanks situate on occupied land and
belonging to or held by the outgoing proprieter or any other 219 person shall
continue to belong to or be held by such proprietor or other person;
(f) all tanks, belonging to or held 'by the
outgoing proprietor which are situate on land other than village site or
occupied land and in which no person other than such proprietor has any rights
of irrigation, shall belong to or be held by such proprietor;
(g) all tanks and embankments (bandhans)
belonging to or held by the outgoing proprietor or any other person which are
situate on land other than village site or occupied land and the beds of which
are under cultivation of such proprietor or such other person shall belong to
or be held by such proprietor or such other person and the land under such
tanks and embankments shall be settled with such proprietor or such other
person on such terms and conditions as the State Government may determine;
(h) all groves wherever situate and recorded
in village papers in the name of the outgoing proprietor or any other person
shall continue to belong to or be held by such proprietor or such other person
and the land under such groves shall be settled with such proprietor' or such
other person by the State Government on such terms and conditions as it may determine."
Section 6(1) states "6. Certain transfers to be void.-(1) Except as
provided in sub-section (2), the transfer of any right in the property which is
liable to vest in the State under this Act made by the proprietor at any time
after the 16th March, 1950 shall, as from the date of vesting, be void."
It was contended, in the first place, on behalf of the appellant that the
contracts did not confer settlement of any interest in immovable property and
as such the appellant could not be equated with a person having interest in the
proprietary right falling within the purview of the Abolition Act. It is not
possible for us to accept this argument. The question has already been the
subject matter of consideration by this Court in State of Madhya Pradesh v. Yakinuddin(1).
In that case also, the respondents. by grants from and agreements with the
proprietors, acquired the right to propagate lac, collect tendu leaves and
gather fruits and flowers of Mahua leaves in certain estates. It was held by
this Court that whatever rights the respondents had acquired from the
proprietors ceased to have effect by the operation of s, 4(1) (a) of the Abolition
(1)  3 S.C.R. 13.
220 Act. It was further held that the rights
claimed by the respondents were in the nature of to proprietary rights falling
within s. 4 (1) (a) of the Abolition Act and upon the issue of a notification
under 'S.. 3 of the Abolition Act the rights of the respondents had passed and
became vested in the State of Madhya Pradesh. It was further pointed out that
the rights created by the transactions between the respondents and the grantors
did not come under s. 5 of the Abolition Act. In the course of this judgment
the previous judgment of this Court in Chhotabhai Jethabhai Patel & Co' V.
The State of Madhya Pradesh(1) was expressly overruled. In our opinion the
present case falls directly within the ratio of the, decision of this Court in
State of Madhya Pradesh v. Yakinuddin (2) It follows that the argument of the
appellant on this aspect of the case must be rejected.
We proceed to consider the. next question
raised on behalf of the appellant, viz., whether he was entitled to a refund of
the deposit of Rs. 10,000 which he had made towards the right to collect lac
from the forests for the years 1951, 1952 and 1953. The contention Out forward
on behalf of the appellant is that the contracts Were not in conformity with
Art. 299 of the Constitution and were consequently void and had no effect. It
was claimed that the appellant was entitled to compensation under s. 70 of the
Indian Contract Act which is applicable to the case. It is not disputed on
behalf of the respondent that there was no formal compliance of the provisions
of, Art. 299 of the Constitution but it was said that the bids were accepted by
the Deputy Commissioner Balagbat and were communicated to the appellant who
worked the contracts and actually collected lac in the forests in question. The
trial court refused to grant a decree to the. appellant in this case with
regard to this claim on the ground that the contract was not void and although
there was no conformity with the provisions of Art.
299 of the Constitution there was nothing to
prevent the ratification of such contracts if therefore the benefit of the
Government. The trial, court further observed that the appellant had performed
his 'art of the contract and worked and collected lac from the jungles in
pursuance of the agreement and was therefore not entitled to refund of the
amount in deposit. The finding of the trial court on this point has been I
affirmed by the High Court which also came to the. conclusion that the,
appellant bad worked for some time on the basis of the contracts granted to him
but, the appellant abandoned the contracts of his own accord and the State
cannot therefore be held liable for, the refund of the amount of deposit.
In our. opinion,, the reasoning adopted by
the trial court and by the High Court for rejecting the claim of the appellant
is not correct. It is now well-established that here a contract between (1)
 S.C.R. 476.
(2)  3 S.C.R. 13.
221 the Dominion of India and a private
individual is not in the form required by s. 175 (3) of the Government of India
Act, 1935, it was void and could not be enforced and therefore the opinion f
India cannot be sued by a private individual breach of such contract (See the
decision in Seth Bikhrai Jaipuria v. Union of India(1). It was stated in that
case that under.s. 175(3) of the Government. of India Act, 1935, the contracts
had (a) to be expressed to be made by the Governor-General, (b) to be executed
on behalf of the Governor-General and (c) to be executed by offcers duly
appointed in that behalf and in such manner as the Governor General directed or
authorised. The evidence in the case showed that the contracts were not
expressed to be made by the Governor-General add were not executed on his
It was held by this Court that the provisions
of s. 175 (3) were mandatory and the contracts were therefore void and not
binding on the Union of India which was not liable for damages for breach of
the contracts. The same principle was reiterated by this Court in a later
case-State of West Bengal v. Mls. B. K. Mondal and Sons(2). The principle is
that the provisions of s. 175(3) of the Government of India Act, 1935 or the
corresponding provisions if Art. 299 (1) of the Constitution of India are
mandatory in character and the contravention of these provisions nullifies the
contracts and makes them void. There is no question of estoppel Or ratification
in such a case. The reason is that the provisions of section 175(3) of the
Government of India Act and the corresponding 'provisions of Art. 299 ( 1 ) of
the Constitution have not been enacted for the sake of mere form but, they have
been enacted or safeguarding the Government against unauthorised contracts. 'he
provisions are embodied in s.'175(3) of the Government of India Act and Art.
299(1) of the Constitution on the ground of public policy-on the ground of
protection of general public and these formalities cannot be waivedor dispensed
with. If the plea of the respondent regarding estoppel or ratification is
admitted that would mean in effect the repeal of an important constitutional
provision intended for the protection of the general public that is why the
plea of estoppel or ratification cannot be permitted in such a case. But if
money is deposited and goods are supplied r if services are rendered in terms
of the void contract, the provisions of s. 70 of the Indian Contract Act may be
applicable. In other words, if the conditions imposed by s. 70 of the IndianCon-act
Act are satisfied then the provisions of that section can be invoked by the
aggrieved party ,to the void contract. The first condition is that a person
should lawfully do something for another person or deliver something to him;
the second condition is that i doing the said thing or delivering the said
thing Ike must, not intend to act gratuitously; and the third condition is that
the other (1)  2 S.C.R. 880. (2)  1 Supp. S.C.R. 876.
222 person for whom something is done or to
whom something is delivered must enjoy the benefit thereof. If these conditions
are satisfied, s. 70 imposes upon the latter person the liability to make con
sensation to the former in respect of, or to restore, the thing done or
delivered. The important point to notice is that in a case falling under s.
70 the person doing something for another
delivering something to another cannot sue for the specific performance of the
contract, nor ask for damages for the breach the contract, for the simple
reason that there is no contract between him and the other person for whom he
does something to whom he delivers something. So where a claim for compensation
is made by one person against another under s. 70, it is not on the basis of
any subsisting contract between the parties but a different kind of obligation.
The juristic basis of the obligation in such a case is not founded upon any
contract or tort but upon a third category of law, namely, quasi contract or restitution.
1' Fibrosa v. Fairbairn(1) Lord Wright has stated the legal position as follows
"............ any civilised system of law is bound to provide remedies for
cases of that has been called unjust enrichment or unjust benefit, that is, to
prevent a man from retaining the money of, or some benefit derived from,
another which it is against conscience that he should keep. Such remedies in
English Law are generally different from remedies in contract or in tort, and
are now recognised to fall within a third category of the common law which has
been called quasi contract or restitution." In Nelson v. Larholt(2) Lord
Denning has observed as follows "It is no longer appropriate to draw a
distinction between law and equity.
Principles have. now to be stated in the
light of their combined effect. Nor is it necessary to canvass the niceties of
the old forms of action. Remedies now depend on the substance of the right, not
on whether they can be fitted into a particular framework. The right here is
not peculiar to equity or contract or tort, but falls naturally within the
important category of cases where the court orders restitution if the justice
of the case so requires." Applying the principle to the present case, it
is manifest the appellant would have been entitled to compensation under s. 70
of the Indian Contract Act if he had adduced evidence : support of his claim,
but the trial court has examined the evident. on this point and reached the
conclusion that the appellant.
(1)  A.C. 32,61.
(2)  1 K.13. 330,14' 223 collect lac in
the jungles in the year 1951 but later on abandoned the working of his own
accord. It is well established that a person who seeks restitution has a duty
to account to the defendant for what he has received in the transaction from
which his right to restitution arises. In other words, an accounting by the
plaintiff is a condition of restitution from the defendant (See 'Restatement of
the Law of Restitution', American Law Institute, 1937 Edn., p.
634). The appellant did not produce
sufficient evidence to show to what extent he worked the contract and what was
the profit made by him in the year 1951 and the succeeding year.
In the absence of reliable evidence on this
point the appellant was not entitled to restitution or refund of the deposit he
had made. The case of the appellant with regard to this part of his claim was
therefore rightly disallowed both by the trial court and the High Court and the
respondent is therefore not liable to refund the amount of deposit.
For these reasons we hold that there is no
merit in this appeal which is accordingly dismissed with costs.
G,C. Appeal dismissed.