KUJU COLLIERIES LTD. versus JHARKHAND MINES LTD. & ORS.

Citation: [1975] 1 S.C.R. 703 · Decided: 12-08-1974 · Supreme Court of India · Bench: P. JAGANMOHAN REDDY · Disposal: Dismissed
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Judgment (excerpt)

A 
B 
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D 
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703: 
KUJU COLLIERIES LTD . 
. v. 
JHARKHAND MINES LTD. & ORS. 
August 12, 1974 
[P. JAGANMOHAN REDDY, M. H. BEG, AND A. ALGIRISWAMI, JJ.] 
Contract Act. s. 65-Scope of-Payment not made under coercion or ignorance 
of fair-Whether recoverable. 
The appellant paid to the first respondent a large sum of money in respect of' 
mining lease granted to it. 
the appellant (plaintiff) instituted a suit for recovery· 
of possession of the leased property or in the alternative for refund of the sum 
paid to the first respondent. After institution of the suit the Bihar Land Reforms 
Act came into force as a result of which the appellant's claim in respect of posses~ 
sion of the mines became unenforceable. The appe1Iant, therefore, confined its 
claim for the recovery of the sum paid. 
Dismissing the appeal, the trial court held that the appellant was not entitle dj 
to claim any relief under s. 65 of the Contract Act because there was no occasion for 
it to have been under any kind of ignorance of law and as the Mineral Concession Ru!eS· 
of 1949 rendered any stipulation for payment of salami illegal, the lease on that basis 
\\'as also illegal. The High Court unheld the view of the trial Court. 
Dismissing the appeal, 
HELD : This is not a case to which sections 65, 70 and 72 of the Contract Act 
apply. The payment of the money was not made lawfully nor \Vas it done under 
mistake or coercion. 
[709A] 
(l)·\Vhere an agreement is void ab initio or a contract becomes void due to subse-
quent happenings any person receiving an advantage under such agreement or con-
tract is bound to restore such advantage or to make compensation for it to the per-· 
son fron1 whom he received it. But where even at the time when the agreement 
\vas entered into both the parties knew that it was not lawful and, therefore, void, 
there was no contract but only an agreement. [705F[ 
Harnarh Kaur v. lnder Bahadur Singh, 1923, 50 LA. 69, 75-76 and Shri Ramagya· 
Prasad Gupta & Ors. v. Sri Mur/i Prasad & Ors. C.A. Nos. 1710 of 1967 & 1986 of 
1966 decided on 11-4-1974, referred to. 
Budhu/a/ v. Deccan Banking Company A.LR. 1955 Hyd. 69 and Sil'aran1akri-
sh11aiah v. ]1/arahari Rao, A.LR. 1960 A.P. 186, approved. 
(2) Section 4 of the Mines and Mineral (Regulation and Developn1erit) Act, 
1948 provides that no mining lease shall be granted otherwise than in accordance· 
with the Rules made under the Act. Rule 45 of the Mineral Concession Rules,. 
1949 provides that a mining lease shall be granted only to a person holding a certi~ 
'ficate of approval· from the State Government. Rule 49 provides that no granter 
of mining lease shall charge any pren1ium in addition to or in lieu of the rent speci-· 
fied in such a lease. Jn the present case the appellant had no certificate as required 
under r. 45 and contrary tor. 49 there was a stipulation for pay1nent of a pre1niu1n. 
under the lease deed. The lease in favour of the appellant was, therefore, contrary 
to the provisions of the Act and the rules and as such void. [708F] 
(3) There was no occasion for the plaintiff to have been under any kind of ig-
norance of law under the Contract Act and the Mineral Concession Rules, 1949. 
The appellant was in the business of mining and had the advantage of consulting·. 
its lawyers and solicitors. [708H] 
CmL APPELLATE JurusmcTION : Civil Appeal No. 1865 of 1967. 
Appeal by Special Leave frcm the Judgment & Deciee dat(d the 
19th October, 1965 of the Patna High Court in Original Decree No .. 
311 of 1960. 
704 
SUPREME COURT REPORTS 
[1975] I S.C.R. 
0. P. Malhotra and D. N· Mishra, for the appellant. 
D. N. Mukherjee and N. R. Chaudhury, for respondent Ncs. I, 3, 
& 5. 
S. N. Prasad, for respondent Nos. 3 & 4. 
D. P. Singh, S. C. Aggarwala, V. J. Francis and S. S. Bha/llagar, 
A 
for the intervener. 
B 
The Judgment of the Court was delivered by 
ALAGIRISWAMI, J.-This appeal is against the judgment of the Patna 
High Court by Special Leave granted by this Court. It arises out of a 
mining lease granted by the !st respondent but alleged to have been 
<lone so in the name of the !st respondent by the 2nd respondent in 
favour of Haricharan Singh J.b. & Co. on 7-9-1950. In pursuance 
of the lease a sum of Rs. 80,000/- was paid to the !st respondent. The 
plaint allegation was that the Isl respondent was a Limited Company 
<:reated by the 2nd respondent. There was an earlier learn in respect 
of the same property in favour of rnspondents 3 and 4
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