Article 363 bar and Section 70 compensation claim failed over disputed covenant-based occupation of State property.

Article 363 barred the suit because the dispute arose from the meaning and effect of a covenant governing the post-integration occupation and use of the property, and the surrounding conduct showed a real controversy over that arrangement. The Rajasthan HC therefore upheld the constitutional objection and held the suit not maintainable. Section 70 of the Indian Contract Act also did not support a claim for use and occupation, because the ingredients of lawful non-gratuitous benefit, delivery in the statutory sense, and privity were not established, and the evidence indicated that occupation was intended to continue without rent or compensation. The decree dismissing the suit was sustained.

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Issues: (i) Whether the suit was barred by Article 363 of the Constitution of India as raising a dispute arising out of the covenant between the Union of India and the former Ruler of Alwar State; (ii) Whether the plaintiff could claim compensation for use and occupation under Section 70 of the Indian Contract Act, 1872.

Issue (i): Whether the suit was barred by Article 363 of the Constitution of India as raising a dispute arising out of the covenant between the Union of India and the former Ruler of Alwar State.

Analysis: The covenant governed the status and use of the disputed property after integration of the State, and the controversy turned on its meaning and effect. The Court held that Article 363 is attracted where there is a real dispute arising from such an agreement or covenant, including one entered into pursuant to a prior settlement. On the facts, there was a substantial controversy about the intended duration and nature of the State's occupation, and the surrounding conduct showed that the matter was not free from dispute.

Conclusion: The objection under Article 363 succeeded and the suit was not maintainable on that ground.

Issue (ii): Whether the plaintiff could claim compensation for use and occupation under Section 70 of the Indian Contract Act, 1872.

Analysis: Section 70 applies only where a person lawfully does something for another or delivers something to him, does not act gratuitously, and the other person enjoys the benefit. The Court held that these ingredients were not established. There was no privity of contract between the plaintiff and the State, no delivery of possession in the statutory sense, and the covenant and past conduct indicated that the occupation was intended to continue gratuitously without any stipulation for rent or compensation. The plaintiff also failed to adduce convincing evidence to displace that inference.

Conclusion: No liability to pay compensation arose under Section 70.

Final Conclusion: The appeal failed on both the constitutional objection and the claim for compensation, and the decree dismissing the suit was sustained.

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