R. K. RASTOGI, J. ( 1 ) THIS is an appeal against judgment and decree dated 7-11-1977 passed by Sri K. G. Rastogi, then II addl. District Judge, Rampur in original suit no. 37 of 1973, M/s. Raza Buland Sugar company Ltd. v. The State of Uttar Pradesh. ( 2 ) THE facts giving rise to this appeal are that the plaintiff respondent No. 1 filed the aforesaid suit against the defendant appellants and respondent Nos. 2 and 3 with these allegations that the plaintiff is a public limited company and it runs sugar factory named Raza Buland Sugar Factory. Previously there were two sugar factores, namely, raza Sugar Factory and Buland Sugar Factory, but they were amalgamated in the name and style raza Buland Sugar Factory. The Company suffered loss due to amalgamation of these two factories and so it could not pay prices of sugarcane to the farmers and commission to societies of cane growers as well as the purchase tax in time. Hence, a recovery certificate was issued by the Cane Commissioner to the Collector, rampur for recovery of the above amount as arrears of land revenue. The Collector attached movable and immovable property of the Company. Then its president Sri. P. C. Jhunjhunwala had negotiations with the government and an arrangenment was made for making payment, but all of a sudden on 14-11-1968 the Collector, Rampur appointed Sri P. C. Bhatia as Receiver under Section 146 of the U. P. Land Revenue act. The above order was passed without jurisdiction. No opportunity was provided to the Company to show cause against the proposed action. The losses were enhanced in the tenure of the Receiver and the arrears were increased to Rs. 12. 20 Lakhs. Then he was removed by the Collector on 6-5-1969 and Sri G. C. Pant was appointed as Receiver in his place. The Company filed writ petition No. 377 of 1970 before the High court (Lucknow Bench) challenging the above appointments. There was mismanagement in the tenure of Sri G. C. Pant also and so on 10-6-1969 the management of the factory was again given to Sri P. C. Jhunjhunwala appointing him as Receiver. The Company filed writ petition No. 377 of 1970 before the High court (Lucknow Bench) challenging the above appointments. There was mismanagement in the tenure of Sri G. C. Pant also and so on 10-6-1969 the management of the factory was again given to Sri P. C. Jhunjhunwala appointing him as Receiver. Sri Jhunjhunwala was trying to manage the factory at his level best but again on 2-3-1970 a radiogram was issued to several Collectors of U. P. including the Collector, rampur to appoint Receivers of sugar factories in those districts and so again Sri G. C. Pant was appointed as Receiver on 3-3-1970. Sri Pant was removed from the above post on 24-3-1970 and in his plae Sri Man singh was appointed as Receiver. These appointments were also invalid. The companys writ petition No. 377 of 1970 filed before Lucknow Bench of Allahabad High court was transferred to Allahabad and was registered there as Writ Petition No. 2586 of 1972. This writ petition was dismissed as infructuous on 10-1-1973 as the orders appointng Receivers had been withdrawn by that time. Sri Man Singh borrowed a loan of rs. 75/- Lakhs from the Government to run the factory after pledging the bags of sugar. There was no necessity to borrow this amount. This amount has, however, been repaid to the Government. Vide an interim order passed by the High Court in the aforesaid writ petition it was provided that a sum of Rs. 7 Lakhs which was obtained by sale of sugar shall remain in deposit in the Bank in the name of the plaintiff. This amount was being claimed by the Government as interest on the above amount of Rs. 75/-Lakhs. The Government has got no legal claim for this amount because Sri Man singh, defendant No. 3, was illegally appointed as Receiver and he had no authority to borrow any amount on behalf of the company and so the Company was not liable to repay any amount. The contract was bad and unenforcible and no interest was payable on the above transaction. The plaintiff gave notices under Section 80 C. P. C. to the defendants which were served upon them and thereafter it filed this suit for declaration that it is entitled to receive the amount of Rs. The contract was bad and unenforcible and no interest was payable on the above transaction. The plaintiff gave notices under Section 80 C. P. C. to the defendants which were served upon them and thereafter it filed this suit for declaration that it is entitled to receive the amount of Rs. 7 Lakhs along with interest which might have accrued upon it in the shape of a deposit in the State Bank of India. Rampur, defendant No. 4. ( 3 ) THE defendant Nos. 1 and 2, i. e. State of U. P. and the Collector, Rampur, contested the suit. They filed a joint written statenment in which they justified their action of appointment of Receivers and alleged that the receivers appointed by the Collector were competent persons. Sri P. C. Bhatia was a retired Deputy Cane Commissioner. Both Sri bhatia and Sri G. C. Pant managed the mill very well. However, on the assurance of Sri jhunjhunwala, the mill was given to him during the rushing season of 1970, but he could not execute the promises made by him and so on 3-3-1970 Sri G. C. Pant was again appointed as Receiver, and at that time there was no fund to meet the day to day expenses of the factory, and so a loan of Rs. 75/- lakhs was obtained from the Government on interest at the rate of 10% per annum. This loan was taken in good faith and the Receiver had agreed to pay the interest. The plaintiff has got no right to withhold payment of Rs. 7/- lakhs, which is the amount of interest on the loan. The plaintiff was seeking recovery of the amount of Rs. 7 lakhs, so it should have paid ad valorem court fee on the entire amount and not the court fee of Rs. 200/- only on the relief of declaration, and the suit for mere declaration without the relief of recovery of the amount is not maintainable. It was also hit by Section 34 of the Specific Relief Act. ( 4 ) THE plaintiff filed a replication also in reply to the written statement. ( 5 ) FOLLOWING issues were framed in the suit: (1) Whether the Court-fee paid is insufficient? If so, what is the deficiency? (2) Is the suit for a declaration not maintainable ? Is it barred by Section 34 of the specific Relief Act? ( 4 ) THE plaintiff filed a replication also in reply to the written statement. ( 5 ) FOLLOWING issues were framed in the suit: (1) Whether the Court-fee paid is insufficient? If so, what is the deficiency? (2) Is the suit for a declaration not maintainable ? Is it barred by Section 34 of the specific Relief Act? (3) Is the receipt of fixed deposit of Rs. 7 lacs a document of title? If so, in what capacity is it in possession of defendant No. 2 and does a suit for declaratory decree not lie beause of such possession? (4) Whether the alleged loan transaction of Rs. 25 lacs and Rs. 50 lacs are infructuous and null and void, firstly, for want of compliance with the provisions of Article 299 of the Constitution of India since the alleged agreement of loan were not executed by any person on behalf of the Governor of Uttar pradesh and secondly because they are not sufficiently stamped? (5) Whether the alleged loan transactions cannot bind the plaintiffs and they confer no right on defendant No. 1 or defendant no. 2 against the plaintiff for recovery of interest because of want of registration with the Registrar of Companies? (6) (a) Whether the orders of defendant no. 2 appointing a receiver of the plaintiff company or of its assets and business were without any legal sanction and against law and also without jurisdiction otherwise and therefore null and void? (b) Whether the same defect attached to the subsequent orders changing the persons who were to work as receivers? (7) Whether the orders dated 14-11-1968 taking recourse to the method of appointment of receiver for liquidating the dues under the certificates purporting to have been issued under the U. P. Sugar Cane (Regulation of Supply and Purchase) Act, 1953 and the U. P. Sugar Cane (Purchase tax) Act, 1961 and subsequent orders appointing different persons including Sri Man singh in particularwere invalid and void because the existence, if any, of the following circumstances : (a) Defendant No. 2 neither acted in his own discretion nor applied his own mind to the question whether recourse to the mode of recovery by appointment of receivers from time to time was called for and he only carried out the instructions of defendant No. 1 and was guided by the wishes of defendant no. 1; (b) the orders were always passed ex parte and without observance of the procedure of principles of natural justice; (c) the question whether appointment of receiver would be just and convenient was never considered; (d) the orders were mala fide and not in bona fide exercise of any legal authority; and (e) a receiver could not again have properly and reasonably been appointed when the appointment of Sri P. C. Bhatia and Sri g. C. Pant had failed to achieve the ostensible purpose of recovery of dues under the certificates. (8) Whether the order appointing a receiver contravened the provisions of the industries (Development and Regulation) Act, 1951 and was therefore illegal and void? (9) Whether Sri Man Singh could have legally acted on behalf of the plaintiff in entering into the alleged loan transactions and could have represented it in law and whether the plaintiff company is bound by the said transaction? (10) To what relief, is the plaintiff entitled? (11) Whether the plaintiff can claim the amount in suit in isolation to the other matters? (12) Whether the plaintiff is liable to account for the entire account of the receiver from 4-3-70 to 14-6-70 before claiming the amount in suit? ( 6 ) ISSUE No. 1 was taken as a preliminary issue and it was decided by Sri Sushil kumar, then II Addl. Civil and Session Judge, rampur vide his order dated 17-5-1974. He held that the Court-fee paid was sufficient. ( 7 ) THE suit was heard and decided by sri K. G. Rastogi, then II Addl. District judge, Rampur vide his judgment dated 7-11 -1977. He took issue Nos. 2 and 3 together and held that the suit for declaration was maintainable and it was not barred by Section 34 of the Specific Relief Act. Thereafter he took issue Nos. 6 and 7 together and held that the orders passed by the Collector appointing receivers were invalid. He held on issue No. 4 that the transaction of loan was invalid because the borrower Sri Man singhs appointment was illegal and the transaction was also hit by Article 299 of the Constitution of India. He held on issue no. 9 that since the appointment of Sri Man singh was illegal, he had no authority to execute any document of loan and the plaintiff company is not bound by his act. Issue nos. He held on issue no. 9 that since the appointment of Sri Man singh was illegal, he had no authority to execute any document of loan and the plaintiff company is not bound by his act. Issue nos. 5 and 8 were not pressed before him by the plaintiff and as such they were decided against the plaintiff. Issue Nos. 11 and 12 were not pressed by the defendants so they were decided against the defendants. In view of the above finding he held on issue No. 10 that the plaintiff was entitled to receive the amount of F. D. R. of Rs. 7 lakhs along with interest. He, therefore, decreed the suit. Aggrieved with that judgment and decree, the state of U. P. and the Collector, Rampur have filed this appeal. ( 8 ) WHEN this appeal was filed, Sri V. Swaroop, Advocate, filed his Vakalatnama on behalf of respondent No. 1 and Sri S. N. Verrna, Advocate filed his Vakalatnama on behalf of respondent No. 3. Service on respondent No. 2 was exempted as he was a proforma respondent only. However, thereafter none appeared for the respondents and so arguments of the appellant alone were heard and the record was perused and now we are deciding this appeal on merits. ( 9 ) THE Standing Counsel raised the following points before us : (i) Whether the transactions entered by the receiver Sri Man Singh are illegal merely because his appointment was illegal? (ii) Whether the transaction of loan is a valid transaction or not? (iii) Whether the appellant is entitled to recovery of a sum of Rs. 7 lakhs deposited in the State Bank of India in the shape of f. D. R. along with interest or not? ( 10 ) HOWEVER, before recording finding on the aforesaid three points, we first of all refer to the evidence led by both the parties in this suit. ( 11 ) THE plaintiff filed before the trial court a copy of the notice under Section 80 c. P. C. as paper No. 7c Ext.-1, and postal receipts of its registration and acknowledgment as paper No. 8c/1 to 8c/4 Exhibits 2 to 5. The plaintiff also filed a certified copy of the judgment of this Court in Civil Misc. Application No. 1871 (W) of 1971 P. C. Jhunjhunwala v. State of U. P. This order is dated 25-4-1972. The plaintiff also filed a certified copy of the judgment of this Court in Civil Misc. Application No. 1871 (W) of 1971 P. C. Jhunjhunwala v. State of U. P. This order is dated 25-4-1972. and vide this order the plaintiff was allowed one months time to give a bank guarantee for drawing the sum of rupees seven lacs from the bank. This is paper No. 16c Exhibit 6. The plaintiff also produced a certified copy of the judgment of this Court in Civil Misc. Writ Petition No. 2586 of 1972, P. C. Jhunjhunwala v. The state of U. P. which was filed to challenge the appointment of Receivers. This writ petition was, however, dismissed as having become infructuous as the orders appointing Receivers had lapsed by efflux of time, it is paper No. 17c Ext. 7. The plaintiff also filed certificed copies of some correspondence between it and the defendants as papers No. 99c to 106c, out of them paper nos. C-99, 101 to 103 and 105 have been marked as Exts. 8 to 12. The plaintiff also filed a certified copy of the order passed by this Court in civil Misc. Application No. 535 (W) of 1971 filed in Writ Petition No. 377 of 1970 (Lucknow Bench), P. C. Jhunjhunwala v. State of U. P. , it is paper No. C-132 Ext. 13. This order is dated 27-3-1971, and vide this order the plaintiff company was permitted to sell the stock of sugar bags at the rate of Rs. 121/- per bag, and it was also provided that out of the sale proceeds a sum of Rs. 75,00,000/- shall be deposited with the State Government as repayment of its loan, and a sum of Rs. 7,00,000/- shall be kept in deposit in the State Bank and the rival claims of the parties in respect of this amount shall be decided subsequently, and the balance sale proceeds over and above rs. 82,00,000/- shall be utilized by the company. ( 12 ) THE defendants filed a copy of G. O. No. 2653s/18c. 1561/1970 dated 26-3-1970 (Paper No. 48a1) whereby a loan of rs. 25,00,000/- was sanctioned to the Receiver of the plaintiff company as well as to some other companies mentioned in the G. O. Paper No. 49a is the bond executed by sri Man Singh Receiver in favour of the Government in respect of the above loan amount. 1561/1970 dated 26-3-1970 (Paper No. 48a1) whereby a loan of rs. 25,00,000/- was sanctioned to the Receiver of the plaintiff company as well as to some other companies mentioned in the G. O. Paper No. 49a is the bond executed by sri Man Singh Receiver in favour of the Government in respect of the above loan amount. Paper No. 50a is a copy of G. O. No. 3212 S/18c-1561/1970 dated April 6, 1970 whereby a sum of Rs. 50,00,000/- was sanctioned as loan to the Receiver of the plaintiff company and paper No. 51a is the bond executed by Sri Man Singh Receiver in favour of the Government in respect of this loan amount. ( 13 ) THE defendants also produced a copy of the order of this Court passed in Special appeal No. 80 of 1973 connected with Special appeal No. 141 of 1973 filed by the parties against the Judgment in Civil Misc. Writ petition No. 2586 of 1972. it is paper No. 62c Ext. A1. It may be mentioned that the above writ petition had been dismissed by this Court as infructuous. However, Honble k. B. Asthana, J. while dismissing the writ petition on the ground of its having become infructuous had made some observations on the merits of the writ petition also and being aggrieved with those observations both the parties had filed Special Appeals. These special Appeals were dismissed with this observation that the opinion expressed in the Judgment in Civil Misc. Writ Petition No. 2586 of 1972 on the merits of the case shall not have any effect in any future litigation between the parties as those observations were not necessary when the writ petition was being dismissed as infructuous. The dedendants also filed Forms BM 9 paper No. 63c/1 and 63c/2, Exts. A2 and A3, to show that a sum of Rs. 75,00,000/- was advanced to the plaintiff in accordance with the aforesaid G. Os. A copy of the stock position as on 15-6-1970 was also filed as paper No. 64-C and a copy of the order of the Collector dated 30-3-1970 was filed Ext. A4. ( 14 ) THE plaintiff produced Sri S. K. Kaul its Secretary as P. W. 1 and Sri Prakash chand Jhunjhunwala its Director as P. W. 2. Both of them supported the plaint allegations in their statements. The defendants did not produce any witness. A4. ( 14 ) THE plaintiff produced Sri S. K. Kaul its Secretary as P. W. 1 and Sri Prakash chand Jhunjhunwala its Director as P. W. 2. Both of them supported the plaint allegations in their statements. The defendants did not produce any witness. We have gone through this entire documentary and oral evidence. ( 15 ) THE appointment of Sri Man Singh as a Receiver may be illegal but does it mean that the actions taken by him are also illegal. ( 16 ) IN the case of Jai Kumar v. State, 1968 ALJ 877 a Full Bench of this Court held that the acts done or decisions given by the persons, whose appointments are subsequently found to be invalid, shall remain binding upon the parties. In this case the appointments of several Judges were found to be invalid, but the judgments given by them were held to be valid. The same view was taken by the Honble Apex Court in the case of Gokaraju Rangaraju v. State of A. P. , AIR 1981 SC 1473 where it was further held that the doctrine of de facto applies in such cases, and it saves the acts done by the Officer in exercise of their duties, and that the so-called defective appointment cannot be challenged in such collateral proceedings. ( 17 ) WHEN an authority has been appointed for doing a work and when that authority performs that work in a bona fide manner and there are no allegations of mala fides or misconduct against him, the act done by that authority and the contracts entered into by that authority shall be binding upon the parties in spite of the fact that subsequently the appointment of that authority is found to be Invalid and the doctrine of de facto applies in such cases. ( 18 ) IN the present case the only allegation against the Receivers is that they did not perform their duties property and so the liabilities of the factory were increased in their tenure. ( 18 ) IN the present case the only allegation against the Receivers is that they did not perform their duties property and so the liabilities of the factory were increased in their tenure. On the other hand the allegation of the defendant appellants is that the management of the factory was not proper and so the amount of taxes payable to the government and the commission to be paid to the Co-operatives Societies and the price of sugarcane to be given to the farmers had fallen in arrears when the factory was being run by its own management, and there was no improvement in the position of liabilities of the plaintiff company even when Sri jhunjhunwala, the Director of the Company was appointed Receiver, and so Mr. G. C. Pant and thereafter, Mr. Man Singh had to be appointed as Receivers. It is, however, to be seen that there is no allegation of any mala fide or misconduct against the Receivers and so even if they could not reduce the liabilities of the company during their respective tenures, it cannot be concluded on the basis thereof that they were negligent in performing their duties. The position, in this way, is that though the appointment of Sri man Singh as Receiver was not valid yet the acts done by him in exercise of this power as a Receiver in a bona fide manner shall remain binding upon the parties. ( 19 ) NOW, we come to the next point regarding transaction of Rs. 75 lacs. This transaction has been held to be invalid by the trial Court on the ground that it was executed in violation of Article 299 of the constitution of India as both the bonds were signed by Sri Man Singh only, and no one had signed the said bonds on behalf of the government of U. P. and so these bonds paper Nos. 49-A and 51-A are invalid. It was further held that both these documents are bilateral documents and since they have not been signed by any authority on behalf of the State, they are invalid. ( 20 ) THE learned Standing Counsel submitted before us that :-"the loans of Rs. 25,00,000/- and Rs. 50,00,000/" respectively were sanctioned to the plaintiff company vide G. Os. It was further held that both these documents are bilateral documents and since they have not been signed by any authority on behalf of the State, they are invalid. ( 20 ) THE learned Standing Counsel submitted before us that :-"the loans of Rs. 25,00,000/- and Rs. 50,00,000/" respectively were sanctioned to the plaintiff company vide G. Os. dated 26-3-1970 paper No. 48-A and G. O. dated 6-4-1970 paper No. 50-A and all the terms and conditions of the loan were mentioned in the aforesaid G. Os. The G. Os. were signed by sri Rajendra Pal Khosala, the Special Secretary to the Government. Sri Man Singh executed two deeds for borrowing the money of Rs. 25 lakhs and rs. 50 lakhs respectively on 31-3-1970 and 9-4-1970 incorporating the conditions which were contained in the above G. Os. It is immaterial that the deeds of loan paper Nos. 49-A and 51-A, have not been signed by any one on behalf of the State and they have been signed by the Receiver Sri Man Singh only. The impact of Article 299 of the Constitution of India is only this that no oral contract can be entered for and on behalf of the state and there must be an agreement in writing. ( 21 ) IN the present case, the agreement has been in writing. The terms and conditions on which the loan was sanctioned are contained in the G. Os, dated 26-3-1970 and 6-4-1970 paper Nos. 48-A and 50-A. They are duly signed by Sri Rajendra Pal Khosala, special Secretary to the Government of U. P. Sri Man Singh has executed the deeds, (paper Nos. 49-A and 51-A), in token of acceptance of these terms and conditions mentioned in the aforesaid G. Os. It is immaterial that no one had signed the loan agreement bonds on behalf of the State. The contract had been completed between the parties taking into consideration the G. Os. paper Nos. 48-A and 50-1 signed by the Special Secretary to the Government, and the agreement deeds 49-A and 51-A signed by sri Man Singh Receiver. There is a valid agreement between the parties. ( 22 ) NOW we take the third point regarding claim of Rs. 7,00,000/ -. In this connection it is to be seen that the principal amount of Rs. 75,00,000/- has already been paid to the Government and Rs. There is a valid agreement between the parties. ( 22 ) NOW we take the third point regarding claim of Rs. 7,00,000/ -. In this connection it is to be seen that the principal amount of Rs. 75,00,000/- has already been paid to the Government and Rs. 7,00,000/- are being claimed by the State as interest on the above amount. It was very clearly mentioned in para 1 (3) of the G. Os. referred to above (paper Nos. 48-A and 50-A) that the interest at the rate of 10% shall be charged on the loan amount and if the principal amount and interest is paid in time, then there shall be rebate of 1% in the rate of interest. This rate of interest was also mentioned in the deeds (paper Nos. 49-A and 51-A) referred to above executed by Sri Man singh on behalf of the plaintiff company, and so the plaintiff company is liable to pay interest at this rate as agreed by Sri Man Singh and it is immaterial that no one signed these deeds on behalf of the State. ( 23 ) IT is also to be seen that even in those cases where there is no contract between the parties regarding payment of interest, the plaintiff is entitled to claim interest at the rate of 6% per annum as laid down by the Division Bench in A. K. S. Naidu v. S. J. Reddi, AIR 1977 Madras 56. In the present case there was a provision for payment of interest at the rate of 10% per annum along with a provision of 1% rebate for timely payment. This provision was contained in the aforesaid G. Os. (paper Nos. 48-A and 50-A)while sanctioning the loan, and Sri Man singh Receiver accepted this condition on behalf of the plaintiff company by signing the deeds (paper Nos. 49-A and 51-A) referred to above. As such the Government is entitled to receive the amount of Rs. 7,00,000/- which is in deposition with the state Bank of India, Rampur, defendant No. 4, in the shape of F. D. R. along with interest that might have accrued on that F. D. R. and the plaintiffs suit for declaration to this effect that it is entitled to receive that amount is liable to be dismissed. The trial Court erred by holding otherwise, and decreeing the suit for the above relief. The trial Court erred by holding otherwise, and decreeing the suit for the above relief. ( 24 ) THE appeal, in this way, deserves to be allowed the judgment and decree dated 7-11-1977 passed by the trial Court are liable to be set aside and the plaintiffs suit deserves to be dismissed. ( 25 ) THE appeal is, accordingly, allowed. The judgment and decree dated 7-11-1977 passed by the trial Court are set aside and the plaintiffs suit is dismissed. Both the parties shall bear their own costs throughout. Appeal allowed.