Sarjoo Prosad, C.J.—This is a special appeal against the judgment and decree of Bhandari J. sitting single, confirming in second appeal the decision of the District Judge, Jaipur. Leave to appeal has been granted by the learned Judge.

2. The appeal relates to a suit filed by the plaintiff-respondent, the Maharaja Kishangarh Mills Ltd., for recovery of Rs. 3,539/7/- from the defendant Municipal Committee, which is the appellant here. The plaintiff alleged that the Municipal Committee Madanganj had borrowed on 9th July, 1947 a sum of Rs. 3,000/- and agreed to pay interest at the rate of 6% per annum, after the loan had been duly sanctioned by the Mahkama Khas of the then Kishangarh State. Later the Municipal Committee Madanganj merged in the Municipal Committee Kishangarh and plaintiff averred that, by virtue of the merger, the defendant became liable to pay the aforesaid amount with interest. The defendant resisted the claim and its liability to pay the amount; but admitted that in any case the plaintiff could not recover more than Rs. 2,000/- which was the actual amount paid. By a subsequent amendment in the written statement the defendant further pleaded, that the contract made on

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