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 behalf of the Municipal Committee Madandanj was not executed and signed in conformity with the provisions of sec. 15 of the Kishangarh Municipalities Act (Act IV of 1943—hereinafter called the Act) and as such was not binding on the Municipal Committee Madanganj or on the defendant either. This defence found favour with the trial court which entirely dismissed the plaintiffs suit; but on appeal the learned District Judge, Jaipur decreed the claim for Rs. 2,000/-with interest Rs. 160/14, in all Rs. 2160/14. The decree has been confirmed by Bhandari J. and hence this appeal.

3. The only point which has been canvassed before us, as it was before the learned Judge, is that the contract for loan not being in conformity with sec. 15 of the Act, is not binding on the defendant. The section requires:

"Every contract made by or on behalf of the Committee whereof the value or amount exceed Rs. 20/- shall be signed by the President. If a contract to which this section applies is executed otherwise than in conformity therewith it shall not be binding on the Committee."

Admittedly in this case there was no contract in writing and on the terms of the above section, the contract as such cannot be enforced against the Committee. The question, however, which still falls to be answered is whether the plaintiff is entitled to recover the amount under sec. 65 of the Contract Act. Under sec. 7 of the Act, the Municipal Committee has power and was competent to enter into a contract for loan and the finding is that it did in fact take a loan of Rs. 2,000/- from the plaintiff. Therefore, as pointed out by the learned Judge, the competency of the Municipal Committee Madanganj to take the loan is not challenged. All that is challenged is the binding nature of the contract on the ground of non-compliance with sec. 15 of the Act. It is also not disputed now that if the Madanganj Committee were liable, the defendant by virtue of merger would be also liable. The rule of equity and justice requires that if in fact money has been paid to the defendant under an agreement, not otherwise unlawful, it should pay back the amount to the plaintiff even if for some reason the contract as such is not enforceable. The law safeguards against any unlawful enrichment at the cost of an innocent party and provides for restitution in all such cases. These equitable principles are embodied in sec. 65 and 70 of the Contract Act, and relief should be granted to the extent that these provisions justify. Sec. 65 of the Contract Act runs as follows :—

"When an agreement is discovered to be void or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it. or to make compensation fox it, to the person from whom he received it."

The section

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