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Dominion Of India v. Preety Kumar Ghosh And Another
Judgment Summary — C.P. Sinha, J. (Appeal by Defendant No. 1, Dominion of India)
Factual and Procedural Background
The plaintiff sued for recovery of the price of 1,970 charpois alleged to have been supplied on 12 September 1944 and 1 October 1944 at Rs. 5/8 each, claiming damages at 6¼% per annum from date of supply. The action was principally against Defendant No. 1, the Dominion of India; an alternative prayer was made against Defendant No. 2 in case it was found that Defendant No. 2 had been paid. The trial court entered a decree in favour of the plaintiff. Defendant No. 1 (the Dominion of India) appealed.
Background facts found at trial (and relied on in the judgment) include: in 1944–45 a military camp was at Chas; plaintiff was a contractor to the Military Department at Dhanbad; a Sub-divisional Officer (S.D.O.) of Military Engineering Services (M.E.S.), Chas area, had arranged supplies said to meet an emergency (arrival of South African troops); plaintiff supplied charpois which were accepted and receipts were given; plaintiff presented a bill that was not paid; it was represented to the plaintiff that payment had been made to Amal Chatterjee, another contractor, who plaintiff contended had no authority to receive payment for the plaintiff's supplies.
Defendant No. 1 pleaded that original contracts had been given to Amal Chatterjee, that later work-orders were split and one work-order (for 5,800) was given to the plaintiff but that only 1,879 charpois were supplied by the plaintiff (defendant's written statement), or that plaintiff's supplies were included in Amal Chatterjee's contract and paid to him. Pleas of limitation, lack of proper notice and that there was no legal contract between plaintiff and Defendant No. 1 were raised.
Legal Issues Presented
- Whether the plaintiff can recover the price of the charpois despite absence of a contract made in the form required by Section 175(3) of the Government of India Act, 1935 (i.e. whether S.175(3) makes such contracts unenforceable against the Dominion).
- Whether the supplies made by the plaintiff were independent supplies of 1,970 charpois (as found by the trial court) or were included in Amal Chatterjee's contract (as pleaded by Defendant No. 1).
- If the contract is unenforceable under S.175(3), whether the plaintiff can recover under equitable / restitutionary doctrines — specifically Sections 65 and 70 of the Indian Contract Act (restitution/quantum meruit/unjust enrichment).
Arguments of the Parties
Appellant (Defendant No. 1 / Advocate-General)
- Submitted that under Section 175(3) of the Government of India Act, 1935 there was no valid contract and therefore the plaintiff could not recover the price.
- Originally contended that only 1,879 charpois were supplied by the plaintiff (not 1,970).
- Asserted that the supplies by the plaintiff were not independent but were included in the contract made with Amal Chatterjee and payment for plaintiff's supplies had been made to Amal Chatterjee.
Plaintiff
- Alleged supply of 1,970 charpois on the dates specified (91 on 12 September 1944 and 1,879 on 1 October 1944) and that the supplies were accepted and receipts were given.
- Presently claimed the bill for Rs. 10,835 was unpaid and that representation that payment had been made to Amal Chatterjee was incorrect because Amal had no authority to receive payment for plaintiff's supplies; plaintiff denied having received any payment from Amal Chatterjee.
- Included an alternative claim against Defendant No. 2 if payment was found to have been made to that defendant.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Dominion of India v. Bhikhraj Jaipuria, AIR 1957 Pat 586 | Affirmation that Section 175(3) of the Government of India Act, 1935 is mandatory. | Used to support the proposition that contracts not made as prescribed by S.175(3) cannot be enforced in court. |
| Harnath Kuer v. Indar Bahadur Singh, 50 Ind App 69 : AIR 1922 PC 403 | Application of Section 65 of the Contract Act where an agreement is discovered to be void; restitution of purchase money. | Held to illustrate that S.65 applies to agreements void from inception and that purchase-money can be recovered under S.65; Court relied on this to apply S.65 here. |
| Hansraj Gupta v. Dehra Dun Mussorie Electric Tramway Co. Ltd., 60 Ind App 13 : AIR 1933 PC 63 | Support for the interpretation and application of Section 65. | Listed among authorities showing consistent interpretation of S.65; used to reinforce application of S.65 in this case. |
| Mohan Manucha v. Manzoor Ahmad Khan, 70 Ind App 1 : AIR 1943 PC 29 | Authority on Section 65. | Cited as another case where S.65 has been interpreted consistently with restitution principles relied on by the Court. |
| Madura Municipality v. K. Alagirisami Naidu, ILR 1939 Mad 928 : AIR 1939 Mad 957 | Supportive precedent on restitution/quantum meruit principles (S.65 / S.70). | Used among cases showing the application of restitution/compensation where contracts are unenforceable. |
| Arunachala Nadar v. Srivilliputtur Municipal Council, ILR 58 Mad 65 : AIR 1934 Mad 480 | Interpretation supporting statutory remedies (S.65) rather than relying solely on English equity principles. | Quoted to caution against ignoring plain statutory language of S.65; used to justify reliance on Indian statute. |
| Mohamed Ebrahim Molla v. Commissioners for the Port of Chittagong, ILR 54 Cal 189 : AIR 1927 Cal 465 | Recovery on quantum meruit for services though S.65 not expressly referred to in that case. | Referred to as an example where plaintiffs recovered quantum meruit for services rendered to defendant. |
| Mathura Mohan Saha v. Ram Kumar Saha and Chittagong District Board, ILR 43 Cal 790 : AIR 1916 Cal 136 | Illustrative of principles of restitution and recovery independent of the illegal contract. | Quoted to show law compels restitution/compensation if money/property of others is obtained without authority. |
| Central Transportation Co. v. Pullman's Palace Car Co., (1890) 139 US 24 | Principle that relief can be granted on implied obligations even while disaffirming an illegal contract. | Used to support the proposition that relief (restitution) is not to affirm the illegal contract but can be granted on an implied obligation to prevent unjust enrichment. |
| Chapleo v. Brunswick Building Society, (1881) 6 QBD 696 | Authority cited on restitution where defendant has received benefit. | Quoted (Baggallay L.J.) for the proposition that if a party has received benefit, plaintiff might recover to the extent of benefit derived. |
| Lawford v. Billericay Rural District Council, (1903) 1 KB 772 | Illustration that a corporation cannot avoid payment if it received and used goods even if formal requirements not complied with. | Quoted to show implied contract to pay may arise from acceptance and appropriation of goods by a corporate body. |
| Douglas v. Rhyl Urban District Council, (1913) 2 Ch 407 | Support for restitution where goods accepted by a public body. | Referred to alongside other English cases illustrating implied obligations to pay for accepted supplies. |
| Ram Nagina Singh v. Governor General in Council, AIR 1952 Cal 306 | Review of Sections 65 and 70 and their applicability where Government contracts are unenforceable under statutory formalities. | Relied on as a leading local authority reviewing S.65 and S.70; Court expressly agreed with its observations about applying S.65/S.70 despite S.175(3). |
| Dharmeshwar Kalita v. Union of India, AIR 1955 Assam 86 | Held that S.175(3) does not exclude application of S.65 of the Contract Act. | Quoted to support the proposition that an unenforceable agreement under S.175(3) may still give rise to restitution under S.65 where requirements are satisfied. |
| Damodara Mudal ar v. Secretary of State, ILR 18 Mad 88 | Examples where S.70 applied to secure compensation for supplies rendered to official bodies. | Listed among authorities where S.70 was held applicable in similar circumstances. |
| Secretary of State v. G.T. Sarin & Co., ILR 11 Lah 375 : AIR 1930 Lah 364 | Application of S.70 in governmental contract contexts. | Included as precedent where S.70 was applied to grant compensation despite formal defects in contract-making. |
| Pallonjee Eduljee & Sons v. Lonavala City Municipality, ILR 1937 Bom 782 : AIR 1937 Bom 417 | S.70 applied to secure compensation for accepted supplies/services. | Referred to among cases applying S.70 against municipal or governmental bodies. |
| Zulaing v. Yamethin District Council, ILR 10 Rang 522 : AIR 1932 Rang 176 | S.70 authority in local government context. | Listed as additional supporting authority for application of S.70. |
| H. Young & Co. v. Royal Leamington Spa, (1883) 8 AC 517 | English authority emphasising formal requirements for corporate contracts (relied on by appellant). | Considered and discussed; Court noted English authority but held Indian statutory provisions (S.65/S.70) and local authorities are decisive for Indian cases. |
| Nicholson v. Bradfield Union, (1865) 1 QB 620 | English case suggesting acceptance/appropriation of goods by a corporate body gives rise to obligation to pay despite lack of formal contract. | Quoted to show that English authorities also contain views supportive of implied obligations to pay when goods are accepted and used. |
| Ramnandi Kuer v. Kalawati Kuer, ILR 7 Pat 221 : AIR 1928 PC 2 | Principle that statute's plain language should be examined uninfluenced by prior English law. | Quoted to support the position that Indian statutory language (S.65/S.70) must govern interpretation and relief. |
| Chaturbhui Vithaldas Jasani v. Moreshwar Parashram, AIR 1954 SC 236 | Support for statutory interpretation approach. | Referred to in support of applying Indian statutory doctrine rather than English rules where statute governs. |
| Bankey Behari Prasad v. Mahendra Prasad, AIR 1940 Pat 324 | Held that S.70 may be treated as an implied contract; discussion about whether minors can be liable under S.70. | Mentioned as part of jurisprudence on S.70 (the Court did not decide the minor-related question here). |
Court's Reasoning and Analysis
The court proceeded in a sequential analytical way:
- Factual findings affirmed: the trial court's findings that notices were properly served, limitation did not bar the claim, the plaintiff supplied 1,970 charpois (not merely 1,879), supplies were accepted, and receipts were given.
- The court accepted that Section 175(3) of the Government of India Act, 1935 prescribes mandatory formalities for contracts made on behalf of the Dominion and that, on a plain reading, contracts not made in the manner prescribed cannot be enforced — relying on Dominion of India v. Bhikhraj Jaipuria and others to hold S.175(3) mandatory.
- Having found the contract (in the formal statutory sense) unenforceable under S.175(3), the court did not consider this the end of the matter. It examined whether equitable and statutory provisions of the Contract Act (Sections 65 and 70) permit restitution or compensation where goods were supplied and accepted but a formal contract is unenforceable.
- The court reviewed the documentary correspondence (letters between plaintiff, Garrison Engineer and A.K. Seth) and evidence showing the following: (a) the Garrison Engineer acknowledged receipt of the charpois supplied by the plaintiff and acknowledged plaintiff's claim to be paid; (b) the office had suggested the payment had been made to Amal Chatterjee but the authorised representative of Amal repudiated any payment on account of plaintiff; (c) relevant ledger and measurement books maintained by the Garrison Engineer's office were not produced by Defendant No.1.
- On those factual materials, the court concluded that the plaintiff's supplies were independent and that it could not be held that plaintiff's supplies were included in Amal Chatterjee's contract. The court also concluded that Amal Chatterjee had not received an excess payment on behalf of the plaintiff and that whatever payment was made to Amal was on account of Amal's own supplies.
-
The court then applied Section 65 (restitution where agreement is discovered to be void) and Section 70 (compensation where one lawfully does something for another and the other enjoys the benefit) of the Contract Act. It reasoned:
- S.65 applies where an agreement is discovered to be void (including void from inception) and obliges a person who has received an advantage under such agreement to restore it or compensate the person from whom it was received.
- Even if the formal contract is unenforceable under S.175(3), S.65 can provide restitutionary relief; S.175(3) makes the agreement unenforceable but does not, per the authorities cited (including Dharmeshwar Kalita and Ram Nagina Singh), prohibit restitution under S.65 in the absence of an express statutory bar.
- S.70 embodies equitable principles of restitution/unjust enrichment and applies where a person lawfully does something for another (not gratuitously), and the other enjoys the benefit — here the plaintiff supplied, the defendant accepted and used the charpois, and the plaintiff expected payment.
- The court reviewed authority (English and Indian) and concluded that, in the Indian statutory context, the Contract Act remedies of Sections 65 and 70 are applicable to prevent unjust enrichment even where formal statutory contract-making provisions were not complied with.
- On the cumulative factual and legal analysis — non-production of Garrison Engineer's ledger/measurement books by defendant, express acknowledgements by the Garrison Engineer, plaintiff's documentary letters and the inability of defendant to prove payment to plaintiff through Amal Chatterjee — the court concluded the plaintiff was entitled to restitution/compensation under Sections 65 and 70.
Holding and Implications
Holding: The appeal is dismissed. The court ordered that the trial court's decree in favour of the plaintiff stands. The decision of the bench: APPEAL DISMISSED.
Implications:
- Direct effect on the parties: The Dominion of India (Defendant No. 1) was required to pay the plaintiff for the 1,970 charpois supplied (the trial court's decree for recovery of price and costs is upheld). The court accepted that the plaintiff's supplies were independent and that payment had not been made to the plaintiff.
- Legal principle: Although Section 175(3) of the Government of India Act, 1935 makes contracts not executed in the prescribed manner unenforceable against the Government, that unenforceability does not preclude the availability of restitutionary relief under Sections 65 and 70 of the Contract Act where goods were supplied, accepted and appropriated and the claimant can establish entitlement to compensation. The court applied established precedents in reaching this conclusion rather than purporting to lay down a novel rule.
- No broader novel precedent purportedly created by this opinion beyond applying existing statutory provisions (Sections 65 and 70) and established authorities to the found facts: the Court explicitly relied on prior decisions and statutory interpretation to reconcile S.175(3) with the restitutionary provisions of the Contract Act.
Disposition recorded in the opinion: Appeal dismissed (costs awarded to respondent).
C.P Sinha, J.:— Defendant No. 1, the Dominion of India, is the appellant. The plaintiff had instituted the suit for recovery of the price of 1970 charpois alleged to have been supplied by the plaintiff on 12th September, 1944, and 1st October, 1944, at the rate of Rs. 5/8 each and damages claimed were at the rate of 6¼. per cent, per annum from the date of the supplies. The suit having been decreed against defendant No. 1 the Dominion of India, the present appeal has been filed.
2. In 1944–1945, there was a military camp at Chas, and the plaintiff was a contractor in the Military Department at Dhanbad during, the period. The Sub-divisional Officer of the Military Engineering Services, popularly known as “M.E.S” Chas area made a contract with the plaintiff to meet emergent requirements for supply of 2,000 charpois at the rate of Rs. 5/8/-. According to the contract, the plaintiff alleges, to have supplied 91 charpois on 12th September, 1944, and 1879 charpois on 1st October, 1944. These supplies were duly accepted and receipts given. The plaintiff, thereafter presented a bill for a sum of Rs. 10,835/- to the Sub-divisional Officer, but the bill was not paid and it was represented to the plaintiff that the price of the charpois supplied by him had already been paid to one Amal Chatterji who was also a contractor of the Military Department. The plaintiff states that Amal Chatterjee had no authority to receive the price of the charpois supplied by him. On these facts the plaintiffs went in Court. The claim was made principally against defendant No. 1 the Dominion of India but an alternative prayer had also been included for a decree against defendant No. 2. If it was found that defendant No. 2 was paid the price of the charpois supplied by the plaintiff.
3. Defendant No. 2 did not appear, and the defendant No. 1 filed a written statement. The defence is that originally a contract was given to Amal Chatterjee for supplying of 23,600 charpois under two works orders, one for 12,000 and the other for 11,600. As per contract 12,000 charpois were supplied but as the quality of the supply under the second work was cancelled and the order of 11,600 was thereafter split into two of 5,800 each. One-of these work orders namely for the supply of 5,800 charpois was given to the plaintiff, and the other to one Ganguly.
4. Ganguly also made no supply, and the plaintiff supplied only 1879 charpois and not 1970. Both these work orders therefore were cancelled and Amal Chatterji was again called upon to supply the Charpois and he made the requisite supply. It is said that the supplies made by the plaintiff namely, of 1879 charpois were included in the contract of Amal Chatterjee and the price of the charpois supplied by the plaintiff was accordingly, paid to Amal Chatterji and it was claimed that Amal Chatterjee had, in his turn, paid the price of 1879 charpois to the plaintiff. Plea of limitation and want of proper notice was also taken in defence. Lastly it was contended that there was no legal contract between the plaintiff and defendant No. 1 and so the latter was not bound to pay any amount to the plaintiff.
5. The Court below found that notices were properly served and the question of limitation did not arise, as no part of the claim was beyond time. As to the exact number of charpois supplied the Court has found that 1,970 charpois as claimed by the plaintiff, were really supplied, and not 1879 only as admitted by the defendant in the written statement. The Court also found that the plaintiff made supplies independent of any contract with Amal Chatterjee and that the price of charpois supplied by the plaintiff was never paid to Amal Chatterjee. As to the legality of the contract, the Court has made the following observations:
“It has been asserted by the defence that under the M.E.S Rules the S.D.O has no such authority (to enter into a contract.) But then it has been admitted by the S.D.O (D.W 1) that an emergency had arisen because some African troops had suddenly been posted to Chas area and it was under that emergency that the supply of the charpois was ordered. The admitted position is that the charpois were actually supplied by the plaintiff and had been accepted by the M.E.S The S.D.O (D.W 1) has gone a step further and has admitted that the supply made by the plaintiff was considered to be legal.
The witness has further admitted that the rules of the M.E.S were not being strictly adhered to. Then again the matter, it appears, came up before the Garrison Engineer (G.E) who was the proper authority to enter into the contract on more that one occasion. But he never said that the supply by the plaintiff was made without any contract or was illegal. On the other hand the letter (Ext. 1(d)) which had been written by the Garrison Engineer to the plaintiff on 5-3-46 says that the price of the charpois supplied by the plaintiff had been paid to Amal Chatterjee. The letter further recites that the office of the Garrison Engineer was willing to offer the plaintiff any assistance which might be helpful to him.
There is nothing in it to show that the supply made by the plaintiff was illegal or without authority. And last but not the least is the fact that the defendant have derived benefit from the supply and have used it for the purpose for which it was ordered. The position therefore, is that the supply was actually made by the plaintiff to the defendant of 1970 charpois, the defendant used it for the purpose for which it was ordered and they have not yet paid its price. Under the circumstances, I don't see any reason why the defendant should not pay the price to the plaintiff as claimed by him. ‘The contract is legal and valid and must be binding on defendant No. 1’.”
6. The underlining (here into ‘ ’) has been done by me.
7. Mr. Advocate General, on behalf of the appellant has admitted
1. That under the provisions of Section 175(3) of the Government of India Act, 1935, there was no valid contract, and, therefore, the plaintiff cannot recover the price of the Charpois supplied by him;
2. that only 1879 charpois were supplied by the plaintiff and not 1970; and
3. that the supplies by the plaintiff were not by an independent contract, but the supplier were made on the contract made with Amal Chatterjee, and that the latter had been paid the price of the charpois supplied by the plaintiff.
8. So far as the second submission is concerned, the learned Advocate General later in his argument conceded that 1970 charpois had been supplied. I shall take up the third point first.
9. (After discussion of evidence His Lordship proceeded:) It must, therefore, be held that the supplies by the plaintiff were entirely independent of the supplies made by Amal Chatterjee, and it cannot possibly be held, upon the material on record, that the plaintiff's supplies were included in the supplies made by Amal Chatterjee.
10. I now come to the most important submission by Mr. Advocate General. Section 175(3) of the Government of India Act, 1935 which is the relevant provision, runs as follows:
“All contracts made in exercise of the executive authority of the Dominion or of a province shall be expressed to be made by the Governor General, or by the Governor of the province, as the case may be and all such contracts and all assurances of property made in the exercise of the authority shall be ‘executed’ on behalf of the Governor General or Governor ‘by such person and in such manner as he may direct or otherwise’.”
11. The important words have been underlined (here in ‘ ’) by me. On a plain reading of this section, there is no doubt that the contracts on behalf of the Dominion (and I am concerned in this case with the Dominion) shall expressly mention that the contract was on behalf of the Dominion, and such contracts have to be executed on behalf of the Governor General of the Dominion by such person and in such manner as may be authorised or may be directed. In other words if contracts are not made in the manner prescribed in the sub-section, Courts cannot give effect to such contracts for the reason that the contracts are not in accordance with the provisions of this sub-section and in that sense, therefore, and there can be no doubt about it, this sub-s. (3) of S. 175 must be held to be mandatory.
12. On this point as to the mandatory nature of the provisions contained in S. 175(3) of the Act, there is unanimity of judicial opinion. The latest case of our Court is to be found in Dominion of India v. Bhikhraj Jaipuria, (S) AIR 1957 Pat 586 (A). I would hold, therefore, that, the contract not having been made in the manner prescribed, the contract alleged by the plaintiff cannot be given effect to by the Court of law. In my judgment however, this is not the end of the case. We shall have to consider in this connection the relevant provisions of the contract namely, Ss. 65 and 70 of the Act. Before we do that the facts have got to be cleared up.
13. From the evidence of the plaintiff and the S.D.O (D.W 1) it is apparent that there was an emergency on account of arrival of South African Troops, arrangement had to be made for a large number of Charpois and the plaintiff did supply 1970 charpois and that supply was accepted. Upon the admitted case of the defendant No. 1 the Garrison Engineer (G.E) of the M.E.S had the power to execute contracts up to a limit of Rs. 20,000/- and therefore the Garrison Engineer could have entered into a contract on behalf of defendant No. 1 with the plaintiff.
14. The plaintiff admits that there was no written contract which formed the basis of the supplies by him, although there was a work order for supply of 5,800 charpois and which appears to have been later cancelled. I have already mentioned that the cancellation is neither signed by anybody nor any other document has been shown for proving that, this work order Exhibit A, was cancelled. This Exhibit A bears the signatures of Garrison Engineer and the Assistant Garrison Engineer as already stated. Then we find that Exhibits 3 and 3(a) are the receipts showing supplies in two instalments by the plaintiffs and they were accepted by the S.D.O (D.W 1).
15. Thereafter the plaintiffs submitted a bill & his bill was not paid. A letter Ext. (f) was written by the plaintiff to the Garrison Engineer. That letter is dated 17th January, 1946 and it refers to the order placed with the plaintiff by the S.D.O.F and S. Chas area on 8th September, 1944 for supplies of 2,000 charpois and as there was a heavy demand for the article the S.D.O had requested him to start the work immediately and not to wait for the contract. The charpois were supplied by the plaintiff and formal receipts were granted by the S.D.O F and S. Chas area. It appears that the S.D.O denied having placed verbal orders with the plaintiff and there was some correspondence between the Garrison Engineer, and the plaintiff. From the letter exhibit 1(d) from the Garrison Engineer, Dhanbad Division to the plaintiff, dated 5th March, 1946, I quote the following extracts:
2. On investigation it has been found that the payment of the charpois delivered by you to S.D.O F/S on behalf of Mr. Amal Chatterjee has been made through bill No. 77/1118 dated 24-1-45 to Mr. A.K Seth, the authorised representative of Mr. Amal Chatterjee who was holding the contract for supply of Charpois (Contract No. DB/20 of 44-45 refers) and it is under that you or your brother have received the payment from him. If not please contact Mr. A.K Seth.
In case of difficulty this office is willing to afford you any assistance which may be helpful to you. In case you have any grievance please attend this office in person which will minimise the correspondence and delay.
Please acknowledge.”
16. Thereafter the plaintiff wrote the letter exhibit (c) dated, 21st March, 1946 to the Garrison Engineer. In this letter the plaintiff expresses surprise that after a long lapse of time the receipt of the bill sent by the plaintiff should be repudiated and the plaintiff stated in clear terms that it was not possible for him to imagine how the payment in respect of supplies made by him could be made to Mr. Amal Chatterjee or A.K Seth or anybody else and he denied that he-or his brother had received any payment from Amal Chatterjee. Then comes the letter Ext. 1(b) from the Garriscn Engineer to Mr. A K Seth dated 29th March, 1946. This A.K Seth was the authorised representative of Amal Chatterjee. This letter reads as follows:
“Sub-Payment of Bill in respect of CA No. DB/20 of 44-45. In your Bill No. 77/1118-dated 24-1-45 a quantity of 1970 charpois which, were supplied to the S.D.O F/S Chas by Mr. P.K Ghosh on behalf of Mr. Amal Chatterjee was included and paid to you vide cheque No. A/529081 dated 15-6-45.
Now Mr. P.K Ghosh alleges that those chaipois were supplied on his own account and not on behalf of Mr. Amal Chatterjee.
It is therefore, considered that you have received a sum of Rs. 10,835/- in excess which sum may please be either refunded to this office or paid direct to Mr. P.K Ghosh and a clear receipt from him forwarded to this Office.”
17. A copy of this letter was forwarded to the plaintiff. This letter is followed by a reply from A.K Seth, exhibit 1(a) dated 9th April, 1946 (wrongly printed as 1948). In his letter A.K Seth reiterated that Bill No. 77/1118, dated 24th January, 1945 was paid to Amal Chatterjee against his contract agreement No. DB/20 of 1944–1945 after receipt of 23,600 nos of charpois supplied by him on behalf of Mr. Amal Chatterjee by his (G.E's) S.D.O F/S Chas area. Mr. A.K Seth wondered how the alleged inclusion of Mr. Ghosh's charpois could come in that bill, and said “Hence the alleged payment in excess of a sum of Rs. 10,835,/- is totally incorrect.”
18. A copy of this letter was forwarded to the plaintiff also. This correspondence which I have taken care to mention in detail establishes that the plaintiff did make supplies of 1,970 charpois against order placed by S.D.O F/S Chas area, although the latter had the hardihood of denying the same; that the charpois supplied by the plaintiff had been acknowledged by the Garrison Engineer also.
19. That the Garrison Engineer admitted that, for the supplies made by the plaintiff, the latter had to be paid the price; that according to the Garrison Engineer these supplies by the plaintiff were included in the supplies made by Amal Chatterjee and, therefore the price of those charpois supplied by the plaintiff had been paid to Amal Chatterjee; that A.K Seth, the agent of Amal Chatterjee, repudiated the suggestion and reiterated that 23,600 charpois had been supplied by Amal Chatterjee himself and payment had been made to him for those supplies; that the plaintiffs supplies were in addition to the supplies made by Amal Chatterjee and that the relevant Ledger Books and Measurement Books, though maintained in the Office of the Garrison Engineer Dhanbad Division were not produced by Defendant No. 1. On these materials, in my judgment, the following conclusions are irresistible:
1. That there was no written contract between the plaintiff and the defendant No. 1, and therefore, there was no contract within the provisions of Section 175(3) of the Government of India Act, 1935 which could be enforced:
2. That the person authorised to enter into contracts on behalf of defendant No. 1 acknowledged receipt of 1,970 charpois supplied by the plaintiff and
3. That the Garrison Engineer, the Officer authorised, was of the view that the plaintiff should get the price of the supplies made by him, but the price of these supplies of the plaintiff had been wrongly included in the payment made to Amal Chatterjee.
20. Upon the consideration already referred to and the omission to produce the relevant documents by the defendant No. 1, I am left with no alternative but to accept that Amal Chatterjee received no excess payment on behalf of the plaintiff to cover the price of the supplies made by him and that whatever money was paid to Amal Chatterjee was against the supplies made by him.
21. Section 65 of the Contract Act reads 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 for it to the person from whom he received it.”
22. This section therefore speaks of an agreement having been discovered to be void, or a contract becoming void. Now “agreement” has been defined in S. 2(e) as “every promise & every set of promises, forming the consideration for each other, is an agreement and “An agreement enforceable by law is a contract;” (S. 2(h)). Upon my finding and upon the definition, it is clear that in this case there was no contract. The question is whether there was an agreement or not. According to the plaintiff, there was verbal agreement between him and the S.D.O F/S Chas Area, and I have found that the S.D.O had placed verbal orders with the plaintiff. The S.D.O however was not entitled to enter into any agreement on behalf of defendant No. 1 but from the correspondence which I have referred to above, between the plaintiff and the Garrison Engineer it is apparent that the Garrison Engineer did not repudiate the agreement and it may be said that the plaintiff was entitled to payment for the supplies made, although according to him the payment had been made for the plaintiffs to Amal Chatterjee.
23. Till before the written statement was filed by the defendant No. 1 the Garrison Engineer, the officer authorised on behalf of defendant No. 1 under Section 175(3) of the Government of India Act, 1935 was under the bona fide impression that the agreement between the plaintiff and the Department should be honoured and paid for. It was only when the written statement was filed that it was discovered that the agreement was void and that the agreement in question was not enforceable by law (Section 2(g) of the Contract Act).
24. The question then is, whether, in these circumstances the provisions of Section 65 of the Contract Act should be made applicable. In my judgment, S. 65 applies as this section contains the principle of restitution after benefit had been received, though the agreement was later discovered to be not enforceable by law. In the present case, the goods were supplied by the plaintiff, received and appropriated by or on behalf of, defendant No. 1 and the Garrison Engineer acknowledged both the receipt of the goods and the claim of the plaintiff to be paid for.
25. I would now like to refer to the case reported in Harnath Kuer v. Indar Bahadur Singh, 50 Ind App 69 : (AIR 1922 PC 403) (B). The facts in this case were shortly these: A Hindu next reversioner to an Oudh estate obtained a decree declaring that a certain will authorising the widows of the last holder to adopt was invalid and that he was entitled to the estate upon the death of the last surviving widow. Prior to the death of the said widow, he had purported to sell half the estate in consideration of Rs. 25,000/- advanced to him, and he had declared by the sale deed that when he succeeded he would put the vendee in proprietary possession.
26. After the death of the widow, the widow of the vendee sued the vendor for possession or, alternatively, for recovery of the purchase-money with interest. On these facts, their Lordships applied the provisions of Section 65 of the Contract Act on their judgment that there was no contract in law and no effectual transfer of the villages had been made since the vendor had only an expectancy but under S. 65 the purchase money was recoverable with interest.
27. Their Lordships also held that the period of limitation did not run until the supposed rights of the vendee were discovered to be unenforceable and, which according to their Lordships, was not earlier than when possession was resisted and which was within the statutory period. Dealing with this matter, Sir Lawrence Jenkins who delivered the judgment of the Board, after referring to the term of the section, observed as follows:
“So framed, the plaintiff's claim to compensation rests not on any principle or formula, of English Law, but on the words of this section and it has to be seen whether the facts of this case come within its scope. The section deals with (a) agreements and (b) contracts. The distinction between them is apparent from S. 2; by CL (e) every promise and every set of promises forming the consideration for each, other is an agreement, and by Cl. (h) an agreement enforceable by law is a contract.
Section 65, therefore, deals with (a) agreement enforceable by law and (b) with agreements not so enforceable. By Cl. (g) an agreement not enforceable by law is said to be void. An agreement, therefore, discovered to be void is one discovered to be not enforceable by law, and, on the language of the section, would include an agreement that was void in that sense from its inception as distinct from a contract that becomes void.
The agreement here was manifestly void from its inception, and it was void because its subject matter was incapable of being bound in the manner stipulated.”
28. Thereafter their Lordships dealt with the pleadings on the score of S. 65, and observed as follows:
“Though this aspect of the case has not been satisfactorily presented or developed in the pleadings and the proceedings before the lower Courts, their Lordships think there are materials on the record from which it may be fairly inferred in the peculiar circumstances of this case……”
29. It is not necessary in view of the pronouncement of the Judicial Committee in this case, to refer to any other case, but I shall merely mention the following where the same interpretation has been put on the provisions of Section 65 of the Contract Act e.g Hansraj Gupta v. Dehra Dun Mussorie Electric Tramway Co. Ltd., 60 Ind App 13 : (AIR 1933 PC 63) (C); Mohan Manucha v. Manzoor Ahmad Khan, 70 Ind App 1 : (AIR 1943 PC 29) (D); Madura Municipality v. K. Alagirisami Naidu, ILR 1939 Mad 928 : (AIR 1939 Mad 957) (E); Arunachala Nadar v. Srivilliputtur Municipal Council, ILR 58 Mad 65 : (AIR 1934 Mad 480) (F); Mohamed Ebrahim Molla v. Commissioners for the port of Chittagong, ILR 54 Cal 189 : (AIR 1927 Cal 465) (G) (In this case, although Section 65 of the Contract Act was not referred to it was held that the plaintiffs should recover quantum meruit for the services rendered by them to the defendant) Mathura Mohan Saha v. Ram Kumar Saha and Chittagong District Board, ILR 43 Cal 790 : (AIR 1916 Cal 136 (H)) in this case also S. 65 or 70 of the Contract Act was not referred to, but their Lordships observed as follows:
“The obligation to do justice rests upon all persons, natural and artificial; if one obtains the money or property of others without authority, the law independently of express contract, will compel restitution or compensation; Rankin v. Emigh, (1910) 218 US 27 (I). This is good sense and based on sound principle. The relief is granted, not upon the illegal contract, nor according to its terms, but on an implied contract, of the Corporation for property or money which it has no right to retain, to maintain such an action is not to affirm but to disaffirm the illegal contract: Central Transportation Co. v. Pullman's Palace Car Co., (1890) 139 US 24 (J). As Baggallay L.J said in Chapleo v. Burnswick Building Society, (1881) 6 QBD 696 (K), if the company has received the benefit of the payment, if for instance, that amount has found its way to the credit of its banking account, the plaintiff might have been enabled to establish the claim against the company to the extent of the benefit derived by it from the transaction: Lawford v. Billericay Rural District Council, (1903) 1 KB 772 at p. 786 (L) and Douglas v. Rhyl Urban District Council, (1913) 2 Ch 407 (M))”.
30. In Ram Nagina Singh v. Governor General in Council, AIR 1952 Cal 306 (N), a similar view has been taken, and it has reviewed almost all the cases on Sections 65 and 70 of the Contract Act, and it would not be at all useful for me to refer to that case or any of the cases referred to therein in any detail; it is enough to state that I respectfully agree with the observations made in that case. To the same effect is the view in Dharmeshwar Kalita v. Union of India, (S) AIR 1955 Assam 86 (O) and I would like to quote the following observations of the Court in that case:
“There is no conflict between Section 175(3) of the Government of India Act, 1935, on the one hand, and Section 65 of the Contract Act on the other. The effect of S. 175(3) is to make the contract unenforceable against, the Government if there is no due compliance with its requirement. The section does not go beyond that. The agreement which is hit by it cannot be enforced. But if the aggrieved party who has supplied or rendered services under the agreement can ask for relief under the general law, it could not be validly refused in the absence of a statutory prohibition express or implied. There is no such prohibition contained in S. 175(3) or in any other law and therefore, the conclusion that one is led to is that S. 175(3) does not exclude the application of S. 65 where the requirements of this section are satisfied.”
31. Now so far as the application of Section 70 of the Contract Act is concerned, in my view, the equitable principles on which that section is founded also apply to the present case. Section 70 runs as follows:
“Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered.”
32. The necessary ingredients are:
1. a person lawfully doing anything for another person or delivering anything to him,
2. not intending to do so gratuitously, and
3. other person enjoying the benefit thereof.
33. If these three conditions are fulfilled, the person enjoying the benefit is bound to make compensation to the former. In the present case it has been found that the charpois were supplied by the plaintiff to defendant No. 1 through the S.D.O F/S and the Garrison Engineer acknowledged both the supplies and the right of the plaintiff to be paid for, and that they were so supplied in the belief that payment for the same would be made to the plaintiff, and, therefore, the plaintiff did not make the supplies gratuitously to the defendant No. 1 who enjoyed the benefit of the supplies. In my judgment, therefore, it is clear case for the application of Section 70 of the Contract Act, also. This section, in my opinion, is not founded on contract but embodies the equitable principle of restitution and prevention of unjust enrichment, and this meaning is amply borne out by the first illustration to that section, which reads thus:
“A, a tradesman leaves goods at B's house by mistake. B treats the goods as his own. He is bound to pay A for them.”
34. It has however, been held by several Courts, including ours (Bankey Behari Prasad v. Mahendra Prasad, AIR 1940 Pat 324 (FB) (P), that S. 70 is an instance of an implied contract and, therefore, a minor cannot be made liable on such a contract, and further that the basis of a suit under that section is a contractual one and certainly a minor cannot be sued under that section. Whether the view taken is a correct view does not fall to be considered in the present case. I would, therefore, hold that, on the facts found in this case, Section 70 of the Contract Act applies.
35. I am aware that the plaintiff in his plaint did not refer to S. 70 of the Act, but from the materials on record, if it could be gathered that the ingredients of S. 70, as narraled above are present, the Court shall not be justified in refusing relief to the plaintiff. I would merely like to mention the cases where in similar circumstance, the provisions of S. 70 have hem made applicable: Damodara Mudal ar v. Secretary of State, ILR 18 Mad 88 (Q); Secretary of State v. G.T Sarin & Co., ILR 11 Lah 375 : (AIR 1930 Lah 364) (R); ILR 1939 Mad 928 : (AIR 1939 Mad 957) (E), already referred to, Pallonjee Eduljee & Sons v. The Lonavala City Municipality, ILR 1937 Bom 782 : (AIR 1937 Bom 417) (S); AIR 1952 Cal 306 (N), already referred to, and Zulaing v. Yamethin District Council, ILR 10 Rang 522 : (AIR 1932 Rang 176) (T).
36. Great stress was laid by the learned Advocate-General on the case of H. Young and Co. v. Royal Leamington SPA, (1883) 8 AC 517 (U), which was also followed by this Court in (S) AIR 1957 Pat 586 (A), referred to above. At the time of arguments, I had observed that the principles of English Law or the authority of the decided English cases are of little avail when we have our own statute on a particular subject, and the law governing the parties must be applied with reference to the Statute Law and not with reference to any principle of English Law. Since then I have been able to find authorities which support the view I had expressed. With reference to the said English case, it was observed in ILR 58 Mad 65. (AIR 1934 Mad 480) (F) referred to above, at pase 74 (of ILR Mad): (at p. 482 of AIR), as follows:
“It would be dangerous to ignore the plain statutory provision of S. 65 and artiue as though the matters were entirely dependent union English Rules of Equity as laid down in the English Cases.
37. In Ramnandi Kuer v. Kalawati Kuer, ILR 7 Pat 221 at p. 227. (AIR 1928 PC 2 at p. 4) (V), it was observed:
“It has often been pointed out by this Board that when there is a positive enactment of the Indian Legislature the proper course is to examine the language of that statute and to ascertain its proper meaning, uninfluenced by any consideration derived from the previous state of the law or of the English Law upon which it may be founded.”
38. Same is the case with Chaturbhui Vithaldas jasani v. Moreshwar Parashram, AIR 1954 SC 236 (W).
39. Apart from tiiese referred to above, I find that even in England, Courts have taken a different view than the one taken in (1883) 8 AC 517 (U), referred to above e.g in Nicholson v. Brad field Union, (1865) 1 QB 620 (X) at p. 626, where it was observed as follows:
“We think, therefore that the only question is whether the absence of a sealed contract does, under such circumstances prevent the plaintiff from recovering. It is not necessary to express any opinion as to what might have been the case, if the plaintiff had been suing on this contract, for a refusal to accept the coals……The goods in the present case have actually been supplied to and accepted by the corporation; they were such as must necessarily be from time to time supplied for the very purpose for which the body was incorporated and they were supplied under a contract in fact, made by the managing body of the corporation. If the defendants have been an unincorporated body, nothing would have remained but the duty to pay for them. We think that the body corporate cannot under such circumstances, escape from fulfilling that duty merely because the contract was not under seal.”
40. In (1903) 1 KB 772 (L), it was observed (I am quoting from the placitum) thus:
“Where the purposes for which a corporation is created render it necessary that work should be done or goods supplied to carry those purposes into effect, and orders are given by the corporation in relation to work to be done or goods to be supplied to carry into effect, those purposes, if the work done or goods supplied are accepted by the corporation and the whole consideration for payment is executed, there is a contract to pay implied from the acts of the corporation and the absence of a contract under the seal of the corporation is no answer to an action brought in respect of the work done or the goods supplied.”
41. In the circumstances mentioned above, in my judgment, there is no merit in this appeal, and it must be dismissed with costs.
42. Dayal, J.:— I agree.
K.S.B
43. Appeal dismissed.
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