Patna High Court
Manoharlal Radhakrishna vs The Union Of India (Uoi) And Ors. on 8 August, 1973
Equivalent citations: AIR1974PAT56, AIR 1974 PATNA 56, ILR (1975) 54 PAT 423
JUDGMENT B.D. Singh, J.
1. This appeal on behalf of the firm known as Manoharlal Radhakrishna, agents of Burmah Shell Oil and Storage Company of India Limited, through Radhakrishna Tekriwal, the plaintiff, is directed against the judgment and the decree of the learned Subordinate Judge passed in Money suit No. 59 of 1960, under which Dart decree for Rs. 1556/- only was allowed to the plaintiff as against his claim of Rs. 16,392/-. In the suit. Union of India, representing the North Eastern Railway, General Manager, Chief Engineer of the said Railway at Gorakhpur, and the District Engineer, Katihar, were impleaded as defendants 1 to 4.
2. The plaintiff's case, in brief was that the firm Manoharlal Radhakrishna was registered under the Indian Partnership Act, 1932, and was dealing in Eurmah Shell products as agent of the Burmah Shell Oil Storage and Company Limited (hereinafter referred to as 'the said company') having its office at Saharsa. Radhakrishna Tekriwal was the managing Partner of the firm, who applied for lease for a piece of land measuring 120' x 120' in the North Eastern Railway compound of Saharsa Railway Station for constructing and maintaining thereon a petrol pump and installation of H.S.D. filling station. As required by the Regional Superintendent, Muzaffarpur, District Engineer. Mansi prepared plan No. L/31/57 on the basis of the drawing No. C 12397/1, submitted by the plaintiff. According to the plaintiff, the aforesaid plan was duly approved and counter-signed by the District Engineer. North Eastern Railway, (hereinafter referred to for the sake of brevity as D.E. No.) and the Regional Superintendent Muzaffarpur, and the District Commercial Superintendent, Sonepur, (hereinafter referred to for the sake of brevity as D. C.S.). Copy of the plan, which was given to the plaintiff, was annexed with the plaint as Annexure 1. The plaintiffs further case was that the Regional Superintendent. Muzaffarpur, wrote to the D.C.S. Sonepur under letter No. C/267/11 SHC dated 27-12-1957 approving the grant of the lease to the plaintiff and allotting the land, referred to above, to him, as per plan No. L/31/57 and to get the agreement executed by the plaintiff after realising ground rent from him in advance. The D. C. S in his turn informed the Plaintiff by his letter dated 28-12-1957 regarding the said sanction and approval of the Regional Superintendent, The plaintiff was also informed that the form of agreement was not available in his office at that time. The plaintiff's representative was directed to contact D. E. No. for execution of the agreement and for fixation of the ground rent. The D. E. No referred the matter to the District Magistrate, Saharsa, to ascertain as to what was the market value of the land to be leased to the plaintiff to enable the Department to fix the rent. The District Magistrate informed D. E. N. about the market value. On 13-7-1958 the plaintiff requested D. E. N. to hand over the plot in question pending execution of the agreement. According (sic) to accept and approve the lease by his letter dated 30-7-1958 and for getting the agreement executed after realisation of one year's rent in advance from the plaintiff and he also directed for handing over, the land to the plaintiff Accordingly, D. E. N. realised rent of Rs. 1556/- being the rent for one year and four months from 1-9-1958 to 31-12-1959. The Chief Engineer had informed that the plan for structure should also be certified by the Inspector of Explosive Calcutta which was also complied. The plaintiff duly executed the agreement on 1-9-1958, as required and sent it to D. E. N. Manshi However, the Chief Engineer wanted the plan to be submitted on tracing cloth and he had written to the District Engineer that the plaintiff might be asked to proceed and go ahead with the work, if D. E. N. had no objection The D. E N. raised no objection and the plaintiff was asked to So ahead with the construction. The plaintiff thereafter filled the ditch, which the land contained, with earth and after levelling the same raised boundary pillars, constructed two culverts and two gates, for which he had to incur large sum of money, the details of which are given in the schedule of the plaint. On 28-10-1959 the plaintiff received a letter from the Chief Engineer, Gorakhpur, addressed to the D. E. N. disallowing the installation of the octroi pump, to which the plaintiff sent a reply, but the Chief Engineer, however, cancelled the lease of the plaintiff on 25-11-1959. According to the plaintiff, cancellation of the lease was unjust and improper and the defendants were liable to pay Rs. 16,392/- to the plaintiff towards various item of expenditure incurred by the plaintiff, including the damage, as detailed in the schedule of the plaint.
3. One written statement was filed on behalf of defendant No. 1. Union of India, representing the North Eastern Railway, and the suit was contested by defendant No. 1 alone, whose case was that one K. P. Verma, Agent of Burmah Shell, had applied for a piece of land measuring 120' x 120' in the Saharsa Railway Station compound for the pur-Pose of H. S. D. petrol filling station. The Chief Engineer approved the grant of licence and had ordered the handing over of the land in question only on execution of the agreement and payment of rent in advance. The agreement was not executed by the General Manager, who was the competent authority on behalf of defendant No. 1. In the absence of such an execution the defendant was not liable for any expenses, which might have incurred by the plaintiff. According to the defendant, the installation of petrol pump for retail sale was not permitted as the Railway had never made such settlement anywhere, to avoid accident. No doubt the agreement, could have been made with regard to the storage of petrol pump and installation of filling up station, if it was executed by a competent authority on behalf of the Union of India. The Chief Engineer was not competent to sanction such a lease permitting construction of a petrol pump. The irregularity was detected only when the structure plan was supplied by the plaintiff on the tracing cloth. It was also pleaded that there was no valid lease and, therefore, the question of cancellation of the lease did not arise. There was simply an application for some land on behalf of the plaintiff for some specific purpose. The negotiations were going on for the same, which ultimately failed. Even the plan was not approved and sanctioned by the Chief Engineer or any officer competent to do so. It was further pleaded that defendants 2, 3 and 4 were not necessary parties to the suit.
4. On the pleadings of the parties as many as five issues were framed, out of which issue Nos. 2. 3 and 4 are relevant for disposal of this appeal and they are:
2. Was there any valid lease or contract between the parties with regard to the settlement of the land in suit for installation of petrol pump?
3. Is the Union of India bound by the acts of its officers which were not done according to rules?
4. Is the Union of India liable for the alleged works done by the plaintiff ?
5. On behalf of both the parties various documentary evidence were produced. On behalf of the plaintiff as many as eight witnesses were examined whereas on behalf of defendant No. 1, only one witness, named Krishna Kumar Prasad, was examined. The learned Subordinate Judge after considering the evidence on the record found that there was neither a valid contract nor a valid lease between the plaintiff and defendant No. 1, which was not liable for the works done by the plaintiff regarding construction. However, the learned Subordinate Judge found that the plaintiff was entitled to recover only Rs. 1556/-, the annual rent of the land (item No. 6 of the schedule of the plaint), deposited by him in advance, out of his total claim of Rs. 16,392/-.
6. Mr. Satyanand Kumar, learned counsel appearing on behalf of the appellant, submitted that the learned Subordinate Judge had erred in not allowing the entire claim of the plaintiff. According to him, defendant No. 1 had received the benefit out of the work done by the plaintiff. He pointed out that the land in question was a ditch which required filling up. The plaintiff brought earth from two miles in order to fill UP the ditch, over which the plaintiff had to spend Rs. 7056/- (item 1st of the schedule of the plaint). The second item of his claim was for earth cutting and dressing raming and watering etc. Rs. 1400/-. The third, item was for raising of 48 boundary pillars with wire netting, including the price of brick, labour, cement, sand etc. Rs. 2200/-. The plaintiff had further constructed two culverts 24' x 3' x 4' at a cost of Rs. 3000/-, which forms part of item No. 4. Two wooden and iron gates measuring 12' x 6' were constructed by the plaintiff at a cost of Rs. 600/- (item No. 4). Besides the above, the plaintiff had to suffer damage to the tune of Rs. 500/-, as mentioned in item No. 7. Lastly the plaintiff had to spend money over stamp, typing charges, etc. to the tune of Rs. 80/- for serving notice to the defendant under Section 80 of the Code of Civil Procedure, which formed part of item No. 8 of the schedule.
7. It is conceded by the learned counsel for the appellant that the agreement was not signed by the General Manager of the Railway. who was the competent authority on behalf of defendant No. 1, as required under Clause (1) of Article 299 of the Constitution of India, which runs as follows:--
"All contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President, or by the Governor of the State, as the case may be. and all such contracts and all assurances of property made in the exercise of that power shall be executed on behalf of the President or the Governor by such persons and in such manner as he may direct or authorise."
It is well established that the provisions contained in Article 299 (1) of the Constitution are mandatory. If they are not complied with, the contract is not binding on or enforceable by or against the Government, though a suit may lie against the officer, who made the contract in his personal capacity, if the contract is otherwise valid. But though no suit lies against the Government, Mr. Kumar contended, on the basis of such defective contract, the other party to the contract may obtain relief against Government on the basis of the benefit or service received under the agreement under Section 65 or 70 of the Indian Contract Act (IX of 1872), which is founded on equitable principles. He referred to State of West Bengal v. B. K. Mondal and Sons. AIR 1962 SC 779. In that case Section 175 (3) of the Government of India Act. 1935, which corresponded to the provisions contained in Article 229 (1) of the Constitution of India, came UP for consideration. Their Lordships of the Supreme Court in this connection were also dealing with the Provisions contained in Section 70 of the Indian Contract Act (hereinafter referred to as 'the Act'), which 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 eniovs 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."
Mr. Kumar drew our attention to paragraph 2 of the aforesaid decision of the Supreme Court in which State of West Bengal was the appellant and B. K. Mondal & Sons were respondents. The respondents' case was that on February 8, 1944, it offered to out up certain temporary storage godowns at Arambagh in the District of Hooghly for the use of the Civil Supplies Department of the State of Bengal and that the said offer was accepted by the said department by a letter dated February 12, 1944. Accordingly the respondent completed the said construction and its bill for Rs. 39,476/- was duly paid in July 1944. Meanwhile, on April 7, 1944 the respondent was requested by the Sub-Divisional Officer, Arambagh, to submit its estimate for the construction qf a kutcha road, guard room, office, kitchen and room for clerks at Arambagh for the Department of Civil Supplies. The respondent alleged that the Additional Deputy Director of Civil Supplies visited Arambagh on April 20, 1944, and instructed the respondent to proceed with the construction in accordance with the estimates submitted by it. Accordingly, the respondent completed the said constructions and a bill for Rs. 2,322/8/-was submitted in that behalf to the Assistant-Director of Civil Supplies on April 27, 1944. Thereafter the Sub-Divisional Officer, Arambagh, reauired the construction of certain storage sheds at Khanakul and the Assistant Director of Civil Supplies wrote to the respondent on April 18, 1944, asking it to proceed with the construction of the said storage sheds. This work also was completed by the respondent in due course and for the said work a bill for Rs. 17,003/- was submitted. In that suit the respondent claimed that the two bills submitted by it, in which the respondent had claimed Rs. 2,322/8/- and Rs. 17,003/- respectively, had remained unpaid and that was the basis of the claim made by it.
8. Learned counsel referred to paragraph 3 of the said decision also, which dealt with the case of the appellant of that case to the effect that the appellant denied all the material allegations made by the respondent in its plaint. It alleged that the requests in pursuance of which the respondent claimed to have made several constructions were invalid and unauthorised and did not constitute a valid contract binding the appellant of that case under Section 175 (3) of the Government of India Act, 1935 It pleaded that there was no privity of contract between the respondent and the appellant and the appellant denied its liability for the entire claim. The written statement filed by the appellant was very vague and general in terms and no specific or detailed pleas had been set out by the appellant in its pleading. Reference was made in that case to an earlier decision of the Supreme Court in Chatturbhuj Vithaldas v. Moreshwar Parashram, AIR 1954 SC 236 where, considering the effect of non-compliance of Article 299 (1) of the Constitution. Bose, J. had observed as follows:
"the Government may not be bound by the contract but that is a very different thing from saying that the contract was void and of no effect and that it only meant that the principal (Government could not be sued but there will be nothing to prevent ratification if it was for the benefit of the Government."
9. It was held in the State of West Bengal's case AIR 1962 SC 779 that in those cases the other party to the contract might take advantage of the provision contained under Section 70 of the Act. While interpreting that section their Lordships of the Supreme Court in that as observed in paragraph 14 of the judgment that three conditions must be satisfied before Section 70 could be invoked, The first condition was that a person should lawfully do something for another person or deliver something to him. The second was that in doing the said thing or delivering the said thing, he must not intend to act gratuituously, and the third was, that the other person for whom something was done or for whom something was delivered, must enjoy the benefit thereof. If a person delivered something to another it would be open to the latter person to refuse to accept the thing or to return it. In that case Section 70 would not come into operation. Similarly, if a person did something for another, it would be open to the latter person not to accept as had been done by the former. In that case again Section 70 would not apply. In other words, the person said to be made liable under Section 70 always had the option not to accept the thing or to return it. It was only where he voluntarily accepted the thins or enjoyed, the work done that the liability under Section 70 arose. Their Lordships in paragraph 19 observed that in regard to the claim made against the Government of a State under Section 70, it might be that in many cases the work done or the goods delivered were the result of a request made by some officer or other on behalf of the said Government In such a case, the request might be ineffective or invalid for the reason that the officer making the request was not authorised under Section 175 (3), or, if the said officer was authorised to make the said request, it became inoperative, because it was not followed up by a contract executed in the manner prescribed by Section 175 (3). In either case the thing had been delivered or work had been done without a contract, and that brought in Section 70. A request was thus not an element of Section 70 at all though the existence of invalid request might not make section inapplicable. An invalid request was in law no request at all and so the conduct of the parties had to be indeed on the basis that there was no subsisting contract between them at the material time. Dealing with the case on that basis what has to be enquired is whether the requisite conditions prescribed by Section 70 have been satisfied. If they were satisfied then a claim for compensation could and must be entertained. In recognising the claim for compensation under Section 70, the effect of Section 175 (3) of the Government of India Act, 1935, was not nullified directly or indirectly. It was not that the contract, which was invalid under Section 175 (3) was treated as valid under Section 70 of the Act. Their Lordships observed that the fields covered by the two provisions under Section 175 (3) of the Government of India Act, 1935, and Section 70 of the Indian Contract Act were separate and distinct: Section 175 (3) dealt with contracts and provided how they should be made, and Section 70 dealt with the cases where there was no valid contract and Provided for compensation to be paid in a case where the three requisite conditions prescribed by it were satisfied.
10. In my opinion, the observations made by their Lordships in that case do not lend support to the argument advanced by Mr. Kumar. It may be noted that their Lordships have repeatedly observed that the three requisite conditions were necessary for invoking the aid of Section 70 of the Act. In the ore-sent case, no doubt, the first two conditions are fulfilled but the third condition, namely, that the other party to the contract enjoyed the benefit thereof, was not pleaded by the plaintiff-appellant nor any evidence to that effect was laid by him. In the State of West Bengal's case AIR 1962 SC 779 as it appears from paragraph 24 of the judgment that the acts done by the respondent was accepted by appellant who also used the buildings constructed by the respondent. Therefore, their Lordships on the evidence on the record of that case had held that Section 70 of the Indian Contract Act applied.
11. In my opinion, the importance of the three prerequisite conditions for applicability of the provisions of Section 70 of the Act cannot be minimised. Reference may be made to Mulamchand v. State of Madhya Pradesh, AIR 1968 SC 1218 where their Lordships, while following the judgment in AIR 1962 SC 779, have reiterated the requirement of the three conditions for the applicability of Section 70 of the Act and added that in a case falling under Section 70 the person doing something for another or delivering something to another could not sue for the specific performance of the contract, nor ask for damages for the breach of the contract, for the simple reason that there was no contract between him and the other person. So where a claim for compensation was made by one person against another under Section 70, the juristic basis of the obligation was not founded upon any contract or tort but upon a third category of law, namely, quasi-contract or restitution. Applying those principles, it was manifest that a person whose contract was void for non-compliance with Article 299 (1) of the Constitution, would be entitled to compensation under Section 70 of the Contract Act, if he had adduced evidence in support of his claim. It was well established that a person who sought restitution had a duty to account to the defendant for what he had received in the transaction from which his right to restitution arose, In other words, an accounting by the plaintiff was a condition of restitution from the defendant.
12.-16. The above observations of their Lordships clearly indicate that there must be evidence on the record to establish that the pre-requisite conditions of section were fulfilled, as will be apparent from paragraph 8 of the case of Mulamchand, AIR 1968 SC 1218 wherein the trial Court had examined the evidence on that point, and reached the conclusion that the appellant did collect lac in the jungles in the year 1951 but later on abandoned the working of his own accord. The appellant did not produce sufficient evidence to show to what extent he worked the contract and what was the profit made by him in the year 1951 and the succeeding years. Their Lordships held that in the absence of reliable evidence on that point the appellant was not entitled to restitution or refund of the deposit he had made. Mr. Kumar, however, contended that there is evidence on the record by which it can safely be inferred that the defendant No. 1 had derived benefit from the work done by the plaintiff on their land. The plaintiff had filled in the ditch by earth, levelled it, raised pillars with, net wire fencing, constructed gates and two culverts. All those works done by the plaintiff, enhanced the value of the land, thereby defendant No. 1 definitely derived benefits. In my opinion, on the principles laid down in Mulamchand's case. AIR 1968 SC 1218. the plaintiff could not have asked for damages for the breach of contract. It can safely be held therefore, that the claim of the plaintiff for damage to the tune of Rs. 500/- under item No. 7 of the schedule of the plaint was not tenable. As regards other items of the claim. I have to decide as to whether there is evidence on the record to show that defendant No. 1 had derived benefit. In the plaint the Plaintiff has not pleaded anywhere that defendant No. 1 had derived any benefit. In the oral evidence adduced on behalf of the plaintiff also. I do not find any such statements, Mr. Kumar referred to various correspondence from beginning to end in order to show that the plaintiff was asked to go ahead with the work, and thereupon he had started the work on the land in question. (His Lordship discussed the documentary and oral evidence and proceeded).
17. In my opinion, various documents as well as oral evidence, referred to above, at most establish that the plot in question was handed over to the plaintiff by some of the officers of defendant No. 1. Thereupon the plaintiff did something by way of filling up of the earth and raising various structures over it. They also proved that the plaintiff did those things not gratuitously. Therefore the evidence on the record simply establishes the first and second pre-requisite conditions for the applicability of Section 70 of the Act. They do not establish the third pre-requisite condition, namely, that defendant No. 1 had derived any benefit from the various works done on the plot by the plaintiff.
18. Mr. Kumar submitted that there is sufficient evidence on the record to infer that defendant No. 1 must have derived benefit. If the plaintiff had filled the ditch; raised pillars, and fenced the land with wire netting, constructed gates and culverts. certainly the utility of the land was increased and thereby defendant No. 1 was benefited. Learned counsel referred to a Bench decision of this Court in Dominion of India v. Preety Kumar Ghosh, AIR 1958 Patna 203. In that case, the plaintiff brought a suit against the Dominion of India for recovery of price of a number of Charpois supplied to the military department in pursuance of an oral agreement, between him and the S. D. O., who was not entitled to enter into an agreement on behalf of the defendant. The Garrison Engineer who was authorised on behalf of defendant under Section 175 (3) Government of India Act did not repudiate the contract, but acknowledged the receipt of the supplies, under the bona tide belief that the agreement between the plaintiff and the Department should be honoured and paid for. It was only when the written statement in the suit was filed that it was discovered that the agreement was void, and not enforceable by law for non-compliance of Section 175 (3), Government of India Act. The plaintiff had made the supplies in the bona fide belief that payment for the same would be made to him. It was held (1) that section 65, Contract Act, was applicable to the facts of the case as the agreement was discovered to be void within the meaning of that section, and the plaintiff was entitled to recover compensation for the supplies made by him and (ii) that Section 70 of the Contract Act was also applicable to the facts of the case. Though the plaintiff in his plaint did not refer to Section 70 of the Act, from the materials on record, it could be gathered that the ingredients of Section 70 were present, and therefore the Court would not be justified in refusing relief to the plaintiff. In my opinion, the ratio of that case does not lend support to the contention of the learned counsel for the appellant. It may be noticed that that was the case of movable properties, Garrison Engineer, who was authorised on behalf of the defendant under Section 175 (3) of the Government of India Act did not repudiate the contract, but acknowledged the receipt of the supplies. In the instant case. I have already mentioned, the deed of lease (Ext. 6) was simply signed by the plaintiff, and none of the officers on behalf of defendant No. 1 had signed it. In the case of movable properties, if they are delivered to the other party, and if the other party accepts them, that is sufficient to establish that the recipient derived benefit. In the instant case, there is question of immovable property, and various officers on behalf of defendant No. I were raising objection from time to time, as mentioned already, regarding the irregularity in the grant of the lease to the plaintiff. At no point of time the various works done by the plaintiffs were acknowledged on behalf of defendant No. 1. For the applicability of Section 70 of the Act in the Patna case, referred to above, the same pre-requisite conditions as in the two Supreme Court decisions, mentioned above, have been emphasised.
19. Learned counsel then submitted that in the instant case Section 65 of the Act would apply which provides as:
"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."
In my opinion, from the very wordings of the section, it is clear that the provisions of Section 65 apply only when an agreement at a subsequent stage is discovered to be void or when a contract became void later on by one reason or the other. In the instant case, from the evidence on the record it cannot be gathered that there was any agreement. The plaintiff had simply made an application for the lease and had executed the deed (Ext. 6), but, as mentioned earlier, none had signed the said deed on behalf of defendant No. 1 and subsequently his offer was not accepted by defendant No. 1.
20. Learned counsel also referred to the case of Keshab Kishore Naravan Saraswati v. State of Bihar, 1970 BLJR 333 = (AIR 1971 Pat 99). In my opinion, the decision in that case also does not lend any support to the contention of the learned counsel for the appellant that the third pre-requisite condition of Section 70 of the Act may be inferred. In that case also the two Supreme Court decisions, referred to above, were relied upon and they have laid down the same principle. In my opinion, the plaintiff should have led direct evidence to establish that the defendant No. 1 had derived benefit. In the absence of such evidence. I am unable to infer the benefit to defendant No. 1 from the works done by the plaintiff. It may be noticed that it was the plaintiff, who had offered for obtaining the plot in question under a lease for constructing and maintaining thereon a petrol pump and for installation of HSD filling station. He wanted to carry on retail sale of petrol and high speed diesel oil filling station. Therefore, he filled up the ditch in the plot, levelled it and did other constructions on it exclusively for his benefit, and for the convenience of his customers. It cannot be inferred that those structures and improvement in the land, which might have been useful to the plaintiff, would also be useful to the railway in absence of any evidence on the record. Reference may be made to Naicker v. R. G. Orr, 45 Ind Cas 786 = (AIR 1919 Mad 1145) where it was held that section 70 of the Act did not apply to cases where a person did an act for his own benefit and that act incidentally benefited his neighbour or any other person. A person making claim under Section 70 of the Act must Prove that he did some act for the other party). An act could not be described as done by one person for another, unless it could be shown that, but for the existence of that other's interest, it would not have been done. In Yogambal Bovee Ammani Ammal v. Naina Pillai Markavar, (1910) ILR 33 Mad 15 Munro and Sankaran Nair, JJ. observed that in order to enable a party to recover money paid by him from another under Section 70 of the Act it was necessary that the party sought to be made liable must not only have benefited by the payment but must also have had the opportunity of accepting or rejecting such benefit. Where no such option was left to him and the circumstances did not show that he intended to take such benefit, he could not be said to have 'enjoyed such benefit' within the meaning of the section. When the person paying was interested in making the payment, he could not be presumed, in the absence of evidence to show that he intended to act for the other party also, to have acted for such other party. After careful consideration of the facts and circumstances of the instant case I am of the opinion that the plaintiff had no right to force the benefit on defendant No. 1. Therefore, I am constrained to hold that there is no merit in this appeal.
21. In the result, the judgment and the decree of the trial court are upheld and the appeal is dismissed, but there will be no order as to costs.
Anwar Ahmad, J.
22. I agree.