State of U. P. v. Khushiram Hiralal — 1965 DIGILAW 296 (ALL)

JUDGMENT D.P. Uniyal, J. - This appeal by the defendant, the State of U. P., is directed against the decision of the Additional Civil Jude, Dehra Dun, decreeing the plaintiff's suit for Rs. 23,186/15/6 with pendent lite and future interest per annum and proportionate costs. 2. On 1-9-1947 the defendant requisitioned six motor vehicles belonging to the plaintiff's firm through Sri J. M. Sinha, the then Petrol Rationing Officer, Dehra Dun. The vehicles were taken for emergent work connected with the evacuation of refuse 40 gees from West Pakistan in the wake of communal disturbances following the partition of India. It was common ground that no hire was settled for the vehicles on the date when they were taken possession of by the defendant's agent, and that the petrol supplied in the vehicles to facilitate their removal from Dehra Dun was paid for by the plaintiff. The allegation of the plaintiff was that in January 1948 Sri R. P. Ghildayal the then Regional Transport Officer, Meerut, had told the vehicle owners that the hire would be Rs. 30/. per day per vehicle. Acting on the said representation the plaintiff submitted monthly bills of hire to the defendant at the above rate. It was on this footing that a sum of Rs. 35,773/12/- inclusive of cost of petrol, was said to have become payable to the plaintiff. The plaintiff further asserted that the defendant failed to return his vehicle U.P.S. 1965 on account of which he suffered a loss of Rs. 7,500/-. 3. It was on these allegations that a total sum of Rs. 40,273/12/- was sought to be recovered after deducting Rs. 3,000/- received from the defendant on 26-1-1948. 4. The defendant contested the suit. It was not denied that hire of the vehicles had not been settled on the date of their delivery and they had been removed without specifying the period for which they were to be used. The appellant pleaded that the vehicles were taken on hire at Rs. 30/- per working day and that the appellant was prepared to pay Rs. 11/13/- per non-working day, less Rs. 3/- as diet charges supplied to the driver and the cleaner. The appellant pleaded that the vehicles were taken on hire at Rs. 30/- per working day and that the appellant was prepared to pay Rs. 11/13/- per non-working day, less Rs. 3/- as diet charges supplied to the driver and the cleaner. As regards vehicle No. UPS 1965, it was alleged that it had been, released by the appellant on the 26th March 1948, but the driver of the respondent had not cared to remove it and left it uncared for. The appellant disowned its liability for the price of the said vehicle. It was further pleaded that the suit was time barred and was liable to be dismissed. Alternatively, it was pleaded that the price of vehicle No. UPS could not he more than Rs. 1,000/-. 5. The learned Civil Judge held that it was the common case of the parties that no hire was settled at the time the vehicles were taken by the appellant. The evidence, however, disclosed that Sri R. P. Ghildayal, Regional Transport Officer, had called a meeting of the vehicle owners and promised that they would be paid at the rate of Rs. 30/- per day per vehicle. The learned Sessions Judge, therefore, calculated the hire at the rate of Rs. 30/- per day and not at the rate of Rs. 30/- per working day only. He did not accept the contention of the State Government that the hire of Rs. 30/- per vehicle had been settled on the basis of per working day. He did not believe the statement of Sri Ghildayal that the expression 'hire per day' was tantamount to hire per working day. Admittedly there - was some talk about the hire but nothing had been said at the meeting about the rate of hire for non-working day. The statement of Khusi Ram, the plaintiff's witness, was clearly to the effect that Sri Ghildayal had promised to pay Rs. 30/- per day per vehicle and had not said that the hire of Rs. 30/- per vehicle was for working days only. The learned Civil Judge accepted the statement of Khusi Ram as being the correct version of what transpired at the meeting of the vehicle owners. In our opinion the learned judge was right in placing reliance on the evidence of Khusi Ram on this part of the case. 6. 30/- per vehicle was for working days only. The learned Civil Judge accepted the statement of Khusi Ram as being the correct version of what transpired at the meeting of the vehicle owners. In our opinion the learned judge was right in placing reliance on the evidence of Khusi Ram on this part of the case. 6. The case of the appellant that the respondent was not entitled to claim hire at the rate of Rs. 30/- per day for days on which the vehicles did not ply was, in our opinion, an after thought. The respondent had been submitting monthly bills of hire on the basis of Rs. 30/- per day and the appellant had not raised any objection at any time about the correctness of the amount of hire claimed by the respondent. Long before the present controversy about the rate of hire arose the State Government had itself suggested to the Government of India that Rs. 30/- per day plus free supply of petrol and lubricating oil was a reasonable rate of hire for the vehicle requisitioned by the State Government. Sri Kazalbash, Regional Transport Officer, Meerut, admitted in his answer to interrogatory No. 2 that a telegram had been sent by the Uttar Pradesh Government mentioning Rs. 30/- per day plus free supply of petrol and lubricating oil and that the implication about working days was not classified in the wire. It may be stated that the U. P. Government had requisitioned vehicles for evacuation work at the request of the East Punjab Government and the Government of India. In the U. P. Gazette Supplementary Grants 1949- 50, Vol. I at page 66 (vide Ex. A-76) it was stated thus: "This Government, however, supplied some 573 trucks including about 90 vehicles taken by private individuals on their own initiative, to the East Punjab Government for relief and rehabilitation work and suggested to the Government of India a rate of Rs. 30/- per day, plus engine oil and fuel for each vehicle except in those cases in which the bus did not operate on account of the fault of the owner and also informed the East Punjab Government accordingly." 7. It appears, however, that the East Punjab Government did not agree with the U. P. Government and suggested that hire should be at the rate of Rs. 20/- per vehicle for a working day and Rs. It appears, however, that the East Punjab Government did not agree with the U. P. Government and suggested that hire should be at the rate of Rs. 20/- per vehicle for a working day and Rs. 8/- for nonworking day, plus certain incidental charges. The U. P. Government presumably took hint from the suggestion made by the East Punjab Government and began to have second thoughts. This becomes clear from a letter dated 7th May, 1949 addressed by the Transport Commissioner to the Deputy Secretary, U.P. Transport Department, in which it was stated that- "Figures have also been worked out on the basis of what East Punjab is prepared to pay for the period the vehicles remained in East Pun. I i.e. Rs. 30/- per day for the full working day and Rs. 11/13/- per day for non-working days. From these figures the advances, etc. already paid have to be deducted." 8. This letter is most revealing in that it goes to show that the U. P. Government for the first time thought of fixing the rates of hire according to the basis suggested in the letter of the East Punjab Government. This letter also goes to confirm that the appellant's allegation that the respondent had been informed in January 1948 that the hire per vehicle for each working day would be Rs. 30/- and Rs. 11/13/- per vehicle for each non-working day, was false. The letter quoted above leaves no room for doubt that the Government came to fix an arbitrary rate on the above basis some time in May 1949 with a view to reduce its liability for hire of vehicles taken from private owners. We are satisfied that the appellant was not entitled to resile from the stand taken by it in its telegram to the Government of India that it was agreeable to pay Rs. 30/- per day for each vehicle. The learned Civil Judge has in a very careful judgment arrived at the correct figure as to the hire due to the respondent in respect of each of the six vehicles requisition by the appellant. It is not, in opinion, open to the appellant to challenge this finding which is based on un rebutted documentary evidence on the record. 9. The learned State Counsel raised the plea of limitation with respect to petrol charges claimed by the respondent. It is not, in opinion, open to the appellant to challenge this finding which is based on un rebutted documentary evidence on the record. 9. The learned State Counsel raised the plea of limitation with respect to petrol charges claimed by the respondent. It was said that petrol had been supplied is the vehicles by the respondent on the 1st September 1947 while the suit was filed on 6th February 1951 and, therefore, the claim was barred by time. This contention is wholly unfounded because by its letters Ex. 11 dated 29th October 1949 and Ex. A 10 dated 10th January 1950 the appellant admitted liability to pay all dues in respect of the vehicles in question. The acknowledgement of liability had been made within three years of the period of limitation and therefore, the claim in respect of petrol supplied by the respondent was rightly decreed by the learned Civil Judge. 10. The learned State counsel did not challenge the other findings of fact recorded by the learned Civil Judge and it is not, therefore, necessary to go into them. 11. It was, however, vehemently contended on behalf of the appellant that the suit as framed was liable to be dismissed inasmuch as it was founded on a contract between the State Government on the. one hand and the respondent firm on the other. The argument was that under Section 175 (3) of the Government of India Act, "all contracts made in exercise of the executive authority of a province shall be expressed to be made by the Governor of the province and all such contracts and all assurances of property made in exercise of that authority shall be executed on behalf of the Governor by such person and in such manner as he may authorise." It was said that since there was no written contract between the State Government and the respondent in respect of payment of hire of the vehicles in question, the liability was not legally enforceable inasmuch as such contract could only be made in the manner envisaged by this section. Alternatively it was contended that the respondent's claim was not for compensation under Section 70 of the contract Act and, therefore, the suit was liable to be dismissed. Alternatively it was contended that the respondent's claim was not for compensation under Section 70 of the contract Act and, therefore, the suit was liable to be dismissed. Strong reliance was placed on the case of State of West Bengal v. M/s V.K. Mondal and Sons, A.I.R. 1962 S.C. 779, in which it was held that Cl. (3) of Section 175 was mandatory and that contravention of the said clause implied nullification of the contract. Their lordships held "In enacting the provisions of Section 175 (3) the Parliament intended that the State should not be burdened with liability based on unauthorised contracts and the plain object of the provision, therefore, is to save the State from spurious claims made on the strength of such unauthorised contracts. Thus the provision is made in the public interest and so there can be no danger in holding that the word 'shall' used in the provision is intended to make the provision itself obligatory and not directory." 12. The question, therefore, arises whether the present is a case in which the claim is founded on a contract between the State Government on the one hand and the respondent on the other. From a perusal of the plaint it becomes clear that the claim was not founded on contract. In para. 4 of the plaint it was clearly stated that the motor vehicles of the respondent were taken for emergent work of refugee evacuation without settling the rate of hire or the period for which they were to be used. The cause of action, according to para. 5, had arisen in September 1947 when the vehicles were removed by the appellant, as also on subsequent dates when the bills were submitted by the respondent to the appellant for payment of his dues. The averments in the plaint clearly make out that the respondent had based his claim upon the removal of the vehicles by the appellant for evacuation work and not upon the breach of any contract existing between the parties. The respondent said that he had delivered his vehicles to the State Government Which accepted them and enjoyment their use. Thus the cause of action was non-gratuitous use and enjoyment of the vehicles. The alter. native claim was based on the voluntary use of the respondent's property by the appellant. Such a claim would clearly fall under Section 70. The respondent said that he had delivered his vehicles to the State Government Which accepted them and enjoyment their use. Thus the cause of action was non-gratuitous use and enjoyment of the vehicles. The alter. native claim was based on the voluntary use of the respondent's property by the appellant. Such a claim would clearly fall under Section 70. The principle behind Section 70 of the Contract Act is to prevent unjust enrichment and is applicable where there is no valid contract subsisting between the parties, and where benefit has accrued to the appellant as a result of such use and enjoyment so as to make it lawful on the part of the respondent to claim compensation for the benefit received. The Supreme Court in the case above cited made it clear that there was no bar to the applicability of Section 70 to cases of invalid contracts made by the State Government and that the preponderance of opinion was in favour of the view that Section 70 was attracted to such a case. 13. It was further held by the Supreme Court that Section 175(3) did not in any way prevent a contract with the Government being implied or a Government from incurring an obligation under a quasi-contract. Their lordships went on to say-. "A contract implied in law or a quasi-contract is not a real contract or, as it is called, a consensual contract and Section 175(3) is concerned only with such contracts..... It therefore applies to consensual contracts which the Government makes and not to something which is also called a contract but which the law brings into existence by a fiction irrespective of the parties having agreed to it." 14. It follows that even where there is an invalid contract between the State Government and a private individual the claim against the State Government can still succeed on the basis of an obligation arising under an implied contract, namely, that the State Government having derived benefit under the transaction it is liable to compensate the other party for the se and enjoyment of his property. 15. We have, therefore, no hesitation in holding that Section 175(3) of the Government of India Act has no application to the present case and the plaintiff was entitled to base his claim under Section 70 of the Contract Act. In the circumstances the. 15. We have, therefore, no hesitation in holding that Section 175(3) of the Government of India Act has no application to the present case and the plaintiff was entitled to base his claim under Section 70 of the Contract Act. In the circumstances the. decree passed by the learned Civil Judge is perfectly legal and must be upheld. 16. We accordingly find no force in this appeal and it is accordingly dis Missed with costs.