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1973 DIGILAW 134 (KER)

M. MOHAMMED v. A. NARAYANA RAO

1973-06-04

K.SADASIVAN

body1973
Judgment :- 1. Defendant is the appellant. The plaintiff's suit was for recovery of Rs. 1,000/ -borrowed by the defendant in the last week of April 1967 undertaking to repay within a month. Instead of parting with cash the defendant bad issued a cheque to the plaintiff for Rs. 1,000/-. The plaintiff presented the cheque for payment, but it was dishonoured by the bank. Hence the suit was filed for recovery of the amount. The transaction was denied in toto by the defendant. The plaintiff and defendant are PWD. contractors. Defendant had tendered for a contract work along with the plaintiff and two others. The defendant's tender was at first accepted, and the work was started by him. But later, the work was re-tendered, and on that occasion to dissuade the plaintiff from tendering, the cheque in question was issued to him by the defendant. But quite against the agreement the plaintiff tendered for the work and so, the defendant was forced to instruct the bank not to honour the cheque. The cheque in effect is an escrow, and the agreement is opposed to public policy and hence unsustainable in law. These contentions were repelled and the suit was decreed. The decree of the trial court stands confirmed by the appellate court. 2. The plea that the transaction is opposed to public, policy, I do not think, is available to the defendant. It has been held in a series of decisions that such agreements are valid, and not opposed to public policy. Rajamannar J. (as be then was) of the Madras High Court had to deal with a similar case in Md. lsack v. Sreeramalu (AIR. 33-1946 Madras 289) where A and B made tender-to postal authorities to secure a licence to carry mails between certain places. There was an agreement between A and B by which A was to withdraw his tender and in consideration of the withdrawal, B agreed to pay A a certain monthly sum. lsack v. Sreeramalu (AIR. 33-1946 Madras 289) where A and B made tender-to postal authorities to secure a licence to carry mails between certain places. There was an agreement between A and B by which A was to withdraw his tender and in consideration of the withdrawal, B agreed to pay A a certain monthly sum. A withdrew his tender and the licence was given to B. In a suit by A to recover the sum on the basis of the agreement the Court held that the agreement for the withdrawal of the tender which was in the nature of an offer or bid, was like an agreement between intending bidders that one should keep off from bidding and was not unlawful or opposed to public policy under S.23 of the Contract Act. 3. To the same effect is the ruling of the Nagpur High Court reported in Mahafazul Rahim v. Babulal (AIR. 36-1949 Nagpur 113). The Court held: "A right to bid at as auction is a valuable right and unless there is any law which prevents persons from entering into agreements not to bid, such agreements prima facie are legal, and the consideration of the agreement could be enforced in a Court of law. An agreement between two bidders whereby one agrees not to bid at an auction sale of the right to recover market dues, in consideration of Rs. 500 can be enforced". The same view has again been taken by the Madras High Court in Ramalingaish v. Subbarami Reddi (AIR. 38-1951 Madras 390) wherein Panchapagesa Sastri J. held: "An agreement not to bid against each other in an auction is not illegal under the common law. In England it would appear that there bad been an enactment of a statute to remedy the evil of 'a knock out' combination like this. There is no similar statute in India Such an agreement is not invalid on the ground of public policy and does not invalidate the auction sale". From the above authorities it is clear that the transaction is not opposed to public policy, and the plaintiff's suit is maintainable. There is no similar statute in India Such an agreement is not invalid on the ground of public policy and does not invalidate the auction sale". From the above authorities it is clear that the transaction is not opposed to public policy, and the plaintiff's suit is maintainable. The defendant's contention then was that the cheque was issued by him on the clear understanding that it would be presented for payment only after his tender was accepted by the department and as it was presented before the tender was actually accepted he had to instruct the bank not to pay. This is an unsustainable plea. In the first place, the acceptance or rejection of the defendant's tender has no bearing whatever on the encashment of the cheque. The cheque was issued to prevent the defendant from submitting his tender. Two other contractors were also scared away like this. If instead of the cheque the amount was paid in cash, there would not have been any difficulty and the question of acceptance or rejection of the tender could not have arisen. Now that a cheque was issued the defendant got the opportunity to outwit the plaintiff and cause difficulties to him. I see therefore, no force in the contention that only when the tender was accepted that the plaintiff had the right to demand payment. In fact, it is seen that subsequently, the defendant's tender was accepted also. In Para.8 of the trial court judgment it is observed as follows "It is admitted that at the time of the filing of the suit the tender in favour of the defendant was not accepted by P.W.D. and it was accepted thereafter." The matter has thus ended. 4. The further contention of the learned counsel is that the case as put forward in the plaint namely, that a sum of Rs 1,000/- was borrowed is inconsistent with and against the records produced in the case. The case as developed at the trial was different and this circumstance is sufficient to non-suit the plaintiff. There is absolutely no force in this contention. The Supreme Court has observed in Firm Sriniwas Ram v. Mahabir Prasad (AIR. 38-1951 Supreme Court 177): "A plaintiff may rely upon different rights alternatively and there is nothing in the CPC. to prevent a party from making two or more inconsistent sets of allegations and claiming relief thereunder in the alternative. There is absolutely no force in this contention. The Supreme Court has observed in Firm Sriniwas Ram v. Mahabir Prasad (AIR. 38-1951 Supreme Court 177): "A plaintiff may rely upon different rights alternatively and there is nothing in the CPC. to prevent a party from making two or more inconsistent sets of allegations and claiming relief thereunder in the alternative. Ordinarily, the Court cannot grant relief to the plaintiff on a case for which there was no foundation in the pleadings and which the other side was not called upon or had an opportunity to meet. But when the alternative case, which the plaintiff could have made, was not only admitted by the defendant in his written statement but was expressly put forward as an answer to the claim which the plaintiff made in the suit, there would be nothing improper in giving the plaintiff, a decree upon the case which the defendant himself makes. A demand of the plaintiff based on the defendant's own plea cannot possibly, be regarded with surprise by the latter and no question of adducing evidence on these facts would arise when they were expressly admitted by the defendant in his pleadings. In such circumstances, when no injustice can possibly result to the defendant, it may not be proper drive to the plaintiff to a separate suit. 5. Thus, where in a suit for specific performance of a contract, in part performance of which the plaintiff alleges to have paid the defendant some money, the defendant denies the contract and pleads that the money was taken by him as a loan, the Court can pass a decree for recovery of the loan in favour of the plaintiff on his failure to prove the contract even though the plaintiff had failed to plead and claim relief, on this alternative case". Thus, the defendant has no contention worth placing before the Court. After having been benefitted by the abstention of the plaintiff from tendering, the defendant now wants to wriggle out and befool the plaintiff. The suit in the circumstances has rightly been decreed by the courts below. The decrees of the courts below are hence confirmed, and this Second Appeal is dismissed with costs.