ORDER : - Defendants are the revision petitioners. The judgment sought to be revised is one passed by the appellate court in a C.M. Appeal allowing the injunction application filed by the plaintiff after setting aside the order of the trial court dismissing the same. 2. Railway administration is the revision petitioners and respondent/plaintiff is a contractor who entered into an agreement for the construction of the First Reach of the Ernakulam-Alleppey Railway line in 1981. Due to various reasons including the inability of the Railway administration in making available the entire land after acquisition, the work was delayed. Therefore a fresh agreement with revised rates was entered into on 10-5-1983 providing that the lands will be made available within three months and in the matter of delay, suitable extension of time will be given without any right to the Contractor to get compensation. Within the stipulated period of three months the entire site was not handed over. About 90% of the land was made available even on the date of agreement namely 10-5-1983 and the entire balance excluding less than 50 metres of land was handed over on 1-10-1983. The entire balance was made available on 1-3-1985. 3. It is an admitted fact that the Contractor was bound to execute the work only after the land was made available. As already stated provision was made for extension of time for completion on account of delay without any right for compensation. After the entire land was made available on 1-3-1985 the Contractor on his application on account of his own delays for which the Railway administration is not in any way responsible, got extension on several occasions and finally on his application and agreement dt. 23-6-1986 time was got extended till 30-9-1986. Even then only a small portion of the work alone was done and hence after notice to the Contractor the contract was terminated at his risk and cost and the work was entrusted to some other agency. 4. When the contract dt. 10-5-1983 was entered into a loan or mobilisation grant of Rupees Two Lakhs was given to the Contractor on his furnishing a bank guarantee for 2.41 lakhs of rupees. When the contract was terminated the Railway administration took steps for encashing the Bank guarantee for realisation of the amounts due. At the instance of the Contractor the Bank refused to respond.
When the contract was terminated the Railway administration took steps for encashing the Bank guarantee for realisation of the amounts due. At the instance of the Contractor the Bank refused to respond. The Contractor then filed O.S.1409 of 1986 before the Munsiff's Court, Ernakulam to declare the agreement null and void, for injunction against encashment of the Bank guarantee and for realisation of the balance amount alleged to be due to him. He filed I.A.5487 of 1986 for temporary injunction against encashment of the Bank guarantee. Though the Munsiff dismissed the application, it was allowed by the District Judge in C.M. Appeal. 5. The agreement is to do the work for 15 and odd lakhs of rupees and the amount advanced under the Bank guarantee was rupees two lakhs. The question of sufficiency of court fee and pecuniary jurisdiction are matters to be considered by the trial court and I am not expressing anything on those aspects. 6. Facts are not in serious dispute except regarding the quantity of work done and the amount alleged to be due to the contractor. On admitted facts there is a prima facie case that the contractor/plaintiff has broken the contract resulting in the Railway administration being entitled to claim damages, if any, and encash the Bank guarantee. Probably being aware of this fact the Contractor, who was all along getting extension of time on his own application on account of his own laches even after the entire land was made available suddenly turned round and took the stand that the contract itself is unenforcible because it is null and void for the reason that it is one involving injury to the property of third person and hence unlawful under S.23 of the Contract Act. This plea and some other circumstances seems to have found favour with the District Judge though the Munsiff negatived them. I do not think that the approach of the District Judge is legal. 7. The prime question that has to be looked into is whether prima facie the agreement is null and void. If it is null and void it is non est and unenforcible and any amount of subsequent actions or ratifications cannot revalidate or give life to it. A contract which is void because it is forbidden by law cannot become valid even if the parties act according to the contract.
If it is null and void it is non est and unenforcible and any amount of subsequent actions or ratifications cannot revalidate or give life to it. A contract which is void because it is forbidden by law cannot become valid even if the parties act according to the contract. In support of this position the learned counsel for the contractor drew my attention to the decisions in Gauri Datt v. Bandhu AIR 1929 All 394, Birla Jute Mfg. Co. v. Dulichand AIR 1953 Cal 450 and Suwalal Jain v. Clive Mills Co. AIR 1960 Cal 90. Therefore if the agreement is void by reason of it being contrary to the provisions of S.23 of the Contract Act no rights or liabilities will flow out of it in spite of any amount of subsequent actions. In such a case the extensions obtained by the contractor after the entire land was made available cannot arm the Railway administration with the right to enforce liability and the contractor may be entitled to be compensated for the work, if any, done on the principle of 'quantum meruit'. 8. Agreements forbidden by law, defeating the provisions of any law fraudulent, involving or implying injury to persons or property of another or immoral or opposed to public policy are those dealt with in S.23 of the Contract Act. The contractor contends that the agreement in this case is void by reason of the fact that it involves injury to others. This argument is based on the contention that the agreement was to execute work in properties belonging to and possessed by third parties. In support of this contention the learned counsel sought support from the decision in K. Abdulkhadar v. Plantation Corpn. of Kerala Ltd. AIR 1983 Ker 1. The agreement in that case was for the construction of a Road for the Plantation Corporation through properties of strangers. Even before acquiring and handing over some portions of those properties the Corporation cancelled the agreement on the allegation of breach of agreement by the contractor and claimed damages. It was in that context that the decision held that it involves injury to the properties of other persons and hence void under S.23. 9. Here the position is entirely different. The agreement was not for doing work in the properties of other.
It was in that context that the decision held that it involves injury to the properties of other persons and hence void under S.23. 9. Here the position is entirely different. The agreement was not for doing work in the properties of other. The agreement was only to do the work in the properties after they are acquired and handed over. The agreement itself contemplated delays in that process and by mutual consent it was provided that in case of delay in so doing time will be extended without right to get compensation. Even though not within the period stipulated in the agreement the properties were acquired and made available. On account of the delay in acquiring and handing over the land the contractor had not rescinded the contract and he did not claim any enhanced amount. That means the contract was subsisting even after the land was made available. Thereafter the contractor sought several extensions of the term of contract on account of his own inconvenience and obtained extensions also. He is not justified in contending that the contract is void under S.23 of the Contract Act. That is evidently only a devise to wriggle out of the contract and escape liability. S. 23 of the Contract Act has no application in this case for the reason that the work agreed to be done was only on the properties after they are acquired and made available. Such attitudes on the part of the contractors are uncharitable and is not conducive to public interest. I find no merit in the contention. 10. If so the position is that the agreement is valid and prima facie the contractor was at fault. At this stage it cannot be said that he has a prima facie case in the sense that the agreement is void or it was illegally terminated. The rights and liabilities are only to be worked out. What is sought to be recovered by encashment of the Bank guarantee is a mobilisation grant or a loan advanced for due performance of the contract. If the Bank guarantee is not allowed to be encashed and the validation period expires the Railway administration will be put to irreparable injury because recovery of the amount may become difficult or impossible. 11.
If the Bank guarantee is not allowed to be encashed and the validation period expires the Railway administration will be put to irreparable injury because recovery of the amount may become difficult or impossible. 11. The Bank is not concerned with the underlying contract between the contractor and the Railway administration as held in United Commercial Bank v. Bank of India AIR 1981 SC 1426. Duties of the Bank are created only by the document of guarantee and subject to the limitations imposed by it. The contractor will not be entitled to an order of injunction under O.39 R.1 or 2 unless he could establish a prima facie case in the sense that he has a bona fide contention or a serious question to be tried. In the background of the factual and legal positions discussed above, I do not think that such is the position. Balance of convenience and irreparable injury are also matters to weigh with the court. I am of opinion that the District Judge did not act legally in these aspects. The revision petition is therefore allowed and the judgment of the District Judge is set aside restoring the order of the Munsiff dismissing the injunction application. That means the revision petitioner will be free to encash the Bank guarantee. However there will be no order as to costs before this court. Petition allowed.