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Madhya Pradesh High Court · body

2006 DIGILAW 23 (MP)

UNION OF INDIA v. TARA SINGH KHURAL

2006-01-03

S.L.JAIN

body2006
Judgment ( 1. ) BEING aggrieved by the judgment and decree dated 7-2-98, passed by 9th add1. Distt. Judge, Jabalpur in civil Suit No. 208-B/95 defendant/appellant union of India has filed this appeal challenging the correctness, propriety and validity of the same. ( 2. ) THE brief resume of the facts required to be stated for disposal of this appeal is as follows:-Plaintiff/respondent who is the proprietor of M/s Tara Singh khural filed a suit against the defendant/appellant for the recovery of rs. 1,76,800/- alleging that the plaintiff concern is engaged in building construction and contractorship. It had been the contractor of Garrison engineer. The plaintiff executed certain works on verbal instructions from various departmental functionaries of the appellant. After the execution of the work, the same was checked by the authorities and part payment was made to the respondent. As the balance payment was not made on demand, the appellant served with a notice but despite notice the payment was not made. ( 3. ) THE Suit was contested by the defendant/appellant alleging that they have a set procedure for executing contracts such as floating tenders, receiving the tenders, acceptance of tenders, conclusion of contracts, issuance of work orders to contractors for commencing work, supervision of work and completion certificate of work for which Garrison Engineers are the authority. The appellant pleaded that no work order was ever issued to the respondent and no part payment was made to him for execution of the work said to have been completed by him. ( 4. ) THE Trial Court framed issues. The Plaintiff gave his evidence before the Court below. No evidence was led by the respondent. The Trial Court recorded a finding that the respondent is entitled to receive an amount of rs. 1,76,800/- carrying interest at the rate of 6% per annum from the date of the filing of the plaint till the realization of the amount. ( 5. ) I have heard Shri Brian Dsilva, Counsel for the appellant and Shri v. R. Rao, Counsel for the respondent. ( 6. ) LEARNED Counsel for the appellant submitted that when an agreement is executed on behalf of the Union of India, it should be expressed to be made by the President and should be executed on his behalf by such persons as he may direct or authorize. ( 6. ) LEARNED Counsel for the appellant submitted that when an agreement is executed on behalf of the Union of India, it should be expressed to be made by the President and should be executed on his behalf by such persons as he may direct or authorize. A contract entered into without complying with the requirements of Article 299 of the Constitution is void in the sense that it cannot be enforced by the other party to the contract. Where no contract within the meaning of Article 299 of the Constitution is executed all conditions contained in the oral agreement are void and ineffective in the eyes of law. The government cannot be bound by the contracts entered into by the officers of the government without any authority. ( 7. ) IN response, learned Counsel for the respondent supported the judgment of the Trial Court. ( 8. ) TAKING an overall view of the rival contentions of the parties, the main question which falls for consideration is whether a contract executed without formal deed and without complying with the requirement of Article 299 of the Constitution of India can be enforced ? ( 9. ) THE main thrust of the contention raised by Counsel for the appellant is that Article 299 of the Constitution expressly provides the mode in which contracts can be executed on behalf of the government. No government work can be performed on oral instructions. The Article expressly requires that contracts must be executed by a proper authority. The case of the plaintiff is based on oral contracts. Article 299 of the Constitution necessarily implies that oral contracts will not be binding on the Government. Although, Article 299 of the Constitution does not prescribe any particular mode for execution of contracts on behalf of the President or the Governor, the contracts must be in writing. ( 10. ) PER contra, learned Counsel for the respondent submitted that even in a case the contract is discovered to be 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. ( 11. ( 10. ) PER contra, learned Counsel for the respondent submitted that even in a case the contract is discovered to be 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. ( 11. ) THE Counsel also submitted that the granting of relief under section 65 of the Contract Act does not amount to violating the Provisions of article 299 of the Constitution in as much as the relief under Section 65 is specifically granted on the basis that the contract is void. ( 12. ) I have bestowed my anxious consideration to the submissions. So far as Section 65 of the Contract Act is concerned, it applies to two types of cases:- (1) Where the agreement is discovered to be void and; (2) When it becomes void. ( 13. ) THE first category comprise those contracts which are void from the beginning but this fact was not known to the parties or at least to the party seeking to invoke this Section. Consequently, if the contract is void ab-initio to the knowledge of both the parties, this Section shall have no application. ( 14. ) CASES in the second category however are those where the contract was valid at inception but the same became void on account of subsequent event. ( 15. ) SECTION 65 applies only where the agreement had subsequently been discovered to be void or when it became void later on by one reason or the other. For a contract becoming void, it should be valid ab-initio. Where both the parties knew that the agreement is void ab-initio one of them later on claiming restoration under Section 65 of the Contract Act cannot be held to be discovered the voidness. He would not be entitled to invoke this section. The present is not a case where the agreement was discovered to be void or it subsequently became void. Therefore, the provisions of Section 65 of the contract Act would not apply to the present case. ( 16. ) HOWEVER, the provisions of Section 70 of the Contract Act would apply to the present case. From the evidence of plaintiff it is established that the work was performed by the respondent for the appellant which the appellant voluntarily accepted. Therefore, the provisions of Section 65 of the contract Act would not apply to the present case. ( 16. ) HOWEVER, the provisions of Section 70 of the Contract Act would apply to the present case. From the evidence of plaintiff it is established that the work was performed by the respondent for the appellant which the appellant voluntarily accepted. Even if there was no contract executed in terms of Article 299 of the Constitution, the relationship of the parties resembles to one created by contract. Section 70 of the Contract Act has been placed in Chapter 5 which deals with certain relations resembling those created by contract. This chapter does not deal with the rights or the liabilities accruing from contracts. ( 17. ) THE object of Section 70 of the Contract Act is to enable the Courts to do substantial justice in cases where the relation between the parties is not based on the contract and the intervention of the Court is required to prevent unjust enrichment. ( 18. ) IN the present case, admittedly the benefit has been lawfully conferred and the act was done by the plaintiff not intending to do it gratuitously, and the appellant was really benefited by it. A party is entitled to the benefit of Section 70 of the Act even if there is no contract or the contract is void. This Section is founded on the equitable doctrine of restitution or prevention of unjust enrichment. ( 19. ) SECTION 70 applies to the contracts with the government which are found to be not enforceable against the government on account of the non compliance of the prescribed formalities. This Section applies even if contract is void for non-compliance of Article 299 (1) of the Constitution of India. ( 20. ) EVEN otherwise the Central Government which owns its obligation arising out of a contract should discharge the same and should not compel the citizen concerned to file a suit for recovery of amount. In a democratic society it is the duty of the State to do what is fair and just to the citizen and the State should not take stand to deprive a citizen of his legitimate claim. ( 21. ) IN support of its claim, the plaintiff examined himself and K. D. Kaushal, PW-2. In a democratic society it is the duty of the State to do what is fair and just to the citizen and the State should not take stand to deprive a citizen of his legitimate claim. ( 21. ) IN support of its claim, the plaintiff examined himself and K. D. Kaushal, PW-2. The plaintiff has stated that as per the practice prevailing in mes, it is not always necessary that for doing any construction work tender must be called. In case of emergency, the work is performed on the oral instructions and after completion of the work the same is regularized. Earlier also he executed a number of oral orders. He was orally informed to furnish the bungalow meant for Station Commander who was to join shortly at Jabalpur. He has stated about different works performed by him on the oral instructions of the authorities. He has also tendered the documentary evidence. Completion certificate was also provided to him. ( 22. ) THE evidence of the plaintiff is corroborated by K. D. Kaushal who was earlier an employee of MES. ( 23. ) NO evidence has been led by the appellant to controvert the oral and documentary evidence led by the plaintiff. Therefore, on the basis of the evidence adduced by the plaintiff, the Trial Court has rightly recorded a finding that the work of Rs. 1,76,800/- was performed in the Bungalow of Station commander, at Parade Ground and also at GRC Mess. ( 24. ) THE Trial Court committed no error in decreeing the suit in view of the provisions of Section 70 of the Contract Act. On the principle of quantum merit also respondent is entitled to be compensated. The principle of quantum merit is often applied where for some technical reason a contract is held to be invalid. Under such circumstances an implied contract is assumed under which the person for whom the work has been done is obliged to pay reasonably for the work done to the person who does work. Where a party to a contract has wholly or partially performed its obligation, he may neglect the contract and suo upon the merit. ( 25. ) IN view of the foregoing discussions, I am of the view that the Trial court has rightly decreed the suit. I do not find any merit in this appeal and the same is dismissed. Where a party to a contract has wholly or partially performed its obligation, he may neglect the contract and suo upon the merit. ( 25. ) IN view of the foregoing discussions, I am of the view that the Trial court has rightly decreed the suit. I do not find any merit in this appeal and the same is dismissed. The appellant shall bear their own costs of the suit in the Trial court and this appeal and also the costs of respondent throughout. Counsel fee as Rs. 1,000/- if certified. First Appeal dismissed.