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2009 DIGILAW 469 (GAU)

Jarkar Gamlin v. Tummar Bagra

2009-07-17

I.A.ANSARI, P.K.MUSAHARY

body2009
JUDGMENT I.A. Ansari, J. 1. The material facts, giving rise to this appeal, are not in dispute and may be, therefore, set out, in brief, as under: (i) Pursuant to a Notice Inviting Tender (in short, 'NIT'), issued, on 20.5.2004, by Deputy Commissioner, West Siang District, the appellant and some others submitted tenders seeking appointment as carriage contractor of PDS items (i.e., food articles, which are distributed under the Public Distribution System) from the base depots of the Food Corporation of India (in short, TCI') to various public distribution centres (hereinafter referred to as 'PDC') and en route locations, in the district of West Siang, for the year 2004-2005. The appellant quoted 10 paise and 19 paise per quintal, per kilometre, for plains and hill areas respectively, as his carriage rate. At the time, when the tender process was in progress, carriage of PDS items by head-load stood banned. By an order, dated 24.6.2004, the State Government extended the ban on carriage, by head-load, of PDS items for a further period of one year. Accepting the rates, quoted by the appellant, the Government approved selection of the appellant, as PDS carriage contractor, at the rates offered by the appellant, for the financial year 2004-2005, i.e., the year commencing from 1.4.2004 and ending on 31.3.2005. The Deputy Commissioner, West Siang District, Along, was accordingly directed by the Government to complete the formalities by executing requisite deed of agreement with the appellant. Following the approval of his selection, as PDS carriage contractor, the appellant made a representation to the Deputy Commissioner, West Siang District, Along, stating to the effect, inter alia, that while quoting the rates in his tender, he was under the impression that the road condition throughout the district was good, but he had, subsequently, discovered that location of most of the PDCs were in remote areas and access to these places were only by kacha road. The appellant also submitted that on one of the roads, trucks were allowed to carry only 5 tons of loads and that, in the meanwhile, there had been considerable increase in the cost of petroleum products. In his representation aforementioned, the appellant contended that he had expected the Government's ban, on the head-load carriage, to be lifted but, as the ban was decided to be continued, his own assessment and calculation of the expenses, involved in the execution of the contract, proved incorrect. In his representation aforementioned, the appellant contended that he had expected the Government's ban, on the head-load carriage, to be lifted but, as the ban was decided to be continued, his own assessment and calculation of the expenses, involved in the execution of the contract, proved incorrect. In his representation aforementioned, the appellant also brought it to the notice of the Deputy Commissioner, West Siang District, that the Government had introduced a uniform rate of carriage of PDS items by road and, in respect of some districts, the rate of 3.00 per quintal, per kilometre, already stood approved by the Government. The appellant accordingly requested to give him the enhanced rate of Rs. 3.00 as mentioned hereinbefore. (ii) As a result of the fact that the appellant had expressed his inability to work at the rate, which had been approved in acceptance of his tender, the deed of agreement, which the Government, while approving the selection of the appellant, had directed to be executed, could not be executed. On receiving the appellant's representation, Deputy Commissioner, West Siang, constituted a Board to examine/refix the rate of carriage of PDS items in West Siang District. Having considered various factors, the Board, on 30.11.2004, decided to pay to the appellant the uniform rate of Rs. 3.00 per quintal per kilometre, as carriage charge, in respect of PDS items, in West Siang District too. The Deputy Commissioner, West Siang, accordingly wrote a letter, dated 2.12.2004, to the Director of Civil Supply, Arunachal Pradesh, seeking Government's approval for the rate, which had been recommended by the said Board. The Government, on 18.2.2005, approved the enhancement of rate as had been sought for. Consequently, on 19.2.2005, a notification was issued specifying the distribution charges, at various places, @ Rs. 3.00, per quintal, per kilometre. The appellant, then, entered into an agreement with the Government, on 9.3.2005, to carry PDS items for the period 2005-2006 at the approved rate of Rs. 3.00 per quintal, per kilometre. Work order was accordingly issued in favour of the appellant, on 10.3.2005, in terms of the agreement reached between the parties concerned, the carriage rate being the approved rate of Rs. 3.00 per quintal, per kilometre. 3.00 per quintal, per kilometre. Work order was accordingly issued in favour of the appellant, on 10.3.2005, in terms of the agreement reached between the parties concerned, the carriage rate being the approved rate of Rs. 3.00 per quintal, per kilometre. Thus, though the appellant was awarded the contract 'at his own quoted rate', pursuant to the said NIT, he never executed the said contract, which was meant for the period 2004-2005; and what, in effect, happened was that the appellant was awarded, without issuance of any NIT, a new carriage contract, at the said notified uniform rate of Rs. 3.00, per kilometre, per quintal, the contract being for the period 2005-2006 and not for the period 2004-2005. (iii) On allotment of the said contract, at the uniform rate of Rs. 3.00 per quintal, per kilometre, for the year 2005-2006, to the appellant, a writ petition, under Article 226 of the Constitution of India, was filed by some registered licence holders of PDCs, their grievance being, in brief, thus : At the time of submitting tenders, pursuant to the NIT, dated 20.5.2004, all the tenderers, including the present appellant (who was impleaded as the private respondent in the said writ petition), had given an undertaking to the effect that the offered rate was valid up to 31.3.2005 or up to completion of the period of the contract, whichever would be later, and that no enhancement of rate would be sought for during the period of validity of the contract, if awarded. In the face of such an undertaking having been given by the appellant (i.e., the private respondent in the said writ petition), the appellant could not have sought for enhancement of rate and that the enhancement of rate, during the subsistence of the contract, which had been entered into pursuant to the NIT, dated 20.5.2004, was illegal and mala fide and, hence, the enhancement of the rate deserves to be set aside. In their writ petition, the writ petitioners did not contend that the award of contract, in favour of the appellant, by the Government, for the period 2005-2006, was illegal inasmuch as no fresh NIT had been issued in respect of the period 2005-2006 and no selection process for awarding the carriage contract, for the financial year 2005-2006, had been initiated. In their writ petition, the writ petitioners did not contend that the award of contract, in favour of the appellant, by the Government, for the period 2005-2006, was illegal inasmuch as no fresh NIT had been issued in respect of the period 2005-2006 and no selection process for awarding the carriage contract, for the financial year 2005-2006, had been initiated. The writ petitioners' objection was not against the award of contract for the year 2005-2006, but the carriage rate at which the appellant had been awarded the contract. The writ petitioners, it needs to be noted, had not even participated in the earlier NIT, dated 20.5.2004 (which was meant for the period 2004-2005), nor did they contend that they were interested in obtaining the contract, which had come to be awarded to the appellant. The writ petitioners had also not contended that any one of them was willing to execute the contract either at the rates, which the appellant had quoted, or at the new rate, which the Government had awarded. These apart, except contending that the enhancement of the rate was mala fide, no particulars to show that the Government and its officials had acted, with ulterior motive or mala fide, were pleaded, furnished or brought on record, by the writ petitioners. Consequently, the writ petitioners did not seek to get the award of the contract set aside and quashed; what the petitioners merely challenged was the legality of the enhancement of rate and they sought for, inter alia, issuance of a writ of mandamus, commanding the respondents to pay to the appellant at the appellant's quoted rate and not at the enhanced rate, which had been approved by the Government, on 10.3.2005, in respect of the period 2004-2005 and not in respect of the period 2005-2006. (iv) As the writ petitioners had not sought for cancellation of the award of contract to the present appellant for the year 2005-2006, the Court, while issuing notice of motion/in the said writ petition, directed, on 4.8.2005, that pending consideration of the prayer for interim order, the present appellant's bill amount shall not be released. (iv) As the writ petitioners had not sought for cancellation of the award of contract to the present appellant for the year 2005-2006, the Court, while issuing notice of motion/in the said writ petition, directed, on 4.8.2005, that pending consideration of the prayer for interim order, the present appellant's bill amount shall not be released. As the award of contract for the year 2005-2006 had not been stayed, nor had the Court directed the respondents, in the writ petition (i.e., the present appellant and the State Government), to refrain from proceeding with the contract work of carriage, which had been awarded to the appellant, for the year 2005-2006, the appellant continued to execute the work without, however, receiving payment therefor. (v) In the writ petition aforementioned, the contention of the private respondent (i.e., the present appellant) was that the enhancement of rate was legal and justified and that no rights, fundamental or legal, of the writ petitioners had been infringed by the enhancement of rate and, hence, the writ petitioners had no locus standi to file the writ petition and challenge the allotment of work to the appellant. It was also the case of the appellant (i.e., respondent No. 7 in the writ petition), that as the Government's approval of the enhancement of rate, which was the uniformly enhanced rate, and the deed of agreement, executed by the parties concerned, had not been challenged, the writ petitioners were not entitled to any relief. It was further contended by the present appellant (i.e., respondent No. 7 in the writ petition) that the NIT, dated 20.5.2004, was for the period of 2004-2005 and that on refusal of the appellant to undertake the work, at the quoted rates, no agreement could be entered into in respect of the carriage work for the year 2004-2005, and that it was only upon enhancement of the rate that a deed of agreement was signed, on 9.3.2005, by the appellant undertaking to carry out the work of carriage of the PDS items for the next financial year, namely, 2005-2006. Thus, according to the appellant (as respondent No. 7 in the writ petition), the enhancement of rate was in respect of a new contract for the year 2005-2006 inasmuch as the NIT, in question, was for the year 2004-2005. Thus, according to the appellant (as respondent No. 7 in the writ petition), the enhancement of rate was in respect of a new contract for the year 2005-2006 inasmuch as the NIT, in question, was for the year 2004-2005. It was also the case of the respondent No. 7 in the writ petition (i.e., of the present appellant) that the enhancement of rate was just and fair, that all the relevant factors had been taken into account by the Government, while arriving at the decision to enhance the rate, and, hence, the enhancement of the rate, which was already uniform in nature, was not illegal. (vi) As far as the State Government is concerned, its contention was that considering the fact that in some of the districts, the uniform, rate of Rs. 3.00 already stood approved by the State Government, the Board, having considered various relevant factors, had come to the conclusion that the carriage of PDS items was not feasible at a rate lower than the rate of Rs. 3.00 per quintal, per kilometre, and had accordingly recommended enhancement of rate and the Government had, having found the recommendation reasonable, accepted the recommendation and approved the enhancement of rate. The enhanced rate was, thus, legal and bona fide and that the said upward revision of rate was not a singular phenomenon. (vii) Having realised that in the face of the fact that the writ petitioners had not sought to get set aside and/or quashed the award of contract in favour of the appellant, but had sought for issuance of writ of mandamus commanding the State respondents not to pay carriage charges at the enhanced rate and that in such circumstances, their writ petition might not stand, the writ petitioners amended the writ petition by filing an amended writ petition, on 7.12.2005, i.e., after more than almost nine months from the date of award of the contract, in question, to the present appellant, which was for the period 2005-2006 and not 2004-2005. It is in the amended writ petition that the writ petitioners, for the first time, sought for setting aside the award of the contract to the present appellant. It is in the amended writ petition that the writ petitioners, for the first time, sought for setting aside the award of the contract to the present appellant. No further interim order was, however, sought for or passed in the writ petition and the only restraint, which had been imposed, in the writ petition, was that the Government shall not make payment to the appellant in respect of the carriage contract, which was being executed by the appellant. (viii) By a judgment and order, dated 24.3.2006, the writ petition was disposed of. The award of the contract, in respect of the period 2005-2006, to the appellant, was not set aside; obviously, the contract could not have been set aside, because the contract stood already executed. We may, however, hasten to add that the learned single Judge, while disposing of the appeal, did not hold the contract, in question, as illegal or invalid. In fact, no observation was made by the learned single Judge on the validity of the allotment of the said contract for the year 2005-2006. While disposing of the writ petition, the learned single Judge, however, held the impugned decision of the Government to enhance the rate as illegal and against public interest. The enhancement of rate was accordingly set aside. The respondents were directed to issue necessary Notice Inviting Tender afresh for allotment of carriage contract for distribution of PDS items as the term of the contract had already expired by efflux of time. The directions, so given, were based on the finding, reached by the learned single Judge, that the enhancement of rate could not have been made during subsistence of the contract inasmuch as an undertaking had already been given by the appellant, while submitting his tender pursuant to the NIT, dated 20.5.2004, aforementioned, that the appellant (i.e., respondent No. 7 in the writ petition) would not seek for any enhancement of rate during the period of validity of the contract, if awarded, i.e. during the year 2004-2005, that the enhancement of rate was without proper application of mind and such enhancement was done ignoring public interest in as much as the enhancement of rate, in the facts and circumstances of the case, was not possible after the appellant (i.e., respondent No. 7 in the writ petition) already stood selected as a carriage contractor on the basis of the lower rate quoted by him. (ix) Aggrieved by the directions given, in the writ petition, to the effect that the present appellant shall be paid, for transportation of the PDS items, only at the rates quoted by him in the tender process, which had been initiated pursuant to the NIT, dated 20.5.2004, and not at the rate of Rs. 3.00 per quintal, per kilometre, the awardee of the contract has preferred the present appeal. 2. We have heard Mr. B.C. Das, learned Counsel, appearing on behalf of the appellant, i.e., the awardee of the contract. None has appeared on behalf of the private respondents. We have, however, heard Mr. R.H. Nabam, learned Senior Government Advocate, appearing on behalf of the State respondents. 3. It is submitted, on behalf of the appellant, that contrary to the finding, reached by the learned single Judge, the pleadings of the parties and the materials on record clearly bring out the fact that the enhancement of rate, in question, had not been made during subsistence of the contract, which had been, pursuant to the NIT, dated 20.5.2004, entered into by the Government with the appellant. It is submitted by Mr. B.C. Das, learned senior counsel, that due to changed situation and, upon refusal of the appellant to undertake execution of the awarded contract, no deed of agreement was executed by the parties concerned and no work order could be issued to the appellant. Hence, pursuant to the said NIT, no concluded contract, according to Mr. Das, was reached between the parties concerned. It is also submitted by Mr. Das that the NIT, dated 20.5.2004, did not materialise into any concluded contract for the period 2004-2005, inasmuch as, points out Mr. Das, the decision for the rate of enhancement was taken as late as on 8.2.2005 and the appellant entered into an agreement with the Government, on 9.3.2005, in respect of financial year 2005-2006, whereas the NIT was for the financial year 2004-2005 and it was only on 10.3.2005 that a work order was issued, at the approved enhanced rate, in favour of the appellant for execution of the carriage contract for the period 2005-2006 (and not 2004-2005). Hence, according to Mr. Das, the enhanced rate was in respect of a new contract, which was for the period of 2005-2006, whereas the NIT was, reiterates Mr. Das, for the financial year 2004-2005. Hence, according to Mr. Das, the enhanced rate was in respect of a new contract, which was for the period of 2005-2006, whereas the NIT was, reiterates Mr. Das, for the financial year 2004-2005. Thus, the finding of the learned single Judge, contends Mr. Das, that the enhancement of rate was during the subsistence of the contract, which the parties had entered into in pursuance of the said NIT, is, in the face of the materials on record, a wholly erroneous finding. 4. It is contended by Mr. Das that acting upon the new contract, which was so entered into and not related to the NIT, dated 20.5.2004, since the appellant has carried out his part of the contract on the enhanced rate, he could not have been disentitled from receiving payment at the enhanced rate inasmuch as the Court had, at no stage, stopped or restrained the appellant from executing the newly awarded contract for the financial year 2005-2006 nor had the Court suspended the award of the new contract or execution of the new contract. In such circumstances, when the appellant has executed the carriage contract on the basis of the terms and conditions of a new contract, the appellant is, submits Mr. Das, entitled to the payment at the said uniform rate. This apart, contends Mr. Das, even if the contract, which was, eventually, entered into, by the appellant and the Government, in respect of carriage of PDS items, for the period of 2005-2006, is treated to be illegal, the fact remains that the Government has acquired benefits from such illegal contract and the appellant is entailed to be compensated for the benefits, which have accrued to the Government. Reference, in this regard, is made by Mr. Das to Section 70 of the Contract Act. 5. It is submitted by Mr. Das that in arriving at its decision to enhance the rate, the State respondents have taken into account, in the light of the materials on record, price hike of petroleum products, cost of spare parts of vehicles, expenditure of loading and unloading and the fact that almost all the locations en route and the fair price shops were located in remote areas and carrying PDS items to these locations was a difficult task inasmuch as the connecting roads were not good. It also needs to be noted, points out Mr. It also needs to be noted, points out Mr. Das, that before the new contract was awarded to the appellant, the Government had already introduced, in the districts other than West Siang, uniform rate of Rs. 3.00 per kilometre, per quintal, for carriage contract of PDS items in the plains as well as hilly areas. All these facts, according to Mr. Das, were relevant, proximate and germane to the decision of the State Government and these facts could not have been regarded as inconsequential and/or irrelevant and/or mala fide in the factual setting of the present case. Mr. Das, therefore, submits that the impugned direction, given in the writ petition, to make payment to the appellant in respect of the new contract, at the rate, which the appellant had quoted, pursuant to the NIT, in respect of the period 2004-2005, is wholly untenable in law and the impugned directions may, therefore, be interfered with. 6. Since none has appeared on behalf of the writ petitioners and the State respondents have chosen to support the case of the appellant, we have closely scanned the pleadings of the parties and materials on record. We have also carefully perused the impugned judgment and order. What we notice is that the NIT, dated 20.5.2004, aforementioned, was issued for carriage of PDS items during the period 2004-2005 and the rates, quoted by the appellant, were 10 paisa and 19 paisa, per kilometre, per quintal, for plains and hill areas respectively. After, however, the appellant already stood selected for award of the carriage contract and his appointment stood approved by the Government, the appellant expressed his inability to execute the contract at the rates, which he had offered. Not only that the appellant expressed his inability to execute the contract, he, rather, sought for the uniform rate of Rs. 3.00, per kilometre, per quintal, for plains and hill areas, which the Government had already introduced in some districts. The reason, assigned by the appellant for his inability to execute the contract at his own offered rates, was, inter alia, that he had expected the Government's ban, imposed on head load carriage, to be lifted. As the ban was extended, his own assessment and calculation of the expenses, involved in the execution of the contract, proved incorrect. The reason, assigned by the appellant for his inability to execute the contract at his own offered rates, was, inter alia, that he had expected the Government's ban, imposed on head load carriage, to be lifted. As the ban was extended, his own assessment and calculation of the expenses, involved in the execution of the contract, proved incorrect. As a result of refusal of the appellant to execute the contract, no deed of agreement was executed and no work order was issued. What the State respondents did was to constitute a Board to examine revision of carriage rates, in the district of West Siang. The Board, having-considered various factors, as already indicated above, decided to apply uniform rate of Rs. 3.00 per kilometre, per quintal, in the said district too. The State Government approved this enhancement. A notification announcing the said uniform rate was accordingly issued on 19.2.2005 and it is, thereafter, that the appellant entered into an agreement with the Government, for the period of 2005-2006, to carry PDS items at the notified uniform rate of Rs. 3.00 per kilometre, per quintal. A work order was accordingly issued on 10.3.2005 and the contract agreement was executed. 7. We may, now, pause here to point out that from the facts narrated above, what becomes clear is that the NIT, dated 20.5.2004, was for carriage of PDS items for the period 2004-2005. Though the appellant had offered the rates as indicated above and his offered rates were accepted, the appellant expressed his inability to execute the contract. Thus, notwithstanding the fact that a Board was constituted and a uniform rate of Rs. 3.00 per kilometre, per quintal, for carriage contract, was brought into force in the district, in question, which was in the same pattern as in some other districts of the State, the fact remains that the contract, awarded to the appellant, was not executed by the appellant. Hence, in terms of the NIT, dated 20.5.2004, no execution of contract, which was awarded to the appellant, took place. 8. What is also clearly noticeable is that the contract, which came to be, eventually, allotted to the appellant, was for the period of 2005-2006 and though the rate awarded was the enhanced rate, the fact remains that the said enhanced rate was already a notified rate in respect of some districts. 8. What is also clearly noticeable is that the contract, which came to be, eventually, allotted to the appellant, was for the period of 2005-2006 and though the rate awarded was the enhanced rate, the fact remains that the said enhanced rate was already a notified rate in respect of some districts. When the writ petitioners came to this Court, they did not, as already indicated above, put to challenge the award of contract for the period of 2005-2006; what they merely contended was that the enhancement of rate was illegal. Consequently, the interim direction, passed by this Court, on 4.8.2005, merely stopped the State respondents from clearing the bills of the appellant. In fact, the amended writ petition was filed, as already pointed out above, as late as in December, 2005, i.e., after about 9 months of the newly concluded contract. Though the writ petition was subsequently amended, neither the writ petitioners, as the record reveals, sought for modification of the said interim order nor was the said interim order modified by the Court. As a result thereof, the execution of the newly awarded contract, for the period 2005-2006, was never suspended; consequently, the newly awarded contract, for the financial year 2005-2006, continued to be executed by the appellant. 9. What is, now, necessary to point out is that though it has been contended, on behalf of the appellant, that no contract, pursuant to the NIT, dated 20.5.2004 was arrived at by the parties concerned, this submission, in our opinion, is not legally sustainable inasmuch as a Notice Inviting Tender is, under the law of contract, an invitation to make offer. The appellant, in the present case, while participating in the process of the said NIT, made his offer; and this offer, having been accepted by the Government, must be treated to have resulted into a concluded contract. 10. Notwithstanding, therefore, the fact that no formal deed of agreement was signed and/or no formal work order was issued, the fact remains that the Government had accepted the appellant's offer, which was unconditional, and, on acceptance of such an offer, a concluded contract had been reached. 10. Notwithstanding, therefore, the fact that no formal deed of agreement was signed and/or no formal work order was issued, the fact remains that the Government had accepted the appellant's offer, which was unconditional, and, on acceptance of such an offer, a concluded contract had been reached. As the appellant has not executed the carriage contract in terms of such concluded contract, he might have been held liable for breach of contract; but this breach cannot be a reason for disentitling the appellant from receiving his dues, at the enhanced rate, if he is, under the law, otherwise, entitled to receive. 11. On the ground, therefore, that the petitioner had not executed the carriage contract at the rates at which he had made his offer, the subsequent act of execution of the carriage contract, for a new financial year, i.e., for the period of 2005-2006, could not have been treated as a subsisting contract. The contract, which the appellant entered into, at the enhanced rate, was for the period 2005-2006 and was, therefore, a new contract. Whether the contract, so entered into, was or was not a legal contract is the question, which, now, needs to be answered. In this regard, it needs to be noted that for awarding the carriage contract for the year 2005-2006, no NIT was ever published and no recognised sustainable system, as regards awarding of such public contract, was adopted by the State respondents. Thus, the newly concluded contract, which the appellant had entered into and executed, was ex facie illegal. What is, however, of immense importance to note is that the execution of the newly concluded contract was never suspended. It so had happened, because of the fact that the writ petitioners had not, initially, challenged the award of the new contract to the appellant. Consequently, the appellant has executed the contract. 12. The question, therefore, is as to whether the appellant is, now, entitled to receive payment at the rate at which he was awarded the new contract for the period 2005-2006? Notwithstanding the fact that the contract, awarded to the appellant, for the period 2005-2006, is illegal, the fact remains that the Government has derived benefit from such an illegal contract. The question, therefore, is as to whether the appellant is, now, entitled to receive payment at the rate at which he was awarded the new contract for the period 2005-2006? Notwithstanding the fact that the contract, awarded to the appellant, for the period 2005-2006, is illegal, the fact remains that the Government has derived benefit from such an illegal contract. The law is well-settled that a person, who derives benefit from an illegal contract, is nevertheless liable to pay compensation for the benefits so received if the benefit was not intended to be gratuitous. 13. In the present case, the writ petitioner had not/initially, asked for suspension of the execution of the contract. Had the Court restrained the appellant from executing the new contract or had the Court made the execution of the contract subject to the outcome of the writ petition, the situation would have, perhaps, been a little different. Had there been any restraint, imposed by the Court, on the execution of the newly concluded contract, one could have, perhaps, held that the appellant, having carried out the contract, at his own risk, cannot seek benefit of his own wrong. When, however, the appellant's execution of the contract work was not suspended and the appellant has completely executed the contract, it would be inequitable not to pay to the appellant any consideration for the contract, which he has executed. The question, therefore, is as to what should have been the quantum of compensation? The appellant's offered rates were in respect of the period 2005-2006 and, certainly, not for the period 2005-2006. In such a situation, the appellant could not have been forced to execute the new contract for the period 2005-2006, at the rates, which he had earlier offered for the period 2004-2005. For breach, if any, of the earlier contract, the appellant was liable to be sued; but no such damage suit was filed nor was any suit filed warranting specific performance of the contract, which had been allotted to the appellant, for the period 2004-2005. In such a situation, it would be highly illegal to insist that the appellant shall be paid for the carriage contract, executed by him, during the financial year 2005-2006, at the rates, which he had offered, for carriage work, during the year 2004-2005. In such a situation, it would be highly illegal to insist that the appellant shall be paid for the carriage contract, executed by him, during the financial year 2005-2006, at the rates, which he had offered, for carriage work, during the year 2004-2005. This apart, it is the admitted situation that the Government has notified a uniform rate of carriage and this rate has not been interfered with by any Court. It logically follows that anyone, who executes such a contract, would be entitled to be paid at such uniform rate. In the present case too, the appellant would have been entitled to payment at the uniform rate. Should, therefore, the appellant be denied the benefit of such payment, because of the fact that the contract, which he finally executed, was illegal? We have already pointed out that a beneficiary of an illegal contract is nevertheless bound to compensate the person from whom benefit is derived by the beneficiary. In the face of this principle, governing contract, it becomes clear that notwithstanding the fact that the contract, in question, was illegal, the fact remains that when the Court has not set aside the contract, obviously because of the fact that the period of execution of the contract was over, the appellant becomes entitled to receive payment at the uniform rate of Rs. 3.00 per kilometre, per quintal, as has been notified by the Government. 14. In State of West Bengal v. M/s. B.K. Mondal and Sons, AIR 1962 SC 779 , the contracts, in question, were, admittedly, not entered into by any person duly authorised by the Governor. Hence, the contracts, in question, were held to be invalid under Section 175(3), of the Government of India Act. Similar are the provisions in Article 299 of the Constitution of India, which lays down that all contracts, made in exercise of the executive power of the State, shall be executed, on behalf of the Governor of the State, by such persons and, in such manner, as the Governor may direct or authorise. In the light of the provisions of Article 299, even today, when a contract is entered into by a Government officer with any person, without the authority of the Governor of the State, such a contract is invalid. In the light of the provisions of Article 299, even today, when a contract is entered into by a Government officer with any person, without the authority of the Governor of the State, such a contract is invalid. The question, in M/s. B.K. Mondal and Sons (supra), therefore, was as to whether the Government was liable to pay the bills of the contract works to M/s. B.K. Mondal and Sons, though the fact that the contracts, in question, were, in the light of the provisions of Section 70 of the Contract Act, invalid. The contractor, however, demanded payment of his bills for execution of such illegal contracts, on the strength of the provisions of Section 70 of the Contract Act, by contending that the execution of the contracts was not gratuitous, the Government had accepted the construction works, which the contractor had done and had enjoyed the benefits thereof, and, having so enjoyed the benefits, the Government was bound to compensate the contractor. In effect, what was contended was that though the Government was not to pay, because of the execution of the contracts in terms and conditions of the contracts, but in the form of compensation for the benefits enjoyed by the Government in consequence of the fact that the contracts, though illegal, were executed, the intention of the contract not being gratuitous in nature. 15. It was contended, in M/s. B.K. Mondal and Sons (supra), that the contracts being invalid, no liability, even in the light of the provisions of Section 70, to pay the bills of the contract, could have been imposed on the Government. As the scope of Section 70 was one of the subject-matters of determination in M/s. B.K. Mondal and Sons (supra), it is apposite to know as to what Section 70embodies. The section reads thus: Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys 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. The section reads thus: Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys 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. 16 The Apex Court, pointed out, in M/s. B.K. Mondal and Sons (supra), that though it is true that Section 70 requires that a person should lawfully do something or lawfully deliver something to another and though the word "lawfully" is not a surplusage and must be treated as an essential part of the requirement of Section 70, it is not possible to hold that the delivery of a thing or doing of a thing, acceptance and enjoyment whereof gives rise to a claim for compensation under Section 70, is forbidden; so, interpretation of the word "lawfully", as sought to be attributed to Section 70, held the Supreme Court, in M/s. B.K. Mondal and Sons (supra), cannot be acceded to. 17. Explaining the reason for taking the above view of the scope of Section 70, the Supreme Court pointed out, in M/s. B.K. Mondal and Sons (supra), that "it is, of course, true that between the person claiming compensation and person against whom it is claimed, some lawful relationship must subsist, for, that is the implication of the use of the word "lawfully" in Section 70; but the said lawful relationship arise not because the party, claiming compensation, has done something for the party against whom the compensation is claimed, but because what has been done by the former has been accepted and enjoyed by the latter. It is only when the latter accepts and enjoys what is done by the former that a lawful relationship arises between the two and it is the existence of such lawful relationship, which gives rise to the claim for compensation." The Supreme Court, in M/s. B.K. Mondal and Sons (supra), concluded thus; "Therefore, in our opinion, all that the word "lawfully" in the context indicates is that after something is delivered or something is done by one person for another and that thing is accepted and enjoyed by the latter, a lawful relationship is born between the two which under the provisions of Section 70 gives rise to a claim for compensation." The Supreme Court has also pointed out, in M/s. B.K. Mondal and Sons (supra), that what Section 70 prevents is unjust enrichment and it applies as much to individuals as to corporations and Governments. 18. Summarising the scope of Section 70, the Apex Court, in M/s. B.K. Mondal and Sons (supra), observed and held as follows: 14. It is plain that three conditions must be satisfied before the section can be invoked. The first condition is that a person should lawfully do something for another person or deliver something to him. The second condition is that in doing the said thing or delivering the said thing he must not intend to act gratuitously; and the third is that the other person for whom something is done or to whom something is delivered must enjoy the benefit thereof. When these conditions are satisfied Section 70 imposes upon the latter person the liability to make compensation to the former in respect of, or to restore, the thing so done or delivered. In appreciating the scope and effect of the provisions of this section it would be useful to illustrate how this section would operate. If a person delivers some thing 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 does something for another it would be open to the latter person not to accept what has been done by the former; in that case again Section 70would not apply. In other words, the person said to be made liable under Section 70 always has the option not to accept the thing or to return it. Similarly, if a person does something for another it would be open to the latter person not to accept what has been done by the former; in that case again Section 70would not apply. In other words, the person said to be made liable under Section 70 always has the option not to accept the thing or to return it. It is only where he voluntarily accepts the thing or enjoys the work done that the liability under Section 70 arises. Taking the facts in the case before us, after the respondent constructed the warehouse, for instance, it was open to the appellant to refuse to accept the said warehouse and to have the benefit of it. It could have called the respondent to demolish the said warehouse and taken away the materials used by it in constructing it, but, if the appellant accepted the said warehouse and used it and enjoyed its benefit then different considerations come into play and Section 70 can be invoked. Section 70 occurs in Chapter V which deals with certain relations resembling those created by contract. In other words, this chapter does not deal with the rights or liabilities accruing form the contract. It deals with the rights and liabilities accruing from relations which resemble those created by contract. That being so, reverting to the facts of the present case once again, after the respondent constructed the warehouse it would not be open to the respondents to compel the appellant to accept it because what the respondents has done is not in pursuance of the terms of any valid contract and the respondent in making the construction took the risk of the rejection of the work by the appellant. Therefore, in cases falling under Section 70 the person doing something for another or delivering something to another cannot sue for the specific performance of the contract nor ask for damages for the breach of the contract for the simple reason that there is no contract between him and the other person for whom he does something or to whom he provides is that if the goods delivered are accepted or the work done is voluntarily enjoyed then the liability to pay compensation for the enjoyment of the said goods or the acceptance of the said work arises. Thus, one person against another under Section 70, it is not on the basis of any subsisting contract between the parties, it is on the basis of the fact that something was done by the party for another and the said work so done has been voluntarily accepted by the other party. That broadly stated is the effect of the conditions prescribed by Section 70. 15. * * * 16. It is true that Section 70 required that a person should lawfully do something or lawfully deliver something to another. The word "lawfully" is not a surplusage and must be treated as an essential part of the requirement of Section 70. What then does the word "lawfully" in Section 70denote? Mr. Sen contends that the word "lawfully" in Section 70 must be read in the light of Section 23 of the said Act; and he argues that a thing cannot be said to have been done lawfully if the doing of it is forbidden by law. However, even if this test is applied it is not possible to hold that the delivery of a thing or a doing of a thing the acceptance and enjoyment of which gives rise to a claim for compensation under Section 70 is forbidden by Section 175(3) of the Act; and so the interpretation of the word "lawfully" suggested by Mr. Sen does not show that Section 70 cannot be applied to the facts in the present case. 19. Referring to M/s. B.K. Mondal and Sons (supra), the Supreme Court, in Union of India v. J.K. Gas Plant reported in (1980) 3 SCC 474, set out the conditions for application of Section 70 in the following words: The first condition is that a person should lawfully do something for another person or deliver something to him. The second condition is that in doing the said thing or delivering the said thing he must not intend to act gratuitously; and the third is that the other person for whom something is done or to whom something is delivered must enjoy the benefit thereof. When these conditions are satisfied Section 70 imposes upon the latter person, the liability to make compensation to the former in respect of, or to restore, the thing so done or delivered. 20. When these conditions are satisfied Section 70 imposes upon the latter person, the liability to make compensation to the former in respect of, or to restore, the thing so done or delivered. 20. The Supreme Court, in Midamchand v. State of M.P. reported in AIR 1968 SC 1218 , reiterated the conditions, which are to be satisfied in order to attract Section 70 of the Contract Act. The Apex Court, referring to Mulamchand (supra), pointed out, in K.S. Satyanarayana v. V.R. Narayana Rao reported in (1999) 6 SCC 104 , that the first condition, for invoking the provisions of Section 70 of the Contract Act, is that a person should lawfully do something for another person or deliver something to him; the second condition is that in doing the said thing or delivering the said thing he must not intend to act gratuitously; and the third condition is that the other person, for whom something is done or to whom something is delivered, must enjoy the benefit thereof. If these conditions are satisfied, Section 70 imposes upon the latter person the liability to make compensation to the former in respect of, or to restore, the thing so done or delivered. 21. The principle, flowing from the above observations, made in M/s. B.K. Mondal and Sons (supra), is that when a contract is illegal, but, in execution of such a contract, a party has derived benefit, the party, who derives and accepts the benefit, has to compensate the person from whom such benefit is derived and accepted. Hence, though a contract is illegal, the fact remains that if, in terms of the contract, the Government has derived benefit, or received delivery of property, the Government has to compensate the person, who delivers the property, or from whom benefit is derived by the Government. In the present case too, the Government has received the benefit' of delivery of property, i.e. PDS items, through carriage, from the present appellant. Hence, even if the contract, in question, which was executed for the financial year 2005-2006, was, having been awarded without calling for tenders, illegal, the fact remains that the Government is bound to compensate the appellant for the benefits, which it has derived by getting the PDS items carried from one place to another by the present appellant. Hence, even if the contract, in question, which was executed for the financial year 2005-2006, was, having been awarded without calling for tenders, illegal, the fact remains that the Government is bound to compensate the appellant for the benefits, which it has derived by getting the PDS items carried from one place to another by the present appellant. In the case at hand, the learned single Judge has, in fact, not held the contract to be illegal, though it could have been, in our opinion, so held. The facts, therefore, that the award of contract to the appellant was illegal, but having accepted the benefit of such a contract, the Government is bound to pay compensation for the benefits, which it enjoyed, appear to have completely escaped the attention of the learned single Judge. 22. Be that as it may, when the appellant was allowed to execute the contract, in question, it will be highly iniquitous not to let the Government compensate the appellant for the benefits, which the Government has derived, because of the execution of the contract by the appellant. Had the Court made the execution of the contract subject to the outcome of the writ petition and if in that kind of a situation had the appellant executed the contract at its own risk, the situation would have, perhaps, been, as already indicated above, a little different. The present one is a case, where the Court had allowed the present appellant to execute the contract. Had the appellant not executed the new contract, awarded to him for the period 2005-2006, he would have been made liable for breach of contract. The appellant was, therefore, left with no option, as correctly pointed out, on behalf of the appellant, but to execute the contract. When the writ petitioners had not, initially, sought for cancellation of the award of the new contract to the appellant and made such a prayer belatedly and, even on such a prayer having been made, when the Court had not stopped execution of the new contract, the Court is bound to ensure that for the benefits, which the Government has derived, as a result of the contract having been executed, the appellant, as contractor, be compensated. 23. 23. We may also pause here to point out that it had not been the case of the writ petitioners that they were participants in the tender process nor did they claim that the contract ought to have been awarded to them. By no means, therefore, any right or rights, fundamental, legal or otherwise, of the writ petitioners were affected by the allotment of the contract. When the writ petitioners had not even participated in the tender process, which had been initiated pursuant to the NIT, dated 20.5.2004, they had, as rightly contended by Mr. Das, no locus standi to challenge the rate at which the carriage contract was awarded. There can, therefore, be no escape from the conclusion that the appellant had correctly contended before the learned single Judge that the writ petitioners had no locus standi to challenge the rate at which the contract had been awarded to the appellant. This aspect of the matter has not been dealt with by the learned single Judge. 24. Coupled with the above, it is also worth pointing out that the claim for compensation, raised by the appellant against the Government, cannot be said to be invalid or illegal inasmuch as the contract, in question, is binding not only on the appellant but also on the Government. When the writ petitioners were not the persons, who had participated in the tender process, held pursuant to the NIT, dated 20.5.2004, and when the contract, which the appellant had, ultimately, executed, was a new contract and not the one, which had been set into motion by the NIT, dated 20.5.2004, and, further, when the appellant had not been restrained from execution the contract, in question, the appellant remained and still remains, even in the light of the provisions of Section 70 of the Contract Act, entitled to be compensated for the benefits of the carriage of the PDS items, which the Government has derived. 25. The question, therefore, is as to how one should determine, in a case of present nature, the quantum of compensation payable to a person, such as, the present appellant. 26. While considering the above aspect of the present case, it needs to be pointed out that the real basis for a claim, under Section 70 of the Contract Act, is not the terms of the contract, but the quantum of the benefit actually derived. 26. While considering the above aspect of the present case, it needs to be pointed out that the real basis for a claim, under Section 70 of the Contract Act, is not the terms of the contract, but the quantum of the benefit actually derived. In the absence of any other material, the contract, between the parties, provides a reasonable basis for calculating the benefit and, hence, the only reasonable way of arriving at the value of the benefit derived by the Government is to make the rate, agreed upon by the parties to the contract, as the basis for determination of the quantum of compensation, inasmuch the agreed rate, unless shown, otherwise, would be a fair indication of the value of the contract. We may, in this regard, refer to Pannalall v. Deputy Commissioner, Bhandra and Anr. reported in (1973) 1 SCC 639 , wherein the Supreme Court was faced with the question as to how the quantum of benefit, actually derived, should be determined. The Supreme Court, in Pannalall (supra), held that in the absence of any other material, the contract between the parties provides a useful basis for calculating that benefit. It was, of course, held, in Pannalall (supra), that there was no allegation that the rates, agreed upon, and later enhanced, were not fair rates or that anybody else would have undertaken the work cheaper. In the present case too, the writ petitioners, nowhere, claimed that they were agreeable to undertake the work of carriage at a rate lower than the said uniform rate of Rs. 3/- per quintal, per kilometre, nor did they contend that anyone would have undertaken the work at the rate, which the appellant had quoted. It was also not the case of the writ petitioners that the rate, which the Government had, eventually, decided to pay to the appellant, was not a fair rate. The entire grievance of the writ petitioners was that since the appellant had quoted rates with the undertaking that he (the appellant) would not ask for enhancement of rates, he (the appellant) was liable to execute the contract at his offered rate, which had been accepted by the Government. We have already pointed out, it bears repetition, that none of the writ petitioners claimed that he had participated in the said tender process or was willing to work at the rate, which the appellant had quoted. We have already pointed out, it bears repetition, that none of the writ petitioners claimed that he had participated in the said tender process or was willing to work at the rate, which the appellant had quoted. They had also not claimed that the rates, which, eventually, the Government had agreed to pay, was an unfair rate. In fact, and as already indicated above, the contract, which the appellant, eventually, executed, none other than the appellant and the State respondents were parties to. In such circumstances, the learned single Judge, having not set aside the contract and having not directed award of the contract to anyone else, could not have, in our considered opinion, directed that the appellant be paid at the old rates, offered by him, though the contract, which the appellant had, ultimately, executed, was a new contract for the period 2005-2006 and not for the period 2004-2005. Viewed from any angle, the direction, forcing the Government to pay, at the rate, at which the appellant had never agreed to execute the carriage contract, for the year 2005-2006, cannot be held to be legal, just and fair, particularly, when the rate at which the new contract was awarded to the appellant was a rate, which was a modified uniform rate in many other districts of the State of Arunachal Pradesh. 27. What crystallises from the above discussion held, as a whole, is that the impugned direction, passed in the writ petition, to pay to the appellant at the rate, which the appellant had quoted in respect of the carrying charges for the period 2004-2005, is not legal and needs to be interfered with, or else, it would cause serious miscarriage of justice. 28. In the result and for the reasons discussed above, the impugned direction, passed in the writ petition, to pay to the appellant at the rate quoted by him, in respect of the carrying charges of PDS items, for the year 2004-2005, is hereby set aside and the appellant is directed to be paid his dues in terms of the contract, which was executed by the appellant and the State Government on 9.3.2005. The appear shall accordingly stand allowed. 29. With the above observations and directions, this appeal stands disposed of. 30. No order as to costs.