Case: Pannalal Vs. State Of Bombay And Ors

The appellant is a building contractor. He constructed buildings for the Bai Gangabai Memorial Hospital, Gondia, Kunwar Tilaksingh Civil Hospital, Gondia, and also for the Twynam Hospital, Tumsar, all within the district of Bhandara in Madhya Pradesh, in execution of three separate contracts in respect of the three hospitals which were concluded between him and Deputy Commissioner of Bhandara. Though he received part payment in respect of each of these contracts he claims not to have received full payment of what was due to him. On April 1, 1948 he brought the three suits out of which these three appeals have arisen for obtaining payments which he claims was due to him. His averments in all the three plaints are similar, except that in respect of one of the suits, viz., the one in respect of the construction work done for the Bai Gangabai Memorial Hospital, he has also claimed the price of some furniture said to have been supplied by him at the request of the Deputy Commissioner. The common case of the plaintiff in these three suits was that the Deputy Commissioner entered into these contracts "as representative of the Provincial Government" after having obtained previous sanction of that Government. It was further his case that the Deputy Commissioner, Bhandara, as the administration head of the hospitals entered into these contracts and as such was liable to pay the amounts due on the contracts. The plaint also averred that the Gondia Municipal Committee, Gondia, in the suit in respect of Bai Gangabai Memorial Hospital and the Dispensary Funds Committee in the other two suits were liable to satisfy plaintiffs claim inasmuch as they had taken the benefit of the work done under the contract which was not intended to be done gratuitously. On these averments the plaintiff impleaded the Provincial Government of the Province of Central Provinces and Berar as the first defendant, and the Deputy Commissioner of the Bhandara District, as the second defendant, in all the three suits. The Gondia Municipal Committee was impleaded as the third defendant in Suit No. 3-B of 1948, i.e., the suits in respect of Bai Gangabai Memorial Hospital. The Dispensary Funds Committee was impleaded as the third defendant in the other two suits. In both, the members of the Dispensary Funds Committee were also impleaded by name as defendants. Mr. G. K. Tiwari, who as Deputy Commissioner, Bhandara, signed the argument was impleaded in his personal capacity in all the three suits (Defendant No. 4 in Suit No. 3-B, Defendant No. 9 in Suit No. 2-B and defendant No. 14 in Suit No. 1-B). The State of Madhya Pradesh was later substituted for the Provincial Government of the Province of Central Provinces and Berar as the first defendant in all the three suits.It was admitted in the plaint that the construction could not be completed within the time mentioned in the contracts but it was pleaded that the time was not the essence of the contract and further, that the delay was due to the Deputy Commissioners failure to supply the necessary materials in time and inclemency of weather and also that time was extended by the Deputy Commissioner. In all the three suits the plaintiff made his claim at a higher rate than the contract rate on the plea that the Deputy Commissioner had sanctioned these higheris necessary to mention however that in Suit No. 3-B the plaintiff asked for a decree of Rs. 21, 281/- with costs and interest from the date of suit against defendants 1 to 3 and in the alternative, against defendant No. 4, i.e., Mr. G. K. Tiwari. I suit No. 1-B, the plaintiff claimed a decree for Rs. 12, 000. - with full costs and future interest from the date of suit against defendants 1 to 3 and/or defendant No. 14, i.e., Mr. G. K. Tiwari. In Suit No. 2-B, the plaintiff asked for a decree for Rs. 32, 208/- with costs and future interest against defendants 1 to 3 and/or defendant No. 9, i.e., Mr. G. K.main contention of the State of Madhya Pradesh in resisting the suits was that the agreement for the construction of the buildings was not made on behalf of the State Government and also that the hospital was not government hospital and therefore it had no liability. The same contentions were raised by the Deputy Commissioner, Bhandara and Mr. Tiwari, personally. All of them further contended that even on merits the plaintiff was not entitled to any relief, for, though time was essence of the contract the work was not finished within the time agreed upon. They also resisted the plaintiffs claim to increased rates on the ground that the previous sanction of the Deputy Commissioner had not been obtained. Another contention raised in all the suits was that the plaintiffs claim was barred by time. The other defendants also contested the suits on grounds which it is unnecessary for the purpose of the present appeals to set out.The Trial Judge held that the agreements in question were made for and on behalf of the State and further, that the constructions had "beyond doubt benefited the State" and so the State was liable. The learned Judge also rejected the various objections raised by the defendants to the plaintiffs claim on merits except that he disallowed part of the plaintiffs claim and gave the plaintiff a decree for part of his claim against the State of Madhya Pradesh in all the three suits. He also held that none of the other defendants were liable and dismissed the suits as againstthe Trial Courts decision in these suits the State of Madhya Pradesh preferred appeals to the High Court of Judicature at Nagpur. During the pendency of these appeals the State of Madhya Pradesh was substituted by the State of Bombay. In all these appeals the plaintiff Pannalal was impleaded as the first respondent; and all the other defendants were also impleaded as respondents. Disagreeing with the Trial Court the High Court held that the contract entered into by the Deputy Commissioner was not binding on the State Government; that the Deputy Commissioner signed the contract at his own discretion; and further, the contracts not having been entered into in the form as required under s. 175(3) ofthe Government of India Act, 1935, were not enforceable against the State Government. The High Court also held that the Government could not be held to have ratified the action of the contracts entered into by the Deputy Commissioner. The High Court also rejected the argument that the Government having received the benefit of the works must pay for them, on their finding that the hospitals were not government hospitals and Government "can in no sense be regarded as having benefited by anything done with respect to them." On these findings the High Court set aside the decree passed by the Trial Court against the State Government and allowed the appeals with costs.It appears that a prayer was made on behalf of the plaintiff-respondent that the High Court should pass decrees against the Deputy Commissioner, Bhandara, under Or. 41, r. 33 of theCode of CivilProcedure. That prayer was rejected by the High Court in these wordsPhadke then prayed that under Order 41, rule 33 of theCode of CivilProcedure we should pass decrees against the Deputy Commissioner, Bhandara, who was indubitably, a party to the contracts. Though the provisions of Order 41, rule 33 are wide enough to permit this we do not see any reason why we should exercise our power when it was open to the respondent No. 1 to prefer a cross-objection against the dismissal of his suits against those defendants, as well as against some otherHigh Court also rejected the Counsels prayer to grant him leave to file a cross-objection at that stage. In the result, all the three suits were dismissed by the High Court in their entirety. The High Court however granted a certificate under Art. 133(1)(c) of the Constitution. On the basis of that certificate these three appeals have been preferred by the plaintiff.

Reasoning:
There is, in our opinion, no substance in the appellants contention that the State Government was liable. On the materials on the record, it appears clear to us that the Deputy Commissioner did not act on behalf of the State Government in signing the contracts. Nor can it be said that the State Government derived benefit from the work done by the plaintiff. In our opinion, the High Court was right in its conclusion that the State Government was not liable in respect of any of these contracts and rightly dismissed the suits as against the defendant No.the High Court has refused to exercise its powers under Or. 41, r. 33 of theCode of CivilProcedure on an incorrect view of the law the matter has to go back to the High Court. We maintain the High Courts order in so far as it dismisses the suits against the State of Bombay but set aside the order in so far as it dismisses the suits against the other defendants and send the case back to the High Court in order that it may decide, on an examination of the merits of the case, whether relief should be granted to the plaintiff under the provisions of Or. 41, r. 33, Civil Procedure Code. Costs incurred in this Court will abide the final result in the appeals before the High Court atthe legislature also wanted to give effect to the views held by the different High Courts that in exceptional cases as mentioned above an objection can be preferred by a respondent against a correspondent is indicated by the substitution of the work "appellant" in the third paragraph by the words "the party who may be affected by suchour opinion, the view that has now been accepted by all the High Courts that Order 41, r. 22 permits as a general rule, a respondent to prefer an objection directed only against the appellant and it is only in exceptional cases, such as where the relief sought against the appellant in such an objection is intermixed with the relief granted to the other respondents, so that the relief against the appellant cannot be granted without the question being re-opened between the objecting respondent and other respondents, that an objection under Or. 41, r. 22 can be directed against the other respondents, is correct. Whatever may have been the position under the old s. 561, the use of the word "cross-objection" in Or. 41 r. 22 expresses unmistakably the intention of the legislature that the objection has to be directed against the appellant