Case: Pannalal Vs. Dy. Commissioner, Bhandara &amp; Another Etc

1. These three appeals have come to this Court a second time by way of a certificate granted by the High Court of Bombay. The appellant filed three suits, Civil Suit No.of 1948 for RupeesCivil Suit No.of 1948 for Rs. 31,028/l Suit No.of 1948 for Rs. 21,381/for the work of additions and alterations to three hospitals, Kunwar Tilak Singh Hospital at Gondia, Bai Gangabai Hospital at the same town and Twynam Hospital at Tumsar, all in Bhandara District, then in the State of Madhya Pradesh and now in the State of Maharashtra. In December 1943 he entered into three contracts in relation to the above three hospitals with Mr. Tiwari, the then Deputy Commissioner of Bhandara District. He was paid various amounts in respect of the work done for these three hospitals and dispute having arisen in respect of the appellants claim for the balance of the amounts due in respect of these three contracts, the appellant filed the above three suits. In two of these suits he made the Government of Madhya Pradesh as well as the Deputy Commissioner parties. The Deputy Commissioner, Mr. Tiwari, was also made a party in his personal capacity. He also made the Dispensary Fund Committee another defendant in each of the suits and as the Committee was not a statutory body he impleaded all its members as parties. In respect of Bai Gangabai Hospital the State Government, the Deputy Commissioner, the Municipal Committee of Gondia, which owned the hospital, as also Mr. Tiwari in his personal capacity were made parties. The trial Court decreed the suits against the State Government alone. The amounts decreed were Rs. 8,214/in C.S. No.in C. S.in C. S.. These were to carry interest, past and future. The State Government took the matter on appeal to the High Court of Judicature at Nagpur. The appellant did not file anyin spite of the failure of the trial Court to pass decrees against the other defendants. By the time the appeals came up for hearing Bhandara District became a part of the State of Maharashtra. The High Court of Bombay allowed the appeals filed by the State. The High Court also declined to exercise its powers under Order 41, Rule 33 of the Code of Civil Procedure against the other defendants. On appeal this Court set aside the order of the High Court refusing to consider the claim against the other defendants under Order 41, Rule 33 and remanded the case back to the High Court. This Court, however, confirmed the judgment of the High Court as far as the dismissal of the suit against the State was concerned. The High Court again dismissed the suits and the matter has again come before this Court by way of leave granted by the High Court of Bombay. It appears that sinch then the State of Maharashtra has taken over the Kunwar Tilak Singh Hospital and the Twynam Hospital and, therefore, the only question to be decided in two of these three appeals is the liability of the State of Maharashtra for any sums that may be found due to the appellant in respect of these two hospitals. The Bai Gangabai Hospital is even now owned by the Municipal Committee, Gondia and its liability also is to be determined.2. The exact status of the Dispensary Fund Committee is not very clear. It does not appear to be a statutory body nor does it appear to be a permanent body. It seems to be something of an ad hoc body appointed by the Deputy Commissioner and consisted of a number of officials and a fewThe Deputy Commissioner himself was not a member of the body. It appears, however, as we would show later, that the Deputy Commissioner was acting on behalf of this body with the tacit approval of the Committee itself. The contracts were signed by the Deputy Commissioner as Deputy Commissioner but not on behalf of the State; nor did they say that they were on behalf of the Dispensary Fund Committee or the Municipal Committee. But in his evidence Mr. Tiwari stated that he entered into the agreement on behalf of the Gondia Municipal Committee and the Dispensary Fund Committee, and not in his personal capacity or in his capacity as Deputy Commissioner and that the idea was that the funds will be forthcoming if he signed the agreement and the work will be more readily done. There being no dispute that the work in respect of all these three hospitals was done by the appellant and the ownership of the hospitals vests in one case with the Gondia Municipal Committee and in the other two cases with the Government of Maharashtra, only two questions arise for decision, (i) what is the amount due, and (ii) are the Municipal Committee of Gondia and the State of Maharashtra liable either on the basis of the contracts or under S. 70 of the Contract Act.

Court's reasoning:
5. But even apart from contract we have no hesitation in holding that in all the three cases liability under Section 70 of the Contract Act clearly arises. We do not understand why the High Court thinks that the Dispensary Fund Committees cannot be regarded as the owners or beneficiaries of the buildings of the hospitals. And more curiously the High Court has said that it is the public that are the beneficiaries. The buildings on construction belong to the Dispensary Fund Committees and the Municipal Committee and they have received benefit in so far as they are theis no doubt that in this case the Dispensary Fund Committees have accepted the buildings and they have also been accepted by the State of Maharashtra when they took over the hospitals with their buildings which the appellant had constructed. Thus, the Dispensary Fund Committee in two cases and the Municipal Committee of Gondia in the third have received the benefit and the State of Maharashtra, having taken over the two hospitals became liable to pay the suit amount as successors in interest of the Dispensary Fundhas not been alleged on behalf of the defendants that the rates agreed upon and later enhanced were not fair rates or that anybody else would have undertaken the work cheaper. The only reasonable way of arriving at the value of the benefit derived by the Government is on the basis of the rates agreed upon (including future increases in rates by PWD) and that would be a fair indication of the value of the work.We may in this connection refer to the decision of this Court in Piloo Sidhwa v. Municipal Corpn. (1970) 3 SCR 415   = (AIR 1970 SC 1201  ) where the market price was taken as a proper indication of compensation under Section 70 and interest also was awarded.8. Mr. Phadke appearing on behalf of the appellant did not want any relief against defendants other than the State of Maharashtra in Appeals Nos. 1072/67 and 1073/67 and the Municipal Committee of Gondia in Appeal No. 1071/67. The amount mentioned by us earlier would have had to carry interest at the rate of 6 per cent from the date of plaint but Mr. Phadke appearing on behalf of the appellant has stated that he would be satisfied with a decree for Rs. 8,214/l Suit No.i.e. Appeal No. 1072/67, for Rs. 19,298/in Appeal No. 1073/67, and Rs. 12,765 in Appeal No. 1071/67. There will be decrees accordingly. These amounts are far less than what the appellant is entitled to as indicated above, and he would, therefore, get his full costs in all the Courts. They would, of course carry interest at 6 per cent from this date till date of realisation.