Case: State Of West Bengal Vs. M/S. B. K. Mondal And Sons

2. The respondents case was that on February 8, 1944, it offered to put up certain temporary storage godowns at Arambagh in the District of Hooghly for the use of the Civil Supplies Department of the State of Bengal and that the said offer was accepted by the said department by a letter dated February 12, 1944. Accordingly the respondent completed the said construction and its bill for Rs. 39,476/- was duly paid in July 1944. Meanwhile, on April 7, 1944, the respondent was requested by the Sub-Divisional Officer, Arambagh, to submit its estimate for the construction of a kutcha road, guard room, office, kitchen and room for clerks at Arambagh for the Department of Civil Supplies. The respondent alleged that the Additional Deputy Director of Civil Supplies visited Arambagh on April 20, 1944 and instructed the respondent to proceed with the construction in accordance with the estimates submitted by it. Accordingly the respondent completed the said constructions and a bill for Rs. 2,322/8/- was submitted in that behalf to the Assistant Director of Civil Supplies on April 27, 1944. Thereafter the Sub-Divisional Officer, Arambagh required the construction of certain storage sheds at Khanakul and the Assistant Director of Civil Supplies wrote to the respondent on April 18, 1944, asking it to proceed with the construction of the said storage sheds. This work also was completed by the respondent in due course and for the said work a bill for Rs. 17,003/- was submitted. In the present suit the respondent claimed that the two bills submitted by it in which the respondent had claimed Rs. 2,322/8/- and Rs. 17,003/- respectively had remained unpaid and that was the basis of the present claim3. The appellant denied all the material allegations made by the respondent in its plaint. It alleged that the requests in pursuance of which the respondent claims to have made the several constructions were invalid and unauthorised and did not constitute a valid contract binding the appellant under S.175(3) of the Government of India Act, 1935 (hereafter called the Act). It pleaded that there was no privity of contract between the respondent and itself and it denied its liability for the entire claim. The written statement filed by the appellant was very vague and general in terms and no specific or detailed pleas had been set out by the appellant in its pleading4. However, G.K. Mitter, J., who tried the suit, framed five material issues on the pleadings and recorded his findings on them. He held that having regard to the provisions of S. 175(3) of the Act there was no valid and binding contract between the respondent and the appellant for the construction of huts and sheds at Khanakul and Arambagh. This finding was in favour of the appellant. He held that the respondents claim against the appellant was, however, justified under S. 70 of the Indian Contract Act, and he came to the conclusion that the said claim was not barred by limitation. He also rejected the plea of the appellant that the liability of the Province of Bengal had not devolved upon the appellant under the provisions of the Indian Independence (Rights, Property and Liabilities) Order 1947. Thus, on these three points the finding of the trial Judge were against the appellant. It appears that at the trial the respondent had also relied upon S. 65 of the Indian Contract Act in support of its claim. The learned judge held that S. 65 did not apply to the facts of the case and so the finding on this point was in favour of the appellant. The result was that the respondents claim was upheld under S. 70 of the Contract Act and a decree for the amount claimed by it was accordingly passed in its favour5. The appellant disputed the correctness and validity of the said decree by preferring an appeal to the Calcutta High Court in its civil appellate jurisdiction. The said appeal was heard by S. R. Das Gupta and Bachawat, JJ. The two learned Judges who heard the said appeal delivered separate though concurring judgments and substantially confirmed the material findings recorded by the trial court. In the result the appeal preferred by the appellant was dismissed. The appellant then applied for a certificate to come to this Court but the High Court rejected its application. Thereupon the appellant moved this Court for a special certificate and on obtaining it has come to this Court;

Court's reasoning:
In our opinion, there can be no doubt that failure to comply with the mandatory provisions of the said Section makes the contracts invalid. The question as to whether mandatory provisions contained in statutes should be considered merely as directory or obligatory has often been considered in judicial decisions. In dealing with the question no general or inflexible rule can be laid down. It is always a matter of trying to determine the real intention of the Legislature in using the imperative or mandatory words, and such intention can be gathered by a careful examination of the whole scope of the statute and the object intended to be achieved by the particular provision containing the mandatory clause. If it is held that the mandatory clause is obligatory it inevitably follows that contravention of the said clause implies the nullification of the contract. There can be no doubt that in enacting the provisions of S. 175(3) the Parliament intended that the State should not be burdened with liability based on unauthorised contracts and the plain object of the provision, therefore, is to save the State from spurious claims made on the strength of such unauthorised contracts. Thus the provision is made in the public interest and so there can be no difficulty in holding that the word shall" used in making the provision is intended to make the provision itself obligatory and not directory. This is the view taken by this Court in Bhikraj Jaipuria v. Union of India, Civil Appeal No. 86 of 1959, D/- 24-7-1961: (AIR 1962 SC 113  ), and, with respect, we are in entire agreement with that viewThe contract which is void may not be capable of ratification, but, since according to the Court the contract in question could have been ratified it was not void in that technical sense. That is all that was intended by the observation in question. We are not prepared to read the said observation or the final decision in the case of Chatturbhuj, 1954 SCR 817  : (AIR 1954 SC 236  ) as supporting the proposition that notwithstanding the failure of the parties to comply with Art. 299(1) the contract would not be invalid. Indeed, Bose, J., has expressly stated that such a contract cannot be enforced against the Govt., and is not binding on it. Therefore, we do not think that Mr. Chatterjee can successfully challenge the finding of the Courts below that the contracts in question were invalidThe question which the appellant has raised for our decision falls to be considered in the light of the provisions of S. 70 and has to be answered on a fair and reasonable construction of the relevant terms of the said Section. In such a case, where we are dealing with the problem of construing a specific statutory provision it would be unreasonable to invoke the assistance of English decisions dealing with the statutory provisions contained in English law. As Lord Sinha has observed in delivering the judgment of the Privy Council in Ramanandi Kuer v. Kalawati Kuer, 55 Ind App 18. ; ILR 7 Pat 221  : (AIR 1928 PC 2  ) " it has often been pointed out by this Board that where there is a positive enactment of the Indian Legislature the proper course is to examine the language of that statute and to ascertain its proper meaning uninfluenced by any consideration derived from the previous state of the law or of the English law upon which it may be founded". If the words used in the Indian statute are obscure or ambiguous perhaps it may be permissible in interpreting them to examine the background of the law or to derive assistance from English decisions bearing on the point; but where the words are clear and unambiguous it would be unreasonable to interpret them in the light of the alleged background of the statute and to attempt to see that their interpretation conforms to the said background. That is why, in dealing with the point raised before us we must primarily look to the law as embodied in S. 70 and see to put upon it a fair and reasonable constructionTaking 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 upon the respondent to demolish the said warehouse and take 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 S. 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 from 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 respondent to compel the appellant to accept it because what the respondent has done is not in pursuance of the norms 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 S. 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 delivers something. All that Section 70 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, where a claim for compensation is made by one person against another under S. 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 S. 70In our opinion, this argument is not well-founded. It is true that the provisions of S, 175(3) are mandatory and if any contract is made in contravention of the said provisions the said contract would be invalid; but it must be remembered that the cause of action for the alternative claim of the respondent is not the breach of any contract by the appellant; in fact, the alternative claim is based on the assumption that the contract in pursuance of which the respondent made the constructions in question was ineffective and as such amounted to no contract at all. The respondent says that it has done some work which has been accepted and enjoyed by the appellant and it is the voluntary acceptance and enjoyment of the said work which is the cause of action for the alternative claim. Can it be said that when the respondent built the warehouse, for instance, without a valid contract between it and the appellant it was doing something contrary to S. 175 (3)? As we have already made it clear even if the respondent built the warehouse he could not have forced the appellant to accept it and the appellant may well have asked it to demolish the warehouse and take away the materials. Therefore, the mere act of constructing the warehouse on the part of the respondent cannot be said to contravene the provisions of S. 175(3). In this connection it may be relevant ,to consider illustration (a) to S. 70. The said illustration shows that if A a tradesman leaves goods at Bs house by mistake, and B treats the goods as his own he is bound to pay A for them. Now, if we assume that B stands for the State Government, can it be said that A was contravening the provisions of S. 175(3) when by mistake he left the goods at the house of B? The answer to this question is obviously in the negative. Therefore, if goods are delivered by A to the State Government by mistake and the State Government accepts the goods and enjoys them a claim for compensation can be made by A against the State Government, and in entertaining the said claim the Court could not be upholding the contravention of S. 175(3) at all either directly or indirectly. Once it is realised that the cause of action for a claim for compensation under S. 70 is based not upon the delivery of the goods or the doing of any work as such but upon the acceptance and enjoyment of the said goods or the said work it would not be difficult to hold that S. 70 does not treat as valid the contravention of S. 175(3) of the Act. That being so, the principal argument urged by Mr. Sen that the respondents construction of S. 70 nullifies the effect of S. 175(3) of the Act cannot be acceptedTherefore, 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 S. 70 gives rise to a claim for compensation20. It is well-known that in the functioning of the vast organisation represented by a modern State government officers have invariably to enter into a variety of contracts which are often of a petty nature. Sometimes they may have to act in emergency, and on many occasions, in the pursuit of the welfare policy of the State government officers may have to enter into contract orally or through correspondence without strictly complying with the provisions of S. 175 (3) of the Act. If, in all these cases, what is done in pursuance of the contracts is for the benefit of the Government and for their use and enjoyment and is otherwise legitimate and proper S. 70 would step in and support a claim for compensation made by the contracting parties notwithstanding the fact that the contracts had not been made as required by S. 175 (3).If it was held that S. 70 was inapplicable in regard to such dealings by government officers it would lead to extremely unreasonable consequences and may even hamper, if not wholly bring to a standstill the efficient working of the Government from day to day. We are referring to this aspect of the matter not with a view to detract from the binding character of the provisions of S. 175 (3) of the Act but to point out that like ordinary citizens even the State Government is subject to the provisions of S. 70, and if it has accepted the things delivered to it or enjoyed the work done for it, such acceptance and enjoyment would afford a valid basis for claims of compensation against it. Claims based on a contract validly made under S. 175 (3) must, therefore, be distinguished from claims for compensation made under S. 70, and if that distinction is borne in mind there would be no difficulty in rejecting the argument that S. 70 treats as valid the contravention of S. 175 (3) of the Act. In a sense it may be said that S. 70 should be read as supplementing the provisions of S. 175 (3) of the Act24. Turning to the facts of this case it is clear that both the Courts have found that the acts done by the respondent were done in fact in pursuance of the requests invalidly made by the relevant officers of the appellant, and so they must be deemed to have been done without a contract. It was not disputed in the Courts below that the acts done by the respondent have been accepted by the appellant and the buildings constructed have been used by it. In fact, both the learned judges of the Appellate Court have expressly pointed out that the appellant did not contest this part of the respondents caseTherefore, once we reach the conclusion that S. 70 can be invoked by the respondent against the appellant, on the findings there is no doubt that the requisite conditions of the said Section have been satisfied. That being so, the Courts below were right in decreeing the respondents claimMr. Sen pressed into service the analogy of the minor and contends that the result of S. 175 (3) of the Act is to make the appellant incompetent to enter into a contract unless the contract is made as required by S. 175 (3). In our opinion, this argument is not well founded. Section 175 (1) provides for and recognises the power of the Province to purchase or acquire property for the purposes there specified and to make contracts. No doubt S. 175 (3) provides for the making of contracts in the specified manner. We are not satisfied that on reading S. 175 as a whole it would be possible to entertain the argument that the appellant is in the position of a minor for the purpose of S. 70 of the Contract Act, incidentally, the minor is excluded from the operation of S. 70 for the reason that his case has been specifically provided for by S. 68.What S. 70 prevents is unjust enrichment and it applies as much to individuals as to corporations and Government. Therefore, we do not think it would be possible to accept the very broad argument that the State Government is outside the purview of S. 70.Besides, in the case of a minor, even the voluntary acceptance of the benefit of work done or thing delivered which is the foundation of the claim under S. 70 would not be present, and so, on principle S. 70 cannot be invoked against a minor35. We are not, therefore, called upon in the present case to pronounce upon the question whether compensation under S. 70 of the Contract Act can be awarded where goods are delivered to, or work done for, the Government under a contract with it which is invalid for the reason that it had not been made in the terms prescribed by S. 175(3) of the Government of India Act and we do not do so36. Now, if the work was done at the request of the officers of the Government who had no authority to make the request for the Government and the respondent was aware of this, it would follow that the work had been done at the request made by the officers in their personal capacity. In such a case it seems to us that if the request resulted in a contract between the officers and the respondent under which the officers were personally bound to pay the respondent reasonable remuneration for the work, then it would be a very debatable question whether the respondent would have any claim against the Government under S. 70. We say debatable because we have grave doubts if the Section was intended to give a person in the position of the respondent who had a remedy against the officers personally under a contract with them, a remedy against the Government for the same thing in addition to the remedy under the contract.