Case: M/s. Hansraj Gupta &amp; Company Vs. Union of India

1. This is a plaintiffs appeal by special leave. The plaintiff M/s. Hansraj Gupta and Co. (hereinafter referred to as the Company) had brought a suit onon the basis of a contract for supply ofto the Military Units at Dehradun and Clement Town from45 entered into by Mahesh Chandra Gupta, defendant No. 2, (hereinafter referred to as "the Contractor"), and the Govt. of India, acting through the Commander, U. P. Area, now represented by the Union of India, defendant No. 1. The Company claimed as the financier of the Contractor and sued on the strength of an authority conferred by a power of attorney executed by the Contractor to collect monies due for supplies made under the contract by the supplying contractor. According to the plaint, the whole supply was actually made by the Contractor.2. The Contract (Ex.4, provided that the parties were to be governed by special conditions or stipulations contained in instructions to "tenderers" which were to be a part of the contract. According to these instructions, the rates agreed upon for the supply of Common firewood and Splitcould not be varied at all for the first six months in a contract for a year like the one under consideration. But, revision of rates agreed upon could be recommended, under clause 13 of the special conditions by referees appointed by the Government, who presumably constituted the "Reviewing Tribunal." consisting of "the Deputy Commissioner or his representative, the Commander, Royal Indian Army Supply Corps (C. R. I A. S. C.) or his representative, and the local purchase officer (Military)" Three members were to constitute the quoram. The clause went on to provide that the contractor could present his case for revision which was apparently only to be recommended by the Tribunal. The clause said "The final recommendation in all cases reviewed shall rest with the officer sanctioning the contract". This rather nebulous clause, apparently made the referees members of the Tribunal to be appointed to revise rates conformably with the rise and fall of market rates. It is not quite clear whether the referees were also members of the Tribunal; but presumably they were. It also appeared that the function of referees or the Tribunal was nothing more than to recommend the matter to the sanctioning officer. And, even the officer sanctioning the contract could only recommend a revision. It was not specified when the right to obtain payment at revised rates was to accrue and upon whose sanction.

Court's reasoning:
11. We think that insurmountable difficulties also lie in the path of acceptance of each of the last mentioned submissions of the plaintiff appellant. We will take up the first submission first. We find that there was no case set up by the plaintiff that there was any privity of contract between the plaintiff and the Union of India. The mere statement in the letter ofthat the contract with the supplier Mahesh Chandra was deemed to be terminated with effect fromand that the subsequent supplies were by the clients of Shri Khurshed Lal (that is to say the plaintiff) was useless. It contradicts the assertion made in the paragraph 6 of the plaint that the wood was actually supplied by the contractor Mahesh Chandra (defendant No. 2) uptoThese bare assertions of some Military Officers could not alter facts, or the law or result in a fresh contract with the plaintiff. The difficulty which confronted this new case, sought to be set up by the plaintiff, is even more formidable than mere want of signature of a duly authorised sanctioning authority on the letter. The constitutional provisions of Section 175 (3) of the Government of India Act would bar mere assertions of this kind from operating as evidence of a contract. Again as held by the High Court, the claim for the price of goods supplied on a fresh contract, even if assumed to have come into existence in 1946, would be beyond three years in 1950 so that it would be barred by three years rule of limitation prescribed by Article 52.Moreover, a fresh agreement in 1946 to pay for a past supply of goods from 1944 to 1945, if already covered by the contract of 1944 and fully paid for under it as held by the trial Court and the High Court, would fail for want of consideration. So, the whole case of a fresh contract of l946 is also quitehowever, think that the conditions for the applicability of this Section must at least be set out in the pleadings and proved. As already noticed above, the plaintiff has not said anywhere in the plaint that any supplies were made by the plaintiff to the Army authorities. On the other hand, the assertion is that the supplies were made by the contractor (defendant No. 2).Section 70 of the Contract Act enables the person who actually supplies goods or renders some services, not intending to do so gratuitously, to claim compensation from the Person who enjoys the benefit of the supply made or services rendered. It is a liability which arises on equitable grounds even though express agreement or a contract may not behave not been taken through the whole evidence so as to be able toit on that question. We are not ordinarily called upon to do so on an appeal by special leave. We, therefore, prefer to rest our decision on the claim under Section 70 of the Contract Act on the ground that, on the case set up in the plaint, the plaintiff cannot fall back on any liability under Section 70 of the Contract Act when the supplies were obviously not actually made by the plaintiff.15. If, however, it is true that the plaintiff company, which claimed payment of Rs. 1,90,042/0/5 on bilk submitted, from948 for unpaid for supplies at enhanced rates, with interest at 7 l/2% per annum uptoso as to bring the total claim to Rs. 2,28,397/14/5, has not received payment at all for supplies of wood at rates stipulated for in the written contract for any period covering the contract for supplies made from5, because the actual rates at which the payments were to be made were disputed and remained undecided due to no fault of the supplying contractor or the plaintiff, we hope that, as suggested by the learned Counsel for the Union of India, the plaintiff will be able to obtain payment for the unpaid for supplies actually made at rates specified in the original contract although the suit for it is barred by time. Even though the plaintiff may be morally entitled to that much payment at least we are unable to decree the suit for a time barred claim.