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In the High Court of Judicature, Andhra Pradesh at Hyderabad
P.S. NARAYANA, J.
M.V.V. Prasada Rao – Appellant
Versus
Municipal Council, Kakinada – Respondents
AS No. 151 of 1995
Decided on : 22-06-2005
Indian Contract Act, 1872 - Section 70 - Andhra Pradesh Municipalities Act, 1965 - Section 43,43(3),44,45,47(3),65 and 70 - City Municipal Act of 1919 - Section 81(3) - District Municipalities Act of 1920 - Section 69 - Madras City Municipal Act 1919 - Madras District Municipalities Act 1920 - Punjab Municipal Act 1911 - Section 18 and 47 - Auction sale - Suit for recovery due towards arrears of lease and penal interest - successful bidder for lease of right of collection of fees in four markets of Kakinada Municipality and road margin under Section 289 of Andhra Pradesh Municipalities Act for year - Period of lease is from and bid amount is besides establishment charges - As per terms and conditions of lease defendant is not entitled to ask for any remission from bid amount - Terms and conditions as published in Gazette notification were read over and explained to all bidders who participated in auction on - Said sale was confirmed by plaintiff in its resolution in favour of defendant - As per terms and conditions defendant has to pay a monthly instalment of before day of each month and in default, defendant has to pay penal interest at Rs. 2.50ps% p.m. i.e. 30%. If defendant do not adhere to repayment schedule promptly plaintiff has a right to cancel lease and conduct re-auction for remaining period and loss if any dug to that will be recovered from defendant - It is further alleged in plaint that defendant paid instalment amounts up to September but not before of each month - Therefore as per contract he is liable to pay penalty - Defendant paid only for October and failed to pay November and December instalments - Plaintiff adjusted instalments of January February and March from deposit that was made by Contractor - Defendant was not paying before due date as such he is liable to monthly instalments along with penal interest - “ Whether plaintiff is entitled for recovery of as prayed for?Whether interest claimed in suit is penal and usurious? Whether plaintiff is entitled to claim any interest as prayed for in suit? Whether defendant is entitled to claim any remission as prayed for? Whether valuation of suit is incorrect? To what relief?Whether respondent-plaintiff Municipal Council Kakinada is entitled to enforce suit claim in light of Section 45 of Act? If so to what relief parties are entitled to? Question raises for consideration whether a decree could be passed in favour of a party to a contract which does not conform to requirements of Section 81 City Municipal Act but who has supplied goods in pursuance thereof for recovery of their value not on basis of a contract - Held, Mode of executing contracts - Every contract made by or on behalf of a Council where of value of amount exceeds one thousand rupees shall be in writing and except in case of contracts made under provisions of sub-section (3) of Section 43 shall be signed by Commissioner - A contract executed or made otherwise than in conformity with provisions of this section or of Section 43 and of rules referred to in Section 44 shall not be binding on Council - Defendant had derived benefit out of said auction in which he was successful bidder - Evidence of also had been discussed at length - Statement of account for year was marked as - On strength of only due deduction had been given - Though were marked and certain submissions were advanced that defendant is entitled for some more deductions on appreciation of evidence this Court is of considered opinion that said stand is not a just and reasonable stand in facts of case - Be that as it may only question which was argued in elaboration by both Counsel is right of Municipality to enforce claim as against defendant in absence of a written agreement Court view of bar imposed by Section 45 of Act - It on principle of ‘quantum meruit’ or ‘quantum valebat’ or principle of compensation embodied in Section 65, Contract Act - In respect of this there is some conflict of authority though this Court has almost uniformly taken a view favourable to entertainability of such a claim - Section 70 - Obligation of person enjoying benefit of non-gratuitous act - 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 benefit thereof latter is bound to make compensation to former in respect of or to restore thing so done or delivered - Appeal Allowed
JUDGMENT :
1. Mr. M.V.V. Prasada Rao, the unsuccessful defendant in O.S. No. 205 of 1986 on the file of the I Additional Subordinate Judge, Kakinada, had preferred the present appeal aggrieved by the judgment and decree made in the aforesaid suit, dated 22-9-1994. The Municipal Council, Kakinada, is the respondent-plaintiff.
2. The respondent herein-plaintiff in the aforesaid suit filed the suit for recovery of Rs. 1,64,126-50ps due towards arrears of lease and penal interest with subsequent interest and for costs. The learned I Additional Subordinate Judge, Kakinada, recorded the evidence of P.W. 1 and D.W. 1, and marked Exs. A-1 to A-5 and Exs. B-1 to B-14, and ultimately decreed the suit in part after deducting Rs. 43,000/-, as D.W. 1 admitted that the account shown in Ex. A-4 was correct, with proportionate costs and with subsequent interest at 6% p.a., from the date of decree till realization. Hence, the appeal. Sri M. Ram Mohan, the learned Counsel representing the appellant-defendant would contend that there is no written agreement for the period-in-question and unless there is a written agreement, the contract cannot be enforced as the same being void. On the strength of the same, no relief can be claimed by the respondent-plaintiff, the Municipal Council, Kakinada. The learned Counsel placed strong reliance on Section 45 of the Andhra Pradesh Municipalities Act, 1965 (hereinafter, in short, referred to as ‘the Act’ for the purpose of convenience), which deals with the mode of executing contracts. The learned Counsel also would submit that apart from the deduction which had already been given in the light of the peculiar facts and circumstances, the appellant-defendant is entitled to certain further deductions. At any rate, the Counsel would maintain that in the absence of a written agreement as contemplated by Section 45 of the Act, the respondent-plaintiff is not entitled for any relief at all.
3. Per contra, Sri S. Nageswara Reddy, the learned Standing Counsel representing the Municipal Council, Kakinada, had taken this Court through the findings recorded by the Trial Court, the evidence of P.W. 1 and D.W. 1, and would maintain that the fact that the appellant-defendant had derived benefit or advantage during the period is not in controversy. The learned Counsel also had drawn the attention of this Court to Section 65 and also Section 70 of the Indian Contract Act, 1872, and would maintain that Section 45 of the Act would not operate as a bar to maintain the claim. The learned Counsel also placed reliance on certain decisions apart from bringing to the notice of this Court certain other provisions of the Indian Contract Act, 1872 as well.
4. Heard both the learned Counsel.
5. The parties hereinafter are referred to as plaintiff and defendant as shown in O.S. No. 205 of 1986 on the file of I Additional Subordinate Judge, Kakinada.
6. The suit was filed for recovery of Rs. 1,64,126-50ps due towards arrears of lease and penal interest with subsequent interest and for costs and the suit was partly decreed.
7. The plaintiff pleaded in the plaint as hereunder:
“The defendant was the successful bidder for the lease of the right of collection of fees in the four markets of the Kakinada Municipality and road margin under Section 289 of the Andhra Pradesh Municipalities Act for the year 1984-1985. The period of lease is from 1-4-1984 to 31-3-1985 and the bid amount is Rs. 5,20,000/- besides the establishment charges. As per the terms and conditions of the lease, the defendant is not entitled to ask for any remission from the bid amount. The terms and conditions as published in the Gazette notification dated 10-2-1984 were read over and explained to all the bidders who participated in the auction, held on 7-3-1984. The said sale was confirmed by the plaintiff in its resolution No. 1250 dated 27-3-1984 in favour of the defendant. As per the terms and conditions, the defendant has to pay a monthly instalment of Rs. 54,910/- before 10th
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