Back
PATNA HIGH COURT
H.Mahapatra and Tarkeshwar Nath JJ.
State Of Bihar
Versus
Thawardas Pherumal
Appeal from Original Decree No. 460 of 1959 ;
Decided On : OCTOBER 09, 1963
CONTRACT - VOID CONTRACT - COMPENSATION - SECTION 70 OF THE INDIAN CONTRACT ACT - LIMITATION - ARTICLE 120 OF THE LIMITATION ACT - INTEREST - PENDENT LITE AND FUTURE INTEREST.
Fact of the Case:
The plaintiff, a partnership firm, entered into an agreement with the Governor of Bihar to execute the works of settling tank and ancillary works at Sindri. While the work was proceeding, the Central Government increased the wages of labourers in the coal mining area. The plaintiff had to pay wages at the increased rates to the labourers employed in those works. The plaintiff claimed additional sums from the defendant, the State of Bihar, to cover the increased wages. The defendant denied liability, and the plaintiff filed a suit for recovery of the amount claimed.
Finding of the Court:
The court held that the contract between the plaintiff and the defendant was void as it was not in writing as required by Section 175(3) of the Government of India Act 1935. However, the court held that the plaintiff was entitled to compensation under Section 70 of the Indian Contract Act, as the defendant had enjoyed the benefit of the work done by the plaintiff. The court also held that the suit was not barred by limitation as the plaintiff had filed the suit within six years of the accrual of its right to sue, as provided under Article 120 of the Limitation Act. The court further held that the plaintiff was entitled to pendente lite and future interest on the decretal amount.
Issues: 1. Whether the contract between the plaintiff and the defendant was valid. 2. Whether the plaintiff was entitled to compensation under Section 70 of the Indian Contract Act. 3. Whether the suit was barred by limitation. 4. Whether the plaintiff was entitled to pendente lite and future interest on the decretal amount.
Ratio Decidendi: 1. A contract entered into by the Governor of a province must satisfy three conditions: it must be expressed to be made by the Governor; it must be executed; and the execution should be by such persons and in such manner as the Governor might direct or authorise. If a contract is not in the form required by Sec.175(3), it cannot be enforced. 2. 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 the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered. 3. The period of limitation for a suit for which no period of limitation has been provided elsewhere in the first schedule of the Indian Limitation Act is six years, and this period has to be reckoned from the time the right to sue accrues. 4. Interest is payable on a decretal amount from the date of the suit till the date of recovery.
Final Decision: The appeal was dismissed, the cross objection was allowed in part, and the judgment and decree of the trial court were modified. The plaintiff's suit was decreed in part for a sum of Rs. 98528 with interest at the rate of 6 percent per annum pendente lite and future till recovery of the said amount, and the plaintiff was entitled to proportionate costs throughout. The defendant was directed to pay the decretal sum to the plaintiff within a period of three months from the date of the judgment.
Tarkeshwar Nath, J.
1. This appeal by the State of Bihar (defendant) arises out of a suit for recovery of Rs. 98528/- as principal and Rs. 17241/14/- as interest from August 1953 to June 1956 at the rate of 6 per cent per annum.
2. Plaintiff was a partnership firm carrying on coziness at various places including Sindri. There is a factory at Sindri for manufacture of fertilizers and it is known as Sindri fertilizer Factory. By a notice dated 13-8-1946, the Government of Bihar through the Executive Engineer, Sindri Water Works Division of the Public Health Engineering Department invited tenders from contractors desiring to execute the works for settling tank and ancillary works for water supply to the Fertilizer Factory at Sindri, me plaintiff submitted tender for the said works and that tender was accepted by the Government of Bihar. By an indenture of agreement dated 1/23rd April, 1947, between the plaintiff and Governor of Bihar the latter appointed the plaintiff as contractor for the purpose of executing the works of settling tank and ancillary works at Sindri on terms and conditions mentioned therein. The Superintending Engineer Public Health Department, executed that agreement and he had full authority to do so on behalf of the Governor of Bihar. While the said work was proceeding, the Central Government in the Ministry or Labour increased the wages of labourers in the ceal mining area by a resolution published in the Gazette of India extraordinary dated 12-5-194/.
Sindri was within the ambit of the coal mining area and thus the plaintiff had to pay wages at the increases rates to the labourers employed in those works according to the said resolution. The rates in the aforesaid indenture of agreement were settled on the basis of then prevailing rates of wages but they were much lower than the wages fixed by the said resolution. The plaintiff explained an these facts before the Superintending Engineer, Public Health Engineering Department, Government of Bihar, and expressed inability to execute the said works in the altered, circumstances brought about by the said resolution, appreciated the plaintiffs difficulties and promised to pay the plaintiff additional sums so that the plaintiff might pay increased wages to the labourers employed in those works. The plaintiff completed those works to the satisfaction of the authorities concerned and thereafter submitted a claim for further and additional amount which had been spent in order to pay the increased wages, me Chief Engineer or the Public Health Department scrutinised that claim and fixed it at Rs. 98528 only. The said Chief Engineer as representative and agent of the State or Bihar acknowledged the plaintiffs right to get that sum in his letter dated 30-7-1953 addressed to the Managing Director Sindri Fertilizer and Chemicals Ltd.
A copy of that letter was forwarded to the plaintiff as well. The employees and the agents of the defendant promised to pay that sum to the plaintiff, but in spite of repeated demands the defendant failed and neglected to pay that amount to the plaintiff. The plaintiff sent a notice under Section 80 of the Code of Civil procedure and then instituted this suit on 30-8-1956 for the recovery of a total sum of Rs. 1,15,769/14/- (the amount of principal and interest) and made a prayer for pendente lite and future interest as well.
3. The defendant took several pleas and one of them was that the defendant had acted only as an agent for and on behalf of the Union of India to execute the said works for water supply to the Fertilizer at Sindri which was a concern of the Government of India and in those circumstances, the suit was not maintainable unless the Union of India was made a party to it. Another plea was that the suit was barred by limitation as the work was completed prior to three years before the institution of the suit. The defendant admitted the contract and the agreement in question, but contested the claim of the plaintiff with re
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
