A contract with the Union Government or the State Government made without complying with the formalities prescribed under Section 175(3) of the Government of India Act, 1935, or Article 299(1) of the Constitution of India, is void ab initio and cannot be ratified subsequently. However, the Government is liable to compensate the person delivering goods or rendering services under such a void contract if the Government has enjoyed the benefit of the goods or services delivered.

Anant Singh, J.

1. The plaintiff is the appellant, it is a registered firm known as "Hindustan Construction Company" with the head quarter at Sarayaganj in the town of Muzaffarpur. It was doing business at the relevant time in the manufacture and supply of bricks. The defendant-respondent is the State of Bihar.

2. The suit, giving rise to this appeal, was instituted by the plaintiff for recovery of a sum of Rs. 3,14,756/14/2 including interest from the defendant as damages and compensation for breach of contracts.

3. The State of Bihar, acting through the Public Works Department, required several lakhs of bricks, brickbats ana Jhamas, hereinafter to be referred to only as "the bricks", for some projects in the Muzaffarpur Division and Champaran Division, both controlled by one Superintending Engineer in the North Bihar Circle. The bricks were required in connection with the constructions of (1) Muzaffarpur-Hajipur Road, (2). Muzaffarpur Border Champaran-sagauli Road, (3) Buildings at Muzaffarpur, (4) Buildings at Darbhanga and (5) Buildings at Lohata in Motihari during the seasons of 1945-46 and 1946-47. Tenders were called for on behalf of the defendant through the proper authorities of the Public Works Department (P.W.D.) for the supply of bricks, and the plaintiffs tenders were accepted. Two separate written agreements, Exts. B and B-1, were executed in connection with the two Road projects, but no written agreement was entered in respect of the building projects. The contracts about them were created only by acceptance of tenders and exchange of letters.

4. One of the terms of ail the agreements, according to the plaintiffs case, was that the defendant, through the P.W.D., would arrange for the supply of requisite quantity of coal necessary for the burning of bricks at the various sites. The plaintiff started laying bricks in huge quantity in the hope that necessary quantity of coal would be supplied by the defendant in due time. The defendant, no doubt, arranged for some of the required quantity of coal, but it failed to arrange for all the necessary quantity. The result was that a huge quantity of moulded bricks remained unburnt and got destroyed by rains and other causes putting the plaintiff to heavy losses, for which the responsibility was of the defendant, it further failed to take supply of some burnt bricks which the plaintiff had to sell to others, though at no loss, but the plaintiff had to incur some loss for the carting of such undelivered bricks, and it had claimed some damages on this head as well. The plaintiff put up a claim for an the losses sustained by it, but the defendant did not agree to pay the whole of it. The plaintiff was then obliged to serve a notice under Section 80 of the Code of Civil Procedure on the proper authorities of the defendant; out when the defendant failed to settle the plaintiffs claim, the present suit was filed for recovery of the aforesaid amount including interest.

5. The defendant in paragraph 4 of its written statement submitted that there was a contract between the parties for the supply of bricks, but the other averments of the plaintiff, as made out in the plaint, were not admitted. The main defence taken was the absence of any valid contract. In regard to the contracts for supply of bricks in connection with the three building projects, all liability was denied on the ground that they were altogether void, not being converted into written agreements by the proper authorities authorised by the defendant to execute the same. The validity of the two agreements, Exts. B and B-1, for the two road projects was admitted, but it was said in paragraph 6 of the written statement that "the supply of bricks for road works was to be completed by 31-7-46 as per agreement No. 5 of 1945-46", which is Ext. B, nothing having been said about the time limit of the completion of the supply under the other agreement bearing No. 2 of 1946-47, Ext. B1. Thus, an the liability for damages