1964 Supreme(Cal) 133

HIGH COURT OF CALCUTTA
P. C. Mallick
SURJIT SINGH ATWAL - Appellant
Versus
UNION OF INDIA - Respondent
Suit 531  Of  1951
Decided On : JUNE 12, 1964

A contract entered into by the Government in violation of Section 175 (3) of the Government of India Act is not enforceable.

Headnote:

CONTRACT - Suit for recovery of money - Terms and conditions of contract - Formal contract subject to contemporaneous letter - Final bill prepared and paid except Rs. 50,000/- - Notice under Section 80 of Civil Procedure Code - Validity of notice - Jurisdiction of court - Cause of action - Finality of bill - Interpretation of contract.

Fact of the Case:

The plaintiff, a contractor, filed a suit for recovery of Rs. 50,000/- with interest. The contract was for construction of a hard-runway, taxi tracks and three dispersal roads. The plaintiff's tender was not accepted, but he was urged to take up the contract on terms and conditions contained in two letters passed between the parties in January 1943. The formal contract was signed by the parties in February 1944. The work was completed in 1945. In November 1947, it was agreed that the final bill to be prepared on the basis of rates settled would be payable immediately save and except the sum of Rs. 50,000/- the payment of which would be withheld for a fortnight from the date of payment of the final bill. The final bill was prepared by the Executive Engineer and was paid on November 22, 1947 except Rs. 50,000/- withheld in terms of the agreement. The plaintiff claimed that on such acceptance of the final bill there was a final and concluded contract between the parties. The defendant denied the allegations and pleaded that the formal contract was not subject to the conditions contained in the letter dated 28th/29th February 1944. It was also pleaded that payments made to the contractor were all 'on account bills'. The defendant further contended that the contract in suit is hit by the provision of Section 175 (3) of the Government of India Act.

Finding of the Court:

The court held that the formal contract was subject to the contemporaneous letter dated 28th/29th February 1944. The court further held that the final bill prepared and paid except Rs. 50,000/- was a final bill. The court also held that the notice under Section 80 of the Civil Procedure Code was valid. However, the court held that the suit was not maintainable as the contract in suit was hit by the provision of Section 175 (3) of the Government of India Act.

Issues: 1. Whether the formal contract was subject to the contemporaneous letter dated 28th/29th February 1944? 2. Whether the final bill prepared and paid except Rs. 50,000/- was a final bill? 3. Whether the notice under Section 80 of the Civil Procedure Code was valid? 4. Whether the suit was maintainable?

Ratio Decidendi: 1. The court held that the formal contract was subject to the contemporaneous letter dated 28th/29th February 1944 on the basis of the following: - The reference to the contract evidenced by the January letters and also the formal contract of 1944 pleaded in the plaint are historical facts and are merely introductory. They are not any part of the cause of action in suit. - The claim in suit is not in terms either of the contract evidenced by the two letters of January or of the formal contract No. AVII/96 but in terms of the contract arrived at in November, 1947 and pleaded in paragraphs 5 and 6 of the plaint. - The most important term of the new contract is that the rates at which the plaintiff would be paid far all the works done were agreed, settled and confirmed by the parties. 2. The court held that the final bill prepared and paid except Rs. 50,000/- was a final bill on the basis of the following: - Ex-facie CC II Consolidated is on bill form red in colour in which running bills are prepared. The colour of a final bill is yellow. - Ex-facie when the bill was prepared the word 'final' was written on the measurement boob on which the original bill is made. - The measurement book is admittedly the basic document. - Subsequently, when after the preparation of the bill the measurement book was sent to the S. D. O. 's Office, the word 'final' was struck out. - The initial of the clerk who struck out the word 'final' does appear in the bill. It does not bear the initial of an officer. - Nor does the date on which it was done, appear in the measurement book. - The work was concluded as far back as 1945 and the settlement was admittedly effected in November 1947 in a conference in which, the Superintending Engineer was specially deputed to settle finally the claims of the contractor and that the bill ex facie shows that the bill prepared was intended to be final. 3. The court held that the notice under Section 80 of the Civil Procedure Code was valid on the basis of the following: - The notice in the instant case was served by the plaintiffs attorney on the Chief Secretary of the Central Government. - The validity of the notice is challenged, on the ground, first, that the cause of action in the notice is different from the cause of action in suit and second, the relief claimed in the suit for accounts and enquiry is not indicated in the notice. - It is true that the November 1947 Contract has not been referred to in the notice, though it is alleged in the notice that the final bill "was partly paid on 22-11-47 retaining Rs. 50,000/- which was agreed to be paid as soon as the other claims of our client in respect of the job are disposed of by the department." - Mr. Kar wants me to note that the date of the alleged agreement is not given nor have the terms of the agreement as pleaded in paragraph 5 of the plaint been set out. - No reference to the agreement at all has been made in the notice. - It is to be noted further that whereas in the agreement pleaded in paragraph 5 of the plaint the sum of Rs. 50,000/-withheld from payment was payable within a fortnight from the date of payment of the rest of the bill, i. e. , 22-11-47, in the notice the amount was payable only after the disposal of the other claims of the plaintiff. - Payment was, therefore, conditional. - It is, therefore, contended that the cause of action as stated in the notice is different from the cause of action pleaded in the plaint. - On the top of that, relief for accounts has not been set out in the notice. - Hence, the notice is not in compliance with Section So of the Code. - The plaintiff must, therefore, be non-suited on this ground. 4. The court held that the suit was not maintainable as the contract in suit was hit by the provision of Section 175 (3) of the Government of India Act on the basis of the following: - The subject matter of the contract out of which the claim arises is the construction of hard runway, taxi tracks and dispersal road all situate outside the jurisdiction of this Court. - It is pleaded in paragraphs 5 and 6 of the plaint that the rates at which the plaintiff would be paid, were settled in a conference at Calcutta within the jurisdiction of this Court. - A final bill was agreed to be prepared and was prepared by the Executive Engineer at Calcutta and the amount of the bill so prepared would be paid forthwith and was partly paid in Calcutta save a sum of Rs. 50,000/- the payments of which was to be withheld for a fortnight from the date of payment of the bill. - The jurisdiction of this Court is invoked on the facts pleaded in paragraphs 5 and 6 of the plaint and no other.

Final Decision: Suit dismissed.