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CALCUTTA HIGH COURT
Sinha, J.
Ram Nagina Singh - Appellant
Versus
Governor-General in Council - Respondent
Original Civil Suit No. 1572 of 1946
Decided On : 02-09-1949
Contract - Government Contract - Government of India Act, 1935, Section 175(3) - Contract Act, 1872, Sections 65, 70 - A contract entered into by the Government of India without complying with the formalities prescribed by Section 175(3) of the Government of India Act, 1935, is void and unenforceable. However, the Government is liable to make compensation for the benefit received under such a void contract under Section 65 of the Contract Act, 1872. The Government is also liable to pay for the goods received and enjoyed by it under Section 70 of the Contract Act, 1872, even though there was no valid contract.
Fact of the Case:
The plaintiff, a brick manufacturer, supplied bricks to the Chief Engineer, Eastern Command, under permits issued by the Controller of Bricks, Bengal. The bricks were delivered to the Eastern Construction Company, which was engaged in military work, and the Company acknowledged receipt of the bricks. The plaintiff submitted bills to the Chief Engineer for the price of the bricks, but the Chief Engineer refused to pay, claiming that the Company had already paid for the bricks. The plaintiff sued the Government of India for the price of the bricks, alleging that the Chief Engineer had guaranteed payment.
Finding of the Court:
The court found that the plaintiff had supplied the bricks to the defendant (Government of India) and not to the Eastern Construction Company. The court held that the agreement under which the bricks were supplied was void and not binding on the defendant because it did not comply with the formalities prescribed by Section 175(3) of the Government of India Act, 1935. The court also held that the letter of guarantee issued by Major Benge was not binding on the defendant because Major Benge had no authority to bind the defendant. However, the court held that the plaintiff was entitled to compensation under Section 65 of the Contract Act, 1872, for the benefit received by the defendant under the void agreement. The court also held that the plaintiff was entitled to recover the price of the bricks under Section 70 of the Contract Act, 1872, because the defendant had received and enjoyed the benefit of the bricks.
Issues: 1. Was there a contract between the plaintiff and the defendant? 2. Did the plaintiff supply any goods to the defendant? 3. Did the defendant guarantee payment of any sum to the plaintiff? 4. Is the defendant bound to make compensation to the plaintiff?
Ratio Decidendi: The court held that a contract entered into by the Government of India without complying with the formalities prescribed by Section 175(3) of the Government of India Act, 1935, is void and unenforceable. However, the Government is liable to make compensation for the benefit received under such a void contract under Section 65 of the Contract Act, 1872. The Government is also liable to pay for the goods received and enjoyed by it under Section 70 of the Contract Act, 1872, even though there was no valid contract.
Final Decision: The court held that the plaintiff was entitled to recover compensation from the defendant under Section 65 of the Contract Act, 1872, for the benefit received by the defendant under the void agreement. The court also held that the plaintiff was entitled to recover the price of the bricks under Section 70 of the Contract Act, 1872, because the defendant had received and enjoyed the benefit of the bricks.
JUDGMENT
Sinha, J. - This is a suit for recovery of Rs. 18,011-3-3 on account of price of bricks supplied by the plff. to the Chief Engineer, Eastern Command & alternatively as compensation.
2. The plff. is a manufacturer of bricks & has a brickfield at, among other places, Ballykhab in the district of Howrah. In January, 1942 an order was promulgated by the Govt. of Bengal in exercise of powers conferred by Clause (a) Sub-R. (2) of R. 81, Defence of India Rules, to the effect that no first & second class bricks manufactured in brick kilns within the areas specified in the order should be disposed of by sale or otherwise without a written permit issued by the Chief Controller of prices, Bengal or any officer authorised by him in writing in that behalf. The Sadar Sub-Division of the district of Howrah within which Ballykhal is situate is one of the areas specified in the said order.
3. On 2-12-1943, the Controller of bricks, Bengal, issued three permits, viz., Permit Nos. 1604, 1605 & 1606, whereby the Chief Engineer, Eastern Command, was allowed to purchase bricks, Jhama, brickbats (hereinafter referred to as bricks) referred to in the permits from Messrs. R. N. Sinha & Bros., Ballykhal Uttarpara (Hooghly) for supply for urgent military work. The permits mentioned the rates ex-field at which the bricks could be purchased. Permit No. 1604 related to purchase of brinks marked "Kalyan", permit to 1605 to bricks marked "P.W.D."' & permit No. 1606 to bricks marked "E.C.C." on the back of the said permits an endorsement was made on behalf of the Chief Engineer, Eastern Command in these words: "These bricks are to be collected by M/s Eastern Construction Co., Ltd., on behalf of the C.E., E.C.".
4. The Eastern Construction Company (hereinafter called the Company) is a firm of Engineers who were at the material time engaged in doing military work & in particular a work which was called Job No. 115 in Alipore & there is no doubt that these bricks were necessary for the purpose of carrying out & completion of the said work.
5. It appears that the plff. supplied bricks under these permits. The bricks were delivered to the Company at Juggernath Ghat & Dahi Ghat by boat wherefrom the bricks were transported by lorry at the cost of the Company. There is no dispute about the quantity of bricks supplied.
6. Between 14-12-1943 & 14-1-1944 about 2,00,000 bricks were supplied. The challans Were made out in the name of the Company & the acknowledgment of the receipt thereof was signed on its behalf. On 5-2-1944 the plff. made out three bills addressed to the Company in respect of Bricks supplied under these permits & charged the rates mentioned in the permits. It appears that the Company insisted on paying lower rates than those mentioned in the permits. The bills were not paid.
7. The evidence on behalf of the plff. is that on 15-1-1944, one Biswanath Singh, representing the plff. called on the Chief Engineer at 100, Clive Street, Calcutta, when he was ordered to deliver the bricks to the Company. Biswanath Singh thereupon saw Major Benge who was then the Garrison Engineer at Dum Dum & under whose supervision the Company was carrying out Job No. 115. Biswanath Singh asked Mr. Benge as to who was going to pay for the bricks which were being supplied & he was assured that the Govt. took responsibility for payment of the price. Biswanath Singh thereupon asked for something in writing & Major Benge wrote out the following on a piece of paper & signed it.
"Payment for bricks collected or to be collected on permits Nos. 1604 & 1606 from R. N. Singha by M/s Eastern Construction Company will be guaranteed by G. E. 157 I.W.S., from bill owing to M/s Eastern Construction Company for works done on Job 115."(Ex.2).
8. The plff. thereafter supplied further bricks & delivered them to the Company on 20-1-1944 a letter was written on behalf of the Chief Engineer. Eastern Command, copy whereof was sent to the plff. The letter was addressed to the Company & asked it to dra
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