The main legal point established in the judgment is that even if a contract is illegal, if a party has derived benefit from it, the party who has delivered the property or provided the service is entitled to compensation.

I.A. Ansari, J.

1. The material facts, giving rise to this appeal, are not in dispute and may be, therefore, set out, in brief, as under:

(i) Pursuant to a Notice Inviting Tender (in short, 'NIT'), issued, on 20.5.2004, by Deputy Commissioner, West Siang District, the appellant and some others submitted tenders seeking appointment as carriage contractor of PDS items (i.e., food articles, which are distributed under the Public Distribution System) from the base depots of the Food Corporation of India (in short, TCI') to various public distribution centres (hereinafter referred to as 'PDC') and en route locations, in the district of West Siang, for the year 2004-2005. The appellant quoted 10 paise and 19 paise per quintal, per kilometre, for plains and hill areas respectively, as his carriage rate. At the time, when the tender process was in progress, carriage of PDS items by head-load stood banned. By an order, dated 24.6.2004, the State Government extended the ban on carriage, by head-load, of PDS items for a further period of one year. Accepting the rates, quoted by the appellant, the Government approved selection of the appellant, as PDS carriage contractor, at the rates offered by the appellant, for the financial year 2004-2005, i.e., the year commencing from 1.4.2004 and ending on 31.3.2005. The Deputy Commissioner, West Siang District, Along, was accordingly directed by the Government to complete the formalities by executing requisite deed of agreement with the appellant. Following the approval of his selection, as PDS carriage contractor, the appellant made a representation to the Deputy Commissioner, West Siang District, Along, stating to the effect, inter alia, that while quoting the rates in his tender, he was under the impression that the road condition throughout the district was good, but he had, subsequently, discovered that location of most of the PDCs were in remote areas and access to these places were only by kacha road. The appellant also submitted that on one of the roads, trucks were allowed to carry only 5 tons of loads and that, in the meanwhile, there had been considerable increase in the cost of petroleum products. In his representation aforementioned, the appellant contended that he had expected the Government's ban, on the head-load carriage, to be lifted but, as the ban was decided to be continued, his own assessment and calculation of the expenses, involved in the execution of the contract, proved incorrect. In his representation aforementioned, the appellant also brought it to the notice of the Deputy Commissioner, West Siang District, that the Government had introduced a uniform rate of carriage of PDS items by road and, in respect of some districts, the rate of 3.00 per quintal, per kilometre, already stood approved by the Government. The appellant accordingly requested to give him the enhanced rate of Rs. 3.00 as mentioned hereinbefore.

(ii) As a result of the fact that the appellant had expressed his inability to work at the rate, which had been approved in acceptance of his tender, the deed of agreement, which the Government, while approving the selection of the appellant, had directed to be executed, could not be executed. On receiving the appellant's representation, Deputy Commissioner, West Siang, constituted a Board to examine/refix the rate of carriage of PDS items in West Siang District. Having considered various factors, the Board, on 30.11.2004, decided to pay to the appellant the uniform rate of Rs. 3.00 per quintal per kilometre, as carriage charge, in respect of PDS items, in West Siang District too. The Deputy Commissioner, West Siang, accordingly wrote a letter, dated 2.12.2004, to the Director of Civil Supply, Arunachal Pradesh, seeking Government's approval for the rate, which had been recommended by the said Board. The Government, on 18.2.2005, approved the enhancement of rate as had been sought for. Consequently, on 19.2.2005, a notification was issued specifying the dist