Enforceability of the contract not in conformity with the provisions of statute.

These two appeals have been referred to a Full Bench for the determination of three questions framed by Basheer Ahmed Sayeed, J., on the ground that there was a conflict of decisions on the points covered by them.

Before setting out these questions, it might perhaps be more convenient to narrate the facts giving rise to these appeals, because on them would depend as to how far it is necessary for us to decide the questions which have been formulated by the learned Judge. One Kothandapani Naidu who is the respondent in these two appeals filed two suits, O.S. No.651 of 1949 and O.S. No.717 of 1949 on the file of the City Civil Court, Madras, against the Corporation of Madras who is the appellant in these appeals. In the first suit O.S. No.651 of 1949 he made a claim for a decree in his favour for a sum of Rs.980, being the value of green grass supplied to the Corporation between 1st November, 1948 and 31st March, 1949 and for the refund to him of a sum of Rs.270, which had been deposited by him with the Corporation as security for the supply of the said grass. The plaintiff also claimed some amount by way of interest on the value of the grass, but as the claim in regard to this was given up at an early stage of the proceedings, it is unnecessary to refer to this. The total effective sum claimed by the plaintiff in this suit was about Rs.1,250. The Corporation filed a written statement and defended the suit. It was admitted that the grass had been supplied under the contract and that the plaintiff had fulfilled the terms thereof and was entitled to this sum of Rs.1,250. But it was claimed that in respect of another contract the plaintiff had committed a breach, as a result of which the Corporation had sustained a loss of Rs.2,216 and odd and they claimed to set off the amount due to the plaintiff in this suit against the loss which had been caused to them in the other contract. The claim in regard to O.S. No.717 of 1949 is the other contract that was referred to in the defence to O.S. No.651 of 1949. The plaintiff claimed in O.S.No.717 of 1949 the payment to him of Rs.1,541-13-6 as the value of the provisions which he had supplied to the Corporation as well as a refund of a sum of Rs.300, which he had deposited with the Corporation as security for the due performance of the contract. The contract in pursuance of which these goods were supplied related to the supply of diet articles to the Corporation mid-day meals centres for the period 1st October, 1948 to 31st March, 1949. After the date of the tender and acceptance, there were disputes between the Corporation and the contractor as to the items which he was bound to supply with the result that no formal contract was executed, so as to conform to the requirements of section 81 of the Madras City Municipal Act. The plaintiff claimed the sum of Rs.1,541 on the ground of a sale of goods constituted by his delivery of them to and their acceptance by the Corporation. The defence of the defendant-Corporation was that the plaintiff was guilty of a breach of this contract, in that he did not deliver all the articles contracted to be supplied by him as a result of which they sustained the loss of Rs.2,216-8-11 which has been mentioned earlier and after adjusting the amount due to the plaintiff in respect of the supply of grass which was the subject-matter of O.S. No.651 of 1949, they claimed to adjust the balance from the amount due for the claim in O.S. No.717 of 1949 and expressed their willingness to have a decree passed against them for the balance of Rs. 589-7-1.

The two suits, being thus linked up with each other by reason of the common defence put forward by the Corporation, were tried together by the learned Judge of the City Civil Court. At the trial two questions were formulated as arising for the decision in the case: (1) whether the defendant was entitled to adjust or appropriate the amounts in its hands to the credit of the plaintiff towards the loss or