The central legal point established in the judgment is that even if a contract is found to be invalid, the party who has received an advantage under the contract is entitled to recover the benefit under the principle of quantum meruit and Section 65 of the Contract Act.

Madhavan Nair, J.

1. The defendant is the appellant. This second appeal arises out of a suit instituted by the English and Scottish Co-operative Wholesale Societies for the recovery of Rs. 1,387-13-7. The plaintiffs alleged that the defendant executed two contracts under Act 1 of 1903, binding himself to work with a hundred coolies in the Mango Range Estate of the plaintiffs and received a consideration of Rs. 1,200 and further advances and way expenses of the coolies. The suit was for the recovery of the amount on the ground that the defendant failed to keep the required number of coolies in the estate. A schedule showing how the plaint amount was arrived at was also filed along with the plaint. The defendant contended amongst other things that the agreements were not supported by consideration, that the suit contracts were invalid and unenforceable and that the amount claimed in the plaint as due from him was not correct. The last point was covered by issue 8. As the District Munsif found that the contracts were invalid he held that nothing was due to the plaintiffs and therefore dismissed the suit. On appeal the learned Subordinate Judge held that consideration was proved for both the contracts and that the plaintiffs could recover the amount advanced under these contracts. In the result he reversed the decree of the lower Court and allowed the appeal with costs.

2. In second appeal it was argued that the contracts are invalid inasmuch as they did not comply with the provisions embodied in the rules relating to the execution of contracts under Act 1 of 1903, and that therefore in estimating the amount due from the defendant, Rs. 1,200 advanced under the contracts should not be debited against him; and that in any event the learned Subordinate Judge was wrong in having disposed of the appeal without considering issue 8. As Mr. Sitarama Rao on behalf of the respondents frankly admitted that the contracts were invalid as they were not executed in strict compliance with the rules under the Act, it is not necessary to discuss the rules referred to in this connexion and which are published in the Fort Saint George Gazette. The question is: the contracts being invalid, should not credit be given to the plaintiffs for the sum of Rs. 1,200 found to have been advanced by them the to defendant. In support of the contention that no such credit should be given the appellant strongly relied upon Young & Co. v. Mayor, etc., of Royal Leamington Spa (1883)8 AC517.

3. In my opinion the present case is distinguishable from the decision in Young & Co. v. Mayor, etc., of Royal Leamington Spa (1883)8 AC517., in as much as the claim made here is not for the enforcement of the invalid contracts but for the restoration of the benefit accrued under the contracts, the contracts having been found invalid. Further the case in Young & Co. v. Mayor, etc., of Royal Leamington Spa (1883)8 AC517., concerned itself with a contract made by a Corporation to which special consideration may be said to be applicable. The claim for the return of the amount in cases like the present seems to be based on the principle of quantum meruit. In Mathura Mohan Saha v. Ram Kumar Saha (1916)43Cal19 (at p. 827), it was pointed out that:

where a Corporation receives money or property under an agreement which turns out to be ultra vires or illegal, it is not entitled to retain the money. The obligation to do justice rests upon all persons natural or artificial; if one obtains the money or property of others without authority, the law independently of express contract will compel restitution or compensation.

4. In Mohamed Ebrahim Molla v. Commissioners for the Port of Chittagong AIR1927Cal465 an agreement the value of which exceeded Rs. 2,500, was executed by the Port Officer of Chittogang, by his proxy, the Port Officer of Moulmein, on behalf of the Commissioners for the Port of Chittagong by which a towing vessel was let out by the Port Commissioners on operations outside t