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High Court Of Madhya Pradesh
P. K. Tare and A. P. Sen, JJ.
STATE OF MADHYA PRADESH - Appellant
Versus
FIRM GOPICHAND SARJU PRASAD - Respondents
First Appeal 88 Of 1965
Decided On : 01/09/1970
(2) Practice–new plea of fact in appeal–when may be considered.
There was no plea in the written statement or memo of appeal that the contract was invalid because of non-compliance of the requirements of Article 299 (1) of the Constitution. It is a question of fact. In view of Order VI rule 8 and Order VIII rule 2 of the Code of Civil Procedure, the question cannot be allowed to be raised at the hearing unless it is sufficiently pleaded in the written statement. But where the non-compliance of Article 299 of the Constitution is patent from the allegations in the plaint or the defence adduced by the plaintiff himself, the Court will not shut its eyes to it and uphold the defective contract simply because the defect has not been pleaded.
The requirements of Article 299 (1) are mandatory and the contravention of constitutional requirements cannot be waived. AIR 1963 SC 1685 relied on.
The point of law arising out of admitted facts may be permitted to be raised in first appeal though not pleaded in the written statement or in the memo of appeal. [Para 8]
(2) Constitution of India–Art. 299 (1)–requirements of–purpose and nature of the provision–no waiver or estoppel of the requirement–requirements not fulfilled–no suit lies for breach of the contract.
It is now well settled that where a contract between the Government and a private individual is not in the form required by Article 299 (1) of the Constitution, it was void and could not be enforced and, therefore, the Government cannot be sued by a private individual for breach of such a contract. Article 299 (1) lays down three conditions for the making of a contract by a Governor of a State. They are: it must be expressed to be made by Governor; it must be executed, and the execution should be by such person and in such a manner as the Governor may direct or authorise. The principle is that provisions of Article 299 (1) are mandatory is character and the contravention thereof nullifies the contracts and makes them void. There is no question of estoppel or ratification in such a case. The reason is that the provisions of Article 299 (1) of the Constitution have not been enacted for the sake of mere form but they have been enacted for safeguarding the Government against unauthorised contracts. The provisions are embodied in the Constitution on the ground of public policy–on the ground of protection of general public and those formalities cannot be waived or dispensed with. That is the reason why the plea of estoppel or ratification cannot be permitted in such a case. AIR 1962 SC 113, 1966 JLJ 1012 & 1968 JLJ 1025 relied on. [Para 9]
(3) Constitution of India –Art. 299(1)-other requirements fulfilled–formal deed not necessary–contract by tender and acceptance possible–the tender and acceptance should be by authorised authority–tender and acceptance made by incompetent officer–contract not valid-Forest Financial Rules–R. 125.
A contract by tender and acceptance would be valid, provided the other requirements of Article 299 (1) are fulfilled. AIR 1963 SC 1685 relied on. [Para 11]
But the tender must be on behalf of the Governor by the Officer authorised in behalf and similarly the acceptance must be by such Officer. Rule 125 of the Forest Financial Rules provides that the Conservator of Forests is the competent authority to sanction the sale. Where the advertisement of sale was issued not by the Conservator of Forests but by the Divisional Forest Officer, the tender was not on behalf of the Governor. The bid was not sanctioned by the Conservator of Forests, and hence there was no acceptance on behalf of the Governor. There could not be a valid contract by tender and acceptance. [Para 13]
(4) Contract Act, 1872–Ss. 39 & 38–repudiation of contract by one party–options open to the other party–other party treating the contract as abandoned–cannot sue for damages.
Where there is a repudiation of contract by one party (Government), the plaintiff has a right to elect either to treat the contract as having been wrongfully terminated and to sue for damages for such breach; or to treat the contract as having been abandoned. Where the plaintiff adopts the later course by withdrawing the amount deposited towards part payment, the other party is relieved from further obligation under the contract. The plaintiff will be regarded as having waived his right for damages for breach of contract. [Para 14]
(5) Contract Act, 1872–S. 25–substantial failure of consideration–acceptance of contract under ignorance of the facts–contract may be repudiated.
Where there was substantial failure of consideration, the contract may be repudiated. Timber measuring 4301 cfts was auctioned. The acceptance of the bid by Divisional Forest Officer was subject to sanction by the Conservator of Forests who sanctioned it in ignorance of the facts. Later on it was discovered that the timber was 6248 cfts. The Conservator of Forests was entitled to repudiate the contract. [Para 14]
(6) Jurisdiction–delegation of power–does not divest the officer delegating the power of its authority to act. [Para 14]
( 1 ) THIS judgment will also govern the disposal of First Appeal No. 88 of 1965 (Firm gopichand Sarju Prasad v. The State of Madhya Pradesh) heard along with this appeal.
( 2 ) THESE appeals arise out of a suit for damages wherein the plaintiffs claimed Rs. 21,975/- as damages for breach of a contract. The trial Judge has given a decree in favour of the plaintiffs to the extent of Rs. 4,800/- and dismissed the rest of the claim of the plaintiffs. The State of Madhya Pradesh has preferred this appeal against the decree granted to the plaintiffs who have filed First Appeal No. 88 of 1965 with regard to the claim which was disallowed by the trial Judge.
( 3 ) THE facts shortly stated are as follows. On 26th June 1959, the Divisional Forest officer, Rewa issued an advertisement in the Madhya Pradesh Rajpatra stating that 4301. 71 cft. of timber lying at the forest depot at Jhiria would be sold by auction on 2nd July 1959. The auction on that day was, however, postponed to 9th july 1959 as the bids offered were too low. On 9th July 1959, the Divisional Forest officer increased the up-set price to Rs. 27,000/- and announced to the bidders the sale conditions, inter alia, that (a) the successful bidder would have to deposit rs. 1000/- as earnest money together with half the amount of his bid immediately after acceptance of the bid, (b) he would have to furnish solvency certificate for the balance within 7 days therefrom, and (c) the remaining amount of the bid would have to be paid before removal of the timber from the depot and such removal had to be carried out within a month.
( 4 ) AT the auction, the plaintiffs offered the highest bid of Rs. 24,000/-which was accepted by the Divisional Forest Officer subject to sanction by competent authority and conditions of sale. The bid-list was signed by the plaintiffs in token of their acceptance of the terms and by the Divisional Forest Officer. The plaintiffs on acceptance of their bid, deposited Rupees 1000/- towards earnest money and rupees 9,000/- as part payment of the price i. e. Rs. 10,000/- in all. On 20th July 1959, the Divisional Forest Officer conveyed the sanction of the Conservator of forests of the auction sale in their favour under memorandum No. 7415, dated 14th July 1959 and asked them to deposit the balance amount of Rs. 14,000/- by 9th August 1959 and take away the timber within that time. But before the plaintiffs could lift the timber, the Divisional Forest Officer, by his letter dated 28th july 1959, informed the plaintiffs that the Conservator of Forests, by memo No. 128 dated 27th July 1959, had cancelled the sale in their favour and directed them to withdraw the amount of Rupees 10,000/- deposited by them. The plaintiffs made representations in the matter and on their being turned down, eventually withdrew the amount on 20th March 1961 and brought the suit for recovery of rupees 20,000/- as damages for breach of contract and Rs. 1975/- towards interest on the amount of Rs. 10,000/- from the date of deposit till the date of withdrawal at the rate of 12 per cent, per annum.
( 5 ) THE cancellation of the auction sale was ordered by Shri K. N. Mishra, the new conservator of Forests on the instructions of the Chief Conservator of Forests as they apprehended that there was something seriously amiss with the auction. The divisional Forest Officer had neither made any physical verification of the timber nor had adhered to Government instructions in fixing the up-set price. On an investigation being ordered by Shri K. N. Mishra, it was discovered that the actual stock of timber measured 6248. 77 cft. It is worthy of mention that the Divisional forest Officer first reported that the timber on verification was 4846. 58 cft. but Sri mishra was not satisfied and he directed that a responsible officer should take an actual measurement. Apart from this, the auction sale was also cancelled because the new Conservator of Forests found that there was no due publicity
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