State of West Bengal v. B.K. Mondal & Sons

A contractor built government storage sheds and offices at the request of officers who had no power to bind the Government. No contract was signed in the form the law required. The Government used the buildings and did not pay. The Supreme Court held that Section 70 of the Indian Contract Act made the Government pay compensation.

Quick Revision

Parties

State of West Bengal — appellant and defendant. It is the successor of the Province of Bengal, whose officers asked for the work and whose Civil Supplies Department used it.

M/s. B.K. Mondal & Sons — respondent and plaintiff. It was a firm of building contractors that had done construction work for the Provincial Government before.

The bench was Gajendragadkar, Sarkar, Wanchoo, Das Gupta and Ayyangar JJ. Gajendragadkar J. delivered the judgment of himself, Wanchoo and Ayyangar JJ. Sarkar J. delivered the judgment of himself and Das Gupta J.

Procedural History

1. The respondent sued the appellant on the Original Side of the Calcutta High Court for Rs. 19,325. Sarkar J. records that the suit was filed in 1949.
2. G.K. Mitter J. tried the suit and framed five issues on the pleadings.
3. He held that there was no valid contract, because Section 175(3) of the Government of India Act, 1935 was not followed. This finding favoured the appellant.
4. He held that the claim was justified under Section 70 of the Indian Contract Act and was not barred by limitation.
5. He rejected the plea that the liability of the Province of Bengal had not passed to the appellant under the Indian Independence (Rights, Property and Liabilities) Order, 1947.
6. He held that Section 65 of the Contract Act did not apply. This finding also favoured the appellant.
7. He decreed the claim under Section 70.
8. The appellant appealed to the Calcutta High Court. S.R. Das Gupta and Bachawat JJ. heard it. They gave separate but concurring judgments and substantially confirmed the findings. The appeal was dismissed.
9. The appellant applied for a certificate to appeal to this Court, and the High Court refused it.
10. The appellant then obtained special leave. This was Civil Appeal No. 286 of 1958, an appeal from the judgment and decree dated 4 January 1957 in Civil Appeal from Original Decree No. 155 of 1953.
11. The Supreme Court decided the appeal on 5 December 1961.

Facts

The facts below are from Gajendragadkar J.'s account and Sarkar J.'s account.

1. On 8 February 1944 the respondent offered to put up temporary storage godowns at Arambagh, Hooghly district, for the Civil Supplies Department of the State of Bengal.
2. The Department accepted the offer by a letter dated 12 February 1944. The respondent completed the godowns. Its bill for Rs. 39,476 was paid in July 1944.
3. On 7 April 1944 the Sub-Divisional Officer, Arambagh asked the respondent for an estimate. The work was a kutcha road, a guard room, an office, a kitchen and a room for clerks at Arambagh.
4. The respondent says the Additional Deputy Director of Civil Supplies visited Arambagh on 20 April 1944. He told it to go ahead according to its estimates.
5. The respondent completed that work. It sent a bill for Rs. 2,322/8 to the Assistant Director of Civil Supplies on 27 April 1944.
6. The Sub-Divisional Officer then required storage sheds at Khanakul. The Assistant Director wrote to the respondent on 18 April 1944 (the date as stated in the judgment) and asked it to build them.
7. The respondent completed the sheds and sent a bill for Rs. 17,003.
8. These two bills, for Rs. 2,322/8 and Rs. 17,003, were unpaid. They made up the claim of Rs. 19,325.
9. Sarkar J. records that the officers who made the requests had no authority from the Government to do so. The respondent knew this all along. These facts were not in dispute.
10. The officers told the respondent that its estimates had been sent to the Deputy Director for formal sanction. They told it not to delay the work meanwhile.
11. The respondent had done similar work for the Government before on similar requests, and had been paid.
12. The Government urgently needed the work and put it to use as soon as it was done. It objected to the bill on the grounds of bad quality and lack of proper sanction.
13. The appellant's written statement denied all material allegations. It pleaded that the requests were invalid and unauthorised, and that they were not a valid contract under Section 175(3). It pleaded no privity of contract, and denied liability for the whole claim.
14. The Court noted that the written statement was vague and general, with no specific pleas.
15. The parties did not dispute the amount. S.R. Das Gupta J. recorded that the appellant did not contest the quantum decreed.
16. Bachawat J. recorded that the Advocate-General frankly admitted that the Province of Bengal was under a moral obligation to pay the respondent.

Issues Raised

The Court's questions follow from the main point argued, as Gajendragadkar J. states it, and from Sarkar J.'s formulation.

1. Was the contract invalid because the mandatory provisions of Section 175(3) of the Government of India Act, 1935 were not followed?
2. Does Section 70 of the Indian Contract Act apply to the present case?
3. Does recognising a Section 70 claim indirectly nullify Section 175(3), or treat as valid a contract that is invalid?
4. What does the word lawfully in Section 70 mean?
5. Is the State, like a minor, outside the scope of Section 70?
6. Were the three requisites of Section 70 satisfied on the facts? Sarkar J. framed this as the only question argued.

Arguments Contended

For the appellant (State of West Bengal)

Mr. Sen argued for the appellant.

• The main point was that Section 70 does not apply to this case.
• The contract was invalid because Section 175(3) was not followed. Mr. Sen said the finding of the courts below on this was correct.
• The rule in Section 70 rests on the notes in Smith's Leading Cases to Lampleigh v. Brathwaite. So English decisions on the point are relevant.
• He relied strongly on H. Young & Co. v. Mayor and Corporation of Royal Leamington Spa. There a statute required a contract to be in writing and under seal, and the House of Lords held the requirement obligatory.
• He said Lawford v. The Billericay Rural District Council was irrelevant. It dealt with a common law rule, and this case deals with a statutory provision.
• Allowing compensation would circumvent Section 175(3). The work was only performance of a so-called contract made against that section.
• The word lawfully in Section 70 must be read with Section 23 of the Contract Act. A thing is not done lawfully if the law forbids it.
• He relied on the test of Straight J. in Chedi Lal v. Bhagwan Dass on the word lawfully. The respondent held no such relation to the appellant as would entitle it to compensation.
• The appellant is like a minor in capacity to contract. A minor is outside Section 70, so the State is too. He cited Mohori Bibee v. Dhurmodas Ghose.
• Before Sarkar J. the appellant also argued that Section 70 operates only where English law would imply a contract or quasi-contract. He said Section 175(3) bars any such contract with the Government.
• Before Sarkar J. the appellant argued that work under a contract invalid by Section 175(3) is unlawful, because it evades the section.
• Before Sarkar J. the appellant's main argument was that the High Court erred in granting Section 70 relief for work under a contract invalid by Section 175(3).
• Note: the appellant never argued that the officers were personally liable under a contract with the respondent.

For the respondent (B.K. Mondal & Sons)

Mr. N.C. Chatterjee argued for the respondent.

• The suit claimed under a contract. In the alternative it claimed under Section 70, saying the respondent lawfully did the works, did not intend to act gratuitously, and the appellant enjoyed the benefit.
• At the trial the respondent also relied on Section 65 of the Contract Act.
• Mr. Chatterjee faintly suggested that the contract could not be called invalid.
• He argued that holding Section 175(3) obligatory is inconsistent with Chatturbhuj Vithaldas Jasani v. Moreshwar Parashram. He made the same point in Bhikraj Jaipuria.
• He relied on Bose J.'s remark in Chatturbhuj that the Government may not be bound by such a contract, but that did not make it void. It could be ratified if it benefited the Government.
• The judgment does not record any other separate argument by the respondent.

Court's Reasoning

There are two opinions. The judgment has no numbered paragraphs. The steps follow the order of each opinion.

Gajendragadkar J. (for himself, Wanchoo and Ayyangar JJ.)

1. Noted: The respondent claimed Rs. 19,325 for works done. It claimed on a contract, and in the alternative under Section 70.
2. Noted: Mr. Sen's principal point was that Section 70 does not apply. Before dealing with it, the Court first looked at the finding that the contract was invalid under Section 175(3).
3. Noted: Section 175(3) says contracts made in exercise of a province's executive authority must be expressed to be made by the Governor. They must be executed on his behalf by persons he directs or authorises.
4. Noted: It was common ground that no duly authorised person executed the contracts.
5. Held: There is no doubt that failure to comply with the mandatory provisions of Section 175(3) makes the contracts invalid.
6. Noted: No general or inflexible rule decides whether a mandatory provision is only directory. The Court must find the real intention of the Legislature. It does so from the scope of the statute and the object of the provision.
7. Held: Parliament meant that the State should not be burdened with liability on unauthorised contracts. The provision protects the State against spurious claims and is made in the public interest. So "shall" makes it obligatory, not directory. A mandatory clause held obligatory means that breach nullifies the contract.
8. Noted: This is the view in Seth Bhikraj Jaipuria v. Union of India. The Court agreed with it.
9. Noted: Mr. Chatterjee argued that this conflicts with Chatturbhuj Vithaldas Jasani v. Moreshwar Parashram. That case concerned a firm's contract to supply goods to the Central Government. The contract did not meet Article 299(1) of the Constitution, which corresponds substantially to Section 175(3).
10. Noted: The question there was whether Chatturbhuj was disqualified from Parliament under Section 7(d) of the Representation of the People Act, 1951. Bose J. said Section 7(d) does not require the contract to be enforceable against the Government. It is enough that it is a contract for the supply of goods to the Government.
11. Noted: Bose J. also said the Government may not be bound, but that is different from saying the contract was void. He said the Government could not be sued, but could ratify the contract if it benefited the Government.
12. Held: That remark must be read in the context of the narrow question before that Court. It meant only that the Government could ratify the contract, so the contractor still fell within Section 7(d). A void contract may not be capable of being ratified, so the contract was not void in that technical sense.
13. Held: The Court would not read that remark, or the decision, to mean that a contract breaching Article 299(1) is valid. Bose J. had said expressly that such a contract cannot be enforced against the Government and is not binding on it.
14. Held: The finding of the courts below that the contracts were invalid stands. The main question is whether Section 70 applies.
15. Noted: Mr. Sen argued that Section 70 must be read against its background. He said it rests on the notes in Smith's Leading Cases to Lampleigh v. Brathwaite, so English decisions are relevant.
16. Noted: He strongly relied on H. Young & Co. v. Mayor and Corporation of Royal Leamington Spa. There the House of Lords considered Section 174(1) of the Public Health Act, 1875. That section required every contract by an urban authority over a certain value to be in writing and under the authority's common seal.
17. Noted: The House of Lords held that provision obligatory, not merely directory. It applied even to an executed contract where the authority had full benefit and enjoyment.
18. Noted: In Young's case the Corporation made a contract with Powis to supply water to the district. It ended before completion. The Council then passed a resolution, not under seal, authorising its engineer to complete the works. The plaintiff, employed by the engineer, did the work and sued for the balance.
19. Noted: The Queen's Bench upheld the Corporation's defence. The Court of Appeal and House of Lords confirmed it.
20. Noted: Lord Blackburn approved Lindley L.J.'s observation. Holding the defendants liable would repeal the Act and deprive ratepayers of the protection Parliament intended. Hardship was not a ground to decline to give effect to a clear statute.
21. Noted: Lord Bramwell added that he did not share the regret. The seal required deliberation and reflection, and he said it is idle to say there is no magic in the seal.
22. Noted: Mr. Sen said Young's case helps in deciding the effect of breaching Section 175(3) and whether Section 70 applies.
23. Noted: Young's case is now obsolete in England. The Local Government Act, 1933 repealed the relevant provisions of the 1875 Act.
24. Noted: Section 266 of the 1933 Act lets a local authority contract as needed. Contracts must follow its standing orders. For goods or works, those orders must require published notice and invited tenders.
25. Noted: The proviso protects a person contracting with the authority. That person need not enquire whether the standing orders were followed. A contract otherwise valid has full force even if they were not.
26. Noted: The Corporate Bodies Contract Act, 1960 (8 and 9 Eliz. 2 c. 46) now governs corporate contracts. Its Section 1 allows a contract needing writing to be made in writing signed by a person acting under the body's authority. A contract valid by parol may be made by parol. A contract so made binds the body corporate. Section 1(4) preserves contracts under seal.
27. Noted: So the rigid requirement of a seal is obsolete, and Young's case has ceased to matter.
28. Noted: Earlier, English law distinguished two cases. In one, the writing and seal requirement came from a statute like Section 174(1). There non-observance made the contract void, and the corporation owed no compensation even if it had the benefit.
29. Noted: In the other, the requirement came from the common law. Failure to comply was then no defence to a contractor's claim, if the corporation had the benefit of the work. This was laid down in Lawford v. The Billericay Rural District Council.
30. Noted: Lawford held that where work is done or goods supplied for the corporation's purposes, and the corporation accepts them, a contract to pay is implied from its acts. The whole consideration is executed. The absence of a contract under seal is no answer.
31. Noted: Vaughan Williams L.J. in Lawford followed Lord Denman in Doe v. Taniere. Where a corporation has acted on an executed contract, the presumption is that everything needed to bind it was done. This does not conflict with the rule that a corporation contracts by deed.
32. Noted: Lawford thus rested on an implied contract arising from executed consideration and acceptance of the benefit.
33. Noted: Mr. Sen said Lawford is irrelevant and Young's case relevant, since Section 175(3) is a statutory provision.
34. Held: The Court was not impressed by that argument. The question must be answered on a fair and reasonable construction of Section 70.
35. Held: When construing a specific statutory provision it would be unreasonable to invoke English decisions on English statutory provisions.
36. Noted: Lord Sinha said in Ramanandi Kuer v. Kalawati Kuer that where there is a positive Indian enactment, the proper course is to examine its language. Its meaning is to be found without influence from the earlier law or the English law on which it may be founded.
37. Held: If the Indian words are obscure or ambiguous, the background or English decisions may perhaps help. Where the words are clear, it would be unreasonable to interpret them by an alleged background. So the Court looked primarily to Section 70 itself.
38. Noted: Section 70 says that a person who lawfully does anything for another, or delivers anything to him, not intending to do so gratuitously, can claim compensation. The other person must enjoy the benefit. He must then pay compensation for, or restore, the thing done or delivered.
39. Held: Three conditions must be satisfied. First, a person lawfully does something for another or delivers something to him. Second, he does not intend to act gratuitously. Third, the other person enjoys the benefit. Then Section 70 makes the latter liable to make compensation or restore the thing.
40. Noted: A person who receives a thing can refuse to accept it or return it. Then Section 70 does not operate. If someone does something for another, that other can decline to accept it. Then Section 70 does not apply.
41. Held: The person said to be liable always has the option not to accept. Liability arises only where he voluntarily accepts the thing or enjoys the work.
42. Noted: Here the appellant could have refused the warehouse. It could have called on the respondent to demolish it and take away the materials. But if it accepted, used and enjoyed the warehouse, Section 70 can be invoked.
43. Noted: Section 70 is in Chapter V, which deals with relations resembling those created by contract. It does not deal with rights and liabilities from contract.
44. Noted: After building the warehouse, the respondent could not compel the appellant to accept it. The work was not done under a valid contract, and the respondent took the risk of rejection.
45. Held: In cases under Section 70 the claimant cannot sue for specific performance or damages for breach of contract, as there is no contract.
46. Held: Section 70 only provides that if goods are accepted or work is voluntarily enjoyed, liability to pay compensation arises. The claim is not on a subsisting contract. It rests on something done for another and voluntarily accepted.
47. Noted: Mr. Sen argued that recognising the claim circumvents the mandatory Section 175(3). He said the work was only performance of a so-called contract against that section.
48. Held: The argument assumes that a decree would treat an invalid contract as valid. That is not well-founded.
49. Held: The alternative claim is not for breach of contract. It assumes the contract was ineffective, so there was no contract at all. The cause of action is the voluntary acceptance and enjoyment of the work.
50. Held: Building the warehouse without a valid contract did not contravene Section 175(3). The respondent could not force the appellant to accept it, and the appellant could have asked it to demolish the warehouse.
51. Noted: Illustration (a) to Section 70 involves A, a tradesman, who leaves goods at B's house by mistake. B treats the goods as his own and must pay A. Suppose B stands for the State Government. A did not contravene Section 175(3) by leaving the goods by mistake.
52. Held: If goods delivered by mistake are accepted and enjoyed by the State, A can claim compensation. In entertaining the claim, the Court would not uphold any contravention of Section 175(3), directly or indirectly.
53. Held: The cause of action under Section 70 is acceptance and enjoyment, not delivery or doing the work. So Section 70 does not treat contravention of Section 175(3) as valid. Mr. Sen's principal argument fails.
54. Held: The word lawfully in Section 70 is not an unnecessary word. It is an essential part of the requirement.
55. Noted: Mr. Sen said lawfully must be read with Section 23 of the Contract Act, so a thing forbidden by law is not lawfully done.
56. Held: Even on that test, the delivery or doing of the thing, whose acceptance and enjoyment gives rise to a claim, is not forbidden by Section 175(3). The interpretation does not stop Section 70 applying.
57. Noted: Another argument relied on Straight J. in Chedi Lal v. Bhagwan Dass. He presumed the legislature meant cases where a person held such a relation to another that the party doing the act was entitled to look for compensation. The appellant said the respondent had no such relation.
58. Held: The Court was not satisfied that Straight J.'s test is justified by the words of Section 70. The Court disapproved it.
59. Held: Some lawful relationship must exist between claimant and defendant, as lawfully implies. But it arises because what one party did was accepted and enjoyed by the other, not merely because the work was done.
60. Why: That lawful relationship gives rise to the claim. Applied literally, Straight J.'s test would make Section 70 hardly necessary, since a claimant with such a relationship would already be entitled to compensation.
61. Held: "Lawfully" shows only that, once a thing is delivered or done and is accepted and enjoyed, a lawful relationship is born between the two. That relationship gives rise to a claim for compensation.
62. Held: The thing must not be delivered or done fraudulently or dishonestly, nor gratuitously. Section 70 does not cover persons who meddle unasked in another's affairs, or impose unwanted services.
63. Held: Since the other person must be able to reject the thing, the acceptance and enjoyment must be voluntary. This is a safeguard against spurious claims for unauthorised acts. The appellant could have refused an unauthorised or spurious act, and then no claim would arise.
64. Held: There is no scope under Section 70 for claims for specific performance or damages for breach. The claim rests on there being no contract. The conduct of the parties creates a relationship resembling that from contract.
65. Noted: Against a State Government, the work or goods often follow a request by some officer. The request may be ineffective because the officer lacked authority under Section 175(3). Or the officer had authority but the request was not followed by a contract executed as Section 175 requires.
66. Held: In either case the work is done without a contract, and Section 70 comes in. A request is not an element of Section 70. An invalid request is in law no request, so the conduct is judged as if there were no subsisting contract.
67. Held: The Court must then ask whether the three conditions are satisfied. If they are, a claim for compensation can and must be entertained.
68. Noted: Section 70 provides compensation for the goods delivered or work done. The alternative is restoration of the thing. Here the amount was not disputed. A claim for compensation under Section 70 normally does not mean the same as damages for breach of a subsisting contract.
69. Held: Recognising the claim does not directly or indirectly nullify Section 175(3), or treat an invalid contract as valid. The fields are separate and distinct. Section 175(3) deals with how contracts are made. Section 70 applies where there is no valid contract. There is no conflict.
70. Noted: In a modern State Government, officers must enter many contracts, often petty. Sometimes they act in an emergency. For the State's welfare policy they may contract orally or by letter without strictly complying with Section 175(3).
71. Held: Where the work benefits the Government, is used by it, and is otherwise legitimate and proper, Section 70 supports a compensation claim. This is so even though Section 175(3) was not followed.
72. Why: Holding Section 70 inapplicable would lead to extremely unreasonable consequences. It might hamper, even bring to a standstill, the day-to-day working of the Government.
73. Held: The Court did not detract from the binding character of Section 175(3). The State, like an ordinary citizen, is subject to Section 70. Acceptance and enjoyment give a valid basis for compensation claims.
74. Held: Claims on a contract validly made under Section 175(3) must be distinguished from claims under Section 70. In a sense Section 70 should be read as supplementing Section 175(3).
75. Noted: Mr. Sen ingeniously argued that the appellant is like a minor in capacity to contract, and a minor is outside Section 70.
76. Noted: A minor, like a lunatic, is incompetent to contract (Mohori Bibee v. Dhurmodas Ghose). Where he purports to contract, the contract is void and neither Section 64 nor Section 65 applies.
77. Noted: Section 68 specifically provides for claims for necessaries against a minor. So a minor cannot be sued for compensation under Section 70 (Bankay Behari Prasad v. Mahendra Prasad).
78. Noted: Mr. Sen said Section 175(3) makes the appellant incompetent to contract unless the contract is made in that way.
79. Held: This argument is not well founded. Section 175(1) recognises the Province's power to purchase or acquire property and to make contracts. Section 175(3) only prescribes the manner. The appellant is not in the position of a minor.
80. Held: A minor is excluded from Section 70 because Section 68 covers his case. Section 70 prevents unjust enrichment, and applies as much to individuals as to corporations and Government.
81. Why: Also, for a minor the voluntary acceptance of the benefit, which founds a Section 70 claim, would not be present. So on principle Section 70 cannot be invoked against a minor.
82. Noted: Many Indian decisions have considered Section 70 for invalid contracts of Provincial Governments or corporations. The preponderance of opinion favours the Court's view. The Court listed the cases below under Authorities.
83. Noted: The Court cited the remarks of Jenkins C.J. in Suchand Ghosal v. Balaram Mardana. The terms of Section 70 are wide, but applied with discretion they enable courts to do substantial justice. Final courts of fact must be guarded and circumspect, and must not countenance acts or payments that are really meddling.
84. Noted: On the facts, both courts found the acts were done in pursuance of requests invalidly made by the appellant's officers. So they must be deemed done without a contract.
85. Noted: It was not disputed that the appellant accepted the acts and used the buildings. S.R. Das Gupta J. said the appellant did not contest the quantum decreed.
86. Noted: Bachawat J. said the Government urgently needed the work, accepted it as soon as done, and used it for its benefit. He recorded that the Advocate-General admitted a moral obligation to pay. He added that Section 70 converts such a moral and natural obligation into a legal one.
87. Held: Since Section 70 can be invoked on the findings, the requisite conditions are satisfied. The courts below rightly decreed the claim.
88. Held: The appeal fails and is dismissed with costs.

Sarkar J. (for himself and Das Gupta J.)

1. Noted: Sarkar J. agreed that the appeal should fail.
2. Noted: In 1944 the respondent, a firm of contractors, did construction work at the request of certain officers of the Government of Bengal. The Government took the benefit. The officers had no authority from the Government to make the request, and the respondent knew this. These facts were not in controversy.
3. Noted: The respondent sued in 1949 in the Original Side of the Calcutta High Court. The High Court held there was no contract on which a decree could be passed. It held the respondent entitled to compensation under Section 70. The liability of the Government of Bengal passed to West Bengal under the Indian Independence (Rights, Property and Liabilities) Order, 1947.
4. Noted: The only question argued was whether the High Court rightly passed a decree under Section 70.
5. Noted: G.K. Mitter J. gave the requisites for compensation for work done. First, the work is lawfully done. Second, it is not intended to be gratuitous. Third, the person for whom it is done enjoys the benefit.
6. Held: The Court agreed with this analysis, and with the High Court's view that the requisites exist here.
7. Noted: The appellant argued that the High Court granted relief under Section 70 for work done under a contract invalid by Section 175(3). Many English and Indian authorities were cited for this.
8. Held: It is unnecessary to discuss them. The basis of the argument does not exist in this case, and the High Court did not decide the case on that basis.
9. Held: On the High Court's findings there was no agreement, valid or invalid, between the respondent and the Government. So no question arises about the validity of an agreement under Section 175(3). Nor does a question arise whether Section 70 applies to work done under a contract invalid for that reason.
10. Why: An agreement could only have been made through the officers. They lacked authority to bind the Government, to the respondent's knowledge.
11. Noted: G.K. Mitter J. said the plaintiff never doubted that no agreement of any kind was made with the Province of Bengal. The plaintiff knew from the beginning that the officers had no authority to make a binding contract and were awaiting sanction from higher officials.
12. Noted: Bachawat J. said neither officer had authority from the Province to make the request. There was no agreement, express or implied. So there was no agreement which was void or discovered to be void.
13. Noted: The High Court distinguished Union of India v. Ramnagina Singh. That case held Section 70 did not apply where work was done under a request which resulted in a void agreement. Here there was no request from the Government.
14. Held: It is wrong to say the High Court decided on the basis that Section 70 applies to work under an invalid contract with the Government. The judges only discussed cases on that question because counsel cited them.
15. Held: The Court did not decide one question. It is whether Section 70 compensation can be awarded for work done under a Government contract invalid by Section 175(3).
16. Noted: Suppose the officers made the request in their personal capacity, and a contract bound them to pay. Then it would be a very debatable question whether the respondent could claim against the Government under Section 70.
17. Noted: Sarkar J. had grave doubts that Section 70 meant to give a person with a remedy against the officers personally a second remedy against the Government for the same thing. He said no more, because no contract with the officers had come into existence.
18. Noted: When one asks another to do work, a tacit promise to pay reasonable remuneration may be inferred in some circumstances. It may become a contract when the work is done. The consideration is the detriment suffered by the promisee in doing the work.
19. Noted: Sarkar J. cited an illustration from Pollock on Contracts (13th edition, p. 9). A passenger who steps into a ferry-boat requests the ferryman to take him over for the usual fare. The position would be the same if a person asks the ferryman to carry another across, without mentioning payment. The person asking tacitly promises the usual fare.
20. Noted: A tacit promise may be inferred only if a man of business and experience would consider it reasonable on the circumstances. It is an inference of fact. No law requires it.
21. Noted: He quoted Cheshire and Fifoot's Law of Contract (5th edition, p. 30). Businessmen do not express their communications as a catechism. The rules on offer and acceptance are presumptions drawn from experience. They apply as far as they help to establish agreement.
22. Held: On these facts the Court was unable to infer a tacit promise by the officers to pay personally. The officers made clear, and the respondent knew, that the Government would pay.
23. Why: The officers said the estimates were sent to the Deputy Director for formal sanction and the respondent must not delay. The Deputy Director was presumably the officer who could grant sanction, but he was not one of the officers who made the request. The respondent knew the Government needed the work and the officers had no personal interest. It never thought the officers had promised personally. It kept asking the Government to sanction the orders, sent estimates to it and asked it for payment. It had done similar work before without thinking the officers took on personal liability.
24. Noted: The appellant's counsel never even suggested there was such a contract.
25. Held: It is not possible on the record to say the officers promised to secure payment. Sarkar J. agreed with Bachawat J. that the work was done at the officers' request, but not in circumstances that imply a personal promise to pay.
26. Noted: Bachawat J. said credit was given to the Province of Bengal and not to the officers. It is impossible to say the work was done for the officers.
27. Noted: The other High Court judges did not refer to this point because it was not argued. It was not a point any advocate could reasonably advance.
28. Noted: Sarkar J. did not say that Government officers can never take on personal liability to contractors. Each case turns on its own facts. Circumstances may exist where a personal undertaking can reasonably be inferred. This is not such a case.
29. Held: The respondent did the work for the Government without any contract with anybody. The only question is whether the three requisites of Section 70 are satisfied, and they are.
30. Held: The Government took the benefit. The respondent did not intend to work gratuitously.
31. Why: The respondent submitted an estimate and was prompt with its bill. It had earlier done similar work at officers' request, without a proper contract, and been paid. It was a firm of contractors whose trade was building for payment, and the Government knew this.
32. Why: The Government never thought the work was gratuitous. It objected to the bill on grounds of bad quality and lack of proper sanction. It urgently needed the work and used it promptly. It knew a party who worked for pay had done it.
33. Held: The officers' request does not affect the question. It had no compelling effect, no effect as a promise, and in fact no effect at all.
34. Noted: Its practical use was to tell the respondent that the Government needed the work immediately. It would give sanction in due course and pay when the work was done. The respondent acted readily, as it gave a chance of more business.
35. Held: So the respondent did the work of its own free choice, in the way of business, and meant to be paid.
36. Held: The work was done lawfully. The Court assumed, as the appellant's counsel said, that work done under a contract invalid by Section 175(3) is unlawful, because it evades the section.
37. Held: But Section 175(3) does not say that work done for the Government without any contract at all, voluntarily, is unlawful. The Government is free not to take the benefit. No law was pointed out that makes such work unlawful.
38. Held: There is no law, as Bachawat J. said, that the Government cannot take work except under a contract made as Section 175(3) prescribes. The section may forbid the Government to take work under a contract invalid for want of its terms. It does not make it unlawful to take the benefit of work done without any contract.
39. Why: If the work were unlawful, the Government would not have accepted its benefit. The Government badly needed the work, so it cannot say the work was not lawfully done.
40. Noted: The appellant argued that a Section 70 obligation arises only where English law would create one on an implied contract or quasi-contract. He said no such contract can exist with the Government, because a contract can be made with it only under Section 175(3).
41. Held: Resort to English law is not justified for a question on an Indian statute unless the statute cannot reasonably be understood without it.
42. Noted: There is good authority that Section 70 was framed to avoid the niceties of English law. Those niceties come largely from historical reasons. The aim was a simple position, free from fictions. Sarkar J. cited Pollock on Contracts (13th edition, p. 10).
43. Held: Section 175(3) does not prevent a contract with the Government being implied, or the Government from incurring a quasi-contractual obligation. A contract implied in law, or a quasi-contract, is not a real or consensual contract. Section 175(3) is concerned only with consensual contracts.
44. Noted: Section 175(3) says all contracts made in exercise of the executive authority of the Federation or a Province shall be expressed in a certain manner. They shall be executed on behalf of the Governor-General or Governor by persons and in the manner he directs or authorises.
45. Held: So Section 175(3) applies to consensual contracts the Government makes. It does not apply to something also called a contract, which the law creates by a fiction regardless of the parties' agreement.
46. Held: Section 70 must be applied where its requisites exist. If a contract must be implied or a quasi-contract contemplated to apply the section, that must be done. Section 175(3) does not prevent it, and no other impediment exists. The argument fails.
47. Held: Section 70 applies to this case, and the decree of the High Court should be confirmed.

Authorities

Gajendragadkar J.'s opinion:

• Seth Bhikraj Jaipuria v. Union of India, [1962] 2 S.C.R. 880 — approved. Held Section 175(3) obligatory, not directory.
• Chatturbhuj Vithaldas Jasani v. Moreshwar Parashram, [1954] S.C.R. 817 (Article 299(1) and Section 7(d) of the Representation of the People Act) — explained. Bose J.'s remark on ratification does not make a contract in breach of Article 299(1) valid.
• H. Young & Co. v. Mayor and Corporation of Royal Leamington Spa (Section 174(1), Public Health Act, 1875) — relied on by the appellant. Not followed; the Court held English decisions on English statutes unhelpful. Also noted as obsolete in England.
• Lampleigh v. Brathwaite (through the notes in Smith's Leading Cases) — cited by the appellant for the background of Section 70.
• Lawford v. The Billericay Rural District Council — noted for implied contract on executed consideration and acceptance of benefit.
• Doe v. Taniere (Lord Denman) — noted. Where a corporation has acted on an executed contract, it is presumed everything needed to bind it was done.
• Ramanandi Kuer v. Kalawati Kuer, (1927) L.R. 55 I.A. 18 (Privy Council, Lord Sinha) — relied on. Examine the Indian enactment's language without influence from the previous law or English law.
• Chedi Lal v. Bhagwan Das, (1889) I.L.R. 11 All. 234 (Straight J.) — the test on lawfully was disapproved.
• Mohori Bibee v. Dhurmodas Ghose (Privy Council) — noted. A minor's purported contract is void, and Sections 64 and 65 do not apply.
• Bankay Behari Prasad v. Mahendra Prasad — noted. A minor cannot be sued under Section 70, because Section 68 covers his case.
• Suchand Ghosal v. Balaram Mardana, (1911) I.L.R. 38 Cal. 1 (Jenkins C.J.) — quoted. Section 70 is wide but must be applied with discretion, and meddling acts must not be approved.
• Cases listed as supporting the Court's view on Section 70: Mathura Mohan Saha v. Ram Kumar Saha and Chittagong District Board; Abaji Sitaram Modak v. The Trimbak Municipality; Pallonjee Eduljee & Sons, Bombay v. Lonavla City Municipality; Municipal Committee, Gujranwala v. Fazal Din; Ram Nagin Singh v. Governor-General in Council; Union of India v. Ramnagina Singh; Union of India v. New Marine Coal Co. (Bengal) Ltd.; Damodara Mudalar v. Secretary of State for India; Corporation of Madras v. M. Kothandapani Naidu; Yogambal Boyee Ammani Ammal v. Naina Pillai Markayar; Ram Das v. Ram Babu.
• Cases listed as dissenting from that view: Chedi Lal v. Bhagwan Dass; Radha Kishana Das v. The Municipal Board of Benares; Anath Bandhu Deb v. Dominion of India; Punjabhai v. Bhagwan Das Kisandas; G.R. Sanchuiti v. Pt. R.K. Choudhari.

Sarkar J.'s opinion:

• Union of India v. Ramnagina Singh — noted. Held that Section 70 did not apply where work was done under a request resulting in a void agreement. The High Court distinguished it because here there was no Government request.
• Pollock on Contracts (13th edition, pp. 9 and 10) — the ferry-boat illustration, and the view that Section 70 was framed to avoid English law's niceties.
• Cheshire and Fifoot's Law of Contract (5th edition, p. 30) — quoted on presumptions of agreement drawn from experience.

The judgment has no footnotes.

Provisions mentioned

• Section 70, Indian Contract Act, 1872 — a person who lawfully does something for another, not meaning it to be free, must be paid if the other enjoys the benefit.
• Section 175(3), Government of India Act, 1935 — Government contracts must be expressed to be made by the Governor and executed by persons he authorises. Section 175(1) recognises the Province's power to buy property and make contracts.
• Article 299(1), Constitution of India — the corresponding provision, as noted in Chatturbhuj.
• Section 23, Indian Contract Act — used by the appellant to read lawfully as not forbidden by law.
• Section 64 and Section 65, Indian Contract Act — do not apply to a minor's void contract. Section 65 was also relied on at the trial and rejected.
• Section 68, Indian Contract Act — claims for necessaries supplied to a person incapable of contracting, such as a minor.
• Illustration (a) to Section 70 — a tradesman leaves goods at a house by mistake, and the householder treats them as his own.
• Section 7(d), Representation of the People Act, 1951 — disqualification for a contract for supply of goods to the Government.
• Section 174(1), Public Health Act, 1875 and Section 266, Local Government Act, 1933 — English statutes discussed in Young's case.
• Corporate Bodies Contract Act, 1960 (8 and 9 Eliz. 2 c. 46), Section 1 — English law on corporate contracts.
• Indian Independence (Rights, Property and Liabilities) Order, 1947 — passed the Province's liability to West Bengal.

Judgement

1. The appeal is dismissed with costs.
2. Gajendragadkar J. (for himself, Wanchoo and Ayyangar JJ.) held that the contracts were invalid under Section 175(3). He also held that Section 70 of the Contract Act applied, so the courts below were right to decree the respondent's claim.
3. Sarkar J. (for himself and Das Gupta J.) held that there was no contract with the Government or the officers. The three requisites of Section 70 were satisfied. The High Court's decree was confirmed.
4. The Court was unanimous on the result.

Legal Principle / Ratio

Per Gajendragadkar J. for the majority, Section 70 does not depend on a subsisting contract. It applies where a person lawfully does something for another, not intending it to be free, and the other voluntarily accepts and enjoys it. It applies to the State as to any citizen, and it supplements Section 175(3) without conflict. Sarkar J. applied Section 70 on the narrower ground that there was no agreement at all, and left the invalid-contract question open.

Key holding (Gajendragadkar J.): "Section 70 deals with cases where there is no valid contract and provides for compensation to be paid".

Critical Analysis

Analysis based on the judgment text.

• The two opinions reach the same result on different routes. Gajendragadkar J. assumes the contracts were invalid and applies Section 70. Sarkar J. finds there was no agreement at all.
• Sarkar J. expressly leaves open whether Section 70 applies to work under a contract invalid by Section 175(3). The majority answers that question.
• Sarkar J. also leaves open whether a contractor who has a remedy against officers personally can claim against the Government. He says only that it is debatable.
• The majority notes that the facts were not disputed. It also records the Advocate-General's admission of a moral obligation to pay.

Significance

• The judgment sets out the three conditions of Section 70 and the meaning of lawfully.
• The majority (Gajendragadkar J.) decides that Section 70 claims lie against the State although Section 175(3) was not followed.
• It declines to import English decisions into the construction of Section 70.
• The majority describes Section 70 as preventing unjust enrichment and as covering relations resembling contract.

Exam-Important Points

• Three conditions: lawful act, no intention to act gratuitously, and enjoyment of the benefit by the other person.
• No contract claims: a Section 70 claimant cannot sue for specific performance or damages for breach.
• Voluntary acceptance: the cause of action is acceptance and enjoyment, not the doing of the work. The other party must have the option to refuse.
• Section 175(3): mandatory, so a contract made against it is invalid. Section 70 still supplements it.
• Trap: a request is not an element of Section 70, and an invalid request is no request. But the work must not be meddling or unwanted.
• Trap: the State is not like a minor. A minor is outside Section 70 because Section 68 covers him.
• Trap: Sarkar J. did not decide the invalid-contract question. Quote Gajendragadkar J. for it.
• Straight J.'s test in Chedi Lal on lawfully was disapproved.

Prepared from the full text of the judgment. The judgment has no numbered paragraphs. The citation is as printed in the report header. The SCC citation is not in the judgment text.