TMI Blog1961 (7) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... e order No. 106 was signed by the Divisional Superintendent. Under the purchase orders delivery of grains was to commence within seven days of acceptance and was to be completed within one month. The appellant delivered diverse quantities of foodgrains from time to time but was unable fully to perform the contracts within, the period stipulated. Between July.), 20, 1943 and August of 4, 1943, he supplied 3465 maunds of rice and between September 1, 1943 and September 19, 1943 he supplied 1152 maunds 35 seers of wheat. In exercise of the powers conferred by cl.(b) of Sub-r. (2) of r.81 of the Defence of India Rules, the Government of Bihar by notification No. 12691-P.C. dated September 16, 1943 directed that commodities named in column I of the schedule shall not, from and including September 20, 1943 and until further notice, be sold at any primary source of supply or by the proprietor, manager or employee of any mill in the Province of Bihar at prices exceeding those specified in the second column of the schedule. The controlled rat-. of rice (medium) was ₹ 18/- per standard maund, of wheat (red) ₹ 17/-, of wheat (white) ₹ 18/- and of gram ₹ 12-8-0. The S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence between the contract price and the price for which the grains were sold. The suit was resisted by the Dominion of India contending inter alia that the appellant had no cause of action for the claim in the suit, that the contracts between the appellant and the Divisional Superintendent Dinapur were not valid and binding upon the Government of India and that the contracts were liable to be avoided by the Government, that time was of the essence of the contracts, that stipulations as to time were not waived, and that no breach of contract was committed by the East Indian Railway Administration and in any event, the appellant had not suffered any loss as a result of such breach. By the written statement, it wag admitted that the East Indian Railway through the Divisional Superintendent, Dinapur had by three orders set out in the plaint agreed to buy and the appellant had agreed to sell the commodities specified therein, but it was denied that the Divisional Superintendent had been given complete authority to enter into contracts for the supply of foodgrains. The trial court held that time was not of the essence of the contracts and even if it was, breach of the stipulation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for compensation for breach of contract, and (2) whether the appellant has proved the ruling market rate on October 1, 1943 for the commodities in question. , The finding that the Railway Administration had waived the stipulation as to the performance of the contracts within the time prescribed though time was under the agreement of the essence, is not challenged before us on behalf of the Union of India. If the finding as to waiver is correct, manifestly by his telegraphic intimation dated September 28, 1943, that the foodgrains not despatched before October 1, 1943, will not be accepted the Divisional Superintendent committed a breach of the contract. Section 175 (3) of the Government of India Act as in force at the material time provided : Subject to the provisions of this Act, with respect to the Federal Railway Authority, all contracts made in the exercise of the executive authority of the Federation or of a Province shall be expressed to be made by the Governorhttp:// General, or by the Governor of the Province, as the case may be, and all such contracts and all assurances of property made in the exercise of that authority shall be executed on behalf of the Governo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l judge relied upon the evidence of Ribbins, Grain Supply Officer and Personal Assistant to the Divisional Superintendent, Dinapur. The High Court disagreed with that view. The High Court observed that the authority of the officer acting on behalf of the Governor-General must be deduced from the express words of the Governor-General himself expressed by rules framed or by notification issued, under s. 175(3). No notification has been produced in this case showing that the Divisional Superintendent had been authorised by the Governor General to execute such contracts on his behalf, nor has any rule been produced which conferred authority upon the Divisional Superintendent to make such contracts. After referring to paragraph 10 of the notification, Ex. M- 2 items 1 to 34, the High Court observed: Therefore this notification rather shows that the Divisional Superintendent had no authority to execute the contracts for the purchase of food grains. In our view, the High Court was in error in holding that the authority under s. 175(3) of the Government of India Act, 1935 to execute the contract could only be granted by the Governor General by rules expressly promulgated in that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in para 5 of the plaint. It is true that by paragraph 1, the authority of the Divisional Superintendent to enter into contract with, trading firms dealing in foodgrains for the supply of foodgrains was denied and it was further denied that the Divisional Superintendent was invested with complete authority to enter into contracts for the purchase of food supplies and to do all that was necessary in that connection. There was some inconsistency between the averments made in paragraphs 1 and 3 of the written statement, but there is no dispute that the purchase orders were issued by the Divisional Superintendent for and on behalf of the East Indian Railway Administration. Pursuant to these purchase orders, a large quantity of foodgrains was tendered by the appellant: these were accepted by the Railway Administration and, payments were made to the appellant for the grains supplied. Employees of the Railway Administration wrote letters to the appellant calling upon him to intimate the names of the railway stations where grains will be delivered and about the date when the supply. will commence. They fixed programmes for inspection of the goods, kept wagons ready for accepting deliver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Head Office were in the office file . None of these documents were, however, produced or tendered in evidence by the Railway Administration. The evidence on the whole establishes that with a view to effectuate the scheme devised by the Railway Board for distributing foodgrains to their employees at concessional rates, arrangements were made for procuring foodgrains. This scheme received the approval of the Railway Board and Railway Officers were authorised to purchase, transport and distribute foodgrains. If, in the implementation of the scheme, the foodgrains were received by the Railway Administration, special wagons were provided and goods were carried to different places and distributed and payments were made for the foodgrains received by the Railway Administration after testing the supplies, the inference is inevitable that the Divisional Superintendent who issued the purchase orders acted with authority specially granted to him. The evidence of Ribbins supported by abundant documentary evidence establishes beyond doubt that the Divisional Superintendent though not expressly authorised by the notification Ex. M-2 to contract for the purchase of foodgrains, was specia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intention of the Legislature by carefully attending to the whole scope of the statute to be construed. It is clear that the Parliament intended in enacting the provision contained in s. 175(3) that the State should not be saddled with liability for unauthorised contracts and with that object provided that the contracts must show on their face that they are made on behalf of the State, i. e., by the Head of the State and executed on his behalf and in the manner prescribed by the person authorised. The provision, it appears, is enacted in the public interest, and invests public servants with authority to bind the State by contractual obligations incurred for the purposes of the State. It is in the interest of the public that the question whether a binding contract has been made between the State and a private individual should not be left open to dispute and litigation ; and that is why the legislature appears to have made a provision that the contract must be in writing and must on its face show that it is executed for and on behalf of the head of the State and in the manner prescribed. The whole aim and object of the legislature in conferring powers upon the head of the Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Municipal Corporation of Bombay, the latter claimed that it was entitled to remain in occupation on payment of a nominal rent, of an extensive piece of land because of a resolution passed by the Government of Bombay sanctioning such user. Jenkins C. J. in delivering the judgement of the Court observed. I think that a disposition in 1865 of Crown lands by the Governor in Council was dependent for its validity on an adherence to the forms prescribed, and that therefore the Resolution was not a valid disposition of the property for the interest claimed. In Kessoram Poddar and Co. v. Secretary of State for India (I.L.R. (1927) 54 Cal. 969), it was held that in order that a contract may be binding on the Secretary of State in Council., it must be made in strict conformity with the provisions laid down in the statute governing the matter and if it is not so made, it is not valid as against him. The same view was expressed in S. C. Mitra and Co. v. Governor-General of India in Council (I.L.R. (1950) 2 Cal. 431.), Secretary of State v. Yadavgir Dharamgir(I.L.R. (1936) 60 Bom. 42), Secretary. of State and another v. G. T. Sarin and, Company U. P. Government v. Lala Nanhoo Mal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we have no doubt Government will always accept the responsibility. If not, its interests are safeguarded as we think the Constitution intended that they should be. The learned Judge also observed: It would, in our opinion, be disastrous to hold that the hundreds of Government officers who have daily to enter into a variety of contracts, often of a petty nature, and sometimes in an emergency, cannot contract orally or through correspondence and that every petty contract must be effected by a ponderous legal document couched in a particular form. The rationale of the case in our judgment does not support the contention that a contract on behalf of a State not in the form prescribed is enforceable against the State. Bose J. expressly stated that the Government may not be bound by the contract, but that is a very different thing from saying that the contract ,as void and of no effect, and that it only meant the principal (Government) could not be sued; but there will be nothing to prevent ratification if it was for the benefit of the Government. The facts proved in that case clearly establish that even though the contract was not in the form prescribed, the Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be expressed to be made by the Governor- General in Council did not define how orders were to be made but only how they are to be expressed; it implied that the process of making an order preceded and was something different from the expression of it. Secondly, it was observed, the provision, was not confined to orders only and included proceedings and in the case of proceedings, it was still clearly a method of recording proceedings which had already taken place in the manner prescribed rather than any form in which the proceedings, must take place if they are valid. Thirdly, it was observed, that the provision relating to the signature by a Secretary to the Government of India or other person indicated that it was a provision as to the manner in which a previously made order should be embodied in publishable form, and it indicated that if the previous directions as to the expression of the order and proceedings and as to the signature were complied with, the order and proceedings shall not be called in question in a court of law on one ground only. The rule contained in s. 40 (1) was in the view of the court one of evidence which dispensed with proof of the authority grante ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of U.P. v. Manbodhan Lal Srivastava((1958) S.C.R. 533) in which case this court held that the provisions of Art. 320 el. (3) (e) of the Constitution relating to the consultation with the Public Service Commission before discharging at public servant are merely directory. The fact that certain other provisions in the Constitution are regarded as merely directory and not mandatory, is no ground for holding that the provisions relating to the form of contracts are not mandatory. It maybe said that the view that the provisions in the Constitution relating to the form of contracts on behalf of the Government are mandatory may involve hardship to the unwary. But a person who seeks to contract with the Government must be deemed to be fully aware of statutory requirements as to the form in which the contract is to be made. In any event, inadvertence of an officer of the State executing A contract in manner violative of the express statutory provision, the other contracting party acquiescing in such violation out of ignorance or negligence will not justify the court in not giving effect to the intention of the legislature, the provision having been made in the interest of the publi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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