9911796707
TMI Blog1965 (10) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... the Government and that these contracts were subsisting on January 14, 1962, the date fixed for filing nomination papers. The Election Tribunal, after reviewing both oral and documentary evidence, held that the respondent had entered into contracts to do Mosaic flooring work in the Rajendra Surgical Block of Patna Medical Hospital and that these were subsisting on the date of the nomination, viz., January 14, 1962. The Election Tribunal further held that by virtue of cl. 3 (c) of the conditions embodied in the agreement, Ex. 'T', it was not at all necessary for the Public Works Department to have entered into a contract with the respondents company, called the Patna Flooring Company. In the result, the Election Tribunal declared the election of Respondent No. 1 to the Bihar Legislative Assembly from the Lal Ganj North Constituency as void, but refused the prayer of the petitioner before it to be declared elected. Both sides appealed to the High Court but we are only con- cerned with the election appeal No. 11 of 1963, filed by Bateshwar Prasad, the returned candidate. Before the High Court three points were taken : (1) The appellant was not a contractor under the State Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ualification under s. 7(d') of the Act, and accordingly set aside the judgment and order of the Election Tribunal. Mr. Purshottam, the learned counsel for the appellant, has urged before us that the High Court was wrong in holding that the amendment had made any change in the law on the question whether the contract which is void under art. 299 of the Constitution is or is not a contract within s. 7(d) of the Act. He says that the reasoning of the decision of this Court in Chatturbhuj's(1) case still holds the field. He then says that the High Court came to a wrong conclusion on the question of fact in this case, namely, whether the contracts subsisted or not at the relevant date, and that this Court should reverse the finding even though it is a finding of fact. Mr. Sarjoo Prasad, the learned counsel, for the respondent, controverts this point and he urges that this Court should not go into the question of fact. On the question of law, he says that the present s. 7 (d) is quite different from the old s. 7 (a) and that the Supreme Court decision cannot be applied to the wording of the present section. Coming to the law point, it is necessary to set out the old and the new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods had been supplied or work had been executed or services performed. It continues to subsist till payment is made and the contract is fully discharged by performance on both sides. But whether Chatturbhujs([1954] S.C.R. 817) case applies when a void con- tract has not been accepted or ratified by the Government, we will consider presently. Mr. Purshottam next contends that the respondent entered into two contracts and they were subsisting at the date of the nomination as the respondent had not been paid for his work and as a matter of fact a suit is pending against the Government for recovery of the money. He has taken us through the documentary evidence and it is now necessary to deal with it. The documentary evidence may be conveniently divided into two groups. The 'first group relates to documents bearing on the formation of the alleged contract. It appears that one G. P. Saxena had entered into a contract, Ex. D., for the construction of a surgical block in the Patna Medical College compound, Patna, and this contract was entered into in 1951, and the respondent was working as a sub-contractor under him. It further appears that there were some disputes between Saxena and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was a top priority work. It appears that by May 25, 1955, 90% of the work had been done and the Patna Flooring Company wrote to the Sub- Divisional Officer requesting that the S.O. Incharge of the said work be ordered to submit an on account bill for making payment to them at an early date. Mr. Purshottam contends that on a perusal of the correspon- dence contained in this group it is quite clear that an oral contract for the construction of work was entered into between the Executive Engineer and the Patna Flooring Company and that the High Court had erred in holding that no such contract ever -came into being. He points out that under cl. 3 (c) of the Contract, Ex. D, the Executive Engineer was entitled to ask the Patna Flooring Company to do the work. Clause 3 (c) reads as follows "Clause 3.-In any case in which under any clauses of this contract the contractor shall have rendered himself liable to pay compensation amounting to the whole of his security deposit in the hands of Government (which whether paid in one sum or deducted by instalments) to Executive Engineer on behalf of the Governor of Bihar, shall have power to adopt any of the following courses, as he may dee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned contract for the supply of goods would cease to attract the provisions of s. 7(d) of the Representation of the People Act on the ground that it did not comply with the provisions of art. 299 ( 1 ), and this Court held that notwithstanding the fact that the contract could not be enforced against the Government it was a contract which fell within the mischief of s. 7(d)." This Court further observed that "all that this Court meant by the said observation (of Bose J. in Chatturbhuj's(2) case at p. 835, quoted below) was that the contract made in contravention of art. 299(1) could be ratified by the Government if it was for its benefit and as such it could not take the case of the contractor outside the purview of s. 7(d). The contract which is void may not be capable of ratification, but, since according to the Court the contract in question could have been ratified it was not void in that technical sense. That is all that was intended by the observation in question." But the question arises whether Chatturbhuj's(22) case can be extended to cover a case where the contract has in fact not been ratified. Bose J. observed in Chatturbhuj's([1954] S.C.R. 817 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 8th July, 1955 so that I may ask the contractor Shri G. P. Saxena to pay you off finally and settle your accounts immediately." It appears that something happened between May 25, 1955 and July 12, 1955. According to the respondent, what happened was that Saxena approached the Superintending Engineer and the Superintending Engineer ordered that Saxena would continue to be the contractor as before and no contract would be given to any firm. The respondent stated this in his evidence as R. W. 32. It is objected that this is hearsay and this part of the statement is not admissible. There is some force in this contention and we omit this part of the statement from consideration. But apart from this oral evidence it is quite clear from this letter that something happened, otherwise it was not necessary to use the words "personally explaining to you the whole position" in this letter, and it is not understandable why the Patna Flooring Company was being asked to submit the bill to Saxena. This inference is strengthened by subsequent correspondence. By letter, dated July 13, 1955, Ex. A3, the S.D.O. acknowledged the receipt of the bill and said that he had sent it to Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficant fact and shows that as far as the Government was concerned, the, original contract stood and the Government had not chosen to treat Patna Flooring Company as a contractor, but only as a subs. contractor working under Saxena. Mr. Purshottam laid a great deal of stress on the pleadings in the money suit No. 53 of 1959. There is no doubt that the plaint in the money suit filed by the Patna Flooring Company shows that Bateshwar Prasad, plaintiff, was trying to make out that there was a direct contract entered into between the P.W.D. and the plaintiff, but even so, the plaint does not make them solely responsible. We have also come to a finding that there was admittedly a contract -in the beginning. The fact that the plaint does not allege any subsequent non-acceptance or refusal to ratify by the Government -would not stop the respondent from proving in this case that on the material on record it is clear that the Government had not -ratified the contract with the respondent but confirmed the original contract with Saxena. The written statement filed by the Government in the money suit cannot be used to destroy the inference which clearly arises from the documents referred to ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or business by him with the appropriate Government for the supply of goods to, or for execution of any works undertaken by that Government." The appellant contends that the first respondent was disqualified from being a member because there was between him and the Government of Bihar a subsisting contract relating to execution of works for the Government. Two components of the issue to be determined in this appeal are: whether at the relevant time there was between the State of Bihar and the first respondent a contract in the course of the first respondent's trade or business for execution of any work undertaken by that Government and whether at the material time the contract was subsisting. The Trial Court answered both the components in the affirmative. The High Court was of the view that there was no contract at any time between the. State of Bihar and the first respondent. The appellant's case was that the first respondent and his son Bhupendra Nath Prasad carried on business of executing mosaic flooring, plumbing and sanitary works in the name of M/s Patna Flooring Company, that the first respondent on behalf of M/s Patna Flooring Company had obtained contracts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xecutive Engineer shall have power to adopt any of the following courses, as he may deem best suited to the interests of Government : (a) To rescind the contract; (b) To employ labour paid by the P.W.D. to carry out the work, or any part of the work, debiting the contractor with the cost of labour; (c) To take away such part of the work of the contract as shall be unexecuted out of his hand-,, and to give it to another contractor for completion. The first respondent was working as a sub-contractor under Saxena in certain sections of the work undertaken by the latter. In April, 1956, Saxena was unwilling or unable to complete the " mosaic flooring" and "mosaic dado" under his contract, and negotiations took place between the Executive Engineer, Construction Division, and the first respondent regarding completion of that work by the first respondent. On April 17, 1955, the first respondent addressed a letter Ext 1 (g), to the Executive Engineer recording the conversation he had with the Executive Engineer relating to the rates of mosaic work etc., and submitted his terms and conditions. The rates offered by the first respondent were substantially lower than th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to them. A copy of that letter was sent to the Sub- Divisional Officer along with a copy of the bill for -the work done, for information and for immediate payment, but no payment was made. The P.W.D. authorities, it appears, thought that instead of making the payment directly to the first respondent, Saxena should be called upon to pay the amounts due to M/s Patna Flooring Company for work done by them, This is evidenced by several letters on the record to which we will presently refer. Interruptirig the narrative at this stage, it may be observed that the evidence set out leaves no.,room for doubt that there were negotiations between M/s. Patna Flooring Company and the Executive Engineer for carrying out "mosaic flooring and dado work" which was part of work Saxena had undertaken to do and which he had failed to complete. The Executive Engineer asked M/s Patna Flooring Company to carry out that work and the latter submitted its own schedule of rates, and asked for certain facilities which did not form part of Saxena's contract. In our view Ext. 1 (g) dated April 17, 1955 and Ext. 1 (c) dated April 20, 1955 constitute an offer to execute "the mosaic and dado&quo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted by a ponderous legal document couched in a particular form. It may be that Government will not be bound by the contract in that case, but that is a very different thing from saying that the contracts as such are void and of no effect. It only means that the principal cannot be sued; but we take it there would be nothing to prevent ratification, especially if that was for the benefit of Government. There is authority for the view that when a Government officer acts in excess of authority Government is bound if it ratifies the excessee The Collector of Masulipatam v. Cavalry Venkata Narrainapah-8 M.I.A. 529 at 554." It was also held that s. 7(d) of the Act did not require that the contracts at which it strikes, should be enforceable against the Government: all that it requires is that the "contract should be for the supply of goods to the Government." The purpose of the Act it was observed, is to maintain the purity of the legislatures and to avoid a conflict between duty and interest, and that it is obvious that the temptation to place interest before duty is great when there is likely to be some difficulty in recovering the money from the Government. Absence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he State of Bihar ₹ 22,947/07 nP and ₹ 5,000/- as damages and loss sustained by M/s Patna Flooring Company. In the plaint in suit No. 53 of 1959 filed by M/s Patna Flooring Company by paragraphs -6, 7 and 8 substantially the same averments were made. In paragraph-7 of the plaint it was stated "Thus it is clear the plaintiffs and their firm began the work under a direct contract from the P.W.D. which also appears from letter No. 705 and 706 dated 23-5-55 addressed to the plaintiffs firm by the S.D.O. No. III Sub- division............ and in paragraph-8 it was stated that "the mosaic work done by the plaintiffs had been done under a direct contract from the P.W.D. authorities and "Sri G. P. Saxena had no interest in this mosaic work but if any how it has been entered in the M.B. in the name of Sri G.P. Saxena then the payment to the extent of the plaintiffs dues should be withheld and the same should be paid to the plaintiffs by the P.W.D. authorities." We are informed at the Bar that suit No. 53 of 1959 has as yet not been disposed of. We are called upon in this case to decide whether it is established that there was a contract between the State of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplaining to you the whole position and you promised to submit your final correct bill on Friday the 8th July, 1955 so that I may "ask the contractor Shri G. P. Saxena to pay you off finally and settle your accounts immediately." This letter clearly indicates that in the view of the Sub-Divisional Officer the bill had to be submitted by the first respondent to the P.W.D. -authorities and that they would persuade Saxena on account of whose default the contract with the first respondent was necessitated to pay the amount due to him. The next letter is dated July 13, 1955 addressed- by the Sub-Divisional Officer to M/s Patna Flooring Company intimating that the bill of M/s Patna Flooring Company had been, sent to Saxena for immediate settlement and payment, and asking the Company to settle the account with Saxena and to receive payment from him and to report to the P.W D. authorities. On July 20, 1955 there is another letter from the Sub-Divisional Officer forwarding a copy of letter No. 949 dated July 20, 1955 which was addressed to Saxena asking the latter to issue orders to his contractors to mend and rectify all the cuttings and damages properly so that the building may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he endorsement signed bySaxena it is stated that the account was correct and he admitted that ₹ 11,408/13/3 were due from him which he promised "to pay very soon". It was also stated that the terms of the original agreement between Saxena and M/s Patna Flooring Company will also remain operative. The endorsement signed by the first respondent states : "Agreed and accepted the cheque for ₹ 15,000/We shall finish the final polish work within a very short time. As the account has been settled today, the 21st July, 1955. I am herewith returning the cheque No. BZ/131 08046 dated 18-1-55 drawn on the Imperial Bank of India, Patna for ₹ 12,000/- and balance now stands as mentioned ₹ 11,408/13/3 as per settlement, subject to encashment of to-day's cheque No. G140696 dated 21-7-1955 on the Bank of Behar Ltd. Patna." A copy of this account was forwarded to the Executive Engineer, 'Construction Division, through the Sub-Divisional Officer "for information and record with reference to the discussion which was held between" Saxena and the first respondent "in his presence and the presence of the Sub- Divisional Officer No. III ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s terminated. For the work which Saxena failed to complete, he was liable to compensate the Government under the terms of his contract. The Executive Engineer had informed Saxena that the amount payable to the first respondent would be deducted from his bill, and had on diverse occasions called upon Saxena to pay the amount due, to the first respondent. The first respondent was concerned to receive the money due to him, and it was a matter of no consequence to him whether the Government paid it directly or the authorities got it paid by Saxena. The desire of the first respondent not to imperil his position as a contractor with the Government in P.W.D. contracts may well be understood. It is difficult to appreciate how this settlement made in the presence of the Executive Engineer, whereby Saxena agreed to discharge the liability of the Government, in consideration of discharge of his own liability under his contract, negatives the existence of the contract between the Government of Bihar and the first respondent. There is on the record correspondence relating to the demands for payment by the first respondent. A letter dated March 28, 1956 was addressed by Saxena to the Executive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Patna Flooring Company, a letter dated September 10, 1958 was addressed to Saxena by the Executive Engineer in which it was recorded that the contractor's (Saxena's) representative had seen the Executive Engineer in his office at the time of refund of the security deposit kept back on account of income-tax dues and had promised that he would settle up the account with M/s Patna Flooring Company and pay their dues immediately, and that although the "refund of the amount had already been given the dues of M/s Patna Flooring Company had not been. cleared". Saxena was once more requested to clear off the dues of M/s Patna Flooring Company so that the refund of the amount kept in deposit may be given to him. This is all the material correspondence on which the first respondent has relied. The correspondence makes it abundantly clear that the primary liability for payment of the dues was of the State of Bihar and they accepted that liability. The Bill of M/s Patna Flooring Company was received by the P.W.D. authorities and they called upon Saxena to satisfy the claim because under the terms of the contract the liability for payment would ultimately be enforced agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E., S '.B.C. taken to this arrangement, if so, copies of the correspondence may please be furnished ?" There is no record of the reply, if any, given to this query. There is, however, at the foot of the letter an endorsement dated May 17, 1958, made by some one "write to, the contractor". It is true that the Superintending Engineer was in overall charge of the construction work and by the terms of the tender itself the authority of the Executive Engineer to accept the tender is limited : cl. 9 of the form of tender Ext. D. But there is no evidence on the record that the Superintending Engineer had at any time countermanded the arrangement between the Executive Engineer and M/s Patna Flooring Company. The first respondent in his examination before the Trial Court stated that mentioning the rates and terms that my firm had with G. P. Saxena for construction of mosaic and Dado work in Rajendra Surgical Block. No direct contract was ever entered with between P.W.D. department and my firm even after this letter Ext. 1 (g). Saxena went to Superintending Engineer and objected. The Superintending Engineer ordered that Saxena will continue to be the contractor as before a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt carried out the work independently of Saxena. It now remains to consider whether there was a subsisting contract at the date of filing of the nomination paper. The work of construction entrusted to the first respondent was completed in July 1955 and in respect of "bath rooms and the lecture theatre" was completed sometime before April 1956. The first respondent had not been paid the amounts due to him. It cannot be said that in view of the attitude adopted by the State of Bihar there has been a breach of the contract. The expression "there subsists a contract" in s. 7(d) of the Act includes cases in which one party has performed his part of the contract and part performable by the other party remains. It was so held by this Court in Chatturbhuj's case(1). The first paragraph of the head note in that case states : "A contract for the supply of goods does not terminate when the goods are supplied, it continues into being till payment is made and the contract is fully discharged by performance on both sides." In that case pursuant to an oral request made on behalf of the State of Madhya Pradesh, Chatturbhuj Jasani had supplied " canteen sto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the application of the clause after it was amended also is subject to the same condition. If there was no subsisting contract, neither under s. 7 (d) before it was amended, nor after it is amended, would the disqualification be incurred. In the present case the first respondent performed his part of the contract, and no payment has been made by the Government of Bihar to him. In the circumstances, relying upon Chatturbhuj Jasani's case([1954] S. C. R. 817), we are of the view that the contract was a subsisting contract. Mr. Sarju Prasad appearing on behalf of the first respondent, contended that by s. 116-B of the Act, the decision of the High Court is made "final and conclusive" and interference by this, Court with that decision, even if it appears that an error has been committed by the High Court, will not be justified. But by s. 116-B the jurisdiction conferred upon this Court by Arts. 133 and 136 of the Constitution is not, and cannot be restricted. If the circumstances of the case justify, this Court has the power, and is indeed under a duty, to set aside the verdict of the High Court' The Court is dealing with a case in which a question which vitally concer ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
