1963 (4) TMI 101 - SC - Indian Laws

Summary

Issues Involved:
1. Jurisdiction of the Calcutta High Court.
2. Validity and enforceability of the contract under Section 175(3) of the Government of India Act, 1935.
3. Applicability of Section 70 of the Indian Contract Act.
4. Alleged payment of the bills by the respondent.
5. Claim for compensation by the appellant.
6. Plea under Section 80 of the Code of Civil Procedure.
7. Admission of the claim by the respondent.
8. Negligence and estoppel.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Calcutta High Court:
The respondent did not press the issues concerning the jurisdiction of the Calcutta High Court, and therefore, no findings were recorded on these issues.

2. Validity and Enforceability of the Contract:
The trial court found that the contract on which the appellant based its claim was invalid and unenforceable because it did not comply with Section 175(3) of the Government of India Act, 1935. This finding was upheld by both judges in the Division Bench of the High Court, and it was concluded that the contract was void and unenforceable.

3. Applicability of Section 70 of the Indian Contract Act:
The trial court held that the respondent was bound to pay the appellant the amount claimed by way of compensation under Section 70 of the Indian Contract Act. This decision was challenged, and the Division Bench of the High Court had differing views. Bose J. held that Section 70 was inapplicable, while Mukarji J. found that the contract had been ratified but still dismissed the claim on other grounds. The Supreme Court, referring to a recent decision in the State of West Bengal v. M/S. B. K. Mondal & Sons, concluded that Section 70 would justify the claim made by the appellant.

4. Alleged Payment of the Bills:
The trial court found against the respondent on the issue of the alleged payment of the bills. The respondent claimed that payment had been made through an 'account payee' cheque, which was delivered to a person purporting to have authority to receive payment on behalf of the appellant. However, this was found to be part of a fraudulent scheme.

5. Claim for Compensation by the Appellant:
The trial court held that the respondent was bound to pay the appellant the amount claimed by way of compensation. This finding was crucial in deciding the fate of the suit, leading to a decree in favor of the appellant. The Supreme Court upheld this finding, concluding that the appellant was entitled to compensation under Section 70 of the Indian Contract Act.

6. Plea under Section 80 of the Code of Civil Procedure:
The issue raised under Section 80 of the Code of Civil Procedure was not pressed by the respondent, and therefore, no finding was recorded on this issue.

7. Admission of the Claim by the Respondent:
The trial court answered against the appellant on the issue of whether the respondent had admitted the claim. This finding was not central to the final decision.

8. Negligence and Estoppel:
The Division Bench of the High Court had differing views on negligence and estoppel. Mukarji J. held that the appellant was negligent in handling the intimation card, which led to the fraudulent encashment of the cheque, and thus, the appellant was estopped from claiming the amount. Bose J. did not entertain the plea of negligence. The Supreme Court, however, found that negligence was not properly pleaded in the trial court and that the broad principle of estoppel by negligence, as applied by Mukarji J., was not sustainable. The Supreme Court concluded that the appellant's alleged negligence did not create an estoppel against its claim.

Conclusion:
The Supreme Court allowed the appeal, setting aside the decree passed by the appellate court and restoring the trial court's decree in favor of the appellant, with costs throughout. The appellant was entitled to recover the claimed amount under Section 70 of the Indian Contract Act, and the plea of estoppel by negligence raised by the respondent was not upheld.