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TMI Blog1965 (10) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Government for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;) 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 statutory provisions, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 the Public Works Department an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 deem best suited to, the interests of Government.... (c) To measure up the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. ) case as follows : In the present case, there can be no doubt that the Chairman of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 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 Saxena for making settlement. Ex. A-17, dated July 20, 1955, is significant. The Sub- Divisional Officer requested Saxena to issue orders to his contractors to m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 above. It -is doubtful whether the written statement can be taken into consideration at all. In the result we hold that no contract between respondent No. 1 and the Government subsisted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 from the Government of Bihar for doing Mosaic and dado works at Rajendra Surgical Block of Patna General Hospital, and that in connection with the said contracts the first respondent h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 those under the contract with Saxena, but he requested that certain construction materials be supplied by the Department on his account, and the price thereof may be debited against his bill. The Executive Engineer made a note on this letter It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 work and acceptance there,of on behalf of the Government of Bihar. The work of mosaic flooring and dado work in the Rajendra Surgical Block which was part of the contract of Saxena was completed by M/s Patna Flooring Company in July 1955 after Saxena was intimated that the work which remained to be done would be completed through other age ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 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 a formal contract in the terms of Art. 299 of the Constitution will not therefore affect the operation of disqualification prescribed by s. 7(d) of the Act. The inference arising from the documentary evidence, which we have already set out, is further strengthened by the admissions made by the first respondent many years after execution of the mosaic and dado work. In a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 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 Bihar and the first respondent relating to construction work, which disqualified him from being a member of the Bihar Legislature. We are not concerned to decide 'whether the contract was enforceable against the State. The evidence already set out in our view abundantly supports the case, that there was a contract directly between the first respondent and the State of Bihar relating to the execution of work, and that the contract was made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 be in a fit condition for handing over on August 1, 1955. A copy of this letter was forwarded to M/s Patna Flooring Company for their information and necessary action, and they were asked to rectify all the defects pointed out to them and to complete the remaining work by the scheduled date. It may be noticad that Saxena's contract in its entirety was not terminated : only a part of the contract had been taken away from him. Directions had therefore to be given to him to complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en 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 Subdivision. Strong reliance was placed upon this document by counsel for the first respondent in support of his claim that there was in truth no contract between the State of Bihar through its P.W.D. authorities and the first respondent, but the contract con- tinued at all material times to subsist between Saxena and the State of Bihar. -After carefully considering this argument, in our view, this document is not susceptible of any such interpretation The P.W.D. authorities had adopted the attitude that even though they w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Engineer informing him that M/s Patna Flooring Company had not sent their bill to him and that they may be directed to furnish a copy of their bill to enable him to check the same and arrange payment. This letter refers to the payment for the work done after December 1955, because the bill in respect of the work done in July 1955 had already been submitted and was the subject-matter of the settlement of account Ext. G. There are letters dated August 21, 1957, December 7, 1957 and March 8, 1958 in which the Executive Engineer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 against Saxena. None of these letters even indirectly suggests that the contract for work done by M/s Patna Flooring Company in the matter of mosaic flooring and dado work was done in execution of the subcontract which that Company had obtained from Saxena. The anxiety evinced by the Superintending Engineer, the Executive Engineer and the Sub-Divisional Officer that the claim of M/s Patna Flooring Company be settled by payment through Saxena is consistent with the case that the primary liability was of the State of Bihar and the P.W.D. authorities wan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 and no direct contract will be given to any firm. But it is not suggested that there was any such arrangement in the presence of the first respondent. The Superintending Engineer has not been examined, and there is on the record no evidence to support this part of the case, which was never set up in the Trial Court and the High Court. The admissions made by the first respondent in his notice and the plaint in suit No. 53 of 1959 were sought to be explained by him on the plea that he had signed the plaint and the verification without reading the plaint of the suit as the plaint was re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses 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 stores between October 8, 1951 to January 23, 1952, and bad submitted invoices in respect thereof. Payments were made in respect of those invoices between November 15, 1951 and March 20, 1952. Elections to the Parliament were held in December 1951, and Jasani stood as a candidate for one, of the two seats before payment for the stores supplied was made. The Court refused to accept the plea raised on behalf of the elected candidate that the moment the contract is fully executed by the candidate, the contract is at an end and a new relationship of debtor and creditor takes its place. It is true that the material words of s. 7 (d) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 concerns the purity of elections arises-. A person who has a contractual relationship between him and the executive would, on getting elected, be able to bring pressure to bear upon the executive to settle his claim or to secure advantage for himself to which he may not be lawfully entitled. This appears to be the scheme underlying s. 7(d) which disqualifies a person from being chosen, as a member of the Legislature if there subsists a contract entered into the course of his trade or business by him with the appropriate Government for the supply of goods or for execution of any works. If, on the evidence, subsistence of the contract which disqualifies a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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