Matilal Sarda vs State of Bihar and Another

N.C. Mukherji, J.—This appeal arises out of a suit for recovery of Rs. 1,46,026-4-9 together with Rs. 10,006-8-0 in all Rs. 1,56,032-12-9 from the defendants by way of damages. The case of the plaintiff may briefly be stated as follows:-

The defendant No. 1 is the proprietor of a| mill legally known as Manbhum Rice & Oil Mills. Defendant No. 2 was the manager of the aforesaid mill. That in connection with the Government''s Monopoly Scheme and Levy Scheme the defendant No. 1 was appointed purchasing agent of paddy by the plaintiff with effect from 1st December 1946. He was also appointed one of the plaintiff''s Milling agents for the purpose of milling all such paddy as was purchased by various a gents of the plaintiff together with all other paddy which was secured from other sources. For all paddy purchased and milled by the defendant No. 1, he was to get a fixed commission of 4 annas per maund on the paddy and Rs. 1-4-0 per maund for the milling of milled rice. That according to the terms of the agency, which were accepted and agreed to by the defendants, defendant No. 1 was to purchase paddy on behalf of the Government and submit reports of such purchase of paddy to the District Supply Officer against which he would get part payment from the Government. It was agreed that the milled rice would be disposed of in accordance with the instructions issued by the plaintiff''s officers from time to time. It is stated that huge quantity of paddy was lying with the defendants and even being asked to deliver the balance stock of paddy, the defendants failed to deliver the same. In Schedule A of the plaint, total quantity of paddy purchased by the defendant on Government account, total quantity of rice available out of the above paddy according to the prescribed rates of Government total rice despatched to different consignees under Government order out of the above rice from 12th February 1947 to, 26th July 1947 balance due against the defendant''s purchase made on Government account from 7th January 1947 to 24th April 1947, prices thereof, total quantity of paddy received by the defendants from different purchasing agents and stockiest of levied paddy on Government account for milling from 1st February 1947 to 1949, total quantity of rice available out of the above paddy according to prescribed rates of Government, total quantity of rice despatched to different consignees under Government orders out of the above rice from 30th August 1947 to 12th February 1950, balance due against the quantity received by the defendants from different sources on Government account for milling, prices of the balance amount of rice, total number of gunny bags lying with the defendants and particulars thereof have all been mentioned in detail. In Schedule B of the plaint, mill''s dues from the plaintiff have been stated.

The suit was contested by defendants 1 and 2. The defendant No. 1 pleaded want of cause of action and non-maintainability of the suit. He denied that he was appointed purchasing agent of paddy by the plaintiff and that he was also appointed as one of the plaintiff''s milling agents. It is stated that the defendant No. 1 did not accept the terms of the agency. There was no contract of agency for purchase of paddy between the defendant No. 1 and the Government. There was only sale and purchase transaction of the paddy and the relationship between the parties was that of vendor and purchaser. There was no contract of agency for milling the paddy and there was simply a contract for works and labour to be done on the materials supplied by the plaintiff. Defendant No. 1 denies that any percentage of extraction of rice from paddy was fixed by the Government and accepted by this defendant. It is said that 27,634 maunds 30 seers of rice was despatched by the defendant No. 1 according to the instructions received from the Government out of 58,561 maunds of paddy supplied to him for milling. It is also stated that at the time of taking delivery, Government officials left broken particles of rice which remained in the godown of the defendant, that the storage of rice was due to wastage and driage of rice lying in the defendant''s godown. Defendant No. 1 pleaded that he has supplied the entire rice obtained from the paddy supplied to this defendant. The sale rate of paddy at Rs. 16-12-0 per maund for medium rice and Rs. 22/- per maund for fine vice has been challenged.

Defendant No. 2 pleads ignorance that defendant No. 1 was the purchasing and milling agent of the plaintiff. His case is that he has always worked under the instruction of defendant No. 1 in connection with his milling and other business in the capacity of his servant. He states that he was not aware of any contract or agency between the plaintiff and the defendant No. 1. He pleads that all transactions between the plaintiff and the defendant No. 1 were ordinarily purchase and sale.

The learned Additional Subor dinate Judge, Purulia, after a careful consideration of the facts, circumstances and evidence on record came to the conclusion that there was a contract between the plaintiff and the defendants as asserted in the plaint. The learned Subordinate Judge allowed the major portions of the claims of the plaintiff after allowing deduction to the defendant No. 1 in respect of certain amounts which, according to the learned Judge, the plaintiff ought to have deducted. Being aggrieved, the defendant No. 1 has come up in appeal in this Court.

Mr. Mukul Prakash Banerjee appearing on behalf of the appellant, in the first place, submits that the plaintiff has not proved that there was any written contract between the parties and that being so, the same is not enforceable according to the provisions of Article 299(1) of the Constitution of India.

Article 299(1) reads as follows:--

All contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President, or by the Governor of the State, as the case may be, and all such contracts and all assurances of property made in the exercise of that power shall be executed on behalf of the President or the Governor by such persons and in such manner as he may direct or authorise

On behalf of the respondent it is submitted that the defendant never took this point in the court below and in the long written statement it was never pleaded that the contract, if any, was illegal. What the defendant pleaded in the written statement was to the effect that there was no contract at all between the parties. In paragraph 4 of the written statement the defendant No. 1 states : "That there was no contract of agency for the purchase of paddy as between this defendant and the Government nor was the relationship between the parties was that of principal and agent. There was only sale and purchase transactions of the paddy and the relationship between the parties was that of vendor and purchaser". In this connection provisions of Order VI Rule 8 and Order VIII Rule 2 may be referred to. This rule provides "Where a contract is alleged in any pleading, a bare denial of the same by the opposite party shall be construed only as a denial in fact of the express contract alleged or of the matters of fact from which the same may be implied, and not as a denial of the legality or sufficiency in law of such contract". The provisions of Order VIII Rule 2 also provide : "The defendant must raffle by his pleading all matters which show the suit not to be maintainable, or that the transaction is either void or voidable in point of law, and all such grounds of defence as, if not raised, would be likely to take the opposite party by surprise, or would raise issues of fact not arising out of the plaint, as, for instance, fraud, limitation, release, payment, performance, or facts showing illegality". So it follows that where the defendant disputes the legality or sufficiency in point of law of the contract set up by the plaintiff, he must plead specifically in the grounds of his objection. It was not sufficient merely to traverse any allegation the plaintiff might have made. Mr. Banerjee relies on certain decisions in order to support the contention that even if the legality of the contract has not been challenged in the written statement, if the court finds that such a contract is not enforceable, then the plaintiff cannot get relief in the absence of proving the written contract. Mr. Banerjee first refers to a decision reported in Ranjit Kumar Chakravarty Vs. State of West Bengal, . In this case it was pleaded in the written statement that there was no proper or binding contract of service between the plaintiff and the defendant. It was found that this averment was not very satisfactory. But it did indicate that though there was a contract of employment, in the instant case, it was defective in law. In that view of his finding His Lordship was of the opinion that the case reported in Kalyanpur Lime Workers Ltd. Vs. State of Bihar and Another, did not cover the instant case. In the Supreme Court case the dispute raised in the written statement was whether the terms of lease agreed to by the parties were final or not, that is, whether in fact there was a concluded contract. No defence was raised that the contract was not enforceable because of non-compliance with the provisions of Section 30 of the Old Government of India Act. Mr. Banerjee next refers to a decision reported in Smt. Surasaibalini Debi Vs. Phanindra Mohan Majumdar, . It has been held "Where a contract or transaction ex facie is illegal there need be no pleading of the parties raising the issue of illegality and the Court is bound to take judicial notice of the nature of the contract or transaction and mould its relief according to the circumstances". Their Lordships held that the case before them was not, however, of that type. We are of the opinion that the present case is also not of that type. In this case it cannot be said that the contract sought to be proved by the plaintiff is ex facie illegal. Mr. Banerjee also refers to a decision reported in K.P. Chowdhary Vs. State of Madhya Pradesh and Others, . In this case it has been held.

In view of Article 299(1) of the Constitution, there can be no implied contract between the Government and any other person, the reason being that if such an implied contract between Government and any other person were allowed, that would in effect make Article 299(1) useless, for then a person who had a contract with Government which was not executed at all in the manner provided in Art. 299(1) could get away by saying that an implied contract may be inferred by the facts and circumstances of a particular case. Further if the contract between the Government and another person is not in compliance with Art. 299(1), it would be no contract at all and could not be enforced either by the Government or by the other person as a contract

In the present case there is no question of implied contract. The plaintiff''s case is a clear case of contract. The defendants take a plea that there was no contract at all. The plaintiff tried to prove the contract by adducing oral and documentary evidence and the learned court below was satisfied that the plaintiff succeeded in doing so. The defendants never took the point that as there was no written contract between the parties, the contract could not be enforceable according to the provisions of Article 299(1) of the Constitution of India. As the question of illegality of contract has not been pleaded in the written statement we are of the opinion that the defendant cannot be allowed to raise this point for the first time in appeal. Another fact is worth mentioning. Apart from the fact whether there was a contract or not, it is in evidence that the defendant No. 1 worked on behalf of the Government, purchased paddy, milled the same and despatched the same as desired by the Government. That being so, the plaintiff is certainly entitled to realise his dues from the defendant if there be any. We have gone through the judgment and we find that the learned Subordinate Judge had taken great pains in considering the entire oral and documentary evidence on record and ultimately came to finding that the defendant No. 1 as the proprietor of Manbhum Rice and Oil Mills acted as purchasing agent of paddy and milling agent of rice of the plaintiff on the terms stated in the plaint. We find nothing to disagree with the above finding.

In paragraph 22 of the written statement the defendant No. 1 alleges there was no short delivery of the value of Rs. 816-2-9. It is in evidence that the defendants accepted the payment in respect of rice sent to D.C., Hazaribagh and they deducted the amount of Rs. 816-2-9 from their bill. This being the position, it does not lie in the defendant No. 1''s mouth now to say that there was no shortage in the delivery of rice sent to D.C., Hazaribagh. The learned court below found that the deduction of Rs. 816-2-9 was rightly made. The next contention of the defendant was that no deduction was made in respect of 348 maunds of rice sent to the Indian Aluminium Company. On this point also the learned Judge considered the documentary and oral evidence and found that as the defendant No. 2 accepted the correctness of the account-sheet, Ext. 15, in 1949, the defendant No. 1 was not entitled to any deduction out of the claim of the plaintiff on this account. The next contention of the defendant No. 1 is that the defendants supplied 91 maunds of paddy to the Town Welfare Officer, Purulia in 1949. It is in evidence that the said amount of paddy was received by the Town Welfare Officer from the mill. That being so, the learned Judge found that the defendant No. 1 was entitled to the deduction of the price of 91 maunds of paddy out of the total claim of the plaintiff. The learned Judge observed that both the parties agreed that 91 maunds of paddy be considered to be paddy of medium quality. Thus the learned Judge found that the price of 59 maunds 6 seers of rice at Rs. 16-12-0 per maund should be deducted out of the total claim of the plaintiff. Mr. Banerjee contended that no credit was given in favour of the defendant for the supply of 91 maunds of paddy to the Town Welfare Officer, but as has already been pointed out that such credit was allowed. The plaintiff claimed in the plaint that in all 8631 maunds 26 seers of rice was due from the defendants to the plaintiff. The plaintiff claimed damages for the same. The learned Judge after going through the evidence carefully found that the plaintiff''s claim was true. In the matter of assessment of damages the learned Judge was of the opinion that the price of rice and not paddy should be taken into consideration and as such damages were assessed at Rs. 16-12-0 per maund for 3979 maunds 36 seers of medium rice and at the rate of Rs. 22/- per maund in respect of 4651 maunds 30 seers of fine rice. Mr. Banerjee contended before us that no milling charge had been allowed to the defendant for the undelivered paddy. The learned Judge found "that the defendant No. 1 was to get Rs. 1-4-0 per maund of rice as commission for milling paddy into rice. The commission on 8631 maunds 26 seers of rice comes to Rs. 10,789-10 annas and the defendant No. 1 is entitled to a deduction for the same out of the total claim of the plaintiff". Mr. Banerjee submits that though the above amounts have been allowed in favour of the defendant, in the decree, these amounts have not been deducted. Mr. Banerjee drew our attention to the statement made in paragraph 13 of the plaint where it has been stated that "after repeated tagids the defendants despatched on behalf of Government 500 maunds medium rice on 11th November 1949 and 387 maunds 10 seers of medium rice only on 12th February 1950. It is submitted that the price of the aforesaid quantities, the commission and the milling charge had not been paid by the plaintiff. This is not correct because in the schedule to the plaint we find total quantity of paddy purchased by the defendant on Government account from 7.1.47 to 24.4.47 and total rice despatched to different consigness from 12th February 1947 to 26th July 1947. Again we find the total quantity of paddy received by the defendants from different purchasing agents and stockiest for milling from 1st February 1947 to 19th March 1949 and total quantity of rice despatched to different consignees under Government orders out of the above rice from 30th August 1947 to 12th February 1950. That being so, the quantity referred to above was included in the schedule to the plaint. The contention raised in this regard is therefore negatived. Mr. Banerjee next submits that if his contention that the contract was unenforceable be accepted, then defendant No. 1 is entitled to get deduction for price of paddy which he himself purchased. As we have hereinbefore have negatived the contention, this claim of the defendant No. 1 cannot be allowed. The learned Judge allowed the plaintiff to get interest at the rate of 61/4% on the claim as damages. In this appeal the question of payment of interest has not been challenged. At first a ground was taken in the Memorandum of Appeal but that ground has been subsequently deleted. The learned Judge has allowed that the plaintiff is entitled to the price of old and new gunny bags which were lying with the defendants. We are of the opinion that this amount has been properly allowed. No other point has been raised in this appeal. We find that there has been some wrong calculation in the decree. The plaintiff''s claim in the plaint was Rs. 1,46,026-4 as-9 P together with damage by way of interest at 61/4% amounting to Rs. 10,006-8 as. The price of 91 maunds of paddy at Rs. 16-12 as calculates at Rs. 990-12 as. This amount together with Rs. 10,789-10 as milling charge makes a total of Rs. 11,780-6 as. This total amount ought to have been deducted from) Rs. 1,46,026-4 as-9P. The figure after deduction works out at Rs. 1,34,245-14-9P. Interest at 61/4% on the above sum is calculated at Rs. 8,390/-making a total of Rs. 1,42,635-14 as-9P. We find that in the decree a sum of Rs. 1,44,252-6 as-9p has been allowed as plaintiff''s claim and damages. That amount has been wrongly calculated. The correct calculation would be Rs. l,42,635-14 as-9p. As regards pendente lite interest, as the plaintiff''s claim has been reduced the interest works out at Rs. 20,800/- and the plaintiff is entitled to get that amount and not Rs. 21,047-6 as-Op.

In the result, the appeal is dismissed, The judgment of the court below is affirmed but the decree is modified to the extent indicated above. There will be, however, no order for costs in this appeal.

M.M. Butt, J.

I agree.