Municipal Committee and Another vs Bajrang Rao and Another

M.M. Kumar, J.—This is defendants appeal filed u/s 100 of the Code of Civil Procedure, 1908 (for brevity the ''Code'')''challenging concurrent findings of fact recorded by both the Courts below which are to the effect that the plaintiff-respondent is entitled to recover an amount of Rs. 6,52,730/- from the defendants/appellants along with interest @ 6% p.a. from the date of filing the suit till its realisation. Both the Courts below have concurrently found that the defendants-appellants have admitted passing of resolution No.7 dated 29.4.1999 and some other correspondence between the plaintiff-respondent and the defendants-appellants which establish that the work was carried out by the plaintiff-respondent for which resolution No.7 dated 29.4.1999 was passed by the defendants-appellants Municipal Committee, It has also sent estimate prepared by the Junior Engineer of the department to the Deputy Commissioner, Kaithal and ex post facto approval to all the works done by the plaintiff-respondeat was granted by the Deputy Commissioner vide letter No.946 dated" 12.7.1999. All the estimates and record placed on record has proved that an amount of Rs. 6,52,730/- was payable by the Municipal Committee and the plaintiff-respondent is entitled to recover the same. In this regard the view of the learned lower appellate Court deserves to be noticed which read as under:-

The plaintiff had examined Madan Lal an Assistant from D.C. Office, Kaithal, as PW1 and statements of Suresh Sharma, Secretary municipality Pundri and R.D Mittal an assistant from D.C. Office were recorded in admission and denial on 2.5.2000. Mr. R.D.Mittal, admitted the documents Ex.P.l to Ex.P. 10 as copies of the letters which were available in the office record. Similarly Suresh Sharma, Secretary Municipality '' Pundri admitted the documents Ex.P.3/1, Ex.P.2, Ex.P.4 to P.30. Similarly, Madan Lal, Assistant D.C. Office was examined as PW1 to prove the official correspondence regrading the present controversy.

Ex.P.l is the representation made by the plaintiff for non-payment of the amount in question. Eix.P.2 is the letter from Deputy Commissioner to the Secretary, Municipality requiring him to take necessary action in the matter. Letter Ex.P.3 from Secretary, Municipal Committee, Pundri to the Deputy Commissioner admits that the plaintiff had carried out some work for the municipal committee on the oral requests of the municipal counselors. The municipal committee passed a resolution No.7 on 29.4.1999 admitting these facts and constituted a sub-committee to enquire into these facts. The copy of resolution was produced as Ex.P.3 Ex.P.3/2 is the enquiry report of the sub-committee which shows that the prescribed works (as mentioned in para No.2 of the plaint) were found to have been carried out by the plaintiff. The details of these works have been given in this report. After receiving the said report the Deputy Commissioner, accorded ex past facto administrative approval to all the works. This is clear from letter Ex.P.5 to Ex.P.6 shows that the work carried out by the contractor was assessed and entered in the measurement book of municipal committee Pundri at pages 2 to 25. Ex.P.6/1 is the assessment of the cost of the work carried out by the plaintiff. This assessment made by S.D.O. Panchayati Raj was accepted by the Deputy Commissioner and he directed for further necessary action in the matter vide his letter Ex.P.7. Vide letter Ex.P.8 the Secretary had informed the Deputy Commissioner that an amount of Rs. 6,52,730/- was payable to the contractor for the work carried out by him and that an amount of Rs. 17,52.000/- was available with the municipal committee.

It is thus clear from the aforesaid official correspondence that the work in question was actually carried out by the plaintiff and the municipal committee had itself assessed the said work at Rs. 6,52,730/-. The Deputy Commissioner, had directed the Secretary to proceed further as per Rules. The payment was never made to the plaintiff....

The argument of the defendants-appellants that in accordance with the provisions of Section 50 of the Haryana Municipal Act, 1973 (for brevity the ''Act'') the contract was required to be in writing if it exceeds Rs. 500/ and that it must be signed by two members one of whom should be the President or Vice President was rejected. The lower Appellate Court has placed reliance on two judgments of Supreme Court in the cases of State of West Bengal v B.K. Mondal and Sons AIR 1962 S.C. 79 and The New Marine Coal Co. (Bengal) Private Ltd. Vs. Union of India (UOI), .

Mr. Sameer Rathore, learned Counsel for the defendants/appellants has vehemently argued that u/s 50 of the Act every contract may (by?) or on behalf of the Municipal Committee which exceeds Rs. 50/- has to be in writing and it must be signed by two Members one of whom should be the President or Vice President and the other one Executive Officer of the Secretary of the Committee. Learned Counsel has emphasised that this provision partakes the character of Article 299 of the Constitution which provides that all agreement entered into on behalf of the Union of India or of State are required to be in writing and entered into by the President or by the Gerynor of the State, In support of his submission learned Counsel has placed reliance on a judgment of Delhi High Court in the case of Hindustan Housing Factory Ltd. v. Delhi Municipal Committee 1993(3) R.R.R. 552. He has placed reliance on the judgment of the Supreme Court in H.S. Raikhi case (supra).

After hearing learned Counsel I am of the view that the instant appeal is liable to be dismissed because the lower Appellate Court has rightly placed reliance on judgments of the Supreme Court in the cases of M/s B.K. Mondal (supra) and the New Marine Coal Co. (supra). In the former case a Constitutional Bench of Supreme Court has laid down three conditions which must be fulfilled to invoke the principle of equitable compensation envisaged by Section 70 of the Contract Act, 1872. The aforementioned position emerges from the reading of para 14 of the judgment which is as under: -

It is plain that three conditions must be satisfied before this section can be invoked. The first condition is that a person should lawfully do something for another person or deliver something to him. The second condition is that in doing the said thing or delivering the said thing he must not intend to act gratuitously; and the third is that the other person for whom something is done or to whom something is delivered must enjoy the benefit thereof. When these conditions are satisfied Section 70 imposes upon the latter person the liability to make compensation to the former in respect of or to restore, the thing so done or delivered. In appreciating the scope and effect of the provisions of this Section it would be useful to illustrate how this section would operate. If a person delivers something to another it would be open to the latter person to refuse to accept the thing or to return it; in that case Section 70 would not come into operation. Similarly, if a person does something for another it would be open to the latter person to accept what has been done by the former; in that case again Section 70 would not apply. In other words, the person said to be made liable u/s 70 always has the option not to accept the thing or to return it. It is only where he voluntarily accepts the thing or enjoys the work done that the liability u/s 70 arises. Taking the facts in the case before us, after the respondent constructed the warehouse, for instance, it was open to the appellant to refuse to accept the said warehouse and to have the benefit of it, It would have called upon the respondent to demolish the said warehouse and take away the materials used by it in constructing it; but if the appellant accepted the said warehouse and used it and enjoyed its benefit then different consideration come into play and Section 70 can be invoked. Section 70 occurs in Chapter V which deals with certain relations resembling those created by contract. In other words, this chapter does not deal with the rights or liabilities accruing from relations which resemble those created by contract.

(Emphasis added).

Similar view has been taken by the Supreme Court in the case of V.R. Subramanyam Vs. B. Thayappa and Others, . However, principles of Section 70 of Contract Act, 1872 and as propounded in the aforementioned judgment have been again applied for grant of amount of compensation in respect of construction work done for Municipal Committee. In the case of Pannalal v. Dy. Commissioner, Bhandara holding that the provisions of Section 70 of the Contract Act, 1872 apply to individual and the Corporate Act, 1872 apply to individual and the Corporate Bodies/Government alike their Lordships of the Supreme Court held as under:-

It is true, as the learned Judges of the High Court pointed out that real basis for a claim u/s 70 is not the terms of the contract but the quantum of the benefit actually derived. In the absence of any other material the contract between the parties provides a useful basis for calculating that benefit, it has not been alleged on behalf of the defendants that the rates agreed upon and later enhanced were not fair rates or that anybody else would have undertaken the work cheaper. The only reasonable way of arriving at the value of the benefit derived by the Government is on the basis of the rates agreed upon (including future increases in rates by PWD) and that would be a fair indication of the value of the work. We may in this connection refer to the decision of this Court in Piloo Dhunjishaw Sidhwa Vs. Municipal Corporation of The City of Poona, , where the market price was taken as a proper indication of compensation u/s 70 and interest also was awarded.

It is thus evident that if a contract has been held to be illegal and not entered into in accordance with the provisions of statute then the remedy of a plaintiff is not completely lost as long as it is shown that the plaintiff has lawfully done something for the other and he did not intend to act gratuitously. The other condition required to be proved is that the defendant has enjoyed the benefit of works done after accepting the same. In the present case all the three ingredients have been proved. In the letter Ex.P-3 the Secretary Municipal Committee, Pundri (defendant-appellant) has written to the Deputy Commissioner admitting that the plaintiff-respondent had carried out some work for the Municipal Committee on the oral request of Municipal Councillor. Thereafter the Municipal Committee had passed a resolution No. 7 on 29.4.1999 admitting those facts. It also constituted a Subcommittee to enquire into these facts. A copy of the resolution has been brought on record as Ex.P-3 and the enquiry report of the Sub-Committee has been produced as Ex.P-3/2. These documents show that the prescribed works were found to have been carried out by the plaintiff-respondent and the details have been given in the report. Even the ex post facto administrative approval was accorded by the Deputy Commissioner which is proved by letters Ex.P-5 and P-6, These letters proved that the works were in fact carried out by the plaintiff-respondent and assessed. The work was entered in the measurement book of the Municipal Committee, Pundri (defendant-appellant). Even the assessment of the cost of the work as carried out by the plaintiff-respondent has been made by the S.D.O. Panchayati Raj Ex.P-6/1 which was accepted by the Deputy Commissioner by recommending further necessary action vide his letter Ex.P-7. Accordingly the Secretary of the defendant-appellant vide his letter Ex.P-S had intimated the Deputy Commissioner that an amount of Rs. 6,62,730/- was payable to the plaintiff-respondent for the works he has carried out and that an amount of Rs. 17,52,000/- was available with the Municipal Committee, it is thus clear that all the conditions envisaged In para 14 of the judgment in the case of M/s B.K. Mondai and Sons (supra) have been satisfied. Therefore, the case is securely covered by the view taken by the Supreme Court. Further doubts have been completely removed by the later judgment of the Supreme Court in the cases of Piloo Dhunjishaw Sidhwa Vs. Municipal Corporation of The City of Poona, and Pannalal case (supra). Therefore the view taken by the lower Appellate court deserves to be approved.

The arguments of the learned Counsel based on Article 299 of the Constitution and Section 50 of the Act would not require any details consideration because Section 70 is available in cases where obligations have arisen out of certain obligations resembling with those created by contract. In other words Chapter 5 of the Contract Act, 1872 does not deal with the rights and liabilities accruing from the contract, However, it would be apt to remark that the legal position as projected by the learned Counsel for the defendants-appellants emanating from the judgments of the Supreme Court in the cases of H.S. Rikhy (supra) or the judgment of the Delhi High Court in Hindustan Housing Factory Limited (supra) could hardly be, doubted. The provisions are available despite Section 50 of the Act. Therefore, those principles would not be attracted to the facts of the present case because the plaintiff-respondent deserves to succeed on the basis of Section 70 of the Contract Act, 1872. Therefore, the arguments raised by the learned Counsel for the appellant would not survive.

For the reasons aforementioned this appeal fails and the same is dismissed.