Sildi and Company vs The Governor-General in Council

Sarkar, J.—This is a suit against the Government of India. The Plaintiff''s case is that at the request of a military officer of the Government, it supplied at Job A.S.F. No. 8 four pump sets, each set consisting of a pump and an engine, for which the Defendant agreed to pay Rs. 15,525. This sum is also claimed, in the alternative, u/s 70 of the Indian Contract Act as compensation for goods supplied without the intention of doing so gratuitously and of which the Defendant has had the benefit. The defence is that the contract is not binding on the Government as it was not in the form prescribed by Section 175 of the Government of India Act, 1935, that the Defendant did not have the benefit of the goods and that the goods were in any event worthless and had been rightly rejected by the Defendant and had in fact been taken away by the Plaintiff.

The Plaintiff also claims Rs. 350 on account of the price of a certain cylinder. It is not necessary to go into this latter claim for the Defendant has agreed to pay this sum without admitting liability and the Plaintiff is content to accept payment on that term.

It may also be stated here that the Defendant admits having accepted one pump out of the goods supplied and has agreed to pay for the same and in fact deposited in court Rs. 800, being the price thereof. The disputes in this suit do not concern this pump and the cylinder mentioned above.

The following issues were framed for trial:

(1) What are the terms and conditions of the contract mentioned in the plaint?

(2) Is such contract valid or binding on the Defendant?

(3)(a) Did the Defendant enjoy the benefit of the machines and the cylinder?

(b) Is the Plaintiff entitled to compensation for such enjoyment?

(4) Were the engines and pump supplied by the Plaintiff in terms of the contract?

(5)(a) Was the Plaintiff liable to provide for repairs?

(b) Were any repairs necessary?

(c) Did the Plaintiff provide for the repairs?

(6) (a) Was the Defendant entitled to reject the goods?

(b) Did he reject the goods?

(c) Did the Plaintiff take back the pumps and engines ?

(7) Were the machines merchantable as second hand machines?

(8) What is the reasonable price of the cylinder supplied?

(9) To what relief, if any, is the Plaintiff entitled?

The hearing of the suit commenced on August 11, 1949 and evidence was concluded after four days hearing, on August 18, 1949. It then transpired that Sinha, J. was about to deliver judgment in a case in which important points of law involved in this case were likely to be considered. Both parties requested me to adjourn this suit for arguments till after Sinha, J. had delivered his judgment. This judgment has since been delivered and the matter, therefore, came up for arguments on February 28, 1950.

It is conceded on behalf of the Plaintiff that if I held that the contract sued upon was not binding on the Defendant, the issues other than issues Nos. (3) and (9) would not arise. The Plaintiff, however, contended that it was entitled to make a claim u/s 65 of the Indian Contract Act. This is a new issue and it has been fully argued before me.

I have no doubt in my mind that it must be held that the contract on which the Plaintiff sues is not binding on the Defendant. The authorities are clear that Section 175 of the Government of India Act, 1935, is mandatory and a contract not made in compliance with the provisions of that section is of no effect. That was the view accepted by Sinha J. in the judgment already referred to in the case of Ram Nagina Sing v. Governor-General in Council (1949) 84 C.J.L. 275, 294.

In this view of the matter I have only to decide whether the Plaintiff should succeed u/s 65 or Section 70 of the Indian Contract Act.

First as to Section 65. The Defendant objects that there is no sufficient pleading on which a claim under this section can be based. The Plaintiff''s answer is that there is, and that in any event relief u/s 65 can be claimed without any pleading.

Section 65 deals with agreements which are discovered to be void and contracts which have become void. The present case is not one of a contract becoming void for here there has been no contract, that is to say, no agreement enforceable at law. This case, therefore, if it has to come u/s 65, must be one of an agreement being discovered to be void. It has to be established. That the agreement was in this case discovered to be void. It has also to be established when it was so discovered for the period of limitation for a suit u/s 65 starts running from such date ( (1888) L.R. 15 I.A. 211 (Privy Council) .) The date of discovery is also important because it has to be proved that the advantage was received before that date: Ram Nagina Sing v. Governor General in Council (1949) 84 C.L.J. 275, 294. Jagadish Prasad Pannalal v. Produce Exchange Corporation Ltd. AIR (1946) Cal. 245, 248. Now these are questions of fact and that being so they have to be pleaded. If they have not been pleaded they cannot now be allowed to be established. It has been held by the Judicial Committee that, "in the absence of special circumstances (****) the time at which an agreement is discovered to be void within the meaning of Section 65 is the date of the "agreement", AIR 1933 63 (Privy Council) . In the absence of the special circumstances, therefore, there is no scope for relief u/s 65 being granted where the case is one of the agreement being discovered to be void. See Annada Mohan Roy v. Gour Mohan Mullick (1923) L.R. 50 L.A. 239. The special circumstances must necessarily be questions of fact and must be established on the evidence. The Defendant is also entitled to lead evidence on this point but he is not bound to do so unless it is pleaded and an issue raised.

Again, a claim u/s 65 is a particular kind of cause of action and is governed by a particular article of the Limitation Act. That is what was held in Basso Koer''s case already mentioned. If it is so, then that cause of action has to be pleaded. It is elementary that there can be no decree on a cause of action which has not been pleaded.

It was argued that it was held in the case of Babu Raja Mohan Manucha v. Babu Manzoor Ahmad Khan (1942) L.R. 70 I.A.that it was not necessary to plead facts giving rise to a claim u/s 65. I do not see that that was the decision in that case. All that their Lordships of the Judicial Committee held in that case was that an amendment of the plaint should have been allowed to raise the plea and they decided the case on the basis that the amendment had been allowed as they found that all the evidence for that plea was already on the record. In (1943) 13 AWR 56 (Privy Council) the Judicial Committee strongly deprecated the conduct of the lower court in allowing a claim u/s 64 of the Contract Act being entertained without the necessary pleading. They said,

In mercy to the parties and in the public interest, their Lordships think that they can hardly refuse to entertain the important question of commercial law upon which there was a difference of opinion in the High Court. But they cannot omit to take strong objection to the informality with which it has in this case been raised. While a rigid practice of refusing leave to amend is far from commendable, to entertain a claim of which the pleadings contain no suggestion is another matter altogether. It is unfortunate that a proper application for leave to amend was not insisted on by the High Court and a formal order made thereon duly safeguarding the rights of the Defendant, and ensuring that the basis in fact of the now case made should be set forth with particularity and exactness by the Plaintiff.

If an amendment was necessary to raise a claim u/s 64 of the Indian Contract Act, it would be no less necessary when a claim is sought to be made u/s 65 of the same Act. To say that an amendment is necessary is to say that a pleading is necessary.

It was also contended that no specific pleading was necessary because Section 65 laid down a rule of law which the Court was bound to apply. This does not carry the matter any further. The Court is similarly bound to apply all other rules of law but no question of the application of any rule of law arises unless there are facts which require such application and facts have to be pleaded.

It was of course open to the Plaintiff to apply for the necessary amendment of the plaint in this case. The Plaintiff did not, however, choose to make any such application. There was very good reason for this course of action. If the amendment had been allowed, the claim raised by the amendment would not have been maintainable unless a notice for it had been given u/s 80 of the CPC as the Defendant in this case is the Government. No such notice, however, was given in this case. That notice was not given before the suit as it had to be. On the facts of this case, the Plaintiff is forced to the position that the discovery by it of the agreement being void was made after that contention had been raised in the written statement. Its cause of action for restitution u/s 65, therefore, arose after the suit had been filed just as it did in Babu Raja Mohan Manucha v. Babu Manzur Ahmed Khan (6). That being so, no notice u/s 80 of the Code could have been given before the suit, as any such notice would be premature and invalid. Kesoram Poddar and Company v. Secretary of State for India (1926) 54 Cal. 969, 1024.

The question as to whether the plaint in this case pleads the facts necessary to give rise to a claim u/s 65 of the Indian Contract presents no difficulty. These facts are that the agreement was discovered to be void, the date when the discovery was made, any special circumstances making the date of the discovery later than the date of the agreement and that the goods were delivered before such discovery. The plaint in this case does not allege any of these facts. In fact it does not allege that the agreement was at all void and, of course, does not state when it was discovered to be void. The necessary pleading, therefore, is absent.

In this state of the pleadings I ought not to permit the Plaintiff to put forward now a claim u/s 65 of the Indian Contract Act.

I now turn to the claim u/s 70 of that Act. There is no question that there is proper pleading for this claim and also a proper notice in respect of it u/s 80 of the Code The Defendant has, however, contended that he did not receive any benefit from the supplies made by the Plaintiff.

Section 70 is in the following terms:

Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered.

This is not a case of a person doing anything for another." There is no allegation in the plaint that the Plaintiff did anything for the Defendant. If Section 70 is to apply, the case must be brought within the other alternative mentioned in the section, that is to say, it must be a case of the Plaintiff delivering something to the Defendant. Now, there is no pleading that the Plaintiff delivered the pump sets to the Defendant. The pleading is that they were delivered at Job A.S.F. No. 8. The evidence has been that they were delivered at a certain military camp called the Angus Camp. My impression is that the case has all along proceeded on the basis that the Angus Camp was an American Army Camp and was in charge of the Americans. There does not, however, appear to be any direct oral evidence on the point. This is possibly because of the fact that that was the basis on which both sides conducted the case. There is, however, evidence that the persons present when the pump sets were delivered were American Officers: The matter, however, is put beyond all controversy by the Plaintiff''s own letters. Thus in its solicitors'' letter of November 13, 1945 it was stated:

Our clients supplied the goods to the U.S. Army when they were urgently in need of then and the U.S. Army had the use and benefit of the engines and the pumping sets and the price thereof should not be withheld.

This statement is repeated in several other letters from the same solicitors. There is, therefore, no doubt that the pump sets were delivered not to the Defendant but to the American Army. That being so, there is in my view no scope for a claim being made u/s 70 against the Defendant. Under that section the person bound to make compensation is the person to whom the goods were delivered and who has had the benefit of them. Admittedly the goods were delivered to the Americans and they had the benefit thereof and hence the Government of India cannot be called upon to make compensation in respect of them u/s 70. If the Americans had taken the goods as agent of the Defendant, then it might possibly have been argued that the delivery was to the Defendant-I do not, however, say anything as to the force of such an argument. Such agency would in any event be a question of fact and there is no evidence whatever to support it. Indeed the case of the Plaintiff, as could be gathered from the argument addressed on its behalf, was that the Indian Government were purchasing things as agent for the Americans. On this basis there is no scope for the argument that I have previously noticed and which, I felt, was at one time sought to be advanced on behalf of the Plaintiff.

Then there is the question of receiving benefit. It was suggested that there must have been some agreement between the Governments of India and U.S.A. under which the former would be paid the price of the goods which it purchased for the latter or at any rate would get credit in the accounts between the two for the goods. This is all mere theorising. No notice can be taken of such an argument in the absence of any evidence and there is none. Further it is admitted that both the Governments were agreed that the goods supplied were worthless and by common consent rejected them. It is irrelevant to enquire whether the goods were really worthless or whether their rejection was rightful or wrongful. If both the Governments were agreed that the goods were worthless, one would not pay or give credit to the other and the other would not demand payment or credit. In the result, even accepting that there was an agreement between the two Governments as is suggested, it is impossible to hold that the Defendant derived any benefit out of the supply to the U.S.A. Government.

Lastly I come to the question whether the goods were worth anything for if they were not, then in any case the Defendant did not obviously derive any benefit. In this respect the Defendant has been at some disadvantage as its officers who had inspected the machines before their rejection are practically all gone now. The Defendant was, however, able to find two witnesses capable of deposing about the matter: One of them being a lieutenant colonel and the other a lieutenant no longer in service.

The first witness was able to speak about one engine and he described it as junk. That, of course, was a figurative expression but gives sufficient indication of the condition of the engine. He also said that another engine had caught fire, and when he saw it, it was completely destroyed. His opinion was that the fire had been due to inherent defect. He admitted that he did not know that this engine had been supplied by the Plaintiff. There is, however, no doubt that this was so for the Defendant''s other witness said that one of the engines supplied by the Plaintiff had caught fire. Then the Defendant''s first witness also said that three out of the four pumps supplied were of no use for they were centrifugal pumps and would not draw water from the tube-wells to which they had been fitted because the water level in the tube wells varied from time to time.

The Defendant''s second witness said that he saw the pump sets first about the middle of November 1943-the supply was by the middle of the preceding October-and since then they had been continually giving trouble and eventually on December 24, 1943, he rejected them. He also said that the pump sets broke down continually and the residents of the camp were put to great difficulty about water-supply so much so that arrangement had to be made to fetch water by tank lorries from a neighboring jute mill. This witness, however, admits that he saw the pump sets on three occasions only between the middle of November and 24th of December. He described the pump sets in detail even by drawing sketches and said they were improvised things quite unsuitable for the use to which they were put. He explained the manner in which they were defective.

There can be no doubt that the Defendant''s witnesses were witnesses of absolute truth. That cannot be said of the Plaintiff''s witnesses. Furthermore, the latter were admittedly not technical men while the former were so. It also appeared that the Plaintiff could have produced documents to show that its case was true but this was not done and the inference from such failure must be inevitably against it.

On the evidence before me, I have no doubt chat the machinery supplied were defective and had been rightly rejected by the Defendant. I ought to add, however, that the Defendant was unable to produce'' any evidence in support of its case that after rejection the machinery was removed by the Plaintiff, but this does not matter. Admittedly the Defendant had rejected the goods and called upon the Plaintiff to remove them and if it did not do so that obviously cannot increase the Defendant''s liability. I ought also to add that it is admitted by the Plaintiff that its agents repeatedly inspected the machines while they were at the Angus Camp. The Plaintiff''s evidence was that this was routine inspection. I am not much impressed by this. Angus Camp was quite a few miles out of Calcutta and to go there meant time and money. Why the Plaintiff should incur to trouble and express for repeated routine inspection is something that I am unable to appreciate. It is true that there are not many written complaints from the Defendant about the condition of the machinery while there are certain letters from the Plaintiff stating that the machinery were working satisfactorily and to most of these no replies had been given The Defendant''s second witness said that they were at war and had no time for correspondence and that repeated verbal complaints had been made to the Plaintiff at its office or when its men came for inspection. I am quite prepared to accept this evidence. I am quite unable from the omission on the part of the Defendant to write, to come to the conclusion that the statements in the Plaintiff''s letters were true. There is indubitable evidence that serious objections to the condition of the machines had been taken by the Defendant at times. About the middle of November 1943 the Plaintiff had even been told to replace the machines or they would be rejected. Then the arrangement for the water supply from the neighboring mill points to a break down or at least to a very unsatisfactory working of the mechines. In this state of the evidence it is impossible to hold that the machines supplied by the Defendant worked satisfactorily for any reasonable length of time.

It has to be noted that I am not concerned with any question as to whether the goods were in terms of the contract for I have held there was no contract and I have been asked not to go into the issues as to the terms of the contract or the goods being in accordance therewith if I held that the contract did not exist. It matters not, therefore, that the contract provided that the machinery would be secondhand and there is, hence, no force in the argument that no better performance could in any event, be expected or demanded. All that I am now concerned with is whether any benefit was derived from the machines as they were. In my view the evidence is clear that no benefit but only trouble was the outcome of the machinery delivered. The benefit received for the few days that the machinery worked was more than offset by the trouble that followed in the period that they failed to work. It has to be remembered that the health of an army at war is a most, serious matter and any break down in the sanitary arrangements for the army might result in disastrous consequences.

The contract being out of the way, it is equally irrelevant to enquire whether the rejection was wrongful. Any person has the right to reject goods delivered to him unless he has agreed to accept them and to justify such rejection it is not necessary for him to show that the goods were in any way unsatisfactory. The Plaintiff contends that if once the goods were accepted, though there was no contract they could not afterwards be rejected. It is said that in this case the Defendant accepted the goods by working them for a considerable period. I am doubtful about the force of this argument. I am, however, clear in my mind that there was no acceptance of the goods in this case. When a person has delivered to him machinery, without a contract providing for such delivery, he is certainly entitled to try them before he decides to keep them and he does not accept them by trying them. A buyer under a contract would have the right to a reasonable inspection of the goods. It would be a lamentable state of the law to hold that a person who has goods sent to him without his having asked for them, and obviously for his acceptance, should have no such right, and that he should either keep them at his peril or reject them at once. What the Defendant did in this case was just to try them for sometime and never intimated his acceptance of the goods. The correspondence and the evidence unmistakably show that the Plaintiff was aware that the Defendant had not accepted the machinery and was entitled to reject them if they were not in terms of the contract. The contract may be out of the way but that would not change the character of the mutual understanding as to the basis on which the Defendant worked the machines. In such circumstances, it is impossible to say that by working the machines the Defendant accepted them and did so irrevocably. The Defendant was, therefore, entitled to ask the Plaintiff to take them away. Section 70 does not make the Defendant who uses the goods for trying them liable for any benefit received by such trial. I am therefore unable to hold, as I am asked to do, that by using the machinery for testing them, the Defendant has received benefit of the delivery of the machinery and must make full compensation as if he had freely kept them.

Looking at the matter from all points of view that have been placed before me, I have formed the opinion that in this case no benefit was derived from the delivery of the pump sets either by the Indian Government or the U.S. Army and no question of making any compensation arises.

In the result this suit fails.

The Defendant having, however, agreed to pay the Plaintiff Rs. 350 in respect of one cylinder delivered by the Plaintiff and Rs. 800 as the price of one pump retained, there will be a decree by consent for Rs. 1,150 in favour of the Plaintiff.

Save as aforesaid this suit is dismissed. The Plaintiff will pay the Defendant''s costs of this suit, certified for two counsels.