8UPREME COURT REPORTS [I962j The a ommission~r of I nC<Jme–tax, Bombay City I1 v. consideration. The result, therefore, is that all these three appeab fail and must be dismissed with costs ; one heari1!¥ foe.
Appeal8 dismissed. Shalr:untala and two others, etc. S •. K. Das J. July, 24. SETH DJKHRAJ JAI~URIA v. UNION OF INDIA (J. L. KAPUR, 1{. SUBBA RAO, M. HIDAYA'.l'ULLAH, J. ·c. SnAH ;ind ~AGHUBAR DAYAL, ,JJ.)
Contract-Divisional. Supprintendent of Railway placing orders-Cont,ract not 1 e:tpressed to be in name of Goverrior- General and not executed on behalf of Governor-General-Whethei· binding on G6uern1nent- (/overnmi:nt of India Act, 1935 (26 Geo. IJ Ch. 2) s. f715 (3).
In the year 1913 the Divisional Superintendent, East lti<liciu Raihvay piacecj certain purcha~e oi<lers with the appel- lant for the supply "of foodgrains for the employees of the East ~ndian Railway. , The orders \\:'ere not ('Xpressed to be made .in the name Of the Governor-General and were not
executed on ~ehal( of the !J.overnor-General as required by s. 175 (3) of the Government oflnclia Act, 1935. They were signed Dy the Divisional Superintendent eithef..inwhis oWn hand or in the ·haiid of h'is PCrsonal Assistant.
Some deliveries of foodgrains \.Vere made under theSe orders aild were aCcepted and paid for by the Railway Administration. But lhe Railway i\dn1inistration declined to accept further deliveries of food- grains. The-appellant sold the balance of foodgrains under the purchase orders and fi.JetJ a suit to recover the difference bet- \Vcen thC price realised Ly
~-ale and the contract price. The respondent resisted the suit infe.r alia on the ground t.hat the contracts were not Binding on it. Held, that the contracts were not binding on the res-
pondent and it was not liable for damages for breach of the contracts. Under s.17.'(3) of-the Government of India Act, J 935, as it stood at the relevant time, the contracts had: (a) to be expressed to be made by the Governor-General, (b) to be executer! 0n hehalf of the Governor-General and (c) to be ·executed by officers duly appointed in that behalf and in such manner as the Governor-General directed or authorised. The ·2 S.C.R.
authority to a persun to execute contracts may be conferred not ouly by rules expre,oly framed and by formal notifications issued in this behalf but may also be speci;illy conferreu. The evidence in the case showeu that such authority was specially conferred upon the Divisional Superintendent. But the con- tracts were not expressed to be made by the Governor-General and were not executed on liis behalf.
The provisions of s. 175(3) were mandatory. The object of enacting these pro- visions was that the State should not be saddled with liability for unauthorised contracts and hence it was provided that the contracts rr. ust show on their face that they were made by the Governor-General and executed on his behalf in the
manner prescribed by the person authorised. State of Bihar v. Mfs. Karam Chand Thapar and Bros., Ltd. (1962) I S. C.R. 827, followed • Liverpool Borough Bank v. Turner, (1861) 30 L. J.
Ch. 379, Municipal Coiporation tf Bom/Jay v. Secretary of Slate, I. L. R. (1905) 29 Born. 580, Kessoram Poddar and Co., v. Secretary of State for India, I. L. R. (1927) 54 Cal. 969, S. C .. Mitra and Co., v. Governor-General of India in Council, I.L.R. (J9j0) 2 Cal. 431, Secrdary of State v. Yadavgir
Dharamgir, I. L. R. (1936) 60 Born. 42, Secretary of State v. G.T. Sarin and Co., I. L. R. (1930) 11 Lah. 375, U. P. Govern- ment v. LalNanhoo Mal Gupta, A. I. R. (1960) All. 420, and Devi Prasad Sri Krishna Prasad Ltd. v. Secretary of State, I. L. R. (1941) All. 741, referred to.
S. K. Sen v. P,-ovincial P. TV. D., State of Bihar, A. I. R. (1960) Pat., Chatturbhuj VithaldasJasoni v. Morashwar Prash- rarn, (1954) S. C.R. 817, J. K. Gas Plant Mfg., Co. (Rnmtur) Ltd. v. King Emperor, (1947) l. C.R. 141, Moreshwar l'an-
garkar v. State of Bombay, (1952) S. C.R. 612, State uf Bom- bay v. l'urshottam Jog Naik (1952) S. C.R. 674 and :>iate ~f U.P. v. Manbodhan Lal Srivastava, (1958) S. C.R. 533, dis- tinguished.
C1v1L APPELLATE JumsrnctroN : Civil Appeal No. 86 of 1959. Appeal by special leave from the judgment and order dated March ~7, 1957, of the Patna High Court in Appeal from Original Decree No. 359
of 1948. A. V. V isu·anatlia Sastri and 8. l'. Vcirma, fw the appellant. Seth Bikhraj Jaipuria v. Union of India Seth Bikhraj Jaipuria v. lhdon of Indla Shah J; 88:2 [1962j fl . .\'. Sanyal, Additional Solicitor-General of
India, R. Ganapnthy Iyer and 'I'. Jf. Sen, for the respondent. 1961. July, 24. The Judgment of the Court was delivered by SHAH, Bikhraj Jaipuria-hereinafter called the appellant-is the sole proprietor of a
grocery business conducted in the name and style of "Hnjaram Vijai Kumar" in the town of Arrah in the State of Bihar. In the months of July and August, 1943, the Divisional Superintendent, East
Indian Bailway under three ".purchase orders" agreed to buy and the appellant agreed to sell certain quantities of food grains for the employees of the East Indian Railway. The following table sets out the purchase
pricPs, the commodities, the dates of purchase orders, the quantities and the rates and the method ,,f supply. Purchase Date of Kinds Quantity :Kates. Order purchase of of No. orders. commo- commo-
<lity. di ties. (I) (2) (3) ( 4) (5) 69. 20-7-1943. Gram 1st 1000 mds. @ Rs. 15/- quality. per md. (plus cost of new bags not exceeding Rs. 75/· per bags) F.O.R. any E.I.Rly. sta-
tion in Bihar. 76. '. 4-7-1943. Rice 1000 md8. @ Rs. 22-8-0 Dhenki (plus cost of Medium bags not ex- quality. ceeding Rs. 7 5 2 S.C.R. (1) SUPREME COUl~T REPORTS 1116. (2) (3) (4)
(5) per cent) per md. F.O.R. any station on the divi- sion. ii. Wbeat white as per samplu. 24-S-l!J43. Rice medium quality. 5000 mds. @ Rs. 20-8-0 per md. with bags F.O.R. any station
on E.I.R. on the Division. 15000 mds. @ Rs. 24/- per md. with- out bags F.O.R. E.I. Riv. stiition in Bihar. Purchase orders Nos. 69 and 76 were signed by S.C. Ribbins, Person11l Assistant to the Division-
al Superintendent and purchase order No. 106 was signed by the Divisional Superintendent. Under the purchase orders delivery of grains was to commence within sevf>n days of acceptance and was to be com-
pleted within one month. Ttie appellant delivered divf>rse quantities of foodgrains from time to time but was unable folly to perform the contraets with- in the rmriod stipulated. Retween .Tuly 20, Hl43
and August :!4, 1943, he supplied 3465 mannds of rice and between September 1, 1943 and Scph·mber I 9, 1943 he supplied 1152 maunds 35 seers of wheat. In exercise of the powers conferred by cl.(b) of
Rub-r. (2) of r.81 of the Defence of India Rules, the Government of Hihar by notification No. 12691-P.C. dated September ltl, l!l43 dircctPd that commodities named in ('olumn I of the ~ehedulP shall not, from
and including September 20, 1943 and until further notice, be sold at any primary somco of supply or by the proprietor, manager or employee of any mill in the Province of Bihar at prices exceeding those
Seth Bikhraj Jaipuri<L v. Union of lndi, Shah T. Selk Bikhraj Jaipuria v. Union of India Shah .J. (1962J specified in the second column of the schedule. The controlled rat~ of rice (medium) was Rs. 18/- per
standard maund, of wheat (red) Rs. 17/-, of wheat (white) Rs. 18/- and of gram Rs. 12-8-0. The Sub- Divisional Magistrate, District Arrah issued on i:leptember 21, 1943, a price-list of controlled arti-
cles fixing the same prices as were fixed for wheflt, rice and gram by the notification issued by the Government of Bihar. By cl.(2) of the notification, a warning was issued that in the event of the deal-
ers Melling controlled articles at rates exceeding those fixed or with-holding stocks of such articles from sale, "they will be liable to prosecution under r.81 ( l) of the Defence of India Rules."
By a telegraphic communication dated Sep- tember 28, 1943, the Divisiond Superintendent in- formed the appellant that under the purchase orders, foodgrains tendered for delivery will not,
unless despatched before October 1, 1943, be accept- ed, and barring a consignment of 637 maunds 20 seers accepted on October 7, 1943, the Railway Administration declined to accept delivery of food
grains offered to be supplied by the appellant after October I, 1943. The appellant served a notice upon the Divisional Superintendent complaining of breach of contract and sold between February 18
and F"bruary 23, 1944 the balance of foodgrains under the purchase orders which were lying either at the various railway stations or in his own go- downs, The appellant then called upon the Railway
Administration to pay the difference between the price realised by sale and the contract price and failing to obtain satisfaction, commenced an action (Suit No. 359/48A) in the court of the
First Additional Subordinate Judge, Patna for a decree for Rs. 2,89,995-15-3 against the Dominion of India. The appellant claimed Rs. 2,32,665-12-0 being the difference between the
contract price and the price realised, Rs.42, 709-10-3 as interest and Rs. 14,620-9-0 as frei~ht, wharf- l 2 S.C.R. age, cartttge, ' price of pucking muterial, Jabour churges and costs iflcnr_red in holding the sale.
The appellant s11bmitted that under·the terms of thEl purchaSo orckrn, supply \Vas .to commence within seven days of the date of receipt of the -orders and w:is to be completed within one month, but
it was not intended that time should be of the essence of the contract, and in the alternative that the Railway Administration had waived the stipulation as to time in the performance of the
contracts and t.herefore he was entitled, the.· Rail- way Administration having committed breach of the contracts, to recover as compt"nsation tho difference between tho contract price and the price
for which the grains were sold. The suit'was resisted by the Dominion of India contending int~r alia that the appellant· had no cause of action for tho claim in the suit., that the contrapts between the
appellant 1 and the Divisional Superiiitendent, Dinapur were .not l'alid and binding upon the Government of India and that.th!' contracts were liable to lie a Yoide'd by the ·Government, that •time
was of the essence of the contrar.ts, that stipulitt[ons as to time were not waived, itncl that·· no breach of contract was committed by the East Indian Ritilway Administration anq iri any event, the appellant
h<J,d not m1ffered :1.l1y loss as a rC'snlt of sunh.Jire,ach. By the written statement, it was admitted that the East Indian Railway through the Divisional Snpnrin- tcndent, Dinapur had hy three orders set out in the
plaint agreed to buy and the appellant hail agreed to sell the commodities specified therein, but it waH denied that the Divisionttl Superintendent hnd henn "given complete authority to (1ntnr int.o nontracts
for the supply(bf foodgrains." The trial court held that timo was not of tho essence of the contracts and even if it was, broach of the stipulation in that behalf wits waived. It further held that the plea }>hat the contracts were
void because they were not in accordance with the 1961 G Seth Bikhraj JaipUria v. Union of lrulia Shah J. J~/Jl Seth Bikhraj Jaipu.ria v. If nion of India Shnh J. SS() [Hl62] provisions of s. 175 (:3) of"tht1 Governm()nt of Imlia
Act, f935,, oouid not be per!p.itted t-0 be urged, no such pl~a }javing been raised by· the written state- ment. Holding that the Divisional Superinlen!lent was authnrisc{l to onttit. into. tho contracts for
purchase of foodgrains, and that he had committed hr.each of contract, t·he trial Judge awarded to the appellant Rs. l ,29,4fi0-7 -0 with interest -thereon at the rate of 6% per amJum fro.m October I, 1943,
to the date of the institution of the suit and further interest at 6% on judgment. Against that decree, an appeal was preferred by the: Union of India to the High Court· of Judicature' at Patna and the
appellart filc>d cross-objection~ to the decr(lo appealed from. The.High Comt- helcl that· time was of tho essonrc of the contracts, b11t tho Railway Administration having accopt-ed the g~iods tendered
after the expiration of the period prescribed thereby, the Rtipulatiun as t.o time was waived. The High Cnurt fnrth<:r helrl t.hat by t-ho notificit- tion unclt-r r. 81 of t.110 DPf.,ncP of India. Rules,
performance of the contracts nad not. been ro11de1·ed illogaLbut t.lie Divisimlal S11perintondent. had "no authArity to enter into contracts to purohnse. food grains on bohalf of the Railw(l.y Administ.ratioi;i
and thftt in any .event., t.he contracts not havit1g hMJl 1>xpresRP.d to lw macfo by t):ie Go1ernor-General :md not hn.v'ing lwcn 01;:oquted on bc•half. of tho Governor-General by
an officer duly appointed in that behalf and in manner pres- cribed, th~ .contracts were ui;ienforceable. '.Ghe High Court aiso held· t.ha t the appellant was not <'ntitlcrl to a di-ere<'
for compensation because he had failed to provn the ruling market rnte on the date of breach viz , October 1, 1943. The High Court also observed that the trial cmirt erred in awarding interest. prior tci the date of the
snit and in so holding, reii\'~I upon the judgment of the .Privy Gounc.il ii) Bengal N agpiir Railu:ay Co., Ltd. v. Rut1anji Rr;;mji- and olhers ('J. (I) L. R. (1938) 65 "I. A. 66.
'r r In this appeal by the appellant, two· questions fall to be determined, (1) w!.ether relying upon the purchase orders signed by the Divisional Superintendent which were not made and executed
in the m1111ner prescribed by s.175 (3) of the Government of India Act 1935, ·.the appellant could sue ttle D'ominion o'f India for compensation for breach of contract, !J,nd (2) whether the appellant
pas proved the ruling market rate on October 1, 1943 for the commodities in question. The finding tnat the Radway Administl'ation had waived the stipulation as to the performance of the contracts within the time prespribcd though
time w:1s under the agreement of trie essence, is not challenged before us -on behalf of the Union of India. If the finding as to waiver is conect, manifestly hy his telegraphiP intimation dated
September 28, 1943, that tho fooclgrains not des- patched before Octal/er 1, 1943, will not be accept- ed the Divisional Superintcrnl<'n1 rnmmitted a breach of the contract. Section 175 (3) of th(' :Uoycrnmeut of India
Act as in f<;>rce at. t.he materia I t.ime-provi<led : "Subject to tho•provisions of this Act, with respect to the Federal Railway Authority, all contracts made in the exorcise of the executive
authority of the Federation or of a Province shall be expressed to be made by the Governor-General, or by the Governor of the Province, as the case may be, and all such contracts and all assurnnces
of property made in the exercise of that authoritv shall bo executed on behalf of the Governor-GeneraL or Governor by. such .persons and in such' manner aS" he may direct or authorise."
The Federal Railway Authority harl not come foto being in the year 1943: it was in fact never sot up. The contracts for t4e supply of foodgrains were undoubtedly made, .in the exercise of executive
8 eth:fJikhraf Jaipi.lria v. Union of India. Seth Bikhraj Jaipuria v. Union of India Shah J. [1962] authority of the Federation. The contracts had therefore under ~. 175(3), (a) to be expressed to be
m~d'' by the Gm·ernor-General, (b) to be executed on hehalf of the Governor-General, and (c) to be ,cxec•1tcd by officers duly appointed in that behalf and in such manner as the Governor-General may
direet or authorise. But no formal contracts were executed for the supply of foodgrains by the appellant : he had merely offered to supply food- grains by letters addressed to the Divisional Superin-
tendent and that officer had by what are called "purchase orders" accepted those offers. These purchase orders were not expressed to be made in the name of the Governor-General and were not
executed on beltalf of the Governor-General. The purchase orders were signed by the Divisional Superintendent either in his own hand or in the hand of his Personal Assistant. In the first instance,
it has to be considered whet her the Divisional Superintendent had authority to contract on behalf of the Railway Administration for buying foodgrains required by the Railway Administration. By Ex.M-2
which was in operation at the matt>rhtl time, all instruments relating to purchase or hire, supply and conveyance of materials, stores, machinery, plant, telephone lines and connections, coal etc. could be
executed amongst others by the Divisional Super' intendent; but contracts relating to purchase of foodgrains are not covered by that authority. Under item 34 which is the residuary item, all
deeds and instruments relating to r~ilway matters other than those specified in items 1 to 33 may be executed by the Secretary of the Railway Board. It is common ground that there is no other item
which specifically authorises the making and execution of contracts relating to purchase of food- grains; deeds and instruments relating to purchase of foodgrains therefore fall within item 34. The
Secretary to the Railway Board had not executed these purchase orders :··but the trial Court held 2 S.C.R. that the Divisional Superintendent was authorised to enter ,into contracts with t,he appellant for the
supply of foodgrains. In so holding, the trial judge reliPd upon the evidence of Ribbins, Grain Supply Officer and Personal Assistant to the Divisional Superintendent, Dinapur. The High Court disagreed
with that view. The High Court observed that the authority of the officer acting on behalf of the Governor-General "must be deduced from the express words of the Governor-General himself
expressed by rules framed or by notification issued, under s. 175(3), No notifica.t .on has been produced in this case showing that th.e Divisional Superin- tendent had 'been authorised bv the Governor·
General to execute such contracts on his behalf, nor has any rule been produced which conferred authority upon the Divisional Superintendent to make such contracts." After referring to paragraph IO of the noti-
fication, Ex. M-2 items l to 34, the High Court observed: "Therefore this notification rather shows that the Divisional Superintendent had no authority to executP the contracts for the purchase of food
grains." In our view, the High Court was in error in holding that the authority under s. 175(3) of the Government of India Act, 1935 to execute the contract could only be granted by the Governor-
Genera:l by rules expressly promulgated in that behalf or by formal notifications. This court has recently held that special authority may validly be given in respect of a particular contract or contracts
by the Governor to an officer other than the officer notified under the rules made under s. 175(3). In TlwState of Bihar v.11!/s. Karam Chand Thapar and Brothers Ltd.(1), Venkatarama Aiyar J. speaking for
the court ·Observed : (I) (f962) l S.C.R. ~27. Seth Bikh•aj Jaipuria v. Union of India. Shah J. Seth Bikhraj Jaipuria v. Union of India Shah../ [1962] "It was further argued for the appellant that
tlIBrc being a Government notification of a formal character, we should not travel outside it and find authority in a JWrson who is not authorised there- under. But s. 175 (3) does not prescribe any
partieular mode in which authority must . be eonf0rred. Normally, no doubt, such conferment will b" by mitifieation in the Oft'icial Gazette, but there is nothing in the section itself to preclude
authorisation being conferred ad hoc on any person, and when that is established, the requirements of the se.,tion must be held to be satisfied." In that case, an agreement to refer to arbi-
tration on behalf of the Government of Bihar was executt·d by the Executive Engine0r whereas by the notifieation issued hy the Government of Bihar under ~.17 5 (3) all instruments in that behalf had
to be <•xecuted by the Secretary or the Joint Secre- t'lry to the Gov,·rnment. This Court on a consider- ation of thP <•orrespnndfmcP producerl in the case agrPed with the High r,onrt that thP ExePutive Engi-
neer ha<! been SJIP<·ia ll~- authorised hy the Governor acting t.Jmmgh his Sfwrt>tary to ex<>CUtf• th<> agree- ment for rnfrn>nc•P to arbitration. St>etion 175 (3) in term- dnP8 not provide that the direction or
authorhl' given by the Governor-General or the Governor to a perEon to execute contracts shall be given only by rules or by notifications, and the High Court was in our judgment in error in assuming that
such a11thority can be given only by rules expressly framed or by formal notifications issued in that behalf. In para 5 of th" plaint, the appellant pleaded: "That for the purposes and under the autho-
rity conf<tTP<l as noted in the para 3 above in July anrl Augu~t, 1943 the said E. I. Rly. through its then Diviqimml Superintendent, Dinapur, by three diverse orders agreed to buy and the plaintiff agreed
to sell thP following commodities at the rates men- tioned against them. By para 3 of the written statement, the Domi- nion of India accepted the allegations made in para 5 of the plaint. It-is true that by paragraph 1,
the authority of the Divisional Superintendent to enter into contract with trading firms dealing in foodgrains for the supply of foodgrains was denied and it was further denied that tho Divisional Superin-
tendent "was invested with complete authority to enter into contracts for the purchase of food supplies and to do all that was necessary in that connection." There was some inconsistency bet-
ween the averments made in paragraphs 1 and 3 of the written statement, but there is no dispute that the purchase orders were issued by the Divi- sional Superintendent for and on behalf of the
East Indian Railway Administmtion. Pursuant to these purchase orders, a large quantity of food- grains was tendered by the appellant: these were accepted by the Railway Administration ancl pay-
ments were made to the a1ipellant for the gr·ains supplied. Employees of the Railway Administra- tion wrote letters to the appellant calling upon him to intimate the names of the railway stations where
grains will be delivered and about the date when the supply will commence. They fixed programmes for inspection of the goods, kept wagons ready for accepting delivery, held meetings on diverse occa-
sions for settling programmes for the supply of grains, rejected grains which were not accord- ing to the contract, entered into correspondence with the appellant about the return of empty bags
accepted bills and railway receipts and made pay- ments, returned certain bills in respect of the grains tendered beyond the period of contract and did diverse other acts in respect of the goods which
could only be consistent with the contracts having been made with the authority of the Railway Administration granted to the Divi~ional Superin- tendent. There is also the evidence of Ribbins
which olearly supports the view that the agree- ments to purchase foodgrains by the Divisional _Seth Bikhraj Jaipuria v. Union of India Shah J. Seth Bikhraj Jaipuria v. Union of India
ShahJ [1962) Superintendent were part of a scheme devised by the Railway Administration at the time of the serious famine in 1943 in Benga I. In cross-ex- amination, Rib bins stated:
"When the Bengal famine arose in April-May 1943, the (necessity for a scheme of) arrangement of supplying foodgrains to E. I. Railway employees arose … A scheme was drawn up for carrying out
this work in writing. In ot.her words orders were received from Head Office Calcutta about it. The Deputy General Manager, Grains, Calcutta is~ued the necessary orders … The agent or General Mana-
ger as he is called appropriated the above function- ary. He must have done so presumably under orders … The entire scheme did subsequently get the assent of the Railway Board. From time to time
order came with instruction from Head Office. All such directions should be in the office of D. Supdt., Dinapur. Some posts had to be created for carry- ing out this scheme. Originally one post of Asstt.
Grain Supply Ufficer was created. Subsequently, two posts were created one on a senior scale and the other as Asstt. in Dinapur Dv. staff had to be appointed to be in charge of the grain shops. They
were exclusively appointed to work the grain shop organisation. The Railway made some arrange- ment in some places for accommodation and addi· tionnl storage … Grain shops were located at these
places when accommodation was made for addi· tional storage." Ribbins was for some time a Grain Supply Officer under the East Indian Railway and he admitted that orders similar to the purchase orders
in question in this litigation were drawn up in cyclostyled forms "as per orders from the Head Office." The witness stated that the instructions of the Head Office were "in the office file".
None of these documents were, however, produced or tendered in evidence by the Railway Administra· ti on. 2 S.C.R. The evidence on the whole establishes that with a view to effectuate the scheme devised by
the Railway Bmird for distributing foodgrains to their employees at concessional rates, arrangements were made for procuring foodgrains. This scheme received tho approval of the Railway Board and
Railway Officers were authorised to purchase, transport and distribute foodgrains. If, in the implementation of the scheme, the foodgrains were received by the Railway Administration, special
wagons were provided and goods were carried to different places and distributed and payments were made for the foodgrains received by the Railway Administration after testing the supplies,
the inference is inevitable that the Divisional SupRrintendent who issued the purchase orders acted with authority specially grankld to him. The evidence of Rib bins supported by abundant docu-
mentary evidPnce establishes beyond doubt that the Divisional Superintendent though not expressly authorised hy the notification Ex. M-2 to contract for the purchase of foodgrains,
was specially authorised to enter into these contracts for the purchase of foodgrains. The question still remains whether the purchase orders executed by the Divisional Superin- tendent but which were not expressed to be made
by the Governor-General and were not executed on behalf of the Governor-General, were binding on the Government of India. Section 17 5( 3) plainly requires that contracts on behalf of the
Government of India shall be executed in the form prescribed thereby ; the section however does not set out the consequences of non-compliance. Where a statute requires that a thing shall be done
in the prescribed manner or form but does not set out the consequences of non-compliance, the question whether the provision was mandatory or directory has to be adjudged in the light of the
intention of the legislature as disrlose<l by the Seth Bikhraj Jaipuria v. Union of bdia Shah J. Stth Bikhraj Jaip:uria v. U ni9n of India BkahJ. [1962] obje<•t, purpose [l,lHl scope of the statute. If the
statute is mandatory, the thing done not in the manner or form prescribed can have no effect or validity : if it is c!ireetory, penalty may be incurred for non-compliance, but tho aot or thing done is
regarded as good. As observed in Maxwell on Interpretation of Statutes 10th Edition p. 376 : "It has been said that no rule can be laid down for determining whether the command is
to be considered as lt mere direction or instruction involving no invalidating consequences in its dis- regard, or as imperative, with an implied nullifica- tion for disobediencP. beyond the fundamental
one that it depends on the scope and object of the enactment. It may perhaps be found generally correct to say that nullification is the natural and usual consequence of disoberlience, but the question
is in the main governed by considerations of con- venience and justice, and when that result would involvl' general inconvenience or injustice to inno- cent persons, or advantage to those guilty of the
neglect, without promoting the real aim and object of the enactment such an intention is not to be attri- buted to the legislature. The whole sou.Pe and purpose of the statute under consideration must
be regarded." Lord Campbell in Liverpool Borough Bank v. Turner(1) observed : "No universal rule can be laid down as to whether mandatory enactments shall be considered directory only or obligatory with an implied null-
fication for disobedience. It is the duty of Court of justim• to try to get at the real intention of the Legislature by carefully attending to the whole scope of the statute to be construed."
It iH clear that the Parliament intended in enacting the provision contained i11 s. 175(3) that (1) (1861) 30 L. ]. Ch. 379. 28.C.R. the State should not be saddled with liability for
unauthorised contracts and with that object provided that the contracts must show 011 their face that they are made on behalf of the State, i. e., by the Head of the State and executed on
his behalf and in the manner prescribed by the person authorised. The provision, it appears, is enacted in the public interest, and invests public servants with authority to bind the State by con-
tractual obligations incurred for the purposes of the State. It is in the interest of the public that the question whether a binding contract has been made between the State and a private individual should
not be left open to dispute and litigation ; and that is why the legislature appears to have madf' a provision that the contract must be in writing and must on its face show that it is executed for
and on behalf of the head of the State and in the manner prescribed. The whole aim and object of the legislature in conferring powers upon the head of the State would be defeated if in the caHe of a
contract which is in form ambiguous, disputes are permitted to be raised whether the contract wns intended to be made for and on behalf of the State or on behalf of the person making the contract. This
consideration by itself would be sufficient to imply a prohibition against a contract being effectively made otherwise than in the manner prescribed. It is true that in some cases, hardship may result to a person
not conversant with the law who enters into a con- tract in a form other than the one prescribed by law. It also h~ppens that the Government contracts are sometimes made in disregard of the forms
prescribed ; but that would not in our judgmPnt be a ground for holding that departure from a provi- sion which is mandatory and at the ,;ame time salutary may be permitted. Ther(' is a large body of judicial opinion in the
High Courts in fuclia on the question whether 1961 — S,th Bilchraj Jaipuria v. Union of India ShahJ. Seth Bikhraj Jaipuria v. Union of India Shah J. SUPREME COURT l:{EPORTS [1962]
contracts not in form prescribed by the Constitution Acts are binding upon the State. _ The view has been consistently expressed that the provisions under the successive Constitution Acts relating to
the form of contract between the Government and the private individual are mandatory and not merely directory. In Municipal Corporation of Bombay v. Secre- tary of State (1), the true effect of s. l of St. 22 and
!:!3 Vic. c. 41 fell to be determined. The Governor. General of India in Council and the Governors in Couneil and officers for the time being entrusted with the Government were, subject to restrictions
prescribed by the Secretary of State in Council, empowered to sell and dispose of real and personal estate vested in Her Majesty and to raise money on such estate and also to enter into contracts within
the respective limits for the purposes of the Act. It was provided that the Secretary of State in Council may be named as a party to such deed, contract, or instl'Ument and the same must be expressed to
be made on behalf of the Secretary of State in Council by or by the order of the Governor-General in Council or Governor in Council, but may be executed in other respects in like manner as other
instruments executed Ly or on behalf of him or them respectively in his or their official capacity, and may be tmforced by or against the Secretary of State in Uouncil for the time being;
In a suit between the Government of Bombay and the Municipal Corporation of Bombay, the latter claimed that it was entitled to remain in occupation on payment of a nominal rent, of an extensive piece
of land because of a resolution passed by the Gov- ernment of Bombay sanctioning rnch user. Jenkins C. J. in delivering the judgement of the Court observed: "I think that a dieposition m 1865 of Crown
(I) I. L. R. (1905) 29 Born. 580. 2. S.C.R. lands by the Governor in Council was dependent for its validity on an adherence to the forms pres- cribed and that therefore tho Resolution waK not
a valid disposition of the property for the mtercst claimed!' In Kessoram Podd1ir and Co. v. Secretary of State for India (1), it was held that in order that a contract may be binding on the Secretary of State
in Council, it must be made in strict conformity with the provisions laid down in the statute govern- ing the matter and if it is not so made, it is not valid as against him. The same view wa~ expressed in S. a .. Mitra
and Co. v. Govenwr-General of India in Conncil ('), Secretary of State v. Y adavgir Dhamrnrrir("), Secretnry of State and another v. G. T. Sarin and Uompnny ('), U . .P. Governtnent v. Lala Nanhoo .i11al R-uptci ('),
Devi Prasad Sri Krishna Pmsnd Ltd. v. Secretary of St(t.te ('), and in S. K. Sen v. Provincial P. W. D. State of Bihar ('). But Mr. Viswanatha Sastri on beh~lf of the appellant contended that this court in Chatturbhuj
Vithaldas Jasani v. 1lforeshwar Parashram (8 ) hots held that a contract for the supply of goods to the Government which is not in the form presPriLed by .Art. 299 (I) of tho Constitution (which is substan-
tially the same form as s. 175 (3) of the Govern- ment of India Act, 1935) is not void and unenforce- able. In that case, the election of Chatturblmj Jasani to the Parliament was challenged on the
ground that he had a share or interest in a contract for the supply of goods to the Union Government. It was found that Jasani wa,s partner of a firm whicb had entered into contracts with the Union
Government for the supply of goods and these contracts subsisted on November 15, 1!)51 ;md (1) I.L.R. (1927) 54 Cal. %9. (2) I.LR. (1950) 2 Cal. 431. (3) I.L.R. (1936) 60 Born. 42.
(4) I.L.R. (1930) 11 Lah. 375. (5) A.LR. (1960) All. 420. (6) I.L.R. (1941) All. 741. (7\ A.I.R. (1960) Pat. IS9. (8) (1954) 8. C.R. 817. Seth Bikhraj Jaipuria v. Union of India Shah J.
Seth Bikhraj Jaiputia v. Union. of 1 ndfa Shah J. {1962) February 14, 1952 respectively the last date for filing nominations and the date of declaration of the results of the election. This court held th~t Jasani
was disqualified from being elected by virtue of the disqualification set out in s. 7 (b) of the Represen- tation of the People Act 43 of 1951. The contracts in that case were admittedly not in the form pres-
cribed by Art. 299 (I) of the Constitution, and rely- ing upon that circumstance, it was urged that the contracts were void and had in law no existence. In dealing with this plea, Bose J. speaking for the
court observed : "We feel that some reasonable meaning must be attached to article 299(1). We do not think the provisions were inserted for the sake of mere form. We feel they are there to safeguard Government
against unauthorised contracts. If in fact a contract is unauthorised or in excess of authority it is right that Government should be safeguarded. On the other hand, an officer entering into a contract on
behalf of the Government can always safeguard himself by having recourse to the proper form. In between is a large class of contracts, probably by far the greatest in numbers, which though
authorised, are for one reason or other not in pro- per form. It is only right that an innocent con- tractin~ party should not suffer because of this and if there is no other defect or objection we have no
doubt Government will always accept the responsi- bility. If not, its interests are safeguarded as we think the Constitation intended that they should be." The learned Judge also observed:
"It would, in our opinion, be disastrous to hold that the hundreds of Govnnment officers who have daily to enter· into a variety of contracts, often of a petty nature, and sometimes in an emer-
gency, cannot contract orally or through correspon- dence and that every petty contract must be effect- ed by a ponderous legal documl'nt couched in a partil'ular form." 2 S.C.R. 89!)
The rationale of the case in our judgment does not support the contention that a contract on behalf of a State not in the form prescribed is enforceable against the State. Bose J. expressly
stated that the "Government may not be bound by the contract, hut that is a very different thing from saying that the contract was void and of no effect, and that it only meant the principal (Government)
could not be sued ; but there will be nothing to pre- vent ratification if it was for the benefit of the Government." The facts proved in that case clearly establish that even though the contract was not in the form
prescribed, the Government had accepted perform- ance of the contract by the firm of which Jasani was a partner, and that in fact there subsisted a relation between the Government and the firm
under which the goods were being supplied and accepted by the Government. The agreement between the partiPs could not in the case of dispute have been enforced at law, but it was still being
carried out according to its terms : and the Court held that for the purpose of the Representation of the People Act, the existence of such an agreement which was being carried out in which Jasani was
interested di~qulified him. It was clearly so stated when Bose J. observed: "Now section 7 ( d) of the Representation of the People Act does not require that the contract>R at, which it strikes
should be enforceable against the Government; all it requires is that the contracts should be for the supply of goods to the Govern- ment. The contracts in question are just that and so are hit by the section".
Reliance was also placed by counsel for the ~ppellant upon cases decided under s.40 of the Government of Inclia Act, 1915, which was continu- ed in operation even after the repeal of the Act, 1915,
by the 9th schedule to the Government of Indi& Seth Bikhraj Jaipuria v-. U1'io11 of India Shah J. Seth Bikhraj Jaipitria v. Union~! India Shah J. [1962) Act; 1935. Section 40 prescribed the manner in
which the business of the Governor-General in Council was to be conducted. It provided that all ordBrs and other proceedings of the Governor- Qpnernl in Council shall be expressed to be made
by the Governor-General in Council and shall be signed by a Secretary to the Government of India or otherwise as the Governor-General in Council may direct and shall not be called in question in
any legal proceeding on the ground that they were not duly made by the Governor-General in Council. In J.K. Gas Plant Manvfacturing Co., (Rampur) Ltd., v. King Emperor ('), certain persons were
accused of offences committed by them in contra- vention of els. (5) and (8) of the Iron and Steel (Control of Distribution) Order, 1941, which order was not expressed to be mad('. by the Governor-
Genernl in Council as required by ·s. 40(1) of the 9th schedule to the Constitution Act. The Federal Court held that the scope and purpose of the AQt did not. demand a eonstruetion giving a mandatory
rather tha11 a directory effect. to t,Jw words in s. 40: for, in the first instanre, the provision that all orr!Pr,; of the Governor-General in Council shall be expr<'Ksetl to be made by the Governor-General
in Courn·il did not define how orders were to be made but only how they are to be expressed; it implied that tho process of making an order pre- ceded and was something different from the expres-
sion of it. Secon<lly, it was observed, the provision was not confined to orders only and included pro- ceedings and in the case of proceedings, it was still clearly a method of rccorcling proceedings which
had alreacly taken place in the manner prescribed rather than any form in which the proceedings .. n'lnst take place if they are valirl. Thirdly, it was observed, that the provision relating to the sign a~
ture by a Secretary to the Government of India or other person indicated that it was a provision as (l) (1947) F.C.R. 141. 2S.C.R. Sm'REME COURT REPORTS to the manner in which a previously made order
should be embodied in publishable form, and it indicated that if the pr<'vious directions as to th"e expression of the order and proceedings and as to the signature were complied with, the order and
proceedings shall not be called in question in a court of law on one ground only. The rule contained in s. 40 ( l) was in the view of the court one of evidence which dispensed with
proof of the authority granted by the Governor- General in respect of orders or proceedings which complied with the requirements prescribed : the making of the order or the proceedings was indepen-
dent of the form of the order or proceedings expres- sing it. But it cannot be said that the making of the contract is independent of the form in which it is executed. The documrnt evidencing the contract
is the sole repository of its terms and it is by the execution of the <'Ontract that the liability ex contractu of either party arises. The principle of J. K. Gas Plant Manufacturing
Co.'s case has therefore no applic'1tion in the interpretation of s. 175 (3) of the Government of India Act, 1935. Reliance was also placed upon Dattatreya Moreshwar Pangarkar v. The State of Bombay (1)
and The State of Bombay v. Purshottam Jog Naik (2). In both these e~Res, orders made by the Government of Bombay under the Preventive Detention Act were challenged on the ground that
the orders did not comply with the requirements of Art. 166 of the Constitution. Article Hi6 sub- stantially prescribes thr same rules for authentica- tion of the orders of th" Governor of a State a·s
s. 40 to the 9th scheduk of the GovernmPnt of India Act, 1935 prPscribr<l for the authentication of the orders of the GovNnor-Gencral and thP Gover- nors. In the former case, this court observed that
(I) (1952) S.C.R. 612. (2).11952) S.C.R. 674. Seth Bikhraj Jaipuria v. Union of l ndia Shah J. Seth Bikhra j Jaipuria v. Union of India Sltah J. [1962) the Preventive Detention Act contemplates and
requires the taki11g of an executive decision for confirming a detention order under s. 11 (1) and omission to make and authenticate that decision in the form set out in Art. 166 will not make the
decision itself illegal, for the provisions in that arti- cle are merely directory and not mandatory. In the latter case, an order which purported to have been made in the name of the Government of Bombay
instead of the Governor of Bombay as required by Art. 166 was not regarded as defective and it was observed that in any event, it was open to the State Government to prove that such an order was validly
made. The court in those cases therefore held that the provisions of Art. 166 are directory and not manrl.atory. These cases proceed on substantially the samp grounds on which the <lecision in J. K. Gas
Plrint and 11/anufacturing Co.'8 case proceeded, and have no bearing on the interpretation of s. 175 (3) of the Government of India Act, 1935. Relianee was also placed upon the State of
U.P. v. Manbodlwn. Lal Srfra.ytava(') in which case this court held that the provisions of Art. 320 cl. (3) ( c) of the Constitution relating to the consultation with the Public Service Commission before discharging a
public servant are merely directory. The fact that certain other provisions in the Constitution are regarded as merely directory and not mandatory, is no ground for holding that the
provisions relating to the form of contracts are not mandatory. It may be said that the view that the provisions in the Constitution relating to the form of contracts on behalf of the Government are
mandatory may involve hardship to the unwary. But a person who seeks to contract with the Government must be deemed to be fully aware of (IJ (1958) s.c.R. 533, statutory requirements as to the form in which the
contract is to be made. In any event, inadvt'rtence of an officer of the State executing a contmct in manner violative of the express statutory provision, the other contracting party acquiescing in such
violation out of ignorance or negligence will not Justify the court in not giving effect to the intention of the legislature, the provision having been made in the interest of the public. It must therefore be
held that as the contriict was not in the form required by the Government of India Act, 1935, it could not be enforced at the instance of the appe 1- lant and therefore the Dominion of India could
not be sued by the appellant for compensation for breach of contracts. We are also of the view that the High Court. was right in holding that the appellant failed to prove that he was entitled to compensation assum-
ing that there was a valirl and enforceable contract. The appellant nlaimed that he was entitle(! to the difference hr.tween the contract price and the price realised by sale of the foodgrains offered after
October 1,1943 but not accepted by the Railway Administration. The High Court right.ly pointed out that the appellant was, if at all, entitled only to compensation for loss suffered by him by reason
oft.he wrongful breach of contract committed by the State, such compensation being the difference between th 0 contra.ct price and the niling market rate on October 1,1943, and that the appellant had
failed to lead evidence about the ruling market rate on October 1,1943. The trial judge held that the "control price-list xxx was reliable for ascertain- ing the measure of damages in the case". This docu-
ment was a notification relating to the controlled rates in operation in the district of Arrah, by which the sale of foodgrains at prices exceeding the rates prescribed was made an offence.
The appellant had obviously the option of delivering foodgrains at any railway station F. 0. R. in the Province of Seth Bikhraj Jaipuria v. Union oflndw Shah .T. Seth Bikhraj Jaipuria
v. Union of Indin Shah J. 1.961 July, 24; (1962] Bihf!.r, and there is no evidence on the record whe- ther orders similar to Ex.l\f-2 were issued bv the authorities in other districts of the Bihar ·state.
But if the grains were supplied in the district of Arrali, the appellant could evidently not seek to rerovcr price for the goods supplied and accepted on ancl after October 1, 1943, at rates exceeding
those fixed by the notification; for, by the i5sue of the control orders, on the contracts must be deemed to be snper-imposed the condition tha.t foodgrains shall he sold only at rates specified
therein. If the grains were to be supplied outside the district of Arrah, the case of the appellant uffers from complete lack of evidenre as to the ruling ratrs of the foodgrains in
dispute on Octo lwr I , 1943. The High Court was therefore rigltt in declining to award damages. On the view taken by us, this appeal must stand dismissed with costs. Appeal dismissed.
THE STATE OF ANDHRA PRADESH v. THADI NARAYANA (P. B. GA.JENDRAGADKAR, K. N. WANCHOO and K. c. DAS GUPTA, JJ.) Criminal Appeal- -Acquittal of some charges and conviction other8–Appeal by accused against conviction-Powers of appe .. ,ate court–!/ can set
aside arqu<ttal also-Code of Criminal Procedure, 1898 (V of 1898), s. 423 (I) (b). The accused was tried for offences under s. 302 and s. ~92 Indian Penal Code. The Sessions Judge acquitted her under
s. 302 ands. 392 but convicted her under s. 411 Indian Penal Code. The accused appealed to the High Court against her conviction under s. 411. The State did not appeal against the acquittal nor did the High Court issue any notice to the accused under s. 439 (2). The High Court set aside the order of conviction under s. 411 as well as the order of acquittal