Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 22
PETITIONER:
LALITESHWAR PRASAD SAHI
Vs.
RESPONDENT:
BATESHWAR PRASAD AND OTHERS
DATE OF JUDGMENT:
07/10/1965
BENCH:
SIKRI, S.M.
BENCH:
SIKRI, S.M.
GAJENDRAGADKAR, P.B. (CJ)
WANCHOO, K.N.
HIDAYATULLAH, M.
SHAH, J.C.
CITATION:
1966 AIR 580 1966 SCR (2) 63
CITATOR INFO :
F 1969 SC 302 (10)
E 1980 SC1109 (4)
ACT:
Representation of the People Act, 1951-S. 7(d)-Contract with
Government not complying with provision of Art. 299 of the
Constitution--Not subsequently ratified by Government-
Whether disqualifies candidate.
HEADNOTE:
In an election petition filed by the appellant, the
respondent’s election to the Bihar Legislative Assembly was
challenged, mainly on the ground that he was disqualified
under s. 7(d) of the Representation of the People Act.,
1951, as he had entered into a contract with the State
Government which was subsisting on January 14, 1962, i.e.
the date fixed for filing nomination papers.
One S had entered into a contract in 1951 with the State
Government. for certain construction work and the respondent
was working as a subcontractor under him. As there was
delay etc. in the completion of the work by S, in exercise
of a power reserved to the State Government in cl. 3(c) of
the agreement with S, whereby the Government could, under
certain circumstances, make alternative arrangements for the
completion of the work, the Executive Engineer of the
Government approached the respondent to ascertain if he
would complete the work instead. In a letter addressed to
the Executive Engineers, the respondent offered to do the
work on certain terms and this offer was accepted.
Thereafter, various letters were exchanged with the
respondent by the S.D.O. and the Executive Engineer about
the progress of the work. However, after most of the work
to be done by the respondent was completed,, S was restored
as the contractor and further correspondence about the work
done by the respondent and regarding the payment for it was
conducted by the concerned officers of the State Government
with S. The payment for this work remained’ outstanding on
the date for filing nomination papers in January 1962.
The Election Tribunal allowed the petition and declared the
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 22
respondents’ election to be void. But the High Court
reversed this decision and held that the respondent had at
all relevant times continued to be a sub-contractor of S,
and that even assuming there was a contract between the
respondent and the State Government, the alleged contract
was void in view of Art.. 299(1) of the Constitution.
On appeal to this Court,
HELD: (per majority)
No contract between the first respondent and the State
Government subsisted at the relevant time and the respondent
was not disqualified under s. 7(d).
The correspondence in the case clearly disclosed an
agreement for the execution of work between the Executive
Engineer and the respondent, But the fact that by virtue of
cl. 3 (c) of the contract with S, the Government could,
under certain circumstances, enter into an agreement
64
with someone else to do the work, did not dispense with the
requirement of compliance with the provisions of Art. 299.
[70 E-F]
The evidence on record showed that the State Government had
chosen not to ratify the agreement with the respondent but
to consider the original contact with S as still standing
and to treat the respondent as a subcontractor working under
S. [73 H]
The principle in Chatturbhuj Vithaldas Jasani’s case ([1954]
S.C.R. 817) that although a contract may not comply with
Art. 299, such contract, being capable of ratification by
the Government may still disqualify a person under s. 7(d),
cannot be extended to cover a case where the Government has
in fact not ratified the contract. To hold otherwise would
be to substitute "agreement" for "contract" in s. 7(d). A
mere agreement entered into in contravention of Art. 299 and
in fact not ratified cannot be cared a "contract" within s.
7(d). [72 A-B)
New Marine Coal Co. (Bengal) v. The Union of India A.I.R.
1964 S.C. 152; State of W. Bengal v. B. K. Mondal A.r.R.
1962 S.C. 779; referred to.
(per Hidayatullah and Shah JJ., dissenting);
The available evidence clearly, supported the case that
there was a contract directly between the first respondent
and the State for the execution of certain construction work
and not that the work was done by the first respondent under
a sub-contract from S. The court was only required to
determine whether there was such a contract and was not
concerned with the question whether the contract was
enforceable against the State. [81 G]
Although the contract was not in the form prescribed tinder
Art. 299, it was not for that reason unlawful. It was
always open to the State, notwithstanding informality in the
mode of execution of the contract, to accept liability
arising under the terms of the contract. Such a contract,
although not enforceable by action against the Government
was still to be regarded as disqualifying a person under s.
7(d). The first respondent had performed his part of the
contract but no payment had been made to him. There was
therefore a subsisting contract within the meaning of 7(d).
[79 A; 80 A-B; 91 B]
Chaturbhuj Vithaldas Jasani’s case [1954] S.C.R. 817
applied; Bhikraj Jaipuria v. Union of India [1962] 2 S.C.R.
830 referred to.
JUDGMENT:
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 22
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 211 of 1965.
Appeal by special leave from the judgment and decree dated
the April 25, 1964 of the Patna High Court in Election
Appeal No. 11 of 1963.
Purshottam Trikumdas and D. Goburdhun, for the appellant.
Sarjoo Prasad, Nagendra Kumar Roy and K. K. Sinha, for the
respondent No. 1.
The Judgment of GAJENDRAGADKAR C.J., WANCHOO and SIKRI, JJ.
was delivered by SIKRI J. The dissenting Opinion of
HIDAYATULLAH and SHAH, JJ. was delivered by SHAH J.
65
Sikri J. This is an appeal by certificate granted by the
High Court of Patna, directed against the judgment of the
said High Court reversing the decision of the Election
Tribunal, Muzaffarpur. This appeal arises out of the
election of the respondent, Shri Bateshwar Prasad, to the
Bihar Legislative Assembly from Lal Ganj North Constituency.
The appellant was one of the candidates. He filed an
election petition No. 133 of 1962, alleging inter alia that
the election of respondent No. 1, Shri Bateshwar Prasad, was
void as he was disqualified under s. 7(d) of the
Representation of the People Act, 1951, hereinafter referred
to as the Act. His complaint was that respondent No. 1 had
entered into various contracts with the Government and that
these contracts were subsisting on January 14, 1962, the
date fixed for filing nomination papers. The Election
Tribunal, after reviewing both oral and documentary
evidence, held that the respondent had entered into
contracts to do Mosaic flooring work in the Rajendra
Surgical Block of Patna Medical Hospital and that these were
subsisting on the date of the nomination, viz., January 14,
1962. The Election Tribunal further held that by virtue of
cl. 3 (c) of the conditions embodied in the agreement, Ex.
’T’, it was not at all necessary for the Public Works
Department to have entered into a contract with the
respondents company, called the Patna Flooring Company. In
the result, the Election Tribunal declared the election of
Respondent No. 1 to the Bihar Legislative Assembly from the
Lal Ganj North Constituency as void, but refused the prayer
of the petitioner before it to be declared elected.
Both sides appealed to the High Court but we are only con-
cerned with the election appeal No. 11 of 1963, filed by
Bateshwar Prasad, the returned candidate. Before the High
Court three points were taken :
(1) The appellant was not a contractor under
the State Government for the mosaic work to be
done in the Rajendra Surgical Block, but that
at all relevant times, he was a sub-contractor
under one G. P. Saxena, who was a contractor
under the State Government for the purpose;
(2) Assuming that there was a contract
within the meaning of section 7(d) of the
Representation of the People Act, 1951 (Act 43
of 1951), sometime, there was no subsisting
contract when the appellant had filed
nomination paper in 1962 and thereafter;
66
(3) Assuming again that there was a contract
between the appellant and the State Government
some_ time, the contract alleged was void, in
view of Article 299 (1) of the Constitution of
India, so that the Tribunal could not have
held that the appellant was disqualified. to
be chosen as a candidate.
The High Court reviewed the entire evidence and came to the
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 22
conclusion on point No. 1 above that the appellant was not a
con. tractor under the State Government but continued to be
a subcontractor under Saxena for mosaic work. It also
differed from the Election Tribunal on the interpretation of
cl. 3(c) of Ex. ’1’. On the second point, the High Court
felt that in view of its decision on the first point, the
question was of mere academic interest and there might be
substance in the argument of the learned counsel for the
respondent that this question ought not to be allowed to be
raised at this stage. Regarding the third point, the High
Court held that Chaturbhuj’s case (Chatturbhuj Vithaldas
Jasani v. Moreshwar Parashram) (1) was distinguishable
because in the instant case the State Government had not
accepted the performance of the contract by the appellant.
It further held that since the decision in Chaturbhuj’s(1)
case the law had been amended by the amendment of s. 7 (d)
and the effect of the amendment was "that the candidate
shall be disqualified for being chosen as a member only if
there still exists, in substance, at the relevant time, a
valid and binding contract between him and the appropriate
government." The High Court further observed that "it is
difficult to accept the contention of the learned counsel
for the respondent that a transaction may be void under the
Contract Act, but its factual existence may still be a
disqualification under present section 7(d)." In conclusion,
the High Court held that Bateshwar Prasad had not incurred a
disqualification under s. 7(d’) of the Act, and accordingly
set aside the judgment and order of the Election Tribunal.
Mr. Purshottam, the learned counsel for the appellant, has
urged before us that the High Court was wrong in holding
that the amendment had made any change in the law on the
question whether the contract which is void under art. 299
of the Constitution is or is not a contract within s. 7(d)
of the Act. He says that the reasoning of the decision of
this Court in Chatturbhuj’s(1) case still holds the field.
He then says that the High Court came to a wrong conclusion
on the question of fact in this case, namely,
(1) [1954] S.C.R. 817.
67
whether the contracts subsisted or not at the relevant date,
and that this Court should reverse the finding even though
it is a finding of fact. Mr. Sarjoo Prasad, the learned
counsel, for the respondent, controverts this point and he
urges that this Court should not go into the question of
fact. On the question of law, he says that the present s.
7 (d) is quite different from the old s. 7 (a) and that the
Supreme Court decision cannot be applied to the wording of
the present section.
Coming to the law point, it is necessary to set out the old
and the new statutory provisions, and these are as under :
"7. A person shall be disqualified for being
chosen, as, and for being, a member of either
House of Parliament or of the Legislative
Assembly or Legislative Council of a State....
(d) if, whether by himself or by any person
or body of persons in trust for him or for his
benefit or on his account, he has any share of
interest in a contract for the supply of goods
to, or for the execution of any works or the
performance of any services undertaken by the
appropriate Government;"
As amended
"7. A person shall be disqualified for being
chosen as, and for being, a member of either
House of Parliament or of the Legislative
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 22
Assembly or Legislative Council of a State....
(d) if there subsists a contract entered
into in the course of his trade or business by
him with the appropriate Government for the
supply of goods to, or for the execution of
any works undertaken by, that Government;".
Comparing the old section and the new section, there is no
doubt that there has been a change in the wording. One
change is quite clear and that is that the contract now must
have been entered in the course of his trade or business by
a person with the appropriate government. Previously it
need not have been a contract in the course of trade or
business. The words were much wider and included any
contract entered into for his benefit or on his own account
or a contract in which he had any share or interest. To
this extent the Legislature has clearly narrowed the area of
this disqualification. But is Mr. Sarjoo Prasad right in,
contending that the change has gone further and that it only
68
embraces executory contracts but not executed contracts ? In
our opinion, the Legislature has made no change in this
respect for under the old provision it was also necessary
for a contract to have subsisted at the relevant time. This
Court had in Chaturbhuj’s(1) case included both executed and
executory contracts within the provision of S. 7 (d) and had
refused to follow the English rulings to the contrary. We
cannot go into the question whether this was rightly done or
not for we are bound by that decision. Accordingly,
following Chatturbhuj’s(1) case we hold that a contract for
the supply of goods or for the execution of any works or the
performance of any services undertaken does not cease to
subsist only because the goods had been supplied or work had
been executed or services performed. It continues to
subsist till payment is made and the contract is fully
discharged by performance on both sides.
But whether Chatturbhujs(1) case applies when a void con-
tract has not been accepted or ratified by the Government,
we will consider presently. Mr. Purshottam next contends
that the respondent entered into two contracts and they were
subsisting at the date of the nomination as the respondent
had not been paid for his work and as a matter of fact a
suit is pending against the Government for recovery of the
money. He has taken us through the documentary evidence and
it is now necessary to deal with it. The documentary
evidence may be conveniently divided into two groups. The
’first group relates to documents bearing on the formation
of the alleged contract. It appears that one G. P. Saxena
had entered into a contract, Ex. D., for the construction
of a surgical block in the Patna Medical College compound,
Patna, and this contract was entered into in 1951, and the
respondent was working as a sub-contractor under him. It
further appears that there were some disputes between Saxena
and the Public Works Department and he was not completing
the work in time or to their satisfaction. Consequently,
the Sub-Divisional Officer enquired from the Patna Flooring
Company whether they would be willing to complete the work.
Patna Flooring Company, on April 17, 1955, wrote to the
Executive Engineer, through the Sub-Divisional Officer, and
gave their quotations and terms and conditions. It may be
noted here that these terms were different from the terms
under which Saxena had taken the contract. This is an
important fact and it is necessary to bear this in mind. On
April 25, 1955, the Sub-Divisional Officer forwarded this
letter to the Executive Engineer with the remarks that "the
contractor
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 22
(1) [1954] S.C.R. 817.
69
is being asked to start work immediately as per your
orders." The Executive Engineer noted on this letter as
follows : "It is hoped necessary notice has been given by
you to the defaulting contractor." The S.D.O. noted that
"the contractor had already been served with a notice and a
copy to your office vide T.O. No. 497, dated 20th April,
1955. The P.F.C. has been ordered to start work and a copy
of that submitted to you vide T.O. No. 504, dated 20th
April, 1965". On April 20, 1955, the Sub-Divisional Officer
wrote to the. Patna Flooring Company to "start immediately
the remaining mosaic floor and dado work in the R. S. Block
and finish the work completely within a fortnight as
promised by you." He endorsed a copy of this letter to the
Executive Engineer. He also sent a notice to Saxena
informing him that as he had failed to do (in spite of
repeated asking) the remaining mosaic work of floor and dado
in Surgical Block, the remaining work was being got done by
other agency and the cost would be recovered from him. He
endorsed a copy of this to the Executive Engineer noting
that the remaining work was being done by the Patna Flooring
Company, as instructed by him. On May 13, 1955, the
Executive Engineer warned Patna Flooring Company to finish
the work within the stipulated time and that no extension of
time would be granted if the work would be left unfinished.
On May 23, 1955, the Sub-Divisional Officer again wrote to
Patna Flooring Company saying that necessary instructions
regarding slope etc. had already been given at the site,
that there was no cause for delay in work and asked them to
push up the progress of the work as it was a top priority
work. It appears that by May 25, 1955, 90% of the work had
been done and the Patna Flooring Company wrote to the Sub-
Divisional Officer requesting that the S.O. Incharge of the
said work be ordered to submit an on account bill for making
payment to them at an early date.
Mr. Purshottam contends that on a perusal of the correspon-
dence contained in this group it is quite clear that an oral
contract for the construction of work was entered into
between the Executive Engineer and the Patna Flooring
Company and that the High Court had erred in holding that no
such contract ever -came into being. He points out that
under cl. 3 (c) of the Contract, Ex. D, the Executive
Engineer was entitled to ask the Patna Flooring Company to
do the work. Clause 3 (c) reads as follows
"Clause 3.-In any case in which under any
clauses of this contract the contractor shall
have rendered himself liable to pay
compensation amounting to the whole
70
of his security deposit in the hands of
Government (which whether paid in one sum or
deducted by instalments) to Executive Engineer
on behalf of the Governor of Bihar, shall have
power to adopt any of the following courses,
as he may deem best suited to, the interests
of Government....
(c) To measure up the work of the
contractor, and to take such part of the work
of the contract as shall be unexecuted out of
his hands, and to give it to another
contractor to complete, in which case any
expenses which may be incurred in excess of
the sum which would have been paid to the
original contractor if the whole Work had been
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 22
executed by him (of the amount of which excess
the certificate in writing of the Executive
Engineer shall be final and conclusive) shall
be borne and paid by the original contractor
and may be deducted from any money due to him
by Government under the contract or otherwise,
or from his security deposit or the proceeds
of sale thereof, or a sufficient part
thereof."
We are inclined to agree with Mr. Purshottam that the
correspondence in this group clearly discloses an agreement
for the execution of work between the Executive Engineer and
the Patna, Flooring Company, and the Election Tribunal was
quite right in coming to this conclusion. But we may say
that the Election Tribunal was not right in holding that cl.
3 (c) got rid of art. 299 of the Constitution. Any work
which is given in exercise, of the powers under cl. 3(c) has
also to comply with the provisions of art. 299 of the
Constitution. What the effect of this is we will consider
later.
Mr. Sarjoo Prasad, however, says that assuming that a con-
tract was entered into, the contract did not subsist at the
time of the nomination because the Government had refused to
ratify the contract given tinder cl. 3(c) and that
Chatturbhuj’s(1) case does not lay down that a contract
which has not been ratified by the Government is a contract
within S. 7(d) of the Act. It seems to us that there is a
great deal of force in the contention of the learned
counsel. It is true that this Court has held in a number of
cases, the latest being New Marine Coal Co. (Bengal) v. The
Union of India(2), that a contract entered into with the
Government in contravention of S. 175(3) of the Government
of India Act, 1935, or art. 299 of the Constitution is void
and unenforce-
(1),[1954] S.C.R. 817.
(2) A.I.R. 1964 S.C. 152.
71
able. But in State of West Bengal v. B. K. Mondal(1) this
Court distinguished Chatturbhuj’s(2) case on the ground that
in the latter case "this Court was dealing with the narrow
question as to whether the impugned contract for the supply
of goods would cease to attract the provisions of s. 7(d) of
the Representation of the People Act on the ground that it
did not comply with the provisions of art. 299 ( 1 ), and
this Court held that notwithstanding the fact that the
contract could not be enforced against the Government it was
a contract which fell within the mischief of s. 7(d)." This
Court further observed that "all that this Court meant by
the said observation (of Bose J. in Chatturbhuj’s(2) case at
p. 835, quoted below) was that the contract made in
contravention of art. 299(1) could be ratified by the
Government if it was for its benefit and as such it could
not take the case of the contractor outside the purview of
s. 7(d). The contract which is void may not be capable of
ratification, but, since according to the Court the contract
in question could have been ratified it was not void in that
technical sense. That is all that was intended by the
observation in question." But the question arises whether
Chatturbhuj’s(22) case can be extended to cover a case where
the contract has in fact not been ratified. Bose J.
observed in Chatturbhuj’s(2) case as follows :
"In the present case, there can be no doubt
that the Chairman of the Board of
Administration acted on behalf of the Union
Government and his authority to contract in
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 22
that capacity was not questioned. There can
equally be no doubt that both sides, acted in
the belief and on the assumption, which was
also, the fact, that the goods were intended
for Government purposes, namely, amenities for
the troops. The only flaw is that the con-
tracts were not in proper form and so, because
of this purely technical defect, the principal
could not have been sued. But that is just
the kind of case that s. 230 (3) of the Indian
Contract Act is designed to meet.... It only
means that the principal cannot be sued; but
we take it there would be nothing to prevent
ratification, especially if that was for the
benefit of Government. There is authority for
the view that when a Government officer acts
in excess of authority Government is bound if
it ratifies the excess : see The Collector of
Masulipatam v. Cavalry Venkata Narrainapah (8
M.I.A. 529 at 554)."
(1) A.I.R. 1962 S.C. 779. (2) [1954] S.C.R. 817.
72
It seems to us that the decision in Chatturbhuj’s(1) case
cannot be extended to cover a case where the Government has
in fact not ratified the contract. If we were to hold that
this type of transaction is covered then we would be giving
no effect to the word "contract" in s. 7 (d) and we would be
substituting the word agreement" for it. The Legislature
has not chosen to use the word "agreement" but has used the
word "contract". Therefore, a mere agreement entered into
in contravention of art. 299 and in fact not ratified cannot
be called a "contract" within s. 7(d) of the Representation
of People Act.
The question then arises whether the Government did or did
not ratify the oral contract entered into between the
Executive Engineer and the Patna Flooring Company. In this
connection, Mr. Sarjoo Prasad, relies on a number of
documents. The first document he refers to is Ex. A-2,
dated July 12, 1955. The Sub-Divisional Officer wrote to
the Patna Flooring Company as follows :
"It is disappointing to note that in spite of my repeated
askings you have not submitted your final bill for the
mosaic work until now. I have been personally explaining to
you the whole position and you promised to submit your final
correct bill on Friday the 8th July, 1955 so that I may ask
the contractor Shri G. P. Saxena to pay you off finally and
settle your accounts immediately."
It appears that something happened between May 25, 1955 and
July 12, 1955. According to the respondent, what happened
was that Saxena approached the Superintending Engineer and
the Superintending Engineer ordered that Saxena would
continue to be the contractor as before and no contract
would be given to any firm. The respondent stated this in
his evidence as R. W. 32. It is objected that this is
hearsay and this part of the statement is not admissible.
There is some force in this contention and we omit this part
of the statement from consideration. But apart from this
oral evidence it is quite clear from this letter that
something happened, otherwise it was not necessary to use
the words "personally explaining to you the whole position"
in this letter, and it is not understandable why the Patna
Flooring Company was being asked to submit the bill to
Saxena. This inference is strengthened by subsequent
correspondence. By letter, dated July 13, 1955, Ex. A3, the
S.D.O. acknowledged the receipt of the bill and said
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 22
(1) [1954] S.C.R. 817.
73
that he had sent it to Saxena for making settlement. Ex.
A-17, dated July 20, 1955, is significant. The Sub-
Divisional Officer requested Saxena to issue orders to his
contractors "to mend and rectify all the cuttings and
damages properly and nicely so that the building is in a fit
condition for handing over on 1-8-1955." On July 23, 1955,
Saxena endorsed it to the Patna Flooring Company for
information and necessary action and with the request to
rectify the defects pointed out to the Patna Flooring
Company and complete the remaining portions of works and
give final polishes thereto by the schedule date. It is not
understandable why Saxena was endorsing this for action to
Patna Flooring Company unless the Government had chosen not
to ratify the contract with the Patna Flooring Company and
was still treating him as a contractor. It is also
significant that it has not been alleged or, proved that any
similar letter was written to Patna Flooring Company direct
by the S.D.O. On July 21, 1955, a "statement showing up to
21st day of July, 1955, correct amount for the mosaic work
done by M/s. Patna Flooring Co. in the Rajendra Surgical
Block, Patna Medical College and Hospital, Patna-
Transactions between Shri G. P. Saxena, Prop. M/s. G. P.
Saxena & Co. and M/s. Patna Flooring Co." was made out and
this statement of account shows "Bill No. BP/1833/45/55,
dated 13-7-55 through the S.D.O. No. III Subdivision,
Construction Division, Patnabill for Rs. 14,000/9/-" and
Saxena agreed to settle this bill, and a copy of that
statement was forwarded to the Executive Engineer for record
with reference to the discussion which was held between
Saxena and Prasad in his presence and the presence of the
S.D.O.’ This statement shows that the Government Officer was
acknowledging that the liability for work done by the Patna
Flooring Company would be that of Saxena. If a direct
contract between the Patna Flooring Company and the
Government still subsisted, all this arrangement seems to be
uncalled for.
Mr. Sarjoo Prasad further points out an important fact that
when Saxena submitted the bill to the Government, he not
only charged for the work done by the Patna Flooring Company
but he charged it at the rates contained in his own contract
and not’ in the quotations, dated April 14, 1955, given by
the Patna Flooring Company. We agree with him that this is
a very significant fact and shows that as far as the
Government was concerned, the, original contract stood and
the Government had not chosen to treat Patna Flooring
Company as a contractor, but only as a subs. contractor
working under Saxena.
74
Mr. Purshottam laid a great deal of stress on the pleadings
in the money suit No. 53 of 1959. There is no doubt that
the plaint in the money suit filed by the Patna Flooring
Company shows that Bateshwar Prasad, plaintiff, was trying
to make out that there was a direct contract entered into
between the P.W.D. and the plaintiff, but even so, the
plaint does not make them solely responsible. We have also
come to a finding that there was admittedly a contract -in
the beginning. The fact that the plaint does not allege any
subsequent non-acceptance or refusal to ratify by the
Government -would not stop the respondent from proving in
this case that on the material on record it is clear that
the Government had not -ratified the contract with the
respondent but confirmed the original contract with Saxena.
The written statement filed by the Government in the money
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 22
suit cannot be used to destroy the inference which clearly
arises from the documents referred to above. It -is
doubtful whether the written statement can be taken into
consideration at all.
In the result we hold that no contract between respondent
No. 1 and the Government subsisted at the relevant time,
viz., the date of the nomination, and the respondent was not
disqualified under 7(d). The appeal accordingly fails and
is, dismissed with costs.
Shah J. At the general elections held in February 1962 the
appellant Laliteshwar Prasad Sahi and the first respondent
Bateshwar Prasad contested a seat from the Lalganj North
constituency in the Bihar Legislative Assembly. The first
respondent was declared elected. The appellant then filed a
petition before the Election Tribunal, Muzaffarpur, for an
order declaring the election of the first respondent void on
the ground that the first respondent was disqualified under
S. 7(d) of the Representation of the People Act 1951-
hereinafter called ’the Act’-for being a member of the Bihar
Legislative Assembly, and for an order that the appellant be
declared duly elected. The Election Tribunal disqualified
the first respondent under S. 7(d) of the Act because in the
view of the Tribunal on the date on which the first respon-
dent filed the nomination paper there was a subsisting
contract between him and the State of Bihar for execution of
works undertaken by the Government. The Tribunal declined
to declare the appellant duly elected.
Against the order passed by the Tribunal, appeals were pre-
ferred to the High Court of Patna by the appellant and the
first respondent under s. 116-A of the Act. In the view of
the High Court. the first respondent was not disqualified
from being elected
75
a member of the Bihar Legislative Assembly because there was
at the date of nomination no subsisting contract for supply
of goods or execution of works between the first respondent
and the Government of Bihar. The appeal filed by the first
respondent was accordingly allowed and the appeal filed by
the appellant was dismissed. With certificate granted by
the High Court, the appellant has preferred this appeal.
Section 7 ( 1 (d) of the Act as it stood at the relevant
time read as follows
"A person shall be disqualified for being
chosen as and for being, a member of either
House of Parliament, or of the Legislative
Assembly or Legislative Council of a State.
(d) If there subsists a contract entered
into in the course of his trade or business by
him with the appropriate Government for the
supply of goods to, or for execution of any
works undertaken by that Government."
The appellant contends that the first respondent was
disqualified from being a member because there was between
him and the Government of Bihar a subsisting contract
relating to execution of works for the Government. Two
components of the issue to be determined in this appeal are:
whether at the relevant time there was between the State of
Bihar and the first respondent a contract in the course of
the first respondent’s trade or business for execution of
any work undertaken by that Government and whether at the
material time the contract was subsisting. The Trial Court
answered both the components in the affirmative. The High
Court was of the view that there was no contract at any time
between the. State of Bihar and the first respondent.
The appellant’s case was that the first respondent and his
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 22
son Bhupendra Nath Prasad carried on business of executing
mosaic flooring, plumbing and sanitary works in the name of
M/s Patna Flooring Company, that the first respondent on
behalf of M/s Patna Flooring Company had obtained contracts
from the Government of Bihar for doing "Mosaic and dado
works" at Rajendra Surgical Block of Patna General Hospital,
and that in connection with the said contracts the first
respondent had filed suit No. 53 of 1959 in the Court of the
Subordinate Judge, Patna, against the State of Bihar the
Executive Engineer, P.W.D. (Construction Division No. 1) and
others for a decree for Rs. 18,5000/- and it
Sup. C.I../66-6
76
was claimed in the plaint in that suit that there was a
"direct contract" between the first respondent and the State
of Bihar,. and on that account the first respondent was
disqualified under S. 7(d) of the Act from being a member of
the Bihar Legislative Assembly. The first respondent denied
that he was looking after the business of M/s Patna Flooring
Company on the date of filing of the nomination paper and
contended that the contract for doing mosaic work at
Rajendra Surgical Block of the Patna Medical College General
Hospital was between G.P. Saxena and the Government of
Bihar, and that he--the first respondent-had never entered
into a contract with the Government of Bihar for doing
mosaic work at Rajendra Surgical Block and that in any event
there was no subsisting contract at the date of his
nomination as a candidate.
There is on the record a mass of documentary evidence which
throws light upon the question in dispute. Saxena had
submitted in March 1951 his tender for the construction work
of the Rajendra Surgical Block at Patna, which was
undertaken by the Government of Bihar. Items 39 & 40 of the
contract related to "mosaic flooring and dado". For "mosaic
flooring" the rate tendered and accepted was Rs. 2/4/- per
sq. ft and for " mosaic dado" the rate was Rs. 2/8/- per sq.
ft. By cl. 2 of the conditions of the contract, it was
provided, inter alia, that the contractor shall strictly
carry out the work within the time stipulated with all due
diligence and that the contractor, shall pay as compensation
amounts equal to 1/3 per cent, on the estimated cost of the
whole work as shown by the tender for every day that the
work remains uncommenced or unfinished after the agreed
dates. By clause 3 it was provided that in any case in
which the contractor shall have rendered himself liable to
pay compensation amounting to the whole of his security
deposit in the hands of the Government, the. Executive
Engineer shall have power to adopt any of the following
courses, as he may deem best suited to the interests of
Government :
(a) To rescind the contract;
(b) To employ labour paid by the P.W.D. to
carry out the work, or any part of the work,
debiting the contractor with the cost of
labour;
(c) To take away such part of the work of
the contract as shall be unexecuted out of his
hand-,, and to give it to another contractor
for completion.
77
The first respondent was working as a sub-contractor under
Saxena in certain sections of the work undertaken by the
latter. In April, 1956, Saxena was unwilling or unable to
complete the " mosaic flooring" and "mosaic dado" under his
contract, and negotiations took place between the Executive
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 22
Engineer, Construction Division, and the first respondent
regarding completion of that work by the first respondent.
On April 17, 1955, the first respondent addressed a letter
Ext 1 (g), to the Executive Engineer recording the
conversation he had with the Executive Engineer relating to
the rates of mosaic work etc., and submitted his terms and
conditions. The rates offered by the first respondent were
substantially lower than those under the contract with
Saxena, but he requested that certain construction materials
be supplied by the Department on his account, and the price
thereof may be debited against his bill. The Executive
Engineer made a note on this letter "It is hoped, necessary
notice has been given to the defaulting contractor". On
April 20, 1955, the Sub-Divisional Officer made a note that
the contractor (Saxena) had "already been served with a
notice" and that the first respondent’s firm had been
ordered to start the work. On April 20, 1955, the Sub-
Divisional Officer addressed a letter Ext. 1 (c) to M/s
Patna Flooring Company as under :
"As ordered by the Executive Engineer, please
start immediately the remaining mosaic floor
and dado work in the R. S. Block and finish
the work completely within a fortnight as
promised by you."
Intimation about entrustment of the work to
M/s Patna Flooring Company was also given to
Saxena by letter Ext. 1 (j). It was stated in
that letter :
"As you have failed to do (in spite of
repeated askings) the remaining mosaic work of
floor and dado in Surgical Block, the
remaining work is being got done by other
agency and the cost will be recovered from
your bill which plea&-, note."
M/s Patna Flooring Company was called upon by letters dated
May 7, 1955 and May 13, 1955 and May 23, 1955 to complete
the work within the period stipulated. On May 25, 195 M/s
Patna Flooring Company addressed a letter to the Sub-
Divisional Officer informing him that his firm had finished
about 90% of the entire work entrusted to them, and
requested that an "on account payment" may be made to them.
There is on the record no further correspondence in regard
to the mosaic flooring and dado
78
work in the Surgical Block. On December 23, 1955, the Sub-
Divisional Officer addressed a letter to M/s Patna Flooring
Company referring to an "oral order" of the Executive
Engineer and requested the Company to do mosaic work in "two
bath rooms and laboratory of the Lecture Theatre" and asked
them "to do the work as, per instructions". On April 4,
1956 M/s Patna Flooring Company submitted a bill for the
"flooring and dado work" done in the bath rooms of the
Lecture Theatre under the orders of the Executive Engineer
and of the Sub-Divisional Officer and requested that payment
be made to them. A copy of that letter was sent to the Sub-
Divisional Officer along with a copy of the bill for -the
work done, for information and for immediate payment, but no
payment was made. The P.W.D. authorities, it appears,
thought that instead of making the payment directly to the
first respondent, Saxena should be called upon to pay the
amounts due to M/s Patna Flooring Company for work done by
them, This is evidenced by several letters on the record to
which we will presently refer.
Interruptirig the narrative at this stage, it may be
observed that the evidence set out leaves no.,room for doubt
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 22
that there were negotiations between M/s. Patna Flooring
Company and the Executive Engineer for carrying out "mosaic
flooring and dado work" which was part of work Saxena had
undertaken to do and which he had failed to complete. The
Executive Engineer asked M/s Patna Flooring Company to carry
out that work and the latter submitted its own schedule of
rates, and asked for certain facilities which did not form
part of Saxena’s contract. In our view Ext. 1 (g) dated
April 17, 1955 and Ext. 1 (c) dated April 20, 1955
constitute an offer to execute "the mosaic and dado" work
and acceptance there,of on behalf of the Government of
Bihar. The work of "mosaic flooring and dado" work in the
Rajendra Surgical Block which was part of the contract of
Saxena was completed by M/s Patna Flooring Company in July
1955 after Saxena was intimated that the work which remained
to be done would be completed through other agency.
Similarly under the instructions of the Executive Engineer
they did the work of "mosaic flooring and dado work" in the
bath rooms and the, Lecture Theatre some time after January’
1956. These contracts were not in the form prescribed by S.
299 of the Constitution, and the contracts not being
expressed to be entered into by the Governor of the State
and in the manner directed by the Governor were
unenforceable against the State: see Bikhraj Jai- puria v.
Union of India(1). But the contracts were not, because
(1) [1962] 2 S.C.R. 880.
79
they were not executed in the manner or in the form
prescribed by Art. 299 of the Constitution, unlawful. It is
always open to the State. notwithstanding informality in_
the mode of execution of the contract to accept liability
arising under the terms of the contract. There is no
dispute that the Executive Engineer was competent on behalf
of the State to, enter into contracts with M/s Patna
Flooring Company in respect of both the items of work. The
contracts resulted from offer ’by M/s Patna Flooring Company
and acceptance by the Executive Engineer. It has been held
by this Court that in cases arising under the Act, a
contract not enforceable by action against the Government
may still be regarded as a contract which disqualifies a
person from standing for election as a member of the
legislature under s. 7(d): see Charturbhuj’s case(2). In
Chatturbhuj’s case no contract was executed in the manner
prescribed by Art. 299 of the Constitution. The contract in
that case was one for supply of goods. The Court in
considering whether the exstence of a contract not in the
form described by Art. 299 of the Constitution disqualified
a person under s. 7(d) observed at p. 835 :
"It would, in our opinion, be disastrous to
hold that the hundreds of Government officers
who have daily to enter into a variety of
contracts often of a petty nature, sometimes
in an emergency, cannot contract orally or
through correspondence and that every petty
contract must be effected by a ponderous legal
document couched in a particular form. It may
be that Government will not be bound by the
contract in that case, but that is a very
different thing from saying that the contracts
as such are void and of no effect. It only
means that the principal cannot be sued; but
we take it there would be nothing to prevent
ratification, especially if that was for the
benefit of Government. There is authority for
the view that when a Government officer acts
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 22
in excess of authority Government is bound if
it ratifies the excessee The Collector of
Masulipatam v. Cavalry Venkata Narrainapah-8
M.I.A. 529 at 554."
It was also held that s. 7(d) of the Act did not require
that the contracts at which it strikes, should be
enforceable against the Government: all that it requires is
that the "contract should be for the supply of goods to the
Government." The purpose of the Act it was observed, is to
maintain the purity of the legislatures and to avoid a
conflict between duty and interest, and that it is
(1) [1954] S.C.R. 817.
80
obvious that the temptation to place interest before duty is
great when there is likely to be some difficulty in
recovering the money from the Government. Absence of a
formal contract in the terms of Art. 299 of the Constitution
will not therefore affect the operation of disqualification
prescribed by s. 7(d) of the Act.
The inference arising from the documentary evidence, which
we have already set out, is further strengthened by the
admissions made by the first respondent many years after
execution of the " mosaic and dado" work. In a notice
served by him upon the Government of Bihar under S. 80 of
the Code of Civil Procedure On January 3, 1959 for payment
of the amount due to him for "mosaic flooring and dado work"
in the Rajendra Surgical Block and the bath rooms and
lecture theatre in the year 1955-56, M/s Patna Flooring
Company stated that "suspension of the work by Saxena made
the P.W.D. authorities anxious" and they called upon them to
continue the work. It was then stated in paragraph- 11 :
"That the P.W.D. authorities, when failed in
their attempt to persuade Shri G. P. Saxena to
continue the work approached Sri Bateshwar
Prasad, one of my said clients, to take up the
work direct and assured full payment by
deducting from the bills of Shri G. P. Saxena
or by preparing direct bills, in the nature of
a contract of guarantee."
In paragraph-12 it was stated
"That as a result of the said approach and
assurance, letter No. BP/1763/28/55 dated
17-4-1955 was addressed by the firm of my
clients to the Executive Engineer quoting
rates rather less than the rates on which Sri
G. P. Saxena got the work from the P.W.D.
Department which was confirmed in letter No.
504, dated 20-4-1955 from the S.D.O. No. III
Sub-division, Construction Division, Patna
where in the department asked my clients to
proceed with the remaining work
In paragraph-13 it was stated:
"That on the receipt of the said letter dated
20-4-1955 my clients started doing the work
and received materials from the P.W.D.
Stores from time to time."
81
In paragraph-14 it was stated
"That the firm of my clients was in direct
contract with you and your
department....................... "
In paragraph-16, the letter dated June 5, 1955 informing the
Executive Engineer about the completion of the work is
referred to, and it is stated that on July 13, 1955 M/s
Patna Flooring Company had submitted their bill for Rs.
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 22
14,000/- to the Executive Engineer. By this notice the
first respondent demanded from the State of Bihar Rs.
22,947/07 nP and Rs. 5,000/- as damages and loss sustained
by M/s Patna Flooring Company.
In the plaint in suit No. 53 of 1959 filed by M/s Patna
Flooring Company by paragraphs -6, 7 and 8 substantially the
same averments were made. In paragraph-7 of the plaint it
was stated "Thus it is clear the plaintiffs and their firm
began the work under a direct contract from the P.W.D. which
also appears from letter No. 705 and 706 dated 23-5-55
addressed to the plaintiffs firm by the S.D.O. No. III Sub-
division............ and in paragraph-8 it was stated that
"the mosaic work done by the plaintiffs had been done under
a direct contract from the P.W.D. authorities and "Sri G. P.
Saxena had no interest in this mosaic work but if any how it
has been entered in the M.B. in the name of Sri G.P. Saxena
then the payment to the extent of the plaintiffs dues should
be withheld and the same should be paid to the plaintiffs by
the P.W.D. authorities."
We are informed at the Bar that suit No. 53 of 1959 has as
yet not been disposed of.
We are called upon in this case to decide whether it is
established that there was a contract between the State of
Bihar and the first respondent relating to construction
work, which disqualified him from being a member of the
Bihar Legislature. We are not concerned to decide ’whether
the contract was enforceable against the State. The
evidence already set out in our view abundantly supports the
case, that there was a contract directly between the first
respondent and the State of Bihar relating to the execution
of work, and that the contract was made in the course of the
first respondent’s trade or business.
The first respondent had pleaded in his written statement
that there was in fact no contract and that he (the first
respondent) had completed the "mosaic and dado work" in the
Surgical Block,
82
the bath rooms and the lecture theatre as a sub-contractor
of Saxena. In so pleading he sought to ignore the letters
Exts. 1 (g), 1 (c) and the relevant correspondence. No
explanation was attempted before the Election Tribunal
explaining that correspondence. It was merely urged that
the two letters Exts. 1 (g) & 1 (c) between M/s Patna
Flooring Company and the P.W.D. authorities and the other
correspondence between the Executive Engineer and, Saxena
indicated that the "mosaic flooring and dado work" was
completed by the first respondent as an agent of Saxena. It
is urged in this Court for the first time that assuming that
Exts. 1 (g) & 1 (c) amounted to an offer by the first
respondent and acceptance thereof by the Executive Engineer,
that offer and acceptance thereof could amount to a binding
contract between M/s Patna Flooring Company and the
Government of Bihar, only if the Superintending Engineer
accepted or ratified the contract and in the absence of any
evidence to that effect, the offer and acceptance did not
give rise to any contract disqualifying the first respondent
under s. 7(d) of the Act.
We may at once observe that the subsequent correspondence
and settlement of accounts Ext. G contain at best ambiguous
statements which do not raise any inference in favour of the
first respondent. We may briefly refer to this evidence.
On July 12, 1955 the Sub-Divisional Officer addressed a
letter to M/s Patna Flooring Company intimating that it was
"disappointing to note that in spite of repeated askings"
the firm had not submitted their final bill for the mosaic
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 22
work till that date. The letter then proceeded "I have been
personally explaining to you the whole position and you
promised to submit your final correct bill on Friday the 8th
July, 1955 so that I may "ask the contractor Shri G. P.
Saxena to pay you off finally and settle your accounts
immediately." This letter clearly indicates that in the view
of the Sub-Divisional Officer the bill had to be submitted
by the first respondent to the P.W.D. -authorities and that
they would persuade Saxena on account of whose default the
contract with the first respondent was necessitated to pay
the amount due to him. The next letter is dated July 13,
1955 addressed- by the Sub-Divisional Officer to M/s Patna
Flooring Company intimating that the bill of M/s Patna
Flooring Company had been, sent to Saxena for immediate
settlement and payment, and asking the Company to settle the
account with Saxena and to receive payment from him and to
report to the P.W D. authorities. On July 20, 1955 there is
another letter from the Sub-Divisional Officer forwarding a
copy of letter No. 949 dated July 20, 1955 which was
addressed
83
to Saxena asking the latter to issue orders to his
contractors to mend and rectify all the cuttings and damages
properly so that the building may be in a fit condition for
handing over on August 1, 1955. A copy of this letter was
forwarded to M/s Patna Flooring Company for their
information and necessary action, and they were asked to
rectify all the defects pointed out to them and to complete
the remaining work by the scheduled date. It may be noticad
that Saxena’s contract in its entirety was not terminated :
only a part of the contract had been taken away from him.
Directions had therefore to be given to him to complete the
contract of the building and to hand over the same by July
31, 1955, and to M/s Patna Flooring Company to rectify all
the defects pointed out of them. If M/s Patna Flooring
Company were merely a subcontractor, there is no reason why
a copy of this letter should have been addressed to them and
that they should have been asked to rectity the defects. On
July 21, 1955 a statement of account was drawn up in respect
of the mosaic work done by M/s Patna Flooring Company in the
Rajandra Surgical Biock. It is described as "a statement of
account of mosaic work between G. P. Saxena and Messrs Patna
Flooring Company". On the credit side of the account are
three items : Rs. 57,443/4/3 in respect of bill dated
November 25, 19.33 ; Rs. 4,719/9/3 in respect of bill dated
March 31, 1955 -and Rs. 14,000/- in respect of bill dated
July 13, 1955 through the Sub-Divisional Officer No. III
Sub-division, Construction Division, Patna. On the debit
side., are various items of payments aggregating to Rs.
49,754/9/3 leaving a balance, of Rs. 26,408/13/3. Against
that amount a cheque for Rs. 15,000/- is recorded as given
on July 21, 1955 on the Bank of Bihar Ltd., leaving a
balancer of Rs. 11,408/13/3, There are two notes at the foot
of this account. The first part of note No. (1) deals with
the, bill dated March 31, 1955 which is not material. It
then proceeds to record that M/s Patna Flooring Company will
be responsible for rectification of the defects in mosaic
work in bill No.-BP/1838/35/55 and 93/55 dated July 13, 1955
and March 31, 1955 respectively. Note No. (2) states that
M/s Patna Flooring Company will realise from Saxena m-
mediately the amount of the claim for work included in the
third bill. This is signed by the first respondent. At the
foot of thesetwo notes there are two endorsements one signed
by Saxena and the other by the first respondent. In the
endorsement signed bySaxena it is stated that the account
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 17 of 22
was correct and he admitted that Rs. 11,408/13/3 were due
from him which he promised "to pay very soon". It was also
stated that the terms of the original agreement between
Saxena and M/s Patna Flooring Company
84
will also remain operative. The endorsement signed by the
first respondent states :
"Agreed and accepted the cheque for Rs.
15,000/We shall finish the final polish work
within a very short time. As the account has
been settled today, the 21st July, 1955. I am
herewith returning the cheque No. BZ/131 08046
dated 18-1-55 drawn on the Imperial Bank of
India, Patna for Rs. 12,000/- and balance now
stands as mentioned Rs. 11,408/13/3 as per
settlement, subject to encashment of to-day’s
cheque No. G140696 dated 21-7-1955 on the Bank
of Behar Ltd. Patna."
A copy of this account was forwarded to the Executive
Engineer, ’Construction Division, through the Sub-Divisional
Officer "for information and record with reference to the
discussion which was held between" Saxena and the first
respondent "in his presence and the presence of the Sub-
Divisional Officer No. III Subdivision." Strong reliance was
placed upon this document by counsel for the first
respondent in support of his claim that there was in truth
no contract between the State of Bihar through its P.W.D.
authorities and the first respondent, but the contract con-
tinued at all material times to subsist between Saxena and
the State of Bihar. -After carefully considering this
argument, in our view, this document is not susceptible of
any such interpretation The P.W.D. authorities had adopted
the attitude that even though they were liable to meet the
bill of M/s Patna Flooring Company for the work done under
the arrangement arrived at between them by Exts. 1(g) and
1(c) they would procure payment of the amount due from
Saxena. The first respondent had admittedly done the work
in respect of two bills dated November 25, 1953 and March
31, 1955 as sub-contractor for Saxena. A third bill for Rs.
14,000 had been submitted for the work done by the first
respondent for which the bill was sent to the Sub-Divisional
Officer. Saxena was apparently refusing to make the
payment, and a meeting was arranged in the presence of the
Executive Engineer and the Sub-Divisional Officer in which a
consolidated account was made and Saxena agreed to pay the
balance of Rs. 26,408/13/3 and against which he gave a
cheque for Rs. 15,000/-. This statement of account cannot
conceivably be utilised in suport of the case of the first
respondent that there was no contract between him and the
P.W.D. authorities representing the State of Bihar: it is
merely a settlement arrived at between the first respondent
and Saxena in the presence of the
85
Executive Engineer and the Sub-Divisional officer under
which Saxena agreed to pay the amount of Rs. 11,408/13/3
remaining due on the consolidated account. The settlement
at the instance of the Executive Engineer and the, Sub-
Divisional Officer does not purport to wipe out the contract
which was previously arrived at and the construction work
done in pursuance of that contract, and the mere endorsement
under the signature of Saxena that the terms of the original
agreement between him and M/s Patna Flooring Company will
also remain operative only indicates that M/s Patna Flooring
Company may continue to work as subcontractor of Saxena,
lost it might give an impression that the sub-contract
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 18 of 22
between Saxena and M/s Patna Flooring Company was
terminated.
For the work which Saxena failed to complete, he was liable
to compensate the Government under the terms of his
contract. The Executive Engineer had informed Saxena that
the amount payable to the first respondent would be deducted
from his bill, and had on diverse occasions called upon
Saxena to pay the amount due, to the first respondent. The
first respondent was concerned to receive the money due to
him, and it was a matter of no consequence to him whether
the Government paid it directly or the authorities got it
paid by Saxena. The desire of the first respondent not to
imperil his position as a contractor with the Government in
P.W.D. contracts may well be understood. It is difficult to
appreciate how this settlement made in the presence of the
Executive Engineer, whereby Saxena agreed to discharge the
liability of the Government, in consideration of discharge
of his own liability under his contract, negatives the
existence of the contract between the Government of Bihar
and the first respondent.
There is on the record correspondence relating to the
demands for payment by the first respondent. A letter dated
March 28, 1956 was addressed by Saxena to the Executive
Engineer informing him that M/s Patna Flooring Company had
not sent their bill to him and that they may be directed to
furnish a copy of their bill to enable him to check the same
and arrange payment. This letter refers to the payment for
the work done after December 1955, because the bill in
respect of the work done in July 1955 had already been
submitted and was the subject-matter of the settlement of
account Ext. G. There are letters dated August 21, 1957,
December 7, 1957 and March 8, 1958 in which the Executive
Engineer called upon Saxena to settle the claim of M/s Patna
Flooring Company. There is draft of a letter of the
Executive Engineer dated March 16, 1958 reciting that Saxena
was requested several
86
times to settle the claim amicably "but he was not in a mood
to do so and wanted to drag the department into litigation".
The second paragraph of that letter is important. It states
"As a matter of fact when Shri Saxena failed
to complete the particular item of work M/s
Patna Flooring Co., were engaged at the
instance of the then Departmental Officer.
Materials were also issued to them, the cost
of which are still outstanding against them.
And as such the department will have to pay
the amount in question to M/s Patna Flooring
Co. for the work done by them. It may be
added here that the work done here by this
time has already been billed for in favour of
Shri G.P. Saxena. The correct procedure in
this case would have been for the department
to make payment to M/s Patna Flooring Co."
By the last paragraph it is recorded that Saxena may be
advised to settle the matter amicably and to obtain a
clearance certificate from M/s Patna Flooring Company. The
Superintending Engineer also addressed a letter to Saxena on
May 26, 1958 calling upon him to settle the matter amicably
with M/s Patna Flooring Company within a month and
threatening that the amount due will have to be deducted
from his final ball. A copy of this letter was forwarded to
M/s Patna Flooring Company.
It appears that on July 25, 1958, Saxena submitted a state-
ment about the construction work done by him and included
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 19 of 22
therein the work done by M/s Patna Flooring Company. At the
foot of the bill is a memorandum,relating to payments made
from time to time and the last item shown therein is Rs.
13,897/- due to M/s Patna Flooring Company. Saxena not
having paid the amount to M/s Patna Flooring Company, a
letter dated September 10, 1958 was addressed to Saxena by
the Executive Engineer in which it was recorded that the
contractor’s (Saxena’s) representative had seen the
Executive Engineer in his office at the time of refund of
the security deposit kept back on account of income-tax dues
and had promised that he would settle up the account with
M/s Patna Flooring Company and pay their dues immediately,
and that although the "refund of the amount had already been
given the dues of M/s Patna Flooring Company had not been.
cleared". Saxena was once more requested to clear off the
dues of M/s Patna Flooring Company so that the refund of the
amount kept in deposit may be given to him.
87
This is all the material correspondence on which the first
respondent has relied. The correspondence makes it
abundantly clear that the primary liability for payment of
the dues was of the State of Bihar and they accepted that
liability. The Bill of M/s Patna Flooring Company was
received by the P.W.D. authorities and they called upon
Saxena to satisfy the claim because under the terms of the
contract the liability for payment would ultimately be
enforced against Saxena. None of these letters even
indirectly suggests that the contract for work done by M/s
Patna Flooring Company in the matter of "mosaic flooring and
dado work" was done in execution of the subcontract which
that Company had obtained from Saxena. The anxiety evinced
by the Superintending Engineer, the Executive Engineer and
the Sub-Divisional Officer that the claim of M/s Patna
Flooring Company be settled by payment through Saxena is
consistent with the case that the primary liability was of
the State of Bihar and the P.W.D. authorities wanted to
avoid litigation. The conduct of the authorities in the
context of the documents to which we have already referred
to is in our view consistent only with the inference that
the construction work was done by M/s Patna Flooring Company
under a contract directly with the P.W.D. authorities.
M/s Patna Flooring Company ware approved contractors and if
they were made to believe that Saxena will be induced to pay
the amount due to them, it was not expected that they would
incur the displeasure of the authorities, by insisting upon
payment directly by the State. The offer and acceptance
incorporated in Exts. 1 (g) and 1 (c) the construction work
done by M/s Patna Flooring Company, thereafter the
submission of the bills by M/s Patna Flooring Company for
payment, the anxiety of the P.W.D. authorities that payment
should be made to M/s Patna Flooring Company and their
intervention in securing payment and anxiety to avoid
litigation clearly establish that the contract pursuant to
which the work of "mosaic flooring and dado" was done was
between M/s Patna Flooring Company ’and the Government
directly. the contract was not unauthorised and therefore no
question of ratification arises. It may also be noticed
that the contract required to be ratified and was not
ratified was never raised in the trial Court or in the High
Court.
The argument -that after the contract was entered into, the
Superintending Engineer had countermanded the arrangement,
is in our judgment without substance. On the letter dated
May 16, 1958 there is an endorsement presumably by the
Executive Engineer in which it is recorded that M/s Patna
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 20 of 22
Flooring Company
88
were engaged at the instance of the then Departmental
Officers for completing the work left incomplete by Saxena,
and it is followed by a query "Was the sanction of S.E., S
’.B.C. taken to this arrangement, if so, copies of the
correspondence may please be furnished ?" There is no record
of the reply, if any, given to this query. There is,
however, at the foot of the letter an endorsement dated May
17, 1958, made by some one "write to, the contractor". It
is true that the Superintending Engineer was in overall
charge of the construction work and by the terms of the
tender itself the authority of the Executive Engineer to
accept the tender is limited : cl. 9 of the form of tender
Ext. D. But there is no evidence on the record that the
Superintending Engineer had at any time countermanded the
arrangement between the Executive Engineer and M/s Patna
Flooring Company. The first respondent in his examination
before the Trial Court stated that
"I had sent Ext. 1 (g) to S.D.O., P.W.D. No. 3
mentioning the rates and terms that my firm
had with G. P. Saxena for construction of
mosaic and Dado work in Rajendra Surgical
Block. No direct contract was ever entered
with between P.W.D. department and my firm
even after this letter Ext. 1 (g). Saxena
went to Superintending Engineer and objected.
The Superintending Engineer ordered that
Saxena will continue to be the contractor as
before and no direct contract will be given to
any firm."
But it is not suggested that there was any such arrangement
in the presence of the first respondent. The Superintending
Engineer has not been examined, and there is on the record
no evidence to support this part of the case, which was
never set up in the Trial Court and the High Court.
The admissions made by the first respondent in his notice
and the plaint in suit No. 53 of 1959 were sought to be
explained by him on the plea that he had signed the plaint
and the verification without reading the plaint of the suit
as the plaint was required to be filed in great hurry. A
similar explanation was also given in respect of the
contents of the notice. It is difficult -to accept this
explanation which was invented with a view to get out of the
inconvenient admissions. The Executive Engineer Mukteshwar
Prasad in his evidence stated that the Sub-Divisional
Officer had given a warning to Saxena that his contract
would be terminated and a part of the work would be done
through another agency
89
and that thereafter M/s. Patna Flooring Company were
engaged to complete the work. Rameshwar Prasad Singh, who
succeeded Mukteshwar Prasad as the Executive Engineer also
said that the unexecuted part of the mosaic work was taken
away from Saxena and was entrusted directly to, M/s. Patna
Flooring Company and that M/s. Patna Flooring Company were
directed to complete the work. It was never suggested to
either of these witnesses that the arrangement was
countermanded by the Superintending Engineer.
The first respondent approached the Court denying that there
was a contract between him and the State of Bihar relating
to the construction work. That denial is falsified by
letters Exts. 1(g) and 1 (i) and is further falsified by his
statements made by him on oath in his plaint. On his own
admissions, the first respondent is a person who is willing
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 21 of 22
to trim his sails as his interest demands. The explanation
given by the first respondent regarding the admissions made
by him in the plaint cannot be accepted as truthful. On a
careful consideration of all the circumstances, we are
unable to agree with the High Court that there was no
contract between the first respondent and the P.W.D.
authorities representing the State of Bihar in respect of
the "mosaic and dado work" by Exts. 1 (g) and 1 (c)
pursuant to which the first respondent carried out the work
independently of Saxena.
It now remains to consider whether there was a subsisting
contract at the date of filing of the nomination paper. The
work of construction entrusted to the first respondent was
completed in July 1955 and in respect of "bath rooms and the
lecture theatre" was completed sometime before April 1956.
The first respondent had not been paid the amounts due to
him. It cannot be said that in view of the attitude adopted
by the State of Bihar there has been a breach of the
contract. The expression "there subsists a contract" in s.
7(d) of the Act includes cases in which one party has
performed his part of the contract and part performable by
the other party remains. It was so held by this Court in
Chatturbhuj’s case(1). The first paragraph of the head note
in that case states :
"A contract for the supply of goods does not terminate when
the goods are supplied, it continues into being till payment
is made and the contract is fully discharged by performance
on both sides."
(1) [1954] S. C. R. 817.
90
In that case pursuant to an oral request made on behalf of
the State of Madhya Pradesh, Chatturbhuj Jasani had supplied
" canteen stores" between October 8, 1951 to January 23,
1952, and bad submitted invoices in respect thereof.
Payments were made in respect of those invoices between
November 15, 1951 and March 20, 1952. Elections to the
Parliament were held in December 1951, and Jasani stood as a
candidate for one, of the two seats before payment for the
stores supplied was made. The Court refused to accept the
plea raised on behalf of the elected candidate that the
moment the contract is fully executed by the candidate, the
contract is at an end and a new relationship of debtor and
creditor takes its place. It is true that the material
words of s. 7 (d) of the Act which fell to be considered in
that case were somewhat different. They stood as follows :
"A person shall be disqualified for being
chosen as, and for being, a member of either
House of Parliament or of the Legislative
Assembly or Legislative Council of a State ..
(d) If, whether by himself or by any person
or body of persons in trust for him or for his
benefit or on his account, he has any share or
interest in a contract for the supply of goods
to, or for the execution of any works or the
performance of any services undertaken by the
appropriate Government-"
The conditions under which disqualification was incurred
were wider under the section as it then stood. Any share or
interest in a contract for the supply of goods, or for the
execution of any works or the performance of any services
undertaken whether by himself or any person or body of
persons in trust for him or for his benefit or on his
account, disqualified a candidate from being elected as a
member of the Legislature. The Act as amended has now
restricted the conditions which import a disqualification.
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 22 of 22
The two conditions now are that the contract must be in the
course of the candidate’s trade or business, and it must be
for supply of goods or for execution of any works undertaken
by the Government. Contracts in respect of services
undertaken for the appropriate Government are apparently not
within s. 7(d) as amended. The amended section again
requires that there must be a contract entered into by the
candidate. Mere interest in a contract unless the
candidate has entered into the contract directly or through
an agent, would apparently not disqualify him. But s. 7(d)
before it was amended was attracted, if there was a
subsisting contract
91
and the application of the clause after it was amended also
is subject to the same condition. If there was no
subsisting contract, neither under s. 7 (d) before it was
amended, nor after it is amended, would the disqualification
be incurred. In the present case the first respondent
performed his part of the contract, and no payment has been
made by the Government of Bihar to him. In the
circumstances, relying upon Chatturbhuj Jasani’s case(1), we
are of the view that the contract was a subsisting contract.
Mr. Sarju Prasad appearing on behalf of the first
respondent, contended that by s. 116-B of the Act, the
decision of the High Court is made "final and conclusive"
and interference by this, Court with that decision, even if
it appears that an error has been committed by the High
Court, will not be justified. But by s. 116-B the
jurisdiction conferred upon this Court by Arts. 133 and 136
of the Constitution is not, and cannot be restricted. If
the circumstances of the case justify, this Court has the
power, and is indeed under a duty, to set aside the verdict
of the High Court’ The Court is dealing with a case in which
a question which vitally concerns the purity of elections
arises-. A person who has a contractual relationship
between him and the executive would, on getting elected, be
able to bring pressure to bear upon the executive to settle
his claim or to secure advantage for himself to which he may
not be lawfully entitled. This appears to be the scheme
underlying s. 7(d) which disqualifies a person from being
chosen, as a member of the Legislature if there subsists a
contract entered into the course of his trade or business by
him with the appropriate Government for the supply of goods
or for execution of any works. If, on the evidence,
subsistence of the contract which disqualifies a candidate
is established, the Court would not be justified in refusing
to give effect to its conclusion especially when the
question vitally concerns the public in keeping out of the
Legislature persons who have claims arising out of
subsisting contracts against the Government.
In our view the appeal ought therefore be allowed, and the
order passed by the High Court set aside and the order of
the Election Tribunal restored with costs in this Court and
the High Court.
ORDER
In accordance with the opinion of the majority the appeal is
dismissed with costs.
(1) [1954] S. C. R. 817.
Sup. C.I./66-7
92