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Mani Ram Misra Vs. Purshotam Lal and anr. - Court Judgment

LegalCrystal Citation
SubjectContract;Civil
CourtAllahabad
Decided On
Reported inAIR1930All732
AppellantMani Ram Misra
RespondentPurshotam Lal and anr.
Excerpt:
- - he held that on evidence the plaintiff had failed to make out his case and that the agreement set up by the plaintiff was void under the provisions of the contract act......that he the plaintiff was the person who held a particular set of contracts obtained from the railway company, that the defendants worked as the plaintiff's servants and that all the profits received by the carrying out of the contract ought to go to the plaintiff. he sued for accounts besides for declaration.2. the plaintiff alleged in the plaint that he used to take contracts from the railway company, but for certain reasons the railway company refused to grant him any further contract. in order to secure further contracts from the railway company he agreed with the defendants that defendant 1 would put himself forward as the applicant for the contracts and when the same were secured defendant 1 and defendant 2 would serve for a pay the plaintiff the real contractor.3. the defence.....
Judgment:

Mukerji, J.

1. The plaintiff in the Court below is appellant before us. He sued the respondents for a declaration that he the plaintiff was the person who held a particular set of contracts obtained from the railway company, that the defendants worked as the plaintiff's servants and that all the profits received by the carrying out of the contract ought to go to the plaintiff. He sued for accounts besides for declaration.

2. The plaintiff alleged in the plaint that he used to take contracts from the railway company, but for certain reasons the railway company refused to grant him any further contract. In order to secure further contracts from the railway company he agreed with the defendants that defendant 1 would put himself forward as the applicant for the contracts and when the same were secured defendant 1 and defendant 2 would serve for a pay the plaintiff the real contractor.

3. The defence to the suit was two fold. One was that the plaintiff's case was not true and the defendants were the real contractors, and secondly, the agreement alleged by the plaintiff was void under Section 23, Contract Act. The learned Subordinate Judge gave effect to both the pleas. He held that on evidence the plaintiff had failed to make out his case and that the agreement set up by the plaintiff was void under the provisions of the Contract Act. In this appeal we have heard the point of law raised by the defendants and we are of opinion that it succeeds. In the result we have decided not to hear the case on the facts.

4. Section 23, Contract Act, reads as follows:

The consideration or object of an agreement is lawful unless * * * * it is fraudulent * * * *.

5. The question is whether the agreement set up by the plaintiff had for its object something which was fraudulent in its nature and therefore the contract could not be enforced at the instance of the plaintiff. On the admitted facts the plaintiff was refused contracts and if it was known to the railway authorities that the plaintiff was the person who was offering himself for the contracts, he would not have been accepted. In order therefore to secure the contracts the plaintiff put forward defendant 1 as the real contractor. In doing this the plaintiff committed 'fraud' on the railway company as defined in Section 17, Contract Act. There the word 'fraud' is defined as meaning and including any of the acts mentioned there committed by a party to a contract. One of the acts is:

the suggestion as to a fact of that which is not true by one who does not believe it to be true.

Here the suggestion was made by defendant 1 to the railway company that he was the real contractor and not the plaintiff, who was not acceptable to the railway company. The object of the agreement between the parties therefore was that a suggestion might be made to the railway company by one of the persons who were parties to the agreement that defendant 1 was going to be the contractor and this was not a fact. It was further to the knowledge of defendant 1 that the plaintiff was the contractor and not he himself. Therefore, when defendant 1 represented it to the railway company that he was the contractor, he represented a matter which was not believed by him to be true. In the result the object of the agreement was 'to commit a fraud on the railway company, and this fraud was successfully committed, according to the plaintiff's own allegations.

6. A large number of eases were cited before us as to whether the agreement was vitiated, as found by the learned Judge of the Court below. Most of the cases cited before us however have no bearing on the point in question. They relate to sub-letting or assignment of a contract contrary to the terms on which the contract was granted. For example, there are cases in which a contractor in the Forest Department was prohibited from sub-letting or assigning his contract and he did so; it was held that this contract between the contractor and the sub-lessee or assignee was not prohibited by Section 23, Contract Act. One case that came near to the case before us will be found reported in Nazaralli Sayad Imam v. Babamia Dureyatimsha [1916] 40 Bom. 64. There two persons previously to the bidding for grass, agreed that they would share in the profits of the con tract and they did not tell the officer who was selling the grass that there was such a partnership existing between the bidder and another person, such a contract being prohibited by the rules. In this case however the learned Judges did not consider the aspect of the case that has been put forward before us, viz., the agreement implied a fraud on the officer selling grass.

7. The ease that comes nearest to the case before us is Saheb Ram v. Nagar Mal [1884] 63 P.R. 1884. The facts of this case were these. There was a standing rule of the Commissariat Department that no servant of the department shall obtain a contract with the department. In contravention of this rule a servant of the department, in agreement with another person, took a contract in the name of the partner. It was held that this agreement between the servant of the department and his partner implied fraud on the Commissariat Department and was void under Section 23. Contract Act. The case is based on an English case, viz., Begbie v. Phosphate Sewage Co. Ltd. [1875] 10 Q.B. 491 which was upheld on appeal in Begbie v. The Phosphate Sewage Co. Ltd. [1877] 1 Q.B.D. 679.

8. In our reading of the Act and on authorities therefore it seems to be clear that the plaintiff's case as brought was not maintainable in a Court of justice. In the result the appeal fails and we hereby dismiss it with costs.


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