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The Dominion of India, New Delhi Vs. Ram Rakha Mall and Sons - Court Judgment

LegalCrystal Citation
SubjectContract
CourtPunjab and Haryana High Court
Decided On
Case NumberFirst Appeal No. 23 of 1951
Judge
Reported inAIR1957P& H141
ActsContract Act, 1872 - Sections 51, 54, 73 and 74; Evidence Act, 1872 - Sections 92 and 115
AppellantThe Dominion of India, New Delhi
RespondentRam Rakha Mall and Sons
Appellant Advocate S.M. Sikri, Adv. General and; D.N. Awasthy, Adv.
Respondent Advocate C.L. Aggarwal and; Raj Kumar, Advs. for; Roop Chand,
DispositionAppeal dismissed
Cases ReferredCombe v. Combe
Excerpt:
.....to supply the entire contract quantity irrespective of the fact whether the promised assistance to supply wagons succeeded or failed. i may state here that it was conceded by the learned advocate-general in the beginning of his arguments that the government was not entitled to forleit the security deposited by the plaintiffs under the terms of the contract, but argued that it was within its right to do so under the general law inasmuch as the contractors failed to perform their part of the contract. monir (now chief justice, supreme court of pakistan) in his well-known treatise on law of evidence that there has been considerable confusion and conflict of opinion on the question whether oral evidence of ihe intention or of the acts and conduct of the parties is admissible to show that an..........to supply the entire contract quantity irrespective of the fact whether the promised assistance to supply wagons succeeded or failed. the government relies on clause 5 (f) of the 'special instructions' which has been reproduced in an earlier part of this judgment.it was conceded that the government did not succeed in supplying wagons, but it was argued that this fact did not absolve the plaintiff-firm from the contractual obligation to supply the goods. it was also contended by the learned advocate-general that the firm cannot set up any orai agreement to the effect that the government was responsible for the supply of wagons as such plea contravenes section 92. of the indian evidence act.according to him, this plea amounts to contradiction or, in any case, variation of the terms of.....
Judgment:

Bishan Narain, J.

1. Firm Rani Rakha Mal and Sons had deposited Rs. 5,070 as security with the Government for performance of the contract entered into between the parties. On a suit having been filed by the firm tor refund of this amount and for damages amounting to Rs. 430, the trial Court dismissed the suit relating to damages but decreed the refund of the deposit. The Government is dissatisfied with this decree and has appealed to this Court.

2. The facts leading to this appeal are not seriously in dispute. Firm Ram Rakha Mal and Sons is a firm of contractors. Sometime in the third week of June 1944 the Assistant Director of Military Farms, Northern Circle (Lahore Cantonment) called for tenders for supply of forty lakhs pounds of white bhusa to he supplied to the Military Farms stack yard at Ferozepore Cantonment during August, September and October 1944.

Tho plaintiff firm made a lender with an earnestmoney of Rs. 1,000. It appears that the tenders wereopened on 1st July 1944 at 2-30 p.m. and the plaintiffs' tender to supply the required bhusa at Rs.2-8-G per 100 Ibs. was accepted. According to thetender, out of the entire quantity 20 per cent, wasto be supplied during August 1944, 40 per cent, during September and the remaining 40 per cent, during October 1944. The plaintiff-firm appears tohave been informed of the acceptance of this tenderon 2nd July 1944, as in reply the firm wrote on 5thJuly 1944 to say that the tender was subject to supply of wagons being guaranteed as local supply wassmall.

If was further stated in this letter that if such a guarantee could not be given then the earnest money might be refunded. This request was made with reference to Clause 5 of ''special instructions' (Ex. D-8) which clause forms part of the terms of the agreement between the parties. This clause as far as it is relevant to this case reads as follows:--

'5. Railway wagons cannot be guaranteed, but every effort will be made to arrange wagons for the contractor, provided he fulfils the following conditions:--

(a) Obtains as much bhusa as possible from local resources for which wagons are unnecessary.

(b) Submits a wagon programme to this office not later than the 13th of each month, showing the wagons required for the following month.

(f) Non-receipt of wagons will not be accepted as a plea or excuse for not delivering the bhusa at the agreed rale of delivery (see Clause (a) above).

This contract had to be sanctioned by the Director of Military Farms at Simla, but in anticipation of this sanction the Lahore authorities directed the firm to commence deliveries under the tender (vide memorandum Ex. P-6 dated 29th July 1944). The firm was officially informed of the acceptance of this tender by memorandum dated 6th August 1944, and in accordance with the terms of the contract the firm deposited a security of Rs. 5,070 for due performance of the contract.

In the meanwhile the contractors, on 12th July 1944, sent their requirements of wagons. Permits for wagons were sent to the firm, but the station of destination was given as 'Multan Cantonment' instead of 'Feroaepur Cantonment'. This mistake made in the permits for wagons for the month of August was never corrected in spite of repeated reminders and the firm was not supplied any wagon during this month.

The contractors asked for extension of time for performance of contract by letter dated 21st August 1944, and also requested for wagons as the bhusa in question was lying at various railway stations and was exposed to rains for want of wagons. During September only 20 wagons were supplied which were fully utilised by the contractors. On 27th and 28th September 1944, the contractors informed the authorities that the entire quantity -had been purchased by them and that as it was impossible for a private individual to get wagons the authorities might extend time and in the meanwhile supply the required wagons.

The Government sent permits for wagons for October, but this time the permits contained another clerical mistake, The permits showed that the goods had to be sent to 'the Manager, Military Farm, Bo-wali Military Farm siding Ilarbanspura' instead of 'Manager, Military Farm, Feroxcpore Cantonment'. This mistakeragain was never corrected and no wa-gon was supplied to the contractors during October. All this time the Military authorities never wrote directly to the firm and frantic appeals of the firm remained unattended to.

It was only on 21st October 1944, that the firm received a letter from Lahore requesting it to increase the supply of bhusa during October 1944 and to send supplies every day by carts from local zamindars in spite of wagon difficulties. It appears that the Government made other arrangements with effect from 1st November 1944. The contractors asked for refund of security by letter dated 2nd December 1944, but by order dated 4th July 1945 this security was forfeited by the Government. Admittedly the contractor firm supplied in all 21.17 ger. cent, of the entire quantity and this supply was made partly locally and partly by transport in wagons made available hy the Military authorities.

3. In this appeal the Government's case is that under the written agreement the plaintiff-firm was bound to supply the entire contract quantity irrespective of the fact whether the promised assistance to supply wagons succeeded or failed. The Government relies on Clause 5 (f) of the 'special instructions' which has been reproduced In an earlier part of this judgment.

It was conceded that the Government did not succeed in supplying wagons, but it was argued that this fact did not absolve the plaintiff-firm from the contractual obligation to supply the goods. It was also contended by the learned Advocate-General that the firm cannot set up any orai agreement to the effect that the Government was responsible for the supply of wagons as such plea contravenes Section 92. of the Indian Evidence Act.

According to him, this plea amounts to contradiction or, in any case, variation of the terms of written agreement. I may state here that it was conceded by the learned Advocate-General in the beginning of his arguments that the Government was not entitled to forleit the security deposited by the plaintiffs under the terms of the contract, but argued that it was within its right to do so under the general law inasmuch as the contractors failed to perform their part of the contract.

4. There is no doubt, as observed hy Mr. Justice M. Monir (now Chief Justice, Supreme Court of Pakistan) in his well-known treatise on Law of Evidence that there has been considerable confusion and conflict of opinion on the question whether oral evidence of ihe intention or of the acts and conduct of the parties is admissible to show that an instrument was intended by the parties to be different from what it purports to be, or to show that there was a contemporaneous oral agreement between the parties varying the terms of the instrument.

Their Lordships of the Privy Council in Balki-shan v. Leggc, ILR 22 AH 149 (A), laid down that a such evidence was not admissible. The judicial opinion in India is, however, not agreed as to the precise meaning and scope of this decision of their Lordships of the Privy Council. Subsequent decisions of the Privy Council have also not clarified the legal position and have merely resulted in more conflicting decisions in tins country.

It is hoped that this vexed question relating to precise scope of Section 92 on contemporaneous or subsequent agreement evidenced by oral assurances or by conduct of the parties will soou be decided authoritatively by their Lordships of the Supreme Court.

5. In the present case, however, this position does not directly arise. The terms of the agreement in the present case are given in various forms which are standard forms. Ram Raklia Mal has stated in the witness-box that the Assistant Director, Military Farms (Lahore), had orally agreed to supply wagons and there is no reason to disbelieve him in this respect as the plaintiffs' letter and the subsequent conduct of the parties are in consonance with it.

The programme of the wagon requirements was supplied by the plaintiff-firm in accordance with the agreement. The Government procured the required permits and forwarded them to the contractors, The wagons, however, did not become available to the contractors because of clerical mistakes in these permits. The wagons supplied during September 1944, were fully utilised by the plaintiff-firm. The Government promised to rectify the clerical mistakes in the August and October permits but failed to do so.

Thus the plaintiff-firm throughout the period remained under the impression that the wagons will become available to the firm for this contract at any time. Relying on this expectation the plaintiff-firm purchased the required goods at different places and transported them to the various railway stations. It is true that these goods could have been transported, at whatever cost, by other means of transport, but till the last the plaintiff-firm was lett under the impression that the wagons would soon be available to them.

In these circumstances the question arises whether the Government was within its rights to forfeit the security on the ground that the plaintiff-firm did not perform its part of the contract. As I have already said, it is clear from the correspondence that throughout this period the plaintiffs were acting under the belief that wagons would soon become available. It can be said that in view of this belief the contractors were prevented from arranging alternative means of transport.

It was only a week before the expiry of three months that the Government wrote to say that the supply may be made from local zamindars and even then it was not said that the contractors had been in default in not making full supplies in spite of their failure to supply the wagons. There is ample proof on the record and it is not controverted before me that the plaintiffs had purchased the entire quantity that was to be supplied.

It appears to me that in such circumstances it must be held that the contractors did all that they could to perform their part of the contract and it cannot be said that they had failed to perform their contract and therefore their security was liable to forfeiture.

6. In the circumstances narrated above it appears to me clear that in equity the Government cannot be allowed to go back on the oral promise made by the authority concerned to supply the wagons and therefore the security deposited by the contractors for due performance of the contract cannot he forfeited on the ground that the plaintiff-firm did not perform its part of the contract.

It may be that the written contract cannot be modified by oral agreement, but it is open to a party by its conduct or by oral assurances to induce the other party into believing that the contract need not be performed in accordance with the written terms of the contract and in such a case it is obvious that it would be most unjust to permit such a parly to turn round later on and to rely on the written terms of the contract.

Even if the principle of estoppel is not applicable to such a case, the principle applicable to it may be described as principle of 'quasi-estoppel' as a principle of equity. After all the rules of evidence are meant to advance justice and not to hamper or defeat it. It is well-known that in commercial cir-cles parties often rely on oral assurances and act in accordance with them even when the written contract is in different terms..

When persons are dealing with Government departments which have got standard forms, such a state of affairs often happens because it is always not easy to change the terms of standard forms to bring them in conformity with the conditions prevailing at the time that the particular contract is entered into. There is nothing to my mind in Section 92 of the Indian Evidence Act which prevents the applicability of this principle to a case like the present one.

7. This principle has been the subject-matter of various decisions, Professor Corbin in his treatise on Contracts has observed at page 106 of the Second Volume that a person who has orally prevented the other from performing in accordance with the written contract should not be permitted to charge that other with a wrongful breach. At page 115 of the same volume the learned author has reproduced the following passage from an American Judgment:--

'He who prevents a tiling from being done may not avail himself of the non-performance, which he has, himself, occasioned, for the law says to him, in effect: This is your own act, and, therefore, you are not damnified. The principle is fundamental and unquestioned. Sometimes the resulting disability has been, characterised as an estoppel, sometimes as a waiver.

'We need not go into the question of the accuracy of the description. The truth is that we are facing a principle more nearly ultimate than either waiver or estoppel, one with roots in the yet larger principle that no one shall be permitted to found any claim upon his own inequity or take advantage of his own wrong.'

In England this principle was first laid down in Thomas Hughes v. Metropolitan Ry. Co., (1877) 2 App Cas 439 (B). Lord Cairns at page 448 observed-

'It is the first principle upon which all Courts of Equity proceed, that if parties who have enter- ed into definite and distinct terms involving certain legal results -- certain penalties or legal forfeiture -- afterwards by their own act or with then own consent.....which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not he enforced.....the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties,'

8. Recently Lord Denning, L. J., laid down the principle in the following words in Combe v. Combe, (1951) 1 All ER 767 (C):--

'The principle, as I understand it, is that where one party has, by his words or conduct, made to the other promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then, once the other parly has taken him at his word and acted on it, the one who gave the promise or assurance cannot afterwards be allowed to revert to the previous legal relations as if no such promise or assurance had been made by him, but he must accept their legal relations subject to the qualification which he himself has so introduced, even though it is not supported in point of law by any consideration, but only by his word.'

9. Applying these principles I have no doubt in my mind that the contractors cannot be held responsible for the failure of supplying the contract goods at Ferozepore in accordance with the terms of the contract, as the non-pcrformance was caused by the guarantee Riven by the Military authorities that the wagons will be supplied to the contractors for transport of the contract goods from various railway stations to Ferozepore. In view of this finding it must be held that the Government was not entitled to forfeit the security deposited by the contractors for due performance of the contract.

10. For all these reasons I see no force in this appeal and I would dismiss it with costs,

Chopra, J.

11. I agree.


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