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Prithvi Raj Pungalia Vs. the State of Rajasthan - Court Judgment

LegalCrystal Citation
SubjectContract
CourtRajasthan High Court
Decided On
Case NumberS.B. Civil Writ Petition No. 1620 of 1972
Judge
Reported in1978WLN(UC)321
AppellantPrithvi Raj Pungalia
RespondentThe State of Rajasthan
DispositionPetition dismissed
Cases ReferredChief Conservator of Forest and Ors. v. Ratan
Excerpt:
.....299(1) of the constitution.;a valid contract had been entered into between the petitioner and the state of rajasthan for the execution of the work in respect of which the petitioner had submitted his tender and the contention of the petitioner that the said contract was void and unenforceable on account of the contra ration of the mandatory provisions of article 299(1) of the constitution, can not be sustained.;(b) constitution of india - article, 226--scope of--compensation under terms of contract--held, writ does not lie.;it is settled law that a writ of mandamus does not lie for the purpose of enforcement of obligations under a contract.;it is not open to the petitioner to raise the question as to whether the assessment of rs. 1,03,57 made by the chief engineer could be validly made..........informed the petitioner t tat his tender had been accepted 'on behalf of the governor of the state of rajasthan' and the petitioner was directed to start the work at once and complete the same within a period of 18 months. in the said letter which was signed by respondent no 3 'on behalf of the governor of state of rajasthan', it was stated that the letter of acceptance together with the tender submitted by the petitioner constituted the contract agreement between the petitioner and the governor of the state of rajasthan. to appears that due to some reason or the other, the petitioner could not complete the work within the time stipulated in the contract and respondent no. 2, by his letter dated may 6, 1972, informed the petitioner that action would betaken against him in.....
Judgment:

S.C. Agarwal, J.

1. In this petition under Article 226 of the Constitution of India, the petitioner, Prithvi Raj Pungalia is seeking a writ of mandamus to restrain the respondents from realling a sum of Rs. 1,03,957/-from the petitioner on account of compensation in pursuance of the order dated May 6, 1972 passed by the Chief Engineer, PWD (B&R.;), Rajasthan, Jaipur, respondent Nos. 2 herein, and the order dated June 1, 1972 passed by the Executive Engineer, PWD (B&R;),Jaipur, respondent No 3 herein.

2. The petitioner is a contractor and he had submitted a tender dated December 14, 1970 for Rs. 9,87,592/- for widening the National Highway No. 8 from Km 104, 55 to 140 The said tender of the petitioner was accepted by the Governor of Rajasthan on February 4, 1971 and respondent No. 3 by his letter dated 15-2-1971, informed the petitioner t tat his tender had been accepted 'on behalf of the Governor of the State of Rajasthan' and the petitioner was directed to start the work at once and complete the same within a period of 18 months. In the said letter which was signed by respondent no 3 'on behalf of the Governor of State of Rajasthan', it was stated that the letter of acceptance together with the tender submitted by the petitioner constituted the contract agreement between the petitioner and the Governor of the State of Rajasthan. to appears that due to some reason or the other, the petitioner could not complete the work within the time stipulated in the contract and respondent No. 2, by his letter dated May 6, 1972, informed the petitioner that action would betaken against him in accordance with Clauses 2 and 3(c) of the contract agreement. Respondent No. 3 by his letter dated June 1, 1972, informed the petitioner that under the contract the date of stipulated completion was 14th August, 1972 and the petitioner was required to maintain the pro rata progress of Rs. 54,866/- per month and on that basis he should have completed work worth Rs. 7,68,126/- by the end of March, 1972 as against which the petitioner had executed work worth Rs. 4, 16, 112/-only & that inspire of several notices which have been issued to him in the past, the petitioner had failed to accelerate the work and that the Chief Engineer, PWD (B&R.;), Rajasthan had sanctioned levy of compensation of Rs. 1,03,957/- on the petitioner and had ordered to get the work executed at the petitioner's cost and risk under Clause 3 (c) of the agreement Aggrieved by the aforesaid orders dated 6th May, 1972 and 1st June, 1972 the petitioner has filed this writ petition under Article 226 of the Constitution.

3. The first contention urged by Shri H.M. Parekh, the learned Counsel for the petitioner, in support of the writ petition is that no valid contract had been entered into by the petitioner with the State Government and that the levy of the recovery of the Compensation amount of Rs. 1,03,957/- from the petitioner under the impugned orders was, therefore, illegal The learned Counsel has submitted that Article 299(1) of the Constitution prescribes the made in which a contract can be entered into on behalf of the State and that the said provisions are mandatory in nature and any contract which does not comply with the requirements of the said Article is void and unenforceable According to the learned Counsel, Article 299(1) of the Constitution prescribes the following requisites for a valid contract:

(a) It must be expressed to be made by the President, or by the Governor of she State, as the case may be,

(b) it must be executed on behalf of the President or the Governor as the case may be, and

(c) its execution must be by such persons and in such manner as the President or the Governor may direct or authorize.

4. The contend n of the counsel for the petitioner is that in the present case the following conditions have not been complied with namely:

(i) the executive Engineer was not a person competent to execute the contract on behalf of the Governor c f the State of Rajasthan;

(ii) no formal document embodying the terms of agreement has been executed; and

(iii) the contract was not expressed to be made by the Governor of the State of Rajasthan.

5. In so far as the competence of the Executive Engineer to execute the contract on behalf of the Governor of the State of Rajasthan is concerned, the counsel for the petitioner has referred to the notification dated November 1, 1956, issued by the Government of Rajasthan, where under in respect of contracts in which the estimated cost of work exceeded Rs. @ 10,00,000/- even the Chief Engineers were not competent to execute the contract and powers of the Executive Engineer to execute the contracts on behalf of the Governor of the State of Rajasthan were confined contracts where the cost of construction did not exceed Rs. @ 1.00,000/-. On behalf of the respondents, it is stated that by notification dated July 1, 1960, (Published in the Rajasthan Gazette dated February 2,1961), there has been amendment in the 'Delegation of powers to officers in the Public Works Department' and thereafter the Executive Engineer is competent to execute a contract on behalf of the Governor of State of Rajasthan, incases where the estimated cost of construction does not exceed Rs. @ 10,00,000/- and that in the present case the cost of the construction, as per tender of the petitioner was Rs. 9,87,592/- i.e. less than Rs. @ 10,00,000/- and. therefore, the Executive Engineer was fully competent to execute the contract. In view of the aforesaid notification dated 1st July, 1960, the counsel for the peritonea has conceded that there was no infirmity in the contract on the ground that the Executive Engineer was not competent to execute the same.

6. In support of his contention that execution of a formal document incorporating the terms of the agreement is essential for the formation of a contract under Article 299(1) of the Constitution, The counsel for the petitioner has placed reliance on the decision of the Supreme Court in Bhikraj Jaipuria v. U.O.I : [1962]2SCR880 wherein, while dealing with the provisions of Section 175(3) of the Government of India Act, 1935, (now Article 299(1) of the Constitution), the Supreme court has laid down that the said provisions were mandatory and not merely directory. In my view the decision in Jaipuria's case does not lend support to the aforesaid contention, In the said case the Supreme Court was concerned with the question whether the purchase orders signed by the Divisional Superintendent, East India Railway satisfied the requirements of Section 175(3) of the Govt. of India Act, 1935. The Supreme Court, while holding that the purchase orders did not satisfy the requirement of the said provision has emphasized the fact that the purchase orders were not expressed to be m de by the Governor General and were not executed on behalf of the Governor General. From this it follows that the requirements of Section 175(3) of the Govt., of India Act, 1935 would have been satisfied if the purchase orders had been expressed to be made by the Governor General and were executed on behalf of the Governor General. In other words the decision in Jaipuria's case proceeds on the basis that a formal document embodying the terms of the agreement is not essential. This is what the Supreme court laid down precisely) in its decision in Union of India v. A.L. Rallia Rom : [1964]3SCR164 , where the question to be considered was whether the acceptance of the tender by a letter satisfied the requirements of Section 175(3) of the Government of India Act The Supreme Court, while holding that such a letter of acceptance satisfied the requirements of Section 175(3) of the Government of India Act, has laid down:

Section 175(3) does not in terms require that a formal document executed on behalf of the Dominion of India, and the other contracting party, alone is effective.

In the absence of any direction by the Governor General under Section 175(3) of the Government of India Act proscribing the manner, a valid contract may result from correspondence if the requisite conditions are fulfilled.

It is true that Section 175(3) uses the expression 'executed' but that does not by itself contemplate execution of a formal contract by the contracting parties. A tendor for purchase of good in pursuance of an invitation issued by or on behalf of the Governor General of India and acceptance in writing which is expressed to be made in the name of the Governor General and is executed on his behalf by a person authorized in that behalf would conform to the requirements of Section 175(3)

7. The law laid down in the aforesaid decision was reiterated in Devecos Garments Factory and Anr. v. State of Rajasthan : AIR1971SC141 .

8. The Learned Counsel for the petitioner submits that Rallia Ram's case was decided by a Bench consisting of three Judges only whereas Jaipuria's case was a decision of a Bench of Five Judges and that the decision in Jaipuria's case should be followed in preference to the decision of the Supreme Court in Rallia Ram's case and in support of the aforesaid contention, the learned Counsel has placed reliance on Matulal v. Radhelal : [1975]1SCR127 wherein it has been held that if there are two contradictory decisions of the Supreme Court on a particular issue, the decision given by a Bench composed of larger number of Judges should be followed in preference to the decision given by the Bench composed of smaller number of Judges. In my view, there is no scope for the application of the aforesaid observations in the present case in as much as (as pointed out earlier) there is no contradiction between the decision of the Supreme Court in Jaipuria's case and the decision it, Rallia Ram's case. In this context it may be observed that Justice Shah, who had delivered the judgment on behalf of the Court in Jaipuria's case, had also delivered the Judgment on behalf of the Court in Rallia Ram's case and the decision in Jaipuria s case has been noticed in Rallia Ham's case.

9. I, therefore, hold that that execution of formal document incorporating the terms of the agreement was not essential for the for notation of a contract under Article 299(1) of the Constitution and that the tender submitted by the petitioner and the acceptance there of by the Executive Engineer, who was competent to do so on behalf of the Governor of the State of Rajasthan, conformed with the requirements of Article 299(1) of the Constitution.

10. A contention was also advanced by the learned Counsel for the petitioner that the contract had not been expressed to be made by the Governor of the State of Rajasthan in the present case. I find no merit in the aforesaid contention, in view of the fact that in the letter of acceptance dated If the February, 1971, the Executive Engineer had expressly mentioned underlie signatures that he was signing the said letter on behalf of the Governor of State of the Rajasthan & in last paragraph of the said letter it is stated:

This letter of acceptance together with the tender submitted by you 's embodying all the conditions therein constitute the contract agreement between you & the Governor of the State of Rajasthan for aforesaid work.

11. Taking into consideration, the fact and circumstances of the case, I am of the view that a valid contract had been entered into between the petitioner and the State of Raj. for the execution of the work in respect of which the petitioner had submitted his tender and the contention of the petitioner that the said contract was void and unenforceable on account of the contravention of the mandatory Provisions of Article 299(1) of the Constitution, can not be sustained.

12. The second contention of the learned Counsel for the petitioner was that even if it to be assumed that a valid contract had been entered into by the petitioner and the State of Rajasthan for the execution of the work in respect of which tender had been submitted by the petitioner, it was not competent for the respondents to levy any compensation on the petitioner under the said contract. The contention of the learned Counsel for the petitioner is that the compensation which is sought to be recovered from the petitioner under the impugned orders is in the nature of damages for breach of contract and that the assessment of the such damages is a judicial act and neither the Chief Engineer nor the Executive Engineer was competent to assess the said damages & to recover the same from the petitioner. In support of the aforesaid submission, the learned Counsel has placed reliance on the decision of the Supreme Court in Chief Conservator of Forests and Ors. v. Ratan Singh Hans : AIR1967SC166 .

13. On behalf of the respondent, the learned by. Government Advocate has submitted that under the terms of the contract the Chief Engineer is competent to levy compensation on the petitioner for the failure on his part to perform his obligations under the contract within the period stipulated under the contract and that the question as to whether the petitioner was liable for the compensation under the terms of contract or not could not be gone into in the present proceedings under Article 226 of the Constitution in as much as a writ of mandamus does not lie for the purpose of enforcement of contractual obligations. In support of his aforesaid submission, the learned by Government Advocate his placed reliance on the decisions of the Supreme Court in Hari Shanker V. Dy Excise and Taxation Commissioner : [1975]3SCR254 and State of Punjab v. Balbir Singh and Ors. A.I.R. 1977 S.C 1717.

14. I am of the view that 'he aforesaid contention of the learned Dy. (Government Advocate merits acceptance. The submissions urged by the learned Counsel for the petitioner involve questions as to the determination of the respective rights and obligations of the parties under the contract entered into by the petitioner with the Government of Rajasthan It is settled law that a writ of mandamus does not lie for the purpose of enforcement of the obligations under a contract. The decision of the Supreme Court in the Chief Conservator of Forest and Ors. v. Ratan singh Hans : AIR1967SC166 , on which reliance has been placed by the learned Counsel for the petitioner, has no application to the facts of the present case In that case the assessment of the condensation for damage had been assessed in accordance with the provisions of Rule 15 of the Forest Contract Rules and while interpreting the previsions of the said Rules, the Supreme Court held that the Divisional Forest Officer was not competent to assess the said compensation & that the compensation could only be assessed by the Conservator of Forest in exercise of the power arbitration conferred on him under the contract. The learned Counsel has submitted that the Forest Contract Rules which were the subject matter of interpretation in the said case did not have any statutory force and that the said rules had been made part of the contract by virtue of Clause (6) of the contract. There is, however, nothing in the judgment of the Supreme Court to show that the Forest Cont and Rules did not have statutory force. Therefore, it cannot be said that in quashing the assessment of compensation on the ground that the same was ultra verse, the powers conferred on the Divisional Forest Officer under Clause (15) of the Rules, the Supreme Court was enforcing the terms of the contract and was departing from the settled law that a writ of mandamus does not lie to enforce the terms of a contract.

15. I am, therefore, of the view that it is not open to the petitioner to raise the question as to whether the assessment of Rs. 1,03,957/- made by the Chief Engineer could be validly made under the terms of contract entered into by the petitioner with the State of Rajasthan, cannot be examined in these proceedings

16. It is a matter of regret that this petition has been pending for six years and now the petitioner is being told that his remedy lies else where and that he will have to make a fresh stand. It will, therefore, be in the fitness of things that the respondents may reconsider the whole matter in the light of the submissions that may be made by the petitioner. Such a reconsideration will at least lend assurance to the petitioner (who is suffering from a feeling that he was not dealt with fairly by the then Chief Engineer), that there has been an unbiased examination of the merits of his case. With these observations this writ petition is dismissed. Li the circumstances of the case, the parties are directed to bear their own costs.


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