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Madasami Nadar Vs. Virudhunagar Municipality - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Case NumberAppeal No. 193 of 1973
Judge
Reported inAIR1977Mad147; (1977)1MLJ257
ActsIndian Contract Act - Sections 70
AppellantMadasami Nadar
RespondentVirudhunagar Municipality
Cases ReferredKhan Sahib v. Doraiswami Chettiar
Excerpt:
.....compensation for thing done or delivered to defendant.;there are three limbs to section 70 of the contract act. the first one is, a person lawfully does anything for another or delivers anything to him. the second limb of the section is that he does so or delivers so not intending to do so gratuitously. and the third limb is that the other person enjoys the benefit thereof. lawful relationship arises not because the party claiming compensation had done something for the party against whom the compensation is claimed but because what has been done by the former has been accepted and enjoyed by the latter. the word lawfully in section 70 would in the context indicates that after something is delivered or something is done by one person for another and that thing is accepted and enjoyed by..........which is the defendant in the suit. the council resolved on 28-2-1969 and to wit under ex. p-17 to supply water to the public. it is common ground that at the time when the municipality was seized of the subject, they intended that such supply should be for a period of 120 days. bearing this in mind obviously tenders were called for the supply of such water through lorries to the residents of the town. ex. a-1 is the tender notice. ex. b-2 is the tender which the plaintiff gave in which he obviously quoted an offer to supply such waster for a period of 120 days. under ex. b-5, which is the agreement for the work in question to be performed by the plaintiff no such period however has been stipulated. the plaintiff started performing the contract but under ex. a-4, dated 8-5-1969, the.....
Judgment:
1. The plaintiff who lost in the court of the Subordinate Judge of Ramanathapuram in O. S. No. 134 of 1969 on its file is the appellant. In or about the beginning of 1969, there was acute water scarcity in the Virudhunagar town which is within the jurisdiction of the Virudhunagar Municipality which is the defendant in the suit. The Council resolved on 28-2-1969 and to wit under Ex. P-17 to supply water to the public. It is common ground that at the time when the Municipality was seized of the subject, they intended that such supply should be for a period of 120 days. Bearing this in mind obviously tenders were called for the supply of such water through lorries to the residents of the town. Ex. A-1 is the tender notice. Ex. B-2 is the tender which the plaintiff gave in which he obviously quoted an offer to supply such waster for a period of 120 days. Under Ex. B-5, which is the agreement for the work in question to be performed by the plaintiff no such period however has been stipulated. The plaintiff started performing the contract but under Ex. A-4, dated 8-5-1969, the defendant issued a Memo stating that the plaintiff was required to offer his willingness for the supply of waster through lorries at Rs. 30 per trip as some of the Municipal contractors were willing to supply water through lorries et the said rate. The plaintiff was directed to offer his willingness within 24 hours from the receipt of the said memo. Before the plaintiff could reply to the memo under Ex. A-6, the defendant issued the following notice-

"The Municipal Contractor, V. Madasami Nadar is informed that the contract for the supply of water through lorry is cancelled with effect from 1-6-1969. He should hand over the steel tanks and other materials received from the Municipality to the water works Supervisor on the night of 31-5-1969 without fail."

The defendant therefore expressed his intention to cancel the contract with effect from 1-6-1969. The plaintiff, however, caused a reply to be given to the memo Ex. A-4, under Ex. A-5, in which he fully set out his case. According to the plaintiff the original tender was given wide publicity and the Council accepted the plaintiff's tender as it was found to be a fair one. He pleaded that the contract has been concluded and, therefore strongly expressed that he should be allowed to supply the water as usual for the period ending 31-7-1969. He denied his responsibility to supply such water at the rate of Rs. 30 per lorry per trip. He also claimed damages for the premature termination of the contract. Not being sure whether the Municipality will permit him to continue the supply as was intended under the tender, the plaintiff filed a suit on the file of the Vacation Judge's court. Ramanathapuram in O. S. 25 of 1969 and obtained an interim injunction till 12-6-1969. On 12-6-1969, the defendant entered appearance in the suit end wanted time for counter till 17-6-1969. Thereafter the Vacation Judge passed the following order-

"Interim injunction till then directing the defendant to take the required quantity of water at the rate of Rs. 30 per lorry per trip subject to the decision of the court in the suit."

This order was passed in the presence of the counsel for the defendant. Thereafter end during the course of the proceedings under Ex. A-7, dated 17-6-1969, the defendant purported to terminate the contract once again from 18-6-1969. It is common ground that on and from 18-6-1969, the plaintiff did not supply any water. Consequent upon the alleged premature termination of the contract and also because the plaintiff did not obtain satisfaction for the work done during the period when he caused the supply of water to be made pursuant to the orders of the Civil Court, the plaintiff came to court. The plaint was suitably amended as originally he sought for an injunction alone and he sought for the recovery of a sum of Rs. 20920 being the charges for the supply of water from 1-6-1969 to 17-6-1969. He also reserved his right to claim damages for the unexpired period of the contract which according to the plaintiff extended upto 30-7-1969. We may at once state that the plaintiff filed a petition under Order 2, Rule 2 for a relief to sue separately for damages and this has been dismissed by the court blow as is seen from the order passed in I. A. 1033 of 1969. The plaintiff did no pursue the matter relating to recovery of alleged damages for breach of contract thereafter.

2. The defendant in his written statement denies that the period of 120 days and that it was true that the contract was terminated as stated by the plaintiff and that the plaintiff, after such termination of the contract expressly in writing, was not either legally or equitably obligated to supply any more water as the contract was cancelled and such cancellation was in the best interest of the Municipality and therefore the plaintiff is not entitled to recover any sums towards such services rendered by him between 1-6-1969 to 17-6-1969. No doubt, it is conceded that the plaintiff moved the civil court for an injunction and that such an injunction as was stated by us earlier and as it is seen from Ex. A-8 was passed by the civil court in which the suit was laid. It is also conceded that the plaintiff continued to supply water to the defendant Municipality during the aforesaid period but it is claimed that it is a voluntary and officious act on the part of the plaintiff though I may be founded on the foot of the order of interim injunction granted by the civil court. Reliance is placed upon the ultimate order of dismissal of the application for injunction made by the civil court and it is said that the supply of water being not the result of a lawful or a bona fide act, the plaintiff is not entitled to the suit amount. On the above pleadings the following issues were framed-

1. Whether the cancellation of contract on 18-6-1969 is valid and binding on the plaintiff?

2. Whether there was a contract for supply of water for 120 days from 1-4-1969 as alleged by the the plaintiff?

3. Whether there is any breach of contract by the defendant?

4. Whether the plaintiff is entitled to any damages and if so to what amount?

5. Whether the plaintiff is entitled to any amount and if so to what amount for the alleged non-supply (supply?) of water from 10601969 to 17-6-1969?

6. To what relief if any is the plaintiff entitled?

The learned Judge found that the contract was for the supply of water for an indefinite period ending with 3 days' notice by the defendant Municipality and not for 120 days from 1-4-1969. That though there was a completed contract between the parties, it was subject to clause 9 thereto which provided that it will cause on a notice given by the Municipality three days in advance. The learned trial Judge found that there was a valid cancellation of the contract under Ex. A-6 and that the supervening cancellation of the contract under Ex. A-6 was a superfluity and on issue No. 5 held that the supply of water through lorries of the plaintiff during the period 1-6-1969 to 17-6-1969, either bona fide or under the umbrage of the orders of the civil court is not lawful and, therefore, the plaintiff cannot recover the cost of such work lone by him even under Section 70 of the Contract Act. Hence this appeal.

3. The findings on the other issues other than the main one which we shall consider presently are not challenged before us and we are also of the view that it is unnecessary to go into the question whether what is the content of the contract entered into between the parties and whether the period of the contract is 120 days or otherwise. It is however common ground even before us that the contract was terminable on 3 days' notice at the instance of he Municipality. The case of the plaintiff however is that the determination of the contract by the Municipality under Ex. A-6 was result of an arbitrary capricious exercise of power and it was for this reason the plaintiff disclaimed the authority of the Municipality to snap the jural relationship which arose from the time when the tender was given and accepted and that, therefore, he was right in initiating action questioning the Municipality's right to cancel the contract which according to the plaintiff was premature. On the basic of the order of the court obtained in the presence of both parties as is seen from Ex. A-8, the plaintiff's case is that he caused the supply of water to be made through his own lorries between 1st of June 1969 and 17th of June 1969, and that such supplies were made by him not with the intention of render a service gratuitously but as a person who was entitled to be recompensed for such lawful service made by him the benefit of which was admittedly enjoyed by the defendant Municipality. It is not in dispute that during the relevant period the plaintiff supplied water in the drought area.

The Municipality has not let in any contra evidence to show that they made alternate arrangements for the supply of such water for Virudhunagar town notwithstanding the scarcity situation prevailing then and that it was the plaintiff who supplied such water to the residents during the aforesaid period. Therefore, the only point that arises for consideration in the instant case is whether the plaintiff can claim compensation for such supply of water during the relevant period on the basis of the doctrine of quantum merit and on the foot the he bona fide and lawfully rendered such services but without the intention of doing the same gratuitously.

4. Countering the main contention, learned counsel for the respondent would say that the contract has been terminated under Ex. A-6, any attempt on the part of the plaintiff of perform the services which were by then not required by the Municipality would only tantamount to an officious interference by an intermeddler without there being any legal obligation to render such services. Reliance is made to certain observations in State of West Bengal v. B.K. Mondal and Sons, . The Supreme Court, after referring to the three

conditions ingrained in Sec. 70 of the Contract Act, which is unnecessary for us to reproduce, said-

"When these conditions are satisfied, S. 70 imposes upon the latter person the liability to make compensation to the former in respect of, or to restore the thing go done or delivered...... If a person delivers something to another it would be open to the latter person to refuse to accept the thing or to return it, in that case Sec. 70 would not come into operation. Similarly if a person does something for another it would be open to the latter person not to accept what has been done by the former, in that case again S. 70 would not apply. In other words, the person said to be made liable under Sec. 70, always has the option not to accept the thing or to return it. It is only where he voluntarily accepts the thing or enjoys the work done that the liability under Sec. 70 arises."

Relying upon the above observations and obviously tearing of the above excerpt outside the context, learned counsel for the respondent says that in this case the Municipality did not accept the services of the plaintiff and in fact it has refused. Reliance is also placed upon certain observations of the Supreme Court in Pannalal v Dy. Commissioner. Bhandara, , where Alagiriswami, J.

Speaking for the Bench, after referring to the ratio in State of West Bengal v. B.K. Mondal and Sons,said that in the 1962 case it was held that merely because the contract was illegal it does not follow that the contractor has done something which is not lawful. He reiterated the principle that the real basis of the liability under Section 70 is the fact that the person for whom the work has been done, has accepted the work and has received the benefit thereunder and that what Sec. 70 prevents is unjust enrichment and it applies as much to individuals as to corporations and Government. The learned counsel for the respondent says that the Municipality refused to accept services of the plaintiff. The questions is whether he can say so. So long as the supply of water has been done and that too when the benefits of the supply have reached the Municipality, and as long as the Municipality, and as long as the Municipality as the defendant in this case did not let in any evidence that they refused to accept such services or the benefit arising thereunder, then it is difficult for them to escape the liability which is thrust on them under the principle involved in Sec.

70. Quantum meruit and quantum valibat are doctrines evolved from equity and are built upon the basic concept of good conscience which forms an integral part of judicial interaction. The question which immediately arises for consideration on the merits is whether the plaintiff has rendered the services and whether it was accepted by the defendant or the defendant had the benefit of it. During drought conditions tenders were called for to supply such water. It is not prevented by the Municipality that they made alternate arrangements during the relevant period for the supply of such water. But it is contemporaneously not denied that such water was supplied by the plaintiff by rendering the service in question. It is under the conspectus of such facts the nature of the activity of the plaintiff comes up for discussion.

5. When the plaintiff was confronted with a notice of cancellation of the contract under Ex. A-6, he thought having regard to the wide publicity given at the time when the tender was called for and having regard to the public interest which was the foundation of the resolution of the Municipality, he would be called upon to supply water for a period of 120 days. This apart, the reason given in the memo Ex. A-4 was that other contractors were willing to supply at a lesser rate and, therefore, the plaintiff was called upon to offer his willingness to supply such water to the drought area at a rate lesser than the contract rate. This attitude on the past of the Municipality by itself is not proper, naturally, therefore, the plaintiff who was served with this notice whereby a curious attempt was made by the Municipality to snap the jural relationship which by then was the subject-matter of a written contract Ex. A-4. The course of this litigation has a bearing in this case. No doubt, an ad interim injunction was obtained on 30-5-1969 and notice of the said application was given to the defendant returnable on 12-6-1969. On 12-6-1969, On 12-6-1969, the Municipality was represented by counsel Mr. Harihara Iyer, and an application to vacate the injunction was also filed by then. The parties wanted time for counter till 17-6-1969, and the court passed an order after hearing the parties. The order was to the effect 'Interim Injunction till 17-6-1969' and inter alia the respondent Municipality was directed to take the required quantity of water at the rate of Rs. 30 per lorry per trip subject to the decision of the court in the suit. The rate of Rs. 30 was thought of obviously because under Ex. A-4, the Municipality was prepared to accept such supplies provided the plaintiff was willing to reduce the rate from the quoted rate of Rs. 40 to the rate of Rs. 30 as desired by the Municipality. Having regard to the circumstances of this case it is very difficult to hold that the Municipality did not accept the supply of water till 17-6-1969. We are also of the view that the order passed by the Court below under Ex. A-8 should have been made after due consultation with the affected parties and more or less it was an order by consent. It is not necessary to harp on this any more. Suffice it however to say that u/Ex. A-8 a prima facie impression is gained that the Municipality will accept and the plaintiff agreed to supply water to the drought area at Rs. 30 per lorry get trip. Such being the main or the material fact which has prompted the plaintiff to supply water during the relevant period, can it be said that he officiously interfered and intermeddled with Municipal affairs and caused supply of water on his own volition in spite of the Municipality's aversion to accept such water from him. We are of the view that it cannot be said. On the other hand, the course of conduct of the Municipality inside the court hall as well as outside creates an unimpeachable impression that it accepted the benefit of the supply of water made by the plaintiff during the relevant period.

6. Again, it is said that the court ought not to have passed that order and the plaintiff ought not to have made such supplies taking coverage under the said order. It is a will known principle of law that action of court's cannot prejudice the parties. If the plaintiff acted upto the intent and text to Ex. A-8 and the defendant also accepted such supplies notwithstanding their erstwhile and the present stand before us that there has been a valid termination of the contract under Ex. A-6, it cannot be said that the plaintiff thrust his services on the defendant on the bare expectance of being compensated and not on the sure ground that he will get the reward for all such services done by him at a time when public interest needed it.

7. One other argument that was addressed was whether in the circumstances was whether in the circumstances of this case it could be said that the plaintiff lawfully performed his function. Sec. 70 of the Contract Act reads thus-

"Where a person lawfully does anything for another person or delivers anything to him not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered."

Already, the Supreme Court in State of West Bengal v. B. K. Mondal and Sons, has scanned the three limbs of this section in it. It is sufficient it we refer to the two decisions of our court, one reported in App. 59 of 1970 and one rendered by us and reported in Ramaboyan v. State of Tamil Nadu, 1974-TNLJ 495. In that case, we have referred to the three limbs of S. 70 and for purpose of ready reference they are extracted-

"The first one is a person lawfully does anything for another or delivers anything to him. The second limb of the section is that he does so or delivers so not intending to do so gratuitously. And the third limb is that the other person enjoys the benefit thereof."

Learned counsel for the respondent, having regard to the cancellation of the contract under Ex. A-6, would say that the activity of the plaintiff though under orders of court cannot be said to be lawful within the meaning of Sec. 70 of the Act. In Pallonjee Eduljee and Sons v Lonavala Municipality, AIR 1937 Bom 417, Tyaji J. while criticising the observations of Straight J. in Chadi Lal v. Bhagwandas, (1889)ILR 11 All 234 said that "the observations of straight J. in the above case throws no light on the subject which reads into the word 'lawfully' the existence of a relation before the Act was done, namely, such a relation as either one directly creates or by implication reasonably justified the inference that by doing some act the plaintiff is entitled to look for compensation to the defendant. But the very purpose of the section is to lay down in what circumstances such a relation must be taken to exist, viz., in what circumstances the plaintiff may claim that his act has directly created or reasonably justified the inference that he is entitled to compensation. It therefore follows that the preexistence of a jural relationship is not the necessary since qua non for action under Sec. 70." That this is the correct interpretation to be given to the word 'lawfully' is affirmed in State of West Bengal v. B. K. Mondal and Sons, .

The Supreme Court did not agree with the observations of Straight J. in Chadilal v. Bhagwandas, (1889) ILR 10 All 234 and said-

"With respect, we are not satisfied that the best laid down by Straight J. can be said to be justified by the terms of Sec.

70.......... lawful relationship arises not because the party claiming compensation has done something for the party against whom the compensation is claimed but because what has been done by the former has been accepted and enjoyed by the latter."

That the word 'lawfully' appearing in Sec.70 is an equation for benefit obtained has been made clear in an earlier decision of our court in Muthayya Chetti v. Narayana Chetti, AIR 1928 Mad 317. This meaning and equation of the word 'lawful' in Sec. 70 of the Contract Act has been accepted by a Division Bench of our court in Khan Sahib v. Doraiswami Chettiar, 1974-2 Mad LJ 270 = (AIR 1974 SC 371) presided over by Kailasam J. (as he then was) and N. S. Ramaswami J. There the learned Judges agreed with the interpretation and explanation of the word 'lawful' as was given by the Division Bench earlier in Madhava Chetti N. Narayana Chetti, AIR 1928 Mad 371, and said that what the word 'lawfully' in Sec. 70 would in the context indicate is that after something is delivered or something is done by one person for another and that thing is accepted and enjoyed by the latter, a lawful relationship is born between the two.

8. From the foregoing discussion, it is clear that in order to rest a claim under Sec. 70 of the Contract Act, there need not be a pre-existing legal obligation on the part of the claimant to supply or to serve. So long as it is not an officious overbearance on the part of the plaintiff to intermeddle and cause the supply to be made or cause the work to be done, he can claim compensation provided he did make such supply or did the work not intending to do so or supply so, gratuitously. If it is fairly clear that the plaintiff bona fide acted with the genuine intention of supplying the goods or doing the work, then if it is not intended to be a free or gratuitous act, he is bound to be compensated by the other party for such an overt but sincere act done by the initiating party did not go waste since the party against whom compensation is claimed did have the benefit of the supply of the goods or the performance of the work. So long as the act is not illegal the jurisdiction of the court to grant relief is always available so as to avoid unjust enrichment and also on the basis of an implied forging of a quasi contract between the two parties.

9. We are, therefore, unable to agree with the learned counsel for the respondent that in this case the plaintiff intermeddled and without any sincerity or genuineness did the work and therefore not entitled to be compensated under the well known principle set out above under Sec. 70. The lower court was wrong in having refused relief to the plaintiff for the value of the war done between 1-6-19969 and 17-6-1969.

10. In this case, however, as much emphasis was made on legal contentions, the court below did not advert to the merits. In fact there has not been an adjudication or finding as to what was the quantum of the supply of water made by the plaintiff during the relevant period. The plaintiff in the plaint has asked for a rate of Rs. 40 per trip of supply of water. He is not entitled to be paid at that rate. As a matter of fact, he supplied such water taking advantage of the orders of the court which specifically provided that he would make such supplies excepting only a return at the rate of Rs. 30 per trip of water so supplied to the drought area during the period commencing from 1-6-1969 and ending with 17th June 1969. Whilst, therefore, allowing the appeal, the subject-matter is remitted back to the court below to find the quantum of compensation to which the plaintiff would be entitled to in the light of the observations made above. There will be no order as to costs.

11. Appeal allowed.


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