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Lakshmanprasad and Sons Vs. A. Achutan Nair - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai High Court
Decided On
Case NumberLetters Patent Appeal No. 218 of 1952
Judge
Reported inAIR1955Mad662; (1956)IMLJ78
ActsContract Act, 1872 - Sections 20, 65 and 72
AppellantLakshmanprasad and Sons
RespondentA. Achutan Nair
Appellant AdvocateV. Thyagarajan and ;P.V. Subramaniam, Advs.
Respondent AdvocateK.P. Raman Menon, Adv.
DispositionAppeal allowed
Cases ReferredShiba Prasad Singh v. Srish Chandra Nandi
Excerpt:
.....that fixed by the government under that order. during the period of the suit contract, the maximum price fixed by the government for a particular car was rs. 8,495, but a contract was entered into for the purchase of the car for a sum of rs. 9,350. the purchaser then filed a suit for the recovery of a sum of rs. 1,155 being the difference between the price which he paid for the car and the maximum price fixed by the government.; held, the plaintiff was not entitled to recover the sum claimed, though the motor dealer who sold the car cold not have sold the car lawfully for a price more than the maximum price fixed under the control order, yet there was nothing in law which compelled the dealer to sell at that price. the dealer was liable to be punished for a contravention of the order and..........the contract was entered into, both the plaintiff and the defendants thought that rs. 9350 was the price fixed under the order for the type of hindusthan-10 purchased by the plaintiff. this was evidently because of the impression created by a circular submitted to the provincial motor transport controller by messrs. hindustan motors ltd., fixing the price of hindusthan-10 at rs. 9350 which pcice was apparently approved and confirmed by the provincial motor. transport controller.in a letter dated 2-12-1947, the provincial motor transport controller wrote to the hindustan motors ltd., calcutta, to say that he had informed the appellant firm that the prices contained in circulars nos. 60 and 61 were the ruling prices and that they will render themselves liable for prosecution if they.....
Judgment:
1. The facts of this case are simple. The appellants are a firm of dealers in automobiles carrying on business in Madras. The respondent purchased from them a Hindusthan-10 motor car, fixed head type, for a sum of Rs. 9350 (vide Ex. B. 3) on 22-1-1948. That was at a time when the Madras Civil Motor cars Control Order 1947 was in force, and no type of car could be sold for a price exceeding that fixed by the Government under that order. On the evidence, it is clear that at the time when the contract was entered into, both the plaintiff and the defendants thought that Rs. 9350 was the price fixed under the order for the type of Hindusthan-10 purchased by the plaintiff. This was evidently because of the impression created by a Circular submitted to the Provincial Motor Transport Controller by Messrs. Hindustan Motors Ltd., fixing the price of Hindusthan-10 at Rs. 9350 which pcice was apparently approved and confirmed by the Provincial Motor. Transport Controller.

In a letter dated 2-12-1947, the Provincial Motor Transport Controller wrote to the Hindustan Motors Ltd., Calcutta, to say that he had informed the appellant firm that the prices contained in Circulars Nos. 60 and 61 were the ruling prices and that they will render themselves liable for prosecution if they exceeded the prica indicated in the said Circulars Nos. 60 and 61. Ex. B. 4 is the Circular No. 61, which specifies the maximum retail price of Rs. 9350 for the fixed head type of Hindusthan-10. The respondent paid the said pcice and obtained delivery of the car. It was subsequently discovered that the Provincial Transport Controller had no authority to fix the price and that it was only the Provincial Government that could fix the maximum retail price under the Control order. From the relevant notifications, it appears that during the period of the contract, the maximum price that was fixed by the Government was Rs. 8195. The respondent thereupon filed a 'suit in the City Civil Court, O. S. No. 635 of 1948 for the recovery of a sum of 11s. 1155 being the difference between the price which he paid for the car, namely, Rs. 9350 and the maximum price fixed, by the Government, namely, Rs. 8195 together with interest on the said sum.

In the plaint, it was alleged that the defendants had collected illegally and on false representations the said sum of Rs. 1155 more than what was lawfully payable. The defendants denied that they made any false representation. They stated that the price charged by them, namely, Rs. 9350 was the price in the circular letter above referred to, and that even assuming that there was any misrepresentation, the plaintiff not having rescinded the contract and having kept the car, making rescission impossible, he was not entitled to claim refund of Rs. 1155 as damages or otherwise. The learned City Civil Judge held that the defendants had collected Rs. 1155 over and above the control price from the plaintiff by mis- representation and that the plaintiff's-suit was one for refund of the excess amount collected and not for avoiding the contract and that the plaintiff was entitled to the relief sought. He decreed the suit as prayed for.

The defendants filed an appeal to this Court against the decree and judgment of the learned City Civil fudge (C. C. C. A. No. 10 of 1950S. Basheer Ahmed Sayeed J. dismissed the appeal, The learned Judge helu that the authorised price for which the vehicle could have been sold was only Rs. 8195. He, however, found that the appellants were not guilty of any fraud or misrepresentation and 'that both parties were under a 'bona fide' impression and belief that the price at which the car could be sold was Rs. 9350 and therefore the excess money must be deemed to have been paid under a mistake of fact. The learned Judge was of opinion that the case came directly under Section 72, Contract Act. The reasoning of the learned Judge was as follows :

"Money having been paid under a mistake of fact that the price was what was quoted by the appellants and not otherwise, and when it became known to both the parties that the price that should have been collected was only a lesser sum than what was actually paid, it was open to the respondent to claim the excess and it was reasonable and proper that the excess paid should be refunded by the appellants. The sum of Rs. 9350/- was paid as the amount legally due to the appellants and it was received by the appellants under such belief, though the belief was a mistaken one. There is no evidence or proof that the money paid in excess of the controlled price was intended to be given away as a gift or a present to the appellants by any means, and such being the Case, I am of opinion that Section

72. Contract Act comes into operation and applies to the facts of the case." Lakshmana Prasada and Sons v. Achuthan Nair, (A).

2. Two contentions' were raised on behalf of the appellants before the learned Judge, and they have been raised before us. The first contention is that the respondent having alleged misrepresentation on the part of the appellants as regards the price, the contract was voidable under Section 19, Contract Act, and the respondent could have avoided the contract by returning the vehicle and demanding the money paid by him. Not having done so, he was not entitled to claim the amount paid by him in excess of the control price. This contention the learned Judge did not accept, on his finding that there was no misrepresentation by the appellants. The second contention is that as the appellants had sold the car in contravention of the provisions of the Control Order, the contract was an illegal one and the respondent, could therefore have treated the contract as void and obtained refund of the price paid by him on returning the car. The learned Judge overruled the contention, but it is not clear to us on what ground.

3. It appears to us that the matter could be looked at from two aspects. One is to consider the contract as having been entered into under a mutual mistake of fact. It was open therefore to the respondent to have avoided the contract and returned the car and got back the money which he had paid. He, however, cannot in law compel the appellants to consent to a new contract, namely, a sale of the car for the control price. It may be that if the contract was for the purchase of a car for such price as was fixed by the Provincial Government, then the appellants would not be entitled to claim anything more than such price. But that was not the case. The contract was lor the sale of the car for a particular price, namely, Rs. 9350. Though the appellants could not have sold the car lawfully for a price more than the maximum fixed under the Control Order, yet there was nothing in law which compelled the appellants to sell at that price. They may not be willing to sell a car if they were not satisfied with the maximum price.

4. The same legal position would follow even on the footing that the contract itself was illegal as one in contravention of the provisions of the control order. A sale for a price exceeding the maximum price fixed by the Government was certainly illegal. In fact, the appellants were liable to be punished for a contravention of the order. The respondent could on this ground have treated the contract as void and claimed the price which he had paid and returned the car. As Chitty points out, the only remedy in cases of innocent misrepresentation is general rescission, and the law would not allow this to operate unless the parties could be restored to their original positions. There must be 'restitutio in integrum.' (Chitty on Contracts, 20th Edn., page 543). In our opinion, the learned Judge should have accepted this contention of the appellants.

5. The learned Judge was of the opinion that the case came under Section 72, Contract Act. With due respect to the learned Judge, we do not agree with him. The money was not paid by mistake. It was paid as money rightly payable under the contract, as it stood. The payment was not by mistake; it was the contract which was entered into on a mistaken assumption that the price was Rs. 9135. But the mistake occurred at the time of the formation of the contract. Once the contract had come into existence, there was no mistake made so far as the payment was concerned. What was paid was what was due under the contract. This distinction, the learned Judge apparently overlooked.

6. It is this distinction which furnishes the basis for distinguishing the case of Jagadish Prosad Pannalal v. Produce Exchange Corporation Ltd., AIR 1946 Cal 245 (B), from the decision of the Privy Council in Shiba Prasad Singh v. Srish Chandra Nandi, AIR 1949 P C 297 (C). In our opinion, the present case falls directly within the scope of the principle laid down in A I R 1946 Cal 245 (B). In that case, a contract for sale of maize-starch at the rate of Rs. 77 per cwt. was entered into. Subsequent to the date of the contract but before it was performed, an order was promulgated by the Government of India fixing the maximum price of maize-starch at Rs. 4S per cwt. and making it unlawful for any person to charge any price in excess of Rs. 48. The order was applicable to alt contracts in which delivery was to be given on or about 1-1-1944. The goods were despatched on 27-12-1943, and on 3-1-1944, the railway receipt was endorsed over to the buyer who paid the contract price on that date. The buyer then brought a suit to recover the difference betwen the contract price and the maximum price fixed by the Government of India. It was held by Sen J., that the contract became void on the promulgation of the Government order, and that the buyer was not entitled to recover the difference between the contract price and the price fixed by the Government either under Section 65, Contract Act, or under Section 72, Contract Act. The learned Judge held that payment of the entire contractual sum in ignorance of the fact that the contract had become void was by mistake, and the buyer could recover the entire amount paid and return the goods, but he could not split up the payment and claim only the excess amount as being a payment by mistake refundable under Section 72. The following observations of Sen J., are instructive :

"The question remains whether in this case the plaintiff is entitled to recover the sum claimed. Can it be said that the difference between the contract price, and the maximum price fixed by the Government order represents a payment made by the plaintiff by mistake In my opinion, it cannot; when the contract became void, the plaintiff could have refused to pay anything at all and in that case he would have had to return the goods. If he paid the contractual sum in ignorance of the fact that the contract had become void that would he a payment by mistake. He would, then, recover the entire amount paid and return the goods. Here the entire contractual price has been paid by mistake. The plaintiff cannot he permitted to split up the payment as being a payment made by mistake refundable under Section 72. To do so would be to permit the plaintiff to enforce a new contract on the defendant company. As I have pointed out before, the Government order contains no such compelling clause; it merely prohibits the sale above a certain maximum price but it docs not compel any one to sell at that price."

7. This decision of Sen J., was expressly approved by their Lordships of the Privy Council in AIR 1949 P C 297 (C). Their Lordships said, at page 302.

"Their Lordships do not find it necessary to examine in detail the Indian authorities for the wider interpretation of 'mistake' in Section 72. They would only refer to the latest of these authorities; AIR 1940 Cal 245 (13), in which a carefully reasoned judgment was given by Sen J. Their Lordships agree with this judgment."

8. The ruling in A J R 1949 P C 297 (C), has no application to this case. There, under a mining lease, a lessee had been paying his lessor on a wrong view of his rights based on a misconstruction of the terms of the lease, larger sums by way of royalty than what was due on a proper construction of these terms. It was held that as the money was paid under the belief that it was legally due under the lease and as such belief, however, was mistaken, the case fell within Section 72, Contract Act, and the lessee was entitled to recover the sums paid by him in excess of what was due under the lease. In the present case, there is no question of misconstruction of the terms of the contract. It is clear that under the contract what was payable was Rs. 9350. There was no mistake about it, and that was the amount which the respondent paid. What is now alleged is that he entered into the contract for the purchase of the car at the said price on a mistaken impression that that was the maximum price fixed by the Government under the Control order. The mistake alleged is a mistake which goes to the root of the contract, namely, the price.

9. Following the decision of Sen J., in AIR 1946, Cal 245 (B), we hold that the respondent is not entitled to recover the difference between the contract price and the control price.

10. The appeal is allowed, the judgment of Basheer Ahmed Snyeed J., and the decree of the City Civil Judge are set aside, and the suit is dismissed with costs. No costs in the appeal.


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