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Palaniswami Goundar Vs. English and Scottish Co-operative Wholesale Societies Ltd. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Reported inAIR1933Mad145; 145Ind.Cas.412
AppellantPalaniswami Goundar
RespondentEnglish and Scottish Co-operative Wholesale Societies Ltd.
Cases ReferredHarnath Kunwar v. Indar Bahadur Singh
Excerpt:
- - the suit was for the recovery of the amount on the ground that the defendant failed to keep the required number of coolies in the estate. the claim for the return of the amount in cases like the present seems to be based on the principle of quantum meruit......leamington spa (1883)8 ac517., in as much as the claim made here is not for the enforcement of the invalid contracts but for the restoration of the benefit accrued under the contracts, the contracts having been found invalid. further the case in young & co. v. mayor, etc., of royal leamington spa (1883)8 ac517., concerned itself with a contract made by a corporation to which special consideration may be said to be applicable. the claim for the return of the amount in cases like the present seems to be based on the principle of quantum meruit. in mathura mohan saha v. ram kumar saha (1916)43cal19 (at p. 827), it was pointed out that:where a corporation receives money or property under an agreement which turns out to be ultra vires or illegal, it is not entitled to retain the money. the.....
Judgment:

Madhavan Nair, J.

1. The defendant is the appellant. This second appeal arises out of a suit instituted by the English and Scottish Co-operative Wholesale Societies for the recovery of Rs. 1,387-13-7. The plaintiffs alleged that the defendant executed two contracts under Act 1 of 1903, binding himself to work with a hundred coolies in the Mango Range Estate of the plaintiffs and received a consideration of Rs. 1,200 and further advances and way expenses of the coolies. The suit was for the recovery of the amount on the ground that the defendant failed to keep the required number of coolies in the estate. A schedule showing how the plaint amount was arrived at was also filed along with the plaint. The defendant contended amongst other things that the agreements were not supported by consideration, that the suit contracts were invalid and unenforceable and that the amount claimed in the plaint as due from him was not correct. The last point was covered by issue 8. As the District Munsif found that the contracts were invalid he held that nothing was due to the plaintiffs and therefore dismissed the suit. On appeal the learned Subordinate Judge held that consideration was proved for both the contracts and that the plaintiffs could recover the amount advanced under these contracts. In the result he reversed the decree of the lower Court and allowed the appeal with costs.

2. In second appeal it was argued that the contracts are invalid inasmuch as they did not comply with the provisions embodied in the rules relating to the execution of contracts under Act 1 of 1903, and that therefore in estimating the amount due from the defendant, Rs. 1,200 advanced under the contracts should not be debited against him; and that in any event the learned Subordinate Judge was wrong in having disposed of the appeal without considering issue 8. As Mr. Sitarama Rao on behalf of the respondents frankly admitted that the contracts were invalid as they were not executed in strict compliance with the rules under the Act, it is not necessary to discuss the rules referred to in this connexion and which are published in the Fort Saint George Gazette. The question is: the contracts being invalid, should not credit be given to the plaintiffs for the sum of Rs. 1,200 found to have been advanced by them the to defendant. In support of the contention that no such credit should be given the appellant strongly relied upon Young & Co. v. Mayor, etc., of Royal Leamington Spa (1883)8 AC517.

3. In my opinion the present case is distinguishable from the decision in Young & Co. v. Mayor, etc., of Royal Leamington Spa (1883)8 AC517., in as much as the claim made here is not for the enforcement of the invalid contracts but for the restoration of the benefit accrued under the contracts, the contracts having been found invalid. Further the case in Young & Co. v. Mayor, etc., of Royal Leamington Spa (1883)8 AC517., concerned itself with a contract made by a Corporation to which special consideration may be said to be applicable. The claim for the return of the amount in cases like the present seems to be based on the principle of quantum meruit. In Mathura Mohan Saha v. Ram Kumar Saha (1916)43Cal19 (at p. 827), it was pointed out that:

where a Corporation receives money or property under an agreement which turns out to be ultra vires or illegal, it is not entitled to retain the money. The obligation to do justice rests upon all persons natural or artificial; if one obtains the money or property of others without authority, the law independently of express contract will compel restitution or compensation.

4. In Mohamed Ebrahim Molla v. Commissioners for the Port of Chittagong : AIR1927Cal465 :

an agreement the value of which exceeded Rs. 2,500, was executed by the Port Officer of Chittogang, by his proxy, the Port Officer of Moulmein, on behalf of the Commissioners for the Port of Chittagong by which a towing vessel was let out by the Port Commissioners on operations outside the Chittagong Port,

it was held:

that the agreement being in contravention of the mandatory provisions of Section 29, Chittagong Port Act, 1914, was not enforceable and that the Commissioners were entitled to recover quantum meruit for the services rendered by them.

5. Both these decisions refer to the decision in Young & Co. v. Mayor, etc., of Royal Leamington Spa (1883)8 AC517., relied upon by the appellant. The decision in Mohamed Ebrahim Molla v. Commissioners for the Port of Chittagong : AIR1927Cal465 , was followed by this Court in Municipal Council, Tiruvarur v. Kannuswami Pillai AIR1930Mad600, in which it was held by Kumaraswami Sastri and Pakenham Walsh, JJ., that:

in spite of the invalidity of the contract a decree for what will be due on the basis of quantum meruit can be given.

6. In this case also reference is made to Young & Go v. Mayor, etc., of Royal Leamington Spa (1883)8AC517., and to the other relevant cases bearing on the question. Oil the authority of these decisions it is clear that though the contracts are invalid the plaintiffs in the present case are entitled to the return of Rs. 1,200 advanced under the contracts. Their claim for the return of the amount can also be rested on Section 65, Contract Act, which says that:

when an agreement is discovered to be void, or when a contract becomes void any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it.

7. In this connexion attention may be drawn to the decision of this Court in Thangammal Aiyar v. Krishnan A.I.R.l980Mad132, which, applying the decision of the Privy Council in Harnath Kunwar v. Indar Bahadur Singh AIR1929PC403, held that Section 65, Contract Act, requiring compensation to be paid, or restoration of advantage received, by a party under a contract, would apply to a contract void from its inception. The contention that the amount in question should be returned based on Section 65, Contract Act, seems to be unanswerable. The plaintiffs can thus claim recovery of Rs. 1,200 paid by them under the void contracts either on the basis of quantum meruit or on the principle of the restoration of benefit under a void contract; but this does not dispose of the entire claim made by the plaintiffs. In addition to the money advanced under the contracts they claim from the defendant various other items the correctness and liability to pay which are disputed by the defendant, The defendant also says amongst other things that he has not been allowed the proper amount of commission due to him. The liability to pay the amount claimed by the plaintiffs in the list filed by them along with the plaint has been questioned by the defendant on various grounds. This was the subject-matter of issue 8. In the view that was taken of the case by the District Munsif there was no need to give an express decision on this issue. The learned Subordinate Judge, setting aside the decree of the District Munsif has given a decree to the plaintiffs as prayed for without considering this issue. The Court then called for a finding on issue 8 and after its receipt modified the decree passed.


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