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Raipada Pramanik Vs. the State of West Bengal - Court Judgment

LegalCrystal Citation
SubjectContract;Arbitration
CourtKolkata High Court
Decided On
Case NumberA.F.O.O. No. 319 of 1968
Judge
Reported inAIR1977Cal7
ActsConstitution of India - Article 299(1); ;Evidence Act, 1872 - Section 106
AppellantRaipada Pramanik
RespondentThe State of West Bengal
Appellant AdvocateR.C. Deb, ;S.C. Mitter and ;S.P. Roychowdhury, Advs.
Respondent AdvocateB.K. Roychowdhury and ; P.N. Palit, Advs.
Cases ReferredHiralal v. Badkulal and
Excerpt:
- .....sheet, b. r. k. coal and other relief materials for the area under the subdivisional controller, food and supplies, krishnagar on the basis of a written agreement executed on 22nd of february, 1967 by him and the subdivisional controller, food and supplies, krishnagar, nadia on behalf of the governor, state of west bengal. in the said agreement it was stipulated that the petitioner will store the relief materials in his godown for which he will be paid commission at a certain rate mentioned therein. in clause 21 of the said agreement it has been provided that either of the parties shall be at liberty to terminate the said agreement on giving one month's notice in writing of his intention to so terminate the agreement. in clause 23 of the said agreement it has also beenprovided that in.....
Judgment:

B.C. Ray, J.

1. This appeal by the plaintiff appellant is directed against the judgment and order passed in Title Suit No. 62 of 1966 and it arises out of a proceeding for passing a decree in terms of the award made by the Arbitrator and filed by him in Court.

2. The plaintiff appellant Raipada Pramanik was appointed a clearing and storing agent for C. I. Sheet, B. R. K. Coal and other relief materials for the area under the Subdivisional Controller, Food and Supplies, Krishnagar on the basis of a written agreement executed on 22nd of February, 1967 by him and the Subdivisional Controller, Food and Supplies, Krishnagar, Nadia on behalf of the Governor, State of West Bengal. In the said agreement it was stipulated that the petitioner will store the relief materials in his godown for which he will be paid commission at a certain rate mentioned therein. In Clause 21 of the said agreement it has been provided that either of the parties shall be at liberty to terminate the said agreement on giving one month's notice in writing of his intention to so terminate the agreement. In Clause 23 of the said agreement it has also beenprovided that in the case of difference or dispute arising under the agreement the same shall be referred to two Arbitrators one to be nominated by the Government and other by the agent that is the plaintiff and an umpire to be appointed by the Arbitrators in writing before proceeding with the reference and the decision of the Arbitrators or the umpire as the case may be shall be final and conclusive and the provisions of the Indian Arbitration Act, 1940 and rules framed thereunder shall be deemed to apply to this contract. The State of West Bengal, the defendant neglected to pay the bills submitted by the plaintiff on account of the storage charges amounting to Rs. 52,108.13 paise in spite of repeated reminders. The plaintiff finding no other alternative had to appoint Sree Somnath Chatterji, Barrister-at-law, as his arbitrator in accordance with the provisions of Clause 23 of the said agreement and sent a notice dated 8th of January, 1962 to the Secretary, to the Government of West Bengal, Food and Supplies Department, District Magistrate and the Sub-Divisional Controller, Food and Supplies, Krishnagar, Nadia to nominate its arbitrator to settle the above deputes and differences which have arisen between them within 15 days after the service of the said notice. But in spite of the receipt of the said notice the defendant, that is, the State of West Bengal did not take any steps to nominate their arbitrator. As such in accordance with the provisions of Section 9 of the Indian Arbitration Act, the plaintiff appointed Sri Somnath Chatterji, Bar-at-law as the sole arbitrator for decision of the said dispute. The arbitrator served several notices upon the parties to the dispute and held several meetings. On 11th of August, 1962, the arbitrator made an award for a sum of Rs. 51 398.62 paise in full and final settlement of the dues of the plaintiff against the defendant under the said agreement and after due publication the said award was signed and sealed by the Arbitrator. The Arbitrator then filed this award in Court in compliance with the provisions of Section 14 of the Indian Arbitration Act. The petitioner filed an application under Section 17 of the Arbitration Act praying for passing a decree in terms of the said award. This was numbered as Title Suit No. 62 of 1966. The District Magistrate, Nadia, filed a written objection against the said award contending inter alia that the alleged agreement was not legally valid and binding upon the State of West Bengal as thesame was not executed in the manner provided under Article 299 of the Constitution of India inasmuch as Sri Narendranath Sarkar, the then Sub-Divisional Controller, Food and Supplies had no authority to enter into such a contract. The appointment of arbitrator by the petitioner was illegal as the same was not in accordance with the Clause 23 of the agreement and the alleged award filed by the arbitrator was a nullity. It was also contended that there was no difference or dispute regarding the claim between the plaintiff and the defendant and as such there had been no occasion for appointment of any arbitrator and the appointment of the sole arbitrator by the petitioner and award made by the sole arbitrator was without jurisdiction and so the same was liable to be set aside.

3. In the said suit the plaintiff examined two witnesses. P. W. 1 is the then Sub-Divisional Controller, Food and Supplies, Krishnagar, Nadia and P. W. 2, Sree Sailendranath Das, the then Head-Clerk, in the Office of the Sub-Divisional Controller, Food and Supplies and Relief, Krishnagar, Nadia. The defendant, on the other hand, examined one witness Deb Kumar Ganguly who was an employee in the Office of the Sub-Divisional Controller, Food and Supplies, Krishnagar from 1959 to 1965.

4. On April 19, 1967, the Additional Subordinate Judge, Nadia held that the onus was on the plaintiff to prove that the Sub-Divisional Controller, Food and Supplies, Krishnagar, Nadia had no (sic) authority to enter into any contract on behalf of the Government in respect of relief materials. It was also held that from the printed form of agreement it was clear that the Sub-Divisional Controller had no authority. The agreement (Exhibit 3) was thus unauthorised and as such it could not bind the defendant. It was held that the plaintiff was not ever paid in pursuance of the said agreement and the payment made, if any, could not be said to have been made with the sanction of the Government. It was therefore held that the agreement (Exhibit 3) was not legal and valid and as such the suit at the instance of the plaintiff was held not maintainable. Accordingly, the suit was dismissed. It is against this judgment and order this appeal has been filed.

5. Mr. Rathindra Chandra Deb, learned Counsel appearing on behalf of the appellant has contended that the onus was upon the defendant to show that theSub-Divisional Controller, Food and Supplies, Krishnagar had not been empowered by the District Magistrate, Nadia to execute the agreement on behalf of the Governor, State of West Bengal. It has also been submitted that the defendant wanted the Court to believe the fact that the Sub-Divisional Controller, Food and Supplies was not empowered by the District Magistrate and as such it was for the defendant to prove the same. It has also been submitted that the relevant file containing the order and also the agreements are in the custody of the defendant and the same being not produced the presumption for withholding the evidence would go against the defendant. It has been next contended by Mr. Deb that whether the District Magistrate has empowered the Sub-Divisional Controller, Food and Supplies, Krishnagar, to execute the agreement in respect of relief matters is within the special knowledge of the defendant and as such the onus is upon the defendant to prove the same by producing the relevant documents. The defendant has not discharged the onus and the defence plea should be held to have not been proved. In this connection, Mr. Deb referred to a decision reported in : [1953]4SCR758 . Mr. Deb has lastly contended that the judgment of the Court below was not a proper judgment inasmuch as it did not consider and assess properly the evidence on record which clearly proved that the Sub-Divisional Controller, Food and Supplies was duly empowered and had authority to execute the agreement on behalf of the Governor, State of West Bengal and as such the agreement was a valid agreement. It was also contended by Mr. Deb that the plaintiff had stored the relief materials on the basis of the said agreement executed by the Sub-Divisional Controller believing in good faith that the same was duly made on behalf of the Governor, State of West Bengal. The State of West Bengal also has enjoyed the benefit of the said agreement and as such the plaintiff is entitled to get the relief claimed on the basis of the said agreement and the defendant cannot challenge the same. In this connection Mr. Deb referred to two decisions reported in 1948 (2) All ER 767 and 1950 (1) All ER 538.

6. Mr. Birendra Kumar Roy Chowdhury, learned Advocate appearing on behalf of the respondent has, on the other hand, submitted that the agreement was not in compliance with the provisions of Article 299(1) of the Constitution and as such it was a void contract being madeby a person not authorised and so the suit for a decree in terms of the award of the arbitrator was not maintainable. In this connection Mr. Roy Choudhury mentioned several decisions reported in : [1962]1SCR827 , : [1962]2SCR880 , : AIR1962SC779 , : AIR1962Pat336 (FB) and : [1966]3SCR919 . Mr. Roy Chowdhury further submitted that the Sub-Divisional Controller, Food and Supplies, Krishnagar, Nadia, was not empowered by the District Magistrate, Nadia to execute any agreement on behalf of the Governor, State of West Bengal in regard to storage of relief materials and as there was no order giving the officer such authority there was no question of producing any document before the Court and no adverse inference for non production of any document can be drawn against the defendant. Mr. Roy Chowdhury also submitted that the onus was on the plaintiff to prove that the agreement was duly executed, that is, the Sub-Divisional Controller, had authority to execute the said agreement on behalf of the Governor, State of West Bengal. The burden of proof lies on the plaintiff under Section 101 of the Evidence Act and the plaintiff having failed to discharge the onus the Court below rightly held that the agreement was not a legal and valid agreement.

7. The suit out of which this appeal has arisen was decided on a preliminary point i. e. whether the suit was maintainable. It was held by the Court below that the suit was not maintainable and as such the suit was dismissed without entering into the merits of the other issues raised in the said suit. The only question, therefore, that poses itself for decision in this appeal is whether the agreement (Exhibit 3) executed by the plaintiff and the Sub-Divisional Controller, Food and Supplies, Krishnagar, Nadia is a valid agreement: In other words if the Sub-Divisional Controller had been duly authorised by the District Magistrate, Nadia to execute the said agreement on behalf of the Governor, State of West Bengal, It is proper to set out hereunder the relevant provisions of Article 299(1) of the Constitution :--

'All contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President, or by the Governor of the State, as the case may be, and all such contracts and all assurances of property made in the exercise of that power shall be executed on behalf of the President orthe Governor by such persons and in such manner as he may direct or authorise.'

The said provision is almost in pari materia with the provisions of Section 175(3) of the Government of India Act, 1935, In : AIR1961Cal663 , Province of West Bengal v. Mohonlal Jain it has been observed that under Section 175(3) of the Government of India. Act, 1935 any contract to be made in the exercise of the executive authority of the province should be expressed to be made by the Governor of the Province and should be executed on behalf of the Governor of the Province and further should be executed on behalf of the Governor by such person and in such manner as might be directed or authorised by him. A contract not made in accordance with the above statutory requirement has been subsequently ratified by the Government or by any appropriate authority on its behalf if clearly proved by evidence would make the contract binding on the Government. In : [1962]1SCR827 , State of Bihar v. Karamchand Thappar Ltd. it has been observed that a contract in order to be a valid contract under Section 175(3) of the Government of India Act. 1935 must satisfy three conditions-- (1) it must be expressed to be made by the Governor of the Province, (2) it must be executed and (3) the execution should be by such persons and in such a manner as the Governor might direct or authorise. It has also been observed that the Section does not prescribe any particular mode in which the authority must be conferred. Normally such conferment will be by notification in the official gazette, but there is nothing in the Section itself to preclude authorisation being conferred ad hoc on any person and when that is established the requirements of that Section must be held to be satisfied. The same decision has been followed by the Supreme Court in : [1962]2SCR880 , Bhikrai v. Union of India as well as in : AIR1962SC779 , State of West Bengal v. B. K. Mondal. In the last case : AIR1962SC779 , State of West Bengal v. B. K. Mondal it has been observed by the Supreme Court that the provision is made in public interest and in enacting the provision of Section 175(3) the Parliament intended that the State should not be burdened with a liability based on unauthorised contracts and the plain object of the provision therefore is to save the State from spurious claims made on the strength of such unauthorised contracts. Failure to comply with the mandatory provisions of the Sectionmakes the contract invalid. In : [1966]3SCR919 , K.P. Chowdhury v. State of Madhya Pradesh it has been observed by the Supreme Court that in view of Article 299(1) of the Constitution there can be no implied contract between the Government and another person, the reason being that if such an implied contract between the Government and another persons was allowed, they would in effect make Article 299(1) useless, for then a person who had a contract with Government which was not executed at all in the manner provided in Article 299(1) could get away by saying that an implied contract may be inferred by the facts and circumstances of a particular case. This is, of course, not to say that if there is a valid contract as envisaged by Article 299(1), there may not be implications arising out of such a contract. Further, if the contract between the Governor and another person is not in compliance with the Article 299(1), it would be no contract at all and could not be enforced either by the Government or by other person as a contract.

8. Thus it is now well-settled that a contract executed on behalf of the Governor, State of West Bengal in order to be a legal and valid contract must comply with the mandatory requirements of Article 299(1) of the Constitution.

9. In 1948 (2) All ER 767, Robertson v. Minister of Pensions the fact in short was that by the Pensions (Navy, Army, Air Force and Auxiliary Services) Transfer of Power Order, 1939 (made under the Pensions (Navy, Army, Air Force and Mercantile Marine) Act, 1939, Section 1) the entire administration of disablement claims in respect of military service after September 2, 1939, was transferred to the Minister of Pensions. Mr. Robertson being injured in an accident while on military service was examined by a Medical Board and was found unfit for general service and he- was graded in category B. He wrote to the War Office requesting to settle the question of attributability regarding his disability. The War Office by letter intimated him that his disability was accepted as attributable to military service without any consultation with the Ministry of Pensions. On the faith of that assurance the claimant did not take any further steps to obtain independent medical opinion. The question was whether this assurance as contained in the letter of War Office was binding on the Ministerof Pensions. It was held that his claim to attributability would be dealt with by or through the War Office. If the War Office in dealing with this matter takes on itself to assume authority on this matter with which he is concerned, the claimant is entitled to rely on it having the authority which it assumes. The department itself is clearly bound and as it is an agent of the Crown the Crown is also bound by it. In 1950 All ER 538 it was held that whenever Government Officers, in their dealings with the subject, take on themselves to assume authority in a matter with which he is concerned, the subject is entitled to rely on their having the authority which they assume. These decisions, however, have no application to the case of agreement made not in compliance with the requirements provided in Article 299(1) of the Constitution of India in view of the decisions of the Supreme Court mentioned before.

10. It is evident from the agreement (Exhibit 3) that the said agreement was made in the revised model form for clearing and storing agreement and the same has been signed by the Sub-Divisional Controller, Food and Supplies, Krishnagar, Nadia, for and on behalf of the Governor of the Province of West Bengal being authorised by the District Magistrate Nadia at Krishnagar. Thus from the agreement itself it is clear that the agreement was made in the proper form kept by the District Magistrate, Nadia and the same was signed by the Sub-Divisional Controller, Food and Supplies, Krishnagar, Nadia.

11. The plaintiff has examined the Sub-Divisional Controller, Food and Supplies, Sri Narendra Nath Sarkar, who executed the said agreement as well as the Head Clerk in the Office of the Sub-Divisional Controller, Sree Sailendra Nath Das in order to prove that the Sub-Divisional Controller had authority to execute the agreement on behalf of the State of West Bengal. P. W. 1 Narendra Nath Sarkar stated in examination-in-chief that he signed the agreement (Exhibit 3) dated 22nd of February, 1957 on behalf of the Government of West Bengal. He denied that he had no authority to sign the agreement on behalf of the Government. He also stated that all such agreements were signed by him. In cross-examination he stated that he had authority to sign the agreement on behalf of the Government. He had written authority to sign the agreement on behalf of the GovernmentHe also denied the suggestion that the Sub-Divisional Controller was not authorised. He also stated that it was not a fact that he assumed his authority and signed on behalf of the Government of West Bengal. Usually Office Clerks place the agreement for his signature thereon. He also stated that it was not his concern to know if the Sub-Divisional Controller had authority. P. W. 2, Sree Sailendra Nath Das, who was the Head Clerk in the Office of the Sub-Divisional Controller, Food and Supplies and Relief, Krishnagar at that time stated that so far as he remembered the District Magistrate authorised the Sub-Divisional Controller to sign the contracts in relief matters. The letter of authority is in office. In cross-examination he stated that he saw the Collector's authority giving to Narendra Nath Sarkar in the latter part of 1956. D. W. 1, Deb Kumar Ganguly, who was an employee of the Office of the Sub-Divisional Controller, Food and Supplies stated in cross-examination that contracts in matters of food with storage agent used to be signed by the Sub-Divisional Controller, Food and Supplies. He used to sign in relief matters as well. The Court below has commented upon the deposition of P. W. 1 when he said that it was not his concern to know that the Sub-Divisional Controller had any authority. But the trial Court did not at all consider his specific statements in the cross-examination that he was duly authorised to sign the agreement on behalf of the Government. P. W. 2 has clearly stated that he saw the Collector's authority given to Sree Narendra Nath Sarkar in the latter part of 1956. D. W. 1 also stated in his cross-examination that the Sub-Divisional Controller, Food and Supplies, used to sign in relief matters as well. Thus the evidences clearly proved that the Sub-Divisional Controller, Food and Supplies had been duly authorised to enter into the contract on behalf of the Governor of West Bengal by the District Magistrate, Nadia at Krishnagar. The plaintiff thus discharged the onus which lay upon him.

12. The defendant in the written objection specifically pleaded that the Sub-Divisional Controller was not authorised by the District Magistrate, Nadia to sign the agreement in regard to relief matters on behalf of the Governor, State of West Bengal. In this case admittedly no notification empowering the Sub-Divisional Controller, Food and Supplies, Krishnagar to execute agreement on behalf of the Governor, State of West Bengalby the District Magistrate, Nadia has been published in the Official Gazette. The defence plea is that the Sub-Divisional Controller has authority to execute agreement on behalf of the Governor in respect of matters relating to Food and Supplies Department but he had no authority to execute any agreement in relief matters. Sub-Divisional Controller, Food and Supplies, Krishnagar, was thus given such authority by order made by the District Magistrate, Nadia. The said order is in the office of the Sub-Divisional Controller, Food and Supplies, Krishnagar as is evident from the depositions of the witnesses P. W. 2 and D. W. 1 who were the employees in the office of the Sub-Divisional Controller, Food and Supplies, Nadia. It is neither feasible nor possible for the plaintiff to know of the said order and to get copy of the same and to produce it before the Court below. The file wherein the said order is kept is lying under the custody and control of the defendant respondent. Section 106 of the Indian Evidence Act, 1872 (Act 1 of 1872) clearly enjoins that when any fact is specially within the knowledge of any person the burden of proving that fact is upon him. The onus is, therefore, upon the defendant to prove by producing the file containing the relevant orders, its plea that the Sub-Divisional Controller, Food and Supplies, Krishnagar, Nadia had no authority to enter into the agreement in question for storage of relief materials with the plaintiff on behalf of the Government and as such the agreement was not in conformity with the mandatory requirements of Article 299(1) of the Constitution. This case clearly falls within Illustration (b) to Section 106 of the said Act. The defendant has failed to prove its plea by producing the relevant papers which are in its custody and control and within its knowledge. In AIR 1917 PC 6, Murugesam Pillai v. G. Sambandha Pandara Sannadhi it has been observed by their Lordships of the Privy Council :--

'A practice has grown up in Indian procedure of those in possession of important documents or information lying by, trusting to the abstract doctrine of the onus of proof, and failing, accordingly, to furnish to the Courts the best material for its decision. With regard to the third parties this may be right enough -- they have no responsibility for the conduct of the suit; but with regard to the parties to the suit it is in their Lordships' opinion an inversion of sound practice for thosedesiring to rely upon a certain state of facts to withhold from the Court the written evidence in their possession which would throw light upon the proposition.'

This view was reiterated in AIR 1929 PC 95, Rameswar Singh v. Bajitlal Pathak. These decisions have been relied upon in : [1953]4SCR758 , Hiralal v. Badkulal and it had been held by the Supreme Court that in the suit for recovery of amount due on the basis of adjustment of accounts defendant having possession of account books kept by him and from which balance could be ascertained should produce them before the Court. He cannot be heard to say, relying upon the abstract doctrine of onus of proof, that it was no part of his duty to produce them unless he was called upon to do so.

13. The contention that the judgment and order is not appealable and this appeal is incompetent is not sustainable. The order is one coming within Section 39 of the Arbitration Act and as such this appeal is legally competent and so valid.

14. In the premises aforesaid the contentions made on behalf of the appellant succeed. We hold that the Sub-Divisional Controller, Food and Supplies, Krishnagar, Nadia had been authorised duly by the District Magistrate, Nadia to sign the agreement on behalf of the Governor, State of West Bengal and as such the agreement (Exhibit 3) executed by him is in due compliance with the provisions of Article 299(1) of the Constitution and so it is a legal and valid agreement binding upon the defendant. We, therefore, allow the appeal, set aside the order of the Additional Subordinate Judge directing him to decide the suit on merits with regard to other issues framed in the said suit. In the circumstances of the case there will, however, be no order as to costs. Let the records be sent down to the Court below immediately and the Court below is directed to dispose of the suit as expeditiously as possible.

N.C. Mukherji, J.

I agree.


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