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New Churulia Coal Co. Ltd. Vs. Union of India (Uoi) - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata High Court
Decided On
Case NumberA.F.O.D. No. 65 of 1956
Judge
Reported inAIR1959Cal585
ActsCode of Civil Procedure (CPC) , 1908 - Section 80 - Order 6, Rule 2 - Order 7, Rule 7; ;Constitution of India - Article 299; ;Contract Act, 1872 - Section 65; ;Government of India Act, 1935 - Section 175(3)
AppellantNew Churulia Coal Co. Ltd.
RespondentUnion of India (Uoi)
Appellant AdvocateSubimal Roy, Adv.
Respondent AdvocateG.P. Kar, Adv.
DispositionAppeal dismissed
Cases ReferredDhian Singh v. Union of India
Excerpt:
- k.c. das gupta, c.j. 1. the main question for decision in this appeal is whether the plaintiff, who is the appellant before us, should be allowed to raise an issue as regards relief under section 65 of the indian contract act though the suit as framed was for recovery of a sum of money on the basis of a contract and on an allegation of failure of consideration for the contract. it appears that the plaintiff being in need of a lancashire boiler registered its requirement with the department of government which had been helping parties in india to obtain such boilers from abroad. by a letter dated 31st of january 1946 addressed to the assistant coal commissioner of the department of industries and supplies. government of india, the plaintiff requested allocation of 2 lancashire boilers.....
Judgment:

K.C. Das Gupta, C.J.

1. The main question for decision in this appeal is whether the plaintiff, who is the appellant before us, should be allowed to raise an issue as regards relief under Section 65 of the Indian Contract Act though the suit as framed was for recovery of a sum of money on the basis of a contract and on an allegation of failure of consideration for the contract. It appears that the plaintiff being in need of a Lancashire Boiler registered its requirement with the Department of Government which had been helping parties in India to obtain such boilers from abroad. By a letter dated 31st of January 1946 addressed to the Assistant Coal Commissioner of the Department of Industries and Supplies. Government of India, the plaintiff requested allocation of 2 Lancashire Boilers including one 'by John Thompson with a working pressure of 150 lbs. per sq. inch complete with fittings, mountings and firebars'. On 19th February 1946 the Assistant Coal Commissioner wrote that one second-hand Lancashire Boiler had been allocated to the plaintiff for installation at the Churulia Colliery. It appears further that after the plaintiff had sent a cheque for Rs. 34,000/-on account of the price of the Boiler as intimated by the Assistant Coal Commissioner, the necessary documents including the railway receipt as regards the Boiler were sent to the plaintiff and the plaintiff took delivery of the Boiler in May 1946. The plaintiff's case as made in the plaint is that when received this Boiler was found to be in unserviceable condition and in spite of the repairs which were carried out in accordance with the suggestion of the Assistant Coal Commissioner, the Boiler was still unfit for the purpose for which it had been purchased and could attain only working pressure of 109 lbs. instead of the pressure of 150 lbs. as required. As early as February 1947 the plaintiff on finding that the Boiler was unserviceable asked the Assistant Coal Commissioner to take back the Boiler and to refund the price as also the freight and handling charges. This request was repeated in several letters and ultimately by a letter dated 5th July 1949 the plaintiff wrote rejecting the Boiler and again calling upon the Assistant Coal Commissioner to take back the Boiler and to refund the price together with the amount paid by the plaintiff on repairs of the same. As the defendant did not take back the Boiler or refund the price, the plaintiff brought the present suit for recovery of the sum of Rs. 35,509-12-0 consisting of Rs. 34,000/-paid on account of price, Rs. 364-11-0 for the railway freight, Rs. 325-1-0 for the handling and unloading charges and Rs. 820/- spent on account of repairs. The main defence raised in the written statement was that the contract was void inasmuch as it did not comply with the provisions of Section 175, Sub-section (3) of the Government of India Act. 1935, At the tried the. first issue raised was 'whether the contract pleaded in paragraph 1 of the plaint was enforceable in view of the provisions of Section 175(3) of the Government of India Act'. The learned Judge has held on the authorities of numerous decisions of this Court that the agreement was void. That conclusion is no longer disputed before us and in fact, Mr. Roy, the learned counsel for the appellant, formally submitted to us that his client abandoned the claim on the basis of the contract.

2. At the trial Mr. Roy asked the Court's permission to raise a second issue as to whether the plaintiff was entitled to recover the amount claimed in the plaint under the provisions of Section 65 of the Indian Contract Act, that is, for restitution of the sum of Rs. 64,000/- which was the advantage obtained by the defendant, the Union of India, under the agreement which has been discovered to be void. The learned Judge allowed some evidence to be adduced on the fact and the date of discovery that the agreement was void but ultimately came to the conclusion that the plaintiff cannot be allowed to raise this issue. He also held that even if the plaintiff be allowed to raise it, the suit would be bad for want of notice under Section 80 of the Code of Civil Procedure. It appears also to be his view that the suit would also fail on the ground of limitation as he was unable to accept the plaintiff's case that the agreement was discovered to be void at the time or in the manner alleged by the plaintiff's witness, Tara Das Bhattacharya.

3. The ordinary rule undoubtedly is that every suit his to be disposed of on the basis of the pleadings of the parties and no issue should be allowed to be raised unless the necessary averment of facts is in the pleadings. In this connection Mr. Kar, the learned counsel for the respondent, the Union of India, has drawn our attention to the observations of the Supreme Court in Trojan and Co. v. Nagappa Chettiar, : [1953]4SCR789 . That was a suit for compensation on the ground that certain shares had been purchased by a firm of stock-brokers in contravention of the instructions of the constituent, the plaintiff. No alternative claim was made in the plaint on the ground of failure of consideration. The case that the purchase was unauthorised was abandoned by the counsel and a new case not in the pleadings claiming relief on the ground of failure of consideration was allowed to be raised and a decree was made in favour of the plaintiff directing the defendants to pay to the plaintiff certain amounts in respect of a particular transaction. Dealing with this question Mahajan J. stated:

'We are unable to uphold the view taken by the High Court on this point. It is well settled that the decision of a case cannot be based on grounds outside the pleadings of the parties and it is the case pleaded that has to be found. Without an amendment of the plaint, the Court was not entitled to grant the relief not asked for and no prayer was ever made to amend the plaint so as to incorporate in it an alternative case. The allegations on which the plaintiff claimed relief in respect of these shares are clear and emphatic. There was no suggestion made in the plaint or even when its amendment was sought at one stage that the plaintiff in the alternative was entitled to this amount on the ground of failure of consideration. That being so, we see no valid grounds for entertaining the plaintiff's claim as based on failure of consideration on the case pleaded by him. '

The language used in these observations is certainly wide enough to support Mr. Kar's contention that unless and until the plaintiff has asked for and obtained an amendment of his plaint making an alternative claim on the basis of Section 65 of the Contract Act, the Court is not entitled to allow the plaintiff to raise such an issue. It is necessary to consider, however, whether by these observations the Supreme Court intended to lay down an absolute rule that in no case, not even a case where the facts on which the fresh claim is based are to be found in the defendant's own pleadings, can the Court give relief on grounds not mentioned in the plaint, it is helpful to consider in this connection another pronouncement of the Supreme Court in Srinivas Ramkumar Firm v Mahabir Prasad, : [1951]2SCR277 . That was a suit for specific performance of the contract to sell a house. The plaintiff's case was that the second party deiendants had agreed to sell a house for consideration of Rs. 34,000/- and out of this a sum of Rs. 30,000/- had been paid by the plaintiff firm on behalf of the vendors to a creditor of the latter. The second party defendants contended that they had never agreed to sell the house to the plaintiff and the story of a contract of sale as set up was entirely false. They admitted, however, that they had approached the plaintiff for a loan and the plaintiff advanced to them a sum of Rs. 30,000/-. The trial Court came to the conclusion that the story of a contract of sale as alleged by the plaintiff was not established, that the defendant's story Was true and that the plaintiff did advance a sum of Rs. 30,000/- by way of a loan to the second party defendants. In this view the trial Court dismissed the plaintiff's claim for specific performance and gave the plaintiff a money decree for a sum of Rs. 30,000/- with interest of 6 per cent. per annum from the date of the suit to the realisation against these second party defendants. On appeal the High Court at Patna agreed with the trial Judge that the plaintiff was not entitled to a decree for specific performance. As regards the money decree granted against the second party defendants the High Court, however, held that this was not warranted in law as no case of a loan was made by the plaintiff in the plaint and no relief was claimed on that basis. Accordingly the High Court dismissed the suit in its entirety and set aside the decree for recovery of money that had been made in favour of the plaintiff by the trial Court. The plaintiff appealed to the Supreme Court. The Supreme Court declined to intervene with the findings of facts by the Courts below. It was, however, of opinion that the trial Court was right in giving a decree for money against the second party defendants 'and that the High Court took an undoubtedly rigid and technical view in reversing this part of the decree of the Subordinate Judge.' It will be helpful for our present purpose to set out in full the observations of Mukherjea J. who delivered the judgment of the Court consisting of Sastri J., Mahajan J. and himself.

'It is true' said the learned Judge 'that it was no part of the plaintiff's case as made in the plaint that the sum of Rs. 30,000 was advanced by way of loan to the defendants second party. But it was certainly open to the plaintiff to make an alternative case to that effect and make a prayer in the alternative for a decree for money even if the allegations of the money being paid in pursuance of a contract of sale could not be established by evidence. The fact that such a prayer would have been inconsistent with the other prayer is not really material. A plaintiff may rely upon different rights alternatively and there is nothing in the Civil Procedure Code to prevent a party from making two or more inconsistent sets of allegations and claiming relief thereunder in the alternative. The question, however, arises whether, in the absence of any such alternative case in the plaint it is open to the court to give him relief on that basis. The rule undoubtedly is that the court cannot grant relief to the plaintiff on a case for which there was no foundation in the pleadings and which the other side was not called upon or had an opportunity to meet. But when the alternative case, which the plaintiff could have made, was not only admitted by the defendant in his written statement but was expressly put forward as an answer to the claim which the plaintiff made in the suit, there would be nothing improper in giving the plaintiff a decree upon the case which the defendant himself makes. A demand of the plaintiff based on the defendant's own plea cannot possibly be regarded with surprise by the latter and no question of adducing evidence on these facts would arise when they were expressly admitted by the defendant in his pleadings. In such circumstances, when no injustice can possibly result to the defendant, it may not be proper to drive the plaintiff to a separate suit. As an illustration of this principle, reference may be made to the pronouncement of the Judicial Committee in Mohan Manucha v. Manzoor Ahmad Khan .'

In the case of which was being cited with approval by the Supreme Court, the plaintiff had brought a suit to enforce a registered mortgage granted by one Mansur Ahmad Khan, the defendant's father, in favour of Moti Lal Manucha, the plaintiff's father. The deed contained also a personal covenant to pay the interest half-yearly and to repay the principal at the end of three years. The plaint sought relief, both by sale of the mortgaged property and by enforcement of the covenant. The defendants maintained, inter alia, that the mortgage sued upon was void, having been made in circumstances which brought into operation paragraph 11 of the Third Schedule to the Code of Civil Procedure by reason of which, it was stated, the defendant's father was not competent to mortgage the property. The trial Judge sustained the defendants' contention and also refused the plaintiffs a money decree on the covenant on the ground that the cause of action had become barred by limitation. Accordingly he dismissed the suit. Before the Chief Court it was contended on behalf of the plaintiffs that they were at least entitled to relief under Section 65 of the Indian Contract Act. The Chief Court, however, refused to entertain that ground of claim because it had not been pleaded and was not taken in the memorandum oi appeal. Accordingly they left the plaintiffs to seek that remedy by a separate suit. In their appeal to His Majesty in Council the plaintiffs contested the findings of the Courts in India both as regards the invalidity of the mortgage and as to their claim on the personal covenant being statute-barred; but they also insisted on their right to relief under Section 65 of the Indian Contract Act. The appeal was heard ex parte. In spite of this, however, their Lordships of the Privy Council came to the conclusion that the appellants ought not to be refused restitution in the suit under Section 65 even though that had not been pleaded as a separate ground of claim in the plaint. Dealing with the question their Lordships observed:

'With all due respect to the Chief Court, their Lordships think that their attitude towards the question of pleading was unduly rigid. A defendant who when sued for money lent pleads that the contract was void can hardly regard with surprise a demand that he restored what he received thereunder. What defence the respondents can have desired to make on this aspect of the case is not revealed by anything in the judgment of the Chief Court, apart from the question of limitation, with which their Lordships have already dealt, and from the condition that Section 65 cannot apply where there is a transfer of property and not a mere agreement. This last contention is a pure point of law and one which the Chief Court rightly regarded as without substance and contrary to authority. There is no reason to apprehend that by allowing the appellants to obtain relief under Section 65 any injustice to the respondents can result. On the contrary, prima facie it is hardly just that the rights of the parties in respect of the transaction of August 12, 1919, should be dealt with in part and in part postponed. Though it is a matter of discretion, a result so inconvenient needs to be justified by solid reason, and their Lordships see no sufficient reason to prevent restitution being ordered in this case.'

When it is remembered that this liberal view as regards granting relief even in special circumstances on the basis of a claim not raised in the pleading was approved by the Supreme Court itself in Sri-nivas Ram Kumar's case, : [1951]2SCR277 , I am unable to accept Mr. Kar's contention that in the latter case of : [1953]4SCR789 , the Supreme Court intended to overrule the authority of the decision of Mohan Manucha . In my judgment the view taken in Manucha's case is still good law and far from its authority being shaken by the pronouncement of the Supreme Court, the authority has been affirmed by the Supreme Court in Srinivas's case, : [1951]2SCR277 .

4. Mr. Kar tried to convince us that a different view had been taken by the Privy Council in Muralidhar Chatterjee v. International Film Co.. Ltd. and he has drawn our attention to observations in the judgment of that ease at page 44 of the report.

'While a rigid practice of refusing leave to amend pleadings is far from commendable, to entertain a case of which the pleadings contain no suggestion is another matter- altogether.'

In the first place it is to be noticed that in that case neither the plaint nor the written statement contained any suggestion of the matter on which the plaintiff pressed his claim to recover a sum of Rs. 4,000. In Manucha's case as also in Srinivas's case, : [1951]2SCR277 it could not be stated there was no suggestion in the pleadings of the case on which a relief was ultimately sought for the defendants written statement contained admissions as regards the substantial point on which the claim was pressed. After pointing out that the claim of the plaintiff was based on the case 'that he wrongfully refused to perform his part of the contract by his letter of December 1, 1936 and that the respondents rightfully rescinded the contract on January 21, 1937--matters of which there is no mention whatever either in the plaint or written statement or in any formal minute or petition. Their Lordships did make a declaration that the plaintiffs were entitled to recover from the respondents Rs. 4,000 paid under the contract of 8th May 1936, subject to the right of the respondents to set off the amount due to them as damages for the appellant's repudiation and breaches of the said contract arid gave the respondents leave to file particulars of the claim for damage'. I am, therefore, of opinion that the observations in Muralidhar Chatterjee's case have not in any way affected the authority of the decision in Manucha's case .

5. I have, therefore, come to the conclusion that the mere fact that a claim under Section 65 of the Indian Contract Act on the basis that the contract had been discovered to be void, was not made by the plaintiff in his plaint, is not by itself a sufficient reason why he should not be allowed to raise that point. Where further facts require to be investigated, it would be reasonable to proceed by way of an amendment of the plaint to add such arguments. Where, however, further investigation of facts is not necessary, the Court would be justified in giving the plaintiff relief under the provisions of Section 65 of the Indian Contract Act even without a formal amendment of the plaint.

6. There is no doubt that the question of limitation falls to be considered and that would ordinarily require investigation of facts as to the point of time when the contract was discovered to be void. The learned trial Judge had not been able to accept the evidence of the plaintiff's witness on this question. I do not think, however, that is of much consequence as the learned Judge has apparently believed that there are special circumstances which take this case out of the operation of the ordinary rule, that the date of the agreement is the date of discovery, that the contract is void and that the special circumstances show that the parties had gone on treating from 1946 to 1949 that there was a valid and subsisting contract between them. While the learned Judge has not in so many words stated that the plaintiff's discovery that the contract was void did not take place before 1949, it seems to me that that was what he was inclined to think. I have also examined the correspondence which passed between the plaintiff and the Assistant Coal Commissioner and find it reasonable to believe that the plaintiff discovered the contract to be void at least not up to the time of institution of the suit. (After examining the correspondence, his Lordship proceeded:)

7. In my judgment this correspondence taken with fact that the plaint makes no alternative claim under Section 65 shows clearly that up to the date of the institution of the suit, the plaintiff had not discovered the contract to be void.

8. It may be mentioned that in Mohan Manucha's case their Lordships of the Privy Council were of opinion that as in the special circumstances of the case that the mortgage was not discovered to be void until after the suit had been instituted, no question of limitation could arise under Section 65.

9. On the basis of that authority we are bound to hold once we find, as in my opinion we ought to find, that the contract was not discovered to be void until alter the institution of the suit, that no question of limitation could arise in the instant case.

10. Mr. Kar contends that in any case a fresh investigation of facts would be necessary in order to evaluate the advantage that has to be restored under the provisions of Section 65 of the Contract Act. Under Section 65 if both parties to the agreement which is discovered to be void have received any advantage, each is required to restore it to the other party. Where the advantage required is in the shape of goods or services other than money, valuation of the same in terms of money is required unless it is possible to restore the thing received. Such a case arose in Gobindram Seksaria, a firm v. Edward Radbone . In that case the custodian of enemy property for British India sought to recover a sum of Rs. 87,190 being the difference between the value of the machinery supplied to the defendants less the sum which the defendants had paid to the sellers in terms of the contract. This claim was made on the allegation that the value of the machinery was equivalent to Rs. 1,83,200. It was held that this would not be a correct assessment of the value of the machinery and in all the circumstances of the case the respondent had failed to prove that the advantage which the appellant, the buyers, had received under the contract was of a greater value than the sum which the appellants had already paid to the sellers. In tie present case the advantage sought to be restored is the money which had been received by the Government as the seller from the buyer. There is no question of valuing this money's advantage. If and when the respondent wanted to exercise its claim for restoration of the advantage received by the plaintiff, there would apparently be no difficulty in restoring the boiler itself. In that case also there would be no need of any further investigation to ascertain money value of the advantage to be restored.

11. If there were nothing else to be considered, I would for these reasons be prepared to allow the appellant to raise the question of relief under Section 65 of the Contract Act, subject it may be to leave being given to the defendant respondent to make a claim for set off in respect of the advantage to which it in its turn would be entitled to be restored.

12. Before, however, we can reach a decision on the question whether the plaintiff should be allowed to raise a plea for relief under Section 65 of the Contract Act, it is necessary to consider the effect of Section 80 of the Civil Procedure Code. The effect of that section, is that no suit can be instituted for any relief against inter alia the Union of India until a notice with a full statement of the cause of action on which the claim is based has been given at least two months before the institution. It is true, as pointed out by Mr. Roy, that a suit has already been instituted here. He contends that once a suit has been instituted, the question of whether any other plea con be raised or not is not governed by the provisions of Section 80 of the C. P. C., that Section being limited only to the question of institution of the suit. Where the question sought to be raised after the institution of the suit, whether by amendment or otherwise, does not really add to or alter the cause of action, the provisions of Section 80 would certainly not be a bar to such a question being allowed to be raised. Such a case fell to be considered by the Bombay High Court in Lady Dinbai Dinshaw v. Dominion of India, : AIR1951Bom72 . Chagla, C. J. and Bhagwati, J. allowed there a prayer for amendment of the plaint being of opinion that the amendment proposed did not introduce into the plaint a new or fresh cause of action and all that it did was that it gave further grounds in support of the contentions and allegations which went to constitute the plaintiffs cause of action. It is obvious that the expression 'cause of action' was being interpreted in a liberal way in that case in favour of the subject. And even if it might be said that there was an alteration in the cause of action as soon as fresh grounds were raised in support of the claim for relief, the Court took the view that as Government had already been given proper notice as to the nature of the suit and the case on which the plaintiffs relied for obtaining the relief which they sought, there was really no new or fresh cause of action introduced. It is worth mentioning that in that case the cause of action mentioned already in the plaint of which notice had been given, was the invalidity of an order and that invalidity, according to the plaintiffs, was due to the fact that the order was made for a collateral purpose and was also made mala fide. In the notice one reason was explicitly stated to show why, according to the plaintiffs, the order was not made for the purposes for which it was stated to have been made. The amendment gives another ground in support of the contention of the plaintiffs as to why the order was not made for the purposes for which it was purported to have been made and also furnished another ground why the order was not made bona fide. It was in these circumstances that it was stated that the amendment did not introduce into the plaint any new or fresh cause of action.

13. I find it impossible to say, however, that in the case before us the question now sought to be raised of relief under Section 65 'of the Contract Act does not introduce a fresh cause of action. The cause of action on which the plaint was based was failure of consideration on a valid contract. The claim now made is for restitution of advantage on the basis that the agreement has been discovered to be void. The fact that now as also in the plaint the plaintiff seeks to recover the price, Rs. 34,000, which had been paid to the defendant, does not, in my opinion, justify a conclusion that the cause of action remains the same.

14. Reliance was placed by Mr. Roy on an old decision, Ezra v. Secy. of State, ILR 30 Cal 36, in which this court (Ameer Ali and Stephen, JJ) allowed an amendment introducing a case of fraud. Dealing with this question their Lordships stated:

'There is nothing in the law to show that in case of any amendment necessitated by the alleged discovery of facts previously unknown to the plaintiff, the Secretary of State should have a further notice of two months. Although the Appellate Court has laid down that the section should be literally construed and strictly applied in favour of the necessity for notice, we are not disposed to extend its operation beyond the actual words used. In the case before us the relief asked for is not altered by the amendments, which only embody certain further materials in support of the plaintiff's contention'.

As pointed out, however, by G.K, Mitter, J. the liberal view taken in Ezra's case, ILR 30 Cal 36 does not appear to be consonant with the decision of the Judicial Committee in Bhagchand Dagdusa v. Secy. of State . The Judicial Committee took notice of the marked difference of opinion between the High Court of Bombay, on the one hand, and all the other High Courts in India, on the other, as to the true application of Section 80 of the C. P. C. end of S. 424 of the Code of 1877, which it superseded and that the reasoning, taken in the other High Courts, that Section 80 is explicit and mandatory and admits of no implications or exceptions, is right. It is true that in the actual facts of Bhagchand's case. no notice had been issued on the Secretary of State and there was no question of amendment of the plaint after a suit had been properly instituted with notice. It would, in my opinion, be unreasonable however to limit the application of that decision only to cases where there had been no notice whatsoever. The principle underlying the decision appears to be not more or less than this that before relief or any cause of action can be given against any of the parties mentioned under Section 80, a proper notice as required therein must be served. To give relief on a cause of action not mentioned, in the plaint or in the notice under Section 80 that has been issued, will be, in my opinion, an evasion of the provisions of the statute which cannot be encouraged by the Court.

15. It is to be noticed that the above view taken in Ezra's case ILR 30 Cal 36 does not appear to have been followed in this Court or in any other Court in any subsequent case. On the contrary when in Manindra Chandra Nandi v. Secretary of State ILR 34 Cal 257 the question arose whether a fresh notice under Section 424 of the old Code (corresponding to Section 80 of the present Code) was not necessary for amendment of the plaint introducing a new cause of action, Dr. Rash Behari Ghose relied on Ezra's case ILR 30 Cal 36 for his contention that no such notice would be necessary. Mookerjee, J., did not follow that case and stated.

'It may further be assumed that as pointed out by Mr. Justice Paul, in Ullman v. Jusctices of the Peace 8 Beng LR 265 a plaint, which has been filed after service of a notice in which a particular cause or action is specified, ought not to be allowed to be amended so as to introduce a new cause of action not specified in the notice'.

In Ullman's case 8 Beng LR 265 the Court had to consider an argument that the plaintiff was entitled to fall back upon the cause of action disclosed by one of the defendant's witnesses, though in the notice which under Section 226 of Act VI of 1863 had to be given before an action could be brought against the Justices, a different cause of action had been pleaded. In rejecting the argument, Paul, J., said,

'The object of the notice is to afford the defendants the opportunity of settling the claim, if so advised. Keeping in view the special provisions of this Act, I cannot allow the plaintiffs to amend their case by suggesting another cause of action, and requiring me to frame an issue upon it'.

As mentioned above, Mookerjee, J., accepted this view as correct law, in Manindra Chandra Nandi's case ILR 34 Cal 257.

16. The question whether amendment introducing a cause of action not mentioned in the notice under Section 80 should be allowed was raised again in Mclnerny v. Secretary of State ILR 38 Cal 797. Jenkins, C. J. find Woodroffe, J., held without any discussion it is true that as

'the notice which was served as a preliminary to the plaint as originally framed pointed to a suit based on negligence and it stated a cause of action different from that on which the plaintiff wanted to rely by amending the plaint, it was not open to the Court to give the plaintiff permission to amend his plaint'.

17. The same view was taken by Govinda Menon, J., in Province of Madras v. R.B. Poddar Firm. AIR 1949 Mad 214.

18. On consideration of all these decisions, I am of opinion that the authority of Ezra's case ILR 30 Cal 36 should not be followed.

19. I have, therefore, come to the conclusion that in the face of the provisions of Section 80 of the Civil Procedure Code, it is not proper or possible to allow the plaintiff to raise a plea for relief under Section 65 of the Indian Contract Act.

20. It may be mentioned that before us Mr. Roy formally abandoned the claim on the cause of action as based on the contract and also that he made a formal prayer for amendment of the plaint to introduce his claim on the basis of Section 65. If Section 80 of the Civil Procedure Code had not stood in the way, I would have been prepared to allow the plaintiff to raise this plea for relief under Section 65 even without an amendment. That, in my opinion, cannot be done because of the provisions of Section 80. Those provisions equally prevent us from allowing any amendment to be made before a notice as required under Section 80 has been served.

21. I, would, therefore, dismiss the appeal with costs.

22. Certified for two Counsel.

Bose, J.

23. This appeal raises certain interesting questions of law. The appellant company being desirous of purchasing a Second-hand Lancashire boiler, for installation in its Churulia Colliery placed an order with the Assistant Coal Commissioner (H. Q.) Department of Industries and Supply, Government of India, who was at the time in charge of procuring such boilers for Indian collieries. An agreement for sale was entered into in January 1946 between the Assistant Coal Commissioner as the authorised representative of the Government of India and the appellant company represented by its Managing Agents Messrs. Business Developments Ltd. by means of correspondence exchanged between the parties. On 25-4-1946 the price of the boiler which was fixed at Rs. 34,000/- was paid to the respondent (Union of India), by a cheque drawn in favour of the Controller of Coal Accounts, and the appellant obtained delivery of the Boiler sometime thereafter in May 1946. The boiler was however found to be defective and ultimately the appellant company rejected the boiler and called upon the respondent to take back the boiler and to refund the price. Correspondence on the subject passed between the parties during the period 1946 to 1949 but as the respondent failed and neglected to lake back the boiler or to refund the price the appellant company on 8-9-1949 served notice under Section 80 of the Code of Civil Procedure and five months thereafter, on 9-2-1950, instituted the suit out of which this appeal arises, for recovery of the price and certain other charges mentioned in the plaint, amounting to Rs. 35,509/12/- and in the alternative for an enquiry into damages.

24. In the plaint the claim is made solely on the basis of the contract, and in paragraph 12 of the plaint it is alleged that the plaintiff is entitled to refund of the purchase price together with costs of repairs and other incidental charges as on a total failure of consideration.

25. In the Written Statement which was filed on 18-5-1950 the defence taken up inter alia is that the alleged contract referred to in the plaint does not comply with Section 175(3) of the Government of India Act, 1935 and as such is void and unenforceable, (Paragraph I) and in paragraph 11 of the Written Statement the defendant denies that there has been a total failure of consideration either as alleged or at all. It is also stated in the Written Statement that the rejection of the boiler was not within a reasonable time.

26. At the hearing before the learned trial judge the learned counsel for the defendant proposed to raise only one issue, being the issue as to the invalidity of the contract for non-compliance with the requirements of Section 175(3) of the Government of India Act 1935. Upon that the learned counsel for the plaintiff stated that he would raise a second issue as to whether the plaintiff was entitled to recover the amount claimed in the plaint under the provisions of Section 65 of the Indian Contract Act. The learned counsel for the defendant strongly objected to this second issue being raised on the ground that there was no foundation for any such case in the plaint and that such an issue involved determination of questions of fact which the defendant had not had an opportunity of meeting. The learned trial judge allowed the second issue to be raised tentatively with the following observation:

'Inasmuch however as it appears from more than one decided case that this issue was allowed to be raised even without a specific pleading and a decree passed in favour of the plaintiff, I said that after hearing arguments I would consider whether relief could be given to Mr. Roy's client on that plea. On that basis counsel were required to address me on the two following Issues:

(1) Is the contract pleaded in paragraph I of the plaint enforceable in view of the provisions of Section 175(3) of the Government of India Act?

(2) Is the plaintiff entitled to recover the amount claimed in the plaint under the provisions of Section 65 of the Indian Contract Act?'

27. The learned trial Judge also allowed oral evidence to be adduced on this second issue and it appears that nine questions in examination-in-chief were put to one Tarapada Bhattacharjee who described himself as an Executive Assistant in the appellant company but who it appears was an accountant of the company in 1946.

28. With regard to the first issue the learned trial judge has held that the agreement is void and unenforceable inasmuch as it is not in the form prescribed by Section 175(3) of the Government of India Act. The learned counsel for the appellant has not challenged this finding before us.

29. With regard to the second issue the learned judge has held that in the absence of specific pleading of a case under Section 65, such an issue should not be allowed to be raised especially in view of the fact that the issue involves a trial of at least two questions of fact, namely, (1) the time when the agreement was discovered to be void and (2) what are the advantage.3 which party has received and which it must restore or for which it must pay compensation. The learned Judge has also found that Section 80 of the Code of Civil Procedure furnishes an additional obstacle to such an issue being allowed to be raised.

30. Mr. Subimal Roy, the learned counsel for the appellant, has contended that the learned judge's findings with regard to the second issue cannot be sustained.

31. The learned counsel has submitted that even in the absence of specific pleading of a case under Section 65 of the Contract Act the Courts have granted relief to a party under Section 65 when facts and circumstances exist to justify the granting of such a relief. Reliance has been placed on the decision of the Judicial Committee reported in . In this case a suit was brought on a registered mortgage which contained a personal covenant to repay the principal amount with interest. The plaint sought relief by sale of the mortgaged property and by enforcement of the personal covenant. In the Written Statement the defence that the mortgage was void had been set up. The trial court held that the mortgage was invalid as no previous permission of the Collector as required under Paragraph 11 of the third Schedule to the Code of Civil Procedure had been taken. It also refused relief on the personal covenant as the claim based on the personal covenant had become barred by limitation at the date of the Suit. An appeal was preferred to the Chief Court of Oudh but the Chief Court upheld the findings of the trial court. Before the Chief Court the plaintiffs asked for relief on the basis of Section 65 of the Indian Contract Act. The Chief Court refused to entertain this ground of claim because it had not been pleaded and had not been taken in the Memorandum of Appeal and the Chief Court left the plaintiffs to seek that remedy by a separate suit. The plaintiffs appealed to the Privy Council. The respondents did not lodge any case before the Privy Council nor did they appear at the hearing and so the case was decided ex parte by the Judicial Committee. In course of the argument, the Counsel for the Appellant formally asked for and was granted permission to abandon the claim on the personal covenant and to treat the whole transaction as rescinded, on the discovery that the mortgage was void. The Privy Council observed at p. 13 (of Ind App): (at p. 34 of AIR):

'With all! due respect to the Chief Court their Lordships think that their attitude towards the question of pleading was unduly rigid. A defendant who when sued for money lent pleads that the contract was void, can hardly regard with surprise a demand that he restore what he received thereunder. What defence the respondents can have desired to make on this aspect of the case is not revealed by anything in the judgment of the Chief Court, apart from the question of limitation with which their Lordships have already dealt .............There is no reason to apprehend that by allowing the appellants to obtain relief under Section 65 any injustice to the respondent can result. On the contrary, prima facie it is hardly just that the rights of the parties in respect of the transaction of 12-8-1919 should be dealt with in part and in part postponed. Though it is a matter of discretion a result so inconvenient needs to be justified by solid reason and their lordships see no sufficient reason to prevent restitution being ordered in this case'.

32. It was however made clear in this case that the claim based on the footing of a subsisting contract and the claim based on the principle of restitution as embodied in Section 65 are different and inconsistent claims, and unless the claim based on the contract is given up, no relief can be granted on the basis of Section 65.

33. The observations made by their Lordships with regard to the principle of Section 65 may be reproduced below:

'The principle underlying Section 65 is that a right to restitution may arise out of the failure of a contract though the right be not itself a matter or contractual obligation, .... But the lender who has agreed to make a loan upon security and has paid the money is not obliged to continue the loan as an unsecured advance. The bottom has fallen out of the Contract and he may avoid. If he does so avoid the Contract, he brings himself within the terms of Section 65 and within the principle of restitution of which it is an expression ...............They can refuse to be bound by the contract and rely on the right of recover their money which arose therefrom not under any contract but as a matter of restitution by reason that no contract subsists'.

34. Thus it is clear that the cause of action, for a claim based on Section 65 depends on certain additional elements and facts although the fact of existence of an agreement or a contract may form a link in the chain. The moment a Court decides to grant relief under Section 65 it becomes necessary to investigate into the question as to when the agreement was discovered to be void and what are the advantages received by the respective parties which they are bound to restore or what will be the measure of compensation which one should pay to the other. The determination of these questions may depend on various factors. Unless therefore the parties make their respective cases known to each other by introducing them in the pleadings, injustice may result to one or other of the parties. So the most satisfactory way of dealing with such a situation is to insist on the parties amending their pleadings where such a course is open or to relegate the parties to a separate suit ii that is the only remedy available in the facts and circumstances of a particular case. That the scope of the enquiry which a court has to pursue in the case of a claim based on Section 65 is different is made abundantly clear by their Lordships of the Judicial Committee in the case of . The Privy Council approved and adopted the comment of Stone C. J. on Section 65 which was as follows:

'Compensation for an advantage may appear to be a contradiction, in terms, since compensation connotes a measure of loss or damage and not the value of an advantage ...........Under Section 65 the alternatives are to restore any advantage or to make compensation for it to the person from whom he received it. This must mean valuing or quantifying in money the advantage retained if retained it be'.

35. In this case the Privy Council explained the test for ascertaining the extent of compensation and for valuing the advantage and it was pointed out that various elements may have to be considered according to the facts of particular cases. There is thus no escape from the conclusion that in the absence of specific case raised in the pleading an issue under Section 65 should not be permitted to be raised.

36. The decision in may be treated as a special case because Sir George Rankin who delivered this judgment on 14-12-1942 expressed himself quite differently on the very next day i.e., 15-12-1942 in the case of . In this case the learned trial judge in the High Court had granted relief on the basis of Section 64 of the Contract Act without insisting on an amendment of the plaint and although there was no mention of any such case in the pleading. On appeal in the High Court there was a difference of opinion, Lord-Williams J. took one view and Derbyshire C. J. and Nasim Ali J., took a different view.

36a. Sir George Rankin observed as follows (page 43-44):

'The right is claimed upon the basis that he (appellant) wrongfully refused to perform his part of the contract by his letter of 1-12-1936, and that the respondents rightfully rescinded the contract on 12-1-1937 matters of which there is no mention whatever either in the plaint or Written Statement or in any formal minute or petition. In mercy to the parties and in the public interest their Lordships think that they can 'hardly refuse now to entertain the important question of commercial law upon which there was difference of opinion in the High Court. But they cannot omit to take strong objection to the informality with which it has in this case been raised. While a rigid practice of refusing leave to amend pleadings is far from commendable, to entertain a case of which the pleadings contain no suggestion is another matter altogether. It is unfortunate that a proper application for leave to amend was not insisted on by the High Court and a formal order made thereon duly safeguarding the rights of the respondents and ensuring that the basis in fact of the new case made should be set forth with particularity and exactness by the appellant.'

37. Although in this case also the Privy Council entertained the case not raised in the plaint, they allowed the respondents an opportunity to amend their Written Statement and raise a claim of set off, and gave directions upon the High Court to investigate into this claim of set off and give relief to the respondent if the respondent was found entitled to any relief. But the fact that the Privy Council showed indulgence in entertaining the claim under Section 64 of the Contract Act, cannot be interpreted to mean that the note of warning sounded by the Judicial Committee was not intended for the guidance of the Courts in future.

38. Mr. Roy also placed reliance on the decision of this Court reported in Union of India v. Ram Nagina Singh, 89 Cal LJ 342, in support of his argument. In this case although no case under Section 65 of the Contract Act was pleaded in the plaint, an alternative case based on S. 70 of the Contract Act was laid in the plaint, in the event the Court found, that there was no contractual relation between the parties. Moreover, when the counsel for the plaintiff in course of his opening stated that he wanted to rely on Section 65, no objection was raised on behalf of the defendant nor was any amendment of the plaint insisted on, (p. 351) and the learned Judge therefore treated the question of liability under Section 65 as included in the case.

39. On the other hand no plea was taken in the written statement as to the contract being void under Section 175(3) of the Government of India Act but the learned Judge treated it as included in whether there was any contract between the plaintiff and the Government or not.

40. So as the pleadings of both parties were defective they did not raise any objection and allowed the issue as to Section 65 to be raised. It appears that the defendant also did not raise any objection under Section 80 of the Code and had therefore impliedly waived such objection. It is well settled that the bar of Section 80 can be waived by the party entitled to rely on it. So in this case of 89 Cal LJ 342 the question whether an issue as to Section 65 could be raised in the absence of pleading and without complying with the provision of Section 80 of the Code was not canvassed or decided.

41. It may be also pointed out in this connection that in the case reported in Mohan Manucha's case no question of Section 80 of the Code, arose inasmuch as the litigation was between two private parties and no public officer or Government was concerned in that case.

42. In the case of : [1953]4SCR789 (paragraph 22 of the judgment) Mahajan J. stated as follows:

'It is well settled that the decision of a case cannot be based on grounds outside the pleadings of the parties and it is the case pleaded that has to be found.'

43. Apparently the Supreme Court had in mind the principle enunciated in the case of Eshenchunder v. Shamachurn, 11 Moo Ind App 7 (PC) where Lord Westbury described it as an absolute necessity that the determinations in a cause should be founded upon a case to be found in the pleadings or involved in or consistent with the case thereby made; (See alsoKanda v. Waghu, 85 Cal LJ 352 at p. 356: (AIR 1950 PC 68 at pp. 69-70).

44. The attention of this Court was also drawn to the case of the Supreme Court : [1951]2SCR277 . This case no doubt approved the decision of the Judicial Committee in but in this case before the Supreme Court, the suit was for specific performance of a contract for sale. It was found that there was no concluded contract and so the claim for specific performance was refused; but as the defendant had admitted in the Written Statement that the sum of Rs. 30,000/- was not a part payment of the consideration for the contract of sale but was an advance by way of loan, the trial court passed a money decree for Rs. 30,000/- with interest at the rate of 6 per cent on the basis of the admission in the Written Statement, although no alternative case of loan had been pleaded, in the plaint The Patna High Court on appeal disallowed this money decree and dismissed the entire suit. The Supreme Court however restored the money decree with reduced interest at the rate of 4 per cent.

45. In the case before us although there is specific pleading in the Written Statement to the effect that the contract or agreement sued upon is void by reason of non-compliance with the requirements of Section 175 of the Government of India Act, there is no admission that the agreement was discovered to be void or as to the date when it was discovered to be void. The cases of this Court have very rightly pointed out that the date of discovery is an important and material fact not only for the purpose of determining the question of limitation but also for ascertainment of the fact whether the advantage under the contract had been received before the date of discovery or not. (See Sidli and Co. v. Governor-General-in-Council, Suit No. 1704 of 1946, per A.K. Sarkar J., judgment dated 14-3-1950; Nalini Ranjan Guha v. Union of India, per Bachawat J. 93 Cal LJ 373 at 375; Anath Bandhu v. Dominion of India. AIR 1955 Cal 627 at p. 628 paragraph 10 of the judgment per P.B. Mukharji, J.).

46. If a specific case of Section 65 had been made in the plaint the defendant could have proved by disclosure of further materials that the plaintiff knew about the agreement being void before the institution of the suit.

46a. In my view the learned trial judge is right in his attitude that an issue under Section 65 should not normally be allowed to be raised in the absence of specific pleading of the facts necessary for proper determination of a claim under Section 65.

47. The next question that has been canvassed before us is whether an issue under Section 65 can be raised in the absence of a notice under Section 80 of the Code of Civil Procedure. Mr. Roy has argued that the object of Section 80 of the Code being to bar the institution of a suit against the Government and other persons mentioned in the section, until after the expiry of a period of two months which is allowed for considering and settling the claim or for making amends, the service of a further notice under Section 80 is not necessary if the plaintiff desires to amend his plaint at any stage after the institution of the suit, or to raise a new or alternative ground of claim which does not find place in the original notice or in the pleading. The learned counsel has cited the case of ILR 30 Cal 36 in support of this argument In this case a bench of two learned Judges sitting in the original jurisdiction had held that there was nothing in Section 424 of the Code of Civil Procedure 1882 (now Section 80 of the Code of 1908) to show that in case of any amendment necessitated by alleged discovery of facts previously unknown to the plaintiff the Secretary of State should have had a further notice of two months. Section 424 related to the institution of the suit and although it had been laid down that the section should be literally construed and strictly applied in favour of the necessity for notice, the Court was not disposed to extend its operation beyond the actual words used.

48. In this case the learned Judges apparently came to the conclusion that the additional facts introduced in the plaint by the amendment did not alter the nature or character of the suit. The observations of the learned Judges made in this case are therefore to be limited to the special facts of the case before them. The propositions laid down cannot be regarded as of universal application, because in that case once a suit is instituted against the Government the plaintiff will be relieved of the obligation to serve any further notice under Section 80 and will be at liberty to make all sorts of amendment in his plaint even though the proposed amendment is tantamount to the institution of a fresh suit involving a new ground of claim. It is needless to state that such a result was never intended by the framers of this section. If however the proposed amendment is or such a nature that it does not materially alter or affect the original cause of action pleaded in the plaint a fresh notice may not be necessary. But if the amendment asked for would introduce a new cause of action or would substantially alter or affect the original cause of action such an amendment in my view cannot be allowed without serving a fresh notice embodying the cause of action proposed to be introduced by the amendment. The introduction of a cause of action or a ground of claim based on Section 65 of the Contract Act in place of the cause of action based on a valid subsisting contract, is in my view, an amendment which requires the service of a further notice under Section 80 of the Code; because as soon as such a notice is served the Government may either collect materials or evidence in its possession to resist this new ground of claim or may come to a decision to settle or compromise the claim.

49. In the case of ILR 34 Cal 257 the plaintiff had brought an action against the Secretary of State in January 1902 after due service of notice under Section 424 of the Code of Civil Procedure 1877 for a declaration that the assessment to pay cess on royalty was illegal, null and void and for a refund of the amount paid by the plaintiff on such assessment, with interest and costs. In May 1902 the plaintiff applied for an amendment of the plaint, on the allegation that in addition to the cesses on the royalty he had also been compelled to pay income-tax thereon, asking leave for adding an alternative prayer to the plaint for refund of the amount of income-tax levied upon the same royalty, should the court be of opinion that the royalty on mines was liable to be assessed with the cesses. The defendant opposed this application on the ground that the effect of allowing the amendment would be to introduce a new and separate cause of action but no question of Section 424 of the Code was raised at this stage. The application however was granted, by an order made in July 1902. At the hearing of the case which took place three years thereafter in 1905 and after the plaintiff had closed his case the defendant for the first time took the objection that the alternative claim for refund of the income-tax could not be entertained without a fresh notice under Section 424 of the Code. The learned Subordinate Judge who tried the suit held that the plaintiff was liable to pay both income-tax and road cess on the same royalty from mines, and that his claim for refund of the Income-tax should be dismissed as no notice of this claim had been given to the Secretary of State under Section 424 of the Code and the suit was accordingly dismissed with costs, The plaintiff appealed to the High Court. Dr. Bash Behary Ghose who appeared for the appellant cited the case of ILR 30 Cal 36 (page 260 top) and argued that no notice under Section 424 was necessary and in any event the objection as to notice not having been taken at the earliest possible opportunity it must be deemed to have been waived by the defendant. Rampini J. did not think it necessary to decide these points in view of his finding that the plaintiff was liable to pay both road cess and income-tax (page 265). Mr. Justice Asutosh Mookerjee, however, made the following observations at page 280 (Bot.) 281:

'Upon these facts it was contended by the learned vakil for the appellant that no notice was necessary under Section 424 of the Civil Procedure Code. It was argued that Section 424 of the Code of Civil Procedure has no application to a case like the one before us and that it ought to be limited in its application to cases of what might be called torts or wrongs. This contention is contrary to the decision of this court in Secretary of State for India v. Rajlucki Debi which it was suggested, goes too far and may be open to criticism. It is unnecessary however to examine this point in detail, as I think, that the other contention of the plaintiff upon this matter is well founded. It may be assumed therefore that a notice under Section 424 of the Civil Procedure Code is requisite in cases of this description and it may further be assumed, that as pointed out by Mr. Justice Paul in Ullman v. Justices of the Peace, a plaint which has been filed after service of a notice in which a particular cause of action is-specified, ought not to be allowed to be amended so as to introduce a new cause of action not specified in the notice. The question still remains, whether as urged by the appellant, the defendant has not waiver the notice or whether the defendant is not estopped by his conduct from pleading the want of notice at the trial. In my opinion this question ought to be answered in favour of the plaintiff.'

50. Similarly in a case of the Madras High Court reported in AIR 1949 Mad 214 a suit had been brought for a declaration that the acquisition by the Government of certain land belonging to the plaintiff was mala fide, illegal and ultra vires. Pending the suit the plaintiff applied for amendment of the plaint that since the Bank for which the acquisition was intended had ceased to exist on account of its dissolution there was no further necessity for the acquisition at all. Govinda Menon J. considered and distinguished the case of Ezra v. Secretary of State and following the case of ILR 34 Cal 257 and the case of ILR 38 Cal 797 per Lawrence Jenkins C. J. and Woodroffe J. held that since the amendment had introduced a fresh cause of action which was outside the scope of the suit as originally framed and was inconsistent with the allegation made earlier, the amendment could not be allowed as no fresh notice was served on the Government informing them of the new cause of action,

51. The Privy Council has pointed out again and again that Section 80 of the Code of Civil Procedure is explicit and mandatory and admits of no implications and exceptions. According to the Privy Council the Section has to be applied strictly. See ; Vellyan Chettiar v. Province of Madras AIR 1947 PC 197: and Province of Bombay v. Pestonji Ardeshir Wadia .

52. Mr. Roy also placed reliance on the case of : AIR1951Bom72 . In this case the facts were different and Chagla C. J. observed as follows:

'In my opinion, the amendment does not introduce into the plaint a new or fresh cause ofaction. The cause of action is the same as alleged in the notice. All that the amendment does is that it gives further grounds in support of the contentions and allegations which go to constitute the plaintiff's cause of action.'

53. The learned Chief Justice of the Bombay High Court has no doubt held following the decision of Sir John Beaumont in Chandulal v. Government of Bombay, AIR 1943 Bom 138 that Section 80 of the Code should be construed with some regard to common sense and to the object with which it appears to have been passed and Mr. Justice Bhagawati who was a party to this decision in : AIR1951Bom72 has reaffirmed these propositions in the Supreme Court case of Dhian Singh v. Union of India, : [1958]1SCR781 , but these learned Judges never intended to lay down that an amendment introducing a fresh cause of action or a new ground of claim could be effected without serving a fresh notice under Section 80. So the case in : AIR1951Bom72 is of no assistance to the appellant.

54. At the closing stage of his argument Mr. Roy verbally applied for leave to amend the plaint by introducing a claim based on Section 65 of the Contract Act and he expressed his intention on behalf of his client to abandon the claim as laid in the original plaint, but as no notice embodying this new cause of action under Section 80 of the Code has been served upon the defendant it is not possible to accede to the prayer of Mr. Roy.

55. I, therefore, agree with the learned trial Judge that Section 80 of the Code of Civil Procedure is an additional obstacle in the way of the plaintiff appellant getting any relief based on Section 65 or the Indian Contract Act.

56. In my view the suit has been rightly dismissed by the learned trial Judge. I agree with my Lord the Chief Justice that the Appeal should be dismissed with costs.


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