judgement:
Appeal No. 86 of 1959.
Appeal by special leave from the judgment and order dated March 27, 1957, of the Patna High Court in Appeal from Original Decree No. 359 of 1948.
A. V. Viswanatha Sastri and section P. Varma, for the appellant.
882 H. N. Sanyal, Additional Solicitor General of India, R. Ganapathy Iyer and T. M. Sen, for the respondent.
July, 24.
The Judgment of the Court was delivered by SHAH, J.
Bikhraj Jaipuria hereinafter called the appellant is the sole proprietor of a grocery business conducted in the name and style of "Rajaram Vijai Kumar" in the town of Arrah in the State of Bihar.
In the months of July and August, 1943, the, Divisional Superintendent, East Indian Railway under three " 'purchase orders ' agreed to buy and the appellant agreed to sell certain quantities of food grains for the employees of the East Indian Railway.
The 'following table sets out the purchase prices, the commodities, the dates of purchase orders, the quantities and the rates and the method of supply.
Purchase Date of Kinds Quantity Rates.
Order purchase of of No. orders.
commo commo dity.
dities.
(1) (2) (3) (4) (5) 69.
20 7 1943.
Gram 1st 1000 mds. @ Rs. 15/ quality.
per md.
(plus cost of new bags not exceeding Rs. 75/ per 100 bags) F.O.R. any E.I.Rly.
sta tion in Bihar.
:4 7 1943.
Rice 1000 mds.
@ Rs. 22 8 0 Dhenki (plus cost of Medium bags not ex quality.
ceeding Rs.75 883 (1) (2) (3) (4) (5) per cent) per md.
F.O.R. any station on the division.
Wheat 5000 mds.
@ Rs. 20 8 0 white per md.
with as per bags F.O.R. sample.
any station on E.I.R. on the Division.
24 8 1943.
Rice 15000 mds. @ Rs. 24/ medium per md.
with quality.
out bags F.O.R. E.I. Rly.
station in Bihar.
Purchase orders Nos. 69 and 76 were signed by S.C. Ribbins, Personal Assistant to the Division at Superintendent and purchase order No. 106 was signed by the Divisional Superintendent.
Under the purchase orders delivery of grains was to commence within seven days ' of acceptance and was to ' be completed within one month.
The appellant delivered diverse quantities of foodgrains from time to time but was unable fully to perform the contracts within, the period stipulated.
Between July.), 20, 1943 and August of 4, 1943, he supplied 3465 maunds of rice and between September 1, 1943 and September 19, 1943 he supplied 1152 maunds 35 seers of wheat.
In exercise of the powers conferred by cl.(b) of Sub r.
(2) of r.81 of the Defence of India Rules, the Government of Bihar by notification No. 12691 P.C. dated September 16, 1943 directed that commodities named in column I of the schedule shall not, from and including September 20, 1943 and until further notice, be sold at any primary source of supply or by the proprietor, manager or employee of any mill in the Province of Bihar at prices exceeding those 884 specified in the second column of the schedule.
The controlled rat . of rice (medium) was Rs. 18/ per standard maund, of wheat (red) Rs. 17/ , of wheat (white) Rs. 18/ and of gram Rs. 12 8 0.
The Sub Divisional Magistrate, District Arrah issued on September 21, 1943, a price list of controlled articles fixing the same prices as were fixed for wheat, rice and gram by the notification issued by the Government of Bihar.
By cl.
(2) of the notification, a warning was issued that in the event of the dealers selling controlled articles at rates exceeding those fixed or with holding stocks of such articles from sale, "they will be liable to prosecution under r.81 (1) of the Defence of India Rules.
" By a telegraphic communication dated Sep. tember 28, 1943, the Divisional Superintendent informed the appellant that under the purchase orders, foodgrains tendered for delivery will not, unless despatched before October 1, 1943, be accepted, and barring a consignment of 637 maunds 20 seers accepted on October 7, 1943, the Railway Administration declined to accept,delivery of food grains offered to be supplied by the appellant after October 1, 1943.
The appellant served a notice upon the Divisional Superintendent coraplaining of breach of contract and sold between February la and February 23, 1944 the balance of foodgrains under the purchase orders which were lying either at the various railway stations or in his own godowns.
The appellant then called upon the Railway Administration to pay the difference between the price realised by sale and the contract price and failing to obtain satisfaction, commenced an action (Suit No. 359/48A) in the court of the First Additional Subordinate Judge, Patna for a decree for Rs. 2,89,995 15 3 against the Dominion of India.
The appellant claimed Rs. 2,32,665 12 0 being the difference between the contract price and the price realised, Rs.42,709 10 3 as interest and Rs. 14,620 9 0 as freight, wharf.
885 age, cartage, price of packing material, labour charges and costs incurred in holding the sale.
The appellant submitted that under the terms of the purchase orders, supply was to commence within seven days of the date of receipt of the orders and was to be completed within one month, but it was not intended that time should be of the essence of the contract, and in the alternative that the Railway Administration had waived the stipulation as to time in the performance of the contracts and therefore he was entitled, the Railway Administration having committed breach of ,the contracts, to recover as compensation the difference between the contract price and the price for which the grains were sold.
The suit was resisted by the Dominion of India contending inter alia that the appellant had no cause of action for the claim in the suit, that the contracts between the appellant and the Divisional Superintendent Dinapur were not valid and binding upon the Government of India and that the contracts were liable to be avoided by the Government, that time was of the essence of the contracts, that stipulations as to time were not waived, and that no breach of contract was committed by the East Indian Railway Administration and in any event, the appellant had not suffered any loss as a result of such breach.
By the written statement, it wag admitted that the East Indian Railway through the Divisional Superintendent, Dinapur had by three orders set out in the plaint agreed to buy and the appellant had agreed to sell the commodities specified therein, but it was denied that the Divisional Superintendent had been ""given complete authority to enter into contracts for the supply of foodgrains.
" The trial court held that time was not of the essence of the contracts and even if it was, breach of the stipulation in that behalf was waived.
It further_held that the plea that the contracts were void because they were not in accordance with the 886 provisions of section 175 (3) of the Government of India Act, 1935, could not be.permitted to be urged, no such plea having been raised by the written statement.
Holding that the Divisional Superintendent was authorised to enter into the contracts for purchase of foodgrains, and that he had committed breach of contracts the trial Judge awarded to the appellant Rs. 1,29,460 7 0 with interest thereon at the rate of 6% per annum from October 1, 1943, to the date of the institution of the suit and further interest at 6% on judgment.
Against that decree, an appeal was preferred by the Union of India to the High Court of Judicature at Patna and the appellant filed cross objections to the decree appealed from.
The High Court held that time was of the essence of the contracts, but the Railway Administration having a accepted the goods tendered after the expiration of the period prescribed thereby, the stipulation as to time was waived.
The High Court further held that by the notification under r. 81 of the Defence of India Rules, performance of the contracts had not been rendered illegal but the Divisional Superintendent had no authority to enter into contracts to purchase food grains on behalf of the Railway Administration and that in any event, the contracts not having been expressed to be made by the Governor General and not having been executed on behalf of the Governor General by an officer daily appointed in that behalf and in manner prescribed, the contracts were unenforceable.
The High Court also held that the appellant was not entitled to a decree for compensation because he had failed to prove the ruling market rate on the date of breach viz, October 1, 1943.
The High Court also observed that the trial court erred in awarding interest prior to the date of the suit and in so holding, relied upon the judgment of the Privy Council in Bengal Nagpur Railway Co., Ltd. vs Ruttanji Ramji and others (1).
(1) L. R. (1938) 65 J. A. 66. 887 In this appeal by the appellant, two questions fall to be determined, (1) whether relying upon the purchase orders signed by the Divisional Superintendent which were not made and executed in the manner prescribed by s.175 (3) of the, Government of India Act 1935, the appellant could sue the Dominion of India for compensation for breach of contract, and (2) whether the appellant has proved the ruling market rate on October 1, 1943 for the commodities in question.
, The finding that the Railway Administration had waived the stipulation as to the performance of the contracts within the time prescribed though time was under the agreement of the essence, is not challenged before us on behalf of the Union of India.
If the finding as to waiver is correct, manifestly by his telegraphic intimation dated September 28, 1943, that the foodgrains not despatched before October 1, 1943, will not be accepted the Divisional Superintendent committed a breach of the contract.
Section 175 (3) of the Government of India Act as in force at the material time provided : "Subject to the provisions of this Act, with respect to the Federal Railway Authority, all contracts made in the exercise of the executive authority of the Federation or of a Province shall be expressed to be made by the Governor General, or by the Governor of the Province, as the case may be, and all such contracts and all assurances of property made in the exercise of that authority shall be executed on behalf of the Governor General or Governor by such persons and in such manner as he may direct or authorise.
" The Federal Railway Authority had not come.
into being in the year 1943: it was in fact never set up.
The contracts for the supply of foodgrains were undoubtedly_ made in the exercise of executive 888 authority of the Federation.
The contracts had therefore under section 175(3), (a) to be expressed to be made by the Governor General, (b) to be executed on behalf of the Governor General, and (e) to be execrated by officers duly appointed in that behalf and in such manner as the Governor General may direct or authorise.
But no formal contracts were executed for the supply of foodgrains by the appellant : he had merely offered to supply foodgrains by letters addressed to the Divisional Superintendent and that officer had by what are called "purchase orders" accepted those offers.
These purchase orders were not expressed to be made in the name of the Governor General and were not executed on behalf of the Governor General.
The purchase orders were signed by the Divisional Superintendent either in his own hand or in the hand of his Personal Assistant.
In the first instance it has to be considered whether the Divisional Superintendent had authority to contract on behalf of the Railway Administration for buying foodgrains required by the Railway Administration.
By Ex.
M 2 which was in operation at the material time, all instruments relating to purchase or hire, supply and conveyance of materials, stores, machinery, plant, telephone lines and connections, coal etc. could be executed amongst others by the Divisional Superintendent; but contracts relating to purchase of foodgrains are not covered by that authority.
Under item 34 which is the residuary item, all deeds and instruments relating to railway matters other than those specified in items 1 to 33 may be executed by the Secretary of the Railway Board.
It is common ground that there is no other item which specifically authorises the making and execution of contracts relating to purchase of foodgrains; deeds and instruments relating to purchase of food grains therefore fall within item 34.
The Secretary to the Railway Board had not executed these purchase orders : but the trial Court held 889 that the Divisional Superintendent was authorised to enter into contracts with the appellant for the supply of foodgrains.
In so holding, the trial judge relied upon the evidence of Ribbins, Grain Supply Officer and Personal Assistant to the Divisional Superintendent, Dinapur.
The High Court disagreed with that view.
The High Court observed that the authority of the officer acting on behalf of the Governor General "must be deduced from the express words of the Governor General himself expressed by rules framed or by notification issued, under section 175(3).
No notification has been produced in this case showing that the Divisional Superintendent had been authorised by the Governor General to execute such contracts on his behalf, nor has any rule been produced which conferred authority upon the Divisional Superintendent to make such contracts.
" After referring to paragraph 10 of the notification, exhibit M 2 items 1 to 34, the High Court observed: "Therefore this notification rather shows that the Divisional Superintendent had no authority to execute the contracts for the purchase of food grains." In our view, the High Court was in error in holding that the authority under section 175(3) of the Government of India Act, 1935 to execute the contract could only be granted by the Governor General by rules expressly promulgated in that behalf or by formal notifications.
This court has recently held that special authority may validly be given in respect of a particular contract or contracts by the Governor to an officer other than the officer notified under the rules made under section 175(3).
In The State of Bihar vs M/s. Karam Chand Thapar and Brothers Ltd.(,), Venkatarama Aiyar J. speaking for the court observed : (1) ; 890 It was further argued for the appellant that there being a Government notification of a formal character we should not travel outside it and find authority in a person who is not authorised thereunder.
But section 175 (3) does not prescribe any particular mode id which authority must be conferred.
Normally, no doubt, 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 the section must be held to be satisfied." In that case, an agreement to refer to arbitration on behalf of the Government of Bihar was executed by the Executive Engineer whereas by the notification issued by the Government of Bihar under s.175 (3) all instruments in that behalf had to be executed by the Secretary or the Joint Secretary to the Government.
This Court on a consideration of the correspondence produced in the case agreed with the High Court that the Executive Engineer had been specially authorised by the Governor acting through his Secretary to execute the agreement for reference to arbitration.
Section 175 (3) in terms does not provide that the direction or authority given by the Governor General or the Governor to a person to execute contracts shall be given only by rules or by notifications, and the High Court was in our judgment in error in assuming that such authority can be given only by rules expressly framed or by formal notifications issued in that behalf.
In para 5 of the plaint, the appellant pleaded: " 'That for the purposes and under the authority conferred as noted in the para 3 above in July and August, 1943 the said E. 1.
through its then Divisional Superintendent, Dinapur, by three diverse orders agreed to buy and the plaintiff agreed to sell the following commodities at the rates mentioned against them, 891 By para 3 of the written statement, the Dominion of India accepted the allegations made in para 5 of the plaint.
It is true that by paragraph 1, the authority of the Divisional Superintendent to enter into contract with, trading firms dealing in foodgrains for the supply of foodgrains was denied and it was further denied that the Divisional Superintendent "was invested with complete authority to enter into contracts for the purchase of food supplies and to do all that was necessary in that connection.
" There was some inconsistency between the averments made in paragraphs 1 and 3 of the written statement, but there is no dispute that the purchase orders were issued by the Divisional Superintendent for and on behalf of the East Indian Railway Administration.
Pursuant to these purchase orders, a large quantity of foodgrains was tendered by the appellant: these were accepted by the Railway Administration and, payments were made to the appellant for the grains supplied.
Employees of the Railway Administration wrote letters to the appellant calling upon him to intimate the names of the railway stations where grains will be delivered and about the date when the supply.
will commence.
They fixed programmes for inspection of the goods, kept 'wagons ready for accepting delivery, held meetings on diverse occasions for settling programmes for the supply of grains, rejected grains which were not according to the contract, entered into correspondence with the appellant about the return of empty bags accepted bills and railway receipts and made pay ments, returned certain bills in respect of the grains tendered beyond the period of contract and did diverse other acts in respect of the goods which could only be consistent with the contracts having been made with the authority of the Railway Administration granted to the Divisional Superintendent.
There is also the evidence of Ribbins which clearly supports the vie* that the agreements to purchase foodgrains by the Divisional 892 Superintendent were part of a. scheme devised by the Railway Administration at the time of the, serious famine in 1943 in Bengal.
In cross examination, Ribbins stated: "When the Bengal famine arose in April May 1943, the (necessity for a scheme of) arrangement of supplying foodgrains to E. I. Railway employees arose .
A scheme was drawn up for carrying out this work in writing.
In other words orders were received from Head Office Calcutta about it.
The Deputy General Manager, Grains, Calcutta issued the necessary orders .
The agent or General Manager as he is called appropriated the above functionary.
He must have done so presumably under orders .
The entire scheme did subsequently get the assent of the Railway Board.
From time to time order came with instruction from Head Office.
All such directions should be in the office of D. Supdt., Dinapur.
Some posts had to be created for carrying out this scheme.
Originally one post of Asstt.
Grain Supply Officer was created.
Subsequently, two posts were created one on a senior scale and the other as Asstt.
in Dinapur Dv.
staff had to be appointed to be in charge of the grain shops.
They were exclusively appointed to work the grain shop Organisation.
The Railway made some arrangement in some places for accommodation and additional storage.
Grain shops were located At these places when accommodation was made for additional storage.
" Ribbins was for some time a Grain Supply Officer under the East Indian Railway and he admitted that orders similar.to the purchase orders in question in this litigation were drawn up in cyclostyled forms "as per orders from the Head Office.
" The witness stated that the instructions of the Head Office were "in the office file".
None of these documents were, however, produced or tendered in evidence by the Railway Administration. 893 The evidence on the whole establishes that with a view to effectuate the scheme devised by the Railway Board for distributing foodgrains to their employees at concessional rates, arrangements were made for procuring foodgrains.
This scheme received the approval of the Railway Board and Railway Officers were authorised to purchase, transport and distribute foodgrains.
If, in the implementation of the scheme, the foodgrains were received by the Railway Administration, special wagons were provided and goods were carried to different places and distributed and payments were made for the foodgrains received by the Railway Administration after testing the supplies, the inference is inevitable that the Divisional Superintendent who issued the purchase orders acted with authority specially granted to him.
The evidence of Ribbins supported by abundant docu mentary evidence establishes beyond doubt that the Divisional Superintendent though not expressly authorised by the notification exhibit M 2 to contract for the purchase of foodgrains, was specially authorised to enter into these contracts for the purchase of foodgrains.
The question still remains whether the purchase orders executed by the Divisional Superintendent but which were not expressed to be made by the Governor General and were not executed on behalf of the Governor General, were binding on the Government of India.
Section 175(3) plainly requires that contracts on behalf of the Government of India shall be executed in the form prescribed thereby ; the section however does not set out the consequences of non compliance.
Where a statute requires that a thing shall be done in the prescribed manner or form but does not set out the consequences of non compliance, the question whether the provision was mandatory or directory has to be adjudged in the light of the intention of the legislature as disclosed by the 894 object, put pose and scope of the statute.
If the statute is mandatory, the thing done not in the manner or form prescribed can have no effect or validity : if it is directory, penalty may be incurred for non compliance, but the act or thing done is regarded as good.
As observed in Maxwell on Interpretation of Statutes 10th Edition p. 376 : "It has been said that no, rule can be laid down for determining whether the command is to be considered as a mere direction or instruction involving no invalidating consequences in its disregard, or as imperative, with an implied nullification for disobedience, beyond the fundamental one that it depends on the scope.
and object of the enactment.
It may perhaps be found generally correct to say that nullification is the natural and usual consequence of disobedience, but the question is, in the main governed by considerations of convenience and justice, and when that result would involve general inconvenience or injustice to innocent persons, or advantage to those guilty of the neglect, without promoting the real aim and object of the enactment such an intention is not to be attributed to the legislature.
The whole scope and purpose of the statute under consideration must be regarded.
" Lord Campbell in Liverpool Borough Bank vs Turner(1) observed "No universal rule 'can be laid down as to whether mandatory enactments shall be considered directory only or obligatory with an implied nullification for disobedience.
It is the duty of Court of justice to try to get at the real intention of the Legislature by carefully attending to the whole scope of the statute to be construed.
" It is clear that the Parliament intended in enacting the provision contained in section 175(3) that (1) ; 895 the State should not be saddled with liability for unauthorised contracts and with that object provided that the contracts must show on their face that they are made on behalf of the State, i. e., by the Head of the State and executed on his behalf and in the manner prescribed by the person authorised.
The provision, it appears, is enacted in the public interest, and invests public servants with authority to bind the State by contractual obligations incurred for the purposes of the State.
It is in the interest of the public that the question whether a binding contract has been made between the State and a private individual should not be left open to dispute and litigation ; and that is why the legislature appears to have made a provision that the contract must be in writing and must on its face show that it is executed for and on behalf of the head of the State and in the manner prescribed.
The whole aim and object of the legislature in conferring powers upon the head of the State would be defeated if in the case of t contract which is in form ambiguous, disputes are permitted to be raised whether the contract was intended to be made for and on behalf of the State or on behalf of the person making the contract.
This consideration by itself would be sufficient to imply a prohibition against a contract being effectively made otherwise than in the manner prescribed.
Itm is true that in some cases, hardship may result to a person not conversant with the law who enters into a contract in a form other than the one prescribed by law.
It also happens that the Government contracts ,ire sometimes made in disregard of the forms prescribed ; but that would not in our judgment be a ground for holding that departure from a provision which is mandatory and at the same time, salutary may be permitted.
There is a large body of judicial opinion in the High Courts in India on the question whether 896 contracts not ill form prescribed by the Constitution Acts are binding upon the State.
The view has been consistently expressed that the provisions, under the successive Constitution Acts relating to the form of contract between the Government and the private individual are mandatory and not merely directory.
In Municipal Corporation of Bombay vs Secretary of State (1), the true effect of section 1 of Si. 22 and 23 Vic.
c. 41 fell to be determined.
The Governor General of India in Council and the Governors in Council and officers for the time being entrusted with the Government were, subject to restrictions prescribed by the Secretary of State in Council, empowered to sell and dispose of real and personal estate vested in Her Majesty and to raise money on such estate and also to enter into contracts within.
the respective limits for the purposes of the Act.
it was provided that the Secretary of State in Council.
may be named as a party to such deed, contract, or instrument and the same must be expressed to be made on behalf of the Secretary of State in Council by or by the order.
of the Governor General in Council or Governor in Council, but may be executed in other respects in like manner as other, instruments executed by or on behalf of him or them respectively in his or their official capacity, and may be enforced by or against the Secretary of State in Council for the time being.
In a suit between the Government of Bombay and the Municipal Corporation of Bombay, the latter claimed that it was entitled to remain in occupation on payment of a nominal rent, of an extensive piece of land because of a resolution passed by the Government of Bombay sanctioning such user.
Jenkins C. J. in delivering the judgement of the Court observed.
"I think that a disposition in 1865 of Crown ' (1) I. L. R. 897 lands by the Governor in Council was dependent for its validity on an adherence to the forms prescribed, and that therefore the Resolution was not a valid disposition of the property for the interest claimed.
" In Kessoram Poddar and Co. vs Secretary of State for India (1), it was held that in order that a contract may be binding on the Secretary of State in Council., it must be made in strict conformity with the provisions laid down in the statute governing the matter and if it is not so made, it is not valid as against him.
The same view was expressed in section C. Mitra and Co. vs Governor General of India in Council (2), Secretary of State vs Yadavgir Dharamgir(3), Secretary.
of State and another vs G. T. Sarin and, Company U. P. Government vs Lala Nanhoo Mal Gupta Devi Prasad Sri Krishna Prasad Ltd. vs Secretary of State (6), and in section K. Sen vs Provincial P. Way D. State of Bihar(7).
But Mr. Viswanatha Sastri on behalf of the appellant contended that this court in Chatturbhuj Vithaldas Jasanth vs Moreshwar Parashram (8) has held that a contract for the supply of goods to the Government which is not in the form prescribed by article 299 (1) of the Constitution which is substantially the same form as section 175 (3) of the Government of India Act, 1935) is not void and unenforceable.
In that case, the election of Chatturbhuj Jasani to the Parliament was challenged on the ground that he had a share or interest in a contract for the supply of goods to the Union Government.
It was found that Jasani was partner of a firm, which had entered into contracts with the Union Government for the supply of goods and these contracts subsisted on November 15, 1951 and (1) I.L.R. I.L.R. , (3) I.L.R. I.L.R. (1930) 11 Lah.375.
(5) A.I.R. (1960) All.
(6) I.L.R. (1941) All. 741 (7) (7) A.I.R. (1960) Pat.
(8) ; 898 February 14, 1952 respectively the last date for filing nominations and the date of declaration of the results of the election.
This court held that Jasani was disqualified from being elected by virtue of the disqualification set out in section 7 (b) of the Representation of the People Act 43 of 1951.
The contracts in that case were admittedly not in the form Prescribed by article 299 (1) of the Constitution, and relying upon that circumstance, it was urged that the contracts were void and had in law no existence.
In dealing with this plea, Bose J. speaking for the court observed : "We feel that some reasonable meaning must be attached to article 299(1).
We do not think the provisions were inserted for the sake of mere form.
We feel they are there to safeguard Government against unauthorised contracts.
If in fact a contract is unauthorised or in excess of authority it is right that Government should be safeguarded.
On the other hand, an officer entering into a contract on behalf of the Government can always safeguard himself by having recourse to the proper form.
In between is a large class of contracts, probably by far the greatest in numbers, which though authorised, are for one reason or other not in proper form.
It is only right that an innocent contracting party should not suffer because of this and if there is no other defect or objection we have no doubt Government will always accept the responsibility.
If not, its interests are safeguarded as we think the Constitution intended that they should be.
" The learned Judge also observed: "It would, in our opinion, be disastrous to hold that the hundreds of Government officers who have daily to enter into a variety of contracts, often of a petty nature, and sometimes in an emergency, cannot contract orally or through correspondence and that every petty contract must be effect ed by a ponderous legal document couched in a particular form." 899 The rationale of the case in our judgment does not support the contention that a contract on behalf of a State not in the form prescribed is enforceable against 'the State.
Bose J. expressly stated that the "Government may not be bound by the contract, but that is a very different thing from saying that the contract ",as void and of no effect, and that it only meant the principal (Government) could not be sued; but there will be nothing to prevent ratification if it was for the benefit of the Government.
" The facts proved in that case clearly establish that even though the contract was not in the form prescribed, the Government had accepted performance of the contract by the firm of which Jasani was a partner, and that in fact there subsisted a relation between the Government and the firm under which the goods were being supplied and accepted by the Government.
The agreement between the parties could not in the case of dispute have been.enforced at law, but it was still being carried out according to its terms : and the Court held that for the purpose of the Representation of the People Act, the existence of such an agreement which was being carried out in which Jasani was interested disqualified him.
It was clearly so stated when Bose J. observed: "Now section 7 (d) of the Representation of the People Act does not require that the contracts at 'which it strikes should be enforceable against the Government ; all it requires is that the contracts should be for the supply of goods to the Government.
The contracts in question are just that and so are hit by the section".
Reliance was also placed by counsel for the appellant upon cases decided under s.40 of the Government of India Act, 1915, which was continued in operation.
even after the repeal of the Act, 1915, by the 9th schedule to the Government of India Section 40 prescribed the manner in which the business of the Governor General in Council was to be conducted.
It provided that all orders and other proceedings of the Governor General in Council shall be expressed to be made by the Governor General in Council and shall be signed by a Secretary to the Government of India or otherwise as the Governor General in Council may direct and shall not be called in question in any legal proceeding on the ground that they were not duly made by the Governor General in Council.
In J.K. Gas Plant Manufacturing Co., (Rampur) Ltd., vs King Emperor (1), certain persons were accused of offences committed by them in contravention of cls.
(5) and (8) of the Iron and Steel (Control of Distribution) Order, 1941, which order was not expressed to be made by the Governor General in Council as required by section 40(1) of the 9th schedule to the Constitution Act.
The Federal Court held that the scope and purpose of the Act did not demand a construction giving a mandatory rather than a directory effect to the words in section 40: for, in the first instance, the provision that all orders of the Governor General in Council shall be expressed to be made by the Governor General in Council did not define how orders were to be made but only how they are to be expressed; it implied that the process of making an order preceded and was something different from the expression of it.
Secondly, it was observed, the provision, was not confined to orders only and included proceedings and in the case of proceedings, it was still clearly a method of recording proceedings which had already taken place in the manner prescribed rather than any form in which the proceedings, must take place if they are valid.
Thirdly, it was observed, that the provision relating to the signature by a Secretary to the Government of India or other person indicated that it was a provision as (1) 901 to the manner in which a previously made order should be embodied in publishable form, and it indicated that if the previous directions as to the expression of the order and proceedings and as to the signature were complied with, the order and proceedings shall not be called in question in a court of law on one ground only.
The rule contained in section 40 (1) was in the view of the court one of evidence which dispensed with proof of the authority granted by the GovernorGeneral in respect of orders or proceedings which complied with the requirements prescribed : the making of the order or the proceedings was independent of the form of the order or proceedings expressing it.
But it cannot be s aid that the making of the contract is independent of the form in which it is executed.
The document evidencing the contract is the sole repository of its terms and it is by the execution of the contract that the liability ex contracti of either party arises.
The principle of J. K. Gas Plant Manufacturing Co. 's case has therefore no application in the interpretation of section 175 (3) of the Government of India Act, 1935.
Reliance was also placed upon Dattatreya Moreshwar Pangarkar vs The State of Bombay (1) and The State of Bombay vs Purshottam Jog Naik(2).
In both these cases, orders made by the Government of Bombay under the Preventive Detention Act were challenged on the ground that the orders did not comply with the requirements of article 166 of the Constitution.
Article.
166 substantially prescribes the same rules for authentication of the orders of the Governor of a State as section 40 to the 9th schedule of the Government of India Act, 1935 prescribed for the authentication of the orders of the Governor General and the Governors.
In the former case, this court observed that (1) ; (2) ; 902 the Preventive Detention Act contemplates and requires the taking of an executive decision for confirming a detention order under section 11 (1) and omission to make and authenticate that decision in the form set out in article 166 will not make the decision itself illegal,for the provisions in that arti cle are merely directory and not mandatory.
In the latter case, an order which purported to have been made in the name of the Government of Bombay instead of the Governor of Bombay as required by article 166 was not regarded as defective and it was observed that in any event, it was open to the State Government to prove that such an order was validly made.
The court in those cases therefore held that the provisions of article 166 are directory and not mandatory.
, These cases proceed on substantially the same grounds on which the decision in J. k. Gas Plant and Manufacturing Co. 's case , proceeded, and have no bearing on the interpretation of section 175 (3) of the Government of India Act, 1935.
Reliance was also placed upon the State of U.P. vs Manbodhan Lal Srivastava(1) in which case this court held that the provisions of article 320 el.
(3) (e) of the Constitution relating to the consultation with the Public Service Commission before discharging at public servant are merely directory.
The fact that certain other provisions in the Constitution are regarded as merely directory and not mandatory, is no ground for holding that the provisions relating to the form of contracts are not mandatory.
It maybe said that the view that the provisions in the Constitution relating to the form of contracts on behalf of the Government are mandatory may involve hardship to the unwary.
But a person who seeks to contract with the Government must be deemed to be fully aware of (1) ; 903 statutory requirements as to the form in which the contract is to be made.
In any event, inadvertence of an officer of the State executing A contract in manner violative of the express statutory provision, the other contracting party acquiescing in such violation out of ignorance or negligence will not justify the court in not giving effect to the intention of the legislature, the provision having been made in the interest of the public.
It must therefore be held that as the contract was not in the form required by the Government of India Act, 1935, it could not be enforced at the instance of the appellant and therefore the Dominion of India could not be sued by the appellant for compensation for breach of contracts.
We are also of the view that the High Court was right in holding that the appellant failed to prove that he was entitled to compensation assuming that there was a valid and enforceable contract.
The appellant claimed that he was entitled to the difference between the contract price and the price realised by sale of the foodgrains offered after October 1,1943 but not accepted by the Railway Administration.
The High Court rightly pointed out that the appellant was, if at all, entitled only to compensation for loss suffered by him by reason of the wrongful breach of contract committed by the State, such compensation being the difference between the contract price and the ruling market rate on October 1,1943, and that the appellant had failed to lead evidence about the ruling market rate on October 1,1943.
The trial judge held that the "control price list xxx was reliable for ascertaining the measure of damages in the case".
This document was a notification relating to the controlled rates in operation in the district of Arrah, by which the sale of foodgrains at prices exceeding the rates prescribed was made an offence.
The appellant had obviously the option of delivering foodgrains at an railway station F. O. R. in the Province of 904 Bihar, and there is no evidence on the record whether orders similar to exhibit
M 2 were issued by the authorities in other districts of the Bihar State.
But if the grains were supplied in the district of Arrah, the appellant could evidently not seek to recover price for the goods supplied and accepted on and after October 1, 1943, at rates exceeding those fixed by the notification; for, by the issue of the control orders, on the contracts must be deemed to be superimposed the condition that foodgrains shall be sold only at rates specified therein.
If the grains were to be supplied outside the district of Arrah, the case of the appellant suffers from complete lack of evidence as to the ruling rates of the foodgrains in dispute on October 1, 1943.
The High Court was therefore right in declining to award damages.
On the view taken by us, this appeal must stand dismissed with costs.
Appeal dismissed.

summary/full:
In the year 1943 the Divisional Superintendent, East Indian Railway placed certain purchase orders with the appellant for the supply of foodgrains for the employees of the East Indian Railway.
The orders were not expressed to be made in the name of the Governor General and were not "executed on behalf of the Governor General as required by section 175 (3) of the Government of India Act, 1935.
They were signed by the Divisional Superintendent either in his own hand or in the hand of his Personal Assistant.
Some deliveries of foodgrain s were made under these orders and were accepted and paid for by the Railway Administration.
But the Railway Administration declined to accept further deliveries of foodgrains.
The appellant sold the balance of foodgrains under the purchase orders and filed a suit to recover the difference between the price realised by sale and the contract price.
The respondent resisted the suit inter alia on the ground that the contracts were not binding on it.
Held, that the contracts were not binding on the respondent and it was not liable for damages for breach of the contracts.
Under s 175 (3) of the Government of India Act, 1935, as it stood at the relevant time, the contracts had: (a) to be expressed to be made by the Governor General, (b) to be executed on behalf of the Governor General and (F) to be executed by officers duly appointed in that behalf and in such mariner as the Governor General directed or authorised.
The 881 authority to a person to execute contracts may be conferred not only by rules expressly trained and by formal notifications issued in this behalf but may also be specially conferred.
The evidence in the case showed that such authority was specially conferred upon the Divisional Superintendent.
But the contracts were not expressed to be made by the Governor General and were not executed on his behalf The provisions of section 175(3) were mandatory.
The object of enacting these provisions was that the State should not be saddled with liability for unauthorised contracts and hence it was provided that the contracts trust show on their face that they were made by the Governor General and executed on his behalf in the manner prescribed by the person authorised.
State of Bihar vs M/s. Karam Chand Thapar and Bros., Ltd. ; , followed.
Liverpool Borough Bank vs Turner, ; , Municipal Corporation of Bombay vs Secretary of State, I. L. R. , Kessoram Poddar and Co., vs Secretary of State for India, I. L. R. section C. Mitra and Co., vs Governor General of India in Council, I.L.R. , Secretary of State vs Yadavgir Dharamgir, I. L. R. , Secretary of State vs G.T. Sarin and Co., 1.
L. R. , U. I '.
Government vs Lal Nanhoo Mal Gupta, A. 1.
R. (1960) All. 420, and Devi Prasad Sri Krishna Prasad Ltd. vs Secretary of State, I. L. R. (1941) All. 741, referred to.
section K. Sen vs Provincial P. W. D., State of Bihar, A. 1.
R. (1960) Pat., Chatturbhui Vithaldas Jasani vs Moreshwar Prashram, ; ,J. K. Gas Plant Mfg., Co. (Rampur) Ltd. vs King Emperor, , Moreshwar Pangarkar vs State of Bombay, ; , State of Bombay vs Purshottam Jog Naik, ; and State of U.P. vs Manbodhan Lal Srivastava, (1958) section C. R. 533, distinguished.


judgement:
als Nos.
56 and 57 of 1949.
Appeals from the orders of the High Court of Judica ture at Madras (Wadsworth and Patanjali Sastri JJ.) dated 24th October, 1945, in A.A.O. Nos.
372 of 1943 and 634 of 1944 which were appeals from the orders of the Subordinate Judge of Ellore in E.A. No. 440 of 1937 and C.M.P. No. 152 of 1943 in O.S. No. 87 of 1923.
P. Somasundaram (V. V. Choudhry, with him) for the appellant.
V. Rangachari (K. Mangachari, with him) for the respond ents. 1950.
October 17.
The Court delivered judgment as follows.
FAZL ALI J.
These appeals arise out of an execution proceeding, and the main point to be decided in them is what is the effect of certain provisions of the Madras Agricul turists ' Relief Act (Madras Act IV of 1938, which will hereinafter be referred to as "the Madras Act"), on the rights of the parties.
How this point arises will be clear from a brief statement of the facts of the case.
It appears that in 1908, one Veeresalingam, the husband of the first respondent, borrowed a sum of Rs. 9,000 from one Sitharamayya, and executed a mortgage bond in his fa vour.
Subsequently a suit was 808 instituted by the mortgagee to enforce the mortgage and a final decree in that suit was passed on the 19th August, 1926.
Thereafter, on the 28th October, 1931,the decree holder applied for the execution of the decree by the sale of the mortgaged property.
In 193a, the decree holder transferred the decree to one Sobhanadri, after whose death his son, the appellant before us, was brought on the record as his legal representative in the execution proceedings.
Several years before the assignment of the decree, Veeresa lingam, the defendant, had died and his widow, the first respondent.
was therefore brought on the record as his legal representative.
On the 6th July, 1935, two items of proper ty were sold in execution of the decree and purchased by the decree holder, these being : (1) a village called Tedlam in in West Godavari District; and (2) 4 acres and 64 cents of land in Madepalli village.
The first property was sold for Rs. 21,000 and the second for ' Rs. 1,025.
As, however, the amount due under the decree was only about Rs. 17,860 and odd, the sale of the second property was subsequently set aside and the decree holder deposited into Court the excess amount of about Rs. 3,000 and odd after setting off the decretal amount against the price of the first item of property.
On the 5th August, 1935, the first respondent filed an application under Order XXI, rule 90, and section 47 of the Code of Civil Procedure, to set aside the sale held in July, 1935, alleging certain irregularities in the conduct of the sale.
That application was after several years heard by the Subordinate Judge of Ellore, who by his order dated the 6th March, 1943, dismissed it and directed the sale of the first property to be confirmed and full satisfaction of the decree to be entered.
After about 12 days, i.e., on the 18th March, 1943, the first respondent and the second respondent, who had been adopted by the former on the 12th March, 1936, under the will of her hus band and was subsequently brought on record, filed an appli cation under section 19 of the Madras Act praying for cer tain reliefs under that Act.
This application ' was dismissed on the 22nd March, 1943.
Subsequently, two appeals were filed on behalf 809 of the respondents (who will hereinafter be sometimes re ferred to as judgment debtors), one against the order refus ing to set aside the sale under Order XXI, rule 90 of the Civil Procedure Code, and the other against the order dis missing the application under the Madras Act.
These appeals were heard together by two learned Judges of the Madras High Court and they took the view that the judgment debtors ' application under the Madras Act was maintainable notwith standing the fact that the sale had been confirmed and full satisfaction of the decree recorded, and remitted the case to the trial Court for a finding on the following questions, namely (1) whether the applicants were agriculturists; and (2) if so, what would be the result of applying the provisions of Madras Act IV of 1938 to the decretal debt against them ? So far as regards the judgment debtors ' appeal against the order dismissing their application under Order XXI, rule 90, the Learned Judges were inclined to agree with the trial Court that the sale should stand but declined to pass final orders in the appeal on the ground that "it would seriously prejudice the judgment debtors in the connected application for relief under section 19 of the Madras Act IV of 1938.
" The Subordinate Judge answered the questions referred to him by the High Court on remand as follows : (1) The judgment debtors were not agriculturists and were not therefore entitled to the benefits of the Madras Act;and (2) If they were agriculturists, they were not liable to pay anything under the decree, as, in view of the provisions of the Act, the debt stood discharged on the date of sale.
When however the matter came up before the learned Judges of the High Court, they reversed the first finding of the trial Court and held that the judgmentdebtors were agriculturists within the meaning of the 810 Act, and that the debt stood discharged in view of section 8 (2) of the Act.
At the same time, they held that the sale was not liable to be set aside, and in this view dismissed one of the appeals and allowed the other.
Then followed certain proceedings to which it would have been unnecessary to refer but for the fact that the judgment debtors have attempted to rely on "them in support of one of their preliminary objections to the maintainability of these appeals.
It appears that on the next day after the judgment of the High Court was delivered in the two appeals, counsel for the respondents wrote a letter to the Registrar of the High Court to direct the posting of the two cases 'for being mentioned ' before the Court in order to obtain necessary directions consequent on the orders passed by it in the appeals.
This letter was not placed before the learned Judges until the judgment had been signed by them and ac cordingly the judgment debtors filed two petitions, one being a review petition to the High Court and the other being a petition to the trial Court praying "that the de creeholder may be ordered to pay to the petitioners the purchase money of Rs. 21,000 with interest thereon at 6 per cent.
per annum from the date of sale till the date of payment.
" The trial Court dismissed the latter petition on the ground that it was not maintainable, and the judgment debtors filed an appeal against the order.
The appeal as well as the review petition of the judgment debtors were heard together by the learned Judges who directed the decree holder 's counsel to elect whether his client would deposit the purchase money into Court or have the sale set aside.
The decree holder applied for a short adjournment and ultimately on the 15th November, 1946, his counsel stated that his client wished to retain the property which he had purchased and to pay the purchase money into Court.
Thereupon, he was directed to pay the sum of Rs. 21,000 together with interest within a months from that date.
Subsequently, the appellant (decree holder) having obtained leave to appeal from the High Court preferred 811 these appeals before us.
It may be stated here that along with the application for leave to appeal, the appellant had filed an application for excusing the delay in filing the former application which he accounted for mainly by refer ring to the proceedings for the review of the judgments in the previous appeals to the High Court.
This application was granted and the delay was condoned.
As has been already stated, the main point arising in these appeals relates to the effect of the Madras Act upon this litigation.
That Act was passed and came into effect in 1938, while the execution proceedings were still continu ing.
It will be recalled that the sale took place on the 6th July, 1935; and the application for setting it aside was not disposed of until the 6th March, 1943.
But, strangely enough, the judgmentdebtors did not apply for any relief under the Madras Act during this period, and they made their application only after the sale had been confirmed and satisfaction of the decree had been entered.
How far this belated application affects the right claimed by the judg ment debtors under the Act is one of the questions raised in these appeals, and I shall deal with it after referring to the material provisions of the Act and the findings of the High Court which have given rise to several debatable points.
The sections of the Act which are material for the purpose of these appeals are sections 3, 8 and 19.
Section 3 defines an agriculturist and has a proviso stating that in certain cases a person shall not be deemed to be an agricul turist.
The relevant clause of this proviso, to which I shall also have to advert later, is clause (D) which runs thus : "Provided that a person shall not be deemed to be an 'agriculturist ' if he (D) is a landholder of an estate under the Madras Es tates Land Act, 1908, or of a share or portion thereof in respect of which estate, share or portion any sum exceeding Rs. 500 is paid as peshkash or any sum exceeding Rs. 100 is paid as quit rent, jodi, kattubadi, 812 poruppu or the like or is a janmi under the Malabar Tenancy Act, 1929, who pays any sum exceeding Rs. 500 as land reve nue to the Provincial Government. ' ' The precise question which is said to arise with refer ence to this provision is whether by reason of being the owners of village Tedlam, the judgment debtors should be held to be not entitled to relief under the Act.
The other material sections 8 and 19 run as follows : "8.
Debts incurred before the 1st October, 1932, shall be scaled down in the manner mentioned hereunder, namely: (1) All interest outstanding on the 1st October, 1937, in favour of any creditor of an agriculturist whether the same be payable under law, custom or contract or under a decree of Court and whether the debt or other obligation has ripened into a decree or not, shall be deemed to be dis charged, and only the principal or such portion thereof as may be outstanding shall be deemed to be the amount repay able by the agriculturist on that date.
(2) Where an agriculturist has paid to any creditor twice the amount of the principal whether by way of princi pal or interest or both, such debt including the principal, shall be deemed to be wholly discharged.
(3) Where the sums repaid by way of principal or inter est or both fall short of twice the amount of the principal, such amount only as would make up this shortage, or the principal amount or such portion of the principal amount as is outstanding, whichever is smaller, shall be repayable.
(4) Subject to the provisions of sections 22 to 25, nothing contained in sub sections (1), (2) and (8) shall be deemed to require the creditor to refund any sum which has been paid to him, or to increase the liability of a debtor to pay any sum in excess of the amount which would have been payable by him if this Act had not been passed.
813 Explanation.
Where a debt has been renewed or included in a fresh document in favour of the same creditor, the principal originally advanced by the creditor together with such sums, if any, as have been subsequently advanced as principal shall alone be treated as the principal sum repay able by the agriculturist under this section.
Where ' before the commencement of this Act, a Court has passed a decree for the repayment of a debt, it shall, on the application of any judgmentdebtor who is an agricul turist or in respect of a Hindu joint family debt, on the application of any member of the family whether or not he is the judgment debtor or on the application of the decree holder, apply the provisions of this Act to such decree and shall, notwithstanding anything contained in the Code of Civil Procedure, 1908, amend the decree accordingly or enter satisfaction, as the case may be: Provided that all payments made or amounts recovered, whether before or after the commencement of this Act, in respect of any such decree shall first be applied in payment of all costs as originally decreed to the creditor.
" These sections are material, because in the present case the judgment debtors asked the decree to be amended under section 19 of the Act and they were held to be entitled to relief under section 8.
Having referred to the relevant provisions of the Act, it becomes necessary now to state the main findings of the High Court upon which the decision of this appeal will turn.
These findings are (1) that the sale of Tedlam village, which was held on the 6th July, 1935, and confirmed on the 6th March, 19 13, was a good sale; (2) that by this sale.
the title to the Tedlain village passed to the decree hoMer.
and in hearing the appeal the High Court was justified in proceeding on the footing that the judgment debtors having ceased to be the owners of Tedlam village after its sale, were not 104 814 hit by clause (D) of the proviso to section a of the Act; and (3) that the decree had been satisfied at the date of the sale and the decree holder was liable to repay to the judg ment debtors the full price of the property which was sold.
The main contentions directed against the conclusions arrived at by the High Court are :firstly, that they are self contradictory, because if the sale was an effective sale on the date it was held or confirmed, the decree was also satisfied on that date and the judgmentdebtors were no longer entitled to invoke the provisions of the Madras Act; and secondly, that the view taken by the learned Judges of the High Court that notwithstanding the appeal against the order refusing to set aside the sale they could proceed on the footing that the judgment debtors had ceased to be the owners of Tedlarn village on the date of the sale was un sound in law.
It will first deal with the second point which appears to me to require serious consideration.
The High Court has in my opinion rightly proceeded on the footing that the ownership of Tedlam village would bring the judgment debtors within the mischief of clause (D) of the proviso to section 3 of the Act, and would disentitle them to any relief thereunder.
This view was contested before us on behalf of the judgment debtors on two grounds : (1) that the grant in favour of the ancestor of the judgment debtors did not comprise a whole inam village and what they owned was therefore not an estate under the Madras Estates Land Act (Madras Act I of 1908); (2) that on the date of the application, the judg ment debtxrs were not landholders of village Tedlam because the village was in the possession of a receiver since 1st February, 1937, and the latter was in law the landholder on the crucial date.
None of these contentions however appears to me to have any force.
The first contention was sought to be supported by Exhibit P 1 which is a register of inams and which shows that poramboke or waste lands to the extent of 596 acres had to be deducted from the area 815 of the inam.
The point however has been dealt with very fully and clearly by the learned Subordinate Judge, who has rightly pointed out that it has no force in view of the Madras Estates Land (Amendment) Act, 1945 [Madras Act No. II of 1945].
The second point is equally unsubstantial, be cause it is well settled that the owner of a property does not cease to be its owner merely because it is placed in the hands of a receiver.
The true position is that the receiver represents the real owner whoever he may be, and the true owner does not by the mere appointment of a receiver cease to be a landholder under the Madras Estates Land Act.
I will now revert to the crucial question in the case, viz., whether the learned Judges of the High Court were justified in law in deciding the appeal on the footing that the judgment debtors had ceased to be the owners of Tedlain village and on that account they were not hit by clause (D).
of the proviso to section 3 of the Madras Act.
At this stage, it will be useful to refer to certain provisions of the Civil Procedure Code which directly bear on the question as to when title to immovable property which is sold in execution of a decree is deemed to pass to the purchaser.
One of the provisions is Order XXI, rule 92, which provides that "where no application is made under rule 89, rule 90 or rule 91, or where such application is made and disallowed, the Court shall make an order confirming the sale, and thereupon the sale shall become absolute.
" The second rele vant provision is section 65 which runs thus : "Where immovable property is sold in execution of a decree and such sale has become absolute, the property shall be deemed to have vested in the purchaser from the time when the property is sold and not from the time when the sale becomes absolute.
" In Bhawani Kunwar vs Mathurn Prasad Singh(1) the ques tion as to when a mortgagee who has purchased certain vil lages in execution of the decree acquired title to the properties purchased by him directly arose for considera tion, and the Privy Council rightly pointed (1) T.L.R. 816 out that "the sale in execution of the mortgage decree took effect from the actual date of the sale and not from its confirmation." In a simple case, the provisions cited above should settle the controversy, but, in the present case, the matter has been complicated on account of the appeal against the order refusing to set aside the sale under Order XXI, rule 90.
In such a case, generally speaking, the true position seems to be that there is no finality until the litigation is finally determined by the appellate Court.
This principle has been recognized in a number of cases, but it will be enough to cite Chandramani Shaha vs Anarjan Bibi(1).
The headnote of that case runs as follows : "Where a Subordinate Judge has disallowed an applica tion under Order XXI, rule 90, to set aside a sale in execu tion, and has made an order under rule (1) confirming the sale, and an appeal from disallowance has been dismissed by the High Court, the three years ' period provided by the Indian Limitation Act, 1908, Schedule I, article 180, for an application under Order XXI, rule 95.
by the purchaser for delivery of possession runs from the date of the order on appeal; the High Court having under the Code of Civil Proce dure, 1908, the same powers as the Subordinate Judge, the 'time when the sale becomes absolute ', for the purpose of article 180 is when the High Court disposes of the appeal." Under article 180 of the Indian Limitation Act, the period of limitation runs "from the date when the sale becomes absolute.
" If we give a narrow and literal meaning to these words, the period of limitation should be held to run from the date when the original Court of execution confirms the sale.
But, as was pointed out by the Privy Council, the High Court as an appellate Court had the same powers as the trial Court and it is only when the appeal was dismissed by the High Court that the order of the trial Court confirming the sale became absolute.
Till the deci sion of the appellate Court, no finality was attached to the order confirming the sale.
(1) I.L.R. 61 Cal.
g45. 817 It is clear that in this case the same rule would apply to the order recording satisfaction of the decree and to the order confirming the sale.
If the order recording satisfac tion of the decree was not final and remained an inchoate order until the appeal was decided, the order confirming the sale would have the same inchoate character.
This position seems to have been fully conceded in the statement of their case filed on behalf of the respondents in this Court.
It is quite clear that in this case the learned Judges of the High Court have taken up an inconsistent position.
As I have already stated, they have held, for the purpose of allowing one of the appeals, that the judgment debtors were not hit by clause (D)of the proviso to section 3 of the Act because they ceased to be the owners of Tedlain village at the date of the sale in 1935.
If this conclusion is cor rect, it must follow as a matter of logic that the decree was completely satisfied on the date of the sale, because the sale fetched a larger amount than what was payable under the decree and the excess amount was deposited by the de cree holder in Court.
The sale and satisfaction must go together and if finality is to be attached to the sale it should have been held to attach also to the order recording satisfaction of the decree.
It seems clear to me that if the decree had ceased to exist, no relief could be claimed by the judgment debtors under the Madras Act.
On the other hand, if the appeal had to be decided on the footing that the order recording satisfaction of the decree was not final, the same approach should have been made in regard to the effect of the sale.
It is also clear that if the decree was satisfied on the date of sale by the application of the provisions of the Act, the sale could not stand, because how could the property be sold in execution of a decree which had been already satisfied.
Yet, notwithstanding the fact that nothing was due under the decree, the High Court has held that the sale was a good sale and was to stand.
The correct approach to the case would have been to assume for the purpose of the appeals that neither of the orders passed by the 818 Subordinate Judge was final.
On that view, the appeals to the High Court could not have been decided on the footing that the judgment debtors had ceased to be the owners of Tedlain property and were therefore not hit by clause (D) of the proviso to section 3 of the Madras Act.
In my opinion, the judgment of the High Court cannot be sustained, and the appeal s will have to be allowed.
I will now deal very briefly with two preliminary objec tions raised on behalf of the respondents.
The first objec tion is that the application for leave to appeal to his Majesty in Council against the order of the High Court was barred by limitation, inasmuch as the reasons stated in the affidavit filed by the appellant in the High Court in sup port of his application for excusing delay do not consti tute sufficient reason within the meaning of section 5 of the Limitation Act.
The answer to this objection will be found in the facts which have been already narrated.
The delay was caused mainly by reason of the review of the order of the High Court and the High Court considered that there as sufficient reason for condoning the delay.
This Court cannot override the discretion exercised by the High Court and the matter cannot be reopened in these appeals.
The second objection is based on the fact that the decree holder was given a choice by the High Court to elect wheth er he would deposit the purchase money or have the sale set aside, and his counsel told the learned Judges on the 15th November, 1946 that his client wished to retain the property which he had purchased and pay the purchase money in cash.
It is contended that in view of this statement it was not open to the appellant to contend that he need not pay any amount to the judgment debtors.
This objection also is entirely devoid of any substance,because there is nothing on record to show that the appellant has consented to be bound by the order of the High Court and waived his right to appeal against it by reason of the election.
The learned counsel for the respondents also contended that the sale should have been set aside by the 819 High Court because the permission given to the decreeholder on the 16th February, 1934, to bid and set off the decretal amount against the purchase price was confined to an earlier sale and did not extend to the sate which took place on the 16th March, 1935, after the upset price which had been originally fixed was reduced.
Personally, I am inclined to hold that the permission covered the sale in question, but in any case it is difficult to hold on the facts stated that there was any such material irregularity as would vitiate the sale.
The precise argument which is put forward here was advanced in the Courts below but it did not find favour either with the Subordinate Judge or with the High Court.
Besides, the respondents cannot raise the point in these appeals because they have filed no appeal against the order of the High Court upholding the sale.
In these circumstances, I would allow the appeals, set aside the orders of the High Court and restore the order of the learned Subordinate Judge.
There will however be no order as to costs in these appeals.
MUKHERJEA J. I concur in the judgment just now deliv ered by ray learned brother, Fazl Ali J., and there is nothing further which I can usefully add.
CHANDRASEKHARA AIYAR J.
The facts which have cha given rise to these appeals and the questions for decision have been stated in the judgment just now pronounced by my learned brother Fazl Ali J. I wish to add only a few words on the main contention advanced for the respondents by their learned Advocate, Mr. V. Rangachari.
If by reason of the confirmation of sale and satisfac tion of the decree having been entered up, the title to the village had passed indefeasibly to the decreeholder, there was no longer any decree or decree debt to be scaled down.
If, however, the title did not pass, because it was still open to the respondents to attack the Court sale under Order XXI, rule 90, they were landholders of the village and, as such, they would 820 come within the scope of proviso (D) to section 3 of the Madras Agriculturists ' Relief Act, 1938, which enacts that a landholder who holds a village paying more than Rs. 100 as quit rent or jodi is not an agriculturist within the meaning of the Act.
The apparent inconsistency in the view taken by the High Court was recognised, if not conceded, by the learned coun sel.
In one view, there ,,as no longer any decree in respect of which the Agriculturists ' Relief Act could operate; and in the other view, the respondents could not take advantage of the Act, as their ownership of the village precluded them.
Faced with this dilemma, Mr. Rangachari urged a some what ingenious argument.
He contended that though the.
title passed to the decree holder on the confirmation of sale and became vested in him from the date of the sale, the respo dents could still be regarded as having an interest in the village, as the sale was open or liable to challenge and the title 'of the decree holder was inchoate or incomplete.
There is, however, really no support for this position.
On confir mation, the title of the decree holder became absolute or complete.
If the sale was set aside, the title would revest in the judgment debtor.
There is nothing like an equitable title in the decree holder which could be recognised for certain purposes and not recognised for others.
Under the Madras Act, "agriculturist" means "a person who has a saleable interest in any agricultural or horticul tural land or one who holds interest in such land under a landholder as a tenant, ryot or undertenure holder." Section 10, sub clause (i) of the Act provides that the right conferred on an agriculturist to have a debt scaled down will not apply to any person who, though an "agriculturist" as defined in the Act, did not on 1 10 1937 hold an interest in or a lease or sub lease of any land.
After the sale in 1935, the only interest which the judgment debtors had in the village was to have the sale set aside, under the rele vant provisions of the Civil Procedure Code.
This interest is not the interest contemplated by section 3, sub clause (ii) (a) & (b) of the Act which speaks of a 821 saleable interest or interest as a tenant, ryot or underten ure holder.
I agree in the conclusion reached by my learned broth er.
Appeals allowed.

dataset_name: IN-Abs

summary/full:
In execution of a decree obtained on a mortgage a vil lage owned by the mortgagor which was included in the mort gage was sold by the court on the 6th July 1935 and it was purhased by the mortgagee.
An application by the mortgagor under 0 .XXI,.r. 90, C.P.C., for setting aside the sale for irregulrities was dismissed, the sale was confirmed and full satisifiction of the decree was recorded, on the 6th March 1943.
A few days afterwards the mortgagor and his adopted son made an application under section 19 of the Madras Agricul turists ' Relief Act, 1938, praying for relief under the Act, and, as this application also was dismissed they preferred two appeals, one from the order dismissing this application and the other against the order of 6th March 1943 refusing to set aside the sale.
The High Court of Madras held that, as the mortgagor 's village had been sold he did not come within the purview of el.
(i)) of the proviso to 6. 3 of the Madras Agriculturists ' Relief Act and so he was entitled to claim relief under the Act and the debt stood discharged under the provision of the Act, but the Bale was not liable to be set aside; and in accordance with this judgment the decree holder was directed to pay the amount for which the property had been sold with interest thereon: ' Held per FAZL ALl and MUKHERJEA JJ. (i)that the conclu sions arrived at by the High Court were self contradictory because if the sale was effective on the date it was held or confirmed, the decree was also satisfied on that date and the judgementdebtors were no longer entitled to invoke the provisions of the Act; (ii) that the High Court was not justified in law in deciding the appeal on the footing that the judgment debtors ceased to be owners of the village from the date of sale and on that account were not hit by cl.
(D) of the proviso to section 3 of the Act inasmuch as when an appeal is preferred from an order rejecting an application under O.XXI, r. 90, C.P.C., to set aside an execution sale, the sale does not become absolute until the matter is finally decided by the appellate court.
807 Per CHANDRASEKHARA AIYAR J.
After the execution sale in 1935 the only interest which the judgment debtors had in the village was to have the sale set aside under the relevant provisions of the Civil Procedure Code and this interest, not being an interest contemplated by section 3 (ii) (a) & (b) and section 19 (1) of the Act, they were not "agriculturists" and were not entitled to any relief under the Act.
Held also, per FAlL ALl and MUKHERJEA JJ.
A person does not cease to be a land holder of an estate within the mean ing of cl.
(D) to the proviso to section 3 of the Act merely because the estate is placed in the hands of a receiver.
Bhawani Kunwar vs Mathura Prasad Singh (I.L.R. 40 Cal.
89) and Chandramani Shaha vs Anarjan Bibi (I.L.R. 61 Cal. 945) referred Judgment of the Madras High Court reversed.


judgement:
Appeal No. 134 of 1951.
Appeal from the Judgment and Order dated 20th November, 1950, of the Labour Appellate Tribunal, Lucknow, in Appeal No. 10 of 1950.
Bakshi Tek Chand and Veda Vyasa (section B. Kapur, with them) for the appellants.
Shaukat Hussain for the respondent.
Bishen Singh for the intervener.
December 17.
The Judgment of the Court was delivered by DAS J.
This appeal has been filed with the special leave granted by this Court on May 10, 1951.
By the order granting such leave the appeal has been restricted to one point only, namely, " whether the Government of Uttar Pradesh had the power to extend the time for making the award ex post facto, i.e. after the time limit originally fixed therefore had expired.
There is no dispute as to the facts.
An industrial dispute having arisen between the appellant company and its employees, by Labour Department Notification No. 637 (ST)/XVIII 53 (ST)/50 dated February 18, 1950, the Governor of Uttar Pradesh was pleased, in exercise of the powers conferred by section 3 read with section 4 of the U. P. (U. P. Act No. XXVIII of 1947), to refer the said dispute to the Labour Commissioner.
U. P., or a Conciliation Officer of the State Government nominated by him for adjudication on seven several issues specified therein and to direct the adjudicator to conclude the adjudication proceedings and submit his award to the Government not later than April 5, 1950.
The Labour Commissioner by his letter No. I.M.R. 14 A nominated Shri M. P. Vidyarthi, Regional Conciliation Officer, U. P., as the adjudicator in the above dispute with a direction that be should submit his, award by March 25, 1950, and that if the proceeding, were not likely to be 441 completed within that time he should move the Government for extension of time at least a week before the specified date.
By Notification No. 897 (ST)/XVIII 53 (ST)/50 dated March 20, 1950, the Governor was pleased to order that the adjudicator should also adjudicate on an additional issue formulated therein.
By a further Notification No. 950 ' (ST)/XVIII 53 (ST)/60 dated March 24, 1950, the ,Governor was pleased to refer another additional issue for the decision of the adjudicator.
The adjudicator did not make his award on or before April 55 1950, as directed by the first order of reference but made his award on April 13, 1950, that is to say, 8 days after the expiry of the time originally fixed for the making of the award.
About thirteen days after.
the I delivery of the award Labour Department Notification No. 1247 (ST)/XVIII 53 (ST)/50 was issued on April 26, 1950, whereby the Governor was pleased, in exercise of powers conferred by section 3 read with section 4 of the 'Act, to allow the adjudicator in the said dispute to submit his award by April 30, 1950.
Thereafter by Notification No. 1447 (ST)/XVIII 53(ST)/50 dated August 1, 1950.
, the Governor was pleased, in exercise of powers conferred by section 6 (2) read with sections 3 and 4 of the Act, to order that the award be enforced for a period of six months from the date of that order in the first instance and thereafter for such further period as might be prescribed.
On August 17, 1950, the appellant company preferred an appeal against the award to the Labour Appellate Tribunal contending, inter alia, as follows: That the award dated April 13, 1950, is vitiated, having been given after the expiry of the time limit.
(a) In its order dated February 18, 1950, para.
(5), Government directed the adjudicator to conclude the proceedings and submit his award not later than the 5th April, 1950.
The award is dated 13th April, 1950.
The Government, however, tried to remedy 442 this defect by the issue of G.O. No. 1247 (ST) XVIII 53 (ST)/50 dated April 26, 1950, but under the law this is of no avail.
To be a valid extension of date granted to the adjudicator, Government ,.,order should have been issued before the 5th April, 1950, to keep the authority of the adjudicator alive.
"On the date the adjudicator made the award, i.e., 13th April, 1950, he had no power to make an award.
" The Appellate Tribunal by its decision given on November 20, 1950, dismissed the appeal with the following observations on the point mentioned above. " With regard to the last point our view is that as the Government had the authority under section 6 of the Act to fix time limit for submitting an award it had also the necessary and incidental power to extend the time limit originally fixed, if it considered it necessary.
The first proviso to section 3 empowers the Provincial Government to add more matters for adjudication.
It is obvious that additions to the matters already referred to would or may take more time than what had been originally estimated, and so ,it may lead to an impossible position if the Government had no power to extend the time originally fixed by it, and it makes no difference, in our opinion, whether the time is extended before or after the expiry of the time originally limited.
" The present appeal is against that decision of the Appellate Tribunal but limited to the question hareinbefore mentioned.
Dr. Tek Chand appearing in support of this appeal urges that the adjudicator derived his authority under the order made by Notification No. 637, dated February 18, 1950.
Section 6 (1) provides that the adjudicator " shall, within such time as may be specified, submit its award to the State Government.
" The time specified by the order was " not later than April 5, 1950.
" On the expiry of that time the adjudicator became functus officio and bad no power or authority to make the award.
It is true that two 448 more issues were, by the two subsequent orders, added to the list of issues to be determined by the adjudicator but those issues, Dr. Tek Chand submits, did not involve any detailed investigation into facts necessitating any further time for making the award.
Learned counsel contends that the U.P. Act under consideration has no provision empowering the State Government to enlarge the time for the making of ' the award by the adjudicator. 'In the circumstances, if the State Government took the view that the addition of those two issues would render the time ' specified in the original order inadequate for the purpose it should have cancelled the previous notification and issued a fresh notification referring all the issues to the adjudicator and specifying a fresh period of time within which he was to make his award. ' The State Government did not adopt that course.
What it purported to do was to extend the time for making the award not only after the time originally fixed had expired but also after the award had, actually been submitted.
The argument is that even assuming but not admitting that the State Government had the power to extend the time before the time had expired it certainly had no power to do so after the award had been made, for it was meaningless, urges Dr. Tek Chand, to extend the time to do an act which bad already been done.
He refers us to the decision of the Judicial Committee in Baja Har Narain Singh vs Chaudhrain Bhagwant Kuar(1) where it was held that under the Code of Civil Procedure of 1882 the Court had no power to extend the time for making the award after the award had been filed.
Section 514 of that Code enabled the Court to grant a further time and from time to time to enlarge the period for the delivery of the award but section 521 provided that no award shall be valid unless made within the period allowed by the Court.
Their Lordships of the Privy Council took the view that it would not have been competent for the Court to extend the time after the award had been made, for once the award was made (1) L.R. 18 I.A. 55; 13 All.
300 444 and delivered the power of the Court under section 514 was spent and that although the Court had the fullest power to enlarge the time under that section as long as the award was not completed it no longer possessed any such power when once the award was made.
in order to give full effect to section 521 the Judicial Committee had to confine the exercise of the power to extend the time given to the Court by section 514 to a point of time before the award had been made.
This decision was relied upon by Mr. Justice Harring ton sitting singly on the Original Side of the Calcutta High Court in Shib Krishna Dawn & Co. vs Satish Chander Dutt(1) which was a case governed by the Code of 1908.
The learned Judge overlooked the fact that paragraph 8 of the Second Schedule to the Code of 1908 which corresponded to section 514 of the Code of 1882 expressly conferred power on the Court to allow further time and from time to time, either before or after the expiration of the period fixed for the making of the award, to enlarge such period and that paragraph 15 which corresponded to section 521 of the Code of 1882 contained no provision that an award made out of time was ipso facto invalid and that consequently the reasoning underlying the decision of the Judicial Committee in the case of Raja Narain Singh vs Chaudhrain Bhagwant Kuar (2) had no application to the case before him, which was governed by the Code of 1908.
Having regard to the difference in the language of the relevant provisions of the two Codes, the correctness of the decision of Harrington J. was doubted by Mr. Justice Chitty also sitting singly on the Original Side of the Calcutta High Court in Sri Lal vs Arjun Das(3).
Eventually the, decision of Mr. Justice Harrington was dissented from by a Division Bench of the same High Court sitting in appeal from the Original Side in Jetha Lal Laxmi Chand Shah vs Amrita Lal Ojha(4), which held that the Court had power to enlarge the time for making the award even after the award had (1) I.L.R.38 Cal.
(3) (2) 18 I.A. 55.
(4) I.L R. ;42 C.W.N. 833.
445 actually been made.
The learned Judges in the last mentioned case referred to and relied on the case of Lord vs Lee(1).
Reference has also been made by learned counsel for the respondents to Dentron vs Strong (2) and toMay vs Harcourt (3).
It will be noticed that all those English cases were decided under section 15 of the Common Law Procedure Act, 1854 (17 & 18 Vic , c. 125).
It is true that in that English statute there was no provision similar to section 521 of our Code of 1882 which was noticed by the Privy Council in the case cited by Dr. Tek Chand; nevertheless section 15 of the English statute like section 514 of the Code of Civil Procedure of 1882 corresponding to paragraph 8 of the Second Schedule to the Civil Procedure Code of 1908 and like section 9 of the English Arbitration Act, 1889, corresponding to section 12 of the Indian Arbitration Act, 1899, empowered the Court, from time to time, to enlarge the time for making the award.
There is a similar provision for enlargement of time in section 148 of our Civil Procedure Code of 1908.
There is, however, no similar provision in the U. P.
Section 6(1) of that Act peremptorily requires the adjudicator to submit his award to the State Government " within such time as may be specified " and not "within such time as may from time to time be specified.
" It is significant that the only occasion when the State Government can, under the U. P. Act, specify a fresh period of time is when it remits the award for reconsideration under sub section (2) of section 6, for under subsection (3) the adjudicator is enjoined to submit his award, after reconsideration, within such period as may be specified by the State Government.
Even in this case, under section 6(2) and (3) the State Government may in the order remitting the award specify a time within which the award, after reconsideration, must be filed.
This gives power to the State Government to fix a fresh period of time to do a fresh (1) (2) (1874) L. R. 9 Q.B. 11 7, (3) I.P.R. 13 Q. B.D. 688, 446 act, namely, to reconsider and file the reconsidered award.
It does not give the State Government any power to enlarge the time fixed originally for the initial making of the award.
Therefore, except where ,the State Government under section 6 (2)remits the 'award for reconsideration it has no power even to specify a fresh period of time and much less a power to extend the time for the initial making of the award under section 6 (1).
In exercise of the powers conferred by clauses (b), (c), (d) and (g) of section 3 and section 8 of the U. P. , the Governor was pleased to make an order embodied in Notification No. 615 (LL)/XVIII 7 (LL) 1951, dated March 15, 1951.
The proviso to rule 16 of that order authorised the State Government to extend from time to time the period within which the Tribunal or the adjudicator was to pronounce the decision.
These rules were, however, not in force at the time material to the case before us.
Learned counsel appearing for the respondent and for the State of Uttar Pradesh have not referred us to any similar rule which, was in force in 1950.
In view of the language of section 6 of the U. P. Act and in the absence of a rule like the proviso to rule 16 referred to above it must follow that the State Government had no authority whatever to extend the time and the adjudicator became functus officio on the expiry of the time specified in the original order of reference and, therefore, the award which had not been made within that time must be held to be without jurisdiction and a nullity as contended by Dr. Tek Chand.
Learned counsel for the respondents refers us to the provisions of section 14 of the U. P. General Clauses Act, 1904, which provides that where by any Uttar Pradesh Act any power is conferred on the State Government then that power may be exercised from time to time as occasion requires.
Sections 3 and 4 of the U. P. , certainly confer power on the State Government to refer disputes to an adjudicator for decision 447 and section 6 (1) may be read as empowering the State Government to specify the time within which the adjudicator to whom an industrial dispute is referred for adjudication is to submit his award.
The combined effect of section 14 of the U. P. General Clauses Act and section 6(1) of the U. P. , it is contended, is that the adjudicator is enjoined to submit his report "within such time as may from time to time be specified " and that this being the position, the principles laid down in the English decisions referred to above must be held to be applicable to the present case.
We are unable to accept this line of reasoning.
Under section 14 of the U. P. General Clauses Act the State Government may exercise the power conferred on it by sections 3, 4 and 6, that is to say, it can from time to time make orders referring disputes to an adjudicator and, whenever such an order of reference is made, to specify the time within which the award is to be made.
This power to specify the time does not and indeed cannot include a power to extend the time already specified in an earlier order.
The legislative practice, as evidenced by the provisions of the different statutes referred to above, is to expressly confer the power of extension of time, if and when the legislature thinks fit to do so.
There is no question of any inherent power of the Court and much less of the Executive Government in this behalf.
Section 14 of the U. P. General Clauses Act does not in terms, or by necessary implication, give any such power of extension of time to the State Government and, therefore, the Respondents can derive no support from that section.
Learned advocate for the Intervener, the State of Uttar Pradesh, draws our attention to section 21 of the U. P. General Clauses Act, 1904, and contends that the order of April 26, 1950, should be taken as an amendment or modification, within the meaning of that section, of the first order of February 18, 1950.
It is true that the order of April 26, 1950, does ex facie purport to rectify, the order of 448 February 18, 1950, but, in view of the absence of any distinct provision in section 21 that the power of amendment and modification conferred on the Government may be so exercised as to have retrospective operation the order of April 26, 1950, viewed merely as an order of amendment or modification, cannot, by virtue of section 21, have that effect.
If, therefore, the amending order operates prospectively, i.e., only as from the date of the order, it cannot validate the award which bad been made after the expiry of the time specified in the original order and before the date, of the amending order, during which period the adjudicator was functus officio and had no jurisdiction to act at all.
We do not think the respondents can derive any support from section 21 of the U. P. General Clauses Act.
The result, therefore is that this appeal must be allowed and the award must be declared to be null .and void and we order accordingly.
In the circumstances of this case we make no order as to costs.
Appeal allowed.
Agent for the intervener: C. P. Lal.

summary/full:
On February 18,1950, the Governor of Uttar Pradesh referred an industrial dispute to the Labour Commissioner or a person nominated by him with the direction that the award should be submitted not later than April 5, 1950.
The award, however, was made on April 13, and on April 26, the Governor issued a notification extending the time for making the award up to April 30: Held, (i) in view of the language of section 6 of the U. P. , and in the absence of a provision like that contained in the proviso to r. 16 of the Governor 's notification dated in March 15, 1951, the State Government had no authority whatever to extend the time, and the adjudicator became functus officio on the expiry of the time fixed in the original order of reference and the award was therefore one made without jurisdiction and a nullity.
(ii)Section 14 of the U. P. General Clauses Act, 1904, did not in terms or by necessary implication give any such power of extension of time to the State Government.
(iii)Though the order of April 26 did exfacie purport to modify the order of February 18, in view of the absence of any distinct provision in section 21 of the U. P. General Clauses Act, 1904, that the power of amendment and modification conferred on the State Government may be so exercised as to have retrospective operation, the order of April 26, viewed merely as an order of amendment or modification, cannot, by virtue of section 21, have retrospective effect.
Raja Har Narain Singh vs Chaudhrain Bhagwant Kuar (L.R. 18 I.A. 55) applied.
Jetha Lal Lakshmi Chand Shah vs Amrita Lal Ojha (I.L.R. , Lord vs Lee (L.R. 3 Q.B. 404), Dentron vs Strong (L.R. 9 Q.B. 117), May vs Harcourt (L.R. 13 Q.B.D, 688) distinguished.
57 440