judgement:
Appeal No. 1707 of 1967.
422 Appeal under Section 116 A of the Representation of the People Act, 1951 from the judgment and order dated September 19, 1967 of the Punjab and Haryana High Court in Election Petition No. 28 of 1967.
Harder Singh, P. Parmeswara Rao and S.S. Khanduja, for the appellant.
R.K. Garg, S.C. Agarwala, Baldev Singh Khojiand Anil Kumar Gupta, for respondent No. 1.
The Judgment of the Court was delivered by Bhargava, J.
The appellant, who was defeated by respondent No. 1 (hereinafter referred to as "the respondent"), the successful candidate, in the General Election of 1967 to the Punjab Vidhan Sabha from Nakodar Constituency, District Jullundur, challenged the election of the respondent in an election petition inter alia on the ground that he was disqualified from being chosen as a member of the Assembly, because he was holding an office of profit under the State Government at the relevant time.
This was the only ground which was pressed at the trial of the election petition before the High Court of Punjab and Haryana at Chandigarh.
The High Court dismissed the election petition rejecting this contention of the appellant and, consequently the appellant has come up to this Court in this appeal under section 116A of the Representation of the People Act, 1951.
Admittedly, the respondent was the Chairman of a Panchayat Samiti and the ground that he was disqualified from being a candidate was based on Rules 3 to 7 of the Punjab Panchayat Samitis and Zila Parishads, Non official Members (Payment of Allowances) Rules, 1965 (hereinafter referred to as "the Rules") which are as follows : "3.
There shall be paid a monthly consolidated allowance, in lieu of all other allowances, at the following rates.
to the Chairman of a Panchayat Samiti and that of a Zila Parishad, for performing all official duties and journeys concerning the Panchayat Samitis or Zila Parishad as the case may be, within the district, including attending of meeting, supervision of plans, projects, schemes and other works and also for 'the discharge of all lawful obligations and implementation of Government directives : (a) Chairman, Panchayat Samiti .
Rs. 100 (b) Chairman, Zila Parishad .
Rs. 150 4.
The Chairmen, Vice Chairmen and Members shall, for the purpose of rates of mileage and daily allowance admissible to them under these rules, be divided into the following two categories : 423 (i) Category I This shall include Chairmen and Vice Chairmen of the Panchayat Samitis and Zila Parishads.
(ii) Category II This shall include all other Members of the Panchayat Samitis and Zila Parishads.
There shall be paid to the Chairman, Vice Chairman and Member, mileage allowance for journeys performed for any official work outside the district.
Such journeys shall not be undertaken unless authorised by the Panchayat Samiti or the Zila Parishad, as the case may be.
Note : The Power under this sub rule shall not be delegated to any other authority.
(2) The Vice Chairman and the Member shall also be paid mileage allowance, in respect of a journey performed within the district, for (a) attending the meetings; and (b) for any official work or for supervision of a cattle fair held by the Panchayat Samiti: Provided that the Vice Chairman and the Members shall not be entitled to mileage allowance under clause (b) unless the journey for such work or supervision has been approved by the Panchayat Samiti or Zila Parishad, as the case may be, and the number of Members deputed for supervision does not exceed five on any one day.
The payment of mileage allowance to a Chairman, Vice Chairman and Members for the purposes and journeys mentioned in rule 5 shall be regulated as follows : (i) Mileage allowance by rail.
For 'a journey between the stations connected by rail, the Chairman and Vice Chairman shall be entitled to travel by 1st Class and the Members by 2nd Class.
The Chairman, Vice Chairman and the Members shall be enti tled to draw single fare of the Class of accommodation to which he is entitled: Provided that if the journey is performed in lower class, the Chairman, Vice Chairman and Members shall 424 be entitled to the fare actually paid for that class.
(ii) Mileage allowance by bus.
For a journey between the places connected by road, where regular bus service plies, and also for a journey between the stations connected by rail but performed by bus by taking a single seat the Chairman, Vice Chairman and Members shall be paid the fare actually paid.
(iii) Mileage allowance for journeys between the stations partly connected by rail and partly by bus.
For a journey between stations partly connected by rail and partly by bus, the Chairman, ' Vice Chairman and Members shall be paid actual railway fare limited to the class of accommodation to which he is entitled and the bus fare actually paid.
(iv) Mileage allowance by road. (a) The mileage allowance by road shall be admissible, at the rates specified below, for the journeys performed by the Chainnan, Vice Chairman or Members between stations which are neither connected by rail nor by regular bus : Motor Cycle or Ordinary cycle Other means of con Scooter veyance 12 Paise per mile 9 Paise per mile 25 Paise per mile (b) If a Chairman, Vice Chairman or Member performs a journey by Motor Cycle, Scooter, Ordinary Cycle or by other means of conveyance between the stations connected by rail or regular bus, the mileage allowance calculated at the rates prescribed 'above for each kind of conveyance shall be limited to rail or bus fare, had the journey been performed by rail or bus as the case may be.
Notes. ( 1 ) A Chairman, Vice Chairman or Member, using means of locomotion provided at the expense of the Government, Panchayat Samiti, Zila Parishad or any other local authority shall not be entitled to any mileage allowance.
(2) A Chairman, Vice Chairman or Member travelling in a vehicle belonging to any other Member, Vice Chairman or Chairman shall not be entitled to any mileage allowance.
The mileage allowance of the owner of the vehicle shall, however, be regulated under clause (iv).
425 7.
Subject to the provisions of rule 3, (1) the daily allowance to a Chairman, Vice Chairman and Members shall be admissible at the following rates : Category I .
Rs. 6.00 per day.
Category II .
Rs. 4.00 per day.
(2) A Chainnan, Vice Chairman, or Member shall be allowed : (a) full 'daily allowance for the day he.
attends the meeting; (b) full daily allowance for the days of halt in case the halt is for any of the purposes specified in rule 5 above; (c) half daily allowance for the day of departure and half daily allowance for the day of arrival in connection with a journey performed for any of the purposes specified in rule 5: Provided that (i) in the case of a Chairman, Vice Chairman or Member who is treated as a State guest while attending the meeting or while on duty within or outside the district his daily allowance for such days shall be limited to one fourth if he is provided with free board and lodging and to one half, if he is charged either for board or for lodging; (ii) not more than one daily allowance shall be admissible for a day in any case.
(iii) a Chairman, Vice Chairman or Member may, at his option draw one daily allowance in lieu of mileage allowance plus half daily allowance for the day of journey preceding and following the day(s) of halt.
" It was alleged that the office of Chairman of a Panchayat Samiti was an office under the State Government of Punjab and that the allowances paid under these Rules made that office an office of profit.
Two questions, therefore, arose for decision.
The first was whether the payment of the allowances under rules 3 to 7 made the office of Chairman of Panchayat Samiti an office of profit, and the second was whether the office of Chairman of Panchayat Samiti was an office under the State Government.
The learned Judge trying the election petition recorded evidence in the trial of the petition up to 31st July, 1967, and adjourned the case for arguments to 21st August, 1967.
On 19th 426 August, 1967, however, the Governor of Punjab issued Ordinance No. 10 of 1967 to amend the State Legislature (Prevention of Disqualification) Act, 1952, so as to add section 2(b) in that Act as follows : "It is hereby further declared that the office of Chairman of a Panchayat Samiti or Zila Parishad shall be deemed never to have disqualified and shall not disqualify the holder thereof for being chosen as, or for being, a Member of the Punjab State Legislature." In view of the issue of this Ordinance, the appellant was allowed to challenge the validity of the Ordinance without amendment of the election petition, and the learned Judge trying the petition, being of the view that the various questions involved were of considerable importance and should be settled by a larger Bench, referred the petition to a Full Bench.
The Full Bench held on the first two questions against the appellant, so that the petition had to be dismissed on that ground.
Consequently, the Full Bench refrained from expressing any opinion on the third question relating to the validity of the Ordinance and passed an order dismissing the petition with costs.
In this appeal also, the same three questions have been again raised by the .appellant.
We consider that this appeal can be disposed of on the basis of the answer to the first question alone, because, in our opinion, the High Court came to a correct conclusion in holding that the allowances paid under rules 3 to 7 of the Rules did not convert the office of Chairman of a Panchayat Samiti into an office of profit.
The payment to a Chairman, Panchayat Sanuti, under r. 3 is described in the rule as 'a monthly consolidated allowance in ' lieu of all other allowances for performing all official duties and journeys concerning the Panchayat Samiti within the disutility, including attending of meetings, supervision of plans, projects, schemes and other works, and also for the discharge of all lawful obligations and implementation of Government directives.
This provision in very .clear language shows that the allowance paid is not salary, remuneration or honorarium.
It is clearly an allowance paid for the purpose of ensuring that the Chairman of a Panchayat Samiti does not have to spend money out of his own pocket for the discharge of his duties.
It envisages that, in performing the duties, the Chairman must undertake journeys within the district and must be incurring expenditure when attending meetings, supervising plans, projects, schemes and other works and also in connection with the discharge of other lawful obligations and implementation of Government directives.
No evidence has been led on behalf of the appellant to show that a Chairman of a Panchayat Samiti does not have to perform such journeys 427 in the course of his official duties and to incur expenditure in that connection.
The State Government, which was the competent authority, fixed the allowance for a Chairman of a Panchayat Samiti at Rs. 100/ per month, obviously because it was of the opinion that this sum will be required on an average every month to meet the expenses which the Chairman will have to incur in this connection.
In these circumstances, the burden lay on the appellant to give evidence on the basis of which a definite finding could have been arrived at that the amount of Rs. 100/ per month was excessive and was not required to compensate the Chairman for the expenses to be incurred by him in the discharge of his official duties as envisaged in the rule.
That burden clearly has not been even attempted to be discharged by the appellant.
In this connection, the High Court rightly compared rule 3 of the Rules with the earlier provision on the same subject contained in the Punjab Panchayat Samitis and Zila Parishads NonOfficial Members (Payment of Allowances) Rules, 1961.
Under those earlier Rules of 1961, the Chairman was entitled to draw travelling allowance and daily allowance even when travelling within the district.
There were, however, certain limitations, such as that no travelling allowance was to be drawn by a Member, if the journey was performed for attending a meeting held within a radius of five miles from his place of residence or he performed the journey in a transport provided at the expense of the Zila Parishads/Panchayat Samiris or any other local authority or Government.
There were also limitations on the right to draw daily allowance, e.g., the amount of daily allowance was to be limited to 1/4th of the rate provided, if the Chairman was provided free board and lodging officially and.
at 1/2 rate if he was charged either for board or for lodging.
It appears that in the year ' 1965, it was considered desirable that the Chairman of a Panchayat Samiti should not draw travelling allowance and daily allowance while performing duties within the district and should only be entitled to these ,allowances when required to travel outside the district.
Consequently, under r. 3 of the Rules, provision was made for this monthly allowance of Rs. 100/ as a consolidated amount in lieu of the travelling allowance, daily allowance, or any other allowances to which he might have been entitled in order to compensate him for expenses incurred in connection with the discharge of his official duties.
In these circumstances, the High Court was perfectly correct in arriving at the conclusion that this allowance of Rs. 100/ per month did not amount to receipt of any profit or gain by the Chairman and only represented the amount which he was expected to spend on an average every month for the purpose of properly discharging his official duties.
So far as rules 4 to 7 are concerned they only provide for payment of travelling allowance and daily allowance when a Chair 428 man performs a journey in connection with his official duties outside the district.
Clearly, these allowances are also meant to ensure that he does not have to incur expenditure from his own pocket for the purpose of discharging his official duties.
There is again no evidence from which an inference may be drawn that the amount received by a Chairman for travelling allowance or daily allowance is in excess of the amount of expenditure which he would have to incur for 'the purpose of performing the journeys in order to discharge his official duties.
Our attention was drawn by learned counsel to the fact that in rule 7 the persons entitled to daily allowance are divided into two categories and a Chairman of a Panchayat Samiti belonging to Category II is entitled to Rs. 6/ per diem when a Member of the.
.Samiti belonging to Category II is only entitled to Rs. 4/ per diem.
The argument was that there was no explanation for payment at a higher rate to the Chairman and, consequently, it must be held that the Chairman must be making gain out of the payment to him of daily allowance.
We are unable to accept this submission.
The daily allowance is invariably fixed after estimating what extra expenditure in a day the person concerned would have to incur.
A Chairman, it appears, was expected to incur more expenditure per day than a Member, and that seems to be the reason why a higher rate of daily allowance was prescribed for him.
In any case, such a payment is clearly meant only to cover additional expenditure and out of pocket expenses of the Chairman and, while no evidence has been advanced to show that out of the amount received as daily allowance the Chairman will in fact invariably make a saying, it cannot be held that this payment would result in gain so as to make the office an office of profit.
In the course of his submissions, learned counsel tried to urge that the payment of travelling allowance and daily allowance under rules 3 to 7 was in addition to the payment of the consolidated monthly allowance under r. 3 and payment of two sets of aLlowances must necessarily result in profit to 'the payee.
The argument proceeds on a complete misunderstanding of the Rules.
Rule 3 only covers payment to compensate a Chairman for journeys performed by him for his official duties within the district in which the Panchayat is situated, while rules 4 to 7 govern cases where the journey is performed outside the district.
Rule 3, and rules 4 to 7 are, therefore, complementary and exclusive of each other.
In fact, r. 5 makes it clear that the mileage allowance is admissible only for journeys undertaken outside the district, while, in respect of daily allowance, the fact that the right to receive it accrues only when the journey is outside the district is made manifest by laying down that the receipt of this daily allowance is to be subject to the provisions of r. 3.
The submission that the payment under rules 429 4 to 7 is in addition to the payment under r. 3 is, thus, clearly misconceived.
In this connection, learned counsel drew our attention to a decision of this Court in Ravanna Subanna vs G.S. Kaggeerappa(1) where dealing with the provision relating to this disqualification the Court held: "The plain meaning of the expression seems to be that an office must be held under Government to which any pay, salary, emoluments or allowance is attached.
The word "profit" connotes the idea of pecuniary gain.
there is really a gain, its quantum or amount would not be material; but the amount of money receivable by a person in connection with the office he holds may be material in deciding whether the office really carries any profit.
This principle, on the finding arrived at by the High Court and affirmed by us above, is of no assistance to the appellant.
It is clear that the appellant has failed to establish that the allowances payable under rules 3 to 7 of the Rules result in any pecuniary gain to a Chairman of a Panchayat Samiti and, consequently, there is no question of any disqualification arising.
The appeal fails and is dismissed with costs.
R.K.P.S. Appeal dismissed.
(1) A.I.R. 1954 S.C. 653 at p. 656.

dataset_name: IN-Abs

summary/full:
The appellant who was defeated by the first respondent in the General Election of 1967 to the Punjab Vidhan Sabha, challenged the latter 's election on the ground that he was disqualified from being chosen as a member of the Assembly because he was holding an office of profit under the State Government at the relevant time.
It was admired that the respondent was the Chairman of a Panchayat Samiti and it was contended by the appellant that the allowances paid to the Chairman under Rules 3 to 7 of the Punjab panchayat Samitis and Zila Parishads, Non Official Members (Payment of Allowances) Rules, 1965, made that office an office of profit.
The High Court dismissed that election petition and on appeal to this Court, HELD: The High Court came to a correct conclusion in holding that the allowances paid under Rules 3 to 7 did not convert the office of Chairman of Panchayat Samiti into an office of profit.
The payment to a Chairman under r. 3 is described in the rule as a monthly consolidated allowance in lieu of all other allowances for performing all official duties and journeys concerning the Panchayat Samiti within the district.
This provision clearly shows that the allowance paid is not salary, remuneration or honorarium but an allowance paid for the purpose of ensuring that the Chairman of a Panchayat Samiti does not have to spend money out of his own pocket for the discharge of his duties.
The burden which lay on the appellant to show that the allowance of Rs. 100/ per month was excessive and was not required to compensate the Chairman for his actual expenses had not been discharged.
[426 F G, 427 B C] Rules 4 to 7 only provide for payment of traveling allowance and daily allowance when a Chairman performs a journey in connection with his official duties outside the district.
There is again no evidence from which it could be inferred that the amount received by a Chairman was in excess of his actual expenditure.
[427 H 428 B] There was no force in the contention that the payment of traveling allowance under Rules 3 to 7 was in addition to the payment of the consolidated monthly allowance under Rule 3 and payment of two sets of allowances must necessarily result in profit to the payee.
Rule 3 only covers payment to compensate a Chairman for journeys performed by him for his official duties within the district in which the Panchayat is situated, while rules 4 to 7 govern cases where the journey is performed outside the district.
[428 F G] Ravanna Subanna vs G. section Kaggeerappa, A.I.R. 1954 S.C. 653 at p. 656; distinguished.


judgement:
Appeal No. 706 of 1965.
432 Appeal from the judgment and decree dated September 22, 1964 of the Rajasthan High Court in D.B. First Appeal No. 67 of 1956.
Purshottam Trikamdas and 1.
N. Shroff, for the appellant.
B.D. Sharma, for the respondent.
The Judgment of the Court was delivered by Hegde, J.
This is plaintiff 's appeal.
The Amalgamated Electricity Co. Ltd. is the plaintiff in the suit from which this appeal arises.
It sued the Municipal Committee, Ajmer through its Chairman in suit No. 21 of 1951 in the court of Sub Judge, first class, Ajmer.
In that suit it claimed a sum of Rs. 93,520/2/1 as Surcharge due under certain notifications issued by the Chief Commissioner of Ajmer.
Out of the said sum, a sum of Rs. 28,837/12/5 was claimed as being due as SUrcharge on the bills issued by it in respect of the electricity supplied by it to the defendant for street lighting.
A sum of Rs. 58,143/12/2 was claimed as Surcharge on its bills in respect of the electricity utidised for pumping water in pursuance of one of its contracts with the defendant.
The balance amount was claimed as interest on the amount claimed.
That suit was resisted by the defendant on various grounds.
The trial court substantially allowed the plaintiff 's claim and decreed the suit in a sam of Rs. 44,461/11/9 with interest and proportionate costs.
The High Court of Rajasthan accepting the appeal (No. 67 of 1956) of the defendant dismissed the plaintiff 's suit.
After obtaining a certificate under article 133(1) (a) of the Constitution, the plaintiff has filed this appeal.
The High Court of Rajasthan dismissed the plaintiff 's suit on two grounds namely (1 ) that before filing the suit, no notice as required by section 233 of the Ajmer .Merwara Municipalities Regulation, 1925 has been given and (2) the notification of the Commissioner imposing the impugned Surcharge is either beyond the scope of the provisions of Bombay Electricity Surcharge Act, 1946 (Bombay Ac 't 19 of 1946) (to be hereinafter referred to as the Bombay Act) as extended to Ajmer by the Central Government in pursuance of the powers conferred on it under the Ajmer Merwar (Extension of Laws) Act, 1947 or in the alternative the provisions of the Bombay Act are ultra vires cl.
12 of the .schedule to the (to be hereinafter referred to as the Electricity Act).
In view of the above findings the other pleas taken by the d,efendant were not examined.
We have to see whether the decision of the High Court is in accordance with law.
The material facts of the case are as follows: A company known as Trustees Corporation (I) Ltd. took out license from the Chief Commissioner of Ajmer on 19 1 1928 433 under the provisions of the Electricity Act authorising it to geneate and supply electrical energy within the municipal limits of Ajmer and such extensions beyond those limits as may be permitted by the Chief Commissioner from time to time in accordance with the conditions mentioned in the licence (Exh. 1 ).
Someime later the said company transferred all its rights and liabilities, Ajmer Electric Supply Co., Ltd. The Ajmer Electric Supply Co. Ltd. was later amalgamated with the plaintiff 's company as.
ber the scheme of transfer approved by the Bombay High Court.
Fhe Ajmer Electric Supply Co. Ltd. had en 'tered into an agreenent (Exh. 20) on 31 3 1932 with the Municipal Committee, Ajmer for supplying electricity for street lighting and maintaining the street lighting equipments.
By another agreement (Exh. 21 ) dated 15 3 1939, it undertook to pump water from the wells belonging to Municipal Committee at Bhaonta.
On September 3, 1948, the Governmen 't of India in exercise of the powers conferred on it by section 2 of Ajmer Merwar (Extension of Laws) Act, 1947, extended the Bombay Act to the province of Ajmer Merwar subject to certain modifications.
That notification among other modifications omitted the words "or in any contract for energy or for maintenance of street lighting equipment" found in section 6 of the Bombay Act.
The other modifications made are not relevant for our present purpose.
After the extension of the Bombay Act to Ajmer Merwar the Ajmer Electric SuppLy Co., Ltd., applied under section 3 of the Bombay Act to the Chief Commissioner for imposing Surcharge as provided in that section to meet its increased cost.
On September 19, 1948, the Chief Commissioner directed that the Bombay Act as modified shall apply to two undertakings including Ajmer Electric Supply Co. Ltd., Ajmer.
There was another notification on September 19, 1948 but that is not relevant for our present purpose.
On March 29, 1949, the Chief Commissioner issued the notification herein set out below in substitution of the notification issued by him on September 19, 1948. "CHIEF COMMISSIONER 'S OFFICE, AJMER.
No. 6/5/48 LSG.
Dated Ajmer, the 29th March, 1949.
To be substituted for the notification bearing the same number and date.
Orders by the Chief Commissioner, Ajmer Merwara.
NOTIFICATION No. F/8 4 II(CC) H. Dated Ajmer, the 19th September 1948.
434 In exercise of the powers conferred by sub sec.
(2) of sec.
3 of the Bombay Electricity (Surcharge) Act 1946 (XIX of 1946) as extended to the Ajmer Merwara by the Government of India, Minis 'try of Home Affairs Notification No. 8/9/48 Judicial dated the 3rd September 1948, and in accordance with the recommendations made by the Electricity Advisory Board constituted by him under sec.
35 of the , the Chief Commissioner, is pleased to fix for a period of two years from the date of this Notification, the following rates of surcharge on the charges for energy leviable by the Ajmer and Beawar Electric Supply Companies : (1 ) For supplies made under standard tariffs: (i) Ajmer Electric Supply Co. Ltd., Ajmer 20% (ii) Beawar Electric Supply Co., Ltd., Beawar 15% (2 ) For supplies made under special contracts, other than those made with Municipal Committee for street lighting.
Ajmer Electric Supply Co., Ltd. Ajmer and Beawar Electric Supply Co., Ltd., Beawar. 0.007 of an anna per unit (Kw. hour) per rupee increase in the price of oil beyond the basic price of Rs. 90/ per ton.
(3 ) For supplies for Municipal Street Lighting made under special contracts Ajmer Electrictiy Co., Ltd., Ajmer, Beawar Electric Supply Co., Ltd., Beawar.
O. 128 of an anna per month per each rupee advance in price of fuel oil beyond the basic price of Rs. 90/ per ton for each 60 wattage lamp and prorate for lower and higher wattage lamps.
The surcharge is leviable on the actual energy consumed and not on the standing charges of motors and meters.
By order Sd/ A.N. Lal Secretary to the Chief Commissioner, Ajmer Merwara.
" On the basis of that notification the Ajmer Electric Supply Co., Ltd. called upon the defendant by means of a lawyers ' notice dated 16 8 1951 to pay the surcharge detailed therein.
As the defendant did not comply with the demand made, the plaintiff after the amalgamation men.tioned earlier instituted the present suit.
435 It is not necessary to deal with the various pleas taken by the defendant in resisting the plaintiff 's suit.
Some of those pleas have been given up; some have not been considered by the High Court.
The plaintiff 's suit has been dismissed by the High Court solely on the grounds mentioned above.
If the plaintiff succeeds satisfying this Court that the view taken by the High Court is wrong then the matter will have to go back to the High Court for decision on questions left undecided.
We shall first take up the question of notice under section 233 of Ajmer Merwar Municipalities Regulation.
The contention of the defendant is that the notice issued is invalid inasmuch as the same was issued on behalf of the Ajmer Electric Supply Co. Ltd. after that company was amalgamated with the plaintiff.
The next ground of attack is that the said notice is invalid because it does not set out the name and the place of abode of the intending plaintiff.
These contentions have commended themselves to the learned Judges of the High Court.
Section 233 of the Ajmer Merwar Municipality Regulation prescribes: "Section 233:Suits against Committee or its officers.
No suit shall be instituted against a Committee, or against any member, officer or servant of a Committee, in respect of any act purporting to be done in its or his official capacity, until the expiration of one month next after notice in writing has been, in the case of a Committee, delivered or left at its office, and in the case of an officer or servant, delivered to him or left at his office or place of abode, stating the cause of action and the name and place of abode of the intending plaintiff; and unless the plaint domains a statement that such notice has been so delivered or left: Provided that nothing in this section shall apply to any suit instituted under section 54 of the .
(I of 1877).
" So far as suits against public officials are concerned this section is an exact reproduction of section 80, Civil Procedure Code.
But section 80, Civil Procedure Code has two parts namely: (1) Suits against Governments and (2) Suits against public officers in respect of acts purporting to be done by those public officers in their official capacity.
So far as suits against Governments are concerned, they cannot be validly instituted without giving a notice as required by section 80, Civil Procedure Code.
But when we come to suits against public officers, section 80, Civil Procedure Code applies only to suits in respect of any 'act ' purporting to be done by a public officer and 436 that in his official capacity.
Hence before section 80 can be relied on in any suit against a public officer, it must be shown that it is a suit in respect of an 'act ' purporting to be 'done by him 'in his dial capacity.
In view of the provisions of 'the General Clauses Act, the expression 'act ' also includes illegal omissions.
Therefore if the suit does not relate to any 'act ' or 'illegal omission ' purporting to be done by a public officer in his official capacity, section 80 will not have any application.
Similar is the position under section 233 of the Ajmer Merwar Municipalities Regulation.
The stand taken by the plaintiff is that in the instant case no notice under section 233 of Ajmer Merwar Municipalities Regulation was necessary; alternatively it was urged that if such a notice is necessary, the notice issued complies with the requirements of law.
If the first alternative is accepted there is no need to go into the question as to the validity of the notice issued.
In the suit, the plaintiff does not complain of any act done by the defendant nor does it say that the defendant was guilty of any illegal omission.
The plaintiff 's case is as mentioned earlier that in view of the notification issued by the Chief Commissioner on March 29, 1949 [Exh. 13(B)], it was entitled to recover from the defendant the amount claimed.
The stand taken by the defendant is that the levy of surcharge is invalid.
Whether the contention is sustainable or not there is no doubt that it is bona fide contention.
That contention had commended itself to the High Court.
Every omission is not an illegal omission.
Before an omission can be considered as an illegal omission it must be shown that the official concerned had omitted to discharge some official duty imposed on him in public interest.
The omission in question must have a positive content in it.
In other words the nondischarging of that duty must amount to an illegality.
We are told that under the provisions of the Ajmer Metwar Municipalities Regulation, it is the duty of the Municipal Council to discharge all its liabilities.
In that connection reference was made to certain provisions of the said Regulation.
But the failure on the part of the Municipality to discharge its liabilities will not ordinarily become illegal omissions.
The municipality or its members or office bearer cannot be punished for their failure to pay the amount due to the plaintiff.
To put it differently the omission complained does not entail any penal consequence for the public official responsible for it.
If every omission is considered as an illegal omission and therefore an 'act ' either within the meaning of section 80, Civil Procedure Code or section 233 of the Ajrner Merwar Municipalities Regulation then the distinction between the first part of section 80, Civil Procedure Code and its second part disappears.
If that is so, k follows that in every suit against a public officer relating to his public duty, the issuance of a notice is a condition precedent.
That in our opinion would be rewriting the section.
437 It is true that in Bhagchand Dagdusa Guirathi and ors.
vs Secretary of State for India(1) the Privy Council laid down that section 80 should be strictly complied with and is applicable to all forms of action and all kinds of reliefs claimed against the Government.
But here in this case we are not concerned with a claim against the Government.
Therefore that decision has no application to the facts of the present case.
The case which is relevant for our present purpose is Revati Mohan Das vs Jatindra Mohan Ghosh(2).
Therein a manager of an estate appointed under section 95 the Bengal Tenancy Act, 1885 executed a mortgage in favour of the predecessor of the plaintiff therein after obtaining the sanction of the local court.
The successor of that manager failed to discharge the mortgage debt.
Consequently the plaintiff brought a suit against him for obtaining a mortgage decree.
That suit was resisted on the ground that the plaintiff had failed to give the notice prescribed by section 80, Civil Procedure Code before instituting the suit.
That plea succeeded in the High Court.
The Judicial Committee of the Privy Council reversed the decree of the High Court holding that the failure on the part of the resportdent to discharge the mortgage cannot be considered as an 'act 'within the meaning of section 80, Civil Procedure Code.
In the course of the Judgment Sir George Lowndes speaking for the Board observed thus: "On the alternative contention their Lordships are unable to hold that non payment by respondent 1 is an 'act purporting to be done by ' the manager 'in his official capacity '.
Under the general definitions contained in section 3, an 'act ' might include an illegal omission but there clearly was no illegal omission in the present case.
It is also difficult to see how mere omission to pay either interest or principal could be an act purporting to be done by 'the manager in his official capacity." (emphasis supplied).
At this stage we would like to emphasis the observations of their Lordships; "but clearly there was no illegal omission in the present case.
" This observation shows that a mere omission to discharge the debt without any thing more is not an illegal omission.
It is true that in that case, the court proceeded further and observed: "The mortgage imposed no personal liability upon the manager, but merely provided that if payment was not made the mortgagee would be entitled to realize his dues by sale through the Court, and this was all that the appellant sought by his suit.
The manager for the time being no doubt had an option to pay in order to save the sale, but failure to exercise an option is not in any sense a breach of duty.
The appellant made no claim against (1) 54 I.A. 338.
(2) 61 I.A. 171.
438 respondent 1 personally.
He was there only as representing the estate of which the sale was sought.
In their Lordships ' opinion, such a suit is not within the gambit of section 80 and no notice of suit was required.
" It is possible to read this passage as merely setting out the facts of that particular case and the equitable considerations arising therefrom and not as the ratio of the decision.
Even if we consider that passage as one of the reasons given in support of the decision, the strength of the earlier ratio is not weakened.
The interpretation placed by us on that decision is the same as that placed by the Calcutta High Court in Debendra Nath Roy vs Official Receiver(1).
Mr. Sharma read to us several decisions of the various High Courts wherein it has been laid down that a suit brought in respect of breach of contract by a public official is an act within the meaning of section 80 Civil Procedure Code.
Similarly, illegal omissions have been held to be 'acts ' under that section.
In some of the decisions it was held that the second part of section 80, Civil Procedure Code applies only to actions on torts committed by public officials, in the discharge of their public functions.
There is conflict of judicial opinion on that point.
For our present purpose it is not necessary to resolve that conflict.
Suffice it to say that in the present case, the plaint does not complain of any 'act ' or even an illegal omission on the part of the defendant.
Hence we agree with Mr. Purshottam Tricumdas that no notice under section 233 of the Ajmer Metwar Municipalities Regulation was necessary before instituting the suit.
In that view it is not necessary to consider whether the notice relied on by the plaintiff meets the requirements of the law.
This takes us to the validity of the notification issued by the Chief Commissioner of Ajmer on March 29, 1949 levying certain surcharges on the consumers of electricity supplied by the plaintiff.
Section 6 of the Bombay Act as it originally stood read: "The provisions of the Act shall apply notwithstanding anything in any other law or any licence or sanction granted under the Principal Act or in any contract for energy or maintaining street light equipments.
" The notification extending this Act to Ajmer Metwar modified that section and the modified section reads: "The provisions of the Act shall apply notwithstanding anything in any other law or any licence or sanction granted under the principal Act.
" The words 'Principal Act ' refer to the Electricity Act.
On the basis of this modification it is urged on behalf of the respondent (1) A.I.R. 1938 Cal.
191. 439 that the Chief Commissioner was not competent to levy the impugned surcharge.
From the fact that certain words were omitted in section 6, we are asked to assume that the Government of India intended that no surcharge should be levied on the bills issued to the defendant for the supply of electrical energy for street lighting.
We do not know why the words in question were omitted from section 6.
But to our mind the omission of those words does not in any manner affect the provisions contained in sections 3 and 4 the Bombay Act.
Now we shall set out sections 3 and 4 of the Bombay Act.
They read: "Section 3 . ( 1 ) Any license or sanction holder may apply to the Provincial Government in the prescribed form for fixing a rate of surcharge on the charges for energy or street lighting equipment leviable by him under the terms of his licenee, sanction or contract, as the case may be.
Such application shall be accompanied I by such calculations as may be prescribed.
(2) On receipt of an application under sub section (1) the Provincial Government may, if it considers that a surcharge is desirable in the case of such licensec or sanction holder, by order notified in the Official Gazette, fix the rate of surcharge.
(3) The rate of surcharge fixed under sub section (2) shall not exceed: (a) 331/2 per centuries in the case of undertakings where diesel oil is used for the generation of energy, (b) 20 per centuries in the case of undertakings where steam is used for the generation of energy.
(4) In the order fixing the rate of surcharge under sub section (2), the Provincial Government may specify such conditions as it may think fit to be observed by the licensee or sanction holder.
(5) Without prejudice to the generality of the power contained in sub section (4), the Provincial Government may require the execution of an undertaking in the prescribed form by the licensec or sanction holder that his profits in excess of the prescribed limits shah be transferred to a Rates Stabilization Reserve for prescribed purposes.
(6) The Provincial Government may at any time enhance or reduce by a like order the rate fixed under sub section (2).
: Upon the rate of surcharge being fixed by the Provincial Government from time to time in accordance with this Act, it shall not be lawful for the licensec or sanction holder concerned except with the previous sanction of the Provincial Government to charge at other than charges surch arged at the rate for the time being so fixed; Provided that no surcharge or any subsequent revision thereof shall affect charges leviable for any period not covered by the relevant order of the Provincial Government.
" The provisions contained therein clearly empower the Chief Commissioner to levy surcharge on the bills for the supply of electricity for street lighting.
Section 4 empowers the licensec to collect from the consumer the surcharge levied.
Municipal Councils are not excluded from the operation of sections 3 and 4 of the Bombay Act as extended to Ajmer Merwar.
Similarly electrical energy supplied on the basis of a contract is not excluded from the operation of section 3.
That much is clear from the language of that section.
We see no reason to read into that section an exception in the case of Municipal Councils or electricity supplied for street lighting under a contract.
Section 6 does not in any manner cut down the operation of sections 3 and 4.
In our opinion that section as it stood originally or as modified has no impact on sections 3 and 4.
Charges for the supply of energy for street lighting are ordinarily payable by the Municipal Councils.
Generally speaking it is the Municipal Councils that provide street lighting.
Possibly section 6 was included in the Bombay Act as a matter of abundant caution.
It is not denied that the Bombay legislature had competence to enact that Act.
We shall presently examine the contention that Act is ultra vires the provisions of Electricity Act and therefore the provisions of that Act should not be given effect to.
But for the present we are assuming that Act is valid and proceed to examine the impact of section 6 on sections 3 and 4.
We think that section 6 does not in any manner control sections 3 and 4.
The intention of a legislature or its delegate has to be gathered from the language of the statutory provisions and not from what it failed to say.
If because of modification of section 6, the provisions contained in sections 3 & 4 could not be applied in the case of supply of electrical energy for street lighting under a contract then it could have been said that the notification issued by the Chief Commissioner was without the authority of law.
But that cannot be said in this case.
The provisions in sections 3 and 4 are self contained provisions.
For taking action on the basis of those sections no assistance is needed from section 6.
Therefore we think the High Court was wrong in opining that the notification issued by the Chief 441 Commissioner levying surcharge on the price of the electrical energy supplied for street lighting was without the authority of law.
We shall now examine the contention that the notification issued by the Chief Commissioner on March 29, 1949 is ultra vires the provisions of the Electricity Act.
On this aspect the argument on behalf of the respondent proceeded thus: Section 3(f) of that Act provides that the provisions contained in the Schedule shall be deemed to be incorporated with, and to form part of, every licence granted under this Act save in so far as they are expressly added to, varied or excepted by the licence, and shaH, subject to any such additions, variations or exceptions which the State Government is hereby empowered to make, apply to the undertaking authorised by the license: (Proviso is not relevant for our present purpose) Clause 12 of the Schedule as it stood at the relevant time read: "XII.
CHARGE FOR SUPPLY FOR PUBLIC LAMPS.
The price to be charged by the licensec and to be paid to him for energy supplied for the public lamps, and 'the mode in which those charges are to be ascertained shall be settled by agreement between the licensee and the (State Government) or the local authority, as the case may be, and, where any difference or dispute arises, the matter shall be determined by arbitration.
" The argument proceeded that the Electricity Act which is a central legislation lays down that the price to be charged by the licensee and to be paid to him for the electrical energy supplied for street lighting shall be settled either by agreement between the licensee and the State Government or the local authority as the case may be or, and, where any difference or dispute arises the matter should be determined by arbitration; the price so fixed cannot be altered in any manner; levying surcharge is but one mode of enhancing the price to be paid; such a course is violative of cl. 12 of the Schedule in the Electricity Act; hence it must be held that the Chief Commissioner had no power to levy any surcharge which would interfere with the mandate of cl. 12.
It was not said before us nor before the High Court that the Bombay legislature had no competence to enact the Act.
Electricity is a concurrent subject both under the Constitution as well as under the Government of India Act, 1935.
Therefore quite clearly the Bombay legislature had competence to provide for the levy of surcharge so long as the relevant provision did not conflict with any provision in any central Act.
Hence the question is whether sections 3 and 4 are in conflict 442 with cl. 12 of the Schedule of the Electricity Act ? If the two can co exist then there is no question of conflict between the two.
We see no conflict between cl. 12 of the Schedule in the Electricity Act and sections 3 and 4 of the Bombay Act.
Clause 12 prescribes a procedure for settling the price of electricity supplied by the licensee for street lighting.
It merely lays down the machinery for settling the price if there is dispute between the contracting parties.
That clause does not fix the price to be paid or even the maximum price payable.
We fail to see how that clause takes away the power from the State legislature to impose additional burden on the consumer.
All that clause means is that the licensec cannot dictate his terms to the authority responsible for street lighting.
We are unable to agree with the learned Judges of the High Court that in incorporating cl.
12 of the Schedule, the central legislature intended that under no circumstance the liability of the consumer can be increased beyond what is asked during the continuance of the contract.
In our opinion it imposes no fetters on the powers of the provincial legislatures in the matter of hanging the price of the electricity supplied by the licensec for street lighting.
For the reasons mentioned above we are unable to agree with the High Court that either the suit is bad because of want of a valid notice under section 233 of the Ajmer Merwar Municipalities Regulation or that the notification imposing surcharge is invalid for any reason.
Under the notification imposing surcharge the plaintiff is not entitled to get any additional sum as regards the pumping of water.
Under that notification to the extent it is applicable to this case surcharge is levied only on the price of electrical energy supplied under a contract for street lighting and not in respect of the price of the electrical energy used for pumping water.
Under Exh. 21 the plaintiff entered into an agreement to pump water for a fixed consideration.
For so doing it may have to utilise the electricity produced by it but that does not amount to supplying electricity to the Municipal Council much less supplying electricity for street lighting.
From el. 8 of that agreement it is seen that the parties to that agreement contemplated the pumping of water by using Oil Engines though ordinarily it was expected that it will be done by electrical energy.
It is true that el. 20 of the agreement provides that the Municipal Council shall have first claim over other consumers for the supply of energy for pumping such quantity of water as may be required from the wells at Bhaonta.
In construing the true nature of the contract entered into between the parties.
the contract has to be read as a whole and if so read it is clear that what the plaintiff undertook was to pump water from the wells in question and not to supply any electrical energy.
443 Hence we are in agreement with the learned Judges of the High Court that the plaintiff 's case in this regard should fail.
Mr. Sharma urged that the High Court had not thought it necessary to decide certain contentions advanced on behalf of the defendant in view of its conclusions set out earlier.
He told us that the defendant had pleaded that the plaintiff failed to prove the quantum of surcharge payable by the defendant.
It also contended 'that the notification under which the surcharge is levied cannot have retrospective operation and that no surcharge was leviable under that notification on the charges in respect of maintaining street lighting equipments.
According to the learned Counsel for the plaintiff there is no merit in any one of these contentions.
As mentioned earlier the High Court has not gone into these contentions.
It is for that court to examine those contentions.
This court does not ordinarily examine contentions which have not been examined by the appellate court.
It is best that these questions should be gone into by the High Court.
In the result we allow this appeal, set aside the judgment of the High Court and remand the case back to the High Court for deciding the issues that remain to be decided.
The costs of this appeal shall be costs in the cause.
V.P.S. Appeal allowed.

summary/full:
The Ajmer Electric Supply Co. Ltd. a licensee under the , entered into two contracts with the respondent Municipal Committee, (i) for supplying electricity for street lighting, and (ii) pumping water from the wells belonging to the respondent at a particular place.
The Bombay Electricity Surcharge Act, 1946, was extended to the province of Ajmer Metwar subject to certain modifications.
Thereafter, the Ajmer Electric Supply Co. applied under section 3 of the Bombay Act, to the Chief Commissioner, for imposing the surcharge provided in that section, to meet its increased cost.
The Chief Commissioner issued a notification and on the basis of that notification the Ajmer Electric Supply Co. called upon the respondent by a notice, to pay the surcharge detailed therein with respect to the two contracts.
As the respondent did not comply with the demand, the appellant, with which the Ajme 'r Electric Supply Company was amalgamated, filed a suit for the recovery of the surcharge.
The trial Court decree.d the suit but the High Court set aside the decree on the grounds: (1) Before filing the suit a notice as required by section 233 of the Ajmer Metwar Municipalities Regulation, 1925, was not given; (2) The Commissioner 's notification imposing the impugned surcharge was beyond the provisions of the Bombay Act, because of the omission of certain words from section 6 of that Act as extended to Ajmer Merwara; and (3) The relevant provisions of the Bombay Act.
namely, sections 3 and 4 were ultra vires el.
12 of the Schedule to the Indian Electricity In appeal to this Court, HELD: (1) No notice under section 233 of the Ajmer Merwar Municipalities Regulation was necessary before instituting the suit.
[438 E] Under the section a notice is necessary when the suit is filed against the Committee only in respect of any act done in its official capacity.
The expression 'act ' includes an illegal omission; but.
before an omission can be considered as an illegal omission, it must be shown that there was an omission to discharge some official duty imposed in public interest.
That is the non discharge of the duty must amount to an illegality entailing penal consequences.
[436 B, G] In the present case, the appellant 's contention was that it was entitled to recover from the respondent the amount of surcharge claimed, while the respondent 's case was a bonafide contention, namely, that the levy of 431 surcharge was invalid.
Under the Regulation it was the duty of the respondent to di 'scharge all its liabilities, but failure to do so would not ordinarily make it an illegal omission, because, the respondent or its members or office hearers could not be punished for their failure to pay the amount due to the appellant.
[436 D G] Revati Mohan Das vs Jitendra Mohan Ghosh, 61 I.A. 171, applied.
Debendra Nath Roy vs Official Receiver, A.I.R. 1938 Cal. 191 approved.
Bhagchand Dagdusa Gujrathi vs Secretary of State for India, 54 I.A. 338.
distinguished.
(2) The provisions of section 3 of the Bombay Act empower the Chief Commissioner to levy surcharge on the bills for the supply of electricity for street lighting.
Section 4 empowers the licensec to collect from the consumer the surcharge levied.
Municipal councils are not excluded from the operation of sections 3 and 4 of the Act as extended to Ajmer Metwar.
Similarly, electrical energy supplied on the basis of a contract is not excluded from the operation of section 3.
For taking action on the basis of those sections no assistance is needed from section 6, and so, section 6 as it stood originally or as modified does not in any manner cut down the operation of as. 3 and 4.
Therefore, the High Court was Wrong in its decision that the notification issued by the Chief Commissioner levying surcharge on the price of electrical energy supplied for street lighting was without the authority of law.
[440 C E, H; 441 A] (3) Since 'Electricity ' is a concurrent subject, the Bomhay Legislature was competent to provide for the levy of surcharge so long as the relevant provision did not conflict with any provision in any Central Act.
Clause 12 of the Schedule to the , which is deemed to form part of the licence under section 3(f) of the Electricity Act, does not conflict with sections 3 and 4 of the Bomhay Act.
The clause merely prescribes a procedure for settling the price of electricity supplied by the licensec for street lighting and lays down the machinery for settling the price if there is a dispute between the contracting parties.
It o.nly means that the licensee cannot dictate its terms to the authority responsible for street lighting, but does not fix the price to be paid or even the maximum price payable.
It imposes no fetters on the powers of the Provincial Legislature in the matter of enhancing the price of electricity supplied by the licensec for street lighting.
The High Court was, therefore, wrong in holding that by incorporating cl. 12 into the licenee the Central Legislature intended that under no circumstances the liability of the consumer can be increased heyond what was agreed during the continuance of the contract.
[441 H; 442 A D] (4) Under the notification imposing surcharge, the appellant, however, was not entitled to get any additional sum as regards the pumping of water.
Under the notification surcharge is levied on the price of electrical energy supplied under a contract.
In construing a contract it must be read as a whole.
So read, under the second contract, the appellant only undertook to pump water from the wells and not to supply any electricat energy.
[442 E F, H]


judgement:
Appeal No. 44 of 1965.
Appeal by special leave from the judgment and order dated ' August 22. 1962 of the Calcutta High Court in Appeal No. 35 of 1960.
823 B. Sen, B. P. Maheshwari and R. K. Chaudhuri, for the appellant.
Niren De, Addl.
Solicitor General and D. N. Mukherjee, for the respondent.
The Judgment of the Court was delivered by Shelat, J.
This appeal by special leave is directed against the judgment and order of the High Court of Calcutta rejecting the application by the appellants for setting aside the award in Award Case No. 70 of 1959 passed by the Arbitration Tribunal constituted by the Bengal Chamber of Commerce.
The said Arbitration arose out of a contract dated July 7, 1958 whereunder the appellants agreed to purchase and the respondents agreed to sell two thousand bales of Saidpur N.C. Cuttings.
The contract was in the standard form prescribed by the India Jute Mills Association.
It provided that shipment or rail despatch from agencies was to be made during August and/or September and/or October and/or November, 1958.
As the import of Pakistan jute required an import licence the contract provided: " 'Buyers to provide the sellers with the letters of authority and sellers to open letters %A credit.
If buyers fail to provide the sellers with import licence within Novem ber 1958 then the period of shipment would be upto December, 1958 and the price mentioned in the contract would be increased by 50 nP.
If buyers fail to provide licence by December 1958 then the contract would, be ,settled at the market price prevailing on January 2, 1959 for goods of January and February 1959 shipment.
" One of the printed terms provided: " 'Buyers shall not however be held responsible for delay in delivering letters of authority or opening letters of credit where such delay is directly or indirectly caused by sod by I or due to act of God, war mobilisation demobilization 'breaking off trade relations between Governments, requisition by or interference from government or force majeure.
In any of the aforesaid circumstances where by buyers are prevented from delivering letters of authority or opening letters of credit within one month from the date of the contract, there may be a further extension of time (the delivery period to be extended accord, ingly) by mutual agreement between the buyers and the :sellers otherwise the contract shall be deemed to be cancelled and sellers shall have no claim whatsoever against the buyers." 824 The contract also contained an arbitration clause whereunder all disputes and differences and/or claims arising out of and/or concerning and/or in connection with and/or in consequence of or relating to, the contract whether the contract has been terminated or purported to be terminated or completed were to be referred to the arbitration of the Bengal Chamber of Commerce under their rules for the time being in force.
On August 8, 1958 the appellants applied to the Jute Commissioner, Calcutta, for an import licence.
On August 19, 1958 the Administrative Officer refused to certify the licence on the ground that the appellants.
had sufficient stock to carry on their factory for some month& more.
On August 26, 1958 the Licensing Authority refused to issue the licence.
On November 29, 1958 the appellants requested the Jute Commissioner to certify the issue of a licence stating that by that time their stock had been considerably reduced.
On December 11, 1958 the Jute Commissioner refused to issue the licence and asked the appellants to meet their requirements from purchase of Indian jute.
The respondents thereafter by their attorney 's letter claimed damages from the appellants on the ground that the appellants had failed to furnish the licence pro vided by the contract.
The appellants disclaimed any liability under the said contract and thereupon the disputes between the parties were referred to the said Tribunal.
The Tribunal passed an award holding that the appellants failed to carry out their part of the contract and were liable to, pay damages assessed at Rs. 34,000/ and interest thereon.
Thereupon the appellants filed the said application to set aside the award.
In their said application, the appellants raised the following contentions; (a) that they could not be held to have committed breach of the contract as they had done all that could be expected of them to obtain the licence; (b) that owing to the intervening causes, in the present case a change in the policy of the Government, which the parties could not foresee when they entered into the contract, the contract became impossible of performance and that therefore under section 56 of the Contract Act the contract ought to have been treated ' as void and (c) that the arbitrators had no jurisdiction as the arbitration clause in the said contract perished along with the contract.
The respondents, on the other hand, denied that the performance of the contract became impossible, and asserted that in any event the appellants had taken upon themselves the absolute obligation to procure the licence and lastly that even if the contract was discharged by frustration, the arbitration clause would still survive as there would be disputes and differences between the parties as to whether (i) there was frustration and (ii) even if so, the consequences thereof they pleaded that the contract could not be construed to mean that an unilateral allegation by one of the parties hat there was frustration would put an end to the contract.
It would be for the Arbitrators to decide whether the said contract was discharged by frustration.
825 The learned Single Judge who heard the application found that the contract could not be said to have been discharged by frustration, that the arbitration clause was wide enough to include the dispute whether there was frustration or not, and that the arbitrators were competent to adjudicate such a dispute.
He also found in answer to the appellants ' allegation that the arbitrators were guilty of legal misconduct that the appellants had failed to prove any such legal misconduct.
The Division Bench who heard the appeal from the said order agreed with the learned Single Judge and,dismissed the appeal.
Hence this appeal.
Section 56 of the Contract Act inter alia provides that a contract to 'do an act which, after the contract is made becomes impossible, or by reason of some event which the promiser could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.
It also provides that where one person has promised to do something which he knew, or, with reasonable diligence might have known, and which the promisee did not know to be impossible or unlawful, such a promiser must make compensation to such promisee for any loss which such promisee sustains through the non performance.
As envisaged by section 56, impossibility of performance would be inferred by the courts from the nature of the contract and the surrounding circumstances in which it was made that the parties must have made their bargain upon the basis that a Particular thing or state of things would continue to exist and because of the altered circum stances the bargain should nolonger be held binding.
The courts would also infer that the foundation of the contract had disappeared either by the destruction of the subject matter or by reason of such long interruption or delay that the performance would really in effect be that of a different contract for which the parties had not agreed.
Impossibility of performance may also arise where without any default of either party the contractual obligation had become incapable of being performed because the cir cumstances in which performance was called for was radically different from that undertaken by the contract.
But the common law rule of contract is that a man is bound to perform the obligation which he has undertaken and cannot claim to be excused by the mere fact that performance has subsequently become impossible.
Courts in England have however evolved from time to time various theories to soften the harshness of the aforesaid rule and for that purpose have tried to formulate the true basis of the doctrine of discharge of contract when its performance is made impossible by intervening causes over which the parties to it had no control.
One of such theories is what has been called the theory of implied term as illustrated in F.A. Tomplin Steamship Co. Ltd. vs Anglo Mexican Petroleum Products Co. Ltd.(1) where Lord Lorebum stated: (1) 826 "A court can and ought to examine the contract and the circumstances in which it was made, not of course to vary, but only to explain it, in order to see whether or not from the nature of it the parties must have made their bargain on the footing that a particular thing or a state of things would continue to exist.
And if they must have done so, then a term to that effect would be implied; though it be not expressed in the contract".
He further observed: "It is in my opinion the true principle, for no court has an absolving power, but it can infer from the nature of the contract and the surrounding circumstances that a condition which was not expressed was a foundation on which the parties contracted. . .
Were the altered conditions such that, had they thought of them, they would have taken their chance of them, or such that as sensible men they would have said, "if that happens, of course, it is all over between us." The same theory in a slightly different form was expressed by Lord Watson in Dahl vs Nelson, Donkin & Co.(1) in the following words: "The meaning of the contract must be taken to be, not what the parties did intend (for they had neither thought nor intention regarding it), but that which the parties, as fair and sensible men, would presumably have agreed upon if, having such possibility view, they had made.
express provision as to their several rights and liabilities in the event of its occurrence.
" In the first case the term is a genuine term, implied though not expressed; in the second( it is a fiction, something added to the contract by the law.(2) It appears that, the theory of implied term was not found to be quite satisfactory as it contained elements of contradiction.
For, if the parties foresaw the circumstances which existed at the date of performance they would provide for them in the contract; if they did not, that meant that they deli berately took the risk and therefore 'no question of an implied term could really arise.
In Russkoe V. John Strik & Sons Ltd.(3) Lord Atkin propounded the theory of disappearance of the foundation of contract stating that he could see no reason why if certain circumstances, which the court would find, must have been contemplated by the parties as being of the essence of the contract and the continuance of which must have been deemed to be essential to the performance of the contract, the court cannot say (1) (2) Anson, Principles of the English Law of Contract, 22nd ed.
(3) [1922] 10 LI.L.R. 214 (quoted at p. 466 in Anson 's Law of Contract, 22nd ed.) 827 that when these circumstances cease to exist, the contract ceases to operate.
The third theory is, that the court would exercise power to qualify the absolutely binding nature of the contract in order to do what is just and reasonable in the new situation.
Denning L. J. in British Movietones Ltd. vs London and District ,Cinemas Ltd.(1) expounded this theory as follows: "Even if the contract is absolute in its term, nevertheless, if it is not absolute in intent, it will not be held absolute in effect.
The day is done when we can excuse an unforeseen injustice by saying to the sufferer.
"It is your own folly.
You ought not to have passed that form of words.
You ought to have put in a clause to protect yourself.
" We no longer credit a party with the foresight of a prophet or his lawyers with the draftsmanship of a Chalmers.
" This theory would mean that the Court has inherent jurisdiction to go behind the express words of 'the contract and attribute to the Court the absolving power, a power consistently held not to be inherent in it.
The House of Lords in the appeal from that decision [reported in discarded the theory.
In more recent times the theory of a change in the obligation has come to be more and more generally accepted.
Lord Radcliffe, the author of this theory, in Davis Contractors vs Fareham U.D.C.(2) formulated it in the following words: "Frustration ocours whenever the law reoognises that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would Tender it a thing radically different from that which was undertaken by the contract.
" It is not hardship or inconvenience or material loss which brings about the principle of frustration into play.
There must be a, ,change in the significance of obligation that the thing undertaken would, if performed, be a different thing from that which was ,contracted for.
These theories have been evolved in the main to adopt a realistic approach to the problem of performance of contract when it is found that owing to causes unforeseen and beyond the control of the parties intervening between the date of the contract and the date of its performance it would be both unreasonable and unjust to exact its performance in the changed circumstances.
Though none of them was fully accepted and the court construed the contracts coming before them applying one or the other of them as appearing to be more rational than the other, the conclusions arrived at were the same.
The necessity of evolving one 828 or the other theory was due to the common law rule that court& have no power to absolve a party to the contract from his obligation.
On the one hand, they were anxious to preserve intact the sanctity of contract while on the other the courts could not shut their eyes to the harshness of the situation in cases where performance became impossible by causes which could not have been foreseen and which were beyond the control of parties.
Such a, difficulty has, however, not to be faced by the courts in this country.
In Ganga Saran vs Ram Charan(1) this Court emphasized that so far as the courts in this country are concerned they must look primarily to the law as embodied in secs.
32 and 56 of the Contract Act.
In Satyabrata Ghose vs Mugneeram(2) also, Mukherjee J. (as he then was) stated that sec.
56 laid down a rule of positive law and did not leave the matter to be determined according to the intention of the parties.
Since under the Contract Act a promise may be expressed or implied, in cases where the court gathers as a matter of construction that the con tract itself contains impliedly or expressly a term according to which it would stand discharged on the, happening of certain circumstances the dissolution of the contract would take place under the terms of the contract itself and such cases would be outside the purview of sec.
Although in English law such cases would be treated as cases of frustration, in India they would be dealt with under sec.
In a majority of cases, however, the doctrine of frustration is applied not on the ground that the parties themselves agreed to an implied term which operated to release them from performance of the contract.
The Court can grant relief on the ground of subsequent impossibility when it finds that the whole purpose or the basis of the contract was frustrated by the intrusion or occurrence of an unexpected event or change of circumstances which, was not contemplated by the parties at the date of the contract.
There would in such a case be no question of finding out an implied term ;%greed to by the parties embodying a provision for discharge because the parties did not think about the matter at all nor could possibly have any intention regarding it.
When such an event or change of circumstances which is so fundamental as to be regarded by law as striking at the root of the contract as a whole occur$ it is the court which can pronounce the contract to be frustrated and at an end.
This is really a positive rule enacted in sec.
56 which governs such situations.
The question then is, was there a change in the policy of the Government of India of a total prohibition of import of Pakistan jute as contended by the appellants which was not foreseen by the parties and which intervened at the time of, performance and which made the performance of their stipulation to obtain a, (1) ; (2) ; 829 licence impossible? It is clear from the circulars produced during the trial that as early as March 1958 the Government of India had issued warnings that import of Pakistan jute would be permitted to the absolute minimum and that the jute mills should satisfy their needs by, purchasing Indian jute.
It appears that at the time when the parties entered into the contract the policy was to grant licences in the ratio of 5 : 1, that is, if an importer had bought 500 mounds of Indian jute he would be allowed a licence to import 100 mounds of Pakistan jute.
This policy is indicated by the Circular dated July 17, 1958 issued by the Indian Jute Mills Association to its members.
Such licences would be issued to mills who had stock of less than two months ' consumption.
As already stated, the appellants applied on August 8, 1958 for an import licence for 14,900 maunds and the Jute Commis sioner declined to certify that application on the ground that they held stock sufficient to last them for some months.
In November 1958, they applied again, this time stating that their stock had been reduced and in December 1958 they were told to buy Indian jute.
The said Circular appears to show that the Government had not placed a total embargo on import of Pakistan jute.
At any rate, such an embargo was not proved by the appellants.
It appears, on the contrary, from the documents on record that the policy of the Government was that the licensing authorities would scrutinize the case of each applicant on its own merit.
What is however important in cases such as the one before us is to ascertain what the parties themselves contemplated at the time of entering the contract.
That ' the appellants were aware that licences were not issued freely is evident by the provisions of the contract themselves which provide that if the appellants failed to furnish to the respondents the import licence in November 1958 the period of shipment was to be extended upto December 1958 and the price in that event would be enhanced by 50 nP.
The contract further provided that if the appellants were not able to furnish the licence by December 1958 they would pay damages at the market rate prevailing on January 2, 1959 for January February shipment goods.
These clauses clearly indicate that the appellants were conscious of the difficulty of getting the licence in time and had therefore provided In the contract for excusing delay from November to December 1958 and for the appellants ' liability to pay damages if they failed to procure it even in December 1958.
The contract, no doubt, contained the printed term that the buyers would not be responsible for delay in delivering the licence but such delay as therein provided was to be excused only if it occurred by such reasons as an act of God, war, mobilization etc., and other force majeure.
It is nobody 's case that the performance became impossible by reason of such force majeure.
As already stated when the appellants applied for the licence, the authorities refused to certify their application because they held at that time stock for more than 2 months.
It is therefore 830 manifest that their application was refused because of a personal disqualification and not by reason of any force majeure.
Since this was the position there is no question of the performance becoming impossible by reason of any change in the Governments policy which could not be foreseen by the parties.
No question also would arise of importing an implied term into the contract.
Assuming, however, that there was a change of policy and that the Government in the intervening period had decided to place an embargo on import of Pakistan jute the question would still be whether the appellants were relieved from liability for their failure to deliver the licence.
A contract is not frustrated merely because the circumstances in which it was made are altered.
The Courts have no general power to absolve a party from the performance of his part of the contract merely because its performance has become onerous on account of an unforeseen turn of events.(1) The question would depend upon whether the contract which the appellants entered into was that they would make their best endeavors to get the licence or whether the contract was that they would obtain it or else be liable for breach of that stipulation.
In a case falling under the former category, Lord Reading C.I. in Anglo Russian Merchants Traders vs John Batt & Co.(2) observed that there was no reason why the law should imply an absolute obligation to do that which the law forbids.
It was so said because the Court construed the contract to mean only that the sellers there were to make their best efforts to obtain the requisite permits.
As a contrast to 'such a case there are the cases of Pattahmull Rajeshwar vs K. C. Sethia(3) and Peter Cassidy Seed Co. vs Osuustickaanppa(4) where 'the courts have observed that there is nothing improper or illegal for a party to take upon himself an absolute obligation to obtain a permit or a licence and in such a case if he took the risk he must be held bound to his stipulation.
As Lord Sumner in Bank Lime Ltd. vs Capel (A) Co. Ltd.(5) said: "Where the contract makes provision (that is, full and complete provision, so intended) for a given contingency it is not for the court to import into the contract some other different provisions for the same contingency called by different name.
In such a case the doctrine of discharge by frustration cannot be available, nor that of an implied term that the existing state of (1) M/s Alopi Parshad & Sons vs Union of India ,0.6 793 at p. 808.
(2) (4) (3) [1951] 2 All.
E.R. 352.
(5) ; at p, 455.
831 affairs would continue at the date of performance.
The reason is that where there is an express term the court cannot find on construction of the contract an implied term inconsistent with such express term.
In our view, the provision in the contract that whereas the delay to provide a licence in November 1958 was to be excused but that the contract was to be settled at the market rate prevailing on January 2, 1959 if the appellants failed to deliver the licence in December 1958 clearly meant that the appellants had taken upon themselves absolutely the burden of furnishing the licence latest by the end of December 1958 and had stipulated that in default they would pay damages on the basis of price prevailing on January 2, 1959.
That being the position the defence of impossibility of performance or of the contract being void for that reason or that the court should spell out an implied term in the contract would not be available to them.
In the view that we take that the said contract cannot be said to be or to have been void and that in any event the stipulation as to obtaining the import licence was absolute, the question that the arbitration clause perished along with the contract and consequently the arbitrators had no jurisdiction cannot arise.
But assuming that the appellants had established frustration even then it would not be as if the contract was ab initio void and therefore not in existence.
In cases of frustration it is the performance of the contract which comes to an end but the contract would still be in existence for purposes such as the resolution of disputes arising under or in connection with it.
The question as to whether the contract became impossible of performance and was discharged under the doctrine of frustration would still have to be decided under the arbitration clause which operates in respect of such purposes.
(Union of India vs Kishorilal(1).
Mr. B. Sen for the appellants also raised two other questions, as to the legal misconduct on the part of the arbitrators and as regards interest on damages awarded by them.
We need not however say anything about these two questions as ultimately they were not pressed by him.
The last contention raised by him was that the arbitrators awarded damages on the basis of the market rate at Rs. 51 per maund instead of Rs. 65 which was the export price fixed by the Government of Pakistan.
The argument was that such a basis was contrary to the public policy laid down by the Government of Pakistan and it would not be expedient on our part to give our imprimatur to an infringement by the arbitrators of such a policy.
There is, in our view.
no merit in the argument.
The Government of Pakistan cannot lay down any public or economic policy for this country.
If the arbitrators found the prevalent rate 832 A on January 2, 1959 in Calcutta to be Rs. 51 a maund there can be no objection to their adopting that rate for adjudicating the quantum of damages.
The appeal fails and is dismissed with costs.
R.K.P.S. Appeal dismissed.

summary/full:
The appellant entered into a contract on July 7, 1958 with the respondent to purchase from him 2000 bales of jute to be imported from Pakistan.
The contract, inter alia.
provided that shipment of the consignment would be made; during August November, 1958, that the buyers would obtain the necessary import licence, that if they failed to obtain the licence by November 1958, the period of shipment would be extended upto December 1958 and that if it was not obtained by.
December 1958, the contract would be settled at the market price prevailing on January 24, 1959.
The contract also contained an arbitration clause hereunder all disputes under the con tract including the question whether the contract had been terminated or completed were to be referred to the arbitration of an Arbitration Tribunal.
The appellants applied to the Jute Commissioner on August 8 for an import licence but this was refused on the ground that the appellants had sufficient stock to carry on for some months more. 'They applied again on Nov ember 29, 1958 when their stock was reduced but the Jute Commissioner refused to issue the licence and ,asked them to meet their requirements from purchases of Indian jute.
The respondents thereafter claimed damages from the appellants on the ground that the appellants had failed to furnish, the import licence as provided in the contract.
The appellants disclaimed their 'liability and thereupon the 'disputes between the parties were referred to the Arbitration Tribunal.
The Tribunal passed an award holding that the appellants had failed to carry out their part 'of the contract and Were liable to pay damages to the respondent assessed at Rs. 34,000 and interest.
The appellants thereafter applied the High Court to set aside the award and contended (a) that they could not be held to have committed breach of the contract as they had done all that could be expected of them to obtain the licence; (b) that owing to the intervening causes, i.e., a change in the policy of the Government, which the parties could not foresee when they entered into the contract, the contract became impossible of performance and ought to have been treated as void under section 56 of the Contract Act; and (c) that the arbitrators had no jurisdiction as the arbitration clause in the said contract perished along with the contract.
A Single Bench of the High Court dismissed the application and an appeal to a Division.
Bench was also dismissed.
On appeal to this Court.
822 Held, dismissing the appeal: (i) The provision in the contract that whereas the delay to provide a licence in November 1958 was to be excused but that the contract was to be settled at the market rate prevailing on January 2, 1959 if the appellants failed to deliver the licence in December1958 clearly meant that the appellants had taken upon themselvesthe absolute burden of furnishing the licence, latest by the end of December 1958 and had stipulated that in default theywould pay damages on the basis of price prevailing on January 2,1959.
That being the position the defence of impossibility of performance or of the contract being void for that reason or that the court should spell out an implied term in the contract to that effect was not.
available to the appellants.
[832 B C].
Since under the Contract Act a promise may be express or im plied, in cases where the court gathers as a matter of construction that the contract itself contains impliedly or expressly a term according to which it would stand discharged on the happening of certain circumstances, the dissolution of the contract would take place under the terms of the contract itself and such cases would be outside the purview of section 56 Although in English law such cases might be treated as cases of frustration, in India they would be dealt with under section 32.
In a majority of cases, however, the doctrine of frustration is not applied on the ground that the parties had agreed to an implied term; the court grants relief under the positive rule enacted in section 56 by pronouncing the contract to be frustrated and at an end if it finds that the whole purpose or the basis of the contract was frustrated by the intrusion or occurrence of an unex pected event or change of circumstances which was not contemplated by the parties at the date of the contract.
In such cases there would be no question of finding an implied term embodying, a provision for discharge because the parties did not think about the matter at all nor could possibly halve an intention, regarding it.
Case law reviewed.
[829 C G].
Even if the appellants had established frustration, it would not be as if, the contract was ab initio void.
In cases of frustration it is the performance of the contract which comes to an end but the contract would still be in existence for purposes such as the resolution of disputes arising under or in 'connection with it: and the question whether the contract was discharged under the doctrine of frustration would still have to be decided under the arbitration clause which operates in respect of such purposes.
[832 E], Union of India vs Kishorilal, , referred to.
(ii) If the arbitrators awarded damages on the basis of the market, price prevalent in Calcutta on January 2.
1959, there Could be no objection to their adopting that Irate for adjudicating the quantum of damages on the ground that such a basis was contrary to the public policy laid down by the Government of Pakistan.
[832 H]