CENTRAL UNIVERSITY OF SOUTH BIHAR

CASE-STUDY
Pannalal VS Deputy Commissioner,Bhandara
AIR 1973 SC 1174

Submitted To Course Instructor Submitted By Student

Amitesh-Tejaswi
Dr. Pradip Kumar Das
BA.LLB.(Hons)
Assistant Professor, Law
IInd Semester
School Of Law And Governance
Enrollment No. CUSB1613125060
Subject- Contract-I
Continuous Assessment-II

Page | 1
 INDEX
 Details of the case…………………...………………………………Page-3

 Introduction of the case…………………………….………………Page-4

 Facts of the case……………………..…….…….…………...Page-5 and 6

 Issue of the case………………………….…..…..…………..………Page-7

 Judgment of the case……………………………..………..…Page-7 and 8

 Ratio of the Case………………………………………………………Page-

 Conclusion………..…………………..………………………………Page-8

 Critical-Analysis………………..……………………………………Page-8

Page | 2
 DETAILS OF THE CASE

1) Name of the case:- Pannalal vs Deputy Commissioner, Bhandara.

2) Citations:- AIR 1973 SC 1174.

3) Case decided on a date:- 23rd February 1973.

4) Appellants:- Pannalal

5) Respondents:- Deputy Commissioner, Bhandara And anothers

6) Hon’ble Judges:- A. Alagiriswami Justice, C.A. Vaidialingam Justice and I.D. Dua
Justice.

Page | 3
INTRODUCTION OF THE CASE:- The case is concern with the matter
related to the “obligation of person enjoying benefit of non-gratuitous act” which is
well defined in section 70 of Indian Contract Act,1872 and also related to the
matter of Order 41, Rule 33 of the Civil Procedure Code, 1908. In this case,
appellants is Pannalal who filed a suit against a Deputy Commissioner, Bhandara
i.e. Mr. Tiwari, Dispensary Fund Committee and as well as State Government and
they were made as respondents. In this case, Pannalal entered into a contract for a
work done in respect of three hospitals and for a his work he has to paid certain
amount by the Deputy Commissioner, Bhandara who entered into a contract on the
behalf of the State Government. But Pannalal did not received amount by the
Deputy Commissioner, Bhandara. So, he filed the suits against the Deputy
Commissioner, Bhandara i.e. Mr. Tiwari.
The suit was filed by the Pannalal (appellants) to the Deputy Commissioner,
Bhandara i.e. Mr. Tiwari, Dispensary Fund Committee and State Government
(respondents) in the District Court of Bhandara. The court decreed the suit against
the State Government alone and the amount were decreed. Later the State
Government took the matter to the appeal of the High Court of Judicature at
Nagpur. But at the time appeal came in hearing Bhandara District became a part of
Maharashtra. Then, the case was appeal in the High Court of Bombay and it was
dismissed on a certain grounds of CPC, 1908.

Then, this case was decided by the Supreme Court. The Hon’ble Court observed
the consequences of the case and delivered the judgment that the appellant must
get the full amount as it was decided in the contract and carry the interest at 6
percent from the date of realisation.

Page | 4
FACTS OF THE CASE:- In December 1943, Mr. Pannalal (appellants)
entered into a contract with Deputy Commissioner, Bhandara i.e. Mr. Tiwari
(respondents) for the work of additions and alterations to three hospitals Kunwar
Tilak Singh Hospital at Gondia, Bai Gangabai Hospital at Gondia, Twynam
Hospital at Tumsar all these three hospitals were located in Bhandara district, then
in the state of Madhya Pradesh and now it is in the state of Maharashta. To Mr.
Pannalal has to paid certain amount for his work done towards these three
hospitals. But he did not received the amount how much it was decided in the
contract. So he claims for the balance of the amounts due in respect to the contract.
Mr. Pannalal (appellants) filed three suits (Civil Suit No. 1-B of 1948 for Rs
12,000/- Civil Suit No. 2-B of 1948 for Rs 31,028/- and Civil Suit No. 3-B of
1948 for Rs. 21, 381/- ) against the Deputy Commissioner, Bhandara.
In two of the suits the appellant made the respondents to the State Government,
Deputy Commissioner, Bhandara and the Dispensary Fund Committee. In one of
the suit he made the respondent State Government, the Deputy Commissioner, the
Municipal Committee of Gondia. The trial court decreed the suits against the State
Government alone. The amounts decreed were Rs. 8,214/- in Civil Suit No. 1-B of
1948, Rs. 19,298/- Civil Suit No. 2-B of 1948 and Rs. 12,765-15-0 Civil Suit No.
3-B of 1948 and these were interest to be carry in past and future.
The State Government took the matter on the appeal to the High Court of
Judicature at Nagpur. While at the time of the appeals came up for hearing
Bhandara district became a part of the State of Maharasthra. So the case decided in
the High Court of Bombay and it was filed by the State Government.
The Hon’ble High Court of Bombay declined to exercise its powers under Order
41, Rule 33 of Civil Procedure Code,1908 against the other defendants and
however the suit was dismissed. Then, the matter was then solved by the Supreme
Court Of India.
The contract was in standard PWD form and the rate was also in PWD schedule
rates as regard to the amount due. There had been increased in PWD schedule rates
by 50% in August 1943 and subsequently on 22 January 1944 the PWD rate were
again raised by 20%. So the appellant claimed for Tumsar Hospital Rs. 76456-2-6
in which the total cost calculated according to the agreement rates worked out to
Rs. 53820-0-0 out of which he had already been paid Rs. 53,641-8-0, the appellant
claimed for Kunwar Tilak Singh Hospital Rs. 28906-8-0 in which the total cost
according to the agreement Rs. 20798 out of which he had already been paid Rs.

Page | 5
20,058-4-0 and the appellant claimed for Gangabai Hospital Rs. 59598 in which
the total cost calculated according to the agreement rates was Rs. 44099 out of
which he had already been paid Rs. 45477.
The counsels of respondents delivered the evidence in the court that the Deputy
Commissioner, Bhandara i.e. Mr. Tiwari entered into the agreement on behalf of
the Goinda Municipal Committee and the Dispensary Fund Committee and not in
his personal capacity or in his capacity as Deputy Commissioner and that the idea
was that the funds will be forth coming if he singed the agreement and the work
will done more readily.
The counsels of the appellants delivered the evidence that; The Madhya Pradesh
Medical Manual Part IV , Chapter XXVII relates to classifications of hospitals and
dispensaries. Clause 365 classifies the hospitals under six categories; Government,
Municipal, District Council, Dispensary Fund, Private and Missionary.
Clause 370 states that the financial control of hospitals and dispensaries, is vested
in Dispensary Fund Committees and their management in the Civil Surgeon.
Clause 385 states that the Constitution of the committee of management of
dispensaries under the management of the Dispensary Fund Committees. This
Committee is composed of representatives of the following classes; The Civil
Surgeon, Government officials, Representative of local bodies which contribute
towards the funds, Representatives of the subscribers and Nominated non-officials.
The Constitution of the committee laid down the Deputy Commissioner and he
has to nominated members of class (b) and (e) and the local bodies of class (c) and
members of class (d) were to be elected in the manner prescribed by the Deputy
Commissioner.
The position of the Deputy Commissioner is also very clear from the evidence of
Dr. Kalay, Civil Surgeon, Bhandara to the effect that the Deputy Commissioner is
the administrative head of all the departments of the District, and in his capacity as
such is the person looking after the affairs of these hospitals well and that the
Dispensary Fund Committee becomes the owner of the hospital after it is
constructed and handed over.

Page | 6
ISSUE OF THE CASE:- These three suits were considered with the issue to
determine whether that the what amount is due and are the Municipal Committee
of Gondia and the State of Maharashtra liable either on the basis of the contracts or
under Section 70 of the Contract Act, 1872.
JUDGEMENT OF THE SUPREME COURT:- Justice A.Alagiriswami,
Justice C Vaidialingam and Justice I Dua said that after hearing the learned counsel
for the parties and on perusal of the record , I am of the view that what section 70
prevents is unjust enrichment and it applies to Government the same principle
applies to contracts with statutory corporations, local authorities, where the
contract did not comply with the formalities prescribed by the statues governing
them.
The learned judges stated reasons for that these are as follows:
The learned judges said that the case is on the basis of Section 70 of the Contract
Act and it would be a fair way of assessing the benefit obtained by the defendants
to award the appellant 20% of amount calculated according to the agreement.
These things were already mentioned in a contract.
The learned judges also remarked that it is conceivable that the Deputy
Commissioner took the entire responsibility on his own shoulder and went on with
the work in an informal way.
The learned judges stated that Deputy Commissioner i.e. Mr. Tiwari entered into
the contracts on behalf of the Dispensary Fund Committees and the Municipal
Committee of Goinda, statues usually lay down the formalities to be observed in
entering into contracts on their behalf and there is nothing to show that these
formalities were observed. Therefore, the contract may not, be binding on it.
The learned judges also refer to the decision of the other cases i.e. State of West
Bengal vs B.K. Mondal (1962) 1 SCR (Supp.) 876. In this case respondent
constructed Kutcha Road , guardroom, office, Kitchen and storage sheds at the
request of some officers of the appellant, i.e., the State of West Bengal for the use
of the Civil Supplies Department of the Government. The respondent claimed for
Rs. 19,325 for his works. The court held that the contract was illegal and it does
not follow that the contractor has done anything not lawful. The court also said that
real basis of the liability under section 70 is that the person for whom the work
done has been done, has accepted the work and has received the benefit thereunder
and that what sections 70 prevents is unjust enrichment and it applies as much to

Page | 7
individuals as to corporations and Government. Therefore, Section 70 to the pay
for the same.
The learned judges also refer to the case Piloo Sidhwa vs Municipal Corp. in which
the decision was that the market price was taken as a proper indication of
compensation under section 70 and interest was awarded.
The Hon’ble Court gave the above reason and held that the Government of India
derived benefit from the transaction and that it was liable to pay to appellant. On
the grounds that the liability under Section 70 is the fact that the person for whom
the work has been done, has accepted the work and has received the benefit there
under and what Section 70 prevents is unjust enrichment and it applies as much to
as to Corporations and Government.
RATIO OF THE CASE:-
CONCLUSION:- In the present case, the appellant has entered into a contract
done in a certain work of additions to the three hospitals in a Bhandara District by
the respondent. The appellant did the worked but did not received the amount as
decided in the contract. Then appellant filed the suit and made the respondent
Deputy Commissioner, Bhandara , State Government, Dispensary Fund
Committee. The Hon’ble Supreme Court of India made the respondent liable on
the ground of Section 70 under Indian Contract Act,1872.
Section 70 prevents is unjust enrichment, and it applies Government, the same
principles applies to contracts with statutory corporations, local authorities, where
the contract did not comply with the formalities prescribed by the statues
governing them.
CRITICAL-ANALYSIS:- In the view of decision of above case and
considering the relevant provision of law and the judicial decision. I am in the
opinion of the Supreme Court of India that it has done fair decision. That the
respondent is bound to pay to the appellant on the grounds of Section 70 of the
Indian Contract Act, 1872 which clearly says that the obligation of person enjoying
benefit of non-gratuitous act. Its clear meaning is that when a person does anything
for the another person, or delivers anything to him, not intending to do so
gratuitously and such other person enjoys the benefits thereof the latter is bound to
make compensation.

Page | 8
*************

Page | 9