The National Law Institute University,

Bhopal
Case Analysis of
State of West Bengal v. B.K. Mondal and Sons.
1962 AIR 779

submitted by
Shriyadita Srivastava
Roll Number: 2020BALLB 100
Enrolment Number: A2273

Semester I
B. A. LL. B. (Hons.)

submitted to
Prof. Neha Sharma
Law of Contracts

Date of submission: 31/1/2020

 ACKNOWLEDGEMENT

I extend my sincere gratitude to Prof. Neha Sharma for providing me an

opportunity to work on this case analysis of “State of West Bengal v. B.K.
Mondal and Sons 1962 AIR 779”. I express my thankfulness to her for taking a
keen interest in the project and providing constant encouragement along with
constructive criticism at every stage of the same.
I am also thankful to my family for their relentless support in every way
possible.

DECLARATION

I, Shriyadita Srivastava, D/O Maj Gen Sharad Kumar Srivastava Roll

Number 2020BALLB 100 Enrolment Number A-2273 do hereby declare that
this Case Analysis of “State of West Bengal v. B.K. Mondal and Sons 1962
AIR 779” is an outcome of my own independent research endeavour and has
been carried out under the guidance of Prof. Neha Sharma. Literature relied on
by me for the purpose of this Project has been fully and completely
acknowledged in the footnotes and bibliography. The Project is not plagiarized
and all reasonable steps have been taken to avoid plagiarism. Similarity Index
as per the Turnitin Report is____%. In case, my project is found to be
plagiarized, the course teacher shall have the full liberty to ask me to revise the
Project. If I fail to comply with the instructions of the teacher, my project may
be referred to the Committee Against Use of Unfair Means and I will comply
with the decision of the said Committee.

2
 TABLE OF CONTENTS

 Name of the Case and Citation ……………………..………................... 4

 Size of the Bench …………………………………………….................. 4
 Name of the Judges ………………………………………...................... 4
 Nature of the Judgement…………………………………….................... 4
 Name of the Judges who Delivered the Opinion.….................................. 4
 Advocates on behalf of the Appellant …………….................................. 4
 Advocates on behalf of the Respondent ………………..................……. 4
 Amicus Curiae and Interveners…………………………..................…... 4
 Background to the Case…………………………………......................... 5
 Material Facts of the Case……………………………...…….................. 6
 Questions Raised before the Court ………………………..................…. 7
 Arguments Advanced by the Appellant………........................................ 8
 Arguments Advanced by the Respondent…………………………….... 9
 Arguments Advanced by the Amicus Curiae/ Interveners. 9
……………....
 Articles of the Constitution Related to the Case ...................................... 10
 Provisions of Statutes, Regulations, Notifications, etc Related to the 10
Case…………………………………………………..………………….
 Doctrines/ Theories Invoked in the Judgement ………………………… 14
 Books, Articles and Other Literature Cited in the Judgement …….……. 15
 Case Laws Cited in the Judgement….…………………………..... 16
……...
 Majority Opinion and Separate but Concurrent Opinion……….....….... 22
 Judgement in Parsonam …………………………….…......................…. 24
 Judgement in 25

3
 Rem………………………………………………………..
 Conclusion ………………………………………………........................ 27
 Bibliography ………………………………………………………..…... 28

NAME OF THE CASE

State of West Bengal v. M/S. B.K. Mondal and Sons

CITATION
1962 AIR 779
Equivalent Citation: 1962 SCR Supl. (1) 876

NAME OF THE JUDGES

Justice Pralhad Balacharya Gajendragadkar
Justice Amal Kumar Sarkar
Justice Kailas Nath Wanchoo
Justice Kulada Charan Das Gupta
Justice N Rajagopala Ayyangar

NATURE OF THE JUDGEMENT

Separate but Concurring Opinion

NAMES OF THE JUDGES WHO DELIVIRED THE OPINION

The judgement of P.B. Gajendragadkar, K.N. Wanchoo and N.R. Ayyangar, JJ was delivered
by delivered by P.B. Gajendragadkar, J.
The judgement of A.K. Sarkar and K.C.D. Gupta was delivered by A.K. Sarkar, J.

ADVOCATES ON BEHALF OF THE APPELLANT

B. Sen
P.K. Chatterjee
P.K. Bose

ADVOCATES OF BEHLAF OF THE RESPONDENT

N.C. Chatterjee
A.N. Sinha

4
 P.K. Mukherjee

AMICUS CURIAE AND INTERVENERS

Not Applicable

BACKGROUND TO THE CASE

The first appeal was filed at the Trial Court by the Respondents, B.K. Mondal and Sons
against the state of West Bengal for the non-payment of construction works worth Rs.19,325
done by the Firm, on the request of some government officials.

The Trial Court judge, Justice G.K. Mitter heard the appeal and decreed in favour of the
Respondent, i.e., B.K. Mondal and Sons for the amount claimed by them on the basis of the
following consideration:

1. There was no valid and binding contract between the parties for the works in question
2. The Respondents’ claims were valid under Section 70 of the Indian Contract Act
3. The “claim was not barred by limitation”
4. The liability of the Appellant (state of West Bengal) had not devolved under the
Indian Independence (Rights, Property and Liability) Orders 1947.
5. “Section 65 of the Indian Contract Act did not apply to the facts of the case”,
disallowing the state to escape liability.

The appellant i.e., the State of West Bengal disagreed with the findings of the Trial Court and
appealed to Calcutta High Court under the civil appellate jurisdiction of the same. The appeal
was heard by Justice S.R. Dasgupta and Justice Bachawat, who delivered a separate but
concurring opinion, largely agreeing with the findings of the Trial Court. The state disputed
the validity of the judgement and applied for a certificate to appeal in the Supreme Court. The
High Court rejected the application. Therefore, the state applied for a special certificate to be
heard in the Supreme Court. The special certificate was granted by the Supreme Court,
leading to this judgement, which forms the subject matter of this project.

5
 MATERIAL FACTS OF THE CASE

1. On 8 February 1944, B.K. Mondal and Sons offered to construct some godowns for
temporary storage at Arambagh district, Hooghly for the Civil Supplies Department,
West Bengal. The offer was accepted by them via a letter dated 12 February 1944.
Accordingly, the firm proceeded to complete the work and submitted its bill of Rs.
39,476, which was duly paid by the department in July 1944.

2. On 7 April 1944, the Sub-Divisional Officer of Amarbagh requested the Respondent

to submit an estimate for the construction of a room for clerks, a kutcha road, a
kitchen, guard room and an office for the Department of Civil Supplies, Amarbagh.
The Respondents acted accordingly and on April 20 1944, the Additional Deputy
Director of the Department instructed them to proceed with the work. The
respondents completed the work and submitted the bill for the same on 27 April 1944,
worth Rs. 2322.

3. On 18 April 1944, on the instructions of the Sub-Divisional Officer, Arambagh, the

Assistant Director of the Department directed the Respondent to construct storage
sheds at Khanakul, via a letter dated 18 April 1944. Like in the past, the Respondent
finished the said work and submitted the bill for Rs. 17,003 afterwards.

4. The bills for the works at Arambagh and Khanakul, worth Rs. 2322 and 17,003
respectively, total amounting to Rs. 19,325 were not paid by the Appellants to the
Respondents.

6
 QUESTIONS RAISED BEFORE THE COURT

The Court was faced with the following questions of law, questions of fact and mixed

questions of law and fact in this case.

1. Was there a valid and binding contract between the state of West Bengal and B.K.
Mondal and Sons, under Section 175(3), Government of India Act, 1935? [Mixed
Question of Law and Fact]

2. Are the provisions of Section 175(3), Government of India Act, 1935 merely directory
or obligatory? [Question of Law]

3. Did the act of the firm meet all three conditions of Section 70, Indian Contract Act,
i.e., if the act was done lawfully, non-gratuitously and the government had enjoyed
the benefits, making the Respondents eligible for compensation under this section?
[Mixed Question of Law and Fact]

4. Can the government be held liable to pay compensation under Section 70 of the
Indian Contract Act or can it escape liability by saying that it holds the same position
as a minor in this regard? [Question of Law]

5. If the government can be held liable under Section 70, would it amount to
contradicting the provisions Section 175, GOI Act, 1935? Alternatively, is an act
declared invalid by Section 175, GOI Act 1935 eligible for compensation under
Section 70, ICA keeping in mind its condition for “lawfulness” of the act? [Question
of Law]

7
 6. If there was any scope to observe a tacit promise by the officers to pay personally in
this case? [Question of Fact]

ARGUMENTS ADVANCED BY THE APPELLANT (State of West

Bengal)

1. The government contended that the requests on which the Respondent had undertaken
the work were invalid and unauthorized and did not constitute a valid and binding
contract or under Section 175(3) of the government of India Act, 1935 and there was
no privity of contract between the two parties. The provisions of the section are not
merely directory but obligatory.
2. They denied to pay any part of the claim of Rs. 19,325 made by the Respondent and
argued that recognition of this claim amounts to circumvention and contradiction of
Section 175(3) by treating an invalid contract as valid.
3. Citing the English precedent, Lamplrigh v. Brathwaite1, the advocates of behalf of the
government contended that considering provisions of a statute to be merely directory
rather than obligatory amounts to repealing the provisions, which have been made in
public interest.
4. Section 70 says that the act must be “lawful.” The appellants’ advocates offered an
interpretation of the same in the light of Section 23 of the Indian Contract Act and
contended that “a thing cannot be said to have been lawfully done if the doing of it is
forbidden by law.” They contended that the act of the respondents was invalid under
Section 175(3) of the Government of India Act, 1935, thereby making it unlawful and
ineligible for compensation under Section 70.
5. When an agreement is not made in compliance with the provisions of Article 175(3)
of the Government of India Act, 1935, it leaves the state in the same position of
incompetency to contract as a minor. Thus, if minors are outside the purview of
Section 70, so should be the State.
1
80 ER 255
8
ARGUMNENTS ADVANCED BY THE RESPONDENT (B.K. Mondal
and Sons)

1. No particular arguments have been advanced by the respondents in this case.

However, in the original appeal filed by them, they contended that the construction
works had been done by them under the terms of a contract, making the state liable to
pay for the breach of the same. Alternatively, if the agreement was invalid then they
should be compensated under Section 70 of the Indian Contract Act as the work had
been done lawfully, non-gratuitously and its benefits had been accepted and enjoyed
by the government.

2. The contract cannot be held invalid as Section 175(3) of the Act provides that “all
contracts made in the exercise of the executive authority of a province shall be
expressed to be made by the Governor of the Province and all such contracts made in
exercise of that authority shall be executed on behalf of the Governor by such person
and in such manner as he may direct or authorise.” Relying on the judgement of the
court in Chattubhuj Vithaldas case2, the advocates on behalf of the Respondent argued
that the provisions of the Section are not obligatory and that non-compliance with the
same may lead to the government not being bound by the contract but it does not
amount to the contract being void and ineffective if the contract was for the benefit of
the government.

CONTENTIONS ADVANCED BY AMICUS CURIAE/INTERVENERS

Not Applicable

2
Chatturbhuj Vithaldas Jasani vs Moreshwar Parashram And Others 1954 AIR 236
9
 ARTICLES OF THE CONSTITUTION RELATED TO THE CASE

1. Article 299(1) of the Constitution of India

“Contracts.—(1) All contracts made in the exercise of the executive power of the
Union or of a State shall be expressed to be made by the President, or by the
Governor of the State, as the case may be, and all such contracts and all assurances
of property made in the exercise of that power shall be executed on behalf of the
President or the Governor by such persons and in such manner as he may direct or
authorise.”

This Article of the Constitution, along with the provisions of the Indian Contract Act
governs all government contract. All contracts, including tenders, offers, acceptance,
etc must be made in the name of the President or Governor of the concerned state.

PROVISIONS OF STATUTES, RULES, REGULATIONS AND

NOTIFICATIONS RELATED TO THE CASE
1. Indian Contract Act, 18723

 Section 23
“What considerations and objects are lawful, and what not.—The consideration or
object of an agreement is lawful, unless—
 it is forbidden by law, or
 is of such a nature that, if permitted, it would defeat the provisions of any law;
or
 is fraudulent, or
 involves or implies, injury to the person or property of another, or
 the Court regards it as immoral, or opposed to public policy.
In each of these cases, the consideration or object of an agreement is said to be
unlawful. Every agreement of which the object or consideration is unlawful is void.”

3
Act No. 9 of 1872
10
 The appellants argued that the acts of the respondent were against Section 175(3)
Government of India Act, 1935, hence rendering them unlawful under Section 23,
ICA and therefore, ineligible for compensation under section 70, ICA.

 Section 64
“Consequences of rescission of voidable contract.—When a person at whose option a
contract is voidable rescinds it, the other party thereto need not perform any promise
therein contained in which he is promisor. The party rescinding avoidable contract
shall, if he have received any benefit thereunder from another party to such contract,
restore such benefit, so far as may be, to the person from whom it was received.”

The section was cited to explain the position of minors in reference to contracts. The
Mohori Bibi judgement4 clearly stated that Section 64 and 65 of the Indian Contract
do not apply to minors. The appellants claimed that the government is in the same
position of incompetency to contract as minors in case the contract is not made in
accordance with the provisions of Article 175(3) GOI Act. Hence, it should also be
given the same exemption as minors.

 Section 65
“Obligation of person who has received advantage under void agreement, or contract
that becomes void.—When an agreement is discovered to be void, or when a contract
becomes void, any person who has received any advantage under such agreement or
contract is bound to restore it, or to make compensation for it to the person from
whom he received it.”

The respondents used this section to contend for their claim for compensation but the
court held that this “section did not apply to the facts of the case, so the finding on
this point was in favour of the appellant.” Rightly so, as this section applies to the
cases where the contract becomes subsequently void but here, there was no contract in
the first place.

 Section 70
4
Mohori Bibee vs Dharmodas Ghose (1903) ILR 30 Cal 539 (PC)

11
 “Obligation of person enjoying benefit of non-gratuitous act.—Where a person
lawfully does anything for another person, or delivers anything to him, not intending
to do so gratuitously, and such other person enjoys the benefit thereof, the latter is
bound to make compensation to the former in respect of, or to restore, the thing so
done or delivered1 .
Illustrations (a) A, a tradesman, leaves goods at B‟s house by mistake. B treats the
goods as his own. He is bound to pay A for them.”
This section was part of the main argument of the respondents towards its claim for
compensation. The Court held that the following 3 conditions must be met in order to
claim compensation under the same
 The delivery of goods and services should be done lawfully
 It must be done non-gratuitously
 The receiving party must voluntarily accept and enjoy benefits of the said act.

The court ruled that all the above three conditions had been satisfied in this case,
hence, the respondent’s claims could be decreed under section 70.

The case also deals with multiple issues surrounding the section, such as, if
government can be subjected to the same (it was held that it can be) and if so, would it
lead to contravention of “Section 175(3) Government of India Act, 1935”, etc. The
judge has also cited the first illustration under the section to aid in better interpretation
of the section.

2. Section 175(3) Government of India Act, 1935

“Subject to the provisions of this Act with respect to the Federal Railway Authority,
all contracts made in the exercise of the executive authority of the Federation or of a
Province shall be expressed to be made by the Governor-General, or by the Governor
of the Province, as the case may be, and all such contracts and all assurances of
property made in the exercise of that authority shall be executed on behalf of the
Governor-General or Governor by such persons and in such manner as he may direct
or authorise.”
The section provided the requisites for a government contract to come into existence.
It was enacted with an aim to safeguard the government from the burden of liability
from authorised acts. In the case, one question was whether a contract existed
between the state and the respondent under this section and the second was if this
section was merely directory or obligatory.

12
FOREIGN STATUTES
1. Public Health Act, 1875
2. Local Government Act, 1933
3. Corporate Bodies Contract Act

These acts have been mentioned by the court to trace the evolution of reduction in rigidity to
comply by specific requirements to form a government contract in the United Kingdom.
Initially, the Public Health Act required strict compliance with the provisions for a
government contract to come into existence. This was replaced by the Local Government
Act, which provided that local authorities or committees appointed by it could enter into
contracts through a regulated procedure, involving notice of invitation followed by tender,
etc. Even if this was not followed but the contract was otherwise valid, the contract would
have full force and effect. Next came the Corporate Bodies Contract Act, which provided that
a contract between a corporate body and private person should be in writing, signed by the
parties and that any person acting under the authority of the corporate body could sign,
expressly or impliedly. It further said that a contract made by parole only, by any person
acting under the authority of the corporate body expressly or impliedly will also be valid and
binding on all parties involved. Eventually, the “rigorous requirement” for contracts to be
made under the seal has become obsolete.

13
 DOCTRINES AND THEORIES INVOKED IN THE JUDGEMENT

1. Privity of Contracts

“The doctrine of privity of contract is a common law principle which provides that
a contract cannot confer rights or impose obligations upon any person who is not a
party to the contract.”5 The English case “Tweedle v. Atkinson”6 gave birth to the
concept. The India Judiciary, however, unlike English law, recognises the “rights of
third-party beneficiaries”7
It was argued by the advocates on behalf of the appellants that there was no privity of
contract between the state and the respondents. Therefore, the state did not have any
liability to pay the amount being claimed by the respondent.

5
‘Privity of Contract’ (Wikipedia, 9 June 2013) <https://en.wikipedia.org/wiki/Privity_of_contract> Last
Accessed 25 January 2021
6
(1861) 1 B&S 393
7
Priyesh Sharma, ‘Treatment of Dontrine of Privity by Indian Judiciary’ (mondaq, 11 June 2013)
<https://www.mondaq.com/india/contracts-and-commercial-law/243778/treatment-of-doctrine-of-privity-by-
indian-judiciary> Accessed 25 January 2021
14
 2. Unjust Enrichment

When a person unjustly enriches at the expense of another, the other should make a
restitution for the same. Simply put, when a person gains at the loss of another, he
should reimburse or recompense an amount equal to the benefits gained. The origin of
this doctrine can be traced in the Roman Law maxim, “nemo locupletari debet cum
aliena iactura”, meaning, “no one should be benefited at another's expense.” “In
India, the doctrine of unjust enrichment is codified in enactments such as the Contract
Act, 1872 (Sections 68-72), the Central Excise and Customs Law (Amendment) Act,
1991”8 and further developed by judicial pronouncements over the years.

The whole case revolves around unjust enrichment of the state at the loss of the
respondents. The state voluntarily accepted and enjoyed the benefits of the
construction done by the respondents but refused to pay for the same afterwards, thus
unjustly enriching at the loss of the respondent.

BOOKS, ARTICLES AND OTHER LITERATURE CITED IN THE

The following books have been cited by Justice A.K. Sarkar in the concurring but separate
opinion presented by him on behalf of Justice K.C.D Gupta and himself.

1. “Pollock on Contracts (13th Edition)”9

The following example has been highlighted from the book to illustrate tacit promise.
“The passenger who steps into ferry-boat thereby requests the ferryman to take him
over for the usual fee”10
The judge says that there wouldn’t be much difference if the man gets into the ferry
and asks the ferryman to take him across, without mentioning anything about the
renumeration as the man would be making a ‘tacit promise’ to give the fare even
without expressly saying so.

8
Madhu Sweta, ‘Unjust Enrichment in India- An Introspection’ (mondaq, 3 August 2018)
<https://www.mondaq.com/india/contracts-and-commercial-law/725214/unjust-enrichment-in-india-an-
introspection> Accessed 25 January 2021
9
Sir Frederick Pollock, The Principles of Contract (London, 9th Edition, Stevenson and Sons, 1921)
10
ibid 9
15
 2. “Cheshire and Fifoot’s Law of Contracts”11
In reference to the above example, the Judge says that the inference of how and when
this tacit promise comes into existence is based on reasonableness, experience, and
knowledge of the business to the parties involved, rather than any rigid legal
principles. Hence, it is a question of fact and not a question of law. The same has
been expressed by quoting the following passage from the book.

"It would be ludicrous to suppose that businessmen couch there communications in

the form of a catechism of reduce their negotiations to such a species of interrogatory
as was formulated in the Roman stipulatio. The rules which the Judges have
elaborated from the promise of offer and acceptance are neither the rigid deductions
of logic nor the inspiration of natural justice. They are only presumption, drawn from
experience, to be applied in so far as they serve the ultimate object of establishing the
phenomena of agreement."12

CASE LAWS CITED IN THE JUDGEMENT

1. Bankey Bihari Prasad v. Mahendra Prasad13

This suit arose out of an appeal by the plaintiff to recover the money spent by the him
on the repair of a pyne which served the interests of the defendant as well, under
Section 70 of the Indian Contract Act. One of the defendants in this case was a minor.
In freeing the minor defendant from the liability, the court held that Section 70 could
not be applied to minors.14
The appellants argued that in case the requirements of Section 175(3), Government of
India Act, 1935 are not fulfilled, the government is left in the same position as a
minor. Therefore, following from this given judgment, the state should also not be
held liable to pay compensation under Section 70 of the Indian Contract Act, 1872.

11
Cheshire, Fifoote and Frumston, Law of Contract (14th Edition, OUP 2001)
12
ibid 30
13
1940 AIR PAT 324
14
‘Bankey Behari Prasad v. Mahendra Prasad’ (Casemine)
< https://www.casemine.com/judgement/in/56e103bb607dba389660eb45> Accessed 25 January 2021
16
 2. Chatturbhuj Vithaldas Jasani vs Moreshwar Parashram And Others15
This case deals with the decision of the Nagpur Election Tribunal to set aside the
Parliamentary Constituency election for Bhandara, held over 5 days in December
1951-January 1952. It involves multiple issues regarding the disqualification/
withdrawal of 13 candidates which had led to the setting aside of the election.
However, the portion relevant to this case is the disqualification of Chaturbhuj Jasani.
He was a partner in Moolji Sicka and Company, a bidi manufacturing firm which had
an arrangement with the government to manufacture and stock bidis for the troops.
The question was whether their arrangement to supply the bidis amounted to a
contract under Article 299 of the Constitution. In case it did, the disqualification of
the candidate was justified under Section 7(b) Representation of People Act. The
court held that even though the contract had not been formed by following the exact
from, required to be followed under Article 299, this was only a technical defect and
both the parties had acted under the assumption that the exchange was intended for
the benefit of the government. It would be disastrous to hold that government officers
cannot contract orally or through correspondence to enable the day to day functioning
of the government, unless each petty contract is couched in the particular format
prescribed by law. Hence, even if the contract in this case was not enforceable against
the government, it was not void and enough to disqualify Chaturbhuj Jasani under
Section 7, RPA.16
The point of significance in this judgement was that non-compliance with the
requirement of Section 299 to form a contract with the government made the
agreement non-enforceable against the government but the court did not declare such
an agreement void.

3. Chedi Lal v. Bhagwan Das17

In this case, Justice Straight made an observation regarding the construction of

Section 70 of the Indian Contract Act, as quoted below.

"I presume that the legislature intended something when it used the word
lawfully and that it had in contemplation cases in which a person held such a

15
1954 AIR 236
16
Jahnvi Ahuja, ‘Chaturbhej v. Moreshwar’ (indianlawportal, 7 August 2020)
<https://indianlawportal.co.in/chaturbhuj-v-moreshwar/ > Accessed 25 January 2021
17
(1888) I.L.R. 11 All. 234
17
 relation to another as either directly to create or by implication reasonably to
justify an inference that by some act done for another person the party doing the
act was entitled to look for compensation for it to the person for whom it was
done."

The court did not agree with this interpretation given by Justice Straight that the
lawful relationship arose when one party did something for another and said that
the lawful relationship arises when the other party accepts this doing/ delivery
and enjoys its benefits, which can give rise to claims under Section 70.

4. “Mohori Bibee vs Dharmodas Ghose”18

Until this case was decided in 1903, there was ambiguity regarding the question
whether minor’s agreement is void or voidable under Section 10 and 11 of the Indian
Contract Act, which only provides that minors were incompetent to contract.

The facts of the case are that, the plaintiff, Dharmodas Ghose, a minor had mortgaged
his property in favour of the defendant, Brahmo Dutt, a moneylender to secure a loan
for Rs. 20,000. When this transaction occurred, the attorney of the defendant was
aware that the plaintiff was a minor. Later, the plaintiff brought an action against the
defendant to cancel the mortgage as void and inoperative as he was a minor at the
time of the agreement. The defendants argued that Dharmodas should not be given
any relief as he had fraudulently misrepresented his age at the time of the agreement
and if the mortgage is in fast cancelled, he should be asked to repay the Rs 10,500 that
had already been advanced to his against the mortgage. The Privy Council held that
the effect of Section 10 and 11 renders minor’s agreement ab initio and wholly void.
19

This case was cited by the appellant to draw an analogy between minors and the state
in competency to contract when the agreement with the state has not been made in
accordance with the provisions of Section 175(3) of Government of India Act, 1935.

18
(1903) ILR 30 Cal 539 (PC)
19
Nihal Chhetri, ‘Contract By Minors, Landmark Case Analysis: Mohori Bibee v. Dharmodas’ (latest law, 29
August 2018) <https://www.latestlaws.com/case-analysis/contract-by-minors-landmark-case-analysis-mohori-
bibee-v-dharmodas-ghosh-by-nihal-chhetri/> Accessed 25 January 2021
18
 5. Ramanandi Kuer vs Kalawati Kuer20

Over the reliance of the advocates on English law and English cases, the judges
observed that unless the provisions of Indian statute are ambiguous and obscure, the
court sees no need to derive assistance from English decisions to interpret Indian
positions. If the words of the Indian law are clear and unambiguous, it is unreasonable
to interpret and conform them with the English background.

The same was reiterated by quoting from the Ramanandi Kuer judgment as follows.

“It has often been pointed out by this Board that where there is a positive enactment
of the Indian Legislature the proper course is to examine the language of that statute
and to ascertain its proper meaning uninfluenced by any consideration derived from
the previous state of the law or of the English law upon which it may be founded.”

6. Seth Bhikraj Jaipuria v. Union of India21

The Divisional Superintendent of the East India Railway placed an order for food
grains with the appellant, for the employees of East India Railway. The orders were
signed in his name and not under the name of the Governor-General, as was required
by Section 175(3) of the Government of India Act, 1935. Nevertheless, the Railway
Administration accepted and paid for the initial deliveries but declined to accept the
deliveries after that. The appellant was forced to sold the remaining food grains at a
lower price elsewhere and filed a suit against the Railway Administration to recover
for the difference between the price realised by sale and the contract price. The
respondent contended that there was no binding contract between the parties, thus no
scope for damages for breach of contract. The court agreed with the respondent and
held that there was no contract. The court also pronounced that ‘authority’ to contract
under Section 175(3) could be conferred upon another official through a formal
notification, which had been done for the Divisional Superintendent in this case.
However, the contract still needed to be executed “on behalf of the Governor
General”, in the manner prescribed by law.

7. Suchand Ghosal vs Balaram Mardana22

20
(1928) 30 BOMLR 227
21
1962 AIR 113
22
(1911) ILR 38 Cal 1
19
 The plaintiff was 1/12 joint owner of a property, along with defendant No. 1 to 8.
He made certain payments on behalf of all of them under “Section 310 A of the
Civil Procedure Code”, regarding matters related to the property. The suit was
filed by the plaintiff to recover that sum of money. In deciding the matter, the
judge had made the following observation regarding the scope of Section 70 of the
Indian Contract Act.
“The terms of s.70 are unquestionably wide, but applied with discretion they enable
the Courts to do substantial justice in cases where it would be difficult to impute to
the persons concerned relations actually created by contract. It is, however,
especially incumbent on final Courts of fact to be guarded and circumspect in their
conclusions and not to countenance acts or payments that are really officious”
The same was quoted by Justice Gajendragadkar before deciding the case of B.K.
Mondal.

8. Union of India v. Ramnagina Singh23

In this judgement, it was held that Section 70 has no applicability where work is done
on the request of government officers as such a request in unauthorised, hence, void.
In the B.K. Mondal judgement, the court has expressed its disagreement with this
stand.

FOREIGN CASE LAWS CITED IN THE JUDGEMENT

1. Deod Pennington v. Taniere24

This case was cited to quote the following observation by Lord Denman.
“Where the corporation have acted as upon an executed contract, it is to be
presumed against them that everything has been done that was necessary to make it
a binding contract upon both parties, they having had all the advantage they would
have had if the contract had been regularly made. That is by no means inconsistent
with the rule that, in general, a corporation can only contract by deed, it is merely
raising a presumption against them, from their acts, that they have contracted in such
a manner as to be binding upon them.”

23
89 CLJ 342
24
12 QB 998 1013
20
 2. H. Young & Co. v. The Mayor and Corporation of Royal Leamington Spa25

In this case, the Corporation of Leamington entered into a contract with Powis for
some construction work in the district. Before the construction could be completed,
the contract terminated. To get the work done, the council passed a resolution, not
under the seal, to authorise the engineer to enter into another contract to finish the
remaining work. The new hired contractor, i.e., plaintiff completed the work but was
not paid for it. He approached the court to get his claim. The question was whether a
contract existed between the parties, under Section 174(1) of the Public Health Act,
1875, which provided that “every contract made by an urban authority whereby the
value or amount exceeds $50 shall be in writing and sealed with the common seal of
such authority. The provision of the said section is obligatory and not merely
directory and it applies to an executed contract of which the urban authority have had
the full benefit and enjoyment, and which has been effected by their agent duly
appointed under their common seal." The defendant argued that these provisions had
not been complied with, hence, there was no claim for compensation. The Queen’s
Bench Division and later, the House of Lords agreed with the defendants.

3. Lawford V. Billericay Rural Council 26

This judgement has been cited for its following observation

“where the purposes for which a corporation is created render it necessary that work
be done or goods supplied to carry those purposes into effect and orders are given by
the corporation in relation to work to be done or goods to be supplied to carry into
effect those purposes, if the 890 work done or goods supplied are accepted by the
corporation and the whole consideration for payment is executed, there is a contract
to pay implied from the acts of the corporation, and the absence of a contract under
the seal of the corporation is no answer to an action brought in respect of the work
done or the goods supplied.”

25
(1883) L.R. 8 A.C. 517
26
(1903), L. R. 1 K. B. 779
21
MAJIORTY OPINION AND SEPARATE BUT CONCURRENT
OPINION

 Majority Opinion

The judgement of Justice P.B. Gajendragadkar, Justice K.N. Wanchoo and Justice
N.R. Ayyangar was delivered by delivered by Justice P.B. Gajendragadkar.

The first issue contemplated was whether there was a valid contract between the
parties. It was held that the provisions of Section 175(3) are not merely directory but
obligatory and holding otherwise would be against public interest. In this case, since
the requirements of the section had not been complied with, there was no valid
contract between the parties.

The judges clearly expressed their displeasure on the reliance over English laws and
judgements to interpret Indian statutes, holding that there was no need for the same

22
when there was no ambiguity or lack of clarity in the Indian statute. Nevertheless,
since it had been brought up by the advocates, the court gave its observation that even
the English position has evolved from need for strict compliance with provisions to
form contracts with the government to relaxation and ultimately obsolescence of such
rigorous requirements to enable the day to day functioning of the government.

It was held that to invoke section 70, three conditions must be fulfilled, the act must
be done lawfully, with a non-gratuitous intention and the receiving party must
voluntarily accept and enjoy the benefits of the same. These conditions do not arise
from any accruing contract. The facts of the present case fulfilled all these conditions
to raise a valid claim for compensation.

The question of conflict between section 175(3) of the Government of India Act, 1935
and section 70, Indian Contract Act was also answered. It was held that there is no
conflict between the two, they are separate and distinct laws. One deals with the
requirements/ authority for a valid contract, while the other deals with the condition
when there is no contract. If anything, Section 70 supplements section 175 of GOI
Act. In the functioning of a modern state, where officers would be compelled to enter
into oral and correspondence contracts deviating from Section 175(3), for the sake of
efficiency, if claims are not allowed under section 70, it would have disastrous
consequences.

The arguments of the appellant regarding the position of the state being analogous to a
minor when the provisions of Section 175(3) are not complied was rejected by the
judges.

Lastly, the judges also observed that beyond the legal duty, the state was under a
moral duty to pay for the benefits it had availed.

“The question about the scope and effect of s.70 and its applicability to
cases of invalid contracts made by the Provincial Government or by corporations had
been the subject-matter of several judicial decisions in the country and the opinion
presented in this case was in preponderance with the opinion taken in the following
cases:

23
 Mathura Mohan Saha v. Ram Kumar Saha and Chittagong District Board; Abaji,
Sitaram Modak v. The Trimbak Municipality; Pallonjee Eduljee & Sons, Bombay v.
Lonavla Gity Municipality; Municipal Committee, Gujranwala v. Fazal Din; Ram
Nagin Singh v. Governor-General in Council; Union of India v. Ramnagina Singh;
Union of India v. New Marine Coal Co. (Bengal) Ltd. Damodara Mudalar v.
Secretary of State for India; Corporation of Madras v. M. Kothandapani-Naidu
Yogambal Boyee Ammani Ammal v. Naina Pillai Markayar; and, Ram Das v. Ram
Bab.”

“Besides, the opinion presented in this case was in dissent of the following cases:
Chedi Lal v. Bhawan Das; Radha Kishana Das v. The Municipal Board of Benare
Anath Bandha Deb v. Dominion of India Punjabhai v. Bhagawan Das Kisandas and
G. R. Sanchuiti v. Pt. R. K. Choudhari.”

 Separate but Concurring Opinion

The separate but concurring opinion was delivered by Justice A.K. Sarkar on behalf
of Justice K.C.D Gupta and himself.

The judges agreed that there was no contract between the state and the respondent as
the conditions under Section 175(3) had not been followed. Neither the officers who
had made the request had any authority nor their manner of making the request/
agreement was authorized by law. Even the respondent was well aware of the fact that
it had no express or implied agreement with the state, and they had been informed that
the officers awaited authorisation from the higher level.

Next, the judges dealt with the question if there was any scope of tacit promise by the
officers to pay for the works in their personal capacity. However, the court was unable
to infer any such intention as the respondents had no doubt that the construction had
been requested for the benefit and use of the government and the government would
pay for it. All its appeals for sanctions and payment of the bills had been made in the
name of the government and not the officers.

On the question of whether the claim was valid under Section 70 of the Indian
Contract Act, they held that it was, as all the three conditions for a valid claim had
been fulfilled. The act was done non-gratuitously and at no point in time did either of

24
 the parties have any doubt regarding the same; the respondents had submitted an
estimate before the work and the bill as soon as the work was completed, and the
government and its officials presented no protest against the same. The work was
done lawfully as well. Non-compliance with the requirements of Section 175(3) may
have rendered the contract invalid or void but that does not result in the work being
‘unlawful’. The government had also accepted and enjoyed the benefits of the work as
it was in an urgent need to get it done.

Lastly, it was observed that if Section 70 needed assumption of a quasi-contract to

allow valid claims for compensation, the same could be contemplated to exist and
doing so would not be contrary to Section 175(3) of the government of India Act,
1935.

Thus, the separate but concurring opinion was largely in agreement with the majority
opinion but it also dealt with some issues beyond what had been mentioned in the
majority opinion, including scope of tacit promise and personal liability of the
officers.

JUDGEMENT IN PERSONEM

1. The acts in question were not contracted by “any person duly authorized by the
governor” or in a manner authorized by the statute. In the opinion of the court, this
was contrary to the mandatory requirement under Section 175(3) of the GOI Act for a
contract to come into existence. Therefore, no valid contract existed between the State
of West Bengal and B.K. Mondal and sons.

2. There was no contract and tacit promise personally between the officers and the
Respondents in this case.

25
3. All conditions to be eligible for compensation under Section 70, Indian Contract Act
were fulfilled. The Act was done lawfully, it was done non-gratuitously as evident
from the estimates and bills submitted by the Respondent and lastly, the government
enjoyed the benefits of the same when it had a clear choice not accept the work or
demolish it. Thus, the claim of the respondent under the said section was valid.

4. Based on the observations mentioned above, it was thus held that “the lower courts
were right in decreeing the respondent’s claims.” THE APPEAL WAS DISMISSED
WITH COSTS.

JUDGEMENT IN REM

1. Section 175(3) of the Government of India Act, 1935 was made with an intention to
protect the government from burden of liabilities and spurious claims arising from
unauthorized contracts. It works in public interest, and is obligatory in nature rather
than merely directory.

2. Section 70 of the Indian Contract Act falls under the chapter of “relations resembling
those created by a contract.” There is no actual contract, which is why the persons
who deliver goods/ services cannot seek “specific performance” or “damages for
breach of contract.” The claims for compensation under section 70 are not on the
basis of any subsisting contract but the fact that something was done non gratuitously
by one party for the other and they voluntarily accepted the benefits of the same.

3. To claim compensation under Section 70 of the Indian Contract Act three conditions
must be fulfilled. First, the act must be done lawfully. Secondly, it must be done with
non-gratuitous intentions and lastly, the receiving party must accept and enjoy the
benefits of the act. Lawful relation comes into existence when one party does
something for the other and they accept and enjoy the same. The relationship comes
into existence at the moment the latter party accepts the doings and this lawful
relationship gives rise to the claim for compensation. At the same time, the thing
delivered or done must not be done gratuitously, dishonestly or fraudulently or such
that they cause interfere or imposition, not desirable by the other party. There must be

26
 voluntary acceptance by the receiving party. This condition allows safeguard against
spurious claims and unauthorized acts.

4. In the day to day functioning of the government, if government officers enter into
contracts orally or through correspondence without strictly abiding by the provisions
of Section 175(3), for the benefit of government or cause of public welfare, claims for
compensation under section 70 should be allowed, irrespective of non-compliance
with section 175(3). If the same is not allowed, the consequences would be
unreasonable. This does not nullify the provisions of Section 175(3) but points out to
the fact that Government, like any ordinary citizen can be subjected to Section 70 of
the Indian Contract Act if it has voluntarily accepted and enjoyed benefits of goods/
services. This reiterates that Section 175(3), Government of India Act and Section 70
of the Indian Contract Act are “separate and distinct”. The latter does not contravene
the former, in fact supplements it.

5. The state cannot be considered to be in the position of a minor regarding its capacity
to contract if the provisions of section 175(3) are not complied with. The government
is endowed with the “power to purchase and acquire property” and enter into
contracts. It should be prevented from enjoying unjust enrichment, like any individual
or corporation.

CONCLUSION

In conclusion of the project, I humbly submit my observations and appreciation for the
judgement, State of West Bengal v. B.K. Mondal and Sons 1962 AIR 779.

The area of operation for a modern State expands far beyond the realm of customary
sovereign functions of governance. In its day to day functioning as a welfare State, the State
acts a supplier of goods and services as well as a consumer, ultimately emerging as a key
player in the commercial arena. It this role, the government engages in a myriad of contracts,
of different natures. These contracts have to be made in compliance with the procedure

27
established by law, with due authorisation, in the name of the President of India or Governor
of the concerned state. These requirements have been laid down with an intention to avoid
burden and liability from unauthorized contracts. At the same time, it is difficult to rigorously
follow the procedure. Often, government officials have to enter into oral contracts or through
correspondence for the sake of efficiency in day-to-day functioning. Such contracts are void
in the eyes of law, leaving the other party in a vulnerable position where it supplies good/
services on the basis of these oral/correspondence agreements but is left with no remedy in
case of need. Thus, a balance of rigidity and flexibility has to be stricken, which is perfectly
demonstrated in the case, State of West Bengal v. B.K. Mondal. It was held that there can be
no contract between the government and another party unless of section 175(3), Government
of India Act, 1935 is strictly complied with. This ensured the ‘rigidity’ aspect by preventing
deviation from the intention of the statue, and providing protection to the state from liability
from unauthorized acts. Holding otherwise would have led to the dilution/ circumvention of
the provisions created by the parliament in public interest. At the same time, by decreeing
compensation for the respondents under Section 70 of the Indian Contract Act and not
allowing the state to be unjustly enriched, the flexibility aspect was taken care of. Therefore,
on one hand, the authority of the state as well the laws were upheld and on the other, justice,
equity and good conscience were ensured by pronouncing that the state could be compelled to
pay compensation under Section 70. The distinction and separation of Section 175(3), GOI
Act, 1935 and Section 70, ICA was also well established.

Another appreciable part of the judgment is the stand taken by the judges regarding the
reliance of the advocates on English laws and judgements to interpret Indian laws. Though as
obiter dicta, it was clearly said that it was unreasonable to conform Indian laws with the
English position unless there was any ambiguity or obscurity in the Indian statue.

The judgement is regarded as a landmark case in government contracts and rightly so, it
clarified the ambiguities regarding the nature of Section 175(3), (analogously Article 299 of
the Constitution of India) as obligatory rather than directory and also made it clear that
government could be subjected to Section 70, ICA, and cannot enjoy benefits of unjust
enrichment.

BIBLIOGRPAHY

28
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1. Pollock F, The Principles of Contract (London, 9th Edition, Stevenson and Sons,
1921)

2. Cheshire, Fifoote and Frumston, Law of Contract (14th Edition, OUP 2001)
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1. —‘Privity of Contract’ (Wikipedia, 9 June 2013)
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2. —‘Bankey Behari Prasad v. Mahendra Prasad’ (Casemine)

< https://www.casemine.com/judgement/in/56e103bb607dba389660eb45>

3. Ahuja J, ‘Chaturbhej v. Moreshwar’ (indianlawportal, 7 August 2020)

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6. Sweta M, ‘Unjust Enrichment in India- An Introspection’ (mondaq, 3 August 2018)

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