# July, 24. SETH DJKHRAJ JAI~URIA v. UNION OF INDIA

- **Citation:** [1962] 2 S.C.R. 880
- **Court:** Supreme Court of India
- **Decided:** 1962
- **Bench:** J. L. Kapur, 1{. Subba Rao, M. HIDAYA'.l'ULLAH, J. ·c. SnAH ;ind ~AGHUBAR DAYAL
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/july-24-seth-djkhraj-jai-uria-v-union-of-india-2305
- **Pages:** 25

## Headnote

'
Contract-Divisional. Supprintendent of Railway placing
orders-Cont,ract not 1 e:tpressed to be in name of Goverrior-
'
General and not executed on behalf of Governor-General-Whethei·
binding on G6uern1nent- (/overnmi:nt of India Act, 1935 (26 Geo.
IJ Ch. 2) s. f715 (3).
'
In the year 1913 the Divisional Superintendent, East
lti<liciu Raihvay piacecj certain purcha~e oi<lers with the appellant for the supply "of foodgrains for the employees of the
East ~ndian Railway. , The orders \\:'ere not ('Xpressed to be
made .in the name Of the Governor-General and were not
executed on ~ehal( of the !J.overnor-General as required by
s. 175 (3) of the Government oflnclia Act, 1935. They were
signed Dy the Divisional Superintendent eithef..inwhis oWn hand
or in the ·haiid of h'is PCrsonal Assistant.
Some deliveries of
foodgrains \.Vere made under theSe orders aild were aCcepted
and paid for by the Railway Administration.
But lhe Railway
i\dn1inistration declined to accept further deliveries of foodgrains. The-appellant sold the balance of foodgrains under the
purchase orders and fi.JetJ a suit to recover the difference bet-
\Vcen thC price realised Ly
~-ale and the contract price. The
respondent resisted the suit infe.r alia on the ground t.hat the
contracts were not Binding on it.
Held, that the contracts were not binding on the respondent and it was not liable for damages for breach of the
contracts.
Under
s.17.'(3) of-the Government of India Act,
J 935, as it stood at the relevant time, the contracts had:
(a) to be expressed to be made by the Governor-General, (b) to
be executer! 0n hehalf of the Governor-General and (c) to be
·executed by officers duly appointed in that behalf and in such
manner as the Governor-General directed or authorised. The
•
·2 S.C.R.
SUPREME COURT REPORTS
881
authority to a persun to execute contracts may be conferred
not ouly by rules expre,oly framed and by formal notifications
issued in this behalf but may also be speci;illy conferreu. The
evidence in the case showeu that such authority was specially
conferred upon the Divisional Superintendent. But the contracts were not expressed to be made by the Governor-General
and were not executed on liis behalf.
The provisions of
s. 175(3) were mandatory. The object of enacting these provisions was that the State should not be saddled with liability
for unauthorised contracts and hence it was provided that the
contracts rr. ust show on their face that they were made by
the Governor-General and executed on his behalf in the
manner prescribed by the person authorised.
State of Bihar v. Mfs. Karam Chand Thapar and Bros.,
Ltd. (1962) I S. C.R. 827, followed •
Liverpool Borough Bank v. Turner, (1861) 30 L. J.
Ch. 379, Municipal Coiporation tf Bom/Jay v. Secretary of Slate,
I. L. R. (1905) 29 Born. 580, Kessoram Poddar and Co., v.
Secretary of State for India, I. L. R. (1927) 54 Cal. 969,
S. C .. Mitra and Co., v. Governor-General of India in Council,
I.L.R. (J9j0) 2 Cal. 431, Secrdary of State v. Yadavgir
Dharamgir, I. L. R. (1936) 60 Born. 42, Secretary of State v.
G.T. Sarin and Co., I. L. R. (1930) 11 Lah. 375, U. P. Government v. LalNanhoo Mal Gupta, A. I. R. (1960) All. 420, and
Devi Prasad Sri Krishna Prasad Ltd. v. Secretary of State,
I. L. R. (1941) All. 741, referred to.
S. K. Sen v. P,-ovincial P. TV. D., State of Bihar, A. I. R.
(1960) Pat., Chatturbhuj VithaldasJasoni v. Morashwar Prashrarn, (1954) S. C.R. 817, J. K. Gas Plant Mfg., Co. (Rnmtur)
Ltd. v. King Emperor, (1947) l. C.R. 141, Moreshwar l'angarkar v. State of Bombay, (1952) S. C.R. 612, State uf Bombay v. l'urshottam Jog Naik (1952) S. C.R. 674 and :>iate ~f
U.P. v. Manbodhan Lal Srivastava, (1958) S. C.R. 533, distinguished.
C1v1L APPELLATE JumsrnctroN : Civil Appeal
No. 86 of 1959.
Appeal by special leave from the judgment
and order dated March ~7, 1957, of the Patna
High Court in Appeal from Original Decree No. 359
of 1948.
A. V. V isu·anatlia Sastri and 8. l'. Vcirma, fw
the appellant.
1961
Set

## Text

_Characters 0–39,994 of 48,806. This is a partial read: ask again with offset=39994 for what follows._

'
880
8UPREME COURT REPORTS
[I962j
1961
The
a ommission~r of
I nC<Jme--tax,
Bombay City I1
v.
consideration.
The result, therefore, is that all
these three appeab fail and must
be dismissed
with costs ; one heari1!¥ foe.
Appeal8 dismissed.
Shalr:untala and
two others, etc.
S •. K. Das J.
1901
July, 24.
SETH DJKHRAJ JAI~URIA
v.
UNION OF INDIA
(J. L. KAPUR, 1{. SUBBA RAO, M. HIDAYA'.l'ULLAH,
J. ·c. SnAH ;ind ~AGHUBAR DAYAL, ,JJ.)
'
Contract-Divisional. Supprintendent of Railway placing
orders-Cont,ract not 1 e:tpressed to be in name of Goverrior-
'
General and not executed on behalf of Governor-General-Whethei·
binding on G6uern1nent- (/overnmi:nt of India Act, 1935 (26 Geo.
IJ Ch. 2) s. f715 (3).
'
In the year 1913 the Divisional Superintendent, East
lti<liciu Raihvay piacecj certain purcha~e oi<lers with the appellant for the supply "of foodgrains for the employees of the
East ~ndian Railway. , The orders \\:'ere not ('Xpressed to be
made .in the name Of the Governor-General and were not
executed on ~ehal( of the !J.overnor-General as required by
s. 175 (3) of the Government oflnclia Act, 1935. They were
signed Dy the Divisional Superintendent eithef..inwhis oWn hand
or in the ·haiid of h'is PCrsonal Assistant.
Some deliveries of
foodgrains \.Vere made under theSe orders aild were aCcepted
and paid for by the Railway Administration.
But lhe Railway
i\dn1inistration declined to accept further deliveries of foodgrains. The-appellant sold the balance of foodgrains under the
purchase orders and fi.JetJ a suit to recover the difference bet-
\Vcen thC price realised Ly
~-ale and the contract price. The
respondent resisted the suit infe.r alia on the ground t.hat the
contracts were not Binding on it.
Held, that the contracts were not binding on the respondent and it was not liable for damages for breach of the
contracts.
Under
s.17.'(3) of-the Government of India Act,
J 935, as it stood at the relevant time, the contracts had:
(a) to be expressed to be made by the Governor-General, (b) to
be executer! 0n hehalf of the Governor-General and (c) to be
·executed by officers duly appointed in that behalf and in such
manner as the Governor-General directed or authorised. The
•
·2 S.C.R.
SUPREME COURT REPORTS
881
authority to a persun to execute contracts may be conferred
not ouly by rules expre,oly framed and by formal notifications
issued in this behalf but may also be speci;illy conferreu. The
evidence in the case showeu that such authority was specially
conferred upon the Divisional Superintendent. But the contracts were not expressed to be made by the Governor-General
and were not executed on liis behalf.
The provisions of
s. 175(3) were mandatory. The object of enacting these provisions was that the State should not be saddled with liability
for unauthorised contracts and hence it was provided that the
contracts rr. ust show on their face that they were made by
the Governor-General and executed on his behalf in the
manner prescribed by the person authorised.
State of Bihar v. Mfs. Karam Chand Thapar and Bros.,
Ltd. (1962) I S. C.R. 827, followed •
Liverpool Borough Bank v. Turner, (1861) 30 L. J.
Ch. 379, Municipal Coiporation tf Bom/Jay v. Secretary of Slate,
I. L. R. (1905) 29 Born. 580, Kessoram Poddar and Co., v.
Secretary of State for India, I. L. R. (1927) 54 Cal. 969,
S. C .. Mitra and Co., v. Governor-General of India in Council,
I.L.R. (J9j0) 2 Cal. 431, Secrdary of State v. Yadavgir
Dharamgir, I. L. R. (1936) 60 Born. 42, Secretary of State v.
G.T. Sarin and Co., I. L. R. (1930) 11 Lah. 375, U. P. Government v. LalNanhoo Mal Gupta, A. I. R. (1960) All. 420, and
Devi Prasad Sri Krishna Prasad Ltd. v. Secretary of State,
I. L. R. (1941) All. 741, referred to.
S. K. Sen v. P,-ovincial P. TV. D., State of Bihar, A. I. R.
(1960) Pat., Chatturbhuj VithaldasJasoni v. Morashwar Prashrarn, (1954) S. C.R. 817, J. K. Gas Plant Mfg., Co. (Rnmtur)
Ltd. v. King Emperor, (1947) l. C.R. 141, Moreshwar l'angarkar v. State of Bombay, (1952) S. C.R. 612, State uf Bombay v. l'urshottam Jog Naik (1952) S. C.R. 674 and :>iate ~f
U.P. v. Manbodhan Lal Srivastava, (1958) S. C.R. 533, distinguished.
C1v1L APPELLATE JumsrnctroN : Civil Appeal
No. 86 of 1959.
Appeal by special leave from the judgment
and order dated March ~7, 1957, of the Patna
High Court in Appeal from Original Decree No. 359
of 1948.
A. V. V isu·anatlia Sastri and 8. l'. Vcirma, fw
the appellant.
1961
Seth Bikhraj
Jaipuria
v.
Union of India
1961
Seth Bikhraj
Jaipuria
v.
lhdon of Indla
Shah J;
88:2
SUPREME COURT REPORTS
[1962j
fl . .\'. Sanyal, Additional Solicitor-General of
India, R. Ganapnthy Iyer and 'I'. Jf. Sen, for the
respondent.
1961. July, 24. The Judgment of the Court
was delivered by
SHAH,
J.
Bikhraj
Jaipuria-hereinafter
called the appellant-is the sole proprietor of a
grocery business conducted in the name and style
of "Hnjaram Vijai Kumar" in the town of Arrah in
the State of Bihar. In the months of July and
August, 1943, the Divisional Superintendent, East
Indian Bailway under three ".purchase orders"
agreed to buy and the appellant agreed to sell
certain quantities of food grains for the employees
of the East Indian Railway.
The following table sets out the purchase
pricPs, the commodities, the dates of purchase
orders, the quantities and the rates and the method
,,f supply.
Purchase Date of Kinds Quantity
:Kates.
Order
purchase
of
of
No.
orders. commo- commo-
<lity.
di ties.
(I)
(2)
(3)
( 4)
(5)
69. 20-7-1943. Gram 1st 1000 mds. @ Rs. 15/-
quality.
per md. (plus
cost of new
bags
not
exceeding
Rs. 75/· per
100
bags)
F.O.R.
any
E.I.Rly. station in Bihar.
76.
'. 4-7-1943. Rice
1000 md8. @ Rs. 22-8-0
Dhenki
(plus cost of
Medium
bags not exquality.
ceeding Rs. 7 5
2 S.C.R.
(1)
SUPREME COUl~T REPORTS
883
1116.
(2)
(3)
(4)
(5)
per cent) per
md.
F.O.R.
any
station
on the division.
ii. Wbeat
white
as per
samplu.
24-S-l!J43. Rice
medium
quality.
5000 mds. @ Rs. 20-8-0
per md. with
bags
F.O.R.
any
station
on E.I.R. on
the Division.
15000 mds. @ Rs.
24/-
per md. without
bags
F.O.R.
E.I.
Riv.
stiition
in Bihar.
Purchase orders Nos. 69 and 76 were signed
by S.C. Ribbins, Person11l Assistant to the Divisional Superintendent and purchase order No. 106 was
signed by the Divisional Superintendent. Under the
purchase orders delivery of grains was to commence
within sevf>n days of acceptance and was to be completed within one month. Ttie appellant delivered
divf>rse quantities of foodgrains from time to time
but was unable folly to perform the contraets within the rmriod stipulated. Retween .Tuly 20, Hl43
and August :!4, 1943, he supplied 3465 mannds of
rice and between September 1, 1943 and Scph·mber
I 9, 1943 he supplied 1152 maunds 35 seers of wheat.
In exercise of the powers conferred by cl.(b) of
Rub-r. (2) of r.81 of the Defence of India Rules, the
Government of Hihar by notification No. 12691-P.C.
dated September ltl, l!l43 dircctPd that commodities
named in ('olumn I of the ~ehedulP shall not, from
and including September 20, 1943 and until further
notice, be sold at any primary somco of supply or
by the proprietor, manager or employee of any mill
in the Province of Bihar at prices exceeding those
1961
Seth Bikhraj
Jaipuri<L
v.
Union of lndi,
Shah T.
1961
Selk Bikhraj
Jaipuria
v.
Union of India
Shah .J.
884
SUPREME COURT REPORTS
(1962J
specified in the second column of the schedule. The
controlled rat~ of rice (medium) was Rs. 18/- per
standard maund, of wheat (red) Rs. 17/-, of wheat
(white) Rs. 18/- and of gram Rs. 12-8-0. The SubDivisional Magistrate, District Arrah issued on
i:leptember 21, 1943, a price-list of controlled articles fixing the same prices as were fixed for wheflt,
rice and gram by the notification issued by the
Government of Bihar. By cl.(2) of the notification,
a warning was issued that in the event of the dealers Melling controlled articles at rates exceeding
those fixed or with-holding stocks of such articles
from sale, "they will be liable to prosecution under
r.81 ( l) of the Defence of India Rules."
By a telegraphic communication dated September 28, 1943, the Divisiond Superintendent informed the appellant that under the purchase
orders, foodgrains tendered for delivery will not,
unless despatched before October 1, 1943, be accepted, and barring a consignment of 637 maunds
20 seers accepted on October 7, 1943, the Railway
Administration declined to accept delivery of food
grains offered to be supplied by the appellant after
October I, 1943. The appellant served a notice
upon the Divisional Superintendent complaining of
breach of contract and sold between February 18
and F"bruary 23, 1944 the balance of foodgrains
under the purchase orders which were lying either
at the various railway stations or in his own godowns, The appellant then called upon the Railway
Administration to pay the difference between the
price realised by sale and the contract price
and failing to obtain satisfaction, commenced
an action (Suit No. 359/48A) in the court of the
First Additional Subordinate Judge, Patna for
a
decree
for
Rs. 2,89,995-15-3
against
the
Dominion
of
India. The
appellant
claimed
Rs. 2,32,665-12-0 being the difference between the
contract price and the price realised, Rs.42, 709-10-3
as interest and Rs. 14,620-9-0 as frei~ht, wharf-
l
2 S.C.R.
SUPREME COURT REPORTS
885
age, cartttge, ' price of pucking muterial, Jabour
churges and costs iflcnr_red in holding the sale.
The appellant s11bmitted that under·the terms of
thEl purchaSo orckrn, supply \Vas .to commence within
seven days of the date of receipt of the -orders
and w:is to be completed within one month, but
it was not intended that time should be of the
essence of the contract, and in the alternative
that the Railway Administration had waived the
stipulation as to time in the performance of the
contracts and t.herefore he was entitled, the.· Railway Administration having committed breach of
the contracts, to recover as compt"nsation tho
difference between tho contract price and the price
for which the grains were sold. The suit'was resisted
by the Dominion of India contending int~r alia
that the appellant· had no cause of action for tho
claim in the suit., that the contrapts between the
appellant 1 and the
Divisional
Superiiitendent,
Dinapur were .not l'alid and binding upon the
Government of India and that.th!' contracts were
liable to lie a Yoide'd by the ·Government, that •time
was of the essence of the contrar.ts, that stipulitt[ons
as to time were not waived, itncl that·· no breach of
contract was committed by the East Indian Ritilway
Administration anq iri any event, the appellant
h<J,d not m1ffered :1.l1y loss as a rC'snlt of sunh.Jire,ach.
By the written statement, it was admitted that the
East Indian Railway through the Divisional Snpnrintcndent, Dinapur had hy three orders set out in the
plaint agreed to buy and the appellant hail agreed
to sell the commodities specified therein, but it waH
denied that the Divisionttl Superintendent hnd henn
"given complete authority to (1ntnr int.o nontracts
for the supply(bf foodgrains."
The trial court held that timo was not of tho
essence of the contracts and even if it was, broach
of the stipulation in that behalf wits waived. It
further held that the plea }>hat the contracts were
void because they were not in accordance with the
1961 G
Seth Bikhraj
JaipUria
v.
Union of lrulia
Shah J.
J~/Jl
Seth Bikhraj
Jaipu.ria
v.
If nion of India
Shnh J.
SS()
SUPREME COURT REPORTS
[Hl62]
provisions of s. 175 (:3) of"tht1 Governm()nt of Imlia
Act, f935,, oouid not be per!p.itted t-0 be urged, no
such pl~a }javing been raised by· the written statement. Holding that the Divisional Superinlen!lent
was authnrisc{l to onttit. into. tho contracts for
purchase of foodgrains, and that he had committed
hr.each of contract, t·he trial Judge awarded to the
appellant Rs. l ,29,4fi0-7 -0 with interest -thereon
at the rate of 6% per amJum fro.m October I, 1943,
to the date of the institution of the suit and further
interest at 6% on judgment. Against that decree,
an appeal was preferred by the: Union of India to
the High Court· of Judicature' at Patna and the
appellart filc>d
cross-objection~ to the
decr(lo
appealed from. The.High Comt- helcl that· time was
of tho essonrc of the contracts, b11t tho Railway
Administration having accopt-ed the g~iods tendered
after the expiration of
the period prescribed
thereby, the Rtipulatiun as t.o time was waived.
The High Cnurt fnrth<:r helrl t.hat by t-ho notificittion unclt-r r. 81 of t.110 DPf.,ncP of India. Rules,
performance of the contracts nad not. been ro11de1·ed
illogaLbut t.lie Divisimlal S11perintondent. had "no
authArity to enter into contracts to purohnse. food
grains on bohalf of the Railw(l.y Administ.ratioi;i
and thftt in any .event., t.he contracts not havit1g
hMJl 1>xpresRP.d to lw macfo by t):ie Go1ernor-General
:md
not hn.v'ing
lwcn
01;:oquted
on
bc•half.
of tho
Governor-General by
an officer duly
appointed in that behalf and in manner prescribed,
th~ .contracts were ui;ienforceable.
'.Ghe
High Court aiso held· t.ha t
the appellant was
not <'ntitlcrl to a
di-ere<'
for
compensation
because he had failed to provn the ruling market
rnte on the date of breach viz , October 1, 1943.
The High Court also observed that the trial cmirt
erred in awarding interest. prior tci the date of the
snit and in so holding,
reii\'~I upon the judgment
of the .Privy Gounc.il ii) Bengal N agpiir Railu:ay Co.,
Ltd. v. Rut1anji Rr;;mji- and olhers ('J.
(I) L. R. (1938) 65 "I. A. 66.
'r
I
 r
2 S.C.R. SUPREME COURT REPORTS
887
In this appeal by the appellant, two· questions
fall to be determined, (1) w!.ether relying upon
the purchase orders signed by the Divisional
Superintendent which were not made and executed
in the
m1111ner prescribed by s.175 (3) of the
Government of India Act 1935, ·.the appellant could
sue ttle D'ominion o'f India for compensation for
breach of contract, !J,nd (2) whether the appellant
pas proved the ruling market rate on October 1,
1943 for the commodities in question.
The finding tnat the Radway Administl'ation
had waived the stipulation as to the performance
of the contracts within the time prespribcd though
time w:1s under the agreement of trie essence, is not
challenged before us -on behalf of the Union of
India. If the finding as to waiver is conect,
manifestly hy his telegraphiP intimation dated
September 28, 1943, that tho fooclgrains not despatched before Octal/er 1, 1943, will not be accepted the Divisional Superintcrnl<'n1 rnmmitted a
breach of the contract.
Section 175 (3) of th(' :Uoycrnmeut of India
Act as in f<;>rce at. t.he materia I t.ime-provi<led :
"Subject to tho•provisions of this Act, with
respect to the Federal Railway Authority, all
contracts made in the exorcise 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 assurnnces
of property made in the exercise of that authoritv
shall bo executed on behalf of the Governor-GeneraL
or Governor by. such .persons and in such' manner aS"
he may direct or authorise."
The Federal Railway Authority harl not come
foto being in the year 1943: it was in fact never sot
up.
The contracts for t4e supply of foodgrains
were undoubtedly made, .in the exercise of executive
1961
.--
8 eth:fJikhraf
Jaipi.lria
v.
Union of India.
1961
Seth Bikhraj
Jaipuria
v.
Union of India
Shah J.
888
SUPREME COURT REPORTS
[1962]
authority of the Federation. The contracts had
therefore under
~. 175(3), (a) to be expressed to be
m~d'' by the Gm·ernor-General, (b) to be executed
on hehalf of the Governor-General, and (c) to be
,cxec•1tcd by officers duly appointed in that behalf
and in such manner as the Governor-General may
direet or authorise. But no formal contracts were
executed for the supply of foodgrains by the
appellant : he had merely offered to supply foodgrains by letters addressed to the Divisional Superintendent and that officer had by what are called
"purchase orders" accepted those offers.
These
purchase orders were not expressed to be made in
the name of the Governor-General and were not
executed on beltalf of the Governor-General.
The
purchase orders were signed by the Divisional
Superintendent either in his own hand or in the
hand of his Personal Assistant. In the first instance,
it has to be considered whet her the Divisional
Superintendent had authority to contract on behalf
of the Railway Administration for buying foodgrains
required by the Railway Administration. By Ex.M-2
which was in operation at the matt>rhtl time, all
instruments relating to purchase or hire, supply and
conveyance of materials, stores, machinery, plant,
telephone lines and connections, coal etc. could be
executed amongst others by the Divisional Super'
intendent; but contracts relating to purchase of
foodgrains are not covered by that authority.
Under item 34 which is the residuary item, all
deeds and instruments relating to r~ilway matters
other than those specified in items 1 to 33 may be
executed by the Secretary of the Railway Board.
It is common ground that there is no other item
which specifically authorises the making and
execution of contracts relating to purchase of foodgrains; deeds and instruments relating to purchase
of foodgrains
therefore fall within item 34. The
Secretary to the Railway Board had not executed
these purchase orders :··but the trial Court held
2 S.C.R.
SUPREME COURT REPORTS
889
that the Divisional Superintendent was authorised
to enter ,into contracts with t,he appellant for the
supply of foodgrains. In so holding, the trial judge
reliPd upon the evidence of Ribbins, Grain Supply
Officer and Personal Assistant to the Divisional
Superintendent, Dinapur. The High Court disagreed
with that view.
The High Court observed that the
authority of the officer acting on behalf of the
Governor-General "must be deduced from the
express words of the Governor-General himself
expressed by rules framed or by notification issued,
under s. 175(3),
No notifica.t .on has been produced
in this case showing that th.e Divisional Superintendent had 'been authorised bv the Governor·
General to execute such contracts on his behalf,
nor has any rule been produced which conferred
authority upon the Divisional Superintendent to
make such contracts."
After referring to paragraph IO of the notification, Ex. M-2 items l to 34, the High Court
observed:
"Therefore this notification rather shows that
the Divisional Superintendent had no authority to
executP the contracts for the purchase of food
grains."
In our view, the High Court was in error in
holding that the authority under s. 175(3) of the
Government of India Act, 1935 to execute the
contract could only be granted by the GovernorGenera:l by rules expressly promulgated in that
behalf or by formal notifications. This court has
recently held that special authority may validly be
given in respect of a particular contract or contracts
by the Governor to an officer other than the officer
notified under the rules made under s. 175(3).
In
TlwState of Bihar v.11!/s. Karam Chand Thapar and
Brothers Ltd.(1), Venkatarama Aiyar J. speaking for
the court ·Observed :
(I) (f962) l S.C.R. ~27.
1961
Seth Bikh•aj
Jaipuria
v.
Union of India.
Shah J.
1961
Seth Bikhraj
Jaipuria
v.
Union of India
Shah../
890
SUPREME COURT REPORTS
[1962]
"It was further argued for the appellant that
tlIBrc being a Government notification of a formal
character, we should not travel outside it and find
authority in a JWrson who is not authorised thereunder. But s. 175 (3) does not prescribe any
partieular mode in which authority must . be
eonf0rred.
Normally, no doubt, such conferment
will b" by mitifieation in the Oft'icial Gazette, but
there is nothing in the section itself to preclude
authorisation being conferred ad hoc on any person,
and when that is established, the requirements of
the se.,tion must be held to be satisfied."
In that case, an agreement to refer to arbi-
.•
tration on behalf of the Government of Bihar was
executt·d by the Executive Engine0r whereas by the
notifieation issued hy the Government of Bihar
under ~.17 5 (3) all instruments in that behalf had
to be <•xecuted by the Secretary or the Joint Secret'lry to the Gov,·rnment. This Court on a consideration of thP <•orrespnndfmcP producerl in the case
agrPed with the High r,onrt that thP ExePutive Engineer ha<! been SJIP<·ia ll~- authorised hy the Governor
acting t.Jmmgh his Sfwrt>tary to ex<>CUtf• th<> agreement for rnfrn>nc•P to arbitration. St>etion 175 (3)
in termdnP8 not provide that the direction or
authorhl' given by the Governor-General or the
Governor to a perEon to execute contracts shall be
given only by rules or by notifications, and the High
Court was in our judgment in error in assuming that
such a11thority can be given only by rules expressly
framed or by formal notifications issued in that
behalf.
In para 5 of th" plaint, the appellant pleaded:
"That for the purposes and under the authority conf<tTP<l as noted in the para 3 above in July
anrl Augu~t, 1943 the said E. I. Rly. through its
then Diviqimml Superintendent, Dinapur, by three
diverse orders agreed to buy and the plaintiff agreed
to sell thP following commodities at the rates mentioned against them.
2 S.C.R. SUPREME COURT REPORTS
891
By para 3 of the written statement, the Dominion of India accepted the allegations made in
para 5 of the plaint. It-is true that by paragraph 1,
the authority of the Divisional Superintendent to
enter into contract with trading firms dealing in
foodgrains for the supply of foodgrains was denied
and it was further denied that tho Divisional Superintendent "was invested with complete authority
to enter into contracts for the purchase of food
supplies and to do all that was necessary in that
connection." There was some inconsistency between the averments made in paragraphs 1 and 3
of the written statement, but there is no dispute
that the purchase orders were issued by the Divisional Superintendent for and on behalf of the
East Indian Railway Administmtion. Pursuant to
these purchase orders, a large quantity of foodgrains was tendered by the appellant: these were
accepted by the Railway Administration ancl payments were made to the a1ipellant for the gr·ains
supplied. Employees of the Railway Administration wrote letters to the appellant calling upon him
to intimate the names of the railway stations where
grains will be delivered and about the date when
the supply will commence. They fixed programmes
for inspection of the goods, kept wagons ready for
accepting delivery, held meetings on diverse occasions for settling programmes for the supply of
grains, rejected grains which were not according to the contract, entered into correspondence
with the appellant about the return of empty bags
accepted bills and railway receipts and made payments, returned certain bills in respect of the grains
tendered beyond the period of contract and did
diverse other acts in respect of the goods which
could only be consistent with the contracts having
been made with the authority of the Railway
Administration granted to the Divi~ional Superintendent. There is also the evidence of Ribbins
which olearly supports the view that the agreements to purchase foodgrains by the Divisional
1961
_Seth Bikhraj
Jaipuria
v.
Union of India
Shah J.
1961
Seth Bikhraj
Jaipuria
v.
Union of India
ShahJ
892
SUPREME COURT REPORTS
[1962)
Superintendent were part of a scheme devised by
the Railway Administration at the time of the
serious famine in 1943 in Benga I.
In cross-examination, Rib bins stated:
"When the Bengal famine arose in April-May
1943, the (necessity for a scheme of) arrangement
of supplying foodgrains to E. I. Railway employees
arose ... A scheme was drawn up for carrying out
this work in writing. In ot.her words orders were
received from Head Office Calcutta about it. The
Deputy General Manager, Grains, Calcutta is~ued
the necessary orders ... The agent or General Manager as he is called appropriated the above functionary. He must have done so presumably under
orders ... The entire scheme did subsequently get the
assent of the Railway Board. From time to time
order came with instruction from Head Office. All
such directions should be in the office of D. Supdt.,
Dinapur. Some posts had to be created for carrying out this scheme. Originally one post of Asstt.
Grain Supply Ufficer was created. Subsequently,
two posts were created one on a senior scale and
the other as Asstt. in Dinapur Dv. staff had to be
appointed to be in charge of the grain shops. They
were exclusively appointed to work the grain shop
organisation. The Railway made some arrangement in some places for accommodation and addi·
tionnl storage ... Grain shops were located at these
places when accommodation was made for addi·
tional storage."
Ribbins was for some time a Grain Supply
Officer under the East Indian Railway and he
admitted that orders similar to the purchase orders
in question in this litigation were drawn up in
cyclostyled forms "as per orders from the Head
Office." The witness stated that the instructions
of the Head Office were "in the office file".
None
of these documents were, however, produced or
tendered in evidence by the Railway Administra·
ti on.
2 S.C.R.
SUPREME COURT REPORTS
893
The evidence on the whole establishes that
with a view to effectuate the scheme devised by
the Railway Bmird for distributing foodgrains to
their employees at concessional rates, arrangements
were made for procuring foodgrains.
This scheme
received tho approval of the Railway Board and
Railway Officers were authorised
to purchase,
transport and distribute foodgrains. If, in the
implementation of the scheme, the foodgrains were
received by the Railway Administration, special
wagons were provided and goods were carried to
different places and distributed
and payments
were made for the foodgrains received by the
Railway Administration after testing the supplies,
the inference is inevitable that the Divisional
SupRrintendent who issued the purchase orders
acted with authority specially grankld to him. The
evidence of Rib bins supported by abundant documentary evidPnce establishes beyond doubt that
the Divisional Superintendent though not expressly
authorised hy the notification Ex. M-2 to contract
for the purchase of foodgrains,
was specially
authorised to enter into these contracts for the
purchase of foodgrains.
The question still remains
whether the
purchase orders executed by the Divisional Superintendent but which were not expressed to be made
by the Governor-General and were not executed
on behalf of the Governor-General, were binding
on the Government of India.
Section 17 5( 3)
plainly requires that contracts on behalf of the
Government of India shall be executed in the
form prescribed thereby ; the section however does
not set out the consequences of non-compliance.
Where a statute requires that a thing shall be done
in the prescribed manner or form but does not
set out the consequences of non-compliance, the
question whether the provision was mandatory or
directory has to be adjudged in the light of the
intention of the legislature as disrlose<l by the
1961
Seth Bikhraj
Jaipuria
v.
Union of bdia
--
Shah J.
1961
Stth Bikhraj
Jaip:uria
v.
U ni9n of India
BkahJ.
894
SUPREME COURT REPORTS
[1962]
obje<•t, purpose [l,lHl scope of the statute. If the
statute is mandatory, the thing done not in the
manner or form prescribed can have no effect or
validity : if it is c!ireetory, penalty may be incurred
for non-compliance, but tho aot or thing done is
regarded as good.
As observed in Maxwell on
Interpretation of Statutes 10th Edition p. 376 :
"It has been said that no rule can be laid
down for determining whether the command is
to be considered as lt mere direction or instruction
involving no invalidating consequences in its disregard, or as imperative, with an implied nullification for disobediencP. beyond the fundamental
one that it depends on the scope and object of the
enactment. It may perhaps be found generally
correct to say that nullification is the natural and
usual consequence of disoberlience, but the question
is in the main governed by considerations of convenience and justice, and when that result would
involvl' general inconvenience or injustice to innocent persons, or advantage to those guilty of the
neglect, without promoting the real aim and object
of the enactment such an intention is not to be attributed to the legislature. The whole sou.Pe and
purpose of the statute under consideration must
be regarded."
Lord Campbell in Liverpool Borough Bank v.
Turner(1) observed :
"No universal rule can be laid down as to
whether mandatory enactments shall be considered
directory only or obligatory with an implied nullfication for disobedience. It is the duty of Court
of justim• to try to get at the real intention of the
Legislature by carefully attending to the whole
scope of the statute to be construed."
It iH clear that the Parliament intended in
enacting the provision contained i11 s. 175(3) that
(1) (1861) 30 L. ]. Ch. 379.
28.C.R.
SUPREME COURT REPORTS
895
the State should not be saddled with liability for
unauthorised contracts
and with
that object
provided that the contracts must show 011 their
face that they are made on behalf of the State,
i. e., by the Head of the State and executed on
his behalf and in the manner prescribed by the
person authorised.
The provision, it appears, is
enacted in the public interest, and invests public
servants with authority to bind the State by contractual obligations incurred for the purposes of
the State.
It is in the interest of the public that the
question whether a binding contract has been made
between the State and a private individual should
not be left open to dispute and litigation ; and
that is why the legislature appears to have madf'
a provision that the contract must be in writing
and must on its face show that it is executed for
and on behalf of the head of the State and in the
manner prescribed. The whole aim and object of the
legislature in conferring powers upon the head of
the State would be defeated if in the caHe of a
contract which is in form ambiguous, disputes are
permitted to be raised whether the contract wns
intended to be made for and on behalf of the State
or on behalf of the person making the contract. This
consideration by itself would be sufficient to imply a
prohibition against a contract being effectively made
otherwise than in the manner prescribed. It is true
that in some cases, hardship may result to a person
not conversant with the law who enters into a contract in a form other than the one prescribed by law.
It also h~ppens that the Government contracts
are sometimes made in disregard of the forms
prescribed ; but that would not in our judgmPnt be
a ground for holding that departure from a provision which is mandatory and at the ,;ame time
salutary may be permitted.
Ther(' is a large body of judicial opinion in the
High Courts in fuclia on the question whether
1961 --
S,th Bilchraj
Jaipuria
v.
Union of India
ShahJ.
1961
Seth Bikhraj
Jaipuria
v.
Union of India
Shah J.
896
SUPREME COURT l:{EPORTS
[1962]
contracts not in form prescribed by the Constitution
Acts are binding upon the State. _ The view has
been consistently expressed that the provisions
under the successive Constitution Acts relating to
the form of contract between the Government and
the private individual are mandatory and not
merely directory.
In Municipal Corporation of Bombay v. Secretary of State (1), the true effect of s. l of St. 22 and
!:!3 Vic. c. 41 fell to be determined. The Governor.
General of India in Council and the Governors in
Couneil and officers for the time being entrusted
with the Government were, subject to restrictions
prescribed by the Secretary of State in Council,
empowered to sell and dispose of real and personal
estate vested in Her Majesty and to raise money on
such estate and also to enter into contracts within
the respective limits for the purposes of the Act. It
was provided that the Secretary of State in Council
may be named as a party to such deed, contract,
or instl'Ument and the same must be expressed to
be made on behalf of the Secretary of State in
Council by or by the order of the Governor-General
in Council or Governor in Council, but may be
executed in other respects in like manner as other
instruments executed Ly or on behalf of him
or them respectively in his or their official
capacity, and may be tmforced by or against the
Secretary of State in Uouncil for the time being;
In a suit between the Government of Bombay and
the Municipal Corporation of Bombay, the latter
claimed that it was entitled to remain in occupation
on payment of a nominal rent, of an extensive piece
of land because of a resolution passed by the Government of Bombay sanctioning rnch user. Jenkins
C. J. in delivering the judgement of the Court
observed:
"I think that a dieposition m 1865 of Crown
(I) I. L. R. (1905) 29 Born. 580.
2. S.C.R.
SUPREME COURT REPORTS
897
lands by the Governor in Council was dependent
for its validity on an adherence to the forms prescribed and that therefore tho Resolution waK not
'
.
a valid disposition of the property for the mtercst
claimed!'
In Kessoram Podd1ir and Co. v. Secretary of
State for India (1), it was held that in order that a
contract may be binding on the Secretary of State
in Council, it must be made in strict conformity
with the provisions laid down in the statute governing the matter and if it is not so made, it is not
valid as against him.
The same view wa~ expressed in S. a .. Mitra
and Co. v. Govenwr-General of India in Conncil ('),
Secretary of State v. Y adavgir Dhamrnrrir("), Secretnry
of State and another v. G. T. Sarin and Uompnny ('),
U . .P. Governtnent v. Lala Nanhoo .i11al R-uptci ('),
Devi Prasad Sri Krishna Pmsnd Ltd. v. Secretary of
St(t.te ('), and in S. K. Sen v. Provincial P. W. D.
State of Bihar (').
But Mr. Viswanatha Sastri on beh~lf of the
appellant contended that this court in Chatturbhuj
Vithaldas Jasani v. 1lforeshwar Parashram (8 ) hots
held that a contract for the supply of goods to the
Government which is not in the form presPriLed by
.Art. 299 (I) of tho Constitution (which is substantially the same form as s. 175 (3) of the Government of India Act, 1935) is not void and unenforceable. In that case, the election of Chatturblmj
Jasani to the Parliament was challenged on the
ground that he had a share or interest in a contract
for the supply of goods to the Union Government.
It was found that Jasani wa,s partner of a firm
whicb had entered into contracts with the Union
Government for the supply of goods and these
contracts subsisted on November 15, 1!)51 ;md
(1) I.L.R. (1927) 54 Cal. %9.
(2) I.LR. (1950) 2 Cal. 431.
(3) I.L.R. (1936) 60 Born. 42.
(4) I.L.R. (1930) 11 Lah. 375.
(5) A.LR. (1960) All. 420.
(6) I.L.R. (1941) All. 741.
(7\ A.I.R. (1960) Pat. IS9.
(8) (1954) 8. C.R. 817.
1961
Seth Bikhraj
Jaipuria
v.
Union of India
Shah J.
1961
Seth Bikhraj
Jaiputia
v.
Union. of 1 ndfa
Shah J.
898
SUPREME COURT REPORTS
{1962)
February 14, 1952 respectively the last date for
filing nominations and the date of declaration of the
results of the election. This court held th~t Jasani
was disqualified from being elected by virtue of the
disqualification set out in s. 7 (b) of the Representation of the People Act 43 of 1951. The contracts
in that case were admittedly not in the form prescribed by Art. 299 (I) of the Constitution, and relying upon that circumstance, it was urged that the
contracts were void and had in law no existence.
In dealing with this plea, Bose J. speaking for the
court observed :
"We feel that some reasonable meaning must
be attached to article 299(1). We do not think the
provisions were inserted for the sake of mere form.
We feel they are there to safeguard Government
against unauthorised contracts. If in fact a contract
is unauthorised or in excess of authority it is right
that Government should be safeguarded. On the
other hand, an officer entering into a contract on
behalf of the Government can always safeguard
himself by having recourse to the proper form. In
between is a large class of contracts, probably by
far
the greatest in numbers, which though
authorised, are for one reason or other not in proper form. It is only right that an innocent contractin~ party should not suffer because of this and
if there is no other defect or objection we have no
doubt Government will always accept the responsibility. If not, its interests are safeguarded as we
think the Constitation intended that they should be."
The learned Judge also observed:
"It would, in our opinion, be disastrous to
hold that the hundreds of Govnnment officers who
have daily to enter· into a variety of contracts,
often of a petty nature, and sometimes in an emergency, cannot contract orally or through correspondence and that every petty contract must be effected by a ponderous legal documl'nt couched in a
partil'ular form."
2 S.C.R.
SUPREME COURT REPORTS
89!)
The rationale of the case in our judgment
does not support the contention that a contract on
behalf of a State not in the form prescribed is
enforceable against the State. Bose J. expressly
stated that the "Government may not be bound by
the contract, hut that is a very different thing from
saying that the contract was void and of no effect,
and that it only meant the principal (Government)
could not be sued ; but there will be nothing to prevent ratification if it was for the benefit of the
Government."
The facts proved in that case clearly establish
that even though the contract was not in the form
prescribed, the Government had accepted performance of the contract by the firm of which Jasani
was a partner, and that in fact there subsisted a
relation between the Government and the firm
under which the goods were being supplied and
accepted by the Government. The agreement
between the partiPs could not in the case of dispute
have been enforced at law, but it was still being
carried out according to its terms : and the Court
held that for the purpose of the Representation of
the People Act, the existence of such an agreement
which was being carried out in which Jasani was
interested di~qulified him. It was clearly so stated
when Bose J. observed:
"Now section 7 ( d) of the Representation of the
People Act does not require that the contract>R at,
which it strikes
should be enforceable against
the Government; all it requires is that the contracts
should be for the supply of goods to the Government. The contracts in question are just that
and so are hit by the section".
Reliance was also placed by counsel for the
~ppellant upon cases decided under s.40 of the
Government of Inclia Act, 1915, which was continued in operation even after the repeal of the Act, 1915,
by the 9th schedule to the Government of Indi&
1961
Seth Bikhraj
Jaipuria
v-.
U1'io11 of India
Shah J.
1961
Seth Bikhraj
Jaipitria
v.
Union~! India
Shah J.
900
SUPREME COURT REPORTS
[1962)
Act; 1935. Section 40 prescribed the manner in
which the business of the Governor-General in
Council was to be conducted. It provided that all
ordBrs and other proceedings of the GovernorQpnernl in Council shall be expressed to be made
by the Governor-General in Council and shall be
signed by a Secretary to the Government of India
or otherwise as the Governor-General in Council
may direct and shall not be called in question in
any legal proceeding on the ground that they were
not duly made by the Governor-General in Council.
In J.K. Gas Plant Manvfacturing Co., (Rampur)
Ltd., v. King Emperor ('),
certain persons were
accused of offences committed by them in contravention of els. (5) and (8) of the Iron and Steel
(Control of Distribution) Order, 1941, which order
was not expressed to be mad('. by the GovernorGenernl in Council as required by ·s.