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Petitioner: ALI MUHAMMAD VS Respondent: KARACHI METROPOLITAN CORPORATION and another
Court Name: Sindh High Court Judge(s): Saleem Akhter Title: ALI MUHAMMAD vs KARACHI METROPOLITAN CORPORATION and another Case No.: Suit No. 726 of 1978 Suit No.171 of 1972 Suit No. 171/72 Suit No. 171 of 1972 Date of Judgment:1985-03-17 Reported As: 1985 CLC 1730 Result: Suit decreed
JUDGMENT
JUDGMENT ' The plaintiff is a registered contractor with the defendant No. 1 for sufficiently long period. On or about 22-1-1977 the plaintiff was asked by the defendant No. 2 acting on behalf of the defendant No. 1 as its Executive Engineer for erection of a stage and railing at Nishtar Park where Z.A. Bhutto was to address a public meeting on 31-1-1977. The plaintiff agreed to carry out the work. The plaintiff was instructed to remove G.I. Pipes from Sher-Pao Garden and instal them in Nishtar Park. The plaintiff employed labour and when he started removing the G.I. pipes to Nishtar Park, the defendant No. 2 acting on behalf of the defendant No. 1 told the plaintiff on 25-1-1977 that he should not remove the pipes, but fix wooden posts and make three holes and run the ropes throughout. The plaintiff was instructed to dig hole of 14' x 14' and to erect poles firmly by using mixture. The plaintiff completed the work according to the instructions received from the defendant No. 2. On 26-1-1977 the defendant No. 2 instructed the plaintiff to supply 100 bamboo poles and 100 wooden bellies (timbers) and instal them for the purposes of fixing loud speakers. According to the plaintiff he performed the job and also supplied 100 bamboo poles. It is alleged that before the commencement of the job and during the work the defendant No. 2 had assured the plaintiff that payment of the bill would be made as work was being done for the then Prime Minister of Pakistan. During the work the Central and Provincial Ministers visited the site and also gave instructions and suggestions from time to time. After the public meeting was over on 31-1-1977 the defendant No. 2 alongwith the staff of the defendant No. 1 took away all materials supplied by the plaintiff except the wooden timbers which had been brought on hire. The particulars of all the materials have been given in paragraph 9 of the plaint. It is alleged that after one week of the public meeting the plaintiff submitted his bill to the defendant No. 1 through defendant No. 2 for Rs.84,900 but he was
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asked to wait till such time other public meetings at Hyderabad and Kakri Ground Karachi were held and the defendant No. 2 obtains sanction from the higher authorities. As no action was taken by the defendant No. 2 the plaintiff approached the Administrator of the defendant No. 1 for payment of his bills and he was assured that the bill would be paid. The plaintiff came to know that wooden post and manila ropes were sent to Hyderabad Municipality and the bamboos were appropriated by the defendant No. 1. The defendants had assured the plaintiff to make payment on receiving the same from Hyderabad Municipality and Government instructions were also issued for making payment but nothing was paid. The plaintiff wrote letters to the defendant No. 1 demanding payment of his bills. Finally the suit was filed. ' The defendants Nos. 1 and 2 have denied the claim. They have taken the objection that the suit is barred under section 42 of the Sind Local Government Ordinance, 1972 read with rule 5 of the Municipal Committee (Contract) Rules, 1960 as the contract was not executed in the manner prescribed by law. The defendants have denied that there was any contract between the plaintiff and the defendants and further pleaded that Jam Sadiq Ali Minister for Housing and Town Planning had asked Administrator of K.M.C. to send Contractors, who would make arrangement for public meeting at Nishtar Park. The plaintiff was accordingly directed to go and see him. It was further stated that defendant No. 2 did not have authority to order work for Rs.84,000. ' It was denied that any order was placed or that 100 bamboos were supplied to the defendants. It is further denied that the defendants had assured that they will pay for the work which the plaintiff was carrying out for Pakistan People's Pary. It was also denied that the wooden poles and manila ropes were handed over to Hyderabad Munici pality. The defendants denied that they are liable to pay any amount to the plaintiff. On the basis of pleadings issues were framed which have been re- cast with the consent of the parties as follows:-- (1) Did the plaintiff supply the material and render services to the defendant in respect of public meeting on 31-1-1977 under the instructions of the defendant No. 2 acting on behalf of the defendant No. 1? (2) Whether the plaintiff was awarded the work by the defendant Corporation for erection of stage and railing at Nishtar Park ? (3) Did the defendant No. 1 fail to pay the bill by the plaintiff though duly recommended by the Ministry concerned? (4) Whether the defendant No. 1 sent material to Hyderabad Municipal Corporation for use in the public meeting at Hyderabad, if so, its effect? (5) Whether the suit is barred under section 42 of the Sind Local Government Ordinance read with rule 5 of the Municipal Committee (Contract) Rules 1960? (6) Is the plaintiff entitled to the payment of his bill from the defendant, if so, for what amount? (7) What should the decree be? 'Issues Nos. 1 and 2: ' It will be convenient to take these issues together. The claim set out by the plaintiffs has been stated in the earlier part of the judgment. The defendant No. 2 has stated that under the instructions of the Administrator K.M.C. he had asked the plaintiff to carry out the work. This work as stated by the plaintiff first included the removal of G.I. pipes from Sherpao Garden, now known as Bagh-e-Quid-e-Azam and thereafter, he was asked to fix poles and bamboos and run the ropes, through the wooden posts for the purpose of holding public meeting at Nishtar Park. Although it has been alleged by the defendants that the work was to be done for a public meeting held by the Pakistan Peoples' Party, the fact remains that the entire instructions were issued by the defendants under the oral instructions issued by the provincial Minister for Local Government and Public Works. After the meeting was held, the plaintiff submitted his bill, and has given full details of the materials supplied and the services rendered. This has not been denied by the defendants at any stage
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except in the written statement. From the evidence on record, it is established that the plaintiff had supplied the materials mentioned in Exh. 5/1 and the work stated therein was rendered on the instructions of the defendant No. 1. The finding on both the issues is therefore, in the affirmative. Issue No. 3: ' It is an admitted position that the bill given by the plaintiff was not paid. The plaintiff has produced letter from the Government of Sind recommending payment to the plaintiff. The finding, therefore, is in the affirmative. The liability of the defendants to pay the bill has been discussed in issue No. 6. Issue No. 4: ' After the public meeting was held on 31-1-1977, manila ropes and 204 wooden posts were taken away by the Hyderabad Municipal Corporation for arranging a public meeting of similar nature there. This fact is fully established by the defendants' letter, dated 28-4-1977 Exh. 5/3. It is a letter addressed to the Administrator Hyderabad Municipal Corporation enclosing a bill of the plaintiff for Rs.52,314 towards the cost of manila ropes and wooden posts which the defendant had asked the plaintiff) to submit to them for onward transmission. In this letter it is stated that "the bill is sent herewith for making payment to the Contractor (plaintiff, directly." It is further stated that "the materials were arranged on your behalf by the K.M.C." It therefore, seems clear that the defendant No. 1 had arranged these materials and delivered to the Hyderabad Municipal Corporation. The finding to this issue is in the affirmative. The plaintiff is entitled to relief as discussed in the following issues. ' Issues Nos. 5, 6 and 7: ' As these issues are interlinked it would be proper to deal with them together. Mr. Muslim Naqvi and Mr. Munawar Ghani the learned counsel for the defendants have contended that in view of section 42 of the Sind Local Government Ordinance, 1972 and rule 5 of the West Pakistan Municipal Committee (Contract) Rules, 1960 unless the contract is made in the manner provided by law it is not binding on the defendant No. 1. Section 42 provides the manner in which the contract is made and subsection (7) provides that no contract otherwise in conformity of this section shall be binding on the Corporation. ' Mr. Ghulam Muhammad G. Ibrahim the learned counsel for the plaintiff contended that in cases of emergency it is not necessary to invite tender, and as it was a case of emergency the tenders were not invited and according to the practice as admitted by D.W. 2 in such case the papers are prepared after the work is completed. He has further contended that subsection (7) of section 42 is directory and not mandatory. In this regard the learned counsel has referred to the case of Saleemsons Ltd. PLD 1973 Kar. 1 where the principle governing the interpretation of statute for determining whether it is mandatory or directory has been laid down as follows:-- "To ascertain the real intention of the Legislature it is necessary to examine the subject-matter, the scope of the object of the enactment; whether the act creates public duties or confers private rights, whether any injury will result from ignoring it; whether it requires some antecedent and prerequisite conditions to the performance of an act or taking of a proceeding in order to invest it with validity". ' In the present case firstly the word 'shall' has been used and a certain procedure has been prescribed for making the contract. It is not to be ignored that the Ordinance and Rules regulate the working of the Municipal Corporation and the contracts are always made by the Officers concerned. The Municipality/Corporation have to work for the welfare of the people and spend public money. Therefore some limitation and procedure has to be prescribed to regulate the working of such officers who enter into contract on behalf of the Corporation. One of the main objects seems to be to put a check on wastage of public money. Considering the object, purposes
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and the benefits to be derived by such contracts, it seems necessary that a strict construction should be placed and the word 'shall' cannot be read as 'may'. In subsection (7) of section 42 the consequences of non-compliance with this provision have been stated and it has been clearly provided that any contract entered into otherwise than in conformity with the provision of section 42 will not be binding on the Council/Corporation. In the face of such a provision the conditions prescribed cannot be termed as 'directory', they are mandatory. The learned counsel for the defendants have relied on PLD 1968 Lah. 1419. It is now well-settled that contracts entered into with the Corporation is breach of statutory provisions and rule, as in the present case are not binding on any party. In the present case the parties have not entered into any contract. It was in compliance with the order of the defendant No. 1 that the plaintiff had rendered services and supplied goods. After the judgment was preserved the plaintiff filed an application under section 151, C.P.C. praying that the Advocate wanted to argue that even if there was no valid contract as provided by the Sind Local Government Ordinance, 1972 the plaintiff was entitled to compensation under sections 65 and 70 of the Contract Act. After notice to the other side, on 28-5-1984, I allowed the plaintiff to raise this argument as it did not require any additional evidence and the entire argument was purely legal. The learned counsel for the parties therefore, addressed on this aspect of the case as well. ' Mr. Ghulam Muhammad Ebrahim the learned counsel for the plain tiff contended that the plaintiff was entitled to press into service sections 65 and 70 of the Contract Act which read as follows:-- 65. Obligation of person who has received advantage under void agreement of contract that becomes void.--When an agreement is discovered to be void, or when a contract becomes void, any person who has recived 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. 70. 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 delivered. ' According to the learned counsel as the defendant No. 1 has benefited by the services rendered by the plaintiff inasmuch as the goods including bamboos, nylon ropes and wooden posts have been appropriated by the defendants, the plaintiff is entitled to compensation. ' The question whether sections 65 and 70 of Contract Act will apply to the cases in which the agreement with the Municipal Council/ Corporation is not enforceable due to non-compliance of technicalities regarding execution of the contract has been approached by various High Courts in the past and there seems to be differences of opinion. One set of decisions has taken the view that if the contract has been not executed as required by the statutes, section 65 or 70 cannot be invoked by any party. The other view is that equitable interpretation has to be placed on sections 65 and 70 and in cases where agreement entered into with unauthorised person or in unauthorised manner is discovered to be void or unenforceable, the party to whom any service has been rendered or goods have been delivered must return the same or compensate the other party. The cases in favour of the first view have mainly relied on the leading English decision in H. Young and Company v. Mayor of Corporation of Royal S.P. (1883) 8 Appeal Cases 517. For the purposes of the present case I will restrict to cases relating to contract by or with the Municipal Corporation. The view that where the contract is required to be executed in a particular form and the statutory provision relating to execution of the contract has not been complied with the same is invalid and not binding on any party notwithstanding that there has been a part performance of the contract, has been expressed in the following cases:-- (1) Radha Krishna v. Municipal Board Benares I L R 27 All. 592.
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(2) Mathura v. Ram 43 Cal. 790 (814). (3) Mahomed v. Commissioner, Chittagong Port 54 Cal. 189. (4) Eiekiel v. Annada 36 CLJ 109. (5) Raman Chetti v. Municipal Council, Kumbakonam 30 Mad. 290. (6) M.M. Sherazee v. District Council Kayambse AIR 1937 Rang 378.' (7) Chairman S.B. Municipality v. Amulya 34 Cal. 1030. ' It was also held in the following cases that where the contract with a Municipality has not been executed in accordance with the statutory provision it is void and money cannot be recovered by the person for the goods supplied or work done under such contract. Municipal Board Lucknow v. Deb. 137 I.C. 574=AIR 1932 Oudh 193, and Srivilliputtur v. Arunachala 144 I C 784. ' Mr. Muslim Naqvi the learned counsel for the defendants has also referred to an unreported decision of a learned Single Judge of our Court in Suit No. 171 of 1972 Mohammad lqbal Abdul Qadir v. Karachi Municipal Corporation, decided on 27-9-1973. Mr. Naqvi has solely relied upon this judgment, therefore, I feel necessary to examine it. In this case K.M.C. had invited tenders for supply of 1,400 manholes made of angle iron. The plaintiff submitted the tender where he agreed to supply the same and a contract was entered into in July, 1960 which contained an arbitration clause. The plaintiff agreed to charge 14% below the estimated cost of Rs.35,000. The plaintiff supplied 150 manholes made of angle iron in terms of contract but the remaining 1,250 manholes supplied by the plaintiff were made of cast iron. The plaintiff was paid 23,500 and on completion of supply he made a further claim. The arbitrator made an award in favour of the plaintiff for Rs.42,185. The learned Single Judge set aside the award and did not make it rule of the Court. The question before the learned Single Judge was whether the deviation in the nature of work permitted by Engineers of the K.M.C. constituted a valid contract and if so did the oral contract form part of the original contract so as to attract arbitration clause. After referring to the provision of section 26 of the Municipal Administration Ordinance, 1960 which is similar to section 42 of the Sind Local Government Ordinance, 1972 and rule 5 of the West Pakistan Municipal Committee (Contract) Rules, 1960 which is also applicable to the present case, relying on H. Young and Company v. The Mayor and Corporation of Royal S P A and after extensively quoting Mulla's Commentary on section 65 of Contract Act it was observed as follows:-- "Considering the effect of sections 65 and 70 of the Contract Act I will sum up by saying that the subsequent oral contract should initially be made by an authorised person and in a lawful manner but if on the other hand it is done by an unauthorised person in violation of law, these provisions will not be attracted." It was further held:-- "A person who disregards the express and clear statutory conditions governing the making of contracts creates the effect of rendering the agreement unenforceable and in such cases an agreement is not discovered to be void within sections 65 and 70 of the Contract Act. Moreover, the doing of an act in violation of the expressed terms of the statute can possibly confer no rights by virtue of section 70 of the same Act because initially his act is not lawful or in accordance with law." ' This judgment has taken into consideration Ramman Chati v. Municipal Council of Kumbakonam 30 Mad. 290, Ahmadabad Municipality v. Sulemany I L R 27 Bom 618 and D. Vanjceswara Ayyar v. District Board South Arcot AIR 1941 Mad. 887. It seems that the authorities which have expressed the contrary view were not brought to the notice of the learned Judge and I would like to refer them also.
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' Mr. Ghulam Muhammad Ebrahim the learned counsel has also referred to Mian Akbar Hussain v. West Punjab Government PLD 1954 Lah. 188 where the Excise & Taxation Department issued temporary licence for the sale of opium and liquor for a period of one year to the appellant. He paid the licence fee for some time, but afterwards he fell in arrears for which a demand of Rs.73,916 was made. Thereupon the appellant instituted a suit for declaration that nothing was due from him to the Punjab Government and prayed for permanent injunction. The trial Court dismissed the suit. In appeal it was held that the Excise Commissioner Punjab who had issued the licence at the relevant date was not competent to do so, and therefore, the licence issued by the Officer was invalid, and the demand of the Government of Punjab was not sustainable. The appeal was allowed and the decree was passed in appellant's favour. In Letters Patent Appeal while holding that no proper Notification was issued, it was observed that "the principle of section 65 of the Contract Act could be invoked by the Provincial Government and the Court could order the appellant to pay the Provincial Government the benefits which he has derived from the sale of articles which he could not have sold without licence'. As no reasoning has been given in this judgment, it may not be of much assistance to the present controversy. ' The learned counsel for the plaintiff has referred to Dr. Fazal Din v. Municipal Committee Lyallpur PLD 1956 Lah. 916. In this case the Municipal Committee had invited tenders for the lease of land which was submitted by the appellant and accepted by the Municipal Committee. A document purporting to be a lease-deed was executed between the parties and the lease was granted to the appellant for one year. The possession was delivered to the appellant, but on his failure to pay the lease money, the lease was reauctioned. The Municipal Committee forfeited Rs.10,000 already paid by the appellant and made a further claim of Rs.38,000 being the difference between the lease money the appellant had agreed to pay and the lease money which was secured by reauction. The appellant inter alia pleaded that possession was not delivered to him and the terms of contract were not complied with by the Municipal Committee. The learned Senior Civil Judge held that the appellant had committed default and the Municipal Committee was entitled to the damage. In the 1st Appeal filed in the High Court, for the first time, the appellant argued that because of the failure to comply with section 6, Punjab Municipal (Executive Officers) Act, 1931 and section 107 of the Transfer of Property Act there was no valid lease and the Municipal Committee could not claim any amount. It was held that the agreement was wholly void and not binding either on the plaintiff or the defendant. Thereafter the question arose whether relief could be granted on the basis of sections 65 and 70 of the Contract Act and it was observed that "although it was not pleaded in the plaint even if the agreement is found to be void, the defendant should restore any benefit which he may have derived from the contract, we consider it only just that the question of benefit should be gone into and a decree passed in favour of the plaintiff/respondent. "While considering the effect of sections 65 and 70 of the Contract Act the following observation was made:-- "It was urged before us by learned counsel for the appellant, though only halfheartedly, that no relief by way of quantum meruit could be granted under sections 65 and 70 of the Contract Act. Learned counsel relied on the unreported judgment of this Court to which we have already referred. In that case no relief was granted to the Committee but there is no discussion in the judgment of the question as to why restoration of benefit cannot be ordered. There is in favour of the appellant, no doubt a judgment of the Full Bench of the Oudh Chief Court in Municipal Board Lucknow v. S.C. Deb. It was held in that case that although section 65 did cover the ease, it was not to be applied because the provision in the U.P. Municipalities Act making the contract not binding on the Committee was in the nature of a special law which should apply to the execution of general law. Another ground of decision was that a person could not be allowed to do indirectly what he was not allowed to do directly. Reliance was placed by the learned Judges of the Full
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Bench on an English case which went up to the House of Lords. This Full Bench case of the Oudh Chief Court was dissented from by a Bench of the Madras High Court, consisting of Abdur Rahman and Panrang Row JJ, in Madura Municipality through Commissioner v. K. Alagirisami Naidu. After a full consideration of the point, we are in entire agreement with the view expressed in the Madras case and for the reason it is not necessary to enter into a detailed discussion of the matter. In this Court relief has always been granted on the basis of quantum meruit vide Municipal Committee Gujranwala v. Fazal Din and Municipal Committee Lahore v. Miran Bakhsh and this is the view generally accepted by the High Courts in pre-Partition India vide Zulaing v. Yamethin District Council Muhammad Ebrahim Molla v. Commissioner for the Port . of Chittagong and Pallonjee Eduljee & Sons v. The Lonavla City Municipality. ' It will be seen that reliance entirely has been placed on the reasoning of Madaura Municipality through Commissioner v. K. Alagirisami Naidu A I Ft 1935 Mad. 957 where while holding that there was no valid contract between the parties the following observation was made:-- "This is, however not enough to dispose of the case. The defendant had admittedly taken the rubbish and nightsoil from the Municipal Depots for the whole year and has already paid as stated above, a large portion of the amount out of what he had agreed to pay. Should the Municipality be held disentitled then to recover the balance or any other sum which may be found to be due either on the basis of quantum, valabat or on the principle embodied in section 70, Contract Act on the ground that the contract has been found to be unenforceable? There was a divergence of opinion on this point, so far as this Court is concerned and some of the cases had gone to the length of deciding that when an agreement was found to be unenforceable for want of fulfilment of statutory…
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