The payment of the money to Smt. Rat Kumari Soni by the Government was also not made as rent but it was paid as compensation for use and occupation under Section 70 of the Indian Contract Act. That being so in my opinion, no relationship of landlady and tenant exists between the parties.
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Himachal Pradesh High Court
Smt. Rajkumari Soni vs State Of Himachal Pradesh on 1 June, 1971
Equivalent citations: AIR 1972 HP 1
Bench: M Beg, C R Thakur
1. This revision petition had been referred to the Division Bench by Hardayal Hardy Judge. Delhi High Court, in August 1970 when that High Court had its jurisdiction over Himachal Pradesh. The point referred to is whether the said respondents (Union of India and Himachal Pradesh Administration), now substituted by the State of Himachal Pradesh vide order, dated 8-4-1971 are tenants within the meaning of the East Punjab Urban Rent Restriction Act. 1949?
2. Smt. Rai Kumari Soni is the owner of a building known as "Onkar Lodge" at Simla. On 9-4-1965. Dr. D. D. Arora. Deputy Director of Health Services and Dr. D. K. Bhattacharya. Assistant Director of Health Services, with the approval of the Director of Health Services. Himachal Pradesh took from the petitioner the lower flat of the aforesaid building on a monthlv rental of Rs. 150/-. On 13-1-1966 Smt. Raj Kumari Soni filed an application before the Rent Controller for eviction of Dr. D. D. Arora and Dr. D. K. Bhattacharya from the premises on the ground of non-payment of rent. The respondents paid Rs. 567-10 Paise as rent upto 28-1-1966 at the rate of Rs. 53/- per month and the petitioner accepted the same under protest. The respondents had also pleaded that the Rent Controller had no jurisdiction to entertain the petition as the tenant was the Union of India and not the respondents impleaded in the application. It was on that basis that the application was withdrawn by her on 2-5-1967.
3. On 22-7-1967 the landlady filed a fresh application, out of which this reference on a revision petition has arisen. The petitioner alleged that a sum of Rs. 3,482-90 Paise was due from the respondents on account of rent from 11-4-1965 to 10-7-1967. The respondents in their reply dated 21-12-1967 admitted that certain offices were located in the premises in question but that the contract was not made as envisaged by Article 299 of the Constitution of India and there being no valid regular lease the petition was not maintainable. It was also pleaded that they had not agreed to pay the rent as calculated by the Punjab Provincial Division (Sic).
4. The Rent Controller held that Dr. D. D. Arora and Dr. D. K. Bhattacharya admittedly the employees of the respondents took the premises in question from the petitioner and that the tenancy in the previous proceedings was also admitted by the two doctors: that those premises were admittedly used for the offices of the respondents. In view of this, he held that the relationship of landlady arid tenant existed between the parties. Further it was held that the rent was Rs. 150/- per month. The rent being not paid on the first date of hearing the respondents were liable for eviction and he accordingly passed an order on 24-7-1968 directing the respondents to vacate the premises in one month's time.
5. The respondents filed an appeal before the Appellate Authority and the same pleas were reiterated by the appellant. The main plea was that the agreement was in contravention of the provisions of Article 299 of the Constitution and as such the relationship of landlady and tenant did not exist between the parties. The Appellate Authority observed that it is not disputed that no contract was made between the President and the petitioner in respect of the lease in dispute. Relying on K. P. Chowdhry v. State of Madhya Pradesh AIR 1967 SC 203 and Dr. H.S. Rikhy v. New Delhi Municipal Committee, AIR 1962 SC 554, he held that there was no contract between the appellant and the respondents transferring the lease rights in favour of the appellant as required by Article 299 of the Constitution of India. Further he held that there was no valid lease in favour of the appellants and the relationship of landlady and tenant did not come into existence between the parties. The respondents in their reply have admitted that there are offices located in the premises mentioned in the petition. The appellant may be bound to pay compensation to the petitioner for use of the premises but in the absence of a contract as contemplated by Article 299 of the Constitution it cannot be found that there is valid lease in favour of the appellants and on that basis the appeal was allowed and the order of the Rent Controller was set aside and the application was dismissed.
6. Against this order of acceptance of the appeal and dismissal of her application for eviction of the Union of India and the Himachal Pradesh Administration, a revision was filed under Section 15 (5) of the East Punjab Urban Rent Restriction Act by the landlady. Before the learned Judge in revision it was contended that it was not necessary that in every case there should be a written document as envisaged by Article 299 of the Constitution. If a Government Servant acts in excess of authority Government is bound by his action if it ratifies the excess and that the Union of India had admitted the tenancy in a suit brought by it against Smt. Raikumari Soni. This admission amounted to ratification of action of the Director and his subordinates. It was in view of these circumstances that the learned Judge found that neither the Appellate Authority nor the Rent Controller had applied his mind to the definition of 'tenant' given in the aforesaid Act. He found that there is no dispute between the parties and that the rent of the premises in question is being paid by the respondents, namely the Union of India and the Himachal Pradesh Administration or in any case on their account. It is in these circumstances that he formulated the question and referred it to the Division Bench as there was no authority dealing with the impact of Article 299 of the Constitution in a case arising under the provisions of the aforesaid Rent Act.
7. 'Tenant' according to Section 2 (i) of the Act, means "any person by whom or on whose account rent is payable for a building or rented land and includes a tenant continuing in possession after the termination of the tenancy in his favour, but does not include a person placed in occupation of a building or rented land by its tenant, unless with the consent in writing of the landlord or a person to whom the collection of rent or fees in a public market, cart-stand or slaughter-house or of rents for shops has been farmed out or leased by a municipal, town or notified area committee." From a bare reading of the definition of the word 'tenant' it would appear that any person by whom or on whose account rent is payable for a building is also included in the definition of tenant. Here, in the instant case, the premises have been taken for running the offices of the Medical Department and the rent is also payable on account of the State of Himachal Pradesh. So that wav the State of Himachal Pradesh does fall within the definition of a tenant as the building is used by the employees for running of the office of the Government and the rent is also payable on behalf of the Government. The employees who actually took the premises of Smt. Rai Kumari Soni are not paying the rent from their pocket. However, the contention of the respondents is that they are not bound by any agreement of their employees as the agreement does not conform to the requirements of Article 299 of the Constitution of India. The provisions of Article 299 (I) read as under;
"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."
8. Thus from the reading of the provisions of the Article, it is evident that in order to comply with the requirements of the said Article the Contract:--
(a) must be executed by a person duly authorised by the President or the Governor, as the case may be.
(b) must be executed by such person on behalf of the President or the Governor, as the case may be and
(c) must be expressed to be made by the President or the Governor, as the case may be.
9. The article does not prescribe any particular mode in which the authority must be conferred by the President or the Governor. Hence it is obligatory On the party contending that the contract is not in conformity with the requirements of the article to establish by evidence as to what is the prescribed mode for execution of contracts on behalf of the President or the Governor. Here no Rules or notification have been produced by the respondent to show in what particular manner the contract had to be executed. However, from the plain reading of Article 299 it is evident that the words 'expressed to be made' connote that there must be a deed or a formal written agreement executed by a person duly authorised under this article. In the instant case, the contract is oral and is apparently against the explicit provisions of Article 299. It is no doubt true that there is no prescribed mode but the contract must be in writing.
10. Learned counsel for the petitioner contends that it is not necessary that the contract should be in writing and support is sought to be derived from Chatturbhuj Vithaldas Jasani v. Moreshwar Parashram, AIR 1954 SC 236. It was a case under the Representation of the People Act in which the election of Chatturbhuj Vithaldas Jasani was challenged on the ground that he was subject to the disqualification set out in Section 7 (d) of the Representation of the People Act, as he was interested in a contract for the supply of goods to the Central Government on the date of his nomination as well as on the date when the results were declared. It was contended on behalf of Chatturbhui that, the contracts by the department with the firm of which he was a partner were not expressed to be made by the President and as such they were void- It had been held that "the provisions of Article 299 (I) were not inserted for the sake of mere form. 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 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 contracting party should not suffer because of this and if there is no other defect or objection Government will always accept the responsibility."
11. It was further held "that the Chairman of the Board of Administration acted on behalf of the Union Government and his authority to contract in that capacity was not questioned. There can equally be no doubt that both sides acted in the belief and on the assumption, which was also the fact, that the goods were intended for Government purposes, namely amenities for the troops. The only flaw was that the contracts were not in proper form and so because of this purely technical defect, the principal could not have been sued. But that is lust the kind of case that Section 230 (3). Contract Act, is designed to meet.
It would be disastrous to hold that the hundreds of Government 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 document couched in a particular form. It may be that Government will not be bound by the contract in that case, but that is a very different thing from saving that the contracts as such are void and of no effect. It only means that the principal cannot be sued; but there would be nothing to prevent ratification, especially if that was for the benefit of Government. When a Government Officer acts in excess of authority Government is bound if it ratifies the excess. The contracts in question were not void simply because the Union Government could not have been sued on them by reason of Article 299 (I)".
12-13. Reliance is also placed on M/s Davecos Garments Factory v. State of Rajasthan, AIR 1971 SC 141. It was a suit filed by the respondents against the appellant for recovery of Rs. 86,000/-as damages for breach of contract on the basis of agreements which were executed by the Inspector General of Police, Rajasthan. The objection of the appellant in that suit was that the agreements are not in accordance with Article 299 of the Constitution of India and hence the suit was not maintainable. The agreement was signed by the Inspector General of Police. Rajasthan. Jaipur, but he did not write after his signatures 'signed on behalf of the Governor'. In that case the objection was not that the Inspector General of Police was not duly authorised to execute the agreement in this behalf. The objection was only with regard to the form of Execution i.e. the Inspector General of Police while signing should have described himself to have signed on behalf of the Governor. Repelling the objection of the appellant. His Lordship held:
"In the absence of any properly framed Rule requiring the specific mention of the words "on behalf of the Governor" at the place where the authority authorised by the Governor to enter into the contract has to append his signature It is not possible to hold that the agreement in the present case did not fully comply with the requirements of Article 299 (I) of the Constitution."
This authority, therefore, does not assist the petitioner. In the case in hand there was no written agreement. It was an oral agreement and that was also entered into by the Assistant Director of Health Services with the approval of the Director of Health Services and it is doubtful if the Director of Health Services could delegate the power, if he had any from the President to enter into an agreement on his behalf. So this oral agreement entered into by an unauthorised person could have no legal sanction behind it and the Government could not be bound by an agreement entered into by an unauthorised person especially when it did not conform to the requirements of Article 299 (I) of the Constitution.
14. The learned counsel has also placed reliance on The Union of India v. M/s. Anglo Afghan Agencies, AIR 1968 SC 718 to support his contention that the respondents are estopped from denying that they were not tenants when it had been admitted in the suit (copy of which is placed on the record) filed by the Union of India against Smt. Raj Kumari Soni for damages that they were tenants of the premises and that wav also the Government had ratified the action of its employees. No doubt, it was held in the aforesaid case that even though the case did not fall within the terms of Section 115 of the Evidence Act, it was still open to a party who had acted on a representation made by Government to claim that the Government shall be bound to carry out the promise made by it even though the promise was not recorded in the form of a formal contract as required by Article 299 of the Constitution. But this view has now been superseded by a later authority of the Supreme Court reported in Mulamchand v. State of Madhya Pradesh. AIR 1968 SC 1218 wherein it has been held that--
"The provisions of Section 175 (3) of the Government of India Act. 1935 or the corresponding provisions of Article 299 (I) of the Constitution of India are mandatory in character and the contravention of these provisions nullifies the contracts and makes them void. There is no question of estoppel or ratification in such a case.
These provisions have not been enacted for the sake of mere form but they have been enacted for safeguarding the Government against unauthorised contracts. They are based on the ground of public policy, on the ground of protection of general public, and these formalities cannot be waived or dispensed with. If the plea of estoppel or ratification is admitted that would mean in effect the repeal of an important constitutional provision intended for the protection of the general public".
15. Reliance was also placed on Union of India v. A.L. Kallia Ram, AIR 1963 SC 1685 where it was held:
Section 175 (3) does not in terms require that a formal document executed on behalf of the Dominion of India and the other contracting party alone is effective. In the absence of any direction by the Governor General under Section 175 (3) of the Government of India Act prescribing the manner, a valid contract may result from correspondence if the requisite conditions are fulfilled. It is true that Section 175 (3) uses the expression "executed" but that does not by itself contemplate execution of a formal contract by the contracting parties. A tender for purchase of goods in pursuance of an invitation issued by or on behalf of the Governor General of India and acceptance in writing which is expressed to be made in the name of the Governor General and is executed on his behalf by a person authorised in that behalf would conform to the requirements of Section 175 (3).
A tender notice was issued by the Government of India, Department of Food (Division III), in the name of the Chief Director of Purchases who had authority to contract for sale of "War disposal" goods and sign the contract. In his letter submitting a tender the respondent offered to purchase the goods on certain rates and conditions. The acceptance note was signed by the Chief Director of Purchases in his official designation without stating in the description that the contract was executed on behalf of the Governor General. Further held that the correspondence between the parties ultimately resulting in the acceptance note, amounted to a contract expressed to be made by the Government and therefore by the Governor General who had invited the tender through the Director of Purchases and it was the Governor General who through the Chief Director of Purchases accepted the tender of the respondent subject to the conditions prescribed therein. No Rules made by the Governor General had been placed before the Court showing that in executing a contract fox the sale of "War disposal" goods, the officer authorised in that behalf must describe himself as signing on behalf of the Governor-General of India".
16. In the aforesaid case no doubt there was no formal agreement but there was correspondence between the Parties for inviting tenders and accepting the same. The only snag in that was that the Chief Director of Purchases had not signed the acceptance note describing himself as signing on behalf of the Governor General of India. Therefore, this authority does not assist the petitioner in any way. The present contract is purely oral and is entered into by the Deputy Director and the Assistant Director of Health Services Himachal Pradesh with the approval of the Director of Health Services. But, it is not known whether the Director who. I believe, was duly authorised to enter into a contract on behalf of the Government could delegate his powers further to his subordinates.
17. The learned counsel for the respondents has also placed reliance on AIR 1962 SC 554. Dr. H. S. Rikhy v. New Delhi Municipal Committee and this case has already been referred to by the Appellate Authority in its order whereby the order of the Rent Controller was set aside. It supports the contention of the respondent in all respects. Further, he has also relied in Abdul Rahiman Khan v. Sadasiva Tripathi, AIR 1969 SC 302 and Konappa Rudrappa Nadgouda v. Vishwanath Reddy, AIR 1969 SC 447, However, these cases are under the Representation of the People Act and have no relevancy for the present purposes.
18. The authority reported in AIR 1954 SC 236 (supra) is also under the Representation of the People Act and that principle cannot usefully be applied to the facts of the present case. Even if it may be held to be applicable, still the latest Supreme Court decision reported in AIR 1968 SC 1238 supra has superseded the previous view and it has laid down in quite unequivocal and clear words that a contract which is absolutely Void cannot be ratified. The contract in the present case has been made by a Government servant without complying with the requirements of Article 299 of the Constitution and the Government is not competent to validate such a contract by ratification as the same is void and if the void contracts are ratified by the Government the very purpose of the provision under Article 299 would be rendered nugatory. Therefore, the admission of the Government at one stage which is sought to be employed by the learned counsel for the petitioner tantamounting to ratification cannot bind the Government as the contract itself was void and not binding and the Government could withdraw that admission at any time.
19. The payment of the money to Smt. Rat Kumari Soni by the Government was also not made as rent but it was paid as compensation for use and occupation under Section 70 of the Indian Contract Act. That being so in my opinion, no relationship of landlady and tenant exists between the parties.
20. In view of the above finding, this revision petition is hereby dismissed. In the circumstances of the case the parties are left to bear their own costs.
M.H. Beg, C.J.
21. I have had the advantage of going through the judgment prepared by my learned brother Chet Ram Thakur. I concur with the conclusion reached by my learned brother that the revision application should be dismissed. I would, however, like to add some observations to support this concurrence.
22. There is no doubt that Article 299 of the Constitution imposes upon the executive authorities of the Union or a State the mandatory duty of executing agreements, which are to be recognised as contracts, in accordance with the provisions of Article 299 (I) of the Constitution so that the absence of a duly executed contract means that no party could rely on it. K.P. Chowdhury v. State of Madhya Pradesh. (AIR 1967 SC 203) was a case in which the mandatory provisions of Article 299 (I) of the Constitution stood in the wav of the recognition even of an implied contract. As was pointed out in Mulamchand v. State of Madhya Pradesh (AIR 1968 SC 1218), the provisions of Article 299 (I) of the Constitution, which are mandatory in character, were intended to safeguard the State against unauthorised acts of its servants. In the circumstances of that case, it was held that the doctrine of estoppel or ratification of an agreement could not convert it into a contract in the teeth of the provisions of Article 299 (I) of the Constitution.
23. On the other hand, a reference to the Union of India v. Anglo Afghan Agencies, (AIR 1968 SC 718), which has been cited on behalf of the applicant landlady, shows that a person acting on a representation made by the Government may still claim that the Government is bound to act in accordance with the representation made even though neither the requirements of a contract governed by Article 299 of the Constitution nor those of an estoppel, within the terms of Section 115 of the Evidence Act, may have been fulfilled. My learned brother treated the principle laid down in this case as having been overruled by Mulamchand's case, AIR 1969 SC 1218 (supra).
24. I do not think that it is necessary for us to enter into the question whether the principles enunciated in cases relating to Article 299 of the Constitution are really in conflict. It may be that in a suitable case, even in the absence of a contract, duly executed in accordance with the provisions of Article 299 of the Constitution, the Government may have so acted, in the circumstances of the particular case, as to enable a claim for the specific performance of some obligation incurred to execute a lease in accordance with Article 299 of the Constitution to be enforced notwithstanding the provisions of Article 299 of the Constitution. That sort of case does not however, seem to have arisen before the Supreme Court. No doubt the doctrine of estoppel cannot operate against the provisions of a Statute, and much less against the provision of the Constitution but Article 299 (I) does not seem to be so wide as to operate as a bar against an obligation upon the State to comply with its provisions and to execute a contract in accordance with Article 299, provided grounds of such an obligation are made out on principles quite apart from those of a purely contractual liability. The Supreme Court authorities appear to me to go no further than to lay down that, where a contract, executed in accordance with Article 299 (I) of the Constitution, is essential for creating a contractual obligation, such a contractual obligation cannot arise without complying with Article 299. Equitable or even constitutional obligations may however, arise or exist apart from any such contractual obligations.
25. In the instant case, there is no question of any equitable or constitutional obligation apart from an agreement alleged to constitute a lease. The applicant-landlady came forward with the allegation that there was such an agreement. One of the contentions was that even a bare agreement should be construed as a contract of tenancy with the State within the meaning of Section 2 (1) of the East Punjab Urban Rent Restriction Act, 1949. Even if such a contention were tenable, an agreement on the essentials of a lease between the applicant-landlady and the alleged tenant, the State authorities, had to be established. After having been taken through the pleadings and the evidence on record. I am unable to find an agreement by the duly authorized State authorities on the amount of the rent to be paid. It was not even proved that the persons through whom the alleged agreement of tenancy was said to have been entered into with the landlady were duly authorized to negotiate on behalf of the State or to bind the State in any way whatsoever. In these circumstances, the remedy of the landlady was really to file a suit against the actual occupants for eviction as trespassers and to claim damages from them. Even the occupants could not be proceeded against, under Section 13 (2) of the East Punjab Urban Rent Restriction Act, 1949, without proof of all essentials of an agreement constituting a lease. The applicant-landlady had however, by omitting the actual occupants from the array of parties, although she had impleaded them and not the Union of India or the State of Himachal Pradesh in an earlier application debarred herself now from obtaining any relief against even the actual occupants as "tenants" within the meaning of the Act.
26. In view of the state of evidence relating to the actual agreement alleged to constitute a tenancy of the opposite parties, I am unable to see how the applicant-landlady can obtain any relief under Section 13 (2) of the Act against the Union of India or the State of Himachal Pradesh. She has other remedies against the actual occupants. I would dismiss this application on this short ground instead of dealing with more difficult question whether Article 299 of the Constitution stands in the way of creating obligations other than those resting on contract. That question is not involved here. In the instant case, the applicant-landlady relied upon an actual contract. Therefore, on the facts of this case, it was necessary to show that a contract was duly executed by the State authorities in accordance with the provisions of Article 299 of the Constitution. There is as I have already mentioned, no question of any other kind of relationship arising between the parties. The merely erroneous admission of the alleged tenancy, even though neither the elements of a lease nor the required execution of a lease in accordance with Article 299 of the Constitution are found in this case, would not bind the opposite parties. I therefore, concur with the conclusion reached by and the order proposed by my learned brother.
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