P.C. Wadhwa Vs State of Punjab

1. This second appeal has been filed by the defendant against the judgment and decree dated 20th July, 1976 of the Additional District Judge, Chandigarh.

2. Briefly the facts are that in pursuance of advertisement dated 20-8-1951 issued by the Punjab Public Service Commission, Simla, for the post of Stipendiary Probationers for the Superior Forest Course at the Indian Forest College, Dehra Dun, the defendant applied and was selected by the Commission. He joined the Forest Department for preliminary practical training on 20-11-1951 and underwent the training until l7th March, 1952. On completion of the training he joined the Indian Forest College at Dehra Dun on 1st April, 1952. After successful completion of the training, he was to be appointed as PFS Class I Officer: It is averred that according to the'' conditions of the advertisement, the selected candidates were required to sign an agreement to the effect that they would serve the Department for not less than 5 years and in case they failed to do so, they would required all the monies spent by the Government on their training and education. The bond, however, could not be got signed from the defendant.

3. In September, 1952, he left the College without sanction of the Government and joined the Central Police Training College at Abu as he had been selected in I.P.S. The defendant was requested to return the amount of Rs. 3250/- spent by the plaintiff on him but he did not do so. Thereafter the Government started deducting the amount from the pay of the defendant who had by then joined the service as an I.P.S. Officer. He resisted the recovery of the amount and instituted a suit for declaration that the Government was not entitled to deduct the amount from his salary which was decreed by the trial Court on 21st June 1960. An appeal by the State against that decree was dismissed. The State came up in second appeal to this Court which was withdrawn considering that the remedy of the State was by way of a Civil suit. Consequently it instituted a suit for recovery of Rs. 3,250/- against the defendant.

4. The defendant contested the suit. He admitted that he underwent preliminary training till l7th March, 1952 and left the Indian Forest College, Dehra Dun, thereafter. However, he pleaded that he was under no legal obligation to get prior sanction of the Government for leaving the College. He further stated that no agreement was executed between the parties regarding the refund of the amount in case he did not join the service and, therefore, he was not liable to refund the same. He admitted that there was previous litigation between the parties and pleaded that the present suit was barred by the principle of res judicata. He also stated that the plaintiff was estopped from filing the suit.

5. The trial Court held that the suit was not barred by the principle of res judicata and that the plaintiff was entitled to recover Rs. 3,085.15P. from the defendant under S. 70, Contract Act. Therefore, the suit of the plaintiff was decreed for recovery of Rs. 3,085.15P. with proportionate costs.

6. The defendant went up in appeal before the Additional District Judge who affirmed the judgment and decree of the trial Court and dismissed the same. He has come up in second appeal to this Court.

7. The first question that arises for determination is as to whether the present suit is barred by principle of res judicata. The appellant, who himself argued the appeal, has contended that in the previous suit the respondent could take a plea that it was entitled to recover the amount under S. 70, Contract Act which it failed to do. Consequently it is not entitled to file a suit on that ground which is barred by virtue of Explanation IV to S. 11, Civil P.C.

8. I have duly considered the argument but do not find any substance therein. The earlier suit by the appellant was for declaration to the effect that the order of the State ordering deduction of Rs. 3,250/- from his pay was illegal and was, therefore, not binding upon him. He had further prayed that the State be restrained from deducting the amount from his pay. The main ground on which the relief was claimed was that the Government had no power to fix his liability for the amount summarily and it was bound to get a decree from a Court of law in case it wanted to enforce the liability. While deciding the suit the trial Court observed that the plaintiff (now appellant) disputed his liability to pay the amount to the defendant (now respondent) and the only alternative for the defendant was to enforce its right through a Court of law. The appellate Court affirmed the aforesaid view observing that the Punjab Government could not fix liability against the plaintiff in its discretion and realise the amount summarily by deducting the same from his pay. In view of the aforesaid findings it is clear that the earlier suit was decided on the ground that the Government could not deduct the amount in dispute from the salary of the appellant without having recourse to the Court of law. It is true that the State did not take the plea in that suit that it was entitled to recover the amount under S. 70, Contract Act but it was not necessary for it to take that plea. Explanation IV to S. 11 of the Code says that any matter which might and ought to have been made ground of defence or attack in such former suit would be deemed to have been a matter directly and substantially in issue in such suit. The explanation refers to the grounds of defence which would have been good and proper grounds of defence. In case the decision of the earlier case did not hinge on such a plea, that would not be covered by, the Explanation. In the above view I am fortified by the observations of a Division Bench in Kishan Chand v. Narinjan Das AIR 1928 Lah 967. In that case a suit was brought by the plaintiff to recover certain funeral expenses of the testator on the basis of his will which made provision for his funeral expenses. In the suit the validity of the will was disputed by the defendant. The will also contained a provision for ''election'' under certain conditions which was in dispute in the later suit brought by the defendant against the plaintiff. A contention was raised that a plea could be taken in the earlier suit regarding election and, therefore, that matter operated as res judicata. It was held that the matter did not operate as res judicata. The relevant observations of the Bench are as follows:--

"In that suit plaintiff pleaded inter alia that the will was the result of undue influence and therefore null and void, but did not specifically raise any objection to the provision in the will now under consideration. The contention of the learned counsel for the respondents is that owing to his failure to raise the objection in the previous suit, plaintiff is now precluded from raising it on account of Expl. 4, S. 11, Civil P.C. This contention does not appear to me to be sound. The claim in the previous suit was confined to a share of the funeral expenses, and that claim could only have been defeated by showing that the will as a whole or at any rate the provision in. the will relating to the sharing of the funeral expenses was null and void. The provision with regard to ''election'' even if it were held to be inoperative, could not have rendered the whole will null and void or affected in any way the claim with regard to the share of the funeral expenses. In the circumstances I feel no hesitation in holding that the matter is not res judicata and the question must therefore be decided on its merits."

I am in respectful agreement with the above observations. In the present case the suit filed by the appellant could have been decreed even if a plea had been taken by the State that it was entitled to the benefit of S. 70, Contract Act, and the same would have been accepted by the Court. After taking into consideration all the aforesaid circumstances, I reject the submission of the appellant.

9. The second contention of the appellant is that there was a condition in the advertisement that the selected candidates were to sign an agreement to serve the Department for not less than 5 years and that no such agreement was got executed by the State from him. He further argues that in view of Art. 299 of the Constitution also it. was necessary that the agreement between the parties should have been in writing. Therefore, according to him, the State cannot claim the benefit of S. 70, Contract Act, as a thing done cannot be held lawful if there is no written contract between them. In support of his contention he places reliance on Anath Bandhu Deb Vs. Dominion of India, .

10. I have duly considered the argument. Section 70, Contract Act, says that where a person lawfully does anything for another person 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 the., thing so done. It is evident from a reading of the section that a lawful contract is not prerequisite for taking action under it. A patty is entitled to take benefit of the section even if there is no contract between the parties or the contract between them is void. The section is founded on equitable principle of restitution and prevention of unjust enrichment. In the above view I am fortified by the observations of the Supreme Court in State of West Bengal Vs. B.K. Mondal and Sons, . In that case a suit was Bled by the plaintiff against the State of West Bengal claiming a sum of money for work done by him for the State. His claim was based on a contract and in the alternative under S. 70. The contract entered into between the parties did not conform with the provisions of S. 175(3), Government of India Act, 1935, which is equivalent to Art. 299 of the Constitution and, therefore, the terms of the contract could not be enforced. A contention was raised therein that the word ''''lawfully'''' in Section 70 must be read in the light of S. 23 of the said Act and that a thing cannot be said to have been done lawfully if, the doing of it is forbidden by law. The contention was rejected observing that it was not possible to hold that the delivery of a thing or a doing of a thing, the acceptance and enjoyment of which gave rise to a claim for compensation under S. 70 was forbidden under S. 175(3), Government of India Act, and so the interpretation of the word "lawfully" could not be applied to the facts of the case. The word "lawfully" in S. 70 was interpreted by their Lordships as follows:

"Therefore, in our opinion, all that the word "lawfully" in the context indicates is that after something is delivered or something is done by one person for another and that thing is accepted and enjoyed by the latter, a lawful relationship is born between the two which under the provisions of S. 70 gives rise to a claim for compensation."

While interpreting S. 70 the learned Judges further observed as follows:--

"Section 70 deals with cases where a person does a thing for another not intending to act gratuitously and the other enjoys it. It is thus clear that when a thing is delivered or done by one person it must be open to the other person to reject it. Therefore, the acceptance and enjoyment of the thing delivered or done which is the basis for the claim for compensation under S. 70 must be voluntary. It would thus be noticed that this requirement affords sufficient and effective safeguard against spurious claims based on unauthorised acts. If the act done by the respondent was unauthorised and spurious the appellant could have easily refused to accept the said act and then the respondent would not have been able to make a claim for compensation........normally a claim for compensation made under S. 70 may not mean the same thing as a claim for damages for breach of contract if a contract was subsisting between the parties.

Thus considered it would, we think, not be reasonable to suggest that in recognising the claim for compensation under S, 70 we are either directly or indirectly nullifying the effect of S. 175(3) of the Act or treating as valid a contract which is invalid. The fields covered by the two provisions are separate and distinct; S. 175(3) deals with contracts and provides how they should be made. Section 70 deals with cases where there is no valid contract and provides for compensation to be paid in a case where the three requisite conditions prescribed by it are satisfied. We are, therefore, satisfied that there is no conflict between the two provisions."

The above principle was reiterated in Mulamchand v. State of Madhya Pradesh AIR 1968 SC I218 , wherein it was observed that the provisions of S. 70 can be invoked by the aggrieved party to the void contract. The just condition to be satisfied under the section is that a person should lawfully do something for another person or deliver something to him; the second condition is that in doing the said thing or delivering the said thing he must not intend to act gratuitously; and the third condition is that the other person for whom something is done or to whom something is delivered must enjoy the benefit thereof. If these conditions are satisfied S. 70 imposes upon the latter person the liability to make compensation to the former in respect of, or to restore the thing, so done or delivered. So where a claim for compensation is made by one person against another under S. 70, the juristic basis of the obligation is not founded upon any contract or tort but upon a third category of law, namely, quasi-contract or restitution. It is further observed that in view of the above principle a person whose contract is void for non-compliance with Art. 299(1) of the Constitution would be entitled to compensation under S. 70. In Anath Bandhu Deb Vs. Dominion of India, , while interpreting S. 70, Contract Act, and S. 175(3) Government of India Act, the learned Judge observed that S. 70 could not be applied when the act done or delivered was not lawful, It could not be said that a person lawfully paid money to the Government when the contract with the Government in order to be enforceable was required by statute to be in particular form but the person disregarded that form. With great respect to the learned Judge, I am unable to accept the view expressed by him. Moreover, the view stands impliedly overruled in the cases referred to above. The appellant then drew my attention to the observations of the learned Judge to the effect that S. 70 could not be taken benefit of by the plaintiff in view of the circumstance that according to the tender the agreement was required to be signed. With great respect to the learned Judge, I have not been able to persuade myself to agree with these observations too. Whether the agreement in writing is provided by a statute or by mutual consent, that does not make any difference. Section 70 does not recognise any such distinction and it applies to both types of agreements. Consequently I reject the submission of the appellant.

11. The third contention of the appellant is that he did not take any benefit from the training imparted to him and, therefore, the provisions of S. 70 are not applicable. I do not find any substance in this submission too. The State gave to the appellant stipend during the period he underwent training and also, paid his college fee. It is true that he acquired! knowledge in a particular branch. However knowledge of all types is always helpful in one''s life. The training was not thrust upon him. He had the option to refuse to have the training, but he did not do so. The arrangement for his training was also not made gratuitously. The appellant had been sent for the training on his agreeing to se e the State for not less than 5 years. There was nothing unlawful in the act of the State in sending him for training. Therefore, the provisions of S. 70 are applicable to the present case.

12. The last contention of the appellant is that in the earlier case a settlement was arrived at between the parties at the instance of the State in view of which the appellant gave up the costs awarded by the Courts. He submits that the State was, therefore, estopped from bringing the suit for recovery of the amount. I have given my thoughtful consideration to the argument but also find no merit therein. The fact is that it was the appellant who requested the Government vide letter dated February, 1962, Exhibit D. 12, to withdraw the appeal. The ground on which he made the request was that the appeal would cause unnecessary harassment to him as he would have to engage a counsel, that he would remain under a constant worry and anxiety-till it remained pending and that in case the Government lost the case, that would mean an uncalled for charge on the public exchequer. After receipt of the letter the Government informed him that it was ready to consider his request in case he gave up the entire costs of litigation. Thereafter the appellant informed the Government vide letter dated 29th April, 1969, Exhibit D. 15, that he was prepared to give up the entire costs of litigation in case the Government withdrew the appeal.

13. From the above facts it is clear that the Government withdrew the appeal at the instance of the appellant. Promissory estoppel has been defined in Art. 344 of Halsbury''s Laws of England, Simonds Edition, Volume 15 as follows:--

"When one party has, by his words or conduct, made to the other a promise or assurance which was intended to effect the legal relations between them and to be acted on accordingly, then, once the other party has taken him at his word and acted on it, the one who gave the promise or assurance cannot afterwards be allowed to revert to their previous legal relations as if no such promise or assurance had been made by him, but he must accept their legal relations subject to the qualification which he himself has so introduced."

The matter was considered in a latest judgment of the Supreme Court in Motilal Padampat Sugar Mills Co. Ltd. Vs. State of Uttar Pradesh and Others, , wherein P.N. Bhagwati, J. (as he then was) speaking for the Bench, observed that the true principle of promissory estoppel seems to be that where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or effect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so having regard to the dealings which have taken place between the parties, and this would be so irrespective of whether there is any pre-existing relationship between the parties or not. The doctrine of promissory estoppel need not be inhibited by the same limitation as estoppel in the strict sense of the term. It is an equitable principle evolved by the Courts for doing justice. There is no dispute about the proposition enunciated in the aforesaid case. However, the principle is not applicable to the facts of the present case. As already mentioned in the present case, it was the appellant who made a request to the State for withdrawal of the appeal and in view of the request the State withdrew the same. No assurance by words or conduct can be said to have been given by the State that no legal action would be taken to recover the amount from him. Therefore, the principle of promissory estoppel does not apply to the present case.

14. For the aforesaid reasons I do not find any merit in the appeal and dismiss the same with no order as to costs.

Appeal dismissed.