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PETITIONER: LALITESHWAR PRASAD SAHI

       Vs.

RESPONDENT: BATESHWAR PRASAD AND OTHERS

DATE OF JUDGMENT: 07/10/1965

BENCH: SIKRI, S.M. BENCH: SIKRI, S.M. GAJENDRAGADKAR, P.B. (CJ) WANCHOO, K.N. HIDAYATULLAH, M. SHAH, J.C.

CITATION:  1966 AIR  580            1966 SCR  (2)  63  CITATOR INFO :  F          1969 SC 302  (10)  E          1980 SC1109  (4)

ACT: Representation of the People Act, 1951-S. 7(d)-Contract with Government  not complying with provision of Art. 299 of  the Constitution--Not   subsequently  ratified  by   Government- Whether disqualifies candidate.

HEADNOTE: In  an  election  petition  filed  by  the  appellant,   the respondent’s election to the Bihar Legislative Assembly  was challenged,  mainly on the ground that he  was  disqualified under  s.  7(d) of the Representation of  the  People  Act., 1951,  as  he  had entered into a contract  with  the  State Government  which was subsisting on January 14,  1962,  i.e. the date fixed for filing nomination papers. One  S  had entered into a contract in 1951 with  the  State Government. for certain construction work and the respondent was  working  as a subcontractor under him.   As  there  was delay  etc. in the completion of the work by S, in  exercise of  a power reserved to the State Government in cl. 3(c)  of the  agreement with S, whereby the Government  could,  under certain circumstances, make alternative arrangements for the completion  of  the  work, the  Executive  Engineer  of  the Government  approached  the respondent to  ascertain  if  he would  complete the work instead.  In a letter addressed  to the  Executive Engineers, the respondent offered to  do  the work   on  certain  terms  and  this  offer  was   accepted. Thereafter,   various  letters  were  exchanged   with   the respondent  by the S.D.O. and the Executive  Engineer  about the  progress of the work.  However, after most of the  work to be done by the respondent was completed,, S was  restored as the contractor and further correspondence about the  work done by the respondent and regarding the payment for it  was conducted by the concerned officers of the State  Government with  S. The payment for this work remained’ outstanding  on the date for filing nomination papers in January 1962. The Election Tribunal allowed the petition and declared  the

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respondents’  election  to  be void.   But  the  High  Court reversed  this decision and held that the respondent had  at all  relevant times continued to be a sub-contractor  of  S, and  that  even assuming there was a  contract  between  the respondent  and the State Government, the  alleged  contract was void in view of Art.. 299(1) of the Constitution. On appeal to this Court, HELD: (per majority) No  contract  between  the first respondent  and  the  State Government subsisted at the relevant time and the respondent was not disqualified under s. 7(d). The   correspondence  in  the  case  clearly  disclosed   an agreement  for the execution of work between  the  Executive Engineer and the respondent, But the fact that by virtue  of cl.  3  (c) of the contract with S,  the  Government  could, under certain circumstances, enter into an agreement 64 with someone else to do the work, did not dispense with  the requirement  of compliance with the provisions of Art.  299. [70 E-F] The evidence on record showed that the State Government  had chosen  not to ratify the agreement with the respondent  but to  consider the original contact with S as  still  standing and to treat the respondent as a subcontractor working under S. [73 H] The principle in Chatturbhuj Vithaldas Jasani’s case ([1954] S.C.R.  817)  that although a contract may not  comply  with Art.  299, such contract, being capable of  ratification  by the Government may still disqualify a person under s.  7(d), cannot be extended to cover a case where the Government  has in fact not ratified the contract.  To hold otherwise  would be  to substitute "agreement" for "contract" in s. 7(d).   A mere agreement entered into in contravention of Art. 299 and in fact not ratified cannot be cared a "contract" within  s. 7(d). [72 A-B) New  Marine Coal Co. (Bengal) v. The Union of  India  A.I.R. 1964  S.C.  152; State of W. Bengal v. B. K.  Mondal  A.r.R. 1962 S.C. 779; referred to. (per Hidayatullah and Shah JJ., dissenting); The  available  evidence clearly, supported  the  case  that there  was a contract directly between the first  respondent and the State for the execution of certain construction work and not that the work was done by the first respondent under a  sub-contract  from  S. The court  was  only  required  to determine  whether  there was such a contract  and  was  not concerned  with  the  question  whether  the  contract   was enforceable against the State. [81 G] Although the contract was not in the form prescribed  tinder Art.  299,  it  was not for that reason  unlawful.   It  was always open to the State, notwithstanding informality in the mode  of  execution  of the contract,  to  accept  liability arising  under the terms of the contract.  Such a  contract, although  not enforceable by action against  the  Government was still to be regarded as disqualifying a person under  s. 7(d).   The first respondent had performed his part  of  the contract  but  no payment had been made to him.   There  was therefore a subsisting contract within the meaning of  7(d). [79 A; 80 A-B; 91 B] Chaturbhuj   Vithaldas  Jasani’s  case  [1954]  S.C.R.   817 applied; Bhikraj Jaipuria v. Union of India [1962] 2  S.C.R. 830 referred to.

JUDGMENT:

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CIVIL APPELLATE JURISDICTION : Civil Appeal No. 211 of 1965. Appeal  by special leave from the judgment and decree  dated the  April  25,  1964 of the Patna High  Court  in  Election Appeal No.  11 of 1963. Purshottam Trikumdas and D. Goburdhun, for the appellant. Sarjoo  Prasad, Nagendra Kumar Roy and K. K. Sinha, for  the respondent No. 1. The Judgment of GAJENDRAGADKAR C.J., WANCHOO and SIKRI,  JJ. was  delivered  by  SIKRI  J.  The  dissenting  Opinion   of HIDAYATULLAH and SHAH, JJ. was delivered by SHAH J.                              65 Sikri  J.  This is an appeal by certificate granted  by  the High  Court of Patna, directed against the judgment  of  the said  High  Court  reversing the decision  of  the  Election Tribunal,  Muzaffarpur.   This  appeal  arises  out  of  the election  of the respondent, Shri Bateshwar Prasad,  to  the Bihar Legislative Assembly from Lal Ganj North Constituency. The  appellant  was  one of the  candidates.   He  filed  an election petition No. 133 of 1962, alleging inter alia  that the election of respondent No. 1, Shri Bateshwar Prasad, was void   as  he  was  disqualified  under  s.  7(d)   of   the Representation of the People Act, 1951, hereinafter referred to as the Act.  His complaint was that respondent No. 1  had entered into various contracts with the Government and  that these  contracts  were subsisting on January 14,  1962,  the date  fixed  for  filing nomination  papers.   The  Election Tribunal,   after  reviewing  both  oral   and   documentary evidence,   held  that  the  respondent  had  entered   into contracts  to  do  Mosaic  flooring  work  in  the  Rajendra Surgical Block of Patna Medical Hospital and that these were subsisting on the date of the nomination, viz., January  14, 1962.  The Election Tribunal further held that by virtue  of cl.  3 (c) of the conditions embodied in the agreement,  Ex. ’T’,  it  was  not at all necessary  for  the  Public  Works Department  to  have  entered  into  a  contract  with   the respondents company, called the Patna Flooring Company.   In the  result, the Election Tribunal declared the election  of Respondent No. 1 to the Bihar Legislative Assembly from  the Lal Ganj North Constituency as void, but refused the  prayer of the petitioner before it to be declared elected. Both  sides appealed to the High Court but we are only  con- cerned  with  the election appeal No. 11 of 1963,  filed  by Bateshwar  Prasad, the returned candidate.  Before the  High Court three points were taken :               (1)   The appellant was not a contractor under               the State Government for the mosaic work to be               done in the Rajendra Surgical Block, but  that               at all relevant times, he was a sub-contractor               under  one G. P. Saxena, who was a  contractor               under the State Government for the purpose;               (2)   Assuming  that  there  was  a   contract               within  the  meaning of section  7(d)  of  the               Representation of the People Act, 1951 (Act 43               of  1951), sometime, there was  no  subsisting               contract   when   the  appellant   had   filed               nomination paper in 1962 and thereafter;               66               (3)   Assuming again that there was a contract               between the appellant and the State Government               some_ time, the contract alleged was void,  in               view of Article 299 (1) of the Constitution of               India,  so  that the Tribunal could  not  have               held  that the appellant was disqualified.  to               be chosen as a candidate. The High Court reviewed the entire evidence and came to  the

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conclusion on point No. 1 above that the appellant was not a con. tractor under the State Government but continued to  be a  subcontractor  under  Saxena for mosaic  work.   It  also differed from the Election Tribunal on the interpretation of cl.  3(c) of Ex.  ’1’.  On the second point, the High  Court felt  that in view of its decision on the first  point,  the question  was of mere academic interest and there  might  be substance  in  the argument of the learned counsel  for  the respondent that this question ought not to be allowed to  be raised  at this stage.  Regarding the third point, the  High Court  held  that Chaturbhuj’s case  (Chatturbhuj  Vithaldas Jasani  v.  Moreshwar  Parashram)  (1)  was  distinguishable because  in  the instant case the State Government  had  not accepted  the performance of the contract by the  appellant. It  further held that since the decision in  Chaturbhuj’s(1) case  the law had been amended by the amendment of s. 7  (d) and  the  effect of the amendment was  "that  the  candidate shall  be disqualified for being chosen as a member only  if there  still exists, in substance, at the relevant  time,  a valid  and binding contract between him and the  appropriate government."  The  High Court further observed that  "it  is difficult  to accept the contention of the  learned  counsel for the respondent that a transaction may be void under  the Contract  Act,  but  its factual existence may  still  be  a disqualification under present section 7(d)." In conclusion, the High Court held that Bateshwar Prasad had not incurred a disqualification under s. 7(d’) of the Act, and  accordingly set aside the judgment and order of the Election Tribunal. Mr.  Purshottam, the learned counsel for the appellant,  has urged  before  us that the High Court was wrong  in  holding that  the  amendment had made any change in the law  on  the question  whether the contract which is void under art.  299 of  the Constitution is or is not a contract within s.  7(d) of  the Act.  He says that the reasoning of the decision  of this  Court in Chatturbhuj’s(1) case still holds the  field. He then says that the High Court came to a wrong  conclusion on the question of fact in this case, namely, (1)  [1954] S.C.R. 817.                              67 whether the contracts subsisted or not at the relevant date, and  that this Court should reverse the finding even  though it  is  a finding of fact.  Mr. Sarjoo Prasad,  the  learned counsel,  for the respondent, controverts this point and  he urges  that  this Court should not go into the  question  of fact.  On the question of law, he  says that the present  s. 7 (d) is quite different from the old s. 7 (a) and that  the Supreme  Court decision cannot be applied to the wording  of the present section. Coming to the law point, it is necessary to set out the old and the new statutory provisions, and these are as under :               "7.  A person shall be disqualified for  being               chosen, as, and for being, a member of  either               House  of  Parliament or  of  the  Legislative               Assembly or Legislative Council of a State....               (d)   if, whether by himself or by any  person               or body of persons in trust for him or for his               benefit or on his account, he has any share of               interest in a contract for the supply of goods               to,  or for the execution of any works or  the               performance of any services undertaken by  the               appropriate Government;"               As amended               "7.  A person shall be disqualified for  being               chosen  as, and for being, a member of  either               House  of  Parliament or  of  the  Legislative

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             Assembly or Legislative Council of a State....               (d)   if  there  subsists a  contract  entered               into in the course of his trade or business by               him  with the appropriate Government  for  the               supply  of goods to, or for the  execution  of               any works undertaken by, that Government;". Comparing  the old section and the new section, there is  no doubt  that  there has been a change in  the  wording.   One change is quite clear and that is that the contract now must have been entered in the course of his trade or business  by a  person  with the appropriate government.   Previously  it need  not  have been a contract in the course  of  trade  or business.   The  words  were much  wider  and  included  any contract entered into for his benefit or on his own  account or  a  contract in which he had any share or  interest.   To this extent the Legislature has clearly narrowed the area of this  disqualification.  But is Mr. Sarjoo Prasad right  in, contending that the change has gone further and that it only 68 embraces executory contracts but not executed contracts ? In our  opinion,  the Legislature has made no  change  in  this respect  for under the old provision it was  also  necessary for a contract to have subsisted at the relevant time.  This Court had in Chaturbhuj’s(1) case included both executed and executory contracts within the provision of S. 7 (d) and had refused  to follow the English rulings to the contrary.   We cannot go into the question whether this was rightly done or not  for  we  are  bound  by  that  decision.   Accordingly, following Chatturbhuj’s(1) case we hold that a contract  for the supply of goods or for the execution of any works or the performance  of  any services undertaken does not  cease  to subsist only because the goods had been supplied or work had been  executed  or  services  performed.   It  continues  to subsist  till  payment  is made and the  contract  is  fully discharged by performance on both sides. But  whether Chatturbhujs(1) case applies when a  void  con- tract  has not been accepted or ratified by the  Government, we  will consider presently.  Mr. Purshottam  next  contends that the respondent entered into two contracts and they were subsisting  at the date of the nomination as the  respondent had  not  been paid for his work and as a matter of  fact  a suit  is pending against the Government for recovery of  the money.  He has taken us through the documentary evidence and it  is  now  necessary to deal  with  it.   The  documentary evidence  may be conveniently divided into two groups.   The ’first  group relates to documents bearing on the  formation of  the alleged contract.  It appears that one G. P.  Saxena had  entered into a contract, Ex.  D., for the  construction of  a surgical block in the Patna Medical College  compound, Patna,  and this contract was entered into in 1951, and  the respondent  was working as a sub-contractor under  him.   It further appears that there were some disputes between Saxena and  the Public Works Department and he was  not  completing the  work in time or to their  satisfaction.   Consequently, the Sub-Divisional Officer enquired from the Patna  Flooring Company whether they would be willing to complete the  work. Patna  Flooring  Company, on April 17, 1955,  wrote  to  the Executive Engineer, through the Sub-Divisional Officer,  and gave  their quotations and terms and conditions.  It may  be noted  here that these terms were different from  the  terms under  which  Saxena  had taken the contract.   This  is  an important fact and it is necessary to bear this in mind.  On April  25, 1955, the Sub-Divisional Officer  forwarded  this letter to the Executive Engineer with the remarks that  "the contractor

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(1)  [1954] S.C.R. 817.                              69 is  being  asked  to  start work  immediately  as  per  your orders."  The  Executive Engineer noted on  this  letter  as follows  : "It is hoped necessary notice has been  given  by you  to  the defaulting contractor." The S.D.O.  noted  that "the contractor had already been served with a notice and  a copy  to  your office vide T.O. No. 497, dated  20th  April, 1955.  The P.F.C. has been ordered to start work and a  copy of  that  submitted  to you vide T.O. No.  504,  dated  20th April, 1965".  On April 20, 1955, the Sub-Divisional Officer wrote to the.  Patna Flooring Company to "start  immediately the remaining mosaic floor and dado work in the R. S.  Block and  finish  the  work  completely  within  a  fortnight  as promised  by you." He endorsed a copy of this letter to  the Executive  Engineer.   He  also  sent  a  notice  to  Saxena informing  him  that  as he had failed to do  (in  spite  of repeated asking) the remaining mosaic work of floor and dado in Surgical Block, the remaining work was being got done  by other  agency and the cost would be recovered from him.   He endorsed  a  copy of this to the Executive  Engineer  noting that the remaining work was being done by the Patna Flooring Company,  as  instructed  by  him.  On  May  13,  1955,  the Executive  Engineer warned Patna Flooring Company to  finish the work within the stipulated time and that no extension of time would be granted if the work would be left  unfinished. On  May 23, 1955, the Sub-Divisional Officer again wrote  to Patna  Flooring Company saying that  necessary  instructions regarding  slope  etc. had already been given at  the  site, that there was no cause for delay in work and asked them  to push  up the progress of the work as it was a  top  priority work.  It appears that by May 25, 1955, 90% of the work  had been  done and the Patna Flooring Company wrote to the  Sub- Divisional Officer requesting that the S.O. Incharge of  the said work be ordered to submit an on account bill for making payment to them at an early date. Mr. Purshottam contends that on a perusal of the  correspon- dence contained in this group it is quite clear that an oral contract  for  the  construction of work  was  entered  into between  the  Executive  Engineer  and  the  Patna  Flooring Company and that the High Court had erred in holding that no such  contract  ever -came into being.  He points  out  that under  cl.  3  (c) of the Contract, Ex.   D,  the  Executive Engineer  was entitled to ask the Patna Flooring Company  to do the work.  Clause 3 (c) reads as follows               "Clause  3.-In  any case in  which  under  any               clauses of this contract the contractor  shall               have   rendered   himself   liable   to    pay               compensation amounting to the whole                70               of  his  security  deposit  in  the  hands  of               Government  (which whether paid in one sum  or               deducted by instalments) to Executive Engineer               on behalf of the Governor of Bihar, shall have               power  to adopt any of the following  courses,               as  he may deem best suited to, the  interests               of Government....               (c)   To   measure   up  the   work   of   the               contractor, and to take such part of the  work               of the contract as shall be unexecuted out  of               his   hands,  and  to  give  it   to   another               contractor  to  complete, in  which  case  any               expenses  which may be incurred in  excess  of               the  sum  which would have been  paid  to  the               original contractor if the whole Work had been

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             executed by him (of the amount of which excess               the  certificate in writing of  the  Executive               Engineer shall be final and conclusive)  shall               be  borne and paid by the original  contractor               and may be deducted from any money due to  him               by Government under the contract or otherwise,               or  from his security deposit or the  proceeds               of   sale  thereof,  or  a   sufficient   part               thereof." We  are  inclined  to agree with  Mr.  Purshottam  that  the correspondence in this group clearly discloses an  agreement for the execution of work between the Executive Engineer and the  Patna, Flooring Company, and the Election Tribunal  was quite  right in coming to this conclusion.  But we  may  say that the Election Tribunal was not right in holding that cl. 3  (c)  got rid of art. 299 of the Constitution.   Any  work which is given in exercise, of the powers under cl. 3(c) has also  to  comply  with the provisions of  art.  299  of  the Constitution.   What the effect of this is we will  consider later. Mr.  Sarjoo Prasad, however, says that assuming that a  con- tract was entered into, the contract did not subsist at  the time of the nomination because the Government had refused to ratify   the  contract  given  tinder  cl.  3(c)  and   that Chatturbhuj’s(1)  case  does not lay down  that  a  contract which has not been ratified by the Government is a  contract within  S. 7(d) of the Act.  It seems to us that there is  a great  deal  of  force  in the  contention  of  the  learned counsel.  It is true that this Court has held in a number of cases, the latest being New Marine Coal Co. (Bengal) v.  The Union  of  India(2), that a contract entered into  with  the Government  in contravention of S. 175(3) of the  Government of India Act, 1935, or art. 299 of the Constitution is  void and unenforce- (1),[1954] S.C.R. 817. (2) A.I.R. 1964 S.C. 152.                              71 able.   But in State of West Bengal v. B. K. Mondal(1)  this Court distinguished Chatturbhuj’s(2) case on the ground that in  the latter case "this Court was dealing with the  narrow question as to whether the impugned contract for the  supply of goods would cease to attract the provisions of s. 7(d) of the  Representation of the People Act on the ground that  it did  not comply with the provisions of art. 299 ( 1  ),  and this  Court  held  that notwithstanding the  fact  that  the contract could not be enforced against the Government it was a contract which fell within the mischief of s. 7(d)."  This Court  further observed that "all that this Court  meant  by the said observation (of Bose J. in Chatturbhuj’s(2) case at p.  835,  quoted  below)  was  that  the  contract  made  in contravention  of  art.  299(1) could  be  ratified  by  the Government  if it was for its benefit and as such  it  could not  take the case of the contractor outside the purview  of s.  7(d).  The contract which is void may not be capable  of ratification, but, since according to the Court the contract in question could have been ratified it was not void in that technical  sense.   That  is all that was  intended  by  the observation  in question." But the question  arises  whether Chatturbhuj’s(22) case can be extended to cover a case where the  contract  has  in  fact not  been  ratified.   Bose  J. observed in Chatturbhuj’s(2) case as follows :               "In  the present case, there can be  no  doubt               that   the   Chairman   of   the   Board    of               Administration  acted on behalf of  the  Union               Government  and his authority to  contract  in

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             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 is that  the  con-               tracts were not in proper form and so, because               of this purely technical defect, the principal               could  not have been sued.  But that  is  just               the kind of case that s. 230 (3) of the Indian               Contract  Act is designed to meet.... It  only               means  that the principal cannot be sued;  but               we  take it there would be nothing to  prevent               ratification,  especially if that was for  the               benefit of Government.  There is authority for               the  view that when a Government officer  acts               in excess of authority Government is bound  if               it ratifies the excess : see The Collector  of               Masulipatam v. Cavalry Venkata Narrainapah  (8               M.I.A. 529 at 554)." (1) A.I.R. 1962 S.C. 779.       (2) [1954] S.C.R. 817. 72 It  seems to us that the decision in  Chatturbhuj’s(1)  case cannot be extended to cover a case where the Government  has in fact not ratified the contract.  If we were to hold  that this type of transaction is covered then we would be  giving no effect to the word "contract" in s. 7 (d) and we would be substituting  the word agreement" for it.   The  Legislature has not chosen to use the word "agreement" but has used  the word  "contract".  Therefore, a mere agreement entered  into in contravention of art. 299 and in fact not ratified cannot be called a "contract" within s. 7(d) of the  Representation of People Act. The  question then arises whether the Government did or  did not  ratify  the  oral contract  entered  into  between  the Executive Engineer and the Patna Flooring Company.  In  this connection,  Mr.  Sarjoo  Prasad,  relies  on  a  number  of documents.   The  first document he refers to is  Ex.   A-2, dated  July 12, 1955.  The Sub-Divisional Officer  wrote  to the Patna Flooring Company as follows : "It  is disappointing to note that in spite of  my  repeated askings  you  have  not submitted your final  bill  for  the mosaic work until now.  I have been personally explaining to you the whole position and you promised to submit your final correct bill on Friday the 8th July, 1955 so that I may  ask the contractor Shri G. P. Saxena to pay you off finally  and settle your accounts immediately." It appears that something happened between May 25, 1955  and July  12, 1955.  According to the respondent, what  happened was  that Saxena approached the Superintending Engineer  and the  Superintending  Engineer  ordered  that  Saxena   would continue  to  be the contractor as before  and  no  contract would  be given to any firm.  The respondent stated this  in his  evidence  as  R. W. 32.  It is objected  that  this  is hearsay  and this part of the statement is  not  admissible. There is some force in this contention and we omit this part of  the statement from consideration.  But apart  from  this oral  evidence  it  is quite clear  from  this  letter  that something  happened, otherwise it was not necessary  to  use the words "personally explaining to you the whole  position" in  this letter, and it is not understandable why the  Patna Flooring  Company  was  being asked to submit  the  bill  to Saxena.   This  inference  is  strengthened  by   subsequent correspondence.  By letter, dated July 13, 1955, Ex. A3, the S.D.O. acknowledged the receipt of the bill and said

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(1)  [1954] S.C.R. 817.                              73 that  he had sent it to Saxena for making  settlement.   Ex. A-17,  dated  July  20,  1955,  is  significant.   The  Sub- Divisional  Officer requested Saxena to issue orders to  his contractors  "to  mend  and rectify  all  the  cuttings  and damages properly and nicely so that the building is in a fit condition  for handing over on 1-8-1955." On July 23,  1955, Saxena  endorsed  it  to  the  Patna  Flooring  Company  for information  and  necessary action and with the  request  to rectify  the  defects  pointed out  to  the  Patna  Flooring Company  and  complete the remaining portions of  works  and give final polishes thereto by the schedule date.  It is not understandable  why Saxena was endorsing this for action  to Patna Flooring Company unless the Government had chosen  not to  ratify the contract with the Patna Flooring Company  and was  still  treating  him  as  a  contractor.   It  is  also significant that it has not been alleged or, proved that any similar letter was written to Patna Flooring Company  direct by  the S.D.O. On July 21, 1955, a "statement showing up  to 21st  day of July, 1955, correct amount for the mosaic  work done  by M/s.  Patna Flooring Co. in the  Rajendra  Surgical Block,   Patna   Medical  College   and   Hospital,   Patna- Transactions  between Shri G. P. Saxena, Prop.  M/s.  G.  P. Saxena & Co. and M/s.  Patna Flooring Co." was made out  and this  statement  of account shows "Bill  No.  BP/1833/45/55, dated  13-7-55  through  the  S.D.O.  No.  III  Subdivision, Construction  Division,  Patnabill for Rs.  14,000/9/-"  and Saxena  agreed  to  settle this bill, and  a  copy  of  that statement was forwarded to the Executive Engineer for record with  reference  to the discussion which  was  held  between Saxena  and Prasad in his presence and the presence  of  the S.D.O.’ This statement shows that the Government Officer was acknowledging that the liability for work done by the  Patna Flooring  Company  would  be that of Saxena.   If  a  direct contract   between  the  Patna  Flooring  Company  and   the Government still subsisted, all this arrangement seems to be uncalled for. Mr. Sarjoo Prasad further points out an important fact  that when  Saxena  submitted the bill to the Government,  he  not only charged for the work done by the Patna Flooring Company but he charged it at the rates contained in his own contract and  not’ in the quotations, dated April 14, 1955, given  by the Patna Flooring Company.  We agree with him that this  is a  very  significant  fact  and shows that  as  far  as  the Government  was concerned, the, original contract stood  and the  Government  had  not chosen  to  treat  Patna  Flooring Company  as  a contractor, but only as  a  subs.  contractor working under Saxena. 74 Mr. Purshottam laid a great deal of stress on the  pleadings in  the money suit No. 53 of 1959.  There is no  doubt  that the  plaint  in the money suit filed by the  Patna  Flooring Company  shows that Bateshwar Prasad, plaintiff, was  trying to  make out that there was a direct contract  entered  into between  the  P.W.D.  and the plaintiff, but  even  so,  the plaint does not make them solely responsible.  We have  also come  to a finding that there was admittedly a contract  -in the beginning.  The fact that the plaint does not allege any subsequent  non-acceptance  or  refusal  to  ratify  by  the Government  -would not stop the respondent from  proving  in this  case that on the material on record it is  clear  that the  Government  had  not -ratified the  contract  with  the respondent but confirmed the original contract with  Saxena. The  written statement filed by the Government in the  money

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suit  cannot be used to destroy the inference which  clearly arises  from  the  documents  referred  to  above.   It  -is doubtful  whether  the written statement can be  taken  into consideration at all. In  the result we hold that no contract  between  respondent No.  1  and the Government subsisted at the  relevant  time, viz., the date of the nomination, and the respondent was not disqualified  under 7(d).  The appeal accordingly fails  and is, dismissed with costs. Shah  J. At the general elections held in February 1962  the appellant  Laliteshwar Prasad Sahi and the first  respondent Bateshwar  Prasad  contested a seat from the  Lalganj  North constituency  in the Bihar Legislative Assembly.  The  first respondent was declared elected.  The appellant then filed a petition  before the Election Tribunal, Muzaffarpur, for  an order declaring the election of the first respondent void on the ground that the first respondent was disqualified  under S.  7(d)  of  the Representation of  the  People  Act  1951- hereinafter called ’the Act’-for being a member of the Bihar Legislative Assembly, and for an order that the appellant be declared  duly elected.  The Election Tribunal  disqualified the first respondent under S. 7(d) of the Act because in the view of the Tribunal on the date on which the first  respon- dent  filed  the  nomination paper there  was  a  subsisting contract between him and the State of Bihar for execution of works  undertaken by the Government.  The Tribunal  declined to declare the appellant duly elected. Against the order passed by the Tribunal, appeals were  pre- ferred  to the High Court of Patna by the appellant and  the first respondent under s. 116-A of the Act.  In the view  of the  High Court. the first respondent was  not  disqualified from being elected                              75 a member of the Bihar Legislative Assembly because there was at the date of nomination no subsisting contract for  supply of goods or execution of works between the first  respondent and the Government of Bihar.  The appeal filed by the  first respondent  was accordingly allowed and the appeal filed  by the  appellant was dismissed.  With certificate  granted  by the High Court, the appellant has preferred this appeal. Section  7  ( 1 (d) of the Act as it stood at  the  relevant time read as follows               "A  person  shall be  disqualified  for  being               chosen  as and for being, a member  of  either               House  of  Parliament, or of  the  Legislative               Assembly or Legislative Council of a State.               (d)   If  there  subsists a  contract  entered               into in the course of his trade or business by               him  with the appropriate Government  for  the               supply  of goods to, or for execution  of  any               works undertaken by that Government." The  appellant  contends  that  the  first  respondent   was disqualified  from being a member because there was  between him  and  the  Government of  Bihar  a  subsisting  contract relating  to  execution of works for  the  Government.   Two components of the issue to be determined in this appeal are: whether at the relevant time there was between the State  of Bihar  and the first respondent a contract in the course  of the  first respondent’s trade or business for  execution  of any  work undertaken by that Government and whether  at  the material time the contract was subsisting.  The Trial  Court answered  both the components in the affirmative.  The  High Court was of the view that there was no contract at any time between the.  State of Bihar and the first respondent. The  appellant’s case was that the first respondent and  his

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son  Bhupendra Nath Prasad carried on business of  executing mosaic flooring, plumbing and sanitary works in the name  of M/s  Patna  Flooring Company, that the first  respondent  on behalf of M/s Patna Flooring Company had obtained  contracts from  the  Government of Bihar for doing  "Mosaic  and  dado works" at Rajendra Surgical Block of Patna General Hospital, and  that  in connection with the said contracts  the  first respondent had filed suit No. 53 of 1959 in the Court of the Subordinate  Judge,  Patna, against the State of  Bihar  the Executive Engineer, P.W.D. (Construction Division No. 1) and others for a decree for Rs. 18,5000/- and it Sup. C.I../66-6 76 was  claimed  in the plaint in that suit that  there  was  a "direct contract" between the first respondent and the State of  Bihar,.  and on that account the  first  respondent  was disqualified under S. 7(d) of the Act from being a member of the Bihar Legislative Assembly.  The first respondent denied that he was looking after the business of M/s Patna Flooring Company  on the date of filing of the nomination  paper  and contended  that  the  contract  for  doing  mosaic  work  at Rajendra Surgical Block of the Patna Medical College General Hospital  was  between  G.P. Saxena and  the  Government  of Bihar,  and that he--the first respondent-had never  entered into  a  contract  with the Government of  Bihar  for  doing mosaic work at Rajendra Surgical Block and that in any event there  was  no  subsisting  contract  at  the  date  of  his nomination as a candidate. There is on the record a mass of documentary evidence  which throws  light  upon  the question in  dispute.   Saxena  had submitted in March 1951 his tender for the construction work of   the  Rajendra  Surgical  Block  at  Patna,  which   was undertaken by the Government of Bihar.  Items 39 & 40 of the contract related to "mosaic flooring and dado".  For "mosaic flooring"  the rate tendered and accepted was Rs. 2/4/-  per sq. ft and for " mosaic dado" the rate was Rs. 2/8/- per sq. ft.   By  cl. 2 of the conditions of the  contract,  it  was provided,  inter  alia, that the contractor  shall  strictly carry  out the work within the time stipulated with all  due diligence and that the contractor, shall pay as compensation amounts equal to 1/3 per cent, on the estimated cost of  the whole  work  as shown by the tender for every day  that  the work  remains  uncommenced or unfinished  after  the  agreed dates.   By  clause 3 it was provided that in  any  case  in which  the contractor shall have rendered himself liable  to pay  compensation  amounting to the whole  of  his  security deposit  in  the hands of the  Government,  the.   Executive Engineer  shall  have power to adopt any  of  the  following courses,  as  he may deem best suited to  the  interests  of Government :               (a)   To rescind the contract;               (b)   To  employ labour paid by the P.W.D.  to               carry  out the work, or any part of the  work,               debiting  the  contractor  with  the  cost  of               labour;               (c)   To  take away such part of the  work  of               the contract as shall be unexecuted out of his               hand-,,  and to give it to another  contractor               for completion.                              77 The  first respondent was working as a sub-contractor  under Saxena  in  certain sections of the work undertaken  by  the latter.   In April, 1956, Saxena was unwilling or unable  to complete the " mosaic flooring" and "mosaic dado" under  his contract, and negotiations took place between the  Executive

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Engineer,  Construction Division, and the  first  respondent regarding  completion of that work by the first  respondent. On  April 17, 1955, the first respondent addressed a  letter Ext   1  (g),  to  the  Executive  Engineer  recording   the conversation he had with the Executive Engineer relating  to the  rates of mosaic work etc., and submitted his terms  and conditions.  The rates offered by the first respondent  were substantially  lower  than  those under  the  contract  with Saxena, but he requested that certain construction materials be supplied by the Department on his account, and the  price thereof  may  be debited against his  bill.   The  Executive Engineer made a note on this letter "It is hoped,  necessary notice  has  been given to the defaulting  contractor".   On April 20, 1955, the Sub-Divisional Officer made a note  that the  contractor  (Saxena) had "already been  served  with  a notice"  and  that  the first  respondent’s  firm  had  been ordered  to  start the work.  On April 20,  1955,  the  Sub- Divisional  Officer  addressed a letter Ext. 1  (c)  to  M/s Patna Flooring Company as under :               "As ordered by the Executive Engineer,  please               start  immediately the remaining mosaic  floor               and  dado work in the R. S. Block  and  finish               the  work  completely within  a  fortnight  as               promised by you."               Intimation  about entrustment of the  work  to               M/s  Patna Flooring Company was also given  to               Saxena by letter Ext. 1 (j).  It was stated in               that letter :               "As  you  have  failed  to  do  (in  spite  of               repeated askings) the remaining mosaic work of               floor   and  dado  in  Surgical   Block,   the               remaining  work  is being got  done  by  other               agency  and  the cost will be  recovered  from               your bill which plea&-, note." M/s Patna Flooring Company was called upon by letters  dated May  7, 1955 and May 13, 1955 and May 23, 1955  to  complete the  work within the period stipulated.  On May 25, 195  M/s Patna  Flooring  Company  addressed a  letter  to  the  Sub- Divisional Officer informing him that his firm had  finished about  90%  of  the  entire  work  entrusted  to  them,  and requested that an "on account payment" may be made to  them. There  is on the record no further correspondence in  regard to the mosaic flooring and dado 78 work in the Surgical Block.  On December 23, 1955, the  Sub- Divisional Officer addressed a letter to M/s Patna  Flooring Company  referring  to  an "oral  order"  of  the  Executive Engineer and requested the Company to do mosaic work in "two bath rooms and laboratory of the Lecture Theatre" and  asked them  "to  do the work as, per instructions".  On  April  4, 1956  M/s  Patna Flooring Company submitted a bill  for  the "flooring  and  dado  work" done in the bath  rooms  of  the Lecture  Theatre under the orders of the Executive  Engineer and of the Sub-Divisional Officer and requested that payment be made to them.  A copy of that letter was sent to the Sub- Divisional  Officer along with a copy of the bill  for  -the work done, for information and for immediate payment, but no payment  was  made.   The P.W.D.  authorities,  it  appears, thought  that instead of making the payment directly to  the first  respondent, Saxena should be called upon to  pay  the amounts  due to M/s Patna Flooring Company for work done  by them, This is evidenced by several letters on the record  to which we will presently refer. Interruptirig  the  narrative  at  this  stage,  it  may  be observed that the evidence set out leaves no.,room for doubt

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that  there were negotiations between M/s.   Patna  Flooring Company and the Executive Engineer for carrying out  "mosaic flooring  and dado work" which was part of work  Saxena  had undertaken  to do and which he had failed to complete.   The Executive Engineer asked M/s Patna Flooring Company to carry out  that work and the latter submitted its own schedule  of rates,  and asked for certain facilities which did not  form part  of  Saxena’s contract.  In our view Ext. 1  (g)  dated April  17,  1955  and  Ext.  1  (c)  dated  April  20,  1955 constitute  an offer to execute "the mosaic and  dado"  work and  acceptance  there,of  on behalf of  the  Government  of Bihar.   The work of "mosaic flooring and dado" work in  the Rajendra  Surgical Block which was part of the  contract  of Saxena  was completed by M/s Patna Flooring Company in  July 1955 after Saxena was intimated that the work which remained to  be  done  would  be  completed  through  other   agency. Similarly  under the instructions of the Executive  Engineer they did the work of "mosaic flooring and dado work" in  the bath rooms and the, Lecture Theatre some time after January’ 1956.  These contracts were not in the form prescribed by S. 299  of  the  Constitution,  and  the  contracts  not  being expressed  to be entered into by the Governor of  the  State and   in   the  manner  directed  by   the   Governor   were unenforceable  against the State: see Bikhraj Jai- puria  v. Union of India(1).  But the contracts were not, because (1) [1962] 2 S.C.R. 880.                              79 they  were  not  executed  in the  manner  or  in  the  form prescribed by Art. 299 of the Constitution, unlawful.  It is always  open to the State. notwithstanding  informality  in_ the  mode of execution of the contract to  accept  liability arising  under  the  terms of the  contract.   There  is  no dispute that the Executive Engineer was competent on  behalf of  the  State  to,  enter into  contracts  with  M/s  Patna Flooring Company in respect of both the items of work.   The contracts resulted from offer ’by M/s Patna Flooring Company and acceptance by the Executive Engineer.  It has been  held by  this  Court  that  in cases arising  under  the  Act,  a contract  not enforceable by action against  the  Government may  still  be regarded as a contract which  disqualifies  a person  from  standing  for  election as  a  member  of  the legislature  under s. 7(d): see Charturbhuj’s  case(2).   In Chatturbhuj’s  case no contract was executed in  the  manner prescribed by Art. 299 of the Constitution.  The contract in that  case  was  one  for supply of  goods.   The  Court  in considering  whether the exstence of a contract not  in  the form described by Art. 299 of the Constitution  disqualified a person under s. 7(d) observed at p. 835 :               "It  would, in our opinion, 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,  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 saying that the contracts               as  such are void and of no effect.   It  only               means  that the principal cannot be sued;  but               we  take it there would be nothing to  prevent               ratification,  especially if that was for  the               benefit of Government.  There is authority for               the  view that when a Government officer  acts

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             in excess of authority Government is bound  if               it  ratifies  the excessee  The  Collector  of               Masulipatam  v. Cavalry Venkata  Narrainapah-8               M.I.A. 529 at 554." It  was  also held that s. 7(d) of the Act did  not  require that   the  contracts  at  which  it  strikes,   should   be enforceable against the Government: all that it requires  is that the "contract should be for the supply of goods to  the Government."  The purpose of the Act it was observed, is  to maintain  the  purity  of the legislatures and  to  avoid  a conflict between duty and interest, and that it is (1)  [1954] S.C.R. 817. 80 obvious that the temptation to place interest before duty is great  when  there  is  likely  to  be  some  difficulty  in recovering  the  money from the Government.   Absence  of  a formal contract in the terms of Art. 299 of the Constitution will not therefore affect the operation of  disqualification prescribed by s. 7(d) of the Act. The  inference arising from the documentary evidence,  which we  have  already set out, is further  strengthened  by  the admissions  made  by the first respondent many  years  after execution  of  the  " mosaic and dado" work.   In  a  notice served  by him upon the Government of Bihar under S.  80  of the  Code of Civil Procedure On January 3, 1959 for  payment of the amount due to him for "mosaic flooring and dado work" in  the  Rajendra  Surgical Block and  the  bath  rooms  and lecture  theatre  in the year 1955-56,  M/s  Patna  Flooring Company  stated that "suspension of the work by Saxena  made the P.W.D. authorities anxious" and they called upon them to continue the work.  It was then stated in paragraph- 11 :               "That  the P.W.D. authorities, when failed  in               their attempt to persuade Shri G. P. Saxena to               continue  the  work approached  Sri  Bateshwar               Prasad, one of my said clients, to take up the               work  direct  and  assured  full  payment   by               deducting from the bills of Shri G. P.  Saxena               or by preparing direct bills, in the nature of               a contract of guarantee."               In paragraph-12 it was stated               "That  as  a result of the said  approach  and               assurance,  letter  No.  BP/1763/28/55   dated               17-4-1955  was  addressed by the  firm  of  my               clients  to  the Executive  Engineer   quoting               rates rather less than the rates on which  Sri               G.  P.  Saxena got the work  from  the  P.W.D.               Department  which was confirmed in letter  No.               504,  dated 20-4-1955 from the S.D.O. No.  III               Sub-division,  Construction  Division,   Patna               where  in the department asked my  clients  to               proceed with the remaining work               In paragraph-13 it was stated:               "That on the receipt of the said letter  dated               20-4-1955  my clients started doing  the  work               and  received  materials    from  the   P.W.D.               Stores  from time to time."               81               In paragraph-14 it was stated               "That  the  firm of my clients was  in  direct               contract      with      you      and      your               department....................... " In paragraph-16, the letter dated June 5, 1955 informing the Executive  Engineer  about  the completion of  the  work  is referred  to,  and it is stated that on July  13,  1955  M/s Patna  Flooring  Company had submitted their  bill  for  Rs.

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14,000/-  to  the Executive Engineer.  By  this  notice  the first  respondent  demanded  from the  State  of  Bihar  Rs. 22,947/07  nP and Rs. 5,000/- as damages and loss  sustained by M/s Patna Flooring Company. In  the  plaint in suit No. 53 of 1959 filed  by  M/s  Patna Flooring Company by paragraphs -6, 7 and 8 substantially the same  averments were made.  In paragraph-7 of the plaint  it was  stated "Thus it is clear the plaintiffs and their  firm began the work under a direct contract from the P.W.D. which also  appears  from  letter No. 705 and  706  dated  23-5-55 addressed to the plaintiffs firm by the S.D.O. No. III  Sub- division............  and in paragraph-8 it was stated  that "the mosaic work done by the plaintiffs had been done  under a direct contract from the P.W.D. authorities and "Sri G. P. Saxena had no interest in this mosaic work but if any how it has been entered in the M.B. in the name of Sri G.P.  Saxena then the payment to the extent of the plaintiffs dues should be withheld and the same should be paid to the plaintiffs by the P.W.D. authorities." We  are informed at the Bar that suit No. 53 of 1959 has  as yet not been disposed of. We  are  called upon in this case to decide  whether  it  is established  that there was a contract between the State  of Bihar  and  the first respondent  relating  to  construction work,  which  disqualified him from being a  member  of  the Bihar Legislature.  We are not concerned to decide  ’whether the  contract  was  enforceable  against  the  State.    The evidence already set out in our view abundantly supports the case,  that there was a contract directly between the  first respondent and the State of Bihar relating to the  execution of work, and that the contract was made in the course of the first respondent’s trade or business. The  first respondent had pleaded in his  written  statement that  there was in fact no contract and that he  (the  first respondent) had completed the "mosaic and dado work" in  the Surgical Block, 82 the  bath rooms and the lecture theatre as a  sub-contractor of  Saxena.  In so pleading he sought to ignore the  letters Exts.   1  (g), 1 (c) and the relevant  correspondence.   No explanation  was  attempted  before  the  Election  Tribunal explaining  that correspondence.  It was merely  urged  that the  two  letters  Exts. 1 (g) & 1  (c)  between  M/s  Patna Flooring  Company and the P.W.D. authorities and  the  other correspondence  between the Executive Engineer  and,  Saxena indicated  that  the  "mosaic flooring and  dado  work"  was completed by the first respondent as an agent of Saxena.  It is urged in this Court for the first time that assuming that Exts.   1  (g)  & 1 (c) amounted to an offer  by  the  first respondent and acceptance thereof by the Executive Engineer, that offer and acceptance thereof could amount to a  binding contract   between  M/s  Patna  Flooring  Company  and   the Government  of  Bihar, only if the  Superintending  Engineer accepted or ratified the contract and in the absence of  any evidence  to that effect, the offer and acceptance  did  not give rise to any contract disqualifying the first respondent under s. 7(d) of the Act. We  may at once observe that the  subsequent  correspondence and settlement of accounts Ext.  G contain at best ambiguous statements which do not raise any inference in favour of the first  respondent.  We may briefly refer to  this  evidence. On  July  12, 1955 the Sub-Divisional  Officer  addressed  a letter to M/s Patna Flooring Company intimating that it  was "disappointing  to note that in spite of  repeated  askings" the  firm had not submitted their final bill for the  mosaic

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work till that date.  The letter then proceeded "I have been personally  explaining  to you the whole  position  and  you promised to submit your final correct bill on Friday the 8th July,  1955  so that I may "ask the contractor  Shri  G.  P. Saxena  to  pay  you off finally and  settle  your  accounts immediately." This letter clearly indicates that in the view of  the Sub-Divisional Officer the bill had to be  submitted by the first respondent to the P.W.D. -authorities and  that they  would persuade Saxena on account of whose default  the contract  with the first respondent was necessitated to  pay the  amount due to him.  The next letter is dated  July  13, 1955  addressed- by the Sub-Divisional Officer to M/s  Patna Flooring  Company  intimating  that the bill  of  M/s  Patna Flooring  Company  had been, sent to  Saxena  for  immediate settlement and payment, and asking the Company to settle the account  with Saxena and to receive payment from him and  to report to the P.W D. authorities.  On July 20, 1955 there is another letter from the Sub-Divisional Officer forwarding  a copy  of  letter  No.  949 dated July  20,  1955  which  was addressed 83 to  Saxena  asking  the  latter  to  issue  orders  to   his contractors to mend and rectify all the cuttings and damages properly so that the building may be in a fit condition  for handing  over on August 1, 1955.  A copy of this letter  was forwarded   to   M/s  Patna  Flooring  Company   for   their information  and  necessary action, and they were  asked  to rectify all the defects pointed out to them and to  complete the remaining work by the scheduled date.  It may be noticad that Saxena’s contract in its entirety was not terminated  : only  a part of the contract had been taken away  from  him. Directions had therefore to be given to him to complete  the contract  of the building and to hand over the same by  July 31,  1955, and to M/s Patna Flooring Company to rectify  all the  defects  pointed out of them.  If  M/s  Patna  Flooring Company were merely a subcontractor, there is no reason  why a copy of this letter should have been addressed to them and that they should have been asked to rectity the defects.  On July 21, 1955 a statement of account was drawn up in respect of the mosaic work done by M/s Patna Flooring Company in the Rajandra Surgical Biock.  It is described as "a statement of account of mosaic work between G. P. Saxena and Messrs Patna Flooring  Company".  On the credit side of the  account  are three  items  :  Rs. 57,443/4/3 in  respect  of  bill  dated November 25, 19.33 ; Rs. 4,719/9/3 in respect of bill  dated March  31, 1955 -and Rs. 14,000/- in respect of  bill  dated July  13,  1955 through the Sub-Divisional Officer  No.  III Sub-division,  Construction Division, Patna.  On  the  debit side.,  are  various items of payments  aggregating  to  Rs. 49,754/9/3  leaving a balance, of Rs. 26,408/13/3.   Against that  amount a cheque for Rs. 15,000/- is recorded as  given on  July  21,  1955 on the Bank of  Bihar  Ltd.,  leaving  a balancer of Rs. 11,408/13/3, There are two notes at the foot of this account.  The first part of note No. (1) deals  with the,  bill dated March 31, 1955 which is not  material.   It then proceeds to record that M/s Patna Flooring Company will be  responsible for rectification of the defects  in  mosaic work in bill No.-BP/1838/35/55 and 93/55 dated July 13, 1955 and  March 31, 1955 respectively.  Note No. (2) states  that M/s  Patna  Flooring  Company will realise  from  Saxena  m- mediately  the amount of the claim for work included in  the third bill.  This is signed by the first respondent.  At the foot of thesetwo notes there are two endorsements one signed by  Saxena  and the other by the first respondent.   In  the endorsement  signed bySaxena it is stated that  the  account

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was  correct and he admitted that Rs. 11,408/13/3  were  due from him which he promised "to pay very soon".  It was  also stated  that  the terms of the  original  agreement  between Saxena and M/s Patna Flooring Company 84 will  also remain operative.  The endorsement signed by  the first respondent states :               "Agreed  and  accepted  the  cheque  for   Rs.               15,000/We  shall finish the final polish  work               within a very short time.  As the account  has               been settled today, the 21st July, 1955. I  am               herewith returning the cheque No. BZ/131 08046               dated  18-1-55 drawn on the Imperial  Bank  of               India, Patna for Rs. 12,000/- and balance  now               stands  as  mentioned Rs. 11,408/13/3  as  per               settlement, subject to encashment of  to-day’s               cheque No. G140696 dated 21-7-1955 on the Bank               of Behar Ltd.  Patna." A  copy  of  this account was  forwarded  to  the  Executive Engineer, ’Construction Division, through the Sub-Divisional Officer  "for information and record with reference  to  the discussion  which  was held between" Saxena  and  the  first respondent  "in  his presence and the presence of  the  Sub- Divisional Officer No. III Subdivision." Strong reliance was placed   upon  this  document  by  counsel  for  the   first respondent  in support of his claim that there was in  truth no  contract between the State of Bihar through  its  P.W.D. authorities and the first respondent, but the contract  con- tinued  at all material times to subsist between Saxena  and the  State  of  Bihar.  -After  carefully  considering  this argument,  in our view, this document is not susceptible  of any  such interpretation The P.W.D. authorities had  adopted the  attitude that even though they were liable to meet  the bill  of M/s Patna Flooring Company for the work done  under the  arrangement arrived at between them by Exts.  1(g)  and 1(c)  they  would  procure payment of the  amount  due  from Saxena.   The first respondent had admittedly done the  work in  respect of two bills dated November 25, 1953  and  March 31, 1955 as sub-contractor for Saxena.  A third bill for Rs. 14,000  had  been submitted for the work done by  the  first respondent for which the bill was sent to the Sub-Divisional Officer.   Saxena  was  apparently  refusing  to  make   the payment,  and a meeting was arranged in the presence of  the Executive Engineer and the Sub-Divisional Officer in which a consolidated  account was made and Saxena agreed to pay  the balance  of  Rs.  26,408/13/3 and against which  he  gave  a cheque  for Rs. 15,000/-.  This statement of account  cannot conceivably  be utilised in suport of the case of the  first respondent  that there was no contract between him  and  the P.W.D.  authorities representing the State of Bihar:  it  is merely a settlement arrived at between the first  respondent and Saxena in the presence of the 85 Executive  Engineer  and the  Sub-Divisional  officer  under which  Saxena  agreed to pay the amount of  Rs.  11,408/13/3 remaining  due on the consolidated account.  The  settlement at  the  instance of the Executive Engineer  and  the,  Sub- Divisional Officer does not purport to wipe out the contract which  was previously arrived at and the  construction  work done in pursuance of that contract, and the mere endorsement under the signature of Saxena that the terms of the original agreement  between him and M/s Patna Flooring  Company  will also remain operative only indicates that M/s Patna Flooring Company  may  continue to work as subcontractor  of  Saxena, lost  it  might  give an impression  that  the  sub-contract

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between   Saxena   and  M/s  Patna  Flooring   Company   was terminated. For the work which Saxena failed to complete, he was  liable to  compensate  the  Government  under  the  terms  of   his contract.   The Executive Engineer had informed Saxena  that the amount payable to the first respondent would be deducted from  his  bill, and had on diverse  occasions  called  upon Saxena to pay the amount due, to the first respondent.   The first  respondent was concerned to receive the money due  to him,  and it was a matter of no consequence to  him  whether the  Government paid it directly or the authorities  got  it paid  by Saxena.  The desire of the first respondent not  to imperil his position as a contractor with the Government  in P.W.D. contracts may well be understood.  It is difficult to appreciate  how this settlement made in the presence of  the Executive  Engineer, whereby Saxena agreed to discharge  the liability  of the Government, in consideration of  discharge of  his  own  liability under his  contract,  negatives  the existence  of the contract between the Government  of  Bihar and the first respondent. There  is  on  the record  correspondence  relating  to  the demands for payment by the first respondent.  A letter dated March  28,  1956 was addressed by Saxena  to  the  Executive Engineer  informing him that M/s Patna Flooring Company  had not sent their bill to him and that they may be directed  to furnish a copy of their bill to enable him to check the same and arrange payment.  This letter refers to the payment  for the  work  done  after December 1955, because  the  bill  in respect  of  the  work done in July 1955  had  already  been submitted  and was the subject-matter of the  settlement  of account  Ext.  G. There are letters dated August  21,  1957, December  7, 1957 and March 8, 1958 in which  the  Executive Engineer called upon Saxena to settle the claim of M/s Patna Flooring  Company.   There  is  draft of  a  letter  of  the Executive Engineer dated March 16, 1958 reciting that Saxena was requested several 86 times to settle the claim amicably "but he was not in a mood to do so and wanted to drag the department into litigation". The second paragraph of that letter is important.  It states               "As  a matter of fact when Shri Saxena  failed               to  complete the particular item of  work  M/s               Patna  Flooring  Co.,  were  engaged  at   the               instance  of  the then  Departmental  Officer.               Materials  were also issued to them, the  cost               of  which are still outstanding against  them.               And  as such the department will have  to  pay               the  amount in question to M/s Patna  Flooring               Co.  for  the work done by them.   It  may  be               added  here  that the work done here  by  this               time has already been billed for in favour  of               Shri  G.P. Saxena.  The correct  procedure  in               this  case would have been for the  department               to make payment to M/s Patna Flooring Co." By  the  last paragraph it is recorded that  Saxena  may  be advised  to  settle  the matter amicably  and  to  obtain  a clearance certificate from M/s Patna Flooring Company.   The Superintending Engineer also addressed a letter to Saxena on May 26, 1958 calling upon him to settle the matter  amicably with   M/s  Patna  Flooring  Company  within  a  month   and threatening  that  the amount due will have to  be  deducted from his final ball.  A copy of this letter was forwarded to M/s Patna Flooring Company. It appears that on July 25, 1958, Saxena submitted a  state- ment  about the construction work done by him  and  included

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therein the work done by M/s Patna Flooring Company.  At the foot  of the bill is a memorandum,relating to payments  made from  time  to time and the last item shown therein  is  Rs. 13,897/-  due  to M/s Patna Flooring  Company.   Saxena  not having  paid  the amount to M/s Patna  Flooring  Company,  a letter  dated September 10, 1958 was addressed to Saxena  by the  Executive  Engineer in which it was recorded  that  the contractor’s   (Saxena’s)   representative  had   seen   the Executive  Engineer in his office at the time of  refund  of the security deposit kept back on account of income-tax dues and  had promised that he would settle up the  account  with M/s  Patna Flooring Company and pay their dues  immediately, and that although the "refund of the amount had already been given  the dues of M/s Patna Flooring Company had not  been. cleared".   Saxena was once more requested to clear off  the dues of M/s Patna Flooring Company so that the refund of the amount kept in deposit may be given to him.                              87 This  is all the material correspondence on which the  first respondent   has  relied.   The  correspondence   makes   it abundantly  clear that the primary liability for payment  of the  dues was of the State of Bihar and they  accepted  that liability.   The  Bill  of M/s Patna  Flooring  Company  was received  by  the P.W.D. authorities and  they  called  upon Saxena  to satisfy the claim because under the terms of  the contract  the  liability  for payment  would  ultimately  be enforced  against  Saxena.   None  of  these  letters   even indirectly  suggests that the contract for work done by  M/s Patna Flooring Company in the matter of "mosaic flooring and dado  work" was done in execution of the  subcontract  which that Company had obtained from Saxena.  The anxiety  evinced by  the Superintending Engineer, the Executive Engineer  and the  Sub-Divisional  Officer  that the claim  of  M/s  Patna Flooring  Company  be settled by payment through  Saxena  is consistent  with the case that the primary liability was  of the  State  of Bihar and the P.W.D.  authorities  wanted  to avoid  litigation.   The conduct of the authorities  in  the context  of the documents to which we have already  referred to  is in our view consistent only with the  inference  that the construction work was done by M/s Patna Flooring Company under a contract directly with the P.W.D. authorities.  M/s Patna Flooring Company ware approved contractors and if they were made to believe that Saxena will be induced to pay the amount due to them, it was not expected that they  would incur the displeasure of the authorities, by insisting  upon payment  directly  by the State.  The offer  and  acceptance incorporated in Exts. 1 (g) and 1 (c) the construction  work done   by  M/s  Patna  Flooring  Company,   thereafter   the submission  of the bills by M/s Patna Flooring  Company  for payment, the anxiety of the P.W.D. authorities that  payment should  be  made  to M/s Patna Flooring  Company  and  their intervention  in  securing  payment  and  anxiety  to  avoid litigation  clearly establish that the contract pursuant  to which  the work of "mosaic flooring and dado" was  done  was between  M/s  Patna  Flooring Company  ’and  the  Government directly. the contract was not unauthorised and therefore no question  of  ratification arises.  It may also  be  noticed that  the  contract  required to be  ratified  and  was  not ratified was never raised in the trial Court or in the  High Court. The argument -that after the contract was entered into,  the Superintending  Engineer had countermanded the  arrangement, is  in our judgment without substance.  On the letter  dated May  16,  1958  there is an endorsement  presumably  by  the Executive  Engineer in which it is recorded that  M/s  Patna

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Flooring Company 88 were  engaged  at  the instance  of  the  then  Departmental Officers for completing the work left incomplete by  Saxena, and  it is followed by a query "Was the sanction of S.E.,  S ’.B.C.  taken  to  this arrangement, if so,  copies  of  the correspondence may please be furnished ?" There is no record of  the  reply,  if any, given to  this  query.   There  is, however, at the foot of the letter an endorsement dated  May 17,  1958, made by some one "write to, the contractor".   It is  true  that the Superintending Engineer  was  in  overall charge  of  the construction work and by the  terms  of  the tender  itself  the authority of the Executive  Engineer  to accept  the tender is limited : cl. 9 of the form of  tender Ext.   D.  But there is no evidence on the record  that  the Superintending  Engineer had at any time  countermanded  the arrangement  between  the Executive Engineer and  M/s  Patna Flooring  Company.  The first respondent in his  examination before the Trial Court stated that               "I had sent Ext. 1 (g) to S.D.O., P.W.D. No. 3               mentioning  the rates and terms that  my  firm               had  with  G. P. Saxena  for  construction  of               mosaic  and  Dado work  in  Rajendra  Surgical               Block.   No direct contract was  ever  entered               with  between  P.W.D. department and  my  firm               even  after  this letter Ext. 1  (g).   Saxena               went to Superintending Engineer and  objected.               The   Superintending  Engineer  ordered   that               Saxena  will continue to be the contractor  as               before and no direct contract will be given to               any firm." But it is not suggested that there was any such  arrangement in the presence of the first respondent.  The Superintending Engineer  has not been examined, and there is on the  record no  evidence  to support this part of the  case,  which  was never set up in the Trial Court and the High Court. The  admissions made by the first respondent in  his  notice and  the  plaint in suit No. 53 of 1959 were  sought  to  be explained  by him on the plea that he had signed the  plaint and the verification without reading the plaint of the  suit as  the plaint was required to be filed in great  hurry.   A similar  explanation  was  also  given  in  respect  of  the contents  of  the notice.  It is difficult -to  accept  this explanation which was invented with a view to get out of the inconvenient admissions.  The Executive Engineer  Mukteshwar Prasad  in  his  evidence  stated  that  the  Sub-Divisional Officer  had  given a warning to Saxena  that  his  contract would  be  terminated and a part of the work would  be  done through another agency 89 and  that  thereafter  M/s.   Patna  Flooring  Company  were engaged  to complete the work.  Rameshwar Prasad Singh,  who succeeded  Mukteshwar Prasad as the Executive Engineer  also said  that the unexecuted part of the mosaic work was  taken away from Saxena and was entrusted directly to, M/s.   Patna Flooring Company and that M/s.  Patna Flooring Company  were directed  to complete the work.  It was never  suggested  to either   of  these  witnesses  that  the   arrangement   was countermanded by the Superintending Engineer. The first respondent approached the Court denying that there was  a contract between him and the State of Bihar  relating to  the  construction  work.  That denial  is  falsified  by letters Exts. 1(g) and 1 (i) and is further falsified by his statements  made by him on oath in his plaint.  On  his  own admissions, the first respondent is a person who is  willing

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to trim his sails as his interest demands.  The  explanation given by the first respondent regarding the admissions  made by  him in the plaint cannot be accepted as truthful.  On  a careful  consideration  of  all the  circumstances,  we  are unable  to  agree  with the High Court  that  there  was  no contract  between  the  first  respondent  and  the   P.W.D. authorities  representing the State of Bihar in  respect  of the  "mosaic  and  dado  work" by Exts.  1  (g)  and  1  (c) pursuant to which the first respondent carried out the  work independently of Saxena. It  now remains to consider whether there was  a  subsisting contract at the date of filing of the nomination paper.  The work  of construction entrusted to the first respondent  was completed in July 1955 and in respect of "bath rooms and the lecture  theatre" was completed sometime before April  1956. The  first respondent had not been paid the amounts  due  to him.  It cannot be said that in view of the attitude adopted by  the  State  of  Bihar there has been  a  breach  of  the contract.  The expression "there subsists a contract" in  s. 7(d)  of  the  Act includes cases in  which  one  party  has performed  his part of the contract and part performable  by the  other party remains.  It was so held by this  Court  in Chatturbhuj’s case(1).  The first paragraph of the head note in that case states : "A contract for the supply of goods does not terminate  when the goods are supplied, it continues into being till payment is made and the contract is fully discharged by  performance on both sides." (1)  [1954] S. C. R. 817. 90 In  that case pursuant to an oral request made on behalf  of the State of Madhya Pradesh, Chatturbhuj Jasani had supplied "  canteen  stores" between October 8, 1951 to  January  23, 1952,  and  bad  submitted  invoices  in  respect   thereof. Payments  were  made in respect of  those  invoices  between November  15,  1951 and March 20, 1952.   Elections  to  the Parliament were held in December 1951, and Jasani stood as a candidate  for one, of the two seats before payment for  the stores  supplied was made.  The Court refused to accept  the plea  raised  on behalf of the elected  candidate  that  the moment the contract is fully executed by the candidate,  the contract  is at an end and a new relationship of debtor  and creditor  takes  its place.  It is true  that  the  material words of s. 7 (d) of the Act which fell to be considered  in that case were somewhat different.  They stood as follows :               "A  person  shall be  disqualified  for  being               chosen  as, and for being, a member of  either               House  of  Parliament or  of  the  Legislative               Assembly or Legislative Council of a State ..               (d)   If, whether by himself or by any  person               or body of persons in trust for him or for his               benefit or on his account, he has any share or               interest in a contract for the supply of goods               to,  or for the execution of any works or  the               performance of any services undertaken by  the               appropriate Government-" The  conditions  under which disqualification  was  incurred were wider under the section as it then stood.  Any share or interest  in a contract for the supply of goods, or for  the execution  of any works or the performance of  any  services undertaken  whether  by  himself or any person  or  body  of persons  in  trust  for him or for his  benefit  or  on  his account,  disqualified a candidate from being elected  as  a member  of  the  Legislature.  The Act as  amended  has  now restricted  the conditions which import a  disqualification.

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The two conditions now are that the contract must be in  the course of the candidate’s trade or business, and it must  be for supply of goods or for execution of any works undertaken by  the  Government.   Contracts  in  respect  of   services undertaken for the appropriate Government are apparently not within  s.  7(d)  as amended.   The  amended  section  again requires  that there must be a contract entered into by  the candidate.    Mere  interest  in  a  contract    unless   the candidate has entered into the contract directly or  through an agent, would apparently not disqualify him.  But s.  7(d) before  it  was  amended  was  attracted,  if  there  was  a subsisting contract 91 and the application of the clause after it was amended  also is  subject  to  the  same  condition.   If  there  was   no subsisting  contract, neither under s. 7 (d) before  it  was amended, nor after it is amended, would the disqualification be  incurred.   In  the present case  the  first  respondent performed his part of the contract, and no payment has  been made   by   the  Government  of  Bihar  to  him.    In   the circumstances, relying upon Chatturbhuj Jasani’s case(1), we are of the view that the contract was a subsisting contract. Mr.   Sarju  Prasad  appearing  on  behalf  of   the   first respondent,  contended  that  by s. 116-B of  the  Act,  the decision  of the High Court is made "final  and  conclusive" and interference by this, Court with that decision, even  if it  appears  that an error has been committed  by  the  High Court,  will  not  be  justified.   But  by  s.  116-B   the jurisdiction conferred upon this Court by Arts. 133 and  136 of  the Constitution is not, and cannot be  restricted.   If the  circumstances of the case justify, this Court  has  the power, and is indeed under a duty, to set aside the  verdict of the High Court’ The Court is dealing with a case in which a  question which vitally concerns the purity  of  elections arises-.   A  person  who  has  a  contractual  relationship between him and the executive would, on getting elected,  be able to bring pressure to bear upon the executive to  settle his claim or to secure advantage for himself to which he may not  be  lawfully entitled.  This appears to be  the  scheme underlying  s. 7(d) which disqualifies a person  from  being chosen,  as a member of the Legislature if there subsists  a contract entered into the course of his trade or business by him with the appropriate Government for the supply of  goods or  for  execution  of  any works.   If,  on  the  evidence, subsistence  of the contract which disqualifies a  candidate is established, the Court would not be justified in refusing to  give  effect  to  its  conclusion  especially  when  the question  vitally concerns the public in keeping out of  the Legislature   persons  who  have  claims  arising   out   of subsisting contracts against the Government. In  our view the appeal ought therefore be allowed, and  the order  passed by the High Court set aside and the  order  of the Election Tribunal restored with costs in this Court  and the High Court.                            ORDER In accordance with the opinion of the majority the appeal is dismissed with costs. (1) [1954] S. C. R. 817. Sup.  C.I./66-7 92